Parkin and Sykes

[2011] FMCAfam 842

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PARKIN & SYKES [2011] FMCAfam 842

CHILD SUPPORT – Application to depart from administrative assessments of child support – application filed January 2007 after administrative change of assessment procedures in 2005 and 2006 – right to apply to court for departure – applicable legislative provisions – determination of child support income amount.

Child Support (Assessment) Act 1989, ss.115(b), 117, 118
Child Support Legislation Amendment (Reform of the Child Support Scheme New Formula and Other Measures) Act 2006, Schedule 3, Item 77(3)
Child Support Legislation Amendment (Reform of the Child Support Scheme Initial Measures) Act 2006, Schedule 3, Item 18(d)

Babbit & Babbit [2011] FamCAFC 151
Gyselman & Gyselman (1991) 15 Fam LR 219, (1992) FLC 92-279
Savery & Savery (1990) 13 Fam LR 812, (1990) FLC 92-131
Sheahan & Sheahan (1993) 16 Fam LR 437, (1993) FLC 92-375
Jones v Dunkel (1958) 101 CLR 298

Applicant: MR PARKIN

Respondent: MS SYKES

File Number: PAC 1320 of 2007

Judgment of: Halligan FM

Hearing dates: 15, 16 June 2010; 17, 18 August 2010; 16 May 2011

Date of Last Submission: 16 May 2011

Delivered at: Parramatta

Delivered on: 18 August 2011

REPRESENTATION

Solicitors for the Applicant: In Person

Counsel for the Respondent: Ms Kennedy

Solicitors for the Respondent: Tiyce and Partners Lawyers

ORDERS

1. Pursuant to section 117, Child Support (Assessment) Act 1989, the administrative assessments of child support payable by the father to the mother for the child [X] born in 2001 are varied as follows for the child support periods indicated.

   (a)For the child support period 24 June 2005 to 5 November 2005-

   (i)The father's child support income amount shall be $18,981.

   (b)For the child support period 6 November 2005 to 28 February 2006-

   (i)The father's child support income amount shall be $18,981;

   (ii)The mother's child support income amount shall be $55,000;

   (iii)The mother's disregarded income amount shall be $48,568.

   (c)For the child support period 1 March 2006 to 31 January 2007-

   (i)The father's child support income amount shall be $17,838;

   (ii)The mother's child support income amount shall be $55,000;

   (iii)The mother's disregarded income amount shall be $48,568.

   (d)For the child support period 1 February 2007 to 31 May 2007, child support shall be determined in accordance with Part 5 of the Act as then in force, provided that-

   (i)The father's child support income amount shall be $10,391;

   (ii)The mother's child support income amount shall be $55,000;

   (iii)The mother's disregarded income amount shall be $48,568.

   (e)For the child support period 1 June 2007 to 30 June 2008, child support shall be determined in accordance with Part 5 of the Act as then in force, provided that -

   (i)The father's child support income amount shall be $24,941;

   (ii)The mother's child support income amount shall be $55,000;

   (iii)The mother's disregarded income amount shall be $48,568.

IT IS NOTED that publication of this judgment under the pseudonym Parkin & Sykes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PARRAMATTA

PAC 1320 of 2007

MR PARKIN

Applicant

And

MS SYKES

Respondent

REASONS FOR JUDGMENT

Introduction

1. The father of ten year old [X] has applied for orders to reduce the level of child support he must pay for the child for the period

   
   

   24 June 2005 to 30 June 2008 because, he contends, the assessments in force have used a child support income figure for him that far exceeds his earning capacity and income.  [X]’s mother opposed the father's application.  Despite contending her own income and earning capacity were far lower than the income figure for her used to calculate child support for this period, the mother did not cross-apply to change the relevant assessments.

Background

1. [X] was born in 2001.  The father's child support liability for the child commenced on 29 November 2004, the first assessment of child support issuing for the period 29 November 2004 to 1 December 2004.  The father's child support income amount was $41,075 and the mother's child support income amount was $54,613.

2. From 2 December 2004 the father's child support income amount dropped to $20,000 due to an election he made to estimate his income, and the mother's child support income amount dropped to $15,601 from 26 April 2005 because of an election by her to use an estimate of income.

3. On 24 June 2005 the mother applied to the Child Support Agency (CSA) to change the level of child support, apparently for the period

   
   

   26 April 2005 to 28 February 2006.  The father responded and cross applied to reduce the child support, apparently for the same period.  A decision was made by an officer of the CSA on 14 September 2005 that had the effect of increasing the father's child support for the period

   
   

   24 June 2005 to 31 January 2007.

4. The father objected to this decision to the CSA on 12 October 2005.  On 12 December 2005 the father's objection was rejected by the CSA and the prior decision was left in place.  I will refer to the 2005 change of assessment and objection processes as the 2005 change of assessment procedure.

5. On 26 July 2006 the father applied to the CSA to reduce his child support for the period 29 November 2004 to 31 May 2007.  On

   
   

   26 September 2006 his application was rejected.

6. The father objected to this decision on 30 October 2006.  His objection was decided on 20 December 2006, the objection decision being that the father's objection would be “partially allowed” by leaving the rate of child support up to 31 January 2007 unchanged and fixing the father's child support at a specified annual rate for the period

   
   

   1 February 2007 to 30 June 2008.  The specified annual rate was 12.5 times the annual rate applying for the period 1 February 2007 to

   
   

   31 May 2007 before his objection was “partially allowed”.  I will refer to the 2006 change of assessment and objection processes as the 2006 change of assessment procedure.

7. On 2 November 2006, that is while his 2006 objection was being considered by the CSA, the father applied to the Windsor Local Court to stay his child support above payments of $6.44 per week until his then pending objection was determined and any subsequent court application to vary his child support was determined.  On

   
   

   16 November 2006, the Windsor Local Court stayed enforcement of child support pending further order.  On 23 November 2006, the stay order of 16 November 2006 was continued pending further order.  The order was further continued on 14 December 2006.

8. On 25 January 2007, the father applied to the Family Court of Australia to vary his child support from 29 November 2004.  Parenting proceedings were then pending in that court between the parents about the child.

9. On 31 January 2007, the Local Court transferred the stay proceedings to the Family Court of Australia and continued the previous stay order until 9.30am on 23 February 2007, which was the first court date in the Family Court of Australia for the father's application to vary the child support.  However, on 2 February 2007, the Family Court of Australia vacated the listing on 23 February 2007, and on 22 February 2007 a Registrar of the Family Court of Australia transferred the father's stay application to this Court, but not his substantive child support application to which the stay application by then related.  On

   
   

   22 June 2007, by consent of the parties, I transferred the stay application back to the Family Court of Australia to be consolidated with the parenting and child support departure issues which that court had retained.

10. The parenting issues were finally determined in the Family Court of Australia in August 2008 by orders providing that the parents have equal shared parental responsibility for the child, that he live with the mother, and that he spend time with the father during school terms from after school Friday to before school Monday each alternate weekend and from after school Wednesday to before school Thursday each other week, and in school holidays for specified periods approximating half of the holidays.  The child support proceedings were not determined at that time, and were further adjourned.

11. On 16 February 2009, the Family Court of Australia transferred the child support proceedings to this court.  The father filed an amended application on 26 June 2009, and that is the application now being determined.

12. There does not appear to have been any further stay of the father's child support ordered after the Local Court order made on 31 January 2007, which was expressed to expire on 23 February 2007.  I infer that the father did not further press his stay application in the Family Court of Australia or in this court as he erroneously thought the Local Court stay order continued in force.  On 18 August 2010, after I had pointed out to the father that he was in error in thinking a stay order was in force and when the hearing of the father's departure application became part heard for the second time, I granted a stay until these departure proceedings are completed.

The relevant administrative assessments of child support

1. The father has applied to reduce his child support for the periods covered by the various decisions of the CSA previously referred to. However, the court’s power is to “depart from”, that is, to vary, administrative assessments of child support. Hence, it is important to identify the specific administrative assessments of child support that applied during the periods covered by the father's application, albeit that they may have given effect to the various decisions by the CSA in the 2005 and 2006 change of assessment procedures. The court must apply the provisions of s.117(1)(b) in accordance with s.117(2) – (9) of the Child Support (Assessment) Act 1989 (the Assessment Act) to each period separately in determining the father's application (Babbit & Babbit [2011] FamCAFC 151 at [158]).

2. There are five administrative assessments of child support referable to the period of the father's application.

3. For the period 24 June 2005 to 5 November 2005, the father was assessed to pay child support at the annual rate of $4,869. That was calculated using the statutory formula under Part V of the Assessment Act, but with the father's child support income amount being determined at $40,000 rather than at the amount applicable under the usual formula. The $40,000 per annum figure was fixed by the 2005 change of assessment procedure. The father now seeks an order setting his child support income amount for this period at $17,838.

4. For the period 6 November 2005 to 28 February 2006, the father was assessed to pay child support at the annual rate of $4,290.  That was calculated using the statutory formula with three components varied by the 2005 change of assessment procedure, namely, the father's child support income amount was set at $40,000, the mother's child support income amount was set at $55,000, and the mother's disregarded income amount was set at $48,568.  The father now seeks an order setting his child support income amount for this period at $17,838, with the mother's child support income and disregarded income amounts remaining as determined in the 2005 change of assessment procedure.

5. For the period 1 March 2006 to 31 January 2007, the father was assessed to pay child support at the annual rate of $4,104, using the same child support income amounts for both parties and the disregarded income amount for the mother as for the preceding period, those figures being as determined under the 2005 change of assessment procedure.  The father seeks the same change to this assessment as for the preceding assessment.

6. For the period 1 February 2007 to 31 May 2007, the father was assessed to pay child support at the annual rate of $4,160 as fixed in the 2006 change of assessment procedure.  A copy of the assessment in this amount was not put into evidence before me.  Rather, an assessment in accordance with the unaltered statutory formula in the amount of $331 per annum was put into evidence.  However, both parties agreed that an assessment had issued in accordance with the 2006 objection decision.  I will proceed on the basis of that concession.  The father seeks that for this period his child support be calculated under the statutory formula varied by determining his child support income amount at $4,166, the mother's child support income amount at $55,000 and the mother's disregarded income amount at $48,568.

7. For the period 1 June 2007 to 30 June 2008, the father was assessed to pay child support at the annual rate of $4,160 as fixed in the 2006 change of assessment procedure.  The father seeks the same orders for this period as for the preceding period.

Credit of witnesses

1. The parties were the only witnesses.  While aspects of both parties’ evidence raised some concerns, I was not satisfied either party had sought to deliberately mislead the court.

2. While I did not accept the mother's assertions of an agreement with her father and sister under which she asserted they were beneficially entitled to a share in her home, that was because there was no evidence of such an agreement, not because I disbelieved her evidence seeking to prove an agreement.  And while I have commented about her evidence on this issue being confused and confusing, I am not satisfied she was lying on her oath.

3. Neither party submitted to me that I should find the other party a generally unreliable witness.

The evidence

Father's financial position

1. The father filed only one financial statement, on 25 January 2007.  There was no evidence about his financial circumstances at other times relevant to his application other than in relation to his taxable income.

Income and earning capacity

1. The father's taxable income for the tax years relevant to his application was-

   2004/2005             $16,216

   2005/2006             $3788

   2006/2007             $5084 (loss)

   2007/2008             $7976.

2. The father's sources of income were from a business he conducted as a [occupation omitted] involving the purchase and sale of [items omitted] and, from August 2005, the operation of a [vehicle], including dealing in [occupation omitted], and from rent on an investment property.

3. The father has worked as a [occupation omitted], but not in the past 32 years.

4. In each tax year referred to, the father claimed deductions, inter alia, for depreciation, both on items used in his business, including motor vehicles, and in relation to his investment property.  The total depreciation deductions in each of the four tax years were-

   2004/2005             $5729

   2005/2006             $15,193

   2006/2007             $15,475

   2007/2008             $11,881.

5. The father did not set aside money as savings to cover depreciation of his assets.  He said that his loan repayments represented a provision for depreciation.

6. In the 2007/2008 tax year, the father also claimed a deduction of $1,688 in relation to “Special building write-off” which, according to the depreciation worksheets forming part of the tax returns for these four years, represented 2.5% of the depreciated value of “construction cost” in relation to the investment property, and which in the previous three years had been claimed as part of the depreciation deduction.

7. The father's taxable income in the 2007/2008 tax year was arrived at after deducting the carried forward loss of $5,084 from the previous year.

8. The father had significantly higher taxable income in 2003/2004 than in subsequent years, which he said was due to a profitable business relationship he had for about 12 months, straddling two tax years, the second being 2003/2004.  He said that this business relationship ended.  He said he had a distributorship for the products of a business, and the new owner of that business stopped supplying him with the products of that business in November 2003 after the father and the new owner had a disagreement.  I accept this evidence.

9. He said that his taxable income for 2004/2005 of $16,216 is a typical average income, being “only marginally affected by CSA and family court issues”, by which I understand him to mean that the time he spent attending to CSA and Family Court matters only marginally affected the time he committed to his business, and hence his income from it, during this period.  He said his taxable income of $3788 for 2005/2006 was due to not being able to earn substantial income because of the amount of his time taken up with CSA and Family Court matters.  The father was not challenged in cross-examination on any of this evidence, and I accept it.

10. In about August 2005 the father said he bought a [vehicle] and had it fitted out.  He said he borrowed $100,000 secured by mortgage over his investment property, and $15,000 by way of personal loan from the husband of his step-father’s aunt, who he referred to as an uncle.  After the father acquired this [vehicle], it seems it became his principal source of income.  The father suggested that profit from his prior principal source of income, buying and selling [items omitted], had disappeared, and this now formed a small and reducing part of his business.  I accept this evidence.

11. I am not satisfied the father has any unexercised earning capacity.

Expenses

1. The father said in an affidavit filed on 25 January 2007 that his cost of living was estimated then to be $700 per month, and in addition he then had mortgage repayments of $661 per month and an obligation to repay a personal loan at $1000 per month, but had been unable to make a repayment since April 2006.

2. The father's financial statement, also filed on 25 January 2007, disclosed repayments on two mortgages totalling $571 per week (or about $2,474 per month), “rates, unit levies” of $46 per week ($199 per month), “other rates, unit levies” of $226 per week ($979 per month), and a total of all other expenditure, of which he provided no detail, having failed to complete Part N of his financial statement, of $175 per week ($758 per month).  He listed “Loan repayments” as nil.  That is consistent with his affidavit evidence that he had not made a repayment on his personal loan since April 2006.  I accept the evidence as to the father's expenses, subject to my comments below.

Assets, resources and liabilities

1. The father disclosed in his financial statement that he owned the property in which he lives, worth $300,000, his investment property worth $320,000, his business, including his [vehicle], worth $91,350, household contents worth $200 and antique farm machinery worth $3750.  He disclosed a superannuation interest worth $11,339.  He disclosed a home mortgage debt, apparently secured on his residence, of $41,247, another mortgage debt, apparently secured on the investment property, of $159,584, the loan balance owing to his uncle of $7,700, “invoices and bills” of $3,035, and rent, apparently for a storehouse he no longer rents, of $3,082.  I accept this evidence.

Discussion

1. On the face of the father's financial statement, he had an excess of expenditure over income as at January 2007 of $753 per week, or $39,156 per annum.  Despite stating his net income in January 2007 was $265 per week, his taxable income for that tax year was a loss of $5,084.

2. In submissions, the father suggested that the financial statement form required a mixture of business and personal financial information, giving rise to figures that could be misleading.  He submitted that his expenses listed were his personal expenses with the exception of his business loan, which is the loan secured on the investment property, the loan relating both to that property and to his [vehicle].  He submitted that $406 of his expenses in his financial statement were business expenses, being capital and interest repayments on the business loan, most of which he said would have been interest, and thus would have been included in arriving at his loss for tax purposes.

1. But the fact remains he asserted he paid this sum, and according to his financial statement he had a deficit of $39,000 per annum at the time of this financial statement.  There is no explanation in the father's evidence of how he was funding that deficit beyond suggesting in his affidavit that he was “currently living on credit and borrowed money that has to be paid back; my debts are currently, as at 16 January 2007, around $14,000”.  However, the debts he listed in his financial statement - a personal loan of $7,700 owing to his “uncle” relating to the purchase and fitting out of the [vehicle] he bought in August 2005, $3,082 relating to rent of a warehouse and $3,035 for “invoices and bills” – cannot fund a deficit of $39,000 per annum.  There was no suggestion the “snapshot” of the father's financial position represented by his financial statement was an aberration.

2. In cross-examination the father said that savings he had of about $20,000, together with the personal loan from his “uncle”, originally $15,000, had been spent to assist with the acquisition and fitting out of the [vehicle] purchased in August 2005 and in meeting expenses of his business.  The total of these sums, $35,000, is less than his deficit in a single year according to his financial statement, and seems to have been spent in large measure by late 2005, and could not have gone towards funding his deficit of $39,000 per annum twelve months or more later.

3. I am unable to reconcile the evidence in the father's affidavit of his costs of living and mortgage costs with the figures for like items in his financial statement.  However, it was not submitted on behalf of the mother that I should find that the father had undisclosed income, and I accept his evidence as to his income.  Nor was it suggested on behalf of the mother that the father's expenses were artificially inflated and I accept his evidence about them.

4. The father said in cross-examination that probably between $90,000 and $100,000 of the mortgage debt secured on the investment property related to the [vehicle] he bought in August 2005.  He said that the assets of his business, apart from his [vehicle], included a [other omitted items].  He said the amount he repays on his mortgages is the amount required to be paid.  He said that the investment property is positively geared if only the debt in relation to the acquisition of that property, and not the debt for acquisition of the [vehicle], is taken into account.  He said that apportionment of mortgage loan interest between the [vehicle] and the home for tax purposes was done by his accountant.  I accept this evidence.

Mother's financial position

1. The mother relied on three financial statements, sworn on

   
   

   19 August 2008, 4 November 2009 and 27 May 2010.  None of them relate to any of the periods covered by the father's application.  There was however evidence as to the mother's income during some of those periods.

Income and earning capacity

1. The mother has a university degree majoring in [majors omitted].  She worked as a [occupation omitted] in the [industry omitted] both before and after the child’s birth.  Her income had been about $74,000 before the child’s birth, and when she returned to part work after the child’s birth, her income averaged $55,000 per annum.

2. The mother ceased paid work in about April 2005 and has not been in the paid workforce since.

3. The mother's taxable income for the years relevant to the father's application was-

   2004/2005             $42,670

   2005/2006             $14,285

   2006/2007             $13,529

   2007/2008             $13,957

4. The father said the mother's taxable income for 2004/2005 was $42,670.  In the absence of any contrary evidence from the mother and any other challenge to that evidence, and considering the conceded level of her income, an average of $55,000 per annum, that she earned until mid April 2005 in that tax year, I accept it.

5. The mother's taxable income in 2005/2006 included capital gains of $1,582 resulting from the sale of shares the mother received on the demutualisation of the NRMA.

6. The mother has not needed to file a tax return since 2006, as her income has been below the level at which it is necessary to do so.

7. The mother has been in receipt of a Centrelink pension since

   
   

   13 April 2005.  She received a pension from Centrelink of $13,529 in 2006/2007, $13,957 in 2007/2008, $14,562 in 2008/2009 and $15,283 in 2009/2010.

8. In August 2008, the mother said her income from family benefits and family tax benefits totalled $396 per week.  She said she was not receiving any child support payments.  In her November 2009 financial statement, the mother said her weekly income from “family allowance and pension” was $414, and from Government bonus was $60, a total of $474.  She said she was receiving no child support.  In her May 2010 financial statement, the mother disclosed weekly income from family allowance, family tax benefit and pension of $420, and Government bonus and education allowance of $46, a total of $466, and again she said she was not receiving child support.  I accept this evidence.

9. I note that enforcement of child support was stayed under Local Court orders from 16 November 2006 until 23 February 2007, and under an order I made on 18 August 2010 since that date.

10. The mother said that in 2005 she was diagnosed with post traumatic stress disorder, and that she was and had been unfit for work.  The mother relied on a letter dated 24 June 2009 from Dr K to the CSA stating that the mother had “a diagnosis of a mixed anxiety disorder with features of post traumatic stress disorder, generalised anxiety and obsessionality”.  Dr K stated in this letter that he was of the opinion that the mother “was unfit for work for the first few years that I was providing treatment to her”, the mother having commenced to consult him in January 2005, that “over time (the mother) has made progress in her mental health and resilience, and a year ago … I felt it appropriate to refer her to the Commonwealth Rehabilitation Service for assistance to overcome her anxiety disorder and return to some part-time work”.  Dr K stated that despite the mother having succeeded “in taking some steps towards work-readiness”, she “has not yet reached the point where she is fit to return to work”.  Dr K expressed the opinion in this letter that the mother is not “fit for full time or part time work currently”, and that “over the next few years she is likely to recover to the point where with rehabilitation she is able to return to part-time work or study, but the timetable for this improvement is unclear”.

11. On 19 April 2008, Dr K wrote to “Employment agency/Centrelink” that it was his impression “that (the mother) is fit for study and work and that indeed these will be an important element of her rehabilitation and recovery from her illness”, which he described as “a mixed anxiety disorder with features of post traumatic stress disorder, generalised anxiety and obsessionality”.  However he also stated that “her anxiety disorder is likely to make finding, commencing and continuing study or work challenging, in terms of confidence, preparation and maintaining focus and endurance”.  He added that he did not “feel that (the mother) is fit for full time work currently, and is unlikely to be so for the next two years, as she recovers and either the court matters settle or she becomes resilient to their chronic residual persistence.  I feel that she is fit for part-time work or study, at approximately twenty hours per week.  Some weeks she may be fit for more than this, but she will not be thus fit in an ongoing, reliable way.”

12. On 17 May 2005, Dr K wrote that the mother was working as a [occupation omitted] “until she recently decided to leave work for the time being to focus on her current family court matter with regard to (the father) seeking increased contact with (the child)”.  That letter, which appeared to be a report back to the referring general practitioner, made no reference to the mother's ability to work being impaired by any condition Dr K referred to.  On the other hand, the purpose of this letter appeared to be different to the others, which appeared to be specifically to address the mother's ability to work.

13. The mother first sought to call Dr K as a witness in her case at the commencement of the fourth day of the hearing, when an application was made for leave to call him to give oral evidence by phone.  The father opposed such a course.  I refused permission for the mother to call Dr K to give oral evidence by phone, but I did further adjourn the hearing, to give the mother an opportunity to file and serve an affidavit from Dr K, and to give the father time to consider the further evidence and decide what evidence, if any, he may seek to adduce to respond to it.  However, the mother then failed to file any affidavit from Dr K or from any other medical expert.  The father thus has had no opportunity to cross-examine Dr K.  There was no explanation why, having been given a considerable indulgence well into the hearing to do so, the mother failed to call Dr K.

14. I must in those circumstances determine what weight, if any, I should attach to the evidence comprising Dr K’s letters.

15. The father has consistently maintained that the mother chose to stop work when he commenced parenting proceedings in 2005, and there is some confirmation of that in Dr K’s letter dated 17 May 2005 (Ex O) stating that the mother “decided to leave work for the time being to focus on her current family court matter with regard to her ex-partner”.  Despite this, in a letter dated 24 June 2009 (Ex P), Dr K said that the mother's “psychiatric condition was such that she was unfit for work for the first few years that I was providing treatment to her”, he having first seen her on 25 January 2005 (Ex O).

16. I note that Dr B, who prepared an expert’s report for the parenting proceedings in the Family Court of Australia in late 2007, doubted the mother’s diagnosis of PTSD (Ex T).

17. Dr K’s opinions about the mother's ability to work seem to flow from diagnoses, variously described, but consistently said to be connected with or a consequence of the mother having been the victim of family violence perpetrated by the father.  There is no evidence of family violence by the father against the mother, and hence proof of the only articulated basis for the diagnoses of the conditions said to impair the mother's ability to work is absent.

18. Because of apparent inconsistencies in the various letters from Dr K, the unexplained failure of the mother to call him as a witness thus denying the father any opportunity to cross-examine him, the absence of evidence to prove the only clearly articulated factual foundation for Dr K’s diagnoses, which in turn were the apparent foundation for his opinions that the mother's ability to work was impaired, and the doubts cast on a diagnosis of PTSD, part of Dr K’s diagnoses, by Dr B, I am satisfied I cannot fairly attach any weight to the evidence contained in the various documents authored by Dr K about the mother's working capacity.

19. Accordingly, I am not satisfied that the mother's ability to work is impaired on any medical grounds.  I am however satisfied that her earning capacity was affected by caring responsibilities for the parties’ child to the extent demonstrated by her work history and income earned after the child’s birth up to early 2005.  The mother denied in cross-examination that she ceased work in 2005 to affect child support.

Expenses

1. In August 2008, the mother said her mortgage repayments were $100 per week, motor vehicle registration was $20 per week, minimum credit card repayments were $80 per week, her day to day living expenses totalled $175 per week and the child’s day to day living expenses totalled $165 per week (incorrectly totalled in the financial statement as $175), giving her total weekly expenditure of $540, representing a weekly deficit of expenditure over income of $144, or $7,488 per annum.

2. In her November 2009 financial statement, the mother disclosed mortgage repayments of $65 per week, rates and levies of $16 per week, nil motor vehicle registration charges, nil minimum credit card repayments, her day to day living expenses were $157.50 per week, and the child’s day to day living expenses were $122.50 per week, giving her total weekly expenses of $361, representing a surplus of income over expenditure of $113 per week.

3. In her May 2010 financial statement, the mother disclosed mortgage repayments, described as interest only, of $70 per week, rates and levies of $16 per week, her day to day living expenses of $202.50 and day to day living expenses for the child of $137.50, a total of $426 per week, giving the mother a surplus of $40 per week.

4. I note the mother disclosed owning a motor vehicle and meeting running costs for it in all three financial statements.  However, she listed registration expenses only in her first financial statement.  Who then was meeting registration costs on this vehicle after August 2008 is unexplained.  She was not cross-examined about this.

Property, financial resources and liabilities

1. In August 2008, the mother said her home, in which she said she had a 100% legal interest and a 30% beneficial interest, was worth $400,000, she had $50 in the bank, her motor vehicle was worth $6,000, and her household contents were worth $5,000, giving her gross assets of $411,050, or, allowing for her stated 30% beneficial interest in her home, $131,050.  Her mortgage debt was $50,000 for which she alone was responsible, she had a personal loan with a bank of $12,000, and she owed $8,000 on a credit card and $1,700 to a finance company, giving total debts of $71,700, and total net assets of $339,350, or $59,350 based on her stated 30% beneficial interest in her home.  It was not stated in this financial statement or in her affidavit evidence for whom she suggested she held 70% of the beneficial interest in her home.

2. In her November 2009 financial statement, the mother stated her interest in her home, which she said was a 32% interest, not 30% as stated in August 2008, was worth $134,400, she had $120 in the bank, her motor vehicle was worth $4,000, and she estimated the value of her home contents to be $5,000, giving total gross assets of $143,520.  She estimated the mortgage balance, for which she was wholly responsible, at $50,000, she said she owed a friend $20,000, owed $2,400 on her credit card, and had a HECS debt of $2,234, giving total debts of $74,634, and net assets of $68,886.

3. There was no explanation for the increase in the mother's suggested beneficial interest in her home between August 2008 and November 2009 from 30% to 32%.  It is unclear what the mother's HECS debt related to.  Her evidence was that she commenced a diploma of [course subject omitted] course in 2010.  That would not explain a HECS debt arising in 2009.  She was not cross-examined about this.

4. In her May 2010 financial statement, the mother suggested her 32% interest in her home was still worth $134,400, she had $160 in the bank, her motor vehicle was still worth $4,000 and her household contents were still worth $5,000, a total of $143,560.  Thus, the only movement in her assets between November 2009 and May 2010 was in her savings.  She disclosed a mortgage debt of $50,000, a debt to a friend expressed as “$>20,000”, a credit card debt of $1,395, and a HECS debt expressed as “$>2,234”.  Treating the imprecisely stated debts as $20,000 and $2,234 respectively, the mother's total indebtedness was $73,629, giving net assets of $69,931.

5. When cross-examined about her claimed 32% beneficial interest in her home, the mother said that her father paid for most of the house when she bought it in 1995.  She said that he wants the money he put into the house back, although there is no formal loan agreement.  She said that her father and her sister are the beneficial owners of the other 68% interest in her home.

6. When cross-examined further about her interest in her home, the mother said her sister had the money she needed available at the time and initially lent her what she needed, and then her father paid her sister the money her sister lent to her.  She said her father paid her sister the full amount lent to her.  When pressed about her evidence that her father and her sister owned a 68% beneficial interest in the home, she then said her father paid her sister the bulk of what her sister lent her.  She said the sums went in over a period that may have been months or years.

7. There was never any evidence from the mother to explain how much was advanced by her father or sister, or how she worked out either 30% or 32% as her beneficial interest.  Nor did she call her father or sister to give evidence in her case to corroborate her evidence.

8. The mother gave further evidence about why she said she did not own the full beneficial interest in her home in re-examination, but this evidence also was confused and confusing, and to an extent internally inconsistent.  She said she bought her home in 1995.  She put some savings towards the purchase price, she borrowed further funds from a bank secured by mortgage on the property, and her sister sent her some money towards the purchase in 1995.  She said the mortgage was paid out after a few years in part using lump sums she received from her father on occasions he came to visit her from overseas.  She said she calculated her 32% beneficial interest by adding up the amounts she received from her sister and her father and subtracting that from “the total”.  She at no stage said how much her sister advanced to her or how much her father advanced to her, or what “the total” was.

9. She confirmed her evidence in cross-examination that her father had repaid her sister the money her sister advanced to assist with the purchase.  She said she entered into an agreement with her father and her sister in 1995 to repay to them a portion of the value of the property, being the percentage the funds that they had contributed bore to the total cost of the property.

10. How her sister remained entitled to an interest in the home despite her contribution being repaid to her by her father was never explained.

11. In any event, there is no admissible evidence on which I could find that there was any such agreement entered into.  There is simply the mother's assertion of such an agreement.  Not only did the mother not give evidence from which the court could find there was an agreement, she also failed to call her father and her sister to corroborate her assertion of an agreement, and there was no explanation proffered as to why they were not called.

12. The mother's evidence about this was extremely vague and inconsistent, raising serious doubts about the veracity of her assertions.  Those doubts are increased by the mother inconsistently quantifying her beneficial interest in her financial statements at 30% and then 32%, and by the fact that she asserted to the bank from which she recently borrowed $50,000 that she owned the full beneficial interest in the property.

13. I am therefore not satisfied the mother's beneficial interest in her home is less than her legal interest, namely 100%.

14. The mother intends to sell this property in the near future.

15. The mother’s disclosure of her superannuation interests was unsatisfactory.  In her August 2008 financial statement she disclosed a superannuation interest with AMP, which she described as a small superannuation account, worth $25,000.  In her November 2009 financial statement she disclosed a superannuation interest with Supertrace, which she described as a retirement savings account, of $38,000.  In her May 2010 financial statement, she disclosed a superannuation interest, described as a retirement savings account, and said to be “Supertrace, AMP? Details to be confirmed”, of $62,237.  The mother provided no subsequent confirmation of the details of her superannuation interest or interests until her cross-examination and re-examination.

1. When cross-examined about her superannuation interests, the mother said she did not understand superannuation, she was not sure how much superannuation she had, in 2008 she had given information to a financial advisor, and in May 2010 she had enquired of that financial advisor about her superannuation, and he advised her she had interests with Supertrace and AMP.  She said the figure of $62,237 for her superannuation in her May 2010 financial statement was verbally given to her by her financial advisor.

2. In relation to the superannuation values of $25,000 in her August 2008 financial statement and $38,000 in her November 2009 financial statement, the mother said she was not sure of her position and may have “mucked things up”.  She said she knows nothing about superannuation, and when she received mail from AMP she never opened it.  How then she came up with the figures in her 2008 and 2009 financial statements, the former of which was described as being with AMP, remains unexplained.

3. The mother said early in her cross-examination that when the father's child support proceedings are concluded, she will go to her financial advisor and he will go through her superannuation with her and explain to her exactly what she has and what she can do with it.  She said she could not do that before this hearing as she was studying, she had tests and assignments to complete and various medical appointments to attend.  She did not accept in cross-examination that, having failed to seek this clarification and provide fuller information about her superannuation in these proceedings, she had failed to make full and frank disclosure to the court and the father of her financial position.

4. When the hearing resumed on 17 August 2010, the mother said in cross-examination that over the adjournment she had seen her financial adviser, taken advice about her superannuation, and on her adviser’s advice had rolled or was in the process of rolling her various superannuation accounts into one.  She said her then current superannuation interests were worth $76,723.44.

5. The mother failed in her duty of full and frank disclosure.  Not only did she fail to discharge that duty, her failure was deliberate.  She stated in her last financial statement “Details to be confirmed”, acknowledging that further disclosure was necessary, then failed to confirm those details, saying she intended to wait until all current child support proceedings were finished before making the enquiries she by then knew she could make to be able to provide the information she knew she should provide.

6. She first contacted a financial adviser about her superannuation in 2008 and did so again in May 2010, and completed financial statements in August 2008, November 2009 and May 2010, all of which emphasised her duty of full and frank disclosure.  I do not accept that the mother was so occupied with study, tests and assignments and with various medical appointments over that period of about 21 months that she had insufficient time to obtain the necessary information to make the required disclosure about her superannuation.

7. The mother provided some greater particularity of her superannuation interests for the first time in re-examination on 18 August 2010, when she put into evidence a handwritten document that she said she had obtained from her financial adviser that indicated that the then current superannuation interests, which totalled the figure she mentioned the day before of $76,723.44, were made up of five separate interests, namely-

   a)AMP, $15,139;

   b)Supertrace, $38,799.63;

   c)Supertrace, $8,298;

   d)Tower, $3,464.81;

   e)UniSuper, $11,022.

8. Despite the unsatisfactory aspects of the mother's evidence about her superannuation, superannuation is not particularly significant in determining periodic child support as the mother cannot access her superannuation.

9. The mother was cross-examined about trading in foreign securities.  She said she bought some shares for her father thinking she could transfer them to him, but then found out she could not do so and got “stuck” with the shares.  She said the shares she bought were in a company she worked for, and shares were available for purchase by employees.  She said her father asked her to buy some for him, which she did, using money provided by her father, but the purchase was in her name.  She said then the share certificate went missing and she never got around to doing anything about transferring the shares into her father’s name or selling them, having been told she could not sell them without the share certificate.  She said the shares were still in her name, and that she would sell them if she could and give the money to her father, who now lived in Sydney.

10. The mother did not disclose this shareholding in any of her three financial statements and thus again failed to discharge her duty of full and frank financial disclosure.  There remains no evidence before the court as to the mother's current shareholding or its value.

11. The mother is studying 25 hours per week.  She commenced a diploma of [course subject omitted] course in 2010, which will take “about two years”.  She is seeking to qualify as a [occupation omitted] using her previous degree.

The applicable law

1. The father's application falls to be determined under Division 4 of Part VII of the Assessment Act.

2. The circumstances in which the court may entertain the father's departure application are specified now in s.116 of the Assessment Act. The present s.116 was inserted into the Act with effect from 1 January 2007. While this case does not fall within any of the circumstances identified in the present iteration of s.116 in which a party may apply for a departure order, the current provisions of the section do not apply to the matter.

3. The present s.116 was inserted into the Assessment Act by the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 (the New Formula Act).

4. The New Formula Act provides that if a decision has been made before 1 January 2007 on a change of assessment objection, then the provisions of the Assessment Act in force immediately before 1 January 2007 continue to apply in relation to the decision (New Formula Act, Schedule 3, Part 2, Item 77(3)). In my view, the objection decisions in this case both having been made before 1 January 2007, the provisions of the Assessment Act as in force on 31 December 2006 apply in determining the father's application.

5. I indicated this as my preliminary view to the parties during the hearing to give them an opportunity to address the issue if they wished to contend otherwise.  Neither did.

6. The circumstances in this case meet the preconditions specified in s.115(b) of the Assessment Act, as in force on 31 December 2006, and hence the father is entitled to apply to this court for a departure order.

7. To succeed in his application, the father must prove three things-

   a)that one or more of the grounds for departure set out in s.117(2) of the Assessment Act (as in force on 31 December 2006) exist; and

   b)that it would be just and equitable having regard to the matters referred to in s.117(4) (as in force on 31 December 2006) to make a departure order; and

   c)that it would be otherwise proper having regard to the matters in s.117(5) (as in force on 31 December 2006) to make a departure order (Gyselman & Gyselman, (1991) 15 Fam LR 219 at 224, (1992) FLC 92-279 at 79,064).

8. I explained to the unrepresented father at the commencement of the hearing that these were the matters he had to prove.  Much of the father's affidavit evidence contained trenchant criticism of and complaint about the CSA and the reasons for the decisions of its officers in the two change of assessment procedures.  I explained to him that the court had no power to review the actions and decisions of the CSA and its officers in those change of assessment processes, but had to accept the child support assessments issued in consequence of those decisions as the starting point in assessing whether the father could prove the three matters necessary to succeed in his application.

9. All the grounds for departure require that an applicant establish that the matters said to constitute the ground for departure arise “in the special circumstances of the case”.  “Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasize that the facts of the case must establish something which 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 in the ordinary run of case.”  (Gyselman & Gyeslman, above, Fam LR at 225, FLC at 79,065.)  Special circumstances are “facts peculiar to the particular case which set it apart from other cases” (Savery & Savery, (1990) 13 Fam LR 812 at 815, (1990) FLC 92-131 at 77,897). “The relevant facts of the particular case must be considered to determine whether they constitute special circumstances which, in this context, if not taken into account, would result in injustice or undue hardship to any person” (Sheahan & Sheahan, (1993) 16 Fam LR 437 at 440, (1993) FLC 92-375 at 79,884).

10. As the power of the court is to make an order to depart from an administrative assessment of child support, the court must conduct the three step analysis for each administrative assessment in force during the period over which the father seeks to change the child support.  Thus the court must conduct the three step analysis for five periods-

    a)24 June 2005 to 5 November 2005;

    b)6 November 2005 to 28 February 2006;

    c)1 March 2006 to 31 January 2007;

    d)1 February 2007 to 31 May 2007; and

    e)1 June 2007 to 30 June 2008.

11. I note that s.118(2B) of the Assessment Act, which places restrictions on the court’s power to change child support retrospectively more than 18 months before the application is made to the court to change the assessment, commenced on 1 January 2007, and hence does not apply in this case.

12. On the other hand, s.117(7B), which places limiting conditions on the court’s power to find that a parent’s earning capacity exceeds his or her actual income, commenced on 15 June 2006, and applies to the whole of the father's application, even though the provision was not in force at the time of the 2005 change of assessment process (Child Support Legislation Amendment (Reform of the Child Support Scheme – Initial Measures) Act 2006, Schedule 3, Item 18(d)).

13. I conveyed to the parties a preliminary view in accordance with the preceding two paragraphs during the hearing so that they may address me if they wished to contend for a different interpretation, and so that they may address in particular the matters in s.117(7B) both in evidence and in submissions. Neither did, as to the application or otherwise of the provisions, or adducing evidence or making submissions in relation to s.117(7B).

Has the father established a ground for departure from any of the assessments?

1. At the commencement of the hearing the father said he relied on two grounds for his departure application, namely those under s.117(2)(a)(iii)(A) and s.117(2)(c)(1b). As a result of my subsequently clarifying his case with him, the father also relied on the ground under s.117(2)(c)(1a). As at 31 December 2006, these provisions were in the following terms-

   “(a)  that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of-

   …

   (iii)   commitments of the parent necessary to enable the parent to support:

   (A)   himself or herself; …

   …

   (c)     that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   …

   (ia)   because of the income, property and financial resources of either parent; or

   (ib)   because of the earning capacity of either parent; …”

2. As mentioned, the unrepresented father focussed his case and his submissions on challenging the appropriateness of how the CSA ultimately arrived at his income for the purposes of assessing his child support.  Neither in his written outline of case nor in his oral submissions did he address any of the grounds for departure he relied on.  Nonetheless, the court must consider what he did say, and the evidence in the case, to determine whether any of the grounds for departure he relied on have been made out.

The ground under s.117(2)(a)(iii)(A)

1. There was nothing in the father's evidence to suggest he had any necessary self-support commitments which were out of the ordinary.  I am not satisfied there are any special circumstances about his necessary self-support commitments, and hence he has failed to establish this ground.

The ground under s.117(2)(c)(ia)

1. The father contended that the income figures attributed to him for the relevant child support periods far exceeded his taxable income.  The departure determinations involved changing the father’s child support income amount from that normally applicable in formulaic assessment for the first three child support periods.  For the last two, the departure determination fixed an annual rate of child support.

2. A comparison of his actual taxable income, from which the child support income amount is usually derived, and the annual income attributed to him as his child support income amount for each of the first three relevant child support periods is as follows-

Child support period	Taxable income	Attributed income
24 June 2005 – 5 November 2005	$16,216 (2004/2005) $3,788 (2005/2006)	$40,000
6 November 2005 – 28 February 2006	$3,788 (2005/2006)	$40,000
1 March 2006 - 31 January 2007	$3,788 (2005/2006) $5,804 (loss) (2006/2007)	$40,000

1. If the father’s taxable income appropriately reflects his income for child support purposes, as the father asserts it does, then the disparity between that figure and the figure actually used in my view is a special circumstance, and the result would have been an unjust and inequitable determination of his child support.  The ground for departure would then be made out for these years.  And as it appears the departure for the last two child support periods by determination of an annual rate of child support also proceeded on a similar basis of deeming the father to have much more income than reflected in his taxable income, the ground would also be made out for those periods.

2. However, the mother submitted that the father’s taxable income did not appropriately reflect his income for child support purposes.  It was submitted on her behalf that there should be “written back” the deductions for depreciation in all years as well as the carried forward loss in the 2007/2008 tax year.  While counsel for the mother conceded that doing so would still give income figures well below the $40,000 per annum figure attributed to the father, she submitted that the father’s evidence about a loan of $15,000 from the person he called his uncle for the fit out of the [vehicle], taken with the unexplained failure of the father to call his “uncle” to corroborate his evidence and his suggested inadequate disclosure of the details of this transaction until cross-examined, reflected adversely on the father’s credit.

3. I am not satisfied the father’s credit was successfully impugned in relation to this transaction.  The unrepresented father was never asked in cross-examination why he did not call his “uncle”, and a submission that I should draw an inference under Jones v Dunkel, (1958) 101 CLR 298, adverse to the father from his failure to call his “uncle” was withdrawn. I accept the father’s evidence about this transaction. In any event, this was a once-only capital transaction in 2005, and it was not explained in submissions on behalf of the mother how this should affect the calculation of the father’s income for child support purposes.

4. The father very strongly argued against the appropriateness of “writing back” depreciation and carried forward losses as counsel for the mother submitted I should.  He submitted that he had to expend capital to acquire income producing assets in the form of the [vehicle] and investment property, that he had legitimate loan repayments to meet in relation to them, and that he was making an actual provision for depreciation in the form of loan repayments, thus disputing any suggestion these were merely “book entries”.

5. In his written submissions the father “accept(ed) that there can be certain benefits which accrue from being self employed and that I may have the benefit of things owned by the business for my personal use which thereby save some expenditure on my part.”  He sought that his child support be calculated by using his taxable income and adding 10% to recognise this benefit, but steadfastly objected to any writing back of depreciation or other deductions.

6. I am satisfied in this case that it is appropriate to write back the depreciation costs.  The father said that the loan repayments, which were less than the claimed depreciation in any event, were mostly interest, which was claimed separately as a deductible business expense.  To suggest that the payment of interest on the loan, already claimed as a deduction, can also support a deduction for depreciation is double counting.  Depreciation is a capital allowance, and to the extent to which the loan repayments included some, albeit minor, component of capital, it represented a very small part of the claimed depreciation.

7. I am therefore satisfied that the father’s income for child support purposes for these periods should be adjusted by writing back the depreciation deductions.  As doing so turns the loss in 2006/2007 into a profit, it is also appropriate to write back the carried forward loss in 2007/2008.

8. Doing so means that the father’s adjusted income figures compared to the income figures attributed to him in determining his child support for the first three periods become-

Child support period	Adjusted income	Attributed income
24 June 2005 – 5 November 2005	$21,945 (2004/2005) $18,981 (2005/2006)	$40,000
6 November 2005 – 28 February 2006	$18,981 (2005/2006)	$40,000
1 March 2006 - 31 January 2007	$18,981 (2005/2006) $10,391 (2006/2007)	$40,000

1. I am satisfied that the gross disparity between the adjusted and attributed income figures represents special circumstances in the relevant sense, and that use of the attributed income figures in determining the father’s child support has resulted in an unjust and inequitable determination of child support payable by the father for the first three relevant child support periods.

2. As the determination of an annual rate of child support for the last two relevant child support periods appears to have proceeded on a similar basis as to the father’s income, I am satisfied there are special circumstances and that the annual rate of child support fixed for those periods is an unjust and inequitable determination of the level of the father’s child support for those periods.

The ground under s.117(2)(c)(ib)

1. It is unclear what the father’s case is under this ground.  I am satisfied the father’s earning capacity is appropriately reflected in his actual income.  I do not understand it was contended otherwise by the mother.

2. There was controversy about the mother’s earning capacity.  I have found I am not satisfied her earning capacity was impaired by any medical condition, but it was by her caring responsibilities for the child.

3. The father sought to retain the income figures attributed to the mother in the change of assessment procedures.  The mother did not concede that these figures reflected her actual exercisable earning capacity, but conceded the figures for her income as sought in the father’s application, which were those attributed to her in the change of assessment procedures.

1. In those circumstances, I am not satisfied this ground is established.  I will deal further with the issue of the mother’s earning capacity when considering the justice and equity of making a departure order.

Has the father proved it is just and equitable to depart from any of the assessments?

1. In determining this question, the court must have regard to such of the matters in s.117(4) of the Assessment Act (as in force on 31 December 2006) as are relevant in the case. I will deal with each matter in turn.

The nature of the duty of a parent to maintain a child (s.117(4)(a))

1. The nature of a parent’s duty to maintain his or her child is set out in s.3 in the following terms-

   “(1)  The parents of a child have the primary duty to maintain the child.

   (2)    Without limiting subsection (1), the duty of a parent to maintain a child:

   (a)     is not of lower priority than the duty of the parent to maintain any other child or another person; and

   (b)     has priority over all commitments of the parent other than commitments necessary to enable the parent to support:

   (i) himself or herself; and

   (ii)    any other child or another person that the parent has a duty to maintain; and

   (c)     is not affected by:

   (i) the duty of any other person to maintain the child; or

   (ii)    any entitlement of the child or another person to an income tested pension, allowance or benefit.”  

2. The father said he was the “victim of entrapment by the mother, who deliberately fell pregnant without my consent and then led me to believe she could financially support my son”.  He said that when informed by the mother of her pregnancy, he “said that I would be a father to my son” but “made no other commitment to the mother”.

3. Be that as it may, s.3 is unequivocal, and applies whether or not a parent “made no other commitment” in relation to the child. The parents bear the primary duty to maintain the child. Being “a father to my son” means meeting his needs, including his material needs, consistent with the respective capacities of both parents to do so.

The proper needs of the child (s.117(2)(b))

1. In assessing the child’s proper needs, the court must have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (s.117(6)).

2. There is no evidence from the mother as to the child’s needs during any of the five periods covered by the relevant assessments.  There is unchallenged evidence as to the child’s needs at the time of her various financial statements.  It is represented by the specific costs attributed by the mother to the child in her financial statements - $165 per week at August 2008, $122.50 at November 2009 and $137.50 at May 2010 – plus a figure representing part of the mother's mortgage repayments and other liabilities referable to her providing accommodation, transport and other care of the child.

3. The child has no identified special needs.  I infer that the child has been cared for, educated and trained during the periods covered by the various assessments similarly to the way he was cared for at the times of the mother’s financial statements, and that that was how the parties expected the child to be cared for, educated and trained.

4. While unable to quantify the proper needs of the child during the relevant periods in specific dollar terms, I find that the child’s needs would have been similar at the relevant times to those reflected in the mother’s financial statements, which were unchallenged in relation to these expenses.

The income, earning capacity, property and financial resources of the child (s.117(4)(c))

1. In considering this matter, the court must have regard to s.117(7), which at 31 December 2006 was as follows-

   “(7)  In having regard to the income, earning capacity, property and financial resources of the child, the court must:

   (a)    have regard to the capacity of the child to earn or derive income, including any assets of, under the control of, or held for the benefit of, the child that do not produce, but are capable of producing, income; and

   (b)    disregard:

   (i)      the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and

   (ii)    any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.”

2. There is no evidence the child has any property or financial resources at the relevant times.  At his age now, and at the times of the relevant assessments, he had and has no income or earning capacity.

The income, property and financial resources of each parent (s.117(4)(d))

1. This consideration is further elaborated by s.117(7A), which at

   
   

   31 December 2006 provided as follows-

   “(7A)    In having regard to the income, property and financial resources of a parent of the child, the court must:

   (a)    have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the parent that do not produce, but are capable of producing, income; and

   (b)    disregard:

   (i) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and

   (ii)    any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.”

2. This is another area where the parties’ evidence failed to fully address the issue at the relevant times.  I am satisfied the parties’ respective incomes were as previously set out, and that the father’s relevant income for child support purposes should be determined by writing back the deductions for depreciation and the carried forward loss.

3. I am satisfied that since April 2005, the mother has received an income tested pension, allowance or benefit which must be disregarded.  I am satisfied that the mother's actual income for the entire period covered by the father's application was otherwise nil.

4. The paucity of relevant evidence of both parties, despite a five day hearing, makes determining their property, financial resources and liabilities at each of the relevant child support periods problematic.  I proceed on the basis that, absent any suggestion by either party otherwise, the evidence I have is indicative of these matters at all relevant times.

5. I accept the father's evidence as to the acquisition and fitting out of his [vehicle].  I find both parties owned their real property at all relevant times.  I find the mother's superannuation interests were as ultimately disclosed by her, but could not have been accessed by her.  I am not satisfied either party had any assets or resources that could or should affect the quantification of periodic child support at the relevant times, other than to the extend they were the source of income.

The earning capacity of each parent (s.117(4)(da))

1. The circumstances in which the court may find a person’s earning capacity exceeds his or her income are set out in s.117(7B). As mentioned, while this provision was not in force at the time of the 2005 change of assessment process, it applies to the determination now of the father's application. At 31 December 2006 s.117(7B) provided-

   “(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.”

2. No issue arises in relation to the father's earning capacity.  I am satisfied his income reflects his earning capacity, and it was not submitted on behalf of the mother otherwise.

3. The situation with the mother is more complicated.  It was the mother's case that her earning capacity was adversely affected on medical grounds, and that she had been unable to work at all relevant times.  For reasons previously set out, the mother has failed to satisfy me of this.

4. The mother agreed that when working part time after the child was born and up to April 2005, she was earning on average $55,000 per annum.  The result thus far is that I am satisfied the mother does not work despite being able to do so part time, consistent with her caring responsibilities, and that her failure to work part time is not because of her caring responsibilities or ill health.

5. But before I can find that the mother has and earning capacity greater than her actual income, which for child support purposes is nil, I must be satisfied that she “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” (s.117(7B)(c)).

6. I have rejected the mother's asserted reason for ceasing work, namely ill health.  The mother denied in cross-examination that she ceased work to affect child support.  The mother's evidence does not otherwise address her reasons for leaving work.  The mother made an income estimate election promptly after ceasing employment in April 2005.  That affected the amount of child support payable by the father.

7. The mother's counsel submitted that the mother did not concede that she could work during the relevant child support periods, but conceded orders 2, 3, 5 and 6 sought by the father, under which the father sought to have the mother’s child support income amount set at $55,000 from 6 November 2005 to 30 June 2008 and her disregarded income amount set at $48,568 for the same period.

8. Having specifically drawn attention to s.117(7B) during the hearing, I must interpret that submission as a concession that the mother had not demonstrated that it was not a major purpose of her decision to cease work to affect the administrative assessment of child support in relation to the child.

9. I am therefore satisfied that the preconditions under s.117(7B) to determining the mother’s earning capacity to be greater than her actual income from 6 November 2005 to 30 June 2008 exist, and I determine her earning capacity during that period to be $55,000 per annum.

The commitments of each parent necessary to support himself or herself and any other child or person that parent has a duty to maintain (s.117(4)(e))

1. I accept that the parties’ self-support commitments were as set out in their financial statements, they being unchallenged.  To the extent the evidence did not identify the parties’ self-support commitments during the relevant child support periods, I find that they were of a similar order during those periods.

2. In general terms, neither party had any unusual expenditure or special needs.

3. Neither party had a duty to support another person during the relevant child support periods, other than the child.

The direct and indirect costs incurred by the entitled carer in providing care for the child (s.117(4)(f))

1. In assessing these costs, the court must have regard to income and earning capacity foregone by the entitled carer in providing child care (s.117(8)).

2. There is no evidence of direct costs incurred by the mother in providing child care during the relevant periods.

3. On the basis of my findings that the mother was earning about $74,000 per annum when working full time before the child was born, was earning on average $55,000 per annum when working part time after the child was born, and that she has failed to prove that she cannot work on medical grounds, I find that the income foregone by the mother in providing care for the child was $19,000 per annum during each of the relevant child support periods.  There is no evidence of any earning capacity foregone by the mother.

Any hardship that would be caused to the child or the entitled carer, and to the liable parent or any other child or other person the liable parent has a duty to maintain, if the court made or refused to make the order (s.117(4)(g))

1. To make the orders the father seeks will result in a significant reduction in the child support he must otherwise pay for the child.  Any reduction in support from the father must cause some hardship for the mother and for the child.  However, I have found that during most of the relevant child support periods, from 6 November 2005, the mother’s earning capacity was $55,000 per annum.  It may be argued that the child may have suffered even greater hardship from the mother not having exercised that earning capacity.

2. Be that as it may, not changing the assessments would leave the father liable to pay child support calculated on an income figure about double the figure I have found to be the appropriate figure.  He would have a significant level of arrears and no realistic means of paying them other than by liquidating assets, which may include his assets that produce such income as he does receive.  That would be a significant hardship to him, and I am satisfied a greater hardship than would be caused the mother or the child be changing the amount of child support.  If declining to make a departure order resulted in the father having to sell income producing assets to satisfy the resultant liability, as I am satisfied is a real risk, it may also adversely affect the father’s capacity to contribute to the support of the child in the future, which would create further hardship for the mother and the child.

Findings as to whether it would be just and equitable to make a departure order

1. The matter ultimately revolved around whether the income figure attributed to the father to calculate his child support liability was appropriate.  I have found that it was not, and a proper income figure for him during the relevant child support periods was around half of the income figure actually used.

2. Having regard to all the relevant matters, but in particular my findings as to his income and the balance of hardship, and having regard to the parents’ duty to maintain the child, I am satisfied it would be just and equitable to depart from the assessments for all the relevant child support periods.

Has the father proved it would be otherwise proper to depart from any of the assessments?

1. In determining this question, the court must have regard to the matters specified in s.117(5) (as in force on 31 December 2006). I will deal with each of those matters in turn.

The nature of a parent’s duty to support his or her child and in particular that the parents have the primary duty to maintain their child (s.117(5)(a))

1. I have already set out s.3 of the Assessment Act. Relevantly in deciding whether it would be otherwise proper to make a departure order, s.3 makes it clear that it is the parents, not the tax payer through Centrelink, who bear the primary obligation to support the child.

The effect of making an order on any entitlement of the child or entitled carer to an income tested pension, allowance or benefit or to the rate of any such pension, allowance or benefit (s.117(5)(b))

1. The mother has been on Centrelink benefits since April 2005, and for all five periods covered by the relevant assessments, an order having the effect of reducing the child support the mother is to receive for these years would have affected her Centrelink benefits.  The evidence does not establish, and I was not addressed, as to whether or not the mother's Centrelink benefits were reduced for the child support she was due to receive but did not, or whether and if so how receipt of child support in the future for the periods in the past child support periods for which I am asked to make orders will affect her Centrelink entitlements.

Findings as to whether it would be otherwise proper to make a departure order

1. Having regard to the parents’ duty to support their child, and even assuming that the effect of granting a departure order for the periods the father seeks will cast a greater burden of supporting this child on the taxpayer, something the evidence and submissions do not address, I am satisfied it is otherwise proper to grant a departure order for all five periods covered by the father's application.

What orders should be made

1. Having found a ground for departure established, and that it would be just and equitable and otherwise proper to make a departure order, it remains to determine what order should be made.

2. The orders a court may make in proceedings such as these are set out in s.118. As in force on 31 December 2006, the section empowered the court to alter any of the elements of the formula for administrative calculation of the amount of child support, or to fix a new rate of child support. The father’s application seeks to change certain elements of the administrative formula, namely his and the mother's child support income amounts and the mother's disregarded income amount. I am satisfied this is an appropriate approach in this case. I will consider what order should be made for each of the five child support periods covered by the relevant assessments the father seeks to depart from.

Child support periods 24 June 2005 to 5 November 2005

1. The father sought that his child support income amount for this period be $17,838.

2. All but six days of this period fall within the 2005/2006 tax year, and in my view the father's adjusted income for 2005/2006 as determined previously in these reasons, namely $18,981 per annum, should be the father's child support income amount for this period.  There should be no other change to the formula for this period.

Child support period 6 November 2005 to 28 February 2006

1. For this period, the father sought that his child support income amount be fixed at $17,838, that the mother’s child support income amount be fixed at $55,000, and the mother's disregarded income amount be fixed at $48,568.  The mother conceded the orders in relation to her child support income and disregarded income amounts.

2. As this period falls within the 2005/2006 tax year, I am satisfied that the father's child support income amount should be the adjusted figure previously determined, namely $18,981 per annum.

Child support period 1 March 2006 to 31 January 2007

1. For this period, the father sought that his child support income amount be fixed at $17,838, that the mother’s child support income amount be fixed at $55,000, and the mother's disregarded income amount be fixed at $48,568.  The mother conceded the orders in relation to her child support income and disregarded income amounts.

2. This child support period encompasses the last four months of the 2005/2006 tax year and the first seven months of the 2006/2007 tax year.  If the father's adjusted incomes for the two tax years that this child support period straddles are applied proportionately to the parts of the child support period that fall within each, the figure proposed by the father as his child support income amount is greater than the result.  I am satisfied therefore that the father's application wholly succeeds in relation to this child support period, and his child support income amount should be as he seeks.

Child support period 1 February 2007 to 31 May 2007

1. For this child support period, the father sought that his child support income amount be fixed at $4,166, that the mother’s child support income amount be fixed at $55,000, and the mother's disregarded income amount be fixed at $48,568.  The mother conceded the orders in relation to her child support income and disregarded income amounts.

2. As this period falls wholly within the 2006/2007 child support year, I am satisfied that the father's child support income amount should be set at the adjusted figure determined previously for this year, $10,391 per annum.

Child support period 1 June 2007 to 30 June 2008.

1. For this child support period, the father sought that his child support income amount be fixed at $4,166, that the mother’s child support income amount be fixed at $55,000, and the mother's disregarded income amount be fixed at $48,568.  The mother conceded the orders in relation to her child support income and disregarded income amounts.

2. This period encompasses the last month of the 2006/2007 tax year and the whole of the 2007/2008 tax year.  When depreciation is written back for the 2007/2008 tax year, the father's income becomes $24,941.  I am satisfied this is the appropriate figure for his child support income amount for the whole of this period.

I certify that the preceding one hundred and seventy-six (176) paragraphs are a true copy of the reasons for judgment of Halligan FM

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