J and C
[2003] FMCAfam 39
•11 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| J & C | [2003] FMCA fam 39 |
| FAMILY LAW – Child Support – departure application – “just and equitable” – “otherwise proper”. Child Support (Assessment) Act 1989 s.117 Gilmour and Gilmour (1995) FLC 92-591 |
| Applicant: | L G J |
| Respondent: | D S C |
| File No: | HBM 2253 of 2002 |
| Delivered on: | 11 March 2003 |
| Delivered at: | Hobart |
| Hearing date: | 4 December 2002 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Mr. M. Trezise |
| Solicitors for the Applicant: | Trezise Lawyers |
| Counsel for the Respondent: | Mrs A Cunningham |
| Solicitors for the Respondent: | Simmons Wolfhagen |
ORDERS
That Order No. 1 of the Orders of the Family Court of Australia dated 1st September 1997 bearing No. HB 1105 of 1997 be varied by increasing the amount of child support payable for each of the children, T L C born 3rd April 1993 and B K C born 3rd August 1994, from $35 per week to $65 per week with effect from 1st July 2002.
That the child support due pursuant to the preceding order hereof be varied as and from the instalment of child support next due after 1st September in each year commencing in 2003 in accordance with the annual variation in the Consumer Price Index published by the Commonwealth Statistician for all groups for Hobart (“CPI”) by comparing the CPI at 30th June immediately preceding the date of variation as compared with CPI at 30th June twelve months prior thereto.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
HBM 2253 of 2002
| L G J |
Applicant
And
| D S C |
Respondent
REASONS FOR JUDGMENT
Background & Applications
In this matter the parties are L G J (“the Mother”) and D S C (“the Father”). They were married on 15th December 1990 and separated on 14th September 1996. They were subsequently divorced. The Mother had remarried shortly prior to the hearing in this matter.
Both parties have filed Form 63 Applications. However, because the Mother filed her Application on 21st November 2001 and the Father filed his Application on 11th January 2002, I shall treat the Mother as the Applicant and the Father as the Respondent for the purpose of these Reasons.
Orders were made in the Family Court of Australia on 1st September 1997 which required the Father to pay $35 per week by way of child support for each of the children of the marriage of the parties, namely T L C born 3rd April 1993 and B K C born 3rd August 1994 (“the children”). There was also an order that the child support be varied in accordance with the Consumer Price Index each year commencing in July 1998. It was generally agreed between the parties that the child support due at the time of the hearing was approximately $39 per week per child and that the Father had not paid any such child support for a period of approximately six months.
In her Application filed 21st November 2001, the Mother sought to have the Orders of 1st September 1997 varied by increasing the amount of child support from $35 per week per child to $120 per week per child with annual CPI variations to commence from 1st July 2002. However, in her affidavit filed 29th May 2002, the Mother indicated that her claim was for:
“a total sum of $132 per week until the 18th birthday of the Respondent’s eldest son……and then increased to $165 per week”.
The Father has two other children and, although he was also liable to pay maintenance for them, at the time of the hearing he had not paid anything for them either for approximately six months. However, the older of those two children was to turn eighteen in the week after the hearing. Consequently, the Father’s legal liability to pay maintenance for that child would have ceased on his eighteenth birthday unless that child or the child’s mother took some action to obtain an order for adult child maintenance.
In his Application, the Father sought that the Orders of 1st September 1997 be vacated. Basically, it was his case that child support for the children should revert to being administratively assessed in accordance with the child support formula pursuant to the Child Support (Assessment) Act 1989 (“the Act”).
At the time of the hearing the Mother was pregnant and she was expecting twins in late February 2003. She was due to give up work at the end of 2002.
The Law
The approach that this court must adopt in relation to periodic child support has been well settled by decisions of the Full Court of the Family Court of Australia in Gilmour and Gilmour (1995) FLC 92-591, Liesert v Nutsch (1996) FLC 92-665 and Bryant and Bryant (1996) FLC 92-690. It is clear that I must apply the three-stage process that is required under Section 117 of the Child Support (Assessment) Act 1989 and I must be satisfied that:
·one or more of the grounds for departure in sub-section 117(2) is established;
·it is “just and equitable'' within the meaning of sub-section 117(4) to make a particular order; and
·it is “otherwise proper'' within the meaning of sub-section 117(5) to make a particular order.
Evidence & Findings
The Father had filed Form 17 Financial Statements on 11th January 2002 and 18th July 2002. Some matters referred to in those two documents were significant in relation to these proceedings.
One significant factor was that the Father claimed that his property at Sandford in Tasmania was worth an estimated $154,000. However, he conceded that the property was probably worth more than that after he was shown his own Form 17 Financial Statement completed in mid 1997 which disclosed that the property had a value at that time of $155,000.
Between January and July 2002, the Father had also transferred an interest in a property to his father. His evidence in cross-examination was that his father had paid for the property and that he merely held it in trust for him. Because his father was concerned that the Mother may be able to make a claim against that property, he had transferred the property to his father.
In relation to that property transferred to his father, I find the Father’s evidence somewhat unsatisfactory. He claimed that in 1999 his own father did not have the capacity to borrow money, so the Father had purchased a property in his name and borrowed the required funds. Somewhat surprisingly his father was able to repay all the borrowed funds of approximately $26,000 shortly thereafter. That must raise in my mind a query about why the Father needed to borrow funds for his father in the first place.
Another significant difference in relation to the Father’s financial position between January and July 2002 was his acquisition of a Subaru sports car approximately three months before he filed his Financial Statement in July 2002.
The Father’s evidence was that he purchased that “like a toy” at about the time that he gave up smoking because he had previously been spending $80 per week on cigarettes. The monthly payments required of the Father in relation to the sports car was $650. It is therefore clear that the payments on his sports car were approximately $70 per week greater than his savings when he gave up smoking.
It was the Father’s evidence that he stopped paying child support for the children in this matter (and maintenance for his other children) shortly after he acquired that sports car. However, it was clear from the evidence given by the Father during cross-examination that he was well aware that he should have been paying child support and maintenance rather than spending money on his new “toy”.
At the time of the hearing, the Father was self-employed as an owner/driver carrying freight for a Tasmanian bus company. His contract with that bus company provided that he would have a minimum of thirty-eight hours employment between Monday and Friday. It was his evidence that his hours had been reduced so his taxable income reduced from $50,952 for the year ended 30th June 2000 to $35,645 for the year ended 30th June 2001. Unfortunately, at the time of the hearing, he had not lodged his income tax return for the year ended 30th June 2002.
The financial statements of his family trust show that the gross contract receipts for the year ended 30th June 2000 were $76,514. His taxable income in that year was $50,952.
From the Father’s bank statements that were put into evidence, it appears that deposits of approximately $72,500 were made to his account during the financial year ended 30th June 2002. As it was his evidence that there would be no other deposits other than those from the bus company to whom he was contracted, I can only assume that his gross contract receipts were approximately $72,500 for that financial year. Because I have no evidence that he had any unusual operating expenses during that financial year, I can only conclude that his taxable income in the year ended 30th June 2002 is likely to be a figure approaching $50,000.
It is also interesting to note that the highest positive balance recorded in the Father’s bank account during that financial year exceeded $11,500 and the lowest was a positive balance of almost $4,000. At no time was there a negative balance. However, the Father was claiming that he had been unable to meet his child support and maintenance commitments.
It is the Father’s evidence that he suffers from an arthritic condition and his doctor has advised him to give up his current employment. He also relied upon an affidavit from his doctor, who was not cross-examined. That doctor stated that the Father’s ability to work:
“as an active driver and delivery worker will be restricted in future as his symptoms of lumbar back pain and left hip pain become more frequent and prolonged.”
Unfortunately, the doctor’s report does not quantify the future restrictions on his employment or indicate when the back and hip pain would prevent from being employed in his occupation as a driver and delivery worker.
The Father said that he was attempting to sell his truck and that a potential purchaser was to make him an offer to take over the truck and his work for the bus company. He hoped that he would be able to sell the truck by Christmas or possibly the middle of January 2003. He stated that he had some prospects for employment and stated clearly that he would not be unemployed.
I find it unusual that the Father was quite prepared to sell his income earning asset but his evidence was that he had no idea of the income he would be likely to earn from employment. He seems to adopt the same cavalier attitude to earning income that he adopts to spending it.
I am left with the conclusion that, if the Father sells his business, he would not willingly take that financial step if it would seriously disadvantage him. I am therefore of the view that he has an earning capacity in the vicinity of $45,000 per annum whether he sells his truck or not.
It is clear that, if the Father had been assessed according to the formula for child support payable under the Act, both for the two children by his previous relationship and for these two children, the Father would now be required to pay significantly more overall, and he would have had to pay significantly more in the past. In short, he has had a maintenance and child support holiday for some years.
In the circumstances, I come to the conclusion that, based upon the Father’s actual income in the past and his current earning capacity, a ground for departure pursuant to Section 117(2)(c)(i ) is made out.
In determining what is a proper order to make, I must take into account those factors that are referred to in subsection (4) of Section 117 of the Act.
Essentially, it is the Mother’s evidence that the costs of maintaining the children have increased markedly. She says that the cost of their food and clothing is substantially more than it was in 1997 and they have more activities. She also says that she now incurs considerable expenditure on schooling requirements and on their recreational activities. She says that by reason of those matters and the income, earning capacity, property and financial resources of the Father, it is just and equitable for him to make increased child support payments totalling $132 per week up to the eighteenth birthday of his eldest son and thereafter at the rate of $165 per week.
The Mother was cross-examined in relation to her evidence and there was no serious challenge to her contention that the children cost significantly more to maintain than they did in 1997.
The only significant challenge to the Mother’s evidence, and her ability to support the children, appeared to be in relation to the approximate sum of $10,000 that she and her new husband had spent taking the children to England for a holiday. In fact, her husband had won a trip for two adults and two children but he has two children of his own so, in order to take all four children, it was necessary for them to make a contribution. I note that her husband’s former wife contributed approximately $3,000 towards that expense. The Father in this matter was also asked to contribute but, not surprisingly, he declined.
Given that the Mother’s husband had won a trip for four people, I find it reasonable that he and the Mother took the children of both relationships on that trip. I am sure that the trip was entertaining and educational for all concerned.
I have no difficulty in concluding that the Mother’s claimed expenses for the children are reasonable, especially in the light of the published research by both Lee and Lovering in relation to the costs of maintaining children.
The Father’s counsel acknowledged that the children’s expenses have increased since 1997 but commented that the Mother’s financial position had improved, at least up to the time of the hearing. I was referred to the fact that she had remarried and that her husband was in receipt of a similar income to that of the Father.
It is perfectly clear that the Mother’s new husband has no legal liability to support the two children that are the subject of the Applications that are currently before the Court. It is equally clear that with effect from the end of 2002, her new husband will be supporting her and subsidising the support of the two children. Further, when the twins are born he will be responsible for their support.
The evidence in this matter relating to the impending birth of twins means that the Mother’s capacity to provide financial support for the children will be significantly reduced. Her evidence was that she would be stopping work at the end of last year. I am therefore drawn to the conclusion that with effect from the end of 2002, and for the foreseeable future, the Mother will have no capacity to support the two children that are the subject of the Applications before the Court.
It is clear that the children do not have any ability to support themselves so I must look to the Father’s ability to support them, which is necessarily subject to his commitments to support himself or any other person that he has a duty to maintain. At this stage, he has a duty to maintain one other child from a previous relationship. On the evidence before me, his duty to maintain that child currently requires him to pay approximately $39 per week.
The difficulty that I have in assessing what is a reasonable contribution for the Father to make in relation to these two children is that his finances are somewhat confused. He has clearly mixed his business expenses with his personal expenses in the Financial Statement that he swore on 17th July 2002. For example, he claims to pay a weekly mortgage instalment of $250 per week (i.e. slightly more than $1,000 per month) in relation to a mortgage debt of slightly more than $131,000. However, some of that loan relates to his refinancing of his truck and his Toyota Landcruiser, which are clearly assets of his business. Further, his financial statement shows that the loan from Esanda for the sports car is also a business liability. This appears to give the Father the ability to reduce his taxable income below that of an equivalent salaried tax payer, and that is a good reason why his child support should not revert to an assessment on his taxable income by the Child Support Agency.
I find that I cannot accept the Father’s financial position as stated in his latest Financial Statement. He shows that his expenditure exceeds his income by more than $350 per week. That would mean that his expenditure in a year would exceed his income by more than $18,000. It is quite clear that that is not happening. Indeed, he has been able to maintain a fluctuating positive balance in his bank account that should have enabled him to pay the child support for which he was liable and the tax that he says he has been unable to pay. Instead, he has wasted his money on the luxury of a sports car that he clearly did not need.
Consequently, I am drawn to the conclusion that the Father has a much better ability to support his children than he is prepared to admit.
Only when cross-examined did the Father admit that he had the capacity to pay child support for these two children at $38 per week per child. In my view, his capacity is greater than that.
Taking all these factors into account I am of the view that the appropriate level of child support should be $65 per week for each child and that such should be backdated to 30th June 2002. While I am aware that the Mother filed her Application in November 2001, this matter has taken a long time to come to Court and a backdating to 30th June 2001, as requested by the Mother would create arrears that would be excessive.
In my view, an Order for child support at the rate of $65 per week per child commencing on 1st July 2002, with annual Consumer Price Index adjustments commencing in 2003, is an appropriate order that will not have any negative effect upon the public purse as envisaged by paragraph (b) of subsection 117(5) of the Act. Consequently, it is my view that such an order is otherwise proper for the purposes of that subsection.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Roberts FM
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