MARSHALL & ARMSTRONG

[2016] FCCA 816

FEDERAL CIRCUIT COURT OF AUSTRALIA

MARSHALL & ARMSTRONG [2016] FCCA 816

Catchwords:
CHILD SUPPORT – Departure from the Administrative Assessment – adjustment of income for the relevant periods – adjustment of cost percentage.

Legislation:

Child Support (Assessment) Act 1989, ss.43, 55C, 111, 116, 116(1)(b), 117(1), 117(1)(b), 118, 118(3)

Applicant: MR MARSHALL

Respondent: MS ARMSTRONG

File Number: MLC 4818 of 2015

Judgment of: Judge Hartnett

Hearing date: 10 March 2016

Delivered at: Melbourne

Delivered on: 12 April 2016

REPRESENTATION

Counsel for the Applicant: Ms Fisken

Solicitors for the Applicant: Pearce Webster Dugdales

The Respondent:

Amicus Curiae

No appearance

Ms Whittemore

ORDERS MADE ON 10 MARCH 2016

1. Pursuant to ss.117 and 118 of the Child Support (Assessment) Act 1989 there be a departure from the Administrative Assessment of the child support payable by Mr Marshall (‘the Applicant’) pursuant to Orders 9 December 2015 for the children:-

   (a)T born (omitted) 1991;

   (b)U born (omitted) 1993;

   (c)V born (omitted) 1995;

   (d)W born (omitted) 1998;

   (e)X born (omitted) 2003;

   (f)Y born (omitted) 2011; and

   (g)Z born (omitted) 2011;

   Collectively referred to as ‘the children’.

2. Pursuant to s.117 and 118 of the Child Support (Assessment) Act 1989 there be a departure from the Administrative Assessment of the child support payable by the Applicant pursuant to Order made for the children as follows:-

   (a)For the period 1 May 2011 to 11 August 2011 the Applicant’s adjusted taxable income be amended from an annual rate of $39,236 to an annual rate of $2,629 and cost percentage be amended from 0% to 50%.

   (b)For the period 18 August 2011 to 25 August 2011 the Applicant’s adjustable taxable income be amended from an annual rate of $39,236 to an annual rate of $0 and cost percentage be amended from 0% to 50%.

   (c)For the period 26 August 2011 to 28 September 2011 the Applicant’s adjusted taxable income be amended from an annual rate of $39,236 to an annual rate of $0 and the cost percentage be amended from 0% to 50%.

   (d)For the period 29 September 2011 to 11 October 2011 the Applicant’s adjusted taxable income be amended from an annual rate of $39,236 to an annual rate of $0 and the cost percentage be amended from 0% to 50%.

   (e)From 12 October 2011 to 31 October 2011 the Applicant’s adjusted taxable income be amended from an annual rate of $39,236 to an annual rate of $0 and the cost percentage be amended from 0% to 50%.

   (f)From 1 November 2011 to 31 October 2012 the Applicant’s adjusted taxable income be amended from an annual rate of $41,187 to an annual rate of $0 and the cost percentage be amended from 0% to 50%.

   (g)From 1 November 2012 to 31 October 2013 the Applicant’s adjusted taxable income be amended from an annual rate of $43,243 to an annual rate of $0 and the cost percentage be amended from 0% to 50%.

   (h)From 1 November 2013 to 17 November 2013 the Applicant’s adjusted taxable income be amended from an annual rate of $44,758 to an annual rate of $4,905 and the cost percentage be amended from 0% to 24%.

   (i)From 18 November 2013 to 31 January 2015 the Applicant’s adjusted taxable income be amended from an annual rate of $44,758 to an annual rate of $4,905 and the cost percentage be amended from 0% to 24%.

   (j)From 1 February 2015 to 26 September 2015 the Applicant’s adjusted taxable income be amended from an annual rate of $16,219 to an annual rate of $0 and the costs percentage be amended from 0% to 24%.

AND IT IS REQUESTED THAT:

The Registrar consider whether to remit the late payment penalty (currently totalling $6,953.44) and in order to facilitate this occurring they shall be provided with all copies of all orders made in these proceedings together with all reasons for judgment by the Child Support Agency.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 4818 of 2015

MR MARSHALL

Applicant

And

MS ARMSTRONG

Respondent

REASONS FOR JUDGMENT

1. Before the Court is an amended application filed by the Applicant father on 16 February 2016.  In support of that amended application, the Applicant father has filed an affidavit sworn by him on 1 October 2015. He relies on the evidence as contained therein. He relies upon the evidence as contained in his financial statement sworn on 1 October 2015. The Applicant father also relies upon an Outline of Case document prepared on his behalf by his Counsel, which is dated 10 March 2016, and was of particular assistance to the Court.  Whilst that document contains some submissions on the remission of penalties, such submissions were abandoned, with a concession by Counsel for the Applicant father that the Court had no power with respect to a determination of whether or not in these proceedings the Child Support Registrar will remit or revocate all of the penalties to this date assessed. 

2. The proceedings first commenced on 1 October 2015 when the Applicant father filed his initiating application.  The Court is satisfied there has been service of the application and amended application upon the Respondent mother, together with the affidavit material relied upon by the Applicant father in these proceedings. 

3. The Respondent mother has failed to participate in the proceedings, and the Child Support Registrar has appeared as Amicus Curiae at the final hearing. I am satisfied the Respondent mother is aware of the proceedings being served with the orders made on the 9 December 2015. 

4. The Applicant father also relies upon his individual taxation return for the period 1 July 2014 to 30 June 2015, which he tendered in evidence in the proceedings, and it is marked as “Exhibit 1”.

5. The Court determined to make the orders as sought by the Applicant father. Those orders are not opposed by the Child Support Registrar, whom, I note, is not a party to these proceedings.  The Child Support Registrar has an outstanding enforcement proceeding against the Applicant father which the Court adjourned to 4 May 2016 at 10 am. 

6. These reasons are produced pursuant to s.118 of the Child Support (Assessment) Act 1989 (Cth) (‘the Act’). Section 118(3) of the Act is as follows:-

   “3. If the court makes an order under this section, the court must:

   (a) give reasons for making the order (including reasons for its satisfaction as required by paragraph 117(1)(b);   and

   (b) cause the reasons to be entered in the records of the court.”  

7. Section 117, subparagraph (1) of the Act is as follows:-

   “1. Where:

   (a) an application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case;   and

   (b) the court is satisfied: 

   (i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist;   and

   (ii) that it would be:

   (A) just and equitable as regards the child, the carer entitled to child support and the liable parent;  and

   (B)  otherwise proper

   to make a particular order under this Division. 

   the court may make the order.”

   The Court is satisfied, to the requisite degree, as set out in s.117(1)(b) of the Act for the reasons below.

8. Previous orders were made in related proceedings on 10 September 2015.  The parties to those proceedings are the Child Support Registrar as Applicant and the Applicant father as Respondent. Those orders were relevantly as follows:-

   “1. Within 21 days, the Respondent make either application to the AAT for an extension of time to challenge the registration of the assessment and/or an application to this Court for leave pursuant to s.111 of the Child Support (Assessment) Act 1989 (Cth) and file/lodge the relevant material in support of same.

   2. Subject to Respondent’s compliance with paragraph one, the proceedings be adjourned to a date to be fixed in March 2016.

   3. In the event that the Respondent fails to comply with his obligations pursuant to paragraph one hereof, orders be made in accordance with Annexure A hereof.

   …”

9. The Respondent father (as the Applicant in these proceedings) complied with his obligations pursuant to paragraph 1 of the above orders.

10. On 9 December 2015 these proceedings came before the Court. The Respondent mother did not appear. Ms Whittemore appeared as Amicus curiae on behalf of the Child Support Registrar.  The orders made that day were as follows:-

    “1. Pursuant to ss.111 and 112 of the Child Support (Assessment) Act 1989 (“the Act”) the Applicant father have leave to seek an order pursuant to s.118 of the Act for a departure order with respect to all administrative assessment of child support issued between 1 May 2011 and 31 March 2014.

    2. Pursuant to ss.116 and 117 of the Act the Applicant father have leave (if necessary) to seek a departure order in respect of all administrative assessment of child support issued between 1 April 2014 and this date.

    3. The Application filed on 1 October 2015 be adjourned to be heard with the Application filed on behalf of the Child Support Registrar on 29 May 2015.

    4. All parties file and serve any application or amended application, response, affidavit and financial statement not less than 21 days prior to the adjourned hearing date.

    5. Reserve liberty to apply.

    6. Pursuant to r.21.15 of the Federal Circuit Court Rules 2001 (Cth), the Court certifies that it was reasonable for the parties to employ an advocate.

    7. The hearing date of 9 March 2016 is vacated.

    8. All extant applications are adjourned for final hearing on 10 March 2016 at 10am.

    9. The solicitor for the father serve a sealed copy of this Order upon the mother as soon as is practical.”

History

1. The Applicant father was born in (country omitted) on (omitted) 1962.  He is currently 54 years of age.  He is unemployed and in receipt of Centrelink payments.  The Respondent mother was born in (country omitted) on (omitted) 1972.  She is aged 44 years and engaged as both a (occupation omitted) and (occupation omitted).  The parties were married in 1989 in (country omitted).  They emigrated to Australia in or around (omitted) 2001.  At that time they had four children who emigrated to Australia with them.  Those children are:-

   a)T, born (omitted) 1991, currently 24 years of age;

   b)U, born (omitted) 1993, currently aged 22 years;

   c)V, born (omitted) 1995, currently aged 19 years; and

   d)W, born (omitted) 1998, currently aged 16 years. 

2. In 2003 the Applicant father was granted Australian citizenship.  On (omitted) 2003 the parties’ fifth child, X was born. He is currently 11 years of age.  

3. In 2006, the Applicant father was involved in a motor vehicle accident.  He suffered serious injuries, including internal bleeding, a crushed sternum and chest, vertebrae damage and knee injury.  He was hospitalised for a period of six months.  He was required to undergo surgery eight months after the collision and had small bags attached to help drain any further internal bleeding.  He was required to undertake significant rehabilitation work.  In 2009, he received a lump-sum payment of approximately $300,000 in settlement of his TAC claim.  As a result of that settlement, he was precluded from receiving Centrelink benefits until May 2014. 

4. The Applicant father applied the lump-sum payment received by him from the TAC as follows:

   a)to purchase the home in which he resides in (omitted);

   b)to purchase a property in the Respondent mother’s name at (omitted);

   c)for his family in (country omitted), including for his mother;

   d)a further amount of $54,000 toward a home for the Respondent mother after the sale of her (omitted) property;

   e)to his children for the purchase of computers and trips to (country omitted) for (hobby omitted) and three trips to the (country omitted) for (hobby omitted);

   f)for two motor vehicles, being a Toyota Camry for the Respondent mother and a Toyota Camry for the child T.

5. In March 2011, the parties separated for approximately six weeks with the Applicant father vacating the former matrimonial home when the Respondent mother obtained an Intervention Order against him.  That Intervention Order was subsequently withdrawn at the request of the Respondent mother and the Applicant father returned to resume occupation in the home.

6. In August 2013, the parties separated on a final basis and the Applicant father departed the former matrimonial home.  Since his entitlement to Centrelink payments has resumed, he is on a pension and in receipt of a weekly benefit of $244.

7. In March or April of 2015, the Applicant father received a telephone call from the Child Support Agency.  Thereafter, he received a letter from the Child Support Agency, advising that he had child support arrears.  I accept the Applicant father’s evidence that, prior to those communications with the Child Support Agency, the Applicant father was unaware that the Respondent mother had applied for a child support assessment, and unaware that any arrears had been accruing.  The monies said to be owing at that time by the Child Support Agency, inclusive of penalties and costs, was $31,113.48.

8. The Applicant father was unaware that, during the period he had nil or nominal income, he was required under Australian law to lodge taxation returns.  He first became aware of that requirement in May 2015.  He immediately attended to the lodgement of taxation returns for the years ended 30 June 2010 to 30 June 2015.  His annual taxable income from 2011 to the present has been nil or nominal, but the Child Support Agency has provided a provisional income of between $44,000 to $47,000 per annum to the Applicant father.

9. Up to the time of the parties’ separation and save for the six weeks where the Applicant father left the former matrimonial home, the parties cohabitated and were not separated.  During this period from 2011 until 2013, the (country omitted) community were aware that the Applicant father and Respondent mother continued to reside together and had not separated.  The parties continued to have a sexual relationship throughout this time and indeed two more children were born during this period (the parties twins born (omitted) 2011).  The Applicant father assisted in the care of the children in the home and was responsible for the payment of all outgoings with respect to the former matrimonial home, including mortgage payments, utilities, rates and the like.  He also paid for groceries and other household items.

10. Likewise during this time, the Applicant father met most of the children’s expenses.  He paid for those, which included:-

    a)schoolbooks and stationery;

    b)fees associated with the children’s participation in extracurricular activities;

    c)laptops and games;

    d)out-of-pocket medical expenses;

    e)clothes and shoes;

    f)trips to (country omitted) for (hobby omitted);

    g)school fees;  and

    h)out-of-pocket expenses for kidney replacement.

11. During this period of time, up until separation in August 2013, the Applicant father and Respondent mother shared the care of the children.  The Applicant father was involved in all aspects of the children’s lives.

12. When the Respondent mother moved out of the former matrimonial home, the Applicant father commenced spending time with the children on an informal basis.  They made arrangements between themselves in respect of the care and arrangements for the children.  The Applicant father estimates that he saw the children approximately two to three times per week, according to the wishes of the children, completing tasks such as dropping them off and picking them up from school and having them come to his home.

13. In 2009 and until 2014, the parties’ child W underwent a kidney transplant and was in the Royal Children’s Hospital for several months each year.  The Applicant father attended the hospital regularly during this time and spent time with the other children throughout.  When the child was discharged, the Respondent mother and Applicant father would look after all of the children together. 

14. Throughout the Applicant father’s years of unemployment, he had limited mobility due to the motor vehicle accident. He underwent rehabilitation and was medicated throughout the time, including regular physiotherapy and other operations to his chest, rib and back.  He underwent a full knee construction on 27 October 2015.

15. The Department of Health and Human Services (‘the Department’) provided a provisional taxable income for the Applicant father income that was substantially higher than the Applicant father’s nil income or nominal income over the relevant years.  The Department estimated a provisional income of:-

    a)1 November 2012 to 31 October 2013, $43,243;

    b)1 November 2013 to 17 November 2013, $44,758;

    c)18 November 2013 to 31 January 2015;  $44,758;

    d)1 February 2015 to 26 September 2015; $47,219;

    e)18 November 2013 to 31 January 2015; $44,758.

16. The taxable income in respect of the above years of the Applicant father was actually:

    a)Year ended 30 June 2010     $2721;

    b)Year ended 30 June 2011     $2629;

    c)Year ended 30 June 2012     nil;

    d)Year ended 30 June 2013     nil;

    e)Year ended 30 June 2014     $4905.

17. On 29 May 2015 the Child Support Agency issued an application in a case with respect to the enforcement of child support arrears as alleged to have been accumulated by the Applicant father. On 9 June 2015 the Applicant father lodged an objection to the current child support assessment. On 1 October 2015 the Applicant father filed his initiating application seeking leave pursuant to s.111 of the Act and final orders for a departure order.

18. The outcome of these proceedings being the Applicant father’s application for a departure order will have a direct and significant effect on the amount of outstanding arrears sought to be enforced by the Child Support Agency. 

19. The difficulty for the Applicant father in communicating with the Child Support Registrar is that he is (nationality omitted) and his native language, (omitted). His understanding and knowledge of English both in written and oral form is extremely limited.  His documents filed in these proceedings have been translated by an interpreter and he has attended Court on each occasion assisted by an interpreter in the (omitted) and English languages. 

20. Whilst the Applicant father did, between 2005 and 2013 receive phone calls from time to time from various agencies, he had little understanding of what was said.  I accept that until he had a telephone communication with the Child Support Agency last year and was served with the enforcement application he had not sighted any correspondence from the Child Support Agency. 

Departure application

1. Section 116 of the Act is as follows:-

   “Application for order under Division

   (1)  A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:

   (b)  both of the following apply:

   (i)  the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;

   (ii)  the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; or

   (c)  in the case of a liable parent--the administrative assessment of child support payable by the liable parent for the child is made under subsection 66(1).

   Note 1:  For the orders that a court may make under this Division see section 118.

   Note 2: With a court's leave, a court may make an order under this Division in respect of a day that is more than 18 months earlier than the day on which the relevant application was made (see subsection 118(2B)). A person is taken to have applied under this section if leave is granted.

   Note 3:  A court may make an order under this Division if the court sets aside a child support agreement under section 136.

   (2)  An application may be made by the carer entitled to child support, or the liable parent, in relation to the child.

   (3)  Subject to section 145 (Registrar may intervene in proceedings), the parties to the application are the liable parent and the carer entitled to child support.”

1. The Applicant father relies upon s.116(1)(b) of the Act. The Applicant father is currently before the Court as a result of the enforcement application lodged by the Child Support Registrar and satisfies s.116(1)(b)(i). Prior to the hearing the requirement of s.116(1)(b)(ii) has already been determined in the Applicant father’s favour.

2. As submitted by Counsel for the Applicant father the grounds upon which the Applicant seeks an order for departure for the relevant periods are twofold:-

   a)Firstly, the adjusted taxable income on which the administrative assessment is based for each of the relevant periods is inaccurate. He therefore seeks orders pursuant to s.118(1)(g) being an order to vary his adjusted taxable income for the relevant periods so as to reflect accurately his income for these periods.

   b)Secondly, the care and costs percentage on which the administrative assessments are based for the relevant period is inaccurate. He therefore seeks orders pursuant to s.118(1)(b) being an order to vary his costs percentage for the relevant period so as to actually reflect the care arrangements for the children for those periods.

3. The term “adjusted taxable income” is defined in the s.43 of the Act. Relevantly, that section provides:-

   “Working out parent's adjusted taxable income

   (1)  Subject to this Part, a parent's adjusted taxable income for a child for a day in a child support period is the total of the following components:

   (a)  the parent's taxable income for the last relevant year of income in relation to the child support period;

   (b)  the parent's reportable fringe benefits total for that year of income;

   c)  the parent's target foreign income for that year of income;

   (d)  the parent's total net investment loss (within the meaning of the Income Tax Assessment Act 1997 ) for that year of income;

   (e)  the total of the tax free pensions or benefits received by that parent in that year of income;

   (f)  the parent's reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997 ) for that year of income.

   Note 1:  Other provisions that relate to a person's adjusted taxable income are section 34A and Subdivisions B and C of Division 7.

   Note 2: The components of the definition of adjusted taxable income are defined in section 5.

   (2)  If the Registrar amends an assessment under section 44, then for the purposes of the assessment, the person's adjusted taxable income for a child to whom the assessment relates, for a day in the child support period, is the amount determined by the Registrar.”

4. The current assessments for the relevant periods deem the Applicant father to have the following taxable income:-

   a)1 May 2011 to 11 August 2011 $39,236;

   b)12 August 2011 to 25 August 2011 $39,236;

   c)26 August 2011 to 28 September 2011 $39,236;

   d)29 September 2011 to 11 October 2011 $39,236;

   e)12 October 2011 to 31 October 2011 $39, 236;

   f)1 November 2011 to 31 October 2012 $41,187;

   g)1 November 2012 to 31 October 2013 $43,243;

   h)1 November 2013 to 17 November 2013 $44,758;

   i)18 November 2013 to 31 January 2015 $44,758;

   j)1 February 2015 to 26 September 2015 $47,209.

5. Each of the above incomes is described as “provisional” in circumstances where the Applicant father had not, until 2015, filed any taxation returns for each of the relevant periods.  The figure is a statutory construction calculated as being two-thirds of the male total average weekly earnings.

6. The Applicant father seeks orders to vary the adjustable taxable income to his income as recorded in the notices of assessment now received by him.  The Applicant father is not in receipt of any income from any other sources save his pension income now.

7. The Respondent mother has not argued before the Court that the Applicant father has income and/or financial resources available to him that have not been disclosed by him. 

8. The Applicant father seeks to vary the cost percentages in each of the relevant assessment periods, noting that the current administrative assessments record the Applicant father as having a zero care and zero cost percentage. The Court accepts, given the evidence of the Applicant father as contained in his affidavit and described in these reasons, which evidence is unchallenged by the Respondent mother, that the Applicant father’s care percentages for the relevant period should be adjusted. This is by reference to s.55C of the Act. Items 2 and 4.

9. On the evidence before it the Court is satisfied that there should be a variation to the cost percentage for the relevant periods as follows:-

   a)1 May 2011 to 11 August 2011 to 50 per cent;

   b)12 August 2011 to 25 August 2011 to 50 per cent;

   c)26 August 2011 to 28 September 2011 to 50 per cent;

   d)29 September 2011 to 11 October 2011 to 50 per cent;

   e)12 October 2011 to 31 October 2011 to 50 per cent;

   f)1 November 2011 to 31 October 2012 to 50 per cent;

   g)1 November 2012 to 31 October 2013 to 50 per cent;

   h)1 November 2013 to 17 November 2013 to 24 per cent;

   i)18 November 2013 to 31 January 2015 to 24 per cent;

   j)1 February 2015 to 26 September 2015 to 24 per cent.

10. There shall be an amendment of the annual rate of the Applicant’s adjusted taxable income and an adjustment of the cost percentage calculated as described in the orders which are made.

11. Given the significant changes these orders will bring about in any assessment of child support liabilities of the Applicant father it is requested that the Child Support Registrar give consideration to remitting the late payment penalties incurred to the present time. 

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Date: 12 April 2016