P & R
[2006] FMCAfam 18
•23 January 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| P & R | [2006] FMCAfam 18 |
| CHILD SUPPORT – Application for departure from administrative assessment of child support – earning capacity – respondent mother’s poor health – property and financial resources – no special circumstances – application dismissed. |
| Child Support (Assessment) Act 1989 (Cth), ss.3, 4, 114, 117(1), 117(2), 117(2)(c)(i) |
| Gyselman & Gyselman (1992) FLC 92-279 Savery & Savery (1990) FLC 92-131 Hides & Hatton (1997) FLC 92‑759 DJM v JLM (1998) FLC 92-816 Re Marriage of Regnery 214 Cal. App. 3d 1367 Scott & Scott (1994) FLC 92-457 |
| Applicant: | JP |
| Respondent: | SR |
| File Number: | CAM 650 of 2004 |
| Judgment of: | Mowbray FM |
| Hearing dates: | 3 March & 20 April 2005 |
| Date of last submission: | 6 May 2005 |
| Delivered at: | Canberra |
| Delivered on: | 23 January 2006 |
REPRESENTATION
| Solicitors for the Applicant: | In person |
| Solicitors for the Respondent: | In person |
ORDER
The applications filed on 30 April 2004 and 3 March 2005 be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAM 650 of 2004
| JP |
Applicant
And
| SR |
Respondent
REASONS FOR JUDGMENT
Introduction
This application is brought by the father pursuant to the provisions of the Child Support (Assessment) Act 1989 in which he seeks a departure from administrative assessment of child support for a period commencing on 6 January 2003 and concluding in 2011.
The respondent mother wants his application dismissed.
Background
The applicant was born in October 1958 and is 47 years of age.
The respondent was born in August 1961 and is 44 years of age.
The parties commenced cohabitation in about February 1985 and married in April 1986. They separated in August 1997 and a Decree Nisi was pronounced in the Family Court of Australia in December 1999.
There are two children of the marriage, EP born September 1991 and TP born September 1993.
Shared parenting orders were made in the Family Court at Canberra in November 1999.
On 6 January 2003 the Child Support Agency assessed that the applicant should pay child support at an annual rate of $9,744 or $812 per month from 6 January 2003 to 5 April 2004. A departure application by the father was rejected, as was a subsequent objection. This assessment was the subject of the initial application to this Court.
Further assessments were made by the Agency, some after the application was filed in the Court. It is unclear from the papers when these assessments were made. The applicant tendered two assessments both dated 8 November 2004, the first setting an annual rate of $10,908 ($909 per month) from 1 April 2004 to 30 November 2004, and the second an annual rate of $11,620 ($968 per month) from 1 December 2004 to 28 February 2006. The $10,908 assessment was apparently first made on 23 February 2004.
On 3 March 2005 the applicant filed in court a further application covering the period from April 2004 to June 2005 which had been subject to a second rejected departure application. No objection was lodged with the Agency.
I agreed to treat this as a matter covering the three periods (see ss.115 and 116 of the Assessment Act on this Court’s jurisdiction).
The relevant law
The obligation to pay child support arises under the Act. Section 3 creates the obligation for parents to maintain their children. The objects of the Act are to be found in s.4 and must be borne in mind when deciding an application for child support. Section 4(3) recognises the desirability of parents reaching agreement for the financial support of their children.
Particular objects of the Act are described in s.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;
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;
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;
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;
There are additional particular objects in s.114 for Division 4 of Part 7 which deals with departure orders, ensuring:
(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;
(b) that parents share equitably in the support of their children.
Section 117 empowers a Court to make an order for departure from administrative assessment in special circumstances. Section 117(1) provides:
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:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division;
the court may make the order.
In Gyselman & Gyselman (1992) FLC 92-279 at 79,064 the Full Court said that in an application for departure the Court must engage in a three-step process:
1. Whether one or more grounds of departure in s.117(2) is established;
If so:
2. Whether it is “just and equitable” within the meaning of s.117(4) to make a particular order; and
3. Whether it is “otherwise proper” within the meaning of s.117(5) to make a particular order.
If these three conditions are satisfied then the Court should make the departure order sought.
In Savery & Savery (1990) FLC 92-131 Kay J said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
In Gyselman at 79,065 the Full Court discussed 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.”
Section 117(2) sets out the various grounds for departure. The s.117(2)(c)(i) ground is the only one pressed in this matter:
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of the Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of either parent or the child;
It is clear from the Full Court decision Hides & Hatton (1997) FLC 92‑759 that the three-step process must be followed in respect of each separate assessment for which departure is sought.
The applicant’s case
The applicant effectively seeks an order to reduce his child support obligation to nil. Further he seeks reimbursement of all payments that have been made. He says that there are special circumstances in this case that justify a departure order and the current assessment has resulted in an unjust and inequitable determination of the level of support to be provided by him. His reasons for departure are effectively that the respondent’s earning capacity is significantly higher than she claims. He also points to her assets and financial resources.
More specifically, he seeks an order to depart from the administrative assessment of child support for the following periods:
a)from 6 January 2003 to 31 March 2004;
b)from 1 April 2004 to 30 November 2004;
c)from 1 December 2004 to 28 February 2006; and
d)for future periods for the child, TP until he attains the age of 18 in September 2011.
The applicant was unrepresented. He gave evidence and was cross-examined. With his agreement I extracted from his voluminous papers the documents which appeared to be relevant.
The applicant is employed full time as an EL2 (Executive Officer level 2) in the Commonwealth public service. He has been a public servant since 1978.
Since separation in August 1997 the applicant has shared joint residency of the children. That arrangement was given effect to in orders made by the Family Court in November 1999. He and the respondent have shared in expenses relating to medical costs, school fees, books and sporting activities and in 2004 he paid for the whole amount of EP’s school fees. When the children are in his care he meets their day to day and financial needs.
The applicant did not file a statement of financial circumstances with his application. Annexed to his affidavit filed 10 September 2004 is a document entitled Brief Financial Statement which purports to be a list of his financial circumstances. It is not in proper form and is incomplete. I can only rely on that document to a limited extent.
He records that his annual income is about $81,000. Included in this sum was income from his employment, a negligible amount from NRMA shares and a family tax benefit. Under cross examination he said his salary was now $83,000 per annum.
The applicant’s evidence on his weekly expenditure is somewhat unclear. He claims expenditure on food, car parking, petrol, car insurance, clothing, health and medicine, entertainment, children’s expenses, child support and general household expenses. No figure is provided in his statement. His original departure application to the Agency in May 2003 puts expenditure at about $2,600 per fortnight. His May 2004 application suggests about $2,050 per fortnight. However, based on his responses under cross examination, I could not be satisfied that either of these figures is at all reliable.
The applicant jointly owns a home with his partner RF in the Australian Capital Territory which is valued at $560,000. He contributed $157,000 to the purchase. The balance was provided through a bank loan. His other assets consist of household and personal effects worth between $20,000 and $50,000. He has superannuation worth more than $150,000. There is approximately $403,000 owing on the mortgage and he has other liabilities totalling $10,000.
The applicant’s evidence about his share of the home was somewhat unclear. It would appear that he would have the Court believe that he does not have a half share. It was put to him in cross-examination that his share of the property is $280,000. He denied this. He says that RF and he have not yet worked out an arrangement if their relationship were to end, but they share equally in the mortgage repayments.
The applicant contends that the respondent’s health issues should not be given any consideration. He says that there is no objective evidence that she cannot work or suffers from an illness that would prevent her from working. She chose to leave her employment and to reduce her income. She used some of her redundancy money to fund an overseas holiday. She has indulged her own lifestyle by studying in areas which would not enhance her employment prospects. She also has available to her assets and savings and can withdraw money from her fathers estate held by the Public Trustee.
The respondent’s case
The respondent appeared before the Court unrepresented but with the assistance of a McKenzie friend. She gave evidence and was cross-examined.
The respondent resides in rental accommodation in the Australian Capital Territory. She commenced work with the Commonwealth Public Service in 1979 and over the years has worked her way up to an executive level 2 position. She is currently unemployed. Apart from a short period of part time employment in February-March 2003 and some voluntary church work, she has not worked since November 2001.
The respondent says that she left her employment due to health reasons when in November 2001 she took a voluntary redundancy package. An amount of $72,218.53 was paid to her in November 2001. The respondent says that her plans after leaving her job were to rest for a few months and then look for suitable employment and purchase a home. The respondent says that working in the public service caused her psychological and emotional distress. She believed that if she rested for a few months she would be able to manage her health problems through counselling and alternative therapies which would help her get back into the workforce.
In December 2001 the respondent enlisted the services of a career management consultant. She was unable to re-enter the Australian Public Service (APS) for 12 months because she had received a redundancy package. In January 2002 she registered her details with a number of employment agencies. She attended some interviews but was unsuccessful. Between February and May 2002 she applied for a number of vacant positions and again was unsuccessful. She also undertook some voluntary work.
In April 2002 the respondent says that she was experiencing extreme fatigue and found it difficult to cope with unsuccessful attempts to secure employment.
In June 2002 the respondent made a decision to undertake a course of study. She commenced full time in an anthropology course at University in August 2002. She undertook initial undergraduate requirements in Semester 2 of 2002 but due to her health she dropped a unit. By October 2002 she became more fatigued. She says that it was at this point in time that she realised her condition was chronic. Although the respondent became eligible to re-enter the APS she felt that her health was too poor and believed that she could not sustain the demand of employment.
The respondent successfully completed two units in 2002 and enrolled in postgraduate studies in December 2002. That commenced in March 2003. She undertook three units but began to experience further difficulties with her health and by July 2003 she became very ill. Blood tests were carried out which revealed she had contracted Ross River Fever. Those results, however, were later found to be incorrect. Notwithstanding her poor health the respondent continued to study but in August 2003 she dropped a unit. In December 2003 a medical practitioner prescribed anti-depressants.
In February 2004 she consulted her general practitioner, Dr Black, and he referred her to Dr Jonathan Turtle, a general practitioner who specialises in chronic fatigue conditions. In September 2004 she completed one unit but had to obtain special consideration. During this period she was treated by a chiropractor, a medical practitioner and a kinesiologist and received treatment from a naturopath.
In July 2004 she deferred the remainder of her course indefinitely. She has completed the graduate diploma but is yet to complete the master’s degree. Although her grades appear impressive her health has constrained her from continuing with her course of study.
In February 2003 the respondent was offered temporary employment as a consultant. She attempted a trial period which involved attendance at interviews and writing up interview reports at home. Due to her health she did not satisfy the turnaround time or productivity level expected by the employer and was deemed not suitable for such employment.
The respondent has now been under the care of Dr Turtle for about 10 months. She takes a number of medications and sees him regularly and has regular blood tests as prescribed by him. She has had vitamin B injections and has consulted a neuro-psychologist and sees an osteopath and is seeing a therapist.
The respondent proposes to re-enter the workforce when medical advice permits her to do so.
The respondent discloses in her statement of financial circumstances filed 1 March 2005 that her weekly income totals $502. Included in this sum is the income derived from her cash management account with Macquarie which she uses periodically to pay for household bills, a family tax benefit and a parenting allowance and child support. The respondent’s weekly expenditure set out in her statement of financial circumstances is $706. She has had to draw on her redundancy payment to meet living expenses as her weekly outgoings exceed her income.
As far as assets are concerned, the respondent is the owner of a vacant block of land she bought for $22,500 in 2003 with money given to her by her father. It has been valued at $23,000. Her other assets consist of a 1994 car worth about $8500, savings of about $10,600 and household contents to the value of $20,000. She has two superannuation interests with a total value of $127,500 which she cannot withdraw until retirement age. Her liabilities total about $500.
Consideration
Special circumstances
The first step in the three step process requires the Court to be satisfied that there are special circumstances which result in an unjust and inequitable determination if the administrative formula under the Act is applied. The applicant relies only on the ground in s.117(2)(c)(i). He asserts that the respondent has an earning capacity and property which are not reflected in the administrative assessment.
Earning capacity
In DJM v JLM (1998) FLC 92-816, the Full Family Court referred to the Californian case of Re Marriage of Regnery 214 Cal. App. 3d 1367:
Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good faith efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire …
When the ability to work or the opportunity to work is lacking, earning capacity is absent and application of the standard is inappropriate. Where the payor is unwilling to pay and the other two factors are present, the court may apply the earnings capacity standard to deter the shirking of one’s family obligations.
In Scott & Scott (1994) FLC 92-457 the Full Court said at 87,739:
… whilst the above cases establish that in some circumstances an unemployed parent without income may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his or her children, they are not authority for the proposition that in all such circumstances such a conclusion must or should be reached. If they establish any principle of general application it is only that being unemployed and without income is not of itself necessarily an answer by a parent to an application for child maintenance. The circumstances in which the parent became unemployed or without income, the reasons for it, the nature of his/her previous employment and the efforts (if any) which he or she has subsequently made to obtain employment are all relevant matters for consideration by the court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity, a parent may be required to pay maintenance for his/her children if he/she has property or financial resources which are or ought reasonably to be available for that purpose.
It is ultimately a question of fact, in each case, whether an unemployed parent with no particular qualifications or skills for employment could not be held … to have a current earning capacity sufficient to support an order for maintenance unless he/she has recently given up, without good reason, secure remunerative employment, or unless, having become involuntarily unemployed, he/she has made no reasonable efforts to obtain employment for at least a significant period of time.
The respondent contended that her health began to deteriorate from 1997 up to the time she left the public service in November 2001. She was also employed part time for significant periods between 1997 and 2001. Prior to ceasing her employment the respondent says that she experienced stress, illness and fatigue. In 1999 and 2000 the respondent had blood tests to explain her illness. Her medical practitioner, Dr Peter Black, referred her to a psychologist in about 1998 who she consulted for about 12 months. From time to time during this period Dr Black prescribed anti-depressants, sleeping tablets and anti-anxiety medications.
The respondent also attended stress management counselling, massage therapy and emotional stress relief through kinesiology. She had regular counselling support through the public service Employee Assistance Program between 1998 and 2001. In September/October 2001 she took about 6 weeks leave from work due to exhaustion. The respondent says that it was at this time she felt she was no longer able to meet the demands of her position in the public service.
In her affidavit filed on 1 March 2005 the respondent contends that she continues to experience health problems including:
·extreme tiredness and fatigue
·exhaustion
·aching bones, stiff and sore joints
·painful knees and feet and in various muscles
·blurred vision
·being overwhelmed by tasks or information
·difficulties in concentrating
·fright and inability to manage difficult emotional situations
·memory gaps and language loss
·difficulty in making quick decisions and in maintaining relationships.
The respondent contended that these symptoms have manifested gradually over the past 4 years. She says that at different times she experiences bouts of extreme fatigue, aches and illness following periods of physical over-exertion or periods of stress. To recover can take up to two weeks extensive rest.
The respondent produced medical evidence to corroborate her health problems. In his affidavit filed on 1 March 2005, a general practitioner, Dr Black deposes that the respondent has been his patient since 1993. He last consulted with her on 15 January 2005, at which time she still complained of chronic tiredness. Her emotional status appeared to have improved. Dr Black’s diagnosis is that the respondent suffers chronic fatigue syndrome or Myalgic Encephalomyelitis. She had been suffering for some three years prior to a report made in June 2004.
In oral evidence Dr Black asserted that the applicant had been unfit for employment at least since July 2003. He did not think that this was inconsistent with her having studied at university during this period. Indeed it was about this time that she had reduced the number of units in which she was enrolled. Dr Black was hopeful that the respondent would be able to resume part time work towards the end of 2005. He was adamant that the applicant was not feigning or exaggerating her condition.
In February 2004 Dr Black referred the respondent to Dr Jonathan Turtle, a general practitioner who specialises in chronic fatigue conditions. The respondent has consulted him on about ten occasions. Dr Turtle says that the respondent suffers from chronic fatigue syndrome with secondary depression. Dr Turtle’s assessment is that the respondent is making progress. However she still has significant and disadvantaging fatigue symptoms. In relation to her capacity to work, Dr Turtle says in his affidavit filed on 3 March 2005:
SR is currently fully incapacitated for any work, either full time or part time. It is most likely that SR will be able to commence a return of work within the next 12 months. She will initially have to return to work part time, eg 12 hours a week, and then to slowly increase work hours over a 6 to 12 month period till achieving full time work.
In oral evidence Dr Turtle stated that he could not be precise about timing of a return to work. The time period for improvement with chronic fatigue syndrome is very variable. There was nothing in the respondent’s history or presentation, or his observation of her which suggested she might be feigning her illness.
Dr Turtle agreed that he was not a specialist but a general practitioner who had taken a special interest in this condition over 15 years. He also accepted that chronic fatigue syndrome could not be verified by objective tests. Diagnosis was based on what the patient reported, consistency of history and presentation and observation.
The applicant contended that the medical evidence to support the respondent’s incapacity to work is flawed. He says that it should not be accepted. There is no objective evidence that the respondent cannot work or has a sickness which stops her from working. She has not provided evidence from any recognised specialist in the field but rather two general practitioners.
However, as I explained to the applicant at hearing, in general for the Court to reject the medical evidence of the respondent’s two practitioners the applicant would need to submit contrary evidence. He has not done so. He has not produced any medical evidence that would raise doubts or override the medical evidence presented by the respondent. He has merely made assertions.
The applicant submitted that the respondent’s condition was inconsistent with her undertaking university studies. The respondent however pointed out that the nature of the commitment and the time involved was significantly different from her employment. Dr Black also noted her reduction in units at the relevant time.
In the circumstances it is in my view appropriate to accept the medical evidence of the respondent. Having regard to DJM v JLM and Re Marriage of Regnery I am satisfied that the respondent has not been able to work since at least July 2003, the period given by Dr Black. It may still be sometime before she is able to take up full time employment. Dr Turtle was hesitant about making any predictions. The respondent had and has no earning capacity beyond that for which she has contended. The applicant’s opposing contentions for this period must be rejected.
The question remains what the respondent’s earning capacity was for the period from January to June 2003.
Dr Black’s evidence was that incapacity went back to at least July 2003. A naturopath, Dr Mirinda Lawrence, had been treating the respondent for “viral infections, post traumatic stress, depression and chronic fatigue” since October 2002. However, she did not provide any evidence on the respondent’s fitness for work.
The respondent gave evidence of her attempts over the first six moths of 2002 to enter the workforce – engagement of a career management consultant, registration with employment agencies, referral of her resume to employers, applications and interviews for jobs. She was not successful. She undertook some voluntary work. In the meantime her health was deteriorating.
In February 2003 the respondent was offered a temporary trial for a consultant position with the Recruitment Management Company. The work involved attendance at two days of interviews and writing up the interview reports at home. The respondent worked a total of 31 hours over about three weeks. She testifies that she was not able to cope due to her ill health. She did not satisfy the turnaround time or productivity level expected by her employer. She says that she was not well enough to seek and hold paid employment.
I have no expert evidence that the respondent was unable to work during this six month period. On the other hand the applicant has not put on any evidence which contradicts that of the respondent. The totality of the material before me supports the respondent’s position.
On balance I am therefore satisfied that the respondent was not able to work from January to June 2003 due to her health. She also probably lacked the opportunity as she would have had difficulty finding an employer as she had in 2002. Her earning capacity was as she contended.
Property
The applicant also asserts that special circumstances arise because of the respondent’s property. He referred to her block of land, her redundancy payout, her ability to draw on her father’s estate held by the Public Trustee and her superannuation.
This can be dealt with shortly.
The block has been valued at $23,000. Her redundancy payout now stands at approximately $9,600 having been used for day to day living expenses, medical expenses and costs associated with the children. The respondent is not able to draw on her superannuation for some years when she reaches retirement age. There is no evidence on the quantum of her father’s estate or that she can access it.
It is clear from the account of the respondent’s assets in her financial statement that she is not particularly well off.
Conclusions
This is not a case where the respondent has deliberately contracted out of her obligations to earn income to provide financial support for her children as the applicant contends. To the contrary, the evidence is clear that her reasons for leaving her employment were driven by her poor health. Although separation was in August 1997 she did not seek child support until January 2003. After she ceased employment she provided for the children up to January 2003 principally from her redundancy payment. I am satisfied that the respondent’s decision to leave paid employment was reasonable.
I accept that in normal circumstances she would have had the capacity to work and generate a significant income commensurate with her previous earnings and her position in the APS. However that capacity was lacking, principally due to her health.
Upon receiving her redundancy payout the respondent, save for a few months, made reasonable attempts to secure employment. However, those attempts were unsuccessful. I accept that her poor health made it difficult to secure employment.
I have found that the respondent’s earning capacity since January 2003 was as she has contended. Due to her health she has not had an earning capacity similar to that when she left the public service. In terms of property and financial resources she is not well off.
Do these findings amount to “special circumstances” justifying interference with the administrative assessments, based as those assessments were precisely on these facts? Clearly not. The administrative formula has done the job set it by the Parliament.
I am required to consider whether special circumstances exist for each of the three assessment periods extending from 6 January 2003 to 28 February 2006. I have done this together as most of the issues are common. I have found that there are no special circumstances for each of the periods.
The applicant having failed at step 1, it in unnecessary to consider whether making particular orders would be “just and equitable” and “otherwise proper” (steps 2 and 3).
The applicant also seeks an order covering future periods of support until TP attains the age of 18. This would be inappropriate in circumstances where the respondent’s future income earning capacity remains so uncertain.
A number of the orders sought in the 30 April 2004 application are clearly ones this Court is not empowered to make.
The applications of 30 April 2004 and 3 March 2005 must be dismissed. The applicant has not demonstrated that there are special circumstances that warrant a departure order.
I certify that the preceding eighty-two paragraphs are a true copy of the reasons for judgment of Mowbray FM
Associate: Natasha Werner
Date: 23 January 2006