Ongal and Materns
[2009] FMCAfam 476
•15 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ONGAL & MATERNS | [2009] FMCAfam 476 |
| CHILD SUPPORT – Application for departure from administrative assessment – leave sought by father to proceed with application in respect of assessments more than eighteen months old – mother cross applies seeking departure on grounds of father’s income and capacity to earn – father declares income of $1.00 per week – capacity to earn – capacity to pay – father also seeks departure on the basis of high costs of spending time with children – special circumstances – just and equitable – otherwise proper. |
| Child Support (Assessment) Act1989, ss.111 Family Law Act 1975, ss.44, 117 Child Support (Registration & Collection) Act 1988, ss.4, 72D(1), 88, 98E, 110B, 111, 112, 114, 116, 117, 118 |
| Briese & Briese (1986) FLC 91-713 Black & Kellner (1992) FLC 92-287 Savery and Savery (1990) FLC 92-131 In the Marriage of Gyselman (1992) 15 Fam LR 219 Whitford & Whitford (1979) FLC 90-612 Cantrell & Jennings [2009] FMCAfam 229 |
| Applicant: | MR ONGAL |
| Respondent: | MS MATERNS |
| File Number: | ADC 2107 of 2007 |
| Judgment of: | Brown FM |
| Hearing date: | 19 November 2008 |
| Date of Last Submission: | 19 November 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 15 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | In Person |
| Counsel for the Respondent: | Ms Lee |
| Solicitors for the Respondent: | Julie Margaret |
ORDERS
The father’s application for leave pursuant to section 111 of the Child Support (Assessment) Act 1989 is dismissed.
The father’s amended application filed 12 November 2008 is dismissed.
There be a departure from the administrative assessment of child support payable to Ms Materns by Mr Ongal in respect of the children [X] born in 2001 and [Y] born in 2004 from 31 October 2008 until
31 December 2009 pursuant to which the father’s child support income is fixed at $60,000.00 per annum for the period in question.
The father pay the mother’s costs to be agreed between the parties and failing agreement to be taxed pursuant to the Federal Magistrates’ Court Rules.
IT IS NOTED that publication of this judgment under the pseudonym Ongal & Materns is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 2107 of 2007
| MR ONGAL |
Applicant
And
| MS MATERNS |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings concern the assessment of child support. The parties to the proceedings are Mr Ongal “the father” and Ms Materns “the mother”. They are the parents of [X] born in 2001 and [Y] born in 2004.
The father commenced the relevant round of proceedings on 24 April 2008. He has subsequently amended his application on two occasions since. There have been many other proceedings between the parties regarding care arrangements for [X] and [Y].
Pursuant to some consent orders made in the Family Court of Australia made at Adelaide on 27 February 2007, the children live predominantly with their mother and spend significant periods of time each fortnight, with their father.
The mother and children live in [W]. The father lives in Adelaide, in the parties’ former family home. He travels regularly to [W] to see the children and rents accommodation there. The Adelaide property is owned by the parties and is subject to a mortgage. The father is currently paying the mortgage repayments, which are about $350.00 per week.
There are as yet unresolved proceedings between the parties, in the District Court at Adelaide, regarding the division of property acquired during their relationship. As the parties have never been married, neither this court nor the Family Court has jurisdiction to resolve the resulting issues, which have generated a considerable amount of hostility. From the father’s perspective, the necessary hearing has been delayed by what he asserts are complex issues to do with discovery.
Mr Ongal describes himself as an [occupation omitted]. He is a citizen of the United Kingdom and came to this country on an Australian Distinguished Talent Visa.
In his oral evidence, Mr Ongal told me that he had been involved in designing various devices which were in [occupation omitted]. He does not hold the patents for these devices. The patents are apparently owned by corporations by whom the father has been employed in the past.
It is the mother’s view that the father has the capacity to earn a comfortable income by utilising his talents in respect of [occupation omitted] and is quite possibly concealing a lucrative income, from overseas sources, out of malice for her and a desire to evade his proper financial responsibilities for the two children concerned.
In his statement of financial circumstances, the father estimates his average weekly income at $1.00. He estimates his weekly personal expenditure at $1,408.00. The only savings he discloses is a sum of $10,100.00 held in a bank in [P] in Vanuatu.
In his most recent application[1] the father seeks to depart from a number of administrative assessments of child support for [X] and [Y]. They are as follows:
·For the period from 28 February 2005 to 25 April 2005 his annual amount of child support be fixed at $260.00;
·For the period from 14 August 2006 to 27 August 2007 his annual amount of child support be fixed at $333.00;
·For the period from 28 August 2007 to 27 August 2008 his annual amount of child support be fixed at $11,157.00;
·For the period from 28 August 2008 his annual amount of child support be fixed at nil;
[1] Filed 12 November 2008
The father commenced these proceedings on 24 April 2008. Accordingly, some of the assessments relate to periods more than eighteen months prior to the date of his application. Accordingly, the father needs the court’s leave, pursuant to section 111 of the Child Support (Assessment) Act1989, for leave to proceed with his application. The father also seeks that the mother pay the costs of his application, although he has acted on his own behalf throughout these proceedings.
The mother responded to the father’s initial application on 25 July 2008. It is her position that there should be a departure from the relevant child support assessments for the period from 28 August 2007 until September 2009 pursuant to which the father’s child support income should be fixed at the capped or maximum amount.
In 2007, the capped amount was around $109,000.00, which was increased to around $113,700.00 in 2008. It is the mother’s position that the court should accept that the father had and continues to have the capacity to earn sums significantly in excess of these amounts for the periods in question.
The mother also seeks an order that the father pay the costs of her solicitor, the Legal Services Commission of South Australia, incurred in respect of these proceedings, which she characterises as onerous and largely necessary as a result of the father’s lack of proper disclosure.
Background
The parties have never been married. They lived together from mid-2000 until they separated in September 2004. Subsequently, there were vitriolic proceedings between them in the Family Court of Australia at Adelaide regarding care arrangements for their two children.
These proceedings have been resolved. Pursuant to orders made on 28 February 2007, the children predominantly live with their mother but spend time with their father on five days and nights per fortnight.
The father is a citizen of the United Kingdom. In his affidavit material, he describes himself, in respect of the period immediately prior to the parties’ separation as “a world leading[occupation omitted] …”.[2]
[2] See father’s affidavit filed 24 April 2008 at paragraph 3
In 2004, the husband was employed by a company incorporated in the United States of America, [F]. It is the father’s position that his employment with [F] was terminated in August 2004 and he has had limited and minimal income in the period since. It is his case that due to his United Kingdom citizenship he is not eligible for Australian social security payments.
It is also the father’s position that it costs him a minimum of $1,600.00 per month to visit [X] and [Y], who live in [W]. It is his case that he has funded this expense from the sale of assets and loans from family members.
Given the father’s expertise in his previous field of employment and his previous level of remuneration; the admitted level of his expenditure in the period since the parties separated; and his self-disclosed level of income and receipts; it is the mother’s position that the father’s position is self apparently implausible and has resulted in a grave injustice to her, so far as the assessment of child support is concerned.
The mother first applied for child support on 28 February 2005. In the period since, there have been several assessments of child support, which have been subject to a number of reviews both by senior case officers and the Social Security Appeals Tribunal.
In the period between 28 February 2005 and 17 July 2008 Mr Ongal had been assessed to pay Ms Materns just over $19,000.00 in child support. As at 17 July 2008 Mr Ongal was in arrears in a sum of $11,792.43 in respect of these assessments of child support.
As a result of these arrears, Mr Ongal is currently subject to a departure prohibition order. In the past, Mr Ongal has sought to discharge this order, which prevents him leaving Australia until arrangements satisfactory to the Child Support Agency have been made in respect of the payment of these arrears of child support. Mr Ongal is not currently pursuing this aspect of the case.
Between 28 February 2005 and 24 April 2005 (a period of just under two months) Mr Ongal was assessed to pay child support on the basis of the capped income amount ($130,767.00). This resulted in an annual amount of child support payable by him of $31,672.00.
Mr Ongal sought to review this decision in May of 2005, on the basis that he spent more than five percent of his child support income in having contact with [X] and [Y] and the assessment did not take into account his income, earning capacity, property and financial resources. The decision to dismiss Mr Ongal’s application was made by Senior Case Officer Hine on 8 September 2005.
In the presentation of his case, the father confirmed he lived in [H], a suburb of Adelaide but rented accommodation in [W], at the rate of $80.00 per week, so that he could spend time with the children regularly. Services to the property cost him an additional $80.00 per week. In addition, Mr Ongal stated he had had to purchase a motor vehicle, at a cost of $7,500.00, to enable him to travel to [W]. Fuel cost him $100.00 per week.
All in all, it was found that it cost Mr Ongal $265.00 per week to maintain his contact with the children concerned. However, the senior case officer concerned considered that Mr Ongal had sufficient resources to meet the child support liability in question, until such time as he gained employment. It is the father’s position that he has not been able to secure permanent and reliable employment for himself in the period since.
It was Mr Ongal’s case that he had been living in Australia for around five years, at the time of the review, but was not eligible to receive any government benefits. I accept that this is the case. In order for him to comply with the conditions of his Australian entry visa, it was necessary for him to leave Australia once every three months and obtain a new visa offshore. His practice was to travel to New Zealand at a cost of around $1,000.00 each time.
It was Mr Ongal’s case that he had lost his employment in August 2004. This remains his position. Prior to August 2004, Mr Ongal had been employed as a “tele” or remote worker providing his services to his employer in the USA via the internet.
It is the father’s position that he has had limited employment in the period since, as there are few calls for his highly specialised skills in Australia and remote employees are not particularly attractive to overseas employers in his field, who wish to be able to interact directly with their employees in the same time zone. In addition, such employers would require him to attend overseas meetings, which would not be conducive to him seeing his children regularly pursuant to the current arrangements.
Mr Ongal was born in 1964. He joined [B], as an apprentice, when he was sixteen years of age. Thereafter, he obtained tertiary degrees, relating to [omitted] culminating with a Masters Degree in [omitted] from the University of London which he obtained in 1994. It is
Mr Ongal’s evidence that he has a world class reputation in his field. In 2000 he began employment with [F].
To Senior Case Officer Hine, Mr Ongal stated that he had borrowed £24,000.00 from family members in the United Kingdom to support himself. It was also his position that he had sold shares and life assurance policies to the same end. The senior case officer found that these sales had realised £43,124 or A$103,614.00 for Mr Ongal.
It was also the position that Mr Ongal held a considerable parcel of shares in [F]. This company was in negotiation to amalgamate with another company [Q], also incorporated in the United States. In September of 2005, the value of this share holding was not known to Senior Case Officer Hine.
The senior case officer found that Mr Ongal’s financial position, in respect of the applicable period (28 February 2005 to 24 April 2005) to be unclear, particularly in the absence of any bank statements from
Mr Ongal. However, the senior case officer found that Mr Ongal had access to significant financial resources in the period in question. This was the basis on which she declined to change the assessment.
Both Mr Ongal and Ms Materns objected to the decision of Senior Case Officer Hine. Senior Case Officer Waddell disallowed both objections. Mr Waddell noted that the issues surrounding Mr Ongal’s financial circumstances were complex. I agree with this assessment.
From 26 April 2005 until 27 May 2006, Mr Ongal’s assessment of child support was $260.00 per annum based on a child support income of nil. Mr Ongal had not lodged any tax returns in Australia for the period in question.
This assessment was unacceptable to Ms Materns, who sought a review of it on the basis that the assessment did not take into account the income, earning capacity, property and financial resources of
Mr Ongal. She sought an assessment which would provide her with $30,000.00 of child support per annum.
Ms Materns’s application was determined by Senior Case Officer LePoidevin on 23 October 2006. Mr LePoidevin fixed Mr Ongal’s child support payments at $400.00 per month for the period from 14 August 2006 until 28 February 2007 and thereafter fixed his child support income at a level of $100,000.00.
Mr LePoidevin in his decision, commented on the complex factual situation surrounding the parties and Mr Ongal in particular.
Mr LePoidevin summarised Mr Ongal’s abilities and expertise by describing him as “[occupation omitted]”. Mr Ongal also confirmed that, in the past, he had worked as a tele-worker, providing his services over the internet.
To Mr LePoidevin, Mr Ongal apparently disclosed that he had received a significant portfolio of shares in connection with his work with [F], which had been transferred to his parents. It seems to be the case that he was allocated these shares in part, at least, in recognition of the value of the patents, which he had played a part in developing whilst employed by [F].
The value of these shares had the potential to rise significantly in the event [F] was acquired by another company, [Q]. Around about this time, but prior to any concluded take-over, the father transferred his parcel of shares in [F] to his parents, who live in the United Kingdom.
Mr LePoidevin noted that Mr Ongal had the capacity to fly overseas four or five times a year, admittedly in connection with his Australian visa and had gained a considerable financial resource in respect of the sale of the [F] shares.
These findings were the basis of Mr LePoidevin’s decision to change the applicable administrative assessment of child support, along with Mr Ongal’s apparent offer to make payments of child support of $400.00 per month and his indication that he expected his income, in future, to be in the vicinity of $100,000.00.
Both Mr Ongal and Ms Materns objected to the decision of Mr LePoidevin. Ms Muzzatti considered these objections on 11 December 2006 and rejected each of them. She founded as follows:
“Documents and information provided by Mr Ongal show that he sold shares in a US company to his parents in December 2005. Whilst his parents are pensioners and reside in the UK, Mr Ongal claimed that they were able to purchase the shares from savings although they did not know at the time whether they would derive a profit after the company was taken over in January 2006. Mr Ongal maintained that due to delay caused by administrative and legal requirements, the transfer of the shares to his parents were not effected until after the company was taken over. The value of the shares increased substantially over the next few months and were subsequently sold by his parents for a profit of over 500% of their purchase from Mr Ongal. The funds from the sale of the shares by the parents were paid to Mr Ongal in Australia and who immediately transferred the funds to this parents in UK. Mr Ongal’s bank statements show that he received a total amount of about A$95,000.00 in December 2005 and between March 2006 and June 2006.”[3]
[3] See Notice of Objection dated 11 December 2006 of Roma Muzzatti being exhibit “D” to the father’s Affidavit filed 24 April 2008
However, Ms Muzzatti also indicated that it was a matter for the Court to make findings, based on the evidence likely to be subsequently available to it, regarding the bona fides of the timing of the sale of the [F] shares and what followed from it.
Ms Muzzatti also made reference to the fact that, during the review process, the father had conceded that he was a ”world expert in his fields” and was likely to be able to negotiate a contract providing him with flexible arrangements pursuant to which he was likely to be able to earn up to $100,000 per annum.
Accordingly, at the end of this segment of the internal review process, within the Child Support Agency, the administrative assessment of child support for the period 14 August 2006 to 28 February 2007 was fixed in the sum of $400 per month, which was to be paid by Mr Ongal to Ms Materns. From 1 March 2007 until 27 August 2007, any subsequent assessments were to be based on a child support income of $100,000 for Mr Ongal.
It seems to be the case that Mr Ongal sought to change this assessment, on the basis of the high costs of contact. Subsequently, Mr Ongal’s child support income was fixed at $69,000 per annum for the period 1 April 2007 to 30 November 2007. This decision was made on 6 May 2007 and was later reviewed by an Objections Officer, who confirmed the decision. I have not been provided with copies of either of these decisions.
Ms Materns was grieved by this decision and sought its review by the Social Security Appeals Tribunal (the “SSAT”). The decision of the SSAT was delivered on 25 February 2008. The SSAT reached the conclusion that the issues raised by the application were too complicated for it to deal with given the nature of its jurisdiction. Accordingly, it made no determination.
The SSAT identified the following areas of complexities,
·The nature of Mr Ongal’s business interests. He was personally based in Australia, but operated a UK based consultancy company, which had an exclusive contract to supply services to a US based company;
·
The possible financial resources of the business operated by
Mr Ongal, who was self described as a person of great talent. It being the case that in excess of 54 patents had been issued to protect inventions originating with Mr Ongal, 16 of which were held by [B], 38 by [F];
·Whether Mr Ongal consultancy company, incorporated in the United Kingdom, was subject to UK tax, in particular arising from the sale of shares. Mr Ongal having disclosed that there was a taxation investigation occurring into his affairs in the United Kingdom;
·Value and ownership of the [F] shares alleged to have been sold by Mr Ongal to his parents in December 2005, particularly in the light of [F]’s subsequent takeover by [Q];
·The transfer of monies overseas, which Mr Ongal described as being loans from his parents in the United Kingdom and his sister in New Zealand;
·Mr Ongal’s claim that he was being supported by his mother and was repaying his debts to her;
·The significance of Mr Ongal’s offshore bank account in Vanuatu;
·Mr Ongal’s travel expenses and lifestyle, in the period from the date of the parties’ separation, which he asserted was funded by the sale of assets rather than from income;
·The as yet un-concluded proceedings in the District Court;
·Whether Ms Materns had failed to disclose her interest in a number of pieces of real property, as Mr Ongal alleged.
Ultimately, the SSAT summarised the difficulty in this matter as follows:
“Essentially the main difficulty in this matter is in satisfactorily establishing the extent of the financial resources which need to be considered to correctly establish the level of child support to be paid. Primarily this difficulty relates to Mr Ongal’s affairs but he has raised issues about Ms Materns’s assets.”[4]
I agree with this assessment.
[4] See SSAT Statement of Reasons dispatched 25 February 2008 at paragraph 30, being annexure “E” to the father’s Affidavit filed 24 April 2008
Ms Materns was concerned at the prospect of the SSAT declining to deal with her application. She pointed to the fact that she was receiving no child support from Mr Ongal and was reliant on social security payments to support herself and the children, during the periods they were in her care. In such circumstances, she was apprehensive at the prospect of being compelled to institute court proceedings against
Mr Ongal.
As I have already indicated, I have not been provided with copies of the determinations of the Senior Case Officer and the Objections Officer, which gave rise to the application in the SSAT. However, the SSAT was critical of the approach taken by both. The SSAT said as follows:
“The difficulty with the approach taken by the Child Support Registrar in the application which is currently before this Tribunal is that essentially it has determined that aspects of the case are too complex such that the full extent of the financial resources are not known but the Registrar has then proceeded to make a determination despite this shortcoming. This approach is flawed and the preferable course is to make the determination that it is too complex. The Tribunal cannot be satisfied of the child support income amount if it cannot determine to the fullest extent the financial resources of the party or parties.
The Tribunal finds that the issues raised by the application and the response include issues which relate to the financial resources and capacity of Mr Ongal. The Tribunal finds that the determination of these issues in turn require analysis and determination of such matters as the business conducted by
Mr Ongal, overseas transactions/family loans and the ownership and valuation of a share interest in a foreign company.
The Tribunal concludes that it could not ascertain the extent of the assets and resources of Mr Ongal (and potentially
Ms Materns) without a discovery process, detailed accounting analysis and cross-examination. Consequently if finds that the issues raised by the application are too complex to be dealt with by the Tribunal.
The issues raised in the applicant lend themselves to a more formal process than that under which the Tribunal operates.”[5]
[5] At paragraphs 35 - 38
Subsequently, it seems to be the case, that various Senior Case Officers have declined to deal with child support objections raised by the father on the basis that the issues concerned are “too complex”. This is the background to the father commencing proceedings in this Court and the mother’s response, in which she seeks a departure from the currently applicable child support assessments and the substitution of assessments based on Mr Ongal having a significant level of income.
The mother has provided a letter from the Child Support Agency, dated 17 July 2008, which sets out the various applicable child support assessment, in this case, from 28 February 2005 to the present.[6]
[6] See annexure “A” to mother’s Affidavit filed 25 July 2008
This reveals the following:
Period of Assessment
Annual Rate
Monthly Rate
Daily Rate
28/02/05 to 25/04/05
$31,672.00
$2,639.33
$86.71
26/04/05 to 27/05/06
$260.00
$21.67
$0.711
28/05/06 to 30/06/06
$260.00
$21.67
$0.711
01/07/06 to 13/08/06
$320.00
$26.67
$0.87
14/08/06 to 28/02/07
$4,800.00
$400.00
$13.14
01/03/07 to 27/08/07
$23,225.00
$1,935.42
$63.58
28/08/07 to 30/06/08
$0.00
$0.00
$0.00
01/07/08 to 30/09/09
$0.00
$0.00
$0.00
In total, it seems to be the case that Mr Ongal has been assessed to pay Ms Materns child support in a sum of $19,304. Of this sum, Mr Ongal has paid $7,511.57, which leaves arrears of $11,792.43 as at 17 July 2008.
On 4 October 2007, a delegate of the Registrar of the Child Support Agency made a departure prohibition order in respect of Mr Ongal pursuant to s.72D(1) of the Child Support (Registration & Collection) Act 1988 on the basis that Mr Ongal had a liability for arrears of child support. The departure prohibition order has not as yet been discharged.
The evidence
In my view, neither party can be under misapprehension about the issues which are in dispute in this matter and the complexity of those issues. Mr Ongal has acted on his own behalf in these proceedings. As a result, he has prepared his own affidavit material. He relies on the following documents:
i)A statement of his financial circumstances filed 24 April 2008;
ii)An Affidavit of himself filed 24 April 2008;
iii)An Affidavit of himself filed 6 August 2008;
iv)An Affidavit of himself filed 13 August 2008;
v)An Affidavit of himself filed 22 October 2008;
vi)An Affidavit of himself filed 14 November 2008.
The mother relies on the following documents:
i)A statement of her financial circumstances filed 25 July 2008;
ii)An Affidavit of herself filed 25 July 2008;
iii)An Affidavit of himself filed 5 November 2008.
I did not find Mr Ongal to be a particularly impressive witness. It is unfortunately not an uncommon phenomenon that parties, who have previously been spouses and remain the parents of children, when they become involved in proceedings before the court, to become obsessed with those proceedings and is so doing to become increasingly embittered and aggrieved about the conduct and perceived wrongdoing of their former partner.
Mr Ongal is undoubtedly very bitterly disposed towards Ms Materns. As such, I am concerned that he is determined to pay her as little child support as possible, if any at all and to make her life as difficult as he can. In achieving this goal, I am satisfied that he is determined to make his own financial affairs as impenetratible as possible, both to
Ms Materns and the court and reveal only the information which he feels will assist his overall aim of being as obstructive as possible to Ms Materns and her objective of obtaining child support from him.
Mr Ongal has filed five affidavits of himself in these proceedings. I did not find these affidavits particularly easy to follow and, in my estimation they do not follow a readily accessible chronology. As such, it is difficult to piece together a coherent chronology of Mr Ongal’s financial affairs. Overall, the affidavits pose questions, which
Mr Ongal does not necessarily comprehensively answer.
Attached to the affidavits are many annexures. The annexures include spreadsheets of Mr Ongal’s own calculation, which do not include the primary documentary source material, from which they have allegedly been made, such as bank statements or receipts. It is also noteworthy that other witnesses, who are said to support his case, have not provided affidavits for these proceedings but rather have written letters addressed either to Mr Ongal or “To whom it may concern”.
The child support provisions are complex. The parties themselves have been involved in a plethora of child support proceedings before various arms of the Child Support Agency itself and more recently before the Social Security Appeals Tribunal. I must be careful to remind myself that Mr Ongal is not legally trained and, as such, labours under a disadvantage in these proceedings.
However, on both his own admission and in my impression of him, he is clearly an intelligent person. As such, he can be under no misapprehension about what is the essential evidentiary issue to which these proceedings are directed.
It is what is his capacity to earn income, given his previously well remunerated employment and his self-professed special talents in the [omitted] area. Related to this issue are other matters arising from how he has supported himself financially in the period since the parties separated and what are the sources of that financial support.
In the overall context of this case, I am concerned that Mr Ongal regards his self-justified indignation at how he perceives Ms Materns has treated him in the past, particularly in respect of arrangements for the care of [X] and [Y], as providing him with a licence to evade his financial responsibilities for the two children.
The parties in financial proceedings brought in this court, both in terms of family law legislation and the child support regime, have an obligation to make a “full and frank disclosure” of their financial circumstances. This follows from the requirement to file a statement of financial circumstances in support of each child support application.[7]
[7] See Federal Magistrates Court Rules at Rule 24.03
In my view, this duty is fundamental both to the adjudication of property matters pursuant to the Family Law Act and any applications regarding departure from administrative assessment from child support brought pursuant to the relevant legislation.[8]
[8] See Briese & Briese (1986) FLC 91-713 and Black & Kellner (1992) FLC 92-287 at 79,133
If there is not proper and full disclosure, the court is not in a position to exercise its proper authority and make orders which it considers to be proper pursuant to both the Family Law Act and the Child Support (Assessment) Act.
In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure.
The legal principles applicable
There are two major aspects to this case, which are governed by the provisions of Division 3 and Division 4 of the Child Support (Assessment) Act 1989 respectively.
Firstly, should the applicant be given leave to seek departure from administrative assessments of child support, which are more than eighteen months old but less than seven years old. The governing provisions are contained in Division 3.
Secondly, if so, should there be a departure from those administrative assessments as well as a number of other ones which were made subsequently. The governing provisions are contained in Division 4.
From 1 January 2007 onwards, the Commonwealth Legislature through the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formulas and Other Measures) Act 2006 has theoretically tried to make the change of assessment process easier and clearer for parents.
Part of this regime has been an attempt to limit the scope of applications to courts of appropriate jurisdiction by creating an independent review body, in the form of the Social Securities Appeal Tribunal (SSAT) to conduct a merits review of administrative assessments of child support, which continue to create controversy between those affected by them, after the conclusion of the change of assessment process and objection rights in the child support agency itself.
Pursuant to section 88 of the Child Support (Registration and Collection) Act 1988, the objective of the SSAT is to provide a “mechanism of review that is fair, just, economical, informal and quick”. Pursuant to section 110B appeals to the court from a decision of the SSAT are limited to questions of law.
There has been an application to the SSAT in this case, which did not result in a specific determination relating to the substantive issues in this case. Rather, the SSAT determined the issues raised in the case were too complex for it to deal with. This decision was based on the provisions of section 98E of the Child Support (Assessment) Act 1989.
Pursuant to section 116(1)(ab) either a liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court for a departure order if the SSAT has earlier refused to make a determination in respect of any applicable administrative assessment of child support.
Given all these circumstances, I am satisfied that I have jurisdiction to deal with the various applications in this case. Pursuant to section 111B of the Child Support (Registration and Collection) Act 1988 the court has a wide variety of powers to make orders in respect of the provision of child support.
Division 4 of Part VII of the Child Support (Assessment) Act deals with departure orders from administrative assessments in special circumstances. Pursuant to section 118, the court is empowered to vary, amongst other things, the annual rate of child support payable by a parent; make an order varying a parent’s child support income; or otherwise vary the various components of the child support formula to the particulars of any given case.
However, the entitlement to make an application for departure pursuant to section 118 is limited. Pursuant to section 111(1) a party to a child support assessment may only apply to the court for an order under section 118 of the Act in respect of any day in a child support period, which is more than eighteen months and less than seven years earlier than the day on which the application is made with the leave of the court.
Mr Ongal made his application to the court on 24 April 2008. Accordingly, on my calculations, he requires the court’s leave to proceed with any application to depart from administrative assessments of child support which relate to periods prior to 23 October 2006.
Pursuant to section 112 of the Child Support (Assessment) Act 1989 the court has a discretion to grant such leave and then proceed with any dependant application pursuant to section 118. The matters which are to inform this discretion are set out in subsections (4) & (5) of section 112. The court must have regard to the responsibility and reasons for the delay, any hardship which may be occasioned to the applicant and any other party and any other matters, which the court considers relevant.
The legislative provisions, which relate to the amendment of any administrative assessment of child support that is more than eighteen months old were inaugurated following the recommendations of the Ministerial Taskforce on Child Support, chaired by Professor Parkinson. The Taskforce was concerned to limit retrospective applications in respect of child support and the government accepted its recommendations in this regard.
The Taskforce reported as follows:
“An application for change of assessment may currently be made for a virtually unlimited time. This is highly undesirable, as it may open periods to re-examination which have long past, to the detriment of the other parent who finds past child support obligations being retrospectively reviewed. Particularly where a parent wishes to avoid complying with large outstanding child support debts, a belated application to reduce the assessment may be available, undermining the CSA’s ability to enforce debt. In practice, most decisions are not retrospective. However, the currently open discretion to make an application to vary past periods should generally be limited to the immediately preceding child support period.
However, there may be some exceptional circumstances where a parent has a legitimate reason for delaying their application for a change to a past assessment. One such reason is because information has only recently come to light about a payer’s hidden income. In such cases, a process should exist to enable this general limit on retrospective applications to be eased. A court is in the best position to consider the past ‘rights’ of the parties, and determine whether making an exception is appropriate. For this reason the Taskforce proposes that an application should be made to a court (in practice this would be the Federal Magistrates Court), to grant leave to apply out of time. This would be similar to the existing process under s.44 of the Family Law Act 1975 in relation to property and spousal maintenance applications.
Where such application has been made to a court, and the court is inclined to grant it, the court may have before it much of the necessary information and evidence from the parents to consider making a departure order. It may be inefficient to require the parents to return to the CSA to seek administrative determination of the application. In such cases, the court should have a discretion on application by a parent to proceed to determine the substantive departure application itself.”[9]
[9] see: In the Best Interests of Children – Reforming the Child Support Scheme: Report of the Ministerial Taskforce on Child Support published May 2005 at page 195
As previously stated, if leave is granted, the court has authority to deal with the resulting departure application at the same time as the leave application, rather than referring the matter back to the Registrar of the Child Support Agency, as the Taskforce recommended. Such an approach would enliven division 4 of Part VII of the Child Support (Assessment) Act 1989, which deals with court ordered departure orders.
The objects of the Act are described in section 4(2) as being intended to ensure:
“(a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
(b)that the level of financial support to be provided by parents for their children should be determined in accordance with the legislatively fixed standards; and
(c)that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
(d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them;”
Division 4 of Part VII has its own additional and particular objects, which are set out in section 114. They are as follows:
(a)that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents; and
(b)that parents share equitably in the support of their children.
The provisions of section 117 of the Child Support (Assessment) Act 1989 empower a court to make an order for departure from an administrative assessment of child support in special circumstances. Section 117(1) provides as follows:
Where:
(a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b)the court is satisfied:
(i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii)that it would be:
1. just and equitable as regards the child, the carer entitled to child support and the liable parent; and
2. otherwise proper;
to make a particular order under this Division;
the court may make the order.
Accordingly, the section provides three specific pre-conditions for the making of a departure order. They are as follows:
“(i)an applicant must establish one or more of the grounds for departure as specified in section 117(2);
(ii)thereafter the court must be satisfied that it is just and equitable to make a departure order. In so doing, the court must consider the matters set out in section 117(4);
(iii)the court must then be satisfied that it is otherwise proper to make a departure order and in so doing must consider the matters set out in section 117(5).”
If the three conditions as set out in section 117(1) of the Act are satisfied then the court may make the departure order sought. The proviso to any departure application is that special circumstances should exist.
In Savery and Savery[10] His Honour Justice Kay held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. In the Marriage of Gyselman[11], the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary. That is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.”[12]
[10] Savery and Savery (1990) FLC 92-131
[11] In the Marriage ofGyselman (1992) 15 Fam LR 219
[12] (supra) at page 225
In Gyselman[13] the Full Court of the Family Court as follows:
“As we have already indicated, the exercise under section 117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in subsection 2 has been made out. The legislation then requires the court to consider whether any proposed order is ‘just and equitable’ and ‘otherwise proper’.”
[13] In theMarriage ofGyselman (supra) at 240
Mr Ongal has not specifically stated the provisions of section 117(2) on which he relies. From the contents of his various affidavits, I presume he relies on sub-sections (a)(iv) and (b)(i) – which deal with the high costs incurred by him to spend time with the two children concerned; and (c)(ia) – which deals with issues to do with Ms Materns property and financial circumstances, which he claims the applicable child support assessments do not reflect.
Ms Materns, in her response, ostensibly relies on section 117(2)(c)(1) (sic). This is an error. There can be no doubt that she relies on section 117(2)(c)(ia) & (ib) which deal with issues to do with Mr Ongal’s income, property and financial resources and his earning capacity, particularly that the relevant child support assessments do not reflect Mr Ongal’s true financial position, particularly his capacity to earn income for himself.
In terms of the high costs incurred in respect of Mr Ongal spending time with [X] and [Y], section 117(2B) is relevant. Costs can only be high, for the purposes of a child support departure application, if the costs incurred in respect of spending time with any child concerned exceed five percent of the applicable parent’s taxable income for the child support period in question.
Cases regarding a parent’s capacity to earn are complex. The Ministerial Taskforce on Child Support,[14] the recommendations of which formed the basis of the currently applicable legislation distinguished between two categories of earning cases – “capacity to earn” cases and “capacity to pay” cases.
[14] In the Best Interests of Children – Reforming the Child Support Scheme – Report of the Ministerial Taskforce on Child Support - published 14 June 2005
In the former case, it is accepted that the parent concerned’s income is as stated by him or her in the child support assessment process but that parent has the capacity or ability to earn a higher income. As a consequence, in order to meet both the financial needs of any child concerned and satisfy considerations of overall fairness, it may be appropriate to levy child support on a nominated higher income than that currently being actually earned by the parent in question.
In the latter case, the issue in question is usually whether the parent concerned’s child support income actually reflects what that parent earns. In this category of case arguments often arise, regarding income minimisation schemes, such as salary sacrifice or the channelling of income through trusts or companies.
Ms Materns’ case has aspect of both these issues. She asserts
Mr Ongal is declining to pursue his career in [omitted] because of his animosity towards her as manifested by his recalcitrance to pay her a proper level of child support for [X] and [Y]. In such circumstances, she argues that the court should levy child support on what Mr Ongal could earn if he utilised all his considerable talents in his chosen field of expertise.
It also seems to be her case that Mr Ongal is somehow concealing income from both her and the Child Support Agency in some way. Either he is earning money off-shore, which is being channelled to him through bank accounts unknown to her or he has undisclosed assets, being held elsewhere on his behalf.
This aspect of her case rests on the assumption that it is otherwise inexplicable as to how Mr Ongal currently enjoys the standard of living, which he does and maintains the level of expenditure relating to it, without apparent income.
The legislative provisions regarding “capacity to earn” cases have been significantly modified as a result of the report of the Ministerial Taskforce on Child Support. The Taskforce recommended that a parent’s income should only be increased on the basis that that parent had a higher capacity to earn income if three criteria were satisfied:
·The parent was unwilling to work despite having ample opportunity to do so or had reduced his or her level of normal full-time work below that which was normal in the industry in which he or she was employed;
·The decision of that parent to work less hours was not based on caring responsibilities or the state of health of that parent;
·On the balance of probabilities, a major purpose for the parent’s decision, in respect of his or her employment, was to affect the level of child support assessed.
The legislature has adopted these recommendations. Section 117(4) of the Child Support (Assessment) Act has been amended and subsections (7A) and (7B) have been inserted. The aim of the new legislation is to distinguish between parents who change their income earning patterns for legitimate reasons and those who do so to escape or reduce their child support liabilities.
The relevant sections of the explanatory memorandum indicate as follows:
“The new method of assessment is intended to be flexible enough to allow parents whose earning capacity has been assessed for child support purposes to make decisions about their work and life, for example, choosing to pursue a different career or reducing work hours due to caring responsibilities, in the same way as parents in intact families. However, it is also important to take account of whether a parent, either payer or payee, whose earning capacity is assessed for child support purposes, makes changes to his or her work, where a major purpose of those changes was to affect the assessment of his or her liability. Therefore, the Schedule introduces provisions that allow a court to make an order that a parent has a greater capacity to earn than he or she is presently exercising if the parent has not demonstrated that affecting his or her assessment for child support was not a major purpose of that decision. That is, the court may make an order that a parent has a capacity to earn greater than he or she is presently exercising if the parent cannot show that he or she had an appropriate reason for his or her decision about work changes.”[15]
[15] See explanatory memorandum – Reform of the Child Support Scheme (Initial Measures) Bill 2006 at page8
In determining whether it is just and equitable to depart from an administrative assessment of child support, the court is required to have regard to the income, property and financial resources of each parent [section 117(4)(d)] and the earning capacity of each parent, who is a party to the proceedings [section 117(4)(da)].
Pursuant to sub-section 7(A) the court is required to have regard to the capacity of parents to derive income, including any assets, under the control of or held for the benefit of a parent that do not produce but are capable of producing income for that parent.
Sub-section 7(B) provides the relevant criteria to which the court must have regard in determining whether parent’s earning capacity is greater than that which is reflected in his or her income for the purposes of the child support assessment scheme. The section is crucial in “capacity to earn” cases and reads as follows:
“(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a) one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent’s caring responsibilities; or
(ii) the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.”
Riethmuller FM has considered the new implications of the new provisions in the context of earning capacity cases.[16] He proposes a four step process as follows:
·Step 1 – Does a person have a greater earning capacity?
·Step 2 – Does the earning capacity fall within section 117(7B)(a)?
·Step 3 – Are the lower earnings justified?
·Step 4 – Has the payer proved that avoidance is not a major purpose?
Should leave be granted to the father to seek departures from the applicable administrative assessments which are more than 18 months old
[16] How to decide earning capacity cases and more … : A review of the 2006 amendments to the child support scheme – paper delivered by Riethmuller FM on 16 July 2008
Mr Ongal has provided no reasons to explain the delay in him bringing this aspect of his application. I do not think that this delay can be attributable to any reticent, on his part, with the court process. The fact is that the parties have been in almost constant litigation, with one another, in a variety of forums, since they separated. Mr Ongal has demonstrated little hesitation in bringing proceedings against the mother in the past.
These forums have included the external review arms of the Child Support Agency, as well as the SSAT. From 28 February 2005 onwards, the various applicable assessments have veered between extremes. At the high water mark the annual rate of child support has been around $31,600.00, at its lowest rate it has been nil. A significant level of arrears remain outstanding.
These discrepancies have come about largely because of the uncertainty which has existed about the application of the child support formula to Mr Ongal’s financial circumstances. A level of uncertainty which I am satisfied that Mr Ongal has done little to dispel. Certainly, the more recent assessments have suited him.
In these circumstances, I do not think it can be said that any new piece of evidence or information has come forward, of an exceptional nature, either from Mr Ongal or on his behalf, which explains the delay in him bringing his application to seek a departure from the administrative assessments in question.
To the contrary, his motivation seems to be to avoid child support rather than to ensure a more equitable provision of financial support for [X] and [Y]. In all these circumstances, the potential for hardship occurring by reason of a retrospective examination of the relevant assessments seems to lie more with the mother than the father.
It seems to me likely that Mr Ongal has been primarily motivated, in this aspect of his case, by his desire to have the departure prohibition order against him lifted. Ancillary to this is his desire to have the current amount of arrears discharged. I do not think that he can point to anything which has changed since the assessments were made, of which he not aware at the time and which can be was said to explain the delay which has arisen since.
Notwithstanding the level of arrears and the previous rates of assessment levied, in the period in excess of four years since the parties separated, the father has paid a modest amount of child support to the mother. In all these circumstances, I do not think it would occasion any unacceptable level of hardship to the father if leave is not granted to him.
In Whitford & Whitford[17] the Full Court, in a different context, considered that, where a court was legislatively required to consider potential hardship being occasioned to one party by it not making a particular order and the hardship to be occasioned to the other party if the order in question was made, the exercise involved the balance of “any appreciable detriment financial, personal or otherwise” between the parties concerned. In Cantrell & Jennings[18] Baker FM considered that the same exercise applied to the application of section 112(4) of the Child Support (Assessment) Act. I respectfully agree.
[17] Whitford & Whitford (1979) FLC 90-612 at 78,145
[18] Cantrell & Jennings [2009] FMCAfam 229
In my assessment, Mr Ongal’s response to his obligation to provide financial support for [X] and [Y] has to date been poor. I reach this conclusion because although he is willing to expend considerable sums to spend time with the children in [W], he is unwilling to advance any moneys to the mother to assist her with the children’s financial needs, whilst they are in her care.
On the other hand Ms Materns has not received any significant amount of child support to date. There is likely to be no benefit to her if the review in question is granted. There is the possibility that such a review may conceivably result in a situation where she will be required to repay child support previously collected on her behalf in the past, which she has expended in the care of [X] and [Y]. This would be a hardship to her.
Regrettably, I have come to the conclusion that one of the major motivating factors behind Mr Ongal’s behaviour to date, including his wish to seek a review of all the child support assessments in question since the parties separated, is his marked sense of grievance against
Ms Materns. As such the potential for hardship falling more on
Ms Materns’s shoulders, as a result of any retrospective review occurring is much greater than of it falling on to Mr Ongal’s, if the review sought by him is not allowed.
I respectfully agree with the views of the Ministerial Taskforce on child support outlined above. I do not think that Mr Ongal has been able to point to any exceptional circumstances which justify the initial assessments of child support being subject to re-examination. Rather, Mr Ongal’s motivation appears to be related to seeking to limit his liability for child support. In all these circumstances, I do not propose granting the leave which Mr Ongal seeks.
Should there be any departure from the administrative assessment of child support from 28 August 2007 onwards on the basis of the mother’s income, property and financial resources?
The father claims that the mother has sold her interest in two pieces of real property located at Property M and Property T respectively and concealed the proceeds from both him and the Child Support Agency so that she can escape some form of child support assessment being made against her.
The mother concedes her interest in these two properties has been sold and she has received a sum of around $48,000.00 as a result. It is her case that she no longer retains these funds, which have been utilised to pay her legal costs arising from litigation with Mr Ongal. I do not doubt the mother’s evidence in this regard. Nor do I accept the father’s assertion that she has concealed moneys from him.
The mother’s position is that her sole source of income is a parenting pension and family allowance. I accept her evidence in this regard. The sale of the properties in question would have been relevant, for child support purposes, if Ms Materns had either invested the proceeds or was declining to invest them and, as such, the proceeds in question were capable of generating income.
As I have accepted Ms Materns’s evidence that she no longer holds the funds in question, which have been divested to pay her legitimate expenses, this is not a relevant consideration in the matter.
Should their be a departure from administrative assessment of child support from 28 August 2007 onwards on the basis of the father’s
i)Earning capacity
ii)And/or income, property and financial resources?
In his statement of financial circumstances, Mr Ongal discloses he owns property to the value of $228,600.00. The major aspect of this figure is represented by the sum of $200,000.00, being his half-share in the former family home at [H], which he continues to occupy.
Otherwise, he owns two cars worth $14,800.00 in total; and household contents estimated to be worth $5,000.00. He has disclosed a bank account in Vanuatu containing $10,100.00. He estimates his superannuation entitlements as being $118,855.00.
Mr Ongal estimates his liabilities as being just over $473,000.00. His share of the mortgage on the [H] property is said to be $122,500.00. In addition, he claims to owe his mother the sum of $222,000.00. He has other credit card debts and owes his accountants a sum of money.
Mr Ongal also deposed that he is owned $20,000.00 being “earnings from [Q] for work completed on contract during 2007 …”. This debt is characterised as a financial resource.
Mr Ongal has deposed that his weekly income is $1.00 or presumably $52.00 per annum. His employer is nominated as a company, [N] (UK). He estimates the value of this company as being nil. He apparently owns one hundred percent of its shareholding.
Mr Ongal has estimated his weekly expenditure at $1,408.00. The major component of this sum is $350.00 per week, in respect of the [H] mortgage. He also allegedly is liable to his mother in the sum of $700.00 per week in respect of the debt said to be owed to her of $222,000.00.
Mr Ongal also spends substantial moneys each month, in order to visit [X] and [Y] in [W] and to rent accommodation in [W] to this end.
Mr Ongal deposed that he spends over $1,600.00 per month in these costs and has done so for the past three years. In the period, in question, he states his income has been “minimal”. Due to his British nationality, he is not entitled to Australian social security benefits. Accordingly, how Mr Ongal funds these various expenses is opaque to me.
In his initial affidavit, Mr Ongal conceded that he had had “to move all [his] banking overseas to prevent the CSA being able to confiscate moneys received from my mother for my upkeep, and for the funding of my contact with my children.”[19]
[19] See father’s affidavit filed 24 April 2008 at paragraph 16
By necessary implication, it is Mr Ongal’s position that his living expenses have been financed by a loan from relatives, as well as the liquidation of other assets in the United Kingdom.
In this regard, Mr Ongal deposes as follows:
“Since separation in 2004, and during 2005, all assets under my control were progressively sold to fund my presence in Australia to be with my children, and to defend myself in Family and District court from the malicious claims and behaviours of the mother. All assets and sales were fully discovered in the District Court and to the Child Support Agency. The sales were approximately £10k in shares, £40k in insurance policies and £75k in Florien shares. The money was used to purchase a car to transport the children, to purchase furniture, clothes and toys for the children, to fund applications for permanent residence, and to leave and return to Australia to meet temporary visa requirements.”[20]
[20] See paragraph 19 of the father’s affidavit filed 6 August 2008
Mr Ongal also estimates that he has expended approximately $200,000.00 in legal fees in respect of proceedings between himself and Ms Materns in the Family Court and the District Court. This amount is not recorded as a debt in the father’s statement of financial circumstances and I assume the solicitors in question have been paid in full.
The circumstances of the parties’ final separation were difficult for each of them. In this regard the father complains that he was forced to expend considerable sums of money in “re-establishing” himself. He estimates these costs of being in the vicinity of around $25,000.00. It is also his case that he has spent around $67,000.00 in respect of the recurrent mortgage repayments on the [H] property.[21]
[21] See father’s affidavit filed 27 October 2008 at paragraph 7
Accordingly, as a result of his own testimony, the father concedes that he has spent around $292,000.00, in the period since the parties separated and during which time he has not purportedly been regularly employed. This calculation occurs before any consideration is given to his recurrent living expenses, particularly the cost of regularly visiting [W] and also departing Australia, from time to time, to satisfy the conditions of his visa.
Mr Ongal’s case is that he has funded these various expenses by the sale of assets yielding £125,000.00. The largest component of which relates to the sale of his shares in [F], which allegedly netted $75,000.00 for him, when the shares in question were sold to his parents.
The court has not been provided with any specific documentary evidence regarding the relevant rates of exchange when these assets were sold and how the sums were conveyed to him, particularly whether they were deposited into a particular account or accounts.
When I say specific documents, what I mean is copies of specific ledgers or bank statements, which will definitively establish when and in the manner by which particular sums of money were transferred. Rather, Mr Ongal has prepared his own lists of figures and has asserted the truth of his various calculations. In the overall circumstances of this case, I remain suspicious of these documents created by Mr Ongal alone, which I am concerned may be self serving.
The circumstances of the sale of the [F] shares is particularly obscure to me. Mr Ongal states that the sale of the shares is:
“The issue of the [F] shares is therefore not directly relevant to this application, but is provided for background information only to counter any claim, as repeatedly expressed by the mother to the CSA ,that these shares were sold at undervalue and hence that the loans from my mother that support me are in truth my own money being repaid.”[22]
[22] See Mr Ongal’s affidavit filed 4 June 2008 at paragraph 21
Mr Ongal also states that an application for a permanent visa application, prepared on his behalf in late 2005, incorrectly stated the value of the shares at over A$1,000,000.00. I have not been provided with a copy of the relevant application in question and the context in which the alleged mistake occurred.
The SSAT made reference to this document in its decision dated 25 February 2008. It was one factor, amongst others, which led the SSAT to conclude that the matters raised in the parties relevant applications were too complicated for it to deal with. In particular the SSAT made reference to a written submission made to it by Mr Ongal.
The submission was as follows:
“The one major issue of importance to the CSA, that is associated with the District Court at this time, is the question of whether the sale to my parents of my [F] shares in December 2005 at the pre-takeover market rate, was a legal transaction. If it was, then the associated profits from the takeover belong to them. My mum has used these funds to make loans to me to support myself, which I continue to pay back when I can, a process that will continue until my working level can increase substantially. If it was illegal, then the funds are mine and the CSA has a right to state I am able to pay child support but they first need to undertake an assessment on that basis after the court makes its decision. The question of whether it was or was not legal is a very complicated matter but I remain very confident about my actions at the time.”[23]
[23] Submission made by Mr Ongal to the SSAT on 30 January 2008
The sale of the shares occurred, it seems, in December of 2005, about a year after the parties had separated. It would also seem to be a time at which relations between the parties were extremely poor. My assessment of Mr Ongal is that he is not well disposed towards
Ms Materns and would not want to advance her financially, if he could avoid it, either now or in the past. He is particularly aggrieved that she made what he asserts were unfounded allegations regarding his sexual interference with the parties’ children.
I was not provided with any evidence regarding the precise nature of [F], particularly the extent of its business enterprise. Mr Ongal’s evidence is that it held a number of patents related to [omitted], many of which he had been influential in devising. I would presume that
Mr Ongal would have some idea of what was the commercial value of these patents.
However, I cannot be sure. I have however no doubt that Mr Ongal himself has little doubt about the worth of his own intellectual attributes, in the area of [occupation omitted]. However I also concede that self-appraisal is not always the most accurate method of assessing such talents.
What is clear is that [F] was taken over by a US based company, [Q], in January of 2006 and in so doing acquired the intellectual property of [F]. I assume that, in part, the acquisition of this property was part of the motivation for [Q] to acquire [F]. Whether, in addition [Q] was motivated to any degree by a desire to access the previous talents of
Mr Ongal is something unknown to me.
[Q] is a corporation based in San Diego, California, which is involved in [omitted]. It has a website [omitted] which indicates it has ten subsidiaries, including [F] was previously based in New Jersey.
In his affidavit material, Mr Ongal deposes that the maximum value of his [F] share options was US$3.00 per share. In support of this assertion, he has provided a letter dated 30 July 2007 from Mr C, who is described as the Vice President of [Q].
Mr Ongal has deposed as follows:
“The shares were sold to my parents at the market value of $3.00 per share, minus the significant UK tax obligations which passed to my parents.
I will have with me at the hearing a document provided a detailed description of the circumstances surrounding the transfer to my parents of the [F] shares, written by me in January in 2007, for and discovered within, the District Court proceedings. The transfer was greatly complicated by the unexpected completion of a takeover by [Q] in January 2006. This takeover included a bonus to be paid if a patent grant target was reached by [F] within eight years. This substantial (sic) was unexpectedly paid to the benefit of my parents within two years.”[24]
[24] See Mr Ongal’s affidavit filed 4 June 2008 at paragraphs 24 and 25
I was not provided with the document referred to by Mr Ongal. Nor did he elaborate on the circumstances of further moneys which were allegedly paid to his parents as a result of what was described as the “unexpected” completion of the takeover and the benefit paid to his parents.
On its website, [Q] holds an archive of the various press releases made by the company in preceding years. These press releases include one which is dated 11 August 2005 headed “[Q] to acquire [F]”. A subsequent press release, dated 19 January 2006 is headed “[Q] completes acquisition of [F]”.
In part, this latter press release reads as follows:
“[Q] paid approximately $600 million in [Q] stock and cash, including the vested options and warrants of fair value. Upon the satisfaction of certain milestones, [Q] may also pay an additional $205 million in the form of cash and [Q] stock.”[25]
[25] See [website omitted]
Mr Ongal was not cross-examined in any detail about this transaction which, as previously indicated, the SSAT were trepidatious about broaching because of its potential complexity, particularly regarding its impact on the likely extent of Mr Ongal’s financial resources for child support assessment purposes.
The press releases were not put to Mr Ongal. I discovered them in my own researches. In my view, appearing as they do on the internet, they exist within the public domain and I can give some judicial notice to them. However, I must be cautious about drawing any conclusions from them.
But, regardless of this caution, I must still examine the sale of the [F] shares, within the overall context of this case, particularly in regards to Mr Ongal’s circumstances. He has had access to relatively large amounts of cash since 2004, but has not been in regular employment. I am also concerned that he has not been completely frank about his financial circumstances and adequately explained how he has maintained his living arrangements and expenditure since 2004.
The transaction also involves close members of his family. In these circumstances, particularly given the extreme animosity which exists between Mr Ongal and Ms Materns, I believe that I should have some concerns whether the transaction involved is a bona fide one, which is at arms length. Above all, I am concerned that I have not been fully advised as to the exact value of the transaction concerned.
The transaction causes me concern for the following reasons:
·It seems unlikely that Mr Ongal would have had no knowledge of the acquisition of [F] by [Q], when he purportedly sold his shares/options to his parents;
·It also seems unlikely that he would have had no idea of the potential value of these shares/options particularly given his technical involvement with [F];
·Mr Ongal’s parents have provided no evidence in these proceedings. They live in the United Kingdom. I would expect them to have the normal allegiances of blood to their son;
·No formal documents have been provided in respect of the transaction;
·The impression Mr Ongal wishes to give is that any as yet undisclosed windfall arising from [F]’s acquisition of [F] was unforseen by him and belongs to his parents alone;
·The transaction does not fit easily with the allegedly mistaken and undisclosed application written by Mr Ongal’s migration lawyer, which indicated Mr Ongal had shares valued at over A$1,000,000.00;
·
In the overall context of this case, it seems implausible that
Mr Ongal’s parents would be funnelling funds to him to provide for his financial support, in the form of a loan which Mr Ongal had to repay.
In his initial affidavit, Mr Ongal deposes that he was “sacked” by [F] in early August of 2004.[26] In a later affidavit he asserts his employment was terminated because of pressure being asserted by [Q] on [F] in the lead up to the takeover. I have not been provided with any specific details of Mr Ongal’s level of remuneration by [F], which as previously indicated was a company incorporated in the USA.
[26] See Mr Ongal’s affidavit filed 24 April 2008 at paragraph 4
Applicants for distinguished talent visas must establish to the Department of Immigration and Citizenship that they are prominent in their chosen profession, the arts, sport or research and academia. They must also establish that they will be able to obtain employment or become established in Australia in their area of expertise. As such, they must either establish that they have a job in Australia or can establish a viable business in this country.[27]
[27] See Australian Government: Department of Immigration & Citizenship website visa criteria
However, notwithstanding his apparent rupture with [F], Mr Ongal has been able to secure some employment with its successor [Q], although once again, I am concerned that I have not been provided with full details of the moneys earned. In addition, it seems that Mr Ongal has provided services to other corporate entities.
Between 1 July 2005 and 30 June 2006 Mr Ongal was paid £3,937.50 by [V] apparently a United States company.[28] Between 24 August 2005 and 20 February 2007, Mr Ongal received the sum of US$55,675.32.[29] The letter on which these payments are detailed is signed by Mr B of [Q]. The letter also indicates that prior to 18 January 2006 all payments were issued through [F] but after this date were issued through [Q].
[28] See Annexure F to Mr Ongal’s affidavit filed 22 October 2008
[29] See Annexure G to Mr Ongal’s affidavit filed 22 October 2008
Between 31 December 2007 and 5 August 2008 Mr Ongal or his company [N] were paid the sum of US$75,499.86 by [Q].[30] The letter to this effect is signed by Mr D and indicates that [Q] has a number of subsidiary companies of which Mr D has no personal knowledge of or access to their accounting records.
[30] See Annexure H to Mr Ongal’s affidavit filed 22 October 2008
In a letter dated 7 February 2007, the aforesaid Mr C, under the letterhead of [Q] as follows:
During 2006, Mr Ongal invoiced [Q] for the sum of A$44,000.00 for ideas and inventive work carried out whilst he was unemployed by [F] between August 2004 and June 2005.
This invoice was subsequently paid in August 2007, along with a payment for A$9,100.00 for work carried out in 2006 under his one year consulting contract, resulting in a lump sum payment of A$53,100.00.”[31]
[31] See Exhibit G to Mr Ongal’s affidavit filed 24 April 2008
Mr Ongal confirms that this sum related to work done between September 2004 and June 2005, which resulting in an IOU, which
Mr Ongal called in later. This may be usual practice in this particular industry, but I confess to being bemused by it
In terms of the sums expressed in US dollars and pounds sterling, I am not fully aware of these sums equate to in Australian dollars at the relevant times. However, in total, all the various sums in question amount to a significant sum. To my mind, they also indicate that
Mr Ongal has a capacity to earn income in his chosen area of expertise, which appears to have been the basis of his distinguished talent visa.
Mr Ongal has estimated his likely income for the 2008/2009 tax year to be approximately $30,000.00, after “minimal company costs have been covered”.[32] It is his evidence that this will be far less than the costs which he will incur in travelling to [W] to see [X] and [Y]. He describes these costs as being “massive”.
[32] See Mr Ongal’s affidavit filed 14 November 2008 at paragraph 34
In earlier proceedings between the parties in the Family Court of Australia, in January of 2006 Mr Ongal indicated that he was currently working ten hours a week earning A$100.00 per hour. Obviously this equates to an income of $52,000.00 per year. Mr Ongal provides a gloss on this disclosure asserting that he was not able to find this number of interrupted hours per week.
Mr Ongal has asserted that his work is analogous to that of a [occupation omitted].[33] In an undated letter, addressed to whom it may concern, Mr C indicates that Mr Ongal has been providing contract services to first [F] and then [Q] since June 2005.[34] Mr C also writes that Mr Ongal is effectively barred from contracting to other companies, in his field of expertise, as a result of his contract of retainer with [Q].
[33] See paragraph 33 of Mr Ongal’s affidavit filed 14 November 2008
[34] See Annexure M to Mr Ongal’s affidavit filed 14 November 2008
In 2006, the maximum amount of Mr Ongal’s contract to provide services to [F] was A$100,000.00. Mr C wrote that Mr Ongal “significantly underspent in each year, due to other personal commitments”.
Mr C also indicates that consultants to [Q], such as Mr Ongal, are required to visit the company in the United States and its customers around the world if they are to undertake research work for the company. It is Mr Ongal’s position that the departure prohibition order prevents him undertaking such travel and so restricts his employability.
As has already been indicated, one reason why the SSAT declined to deal with the matter was issues related to the complexity of Mr Ongal’s business arrangements which spanned the United States, the United Kingdom and Australia. At least some of the payments to which
Mr Ongal was entitled were paid to his UK based consultancy company. This company is apparently being investigated by the taxation authorities in the United Kingdom.
As matters currently stand, I am not persuaded that I have been provided with all the necessary evidence to resolve the areas of complexity as identified by the SSAT. Certainly, it seems to be the case that Mr Ongal has a relationship with [Q] and has talents and abilities, which are useful to this company.
The more difficult aspect of the case is ascertaining what is the potential value of these skills and whether it is open to Mr Ongal to exercise them exclusively from Australia. By implication, Mr C’s undated letter referred to above, acknowledges that Mr Ongal has the capacity to undertake research work in the field of [omitted] and to file patents for “compelling new inventions”.
Mr Ongal himself has stated that fifty-four patents have been issued to protect his own inventions, although the patents in question have been held by his various employers. The clear implication of much of
Mr Ongal’s evidence is that his abilities are highly skilled and exceptional. As such, in the absence of more ample disclosure from him, it does not appear unreasonable to conclude that his services would attract some sort of premium within the market place.
a) Does Mr Ongal have a greater earning capacity than he currently discloses?
To all intents and purposes Mr Ongal asserts that his current income is nil. I have no great difficulty in reaching the conclusion that he has a greater income earning capacity than this. He is a self-professed person of special talents, which have provided him with an income in the past. It would also seem to me to be the case that there remains a demand for these talents.
In the past Mr Ongal has provided his services to employers overseas, notwithstanding the fact that he has been based in Australia. It is
Mr Ongal’s position that his skills are not easily utilised within Australia because of their highly specialised nature.
In addition, due to his inability to exit Australia, without making provision to pay the current arrears of child support, he is not in a position to satisfy the essential requirements of any international retainer.
In the context of these proceedings, neither of these strictures on
Mr Ongal’s employability appear inherently implausible. However, the fact remains that Mr Ongal has provided his services, to a variety of employers, since the parties separated. It also seems to be the case that at least some of the services can be provided “on line”. How could it be otherwise, given that Mr Ongal has been resident in Australia prior to the parties’ separation and has been employed by a firm which had its headquarters overseas.
In addition, for the reasons already provided, I have concerns that
Mr Ongal has not been fully frank about the moneys he has received, since separation, by reason of his employment. I reach this conclusion because of Mr Ongal’s admitted significant level of expenditure in the period, when contrasted with his level of apparent income.
Mr Ongal’s present position is that his income is $1.00 per week, derived from interest earned on his savings. Accordingly it is his position that he earns no income whatsoever. This seems to me to be implausible. In addition, it also does not necessarily follow that because Mr Ongal’s income is currently non existent that he has no capacity to earn some level of income.
Mr Ongal is self-admittedly a person of great talent in the field of [omitted]. Even if it be true that the best markets for the sale of his talents lie overseas, this does not necessarily mean that he could not derive some income, in a less specialised field of expertise, within the Australian [omitted] industry.
It seems to me to be nonsensical that there is not some means available to Mr Ongal of him earning some level of income within Australia, given his very special talents. I accept that it may be unpalatable for
Mr Ongal to consider these options. However, my overall assessment of the circumstances which prevail in this case is that he has an ulterior motive to make the provision of child support to Ms Materns for the two children concerned as difficult as possible.
b) Does the earning capacity fall within section 117(7B)(a)
Pursuant to section 117(7B)(a) of the Child Support (Assessment) Act the court may determine that a parent’s earning capacity is greater than that which is reflected in his or her income for child support purposes, subject to the satisfaction of a number of specified criteria. In this case, I am satisfied that Mr Ongal’s income earning capacity is greater than $1.00 per week.
In this context, I must consider whether Mr Ongal has had “ample opportunity” to work in the years since the parties separated. It seems to me that the evidence is clear that Mr Ongal could have worked more and made more effort to gain some level of employment, if he had wished to. As outlined above, I am satisfied that Mr Ongal has determined that he will not seek employment, whilst he remains aggrieved at how he perceives Ms Materns has treated him.
Allied with this issue is my concern that he has most likely been surreptitiously receiving funds from overseas, which represent either income or the proceeds of sale of the [F] shares arising from this company’s acquisition from [Q], which Mr Ongal effectively controls and which are on balance likely to have yielded him a sum greater than £75,000.00.
Mr Ongal’s mode of employment is unusual. In this sense, it is difficult, if not impossible, for the court to glean what are the number of hours per week that constitute full-time work in the occupation in which Mr Ongal is usually employed. However, Mr Ongal himself has indicated an ability to work at least ten hours per week.
On balance, in the period since the parties separated, it seems to me to be more likely than not that Mr Ongal has changed his working patterns, at least those which he is prepared to disclose to the court; the Child Support Agency; and Ms Materns. Certainly, it is difficult to see that he is not, at the very least, capable of exercising some of his considerable talents in the field of invention in the [omitted] field in some form or other to derive some level of income.
c) Are Mr Ongal’s lower earnings justified
This consideration turns on the application of section 117(7B)(b). The court is required to consider whether the parent concerned has made employment decisions, which have resulted in a reduction of income for some justifiable reason relating to his or her state of health or parental or other familial responsibilities.
In this particular case, clearly Mr Ongal enjoys good health. There is however the question of his level of parenting of [X] and [Y] to consider. Pursuant to the orders of the Family Court, Mr Ongal provides a significant component of these children’s parenting. In addition, he spends significant periods of time travelling between Adelaide and [W].
In general terms, I accept that these responsibilities are likely to significantly impact upon Mr Ongal’s capacity to earn income and exercise his particular talents in the field of [omitted]. However, it does not seem to me to be likely to be the case that these responsibilities would totally extinguish his ability to earn an income. On his own case, Mr Ongal concedes an ability to earn around $52,000.00 per annum.
In all these circumstances, I do not think that Mr Ongal’s declared level of earnings, in the period since the parties separated, can be justified by any extraneous factor. Certainly they cannot be justified by any consideration related to the overall justice and equity of the situation.
d) Has Mr Ongal proved that avoidance of child support is not a major purpose of how he has conducted his employment affairs since separation
It is my finding that Mr Ongal has been singularly uncooperative with the child support process since the parties’ separation. In my estimation, he has failed to displace the “fog” which has surrounded his employment circumstances, particularly his potential to be employed, in the four years since the parties’ separated.
There is a self apparent tension between Mr Ongal’s assertion that he is a person of unique talent in the field of [omitted] and his position that he is unable to derive a regular and reasonable level of income. In my estimation, Mr Ongal has failed to discharge the evidentiary burden that he has not crafted his current financial circumstances to avoid the payment of child support to Ms Materns.
In this regard, I do not accept that no areas of employment are available to Mr Ongal in his chosen field of endeavour within the Australian context. Mr Ongal has deposed that he has considerable experience in [omitted]. In these circumstances, it stretches my credulity to suggest that he could not obtain some form of employment. On balance, the more likely probability seems to me to be that
Mr Ongal wishes to avoid paying any child support to Ms Materns as a result of his level of personal animus for her.
Should there be a departure from the administrative assessment of child support from 28 August 2007 onwards on the basis of the father’s high costs of travel?
The high costs of Mr Ongal travelling regularly to [W] to spend time with [X] and [Y] is a significant plank of his case. In particular, he has rented accommodation for himself in [W] and has other significant recurrent expenses in respect of the necessity for him to travel regularly from Adelaide to [W] and return. I accept that these expenses are considerable amounting to somewhere in the vicinity of $1,600.00 per month. For reasons already outlined, I do not accept that Mr Ongal has fully accounted as to how he is able to meet this recurrent level of expenditure.
The care arrangements for [X] and [Y] and the contingent level of expenditure resulting to Mr Ongal are unusual to such a degree as to take this case out of the ordinary run of cases. It is not usual for one party, ostensibly with no reliable source of income, to commit himself to such a high level of recurrent expenditure to spend time with a child or children.
One of the underlying themes of this case is Mr Ongal’s sense of grievance that Ms Materns elected to live with the children in [W]. It is not my function to analyse the rights and wrongs of this decision on her part within the context of a child support departure application.
I am also concerned that, too a large extent, it suits Mr Ongal to have engineered this highly unusual and expensive parenting arrangement because it satisfies his sense of grievance against Ms Materns. The issue being what credit should a parent receive for high costs of travel incurred by him or her in any amendment of the applicable assessment, when that parent provides no other direct financial support to the other parent concerned.
To my mind, it is relevant in assessing the special circumstances, which pertain to this ground of departure, for the court to consider the fact that Mr Ongal has given no reliable explanation as to how he funds this significant level of expenditure and his position seems to be he would rather fund his preferred and unusual care arrangements for [X] and [Y] than provide any direct financial support to Ms Materns for these children.
The conundrum being that Mr Ongal seeks a departure from the administrative level of child support, which is currently nil, on the basis of his high “contact” costs, whereas on the other hand, he remains apparently able to fund the level of expenditure relating to the travel in question. The two concepts are not reconcilable. Hence,
Mr Ongal should not be able to garner much assistance from these circumstances.
Conclusions
From 28 August 2007 onwards, the annual rate of child assessment assessed for Mr Ongal to pay in respect of the financial support for [X] and [Y] is nil. Given my findings about how he has managed his financial affairs since separation, particularly in how he has utilised his capacity to use his self admittedly exceptional talent in the field of [omitted] invention, I am satisfied that special circumstances exist to justify a departure from the applicable child support assessments.
For obvious reasons, particularly given Ms Materns’s modest level of income, such an assessment will be inadequate to provide for the children’s proper needs. In addition, such an assessment results in an effective abrogation of Mr Ongal’s duty to maintain the two children concerned financially, when they are not in his care.
For the reasons outlined above, I am satisfied that either Mr Ongal is consciously failing to utilise his full earning capacity or is concealing sources of income from both the mother and the Child Support Agency. In these circumstances, it is also just and equitable to depart form the applicable administrative assessments.
The more difficult task is for the court to attribute a proper level of child support income for Mr Ongal, against which his child support liability may be quantified. In my view, this difficulty arises because of Mr Ongal’s uncooperative attitude towards the process involved and his willingness to utilise his unusual circumstances to his own financial advantage.
These unusual features encompass the following factors:
·His status as a person who is not a PAYG taxpayer within Australia;
·The nature of his work, which enables him to be employed as a “tele worker” for overseas corporations;
·The lack of accountability of such overseas corporations to the Australian taxation authorities;
·His failure to be transparent about the sale of the [F] shares to his parents and their subsequent acquisition by [Q];
·The tension between his special abilities in the field of [omitted] and his modest level of income at present;
·His willingness to commit himself to a high level of expenditure to spend time with the two children concerned when contrasted with his self declared level of income.
In my view, Mr Ongal has exploited all these factors to make the assessment and collection of child support from him as difficult as possible. In these circumstances, he is not entitled to complain when the court adopts a broad brush approach to its calculation of his level of income. It would be both absurd and fundamentally unfair to both
Ms Materns and the children concerned if Mr Ongal was able to continue to engineer his circumstances so that his child support income remains at zero.
In all the circumstances of this case, I do not find that Mr Ongal has made a full and frank disclosure of all his relevant financial circumstances.
At the present time, certainly whilst the children are in the care of
Ms Materns, [X] and [Y]’s sole source of financial support is the mother’s social security entitlements. Given this state of affairs, it is also my view that it would be otherwise proper to depart from the current level of administrative assessment of child support for the children concerned.
At the present time, Mr Ongal has a significant level of arrears of child support. He has no proposals as to how these arrears should be paid. Rather, it is his position that the court should discharge these arrears. For the reasons already provided, particularly the time which has elapsed since the assessment which gave rise to these arrears were made, I do not believe that it would be an appropriate exercise of the court’s discretion to enable Mr Ongal to re-open these assessments.
As matters currently stand, the Agency itself has taken no steps to enforce collection of the arrears in question other than by placing a departure order on Mr Ongal. This state of affairs is complicated by reason of the fact that the parties’ de facto property proceedings remain outstanding in the District Court.
In all these circumstances, I see no utility in augurating an assessment regime which will, of itself, create a significant level of arrears. For that reason, I propose to make the departure commence from 31 October 2008 onwards.
Pursuant to section 118 of the Child Support (Assessment) Act the court has a wide range of powers which it may make in applying the court based departure process. These include varying a parent’s child support income [section 118(1)(c)].
The mother’s preference is that I should attribute the capped amount of child support income to the father, given his failure to make a full disclosure of his financial circumstances. At the present time, the capped amount stands at $113,763.00.
Such a disposition would not take into account the unusual features of the present care arrangements for [X] and [Y], particularly the high costs inherent in the father spending time with the two children concerned, albeit he has engineered those circumstances to suit his purposes.
The unusual circumstances inherent in this case will inevitably dictate that there will be a level of artificiality in applying a formulaically based process to the assessment of child support.
The artificiality arising because I have no reliable way of gauging what the father’s child support income is. I must attribute a sum for his child support income, against which child support will be calculated, largely because of what I have found to be the father’s conduct and the manner in which he has arranged his affairs since separation.
I think it would be unfair for me to set the capped income amount for the father for the period from August 2007 onwards. This would create a large level of arrears. Although I have considerable reservations about the process, I must fix some lesser but objectively reasonable level of income given all the circumstances of the case.
In all the circumstances of this case, including the level of uncertainty about the father’s actual level of income; the probability that he is not fully utilising his income earning capacity; and the high costs involved in Mr Ongal spending time with the two children concerned; I have come to the conclusion that it would be appropriate to fix a level of child support income, for Mr Ongal, of $60,000.00 per annum, from 31 October 2008 onwards until the end of 2009. I propose making a departure to this effect.
Costs
The mother has sought an order that the father pay some of the costs which she has incurred in these proceedings. I have not been provided with any estimate, on her behalf, of the likely level of those costs.
Pursuant to section 100 of the Child Support (Assessment) Act, the question of costs in child support proceedings is governed by the provisions of the Family Law Act 1975. Section 117 of the Family Law Act provides as follows:
“Costs
(1)Subject to sub-section (2) and sections 117AA and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under sub-section (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.”
Section 117(1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[35]
[35] See Browne v Green 29 Fam LR 428 at 432
In my opinion, there are circumstances in this case which justify the father paying the mother’s costs of these proceedings. In my view, the father has failed to be frank about his true financial position. In addition, he has been unsuccessful in his application.
In all these circumstances, I propose making an order that the father make an order that the mother’s costs to be agreed between the parties and failing agreement to be taxed pursuant to the applicable provisions of the Federal Magistrates’ Court Rules, particularly schedule 2 thereof.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding two hundred and twenty-nine (229) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 15 May 2009
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