P & W
[2003] FMCAfam 545
•10 December 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| P & W | [2003] FMCAfam 545 |
| CHILD SUPPORT – Departure application – lump sum child support – provision of child support otherwise than in form of periodic amounts. |
Child Support (Assessment) Act 1989 (Cth), ss.98X, 115, 116, 117, 123, 124, 128
Child Support (Registration and Collection) Act 1988 (Cth), s.72A
McGuinness v Cowie (2002) FLC 98-018
Dwyer v McGuire (1993) FLC 92-420
T & T [2002] FMCAfam 250
Bendeich (1993) 16 Fam LR 371; FLC 92-355
| Applicant: | M A P |
| Respondent: | J E W |
| File No: | NCM 806 of 2003 |
| Delivered on: | 10 December 2003 |
| Delivered at: | Coffs Harbour |
| Hearing date: | 8 December 2003 |
| Judgment of: | Scarlett FM |
REPRESENTATION
| Solicitors for the Applicant: | Peter Marr & Associates |
| The Respondent: | Appeared on his own behalf |
ORDERS
The annual rate of child support payable by the Respondent father in respect of the child S G W-P born 31 January 1993 is to be varied to $5,200.00 and the daily rate to $14.23682 in respect of the period
1 November 2003 to 30 June 2004.The annual rate of child support payable by the father to the mother in respect of the child S commencing with the child support year ending 30 June 2005 and continuing for each child support year thereafter until the child attains the age of 18 years is varied to $5,200.00 unless the father earns more than $40,000.00 in a year.
If the father earns more than $40,000.00 in any year the rate of child support paid by the father shall be fixed in accordance with the administrative provisions of the Child Support (Assessment) Act 1989 for that year.
The child support paid by the father according to Order 2 is to be indexed by the inflation factor prescribed under the Child Support (Assessment) Act 1989 each six (6) months on and from 1 July 2004.
The father is to provide child support to the child S by way of a lump sum payment for any outstanding child support payments to date and an additional sum of $8,700.00 for future child support within one (1) month of the date of these Orders.
According to the provisions of section 125 of the Child Support (Assessment) Act 1989 the sum of $8,700.00 when paid is to be credited against the father’s future liabilities for child support in respect of the child S. The amount so credited is to account for 25% of the annual rate of child support payable by the father under all future assessments until such time as the total sum of $8,700.00 has been credited in respect of child support otherwise payable by the father.
Any payments of child support previously made by the father under an administrative assessment for child support are to be credited against the father’s liability for child support under the departure Orders for that same period as specified in Order 1.
For the purpose of securing payment by the father of the amounts to be paid according to Orders 2, 3, 4 and 5 the father is directed upon request by the Child Support Registrar to do all acts and things and execute all deeds, documents and instruments as may be necessary to grant to such person or corporation as the Child Support Registrar may direct a charge or encumbrance to be registered over the property currently owned by the father being Lot Plan situated at C Road T in the State of Q securing an amount of $36,400.00.
The father is to pay all costs of and incidental to the preparation, execution and granting of the said registered charge or encumbrance.
In the event that the father refuses or neglects to comply with Order 8 within fourteen (14) days of receiving a request by the Child Support Registrar to do so, then the Registrar or a Deputy Registrar of the Federal Magistrates Court is appointed to do all things and execute all deeds, documents and instruments as may be necessary to enable the registration of the charge or encumbrance referred to in Order 8.
All Exhibits may be returned after one (1) month from the date of these Orders.
The Application is removed from the Pending Cases List.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT COFFS HARBOUR |
NCM 806 of 2003
| M A P |
Applicant
And
| J E W |
Respondent
REASONS FOR JUDGMENT
Application
This is an application by the mother of a child called S against the child’s father for a departure from administrative assessment of child support and also for a payment by the father of a lump sum. The father opposes the application, saying that he has already made an application to vary the applicable rate of child support in the special circumstances of the case. He opposes the application for payment of a lump sum on the basis that it would cause him financial hardship.
The first part of the mother’s application is that there should be a departure from administrative assessment of child support from what she originally deposed was $18.00 but then corrected in the witness box to $175.00 per month to the sum of $5,200.00 per year. She seeks to backdate that amount to a period beginning on 22nd August 2002 and ending on 2nd July 2003. She then seeks an order that the father pay the sum of $5,200.00 per annum, indexed by the inflation factor prescribed by the Child Support (Assessment) Act each 6 months, until the child attains the age of 18 years. This application comes under Division 4 of Part 7 of the Act.
The second part of the mother’s application is an application for an order under Division 5 of Part 7. In this application, she seeks an order for the provision of child support otherwise than in the form of a periodic payment, namely by a lump sum of $10,400.00. To this would be added a lump sum of the arrears that would be created by the backdated departure order.
The father has made an application to the Child Support Agency to increase the amount payable for the child for the period from
1st November 2003 to 30th June 2004. In that application he says that his wages have increased since the last assessment and he seeks to increase the amount payable to $2,600.00 per year. He has also lodged a similar application in respect of his daughter by another woman, and he says that he wants both assessments to be changed so that the two children will receive the same amount of child support.
Background
The parties commenced their relationship in November 1991. The child of that relationship, S, was born on 31st January 1993. The parties ended their relationship in April that same year. The father exercised contact sporadically over the next few years.
In the year 2001 the father commenced a relationship with one
B R. There is one child of that relationship, a little girl called T, who was born on 17th August 2001. The father is currently paying child support for that child.
The mother lodged an application for administrative assessment of child support in early 2002. On 4th April 2002 the Child Support Agency issued a child support assessment at an annual rate of $3,675.00 for the period 4th April to 21st August 2002.
The father had been involved in a motor vehicle accident near A in N Q. He suffered serious injuries to his left hand and his left ankle. He was off work on workers compensation from 30 August 2000 until February 2001. In July 2002 the father received a lump sum compensation payment of $200,000.00. He used the money to purchase a house at R for $180,000. He deposed in his affidavit that the balance of the money was used for stamp duty, furniture and the purchase of a solar hot water system for the property.
In August 2002 the Child Support Agency assessed the father to pay child support at the annual rate of $2,756.00 for the period
22nd August 2002 to 2nd July 2003.
The mother commenced these proceedings in December 2002. The mother solicitors initially had some difficulty in serving a copy of the application on the father, as he had left the house that he had purchased in the R area and was working interstate. The house is currently unoccupied.
The mother had been living in a house at N in New South Wales from 1999 but she moved to L in May 2003. She is currently living there with a man named D K, who has been providing the mother and the child with financial support.
The father’s child support payments had fallen seriously into arrears. In April 2003 the Child Support Agency issued a notice to the father’s bank under, presumably, s.72A of the Child Support (Registration and Collection) Act 1988 requiring the bank to pay over $868.00 held in the father’s savings account.
The father contacted the Child Support Agency and made arrangements for his then employer to deduct child support payments from his wages. He also started making payments manually through Australia Post. On 14th May 2003, the applicant had an outstanding child support liability of $3,056.54.
The father deposed that he borrowed the sum of $2677.00 from a friend to pay his outstanding liability to the Child Support Agency on
31st October 2003. The father produced an affidavit from
S J G in which she deposed that she was the one who had lent him the sum of $2,677.00 for that purpose. She also stated that he had made her two payments of $100.00 each off that debt.
Ms G was available at Court but was not required for
cross-examination.
The father produced a transaction summary from the Child Support Agency dated 7th November 2003, showing the balance outstanding and a list of all transactions between 1st July and 7th November 2003. The transaction summary shows that the outstanding balance at
29th June 2003 had reached $2,800.00. By 7th November, as a result of payments by the father totalling $4,867.90 and with the remission of late payment penalties totalling $431.21, the father had reduced the outstanding balance to $82.34.
B R, the mother of the child T, applied to the Child Support Agency in June 2003 to vary the assessment of child support payable for that child. As a result, the Child Support Agency varied the assessment.
The mother plans to leave L and move back to her home at N. She says that the house at N needs money spent on it. The child S has also had trouble with her teeth and requires orthodontic work. The mother has received a quote from an orthodontist showing the total cost of treatment required for S will amount to $4960.00.
The father is currently living and working in B. The house in T is currently unoccupied.
Issues
The issues between the parties are whether there are special circumstances to justify a departure from the existing administrative assessment, and whether there are special circumstances that would justify an order for child support otherwise than in the form of periodic payments. The mother says that the Court should consider the father's $200,000.00 compensation payout, his history of falling into arrears, the child’s special needs in the form of orthodontic treatment and other dental work over and above the normal amount for a child of her age, and the mother’s need to move back to N renovate the house.
The father says that he has already taken steps to increase the payments of child support administratively, so that there is no need for the Court to make a departure order. He says that he does not have the funds available to provide a lump sum of any size, because he has invested the entirety of his compensation payment into the house at T, near R. The father says that whilst there may be justification for a lump sum order if he was not working or likely to work in the future, the fact is that he is continuing to work and expects to do so in the future. He has the capacity to make periodic payments of child support out of his wages.
The relevant law
In the ordinary course of events, a person may not make an application to a court for an order for departure from administrative assessment in special circumstances unless the person had first gone through the administrative processes required by the Child Support (Assessment) Act. The applicant must first apply to the Child Support Registrar for a determination under Part 6A of the Act and the Registrar must either make or refuse to make a determination in relation to the child
(see s.115(b)).
Next, before the Court has any jurisdiction to hear an application, the applicant must lodge an objection to the making of, or the refusal to make, the departure determination according to s.98X of the Act. The Registrar must either then disallow the objection or allow it only in part. Once it can be shown that these events have occurred, the Court may hear the departure application (see s.116(1A).
The applicant mother in this case has not made an application for a determination under Part 6A in relation to child support. She has not met the requirements of sections 115(b) or 116(1A).
Section 116(1B) provides an exception to the procedure set out in sections 115(b) and 116(1A). That subsection provides that:
“Subsection (1A) does not apply if:
(a) the person is party to an application pending in a court having jurisdiction under this Act; and
(b) the court is satisfied that it would be in the interests of the carer entitled to child support and the liable parent for the court to consider, at the same time as it hears the application, whether an order should be made under this Division in relation to the child in the special circumstances of the case.”
Here, the only other application pending in the court is the mother’s simultaneous application for an order for provision of child support otherwise than in the form of periodic payments to the mother, that is, an application for a lump sum payment of child support. The mother has not complied with the requirements of sections 115(b) and 116(1A), so it will be necessary for her to establish that her application under Division 5 is an “application pending” for the purposes of section 116(1B).
The decision of Kay J in an appeal from a decision of a Federal Magistrate in McGuiness v Cowie (2002) FLC 98-018 is authority for the proposition that the Court may entertain both a lump sum application and a departure application contained within the one document if it chooses to exercise its discretion to do so.
There are good reasons for a Court to exercise its discretion in favour of hearing the two applications together. In each case, the court must consider whether it is “just and equitable” and “otherwise proper”
(ss.117(1)(b) and 124(1)(b)) to make the orders. In order to make an order under s. 116, the court must consider the matters set out in
s.117(4) to decide whether it is “just and equitable” to make the order. Again, it must consider the matters in s.117(5) in order to decide whether it would be “otherwise proper”. Similar criteria apply in making an order under s.123. Section 124(3) requires the Court to have regard to the matters mentioned in subsections 117(4), (6), (7) and (8) in determining whether it would be “just and equitable”. Section 124(4) requires the Court to have regard to the matters in subsection 117(5) in determining whether it would be “otherwise proper”.
In this case, I am satisfied that it would be in the interests of the parties to hear the two applications at the same time. This was the view that Kay J formed in McGuiness v Cowie. Interestingly, a similar question had been argued before Lindenmayer J in the earlier case of Dwyer v McGuire (1993) FLC 92-420. In that case, the Court took a similar view[1]. I note that this case was heard before ss.115 and 116 were amended in 1998. Subsections 116(1A) and (1B) were not added until 1998.
[1] At pages 80, 310 –11.
I note that Dwyer v McGuire was not cited in argument in McGuiness v Cowie, either before the Federal Magistrate or on appeal. It is perhaps trite to remark that courts hearing cases at first instance are entitled to rely on counsel for assistance in citing the appropriate authorities.
Evidence
The mother gave evidence by affidavit. She gave brief oral evidence in chief to correct an incorrect figure in one of her two affidavits. The father, who was not represented, did not seek to cross-examine the mother.
The father gave evidence by affidavit and was cross-examined by Mr Jones, the mother’s solicitor. The father also relied on an affidavit from his friend Sandra G, who deposed to lending the sum of $2,677.00 to the father to pay his outstanding child support. The mother’s solicitor did not require Ms G for cross-examination.
It is the mother’s case that the child S has ongoing problems with her teeth and needs orthodontic treatment. She produced evidence that the course of treatment would cost $4960.00. She also deposed to the fact that the child had required an X-ray of her teeth at a cost of $156.00 and three fillings, each at a cost of $75.00, since May 2003. The father did not challenge this evidence, except to submit that if the mother went back onto a supporting parent benefit she could get the orthodontic treatment free of charge. The father produced no evidence to support that assertion.
The mother also says that her move to L has not been successful and she plans to move back to N. S is unhappy in L and wishes to return. The mother’s relationship with the man D K is “becoming difficult” and she feels that the financial expense on Mr Kennedy in supporting both S and herself is a part of the difficulty. If she leaves L and returns to N she will have to go back onto social security.
The mother deposed that if she were to move back to the house at N, it would need some renovation. She wants to line the walls of the child’s bedroom, install a gas hot water system and a new gas stove, and install an inverter into the solar electric power system so that they can operate a computer. She wishes to purchase a computer for the child for school.
The mother also stated that she had had no contact with the father since October 2002 apart from seeing him at court. She did not know that he was working or that he was paying child support, because the money went into an account that she had not been using for some time. She had no telephone contact number for him and she did not know where he was living.
The mother expressed the view that the father has only started paying child support because of these proceedings. She fears that he will stop paying again, as he has done in the past.
The father said that he had put all his compensation into the house that he bought. He is not living in it because there was no work in the R area. He is working in B where he is able to obtain work regularly. He hopes to do some work on the house so that he can put a tenant into it.
The father said that he has very little spare income. He has the responsibility for his daughter T, and he believes that it would be fair for him to pay the same amount for each child. He had taken steps himself to apply to the Child Support Registrar to increase the payments of child support for S to bring her payments into line with those applying to T. He has two older children but he has no money to pay child support for them.
He pointed out that he had made great efforts to get the child support up to date, including borrowing money from Ms G. He has to pay her back, and he has made two payments, each of $100.00.
The father conceded that the dental requirements for S were a legitimate claim, but he challenged the need for the renovation to the mother’s house at N. He said that the things she planned to do were capital expenses. He challenged the need for a lump sum payment and said that he did not have the funds. A lump sum would only cause him financial hardship. He pointed out that he had the capacity and the will to keep working, so he could produce a regular child support income for the mother.
Conclusions
As Lindenmayer J pointed out in Dwyer v McGuire at 80,311, section 123(3) requires that the Court must deal with any pending application for an order under Division 4, the departure application, before proceeding to determine the application for a lump sum under Division 5.
Special circumstances
I am satisfied that special circumstances exist for an order for departure from administrative assessment of child support. The grounds for departure under s.117(2) are the special needs of the child for orthodontic and other dental expenses and the financial position of the father compared to the mother.
The father conceded during the hearing that the child’s orthodontic expenses were a valid expense for the child. I note that Walters FM in T & T [2002] FMCAfam 250 considered the question of orthodontic expenses, where he found that such expenses were not within those ordinarily covered by the child support he was ordering the father in that case to pay. In the case before me, I am satisfied that the orthodontic expenses and the greater than normal dental expenses for this child constitute a “special circumstance” in that they are a special need of the child S.
I am also satisfied that the application 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 father to the child because of the income, earning capacity, property and financial resources of both parents, but particularly those of the father. The circumstances that are special are that the father has received a sum of $200,000.00 that he has invested in real estate. The house in T is apparently unencumbered and untenanted, so it is not producing income. The father’s employment is sporadic, in that he has moved around various parts of Australia for work, much of it on a temporary basis, so that his income has fluctuated. The real estate puts the father into the situation where he has an asset of some substance, which can be described as a financial resource. He should be in a position to put a tenant into the house if he does not intend to live in it himself. If he does not wish to do that, he can sell the house. It would appear that he has a capacity to borrow against the house.
Just and equitable
I am satisfied that it is just and equitable to depart from the assessment because the child would suffer hardship if an order were not made. There is evidence that the child’s teeth do not have sufficient enamel, requiring frequent dentistry, and are crowding in her mouth, requiring orthodontic work. The mother has entered into an agreement to pay the orthodontist by instalments. The hardship to be suffered by the child if I did not make an order would be greater than the hardship to be suffered by the father in requiring him to arrange his financial affairs so that he can meet his proper share of this child’s need for support.
I am not satisfied that it is just and equitable to backdate the child support claimed to cover the period from 22nd August 2002 to
2nd July 2003. The father did make significant efforts to get this amount paid off, even if it was as a result of collection action under s.72A of the Child Support (Registration and Collection) Act. The fact that the mother did not know she had this money because she did not check the balance in her account is not something that the father had any control over. The father has made his own application to increase the child support payable with effect from 1st November 2003, so he can hardly be heard to complain if the new amount payable starts from that date.
I am also mindful that backdating the revised payment to August 2002 would create what Walters FM has described as “instant arrears” in
T & T, and I consider that the Court should take a conservative approach to retrospective increases to payments. There is a real potential for hardship.
Otherwise proper
In determining whether it would be “otherwise proper” to make a departure order, I must have regard to the matters set out in s.117(5) of the Child Support (Assessment) Act, which says:
“(a) the nature of the duty of a parent to maintain a child …and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.”
I am aware that it is the mother and the father of this child who have the primary duty to maintain her. The mother has been carrying that burden all the child’s life. The mother also gives evidence, not challenged by the father, that her relationship with the man D K in L has been put under strain by the financial needs of the mother and, particularly, the child. There is no evidence that a departure order would have an effect on any income tested pension, allowance or benefit.
I am satisfied that it is “otherwise proper” to make a departure order.
The application under Division 5
Turning to the mother’s application for an order for provision of child support otherwise than in the form of periodic amounts under Division 5, I am satisfied that the mother has shown a need to renovate the home at N. The father conceded the need for an inverter for the solar electricity. I note that he purchased a solar heater for the house at T. The mother also pointed out that the walls of the house were unlined and she wished to line the walls of S’s bedroom to insulate it from the summer heat and the winter cold. She also needs a new gas stove and a gas hot water system. These are hardly luxury items. I am less persuaded that a child of ten years of age needs a computer for school at this time. Most schools have computers available for use by students. The child may need a computer as she progresses in high school.
The need for orthodontic and extra dental work would require an amount of about $5,000.00 in the near future, and the need for renovations to the house would require, on the mother’s figures, about another $3,700.00. I consider that the mother has made out a case for a lump sum of $8,700.00.
The father’s payments of child support have been sporadic in the past. He has had a tendency to work in different states of Australia and the mother has not known where he was. The Child Support Agency has had to take action to recover the arrears in the past, and the mother’s fears of uncertain payments in the future appear to me to be well-grounded.
I am aware that an order under Division 5 must be subject to the considerations referred to by Mushin J in Bendeich (1993) 16 Fam LR 371; FLC 92-355. His Honour said at Fam LR 378, FLC 79, 754 (referring to cases about lump sum child maintenance):
“The rationale underlying the general approach of the court was that the longer s lump sum order operates the greater the chance of change in circumstances necessitating a variation of that order, thereby making that order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and children may change their living arrangements from one parent to another.”
In this case, I note that the child will reach the age of 11 years in January. There are still seven years to go until she attains the age of 18. There does not seem to be any real likelihood that the child would want to reside with the father rather than the mother in the foreseeable future, given the fact that she has had very little contact with him and he resides in Q. There is no evidence that there is any likelihood of any significant change to either party’s income in the foreseeable future.
The mother is not in receipt of an income-tested pension allowance or benefit but she has deposed that she will need to make an application if she leaves the household of Mr Kennedy in L and returns to N.
I believe that it is just and equitable and otherwise proper to make an order for payment of a lump sum. I have considered the special needs of the child, being her teeth. I am satisfied that it would cause hardship to the child if she were not able to have proper care. I am satisfied that the child has no income of her own. I have no evidence of any significant capacity of the mother to earn income. The mother has no financial resources of any significance.
It is for these reasons that I make the orders set out in the schedule at the beginning of this judgment.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: S. Polley
Date: 10 December 2003
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