McOnie and George
[2004] FMCAfam 298
•24 June 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| McONIE & GEORGE | [2004] FMCAfam 298 |
CHILD SUPPORT – Appeal by mother from decision of CSA Registrar – where Registrar exercised discretion and credited father with non-agency payments – where in Family Court property settlement the father stated he was paying private school fees and orthodontic expenses in addition to child support – where father later claimed these as non-agency payments – whether the discretionary decision of the Registrar should be set aside – Application for variation of CSA assessment – whether the father has the capacity to pay increased child support – whether it is just and equitable to vary the child support assessment.
Child Support (Registration and Collection) Act 1988 (Cth), ss.71A, C, D
Child Support (Assessment) Act 1989 (Cth), s.117(1)
Federal Magistrates Court Rules2001
Savery and Savery (1990) FLC 92-131
In the Marriage of Gyselman (1992) 15 FLR 219
Hides v Hatton (1997) FLC 92-759
House v R (1936) 55 CLR 499
Australian Coal & Shale Employees Federation v Commonwealth (1953) 94 CLR 621
Gronow v Gronow (1979) 144 CLR 513
Mallet v Mallet (1984) 156 CLR 608
Kearney & Roucek (1997) 21 FamLR 537
R & F (1995) 20 FamLR 118
In the marriage of LC & TC (1998) 23 FamLR 75
In the Marriage of J F Mee and P J Ferguson 10 Fam LR 971
C and G [2002] FMCAfam 361
| Applicant: | SUE-ANNE McONIE |
| Respondent: | DAVID BRIAN GEORGE |
| File No: | PAM 5077 of 2003 |
| Delivered on: | 24 June 2004 |
| Delivered at: | Parramatta |
| Hearing date: | 9 June 2004 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Maurice |
| Solicitors for the Applicant: | Dimocks Family Lawyers |
| Counsel for the Respondent: | Mr Foster |
| Solicitors for the Respondent: | Heazlewoods Bushby International |
ORDERS
Application dismissed.
Applicant to pay respondent’s costs of both proceedings to be assessed pursuant to Part 21 Rule 21.02(2)(b) in Schedule 1 of the Federal Magistrates Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM 5077 of 2003
| SUE-ANNE McONIE |
Applicant
And
| DAVID BRIAN GEORGE |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings are constituted by two separate applications filed on 21 November 2003. The first is an application on Form 63 for a variation of a child support assessment issued by the child support registrar on 13 October 2003 declining to raise the assessed amount of child support to a sum of $1,146.00 per week being the sum of $573.00 in respect of each of the two children of the parties. The second application is an application on Form 64 being an appeal from a decision of the child support registrar made on 24 October 2003 dismissing the mother’s objection to a determination by the agency crediting the father with prescribed non agency payments (“NAPs”) totalling $15,362.32 representing mortgage payments, school fees and orthodontist fees paid by him for the benefit of the children. The grounds for the departure from the child support assessment in the Form 63 application were that:
15The costs of maintaining the children are significantly effected (sic) because the children are being cared for educated or trained in the matter (sic) that is expected by the parents.
16The father has the capacity to pay the amount required by the orders through his taxable income.
20Hardship would be caused to the mother and the children by the refusal to make the orders sought by the mother insofar as the mother will be unable to meet the proper needs of the children.
21In the special circumstances of the case the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the father for the children because of the income and earning capacity of the father.
The grounds of appeal in the Form 64 application were:
9It would be an unjust and inequitable determination for the father to be credited given:
(a)The financial income and earning capacity of the father for the relevant period.
(b)The financial circumstances of the mother for the relevant period.
(c)The current income and limited financial resources of the mother.
(d)The current income and earning capacity of the father.
(e)The credit obtained by the father for the payments made during spousal maintenance proceedings.
As the issues were argued before me I understood the mother’s complaint in respect of the appeal matter to be that at all material times prior to the decision in certain proceedings in the Family Court for property settlement before Coleman J the father accepted responsibility for payment of the mortgage on the then matrimonial home and school fees and orthodontic treatment for his children. The mother assumed that this was going to continue. She did not make any representations to Coleman J in those proceedings which might have secured her a larger share of the assets if she had been aware that the father did not intend to continue with these payments. The mother argues that the child support Registrar was aware of this concern of hers and that he should have taken into account in coming to his decision the fact that she had made certain financial arrangements on the basis that the father would not seek to have these payments identified as NAP’s and claim credit for them. She argued that the registrar’s discretion exercised under s.71D of the Child Support (Registration and Collection) 1988 Act had miscarried.
The claim made by the mother in relation to the variation of the child support assessment was that the parties had agreed that the children should be educated at the private schools which they were currently attending and that the assessment of the father should reflect his obligation to pay his fair share of these fees. The mother submitted that the father had the capacity to make such payments.
In past cases that I have determined in this area I have set out in detail s.117(1) of the Child Support Assessment Act 1989, made reference to the cases of Savery and Savery (1990) FLC 92-131 and In the Marriage of Gyselman (1992) 15 FLR 219 at [225] and [240] and Hides v Hatton (1997) FLC 759. In this particular case where both parties were ably represented I do not think there is any necessity to follow this formula, although in making my determination I will, of course, follow the law as stated in the Act and in those decisions. However, it is appropriate to set out the provisions of s.71C(1) of the Child Support (Registration and Collection) Act 1988 which covers the payments claimed by the father as NAPs. I am satisfied that these payments do not fall within s.71A of the Act because that sub-section is only referable to agreed payments:
71C(1)[Where Registrar must credit uncredited amounts]
Subject to subsections (3) and (5) and section 71D, in relation to any payment period entered in the Register under paragraph 26(2)(b) or initial period entered in the Register under paragraph 26(2)(a) for which the payer of an enforceable maintenance liability has an uncredited amount, the Registrar must, in spite of section 30, credit:
(a) if the uncredited amount does not exceed 25% of the payer's enforceable maintenance liability for the period—that uncredited amount; or
(b) if it exceeds 25% of that liability—so much of that uncredited amount as does not exceed 25% of that liability;
against the liability of the payer to the Commonwealth in relation to the amount payable under the liability in relation to that period.
71D [Registrar may refuse to credit amounts in special circumstances]
The Registrar may refuse to credit an amount under section 71, 71A or 71C if satisfied that, in the circumstances of the particular case, the amount ought not to be credited.
Evidence
The parents were married in Sydney on 30 January 1982. They separated on 19 June 2002 and their marriage was dissolved on 29 June 2003. Their children are E and N. E was born on 17 August 1987 and N was born on 25 February 1990. Both children attend exclusive private schools in Sydney.
During the marriage the father was a highly paid securities analyst with a number of well known financial institutions. At his zenith he earned approximately $800,000.00 a year. His earnings were generally in the range from $250,000.00 to $500,000.00. The parties lived in a substantial property in a northern suburb of Sydney. The mother had trained, and until the birth of their second child had been employed, as a teacher in the New South Wales education system. She holds a Diploma of Education in Visual Arts, a BA in Fine Arts and English Literature and an MA in English Literature. On or about 12 March 2002 the father’s employment in Sydney terminated. He received a substantial termination benefit and set about looking for alternative employment. He was unable to obtain satisfactory employment in Sydney and in July 2002 accepted a position with a firm of stockbrokers in Melbourne at a salary of $160,000.00 per annum. The father has re-partnered and remarried. He has an eight month old child and his wife is expecting a second child. There was no evidence that the mother has re-partnered.
The parties brought property proceedings before the Family Court of Australia. Until those proceedings were concluded the mother remained with the children in the former matrimonial home. She also made an application for spousal maintenance which was dismissed by Senior Registrar Henderson on 28 October 2002 and has not been appealed. For a period prior to the determination of the property settlement, but after the father had moved to Melbourne and was on his now reduced income, the parties agreed to utilise a redraw facility on their home equity loan in order to pay the school fees. The result of the property settlement proceedings included the payment to the mother of the sum of $1,102,891.58 from the proceeds of sale of the matrimonial home. The father received $521,898.88. Both parties retained certain other assets included Mercedes Benz motor vehicles. The mother purchased an unencumbered property near to the childrens’ schools for the sum of $1,010,000.00. The father purchased a property in Melbourne with his wife for $1,132,000.00 upon which there is a mortgage in the sum of $608,000.00.
The mother gave evidence that she was currently paying the school fees. The money which she was using to do this came from the balance of the property settlement after the purchase of her home. The fund that she was using was rapidly diminishing. She told the court that she had registered with the Department of Education as a casual teacher and was using the work which she was given to improve her knowledge of the curriculum and bring herself up to date generally so that she would be in a position to apply for a permanent teaching job. At the present time she was receiving $247.00 per day of teaching and she works about two days per week. The mother gets no holiday pay or other benefits as she is on a casual rate. There was no evidence that the mother has any other income. The mother’s financial statement indicates that she has a weekly income of $790.00 and a weekly personal expenditure of $1,888.00. She does receive a single parent payment of $180.00 per week and family tax benefit of $50.00 per week. It should also be noted that the father was ordered by Coleman J to repay the mother his share of the money drawn down on the mortgage for payment of school fees. Under the cross examination the mother agreed that she had deposed to the fact that the total expenses for her children including school fees was $1,163.00. Of that figure $576.00 represented for school fees and levies. In respect of the balance of $589.00 she received (subject to the NAPs) $501.00 per week by way of child support. She agreed that in the figures that were contained in her affidavit as expenditure on the children included such things as a proportion of the motor vehicle and house maintenance, gardening and lawn mowing and repairs.
The father gave evidence and had filed an updated financial statement on 4 June 2004. This appeared to indicate that his remuneration package was still $160,000.00 per annum less superannuation deductions of $11,000.00 per annum. After deductions for superannuation and tax he had a balance of $1,727.00 per week. After listing his expenses the father indicated that he had a weekly net deficit of $998.00.
The father was cross-examined at some length about his statements in his affidavits that he wished the children to be enrolled in the Catholic school system. I accepted his evidence that although this was his preferred option he “lost the argument” and was prepared to fund the fees at the two schools which the children currently attended. He was also cross examined about his use of bank accounts and deposits thereto. He agreed he deposited $5,500.00 in November 2003 but said that it came from a drawdown on his mortgage. He stated that the money was used for a share purchase which he disposed of some time later at a profit of approximately $800.00. He was asked about deposits of some regularity entitled “legal fees”. He explained that these were a loan from his mother in law to pay his legal fees for the current proceedings.
The father agreed that he had told the Family Court in relation to the property settlement that he was paying child support and the school fees and other expenses which he later reclaimed as NAPs. I shall discuss the question of what the mother knew about the father’s attitude towards NAPs later in these reasons.
The father was asked further questions about his income and that of his wife. He explained that his wife was formerly on a salary of over $100,000.00 but that she was now at home as the primary carer for their son and was pregnant with their second child. He indicated that his current financial position was strained and he was spending, including child support, more than he earned. He acknowledged that in the past he had earned very substantial amounts of money, up to $800,000.00 per year, and was questioned about the efforts which he had made to seek other employment. He explained that he had made applications for positions but he has not received one yet. He made it clear that he would expect a larger salary package than the one he was currently receiving if a new position came along.
His mother’s counsel was critical of the manner in which the father gave his evidence. He complained that the father attempted to tailor his answers to best position his case. He complained that some of the father’s responses were improbable. I think there is much in what he said. The father was not a completely satisfactory witness, he did tend to obfuscate, he made no concessions. But the real question is whether this establishes that the expenditure he claimed was real. Questions were asked about this expenditure as shown in his affidavit of means. I am satisfied that whilst the allocation of amounts between members of the household could be somewhat awry the more important figure, the total, was not successfully challenged. In these cases the type of expenditure which is required to be particularised in the affidavits is rarely fully vouched and the court must combine its assumption that a deponent is not wilfully distorting the figures with its own experience from dealing with cases of this nature. On this basis I would not be prepared to make a finding that the father’s expenditure figures are inaccurate in any material particulars.
The child support decisions
On 11 December 2002 the father made an application to the Child Support Agency that in respect of the 2002/2003 assessment with effect from 2 July 2002 to 1 October 2003 the father’s child support assessment be reduced to nil. The request was made for the following reasons:
i)“It cost the applicant extra to care for educate or train the children in the way that the parents intended.”
In regard to this reason the father told the CSA that he was paying the school fees which he estimated are approximately $25,000.00 per annum. The case officer came to the conclusion that the private education of the children was a special circumstance to be taken into account under the fairness test. The second reason was that:
ii)“The children, payee or another person has received or will receive money goods or property from the payor for the benefit of the children”.
In this regard the father referred to payments of private health insurance, the costs of a mobile phone for his daughter, orthodontic payments that were all being paid by him. The case officer concluded that he was satisfied there were special circumstances which established this reason. The third reason was:
iii)“The applicant has necessary expenses in supporting himself that affects his ability to support the children.”
The father gave details of his expenditure including the payment of the mortgage on the matrimonial home and the case officer was satisfied there were special circumstances which established that reason. Finally, the father gave as a reason that:
“The child support assessment does not take into account the income, earning capacity, property and financial resources of the applicant or the respondent.”
In this regard he referred to the earning capacity of his former wife as a teacher. The case officer was satisfied there were special circumstances which established that reason.
Notwithstanding the reasons that were established the case officer came to the conclusion that it was not fair to change the assessment and in doing so said:
The father maintained the children are healthy, attending a private school, and because he lives in Melbourne and they live in Sydney, contact is as he can best arrange. The father maintained a property settlement is to be effected between the parties following the sale of the family house property. He maintained the child support assessment should reduce to nil, given his paying in total for the children an amount equivalent to more than the assessment. He indicated that direct payments, $400.00 per week paid since 25 June 2002, were being or should be offset against his assessment under the non-agency payment (NAP) process.
and
The father established his reasons 3 and 5 special circumstances and needs for the children. The education costs for the children total at least $25,800.00 per annum, have been and are currently being paid by the father as well as his paying other costs for the children, including an ongoing $400.00 per week for their living costs. Notwithstanding the matter if CSA collect, the father has chosen to pay costs direct and offset through the NAP process. … I am satisfied against the background of this case, not to make a change to the current assessment at this stage. Clearly the father is paying at least the assessed child support amount. It appears the payments are in part recognised through the NAP process, with the father’s account being adjusted accordingly. After the family house property is sold, and the sale proceeds distributed, then either party can apply for a change of assessment, if the current assessment is thought to be unfair.
It was accepted in the proceedings before me that the case officer was incorrect in his references to the NAP system. At that time the father was not obtaining any credits in that way. The father did not seek to challenge this decision because, he said, he had no available funds to do so. The parties then went before Justice Coleman for a hearing on the property settlement. The mother maintains that the father indicated to His Honour that he was paying the school fees and the father did not dispute this. In fact the school fees had not been paid and there was a debt of approximately $9,500.00 which Coleman J ordered that he indemnify the mother for.
In August 2003 the CSA wrote to the mother advising her that the father had made a claim for the credit of NAPs consisting of shares of the mortgage payments, payments of school fees and payments of certain orthodontic equipment. These were all set out in the letter with annotations of the amount allowed and the amount disallowed. The mother wrote to the CSA and made an objection and the reasoning behind the decision was explained to her in a further letter dated 24 October 2003. The letter stated that the mortgage payments claimed by the father and allowed were those prior to the order of 25 March 2003 which made him solely responsible for future payments. The father was only credited with 50% of the mortgage payments in accordance with child support legislation and guidelines. The father was also allowed credit for two payments of school fees made before the order of 25 March 2003 and certain orthodontic payments, these total $15,360.32 which the CSA considered to be no more than 25% of the father’s enforceable maintenance liability for the period (s.71C(1)(a)). It is against this ruling that the mother appeals.
Finally, on 13 October 2003 the parties received an assessment of child support requiring the father to pay a monthly amount of $2,175.25 and the mother seeks review of that decision on the grounds already indicated.
Discussion
The form 64 appeal
The mother argues that the Registrar should have exercised his discretion under s.71D not to credit the amount of $15,360.32 because the father had told the Family Court that he was paying that money and the mother assumed that he would continue to do so, would not make a claim under the NAP system and arranged her affairs accordingly. She claims that the discretion of the officer miscarried by not taking these matters into account or alternatively that the case officer should never have considered that the matters were NAP items. The difficulties faced by an applicant challenging a discretionary judgment have been well traversed by the Courts. I believe that the principles governing this area as set out by the High Court in cases such as House v R (1936) 55 CLR 499; Australian Coal and Shale Employees Federation v Commonwealth (1953) 94 CLR 621; Gronow v Gronow (1979) 144 CLR 513; Mallet v Mallet (1984) 156 CLR 608 and applied by the Family Court in cases such as Kearney & Roucek (1997) 21 FamLR 537; R & F (1995) 20 FamLR 118; In the marriage of LC & TC (1998) 23 FamLR 75, apply equally to a decision of a Registrar. In order for the mother to succeed in her application to have the discretionary decision set aside, the Court must be satisfied that in coming his/her decision the Registrar either erred in principle, gave weight to extraneous or irrelevant matters, failed to give weight or sufficient weight to relevant considerations or made a decision that was clearly wrong.
In Australian Coal and Shale Employees Federation v Commonwealth (1953) 94 CLR 621 at 627 Kitto J emphasised that discretionary judgments should stand unless the decision is “clearly wrong”. I do not believe that this can be established in this case.
The statement made to the senior case officer by the mother in her notice of objection is found as Exhibit P to her affidavit. This makes it clear that she was not in agreement with what the father proposed to do but does not go so far as to indicate that she changed her position in some way as a result of her assumption after the family law proceedings that he would continue to make the payments of school fees. The document is an articulate argument as to why the NAP payments should not be permitted but the senior case officer considering the objection decided not to exercise his discretion to disallow the claim. It could not be said that at the time of the Family Court proceedings the mother was totally unaware of the possibility of an NAP claim because that possibility was stated very clearly in the extracts from the earlier decision on the father’s application. Of course, it is possible that another senior officer would have dealt with the matter differently and been more sympathetic to the mother. But that does not constitute a finding that an exercise of discretion has miscarried. As Stephen J said in Gronow v Gronow (1979) 144 CLR 513 at 519-520:
“The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not itself justify reversal can be due to little else but a difference of view to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only a trial judge can do, an appellate Court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.”
The variation of the child support assessment
In her Form 63 application the mother puts forward in her grounds 15 and 16 what is in effect grounds found under s.117(2)(b)(ii) and 117(2)(c)(i). I have already indicated that I accept that both parents wish the children to continue to be educated at the private schools which they are currently attending. I also accept, given the very high fees charged by these particular schools, that in order to make those payments and provide child support for the other requirements of the children the father would be required to pay in excess of the cap figure upon which he is currently assessed. But in order to decide whether it is just and equitable in all the circumstances of the case to make an order increasing the father’s child support payments I must have regard to his capacity to pay: In the Marriage of J F Mee and P J Ferguson 10 Fam LR 971; followed in C and G [2002] FMCAfam 361. The father argued strongly that capacity was what this case was all about and it is an argument which I accept. Can the father pay more than he is currently paying? I have already shown that the father claims to be considerably on the wrong side of Mr Micawber’s ledger:
“My other piece of advice, Copperfield, said Mr Micawber, 'you know, annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and - and in short you are for ever floored. As I am!” [David Copperfield - Charles Dickens]
The truth is that the father has found himself in this position because he has purchased an expensive house with a large mortgage, still runs a Mercedes motor vehicle and has budgeted in his financial statement for holidays and entertainment. But he currently has a net income of approximately $1,727.00 per week and supports his wife and their seven month old child as well as paying a reduced figure of $383.00 for child support until the NAPs have been extinguished. There is no evidence that he has any unencumbered assets upon which he could draw to make additional payments of child support unless and until he obtains a better paying position. I am satisfied that at the present time the father’s earning capacity is no greater than that he is currently earning. This is not a case of a father deliberately downgrading his employment to avoid paying child support. I accept that the father in this case is anxious to find himself employment of the type he had in Sydney during many of the years of his first marriage. Naturally, if this happens it will be open to the mother to renew her application.
The mother’s financial situation is somewhat different. Whilst I accept that at the present time she has a considerably lower income than the father and that even if she secures permanent employment with the Department of Education her income will still be very low compared to his, she does have an unencumbered house purchased for approximately $1,000,000.00 and, like the father, she runs a Mercedes motor vehicle. She also has some money left from the property settlement in which she received two thirds of the matrimonial assets whereas the father only received one third.
It is trite to say that just because both parties expect their children to be educated in a particular way that must happen even if following their separation they are no longer able to afford it. The amount sought by the mother is almost double what the father has been assessed at before the NAPs are deducted. It would seem to me that the mother bears the onus of establishing that he has the capacity to pay this amount or any greater amount than that he is currently paying. No new evidence was produced and no concessions were made in cross examination that would indicate any greater capacity than that declared to the child support case officers and in the evidence before this court. The cross examination of the father concentrated heavily upon his precarious financial situation. This is something which he has just begun to understand and hopefully it is not too late. Insolvency would not be beneficial to his prospects of obtaining a very highly paid job in the finance industry. Having considered the matters required by s.117(2) I am satisfied that any increase in the assessed child support for the father would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the father’s income, earning capacity, property and financial resources. This finding also takes into account the father’s responsibility to support his wife and young child.
In the light of the matters discussed above I am unable to accede to the mother’s applications. I dismiss them both. Before the matter ended I requested the parties to address me on costs. The applicant father’s counsel told me that this case has been very expensive for his client who had to travel up from Melbourne and that because of its complexity I should award costs, not on the Federal Magistrates Court scale, but to be taxed under the Family Law Act. I do not accept that there is anything in the complexity of this case or in the conduct of the mother which would warrant giving an order for costs in excess of the normal. I order that the applicant in both proceedings pays the respondent’s costs of both proceedings to be assessed pursuant to Part 21 Rule 21.02(2)(b) in Schedule 1 of the Federal Magistrates Court Rules.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 24 June 2004
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