Johnson & Johnson - [1998] FamCA 1519

[1998] FamCA 1519

FAMILY LAW ACT 1975

IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA  Appeal No SA23L of 1998
AT MELBOURNE  File No ML 7789 of 1994

BETWEEN:

SAMUEL ALEXANDER JOHNSON
Appellant Husband

- and -
LESLEY ANN JOHNSON
Respondent Wife

REASONS FOR JUDGMENT OF
THE HONOURABLE CHIEF JUSTICE NICHOLSON AND
THE HONOURABLE JUSTICE MOORE

CORAM: NICHOLSON CJ, FINN and MOORE JJ

DATE OF HEARING: 27 AUGUST, 1998
DATE OF JUDGMENT: 23 DECEMBER 1998

APPEARANCES:

Mr. S. A. Johnson of 13 Cyril Street Box Hill South 3128 appeared in person.
Ms. L. A. Johnson of 3 Byron Street Box Hill South 3128 appeared in person.

Johnson v Johnson

Appeal No. SA23L of 1998

File No. ML 7789 of 1994
Appeal Coram: Nicholson CJ., Finn and Moore JJ.
Date of Hearing: 27 August 1998.
Date of Judgment: 23 December 1998.

CHILD SUPPORT – Child Support (Assessment) Act 1989 – Part 7 Division 5 – application by husband for reduction of existing periodic assessment to nil - application by wife for lump sum payment – increase by trial Judge of child support payable by husband in course of ordering lump sum payment– no application by wife for such departure - no opportunity for parties to make submissions in relation to orders eventually made by trial Judge - no regard by trial Judge to provisions of ss.124, 125 and 128 of Child Support (Assessment) Act – adequacy of trial Judge’s reasons - on re-exercise of discretion no ground for departure from existing assessment made out.

CHILD SUPPORT – Child Support (Assessment) Act 1989 – meaning of “Administrative Assessment” – ss.5, 115, 117 of Child Support (Assessment) Act – jurisdiction pursuant to s.115(c) of Child Support (Assessment) Act - regard which may be had to the reasons of a reviewing officer for altering an administrative assessment pursuant to Part 6A of Child Support (Assessment) Act – onus on applicant to satisfy requirements of s. 117 – where requirements of s. 117 satisfied the discretion of the court does not permit increase of the amount of child support payable where the only application before it is for a decrease of amount payable.

This was an application by the husband for leave to appeal and an appeal by him against orders made by Mushin J. on 24 March 1998, which ordered essentially that there be a departure from the existing administrative assessment of child support payable by the husband for the children of the marriage, and that such child support be capitalised in a lump sum and paid out of a fund of moneys previously acquired by the husband but subsequently held pursuant to a court order.

The husband and wife separated in May 1994 after a marriage of about 12 years. The two children of the marriage were born in May 1984 and July 1987 respectively. They have lived with the wife since separation.

On 5 September 1996, following an application by the husband, a child support Review Officer determined that the rate of child support payable by the husband in respect of 1994/5 child support year be varied to nil; the rate payable in respect of the 1995/6 child support year be varied to $150 per month; and in respect of the 1996/7 child support year the husband’s child support income be decreased to $30,000 (producing a child support rate of approximately $478 per month).

On 27 March 1997 the husband filed an application in the Family Court of Australia seeking an order that the child support payable by him be assessed in accordance with the formula contained in the Child Support (Assessment) Act 1989 (rather than in accordance with the Review Officer’s decision) for the 1995/6 and 1996/7 years as well as for all subsequent years, and that the Registrar of Child Support do all things to give effect to such an order, including the withdrawal of any notices given pursuant to s.72A of the Child Support (Registration and Collection) Act 1988. The grounds set out in the husband’s application were in essence that special circumstances existed in that the husband did not have the income or financial resources to pay child support beyond that which would be assessed in the ordinary course.

On 21 May 1997 the wife, acting on her own behalf, filed a document in which she asked the court for a “lump sum payment” of child support on the basis that the husband intended to move interstate and that he had no intention of paying any further child support moneys. In an affidavit filed on 23 May 1997 the husband acknowledged that the wife’s affidavit had been served on his solicitors and that he had read that affidavit.

At the hearing before Mushin J. on 28 May 1997, the trial Judge asked the wife what exactly she sought, to which the wife replied that she did not know what she sought in dollar terms, but that a “lump sum would be best”.

The trial Judge then asked Counsel for the husband why he should not order a lump sum payment by the husband of $10,000 or $15,000. Counsel for the husband responded with reasons relating to the husband’s age, poor health and his need for his capital.

Counsel for the husband drew his Honour’s attention to the fact that the Child Support Agency had issued notices under s72A of the Child Support (Collection and Registration) Act, which would have prevented the husband receiving the proceeds of the then forthcoming sale of his properties. The trial Judge accordingly requested the Agency to withdraw the s.72A notices, but also made an order restraining the husband from disposing of $20,000 of the proceeds of sale of his properties

On 8 December 1997 further evidence from the wife was adduced which was directed to the fact that following the hearing before Mushin J. on 28 May 1997, the husband had acquired a property for an alleged sum of $165,000 which was approximately $100,000 more than the husband had informed the court that he would have available to purchase any further property.

On 19 March 1998 further evidence was adduced from the husband which related to his declining financial position, health problems and limited income expectations, and a claim that he needed the preserved lump sum of $20,000 to re-establish himself and put him in a position to pay child support in the future.

In his judgment the trial Judge stated that the wife “effectively sought an order for a departure from the administrative assessment of child support and a lump sum in lieu of periodic payments”, although his Honour acknowledged she was unable to specify particulars of that claim.

His Honour stated that the husband’s ground for departure from the current child support assessment was pursuant to s.117(2)(c)(i) of the Act (“the special circumstances of the case”), and was on the basis of his financial circumstances.

The trial Judge found that the husband received a total of $316 per week by way of income and benefits, that he had expenses of about $361 per week and that his net asset position, following the disposal of certain property developments, was in the vicinity of $127,000. His Honour concluded that there was a ground for departure within the meaning of s.117(2)(c)(i) of the Act.

His Honour then considered whether it was just and equitable pursuant to s.117(4) of the Act to make the departure order, concluding that the balance of hardships was against the wife, by virtue of the fact that she could not expect much by way of child support from the husband in the future, and that if the husband’s application was acceded to, there would be enormous hardship caused to the wife and children. His Honour concluded that the husband’s duty to maintain the children, his source of income and the availability of the sum of $20,000, made it just and equitable and otherwise proper that the wife’s order for a departure from the administrative assessment be made.

His Honour accordingly ordered that:

pursuant to Part 7, Division 4 of the Child Support (Assessment) Act 1989 there be a departure from the existing administrative assessment of child support for the children of the marriage, for the years 1995/96 and 1996/97, with the husband to pay child support for each child of $50 per week during that period;
pursuant to Part 7, Division 5 of the said Act such child support be capitalised in the sum of $5,000 for each child; and
such capitalised sum of $10,000 be paid to the wife out of a fund of $20,000 held pursuant to the court order of 28 May 1997.

His Honour also ordered that in respect of the child support years commencing 1 July 1998 and following, child support be “in accordance with the provisions of the said Act.”

The husband appealed on the basis that the trial Judge had erred in awarding the wife the lump sum of $10,000 for the reason that if the husband had been permitted to receive the whole of the preserved sum of $20,000, he would be able to discharge a large part of his existing liabilities on which he was making significant interest payments and then use the money thus saved on interest payments, to pay child support.

Held: per curiam granting leave to appeal and allowing the appeal:

Per Nicholson CJ and Moore J.:

The husband had sought a departure from an assessment which left him liable to pay about $7,500 child support in respect of the two years in question. In the event, he was required by the trial Judge’s order to pay $10,000 and assets of $20,000 were frozen. This occurred in circumstances where the wife had made no initial complaint about the assessment as varied by the reviewing officer and had made no written application to the Court for a departure order. While she made an application for an order under Division 5 for a lump sum, it was not open to his Honour to conclude that she had made any other application.

Although the trial Judge had jurisdiction under s.115(c) to consider the position of the wife and make orders varying the administrative assessment in relation to the children under that sub-section, his Honour gave no indication either during the trial or in his reasons for judgment that he was applying that provision. Had he intended to do so, the very least that would have been required was the giving of some notice to that effect to the husband or his counsel.

It was unsatisfactory for the trial Judge to simply say that his comparative analysis of the parties’ financial circumstances constituted a special circumstance without going into further detail.

The trial Judge had given inadequate reasons for judgment which did not enable the appellate court to discern either expressly or by implication the path by which the result has been reached: Bennett (1991) FLC ¶92-191 Peters (aka Eustace) v Castuera (1994) FLC ¶92-500, Townsend (1995) FLC ¶92-569, Whitely (1996) FLC ¶92-684; Brazel (1984) FLC ¶91-568; Maday (1985) FLC ¶91-636; Towns (1991) FLC ¶92-199 ; Horsley (1991) FLC ¶92-205.

An assessment made by the Child Support Registrar pursuant to Part 6A of the Child Support Assessment Act is an administrative assessment for the purposes of both ss.115 and 117 of the Act. If and insofar as it can be argued that the definition contained in s.5 limits the words “Administrative Assessment” in s.117 (2)(c) to an assessment under Part 5, the structure of the Act and in particular s.115, evinces a contrary intention. Alternatively if a Registrar makes a determination under s.98B, that has the effect of substituting the assessment arising from the determination as the determination under Part 5 and the reference to administrative assessment contained in s.117(2)(c) cannot be limited to the assessment provided by the formula contained in the Act: Perryman (1993) FLC ¶92-433 followed in part; see also Abela (1995) FLC ¶92-568 per Nicholson CJ and Bryant (1996) FLC ¶92-690.

So far as the issue of a “shifting onus” referred to by Kay J in Perryman is concerned, the onus lies upon the applicant throughout to satisfy all of the requirements of s.117. If these are satisfied, then the Court is at liberty to revert to the original assessment pursuant to the formula or such other figure as it thinks appropriate. However, the view expressed by Kay J in Perryman at 80,442, that the Court cannot increase the amount of child support payable when the only application before it is for a decrease, was endorsed.

It is open to a court to look at the reasons of the reviewing officer for altering an administrative assessment pursuant to Division 6 A of the Act: Ivanovic (1996) FLC ¶92-689 at 83,145 applied; Perryman not followed. While the Act does not provide for a review or appeal from the decision of the reviewing officer as effected by the Child Support Registrar, such reasoning remains relevant. The fact that it may be flawed may give substance to a proposition that there are special circumstances requiring a departure order to be made under s.117. On the other hand if it is not flawed it may provide sound reasons why a departure order should not be made. While it is true that it is the decision and not the reasoning that led to it that is under consideration, it remains appropriate to consider such reasoning.

It was most unsatisfactory for the Full Court to be called upon to construe a highly complex piece of legislation without the benefit of legal argument as was the case in this appeal where the parties were unrepresented.

Per Finn J.:

The trial Judge had before him an application by the wife for lump sum child support. However, there was never any application by her for a departure from the existing assessments for the 1995/6 year and 1996/7 year, to $100 per week for each of those years (which was the basis on which the lump sum was ultimately calculated).

In relation to the 1996/7 year the capitalised sum awarded by his Honour of $5,000 was less than the capitalised amount for the existing assessment for that year (being $5756). However, in relation to the 1995/6 year, his Honour increased the periodic liability from $150 per month to approximately $400 per month (and then capitalised it to $5,000), in circumstances where the only application before him for a departure from the existing assessment was from the husband who was seeking a reduction to a nil assessment.

If his Honour proposed to depart from or vary the existing periodic assessment in the way in which he did, he should have given the parties, particularly the husband, the opportunity to make submissions in relation to what he proposed. It was not sufficient simply to foreshadow at trial a lump sum award of $10,000 and leave it to the parties to speculate how this might be based on a periodic assessmen: Guthrie (1995) FLC ¶92-647 per Fogarty J. at 82,545 and Kay and Purvis JJ. at 82,551-2; and Smith [1998] FamCA 120 in relation to the obligation on a trial judge to inform parties where it is intended to make orders not sought by either party).

Per curiam

The trial Judge also purported to make the order for a lump sum payment pursuant to Division 5 of Part 7 of the Act, without making any reference to the requirements of that division, and in particular no regard was had to the provisions of ss.124, 125 and 128 of the Act.

On a re-exercise of the discretion, there were no special circumstances which would justify a ground for departure from the relevant assessments. Accordingly, the husband’s application for a departure from the assessments for the years 1995/6 and 1996/7 should be dismissed.

LEAVE TO APPEAL GRANTED.
APPEAL ALLOWED.

REPORTABLE

Introduction

This is an application for leave to appeal by the husband from the orders of Mushin J whereby his Honour found the husband liable to pay child support, for the years ending 30 June, 1996 and 30 June, 1997, in the sum of $50 per week for each of the parties’ two children, such sum to be taken to be satisfied by the payment of $10,000 to the wife. His Honour further ordered that, as from 1 July 1998, future child support be paid in accordance with the Child Support (Assessment) Act 1989.

The husband was born on 10 July 1939 and is aged 59 and the wife was born on 14 March 1956 and is aged 42. The parties were married on 18 December 1982 and separated in May 1994. There are two children of the marriage: Aleta Jane Johnson, born 20 May, 1984, who is presently aged 14 and Thomas Mainwaring Johnson, born 13 July, 1987, who is presently aged 11.

Consent orders, whereby the children were to live with the wife and have contact with the husband each Wednesday evening, alternate weekends and half of school holidays, were made by Dessau J on 14 November, 1996. Shortly prior to the trial the children ceased having weekend contact with the husband.

The husband applied for a departure from the administrative assessment of child support for the years ending 30 June 1996 and 30 June 1997. A previous review, dated 6 December, 1995 had increased the husband’s annual child support income for the years February 1995 to June 1997 to $53,738, largely on the basis of information supplied by the husband in a Commonwealth Bank loan application. On 5 September, 1996 a Child Support Review Officer made the following reductions to the amount of child support payable: for the year ending 30 June, 1995, payments were reduced to nil; for the year ending 30 June, 1996, the assessed amount of $1,021 per month was reduced to $150 per month; and for the year ending 30 June, 1997, child support assessed at $1,012.58 per month on the basis the husband had a child support income of $53,738 was reduced by varying the child support income amount to $30,000.

Dissatisfied with that determination, and pursuant to Part 7 of the Child Support (Assessment) Act, the husband applied to the Court for a departure order on 27 March 1997.

The Course of the Trial

The substantive hearing of the matter took place before his Honour on 28 May 1997. At that hearing, the husband was represented by Mr Wilson of Counsel and the wife was unrepresented.

At the conclusion of the hearing, his Honour indicated that he was about to travel overseas and that the parties could not expect judgment before the end of June. He did however make orders restraining the husband from disposing of $20,000, being the proceeds of sale of a property formerly occupied by the husband and directing that it be held in an appropriate interest bearing account with the husband’s solicitor until further order. It appears that that sum is still held by the husband’s solicitor pursuant to that order.

In fact his Honour did not deliver judgment until 24 March 1998. The wife made an application to call fresh evidence on 12 November 1997 and this came before his Honour on 18 November 1997. It appears that there had been some earlier written communication between the wife and his Honour’s associate that caused his Honour to call the matter on before him on that day, he then being unaware that the wife had filed her application. An affidavit had been filed by the wife in support of the application and an affidavit had been filed in reply by the husband.

Counsel for the husband did not wish to cross-examine the wife, but she elected to cross-examine the husband, she being again unrepresented.

The subject matter of the evidence related to an application that the husband had made for a loan to purchase a further property, which the wife argued was indicative that the husband had not fully disclosed his financial position to the Court at the previous hearing. The husband denied this but admitted that his application to the bank did not fully represent his financial position. He said that it had been prepared with the assistance of his solicitors, his accountant and the bank manager to assist him in obtaining the loan.

The matter was then adjourned to 8 December 1997 to enable the bank manager to be called and he substantially confirmed the account given by the husband. The husband also gave some further short evidence and it was put to his Honour that by that time the husband’s financial position had further deteriorated from a net asset position of nearly $118,000 in May to $102,500 in December.

On 13 March 1998, the husband made an application to call further evidence as to what he said was a further deterioration in his financial circumstances, in that he said that his net asset position had diminished by a further $20,000 and sought the release of the $20,000 that his Honour had restrained him from disposing of, the withdrawal of then current child support notices and that a nil assessment of child support continue with a review after three years.

The wife was present on that occasion, but had not been served with the husband’s affidavit material and the matter was further adjourned until 19 March 1998 when both parties were given a further opportunity to be heard in relation to the new material.

It is unfortunate that the judgment in this matter was so long delayed. No doubt, the parties’ first applications contributed to this.

The Applications before the Trial Judge

An unusual feature of his Honour’s reasons for judgment is that he appears to have treated both parties as having made an application for a departure order under Part 7 of Division 4 of the Act . In fact the only written application that was made for a departure order was that of the husband of 27 March 1997. The wife, in a document bearing on the cover sheet the notation “Application” but which is headed “Affidavit” on the first page and which sets out a number of financial matters relevant to herself, the husband and the children said in the final paragraph

“I would ask this court to order a lump sum payment. The reason for this is that the Applicant informed the children that he intends to move interstate once his property at 32 Pine Street Surrey Hills is sold. It is obvious that he is determined to pay as little child support as possible. I believe he is only paying $80 per month at present because of this court case and that he has no intention of paying any further money once the case has been heard.”

In the course of proceedings before his Honour on 28 May 1997 his Honour questioned the wife about what she thought should be the result of the proceedings.

“HIS HONOUR: Yes. Mrs Johnson, what are you saying should be the result of these proceedings?

MRS JOHNSON : Well I think the children should be taken care of, your Honour.

HIS HONOUR: Yes. What do you say that translates to in dollar terms? In terms of the result?

MRS JOHNSON: I do not know. I just believe their father – the $80 a month he is contributing now, that has only been sent – I received the first payment on 1 December – in total – in over three years, actually, all I have received by way of support for the children is $720. He has purchased some items of clothing for the children but not many. It has been a struggle.

HIS HONOUR: Yes. Well, I need to know from you what it is that you are proposing should be the result of these proceedings?

MRS JOHNSON: I think the result should be ---

HIS HONOUR: In dollars?

MRS JOHNSON: In dollars, I do not know exactly what. I would think a lump sum would be best because I do not believe he will – once we leave this court room – I do not believe he will pay monthly.

HIS HONOUR: What do you say the lump sum should be?

MRS JOHNSON: I really do not know, your Honour.

HIS HONOUR: Well, I cannot absolutely require you to answer my question but in the event that you choose not to, you are going to leave yourself wide-open in terms of what the result might be. Do you understand?

MRS JOHNSON : Yes.

HIS HONOUR : If you do not want to make a contribution to my assessment of the situation as to what is proper, it has got to be just and equitable – you have got to establish a special circumstance in accordance with section 117 of the Child Support Assessment Act. You have then got to show that it is just and equitable and you have got to show that it is otherwise proper. The case that is being put against you is that there is nothing special about this case. That what has happened is that your former husband is in a desperate financial position. That he is, I suppose, in one sense not all that far away from bankruptcy but his earning capacity is extremely limited because of his age and his state of health and all of those sort of things and that therefore because there is no special circumstance that what should apply is the administrative assessment that is provided in the formula in the Act.

If that is the case and he is earning an income below round about $9500 and even a little bit more that that, you will get nothing – at all – do you understand that?

MRS JOHNSON : Yes.

HIS HONOUR : So you have go to establish either that he has a larger income than that or that there is a special circumstance by virtue of which I should depart from that assessment. As I understand this, all that you can say is that by virtue of the capital that he is going to get, that you should get some of it. Is that right for the children?

MRS JOHNSON: I would say so, yes, your Honour.

HIS HONOUR: Do you acknowledge – well, sorry – from what you have just said before, it seems to me that you acknowledge that once this is over that it is as far getting any money from his is concerned, is that right?

MRS JOHNSON: Yes.

HIS HONOUR: Unless he wins Tatts, there is nothing there and he is unlikely to win Tatts if my experiences in that regard are any indication. Now, you have seen that document there – the net asset summary – that Mr Wilson gave me.

MRS JOHNSON: Yes.

HIS HONOUR: Are you able to challenge anything that is contained in it?

MRS JOHNSON: Yes, I believe I can.

HIS HONOUR: Right. So you will want to cross-examine him?

MRS JOHNSON: Yes.

HIS HONOUR: Because you understand that if you cannot establish that the contents of that document are wrong in some way, you are stuck with it.

MRS JOHNSON: Yes.

HIS HONOUR: Now, If you are stuck with it, it seems to me, at best, the solution in this case is very small indeed – very small. It may involve a small lump sum but I could not see it being anything more than that, you understand ?

MRS JOHNSON: Yes.” (Transcript 28 May 1997 pp.15-16)

The Trial Judge’s Orders

The Wife’s written “application” contained in the document described variously as an application and an affidavit to which we have referred coupled with the content of the above passage makes it clear that what the wife was seeking was the payment of a lump sum under Division 5 of Part 7 and not a Departure Order under Division 4. In the final event, it seems from an examination of his orders that his Honour did treat the wife as having made an application under Division 5 of Part 7. However he also seems to have treated her as having made a departure application under Division 4 in that he first ordered that, pursuant to Part 7 Division 4 of the Act, there be a departure from the administrative assessment, by providing that for the relevant 2 year period, the husband pay child support in respect of each of the children at the sum of $50 per week.

He then ordered that pursuant to Part 5 of that Division, child support should be capitalised at $5000 in respect of each child, discharged all interest and penalties chargeable against the husband, and directed the payment of the $10,000 to the wife out of the $20,000 that he had ordered invested, with the balance to the husband.

Reasons for Judgment

In his reasons for judgment, his Honour commenced by stating that the application by the husband for a departure order pursuant to Part 7, Division 4 of the Act was the matter before him.

He later set out the grounds of the husband’s application as follows:-

the circumstances of the case are special in that the Applicant does not have the income, earning capacity, property or financial resources to pay child support beyond that which would be assessed in the ordinary course but the determination of the review officer pursuant to Part 6Aof the Child Support (Assessment) Act 1989 made on or about 25 September 1996 requires the Applicant to pay child support at a rate which is significantly greater than that which would be assessed in the ordinary course and beyond the Applicant’s ability to pay;
by reason of the said determination the assessment of child support for the child support years 1995-1996 and 1996-1997 have been amended and the particulars entered in the Child Support Register have been varied to rates of child support beyond the Applicant’s ability to pay.” (AB p.17)

In summarising the contentions of the parties he said that Counsel for the husband had sought orders that child support for the relevant years should be assessed in accordance with the formula contained in the Act, which would result in a nil assessment.

He then said:-

“Mrs Johnson effectively sought an order for a departure from the administrative assessment of child support and a lump sum in lieu of periodic payments.” (AB pp. 17-18) (our underlining)

He then went on to consider s117(2) of the Act and concluded that the husband only sought to rely upon part (c) of that subsection, arguing that the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by him because of the income, earning capacity, property and financial resources of either parent of the child.

His Honour said: -

“I conclude that the grounds for the application restrict that particular ground to Mr Johnson and do not include Mrs Johnson or the subject children. That is reinforced by the proposition that Mr. Johnson’s counsel did not put in question Mrs. Johnson’s income, earning capacity, property, or financial resources and did not seek to challenge her entitlement to child support and the needs of the subject children to such support. However, despite that some issue was made of the circumstances of the parties’ settlement of their application for alteration of property interests to which I will refer in due course.” (AB pp. 18-19)

His Honour then went on to consider the husband’s financial position and concluded that he had net assets of about $127,000. He found that his income at that time was approximately $16,500 per annum, or $316 per week. He noted the husband claimed expenses of $361.20 per week and appears to have accepted this, while calling into question the husband’s expenditure of $50 per week for entertainment and child care of the children.

His Honour then referred to the additional evidence introduced by the wife and evidence as to the purchase of a house by the husband subsequent to the first hearing. He made no specific finding as to this other than to indicate that he accepted the evidence of the husband’s bank manager concerning this transaction. We conclude that his Honour did not think that this evidence significantly altered the situation.

His Honour then summarised the financial situation of the wife as being that she had had an income of approximately $16,000 per annum during the preceding 12 months including $760 child support paid by the husband, about $52 per week from part time employment and the balance by way of social security pension.

His Honour then said: -

“On all the evidence it was a very wise decision by counsel for Mr. Johnson not to challenge Mrs. Johnson’s financial position and particularly her need to receive child support. To Mr. Johnson’s credit his case was not run on the basis that Mrs. Johnson should have employment at a greater rate than at present. However, all of those factors, together with the respective financial positions of the parties leads me to the conclusion that a special circumstance has been made out in accordance with the paragraph of the Act under consideration. Mr. Johnson has minimal income in the traditional sense of that word. He does receive drawings from his company, which is effectively his alter ego. Mr. Johnson’s source of income is from capital arising out of the sales of the properties which he has improved.” (AB p.26)

His Honour then went on to consider whether it was just and equitable to make the order and considered the factors set out in s117(4) of the Act.

After referring to the nature of the duty imposed by s3 on both parents to provide for the children and the fact that the wife’s social security pension was to be excluded from consideration, his Honour said: -

“In my view, the above factors do not require a great deal of explanation. Mr and Mrs Johnson are both obliged by legislation to support their children and the real issue before me is as to the proportions in which that should take place.” (AB p.27)

After discussing the respective balance of hardship as between the parties his Honour said: -

“The only live issue with respect to the question of justice and equity relates to the resulting competing hardships which they will suffer if I will to accede either party’s proposal. I have dealt with that matter below but note here that in my view the balance of hardships is against Mrs. Johnson by virtue of the facts that she cannot expect much by way of child support from Mr. Johnson and accordingly she is likely to be in a very difficult financial position in the future. In this regard I note that I must disregard Mrs. Johnson entitlement to a pension in my consideration of her income. I therefore find that it is just and equitable to make the order sought by Mrs. Johnson, at least in general terms.” (AB p.28)

It is quite clear that by this time, his Honour was approaching the matter as if the wife had made the departure application.

This is reinforced by the fact that when his Honour came to consider whether the making of the order was “otherwise proper”, after referring to the parties’ duty to maintain their children and the fact that the wife’s pension could not be considered, his Honour said: -

“I conclude that particularly because of the duties of the parties it is otherwise proper to make the order generally sought by Mrs Johnson.” (AB p.29)

His Honour then went on to say that the wife’s proposal was that she should receive a lump sum by way of child support for the two years in question.

He then referred to the decision of the Full Court in Lightfoot and Hampson (1996) FLC 92-663 and said: -

“The essence of that decision for the present purposes is that it is first necessary to determine the departure application and the lump sum provisions in Division 5 are another means of procuring payment of the result arising out of the departure application.

With no criticism of the decision of the Full Court, in the circumstances of this particular case there is a certain degree of artificiality in that Mr Johnson’s source of income has been essentially from capital as a result of property improvements. It is very difficult to quantify child support on a periodic basis in this situation.

In my view, Mr Johnson’s duty to maintain the subject children, his source of income and the availability of the sum of $20,000, which may well be the last opportunity for child support clearly make it just and equitable and otherwise proper that I should make an order for departure from administrative assessment. In my view an amount of $50 per child per week for the two years under consideration is appropriate. It is further appropriate that that be paid by way of lump sum from the monies invested as referred to above and I will accordingly order that the sum of $10,000 be paid from that sum to Mrs Johnson.” (AB p. 30)

It appears that his Honour had written this judgment prior to the last application by the husband to call fresh evidence. In an addendum to his judgment, his Honour commented that the fresh evidence indicated that the husband’s financial position had deteriorated further so that his net assets were reduced to $82,600.

He also accepted the husband’s evidence as to his deteriorating health and found that his future expectancy to earn income was very limited. He said that even if he was to release the $20,000 and make a nil order as requested by the husband the latter did not expect to have an income sufficient to pay child support for at least 15-18 months, which his Honour thought was somewhat optimistic.

His Honour doubted the husband’s motives on the issue of child support and said that if he had been persuaded that the release of the monies would have had the effect of enabling the husband to pay child support in the comparatively near future then he might have been persuaded to accede to his application.

The Husband’s Grounds of Appeal

The relevant grounds of Appeal of the husband were: -

That the trial judge erred in not focussing on the long term welfare of the children
That he failed to comply with the provisions of s117(4) of the Child Support (Assessment) Act.
That his orders were contrary to s3 of the Act.
That he erred in his consideration of incorrect, untrue and misleading items.
That the $20,000 was improperly restrained on the basis that it was capital of the husband when in fact it was money connected to the sale as part of the parties’ property settlement.

The husband also complained of his Honour’s delay in making a decision and claimed to have lost interest as a result thereof and said that he had set an unfavourable precedent in relation to lump sum payments.

He sought orders seeking the release of the $20,000 to him and that his current nil assessment continue with a review in two years.

The Appeal

The parties were both unrepresented before this Court and their submissions were largely confined to factual matters.

However we note that the husband’s counsel made a submission to his Honour, which his Honour did not deal with in his judgment; that the nature of the review before his Honour was a review of the administrative assessment and not a review of the administrative assessment made by the reviewing officer. It may be, as Finn J said in her reasons for judgment, that his Honour did eventually proceed upon the basis that he was reviewing the administrative assessment as varied by the reviewing officer but we do not think that this is clear. In any event, his Honour should have dealt with the issue in his reasons as the argument had been raised squarely before him.

In effect, Counsel argued that the reviewing officer’s reasons for making an adjustment to the assessment and the adjustment itself were irrelevant. He said that although it was the husband who was seeking the departure order, it was for the wife to show that there were special circumstances, which justified a departure from the assessment made under the Act, which was a nil assessment.

Conclusions

We think that his Honour’s judgment cannot stand.

Looked at from the point of view of the appellant husband, he was seeking a departure from an assessment, which left him liable to pay about $7,500 child support in respect of the two years in question

In the event he was required by his Honour’s order to pay $10,000 and assets of $20,000 have been frozen. This occurred in circumstances where the respondent wife had made no initial complaint about the assessment as varied by the reviewing officer and had made no written application to the Court for a departure order. While she made an application for an order under Division 5 for a lump sum, we do not think that it was open to his Honour to conclude that she made any other application.

It is true that his Honour did have jurisdiction under s115 (c) to consider the position of the wife and make orders varying the administrative assessment in relation to the children under that sub-section. However, his Honour gave no indication either during the trial or in his reasons for judgment that he was applying that provision. Had he intended to do so, the very least that would have been required was the giving of some notice to that effect to the husband or his counsel.

As we have already pointed out there is confusion throughout his Honour’s reasons for judgment as to what applications were before him and as to who was making them. At the start of his judgment he made it clear that he was considering an application for a departure order by the husband: -

“The application for departure is brought pursuant to Part 7 Division 4 of the Act. In accordance with the requirements of section 115(b) of the Act with respect to the prerequisites for the Court’s jurisdiction in this matter, the Child Support Registrar has made an administrative assessment in respect of the relevant child support years and Mr. Johnson applied for and received a determination by way of review of that assessment pursuant to Part 6A. That determination was made pursuant to section 98B of the Act. Mr. Johnson is dissatisfied with that determination and in accordance with his rights under the Act, has applied for a departure order pursuant to Part 7...”(AB p.13)

He said, after referring to the husband’s application: -

“That is now the matter before me” (emphasis added) (AB p.13)

He then said: -

“Mrs Johnson effectively sought an order for a departure from the administrative assessment of child support and a lump sum in lieu of periodic payments. She was unable to specify particulars of that claim but I do not criticise her for that because the whole process is understandably difficult for a lay person to come to grips with.

I now turn to the merits of these applications.”(Underlining added) (AB p.18).

His Honour does not explain how he came to the conclusion that the wife had made a departure application. A reading of the transcript does not suggest that counsel for the husband ever thought that he was dealing with a departure application by the wife, except in the sense that he argued for technical reasons, discussed subsequently, that she bore the onus of establishing a departure from the original assessment.

When his Honour came to deal with the issue of s117(2) of the Act, the ground seems to have shifted back to consideration of an application by the husband. This is apparent from the passages of his judgment already referred to where his Honour said

“By virtue of the grounds of the application as quoted above (the husband’s written application), it is clear that Mr Johnson only relies on sub paragraph (c)(i) of the sub-section in the following terms:” (AB p.18)

After quoting the relevant portion of the legislation his Honour said: -

“I conclude that the grounds for the application restrict that particular ground to Mr Johnson and do not include Mrs Johnson or the subject children.” (AB p.18)

His Honour went on to examine the husband’s financial situation in some detail, made a brief examination of that of the wife and then at p15 said: -

“However, all of those factors, together with the respective financial positions of the parties leads me to the conclusion that a special circumstance has been made out in accordance with the paragraph of the Act under consideration. Mr Johnson has minimal income in the traditional sense of that word. He does receive drawings from his company, which is effectively his alter ego. Mr Johnson’s source of income is from capital arising out of the sales of properties which he has improved.”
(AB p.26)

His Honour did not indicate whether it was the husband who had established the special circumstance or the wife, nor did he specify whether, as argued by counsel for the husband, it was a nil administrative assessment that he was considering as argued by Counsel for the husband, or whether it was the assessment as varied by the reviewing officer.

Further, he did not indicate what it was that he thought was a special circumstance. It is quite unsatisfactory to simply say that his comparative analysis of the parties’ financial circumstances constituted a special circumstance without going into further detail as to what it was.

When his Honour came to consider the issue of whether it was just and equitable to make an order and whether it was otherwise proper to do so, he seems to have been considering a departure application by the wife. It may be that this suggests that he was also considering the wife’s application by the time that he came to his conclusion as to whether special circumstances had been established but that was certainly not the way that he had started out.

We found his Honour’s reasons for judgment to be confusing to the point where we were unable to understand the line of reasoning that led to his eventual conclusion. As we have said, there appears to have been confusion in his Honour’s mind as to which application he was considering at various times during the course of his reasons. In addition, his Honour’s failure to identify the assessment with which he was dealing further complicated the matter.

If he was dealing with the assessment as varied by the determination of the Reviewing Officer, it is difficult to see how the wife could be regarded as having established special circumstances for a departure order under s117(2).

On the other hand, she might well have been successful if he was considering a theoretical nil assessment under the statutory formula.

If he was considering the husband’s application as an application to depart from the assessment as varied by the reviewing officer, he might have been able to find special circumstances for a departure order, although as appears hereafter, we would not have done so. If he did so, we would doubt whether this would have entitled him to thereafter in effect switch applications and consider whether the wife had established that it was just and equitable and otherwise proper to vary the determination in her favour.

We note that Finn J is of the opinion that if there had been competing departure applications, it would have been open to the trial judge to find special circumstances in connection with the application of one party and then make orders in favour of the other on the basis of being satisfied that it was just and equitable and otherwise proper to make a departure order sought by the other.

Since we did not have the benefit of legal argument on this point and it is not necessary to decide it for the purposes of making a decision in this case we would prefer to leave the question open.

In Bennett and Bennett (1991) FLC ¶92-191, the Full Court held that, in the absence of adequate reasons, the Full Court is not obliged to uphold a judgment merely because the result may be said to fall within the wide ambit of the judge’s discretion. In general, the appellate court should be able to discern either expressly or by implication the path by which the result has been reached. See also Peters (aka Eustace) v Castuera (1994) FLC ¶92-500, Townsend and Townsend (1995) FLC ¶92-569, Whitely and Whitely (1996) FLC ¶92-684; Brazel and Brazel (1984) FLC ¶91-568; Maday and Maday (1985) FLC ¶91-636; Towns and Towns (1991) FLC ¶92-199 ; Horsley and Horsley (1991) FLC ¶92-205.

In our view this case falls squarely within those principles, for the reasons stated and it is therefore necessary for us to allow the appeal and set aside his Honour’s orders. We consider that this result is encompassed within grounds 2 and 3 and 4 of the Husband’s Notice of Appeal.

The issue however does arise as to whether his Honour’s judgment can be supported on the basis of the wife’s application under Division 5 of Part 7 of the Act.

In this regard we have read the judgment of Finn J in draft form and we agree with her conclusions in this regard.

Discretion to make Substitute Orders

This is not a case where it would be appropriate to send the matter back for retrial. It therefore becomes necessary for us to consider the matter afresh.

We do so upon the basis that it was only the husband who was making an application for a departure order and that the onus lies upon him to establish the grounds for such a departure.

In doing so, it is first necessary for us to consider the argument put by the husband’s counsel that the assessment under consideration is not that arrived at following the Review Officer’s determination but is the original formula assessment made under Part 5 of the Act. He said that once special circumstances were established, the onus shifted to the wife.

The substance of the argument was based upon the definition of “administrative assessment” contained in s5 of the Act which defines an “administrative assessment” as an assessment under Part 5 of the Act.

The jurisdiction of the Court to order departures from administrative assessments is to be found in s 115 of the Act.

S 115 Cases to which Division applies

This Division applies to an administrative assessment of child support in

relation to a child in the following cases:

(a) where the child support is for a period up to and including the period ending on 30 June 1992 and the carer entitled to child support or the liable parent wants a court having jurisdiction under this Act to make an order having the effect that the provisions of this Act will be departed from in relation to the child in the special circumstances of the case; or

(b) where the child support is for a period beginning on or after 1 July 1992 and the Registrar has, on application made under section 98B, either made or refused to make a determination under Part 6A in relation to the child; or

(c) where the child support is for a period beginning on or after 1 July 1992 and:

(i) the carer entitled to child support or the liable parent is party to an

application pending in a court having jurisdiction under this Act; and

(ii) the court is satisfied that it would be in the interest of the carer and

the parent for the court to consider, at the same time as it hears that

application, whether an order should be made having the effect that the

provisions of this Act relating to administrative assessment of child support will be departed from in relation to the child in the special circumstances of the case.

As we understand it, the argument was that where a Child Support Registrar has made a departure order under s98B of Part 6A, this is the operative administrative assessment until an application is made for a departure order is made. The powers of the Registrar to alter administrative assessments are contained in s75 of the Act, which was enacted prior to the introduction of the administrative review provisions contained in Part 6A of the Act. That section reads as follows: -

s. 75 Amendment of assessments
(1) The Registrar may, at any time, amend any administrative assessment by making such alterations and additions as the Registrar considers necessary to give effect to this Act.
(2) Subsection (1) has effect despite the fact that:
(a) child support has been paid under the administrative assessment; or
(b) the child support year, or the part of the child support year, to which the administrative assessment relates has ended; or
(c) proceedings are pending in a court having jurisdiction under this Act against or in relation to the administrative assessment.
(3) Without limiting subsection (1), the Registrar may amend any administrative assessment for the purpose of:
(a) correcting any error or mistake (whether or not made by the Registrar); or
(b) correcting the effect of any false or misleading statement made to the Registrar (whether as Registrar or Commissioner); or
(c) giving effect to the happening of a child support terminating event in relation to:
(i) a child; or
(ii) a person who is or was a custodian entitled to child support, or a liable parent, in relation to a child; or
(iii) the child, and a person who is or was a custodian entitled to child support, and a person who is or was a liable parent, in relation to the child; or
(d) giving effect to the happening of an event or change of circumstances that, under this Act, affects the annual rate at which child support is or was payable; or
(e) giving effect to the acceptance of a child support agreement by the Registrar; or
(f) giving effect to a decision or order of a court having jurisdiction under this Act.
(4) Where a provision of this Act expressly authorises the Registrar to amend an administrative assessment, that provision does not by implication limit the power of the Registrar (whether under this section or otherwise) to amend the assessment.
(5) Except as otherwise expressly provided in this Act, every amended administrative assessment is to be taken to be an administrative assessment for all the purposes of this Act. (Our underlining)

In Perryman and Perryman (1993) FLC 92-433 Kay J said at 80,420:-

“It was the submission of the Registrar supported by Counsel for the wife, that the document which issues as a result of the recommendations of the child support review officer is merely an amended "administrative assessment" which has been made by an exercise of the Registrar of his power under s. 75.

I have some difficulty with the concept that one can make an administrative assessment by determining to depart from the provisions of the Act relating to an administrative assessment which it is determined to depart from. The matter is perhaps saved by the provisions of s. 75(5). It seems unfortunate that s. 75(3) has not been amended to include specific reference to a determination made under Part 6A.

It would seem that by operation of s. 75 the process of applying a formula and then departing from the formula by a Child Support Review Officer still creates an "administrative assessment". Thus, where such process has been undertaken and either party is aggrieved by the amended assessment, the provisions of s. 115(b) of the Child Support (Assessment) Act apply. This Court is then seized with power to hear an application for an order for departure from the administrative assessment as so amended. It would appear that the process and findings of the Review Officers will not of themselves be subject to any scrutiny by the Court.

The process that occurs before a Review Officer, although having some of the hallmarks of a judicial hearing (an opportunity to be heard and notice of the proceedings), is intended to be an administrative process. If the result that administrative process creates is not satisfactory to either of the parties affected by it, their remedy lies in seeking to persuade a court exercising jurisdiction under Division 4 of Part 7 to make an order departing from the result, based on the criteria set out in s. 117.

This may mean that during the issue of the assessment or its successor onuses may shift. An administrative assessment based on an application of the formula may issue for say $100 per week. The father may successfully apply to have that reduced to pay $50 per week because of alleged high costs of access. In order for the custodial wife to have the sum of $50 per week increased, she will need to establish that a ground for departure exists (such as there has been an unjust and inequitable determination because of the financial circumstances of each of the parties). She would have to rely on this ground, even if the true ground that she wanted to rely on was that the Review Officer should never have made the departure order in the first place because there were no high costs of access.

There does not appear to be any procedure in the Child Support (Assessment) Act 1989 for a rehearing or a review of the proceedings that take place before the Review Officer.”

Counsel for the husband submitted to his Honour that once the Court came to consider s117(2)(c) , the reference to administrative assessment contained in that sub paragraph must be construed as a reference to the original formula assessment having regard to the definition of that term in s5. He put it that the reference is not a reference to the administrative assessment or an administrative assessment but to administrative assessments in general.

This is a curious argument, because if the original formula assessment is the assessment under consideration then in the present case there would be no reason for the husband to have sought a departure order from it, as it was a nil assessment. It would be an extraordinary result if, by seeking a departure order from an assessment that has been altered by a Registrar pursuant to Division 6A the wife is then forced to justify a departure from the original assessment provided by the formula if the husband seeks to rely on s117(2)(c). In effect, it suggests that the reviewing officer’s determination must be ignored and that when the matter comes to the Court the other party must show grounds for departure from the formula assessment.

We would not be prepared to ascribe such a meaning to the Act. It is in our view clear that s115 envisages that, in cases relating to periods prior to the coming into effect of the amendments contained in Part 6A of the Act, the Court will consider the administrative assessment made under Part 5.

In cases relating to periods after that time, the court will consider either the original administrative assessment if the Registrar has refused to make a determination, or the amended administrative assessment if the Registrar has made a determination under Part 6A.

As Kay J pointed out in Perryman’s case (supra), while it may be unfortunate that the legislature did not amend s75(3) to make it clear that alterations to assessments under Part 6A created administrative assessments within the meaning of s115 and seq., he thought that sub section (5) had the effect of doing so. We agree with this view.

We think that this is the clear intention of the legislation and it should be noted that the opening words of s5, which contains the definition of administrative assessment relied upon by counsel for the husband, are “in this Act, unless the contrary intention appears”.

If and insofar as it can be argued that the definition contained in s5 limits the words “Administrative Assessment” in s117 (2)(c) to an assessment under Part 5, we think that the structure of the Act and in particular s115, evinces a contrary intention. Alternatively we would take the view that if a Registrar makes a determination under s98B, that has the effect of substituting the assessment arising from the determination as the determination under Part 5 and that the reference to administrative assessment contained in s117(2)(c) cannot be limited in the manner argued by Counsel for the husband: see also Abela (1995) FLC 92-568 per Nicholson CJ and Bryant (1996) FLC 92-690.

So far as the issue of a “shifting onus” referred to by Kay J in Perryman’s case is concerned, we have difficulty envisaging how this arises. We consider that the onus lies upon the applicant throughout to satisfy all of the requirements of s117. If these are satisfied, then the Court is at liberty to revert to the original assessment pursuant to the formula or such other figure as it thinks appropriate. We should say however that this is not completely at large and in this regard we agree with the view expressed by Kay J in Perryman’s case at 80,442 that the Court cannot increase the amount of child support payable when the only application before it is for a decrease. This would provide yet another reason why Mushin J’s order in the present case should be set aside.

Before leaving this topic we should say that we do not think that Perryman’s case should be read as authority for the proposition that it is not open to a court to look at the reasons of the reviewing officer for altering an administrative assessment pursuant to Division 6 A of the Act. As was said by the Full Court in Ivanovic and Ivanovic (1996) 92-689 at 83,145, “[a] Court can, however, examine the Review Officer’s “Notice of Decision” and give it such weight as the Court determines appropriate.”.

We agree with Kay J that the Act does not provide for a review or appeal from the decision of the reviewing officer as effected by the Child Support Registrar. However, we do not think that it makes sense to treat such reasoning as irrelevant. The fact that it is obviously flawed may give substance to a proposition that there are special circumstances requiring a departure order to be made under s117. On the other hand it may provide sound reasons why a departure order should not be made. While it is true that it is the decision and not the reasoning that led to it that is under consideration, we do not think it reasonable to pay no regard whatever to such reasoning.

We now turn to the issue of whether the husband has established “special circumstances” for departing from the assessment of the reviewing officer within the meaning of s 117 of the Act. Subsection (1) of that section provides as follows:-

``117(1) Where:

...

(b) the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;

to make a particular order under this Division.

the court may make the order.''

An application under s 117 has three stages. First, an applicant must establish one or more of grounds of departure set out in s 117.
Secondly, the court must determine whether it is ``just and equitable'' within the meaning of s 117(4) to make a particular order.
Thirdly, whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.

Section 117(2) sets out the following grounds that can constitute special circumstances. The relevant one for present purposes is

(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of:

(i) the income, earning capacity, property and financial resources of either parent or the child;…

According to his Honour’s findings, the husband had an income of approximately $16,500 per annum or $316 per week and claimed expenses of $361.20 per week, of which $50 per week was said to be in respect of entertainment and childcare for the children.

The husband had assets of about $127,000, which by the time judgment was given, were partly invested in a house, in which the husband was living and included the sum of $20,000 cash.

According to the husband, his asset position had deteriorated by the time his Honour gave judgment to approximately $80,000. His Honour made no specific finding about this. However the evidence given subsequent to trial revealed that the husband had received about $100,000 more from the sale of a property at Box Hill South than he had anticipated at trial.

The husband is a self employed builder whose situation fluctuates from time to time and it is difficult to separate his income and capital position at any one time.

He endeavoured to call fresh evidence as to his financial position at trial. We refused to permit this for the reasons then given and because the relevant period for consideration is the child support year ending 30 June 1997.

The wife’s position was that she and the children lived in a house bought with the proceeds of a property settlement order made in her favour by consent on 14 November 1996. She had an income of approximately $16,000 per annum consisting of approximately $52 per week from part time employment and the balance from a social security pension save for $760 child support paid by the husband. Since her social security pension must be ignored, she has a minimal income and the obligation to support two children.

The issue is whether the husband has established such a special circumstance. The meaning of “special circumstances” was considered by the Full Court in Gyselman and Gyselman (1992) FLC 92-279 at 79,065 as follows: -

“Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words, "in the special circumstances of the case". Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasize that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. In Savery's case (p. 77,897), Kay J, adopting the view in Philippe and Philippe (1978) FLC ¶90-433 at p. 77,202 in a different context, said that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases". The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.”

The question is whether there is anything “special” or out of the ordinary about the circumstances of this case that distinguish it from other cases.

We do not think that there is any such special factor. The parties each have modest assets and modest incomes although it is a little more difficult to discern what the husband’s income was for the relevant period because of the nature of his income earning activities.

The obligation of the husband under the assessment is to pay the sum of approximately $7500 in respect of the two years in question. This is a relatively modest amount and there is sufficient capital to pay it. We are unable to accept the proposition that this payment will leave the husband in the position that he is unable to carry on his business activities.

It is thus unnecessary to consider whether it is just and equitable or otherwise proper to set aside the assessment. However, if we are wrong about the first point, we would not have been satisfied that the husband had established either proposition.

If and insofar as the wife made any application for a lump sum payment under Division 5, we think that, in the context of these proceedings, any such application must be confined to the child support years in question and his Honour treated the matter in this way. Since the relevant period has expired and the sum owing in respect of the two years in question is ascertainable, we do not think that any application under Division 5 is necessary.

Concluding Observations

There are some matters that we should mention in conclusion.
First, although the husband did not seek to argue that the wife’s financial position should not be brought into account in contradistinction to his own, he complained that he had been “pressured” into a property settlement that had depleted his capital to the extent that he could no longer earn income as he had before. In fact, he consented to the orders made and did so with the benefit of legal advice. We do not consider these proceedings an appropriate vehicle to ventilate any grievance he had in this regard.
Secondly, we are concerned that neither party was represented before the Full Court and the wife was unrepresented throughout.
We have no knowledge as to whether either party applied for legal aid but given current legal aid policies it is unlikely that they would have received aid had they done so.
We can only deplore a situation where the Full Court is called upon to construe a highly complex piece of legislation without the benefit of legal argument. This is an increasingly common phenomenon and is an intolerable situation so far as the future development of the law is concerned.

Leave to Appeal

We would grant leave to appeal to the husband in this case having regard to the complex issues involved

Orders

The orders that we make are as follows: -
That the husband be granted leave to appeal.
The husband’s appeal is allowed.
Orders 1, 2 and 4 of his Honour’s orders are set aside.
That the husband’s application (filed 27 March 1997) for departure orders in respect of the child assessments for the years 1995/6 and 1996/7 be dismissed.
That the wife’s application (filed 21 March 1997) for an order for lump sum child support be dismissed.
That the Registrar of Child Support on notice to both parties, or either party on notice to the other party and to the Registrar of Child Support, have liberty to apply to a judge at the Melbourne Registry of this Court for the release to the Registrar out of funds preserved by the order of Mushin J of 28 May 1997 of all arrears due from the husband under the child support assessments for the 1995/6 and 1996/7 years and IT IS NOTED in connection with this order that all interest and penalties in respect of any arrears due under such assessments have been discharged by Order 3 of the court of 24 March 1998.
That the husband be entitled to receive the balance of the funds referred to in Order 6.

I certify that this page and the previous 19 pages herein are a true copy of the reasons for judgment delivered by The Honourable Chief Justice Nicholson and The Honourable Justice Moore

Danny Sandor

Senior Legal Associate to the Chief Justice

FAMILY LAW ACT 1975

IN THE FULL COURT

OF THE FAMILY COURT OF AUSTRALIA Appeal No. SA23L of 1998

AT MELBOURNE File No. ML 7789 of 1994

BETWEEN:

SAMUEL ALEXANDER JOHNSON

Appellant Husband

- and -

LESLEY ANNE JOHNSON

Respondent Wife

REASONS FOR JUDGMENT OF THE HONOURABLE JUSTICE FINN

CORAM: NICHOLSON CJ., FINN and MOORE JJ.

DATE OF HEARING: 27 AUGUST 1998
DATE OF JUDGMENT: 23 DECEMBER 1998

APPEARANCES:

Mr. S. A. Johnson (of 13 Cyril Street, Box Hill South, VIC, 3128) appeared on his own behalf.

Ms. L. A. Johnson (of 3 Byron Street, Box Hill South, VIC, 3128) appeared on her own behalf.

This is an application by the husband in these proceedings, Mr Samuel Alexander Johnson, for leave to appeal Orders 1, 2, 4, 5, and 9 of orders made by Mushin J. on 24 March 1998. The essential effect of those orders (which I will later set out in full) was:

that “pursuant to the provisions of Part 7, Division 4 of the Child Support (Assessment) Act 1989” (“the Act”) there should be a departure from the existing administrative assessment of child support for the two children of the husband’s marriage to the wife, Mrs Lesley Anne Johnson, for the child support years ending 30 June 1996 and 30 June 1997, with the husband to pay child support for each child of $50 per week during that period, being a total of $100 each week;

that “pursuant to Part 7, Division 5 of the said Act” such child support should be capitalised in the sum of $5,000 for each child, being a total of $10,000; and

that such capitalised sum of $10,000 be paid to the wife out of a fund of $20,000 held pursuant to a court order of 28 May 1997.

His Honour also ordered that in respect of the child support years commencing 1 July 1998 and following, child support be “in accordance with the provisions of the said Act.”

The factual background and the applications filed by the parties

By way of background it need only be said that the husband and the wife separated in May 1994 after a marriage of about 12 years. The two children of the marriage had been born in May 1984 and July 1987 respectively. It appears that they have lived with the wife since separation.

The early history of the child support arrangements are not clear to me. But it is sufficient for present purposes to say that by a decision made on 5 September 1996 a child support Review Officer determined that:

·   the rate of child support payable by the husband in respect of 1994/5 child support year should be varied to nil with effect from 13 February 1995 to 30 June 1995;
·   the rate of child support payable by the husband in respect of the 1995/6 child support year should be varied to $150 per month (that is an annual amount of about $1800); and
·   in respect of the 1996/7 child support year the husband’s child support income should be decreased to $30,000, which according to the reasons of the Review Officer would produce a child support rate of approximately $478 per month (or $5736 per year).

It is clear from the decision of the Review Officer, which appears at pages 64-66 of the Appeal Book, that the applicant for that review was the husband.

Following the Review Officer’s decision, the Child Support Registrar issued on 14 October 1996 an assessment for the period 1 July 1996 to 30 June 1997 showing a monthly liability of $478.50 (see Appeal Book E4).

On 27 March 1997 the husband, through solicitors, filed in the Melbourne Registry of this court a Form 63 application in which he sought an order that child support for the two children of the marriage should be assessed in accordance with the formula contained in the Act for the 1995/6 and the 1996/7 years as well as for all subsequent years, and that the Registrar of Child Support do all things to give effect to such an order, including the withdrawal of any notices given pursuant to s.72A of the Child Support (Registration and Collection) Act 1988. (Section 72A is concerned with the Registrar’s powers to collect from third parties monies due to a child support debtor).

The grounds as set out in the husband’s application for an assessment in accordance with the formula (rather than in accordance with the Review Officer’s decision) were in essence that “the circumstances of the case are special in that (the husband) does not have the income, earning capacity, property or financial resources to pay child support beyond that which would be assessed in the ordinary course.” (See Appeal Book 61-62).

Also on 27 March 1997 the husband, through his solicitors, filed a financial statement (Appeal Book 70) and affidavit (Appeal Book 79) in support of his Form 63 application.

The husband’s Form 63 application was given a return date of 26 May 1997.

It is important to note for present purposes that on 21 May 1997 the wife acting on her own behalf filed a document (which she also swore on 21 May 1997) which has on its cover sheet the description “Application” but which has the heading “Affidavit” on the first page, and in which, after referring to various financial matters relevant to herself, the husband or their children, she said in the final paragraph (paragraph 14):

“I would ask this court to order a lump sum payment. The reason for this is that the Applicant informed the children that he intends to move interstate once his property at 32 Pine Street, Surrey Hills is sold. It is obvious that he is determined to pay as little child support as possible. I believe he is only paying $80.00 per month at present because of this court case and that he has no intention of paying any further moneys once the case has been heard.” (Appeal Book 87) (underlining added)

Following the copy of the wife’s affidavit of 21 May 1997, there appears in the Appeal Book, a copy of an affidavit of the husband which, although not actually signed by the husband, is described in the index to the Appeal Book (which I understand to have been prepared by him) as his affidavit “sworn and filed 23 May 1997”. The importance of this document is that in paragraph 2, it is stated that the wife’s affidavit sworn 21 May 1997 was served on his solicitors on 21 May 1997 and that the husband has read that affidavit. The husband then proceeded in his affidavit to respond to the contents of the wife’s affidavit. In relation to her paragraph 14, the husband denied intending to relocate his home and he also attempted to explain the payment of $80 per month through the Child Support Agency. He made no response to the wife’s claim for a lump sum payment.

However it cannot be contended, in my view, that the husband and his advisers would not have been aware prior to the hearing of his application, that the wife was at least attempting to make an application for a lump sum payment, albeit not in the prescribed application form and with no specification of the amount sought.

Matters raised at the trial

Notwithstanding the return date given to the husband’s Form 63 application of 26 May 1997, the matter in fact came before Mushin J. on 28 May 1997, when the husband was represented by Mr Wilson of Counsel and the wife appeared for herself.

In his opening address, Counsel for the husband outlined the husband’s difficult financial position, and provided his Honour with a schedule (see Appeal Book E5) which showed that after the husband had sold his home (for which settlement was due on 10 July 1997) and an investment property (for which settlement was due on 19 June 1997) and discharged all his liabilities, he would have net assets of $94,440. At this early stage of the proceedings, his Honour suggested twice that the result in this case might be “a smallish lump sum” (see Transcript 28 May 1997 page 13 line 17 and again at line 31):

Shortly afterwards the following exchange occurred between his Honour and the wife (at Transcript, 28 May 1997, page 15 line 5 to page 16 line 11):

“HIS HONOUR:   Yes. Well, I need to know from you what it is that you are proposing should be the result of these proceedings?
MRS JOHNSON:   I think the result should be - - -
HIS HONOUR:   In dollars?
MRS JOHNSON:   In dollars, I do not know exactly what. I would think a lump sum would be best because I do not believe he will – once we leave this court room – I do not believe he will pay monthly.
HIS HONOUR:   What do you say that lump sum should be?
MRS JOHNSON:   I really do not know, your Honour.
HIS HONOUR:   Well, I cannot absolutely require you to answer my question but in the event that you chose (sic) not to, you are going to leave yourself wide-open in terms of what the result might be. Do you understand?
MRS JOHNSON:   Yes.
HIS HONOUR: If you do not want to make a contribution to my assessment of the situation as to what is proper, it has got to be just and equitable – you have got to establish a special circumstance in accordance with section 117 of the Child Support Assessment Act. You have then got to show that it is just and equitable and you have got to show that it is otherwise proper. The case that is being put against you is that there is nothing special about this case. That what has happened is that your former husband is in a desperate financial position. That he is, I suppose, in one sense not all that far away from bankruptcy but his earning capacity is extremely limited because of his age and his state of health and all of those sort of things and that therefore because there is no special circumstance that what should apply is the administrative assessment that is provided in the formula in the Act.
If that is the case and he is earning an income below round about $9500 and even a little bit more than that, you will get nothing – at all – do you understand that?
MRS JOHNSON:   Yes.
HIS HONOUR: So you have go (sic) to establish either that he has a larger income than that or that there is a special circumstance by virtue of which I should depart from that assessment. As I understand this, all that you can say is that by virtue of the capital that he is going to get, that you should get some of it. Is that right for the children?
MRS JOHNSON: I would say so, yes, your Honour.
HIS HONOUR:   Do you acknowledge – well, sorry – from what you have just said before, it seems to me that you acknowledge that once this is over that is it as far as getting any money from him is concerned, is that right?
MRS JOHNSON:   Yes.”

Then at the conclusion of the oral evidence and before Counsel for the husband began his final submissions, his Honour put the following propositions to the wife (Transcript 28 May 1997, page 43, lines 20-24 and lines 25-26):

“HIS HONOUR: And my difficulty is that if, as I think you will agree, the only source of moneys is the lump sum from assets, given how meagre those assets are, if I am going to say anything it is going to be something pretty small.

. . .
HIS HONOUR: And it is not going to be any more than $10,000 or that sort of figure, and that is probably it. Do you understand?”

The wife agreed with both propositions.

When Counsel for the husband commenced his final address, a long discussion ensued between him and his Honour as to which party carried “the onus of proof”; of the nature of the hearing before a single judge of this court where a Review Officer had made a determination in substitution for the original administrative assessment; and about what constitutes the assessment for subsequent departure application purposes following a determination by a Review Officer (see Transcript 28 May 1997, pages 45-57).

4.THAT the husband forthwith disburse the moneys held pursuant to paragraph 1 of the order made on 28 May, 1997 as follows:
(a)     the sum of $10,000 to the wife in full satisfaction of the amounts owing pursuant to paragraphs 1 and 2 hereof; and
(b)     the balance to the husband.
5.THAT in respect of the child support years commencing on 1 July, 1998 and following, child support in respect of the said children otherwise be in accordance with the provisions of the said Act.
6.THAT the Registrar of this Registry of the Court cause a sealed copy of these orders together with a copy of the Reasons for Judgment delivered this day to be forwarded to the Deputy Child Support Registrar for Victoria.
7.That the said Registrar be and is hereby directed to amend the records of 8.    the Child Support Agency to give effect to these orders.
8.THAT all extant applications be otherwise dismissed.
9.THAT the proceedings be removed from the Pending Cases List.
10.CERTIFY for counsel.”

The husband’s appeal against the trial Judge’s orders

It is only Orders 1, 2, 4, 5, and 9 which the husband seeks in his draft notice of appeal to in fact appeal.

It would be fair to say that the main matter pressed by the husband before us in support of his application for leave to appeal and of his appeal (and I mention here that the matter proceeded before us on the basis that we were also hearing the husband’s appeal) was that the trial Judge had erred in awarding the wife the lump sum of $10,000 for the reason that if the husband had been permitted to receive the whole of the preserved sum of $20,000, he would be able to discharge a large part of his existing liabilities on which he was making significant interest payments and then use the money thus saved on interest payments, to pay child support.

It would seem from the addendum to his Honour’s judgment (and in particular from the passage quoted at paragraph 51 above) that this matter of the husband’s need to retain all of the preserved lump sum in order to re-establish himself and put him in a position to pay child support in the future, was a matter put to his Honour by the husband at the further hearings on 13 and 19 March 1998, but that it was a proposal rejected by his Honour. While it was no doubt open to his Honour to reject this proposal by the husband given all the evidence which his Honour had before him regarding the husband’s financial affairs, this complaint by the husband, which is essentially a complaint about the award to the wife of the lump sum of $10,000 does, in my view, have considerable substance for the following reasons.

The errors in relation to the lump sum award

I am satisfied, as I discussed earlier, that the trial Judge had before him an application by the wife for lump sum child support, and that the husband’s representatives were on notice both before and during the hearing that there was an application for lump sum child support, and indeed that his Honour was considering making such an order (although for what amount and under what statutory provision was not clear).

The difficulty is, however, that there was never any application by the wife (even in an oral form or indeed even suggested by his Honour during the course of the hearing) for a departure from the existing assessments of $150 per month for the 1995/6 year, or from $478 per month for the 1996/7 year, to $100 per week for each of those years (which was the basis on which the lump sum was ultimately calculated).

This may well not be a problem in relation to the 1996/7 year where the capitalised sum awarded by his Honour of $5,000 was less than the capitalised amount for the existing assessment for that year (being $478 x 12 = $5756). But it certainly was a problem in relation to the 1995/6 year in relation to which his Honour increased the periodic liability from $150 per month to approximately $400 per month (and then capitalised it to $5,000), in circumstances where the only application before him for a departure from the existing assessment was from the husband who was seeking a reduction to a nil assessment.

If his Honour proposed to depart from or vary the existing periodic assessment in the way in which he did in the first of the orders made by him (see paragraph 52 above), he should have given the parties, particularly the husband, the opportunity to make submissions in relation to what he proposed.

It was not sufficient, in my opinion, simply to foreshadow a lump sum award of $10,000 and leave it to the parties to speculate how (if at all) this might be based on a periodic assessment, particularly in circumstances where the existing periodic assessment for the two years in question would only convert to a total lump sum of about $7,500. (In relation to the obligation on a trial judge to inform parties where it is intended to make orders not sought by either party: see for example Guthrie (1995) FLC 92-647 per Fogarty J. at 82,545 and Kay and Purvis JJ. at 82,551-2; and Smith, Unreported decision of the Full Court, Sydney 16 September 1998).

There is, in any event, an additional difficulty with his Honour’s award of the lump sum of $10,000 in that it is clear from Order 2 of his orders that he purported to make this order pursuant to Division 5 of Part 7 of the Act, but he did not in the course of his judgment make any reference to the requirements of that division.

The somewhat complex provisions of Division 5 of Part 7 were the subject of extensive analysis by Fogarty J. and Kay J. in their judgments in Lightfoot v Hampson (supra), and it is unnecessary to repeat that analysis here. Nor is it necessary to embark on a discussion of the different conclusions reached by their Honours as to whether the powers in Division 5 are an independent source of power to the power in Division 4 to make departure orders.

It is sufficient to say here that essentially Division 5 of Part 7 permits the court to make orders for the provision of child support in a form other than periodic payments, and that if the court is purporting to use the powers in Division 5 to order that lump sum child support be paid in substitution for periodic sums, it must have regard to the provisions of s.124 and in particular to the matters in s.124(2).

Section 124 provides as follows:

“1.    Where:
(a)     a carer entitled to child support or a liable parent makes an application to a court under section 123; and
(b)     the court is satisfied that it would be:

(i)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(ii)otherwise proper;

to make an order that the liable parent provide child support for the child otherwise than in the form of periodic amounts paid to the carer entitled to child support;

the court may make the order.
(2)In determining the application, the court must have regard to:

(a) the administrative assessment in force in relation to the child, the carer entitled to child support and the liable parent; and
(b) any order in force under Division 4 (Orders for departure from administrative assessment in special circumstances) in relation to the child, the carer entitled to child support and the liable parent; and

(c) whether the carer entitled to child support is in receipt of an income tested pension, allowance or benefit or, if the carer entitled to child support is not in receipt of such a pension, allowance or benefit, whether the circumstances of the carer are such that, taking into account the effect of the order proposed to be made by the court, the carer would be unable to support himself or herself without an income tested pension, allowance or benefit; and
(d) the effect that the making by the carer entitled to child support of an application under section 128 (Pensioners entitled to apply to have assessed child support not reduced by more than 25%) would have on the order proposed to be made by the court (and any statement included in the order under section 125).
(3)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make an order under subsection (1), the court must have regard to the matters mentioned in subsections 117(4), (6), (7) and (8).
(4)In determining whether it would be otherwise proper to make an order under subsection (1), the court must have regard to the matters mentioned in subsection 117(5).

(5)Subsections (2), (3) and (4) do not limit the matters to which the court may have regard.”

Thus s.124 requires that the court be satisfied before it makes an order for lump sum child support under Division 5 of Part 7 that it is just and equitable as regards both parents and the child and otherwise proper to make the order, and also that the court have regard to the four matters specified in s.124(2). In determining whether it would be just and equitable and otherwise proper to make the order under Division 5, the court must have regard to the matters contained in ss.117(4),(6),(7) and (8), and also s.117(5) (which are the matters relevant to determining whether a departure order would be “just and equitable” and “otherwise proper” under Division 4).

In the interests of simplifying the hearing and determination of child support cases, I would be prepared to hold that where a trial judge has before him or her, applications under both Division 4 and Division 5 of Part 7, it is open to the judge to consider in the one exercise the question of whether on the one hand it is just and equitable to the parties and the child, and on the other hand otherwise proper, to make either or both a departure order under Division 4 or an order for support in a non-periodic form under Division 5, and indeed it might be said that this is what Mushin J. attempted to do in this case.

But apart from considering the questions of whether it was just and equitable as regards the parties and their children and otherwise proper to make a lump sum order under Division 5, his Honour was also required to have regard to the four matters in s.124(2). There was, of course, some mention in his Honour’s judgment of the existing administrative assessment and in its concluding paragraph prior to the addendum (see paragraph 48 above) there was mention of the proposed departure order of $50 per week. There is also some reference in the judgment to the fact that the wife is a pensioner. Thus it might be said that his Honour did have regard to the matters in s.124(2)(a), (b) and (c). However, his Honour has made no mention of the application of s.128 to this case as required by s.124(2)(d), nor to the related matter of the statement required under s.125, if the court makes an order under s.124.

Specifically with regard to s.125, if the court makes an order under s.124, it must also comply with the provisions of s.125 which provide as follows:

“(1)If the court makes an order under section 124, the court must state in the order whether the child support ordered to be provided by the liable parent is to be credited against the liable parent's liability under any administrative assessment (in this Division called a ``relevant administrative assessment'') of the child support payable by the liable parent to the carer entitled to child support that relates to the period, or a part of the period, for which the order has effect.
(2)The court may state that the child support is not to be credited against the liable parent's liability under any relevant assessment only if it is satisfied that, in the special circumstances of the case, it would be:

(a) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(b) otherwise proper;

that the child support should not be credited.
(3)If the court states in the order that the child support is to be credited against the liable parent's liability under any relevant administrative assessment, the court must also state in the order either:

(a) that the child support has an annual value of a specified amount and that the annual rate of the child support payable under any relevant administrative assessment is to be reduced by that amount; or
(b) that the child support is to count for a specified percentage of the annual rate of child support payable under any relevant administrative assessment.
(4)The court may, under subsections (1) and (3), make different provision in relation to different child support years and in relation to different parts of a child support year.
(5)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a statement of the kind referred to in subsection (2), the court must have regard to the matters mentioned in subsections 117(4), (6), (7) and (8).

(6)In determining whether it would be otherwise proper to make a statement of the kind referred to in subsection (2), the court must have regard to the matters mentioned in subsection 117(5).
(7)Subsections (5) and (6) do not limit the matters to which the court may have regard.”

Similarly, regard was required to be had to s.128 which provides:

“(1)This section applies if:
(a) the court has made an order under section 124 that includes a statement that the child support ordered to be provided by the liable parent is to be credited against the liable parent's liability under any relevant administrative assessment; and
(b) the carer entitled to child support is in receipt of an income tested pension, allowance or benefit (whether or not he or she was in receipt of the pension, allowance or benefit when the order was made).

(2)If the carer entitled to child support applies to the Registrar, in the appropriate approved form, for any relevant administrative assessment to be made as required by this section, the Registrar must immediately take such action as is necessary to give effect to the application (as from the time when the application was made to the Registrar) in relation to any relevant administrative assessment that has been made (whether by amending the assessment or otherwise).
(3)In making a relevant administrative assessment while the application remains in force, the Registrar must:
(a) work out whether, apart from this section, the annual rate of child support referred to in paragraph 127(3)(a) would be reduced under paragraph 127(3)(b) by more than 25%; and
(b) if the annual rate would be so reduced by more than 25% ¾ work out whether, if the annual rate were instead reduced by only 25%, the carer entitled to child support would be entitled to continue to receive the income tested pension, allowance or benefit; and

(c) if paragraph (b) applies and the carer entitled to child support would be so entitled to continue to receive the income tested pension, allowance or benefit ¾ the Registrar must, under paragraph 127(3)(b), reduce the annual rate by only 25%.

(4)        The application stops being in force when:
(a)     the carer entitled to child support notifies the Registrar, in the appropriate approved form, that he or she no longer wants any relevant administrative assessment to be made as required by this section; or
(b)     the carer entitled to child support is no longer in receipt of any income tested pension, allowance or benefit; or
(c)     a child support terminating event happens in relation to the child concerned, the carer entitled to child support, the liable parent or all 3 of them.

(5)If the application stops being in force, the Registrar must immediately amend any relevant administrative assessment that has been made (as from the time when the application stopped being in force) so that the assessment is made as required by this Act (apart from this section).”

While it might be possible to argue that the statement required under s.125(1), being whether the lump sum ordered was to be credited against the husband’s liability, was unnecessary given the clear words of his Honour’s second order that the periodic child support payable under his first order was to be “capitalised”, it is impossible to escape the conclusion that his Honour should have made some mention of the operation of s.128 given the wife’s status as a pensioner.

Section 128 is not an easy section to understand, let alone apply. But its purpose would seem to be to ensure that pensioners do not lose more than 25% of what they would otherwise be entitled to under an administrative assessment for a periodic sum if they receive child support in a form other than periodic cash.

In the present case, as the wife was to receive a lump sum representing $100 per week for the 1995/6 year when the existing assessment for that year (as determined by the Review Officer) was $150 per month, there could be no question that the wife’s child support entitlement suffered any reduction for that year. However, in relation to the 1996/7 year there was to be some reduction in the wife’s child support entitlement, being from $478 per month (or $5736 per year) to $400 per month (or $5,000 per year), but that it is not, of course, in the order of 25%. Nevertheless I consider that it was incumbent upon his Honour to make some express mention of the operation of both s.125 and s.128 if he proposed to make an order under Division 5, particularly given the express requirement contained in s.126 to give reasons for any order made under s.124 (that is Division 5).

It is true that a lay person reading the last paragraph (quoted at paragraph 48 above) of his Honour’s judgment before the addendum, may well understand that his Honour decided to make a lump sum order because he considered that the preserved $20,000 might well provide the last opportunity for any child support in this case. But, in my view, that consideration does not satisfy the obligation imposed on the court to satisfy itself of all the matters required under ss.124 and 125, and then under s.126 to give reasons for any order made under s.124.

In view of his Honour’s failure to address or at least to make clear that he was addressing the matters which he was required to address in making an order for lump sum child support, the appeal must be allowed. An additional reason for allowing the appeal is the making of the departure order in the wife’s favour without application by her or notice to the husband, particularly in circumstances where the amounts in the departure order were the foundation of the lump sum award.

Other issues raised by this appeal

Some issue arose before us, and it is also discussed in the judgment of the Chief Justice and Moore J., as to whether Mushin J. regarded himself as dealing with the original administrative assessment, or the assessment as varied by the Review Officer.

In my view, it is clear that his Honour considered that the assessment which the husband sought to have varied was that which issued as a result of the Review Officer’s determination. This is clear, in my view, from the passage in his Honour’s judgment (which appears at the top of the Appeal Book 17) where his Honour set out the results of the review and then went on to describe the husband’s application.

Further, in my view, his Honour was correct in regarding the assessment which was the subject of the husband’s departure application as being the assessment which issued as a result of the Review Officer’s determination.

Before his Honour, Counsel for the husband had argued that the assessment to be departed from was not the assessment as varied by the Review Officer, but rather the assessment which was originally issued by the Agency. Support for this argument was sought to be obtained from the words of “provisions of this Act relating to administrative assessment of child support” in s.117(2)(c) (quoted earlier at paragraph 35) and on which the husband sought to rely as establishing a ground for departure.

This issue was, in my view, resolved by Kay J. in Perryman (1993) FLC 92-433 (and see also the decision of Nicholson CJ. in Abela (1995) FLC 92-568), when his Honour determined that where an administrative assessment is varied by a Review Officer that varied assessment becomes the assessment for the purposes of any subsequent departure application to the court. His Honour said at 80, 420:

“It was the submission of the Registrar supported by Counsel for the wife, that the document which issues as a result of the recommendations of the child support review officer is merely an amended "administrative assessment" which has been made by an exercise of the Registrar of his power under s. 75.
I have some difficulty with the concept that one can make an administrative assessment by determining to depart from the provisions of the Act relating to an administrative assessment which it is determined to depart from. The matter is perhaps saved by the provisions of s. 75(5). It seems unfortunate that s. 75(3) has not been amended to include specific reference to a determination made under Part 6A.
It would seem that by operation of s. 75 the process of applying a formula and then departing from the formula by a Child Support Review Officer still creates an "administrative assessment". Thus, where such process has been undertaken and either party is aggrieved by the amended assessment, the provisions of s. 115(b) of the Child Support (Assessment) Act apply. This Court is then seized with power to hear an application for an order for departure from the administrative assessment as so amended. It would appear that the process and findings of the Review Officers will not of themselves be subject to any scrutiny by the Court.
The process that occurs before a Review Officer, although having some of the hallmarks of a judicial hearing (an opportunity to be heard and notice of the proceedings), is intended to be an administrative process. If the result that administrative process creates is not satisfactory to either of the parties affected by it, their remedy lies in seeking to persuade a court exercising jurisdiction under Division 4 of Part 7 to make an order departing from the result, based on the criteria set out in s. 117.
This may mean that during the issue of the assessment or its successor onuses may shift. An administrative assessment based on an application of the formula may issue for say $100 per week. The father may successfully apply to have that reduced to pay $50 per week because of alleged high costs of access. In order for the custodial wife to have the sum of $50 per week increased, she will need to establish that a ground for departure exists (such as there has been an unjust and inequitable determination because of the financial circumstances of each of the parties). She would have to rely on this ground, even if the true ground that she wanted to rely on was that the Review Officer should never have made the departure order in the first place because there were no high costs of access.”

In Bryant (1996) FLC 92-690 the Full Court had occasion to consider the meaning of the expression “the provisions of this Act relating to administrative assessment of child support” in s.117(2)(c), and also the question whether that expression included only the initial administrative assessment, and not a subsequent departure order nor the periodic payment provisions of a child support agreement. The Full Court concluded that the expression was not limited to the initial administrative assessment. While the Full Court did not address the position of an administrative assessment which has been the subject of variation by a Review Officer, its reasoning does, in my view, cover that situation. The Full Court’s conclusions regarding the scope of the expression “the provisions of this Act relating to the administrative assessment of child support” were as follows (at 83, 168):

“While s 117(2) might well have been more clearly drafted, nevertheless we are satisfied that the expression "the provisions of this Act relating to administrative assessment of child support" in the sub-section must include not only an administrative assessment made by the Registrar of Child Support under Part 5 of the Assessment Act, but also the periodic payment provisions in a child support agreement which has been accepted by the Registrar under Part 6 of the Assessment Act, and also any order by a Court made under Part 7 of the Assessment Act for departure from an administrative assessment.
Section 119 of the Assessment Act (which is contained in Division 4 of Part 7 of the Assessment Act) provides:
‘(1) When a decision of a court making an order under this Division becomes final, the Registrar must immediately take such action as is necessary to give effect to the decision in relation to any administrative assessment that has been made in relation to the child, the carer entitled to child support and the liable parent concerned (whether by amending the assessment or otherwise). (2) In subsequently making an administrative assessment in relation to the child, the carer entitled to child support and the liable parent concerned while the order is in force, the Registrar must act on the basis of the provisions of this Act as modified by the order.’
Thus, in our opinion, the expression "the provisions of this Act relating to administrative assessment" must, given the provisions of s 119, include within its scope an order under Division 4 of Part 7 for a departure from an administrative assessment.
Similarly in relation to a child support agreement which has been accepted by the Registrar, s 95(2) of the Assessment Act provides that provisions for the payment of periodic child support in such an agreement "have effect, for the purposes of Part 5, as if they were an order made by consent by a Court under Division 4 of Part 7". The combined effect of s 95(2) and of s 119 must be, in our view, that the terms of an accepted child support agreement which provide for the periodic payment of child support, come within the expression "the provisions of this Act relating to administrative assessment of child support".
Further support for the view that the expression "the provisions of this Act relating to administrative assessment of child support" encompasses departure orders and the periodic payment provisions of child support agreements can be gained from s 75 of the Assessment Act. That section permits the Registrar of Child Support to amend any administrative assessment for the purpose of giving effect to (among other things) the acceptance of a child support agreement by the Registrar, and a decision or order of a court having jurisdiction under this Act. Every assessment so amended is taken to be an administrative assessment for all purposes of the Act unless otherwise expressly provided (s 75(5)).
Accordingly, the reference to "administrative assessment" in s 117(2)(c) does not preclude that sub-section from operating where an application is made to vary an existing departure order, or the periodic payment provisions of a child support agreement.”

Thus, as I concluded earlier, Mushin J. was correct in concluding that the administrative assessment which was the subject of the husband’s departure application, was the assessment as varied by the Review Officer.

Given that it was the husband who was the applicant for the review before the Review Officer and that it was also the husband who sought a departure before his Honour, I have difficulty in seeing how any question could arise but that the onus was upon the husband to establish before his Honour his case for a departure from the assessment as varied by the Review Officer, and I consider it unnecessary to discuss this issue further.

Finally, in connection with the two matters just discussed, I would say that it is unnecessary in the context of this case to consider the question of the scope of the powers of a court exercising jurisdiction under the Act to entertain an appeal from a Review Officer, or to consider whether this court can, or should, have recourse to the reasons of a Review Officer when it hears and determines an application for a departure from the assessment as varied by the Review Officer.

Given that I would allow the appeal on the grounds that his Honour was in error, first in ordering a lump sum under Division 5 of Part 7 of the Act which was apparently based on a revised periodic assessment which he had not been asked to make and of which the husband had no notice, and also in failing to address the criteria for the making of such a lump sum order as required by the provisions of Division 5, it is unnecessary that I address the other grounds of appeal, or other matters relied on by the husband in his oral and written submissions in support of those grounds.

Re-exercise of the discretion

I agree with the conclusion of the Chief Justice and Moore J. that this is not a case where it would be appropriate to send the matter back for a retrial and that this court should re-exercise the discretion in relation to the applications which were before his Honour.

I also agree with their Honours’ reasons for concluding, on the basis of the trial Judge’s findings concerning the economic circumstances of the parties and also taking into account that under the assessments for 1995/6 and 1996/7 the husband’s total liability would be in the region of $7,500, together with the availability of the preserved funds, that there are no special circumstances which would take this case out of the ordinary, and thus no ground for departure from the relevant assessments is established.

Given this conclusion, it is unnecessary to consider whether it would be just and equitable and otherwise proper to make the orders sought by the husband.

Accordingly, the husband’s application for a departure from the assessments for the years 1995/6 and 1996/7 should be dismissed.

This, of course, means that those assessments remain in place and the wife is entitled to a total sum on account of them of approximately $7,500. This entitlement would seem to avoid her need for a lump sum, which is the view that I understand the Chief Justice and Moore J. to take in their joint judgment.

In paragraph 14 of her affidavit of 21 May 1997 (see paragraph 11 above) the wife stated that the husband was paying $80 per month. I am uncertain as to what has been the impact of any such payments by the husband on his total liability for the years 1995/96 and 1996/7.

The appropriate course in these circumstances would be, in my view, to permit the Registrar of Child Support, or either of the parties on notice to the Registrar, to make application to a judge in the child support list conducted at the Melbourne Registry for the release to the Registrar from the funds preserved pursuant to Mushin J.’s orders of 28 May 1997 of such arrears as the husband may owe on account of the assessments for 1995/6 and 1996/7. I note, however, in this regard that his Honour by his Order 3 discharged all interest and penalties payable for 1995/6 and 1996/7, and that there was no appeal against nor application to set aside those orders (even though the Child Support Registrar apparently had notice of these orders).

Although the husband also sought to appeal Orders 5 and 9 I would not set aside those orders. Order 9 being concerned with court lists is purely procedural. Order 5 is of more significance in that it provides that from 1 July 1998 child support is to be assessed according to the provisions in the Act. I did not understand the husband to challenge this amount and so I would leave that order in place.

Leave to appeal

Because of the not insignificant issues raised by this appeal, I would grant leave to appeal.

Orders

Accordingly the orders I would make are:

1.That the husband be granted leave to appeal.

2.That the appeal be allowed.

3.That Orders 1, 2, and 4 of the orders of 24 March 1998 be set aside.

4.That the husband’s application (filed 27 March 1997) for departure orders in respect of the child support assessments for the years 1995/6 and 1996/7 be dismissed.

5.That the wife’s application (filed on 21 March 1997) for an order for lump sum child support be dismissed.

6.That the Registrar of Child Support on notice to both parties, or either party on notice to the other party and to the Registrar of Child Support, have liberty to apply to a judge at the Melbourne Registry of this court for the release to the Registrar out of funds preserved by the order of Mushin J. of 28 May 1997 of all arrears due from the husband under the child support assessments for the 1995/6 and 1996/7 years, and IT IS NOTED in connection with this order that all interest and penalties in respect of any arrears due under such assessments have been discharged by Order 3 of the court of 24 March 1998.

7.That the husband be entitled to receive the balance of the funds referred to in Order 6.

I certify that this page and the previous 27 pages herein are a true copy of the reasons for judgment delivered by The Honourable Justice Finn.

Danny Sandor

Senior Legal Associate to the Chief Justice