Mohan and Neeson
[2017] FCCA 388
•3 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MOHAN & NEESON | [2017] FCCA 388 |
| Catchwords: CHILD SUPPORT – Departure Application – Application for leave to amend an Administrative Assessment more than 18 Months prior to the date of the application – Application for Departure filed after Enforcement Summons – Application refused. |
| Legislation: Child Support (Assessment) Act 1989, ss.111, 112, 116, 117 |
| Cases cited: Hides & Hatton (1997) 21 Fam LR 855 Yewen & Child Support Registrar and Anor [2014] FCCA 2399 |
| Applicant: | MR MOHAN |
| Respondent: | MS NEESON |
| File Number: | MLC 7720 of 2015 |
| Judgment of: | Judge Williams |
| Hearing date: | 14 December 2016 |
| Date of Last Submission: | 15 December 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 3 March 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Croft |
| Solicitors for the Applicant: | Coulter Roache |
| The Respondent: | In person |
ORDERS
The Application in a Case filed on 26 April 2016 is dismissed.
The Initiating Application filed on 10 May 2016 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Mohan & Neeson is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 7720 of 2015
| MR MOHAN |
Applicant
And
| MS NEESON |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant seeks to challenge his adjustable taxable income, for child support purposes for a period of seven years. Should he be permitted to do so, after significant delay and consideration of prejudice to both the applicant and the respondent.
Background
This matter commenced on 17 August 2015 when the Child Support Registrar filed an Application in a Case seeking to recover unpaid child support (“the enforcement proceedings”). The respondents to the enforcement proceedings are Mr Mohan (“the applicant”) and (omitted) Pty Ltd (“(omitted) Pty Ltd”). The unpaid child support is in respect of the child A (“A”) born (omitted) 1999. As at 11 August 2015, the sum of $144,257.68 was allegedly due and payable by the applicant[1] comprising $104,981.70 arrears of child support and $39,275.98 for late payment penalties.
[1] Annexure E8 to the affidavit of Ms E sworn 11 August 2015 and filed in the enforcement proceedings.
A is the child of the applicant and Ms Neeson (“the respondent”). The applicant and the respondent were in a relationship for a number of years prior to A’s birth, however they had separated at the time of his birth. The applicant disputed A’s paternity and this was resolved in 2015 when the applicant, respondent and A underwent a paternity test.
Subsequent to A’s birth, the respondent sought to have the applicant assessed for child support. The first assessment was for the period 1 August 1999 to 31 August 1999[2]. Apart from a payment of $1116.21 in November 1999, which was the result of an interception of the applicant’s tax refund, the applicant has not made any payment of child support for A. The balance of outstanding child support and penalties, as at 11 August 2015 was $144,257.68. This comprised outstanding child support of $104,981.70 and late payment penalties of $39,257.68. Whilst this may at first instance seem a very significant debt, it is equivalent to the applicant having paid child support to A of just under $7000 per annum, or $585 per month during the 15 year period the debt has accrued.
[2] Annexure two of the affidavit of Ms E sworn 11 August 2015.
On 27 November 2002 the respondent lodged a change of assessment application. On 22 January 2003, a senior case officer made a decision to refuse to make a determination pursuant to s.98E of the Child Support (Assessment) Act 1989.[3]
[3] Affidavit of Ms E sworn 11 August 2015.
In October 2006, when A was aged seven years and three months, he was hospitalised and diagnosed with Acute Myeloid Leukaemia . He received treatment at the (omitted) Hospital, Melbourne from (omitted) 2006 until (omitted) 2009.[4]
[4] Annexure 21 of the affidavit of Ms Neeson sworn 16 November 2016.
Ms Neeson’s capacity to work and financially provide for A during this time was compromised. She was requested to produce her tax returns for inspection by counsel for the applicant, and her tax returns confirmed a low income during the period she was required to devote herself to caring for A. Annexure 24 to her affidavit is a letter from the (omitted) Hospital dated 2 November 2006, referring to her requirement to be absent from employment. Counsel for the applicant did not object to this evidence.
Ms Neeson’s evidence is that she was aware that staff at the (omitted) Hospital had initiated contact with the applicant, shortly after A’s diagnosis, for the purposes of bone marrow matching. Ms Neeson was not challenged about this evidence.
In 2006 the applicant married Ms M, (“Ms M”) .The applicant and Ms M have three children, X aged eight, Y aged five and Z aged two. They live on a rural property, (omitted). The registered proprietors of (omitted) are the husband’s parents, Ms J and Mr G.
(omitted) Pty Ltd, as trustee of the (omitted) Trust, is the registered proprietor of a property situated at 3250 (omitted), which is known colloquially as “(omitted)”. This property comprises approximately 600 acres and is where the (business omitted) activities of the applicant and Ms M are conducted.
(omitted) Pty Ltd was registered on 7 June 2005 and until 9 July 2014, the applicant’s sister, Ms P was the sole director and secretary. On 9 July 2014 Ms M became the sole director of the company. (omitted) Pty Ltd has 20 issued shares, of which 10 are held by Ms P and 10 are held by Ms J.[5]
[5] Paragraph 36 of the affidavit of Ms E sworn 11 August 2015.
The (omitted) Trust is a discretionary trust which was established on 27 June 2015.(omitted) Pty Ltd is the trustee of the trust, the applicant and his parents are the Appointors and the applicant, his children and remote issue are the primary beneficiaries.[6]
[6] Paragraph 37 of the affidavit of Ms E sworn 11 August 2015.
On 15 November 2007 the applicant and Ms M entered into a contract of sale as purchaser, to purchase (omitted) for the sum of $1,467,405.[7] The deposit for the purchase, $150,000 was paid from (omitted) Pty Ltd’s bank account into the account of the agent on 26 October 2007, in anticipation of execution of the contract of sale.[8]
[7] Paragraph 7 of the affidavit of Ms L sworn 5 Dec 2016.
[8] Paragraph 8 of the affidavit of Ms L sworn 20 April 2016.
On 3 December 2007, the applicant and Ms M executed a sale of real estate nomination form, nominating (omitted) Pty Ltd as the purchaser of (omitted).[9]
[9] Paragraph 10 of the affidavit of Ms L sworn 20 April 2016.
The purchase of (omitted) was financed by a mortgage from the (omitted) bank of $1,250,000.[10]
[10] Paragraph 12 and annexure 7 of the affidavit of Ms L sworn 20 April 2016.
On 23 February 2009 , a senior case officer determined the applicant’s adjusted taxable income.
The applicant and Ms M operate a (omitted) business. Since 2005 income from both endeavours has been distributed to beneficiaries of the (omitted) Trust. Subsequent to the acquisition of (omitted), the businesses have been conducted at that property.
The applicant is the primary worker for both businesses. His evidence was that he works between 30 and 40 hours per week in the businesses performing (duties omitted). This evidence was corroborated by Ms M, save that she estimated the applicant worked approximately 30 hours per week in the businesses. Ms M’s evidence was that she attends to (omitted) work and also performs work on the farm. The couple are occasionally assisted by members of the applicant’s family.
The income and losses generated by the trust for the financial years 2006 to 2015 are summarised as follows:[11]
[11] Paragraphs 16 of the affidavit of Ms L sworn 20 April 2016.
a)$64,232 in a financial year ended 30 June 2006;
b)$150,403 in the financial year ended 30 June 2007;
c)$136,817 in the financial year ended 30 June 2008;
d)a loss of $20,779 in the financial year ended 30 June 2009;
e)$37,087 in the financial year 30 June 2010;
f)$14,084 in the financial year ended 30 June 2011;
g)$67,777 in the financial year ended 30 June 2012;
h)$16,653 in the financial year ended 30 June 2013;
i)$90,054 in the financial year ended 30 June 2014;
j)$71,751 in the financial year end 30 June 2015;
The total income earned during that time was $628,079. The total income earned since the acquisition of (omitted), (including income earned during the first half of the financial year ended 30 June 2008) was $413,444.
Paragraphs 17 to 27 of Ms M’s affidavit[12] sets out the annual distributions of the income of the (omitted) Trust. Apart from a distribution of $6000 in the financial year ended the 30 June 2006, there have been no distributions of income to the applicant. The accounts of the (omitted) Trust for the financial years ending 30 June 2006 to 30 June 2015 inclusive,[13] do not indicate that the applicant has received a wage for his work. The trust distributions have been made to Ms M, the applicant’s parents, Mr G and Ms J, the applicant sisters Ms L and Ms P and the applicant’s brother Mr T.
[12] Affidavit of Ms M sworn 20 April 2016.
[13] Annexures 9,10, 11, 12,13, 14,15, 16 and 17 of the affidavit of Ms M sworn 20 April 2016.
The applicant’s evidence was that he had not filed a tax return since 1999, when his tax return was intercepted by the child support agency and the funds paid to the respondent.
The reasons advanced for the applicant not being paid an income or receiving trust distributions are discussed under the heading “Evidence”.
On 23 February 2009, a senior case officer determined that the applicant’s adjusted taxable income be set as follows:
a)for the period 20 January 2009 to 19 January 2010, $118,363;
b)for the period 20 January 2010 to 19 January 2011, $122,269.[14]
[14] Paragraph 7 of the affidavit of Ms E sworn 11 August 2015.
The senior case officer found that the applicant had alienated his income through a trust, and through third parties.[15]
[15] Paragraph 8 of the affidavit of Ms E sworn 11 August 2015.
The applicant engaged Harwood Andrews lawyers, to lodge an objection to the assessment of 23 February 2009. The objection is dated 20 March 2009. On 19 May 2009 an objections officer disallowed the objection.[16]
[16] Paragraphs 9 and 10 and annexure 4 and 5 of the affidavit of Ms E sworn 11 August 2015.
On 30 March 2011 a senior case officer determined that the applicant’s adjusted taxable income be set as follows:
a)for the period 21 January 2011 to 4 March 2011, $122,269;
b)for the period 5 March 2011 two 31 May 2013 $122,269.[17]
[17] Paragraph 11 and annexure 6 to the affidavit of Ms E sworn live in August 2015.
On 27 May 2013 a senior case officer determined that the applicants adjusted taxable income be set as follows:
a)for the period 1 June 2013 to 30 June 2014, $122,269;
b)for the period one July 2014 to 30 June 2015, $125,937;
c)for the period one July 2015 to 30 June 2016, $129,715.[18]
[18] Paragraph 12 of the affidavit of Ms E sworn 11 August 2015.
Procedural history
On 17 August 2015, the Child Support Registrar filed an application in a case seeking to recover the amount of child support assessed to that date, together with penalties and interest (“the collection proceeding”).
On 30 October 2015 orders were made by consent by His Honour Judge Reithmuller adjourning the collection proceeding to 11 December 2015.
On 11 December 2015, restraining and procedural orders were made by Her Honour Judge Baker and the collection proceeding was fixed for final hearing on 4 May 2016.
On 15 March 2016, procedural orders in the collection proceeding were made in chambers by His Honour Judge McGuire.
On 31 March 2016, the child support registrar filed a further amended application in a case, in the collection proceeding.
On 20 April 2016 the applicant filed a response in the collection proceeding.
On 26 April 2016 the applicant filed an Application in a Case seeking leave to vary the applicant’s taxable income in respect to any one or more of the child support assessments, relied upon by the Child support Registrar, in the collection proceeding.
On 4 May 2016, orders were made by consent by me, which provided as follows:
a)Adjourning the matter to the duty list on 25 May 2016;
b)Dismissing the application in a case filed 26 April 2016;
c)Adjourning the collection proceeding to a date to be fixed;
d)Providing for the applicant to file and serve within seven days, any application under section 111 or s.112 of the Child Support (Assessment) Act1989 (“the adjusted taxable income proceeding”);
e)For the applicant to pay $20,000 to the child support registrar within 30 days.
On 25 May 2016, orders were made by consent by me, which provided as follows:
a)Adjourning the matter for trial on 14 December 2016;
b)Adjourning the collection proceeding to a date 30 days after trial and excusing the child support registrar’s attendance until then;
c)Procedural orders in anticipation of the trial.
Issues for Determination
Should the court vary the applicant’s adjusted taxable income for 18 months prior to an administrative assessment of child support, and if so determination of the applicant’s adjusted taxable income for the relevant period.
Should leave be granted to the applicant to amend an administrative assessment that is more than 18 months, and less than seven years earlier than the day on which the application is made, and if so, determination of the applicant’s adjusted taxable income for the relevant period.
Documents relied upon
The applicant relied upon the following documents:
a)Application in a case filed 26 April 2016;
b)His affidavits filed 10 May 2016 and 5 December 2016;
c)Affidavits of his parents, Ms J and Mr G filed 26 April 2016;
d)Affidavit of Ms M filed 6 December 2016;
e)Outline and submissions filed 12 December 2016.
During the course of the proceedings the applicant’s counsel referred to the affidavit of Ms E filed 11 August 2015 in the collection proceeding. That affidavit was also referred to in the applicant’s outline and submissions.
The respondent relied upon the following documents:
a)Response filed 17 November 2016;
b)Affidavit of respondent filed 17 November 2016.
The Applicable Law
Application for departure from administrative assessment
Section 116 of the Child Support (Assessment) Act sets out two circumstances in which a party may apply to the court for a departure from an administrative assessment of child support.
In this matter the applicant relies on s.116(1)(b)(i) and (ii), which provides for the court to have jurisdiction 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
Section 117 of the Act provides guidance about what are special circumstances which enable the court to be satisfied that it is appropriate to make a departure order.
Section 117 (1) (b) provides as follows:
(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 Applicant relies on the grounds for departure as set out in s.117(2)(a)(i) and s.117(2)(c)(ib) of the Act.
Section 117(2)(a)(i) provides as follows:
(a) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i) the duty of the parent to maintain any other child or another person; or
Section 117(2)(c)(ib) provides as follows:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(ib) because of the earning capacity of either parent; or
Section 117(4) sets out the factors to which a court must have regard, in determining whether it would be just and equitable to the child, the payer and payee to make a particular order under the division.
Section 117(4) provides as follows:
Matters to consider for purposes of subparagraph (1)(b)(ii)
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b) the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g) any hardship that would be caused:
(i) to:
(A) the child; or
(B) the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
Section 117(5) sets out the matters the court must have regard to, in determining whether it would be otherwise proper to make a particular order under the relevant division.
Section 117(5) provides as follows:
(5) In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
Application for amendment of administrative assessment that is more than 18 months old
Section 111 of the Child Support (Assessment) Act provides as follows:
Parent or carer applications
(1) A liable parent, or a carer entitled to child support, (the applicant) may apply to a court having jurisdiction under this Act for leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118;
in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.
Section 112(1) of the Act provides as follows:
(1) If an application is made to a court under section 111, the court may grant leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118.
Section 112(2) of the Act provides as follows:
(2) The court may grant leave for an order to be made under section 118 if the court is satisfied that it would be in the interest of the parties to the proceeding for the court to consider, at the same time as it hears the application under section 111, whether an order should be made under section 118. If the court does so, the applicant is taken to have made an application to the court under section 116 for such an order.
Section 112(4) of the Act provides as follows:
Matters to be considered
(4) In considering whether to grant leave under sub section (1)the court must have regard to:
(a) any responsibility, and reason, for the delay in
(i) making an application under section 98 B or 116; or
(ii) making a determination under section 9 8S;
(b) the hardship to the applicant (other than the registrar) if leave is not granted; and
(c) the hardship to the other party or parties (other than the registrar) if leave is granted
Section 112(5) of the Act provides as follows:
(5) The Court may have regard to any other relevant matter
Section 118(1)(g) of the Act provides as follows:
(1) the orders that the court may make under this the division are as follows:
(g) and order varying a parent’s adjusted taxable income.
The Evidence
The applicant, his mother, Ms J and his wife, Ms M gave evidence and were cross-examined. Leave was granted to enable the applicant’s counsel to adduce some limited further evidence in chief.
The applicant’s counsel did not seek to cross-examine the respondent.
I will address the evidence of each of the witnesses.
The Applicant Mr Mohan
The applicant’s evidence was vague and unsatisfactory and I do not accept most of his evidence. At times he professed to have limited knowledge or at times no knowledge at all of highly relevant matters. Examples of this were as follows:
i)The initial denial that the written Response to the application for the change of child support assessment, in December 2002, was in his handwriting[19]. He eventually conceded the Response was in his handwriting,[20] after it was suggested to him that was highly improbable and implausible that anyone else had prepared the document. He professed to have little recollection of the document. That document forms part of annexure 4 to the affidavit of the respondent filed 17 November 2016;
[19] transcript page 13 at line 22
[20] transcript at page 14, line 22
ii)Equivocation about his postal and living address. He eventually conceded that the only formal addresses he had ever used were (omitted) and his current address (omitted). Both properties were owned by his parents. The only other address he had used for correspondence was an address in South Australia when he obtained a licence in that state at age 17;
iii)Equivocation about whether he had actually received a copy of the initial application for change of child support assessment, which was made in 2002, despite the Response to the application in his own handwriting;
iv)His inability to remember receiving the 2004 child support proceedings, despite his counsel stating “we have not chosen to dispute that it was”[21];
[21] Transcript page 18 at line 17.
v)His evidence that he had never received a letter from Legal Aid, dated 14 May 2003 in relation to paternity testing which was addressed to him at (omitted);
vi)Attempts to diminish the extent of his work on the property, (omitted) and embellish the extent of work performed by Ms M, and other family members;
vii)His involvement in the (omitted) business conducted by the (omitted) Trust, including his evidence that he does not drive a truck outside a 100 km radius of (omitted), which avoids the necessity for completion of a log book;
viii)The nature and extent of unpaid work carried out for his parent’s (omitted) businesses, and no satisfactory explanation why he does not receive any remuneration from his efforts;
ix)No satisfactory explanation why he has not received any trust distributions or wages since 2006, despite him currently working 30 to 40 hours a week on the farm property, including the (omitted) business;
x)No satisfactory explanation why family members have received trust distributions despite them undertaking less work than the him;
xi)Denial that he is the main worker for the (omitted) Trust businesses;
xii)Inability to initially recall the size of his parents property and the name of his parent’s (omitted) business, despite having grown up on the property and lived there for many years;
xiii)Denial of any knowledge of the financial arrangements for the (omitted) business and maintaining that he did not have discussions with Ms M about the financial administration of the business;
xiv)Denial that he had ever had a discussion with anybody about how his finances could be organised to limit his exposure to payment of child support.
The Applicant's Mother Ms J
Ms J, senior, gave evidence in a forthright and confident manner, however she seemed to be making a concerted effort to give evidence which was favourable for Mr Mohan. It was apparent from her evidence that she was in charge of the financial operations of the business she conducted with her husband and had substantial involvement in the financial affairs of the applicant and Ms M.
She gave evidence about the configuration and location of the family farms and about the activities of the family business.
Her evidence about payment to the children from the family business conducted by herself and the husband, (omitted) Pty Ltd, was as follows:
a)Her other son, Mr T, worked for the business and that he had received a gross income of $55,000 for the 2016 financial year. In addition to his salary he received usual employee entitlements including superannuation, free fuel, car repairs and payment of his phone bill. She estimated that Mr T would probably work off and on over six months.[22]
b)Her daughter, Y, is a full-time mother of a four and eight-year-old, does not currently work in the business and has not done so since the birth of her children. When she did work, she worked approximately 30 hours per week and was paid $20 an hour. Y continues to receive free fuel and payment of electricity, phone and repair bills.
c)Her son-in-law, Y’s husband, works in the business as a full-time employee and earns $80,000 per annum plus superannuation. Additionally, for several years whilst Y’s husband was employed by his parents-in-law, he and Y lived rent-free in a house situated on a property owned by the parent’s partnership. His salary was not reduced because of the provision of rent free accommodation.
d)Her daughter, Ms P, is a full-time mother of a two and five-year-old, does not currently work in the business, and has not done so since the birth of the children. She was previously employed in the business and worked approximately 30 hours per week and was paid $20 an hour, just like Y.
e)Her son Mr Mohan commenced work for the family business when he was 18, and obtained his truck licence. In 1997 he received a salary of approximately $500 per week. He sustained injuries in a truck accident in (omitted) 1998. Approximately 12 months later he returned to driving for the family business for approximately 35 to 40 hours per week, and he received a salary for his work.
f)On behalf of Mr Mohan and Ms M, she and her husband currently pay council rates for (omitted) of approximately $2800 per annum, water rates of approximately $400 per annum and payment of amenities bills. They also live rent-free on one of the properties owned by the parent’s partnership.
[22] Transcript at page 31, lines 11 and 12.
Ms J also gave evidence about the purchase of (omitted). According to her, she and her husband paid a deposit for the purchase of the property of approximately $50,000, although she conceded it might have been $150,000. She was quite clear that when the property settled, she and her husband were refunded the deposit paid by them, from the mortgage advance. This was in contrast to the evidence of Ms M and from an examination of the letter from (omitted) Bank referring to the mortgage advance, arithmetically impossible.
She also gave evidence about the allocation of beneficiary distributions from the (omitted) Trust. Her evidence may be summarised as follows:
a)Each year she attends the accountant’s office around April/May. No other family member accompanies her. She, in consultation with the accountant, is solely responsible for deciding the beneficiary entitlements to income from the family businesses.
b)The two criteria for allocation of income are as follows:
i)primarily to minimise tax for all family members;
ii)secondly, “the second is the fact that if some of them have put more in to the work on (omitted)”;[23]
c)Distributions had been made to family members, in some years, including 2010 and 2011, who had not performed any work;
d)There was no explanation why there had not been any distributions to Mr Mohan, despite Mr Mohan’s own evidence that he worked 30 to 40 hours a week at the farm property, other than that Mr Mohan could not work as efficiently as prior to his accidents.
[23] Transcript at page 44, lines 11 and 12.
Ms J would not concede that there was any connection between lack of distributions to Mr Mohan and attempts to minimise Mr Mohan’s income for the purposes of any child support assessment for A.
I accept her evidence about the employment history and payment of other family members; however I do not accept her evidence about the basis of the allocation of trust income. She did not provide a plausible reason for the exclusion of Mr Mohan.
Ms M
Ms M attempted to give evidence in a forthright manner. However it was apparent that she was at pains to give evidence, which would be favourable for her husband. There was a lack of objectivity in her evidence.
Counsel for the applicant sought leave to adduce evidence from Ms M about the source of payment of the applicant’s legal costs and the $20,000, which was paid to the Child Support Registrar, pursuant to orders made on 4 May 2016.
Her evidence was that all legal costs and the $20,000, had been paid from her (omitted) account, from money which she claimed she had earned through work at the (employer omitted). She later added that the money in her (omitted) account had also been accumulated from trust distributions she had received and monies she had saved up from birthdays. She did not quantify the legal costs, which had been paid from her account. She did however state, that she had probably $5000 in her access account and a further $80,000 in her (omitted) bank account. She claimed that Mr Mohan did not have access to her accounts, nor was she aware if he had any personal bank accounts.
In relation to her work at the farm, despite being the mother of three young children aged eight, five and two, she estimated that she worked on average 20 hours per week. She did concede that when the children were babies she was unable to work.
Her evidence was that Ms P, also worked at (omitted) during harvest time. Initially she stated that Ms P worked driving the headers during harvest time, however this was later modified to Ms P working on three or four occasions during harvest. This evidence was in contrast to the evidence of Ms J, which was that Ms P is a full-time mother and does not currently work in the family (business omitted) activities.
Her evidence about the allocation of beneficiary distributions from the (omitted) trust was that there were family discussions to sort out what all family members were happy with, and the ultimate decision was made by Ms J.
She thought that the primary consideration for allocation of beneficiary entitlements was taxation purposes. She agreed that the secondary consideration was on the basis of work performed by the beneficiaries.
When pressed why Mr Mohan, whom she conceded was the primary worker in the business had not received any allocations of income from the trust, she was evasive, and could not provide any plausible explanation as to why that had occurred. She did concede that the failure to distribute taxable income to Mr Mohan could possibly have something to do with child support.
Her evidence about the acquisition of (business omitted) was that (omitted) Pty Ltd was established in 2005, and that the property was purchased in November 2007. The company paid a deposit of $150,000 for the purchase of the property, and these funds had been accumulated from the business activities of the company. Between June 2005 and November 2007. She agreed that the property had been purchased for just under $1.5 million and that, the total purchase price; including stamp duty would have been approximately $1,550,000. She also agreed that the mortgage from the (omitted) bank was for $1,250,000. When questioned about the source of the additional funds required to purchase the property (approximately $150,000), she was vague before suggesting that it could have been a loan from Mr G and Ms J. When challenged about that statement, her response was that she would have to go back and have a look at her bank statements. Her evidence is in stark contrast to the evidence of Ms J, referred to at paragraph 66 hereof.
When questioned about the outstanding mortgage secured against the property, her evidence was that the current balance might be around $800,000. She agreed that the mortgage had been reduced by approximately $450,000 in a nine year period, and the explanation for that was “through our work.”[24]
[24] Transcript at page 62, line 45 and page 63, line 1.
She was unable to provide any plausible evidence as to how, in addition to paying interest on the outstanding mortgage balance, and accumulating’s significant savings in her personal account, the company would have been able to reduce the principle of the mortgage by $450,000 in the nine year period.
Discussion
Application for departure from administrative assessment
In his Initiating Application filed 10 May 2016, the applicant seeks final orders as follows:
1. That:
b. Alternatively, leave be granted under section 116 of the Act for the Court to make an order under section 118 of the act, varying the applicant’s (the paying parent’s) taxable income ;
in respect of any one or more of the administrative child support assessments, relied on by the child support registrar as constituting the whole or any part of any registrable maintenance liability or debt due to the Commonwealth, of Australia with respect to child support payable by the Payer, Mr Mohan (“the payer”) for the child A born (omitted) 1999. (“A”).
The applicant does not particularise the relevant child support assessments. However, counsel for the applicant provided a document titled “Applicant’s outline and submissions for hearing 14 December 2016.” I will refer to that document as the Applicant’s Submissions.
At page 5 of the Applicant’s Submissions, reference is made to the child support assessments. It is submitted that of the assessment dated 11 August 2015, for the period 1 August 2015 to 30 June 2016, is the only assessment, which falls within the 18 month period. I agree with this submission.
The child support assessment for the period 1 August 2015 to 30 June 2016 is included in annexure one of the affidavit of Ms E sworn 11 August 2015, and provides as follows:
Annual amount of child support
$18,142
Monthly rate of child support
$1511.83
Fortnightly rate of child support
$695.38
Weekly rate of child support
$347.69
Daily rate of child support
$49.67
2015 taxable income from Mr Mohan
$129,715
2015 taxable income for Ms Neeson
$63,759
As referred to at paragraph 43 hereof, there are limited circumstances, which provide for the court to have jurisdiction for an application for departure from an administrative child support assessment.
The applicant is currently before the court as a result of an enforcement application filed by the child support registrar and therefore satisfies s.116(1)(b).
Prior to exercising discretion s.116(1)(b)(ii) requires the court to be satisfied that it would be in the best interests of the liable parent, and the carer entitled to child support for departure order to be made in the special circumstances of the case.
The Full Court in the matter of Hides & Hatton (1997) 21 Fam LR 855 said as follows:
[T]he jurisdiction to make an order under s 117 departing from an administrative assessment of child support is a discretionary jurisdiction. But as was made clear by the Full Court in In the Marriage of Gyselman (1991) 15 Fam LR 219 ; (1992) FLC 92–279 , it is a highly structured discretion with the court being required to adhere to the following strict three-step process and to consider (at Fam LR 224; FLC 79,064):
(1) Whether one or more grounds of departure in s 117(2) is established.
If so:
(2) Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order.
(3) Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
The applicant submissions set out what he considers are relevant s.117(2) factors. These will be considered.
Section 117(2)(a)(i) the duty of the parent to maintain any other child or another person
The applicant’s submission is that since the birth of his oldest child X, eight years ago, and the subsequent birth of the two younger children, the applicant has had a duty to maintain other children, which was not considered by the child support registrar, albeit because he was unaware of it.
I agree this ground of departure is established.
Section 117(2) (c)(ib) because of the earning capacity of either parent
The applicant’s submission is that the administrative assessment applied a clearly incorrect view of the applicant’s earning capacity, and in fact applied an income for the applicant well in excess of his actual earning capacity and earnings, even under the assumption supplied by the child support registrar.[25]
[25] Paragraph 30 of the applicant's submissions.
The relevant administrative assessment applied a taxable income of $129,715 for the applicant. This income was determined by a senior case officer on the 27 May 2013, as referred to at paragraph 27 hereof.
The applicant did not make any submissions for the purposes of the determination of 27 May 2013. The only evidence why the applicant did not participate in that determination, or any determination, subsequent to May 2009, is at paragraph 35 of his affidavit sworn 10 May 2016:
“I was not receiving any income and no recovery of child support was being pursued by the child support registrar. Accordingly, following a disallowance of my objection I took no further steps.”
For the reasons set out at paragraph 111 hereof, I am unable to make any findings as to an alternative earning capacity of the applicant.
This ground of departure is not established.
Section 117(4)
Section 117(4) sets out the factors the court must have regard to when determining whether it would be just and equitable as regards the child, the carer entitled to child support, and reliable parent to make a particular order under the division.
The submission of the applicant is that it can never be just and equitable to impose an obligation that is clearly incorrect and significantly overstates the applicant’s income beyond that available to him. Furthermore, imposing such an obligation on the applicant without regard to his duty to his children by Ms M, penalises those children and Mr Mohan and Ms M’s ability to provide for them.
I will address each factor of s.117(4).
(a) the nature of the duty of a parent to maintain a child
Both parents have a duty to maintain A.
(b) the proper needs of the child
The only evidence of A’s current needs is referred to in paragraph 32 of the affidavit of Ms Neeson[26]. Her evidence is that A is in the first year of a (omitted) apprenticeship and requires financial support, including funding of a home for him to enable him to continue with his employment. Ms Neeson was not challenged about this evidence.
[26] Affidavit of Ms Neeson sworn 16 November 2016.
(c) the income, earning capacity, property and financial resources of the child
Apart from the evidence referred to in the preceding paragraph, there was no relevant evidence as to A’s current financial situation.
(d) the income, earning capacity, , property and financial resources of each parent who is a party to the proceedings
Income
Neither party has filed a financial statement in this proceeding. The applicant’s evidence is that he does not receive any income and has not received any distributions from the trust, except a distribution of $6000 for the financial year ended 30 June 2006.
Counsel for the applicant did not dispute the veracity of the respondent’s income, and as previously referred to, I understand the respondent provided her tax returns for inspection by the applicant’s counsel. In any event, her income is apparent from the numerous child support assessments, which are annexures to both her affidavit and the affidavit of Ms E.
Earning Capacity
There was no dispute about the respondent’s earning capacity.
In relation to the applicant’s earning capacity, Counsel for the applicant, most helpfully, provided me with an Aide Memoir 1A, which sets out the following :
a)Distributable income of the trust from 2008 to 2015 inclusive;
b)Calculation of two thirds of the distributable income for each year;
c)The actual distributions of the trust for each year;
d)Calculation of two thirds of the income actually distributed to Ms M, in each year;
e)The respondents income.
The Aide Memoir 1A may be summarised as follows:
| Year | Distributable Income ($) | Two thirds of distributed income ($) | Actual distributions ($) | Two thirds of income distributed to Ms M ($) | Respondent’s income ($) |
| 2008 | 136,818 | 90,300 | Ms M 27,342 Mr G 9,285 Ms J 9,285 Ms L 47,279 Ms P 39,624 Mr T 4,002 | 18,046 | 29,931 |
| 2009 | 20,778 | 13,713 | Ms M - | - | |
| 2010 | 57,865 | 38,191 | Ms M 26,976 Ms L 10,111 | 17,804 | 29,953 |
| 2011 | 14,084 | 9,295 | Ms M 9,884 Ms L 4,200 | 6,523 | 53,791 |
| 2012 | 67,777 | 44,733 | Ms M 32,003 Mr G 17,887 Ms J 17,887 | 21,122 | 33,754 |
| 2013 | 16,653 | 10,991 | Ms M 16,653 | 10,991 | 34,777 |
| 2014 | 90,054 | 59436 | Ms M 41,665 Mr G 24,195 Ms J 24,194 | 27,499 | 51,490 |
| 2015 | 71,751 | 47,356 | Ms M 35,876 Mr G 17,938 Ms J 17,938 | 23,678 | 64,272 |
At the commencement of the hearing, as stated in the Applicant’s Submissions[27] it was the applicant’s case that his adjusted taxable income, should be varied to a sum equivalent to 2/3 of the income distributed to Ms M by the trust in any given year during the assessment period.
[27] Applicant submissions dated 11 December 2016 at paragraph 47.
In final closing submissions, it was conceded by the applicant, that his adjusted taxable income should be varied to a sum equivalent to 2/3 of the distributable income of the trust. That submission was on the basis that Ms M genuinely works on the farm and in the (omitted) business.[28] She is entitled to be remunerated for her endeavours.
[28] Applicant submissions, dated 11 December 2016 at paragraph 45.
I was informed of the applicant’s change of position after hearing the evidence of both Ms M and Ms J as to the alleged nexus between work performed by various family members and the distributions made to them. It was apparent after the conclusion of their evidence that there was no direct nexus between the work carried out by family members and distributions made to them.
Furthermore, neither Ms M nor Ms J were able to provide any reason whatsoever why the applicant had been excluded from trust distributions, when there would obviously have been a significant taxation benefit in doing so.
As can be seen, from the table at paragraph 107 hereof, in most relevant years, there is a substantial difference between the two proposals.
There is a significant difference between the submissions of the applicant as to his income and earning capacity and the income fixed by the child support registrar on 23 February 2009. That decision fixed the applicant’s income at $118,363 per annum.
The Applicant asserts that the basis of that determination was a distribution of $118,363 from the trust in the financial year ended 30 June 2007, to a corporate beneficiary (omitted) Pty Ltd ((omitted) Pty Ltd). (omitted) Pty Ltd is a company then controlled by Ms M, of which the applicant had been a shareholder.
As stated in the Applicant’s Submissions[29] the child support registrar found that the applicant had alienated income to (omitted) Pty Ltd and that (omitted) Pty Ltd’s income should be the basis for fixing the applicant’s income, for child support purposes. CPI-based increases had been applied to adjust that national income in subsequent years assessments.
[29] Applicant submissions, dated 11 December 2016 at paragraph 7f.
The applicant contends that this is inherently flawed, as the total distributable income of the trust in subsequent years was significantly less than $118,363. The table at paragraph 107 hereof sets out the actual distributable income of the trust between 2009 and 2015. I accept that the distributable income of the trust is less than the annual income attributed to the applicant.
The applicant has also provided evidence about injuries sustained in three accidents which are relevant to his earning capacity. The first accident occurred prior to A’s birth, the second occurred in June 2012[30] and the third occurred on 12 December 2012.[31]
[30] Affidavit of Mr Mohan sworn 5 May 2016. At paragraphs 55 -57.
[31] Affidavit of Mr Mohan sworn 5 May 2016. At paragraphs 58 – 62.
Whilst I accept the applicant’s evidence in this regard, there was no corroborative medical evidence, and the applicant’s own evidence is that he now works 30 to 40 hours per week in farm related activities. There was no evidence that the applicant’s injuries had any bearing on the distributable income of the trust in any relevant year.
The applicant’s proposal that his income and earning capacity be fixed by reference to the actual distributable income of the trust, at first instance, had some merit.
However, the lack of disclosure, explanation and contradictory evidence about:
a)the source of the additional $150,000 required to settle the purchase of (omitted); and
b)the source of approximately $425,000 applied in the reduction of the (omitted) Bank mortgage secured against (omitted);
c)the basis of allocation of the trust’s distributable income;
makes it almost impossible to determine the real earning capacity of the applicant.
At the most basic arithmetical level, if all of the trust’s distributable income was received by the applicant and Ms M, after payment of income tax, there would be insufficient funds to enable a reduction of the mortgage by $425,000, without consideration of living expenses for the family. Furthermore, there was no forthright evidence about which of the beneficiaries of the distributable income actually received the income notionally distributed to them. It may well be that other family members actually received the distributions attributed to them and this would make it even more unlikely that the applicant and Ms M would have been able to reduce the mortgage solely from trust distributions.
After Ms M’s evidence about the reduction of the mortgage secured against (omitted), Counsel for the applicant, who is respected and highly competent, did not seek to re-examine the witness about that evidence or make any application on behalf of the applicant, to adduce further evidence concerning the circumstances of the mortgage reduction.
Accordingly there is no reliable evidence to enable me to ascertain the applicant’s earning capacity. It is incumbent upon the applicant to adduce evidence which would enable me to make such a determination.
Property and Financial resources
There is no evidence about the respondent’s property and financial resources. There was no contentious dispute about this issue.
The applicant’s evidence is that he has no assets of any nature whatsoever, and that he does not have any financial resources.
It is almost impossible to reconcile how, firstly, (omitted) was able to be purchased in the first place, and secondly, how the mortgage secured against (omitted), has been reduced, in the manner referred to in this judgement, from the trust distributions which have been made to Ms M, and the applicant.
In the absence of any candid evidence about how this has occurred, the only possible inference, is that there is an additional source of income or financial resource, which has not been disclosed by the applicant and his family members.
(da) The earning capacity of each parent who is a party to the proceedings
I refer to my comments at paragraphs 105 - 126 hereof.
(e) the commitments of each parent who is a party to the proceedings that are necessary to enable the parent to support:
i)himself or herself; or
ii)any other child or another person that the person has a duty to maintain;
The respondent’s evidence is as follows:
a)She continues to work as a (occupation omitted) and is solely responsible for her own support;
b)A’s need for the financial support continues to grow with her being required to fund a further place of residence for A.[32]
[32] Affidavit of Ms Neeson sworn 16 November 2016 at paragraph 32.
The applicant did not provide any evidence as to the cost of his obligations to maintain himself, Ms M or his children.
(f) the direct and indirect costs incurred by the carer entitled to child support, and providing care for the child
There was no specific evidence about the costs incurred by the respondent.
(g) any hardship that would be caused:
i)to:
(A)the child; or
(B)the carer entitled to child support:
by the making of, or the refusal to make, the order: and
ii)to:
(A)the liable parent: or
(B)any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order: and
iii)to any resident child of the parent (see subsection 10) by the making of, or refusal to make, the order
Hardship to the child and carer entitled to child support
The hardship to the respondent is self-evident. She is a single mother, and has financially provided for A with minimal contribution from the applicant. Indeed the only contributions the applicant has ever made towards A’s financial support, prior to the commencement of the enforcement proceedings, are as follows:
i)$1116.21 paid in November 1999, after an interception of his tax return refund by the Child Support Registrar;
ii)approximately $1,200 from July 2016 to September 2016, which included money for his birthday in (omitted) 2016.
It is also self-evident that the respondent’s capacity to work fulltime and earn income reduced substantially following A’s diagnosis of leukaemia in 2006, as she needed to care for him. Her tax returns are demonstrative of her fluctuating income.
Hardship to the liable parent
The hardship to the Applicant is discussed at paragraphs 173 – 180 hereof.
Hardship to another child or another person the liable parent has a duty to support
I accept that the applicant should contribute to the support of his wife and three young children. However, ironically, his evidence is that he earns no income and has no assets. He did not provide any explanation about how he has contributed to the financial support of himself and his family, or how he intends to do so in the future.
Section 117(5)
Section 117(5) of the Act sets out the matters the court must have regard to when determining whether it would be otherwise proper to make a particular order under the division.
Neither party has made specific submissions in relation to this subsection.
Conclusion as to Application for departure from Administrative Assessment
The decision whether to make a departure in order is entirely discretionary.
There is little in the application that satisfies me to determine that it would be just and equitable or otherwise proper to depart from the administrative assessment of child support.
It is the applicant’s responsibility to place before the court, the relevant evidence in support of his application. It would have been of great assistance to the court if there had been frank and unequivocal evidence about:
i)The circumstances surrounding the acquisition of (omitted) and the source of payment of the $300,000, which was contributed to purchase the property, in addition to the mortgage;
ii)The source of funds applied to reduce the mortgage encumbering (omitted), by approximately $425,000 between acquisition in 2007 and 2016;
iii)Why the applicant was excluded from any distribution of income from the (omitted) Trust;
iv)Why the applicant has not received wages for work carried out by him for the benefit of his parents company, when other family members, including the applicant’s brother Mr T and brother-in-law received wages for their work;
v)Why the applicant’s relatives received distributions from the (omitted) Trust, and he did not, particularly as he worked for the trust business endeavours and the relatives, in many relevant years, did not;
vi)The extent of the work carried out by the applicant in the (omitted) business conducted by (omitted) Pty Ltd;
vii)An appropriate level of remuneration for the applicant given the work he carries out for both his parents company and (omitted) Pty Ltd;
viii)Disclosure of relevant financial documents, including the bank accounts of (omitted) Pty Ltd and Ms M.
In the absence of the evidence referred to in the previous paragraph, I am unable to formulate any view about the correct income or earning capacity for the applicant.
Counsel for the applicant submits that the applicant’s income for the relevant assessment is patently wrong. The Court should vary his taxable income to a sum equal to 2/3rds of the income of the (omitted) Trust business. I understand the basis for that submission to be the evidence of both the applicant and Ms M as to the hours of work in the business undertaken by both of them.
I am unable to make a finding that the income applied by the child support registrar is or will be in excess of his actual earning capacity or income. I am unable to be satisfied as to the applicant’s true financial position. I am also unable to make any finding about the applicant’s capacity to provide for Ms M, and for their children.
Ironically, on the evidence presented by the applicant, that he has no income, and has not received any income since 2006, it does not seem that he has contributed to the support of Ms M or their three children.
I do, however, find on the evidence before me, that there must be an additional substantial financial resource available to the Applicant, to have enabled the purchase of (omitted business) in 2007 and the substantial reduction of the mortgage from the $1,250,000 in 2007 to $800,000 in 2016.
There is insufficient evidence to exercise my discretion in the Applicant’s favour.
Accordingly I intend to dismiss this aspect of the application.
Application for amendment of administrative assessment that is more than 18 months old
In his Initiating Application filed 10 May 2016, the applicant seeks final orders as follows:
1. That:
a. Leave be granted under section 111 and/or Section 112 of the Child Support ( Assessment ) Act 1989 (“the Act”) for the court to make an order under section 118 of the Act, varying the applicant’s (the paying parent’s) taxable income ;
in respect of any one or more of the administrative child support assessments, relied on by the Child Support Registrar as constituting the whole or any part of any registrable maintenance liability or debt due to the Commonwealth, of Australia with respect to child support payable by the Payer, Mr Mohan (“the payer”) for the child A born (omitted) 1999. (“A”).
In the Initiating Application the applicant does not particularise the relevant child support assessments. At page 5 of the Applicant’s Submissions, reference is made to the relevant child support assessments. These are as follows:
Assessment date
Periods included in assessment
22 April 2015
1 March 2012 to 21 July 2012
22 April 2015
22 July 2012 to 31 May 2013
22 April 2015
1 June 2013 to 31 August 2013
22 April 2015
1September 2013 to 15 April 2014
22 April 2015
16 April 2014 to 30 June 2014
22 April 2015
1 July 2014 to 2 July 2014
22 April 2015
3 July 2014 to 31 August 2014
11 August 2015
1 September 2014 to 30 June 2015
11 August 2015
1 July 2015 to 31 July 2015
In order to consider granting leave to the applicant to proceed pursuant to s.111 of the Act, I must consider the matters set out in s.112 (4) of the act. I will address the each factor in turn.
At paragraph 104 of his judgement, Judge Brown, in Yewen & Child Support Registrar and Anor [2014] FCCA 2399 summarised. The matters the court should have regard to, in exercising the discretion to grant or refuse leave under s.112(1). These are as follows:
[104] In summary, in the exercise of the discretion to grant or refuse leave under s 112(1), the court should have regard to the following factors:
• Is the court satisfied that the applicant concerned has made a prima facie case to have the relevant child support assessments changed. This is a relevant consideration arising under s 112(5);
• In determining whether the applicant has a prima facie case, the applicant’s evidence on that issue is to be accepted, without cross-examination, unless it is inherently unbelievable or contradictory;
• The court must consider the delay in bringing the application concerned and who is responsible for that delay and why;
• The court must consider the hardship which would be occasioned to each of the parties concerned and balance that hardship;
• The court must consider any other relevant fact or circumstance; and
• In the exercise of its discretion to grant or refuse leave, the court may grant leave despite an inadequate explanation of delay, if other considerations warrant leave being granted nonetheless.
Delay
Section 112 (4) (a) any responsibility, and reason, for the delay in:
i)making an application under section 98 B or 116; or
ii)making a determination under section 98S
The evidence of the applicant in relation to delay is set out at paragraphs 23 - 30 of his affidavit sworn 5 May 2016.
Counsel for the applicant submitted that there was no benefit to anyone from analysing the reasons for delay in seeking to allocate blame.[33] Furthermore, he submits that “neither party took what might, with the benefit of hindsight, be seen to be a frank and productive approach to resolving issues”.[34]
[33] Paragraph 33 of the applicant's submissions.
[34] Paragraph 34 of the applicant's submissions.
This is in stark contrast to the evidence of Ms Neeson. Her evidence is contained in paragraphs 6-13 inclusive of her affidavit sworn 16 November 2016 and annexures N 2 to N 14 of that affidavit. This evidence was not challenged by counsel for the applicant.
Ms Neeson deposes to numerous endeavours on her behalf pertaining to child support and paternity of A. These may be summarised as follows:
| Date | Action taken | Applicant’s response |
| Nov 2002 | Application for Change of Assessment application initiated by Ms Neeson | Applicant responded on 16 December 2000[35] |
| 14 May 2003 | Letter from Victoria Legal Aid to the applicant, addressed to (omitted), proposing DNA testing[36] | Not known |
| 2 April 2004 | Application for child support assessment filed in the Federal Magistrates Court[37] listed for 3 August 2004 | Letter from Mr G, applicant’s father, dated 28 June 2004, to Child Support Legal Service, purportedly responding on behalf of the applicant[38] |
| 23 Feb 2009 | Decision of senior case officer Ms W on 23 February 2009 | 20 March 2009 letter of objection forwarded by Harwood Andrews lawyers on behalf of the applicant |
| 27 May 2009 | Determination of applicants objection of 20 March 2009 | No response |
| 9 Feb 2009 | Application for Change of Assessment initiated by Ms Neeson | No response |
| 18 Mar 2013 | Application for change of assessment initiated by Ms Neeson | No response |
[35] Annexure N 4 of the affidavit of Ms Neeson sworn 16 November 2016.
[36] Annexure N 2 of the affidavit of Ms Neeson sworn 16 November 2016.
[37] Annexure N 2 of the affidavit of Ms Neeson sworn 16 November 2016.
[38] Annexure N 3 of the affidavit of Ms Neeson sworn 16 November 2016.
At paragraph 25 of the 5 May 2016 affidavit the Applicant deposes ( in the context of having had a conversation with the child support agency in late 2001 about his tax return having being intercepted, for child support payment) as follows:
“Given that Ms Neeson was not prepared to submit A for a DNA test, I assume that he could not be my biological child, and accordingly that the matter would not be pursued any further. I did not receive any contact from Ms Neeson directly regarding A, nor any efforts on her part to prove the A was mine.”
The applicant had previously raised the issue of paternity in his Response to the November 2002 Change of Assessment Application. That Response in the last sentence, states as follows:
“I would be a fool to pay any money (even if I had any) for child support until I was 100% sure that the child is mine.”
The statement referred to in paragraph 156 hereof, is in direct contrast to the letter from Victoria Legal Aid, dated 14 May 2003, addressed to the applicant, which proposes that all parties undertake a DNA test to establish A’s paternity. The letter was addressed to the applicant at (omitted).
The applicant’s evidence was that he had not used any address as his official address, other than (omitted) or (omitted), except when he obtained his truck licence, in (omitted) at the age of 17. Apart from the letter from Mr G, dated 28 June 2004, there was no evidence why correspondence addressed to the applicant at (omitted), would not have been received by him. I do not accept that the applicant was not aware of Ms Neeson’s proposal for a paternity test in 2003.
The applicant’s submissions[39] rely, to a significant degree, on his alleged concerns about A’s paternity, which continued until 2015 when the parties underwent DNA testing. However, in 2009, the applicant engaged solicitors, Harwood Andrews, to act on his behalf to object to the child support change of assessment. By letter dated 20 March 2009[40], Harwood Andrews wrote to the child support agency setting out the grounds of objection. There are eight grounds of objection set out in that letter, none of which refer to doubts about the paternity of A. All objections are in relation to financial matters.
[39] Applicant submissions at paragraph 35(b).
[40] Annexure N 10 to the affidavit of Ms Neeson sworn 16 November 2016.
On 19 May 2009, a senior case officer Ms W determined that the applicant’s objection to the change of assessment was disallowed. That decision is annexure M in 11 two the respondent’s affidavit. That decision refers to financial matters, and makes no reference to any submissions by Mr Mohan’s lawyers concerning A’s paternity.
There is no evidence to explain why the applicant failed to raise the issue of A’s paternity in 2009, when he was legally represented.
I do not accept that the applicant’s alleged concerns about A’s paternity have contributed to any delay. The applicant could easily have taken steps to determine A’s paternity in May 2003, when he was invited by the child support agency to undertake a paternity test. The invitation to undergo a paternity test was on the basis that Victoria legal aid would pay the initial cost of the paternity testing, and the applicant would only be required to contribute if paternity was established. Furthermore, the applicant does not provide any explanation why his alleged doubts about A’s paternity were not raised in 2009, when he was legally represented and submissions were made by his lawyers objecting to the change of assessment initiated by Ms Neeson.
Counsel for the applicant referred me to the affidavit of Ms E sworn 11 August 2015. Paragraph 17 of that affidavit provides as follows:
“Each month a copy of the payer transaction statement in the name of the respondent is sent to him at the address record in the child support register”
Annexure 9 to the affidavit of Ms E is a letter of demand for arrears of child support forwarded to the applicant on 7 October 2014. The address on that letter is (omitted), Victoria. That is the same address as the address of the applicant on his affidavit of 5 May 2016 and 5 December 2016 and the same address deposed to by Ms M in her affidavits of20 April 2016 and 5 December 2016.
No explanation has been provided by the applicant for his failure to take action after he received the letter of demand. In fact, no action was taken by him until he was served with the enforcement proceedings issued by the child support registrar on 17 August 2015.
Counsel for the applicant submitted as follows:
“It is submitted that on any analysis of the material before the court. Neither party took what might, with the benefit of hindsight, be seen to be a Frank and productive approach to resolving issues. They were not helped, indeed one view were let down by, advises and agencies supposed to support and assist them.”[41]
[41] Applicant submissions at paragraph 35.
I do not accept that submission. It is evident from the actions of Ms Neeson, that she took many and varied steps to resolve the issue of child support for A and on each occasion was met with extreme resistance. I find she did the best she possibly could, given the constraints of caring for a child with leukaemia and being unable to afford legal representation.
I find that the applicant has not provided any satisfactory explanation for the responsibility, and reason for the delay. Mr Mohan is solely responsible for the delay in this matter, and for the manner in which he has chosen to arrange his affairs to avoid responsibility to provide financial support for A.
Hardship
Section 112 (4) (b) the hardship to the applicant (other than the Registrar) if leave is not granted; and
Paragraph 36 of the applicant submissions refers to hardship to the applicant. That paragraph provides as follows:
“As has already been submitted to refuse a departure order which corrected, or allowed correction of, the patently wrong child support assessments would be unjust and inequitable, and only served to penalise Mr Mohan by hindering his obligations to his children with Ms M and effectively visiting past wrongs on yet more children.”
Additionally, as I understand the applicant’s submissions, if I do not grant leave to proceed with the application for departure, he has been assessed to pay an amount of child support, which is not reflective of his income, income, earning capacity and his financial resources generally.
As referred to previously in this judgement, due to the lack of candid evidence of the applicant and his family, there is simply no evidence which enables me to determine the applicant’s actual income, earning capacity or financial resources and consequentially determine whether the child support assessment income is unjust or inequitable. It is incumbent on the applicant to provide the requisite evidence for me to determine his income. As previously stated, there is no explanation whatsoever about the following:
a)the source of funds (approximately $150,000) to fund the difference between the purchase price (including stamp duty) and the mortgage advance to settle the purchase of (business omitted) in 2007;
b)the source of funds (approximately $425,000) to reduce the mortgage secured against, (business omitted) from $1.25 million -$800,000, between the purchase in November 2007 and this hearing;
c)why the applicant has been excluded from trust distributions since 2006, despite being the primary worker on the property, and in the (omitted) business conducted by the trust.
There is also no evidence about the support the applicant has provided to his children with Ms M, or indeed that he has ever done so.
I accept that the failure to grant the applicant leave will have the effect of him being liable to meet his outstanding child support arrears, and that those arrears are substantial. I note that he has already paid the sum of $20,000 in reduction of those arrears pursuant to orders which were made by consent on 4 May 2016.
As a result of the applicant’s failure to candidly disclose how the trust/and or the applicant and Ms M were able to accumulate approximately $575,000, between 2007 and 2016, I am unable to make a finding that the payment of the substantial arrears would result in hardship for the applicant.
The evidence of Ms J and Ms M as to the accumulation of the additional $150,000 required to settle the purchase of (omitted) in 2007 is completely contradictory.
Similarly, I am not convinced that Ms M’s explanation for the accumulation of the funds in her bank account is satisfactory. On her evidence, she has approximately $80,000 remaining in her (omitted) account, after having paid $20,000 to the child support registrar and a further $5000 in her everyday account. She did not provide any evidence about how much she had paid out of her account for legal fees and whether or not the $80,000 was after payment of legal fees.
Section 112 (4) (c) the hardship to the other party or parties (other than the registrar) if leave is granted.
As previously stated, the hardship to the respondent is self-evident. She is a single mother, and has financially provided for A with minimal contribution from the applicant.
The applicant’s counsel conceded that the respondent had provided her tax returns for inspection by him and that no issues arose from her declared taxable income. Her submissions were that her income reduced whilst she had to devote herself to A’s care when he was suffering from leukaemia. Quite properly, counsel for the applicant conceded that her tax returns reflected the variation in her income during that time.
The respondent’s income is referred to in the various child support assessments, and in the review decisions of the case officers, many of which are annexed to the affidavit of Ms Neeson, sworn 16 November 2011.
Paragraph 36 of the applicant submissions refers to hardship to the respondent. That paragraph provide as follows:
“The extent to which it helps Ms Neeson or A is uncertain as if Ms Neeson receive Centrelink benefits in the relevant period brackets and she has not filed tax returns is ordered to enable was to be determined) receipt of child support may only lead to an obligation to refund Centrelink. In any event. She should not benefit under fairly because the existing child support is manifestly wrong and overstates the amount payable.”
I do not accept that submission. Firstly, there is no evidence that there would need to be any refund to Centrelink, and even if that were the case, I do not accept that the taxpayer should bear the responsibility of the applicant’s failure to pay child support for his son.
Secondly, I refer to my previous comments in this judgement, that there is insufficient evidence to enable me to determine that the existing child support assessment is manifestly wrong and overstates the amount payable.
Other relevant matters
Section 112(5) [other relevant matters] the court may have regard to any other relevant matter
There were no specific submissions made by either party in relation to this subsection.
However, in considering whether or not the applicant has a prima facie case, I consider the evidence of the applicant, his wife, Ms M, and his mother, Ms J, as to the financial arrangements of the family to be inherently unbelievable and contradictory. I refer to the summaries of evidence of each of the three witnesses, referred to at paragraphs 59 – 80 hereof.
The applicant has not provided any credible evidence and which allows me to determine whether or not he has a prime facie case. The deficiencies in the applicant’s evidence are set out at in this judgment.
Conclusion as to application for amendment of Administrative Assessment that is more than 18 Months old
The decision whether to grant leave is entirely discretionary.
There is little in the applicants’ application that satisfies me to determine that it would be just and equitable or otherwise proper to grant leave to amend the administrative assessment that is more than 18 months old.
In Bauer & Becker [2009] FMCAfam 480, Judge Brown said as follows:
“I agree with the view of the child support task force outlined above, that it is “highly undesirable” for a parent to be able to retrospectively review obligations arising out of past child support determinations solely because he or she wishes to avoid the payment of substantial amounts of child support arrears.
The object of section 111 of the assessment act is to prevent the re-examination of past assessment of child support for unlimited periods of time. If there was such a facility, it would undermine the integrity of the overall system.
The reason for the delay in this matter, is solely attributable to Mr Bauer and the manner in which he has chosen to respond to his obligation to provide financial support for A and B. To use an old saw of equity, it cannot be said that he comes to court, to seek the exercise of discretion in his favour, with “clean hands”.
In Child Support Registrar & Rawlings & Anor [2013] FCCA 370 Judge Scarlett said the following:
“Unwarrantable delay justifies the withholding of relief. The exercise of the court’s discretion to deny a relief for delay has been considered in a number of decisions of the High Court, including R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd[42] and Re Commonwealth of Australia; Ex parte Marks[43]
[42] (1949) 78 CLR 389.
[43] (2000) 177 ALR 491.
I agree with the comments referred to in the two preceding paragraphs. I am not persuaded by the applicant’s submissions in relation to delay.
Since A’s birth in (omitted) 1999, the applicant has paid the sum of $1116.21 towards the financial support of A. As previously referred to, that amount resulted from the child support agency intercepting the applicant’s tax return in or around November 1999. Apart from a small amount paid made by the applicant to A in 2015, he has not contributed to A’s support.
Child Support Assessments have been generated since August 1999 and forwarded by the agency to Mr Mohan at either his parents address, (omitted), Victoria or his address (omitted). Despite the applicant’s evidence that these are the two addresses he has always used in Victoria, he claims to have substantially ignored this correspondence on the pretext that he had concerns about A’s paternity. The alleged concerns about paternity spanned some 16 years from 1999 to 2015.
He also claims to have no knowledge about the respondent’s attempts in 2003 to undertake a DNA test to establish A’s paternity. There is no explanation why the issue of paternity was not raised by the applicant in 2009, when he was legally represented and objected to a child support change of assessment. There is also no explanation why he did not take any action to establish paternity between 2009 and 2015.
As earlier referred to in this judgement, the applicant did not provide any evidence or financial documentation which would enable me to determine whether my discretion should be exercised to grant leave, and if so to determine his taxable income.
I was left with the impression that the applicant, in consultation with his family members had taken all steps possible to ensure that the applicant would not be required to pay child support for A. I note, that in her evidence, Ms M agreed with the proposition that failure to distribute taxable income from the trust to the applicant could possibly have something to do with child support.
For 16 years the applicant has not lodged any taxation returns and has not paid any meaningful child support. This is a significant period of time.
One of the primary objectives of the child support scheme is to ensure that both parents financially contribute to the support of their children. Sadly, this has not occurred in A’s case.
I am being asked by the applicant to relieve him of his responsibility to contribute to A’s financial support, because he has arranged his financial affairs, including the establishment of the trust and Ms M’s ownership of other significant assets, so that he does not receive an income or directly own any assets.
Regrettably, the applicant has not presented his case in a candid and forthright manner as to his financial circumstances and I am unable to exercise my discretion to grant leave.
In circumstances when I’m not persuaded to grant leave to the applicant, it is not necessary for me to consider varying the applicant’s adjusted taxable income for child support purposes. As previously referred to, there is no evidence, which would enable me to fairly and equitably determine the applicant’s taxable income.
For the reasons set out in this judgment, I make orders, as set out at the commencement.
I certify that the preceding two hundred and two (202) paragraphs are a true copy of the reasons for judgment of Judge Williams
Date: 3 March 2017
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