PLD and CD
[2004] FMCAfam 518
•19 October 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PLD & CD | [2004] FMCAfam 518 |
| CHILD SUPPORT – Administrative assessment – departure application – over 18 child maintenance – child attending university. |
Family Law Act 1975
Child Support (Assessment) Act 1989
Child Support (Registration & Collection) Act 1988
Lindsey & Lindsey (1995) FLC 92-638
Roche & Glenn (2002) FLC 93-123
Gyselman (1992) FLC 92-279
DJM v JLM (1998) FLC 92-816
Weir v Weir (1993) FLC 92-338
Black v Kellner (1992) FLC 92-287
Jenkins v Livesey (1985) 1 All ER 106
Jones v Dunkel (1959) 101 CLR
Ghazal v GIO (NSW) (1992) NSWLR 336
Luton v Lessels (2002) 76 ALJR 635
Oliver v Oliver (1977) FLC 90-227
In the Marriage of Cosgrove (1995) 20 FamLR 751
| Applicant: | P L D |
| Respondent: | C D |
| File No: | PAM3937 of 2003 |
| Delivered on: | 19 October 2004 |
| Delivered at: | Parramatta |
| Hearing date: | 9 September 2004 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Applicant: | In person |
| Counsel for the Respondent: | Mr D. Dura |
| Solicitors for the Respondent: | Browns The Family Lawyers |
ORDERS
The applicant P L D’s (the applicant father) departure application is dismissed.
The respondent C D’s (the respondent mother) departure application filed 11 May 2004 is dismissed.
Pursuant to s.66L that P L D (the applicant father) pay child maintenance for David in the sum of $200 per week for so long as David is studying full time and he completes a Bachelor of Horticulture degree or such other first bachelor degree as he may transfer to.
The child maintenance pursuant to order (3) above commences operation on 20 May 2004. The applicant father shall pay the arrears due for the period 20 May 2004 until the date of these orders within twenty-eight (28) days.
The applicant father shall pay the child maintenance payable from the date of these orders each week into an account nominated by the respondent mother. The first periodic payment shall be made seven days after the date of these orders and each week thereafter.
For the purpose of order (3) the child, David, will complete his education on the day upon which a university advises he that he has completed all necessary requirements for conferral of a bachelor degree.
Excluding any application for costs all outstanding applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM3937 of 2003
| P D |
Applicant
And
| C D |
Respondent
REASONS FOR JUDGMENT
Introduction
This litigation started when the Child Support Registrar filed an enforcement summons in the Local Court Family Matters on 26 August 2003 seeking to recover $20,446.37 arrears allegedly owed by P D (the applicant father) to the Commonwealth. The applicant then commenced these proceedings when on 19 September 2003 he filed an application in this court for a departure order from an administrative assessment of child support. Collection is currently stayed pending determination of these proceedings.
In his application the applicant challenges the assessments covering the periods 1 May 2000 to 31 March 2001 inclusive and 1 April 2001 to
20 May 2004 “or until the court otherwise orders”. He also asks that penalties totalling $3,409.82 be remitted. The applicant’s case outline document identifies the orders he sought at trial. Relating to the substantive matter he sought:
1. (i) That the Child Support Maintenance Debt be remitted to zero; and
(ii)That a declaration be made that, having regard to the nature of the circumstances, it would be fair and reasonable to remit the late payment penalties in this case; and
(iii)That the mother’s application be dismissed; or in the alternative,
2. That the matter of P D & C D (P)PAM3937/2003 be adjourned pending the outcome of the matter of ROBERT LESLIE WEEKES AND CHILD SUPPORT REGISTRAR – NA50/2003 in the Family Court of Australia at Brisbane:
3. (i) That the matter of P D & C D (P)PAM3937/2003 be adjourned pending the outcome of an Application to state a case in this matter pursuant to section 103 of the Child Support (Assessment) Act 1989 and pursuant to section 94A of the Family Law Act 1975; and
(ii)That a case be stated in the terms of the questions enumerated in paragraphs (4) to (12) inclusive below.
4. Was the exercise of powers by the Child Support Registrar pursuant to section 30 of the Child Support (Assessment) Act 1989, to accept the application in this matter for administrative assessment of Child Support Act, judicial in nature and contrary to Chapter III of the Constitution?
5. Was the exercise of powers by the Child Support Registrar pursuant to section 30 of the Child Support (Registration & Collection) Act 1988, to accept the application in this matter for registration of the liability assessed as a debt owed to and enforceable by the Commonwealth of Australia, judicial in nature and contrary to Chapter III of the Constitution?
6. Was the exercise of powers by the Child Support Registrar pursuant to Child Support (Registration & Collection) Act 1988, to collect the assessed liability in this matter, judicial in nature and contrary to Chapter III of the Constitution?
7. Was the exercise of powers by the Child Support Registrar pursuant to Child Support (Registration & Collection) Act 1988, to collect the assessed liability in this matter, a tax and contrary to section 55 of the Constitution?
8. Was the exercise of powers by the Child Support Registrar pursuant to Child Support (Registration & Collection) Act 1988, to enforce the assessed liability in this matter, judicial in nature and contrary to chapter III of the Constitution?
9. Was the exercise of powers by the Child Support Registrar pursuant to Child Support (Registration & Collection) Act 1988 to enforce the assessed liability in this matter, a tax and contrary to section 55 of the Constitution?
10. Was the exercise of powers by the Child Support Registrar pursuant to Child Support (Registration & Collection) Act 1988, to apply penalties with respect of the assessed liability in this matter, a tax and contrary to section 55 of the Constitution?
11. Is a liable parent party to an application for a Child Support Order under the Child Support (Assessment) Act 1989 required to provide for inspection, for disclosure on oath, private information concerning the party’s financial affairs or particulars on a date prior to:
(i)The court determining that a special circumstance exists within the meaning of section 117 of the Child Support (Assessment) Act 1989 and or
(ii)The court considering the financial support necessary for the maintenance of the child; and or
(iii)The court taking into account the income, earning capacity, property and financial resources of the child.
12. Is a liable parent party to an application for a Child Support under the Family Law Act 1975 required to provide for inspection, for disclosure on oath, information concerning his financial affairs or particulars on a date prior to the court;
(iv)the court considering the financial support necessary for the maintenance of the child; and or
(v)The court taking into account the income, earning capacity, property and financial resources of the child.
13. That the court issue further directions in this matter upon receipt of the answers to the case stated.
14. That the first respondent mother pay the cost of and incidental to this proceedings.
On 11 May 2004 C D (the respondent mother) filed a Form 63 application also seeking a departure order. Her application is in the following terms:
That the rate of child support payable by the liable parent concerned be varied to $1,000 per month for the child Dennis n 1986 in accordance with s.118 of the Child Support (Assessment) Act 1989 as and from the date to which child support presently stands paid.
The same day she filed another application concerning the payment of over 18 maintenance for the parties’ son David. In her second application C D sought an order that the applicant pay $1,000 per month for Dennis until the completion of his full time tertiary education.
The proceedings have had an unusually long period between filing and hearing. By way of pre-trial preparation the court made a series of directions and disclosure orders. On 18 December 2003 the court listed the matter for final hearing on 27 February 2004. This hearing was adjourned so that a series of appeals relating to earlier directions could be determined. On 24 May 2004 the Full Court of the Family Court of Australia heard argument on an appeal by F L, the applicant’s wife and a separate appeal by the applicant. Insofar as the appeal brought by F L was concerned, the Full Court ordered:
1.That F L be granted leave to make an oral application for an extension of time within which to seek leave to appeal pursuant to s102A of the Child Support (Assessment) Act 1989 against orders made by Federal Magistrate Raphael on 18 December 2003.
2.That leave be granted to the said F L pursuant to s.102A of the Child Support (Assessment) Act 1989 to appeal against order 1 of Federal Magistrate Raphael of 18 December 2003.
3.That the appeal be allowed.
4.That order 1 of Federal Magistrate Raphael of 18 December 2003 be varied to provide:
That on or before18 June 2004 the said F L comply with the provisions of paragraphs 1, 10 and 12 of the subpoena issued to her on 13 November 2003.
5.That F L pay the sum of $1,500 towards the costs of the Child Support Registrar as agreed, such sum to be paid within six months of this date.
6.That there otherwise be no order for costs.
The applicant’s appeal resulted in the following orders:
(1)That the husband be granted leave to make an oral application for an extension of time within which to seek leave to appeal pursuant to s.102A of the Child Support (Assessment) Act 1989 (Cth) against orders made by Federal Magistrate Raphael on 18 December 2003.
(2)That the husband’s application for leave to appeal be dismissed.
(3)That the husband’s Notice of Appeal filed 13 January 2004 and Amended Notice of Appeal filed 23 April 2004 be dismissed.
(4)That the husband pay one half of the costs of C D as agreed or taxed in accordance with the appropriate scale pursuant to the Rules of the Court on a party and party basis.
(5)That the husband pay the sum of $1,500 towards the costs of the Child Support Registrar as agreed, such sum to be paid within six months of this date.
On 29 June 2004 I made the following orders:
1.All outstanding applications are consolidated.
2.The time for compliance with Order 2 made 18 December 2003 is extended so that P D shall file and serve an affidavit of documents in answer to the request for discovery no later than 4.00 pm 3 August 2004.
3.P D shall give inspection of the discovered documents to C D and her solicitors at a date, time and place agreed between the parties, but no later than 4.00 pm 19 August 2004.
4.That the matter be listed for further mention and further directions before me at 10.30 am on 20 August 2004.
5.That the matter is listed for hearing as a one day matter to commence at 10.00am on 9 September 2004.
6.The court notes that as the applicant does not wish the respondent to inspect documents at his premises, her solicitors are willing to have inspection take place at their offices.
On 20 August 2004 the court made the following orders:
1.I DIRECT that the father prepare a supplementary affidavit of documents that includes all of the documents enumerated in (1) – (13) in exhibit A and placed with the court papers dated today. That affidavit is to be filed and served no later than 4 pm on 27 August 2004.
2.Inspection shall take place of the discovered documents to C D and her solicitors at a date and time and place agreed between the parties, but no later than 4 pm on 31 August 2004.
3.The court refuses the father’s application for an adjournment of the hearing.
When the matter was called on for this hearing the applicant presented a sixty page summary of argument, included in which is a helpful child support transaction sheet and table of assessments. A considerable volume of the submission related to the applicant’s application that the hearing should be adjourned. That is pending the outcome of proceedings Robert Lesley Weeks & Child Support Registrar NA50/2003, currently before the Full Court of the Family Court. Apparently those proceedings challenge the High Court’s decision in Luton v Lessels (2002) 76 ALJR 635 and assert that the child support legislation as currently formulated offends Chapter III of the Constitution in that an administrative assessment once made by the Child Support Registrar alters a payee’s existing property rights. At issue is the validity of the administrative assessment procedure and subsequent jurisdiction of a court to proceed with either enforcement or assessment of a child support liability. In the alternative the applicant invited this court to state a case for consideration by the Full Court in the terms identified above. The issues raised in the case stated and Robert Lesley Weeks & Child Support Registrar are in similar terms.
In Lindsey & Lindsey (1995) FLC 92-638 the Full Court said, “Where an important issue of law is raised in future, and it is proposed to state a case for the opinion of the Full Court, a trial judge, before doing so, should advise the Chief Justice who will then be in a position to invite the Attorney General to assist the Full Court”. In Roche & Glenn (2002) FLC 93-123 the Full Court made it plain that similar considerations arise when a federal magistrate is asked to state a case. This was the second time the applicant had asked me, and the third time he had asked a federal magistrate to state a case for consideration to the Full Court. He first raised this issue with Federal Magistrate Raphael. Upon Federal Magistrate Raphael declining to state a case, this decision formed part of the applicant’s appeal to the Full Court. During argument the applicant disingenuously denied that the Full Court had considered this aspect of the matter. Yet it is plain from the Full Court’s decision published 4 June 2004 that the applicant ventilated his constitutional issues before that court. At paragraphs 27 – 39 inclusive of its decision under the heading, “The Constitutional Challenge” the Full Court considered the same issues that the applicant sought to raise in this hearing. The Full Court concluded that the applicant’s challenge to the validity of the administrative assessments and jurisdiction must fail. Having failed in the Full Court the applicant was entitled to bring an application for special leave to appeal to the High Court. He has not done so. That remedy is the appropriate remedy and it would be manifestly erroneous in the instant case for this court to either state a case, adjourn pending Robert Lesley Weeks & Child Support Registrar or consider afresh arguments which have previously failed to attract Full Court intervention.
Thus the application for an adjournment and/or to state a case failed.
Short history
The parties married and commenced cohabitation on 8 October 1977.
They have three children, A L D born in 1980, A J D born in 1983 and Dennis born in 1986.
The parties separated on 15 January 1990. They have never resumed cohabitation. At separation all three children resided with the respondent mother.
Shortly after separation the mother applied to the Child Support Registrar for an administrative assessment of child support. The application was accepted and the applicant’s child support liability started on 13 February 1990.
In 1990 the applicant commenced a relationship with his current wife, F L.
When the parities separated the applicant was employed as an accountant.
A Decree Nisi was ordered in April or May 1991.
In November 1993 two of the parties children, A L D and A J D, commenced to reside with the applicant father’s sister. A J D returned to reside with the respondent mother in about April 1994 and, excluding one or two weeks during 1996, resided with her continuously until after A J D’s 18th birthday. None of the assessments under challenge relate to A L D.
The applicant was made redundant in July 1994 and until about April – May 1996 was unemployed.
The applicant married F L on 17 May 1995. Their marriage subsists.
In around May 1996 the applicant obtained contract taxation work, which work he performed until March 1998. In March 1998 he obtained employment as an accountant with a company where he remained until September 1999. Whilst working there he served an apprenticeship which enabled him to obtain a tax agent licence.
On 16 November 1998 consent orders were entered at the Local Court Family Matters to the following effect:
1.That the child support assessments for the year 1July 1998 to 30 June 1999 and 1 July 1999 to 30 June 2000 be departed from.
2.That the father pay child support for the year 1 July 1998 to 30 June 1999 at the rate of $83 per week.
3.That any assessment for the year 1 July 1999 to 30 June 2000 be made pursuant to the Child Support Assessment Act.
An administrative assessment then issued giving effect to these orders.
In February 1998 the respondent became eligible for a sole parent pension. On 24 January 1999 the respondent suffered a knee injury. In November 1999 the nature of the respondent’s pension changed and since then has received a disability support pension.
In November 1999 having completed his apprenticeship, the applicant established his own business as a tax agent. The applicant incorporated a company which is a corporate entity for his accounting practice which he operates. A J D turned 18 on 29 March 2001.
In May 2003 the respondent settled a worker’s compensation claim for the total sum of $100,000 plus payment of her legal fees and medical expenses.
Dennis completed his higher school certificate at the end of 2003.
On 29 January 2004 the respondent started work as a process worker. She works 22 hours per week.
On 1 March 2004 Dennis started full time university studies.
Relevant law – child support
The obligation to pay child support is created by the provisions of the Child Support (Assessment) Act 1989. Section 3 contains the obligation that parents maintain their children. The objects of the Act are found in section 4. Each of the objects needs to be borne in mind when deciding an application under the Act. Section 4(3) of the Act recognises the desirability of parents reaching agreement for the financial support of their children. Sections 114 and 121 identify that the further objects of Divisions 4 and 5 of Part VII include:
a)that the children have their proper meeds met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents and
b)that parents share equitably in the support of the children.
The Full Court of the Family Court in Gyselman (1992) FLC 92-279 set out a three step process that courts must follow in determining an application for a departure order under s.117. The first step whether one or more of the threshold grounds in s.117 is established. If so, the next step is whether it is just and equitable within the meaning of s.117(4) to make a particular order. The final consideration is whether it is otherwise proper within the meaning of s.117(5) to make a particular order.
An issue in this matter is whether the court might properly base its decision on earning capacity rather than actual income. It is clear from DJM v JLM (1998) FLC 92-816 that a court can take into account earning capacity in situations other than those in which a person has deliberately weakened his or her economic position in an attempt to avoid their responsibility to pay child support. What distinguishes these cases from cases in which the court does focus on the actual and reduced income in calculating the level of child support seems to turn on whether the person acted reasonably in all the circumstances in taking the step that led to the reduced income.[1] What is reasonable must be determined not only in light of the particular facts but also in the light of the particular area of law involved. In child support cases an important part of the context for determining what is reasonable is the explicit statement of the Objects of the Act in s.4 in which there is reference to the parents, “capacity to provide financial support”. Thus a different answer to the “what is reasonable” question, may be given in spouse maintenance compared to child support proceedings. Partly, this is because child support legislation prioritises the obligations of parents to support their children.
[1] See, for example, discussion in DJM v JLM (supra.).
Disclosure
One of the important issues in this case concerns the parties’ obligation to make full and frank disclosure, which means they are required to disclose all material facts. In Weir v Weir (1993) FLC 92-338, the Full Court said at 79,593, “This court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black v Kellner (1992) FLC 92-287 that it is the duty of a party involved in property proceedings in this jurisdiction to make full and frank disclosure of their financial affairs”. Where a party puts into issue their financial circumstances, even if the proceedings concern maintenance or child support, there is a similar obligation to give full and frank disclosure. As the Full Court said in Weir “Irrespective of any obligation created by the Family Law Act 1975 or the Family Law Rules that we have identified, in our opinion the obligation of full or frank disclosure applies because of the duty of the court to consider all of the circumstances of the case. See Jenkins v Livesey (1985) 1 All ER 106. This is particularly important in cases where the financial circumstances of the parties may be relevant”. In Weir the Full Court said further “It seems to us that once it has been established that there has been deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”
Shortly after the applicant commenced these proceedings this court and the Full Court made a series of directions aimed at compelling him to give full disclosure of his relevant financial circumstances which included production of source documents within his possession or control. During the course of pre-trial procedures the respondent’s lawyers repeatedly complained about the inadequacy of the applicant’s disclosure. It cannot have come as a surprise to him that at the start of this hearing, given the few documents he produced directly or via discovery, that further complaint was made. The applicant appeared to take the approach that his former wife and the court are required to accept his evidence. Notwithstanding directions previously made he decided to produce only limited source documents. The applicant asserted that the court would accept the notice of assessment made by the Australian Taxation Office of his income and his business returns and financial statements were proof of the facts contained therein. With respect, the taxation returns and notices of assessment prove no more than the ATO accepted information provided by the applicant. There is no evidence that his affairs were audited by the ATO. Similarly, as the applicant was primarily responsible for preparation of the company’s financial statements, these documents do not corroborate his evidence. Although it may have been tedious, and undoubtedly an extensive exercise, the applicant was required to produce source records, for example, original bank statements, running sheets, invoices, and if necessary computer records that revealed the basis for the information contained in the documents produced under discovery. In arguendo the applicant complained that he had about forty filing cabinets of material, production of which was impossible. While many of these related to clients of his accountancy practice, what is clear is that there exists a vast volume of relevant personal and business records that were not provided. The applicant did not produce memorandums and articles of association for his company, nor minutes of the annual general meetings and directors meetings. The court only received a selection of the company’s financial statements and taxation returns. The applicant’s wife produced some of her taxation returns.
As will become apparent I am satisfied that the applicant’s personal and business financial affairs are intrinsically linked with his new wife’s (F L’s). She owns the real estate within which he lives and has an interest in his accounting business. That the respondent alleged that this is so has been clear from the early stages of this matter. It is clear at least from the nature of the subpoena served on F L, the documents sought by discovery and complaints about the adequacy of the applicant’s discovery. Notwithstanding this the applicant failed to call his wife to give evidence, either by affidavit or orally. Thus the court must consider the rule in Jones v Dunkel (1959) 101 CLR 298 concerning the failure to call F L. In Ghazal v GIO (NSW) (1992) NSWLR 336 Kirby P, with whom Mahoney and Clarke JJA agreed, explained the rule in Jones and Dunkel thus “The rule in Jones v Dunkel is one of commonsense reasoning. It provides that an unexplained failure by a party to call a witness may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the case of the party who might be expected to call the witness. It is important to note that this is a facility. It is not an obligation in the reasoning of the decision-maker.” Despite the passing of the Evidence Act1995 (Cth) a Jones v Dunkel inference may still be drawn (See Australian Securities Commission v AS Nominees) (1995) 133 ALR 1 at 12.
The applicant failed to give any adequate explanation concerning his failure to adduce evidence from his wife. Her financial relationship with him is clearly relevant and her evidence was needed to better understand the totality of the applicant’s financial affairs. I do not accept that the applicant’s failure to call his wife was a tactical error that should be excused by virtue of the fact that he appeared unrepresented. The applicant clearly researched the relevant law in great detail and I am satisfied he made a conscious decision not to fully disclose his wife’s financial situation or call her to give evidence. In these circumstances I am satisfied that F L’s evidence would not have assisted the applicants case.
In simple terms the applicant’s failure to give adequate disclosure and to call his wife result in my findings that the applicant has greater income than he has disclosed.
Special circumstances of the case - has the applicant shown a ground for departure?
In his case outline document the applicant shows that he relies on s.1172(c)(i) to establish a ground for departure. The applicant claims that his actual income bears no relationship to the basis upon which his child support liability was calculated. In relation to the years under challenge the business and tax records show that his taxable income is as follows;
· For the financial year ended June 2000 $4,866;
· For the financial year ended June 2001 $8,466;
· For the financial year ended June 2002 $7,000; and
· For the financial year ended June 2003 $10,000.
By Notice of Decision dated 24 May 2000 Senior Case Office Turton set the applicant’s child support income at $35,000 for the period 13 March 2000 to 30 September 2000, for the period 1 October 2000 to 30 September 2001 at $35,000 increased by the inflation factor default income and for the period 1 October 2001 to 19 May 2004 at the same rate including increased by the inflation factor. The applicant’s Part 6B objection to this decision failed. The assessment up to 28 March 2001 related to the parties’ two children, A J D and Dennis. A J D turned 18 in March 2001. Thus the child support percentage for the earlier periods was 27 per cent and after A J D’s 18th birthday fell to 18 per cent. The latter assessments only relate to Dennis.
The Child Support Agency erroneously issued an assessment on 8 September 2001 using a provisional income amount of nil dollars for the applicant’s child support income effective 1 October 2001. It was erroneous because the Child Support Agency ignored that the applicant’s income for this period had been set by departure by virtue of the decision made by Senior Case Officer Turton. The respondent realised the mistake and the applicant’s child support liability was reassessed in accordance with Senior Case Officer Turton’s determination. To the extent that the applicant claims to be aggrieved by the erroneous assessment, I reject his assertion that this worked to his disadvantage. The applicant has had years of dealings with the Child Support Agency and apparently maintains meticulous records of these dealings. I have no doubt that the applicant knew that the assessment was mistaken and any attempt to claim disadvantage is opportunism on his part.
The applicant says that his sole source of income is from his accounting practice and his interest in a Queensland investment property that he owns with his wife. He runs the practice and is responsible for its, his own and his wife’s financial and taxation returns. More than anybody else he has control of the companies financial affairs and records.
The companies’ financial statements show that for the year ended 30 June 2000 it had a total income of $214,220, for 2001 $399,655 and the year ended 30 June 2002 $250,013. The court did not receive the company financial statements for the earlier financial years nor for the years ended 30 June 2003 or 30 June 2004. No adequate explanation was proffered for the failure to produce these documents and I infer that production would not have assisted the applicant’s case. The company’s assets primarily comprise modest plant and equipment and a new Mercedes Benz purchased for approximately $66,000 in October 2002. Its largest liability is the applicant’s loan account. For the year ended 30 June 2000 the unsecured director’s loan was $246,841, the following year $227,193 and for the year ended 30 June 2002 $366,487. There is no evidence that the applicant made significant capital payments to the company. He says that he has taken the modest directors fees to which he is entitled. There is no suggestion that he has allowed monies to which he is entitled to remain in the company. The applicant proffered no explanation as to how his loan account has built up. There are a number of possibilities, none of which are favourable to the applicant’s case. It could be that the applicant has income earned from another undisclosed source, which he has loaned to the company. Or that to a considerable extent the company’s expenses reflected in its profit and loss statement and ATO returns are exaggerated and the applicant has been able to use money received by his accounting business as loans to the company. Perhaps it is a combination of the two scenarios.
When the applicant’s lifestyle is examined there are indications that his income is considerably greater than he protests. The companies returns show that the applicant makes payments to associated entities. He explained that his wife has an interest in the business, how and to what extent is unclear. F L’s tax returns reveal that her main salary or wage occupation is as a nurse. In addition to her salary earned as a nurse ($39,104 in 2000 and $28,124 in 2001) she receives modest rental income from an investment property in Queensland, dividends from a small parcel of shares in public listed companies and allowances, earnings, tips or director’s fees of a few hundred dollars annually. The amounts she receives potentially from directors fees are no more than a few hundred dollars which bears no relationship to the amounts revealed in the companies’ tax returns as payments to related entities. The applicant lives in a home in a Hunters Hill registered in his wife’s name. He and his wife are the registered proprietors of an investment property in Queensland. In late 2002 he and his wife purchased a new Mercedes Benz, albeit with entirely borrowed monies. The relevant issue is that this is an expensive car in relation to which the company pays monthly instalments of $948.17. I do not accept that if the applicant’s financial circumstances were as parlous as he presents, he would maintain and interest in an investment property or incur the costs associated with a new Mercedes Benz. Recently Dennis asked the applicant for $300 towards books. He gave the money without difficulty. If I accepted the applicant’s evidence concerning his income, this was more than a week’s total income.
Often in family law proceedings a person’s uncorroborated testimony is sufficiently compelling that the court accepts their evidence. I am not satisfied that I should do so with the applicant’s testimony concerning his financial affairs. Overall, I am satisfied that the applicant failed in many material respects to give full disclosure concerning his financial affairs with the deliberate intention of masking his true income. He presented only a selection of relevant company and personal source documents. He has not adequately explained his lifestyle by reference to his income. I do not accept his claim that he is substantially reliant upon his wife for his expenses. His failure to call his wife to give evidence is a telling omission. Given his position in the company, the applicant is able to intermingle and manipulate his and the company’s assets and liabilities as well as the treatment of his and the company’s income. I am satisfied that he has done so. The difficulty the court has is that the evidence concerning the applicant’s financial situation is unsatisfactory and does not lend itself to precise findings. To the extent that the applicant’s ground for departure is based on a challenge to his assessed child support income, he fails. It is probable that he earns considerably more during the relevant periods than the amounts set by departure. It is highly likely that he earned at least as much as set by departure. If this were not so, I so not accept that the applicant would have persevered with his accounting practice for so many years for so little return. I have no doubt, that even if he worked in a more menial capacity, that with reasonable effort the applicant could earn as least as much as that used to calculate his child support liability. In making this finding I have not overlooked that he had great difficulty finding work after he was made redundant in July 1994. Having retrained and gained additional qualifications there is no evidence that suggests he would face similar difficulties now. The applicant carried the onus of establishing a ground for departure. He has failed to do so.
The applicant does not challenge the respondent’s child support income amount, or disregarded income amount for the period.
Neither child had an income, earning capacity, property or financial resource, that the applicant contends would amount to special circumstances.
Having regard to these findings I am not satisfied that the applicant has established a ground for departure.
Is it just and equitable or otherwise proper to make a departure order?
Because the applicant has not established a ground for departure I am not required to consider s.117(4) or (5). However, for abundant caution, if I were wrong in deciding against special circumstances I would not find on the facts before me that it is just and equitable to order a departure. The amount payable pursuant to the assessment is modest indeed. Whilst at school, the children attended a private fee paying school, a pattern established when they first started school and prior to separation. Other than the parties, no other person has a legal responsibility to support the children. In November 1998 the applicant agreed that he should contribute $83 per week towards the children’s reasonable expenses. I infer that as the children got older their expenses increased, not only by virtue of the cost of living, but because they were older, I infer eating more and their necessary expenses were greater. The applicant could not have expected the children’s expenses to fall for so long as they remained in private schools and grew older.
The court is entitled to take delay into account. The applicant waited over three years after his Part 6B objection failed before he commenced these proceedings. The experience of this court is that few people keep precise personal records for so long. To the extent that any criticism may have been made against the respondent for her failure to produce precise figures concerning her income and the children’s expenses, this many years after the assessment, I do not accept that criticism is fairly placed. By his delay the applicant placed himself and the respondent in a difficult position, the consequences for which primarily fall for him. Even if he had established a ground for departure I would have found against the application pursuant to ss.117(4) and 117(5).
The Respondent Mother’s departure application
The next matter that the court must consider is the respondent’s departure application. The respondent also bases her application on s.117(2)(c)(i) alleging that the applicant’s income was greater than that used by the Child Support Agency to determine his liability. I have already made findings concerning the applicant’s financial circumstances for this period and do not repeat them. Throughout the relevant period the respondent was in receipt of an income tested pension which income by virtue of s.117(7) the court must disregard. Until May 2003 it appeared that the respondent had few assets, those that she owned comprising modest used furniture and a car. She lived in rented accommodation and I infer had no property or financial resources of value.
When considering the applicant’s departure application I was able to make sufficient findings concerning the reasonableness of the quantum of child support payable pursuant to the assessment for both children even though the evidence was imprecise. In matters such as this the court is entitled to take a broad-brush approach. However, the court can only go so far. The respondent carried the onus of proving that the assessment resulted in an unjust and inequitable determination of the level of financial support provided by the applicant for A J D and Dennis. Her evidence focuses on the current situation and does not enable me to be satisfied that the existing assessment results in an inequitable contribution measured by reference to the children’s expenses. The probability is that because she has delayed so long in challenging the assessment, drawing together the necessary evidence was complicated. In the circumstances the respondent has failed to establish a ground for departure.
If I am wrong in finding against establishing a ground for departure, I would not have made the necessary findings in favour of the respondent pursuant to ss.117(4) or 117(5). I have already criticised the applicant for his failure to bring his departure application in a timely way and the difficulties this caused him in the presentation of his case. My findings apply with equal force to the respondent. She seems to have taken the approach that as the applicant brought her before the court on his application, she might as well challenge the earlier assessments. In this case delay has contributed to her inability to persuade me that the four years after the assessments were first made the court should order a significant retrospective increase in child support.
The child support applications having been finalised any stay on collection of arrears is ended.
The applicant having failed to establish a ground for departure established no persuasive basis upon which this court would recommend or order (if there was a basis to make an order) a waiver of penalties and interest.
The child maintenance application
The respondent brings an application pursuant to s.66L for a child maintenance order relating to David. The law to be applied in relation to child maintenance is set out in Part 7 of Division 7 of the Family Law Act 1975. Section 66H sets out the approach to be taken in proceedings for child maintenance. The objects of the division are to ensure that children receive a proper level of financial support from their parents. Particular objects include ensuring that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both parents and that the parents share equitably in the support of their children. The Full Court of the Family Court have said that the principles in relation to child maintenance apply equally to a child who is over the age of 18 as to a child who is under 18.
The court may make, “such maintenance order, as it thinks proper”[2]. In considering s.66L the court must determine what is meant by “necessary for the completion of education”. The relevant case law shows that necessity hinges on two elements. Firstly, that the child is undergoing education and second that it is necessary and reasonable to require a parent to contribute. Enrolment at a tertiary educational institution such as a university squarely falls under the definition of education. Secondly, when is adult child maintenance for a child continuing their education necessary? Warnick J considers what is “necessary” in terms of completion of a child’s education in In the Marriage of Cosgrove (1995) 20 FamLR 751 at 756. Here Warnick J relies on Strauss J who finds that maintenance is necessary for a child over the age of 18 “if the child reasonably needs support to enable the child to complete his or her education.” Warnick J notes that necessity does not mean that maintenance must be “absolutely essential” but that it should involve the element of “reasonableness”. That is, there may be many ways in which a child could find the financial support to complete his or her education but when balancing the parent’s resources and the child’s potential resources, what is reasonable? A compelling approach to determining reasonableness can be found in Warnick J’s non-exhaustive list of factors to be considered by a court when exercising discretion in adult child maintenance cases. Those factors are:
·Whether the “nexus” of dependence between the child and parents had ceased and the application amounts to a resurrection” of that dependence.
·The period between the initial cessation of dependence (if any) and the application;
·Whether the child had completed the course of education intended by the parents to outfit him/her for employment sufficient to support him/herself;
·Other assistance, benefits or education which the child has received;
·The ability of the child to complete the course in question;
·The likelihood of the child completing the course in question;
·The financial capacity of the child to maintain himself/herself to the completion of the “education”;
·The financial circumstances of those persons responsible for support of the child (generally the parents).
[2] Section 66G
The respondent’s case is essentially that Dennis is undertaking full time university studies and that the provision of maintenance is necessary to enable him to complete his education. The applicant contends that the respondent should fail in this application because she does not establish the threshold requirement that Dennis is receiving education. He submitted that because the respondent failed to produce evidence from Dennis or the university, that Dennis was enrolled and actually attending classes that her case was deficient. The respondent’s evidence is that Dennis is studying full time at a named university where he is enrolled in his first year of a Bachelor degree. At the end of his first semester he has received three passes and a credit. Although it is still early days, it seems likely that Dennis will continue and complete this degree. I accept the mothers evidence that the fact that Dennis receives a youth allowance corroborates the respondent’s testimony that Dennis is studying full time. His entitlement to a youth allowance is established by virtue of his attendance at university. Relevantly, Dennis recently asked the applicant for $300 towards books. Although he refused to concede it, I am satisfied that the applicant knew from Dennis that the book expenditure related to his university studies. The evidence in its entirety satisfies me that Dennis is studying full time as the respondent alleges.
Although Dennis receives a youth allowance by virtue of s66(K)(iv) the court must disregard his allowance.
Similarly, the court must disregard the respondent’s pension entitlement.
Thus, Dennis’s only income is income he earns working one day a week at a warehouse. At the time of the hearing Dennis had been employed for approximately 6-7 months. His income tax assessment reveals that his taxable income for the year ended 30 June 2004 was $7,919. His taxable income comprises his youth allowance as well as his wages. It is regrettable that the respondent did not produce better evidence concerning Dennis’s income. The best evidence would have been his pay slips or bank records. However, the combined effect of her financial statement where she discloses Dennis’s income as $80 per week, Dennis’s income tax assessment and Centrelink statement[3] suggests that Dennis earns approximately $200 per week from the warehouse. This figure is calculated by deducting from his taxable income of $7,919 his Centrelink payments totalling $2,712. The balance remaining is divided by twenty six, reflecting the respondent’s evidence that Dennis worked for about 6 – 7 months prior to the hearing.
[3] Exhibit C
From his earnings Dennis pays his own personal expenses such as clothing, petrol and entertainment. The respondent meets the balance of his expenses. As Dennis uses the respondent’s car it is reasonable to apportion the cars expenses (excluding petrol) equally between the applicant and Dennis. They are the only two occupants of the respondent’s Department of Housing home. Thus it is reasonable that one half of her rental costs are attributable to Dennis’s expenses. Similarly, it is reasonable that the respondent’s average weekly expenses are apportioned equally. Excluding the items that Dennis pays for himself this means the respondent meets average weekly expenses for Dennis of $147 per week. The fixed expenditure comprises $94.5 per week, which results in the respondent meeting Dennis’s necessary expenses of $241.50 each week.
I am not satisfied that Dennis has the capacity to work more than one day a week and continue his university education as a full time student. The only way Dennis can support himself is if he reduces his studies, converting to a part time degree or gives it up altogether. Reducing his study to part time studies prolongs his education. Thus, prima facie, the payment of child maintenance is necessary in order to enable Dennis to complete his education. Whilst the section does not require that the child is entitled to study full time, where a child is undertaking studying for his or her first degree and has the opportunity to do so on a full time basis, the threshold entitlement is established.
Although he has substantial child support arrears, these proceedings continue a nexus of support between the child and father. It would be maifestly unjust that an appropriate over 18 maintenance application failed merely because a parent resolutely failed to comply with his or her obligation to provide financial support. Dennis’s recent request to his father for assistance with his books shows that the young man still looks to his father for support and the dependence nexus discussed by Warnick J is established.
The respondent earns $188 per week gross from her employment with and $5 per week interest. Her total income is $193 per week. Her half share of her household’s average weekly expenses and her personal expenses exceed her income. She has met the shortfall in her income by using her worker’s compensation settlement. She has spent over $50,000 on household and living expenses since May 2003. There is $40,000 left from her worker’s compensation monies, which monies will be rapidly exhausted unless the applicant contributes to Dennis’s expenses. It is unlikely that she will ever have the opportunity to earn sufficient income to create any form of nest egg in the future. It is reasonable that the respondent retains a portion of her worker’s compensation monies for her own expenses and contributes some, but not all of it towards Dennis’s expenses.
I have no doubt that the applicant’s financial circumstances are materially superior to the respondent’s and also to Dennis’s. While in many cases a proper outcome would be one that requires the parties to share equally Dennis’s reasonable expenses until he completes his education, the disparity in the parties’ financial circumstances means that there should be a different outcome. The amount sought by the respondent would have the applicant paying too great a share of Dennis’s expenses. A proper proportion is that the applicant pays $200 per week and the respondent meets the remaining share of Dennis’s costs.
The respondent’s application for over 18 maintenance is contained in her application filed on 11 May 2004. I am satisfied that the order for the payment of over 18 maintenance should commence from the date of filing. The legitimacy of the respondent’s need for maintenance was apparent from the outset. The applicant should have made provision for the probability that Dennis needed and was entitled to his financial support. Although he has repeatedly sought to delay this hearing he could not have expected the court to ignore that Dennis was studying full time and the potential consequences of delay. It would be manifestly unjust to allow a litigant to create delay and then profit from it. While the effect of this will be to establish a significant lump sum due by the applicant, for the reasons already given I am satisfied that he has the capacity to organise his affairs in order to comply with the order. Twenty eight days should be sufficient time to do so. Regular payments must be made weekly into an account nominated by the respondent. Her and Dennis’s financial circumstances are so parlous that weekly rather than monthly payments are needed.
The order will continue for so long as Dennis is studying full time and until he completes his bachelor degree. Completion is defined by receiving advice from the university that he has completed all study and courses needed for conferral.
For these reasons I make the orders at the beginning of this judgment.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate: S Mashman
Date: 19 October 2004
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