Marsh & Eccles
[2008] FMCAfam 1417
•22 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MARSH & ECCLES | [2008] FMCAfam 1417 |
| CHILD SUPPORT – Departure application – no matter of principle. |
| Child Support (Assessment) Act 1989, Part VIA, ss.3, 116, 117(2), 117(4) |
| Applicant: | MR MARSH |
| Respondent: | MS ECCLES |
| File Number: | CAC 1661 of 2007 |
| Judgment of: | Riethmuller FM |
| Hearing dates: | 10 & 11 September 2008 |
| Date of Last Submission: | 11 September 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 22 December 2008 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Counsel for the Respondent: | In person |
ORDERS
That the child support assessment for the child of the parties be departed from, and the weekly rate of child support be set as follows:
(a)For the period 7 May 2003 to 30 June 2003: $15.18 per week;
(b)For the period 1 July 2003 to 30 June 2004: $51.75 per week;
(c)For the period 1 July 2004 to 30 June 2005: $125 per week;
(d)For the period 1 July 2005 to 30 June 2006: $135 per week;
(e)For the period 1 July 2006 to 31 December 2006: $150 per week;
(f)For the period 1 January 2007 to 30 June 2007: $120 per week; and
(g)For the period 1 July 2007 to 30 June 2008: $85 per week.
IT IS NOTED that publication of this judgment under the pseudonym Marsh & Eccles is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 1661 of 2007
| MR MARSH |
Applicant
And
| MS ECCLES |
Respondent
REASONS FOR JUDGMENT
The applicant and the respondent have one child, [X], born in 2001. Both parties seek variations of the child support assessments that have been in force from 7 May 2003 to 31 January 2008. This period covers 8 different child support assessments. To the extent necessary, I grant leave to the parties to pursue changes beyond 18 months.
The respondent also seeks to have the rate fixed for the future to minimise further disputes.
Issues and Evidence
The parties raised a large number of issues with respect to each of the
8 child support assessments. The issues are dealt with below under
14 separate headings.
The parties were unrepresented at the hearing. Both attended with a very large number of documents and folders. Both gave evidence and were cross-examined by the other. I found both quite impressive witnesses. They were both intelligent, although distressed by the difficulties in finalising the child support issues. The mother presented as more organised and focused upon the issues, and with more focused record keeping. Where their evidence differed, I generally accept the evidence of the mother on the basis that she appeared to have a more accurate recollection of the details of the day to day expenses and arrangements, and was more accurate in categorising those expenses. For example, in July 2007 the father claimed a non-agency payment credit for an expense with the child support agency of $226 for glasses purchased for the child, however this sum had been paid by the health insurer and the mother paid the gap between the cost of the glasses and the insurance payment.
Background
The mother sought an increase in the child support by way of a change of assessment, pursuant to Part VIA of the Child Support (Assessment) Act 1989 on 10 October 2005 for the period December 2002 to August 2002, relying upon the costs of child care and the income and earning capacity of the father. This was responded to by a cross-application on the part of the father in November 2005.
The Child Support Agency held conferences with both of the parties, before making a decision in late December 2005 to the effect that issues were too complex to be dealt with under Part VIA of Child Support (Assessment) Act 1989, recommending that the parties apply to the Court for an order. In January 2006, the mother lodged an objection to this decision, which was disallowed in April 2006. No court application was made by either party.
After a change to the assessment in October 2006, the mother lodged an objection in November 2006, which objection was allowed in April 2007.
By August 2007, the CSA had commenced enforcement processes with respect to the outstanding child support, which resulted in the father bringing an application for variation of the child support assessment on 29 August 2007 (these proceedings). The mother cross-applied, seeking an increase in the child support assessment.
The present child support debt is set out in Exhibit D to the Affidavit of the mother and is in the sum of $5,290.28, being the difference between the amounts paid over the period 7 May 2003 to 31 October 2007 of $18,896.77 compared to the assessed child support for that period of around $24,187.05.
The proceedings came on for hearing before me in September 2008. No objection was taken to the Court dealing with the matter. To the extent that it may be necessary, I propose ordering that the parties have leave to bring the proceedings with respect to assessments since the objection decisions pursuant to s.116 of the Child Support (Assessment) Act 1989.
The Law
In determining whether or not to depart from the Child Support Assessment, it is clear that the law requires a 3 step process, that is:
i)To determine whether or not a special circumstance has been established under s.117(2);
ii)To consider what would be a just and equitable child support assessment; and
iii)To consider whether the proposed assessment would be otherwise proper.
The Full Court has made it clear that this must be undertaken with respect to each period of the child support assessment that is sought to be altered because, as is apparent in this case, the assessments will change from time to time and therefore a consideration is required with respect to each assessment period as to whether or not a ‘special circumstance’ has been established, and then what alteration, if any, is ‘just and equitable’ and ‘otherwise proper’.
Special Circumstances
In this case, the ‘special circumstances’ relied upon by the parties are numerous. It is apparent that the parties are able to establish ‘special circumstances’ with respect to income and earning capacity, and the costs of child care, with respect to each of the child support assessment periods: see ss.117(2)(b) and (c). Once a ‘special circumstance’ is established, it is then necessary to determine what would be a just and equitable and otherwise proper child support assessment. As a result, I do not propose to traverse every ‘special circumstance’ claimed by the parties, once a special circumstance has been established for each period, as only one special circumstance in the period is sufficient to satisfy the first step of the departure process. However, I will consider each of the matters raised by the parties in determining what would be ‘just and equitable’, the second step required under the Act.
Period 1 - 7 May 2003 to 31 October 2003
With respect to the period from 7 May 2003 to 31 October 2003, the father was assessed upon an income of $78,516.00. He was without employment from the period 7 May 2003 to 30 June 2003, receiving only an air force pension of around $20,000.00 per annum. The difference in income amounts is stark. From 1 July 2003 to 30 June 2004, the father earned $36,170.00. Again, the difference between his actual income and the income upon which the assessment is based for the period is stark. In addition, the assessment was based upon an income of the mother of only $24,182.00 when she in fact earned $40,733.00 in the 2002-2003 financial year, and $53,918.00 in the 2003-2004 financial year.
The differences in income are so large that I am satisfied that the applicant has established a special circumstance for the assessment issued for that period.
Period 2 - 1 November 2003 to 30 September 2004
For the period 1 November 2003 to 30 September 2004, the father was assessed upon an income of $64,488.00 and the mother an income of $40,733.00. For that part of the period that fell within the 2003-2004 financial year, the father only earned $36,170.00, whereas the mother earned $53,918.00. For that part of the assessment that fell within the 2004-2005 financial year, the father earned $52,033.00 for the year and the mother $65,510.00 for the year. The difference in the annual rate of child support as a result of the income amounts alone is significant (monthly rates of $216 and $381 respectively compared to the assessment rate of $748.67). In the circumstances, I am satisfied that a special circumstance has been established with respect to this period.
Period 3 – 1 October 2004 to 30 September 2005
For the period 1 October 2004 to 30 September 2005, the applicant was assessed upon an income amount of $36,170.00. The mother was assessed on an income amount of $53,918.00. This resulted in a monthly assessment amount of $230.17. To the extent that the assessment fell within the 2004-2005 financial year, it is based upon income different to those the parties actually earned. In this period, the assessment based upon actual earnings would be some $381.00 per month compared to $230.17. In addition, the mother has established that her child care costs (set out in detail below) are around $8,000.00 per annum. I am satisfied that a special circumstance has been established with respect to the part of the period falling within the 2004-2005 financial year.
With respect to the part of the period falling within the 2005-2006 financial year, I note that the father’s income had increased to $68,950.00 compared to the $36,170.00 upon which he was then assessed. The mother’s income had also increased, to $72,571.00.
A formula assessment for this period based upon actual earnings would have been around $582.92. This is significantly more than the assessment as calculated by the Child Support Agency ($230.17 per month). Having regard to the differences in incomes, the assessment could not be considered just and equitable when one has regard to the actual earnings of the parties during this period. I am satisfied that a special circumstance has been established with respect to this period.
Period 4 – 1 October 2005 to 2 February 2006
For the period 1 October 2005 to 2 February 2006, the assessment was based upon an income of the father of $52,033.00 and an income on the part of the mother of $65,510.00 resulting in a monthly rate of $382.08. During the 2005-2006 the father actually earned $68,950.00 and the mother $72,571.00. An assessment based upon these figures would be $582.92, significantly more than the assessment issued by the Child Support Agency. Having regard to the difference in earnings by the father compared to what he was assessed upon, and child care expenses after rebates of around $8,000.00, I am satisfied that a special circumstance has been established with respect to this period.
Period 5 - 3 February 2006 to 31 October 2006
For the period 3 February 2006 to 31 October 2006 the Child Support Agency assessed the applicant upon an income of $52,033.00 per annum and the respondent upon an income of $65,510.00 per annum. For reasons set out in the preceding paragraph, I am similarly of the view that the assessment for this period (producing a monthly rate of $178.92, as a result of the child having major contact with the father), is unjust and inequitable when one has regard to the parties’ actual incomes.
To the extent that this period covers part of the 2006-2007 financial year, I note that the father’s income in that financial year was $85,235.00, significantly more than the $52,033.00 upon which he was assessed. The mother’s income had also increased to $75,254.00. However, the difference in the father’s income is so stark as to make plain that the assessment for the latter part of this period was unjust and inequitable when one has regard to his income amount. A special circumstance is therefore established with respect to this period.
Period 6 - 1 November 2006 to 20 April 2007
For the period 1 November 2006 to 20 April 2007, the father was assessed upon an income of $79,378.00 and the mother upon an income of $72,571.00. During the 2006-2007 financial year, the father actually earned $85,235.00 and the mother $75,254.00. This, based upon the formula alone, would have resulted in a difference in the monthly rate between that assessed at $450.92 and $501.42. The mother also incurred child care expenses as detailed below. The combination of these factors persuades me that the parties have established special circumstances with respect to this child support period.
Period 7 - 21 April 2007 to 30 September 2007
For the period 21 April 2007 to 30 September 2007, the father was assessed upon an income of $79,378.00, but he actually earned $85,235.00. The mother was assessed upon an income of $72,571.00, but she actually earned $75,254.00. The difference in the child support rate, simply using the formula and the differences in income, is $313.42 per month compared to $363.39 per month. In addition, the mother continued to have child care expenses throughout the 2007 calendar year. In these circumstances, I am satisfied that the child care expenses and the differences in the income of the parties is of itself sufficient to show a special circumstance with respect to this child support period.
Period 8 - 1 October 2007 to 31 January 2008
For the period 1 October 2007 to 31 January 2008, the assessment appears to be $32.00 per month based upon an income on the part of the applicant of $55,262.00 and an income on the part of the respondent of $72,571.00 per annum. During this financial year (although the child support period does not cover the whole financial year), the father earned $69,640.00 and the mother $85,628.00. It is apparent from the earnings of the parties that a child support rate of $32.00 per month must be unjust and inequitable in the circumstances. I am satisfied that a special circumstance has been established with respect to this period.
At the hearing, the assessment for the period 1 September 2008 to
30 November 2009was produced, showing that under the new formula the assessment, based upon an income for the applicant of $69,640 and for the respondent of $85,628, resulted in child support payable by the applicant of $39.94 per week. This was calculated using the new formula, based upon the respondent providing 75% of the care of the child and earning 60.97% of the combined income of the parties in excess of their respective self support components.
Conclusions with respect to ‘special circumstances’
Having concluded that special circumstances have been established with respect to each of the child support periods covered in this case, it is appropriate to determine what would be a ‘just and equitable’ level of child support throughout the periods, and whether any or all of the assessment rates for the nine periods should be altered.
Just and Equitable
Section 117(4) sets out a list of factors that must be considered in determining what would be a ‘just and equitable’ child support assessment. In this case the relevant factors are:
a)the nature of the duty of a parent to maintain a child (as stated in s.3 of the Act);
b)the proper needs of the child;
c)the income, earning capacity, property and financial resources of the parties and the child;
d)the commitments of the parties that are necessary for self support and the support of others that they have a duty to maintain;
e)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
f)any hardship that would be caused if the orders for departure are made.
Section 3 of the Act ensures that a parent’s duty to maintain a child is one of very high priority, providing:
3. Duty of parents to maintain their children (1) The parents of a child have the primary duty to maintain the child.
(2) Without limiting subsection (1), the duty of a parent to maintain a child:
(a) is not of lower priority than the duty of the parent to maintain any other child or another person; and
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; and
(ii) any other child or another person that the parent has a duty to maintain; and
(c) is not affected by:
(i) the duty of any other person to maintain the child; or
(ii) any entitlement of the child or another person to an income tested pension, allowance or benefit.
Whilst one must analyse the actual circumstances of the child and the parties through the relevant periods, one of the difficulties that confronts the Court in this case is that the parties have led detailed evidence with respect to only parts of their financial circumstances throughout the relevant periods. There is clear evidence of their incomes from tax returns for each of the financial years. There is also evidence with respect to their expenses (in particular the costs of child care for this child), which is contained in their applications and responses to the Child Support Agency as annexed to their affidavits, and in their financial statements as placed before the Court. These are, however, only ‘snapshots’ through a lengthy period. Before turning to the relevant assessments it is appropriate that I deal with the 14 specific issues raised by the parties at the hearing.
Issues at Hearing
Medical Expenses of the father
The father outlined that he incurs medical expenses each week as a result of injuries he received many years ago. A schedule of the actual expenses was not provided, nor any specific costing. He estimated around $1,500.00 per annum. The mother requested details of the amounts and said that in her view the expenses were no greater those of a person of a similar age without the father’s medical history. No receipts or documents detailing the actual expenses were produced by the father. In his departure application lodged with the Child Support Agency (and annexed to one of his affidavits of 7 December 2005) he listed medical expenses as one of his reasons for a departure, claiming that the amount was approximately $52.50 per week. No particulars as to how that figure was calculated are annexed to the copy of that application in the Affidavit. The Child Support Agency decision made in 2005 merely notes that the applicant has medical issues that impact upon his capacity but does not make any findings with respect to the amounts.
On the material before me, I am not able to make findings with respect to actual amounts involved as there is no evidence of actual payments, nor what it is that is purchased on a regular basis for his medical condition. In any event it appears to me, at least with respect to later years in the relevant period, the amount of the expenses is unlikely to be significant in the outcome of the case.
Private Health Insurance maintained by the father for the child
The applicant has maintained private health cover for the child throughout the period. It is clear that private health cover was maintained at the family rate as he included others in that private health cover. The primary argument put by the respondent is that because the private health cover at the family rate would be maintained by the applicant in any event (for other members of his family), there is no additional cost for this child and therefore no adjustments should be made to take this into account. I do not accept this argument.
An assessment of expenses for a family is not a damages claim for a civil wrong. It is not appropriate to simply approach the matter on the basis that the private health cover for a later child did not incur additional expenses, nor appropriate to look at the cost of health insurance for a single person. Rather the cost of having private health cover is the same as every other person covered in the family group. This is consistent with the way in which the law would approach contributions for joint liabilities. It is appropriate that the costs of the private health cover be the child’s share calculated rateably. Initially this was one third of the cover costs as the applicant’s policy also covered an older child. Following the applicant commencing a relationship and having another child, this was reduced to one quarter (the first child having left the applicant’s cover). The cost of that private cover has varied from time to time.
As at January 2003, it is not clear from the evidence what that cost was. It is clear from the evidence that, from time to time, claims were made on the health fund and the mother paid the gap between the amounts paid by the health fund and the actual expenses incurred for the child. The mother has annexed to her Affidavit details of payments made to general practitioners from 2003 to 2007 and pharmacy payments made in the same period, together with details of expenses paid for glasses for [X]. In the absence of evidence as to the actual costs of the cover, it appears to me that, doing the best that I can on the material available, I can only conclude that each parent has made contributions to the health expenses of the child: one by way of health insurance cover and the other by way of meeting the costs of the gap payments. I am not able to be satisfied that they incurred expenses sufficiently different to require an adjustment to what would otherwise be a ‘just and equitable’ assessment.
The father’s expenses of setting up and maintaining a home
Until October 2003, the father lived with the paternal grandmother. In October 2003, the father purchased a home in [Y] and set up a household with his current spouse. He refinanced this home in 2005. The father explained that the cost of the house itself should be taken into account on the basis that he was seeing the child there, and that he had purchased a house in [Y] as homes in that area were cheaper than the area in which they had been living.
In his written submissions, the father relied upon his financial circumstances following the property settlement between the parties. Property settlement orders were made by consent on the first of March 2004. The father obtained a motor vehicle. The mother retained in the property at [L], ACT, a motor vehicle and the goods and chattels in her possession. Otherwise, the parties retain to the property them in their possession. The relationship had been short one: the parties commenced cohabitation in June 2000, were married in September 2001 and separated on 25 September 2002.
The applicant described in the decision to purchase a home in [Y] as being "distinctly influenced by the requirement to provide a safe and comfortable environment for [X], as well is by the fact that we could not afford a comparable dwelling in the ACT." The applicant's current spouse is presently on maternity leave. They have had a child in 2007.
The applicant, in his financial statement filed on 26 February 2004, said that his mortgage repayments were $200 per week and that he had debts to the New South Wales teachers credit union requiring repayments of $50 per week and a MasterCard which required a minimum payment of $25 per week (on which he was paying $40 per week). Thus the total of these two debts was said to be $4,200. The mortgage was $138,000, and the applicant described legal fees from previous parenting disputes at approximately $12,000. The financial statement gave no details of his weekly expenses for food and household items, etc.
In December 2005, the applicant lodged a document with the Child Support Agency stating that he had taken over debts on a MasterCard of over $19,500, and had a debt of a computer from $2,400. By this time, he had also purchased a motor vehicle for $25,000. In this document, the applicant lists a number of chattels that he complains about, which consist largely of a laptop and software, some glassware, garden equipment, some barbecue tools and hand tools, and some objects of sentimental value. The applicant, in December 2005, listed other expenses all of which appear to be expenses incurred when the parties were together.
In cross examination, the applicant said that he had purchased a bed for the child, but also agreed that he kept a fold-up cot which was subsequently used for his youngest child.
In the objection decision of 23 March 2006, the objections officer records that the applicant had provided no evidence to support the claim related to his necessary expenses for self support.
On the material before me, I am not able to quantify specific expenses involved in setting up a new household beyond the usual expenses a person would have in maintaining a home, or if they purchased a home rather than renting, the expenses often incurred in this regard.
The travel costs for the father to see the child
At the hearing of the matter some time was focused upon the costs of travel. At least until October 2003, when the applicant purchased his home at [Y], he was living nearby. More recently, the applicant's youngest child utilises the same care centre that has been utilised by the child of the parties. The respondent points out that the applicant would attend in Canberra to see his own mother and for much of the period was working in Canberra. Whilst the applicant's work in Canberra was not in the same suburb, it was relatively close. However, [Y] is around 50 km from Canberra, and the distance is greater when the applicant had to travel across the city.
In Annexure "GG" to his affidavit of July 2008, the applicant sets out that his travel expenses from January 2003 until July 2005 (when he commenced working in Canberra again) were approximately $3,500. There is no breakdown of how this figure is calculated. If one accepts this figure on face value, it means that the expenses claimed are approximately $27 per week, as a result of the driving between [Y] and Canberra at times when the applicant was not making the trip in any event. Having regard to the distance involved and the frequency with which the applicant did see the child, it appears to me that this is a reasonable estimate of the costs of travel during this period. When taken with the applicant's decision to live in [Y] and thereby reduce his housing expenses, it is unlikely that this would have amounted to a special circumstances in isolation. However, in determining a just and equitable rate of child support it is a relevant matter to take into account.
The childcare expenses incurred, primarily by the mother, but also in part by the father
The mother incurred significant childcare expenses, even after taking into account the rebates available from the Federal government. The mother paid the vast majority of the childcare expenses required for the child, which enabled the mother to engage in employment. The mother says that during the period November 2002 to December 2006, she paid child care expenses of $33,244.15.
The applicant points out that there are significant childcare rebates from the government that reduce this cost to the applicant. Childcare rebates can be taken into account as they are not an income tested pension or benefit. The respondent annexed receipts and accounts for the period 2002 until mid-2004. Whilst not all of the annexure is receipts, a review of the documents indicates that she paid a little less than $2,000 in 2002, in excess of $8,000 in 2003, and over $3,000 in the first half of 2004 in child care expenses. From the records produced, I accept that child care expenses were around $8,000 in 2003, and around $6,500 in 2004 through until the child commenced school.
More recently after-school care costs a little under $13 a day, which the mother meets. The mother estimates that child care costs are now around $70 per week over the year (accounting for vacation care).
I accept this estimate of $70 per week.
There is no suggestion that the mother has not utilised childcare and after-school care to assist in caring for the child throughout the period. There is nothing to indicate that the costs would have reduced significantly. Whilst she does not have all of the documentary evidence there is sufficient to enable me to be satisfied that she incurred in child care expenses prior to the child attending school of between $6,000 and $8,000 per annum, and that she incurs after-school care costs in the vicinity of $13 the day. These are significant expenses necessary to enable the parents to work.
The father occasionally paid small payments, for example on one occasion he paid $17.97. Over the period, I accept that the father made some small payments towards childcare expenses and before-school care costs; however they were, at best, minimal. Many of the payments were during holiday periods when the father had responsibility for caring for the child.
The actual taxable incomes of the parties for the relevant periods, compared to the income amounts used by the Child Support Agency
As with all child support assessments, the actual taxable incomes of the parents in each year are not utilised for the child support assessment, which must use your the commencement of the period and therefore
be based on a previous years taxable income. Whilst this works particularly well for those in stable employment, it produces inconsistent results of those who have significant variations in their employment or income amounts.
In determining a just and equitable child support assessment, it is appropriate that I have regard to the actual earnings of the parties during each of the relevant periods. It appears that their actual earnings for the relevant years were as follows:
Period
Father
Mother
2003/04
$36,170
$53,918
2004/05
$52,033
$65,510
2005/06
$68,950/$79,378
$72,571
2006/07
$85,235
$75,254
2007/08
$69,640
$85,628
The difference in the figures for the father in the 2005/06 financial year is the difference between the taxable figure, and the figure used by the Child Support Agency after adding back the amount of a fringe benefits salary sacrifice. This issue is discussed below under the next heading.
(vii) The impact of the salary sacrifice scheme provided to the father when earning his income at a [workplace omitted] during part of the period
Whilst the father worked for a [workplace omitted] he was able to utilise a salary sacrifice scheme whereby part of his salary was paid directly to third parties on his instructions. As the [workplace omitted] is a charity, it is not liable for fringe benefits tax, and as the payments are not made directly to the father, he is not liable to pay income tax on those amounts. The amounts are nonetheless reportable to the Australian taxation office, and the value of those fringe benefits is taken up by the Child Support Agency in determining a person's income amount.
As a matter of general principle, the fringe benefits are a financial resource. In cases such as this, they are utilised by a person in the same way that they would utilise the income as part of their salary. The payments were made for items that the father would otherwise have to pay, and he had a choice as to engaging in the salary sacrifice scheme. In substance, the fringe benefits were the equivalent of income in the hands of the husband and should be taken into account on this basis. If this were one of the small number of cases where the recipient had no choice as to the payment of the fringe benefits, and they did not reduce the financial burdens he would otherwise have outside of his employment, then it may not be appropriate to take those fringe benefits into account. This is not one of those rare cases.
I therefore take into account the benefits the applicant received through the fringe benefits scheme whilst employed at the [workplace omitted], quantified in the table above.
The impact of rental income received by the mother for part of the period
After separation, the mother retained the house in the property settlement. The house was not unencumbered, but required significant mortgage repayments. Neither party was in a strong financial position. The mother, in order to manage her budget, but nonetheless retain the house, moved out of the home in October 2005 and rented the home to her adult son at $300 per week. She had obtained a market appraisal to the effect that market rent would be around $345 per week. The property was vacant from period of time last year and is currently rented from $415 per week.
The mother is renting a property owned by her stepmother for $340 per fortnight. This enables her to balance the budget and retain the property for the future. She gave evidence that the rental receipts for the property less than the mortgage repayments she must make on the home. Last financial year the difference was around $19,000.
Of course, the rental property losses are not taken into account by the Child Support Agency when applying the child support formula, but any rental property profits are taken into account.
The result is that the mother, by choosing to live in premises rented from her stepmother at a favourable rate is able to maintain the mortgage on her own property, despite being a single parent. She has arranged affairs to maximise the taxation advantages open to her through renting property. However, this does not give her a greater cash flow in her household budget, but leaves it with a loss that is tax-deductible. These taxation arrangements do not impact upon the way in which the child support would otherwise be calculated so as to disadvantage the applicant in any way.
In these circumstances, it does not appear to me that this issue provides a basis for reducing the amount of child support that would otherwise be payable to the mother. It is not argued by the mother that the arrangement she has had put in place to make ends meet, short of themselves, provide a basis for increasing the child support assessment.
The adjustments that should be made for the periods of unemployment by the father
During the periods that the husband was unemployed, he was not entirely without income, receiving a partial service pension. However, his capacity to provide financially for the child was significantly reduced during these periods. This should be taken into account in determining appropriate level of child support.
If the father was presently in a period of unemployment, careful consideration would need to be given to the dates of his employment and unemployment to ensure that the appropriate rate of child support was set for each relevant week. As this period is now long past, reliance upon the taxable income for the relevant financial year is sufficient, as the income is effectively averaged throughout the course of the year, making assessment simpler but nonetheless ensuring that the applicant’s period of unemployment is properly taken into account.
As it is only the first period that is a partial year of unemployment, it needs separate adjustment. Through the end of the 2002/03 financial year the father only received his [omitted] pension of around $19,000 per annum. This amount should have formed the basis for the assessment at this time.
The adjustments that should be made for the periods of unemployment of the father’s current spouse.
The father is married to his current spouse. They have a child together. To the extent that the father's current spouse is unable to support herself, he has a direct obligation to maintain her as a result of the provisions of the Family Law Act 1975. It is therefore relevant to take into account the unemployment of the father's current wife when determining the appropriate rate of child support.
On the evidence, the father's current wife was unemployed for a period of 5 to 6 weeks in June and July of 2005. During this period he had a prima facie duty to maintain her. The dates have not been particularised, nor what termination pay, if any she received. The period is now long past. Ultimately, I am not satisfied that I have enough information to adjust for this short period. I note that this item was not pursued by the applicant in his final address.
Any adjustments that should be made for the period of maternity leave for the husband’s current spouse
Under the Family Law Act 1975, a husband has a duty to maintain a wife (just as a wife has a duty to maintain the husband) when they are unable to maintain themselves. In each case of assessment, it is to be made as to the capacity of a person to maintain themselves. Section 72 of the Family Law Act 1975 specifically lists caring for a child of a marriage who is under 18 as an appropriate reason for being unable to work. As a result, the applicant has a duty to maintain his wife when she is not working as a result of maternity leave.
The applicant’s wife was on unpaid maternity leave from 31 March 2007 until 1 April 2008. She has now returned to employment and the applicant’s youngest child in child care. The applicant's current wife had changed jobs only eight weeks before she left to have their baby. As a result in her maternity leave was on paid leave. And she stated under her previous job she would have received better entitlements with respect to maternity leave, but chose to change jobs as a result of the nature of the work and an expectation of better entitlements in the future.
Ultimately, the assessment of child support does not require a detailed and review of every life decision that is made within the family, and as such it is not appropriate to me to review the decision of the applicant's current wife to change employment. It could not be characterised as an obviously an appropriate decision, nor designed simply to minimise child support. In these circumstances it is appropriate that I take into account simply as an incident of the obligations of the applicant in his current family.
The applicant's current wife has returned to employment and their child is in full-time child care.
(xii) Whether the Child Support Agency correctly calculated the number of nights that the child would be with each party, in order to apply the correct formula for part of the period
For the period between 1 October 2005 and to February 2006, the applicant says that his level of care of the parties’ child justified a child support assessment on the basis that he had substantial and significant time with the child. This would have altered the child support assessment from one based upon him paying child support at 18% to an assessment based upon him paying child support at 14% and the mother being assessed to pay child support at 8%.
The applicant has provided a calendar setting out dates that he claims the child was in his care pursuant to the court orders. The applicant disputes the agency's calculations for the period 11 October 2004 to
2 February 2006. Throughout this period, the applicant says that he spent time with their child in accordance with the court orders but that the Child Support Agency calculated the number of nights in correctly.
Much of the difficulty with this issue, in this case, is the interaction of the provisions of the Child Support (Assessment) Act 1989 relating to determining the number of nights for the assessment, and the timing of the orders entered into by the parties. On the wife’s case, if one commences counting the number of nights from 1 July 2005, then there is more than 109 nights with the father in that financial year, indeed, even the 2005 calendar year.
It is not open to me to make orders relating to the number of nights set out in the child support register, on a departure application. However, in order to determine a just and equitable assessment throughout the period it is appropriate that I consider the time the child spends with each party. The orders of October 2004 provided for a transition to substantial contact, and by the end of 2005 the appropriate number of nights was provided under the orders. I don’t accept that the mother would have been likely to provide the child to the father for more than the nights provided in the orders. Ultimately, it appears to me that the approach adopted by the mother in her figures of considering that by the 2005/6 financial year there was substantial contact is an appropriate guide to the level of care that the parties had of the child.
Whether any adjustment should be made to take into account the significant increase in the superannuation entitlements of the respondent
In this case, it is argued that increases in the superannuation entitlements of the respondent mother should be a basis for reducing the child support assessment, or at least taken into account. There is no evidence before me to show that the respondent mother has a salary sacrificed income into superannuation which would otherwise have been available for her and the child, and taken into account the purposes of child support. Rather, it appears that increases in her superannuation have occurred as a result of events separate from her income and do not show that she had greater financial capacity to provide for the child.
In these circumstances are not satisfied that this factor, of itself is a basis for independently adjusting the child support assessment. It does, however, form part of the overall financial background of the parties, just as does the applicant's receipt of $45,000 from his mother. However, having regard to the amounts and the circumstances of this case it is not appear to mean that the actual assets and superannuation of the parties is of such magnitude that it bears significantly on the decision that must be made.
(xiv) Whether any adjustment should be made to take into account the distribution received by the father from his mother’s Estate, and the claim that he appears to have with respect to his mother’s Estate.
In October 2006, the applicant received $45,000 from his mother. He explained that this was used to pay off his car loan and reduce his mortgage. The receipt of a capital sum of $45,000 significantly improved the applicant’s financial position.
Had the applicant been unemployed (or assessed at a very low rate of child support) at the time he received this sum, it may have provided a proper basis to consider increasing his child support, as he would then have had assets from which to meet child support.
However, at the time he received this sum, he was earning more than average weekly earnings. He was earning sufficient to pay reasonable levels of child support, and still had a mortgage on a very modest family home. The money was not applied to his day to day lifestyle, but used to retire debt on his family home and car. Whilst it is relevant in assessing the applicant’s overall financial position, I am not persuaded that the receipt of this sum, in the circumstances existing at the relevant time in this case, of itself justifies an increase in child support.
Conclusions
A significant difficulty in determining a just and equitable child support assessment in this case is the very real lack of evidence of the daily finances of the parties; that is, the lack of information about their weekly budgets so as to compare the overall financial position of each party this case. Not surprisingly, at the end of the case, the parties adopted the view that a child support assessment based upon the formula, utilising the actual incomes would, subject to the matters set out above which are not correctly accounted for in the formula, provide a just and equitable assessment.
In this case, as the findings above indicate, if a formula approach is to be adopted then adjustments need to be made with respect to:
a)the income amounts of the parties;
b)the date that the child commenced substantial contact with the father;
c)the childcare expenses; and
d)the support that the father had to provide for his current spouse;
If one re-calculates the child support assessment based upon actual incomes (taking into account salary sacrifice), and the changes in care and the date the applicant’s current wife took maternity leave (for the exempted income amount), the assessments would be approximately as follows:
Period 7/05/2003 30/06/2003 Father's Income $ 19,000.00 Father's Exempt $ 11,740.00 Father's Adjusted $ 7,260.00 Mother's Income $ 40,733.00 Mother's Exempted/disregarded $ 35,012.00 Mother's Adjusted $ 5,721.00 Child Support % 18% Annual Rate $ 792 Monthly rate $ 66.00 Daily rate $ 2.16838 Total for period $ 120.21 $ 120.21
Period 1/07/2003 30/06/2004 Father's Income $ 36,170.00 Father's Exempt $ 12,315.00 Father's Adjusted $ 23,855.00 Mother's Income $ 53,918.00 Mother's Exempted/disregarded $ 36,212.00 Mother's Adjusted $ 17,706.00 Child Support % 18% Annual Rate $ 2,700.0 Monthly rate $ 225.00 Daily rate $ 7.39220 Total for period $ 2,700.00 $ 2,700.00
Period 1/07/2004 30/06/2005 Father’s Income $ 52,033.00 Father’s Exempt $ 12,950.00 Father’s Adjusted $ 39,083.00 Mother’s Income $ 65,510.00 Mother’s Exempted/disregarded $ 38,168.00 Mother’s Adjusted $ 27,342.00 Child Support % 18% Annual Rate $ 4,574.0 Monthly rate $ 381.17 Daily rate $ 12.52293 Total for period $ 4,574.00 $ 4,574.00
Period 1/07/2005 30/06/2006 Father's Income $ 79,378.00 Father's Exempt $ 13,462.00 Father's Adjusted $ 65,916.00 Father's Child Support % 14% Father's assessment $ 9,228 Mother's Income $ 72,571.00 Mother's Exempted/disregarded $ 24,842.00 Mother's Adjusted $ 47,729.00 Mother's Child Support % 8% Mother's assessment $ 3,818 Annual Rate $ 5,410 Monthly rate $ 450.83 Daily rate $ 14.81177 Total for period $ 5,410.00 $ 5,410.00
Period 1/07/2006 31/03/2007 Father’s Income $ 85,235.00 Father’s Exempt $ 13,983.00 Father’s Adjusted $ 71,252.00 Father’s Child Support % 14% Father’s assessment $ 9,975 Mother’s Income $ 75,254.00 Mother’s Exempted/disregarded $ 25,773.00 Mother’s Adjusted $ 49,481.00 Mother’s Child Support % 8% Mother’s assessment $ 3,958 Annual Rate $ 6,017 Monthly rate $ 501.42 Daily rate $ 16.47365 Total for period $ 4,512.75 $ 4,512.75
Period 1/04/2007 30/06/2007 Father's Income $ 85,235.00 Father's Exempt $ 25,773.00 Father's Adjusted $ 59,462.00 Father's Child Support % 14% Father's assessment $ 8,325 Mother's Income $ 75,254.00 Mother's Exempted/disregarded $ 25,773.00 Mother's Adjusted $ 49,481.00 Mother's Child Support % 8% Mother's assessment $ 3,958 Annual Rate $ 4,367 Monthly rate $ 363.92 Daily rate $ 11.95619 Total for period $ 1,091.75 $ 1,091.75
Period 1/07/2007 30/06/2008 Father's Income $ 69,640.00 Father's Exempt $ 25,773.00 Father's Adjusted $ 43,867.00 Father's Child Support % 14% Father's assessment $ 6,141 Mother's Income $ 85,628.00 Mother's Exempted/disregarded $ 25,773.00 Mother's Adjusted $ 59,855.00 Mother's Child Support % 8% Mother's assessment $ 4,788 Annual Rate $ 1,353 Monthly rate $ 112.75 Daily rate $ 3.70431 Total for period $ 1,353.00 $ 1,353.00 $ 19,761.71
Using the same income and care figures under the new child support formula would see the last assessment increase to around $2,084 per annum. Also, the reduction brought about by the applicant’s obligations to his youngest child, and current wife, would not have been so great under the new formula.
The child care expenses vary from around $115 to $150 per week until the child was at school, but thereafter continue at $70 per week averaged over the year.
It is interesting to note that the applicant earned a total income throughout the periods of around 90% of that of the respondent. The period covers around 5 years and 7 weeks, through which the applicant would be obliged to contribute only around $74 per week to the costs of the child.
I note that on the current costs of children tables published by government under the current version of the Child Support (Asesssment) Act 1989, the costs of caring for a child under 12 years, with parents in the income bracket of these parties was around $14,000 in 2007 (around $270 per week) and $15,000 in 2008 (around $290 per week). Even if childcare expenses were notionally included in this figure, the parties are not meeting childcare expenses rateably. Some realistic adjustment needs to be made between the parties for childcare expenses.
The figures for the costs of children in this higher income bracket of the parties are not dissimilar to costs of children figures published elsewhere in the past.
The current financial position of the parties is less than clear from the material. This makes findings in the form usually required by s.117(4) difficult to make. However, there is recent financial information from the respondent as to the costs of caring for the child. In her financial statement of 2 October 2007 she set out, at Item N, that the costs of caring for the child were around $293 per week. Of this, some $70 per week is for childcare expenses. Some expenses are not necessary, but a matter of private choice, such as church donations of $25 per week. The respondent was not challenged with respect to the balance of the expenses, which amount to around $270 per week, inclusive of child care. These expenses are consistent with the costs of children tables published by the Child Support Agency.
Whilst the applicant did not file a financial statement, he annexed a CSA form setting out his finances as at December 2005, showing an after tax income of around $1,100 per week, and expenses of $1,202 per week (of which $106 was said to be compulsory superannuation payments, presumably the superannuation guarantee paid in addition to salary). In this document, he listed child support at $66 per week. The applicant appeared to be making ends meet on $72,000 per annum. He actually earned $79,378 in this financial year. This represents an additional $70 per week after tax. It appears that the applicant was capable of contributing around $136 per week at this time.
On 29 August 2007, the applicant lodged a financial statement showing his average weekly income as $2,677, and his average weekly expenses as $2,432. The income consisted of his salary and [omitted] pension. He disclosed that his current wife was earning an average weekly income of $751 (of course, the applicant's current wife has no obligation to provide financial support for this child, however her capacity to support herself and contribute to the support of the applicant's youngest child is relevant when assessing his obligation to those two persons). In this statement, the applicant sets out current payments per child support of $57 per week. The applicant's total weekly expenses listed at Part N of his financial statement $1,198; however, this includes $419 for other adults in the household. In this financial statement, the applicant lists the total mortgage repayments at $550 per week. It appears that the applicant has taken up all of the household expenditure in his financial statement but not accounted for any contribution by his current wife from her average weekly income of $751. It appears clear that the applicant has the financial capacity to pay $150 per week in child support, without even scrutinising his weekly expenses, which include books and magazines at $30, cleaning (house/pool) at $38, tithing at $75, and motor vehicle maintenance at $120 (the applicant has a Renault motor vehicle purchased in the last few years).
The applicant notes at the end of the financial statement that he received a bequest from his mother $45,000 in October 2006, however he says that in August 2007 when he swore his financial statement he had child support arrears of $9,262.44.
The applicant provided a statement of the actual payments of child support made by him from June 2003 until September 2008, showing payments of $21,667.44 for the period. Even on actual payments, this is a contribution of only around $77 per week.
If one reviews each period, the issues become clearer. It is apparent that the applicant had little capacity to contribute more than the assessment amount in the 2003/2004 year, given his actual earnings amount. Having regards to the respondents earnings for that year I would not be persuaded that it would be just and equitable to set a rate different to the formula calculations based upon actual earnings.
In the 2004/05 year, the applicant was earning around $13,000 per annum less than the respondent, although both were earning well above average weekly earnings. The applicant's child support assessment amounted to little more than a reasonable share of the childcare expenses. Having regard to the reasonable cost of caring children and the childcare expenses in this case it appears to me that the applicant ought to contribute to the financial support of the child.
In the 2005/06 year, the applicant was earning nearly $7,000 more than the respondent. Both were earning nearly double average weekly earnings. The child support formula assessment accounts for the substantial time that the child spend with the applicant in providing for assessments against both the applicant and the respondent to be offset against each other. During this period the applicant had re-partnered, however his partner had not yet ceased work to have a child. He was therefore able to share some of his living expenses with another adult; however, he also had the expense of setting up his household that following the purchase of his home, and recovering from his early years where he suffered some unemployment and underemployment. Ultimately, however, by this stage there appears to me to be no reason why he could not have contributed equally to the costs of child care which was necessary for both of the parents to earn the income is that they did. The assessment in this period ought to be increased by the sum of $3500, representing around one half of the child care expenses.
In the 2006/07 year, the applicant was earning nearly $10,000 more than the respondent. Both were earning in excess of $75,000 per annum. At least until the end of the 2006 calendar year there appears to be no reason that the respondent could not have contributed equally to the costs of child care. From the beginning of 2007 the respondent's current wife was advancing in her pregnancy, towards giving birth in April. She ceased work at the end of March. Whilst an adjustment is made in the formula calculations it is relatively modest compared to the expenses most people incur in having children, and the impact it would have had on the applicant's household to have a significant reduction in income. From the commencement of the 2007 calendar year the child was attending school and the costs of care reduced to after-school care expenses and some holiday care expenses.
In the 2007/2008 financial year the applicant's current wife returned to work only in April. However, there after the applicant is again in a two income household and able to share some of his household expenses with his current wife. The after-school care expenses have not abated as the child is only in early primary school years. Again some adjustment is required through this period, but a different rate to during the time of the applicant's wife was on maternity leave compared to when he no longer had an obligation to support her. Of course, from the birth of the applicant's youngest child some account needs to be taken of his obligations to support this child.
The child support assessments in this case have not been satisfactory to the parties for many years. The assessments presented a difficult problem for the Child Support Agency as the applicant had not lodged tax returns for many years. Despite a decision not to review the child support assessments on the basis of complexity, the parties did not immediately turn to the courts (the parties could now turn to the SSAT). The result is that any decision I make in this judgement will create a retrospective change to the obligations of the parties.
As the figures above indicate, a weighing of the relevant circumstances favours a significant retrospective increase in the child support assessment. In this case, however, the claims by respondent with respect to child care costs and an increase in the child support assessment have been actively pursued for some time. As result the applicant has been well aware of the details of these claims, at a time when he has been continuing to pursue a decrease.
I do not accept that the applicant’s financial position is as dire as he suggests, for example, his most recent teachers credit union statement which shows that in July 2008 he made a purchase from Australian Wine Selectors Newcastle of over $170.
As with many complex child support cases there is no precise mathematical method by which to explain the figures ultimately adopted, which are based upon an amalgam of the circumstances of the parties, the needs of those in their care, and the expenses incurred together with consideration of the costs of children and principles underlying the legislative scheme.
Set out above are the matters that have influenced me in this regard, most importantly the importance of the parties sharing in the financial burdens of caring for their child, the financial positions in earnings of the parties, the costs of the child for persons in the income bracket in which the parties are presently living, the obligations the parties have to others, and of the expenses of child care necessary to unable the parties to an income is that they do. Whilst submissions were made to me about the hardship that will be caused by various potential outcomes in this case, it appears to me that the weekly rates I have struck would not caused hardship to the applicant if he had met these rates at the relevant time, having regard to his actual income during the relevant periods. That there may be some hardship now as a result of him resisting reasonable rates of child support for so long should not disadvantage the respondent.
When one has regard to the actual cost of child care (after government rebates) and the basic costs of housing, feeding, and clothing the child (together with providing for entertainment holidays parties and other appropriate experiences), in the context of the capacities of the parties to meet those expense, I find the rates of child support that I have struck over the various years just and equitable
I find that the child support assessment rates would be just and equitable if they were set as follows:
a)For the period 7 May 2003 to 30 June 2003: $15.18 per week
b)For the period 1 July 2003 to 30 June 2004: $51.75 per week
c)For the period 1 July 2004 to 30 June 2005: $125 per week
d)For the period 1 July 2005 to 30 June 2006: $135 per week
e)For the period 1 July 2006 to 31 December 2006: $150 per week
f)For the period 1 January 2007 to 30 June 2007: $120 per week
g)For the period 1 July 2007 to 30 June 2008: $85 per week
I am particularly mindful of the fact that this will create arrears for the applicant, however this must be balanced against the expenses that have actually been incurred by the respondent and her request (and application to the CSA) some time ago for an appropriate child support assessment.
I am not prepared to alter the current assessment, as I do not have appropriate evidence of the current earnings or expenses of the parties. It is appropriate for the current assessment to be the subject of a departure application and ultimately be determined by the SSAT, if this is required by the parties.
Finally, I must consider whether the assessments would be ‘otherwise proper’, if set at the above rates. There appears to be no impact upon the public purse, as a result of the levels of income of the parties. The outcomes ensure an appropriate contribution to the very real expenses of the child, and child care costs. I therefore find that the assessments would be ‘otherwise proper’ if altered as proposed.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Associate: Robin Smith
Date: 22 December 2008
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