Porter & Porter (No 2)
[2022] FedCFamC1F 244
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Porter & Porter (No 2) [2022] FedCFamC1F 244
File number(s): SYC 4014 of 2012 Judgment of: SCHONELL J Date of judgment: 14 April 2022 Catchwords: FAMILY LAW – FINANCIAL – Interim orders – Where the husband seeks to set aside final orders relating to child support and spousal maintenance – Where the husband also seeks to stay or discharge collection of monies related to child support and spousal maintenance under a Third Party Debt Notice (“the Notice”) – Where the husband seeks these orders on the basis of his health, restrictions placed on his employment, and the reduction in his income – Where the husband failed to articulate a special circumstance to depart from a child support order under s 117 of the Child Support Assessment Act 1989 (Cth) – Where the husband did not discharge the onus in proving that his circumstances had changed pursuant s 83(2)(a) of the Family Law Act 1975 (Cth) – Where the application to set aside final orders for child support and spousal maintenance is dismissed – Where, consequently, the husband’s application to stay or discharge the Notice is also dismissed. Legislation: Child Support Assessment Act 1989 (Cth) s 117
Family Law Act 1975 (Cth) ss 83, 112AP
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 1.13
Cases cited: Gyselman & Gyselman (1992) FLC 92-279; [1991] FamCA 93
Lesley v Lesley [2015] FamCA 894
Porter & Porter & Ors (No. 2) [2020] FamCA 554
Division: Division 1 First Instance Number of paragraphs: 73 Date of hearing: 5 and 8 April 2022 Place: Sydney Solicitor for the Applicant: Litigant in person Solicitor for the Respondent: Litigant in person ORDERS
SYC 4014 of 2012 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR PORTER
Applicant
AND: MS PORTER
Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
14 APRIL 2022
THE COURT ORDERS THAT:
1.The husband within 7 days do all acts and things and sign all documents necessary to cause the DN Group Pty Ltd to pay to the wife the sum of $39,756.70 in satisfaction of the Third Party Debt Notice filed 22 December 2021.
2.The interim Orders 1 – 8 sought by the husband in his Initiating Application filed 28 January 2022 be dismissed.
3.The matter be referred to the docket registrar for case management.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Porter & Porter has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings commenced by the applicant husband (“the husband”) seeking orders setting aside final orders made by the Court in relation to child support and spousal maintenance, as well as an order discharging or staying collection of monies under a Third Party Debt Notice (“the Notice”), and an order for vaccination of a child. The wife seeks payment of the monies due under the Notice.
The proceedings are part of wider proceedings between the parties, which also include orders for variation of final parenting orders, further Third Party Debt Notices and a Contempt Application under s 112AP of the Family Law Act 1975 (Cth) (“the Act”). In circumstances where the husband served the day before the hearing, an affidavit containing various medical reports from the child’s treating paediatrician and where the respondent wife (“the wife”) contended that she had not had sufficient time to meet the evidence filed by the husband, the application in relation to vaccination of the child has been adjourned.
These reasons relate to the financial orders sought by the parties.
BACKGROUND FACTS
The husband is aged 48 years and the wife is aged 47 years.
The husband is a professional. The wife does not work and has not done so since 2004.
The parties were married in 2004 and separated on a final basis in May 2011.
There are three children of the marriage: B aged 15 who has a disability, C aged 14 years and D aged 12 years. B attends Private School 4, which is a fee-paying school for children with disabilities. C attends Private School 5 and D attends Private School 1.
Following the parties’ separation, they entered into consent property settlement orders. The parties also reached agreements in relation to spousal maintenance and child support.
In or about April 2017, the husband defaulted in his obligations under the spousal maintenance orders and binding child support agreement, and ultimately an application was brought by him to set aside the consent orders. That application was heard by Watts J and on the first day of the hearing, the husband informed the Court that he had been made bankrupt on his own Debtor’s Petition filed a couple of days prior to the commencement of the hearing.
The hearing proceeded over a number of days and ultimately culminated in judgment delivered by Watts J on 25 June 2020. Arising out of that judgment, orders were made by way of property settlement, the setting aside of the child support agreement as well as orders for spousal maintenance and child support departure. The existing spousal maintenance order was discharged and orders were made specifically providing for, relevant to the current applications, child support and spousal maintenance. The spousal maintenance order made on 25 June 2020 was subsequently amended under the slip rule on 27 August 2020.
THE CURRENT APPLICATIONS BEFORE THE COURT
Each of the parties appeared unrepresented. The husband for his part relied upon the following documents:
(1)Initiating Application filed 28 January 2022;
(2)Affidavit of the husband filed 4 April 2022;
(3)Financial Statement filed 4 April 2022;
(4)Affidavit of Dr DP filed 1 April 2022; and
(5)A Case Outline document.
The husband’s affidavit also contained numerous pages by way of annexures.
The wife relied upon the following documents:
(1)Response filed 4 February 2022;
(2)Affidavit of the wife filed 20 December 2021;
(3)Affidavit of the wife filed 4 February 2022;
(4)Affidavit of the wife filed 4 April 2022;
(5)Financial Statement filed 4 February 2022;
(6)Amended Financial statement filed 7 April 2022;
(7)Third Party Debt Notice filed 20 December 2021; and
(8)A Case Outline document.
In addition, the wife relied upon a tender bundle and annexures of more than 800 pages.
Much of the material contained in each of the parties’ affidavits and in the annexures was of limited assistance to the issues that the Court was required to determine.
These are interim proceedings and there has been no cross-examination. Consequently, the capacity of the Court to make findings is limited to those matters about which there is no conjecture or dispute.
The wife’s chronology and case outline referenced various events that are not referred to in the evidence and about which there were no submissions.
The orders that the husband seeks are contained in the interlocutory orders part of his Initiating Application. Those orders are as follows:
1That the Third Party Debt Notice issued by Deputy Registrar […] dated 23 December 2021, be stayed.
2That Third Party Debt Notice issued by Deputy Registrar […] dated 23 December 2021, be discharged.
3That Order 23 of the Orders made by Justice Watts on 25 June 2020, be discharged, effective from 1 January 2021;
4Further or in the alternative to Order 3, that Order, 23 of the Orders made by Justice Watts on 25 June 2020 be discharged effective from the date of these Orders.
5That the Father pay periodic Child Support as assessed, calculated and collected in accordance with the Child Support (Assessment) Act, by Services Australia, Department of Child Support.
6That the Father pay non-period (sic) Child Support as follows:
(a)100% of the Children’s private school fees;
(b)100% of the Children’s uniforms, compulsory school equipment, stationery and textbooks, which includes but is not limited to laptop computers and tablets;
(c)100% of school excursions, camps and school-related events;
(d)100% of all of the children’s medical and dental treatment, which includes private health treatment and insurances, as agreed to by the parties.
7That Order 1 (3) of the Orders made by Justice Watts on 27 August 2020 (as amended under the slip rule), be discharged, effective from 1 January 2021;
8Further or in the alternative to Order 6, that Order, 1 (3) of the Orders made by Justice Watts on 27 June 2020 be discharged effective from the date of these Orders.
(As per the original)
The wife opposes the orders sought by the husband and seeks 18 other orders. The wife, in relation to Orders 5 –14 in her Response, made no submissions.
To provide some background to the current dispute, it is necessary to make reference to the decision of Watts J in Porter & Porter & Ors (No. 2) [2020] FamCA 554, and incorporate into these reasons some of his Honour’s observations and findings. The relevant parts are as follows:
3.On 20 June 2014 the husband and wife entered a consent property settlement order (subsequently slightly amended by agreement in relation to arrangements for a new motor vehicle for the wife) which provided the wife a 75 per cent interest in a property which was to be purchased for $2,000,000. This arrangement was subsequently altered by agreement between the parties (without alteration to the property settlement order) so that a property was acquired by the parties for $2,310,000 but held 65 per cent by the wife and 35 per cent by the husband. The husband provided the funding, the bulk of which he raised by mortgage. It was a condition of the order that the husband repay that amount in full within a period of ten years. The husband took all of the business assets and superannuation. The husband and wife also reached agreement in relation to an order for spousal maintenance and a binding child support agreement which provided for periodic child support and the payment of private school fees.
4.In May 2014 the husband formed a new relationship with Ms O, the 6th respondent, with whom the husband worked. They bought a residence together in December 2014; became engaged in mid-2016 and now assert the future of their relationship is uncertain.
5.From about April 2017 the husband commenced to default in his obligations under the orders and the binding child support agreement. The wife and the Child Support Agency brought enforcement action and intercepted income payable to the husband from Organisation DF in order to satisfy arrears. The husband then sought to set aside the 2014 consent orders on the basis that they were made without jurisdiction, asserting that property did not exist at the date of the orders.
6.A final hearing was set to commence on 31 January 2018. From mid to late November 2017 the husband, Ms O and Mr BC, their chief executive officer, met with legal advisors, RR Lawyers and Mr TT (a barrister). A decision was taken that the husband would transfer all ownership and control of the business operations conducted by various companies and trusts to Ms O and for the husband to become bankrupt on his own petition. On the first day of the scheduled final hearing, the husband somewhat dramatically, announced he had been made bankrupt on his own petition that morning.
7.The final hearing was about whether all orders and agreements should be set aside, and if so what, new orders should be made.
…
73.Overall I was not impressed with the husband’s evidence. Not necessarily because the husband deliberately set out to give false evidence but simply because he was not sufficiently interested in engaging with the process to be able to give accurate evidence. One example was his evidence that he didn’t get legal advice on bankruptcy prior to Christmas 2017. When confronted with documents he conceded that was inaccurate. The day he saw Mr TT for advice was the same day as the wife had filed an application that she be appointed as Receiver for his various corporate entities.
74.For reasons set out later, I conclude the husband is not telling the truth about his arrangements with Mr CQ.
75.The husband’s lack of provision to the court of important financial details, particularly in relation to his superannuation interest, has made it difficult to make a precise property adjustment.
76.I am also left in some doubt as to the extent to which the husband has fully disclosed his financial circumstances.
…
337.At the time of the commencement of the final hearing, the husband was working as a professional. He primarily operated at the property owned by VV Property Trust at PP Street, Suburb G (PP Street). The husband had an employment contract with VV Pty Ltd. The copy which is Ms O5-1 to Ms O’s affidavit of 19 February 2019 is undated. His remuneration package is $250,000 exclusive of superannuation. It is based upon a 38 hour week. The husband has entered into a new and similar agreement with Mr BC
338.The husband’s income of $250,000 is a figure initially struck between Ms O and himself and then between Mr BC and himself. The husband’s employment contract requires him to work 38 hours a week although he said he had been working 60 hours a week. The husband asserted that that the average amount an professional earned was between $250,000 and $350,000. There was no evidence to support that assertion and I do not accept it without objective corroborative evidence.
…
349.The husband is currently an undischarged bankrupt. The husband is due to be released from his bankruptcy in February 2021. Subject to any ongoing responsibilities for the payment of monies for child support and/or spousal maintenance and possibly some amount of tax which the husband did not specify, the husband will leave his bankruptcy free of creditors and with an earning capacity as a professional that is significantly more than that which he is obtaining under his current employment contract. I note the trustees could object to the husband being discharged if it is asserted the husband has not complied with the income contribution assessment regime. I find that the husband in all probability will be in a position to regenerate capital over the medium term.
…
351.The children are aged 13, 12 and 10. Pursuant to consent orders made 6 December 2018, the children ordinarily lived with the wife. The husband now cares for B five nights a fortnight. The younger children spend three nights a fortnight with their father. Over a year the children spend equal time with the husband and wife during school holidays. Whilst I accept the husband plays a role in the care of the children and particularly B, the greater burden of that care has fallen and will continue to fall upon the wife and I find that, in particular, the ongoing responsibility for the care of B creates a significant impediment on the wife’s earning capacity.
…
398.I am satisfied that at the current time the husband does not have the capacity to meet all his obligations under the binding child support agreement and I conclude that during the period of the husband’s bankruptcy, exceptional circumstances exist such that hardship will be occasioned to the husband if the agreement is not set aside during the period where his earning capacity is constrained by his current employment contract and the potential call on his earnings by the trustees. Accordingly, the binding child support agreement should be set aside.
399.The court may make orders consequential upon setting aside a binding child support agreement as it considers just and equitable for the purposes of preserving or adjusting the rights of the child or a party to the agreement (s 137 of the Assessment Act).
400.During the period of the bankruptcy, the husband has indicated that he would be prepared to agree to a continuation of the current interim arrangement whereby the sum of $2,000 per week is being deducted from available payments to be apportioned as to $1,000 per week by way of child support (as well as $1,000 per week by way of spousal maintenance). This proposal in relation to periodic child support is just and equitable during the husband’s bankruptcy as long as he continues to meet the non-periodic payments to which he was otherwise committed.
401.Once the husband has been discharged from his bankruptcy however and given the findings that I have made about his capacity to pay, I further find it is just and equitable that payment of child support should be returned to the levels that were previously required under the binding child support agreement which has been set aside, including payment of private school fees.
SPOUSAL MAINTENANCE
402.As indicated above, the consent orders made in 2014 provided that the husband pay the wife spousal maintenance in the sum of $1,000 per week until the youngest child reached the age of 18 or completed a high school certificate; the wife earned $52,000 and/or the wife remarrying or entering a de facto relationship. The amount of $1,000 per week was to be adjusted in accordance with the CPI each 12 months with a provision that in the event the wife earned more than $30,000 per annum there would be a pro-rata adjustment for each dollar she earned over $30,000 per annum.
403.Also as indicated, the husband’s application is that he continue to pay an amount of $1,000 per week by way of spousal maintenance to the wife during his bankruptcy but thereafter he seeks an order that that amount be reduced to $500 per week until D (the youngest child) is 18 years of age.
404.Relevantly in this case, s 83 of the Act provides that the court may not vary the 2014 order unless it is satisfied that the circumstances of the person liable to make payments under the order have so changed as to justify it doing so.
405.In this case the husband relies upon his significantly decreased income and property as a result of his bankruptcy to submit that a reduction by half (if indexation is not taken into account) is justified.
…
418.In relation to the husband’s changed circumstances and capacity to pay, I accept that during his bankruptcy his position that he would continue to pay $1,000 per week to the wife by way of spousal maintenance but ignoring the provision for indexation in the 2014 orders, that amount is consistent with the 2014 orders and is a proper amount.
419.The question is whether or not the order for spousal maintenance after his bankruptcy should be limited to $500 per week as sought by the husband. Once released from his bankruptcy, given what I have found about the husband’s earning capacity, he would have the ability to pay what he formerly paid under the 2014 consent orders. Importantly the husband has not established that his circumstances have changed so as to create a basis for interference with the 2014 orders (given that the husband’s application for change only relates to the time after he is discharged from bankruptcy).
420.In those circumstances, I conclude that once the husband has been discharged from his bankruptcy, it would be proper to require the husband to pay the wife an ongoing amount of $1,000 per week by way of spousal maintenance indexed from the date of the new order on the same terms as set out in the 2014 consent orders.
421.Consequently I have concluded that even though the circumstances of the husband have changed as a result of his bankruptcy, the husband himself in effect does not suggest any change to the order during his bankruptcy but only after his bankruptcy. At that time his changed circumstances will no longer exist and he will again have a higher earning capacity available to him. I find that the amount ordered in 2014 is proper. The husband’s application therefore to discharge the 2014 spousal maintenance order will be dismissed.
422.Again as I have noted, the husband has filed an Application in a Case on 18 May 2020 which I have indicated I will dismiss on the basis that the husband did not seek to rely upon any evidence in support of that application. That is not to say however that the husband, if he wishes to continue the litigation, and having regard to the fact that arrears of spousal maintenance have been discharged to the date of these orders, may make a new application to vary the order that I have made based on a change in his circumstances that are in existence from the date of the order. Again, any such application would need to be heard by another judge.
It is not in dispute that in early 2021, the husband was discharged from his bankruptcy. The consequence of that position was that the husband’s child support obligations increased to $2,100 per week, and his spousal maintenance obligations increased to $1,000 per week.
In the husband’s affidavit, he asserts the following:
28.As and from 18 January 2021, I have not been in a position to meet the child support and spousal maintenance payments as provided in the Orders.
It does not appear to be in issue that since 2019, there have been various conditions imposed upon the husband’s capacity to practice his profession. In that respect, the wife’s evidence in her affidavit of 4 April 2022 is as follows:
42.[Mr Porter] had his [qualification] suspended by the [professional body] in [early to mid] 2019, to the best of my knowledge and belief, until [late] 2019 following […] proceedings at which time the [professional body] imposed various conditions on his [working].
43.[Mr Porter] was again suspended […] by the [professional body] [in early to mid] 2020, until [late] 2019 following further […] proceedings at which time the conditions previously imposed on his [working] were revived.
In his affidavit, the husband contends the following in relation to the conditions imposed upon his practice:
39.[In early] 2019, I was placed under investigation from [a regulation authority] resulting from a complaint made that I was using illicit substances. Following that complaint, I was subject to drug testing and it was discovered that I was taking an antidepressant, which was prescribed to me by my then-girlfriend, [Ms O]. From that date, I have not been able to practice for more than 30 hours.
40.The abovementioned conditions are to be reviewed in [late] 2022, and so far as I am aware such conditions will continue because of my health, as set out below.
Notwithstanding his ability to only work 30 hours per week, the husband contends that his income in the year ended 30 June 2021, after allowance for expenses, was $479,885. The husband attached to his affidavit an Income Tax Return in draft form.
The wife contends that she has had significant difficulties seeking to have the husband comply with his obligations under the existing orders. The wife in her affidavit filed 4 April 2022, asserts the following:
8.[Mr Porter] has never complied with his obligation to pay me spouse maintenance pursuant to Final Orders.
…
10.[Mr Porter] ceased paying [D’s] private school fees for the second time on 5 November 2020.
11.[Mr Porter] ceased paying [C’s] private […] school fees on 27 January 2022.
…
16.I have had to file a total of six (6) Third Party Debt Notices (TPDN) since Final Orders were made on 25 June 2020 and a seventh has been submitted to the Court for approval. The TPDN’s were approved by the Court on the following dates: 14 September 2020; 13 November 2020; 26 February 2021; 22 April 2021; 30 July 2021; and 22 December 20221. [Mr Porter] filed an application to stay the TPDN approved by the Court on 22 December 2021, which is being heard on 5 April 2022.
The wife contends that pursuant to the Notice, the husband is in arrears as to spousal maintenance and child support totalling $93,415. The wife provided a calculation for the determination of that amount in her affidavit filed 17 December 2021, where she said:
37.The amount due to me at the time of swearing this affidavit is $93,415.00, calculated as follows:
Amounts I am owed:
Spousal Maintenance $21,000.00
Child Support $44,100.00
[Private School 1] 2022 Fees $29,160.00
Less what [Mr Porter] has paid through the CSA $-845.00
TOTAL: $93,415.00
There was a lack of clarity as to whether the husband put in issue the amounts that the wife says is owing under the Notice as at 17 December 2021. The husband had the wife’s affidavit filed 20 December 2021 for over three months, where she clearly sets out the arrears for the period 29 July 2021 to 16 December 2021. It was open to the husband to, in a transparent way, address the issue of any payments in the relevant period. The husband in his affidavit attached documents at Annexure E that he said demonstrated non-periodic Child Support Agency (“CSA”) payments to the wife for the period 20 September 2020 to 28 December 2021. Despite his sworn evidence, the statements say they cover a period up to 2 September 2021 (not the period referred to in his affidavit) but even then, he only attached statements up to 9 August 2021. Given the ambit of the dispute is the period from 29 July 2021, it is unclear why a wider period was included. An examination of the statements for the relevant period of arrears show no non periodic CSA payments.
In light of issues raised in the annexures to the husband’s affidavit that were not before the Court on the hearing, the matter was relisted on 8 April 2020 to clarify what were said to be various payments made by the husband in the relevant period. Part of Annexure E to his affidavit is a schedule of payments for the period 2 February 2021 to 28 December 2021 made by garnishee. Enquiries of the wife demonstrated that she agreed she had received those amounts. The evidence was less than clear whether the payments were in satisfaction of the period covered by the Notice or by some earlier Third Party Debt Notice. As these are interim proceedings, in the event that the amount outstanding is greater, that can be addressed at a final hearing.
The total of payments for the period covered by the Notice (excluding amounts that would be covered by his obligation under Order 23 for non-periodic payments) is $53,658.30
Doing the best I can, attempting to identify the evidence as to what is actually outstanding, I shall deduct the above amounts received in the period covered by the Notice from the wife’s assertions as to the monies outstanding on the Notice. The total, therefore owing, I determine is $39,756.70.
The husband’s current position is that he seeks to discharge the spousal maintenance order and stay or discharge the Notice, but apply the funds that are the subject of the Notice to the payment of school fees for the 2022 year.
The husband seeks a discharge of the child support order but otherwise seeks orders to maintain the non-periodical payments and reduce the periodic payment from its current rate of $2,100 per week to what would be the administrative assessment, which the husband contended during the course of his submissions, was approximately $1,022 per week.
As stated earlier, the wife opposes the husband’s applications.
During the course of the hearing, I was able to ascertain that there were currently outstanding arrears to Private School 1 and Private School 5 for the 2022 year, and the wife submitted to me that the child C’s continued attendance at Private School 5 was at risk given the non-payment of school fees.
In circumstances where the husband agreed that the monies the subject of the Notice should be applied towards the payment of school fees, I enquired of each of the parties if they consented to an order that would provide that $50,000 of the monies the subject of the Notice be released immediately to the wife to be applied towards the current outstanding school fees on the basis that it was without prejudice to the wife’s claim for the total of her Notice. That course of action was agreed to by the parties and an order was made to give effect to that position.
The husband contends in his affidavit that his income is as follows:
46.From my abovementioned income, I expect to have a tax liability in the amount of $196,117 therefore leaving me with about $283,756 after tax (or approximately $5,456 per week). After payment to [Ms Porter] of spousal maintenance ($1,000), child support ($2,100), I am left with $2,356 per week, and that does not include the children’s private school fees.
The husband has filed a Financial Statement. That Financial Statement identifies in relation to property owned by the husband, that he has funds at bank and in investments totalling $264,363. The husband’s Financial Statement identifies, consistent with his affidavit, that he has an outstanding tax liability of something in the order of $195,000. The husband also asserts various other liabilities totalling $1,250,000. There is no evidence as to how those liabilities arose and the wife puts in issue how it is that the husband could have a liability in circumstances where he had been discharged from his bankruptcy. For the purposes of this hearing, I am unable to resolve that issue, but proceed upon the basis that the husband has liquid funds of in excess of $260,000.
DISCHARGE OF CHILD SUPPORT ORDERS
As stated earlier, the husband seeks orders to, in essence, reduce the periodic payment from $2,100 per week to what would be the administratively assessment amount, which he informed the Court was something in the order of $1,022.
He proposes to continue to meet the non-periodic expenses of the children such as school fees and other expenses of the children as covered by his proposed Order 6.
What the husband is seeking to do is to depart from the current assessment. He must therefore bring his application within s 117 of the Child Support Assessment Act1989 (Cth) (“CSA Act”).
The husband’s application suffers from a number of difficulties. They are:
(1)A failure to comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules) as to service upon the child support registrar; and
(2)A failure to articulate grounds of departure such that the Court could conclude that a special circumstance exists within the meaning of s 117 of the CSA Act.
Rule 1.13 of the Rules requires the child support registrar to be served with the Application. Enquiries made of the husband at the commencement of the hearing indicate that this has not been done.
In Lesley v Lesley [2015] FamCA 894, McClelland J (as he then was) stated:
57.The obligation to serve the Registrar is in the context of the right of the Registrar to intervene in proceedings before the Court pursuant to section 145 of the CSA Act.
…
59.Failure to serve the Registrar in accordance with the Rules is fatal to the Court dealing with the application at this time. Requiring service to be effected is not simply insisting on ritualistic compliance with the Rules for the sake of mere compliance. Non-service on a person or entity that has a statutory right of intervention is a fundamental denial of natural justice that, in the absence of urgency, prevents the Court from dealing with that aspect of the application. In Child Support Registrar & Nixon, the Full Court said:
… given the emphasis placed by the High Court in both Taylor and Allesch v Maunz on the right of a party to be heard when an order is to be made affecting that party, we accept that where a party has not been given notice of the proceedings in which the order was made, and thus not been heard on the making of the order, that that is a matter which should be given very significant weight in the exercise of the discretion to set aside the order. As his Honour did not refer to the fact that the order had been made without notice to the Registrar, it has to be assumed that he gave this fact no weight, and thus his discretion must be regarded as having miscarried on account of his failure to have regard to this important matter.
We add that we do not accept, as we understood to be submitted by the respondents, that a distinction should be drawn between a party to the proceedings as opposed to a third party. (References omitted)
(Footnote omitted)
In light of the above, that is the end of the husband’s application.
Assuming, however, that I am wrong in this respect, the husband would need to satisfy me that special circumstances exist such that it is appropriate for the Court to exercise power pursuant to s 117 of the CSA Act. In that context, in Gyselman & Gyselman (1992) FLC 92-279 at 79,605, the Full Court said the following as to the meaning of special circumstances:
… Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. …
The husband has not clearly articulated the basis upon which he contends there is a special circumstance.
As best I can determine from the husband’s Case Outline, he articulates three grounds:
(1)His health issues;
(2)The restrictions on his employment by the regulation authority and
(3)The reduction in his income.
Dr DP opines in her report that the husband has many psychological conditions. She does not contend that his health issues are such as to prevent him working. The highest her report goes is her statement “[t]he primary answer to [Mr Porter] working more than 30 hours per week can only be really be answered by the [professional body]. My opinion however is that it is unlikely in the future [Mr Porter] will improve to the point he can work more than 30 hours per week” (affidavit of Dr DP filed 1 April 2022, Annexure A p.3).
This information as to the husband’s health is material that has arisen since the making of the orders. It is not per se, however, a special circumstances identified in s 117. To the extent that it affects his earning capacity, it may arise as one under s 117(2)(c)(ib). However, I note that the husband is in fact earning more now than he was at the time of the hearing before Watts J. At that time, he was earning $250,000 per annum (at [337] – [338]), whereas now he is earning in excess of $479,000 or, $229,000 more than at the time of the hearing. I am not satisfied that where a party is earning more than they were at the time the order was made constitutes a special circumstance to depart from the assessment. Simply put the reduction in hours has not affected the husband’s earning capacity.
Nor are the restrictions on the husband’s employment by the regulatory authority a special circumstance. It is clear from the evidence in both the husband and wife’s affidavits that the restrictions on the husband’s employment as to 30 hours a week were first imposed in early 2019 (see husband’s affidavit filed 4 April 2022, paragraph 39), being a time before the orders.
As at the date that Watts J made the orders, the husband was a bankrupt. His Honour anticipated that the husband’s income would, by necessity, increase, such that he made an order that provided for the husband’s liability to increase when he was discharged from his bankruptcy.
As anticipated by his Honour, the husband’s income did increase such that as at 30 June 2021, his net income before tax is $479,885 per annum. This is much higher than his income when his Honour made the orders, which was in the amount of $250,000 per annum.
In his affidavit, the husband contends that he has a net income after payment of income tax of $5,456 per week (at paragraph 46). He asserts that $1,705 of that amount is referable to the children’s school fees (at paragraph 47). The child support payment of $2,100 per week makes a total of $3,805 per week, leaving the husband with a surplus before spousal maintenance of $1,651 per week.
The husband’s financial position as presented in his Financial Statement is opaque and the absence of cross-examination presents problems in testing the assertions. The husband asserts gross income of $9,228 per week, but also asserts expenditure of $14,131. How the shortfall is met is unexplained. The husband has an alleged liability of $1,250,000, but does not explain what it relates to or when it arose. Notwithstanding alleged shortfalls, the husband has accrued savings.
It is less than clear whether there is a double up in his expenses referred to in his Financial Statement, where he asserts items such as insurance, superannuation and car lease payments as expenses, but also claims amounts as against his income as listed in Annexure L to his affidavit.
I note the husband’s gross income as at 30 June 2021, according to his draft income tax return, is some $1,319,837 as against which he has various expenses, including depreciation of $4,679 which is what might best be described as a deductible item rather than an actual expense.
The situation in relation to the children remains unchanged in that they are attending a private school, the needs of the children remain unchanged particularly in relation to B, the wife’s circumstances have not changed in that she continues to remain unemployed, whereas the husband’s circumstances have changed considerably in the sense that his income has increased.
I am not satisfied that the husband has established that there are any special circumstances, and I dismiss his application for departure from the administrative assessment.
DISCHARGE OF SPOUSAL MAINTENANCE ORDER
The husband seeks to discharge the spousal maintenance order made by Watts J from either 1 January 2021 or from the date of the making of these orders.
The husband bears the onus of establishing that there has been a change in circumstances since the making of the order.
Section 83(2)(a) of the Act requires that the Court shall not make an order increasing or decreasing an amount ordered to be paid, unless it is satisfied that the circumstances of the person for whose benefit the order was made have changed or the circumstances of the person liable to make the payments under the orders have changed.
The husband did not contend that the wife’s circumstances have changed. They have not. On one view, they are materially worse because of his non-compliance with orders.
The husband contended that his circumstances had changed. It is difficult to discern entirely the basis upon which the husband asserts a change in circumstance, but doing the best I can, I ascertain that he contends that there has been a change of circumstances as a consequence of a reduction in his income, and his capacity to work by reason of his health and the restrictions imposed by the regulatory authority.
The husband was discharged from his bankruptcy in early 2021. The husband’s financial position certainly improved from that point on. His income increased from $250,000 per annum to over $479,000 per annum.
To the extent to which the husband referred to his pre-bankruptcy income, the evidence is unhelpful. It is difficult to identify what the husband’s actual income was prior to this bankruptcy. The husband adduces no evidence as to his income prior to the bankruptcy other than by reference to his income in the year ended 30 June 2012. In that respect, the husband says:
13Leading up to the making of the abovementioned Orders, I worked about 60-70 hours per week as a [medical professional] and my taxable income peaked about $1,332,667 in 2012. I have not earned that amount since the return was filed.
By necessary implication from the words in that paragraph, the husband’s income must then have been less than that amount prior to being made bankrupt. The husband bears the onus of proof to establish what his income was prior to bankruptcy to see if there was a change in circumstances. Reliance on his income in 2012 does not discharge the onus on him to establish what his income was prior to his bankruptcy in 2019.
As to an impact on his earning capacity by health issues and the regulatory authority, I note that his evidence before Watts J was that he was working 60 hours per week and earning $250,000 per annum. He is now working 30 hours per week and earning over $479,000 per annum. There is no change in circumstances.
In circumstances where he carried the onus and has not discharged it, I dismiss his application for variation of the spousal maintenance order.
THE THIRD PARTY DEBT NOTICE
The Notice arises in circumstances where the husband has been the subject of orders made by Watts J on 25 June 2020 and 27 August 2020 to pay child support and spousal maintenance. The husband has elected to bring no application to the Court to discharge or vary the orders until his application filed on 28 January 2022.
The husband bears the onus of establishing that it is proper that the Notice be stayed or discharged.
In circumstances where the husband has failed in his applications to vary the spousal maintenance and child support orders for the period covered by the Notice, I fail to see a basis for why the wife should be denied the benefit of collecting the arrears under orders to which she was entitled less the amount paid as referred to earlier.
There are more than sufficient funds in the husband’s bank accounts and investments to meet both his income tax liability and his outstanding liability under the Notice. I will dismiss the husband’s application in relation to the Notice, but will amend the amount recoverable under it to $39,756.70 for the reasons stated above and subject to my earlier comments.
In doing so, I recognise that the orders that were made following the hearing, releasing $50,000 to the wife from the monies held by DN Group Pty Ltd, will have reduced the payments to be made by the husband to meet the school fees for at least some part of 2022. This amount can be regarded as a payment towards the husband’s liability for school fees in the 2022 year.
That does not mean, however, that the husband does not remain indebted to the wife for $39,756.70.
I dismiss the husband’s application for a stay or discharge of the third party debt notice.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 14 April 2022
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