Magee and Gates
[2006] FMCAfam 395
•27 July 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MAGEE & GATES | [2006] FMCAfam 395 |
| CHILD SUPPORT – Application for departure from administrative assessment – special circumstances – just and equitable. |
| Child Support (Assessment) Act 1989 (Cth), s.117 |
| Gyselman & Gyselman (1992) 15 FAM LR 219; FLC 92 – 279 DJM v JLM (1998) 23 FAM LR 396; FLC 92 – 816 |
| Applicant: | MR MAGEE |
| Respondent: | MS GATES |
| File Number: | NCM2908 of 2004 |
| Judgment of: | Coakes FM |
| Hearing date: | 19 December 2005 |
| Date of Last Submission: | 19 December 2005 |
| Delivered at: | Port Macquarie |
| Delivered on: | 27 July 2006 |
REPRESENTATION
| The Applicant: | Appeared in person |
| Solicitors for the Respondent: | The Family Law Firm |
| Solicitor for the Respondent: | Mr Coyle |
ORDERS
That for the Child Support Assessment period 30 January 2004 until
16 December 2005 there be a departure from the administrative assessment of Child Support payable by the liable parent MR MAGEE for the period 30 January 2004 to 16 February 2005 for the children [Y] born [in] 1987 and [Z] born [in] 1989.That for the period 30 January 2004 to 16 February 2005 the father is assessed as liable to pay nil Child Support for the children [Y] born [in] 1987 and [Z] born [in] 1989.
That the Child Support Registrar is requested to make the necessary amendments to the Child Support Register accordingly.
That Order 6 made on 2 June 2005 in the Federal Magistrates Court at Newcastle is discharged.
That any outstanding applications are dismissed except for any application for costs which is listed for hearing at 9.30am 5 September 2006.
IT IS NOTED that publication of this judgment under the pseudonym Magee & Gates is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PORT MACQUARIE |
NCM2908 of 2004
| MR MAGEE |
Applicant
And
| MS GATES |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings involving an application by the father for a departure from a child support administrative assessment.
On 24 February 2004 the Child Support Registrar made a determination that commencing 30 January 2004 and concluding 16 [date omitted] 2005 the child support income amount for Mr Magee be increased to $35,000 and published notice of his decision.
On 1 April 2004 the Child Support Registrar disallowed Mr Magee's objection to the decision and published his notice of decision in relation to the objection. The father was then liable to pay child support for two children, namely, [Y], born [in] 1987, and [Z], born [in] 1989 based on such child support income amount.
The applications
The father commenced proceedings in the Local Court at Raymond Terrace on 23 September 2004 when he filed an application in effect to depart from the child support assessment of 24 February 2004 and that any arrears be discharged. The application was defective.
On transfer from the Local Court to the Federal Magistrates Court the father filed an amended application on 18 February 2005 for a departure from the administrative assessment of child support based essentially upon his significantly reduced capacity to provide financial support.
The father also filed an amended application on 18 February 2005 seeking a stay of operation of the child support assessment from
1 January 2004pending the final determination of his application.
On 2 June 2005 this Court made orders in addition to procedural orders in the following terms:
Order 6: Pursuant to s 140 of the Child Support (Assessment) Act 1989 the operation of the child support assessment for the period up to 25 February 2005 payable by Mr Magee to Ms Gates for [Y] born [in] 1987 and [Z] born [in] 1989 be stayed pending determination of the application made by Mr Magee on 18 February 2005 subject to the applicant continuing to pay $50 per week towards the current arrears.
Order 7: Mr Magee continue to make payments of $510.42 per month in accordance with the current child support assessment. The amount payable is to be varied in accordance with any later assessments made for any period after today's date.
Order 8: The mother's costs of 21 January 2005 estimated at $1027.50 are reserved to the final hearing.
Order 9: The mother's costs of 2 June 2005 are reserved to the final hearing.
Order 10: The father's costs of 2 June 2005 are reserved to the final hearing.
On the face of the father's amended application he sought that he pay child support for the period 30 January 2004 to 1 April 2004 at an annual rate of $260.00 and thereafter as adjusted annually by CPI changes.
At the hearing on 19 December 2005 the father explained that his departure application related to the period 30 January 2004 to
[date omitted] 2005 and that his child support income amount and liability for that period be based upon his taxable income.
I am satisfied that Mr Coyle, the solicitor for the mother, was then aware of the father's application for the purposes of the hearing.
The evidence
I read the following documents as agreed by the parties and relied upon by each of them respectively:
a)Amended application for departure filed by the applicant father on 18 February 2005;
b)Amended response filed by the mother on 19 December 2005;
c)
Affidavit of the father affirmed 20 October 2005 and filed
26 October 2005;
d)Financial statement of the father affirmed 20 October 2005 and filed 26 October 2005;
e)Amended financial statement of the father to 19 February 2005 affirmed 11 May 2005 and filed 16 May 2005;
f)
Amended financial statement of the father for the period
19 February 2005to 1 May 2005 affirmed 11 May 2005 and filed 16 May 2005;
g)
Affidavit of the mother sworn 20 December 2004 and filed
21 December 2004;
h)
Statement of financial circumstances of the mother sworn
19 December 2005and filed 19 December 2005.
The father's affidavit sworn 11 May 2005 and filed 16 May 2005 was also relied upon by the father.
There was one exhibit[1], being a document dated 19 December 2005 from [S] setting out the father's gross wages for the period 01.07.05 to date and in an amount of $9738.42.
[1] Exhibit F1
I also had the benefit of seeing and hearing both the mother and the father in the witness box giving oral evidence. The father represented himself at the hearing and prepared some of his documents himself, but he had been represented by solicitors until they filed a notice of ceasing to act on 8 November 2005. The mother has at all times been represented by solicitors.
Background
The father is 42 years of age. At the time of the hearing he was living at [F], Queensland.
The respondent mother is 41 years of age. She is employed as a casual [in the administrative industry]. She lives at [H], just to the north of Newcastle.
The parties were married [in] 1984 and separated on 23 February 1997 and a decree nisi of dissolution of the marriage was pronounced on
12 May 1998 which became absolute on 13 June 1998.
There are three children of the marriage, namely, [X] born [in] 1985 who became 18 years of age [in] 2003 and was 20 years of age at the time of the hearing. The second child, [Y] was born [in] 1987. She became 18 years of age [in] 2005, just prior to the hearing. The third child, [Z], was born on [in] 1989 and was aged 16 years and three months at the time of the hearing. He is a pupil in year 10 at [S] School in the district where the mother lives.
In about late 2001 or early 2002 the father commenced cohabitation with his present wife, Ms M, who is aged 38 years. They were married [in] 2003. There were periods of separation of some months following commencement of cohabitation and before marriage but the father resumed cohabitation with his present wife about one month before his marriage to her. The father's wife is employed by [omitted].
The mother repartnered with one Mr S but the evidence does not establish when that cohabitation commenced. The cohabitation appears to have continued for some time and certainly until the time of the hearing.
On or about 25 January 1999 the child, [Z], moved from the mother's home to live with his father during a time when the father was employed at [L]. On 1 September 1999 the father left his employment at [L] to look after [Z] full time. The father then became unemployed. He had been employed as a [omitted] at [L] where he had worked for about 10 years.
During 1999 the father established his own business known as [T] but there is little or no evidence as to the success or otherwise of this business. It seems to have failed, for the reason that on 4 November 1999 the father became bankrupt and on 26 May 2000 was discharged from bankruptcy.
[Z] remained living with his father until February 2000 when he returned to his mother and has lived with her since that time.
In about April or May of 2000 the father deposes to working [in the transport industry] and then in about August of 2000 leaving that employment and working [at [M] in the construction industry]. In October 2002 the father left [M] when his job was terminated due to a downturn in work[2].
[2] Annexure H to the father's affidavit filed 26 October 2005.
From 18 October 2002 to January 2003 the father received a Newstart allowance by way of government benefit which came to an end upon marriage to his present wife. In July 2003 following a government incentive scheme, the father commenced his own subcontract business under the name [R] involved in [construction]. The father ceased operation of his business on 25 December 2004 consequent upon the transfer of his wife's employment [to] Queensland.
The father annexed to his first and second affidavits notices of assessment of income tax issued by the Australian Taxation Office disclosing taxable income as follows for the relevant financial years.
Year ending 30 June 1999
Taxable income
$73,223.00
Year ending 30 June 2000
Taxable income
$40,888.00
Year ending 30 June 2001
Taxable income
$41,529.00
Year ending 30 June 2002
Taxable income
$47,904.00
Year ending 30 June 2003
Taxable income
$16,120.00
Year ending 30 June 2004
Taxable income
$406.00
Year ending 30 June 2005
Taxable income
$19,654.00
On about 20 January 2005 the father and his wife moved from the [M] district north of Newcastle to Queensland consequent upon his wife taking up her posting as a [occupation omitted].
On about 16 February 2005 the father commenced casual employment with [B] [in the transport industry]. This employment came to an end temporarily on 6 June 2005 when the father lost his driving licence for a period of two months following a mid-range drink driving charge. On 25 September 2005 the father resumed work with [B] by its parent, [S], and remains so employed at the time of the hearing.
Relevant child support assessments
Towards the end of 2003 the father submitted an estimate of his income to the Child Support Agency for the period 28 November 2003 to
27 November 2004, which the Child Support Agency accepted, subject to any subsequent change in the father's income. The father had been paying $85.58 per month under the previous assessment. The new assessment which took effect on 28 November 2003 required the father to pay child support of $21.67 per month for the two children. This assessment was varied by the Child Support Registrar's decision of
24 February 2004. The father was then required to pay an amount of $510.42 per month although no child support assessment was produced at the hearing reflecting such assessment.
On 12 October 2005 the father entered into an arrangement with the Child Support Agency to pay arrears of child support then totalling $9645.21 by instalments of $50 per week from 18 October 2005 and continuing until 16 June 2009. The payment of arrears was in addition to the monthly child support liability then assessed at $496.17 per month[3].
[3]Annexure A1 to father's affidavit filed 26 October 2005.
The relevant law
The provisions of s.117 of the Child Support (Assessment) Act empower a Court to make an order for departure from administrative assessment in special circumstances. Section 117(1) provides as follows:
(a) that in special circumstances of the case, one or more of the grounds for departure outlined in s 117(2) exist before a Court can make an order for departure;
(b) that under s 117(1)(b)(ii) it would be just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(c) that it would be otherwise proper to make a particular departure order then the Court may make the order.
If these three conditions are satisfied then the Court should make the departure order sought. In Gyselman and Gyselman (1992) FLC 92-279 the Full Court of the Family Court said as follows of the phrase "special circumstances":
"Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that 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 Gyselman and Gyselman the Full Court said that there are three steps to be carried out in the exercise under s.117. The three steps that must be addressed by the Court as separate issues are whether one or more of the grounds for departure under s.117 is established; if so, whether it is just and equitable within the meaning of s.117(4) to make a particular order; and whether it is otherwise proper within the meaning of s.117(5) to make a particular order.
In DJM and JLM (1998) 23 FamLR 396; FLC 92-816 the Full Court considered the circumstances in which a Court may properly base its decision on earning capacity as opposed to actual income when dealing with a child support departure application, and in circumstances where the person liable to pay child support has not deliberately reduced his income to reduce or avoid liability for child support. The Full Court said:
"Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parents 'capacity to provide financial support'.
Property adjustment orders have far less focus and are arrived at on the basis of what is 'appropriate' after weighing up many competing factors. Spousal maintenance is governed by a test of what is proper and having regard to the reasonable ability of the liable spouse to meet the needs of the other.
In our view, there can be different answers to the same question about earning capacity - depending on which head of power is sought to be exercised.
A Judge might reasonably say that a parent should be working longer hours or in more lucrative employment to meet child support obligations. A spouse is only required to support the other spouse to the extent that he or she is reasonably able to do so. This requirement does not impute the same degree of compulsion about it that the child support and child maintenance tests express…"
The ground for departure
The grounds for departure upon which the father bases his application are essentially s.117(2)(a)(iii) "because of the commitments of the parent necessary to support himself", and s.117(2)(b)(ii) "because of the manner in which a child is being educated as was expected by his parents", and s.117(2)(c)(i) "because of the income, earning capacity, property and financial resources of either parent of the child…"
The father's case
The father was cross-examined extensively by Mr Coyle, for the mother. The evidence establishes that in February 2004 the father conducted his own subcontract business and that for the year ended
30 June 2004the gross profit for trading was $24,097.00 and business expenditure was $23,592.00 resulting in an operating profit before income tax of $505.00[4].
[4] Annexure C(i) to the father's affidavit filed 16 May 2005.
By adding back depreciation of $4080.00 there is an amount of about $78.50 per week which the father had available to him to apply to his personal and other expenditure.
The father disclosed in his amended financial statement filed 16 May 2005 that for the period up to 19 February 2005 he had personal expenditure of $120.00 per week by way of contribution to his present wife's mortgage given over a home owned solely by her and for which the father had no legal responsibility. Similarly, the father had no legal responsibility for the sums of $23.00 per week paid towards municipal land and water rates.
The father's costs of supporting himself were assessed by him at $160.00 per week and none of the individual items claimed seems excessive or unwarranted, or was the subject of any serious attack during the hearing.
The father discloses in his financial statement that his present wife has a gross weekly income of $1150.00. The father discloses that his present wife meets all his living, personal and household expenses to the value of $330.00 per week including the mortgage and rates and his business insurance premium.
For the period 1 July 2004 to 25 December 2004 I find on the evidence that the father continued operating his own business as a self-employed subcontractor with business income and expenditure much the same as the 2003/2004 financial year and with the father continuing to have his personal expenditure and some of his business expenditure met largely by his present wife. The father ceased the operation of his business on 25 December 2004 consequent upon his wife being posted to [Queensland] and his wish to accompany her. The posting took effect on 11 January 2005.
I am satisfied on the evidence that the father worked to his capacity whilst conducting his business from 1 July 2003 to 25 December 2004. The business was not especially profitable but neither did it run at a loss. The father had a financial resource in the form of his present wife to meet his personal expenditure. The evidence does not establish that the father could have secured employment elsewhere or that there were jobs open to him, given his qualifications, that would have enabled him to earn the income he had earned for two years between August 2000 and October 2002 whilst he was employed by [M].
The father told the Child Support Registrar that following the loss of his job in 2003, and whilst on Newstart, he looked for but was unsuccessful in finding employment. The evidence establishes that upon relocation to Queensland the father looked for work almost immediately and in industries where his skills lay. I find that the evidence establishes that from 1987 the father had been involved primarily in [occupations omitted]. The departure into [construction] followed a government incentive of which the father took advantage.
This is not a case where the evidence establishes the father deliberately avoided working so as to avoid his child support liability. On the contrary, the father has remained in employment virtually the whole of the time he has been liable to pay child support and has sought out and found work at different times. Much of the evidence at hearing related to the father's apprenticeship as a [tradesman]. It is significant in my view that he has not worked as such since his apprenticeship. His skills and experience lie in different fields.
In the period from 16 February 2005 the father has been in regular employment [in the transport industry] employed by [B], except for the period when he lost his licence. I am satisfied the father looked for work when he lost his driving licence and until he was able to secure fresh employment with [B].
On starting with [B] in February 2005 the father worked a number of extra shifts when he worked the rostered shifts of another [employee] in addition to his own. In February 2005 the evidence establishes that the father's gross income until 22 April 2005 was $7563.60 from which income tax of $1712.00 was deducted, leaving a net income of $5851.60[5]. The taxable income from 19 February 2005 to 22 April 2005 is earned over a period of nine weeks and is therefore an average of $840.40 per week.
[5] Annexure N(viii) to the father's affidavit filed 16 May 2005
From 1 July 2005 the evidence establishes[6] that the father's gross income until 19 December 2005 was $9738.42. The father's employment had ended early June 2005 and recommenced on
25 September 2005. Consequently this income was earned over a period of 12 weeks and is therefore an average of $811.53 per week.
[6] Exhibit F1
There is no evidence before me of the deductions, if any, available to the father in assessing his taxable income and therefore his child support income amount for the purposes of s.38 of the Child Support(Assessment) Act1989 for the 2005/2006 financial year.
The period from 6 June 2005 until 25 September 2005, when the father was not working, arose directly in the loss of his driving licence for a drink/driving charge for a period of two months and then a month or so finding work again. That is not a period for which a departure order should be considered given that his loss of income arises from the father's own acts or omission and was a matter over which he had control. He must therefore assume responsibility for child support for that period.
I am satisfied on the evidence that from 19 February 2005 until the time of hearing on 19 December 2005 the father's child support income amount was not less than $35,000.00 per annum.
I am satisfied on the evidence that from 30 January 2004 until
16 February 2005 the father's child support income amount was less than the father's exempted income amount of between $11,740.00 (for the period 2003/2004) and $13,983.00 (for the period 2004/2005) as determined by s.39 of the Child Support (Assessment) Act. Consequently, I find that the father did not have the capacity or ability to pay child support for the period 30 January 2004 until 16 February 2005 based on income alone.
Considering next the father's property and financial resources, the father has property which comprises personalty only with a net value of about $3000.00. The father does not own any real estate. The father has an interest in superannuation funds together totalling approximately $80,000.00 from which $22,500.00 is payable to the respondent mother when the father becomes entitled to receive his superannuation entitlements and following an order made in the Family Court of Australia at Newcastle on 15 December 1998. The father is not presently able to access his superannuation benefits, both by virtue of his age and his employment.
The father has an outstanding child support liability as referred to above.
The mother's case
The mother says the father could and should have found work and was qualified to work to enable him to pay child support in accordance with the assessment following the Child Support Registrar's decision in February 2004.
The mother's financial circumstances are modest and were not the subject of any challenge. I take into account and accept her evidence as to her financial circumstances. Clearly, the mother is in need of child support for both children in her care.
There remains the issue of the manner in which the children have been educated. The father asserts there was no agreement for the children to attend Catholic secondary schools. The mother gives evidence to the contrary and I prefer the mother's evidence for these reasons.
The history of the change from State schools to Catholic primary schools and the Baptism of the children into the Catholic faith in 1995 occurred prior to separation. I am satisfied that the father well knew and consented to the eldest child, [X], being enrolled in [A] School, for her secondary education. The mother and father together signed on
20 April 1996 an application for school enrolment with a view to her attending such school in 1997[7].
[7] Annexure S to the father's affidavit filed 26 October 2005.
I am also satisfied the father agreed to and anticipated that all three children would be enrolled in and benefit from a Catholic school secondary education. I do not accept the father's evidence that the form he and the mother signed was a pre-enrolment form to show good faith. There have been additional educational costs of the children attending Catholic schools. Consequently this ground for departure fails.
Has the father established special circumstances?
I have made findings as to the father's employment and capacity to work earlier in these Reasons for Judgment. I am not satisfied on the evidence that the father had an actual income or an earning capacity of the amount assessed by the Child Support Agency for the period
30 January 2004until 16 February 2005. Consequently I am satisfied that the father has established special circumstances within the meaning of s.117(2)(a)(iii) and s.117(2)(c)(i) relating to administrative assessment of child support that would result in an unjust and inequitable determination of the level of financial support to be provided by the father for the two children for that period.
Is it just and equitable to make a Departure Order?
This is the second matter I am required to consider. During the period 30 January 2004 to 25 December 2004 the father was self-employed. Between 25 December 2004 and 16 February 2005 the father was unemployed and in the process of relocating to Queensland with his wife in early January.
During both such periods the father was supported financially by his present wife as to his every day needs and part of his business expenditure. The father's business did not provide him with an income sufficient to support himself or pay child support.
The father's only work qualification is that of a [tradesman] but he has never been employed as such except as an apprentice. He has a builder's licence to construct [omitted]. He has worked [occupations omitted], both interstate and intrastate.
I find on the evidence that the father's employment skills have been acquired by virtue of experience rather than trade qualification. In my view it is just and equitable to make a departure order for the period
30 January 2004 to 16 February 2005 for the reason that the father had not been able to obtain employment in his field of skills, and chose to do the next best thing by taking advantage of the incentive scheme to establish his own business, no doubt with a view to making it profitable in the longer term. To require the father to pay child support for this period would be unjust and inequitable for the following reasons.
I find on the evidence that the father has not reduced his income by choosing to be self employed and then avoiding the obligation to pay child support. Whilst it is true that he had the benefit of financial support from his wife for the whole of the period he was self employed and that without such support he would probably not have been able to remain self employed, he was entitled in my view to exercise the choice of establishing his own business when no other course was open to him, rather than choosing not to exercise his employment skills at all. The fact that the business was barely profitable for the 18 months it functioned should not result in the father being required to pay child support when he did not have the ability or capacity to do so. That would amount to an unjust and inequitable imposition.
In coming to such conclusion, I am mindful that the payment of child support by a liable parent, in this case the father, is the highest obligation he has[8].
[8] See DJM v JLM Supra.
Is it proper to make a Departure Order?
This is the third matter I am required to consider. In my view it is proper. It is not as if the mother was wholly or partially reliant upon government benefits. She discloses no income from government benefits in her financial statement filed 19 December 2005. She lives with her partner who it seems is in employment and helps the mother with any shortfall in expenses including the children's expenses. Whilst that does not relieve the father at all of his responsibility to pay child support it is a factor which I take into account.
Conclusion
This is a case in which the father did not earn sufficient income to pay child support for the period 30 January 2004 until 16 February 2005 and did not have the capacity for such period to be assessed to pay child support. The father did not have other resources upon which to draw to pay child support for such period. Consequently I propose to make an order departing from the child support assessment for the period 30 January 2004 until 16 February 2005 and that there be no child support payable for such period.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of Coakes FM
Associate: J. Manners
Date: 1 August 2006
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