Kringas and Kringas - [2009] FMCAfam 357

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KRINGAS & KRINGAS

[2009] FMCAfam 357

CHILD SUPPORT – Departure application – income and earning capacity – what is the earning capacity of the applicant – Child Support (Assessment) Act (1989), s.117.

Child Support (Registration and Collection) Act 1988
Child Support (Assessment) Act 1989

Applicant:

MR KRINGAS

Respondent:

MS KRINGAS

File Number:

MLC 668 of 2007

Judgment of:

Hartnett FM

Hearing dates:

27 & 28 November 2008

Delivered at:

Melbourne

Delivered on:

24 April 2009

REPRESENTATION

Counsel for the Applicant:

Mr MacFarlane

Solicitors for the Applicant:

Flitner & Company

The Respondent:

In person

ORDERS

Any leave required by the husband for the child support period

1 August 2005 to 5 March 2007 is granted pursuant to s.112 of the Child Support (Assessment) Act 1989.
There be a departure from the administrative assessment of child support payable by the applicant and relating to the children [X] born [in] 1997, [Y] born [in] 1997 and [Z] born [in] 1998 for the period:
(a)1 August 2005 to 5 March 2007 by attributing to the applicant a child support income amount of $8,346.00
and for the period:
(b)6 March 2007 to 5 June 2008 by attributing to the applicant a child support income amount of $13,082.00.
Otherwise the application filed 17 August 2007 and the response filed 20 February 2008 is dismissed and those matters removed from the list. The enforcement summons filed 16 January 2007 previously adjourned is now listed for hearing on 9 June 2009 at 10:00am and in the event of consent orders there is leave to seek such orders be made in chambers.
There is liberty to apply with respect to the question of costs. Such application must be made within 28 days hereof.

IT IS NOTED that publication of this judgment under the pseudonym Kringas & Kringas is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLC 668 of 2007

MR KRINGAS

Applicant

And

MS KRINGAS

Respondent

REASONS FOR JUDGMENT

On 16 January 2007 the child support registrar filed an enforcement summons. The named respondent is Mr Kringas, the applicant in these proceedings. The enforcement summons, at that time, claimed a debt due to the Commonwealth under section 30 of the Child Support (Registration and Collection) Act 1988 for $18,395.16 and under section 67 of that Act for $1,421.57 by way of late payment penalties.
Mr Kringas is the father of three children in relation to whom he has a registered liability with the Child Support Agency for collection of maintenance payments. The children are [X] born [in] 1997, [Y] born [in] 1997 and [Z] born [in] 1998.
Mr Kringas responded to the enforcement summons by eventually filing an application on 17 August 2007 seeking leave to amend an administrative assessment of child support notwithstanding that the assessment was more than 18 months old and sought departure for the period 1 August 2005 to 5 March 2007 by attributing to him a child support income amount of $8,346 and for the period 6 March 2007 to

5 June 2008 by attributing to him a child support income amount of $13,082. The respondent mother sought dismissal of the father’s application in a response filed by her on 20 February 2008. Any leave required by the husband pursuant to section 112 of the Child Support (Assessment) Act 1989 for the period 1 August 2005 to 5 March 2007 is granted to him. For the period of August 2005 to March 2007 the decision as to the assessment was made in October 2005 which was objected to by the husband and reviewed in May 2006. He filed the departure application in August 2007 being within an 18 month period for review.

History

The parties were married [in] 1996. They separated in January 2001. For the first 6 years of their marriage the applicant was employed [in the Education Industry]. Then in 1992 he resigned. He wanted to be a [occupation omitted]. He also had three small children to support but, as the respondent acknowledged, [omitted] was his passion. Thus in 1994 the applicant obtained a private [skill omitted], in 1995 a commercial [skill omitted] and in 2000 he obtained an [skill omitted]. Up until this point and throughout all those years he was effectively unemployed and Centrelink payments supported the family. In July 2000 he obtained casual employment in Ballarat on an income of approximately $200 each week and in October 2000 he was offered a position as an [omitted] in Western Australia. He commenced his employment on 11 December 2000 but the family did not relocate to Western Australia as anticipated instead the parties separated and the applicant resigned his position in Western Australia to return to the Geelong area in Victoria being where his family resided.
Final parenting orders were made by consent on 19 February 2002 which provided for the children to live with the applicant for half the school holidays and special occasion days and from 3:30pm Thursday to 9:00am Monday in each alternate week during school terms and to otherwise live with the mother. There was a minor variation to those orders on 12 August 2005.

Father’s income

Shortly after separation and in March 2001 the applicant commenced to receive a New Start Allowance. He continued to receive it until mid 2006. In this period (in 2002) he obtained a [skill omitted].
On 30 January 2003 the applicant’s sister Ms T had incorporated [O] (“the company”). The applicant became that company’s sole director and secretary. The company:
(a)[specific tasks omitted]
The applicant [task omitted] an average of 3 hours a week at the commencement of the company’s operation, undertaking the [task omitted]. He also performed the daily running of the business. He was not renumerated as the company could not afford it.
Following separation, the applicant was assessed to pay child support in the sum of $5 per week. On the evidence it is clear that since separation the applicant father has never intended to provide child support to the mother in any reasonable quantum for her care and support of the children and he has remained steadfast in his determination to structure his income and working life to avoid any possibility of such reasonable payment. Indeed he will not work in a field which will give him even the minimum wage because he refuses to provide financially for his children and because he has rendered himself, by virtue of the many years elapsed since 1992, to be virtually unemployable save in the field in which he now works and in the employment of family. The mother [occupations omitted] and the applicant’s parents provide a home for the children when they spend time with their father. His sister and her husband provide his employment, as it is.
The mother challenged, early on, the applicant father’s earning capacity and on 26 November 2002 the Child Support Agency determined that the child support assessment be departed from by varying the annual child support rate payable to $8,346 for the period 21 November 2002 to 30 April 2004. Following the mother seeking a further change of assessment, again based on the applicant’s earning capacity and his failure to exercise it and/or properly disclose his income, the Child Support Agency again determined a higher amount should be payable by the father, namely the sum of $8,346 for the period 1 May 2004 to 31 July 2005. The applicant sought a departure order in respect of the periods from 21 November 2002 to 31 July 2005 with a discharge of all arrears and was successful in his application before Justice Watt on 4 February 2005, the annual rate of child support payable being reduced to $260 per annum. The Court prefaced those orders with the following: “That upon the Court hearing some evidence from the husband including that he had not been in receipt of an income from 21 November 2002 to date and upon being satisfied that in all the circumstances considered under section 117 and in particular the property orders made this day it is just and equitable to make such order.”
Thus from separation in January 2001 until 31 July 2005 the applicant’s payment of child support was approximately $5 a week. He had become a director of [O] some 2 ½ years prior to 31 July 2005 but the company claims it could not afford to pay him for his work. This did not see him making genuine attempts to find another form of employment despite his qualifications, good health, abilities and not prohibitive age.
On 14 October 2005 the Child Support Agency determined that during the period 1 August 2005 to 5 March 2007 the applicant’s child support income should be set as $65,000. The applicant objected to that assessment, which the Agency disallowed. On 3 April 2007 the Child Support Agency determined that for the period 6 March 2007 to 5 June 2008 the child support income be set at $65,000. The applicant seeks departure from administrative assessment with respect to both periods.
On 27 June 2006 the applicant commenced to be paid for his work with [O]. He received $200 per week and superannuation together with a vehicle for employment purposes. That salary has now risen to $300 a week together with provision of a company motor vehicle. The applicant currently [task omitted] on average 10 hours each week and otherwise performs some administrative tasks. On 13 February 2006 the applicant’s sister had transferred her shareholding in the company to her husband following their marriage. The applicant remained and remains as the sole director.
The applicant continues, as he has done since 2000, to live with his parents who partially support their 44 year old son. They also provide him with a motor vehicle for his private use.
The evidence discloses that the respondent mother has financially provided for the parties three children and been their primary carer since 2000. In the absence of support from the applicant, the respondent has had an onerous obligation. She started a [omitted] business and subsequently took up the occupation of a [omitted], to earn income to provide for the children. Her approach to obtaining employment has been entirely different to that of the applicant father. No job has been too menial if it has meant making appropriate provision for her children and expanding their opportunities in life.
The respondent is in receipt of a parenting payment from Centrelink and income from her personal labours of approximately $132.
The applicant and respondent gave evidence and were each cross-examined in the proceedings. The applicant was legally represented and the respondent was a litigant in person. Each of the applicant’s sister and his brother-in-law gave evidence in the proceedings having sworn affidavits which evidence was relied upon.
The basis of the Child Support Agency attributing a salary of $65,000 to the applicant was the Australian Government Jobsearch website which indicated average weekly earnings for [father’s qualifications omitted] to be $1,250 per week and that unemployment in the field was below average. Measures of the costs of maintaining children in October 2005 (being the relevant time) indicated that it cost approximately $29,486 per year to raise three children of the ages the children then were.
It is clear the applicant’s pursuit of his passion has lead to his failure to meet his primary responsibility – that of providing for the adequate and reasonable needs of his children. He commenced to be on a Newstart Allowance in 1998 whilst the parties were still together as a family unit. This is of some significance in terms of the present application. He remained in receipt of that until mid 2006 (save he earnt $15,000 in 2001) when he commenced to get a wage from his sister’s company. Although he is the sole director and day-to-day manager of that company he receives none of the profits of the company which are retained in the company.
These proceedings are squarely about the father’s earnings and earning capacity. The father argues his income is as claimed by him and represents his earning capacity. The mother does not believe him or his family as to his receipt of actual income. She says if his income truly represents his earning capacity then he should obtain other employment. Section 117(7B) of the Child Support (Assessment) Act 1989 is relevant to the second child support period in these proceedings. It is as follows:
(7B)In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a)     one or more of the following applies:
(i)     the parent does not work despite ample opportunity to do so;
(ii)     the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)   the parent has changed his or her occupation, industry or working pattern; and
(b)the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i)     the parent's caring responsibilities; or
(ii)     the parent's state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
The applicant is now in receipt of a salary of $17,367 gross per annum. When the matter of child support was before Watt J in 2005 the applicant was working but not in receipt of income. The company made a loss in its first year of operation – a small profit of $2,107 – in its second. He now is working approximately 20 hours each week being an increase in his working hours. He has not, since 2006, looked for any form of employment outside the [omitted] industry. He lives in his parent’s home and has no assets. The father has not changed his occupation or working pattern really since 1992 to any significant degree save a marginal improvement.
The applicant’s stated income in the first period is $8,346 and in the second $13,082. The applicant is the chief [occupation omitted] of [O] (being the only one) and sole director of the company. There is only one shareholder, his brother-in-law. The company earnt a profit of $12,000 in 2007 and $15,000 in the financial year before. The father received no share of the profit despite his hands-on management and involvement in the company. His evidence and that of his brother-in-law is that he will not be in receipt of a share of the profits of the company into the foreseeable future. Those profits will continue to be retained. Retained profits are now approximately $40,000.
Between 1996 and 2001 when the applicant was for the most part of Centrelink benefits he looked only for jobs in the [omitted] industry. As he said in evidence:
“That’s all I was looking for. I was looking for effective employment in the [omitted] industry.”
The mother challenged the father as to his unemployment during the period saying he worked as a [in the Sales Industry] in a business owned by his parents. That business was [J] in [address omitted] and she and the babies, as their children then were, attended daily to visit him. The father denied on oath ever working in the shop or being a [in the Sales Industry]. On the balance of probabilities I can make no finding that he did so work whilst in receipt of Centrelink benefits but the family’s easy existence which evidence of the mother I accept throughout this period is at odds with their receipt of extremely limited income.
For the purpose of the conduct of these proceedings the applicant has again borrowed monies for his legal costs from his brother-in-law. The amount is in the sum of $6,000 and will be repaid by the applicant out of his weekly wage over an indefinite time. On the evidence of the applicant he has no capacity to repay this amount on his current salary. Either his salary is greater than disclosed or there will be no expectation that the monies are repaid. I do not accept the evidence of the applicant or of his brother-in-law in relation to this.
For the financial year ended 30 June 2007 the total income of the company was $177,002. The company leases one [equipment omitted] and is making payments on that loan. Otherwise it hires the [equipment] it then hires out to customers. The salary paid to the applicant is based on what the company can afford as determined by its owner and not on how many hours, on the type of input, provided by the applicant. There has been no discussion about increasing the salary paid to the applicant for nearly two years. Mr T does not consider there to have been a need. Mr T has almost no involvement in the operations of the business leaving that almost entirely to the applicant.
The applicant receives Directors fees in addition to salary and a fully maintained car. Thus the payment for the [task omitted] component of his job is approximately $25 per hour. The payment for the bookwork performed by him is less than $10 an hour. None of this troubles the applicant. In addition the company pays for the husband’s phone and for some conference travel and expenses albeit limited.
It may be that in order for the mother to properly support the children she will need, with them, to relocate to Mildura where she has family supports and cheaper living costs. The father’s application succeeds because after so many years of unemployment and underemployment the applicant has rendered his earning capacity minimal and his receipt of income dependent on the discretion of his family members in a business started up by his sister for the benefit of her brother. Given that the applicant has now had the benefit of that employment and exposure and acquisition of skills in the [omitted] industry he might consider how to better his income receipt and make application for jobs in the industry, such jobs not being provided by his family members.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Deputy Associate: Kate Gray

Date: 24 April 2009