Mitchell and Mitchell - [2006] FMCAfam 401

FEDERAL MAGISTRATES COURT OF AUSTRALIA

MITCHELL & MITCHELL

[2006] FMCAfam 401

CHILD SUPPORT – Application for stay of child support – capacity of father to pay child support – father found to have capacity to pay child support of $300 per week – stay order with respect to arrears and child support assessed above that amount.

Applicant:

JEFFREY DOUGLAS MITCHELL

Respondent:

MARYANNE JACINTA MITCHELL

File number:

MLM 5612 OF 2006

Judgment of:

Riethmuller FM

Hearing date:

31 July 2006

Date of last submission:

31 July 2006

Delivered at:

Melbourne

Delivered on:

1 August 2006

REPRESENTATION

Counsel for the Applicant:

Mr Wilson

Solicitors for the Applicant:

Eales and Mackenzie

Counsel for the Respondent:

Mr Testart

Solicitors for the Respondent:

Garden and Green

ORDERS

That collection of arrears of child support for the children MJM born … and MAM born … (“the children”) pursuant to the assessment made 11 May 2006 be stayed.
That pending the determination of the husband’s application to the Child Support Agency dated 6 June 2006 the assessment of child support for the children made 11 May 2006 be stayed insofar as the said assessment exceeds $150 per week per child.
That the husband’s application filed 12 July 2006 be otherwise transferred to the Family Court of Australia at Melbourne.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLM 5612 of 2006

JEFFREY DOUGLAS MITCHELL

Applicant

And

MARYANNE JACINTA MITCHELL

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This is an application by the father for a stay of the current child support assessment. The assessment that is in force at present is as a result of a departure decision made by a senior case officer of the Child Support Agency. That decision was made after a hearing with the mother but in the absence of the father who did not respond to the application for a change of assessment.
There are two children relevant to this application, a 12 year old boy, MJM, and an eight-year-old girl, MAM born on 11 July 1998.
The parties separated on 30 March 2004 and have lived separately since that time. The applicant father is a farmer. The children presently live with the mother. The father must travel a significant distance if he is to have contact which he says costs him around $400 per month, where there is dispute between the parties as to what contact arrangements will ultimately be in place. Similarly, there is significant dispute between the parties as to the actual assets and liabilities and the income being earned by the farming and associated businesses.
All of these matters are the subject of proceedings that are currently pending in the Family Court of Australia. But for the fact that the registry placed this matter in the Federal Magistrates Court lists, it would have, in the usual course, been more appropriate for it to also have gone to the Family Court to be dealt with as part of the proceedings dealing with all of the other issues between the parties. However, it is a matter that needs to be dealt with quickly, at least initially, and therefore I propose to deal with the question of an initial stay today.
The child support assessment prior to the departure application resulted in the father being assessed to pay child support at $179.83 per month. The result of the departure decision is a child support assessment of over $2,000 per month. The father says he is simply unable to pay this amount given the current state of the businesses that he operates. His counsel took me through a profit and loss statement which shows that the business generates gross income, at least in the 2004-2005 year, of $566,000 and had expenses of $521,000, resulting in a net operating profit of $44,705 for the last financial year.
Significantly that expenditure included a sum of $125,920 for depreciation on plant and equipment. This figure is not a cash expenditure of the business, and cash flow analyses are not available in the present material. However, it is clear that there are significant repayments being made by the father on a regular basis in order to operate the business.
In part these repayments are reflected in the profit and loss statement by the figure that is inserted for interest paid which, on the 2004‑2005 profit and loss statement, showed interest being paid for the year of $107,487. Precisely how much of the capital repayments are contained within the current payments made by the father is not entirely clear on the material before me. However, it appears that there is a significant capital component that must be taken into account which will affect the cash flow of the business as it is an outgoing that must be met but does not appear in the profit and loss statement.
The upshot of this very preliminary analysis based upon the limited material that is available at this stage is that there appears to be significant cash flow capacity in the business, but the full extent of it is not clear, and it is certainly not clear at this stage that the father necessarily has the capacity to pay child support on the basis that it was assessed, namely, child support based upon the capped income amount, or the generally accepted maximum income.
However, I am satisfied that he has the capacity to pay child support at a level far greater than the original assessment of $177.92 per month, at least on a preliminary basis, on the basis of the material that is before me.
I also take into account in this matter that the wife had applied to the Child Support Agency for a departure. She has waited and gone through that process and received a decision. The husband did not participate in the process. He now seeks to participate in that process and has only recently prepared his tax returns for the last three years. His conduct in this regard, if there were to be a stay on the child support assessment in its entirety, would have the effect of stopping the children from receiving whatever the ultimately appropriate rate of child support is for several months at a minimum. This is a factor that is appropriate to take into account when weighing the balance of convenience and a preliminary review of the material in determining an appropriate level of child support pending a formal decision by the agency and any further application to the court.
I have regard to the parties' expenditures and in particular I take into account the expenditure figures as set out for the children in the mother's material. The mother is in receipt of a pension or benefit from Social Security of $367 per week. She says that there are expenses for the children totalling $595 per week. However, I note that those expenses include $100 per week for clothing and shoes; $40 per week for child-minding; $100 per week for medical, dental and optical; $50 per week for entertainment and hobbies; $50 per week for education expenses; $25 per week for pharmaceutical expenses and $20 a week for hairdressing and toiletries. There is no material before me to explain why those figures are at the rates that they are and, prima facie, many of them seem quite high for average children of that age.
I bear in mind, however, that the children are also entitled to share in the standard of living reflected by the income and earning capacity of their parents. However, ultimately, the true income and earning capacity of the father is yet to be properly determined.
Doing the best that I can on the limited material, and bearing in mind the figures that have been set out in the various costs of children's surveys in the past, I have come to the conclusion that it is realistic to conclude that the children have a need of $300 per week to meet their day‑to‑day expenses, at least on a frugal basis. On the limited material available I am not satisfied that child support at this rate is beyond the father’s capacity at present.
In these circumstances, I propose to stay the child support arrears and stay the assessment to the extent that it exceeds $300 per week, pending the outcome of the child support change of assessment process that is currently on foot. Given that all of the financial material and financial matters are before the Family Court, I propose to transfer the further hearing of this application, should it be required after the decision of the Child Support Agency, to the Family Court of Australia to be heard with the other proceedings.
Given the nature of the material before me, the child support senior case officer ought not to take my findings on the stay application as anything other than a finding as to the balance of convenience pending a proper inquiry being made as to the actual financial affairs of the parties and not indicative or presumptive of any view of what the final outcome of those proceedings ought to be.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Riethmuller FM

Associate:

Date: