Hooch and Hooch (No.2)

[2012] FMCAfam 1233

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HOOCH & HOOCH (NO.2) [2012] FMCAfam 1233

FAMILY LAW – Child maintenance – 15 year old child – earning capacity – education expenses – orthodontic expenses – discount for lump sum payment – adult child maintenance also sought – father resides in Vanuatu.

Family Law Act 1975, ss.66B, 66C, 66E, 66F, 66G, 66H, 66J, 66K, 66L, 66P, 66R, 69E
Child Support (Assessment) Act 1989, ss.3, 151B

Bereat & Bereat [2010] FamCA 693
Brown & Brown [2007] FamCA 151; (2007) 37 Fam LR 59; [2007] FLC 93-316
Charlton & Crosby [2010] FMCAfam 207
Cosgrove v Cosgrove (No. 2) (1996) 20 Fam LR 761
DJM v JLM (1998) 23 Fam LR 396; (1998) FLC 92-816
Hooch & Hooch [2011] FMCAfam 588
In the Marriage of Bendeich (1992) 110 FLR 418
In the Marriage of Tuck (1979) 7 Fam LR 492
In the Marriage of Vartikian (1984) 10 Fam LR 165
RNL & RHB [2005] FMCAfam 520
S & S [2005] FMCAfam 78
Spano v Spano (1979) 5 Fam LR 506; [1979] FLC 90-707
Todorovic v Waller (1981) 150 CLR 482
W & H [2004] FMCAfam 67

Applicant: MS HOOCH

Respondent: MR HOOCH

File Number: NCC 1736 of 2007

Judgment of: Monahan FM

Hearing dates: 7 & 8 June 2012

Date of Last Submission: 8 June 2012

Delivered at: Sydney

Delivered on: 4 December 2012

REPRESENTATION

Counsel for the Applicant: Mr Dura

Solicitors for the Applicant: Penmans Solicitors

Counsel for the Respondent: Not Applicable

Solicitors for the Respondent: Self-represented Litigant

ORDERS

1. The Respondent (“the father”) pay child maintenance to the Applicant (“the mother”) in the sum of $1,898.34 per month in respect of the child [X], born [in] 1997, (“[X]”), with the first payment taken to have fallen due on 1 December 2010 and each monthly payment thereafter to fall due on the first day of each month until 31 December 2015.

2. By not later than 2 January 2013, the father pay to the mother the sum of $49,356.84, covering the period from 1 December 2010 to 31 January 2013, less any monies paid by the father to the mother following the final hearing, as well as any other child maintenance amounts paid by him to the mother in the period following 1 December 2010.

3. The maintenance to be paid pursuant to order 1 be varied on 1 January in each year (the “review date”) commencing on 1 January 2014, to such sum as shall be determined by multiplying the maintenance being paid on the review date by the fraction N/B where:

   (a)‘B’ is the Consumer Price Index for Brisbane (All Groups) published by the Australian Bureau of Statistics (‘CPI’) in respect of the quarter year ended on the date 12 months prior to the review date (that is, 31 December); and

   (b)‘N’ is the CPI in respect of the quarter year ending on the day immediately preceding the review date.

4. Paragraph three (3) herein is without prejudice to the right of the mother in the year to make such application as she considers appropriate for any other variation of the maintenance which she may claim to be appropriate by reason of her then prevailing financial circumstances.

5. In the event that the father elects to pay child maintenance to the mother for the period from 1 February 2013 to 31 December 2015 (inclusive) in a lump sum, then by not later than 1 February 2013, the father pay to the mother the sum of $63,119.81.

6. In addition to the monthly or lump sum, the father pay to the mother an amount equivalent to 67% of any orthodontic expenses incurred on and from today’s date with respect to [X] until the child attains the age of 18 years, with such payment(s) to be made within 14 days after the father receives a copy of any statement of account outlining the relevant orthodontic expenses.

7. Any Application for costs in this matter be filed and served within the next 42 days.

8. All extant applications be otherwise dismissed.

AND THE COURT NOTES THAT:

(A)The lump sum referred to in paragraph five (5) herein represents a base amount of $66,441.90, less a discount of 5% on account of capitalisation and in recognition of the father’s goodwill in paying the lump sum upfront rather than by way of periodic payments.

IT IS NOTED that publication of this judgment under the pseudonym Hooch & Hooch (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

NCC 1736 of 2007

MS HOOCH

Applicant

And

MR HOOCH

Respondent

REASONS FOR JUDGMENT

Introduction

1. These proceedings were commenced by the Applicant, MS HOOCH, (“the mother”) against the Respondent, MR HOOCH, (“the father”) seeking child maintenance orders in respect of the child of the parties’ relationship, [X], born [in] 1997 (“[X]” or “the child”).

2. These proceedings were commenced by way of the mother’s Initiating Application filed on 16 November 2010. In her Initiating Application, the mother sought a number of final orders with respect to child maintenance. The mother later amended her final orders sought by means of her case outline document dated 5 June 2012. The mother therefore seeks the following final orders:

   “1. That the Respondent Father pay to the Applicant Mother by way of child maintenance for the child [X] born [in] 1997 (‘[X]’) the sum of $2,176.80 per month, first payment due on 1 December 2010, and then on the first of each month thereafter, payable until such time as [X] concludes her tertiary education.

   2. That in order to give effect to Order 1 above, the Respondent Father pay to the Applicant Mother the sum of $39,182.40 within 28 days from the date of these Orders.

   3. That the maintenance to be paid pursuant to order 1 be varied on 1 January in each year (the ‘review date’) commencing on 1 January 2012, to such sum as shall be determined by multiplying the maintenance being paid on the review date by the fraction N/B where ‘B’ is the Consumer Price Index for Brisbane (All Groups) published by the Australian Bureau of Statistics (‘CPI’) in respect of the quarter year ended on the date 12 months prior to the review date (ie. 31 December); and ‘N’ is the CPI in respect of the quarter year ending on the day immediately preceding the review date. This order as to variation in accordance with the CPI is without prejudice to the right of the applicant mother in the year to make such application as she considers appropriate for any other variation of the maintenance which she may claim to be appropriate by reason of her then prevailing financial circumstances.

   4. In the alternative to orders 1 and 2 hereof, that the Respondent Father pay to the Applicant Mother an amount of $260,000 by way of lump sum child maintenance for [X], such amount to be paid within 28 days of the date of these orders.

   5. In addition to the amounts in orders 1, 2 and 3 hereof, that the Respondent Father pay to the Applicant Mother 80% of the expenses for the orthodontic treatment for [X], in which regard the following will apply:

   (a)    The Applicant Mother must provide a quote from [X]’s orthodontist for the cost of her treatment (including braces and retainers), including details of the proposed dates and instalments of the proposed payment;

   (b)    The Respondent Father must pay to the Applicant Mother 80% of each proposed periodic payment at least 28 days in advance of the date on which payment is due to the orthodontist;

   (c)     If [X]’s orthodontic treatment ceases early for any reason such that the full extent of the quoted costs is not payable, the Applicant Mother must immediately notify the Respondent Father and once all amounts have been paid to the orthodontist no further amounts will be payable by the Respondent Father for [X]’s orthodontic treatment;

   (d)    If for any reason the orthodontic treatment costs exceed the amount of the quote, then the Respondent Father must reimburse to the Applicant Mother 80% of any additional amounts she pays for such orthodontic treatment, such amount to be payable within 14 days of the date on which the Applicant Mother notifies the Respondent Father of the additional amount so payable, and provides evidence of such payment, by forwarding notice and evidence to the Respondent Father at an address notified by him and, if the Respondent Father does not notify such an address, then 80% of any such additional amount must be paid by the Respondent Father to the Applicant Mother within 14 days of the date on which the Applicant Mother makes such payment and will become a debt due to the Applicant Mother.

   6. That the respondent father pay the applicant mother’s costs of these proceedings.”

3. The father filed his Response on 27 April 2011 and sought only two orders: firstly, that the mother’s application be dismissed and, secondly, that the mother pay the father’s costs on an indemnity basis.

Background

1. This matter was the subject of a summary dismissal application made by the father, which came before me for hearing on 19 May 2011. On 3 June 2011, I delivered a written decision refusing the father’s application for summary dismissal (for the sake of brevity, I will refer to this decision as “the interim decision”).[1]

   [1] Hooch & Hooch [2011] FMCAfam 588.

2. In the interim decision, I provided the following summary of the parties’ background and the history of the dispute (references omitted):

   “8. The mother is aged 44 years and is a [occupation omitted] who resides on the Gold Coast in Queensland. The father is aged 39 years and is a [occupation omitted]. The father does not disclose his residential address in his documents but there was agreement between the parties that he is now residing in Vanuatu and, indeed, is a resident of Vanuatu. The parties also agree that they commenced cohabitation in 1992 and married [in] 1995. They also agree that they separated on 5 April 2007 and divorced on 8 July 2008. As stated, there is one child of their marriage, namely, [X] who is now aged thirteen and a half.

   9. Final parenting orders were made in the Family Court of Australia at Newcastle on 9 September 2008 (‘the final parenting orders’) and it appears the parties were assisted by an Independent Children’s Lawyer. The mother asserts that the final parenting orders provide for [X] to live with the mother and spend time with the father during times that he is not absent from Australia for the purpose of his employment.

   10. The father asserts that final property orders were also made in the Family Court of Australia at Newcastle on 19 December 2008 (‘the final property orders’). The father asserts that the effect of the final property orders was that the mother received 85 per cent of the net property pool. The father further asserts that ‘…after paying legal costs, I was left with $2500 to live with’.

   11. Indeed, from my brief perusal of the four files the parties have managed to establish since 31 May 2007 the parties, it would appear, have had a long and protracted property and parenting dispute over the period between 2007 and 2008. That said, the parties were ultimately able to conclude both property and parenting matters with orders made by consent.

   12. The mother asserts in her affidavit that the father has spent little time with [X] since the final parenting orders were made. The father asserts that he has spent time with [X] but that the mother has made it difficult for that time to occur. The father asserts he last spent time with [X] in Australia ‘for a short period around Christmas 2010’.

   13. As to child support or child maintenance matters, which is the subject of the mother’s application, there is evidence before the Court that the Child Support Agency, by their letter to the mother dated 17 June 2010 (‘the mother’s CSA letter’), determined that the father ‘ceased to be a resident of Australia and/or a reciprocating country for child support purposes on 11/11/2009’.

   14. Interestingly, the mother’s CSA letter advised the mother as to the following:

   ‘If you [the mother] wish to continue to pursue ongoing child maintenance from Mr Hooch you may have the option of seeking a maintenance order through the Courts. You should seek legal advice in relation to that option.’

   15. The father’s affidavit also reveals that he received a similar letter from the Child Support Agency but that letter did not refer to the potential of a parent pursuing child maintenance proceedings in this Court against the other parent.

   16. There is also evidence before this Court that prior to the Child Support Agency’s determination in respect of the non-collection of the child support liability, the father would have been required to pay child support in the sum of $1866.58 per month up until 31 August 2010.

   17. The mother’s affidavit also attaches a notice of decision on objection to change of assessment decision made by the Child Support Agency on 13 January 2009. It would appear that the father filed an objection in relation to the administrative assessment of child support on 20 October 2008.

   18. The objections stem from an application being made by the mother on 29 August 2008 to increase the amount of child support being paid. The grounds raised by the mother were, to use the Child Support Agency’s language ‘Reason 3’ as follows:

   ‘The costs of maintaining the child are significantly affected by high costs of caring for, educating or training the child in a way both parents expected.’

   and also ‘Reason 8’ as follows:

   ‘The child support assessment is unfair because of a parent’s income, property, financial resources or earning capacity.’

   19. In other words, these are some of the reasons the Child Support Agency uses to reflect ‘section 98C/section 117 considerations’ arising under the Child Support (Assessment) Act 1989.

   20. The objection was duly considered by the Child Support Agency and it was disallowed. It is noteworthy that in the context of the current application the Child Support Agency determined:

   ·     that [X]’s education costs are significant and that she is being educated in a manner intended by both parents, that is, ‘Reason 3’ was established; and

   ·     that the father should be assessed on his earning capacity, that is, that ‘Reason 8’ was established.

   21. Following separation, the father formed a relationship with his now wife, Ms H, formerly known as Ms F (‘the wife’). Both the father and the wife lived on the Central Coast in New South Wales until they moved to Vanuatu. The father also asserts that he is the guarantor of two loans secured by mortgage on two pieces of real estate owned by his wife, those properties being located at [omitted] on the New South Wales Central Coast (‘the [omitted] properties’).

3. Following the interim decision, the matter proceeded to a Conciliation Conference on 18 July 2011, with the father being granted leave to appear by telephone provided that he was legally represented. Unfortunately, the father did not attend at the Conciliation Conference and no progress was made. The matter returned before the Court for mention on 31 August 2011 and on that occasion the matter was referred to a further Conciliation Conference on 4 November 2011 and was also listed for final hearing on 28 June 2012, with an estimated duration of not more than 2 days.

4. At the Conciliation Conference on 4 November 2011, while a solicitor from the firm instructed by the father did attend, the father was not available by telephone and had not provided instructions to his solicitor. The Conference was again not able to proceed.

5. At a mention hearing on 24 November 2011, the father’s solicitors confirmed that they would be withdrawing from the matter and the Court otherwise confirmed the final hearing dates and made trial directions.

6. The Court revisited the matter in Chambers on 20 February 2012, when it became necessary to change the date of the final hearing. The final hearing was relisted to 7 June 2012 for not more than 2 days and new trial directions were made.

7. The matter duly came before the Court for final hearing on 7 June 2012 and concluded on 8 June 2012 (“the Final Hearing”). At the Final Hearing, the mother was represented by Mr Dura of counsel. The father appeared in person and represented himself. Following an oral application by the father, the Court granted him leave to be assisted by Mr F as his ‘McKenzie friend’.

8. On 8 June 2012, the Court reserved its decision and made, inter alia, the following Order and Notation:

   “2. On the first business day after his return to Vanuatu, the Respondent cause the balance of the account held by him on behalf of the child [X], born [in] 1997, together with the sum of money to be allocated to that account by him for the month of June, to be transferred to the Applicant’s ANZ bank account, the details of which are as follows:

   Account Name: Ms Hooch

   BSB: [omitted]

   Account Number: [omitted]

   AND THE COURT NOTES THAT:

   …

   B. The Respondent agreed to pay child maintenance to the Applicant in the sum of $466.00 per month until the judgment hearing.”

Evidence

Mother’s evidence

1. The mother relied on the following documents at the Final Hearing:

   ·Initiating Application filed on 16 November 2010;

   ·Affidavit of the mother sworn and filed on 17 May 2012;

   ·the mother’s Financial Statement sworn and filed on 17 May 2012; and

   ·the mother’s Case Outline document dated 5 June 2012.

2. The mother also provided oral evidence and was cross-examined by the father. The mother was a polite and largely forthcoming witness.

3. The mother tendered the following documents into evidence:

   ·Exhibit “AM1”: an email dated 10 November 2009, together with an attached letter of employment relating to the father;

   ·Exhibit “AM2”: a customer particulars and guarantor form from NAB regarding a home loan entered into by the father’s present wife, Ms H (neé Ms F), to which the father is a guarantor;

   ·Exhibit “AM3”: a bundle of documents relating to the parties’ previous proceedings, being the father’s Application filed on 31 May 2007, his affidavit sworn on 30 May 2007, the father’s Financial Statement filed on 27 April 2011 and the father’s previous Financial Statement filed on 26 July 2007; and

   ·Exhibit “AM4”: costs memorandum from Penmans Solicitors dated 5 June 2012 setting out the mother’s legal costs.

Father’s evidence

1. The father relied on the following documents at the Final Hearing:

   ·Response filed on 27 April 2011;

   ·the father’s Affidavit sworn on 26 April 2011 and filed on 27 April 2011;

   ·the father’s Affidavit sworn on 7 May 2012 and filed on 22 May 2012;

   ·the father’s Financial Statement sworn on 26 April 2011 and filed on 27 April 2011; and

   ·the father’s Case Outline document received on 5 June 2012.

2. In addition, the father tendered a print-out of a calculation obtained from the website of the Child Support agency. This became know as Exhibit “RF1”.

3. The father also provided the Court with oral evidence and was cross-examined by Mr Dura. Generally speaking, the father presented as a pleasant witness, but he was vague at times in his evidence and certain assertions that he made strained credulity.

Submissions

1. Following the presentation of evidence, the parties each provided the Court with submissions.

Mother’s submissions

1. Mr Dura, for the mother made the following points in his submissions:

   “Whilst there was some cross-examination of the mother in relation to the part N expenses contained in the financial statement, I would be asking your Honour to accept that the expenses that are set out therein are reasonable expenses; that, after some cross-examination in the father in comparison to some of his earlier financial statements, my respectful submission, quite appropriately, he conceded that the expenses that the mother sets there and in part N of that financial statement could not be seen to be excessive […] in my respectful submission, your Honour would accept that all of the expenses that are set out that comprise the sum of $653 on a weekly basis would be seen as necessary expenses.

   …

   In my respectful submission, there cannot be any real issue so far as the first step of the two-step process that your Honour has to determine, and your Honour could, and should, find that the financial support necessary for the maintenance of [X] equates to not less than $653 per week – keeping in mind, your Honour, that those expenses that are set out therein do not include expenses related to keeping a roof over her head, such as – you will see, my client is paying off a ..... credit facility as a result of meeting expenses, including legal expenses, but expenses necessary to house herself. Things like council rates, water rates, all of those sorts of things that aren’t included there in part N, and that’s why I say, your Honour, not less than $653.

   What’s also not included in part N [of the mother’s Financial Statement] but is referred to in the affidavit of my client are any medical expenses that may be associated with any of the ongoing psychological assistance to deal with [X]’s eating disorder if that were to arise, given that that has occurred in the past, and or if the bursary comes to an end, any increase in her education expenses. My client sets out in her affidavit, your Honour, that the education expenses as set out in part N are $200 per week, which is less than the $350 per week than it had previously been – and your Honour knows that the bursary covers 50 per cent of the tuition expenses in relation to [X].

   $653 per week equates to, on a yearly basis … about $38,000 or $2829 … per month. And your Honour, what – the mother’s application is for $2176 per month, or 76 per cent of those costs only identified in part N as is presently drafted with the expenses [listed] there.”[2]

   [2] Transcript, 8 June 2012, page 138.

1. Mr Dura also referred the Court to a number of Financial Statements filed by the father and the job descriptions and income amounts listed therein. He submitted that:

   ·the father’s Financial Statement sworn on 24 July 2007 and filed on 26 July 2007 stated that the father worked as a [omitted] with a gross annual income of $124,800.00;

   ·the father’s ‘December 2007’ Financial Statement stated the father’s gross annual income as $130,936.00; and

   ·the father’s ‘April 2011’ Financial Statement stated that the father earned $138,424.00.

2. Mr Dura went on to state:

   “Those documents, your Honour, show a pattern of increases in the father’s income; and when one looks at the documents that I think formed exhibit AM1, which were the documents from the bank, your Honour has the letter of employment from [omitted] and the declarations made by the father and his present wife in relation to the father’s income of $16,000 per calendar month, and $16,000 per calendar month gives you $192,000 by way of annual income. So, clearly a capacity by the father to earn in excess of $120,000 per year – some might argue, significantly greater than that, but at least that.

   In May 2011, a month after the father files his financial statement in these proceedings, there is an application run on his behalf for summary dismissal of these proceedings brought by the mother. That is subsequently dismissed in June [2011] and within weeks of that, the father commences employment with his current employer at a reduced income from $138,000 down to $25,000. It’s a drop in income slightly in excess of $113,000 per annum. The only explanation offered to the court is it was a lifestyle choice; he didn’t want to do that work anymore.

   There is no evidence before your Honour to suggest that he no longer has the physical ability to conduct that work; that he resigned from that employment for any reason other than a voluntary reason; and he did it whilst there were proceedings on foot in this court where the mother was seeking that he make a contribution towards [X]’s expenses of $2176 per month. In addition to those matters, your Honour has heard evidence today which had not been disclosed anywhere else, that the father and his wife, Ms H, have disposed of the lease hold interests in two parcels of property in Vanuatu, in which there was equity of somewhere between 50 and $70,000 – Australian dollars – that was paid over a period of time post August 2011.

   The father asserts that that’s not in his documents because the money was going into his wife’s account, and your Honour, this again was during a period of time when the father knew that these proceedings were on foot, had participated in these proceedings, and was actively opposing them.”[3]

   [3] Ibid, pages 140-141.

3. Concluding his submissions with respect to the father’s income and capacity earn Mr Dura made the following statement:

   “Your Honour could not accept, in my respectful submission, the father’s evidence so far as the status of his financial circumstances.”[4]

   [4] Ibid, page 141.

4. Regarding the issue of [X]’s attendance at a private school, Mr Dura submitted that:

   “It is clear from the affidavit and the application that was filed – put forward on behalf of the father in May of 2007 when one looks at paragraph 38 that not only was he aware of the enrolment for [C] School, but, in fact, he participated in the transfer of [X] from [E] School to the [C] School because he, in fact, says that she went to [E] for – it’s the first six months of kindergarten and ‘we transferred her.’

   …

   It’s clear that the father had sought orders to ensure that [X] remained within the private school system. And he says in paragraph 40, he proposes that her future education remain at [C] School, and anticipates being available to assist the school with [X]’s education until she completes year 12.

   So your Honour could not accept that from the period of her education, and I understand she’s now in about year nine, that from six months into kindergarten that there has been an opposition by the father to [X] being in the private school system. There has been at least seven or eight years from which any form of objection could be undertaken, and the orders, the consent orders that were made in 2008 in relation to the parenting and property again signifies and highlights the father’s consent to [X] remaining in that system.

   …On that basis your Honour would accept that the school fees and the education that she’s currently in are expenses that are reasonably and necessarily incurred for the financial support of [X].”[5]

   [5] Ibid, pages 141-142.

Father’s submissions

1. During his closing address the father submitted that:

   “Your Honour, ever since the day [X] was born her health, welfare and development has always been my main concern. I conceded at the consent orders of the property settlement that the 85 per cent given, that 35 per cent would cover [X]’s schooling and upbringing and I was still prepared to pay child support maintenance. I am prepared to pay 466 per month and CPI increases until the end of December 2015. At that time I will reassess the situation with the applicant regarding [X]’s welfare. My limited contact with [X] is due to my belief that she is being used as a pawn during the divorce and unnecessary pressures were being forced on her.

   I’m prepared to withdraw until [X] is mature enough to make up her own mind as to contact. I did not want [X] to leave the Central Coast as we have extended family support and friends, and support is extended to me by three family members to care for [X]’s dental care and development. Every one of my five sisters, three brothers, myself included, have all attended public schools. We have all been very successful under the public school system. It was always my plan to give up [omitted] work at the age of 40 or before if I could. I no longer wish to work [omitted] as I am isolated. It is hard, physical work. The travelling is daunting. I lose five weeks – four and a half weeks out of every eight weeks, and I do not wish to be away from my wife for that period of time.

   We made preparation well before this case even came to court that we were going to reside in Vanuatu, hopefully with peace and happiness. That’s all I’ve got to say.”[6]

   [6] Ibid, page 143-144.

2. During the course of the Final Hearing, it also became clear that the father believed that the parties’ property settlement (in which consent Orders were made by Registrar Dodson in the Family Court of Australia on 19 December 2008) afforded the mother a total of about $554,806.00 and the father a sum of about $97,000.00 and that, in his view, the more generous provision to the mother was intended to offset any future child support or child maintenance expenses.

3. It also appeared that the father has changed his mind about the benefits of [X] being schooled privately (firstly at [C] School and, later, [S] School) and he indicated that this enrolment had taken place without his consent, his view being that [X] should have been enrolled in a public school.

4. The father also appeared to have some concerns about alleged past behaviour of the mother directed at him, his family and his current wife, Ms H (née Ms F) (to avoid confusion, “Ms F”), which may have led to his decision to relocate with Ms F to Vanuatu.

5. The father faced evidentiary difficulties with some of the issues outlined above. Nevertheless, the Court has heard what he has had to say on these issues of concern to him.

Law and Discussion

1. I will now consider the application in light of the relevant law and available evidence.

Court’s power

1. Section 66G of the Family Law Act 1975 (Cth) (“the Act”) gives the Court the power to “make such child maintenance order as it thinks proper”. Generally speaking, a child maintenance order will cease upon a child’s 18^th birthday.[7] That said, s.66L of the Act allows to Court to make an order for a child aged 18 or more in certain circumstances such as when the Court is satisfied that the provision of maintenance is necessary to allow the child “to complete his or her education”.[8]

   [7] See s.66L(3) of the Act.

   [8] See s.66L(2)(a) of the Act.

2. In this case, I note that [X] has not as yet attained the age of 18 years.

3. At this stage let me note that the ‘paramountcy principle’ (ie. the best interests of the children criteria applicable in parenting matters such as residence and contact disputes) does not apply to child maintenance cases.[9] The relevant criteria in child maintenance disputes are discussed below.

   [9] For a discussion see Tobin & Tobin [1999] FamCA 446; (1999) FLC 92-848; (1999) 24 Fam LR 635 (per Finn, Kay and Chisholm JJ).

4. Prior to considering the application of the relevant criteria in light of the evidence in this case, there are a number of preliminary considerations and jurisdictional factors that need to be canvassed.

Parents have the primary liability to support children

1. Pursuant to s.66C(1) of the Act, the primary liability to maintain children rests with the parents. In respect of the appropriate priorities that should be considered in this context, s.66C(2) stipulates the following three (3) rules which apply:

   “(2)Without limiting the generality of subsection (1), the duty of a parent to maintain a child:

   (a)  is not of lower priority than the duty of the parent to maintain any other child or another person; and

   (b)  has priority over all commitments of the parent other than commitments necessary to enable the parent to support:

   (i)himself or herself; or

   (ii)any other child or another person that the parent has a duty to maintain; and

   (c) is not affected by:

   (i)the duty of any other person to maintain the child; or

   (ii)any entitlement of the child or another person to an income tested pension, allowance or benefit.”

2. These rules are also reflected in s.3 of the Child Support (Assessment) Act 1989 (Cth) (“the CSAA”) where administrative assessment of child support is relevant.

3. In this case the parties have the primary duty to financially support [X]. Each party’s duty to support [X] has priority over all their own commitments other than those commitments necessary to support himself or herself or any other person they have a duty to support, such as a partner. That should not be read as meaning that such other commitments take priority over a parent’s duty to support their child; any asserted priorities must be reasonable in the circumstances and would be taken into account in considering the primary duty to maintain a child. The obligation to support a step-child is secondary to a parent’s obligation to support their own child.

4. I note in the case before me that there are no other relevant children that either party has a duty to support and that the father has re-married. Ms F has 3 children, ages unknown, from a previous relationship,[10] but there is no evidence that they either live with the father and Ms F in Vanuatu or rely on them for support. Where a duty to a partner is raised, a threshold test must be applied whereby the partner in need must establish, amongst other things, that she or he is not reasonably able to support herself or himself.[11] This duty to support is unaffected by any eligible Centrelink entitlements. The duty to support step-children is a secondary one; the primary duty rests with the children’s parents.

   [10] The father’s Affidavit sworn on 7 May 2012 and filed on 22 May 2012, at [59].

   [11] See s.72 of the Act.

Jurisdiction

1. A number of jurisdictional matters require consideration in this case.

Non-application of the child support assessment legislation

1. Section 66E of the Act prohibits the Court from hearing a child maintenance application if the matter is one which should be assessed administratively under the relevant child support assessment legislation.

2. In this case, the relevant child support assessment legislation has no application as the father is no longer an Australian resident.

Eligible applicant

1. According to s.66F(1) of the Act, an application for child maintenance may be sought by: either or both of the child’s parents, the child, a grandparent of the child or any other person concerned with the care, welfare or development of the child.

2. In this case the mother is an eligible applicant.

Connection to Australia

1. In addition, s.69E of the Act requires an Australian connection for jurisdictional purposes.

2. In this case both the mother and [X] are resident and present in Australia.

3. Having considered the relevant criteria, I formally find that the Court has jurisdiction to hear the mother’s application for child maintenance.

Relevant criteria

1. Section 66H of the Act sets out the approach to be adopted by the Court in child maintenance proceedings:

   ·firstly, the Court must consider the financial support necessary for the maintenance of a child (this is expanded on in s.66J); and

   ·secondly, the Court must determine the financial contribution, or respective financial contributions, towards the financial support necessary for maintenance of the child, that should be made by a party, or by parties, to the proceedings (this is expanded on in s.66K).

Required financial support

1. According to s.66J(1) of the Act, the Court must take the following matters (and no others) into account:

   ·the primary duty of parents to support their children (see ss.66B and 66J(1)(a));

   ·the proper needs of the children which includes the children’s ages, education and training and any “special needs” that they may have: (see ss.66J(1)(b) and 66J(2)). In addition, the Court may also take into account the relevant findings of published research in relation to the maintenance of children; and

   ·the children’s income and capacity to meet their own needs (see ss.66J(1)(c) and 66J(3)). The Court is required to have regard to the capacity of a child to earn or derive an income but to disregard the income of “any other person” (eg. a new de facto partner of the parent) unless there are “special circumstances” or any entitlement of the child, or any other person, to an income-tested social security benefit.

2. Clearly, in this case, both parties have the primary liability to support [X]. That liability takes priority over all other necessary commitments of the parties. As to the primary duty of parents to support their children I refer again to my comments in paragraphs 34 to 36 above.

3. The issue of [X]’s ‘proper needs’ was a central feature of this case. She is now a 15 year old teenager who is moving into her adolescent years.

4. Until she relocated to Queensland with the mother in 2009, [X] had continuously attended [C] School since her second term of kindergarten. I am satisfied that the evidence suggests that the parties desired such an education for [X]. Indeed during earlier proceedings between the parties, the father had unsuccessfully sought to restrain the mother from removing [X] as a student from [C] School. That said, there is also evidence that the father later changed his mind on the issue of [X]’s schooling and this dispute formed part of a past child support dispute between the parties. More specifically, in early 2009 the Child Support Agency (“CSA”) ‘disallowed’ a child support objection sought by the father which related to both his earning capacity and the necessity for payment of the private school fees for [C] School. Although the findings of the CSA are not binding on this Court, they are clearly relevant and require consideration.

5. In their decision dated 13 January 2009,[12] the CSA stated:

   “Reason 3. To establish this reason, Ms Hooch must show that the costs of maintaining the child are significantly affected by the high costs of caring for, educating or training the child in the way both parents expected.”

   [12] Decision of Ms M, Objections Officer, CSA dated 13 January 2009; annexure “E” to the mother’s Affidavit sworn and filed on 17 May 2012.

6. On the evidence before me, the reasoning of the CSA is persuasive in the present case. The father merely objects to the costs associated with private schooling rather than suggesting that the child has not, and will not, benefit educationally. The available evidence would suggest that she is progressing very well at school.

7. Although [X] has changed schools, this was due to the mother’s relocation. I am satisfied that, on the available evidence, [X]’s new school, [S] School, is appropriate to her needs and is not dissimilar to the type of education she experienced at [C] School. Indeed, as stated, [X] has succeeded well in her new school and has managed to earn a bursary that has now reduced the applicable school fees which are, in any event, less than those applicable at [C] School. A further change in schools for [X] as she approaches her final high school years may have detrimental effects on her overall learning.

8. The mother has also presented evidence that would suggest that [X] developed an eating disorder that is now being managed with appropriate therapy. This evidence was not challenged by the father.

9. The father did, however, challenge the costs associated with [X]’s dental and orthodontic expenses. The father’s challenge was not on the basis of the child having such needs, but rather that his family might be able to assist with free or lower cost treatment given that a number of paternal family members, including [omitted] are both dentists and [relative omitted] is a hygienist. Under cross-examination, the mother gave evidence as to her difficulties in using the paternal grandfather or aunt as [X]’s dentists because the child needed regular treatment and those family members were located on the NSW Central Coast.[13] The mother also disputed the assertion that [X] did not require braces to improve the development of her teeth.[14] It may be that the issue of orthodontic expenses could be assisted by the father paying the costs associated with appropriate private health insurance to cover any necessary dental and orthodontic treatment for [X] (assuming such insurance were able to be taken out for this and related purposes).

   [13] Transcript, 8 June 2012, page 81.

   [14] Ibid, page 82.

10. Lastly, I note there is no evidence before the Court to suggest that [X], who is a full-time school student and who only recently turned 15 years old, has any income, or capacity to earn an income, to meet her own needs. That said, the father asserts that [X] works part-time at [omitted], earning approximately $100.00 per week.[15]

    [15] The father’s Affidavit sworn on 7 May 2012 and filed on 22 May 2012, at [15].

Available financial contribution

1. Section 66K of the Act sets out the matters which must to be taken into consideration in determining the contribution that a party should make. Apart from considering the parental primary duty (s.66K(1)(a)), the following four specific matters must be taken into account:

   ·the income, earning capacity, property assets and financial resources of the relevant party or each of the parties (see s.66K(1)(b));

   ·the commitments of the relevant party, or each of the parties, that are necessary to enable the party to support himself or herself or any other child or another person that the person has a duty to maintain (see s.66K(1)(c));[16] in this respect the Court has no information before it as to whether the father has a ‘duty’ (under the law of either Australia or Vanuatu) to support his new wife or her children if applicable, although the Court assumes that he is at least under some legal obligation to support his new wife and that she has a legal obligation to support him;

   ·the direct and indirect costs incurred by the parent or other person with whom the child lives in providing care the child (see s.66K(1)(d)); and

   ·any special circumstances which, if not taken into account in the particular case, would result in an injustice or undue hardship to any person (see s.66K(1)(e)).

   [16] For a discussion see In the Marriage of Ryan (1988) 12 Fam LR 529; (1988) FLC 91-970.

1. Section 66K(4) of the Act stipulates that the following two matters must be disregarded by the Court:

   ·firstly, any entitlement of the children, or the person with whom the children live, to an income-tested social security benefit (see s.66K(4)(a)); and

   ·secondly, the income, earning capacity, property and financial resources of any person who does not have a duty to support the children, or if so, is not a party to the proceedings unless, in the special circumstances of the case, the Court considers it appropriate to have regard to them (see s.66K(4)(b)).

Mother’s income, expenses and commitments

1. The mother is aged 45 years and in good health. She describes her occupation as a [omitted] and she works in that capacity for [M] in the outer Brisbane suburb of [omitted]. At the time of separation, the mother was a homemaker and parent and worked part-time as a self-employed [omitted]. The mother owns a modest unencumbered property in [omitted] that was purchased with the proceeds of her property settlement with the father. Her other property is unremarkable.

2. Following the parties’ separation, the mother underwent training and was able to secure employment as a [omitted]. She subsequently found employment as a [omitted] before recently taking up a similar position at [M]. There is no evidence to suggest that the mother has not endeavoured to work to her full capacity.

3. In contrast, there is evidence that the mother is currently meeting all [X]’s expenses. The mother’s evidence is that she spends $653.00 a week, on average, for [X].[17] This equates to average yearly expenditure of $33,956.00. Excluding Family Tax Benefits A and B, the mother asserts that her weekly income before tax is $1212.00 which equates to gross income of approximately $63,000 per annum. In other words, without contribution from the father, the mother would be required to apply more than half of her gross yearly income for child related expenses.

   [17] See mother’s Financial Statement e-filed 17 May 2012, Part N.

4. The father cross-examined the mother in relation to her expenses, including clothing and activity expenses.[18] The father also questioned the mother on the asserted necessity for [X] needing to have a mobile phone.[19] Overall, the mother’s responses were informative and direct and did not cast doubt on the reasonableness of the asserted expenses.

   [18] Transcript, 8 June 2012, pages 77-79.

   [19] Ibid, pages 77-78.

5. Apart from [X], the mother is not liable for the expenses of any other person.

Father’s income, expenses and commitments

1. The father recently turned 41 years of age and is in good health. He describes his occupation as [omitted] and asserts that he is employed on a contract basis with [omitted]. In his most recent Financial Statement filed 22 May 2012 he provides a post office address in Vanuatu for his employer. He asserts that his pre-tax weekly pay is currently $479.45 which would equate to an annual pre-tax income of approximately $25,000.00.

2. Of particular relevance in this case is the father’s decision to give up his work as a [omitted] for what he freely described under cross-examination as being for ‘lifestyle purposes’.[20] The father also acknowledged under cross-examination that his decision to change his career occurred at a time when he knew the mother had commenced these child maintenance proceedings.[21]

   [20] Ibid, page 107.

   [21] Ibid.

3. I asked the father to explain in his own words the work done by a [omitted]. He responded:

   “[omitted].”[22]

   The father went on to state that his earlier experience in [omitted] led him to a career as a [omitted] and that he had basically learnt the necessary skills with ‘on job training’.[23] The father also agreed that it was highly likely that every [omitted] worldwide would employ a [occupation omitted] for the purpose he described.[24]

   [22] Ibid, page 129.

   [23] Ibid, page 130.

   [24] Ibid.

4. It is noteworthy that in his earlier Financial Statement filed 27 April 2011, the father stated that he was a ‘[omitted]’ earning an average weekly pre-tax salary of $2,662.00 which equates to an annual pre-tax salary of approximately $138,500.00. Interestingly, while the father indicated in that Financial Statement that he was not self-employed, he did not provide any details for his then employer.

5. Not surprisingly, the father was cross-examined at some length by the mother’s counsel about his previous employment as a [occupation omitted], his reasons for changing his career and the prospects of him engaging in work as [omitted] into the future. Under cross-examination, the father acknowledged that he has worked for a number of employers as a [omitted] until relatively recently.

6. At the time of the previous property and parenting proceedings in 2007, the father agreed that he was then employed as a [omitted] with [omitted]. In his Financial Statement filed in those proceedings on 26 July 2007 (which was tendered in evidence as part of Exhibit “AM3”), the father stated that he was in receipt of weekly pre-tax income of $2,400.00. This would also equate to an annual pre-tax income of approximately $124,000.00.

7. The father also admitted that as at November 2009 he had been in the permanent employ of [omitted], earning an annual salary of $183,264.00 (in US dollars).[25] Moreover, the [omitted] that he was employed on had just commenced a 7 year contract and his work was located in Vitória, Brazil.[26] The father indicated that during this employment he would work on a ‘28 days on/28 days off’ roster and that his employer would fund his cost of travel from Vanuatu via New Zealand and Chile to Brazil and return for each rostered period.[27]

   [25] Ibid, pages 103-104; also see “Exhibit AM1”.

   [26] Ibid, page 130.

   [27] Ibid, pages 131-132.

8. The issue of earning capacity in light of a voluntary reduction in earnings was considered by the Full Court of the Family Court of Australia (“the Full Court”) in DJM v JLM (1998) 23 Fam LR 396; (1998) FLC 92-816 (“DJM”). In their joint judgment, Baker, Kay and Morgan JJ embarked upon a full examination of the authorities relating to a voluntary diminution of income in circumstances where it could be argued that earning capacity exceeded a parent’s actual earnings. In DJM, their Honours were primarily concerned with the issue of spousal support which arose in that case, however their consideration canvassed many authorities on the issues of child support and child maintenance.

9. In DJM, the husband relinquished his high-paying role as a management consultant in favour of a less rigorous (and less lucrative) position as a lecturer and academic. This move was made in the absence of any health reasons, but rather as a lifestyle choice by the husband. The husband claimed that his career move was one that had been planned during the course of the parties’ relationship, but the trial judge, Purdy J, preferred the evidence of the wife, who claimed that the husband had never indicated any such intention to her. Regarding the sudden reduction in the husband’s work pattern and income, Purdy J stated at first instance:

   “It seems to me if a man is prepared to work at this level while his family is together, there is no basis on which the court can say that he should be excused from such productivity when the marriage breaks down.”[28]

   [28] As quoted by the Full Court in the appeal decision, DJM & JLM (1998) 23 Fam LR 396, at 416.

10. The Full Court went on to examine various authorities on point:

    “In Rowe, (FC of A, Fogarty J, 12 December 1994, unreported), the earning capacity of the father was relevant to the issue of the quantum of child support payable. In 1991 the father had been retrenched. After an unemployment period of eight months he began selling carpet tiles. He remained in that job for approximately two years earning about $40,000 per annum. He then entered into a business with himself and his new wife earning about $15,000 per annum. His Honour said:

    The position for the wife was equally clear cut, namely that the husband had a well paid job, there was no legitimate reason for him to leave, and his child support income should be assessed upon that basis.

    In my view, the circumstances here overwhelmingly support the wife's approach and it is impossible to give effect to the husband's position. There are a number of difficulties about his case.

    Firstly, if one accepted the husband's reasons for leaving they do not justify that step, given his responsibilities to his children. No doubt there are a number of people in the community who work in employment which they do not like and who would prefer to work elsewhere or not at all. That is not a choice they can readily make against the background of the Child Support Scheme. There is no suggestion here the work was affecting in any significant physical or emotional way which would prevent or make it dangerous or undesirable for him to continue in that employment. It was rather he did not like the job of selling tiles and felt he was over qualified for that position. Now I do not know whether it is a congenial or uncongenial employment, but it was earning a significant income and he is not in my view, entitled to throw that in at the expense of the children.”[29] (Emphasis added.)

    [29] DJM & JLM (1998) 23 Fam LR 396, at 416.

11. The Full Court then considered a number of authorities which made it clear that the issue of voluntary unemployment or underemployment is one of fact and discretion that must be weighed by the trial judge in the particular circumstances of each case.

12. Although DJM was primarily concerned with teasing out principles applicable to child support, certain further comments made by the Full Court in relation to support for children bear further examination. Their Honours stated:

    “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. Thus a parent may be required or expected to work long hours or at more than one job if the parent has the capacity and opportunity to do so, and if the children need greater support than they would receive if the parent was only to work shorter hours. At the same time it might not be reasonable to expect an estranged spouse to avail himself or herself of such opportunities so as to provide maintenance for the other spouse. In the latter case it is a question of what is reasonable in the circumstances.

    …

    It is open to a court to give weight to the ability of a party to earn income especially where the opportunity clearly exists to utilise that ability. Whether it is or is not appropriate to require a party to work particular hours or work in a particular occupation is a question peculiarly within the province of a trial judge and needs to be measured on a case by case basis.

    …

    A judge might accept that it is unreasonable to expect a parent to continue to work 80 hours per week while having obligations to care for one child, and while that parent is still earning more than sufficient for his or her own needs and the needs of that parent's children. Alternatively, a judge might conclude, based on a proven work history, that such a work pattern is entirely reasonable in the circumstances. Ultimately the matter reverts to the exercise of discretion by the trial judge based on the individual circumstances of the case then being tried.”[30]

    [30] Ibid, at 423-424.

13. In the case of S & S [2005] FMCAfam 78 (“S & S”), Riethmuller FM referred to the reasoning in DJM. S & S concerned an experienced actuary who had elected to work part time at a reduced (though still significant salary). Federal Magistrate Riethmuller made the following comments[31]:

    [31] S & S [2005] FMCAfam 78, at [69].

    “In DJM v JLM (1998) FLC ¶92-816 the Full Court of the Family Court discussed issues relevant to determining income and earning capacity in great detail. Whilst it is ultimately a question of fact in each case, it is appropriate to identify relevant considerations in determining this question of fact. In this regard, relevant considerations will generally fall within the following categories:

    a)    the ability to generate income;

    b)    the opportunity to generate income; and  

    c)    whether the parent's pursuits are appropriate in the circumstances.”

14. The evidence in S & S was that the husband had made it known that he only wished to work part-time and given the nature of employment opportunities in his industry and locale, this forestalled any offers of full-time employment, making his desire to work part-time and alleged inability to obtain full-time employment a “self-fulfilling prophecy” in his Honour’s words. The husband in S & S was not lacking in ability to work for any physical or mental reason. The husband in that case was also unable to demonstrate that he had actively sought full-time employment leading the Court to form the view that there was no shortage of opportunities to be had if the husband made genuine efforts to grasp these. His Honour therefore concluded that the father had the same income earning capacity that he had at the time when he left his full-time employment.

15. In this case it is difficult for the Court to accept the father’s argument that he was motivated to significantly change his career, and thus significantly reduce his income, for lifestyle reasons only. He is a relatively young and healthy man who, in the absence of evidence to the contrary, could continue to work as a [omitted], or in a similar capacity, into the years ahead. Given the father’s evidence about the prevalence of [omitted] worldwide and the previous circumstances of his employment, the Court can only conclude that there are sufficient opportunities for the father to resume employment with conditions and remuneration commensurate to his former work.

16. In his affidavit filed 21 April 2011, the father asserts at paragraphs 77 and 78 that he had “no property neither real estate or otherwise in Australia” and that he had “no monies paid into any savings accounts in Australia”. While the evidence would suggest that both these statements were factually correct, these statements did not paint a truly accurate picture. The same can be said about similar assertions made by the father in his affidavit filed 22 May 2012 at paragraphs 78 and 79.

17. In his Financial Statement filed 27 April 2011 the father indicated that he was a one half owner with his wife of an unspecified property valued at $201,000.00. Under cross examination, the father admitted that he and his wife had had an interest in property at [omitted] at Vanuatu which they had subsequently disposed of.[32] The father also acknowledged that at the time he and his wife acquired the relevant leasehold interest they borrowed the sum of $118,000.00 from Westpac and that the loan had been reduced to $100,000.00 by November 2009.[33] He stated that they had disposed of their leasehold interest in about August-September 2011.[34] The father could not recall what the leasehold property was sold for, or what the outstanding mortgage was at that time.[35] The father subsequently admitted that by November 2009 he and his wife ‘bought’ the adjoining property in Vanuatu and that the purchase had been financed by increasing the mortgage debt due to Westpac from $100,000.00 to $330,000.00.[36]

    [32] Ibid, page 111.

    [33] Ibid, page 112.

    [34] Ibid.

    [35] Ibid, page 113.

    [36] Ibid, page 115.

18. The following exchange between the father and Mr Dura for the mother, appears to clarify the father’s evidence in respect of the property interests that he asserts he and his wife had in Vanuatu until recently:

    “MR DURA:  Right. So after those funds were advanced [in late 2009] … pursuant to that application and that refinance facility, you purchased a second leasehold interest in a property in Vanuatu?

    ‑‑‑Yes.

    Right, so as at – around about, if I could put it this way, early 2010 your wife and yourself owned two leasehold interests in properties in Vanuatu?

    ‑‑‑Correct, yes, yes.

    Right?‑‑‑Yes.

    And would you say, sir, that they were probably about – worth $200,000 each?

    ‑‑‑Yes.

    Right. So you had total leasehold or interest, if I can call it that, of $400,000, with a debt of $330,000?

    ‑‑‑Correct, yes, yes. Yes, I know that, yes.

    Right. And you say that both of those leasehold interests had now been disposed of?

    ‑‑‑Yes.

    And they were both disposed of in or about August of last year?

    ‑‑‑Yes.

    And you don’t recollect how much you got for them?

    ‑‑‑But what we paid for it we got back

    Right. So you got about $400,000 back?

    ‑‑‑Yes. I think it was about 390 or something, 380 or something, yes.

    330 discharged the mortgage ­ ­ ­?

    ‑‑‑We did lose out. The property market is no good

    You got rid of the mortgage, then?

    ‑‑‑Yes.

    That was secured over that. You say it’s $330,000?

    ‑‑‑Yes. That mortgage was actually taken over by the person and they just paid payments to Ms H in instalments for the balance.

    Okay. So as part of the deal and you disposing of those two leasehold interests, the purchaser discharged your liability for the $330,000 mortgage and the balance, whether your purchase price was 380, 390 or 400, so somewhere between – or in excess of about $50,000 ­ ­ ­?

    ‑‑‑I think it was about 385, 390 after.

    Okay. You say that money was paid in instalments to your wife’s bank account?

    ‑‑‑Correct.

    Right. And were they instalments of about $5000 a month?

    ‑‑‑No, no, some of them were, like, 7000 something and somewhat. They were all different amounts.

    Right. Now, sir, is there any particular reason why none of that information has ­ ­ ­?

    ‑‑‑My wife sends those – sorry, if you ­ ­ ­

    Sir, let me ask you the question. Is there any reason why that particular information doesn’t form part of your evidence in this case?

    ‑‑‑There’s no need.

    Right. You understand, and have understood since the time these proceedings were commenced, that your financial circumstances were relevant to the proceedings. Correct?

    ‑‑‑Yes.

    That included what money you were able to earn?

    ‑‑‑Yes.

    What your expenses were. What your assets were?

    ‑‑‑Yes.

    And what your liabilities were?

    ‑‑‑Yes.

    Right. And when you completed your financial statement in May of 2012, together with your affidavit of May of 2012, you don’t tell the court anything about your disposing of those two properties and what money you have received, do you?

    ‑‑‑No.

    No. Was it the case, sir, that you were attempting to hide it from the court and hide it from Ms Hooch, so she couldn’t get her hands on it?

    ‑‑‑Absolutely not.”[37]

    [37] Ibid, pages 115-116.

19. The father went on to assert that he did not receive the benefit of those payments because they are paid into his wife’s loan accounts relevant to the property she owns, and the property she co-owns, which are both located on the NSW Central Coast.[38] I referred to these properties in my earlier decision.[39] Under cross-examination, the father admitted that he had taken on the responsibility of guaranteeing his wife’s loans over the Central Coast properties despite knowing that he had an ongoing obligation to provide financial assistance for [X].[40] That said, he gave evidence that the relevant loans were serviced by a combination of the rental income received and household income.[41] In this respect he stated that his wife currently earns approximately $1,250.00 to $1,500.00 per week if commissions are included.[42] This is somewhat more that the $600.00 per week he asserted in his Financial Statement filed 22 May 2012. The father’s explained this under cross-examination as the income received by his wife excluded commissions received.[43]

    [38] Ibid, page 117.

    [39] Hooch & Hooch [2011] FMCAfam 588 at [21], [24], [44] and [46].

    [40] Transcript, 8 June 2012, page 117.

    [41] Ibid, pages 118-119.

    [42] Ibid, page 119.

    [43] Ibid.

20. It is also noteworthy that in his Financial Statement filed 22 May 2012 the father asserts that he has no bank accounts where any savings are held. During the Final Hearing the father admitted that he had, in fact, established a bank account in Vanuatu for [X]. The father went on to explain that he had made regular monthly payments into that account since early 2011, and up until the date of the hearing, of $466.00 per month. This was the amount he asserts he was advised by the CSA to pay.

1. Overall, the Court is satisfied that there is evidence that the father has not just been using his income to meet the costs of his household with his wife and to bank modest payments into an account he established for [X], but in addition, using his income, property and resources to assist with payment of the debts associated with his wife’s property interests on the NSW Central Coast.

2. As to general liabilities, the Court has no information before it as to whether the father has a ‘duty’ (under the law of either Australia or Vanuatu) to support his wife or his step-children, although the Court assumes that he is at least under some legal obligation to support his new wife. She would similarly have a duty to support him. That said, it is clear that Ms F is gainfully employed and indeed currently earns more income than the father.

General powers to facilitate a child maintenance order

1. Section 66P of the Act sets out the general powers of Court in relation to child maintenance. These include the power to make an order for:

   ·a lump sum payment, by instalments or in one amount (see s.66P(1)(a));

   ·periodic payment (weekly, monthly or yearly) (see s.66P(1)(b));

   ·the transfer of property (see s.66P(1)(c));

   ·the payment of an amount ordered be wholly or partly secured (see s.66P(1)(d));

   ·any necessary instrument be signed or document produced (see s.66P(1)(e)); and

   ·payment to a specified person, public authority or into court (see s.66P(1)(f)).

   The section also stipulates that the Court may do “all or any” of above orders.

2. In addition, the Court may make:

   ·a permanent or interim order (s.66P(1)(g));

   ·an order imposing terms and conditions (s.66P(1)(h));

   ·an order by consent (s.66P(1)(i));

   ·any other order that the court considers appropriate (s.66P(1)(j)); and

   ·an order for child maintenance under “at any time”: (s.66P(1)(k)).

3. In this case the mother seeks orders for the father to pay both a lump sum order and a periodic payment order (or a lump sum order in lieu of the periodic payment order). In addition, she seeks an order for the father to pay her 80% of [X]’s orthodontic expenses if certain conditions are met. This would equate to an obligation to make further lump sum payments in certain circumstances. Clearly the Court has the power to make the combination of orders sought.

4. The mother also seeks that the payment of the periodic child support sought commence on and from 1 December 2010. This is not unreasonable given that she filed her Initiating Application on 16 November 2010.

5. Any order made would need to reflect the payment of any child maintenance by the father since 1 December 2010.  

Specification in orders concerning child maintenance

1. Section 66R of the Act deals with the specification in Court orders concerning payments for child maintenance purposes.

2. In other words, the Court has to ensure that the child maintenance component is expressly set out in the relevant order and differentiated from property orders and spousal maintenance orders. The Court notes that any issues of spousal maintenance were dealt with on a final basis together with the parties’ property settlement in the Orders made in the Family Court on 19 December 2008.

Adult child maintenance

1. The mother seeks, as outlined above, orders that would see the father contributing funds for [X]’s maintenance until [X] finishes her tertiary education. 

2. In this regard, I note the terms of s.66L of the Act, which states:

   “(1)  A court must not make a child maintenance order in relation to a child who is 18 or over unless the court is satisfied that the provision of the maintenance is necessary:

   (a)  to enable the child to complete his or her education; or

   (b)  because of a mental or physical disability of the child.

   The court may make such a child maintenance order, in relation to a child who is 17, to take effect when or after the child turns 18.

   (2)  A court must not make a child maintenance order in relation to a child that extends beyond the day on which the child will turn 18 unless the court is satisfied that the provision of the maintenance beyond that day is necessary:

   (a)  to enable the child to complete his or her education; or

   (b)  because of a mental or physical disability of the child.

   (3)  A child maintenance order in relation to a child stops being in force when the child turns 18 unless the order is expressed to continue in force after then.”

3. In In the Marriage of Tuck (1979) 7 Fam LR 492, the majority of the Full Court (consisting of Evatt CJ and Murray J; Strauss J dissenting) defined the word “necessary” thus:

   “‘Necessary’ in this context means that the maintenance is needed by the child and that it is reasonable to require the parent to contribute, having regard to the parties financial circumstances and other relevant factors.”[44]

   [44] (1979) 7 Fam LR 492, at 504.

4. Such ‘other relevant factors’ might also include the earning capacity of a child who works part-time while studying, as do many students.

5. In the case of Cosgrove v Cosgrove (No. 2) (1996) 20 Fam LR 761, the Full Court (this time consisting of Nicholson CJ, Finn and Maxwell JJ) made it clear that when considering an application for maintenance of an adult child, “the guiding principle being what in all the circumstances is reasonable”.[45]

   [45] (1996) 20 Fam LR 761, at 764.

6. While the Court does not doubt that [X] is a bright and intelligent young person, there is as yet insufficient evidence before the Court as to her prospects for, and inclination towards, tertiary study.  Similarly, there is a dearth of evidence as to [X]’s likely employment arrangements, part-time or otherwise, and consequent earning capacity during any such period of study.  The absence of reliable evidence regarding these considerations renders altogether too speculative any view that the Court might otherwise form at this time about [X]’s need for support during hypothetical tertiary education.  Hence, the Court is unlikely, at this time, to make an order for child maintenance extending much beyond [X]’s 18^th birthday.  This would not, however, preclude the mother (or, indeed, [X], when she attains majority) from applying to the Court at a later date for orders respecting adult child maintenance during the period that she pursues tertiary education.

7. For this reason, the Court finds it difficult to accept the lump sum figure of $260,000.00 calculated by the mother in paragraph 4 of the orders she seeks.  The composition of the figure is unexplained and was not touched upon in submissions, but the Court infers that this sum purports to include maintenance payable until some arbitrary date when it is assumed that [X] will conclude her hypothetical tertiary education.  Clearly, the Court cannot accept this amount proffered by the mother.

8. That said, the Court is of the view that, should child maintenance be ordered, it should be stated to extend to the end of 2015 to enable the child to finish her final year of secondary education. Such an outcome would, generally speaking, reflect the operation of s.151B of the CSAA had an administrative assessment applied.

Lump sum maintenance

1. The orders sought by the mother contemplate, as I have stated above, a lump sum payment in the alternative, of an amount which presumably accounts for the child’s expenses up to an inconclusive future date when her tertiary education is completed.  There were no submissions made specifically on this proposed order.  For the reasons that I stated at paragraphs 93-100, I am not satisfied that an order for payment of child maintenance extending far beyond the child’s 18^th birthday is appropriate at this stage.  Likewise, no submissions were made to me on the issue of how any lump sum, if one were to be ordered, ought to be calculated and quantified.  Specifically, the Court was not referred to those authorities which ordinarily feature in cases where a lump sum maintenance order is sought. For example, in In the Marriage of Bendeich (1992) 110 FLR 418, Mushin J stated:

   “In In Marriage of Luckie (1989) 97 FLR 103 at 106 a Full Court of this Court made the following statement:

   ‘A number of cases decided under the superseded child maintenance legislation were to the effect that save in exceptional circumstances the most appropriate order for child maintenance was a periodic order rather than a lump sum order anticipating the long term future. These decisions include In Marriage of Spano (1979) 5 Fam LR 506; In Marriage of V and G (1982) 8 Fam LR 193; In Marriage of Racine and Hemmett (1982) 8 Fam LR 716 and In [the] Marriage of Vartikian (No 2) (1984) 10 Fam LR 165.’” [46]

   [46] (1992) 110 FLR 418, at 426.

2. Nonetheless, given the geographical distance between the parties[47] and the fact that the lump sum order is sought in the alternative to a period payment maintenance order where the father may elect the payment option most amenable to his situation, I am inclined to consider extending that option to the father. 

   [47] See the comments of Gee J in In the Marriage of Vartikian (1984) 10 Fam LR 165, at 176-177, particularly where his Honour refers to comments made by Evatt CJ in Spano v Spano (1979) 5 Fam LR 506; [1979] FLC 90-707.

3. In like manner, there were no submissions dealing with what discount, if any, should be applied to the lump sum amount sought in the alternative by the mother.  I am of the view that this issue is essential to the Court’s consideration of the proposed order.

4. The application of a discount to lump sum orders is not at all without precedent.  For example, in Bereat & Bereat [2010] FamCA 693, on a payment ordered by way of spousal maintenance Murphy J granted a discount from $18,000.00 to $15,000.00 (that is, almost 17%) on account of the sum being payable as a lump sum rather than in periodic payments. In so doing, his Honour stated: “I propose to discount that figure slightly to take account of the fact that it is being received as a lump sum and might be invested.  I don’t purport to do a precise calculation in that respect, but shall reduce it to, say, $15,000.00.”  In Charlton & Crosby [2010] FMCAfam 207, Brown FM considered offering a discount where making a similar order, but decided not to do so given the circumstances of the particular case.[48]

   [48] [2010] FMCAfam 207, at [444] - [445].

5. Often, the discount is couched in terms of an adjustment to account for “vicissitudes” which might affect either party positively or negatively in view of the payment of a capitalised sum in lieu of periodic payments.  For example, in Brown & Brown [2007] FamCA 151; (2007) 37 Fam LR 59; [2007] FLC 93-316, the Full Court (consisting of Kay, Warnick and Boland JJ) stated (albeit in respect of spousal maintenance):

   “70. Senior counsel for the husband also submitted that when the trial Judge concluded that the wife should receive an amount that was not dependent on the future vicissitudes of either party, he effectively buffered the wife against adverse vicissitudes, whether for herself or for the husband, but unfairly took no account in the husband’s favour of vicissitudes disadvantageous to him.

   71. We accept that when a trial Judge assesses capitalisation of a periodic sum it is common and generally proper to take account of vicissitudes that might “cut” either way.  That course is simply a reflection of what Fogarty and Burton JJ observed in Vautin:

   ‘…that in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future.…’

   72. However, given that the husband already had the capacity to pay the lump sum, probably the only vicissitude which might have affected the assessment would be the prospect of a massive loss of fortune for the husband.  That might have been thought of as so unlikely to occur, at least to the degree where the contemplated award to the wife would be inappropriate, as to be effectively ignored.  Nonetheless, while we think that the range of vicissitude in this case is certainly less than in many other cases where a capitalisation exercise is carried out, we conclude that the failure of O’Ryan J to disclose in his assessment process any consideration of prospective disadvantage to the husband constitutes at least a failure of reasons.

   73. Senior counsel for the husband further argued that no discount had been given for interest likely to be received on the lump sum.  In so far as some component of the lump sum must provide for the future day to day living expenses of the wife, and therefore is payment in advance, the point again has some validity.”

6. In RNL & RHB [2005] FMCAfam 520, his Honour, Walters FM, stated:

   “162 I have indicated that the husband should pay spousal maintenance at the rate of $150.00 per week for 2.5 years.

   163 In my opinion, the 3% discount scale should be employed to calculate the present value of a relevant weekly sum for the 2.5 year period. (Footnote: See Barrell Insurance Pty Ltd v Pennant Hills Restaurant Limited (1981) 34 ALR 162, Todorovic v Waller (1981) 37 ALR 481 and Racine v Hemmett (1982) 7 FamLR 716)

   164 According to the ‘Table of Multipliers’ contained in paragraph [7840] of Butterworths Australian Family Law (CD-ROM version), the 3% ‘multiplier’ relevant to a period of 2 years is 101.3. The 3% ‘multiplier’ relevant to a 3 year period is 149.8. The mid point between the two multipliers (representing 2.5 years) is 125.55.

   165 I intend to use 125.55 as the appropriate ‘multiplier’ for a period of 2.5 years. If, as is my view, an appropriate quantum of spousal maintenance payable by the husband (as at the date of the trial) is $150.00 per week, then the present value of that periodic sum for 2.5 years is $18,832.50.”

7. The application of a 3% discount rate hearkens back to the decision of the High Court of Australia in the case of Todorovic v Waller (1981) 150 CLR 482 (“Todorovic”).  When the High Court was delivering that decision, the Chief Justice Gibbs made the following statement:

   “Because of the practical importance of the decision in these cases, the court now publishes this statement as to its effect.

   In an action for damages for personal injuries, evidence as to the likely course of inflation, or of possible future changes in rates of wages or of prices, is inadmissible. Where there has been a loss of earning capacity which is likely to lead to financial loss in the future, or where the plaintiff's injuries will make it necessary to expend in the future money to provide medical or other services, or goods necessary for the plaintiff's health or comfort, the present value of the future loss ought to be quantified by adopting a discount rate of 3 per cent in all cases, subject, of course, to any relevant statutory provisions. This rate is intended to make the appropriate allowance for inflation, for future changes in rates of wages generally or of prices, and for tax (either actual or notional) upon income from investment of the sum awarded. No further allowance should be made for these matters.”

8. Todorovic was considered by Baumann FM in W & H [2004] FMCAfam 67. His Honour stated:

   “24. The respondent says the amount to be deposited should be discounted by a rate of three per cent. The applicant says that a simple lump sum calculation should be adopted based on the child support liability I have determined as appropriate. The competing sums to be invested would be either the respondent's estimate (adopting 3 per cent table for six and a half years) $30,600; or the applicant's estimate of $33,300 (using an aggregate method).

   25. Whilst most States have shifted away from the 3 per cent discount rate decided upon by the High Court in 1981 (see Todorovic v Waller (1981) 150 CLR 482) there are still differences across the country (see for example the 5 per cent rate adopted in s 57 of the Civil Liability Act 2003 (Qld)).

   26. The purpose of using a discount table is to attempt to calculate the present value of a periodic sum for a specific period on the basis that the sum is withdrawn from the capital at weekly intervals and adopted interest is credited to the fund at quarterly intervals on the lower balance in the quarter. I would have adopted the discount rate of 5 per cent save for the following factors:

   (a) The current child support payment over the next seven years is to be increased by CPI.

   (b) It would not be appropriate at a time when the child's needs will be at its highest (in 7 years time) for the rate to be reduced to the minimum of $260 because the funds are exhausted. It would be more equitable if the funds are not totally used and, because of the accumulation of interest for the respondent to receive a small refund at the end of the period having properly met his financial obligations to L. As a result I will order the sum of $33,000 to be secured.”

Conclusion

1. Having considered the evidence and submissions I am satisfied as to the following:

   ·firstly, that [X] currently has weekly expenses of not less than $653.00 per week (equating to an annual amount of approximately $34,000.00), which the Court finds to be reasonable in the circumstances;

   ·secondly, that there is a probability that [X] will require on-going orthodontic care;

   ·thirdly, that the father enjoys a superior earning capacity to that of the mother;

   ·fourthly, that the father has the capacity to command an income of not less than $2,400.00 per week (equating to an annual amount of approximately $125,000.00) and that there are sufficient employment opportunities, given his experience and expertise, that would enable him to earn such an income; and

   ·finally, that the father has a duty to support [X].

2. Although not strictly relevant to the Court’s present determination, it seems, on the current evidence, that the father may hold an equitable interest in two properties owned by his current wife on the NSW Central Coast.

3. Given the circumstances discussed, I am also satisfied that the father should shoulder the greater responsibility for of [X]’s on-going expenses. That said, I am not persuaded that this should equate to the 76% of costs sought by the mother. Such a claim is clearly based upon the best case scenario for the father’s earning capacity. Nonetheless, I am satisfied that an outcome whereby the father meets 67% (or approximately two thirds) of [X]’s current on-going expenses is proper. The mother would clearly need to meet the balance (being 33% or one third) of the relevant expenses. This ratio would also apply in respect of any necessary additional orthodontic expenses for the child. As stated, it may be to the advantage of both parents, and of [X], for the parties to arrange for private health insurance cover with [X], to assist with any orthodontic treatment expenses.

4. I am also satisfied that the relevant orders should be back-dated to 1 December 2010.

5. Consequently, there will be orders to the effect that the father pay to the mother the sum of $1,898.34 per month, with the first payment taken to have fallen due on 1 December 2010. Each monthly payment will fall due on the first day of each month until [X]’s 18^th birthday. As such, there will also be an order that the father pay to the mother, by not later than 2 January 2013, the sum of $49,356.84, covering the period from 1 December 2010, to 31 January 2013, less any monies which the father has transferred to the mother following the final hearing, as well as any other child maintenance amounts paid by him to the mother in the period following 1 December 2010.

6. There will be an Order to the effect of that sought by the mother with a view to increasing the quantum of the monthly child maintenance amount in line with the Consumer Price Index (“CPI”) on and from 1 January of each year commencing 1 January 2014 until [X] turns 18 years of age on [date omitted] 2015. In other words, assuming there is an increase in the relevant CPI, the amount due will increase on 1 January in 2014 and 2015.

1. Should the father elect to pay the mother child maintenance in a lump sum, there will be an Order that the father pay same in the sum of $63,119.81, less amounts already paid, by not later than 1 February 2013. 

2. This sum represents a base amount of $66,441.90, less a discount of 5% on account of capitalisation and in recognition of the father’s goodwill in paying the lump sum upfront.  In circumstances where the mother has sought the payment of a lump sum in the alternative and where the Court is unlikely to Order that the father pay a lump sum without giving him the option to make periodic payments, I do not propose to make use of the discount tables which are geared towards evening out the effects of capitalisation.  I do, however, like Murphy J in Bereat, acknowledge the benefits that the mother and the child are likely to obtain (by way of accumulating interest, certainty, et cetera) if the sum is to be paid in a lump sum.  I also think it appropriate for the father to obtain some slight reduction in the amount to be paid if he elects to confer the aforesaid benefits on the mother and the child by choosing to make a lump sum payment.  Accordingly, I propose that a 5% reduction on the lump sum amount should be allowed to the father should he choose to pay the lump sum amount to the mother prior to 1 February 2013.

3. There will also be an Order that, in addition to the monthly or lump sum, the father pay to the mother an amount equivalent to 67% of any orthodontic expenses incurred with respect to [X] from today’s date until she turns 18 years of age on [date omitted] 2015.

4. The Court understands the father’s desire to transition from the demands of work as a [omitted] to a less arduous occupation as he approaches middle age. The impulse to adopt a lifestyle of greater ease, even at the expense of income, is not an uncommon one and should not, of itself, be viewed in a negative light. Nevertheless, the responsibilities of parenthood and the duty to support one’s offspring can conflict with a parent’s desire to sacrifice attainable levels of income for a more relaxed lifestyle. Where this is so, the parent’s primary liability to provide support for their child takes precedence over all other necessary commitments of the parent. This may mean, for example, that a parent has to continue to work in a position that affords them greater earning capacity, rather than opting for semi-retirement on a low income which would not allow them to meet the needs of their child or children.

5. The father, by making the effort to participate in these proceedings despite being based in Vanuatu, has made it clear that he wishes to maintain a supportive paternal relationship with [X] and that he approaches in good faith his responsibility to support the child’s needs. The father’s commitment, expressed at the final hearing, to pay certain monies toward [X]’s expenses upon his return to Vanuatu also reflects positively on the father’s attitude toward his parental duties. The Court does not doubt that the father will approach the responsibility cast upon him by the Court Orders made following this decision in a similarly commendable fashion. I do, however, note that the mother would need to incur some degree of expense in serving the father with any future documents while the father remains a resident of Vanuatu.

6. Both parties, in their respective applications, have sought orders for costs. Notwithstanding this, there were no submissions with respect to costs put before the Court at the Final Hearing. Accordingly, I will make no order as to costs. In the event that either party wishes to pursue an application for costs, they should file and serve an Application in a Case within the next 42 days which will be listed and dealt with in the ordinary fashion in due course. I note, however, that the father was self-represented throughout the Final Hearing, which would severely limit any tenable claim for costs that he may otherwise have had.

7. There will be Orders and Notations of the Court to reflect these reasons.

I certify that the preceding one-hundred and twenty-one (121) paragraphs are a true copy of the reasons for judgment of Monahan FM

Associate:

Date: 4 December 2012