Prior & Prior (No 4)

Case [2023] FedCFamC1F 746

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Prior & Prior (No 4) [2023] FedCFamC1F 746

File number(s): MLC 8811 of 2015
Judgment of: BENNETT J
Date of judgment: 29 August 2023
Catchwords: FAMILY LAW - CHILD SUPPORT- where a departure determination order was by consent for the payment of periodic and non-periodic child support- where liable parent makes application for a discharge from departure determination of child support.
FAMILY LAW - CHILD SUPPORT - departure application four step approach being change of circumstances; special circumstances, just and equitable; otherwise proper – where liable parent lost their job before departure determination order was made but then ceased to receive income – where no evidence of income earning capacity to support child support liability - where liable parent’s loss of income qualifies as a change in circumstances.
FAMILY LAW - CHILD SUPPORT where liable parent’s application to depart from their liability for periodic and non-periodic child support is granted with retrospective effect to 1 December 2020 save that any overpayment created by an administrative assessment of child support be forgiven by increasing the amount of child support payable in that period by the amount of the overpayment created.
FAMILY LAW - PRACTICE & PROCEDURE – where liberty is reserved to the parties to apply in relation to implementation of this order on written notice to the other.
Legislation:

Child Support (Assessment) Act 1989 (Cth) ss 116, 117, 118 & 129

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 1.13

Cases cited:

Hampson v Lightfoot [1996] FamCA 8; (1997) FLC 92-775

In the Marriage of Savery [1990] FamCA 30; (1990) 99 FLR 346

In the Marriage of Sheahan [1993] FamCA 21; (1993) 113 FLR 429

Sathra v Sathra [2013] FamCAFC 142

Division: Division 1 First Instance
Number of paragraphs: 133
Date of hearing: 26, 27 and 28 October 2021
Place: Melbourne (Via MS Teams)
Counsel for the Applicant: Litigant in person
Counsel for the Respondent: Litigant in person
Counsel for the Independent Children's Lawyer: Mr Thistleton
Solicitor for the Independent Children's Lawyer: Victoria Legal Aid
Table of Corrections
19 December 2023 On cover sheet, “26 & 27 October 2021” replaced with “26, 27 and 28 October 2021” as dates of hearing

ORDERS

MLC 8811 of 2015

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR PRIOR

Applicant
AND:

MS PRIOR

Respondent

INDEPENDENT CHILDREN'S LAWYER

ORDER MADE BY:

BENNETT J

DATE OF ORDER:

29 AUGUST 2023

THE COURT ORDERS THAT:

1.The departure determination order made on 31 October 2018 in respect of the children Y born 2003 and X born 2008 be, and is hereby, discharged as and from 1 December 2019 and thereafter there be an administrative assessment of child support.

2.The order for non-periodic child support made on 31 October 2018 be discharged as and from 1 December 2019 save that the father pay, be liable for and hold the mother harmless for payment of tuition expenses still owing to…

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AGLC
Prior & Prior (No 4) [2023] FedCFamC1F 746
Case
[2023] FedCFamC1F 746
Decision Date

CaseChat Overview and Summary

In the matter of Prior & Prior (No 4), the court was tasked with determining whether the father's application for a departure from his child support liability should be granted. The dispute arose from the father's loss of employment and his subsequent inability to meet his child support obligations. The primary legal issues revolved around whether the father's circumstances had changed, whether there were special circumstances justifying a departure, and whether it was just and equitable to discharge his child support liability.

The court examined the father's loss of employment and his subsequent efforts to secure new income. It found that the father had voluntarily resigned from his high-paying job and had not made genuine efforts to obtain alternative employment. Despite his significant income earning capacity and financial assets, the father had not acted responsibly to meet his child support obligations. The court concluded that the father's loss of income constituted a change in circumstances, and that it was just and equitable to discharge his child support liability from 1 December 2019. The court also directed that any overpayment created by an administrative assessment of child support should be forgiven by increasing the amount of child support payable by the amount of the overpayment. The father was also required to pay any outstanding tuition fees for the child's schooling. The court reserved liberty for the parties to apply for clarification on the implementation of the order.

The final orders discharged the father's child support liability from 1 December 2019 and mandated an administrative assessment of child support moving forward. The father was also required to pay any outstanding tuition fees. The court directed that any overpayments should be forgiven by increasing the child support amount accordingly. The parties were required to release funds held in trust to the father, and liberty was reserved for the parties to apply for clarification on the order's implementation.

Orders

Orders of the court

THE COURT ORDERS THAT:

1. The departure determination order made on 31 October 2018 in respect of the children Y born 2003 and X born 2008 be, and is hereby, discharged as and from 1 December 2019 and thereafter there be an administrative assessment of child support.

2. The order for non-periodic child support made on 31 October 2018 be discharged as and from 1 December 2019 save that the father pay, be liable for and hold the mother harmless for payment of tuition expenses still owing to G School (if any) in respect of the attendance of the child Y at the school.

3. Pursuant to s117 of the Child Support (Assessment) Act 1989and subject to paragraph 4 of this Order, for the purpose of the administrative assessment of child support:

(a) for the child support period 1 December 2019 to 30 June 2020 the father’s adjusted taxable income be $95,328;

(b) for the child support period 1 July 2020 to 30 June 2021 the father’s adjusted taxable income be $26,983;

(c) for the child support period 1 July 2021 to 30 June 2022 the father’s adjusted taxable income be $27,183.

4. The annual rate of child support for any year in which an overpayment occurs be increased by the amount of the overpayment created.

5. Without prejudice to the operation of the Child Support (Registration and Collection) Act 1988, the mother and the father do all acts and things necessary to cause the monies held by DD Lawyers pursuant to paragraph 26.3.2 of the Order made on 31 October 2018, in the sum of $16,535.43 plus interest, to be released to the father.

6. I reserve to the parties liberty to apply in relation to implementation of this Order and to activate that liberty by contacting my associate …@... in writing and detailing the difficulty with implementation of this Order.

7. The father’s child support application filed on 20 December 2020 be otherwise dismissed.

Background

Background to the litigation

Section 129(2) of the Assessment Act provides that a court must hear and determine any pending application for a departure order for periodic child support prior to determining any departure order for non-periodic child support in relation to the children, the payee and the payer. SOME BACKGROUND The father was born in the United Kingdom in 1962 and is 61 years old. He now resides in City H, State FF in the United States having dual citizenship with Australia and America. The father is currently not in paid employment. The father was employed until late 2018 as a senior manager of GG Pty Ltd, earning approximately $440,000 per annum. The mother was born in Melbourne in 1970 and is 53 years of age. She lives in Melbourne. The mother is employed as an educator. X is currently in the United States. He travelled in late 2022 pursuant to my Order made 17 October 2022 for which my reasons for decision were published as [2022] FedCFamC1F 783. X was due to return to Australia in mid-2023 but refuses to return. X has not had contact with the mother or his sister since July 2022. Y lives with the mother in Australia and has no had contact with the father since separation. In the first round of parenting proceedings the family was assessed by Dr HH who published two reports. They received therapy from Ms JJ. They were assessed by Family Consultant Ms KK who prepared a family report. This was a case of high parental conflict in which Y aligned herself with the mother and, although living in the mother’s primary care, X sought to maintain a relationship with the father. In the second round of parenting proceedings, which are still underway, X was seen by Family Consultant Ms Q in March 2021 and May 2023. The Family Consultant prepared a family report on 18 March 2021 and a specific issues report on 18 May 2023. The Family Consultant has been cross examined. The parties commenced cohabitation in 1995 or 1996 (the parties could not agree). They married in 1997 in the United Kingdom. Y was born in the United Kingdom in 2003. In 2004 the father and mother and Y relocated from the United Kingdom to Australia. In 2005 the family relocated from Australia to Country LL. X was born in 2008 in Country LL. In 2008/9 the family relocated back to Australia. The parties separated in September 2015 when the father left the family home. They were divorced with effect from 2018. Both parties have re-partnered although their respective partners do not live full time with them. The father issued proceedings in the Federal Circuit Court of Australia (now Division 2 of this Court) in September 2015 with respect to financial matters. In November 2015 the mother filed a response to the father’s initiating application seeking orders for, amongst other matters, child support. The parties attended a number of court events before the matter was transferred to this Court in August 2017. I set the matter down for final hearing on 5 November 2018. In anticipation of the final hearing on 5 November 2018:(a)On 15 August 2018 the father filed a financial statement which disclosed income of $8,480 per week as senior manager of GG Pty Ltd. His expenses were $9,094 including $577 per week child support. His liabilities were $1,013,357. He had property of $2,000,513 and superannuation of $671,434. (b)On 1 August 2018 the mother filed a financial statement which disclosed income of $1,386 per week as an educator at PP Organisation. Her expenses were $1,314 per week. Her liabilities were $165,000. She had property of $900,196 and superannuation of $31,716. (c)On 5 October 2018 the father filed a trial affidavit in which he described his home as being in City H in the United States. At paragraph [8] “My current income is approximately $433,000 AUD gross per annum (subject to the exchange rate applicable between the USA and Australia from time to time). My net income is approximately $240,600 AUD per annum” The father proposed that X reside with him, be permitted to relocate X’s residence to the United States of America and Y would continue to reside with the mother in Melbourne. At paragraph [94(a)] of the father’s affidavit he deposed that, in the event that he was not permitted to relocate X to the United States of America, “I will not be able to continue my current role with [GG Pty Ltd]. [GG Pty Ltd] requires me to be based in the USA. I will therefore have no choice but to resign from my position and I will be required to obtain alternate employment. I do not anticipate securing a similar income in alternative employment. This could cause significant disruption in relation to, amongst other things, the payment of private school fees.”(d)On 19 October 2018 the mother made a trial affidavit in which at paragraph [4.2] she deposed, inter alia, “today, 19 October 2018, at 9:06 AM, my solicitors received a letter from [Mr Prior’s] solicitors stating, amongst other things: “Our client instructs that the chairman of [GG Pty Ltd] very recently conveyed to our client the board was seeking our client’s removal [from his position]. As a result our clients employment will terminate [in late] 2018.”(e)On 31 October 2018 the parties submitted a detailed minute of consent order containing the relevant departure determination order in respect to child support. The Order also provided that the parents would have equal shared parental responsibility for Y and X, that the children would live with the wife, Y would spend time and communicate with the father in accordance with her wishes and that the mother and father would do all acts and things necessary and sign all documents as may be required to complete X’s enrolment at EE School commencing in term one at year seven in 2021. There was detailed provision for the time and communication between the father and X including X spending time in the United States.

Evidence

Evidence Before The Court

In the mother’s affidavit filed on 30 April 2023, she deposes that the balance is “the sum of at least $16,535.43 plus interest held by [DD Lawyers]”. THE EVIDENCE Concurrently with his Initiating Application on 21 December 2020, the father filed a further updated financial statement with the court disclosing a weekly income of nil being unemployed. His expenses were $3,172 including $576 per week child support. His liabilities were $922,000. He had property of $1,146,000 and superannuation of $368,000. Mother’s case outline of 16 December 2020: Child Support 39. There are Final Orders in place. The rule in Rice v Asplund operates to prevent a review of Final Orders. There has been no substantial change. The Husband resigned three weeks prior to the scheduled trial of the matter [paragraph 23 of Husband’s affidavit of 16 November 2020 and Annexure A to My Reply Affidavit]. He executed Final Orders while unemployed. He says he remains unemployed. There has been no change. 40. If the Court does not accept that position, it appears to me that the relevant legislation is in both the Family Law Act and Child Support (Assessment Act) 1989. 41. There appear to be various factors under section 63 and 129 (relating to periodic and nonperiodic child support) which the Husband must be able to satisfy the Court of in order for the Court to vary the orders. A significant change to the position that existed when the Final Orders were executed is required. The Husband was unemployed at the time of executing those orders by virtue of his voluntary resignation three weeks earlier. He says he remains unemployed now. Nothing has changed. 42. Otherwise, for the orders to be modified there must be “just cause”, it needs to be “just and equitable” to do so and “proper”. I say none of these objectives are fulfilled by the Husband’s application, for reasons as follows: 43.1 It is the Husband’s income earning capacity which is relevant, not the income he chooses, or in this instance, chooses not, to receive. The Husband’s income earning capacity is substantial. His tax statements indicate in 2016 he received USD$382,731. In 2017 he received $USD435,775. In 2018 he received USD$323,263. 43.2 The Husband resigned from his employer, and negotiated a substantial payout, in [late] 2018, three weeks prior to the scheduled trial of the substantive proceeding and three weeks prior to Final Orders (Deed of Termination and Settlement- Annexure A to My Reply Affidavit). It is contended he did so strategically. He says he has not worked since. 43.3 The Husband deposes in his affidavit of 16 November 2020 that “after my non-competition agreement expired I then spent a few months working with a [financial] company and [an organisation] in [City H] to try and acquire the company I just had just left”. He goes on “In [late] 2019 it became clear that during the year the company had encountered financial difficulties and was no longer of interest to my backers”. No evidence is provided. The Husband effectively deposes to doing nothing to obtain secure, paying employment to ensure he could fulfil his child support obligations, for 13 months post resignation. He then apparently spent his time on a speculative “equity deal” that apparently didn’t eventuate. 43.4 The Husband deposes at paragraph 29 of his affidavit of 16 November 2020 “In February, I took on an interim part-time [senior management] role, supporting a group of investors from Africa and America. The appointment lasted until [mid-2020] as sadly the investors did not have access to the funds they led us to believe they had”. Again, no admissible evidence is provided. Nevertheless, the Husband has again spent 6 months apparently pursuing speculative equity deals. He therefore, between resigning in [late] 2018, and [mid‑2020], spent 19 months either doing nothing to obtain employment, or spending his time on speculative, unsupported endeavours with no steady income to enable him to meet his obligations. 43.5 There is a complete absence of evidence before the Court as to the genuine attempts the Husband has made, if any, to obtain regular, steady, paid employment, at any level, and of any kind, since the Final Orders. The Court is provided with anecdotes, sweeping statements, the apparent advice of people “in the know”, commentary and opinion. There is no evidence to support the Husband’s application.43.6 What is known, and evidenced, is: 43.6.1 The Husband received over $1.8million gross (at US tax rates) in salary between [late] 2015 and [late] 2018 (based on the Husband’s Trial Affidavit, Tax Returns and Deed of Separation and Termination). 43.6.2 He received $655,000 pursuant to the property settlement, with a further $50,000 being held on his behalf by his lawyers (pursuant to orders of this Court made 9 October 2019, 15 October 2019 and 9 October 2020 43.6.3 He has at least (and I contend about $100,000 more than) $368,000 in pensions he can access given he is over 55 years of age (his Financial Statement of 16 November 2020) 43.6.4 His Financial Statements indicate that since August 2018 he has received over $825,000 net, while apparently only reducing his total liabilities by less than $90,000 (comparison of his August 2018 Financial Statement against 16 November 2020 Financial Statement, Deed of Termination, paragraph 1(a) of My Reply Affidavit). 43.6.5 He has purchased a lavish house in [City H] for three times the value of the average property in that area, and purchased [Motor Vehicle 1] (paragraph 10(d) of My Reply Affidavit and Annexure E, the Husband’s Financial Statement) 43.6.6 He has an income earning capacity of at least USD$400,000 based on his tax returns. 43.6.7 He has, pursuant to his own affidavit material, sought speculative, unpaid positions since resigning on the eve of the trial of this matter; has failed to obtain secure, paid employment, at any level; and failed, potentially intentionally, to exercise his significant income earning capacity at all. The Husband now contends he should not have to pay for [X’s] education; is in arrears on periodic child support; is in arrears on [Y’s] school fees; and says his periodic payments should be reduced to $0. It is contended this is not “just and equitable”. 43.7 The Husband then points to me, having been required to maintain the proceeds of the property settlement so I could buy a home for the children and I to live in (I am still waiting for $250,000 to be released to me so I can complete the purchase after this Court previously ran out of time to hear my application), and says effectively, she still has money from the property settlement that I have otherwise wasted; she has worked and earnt money while I have not sought proper employment; so therefore she should pay for [X’s] education and I should pay nothing. This is in circumstances where I have the care for two children; have a moderate income and earning capacity; household expenses exceed my income; the Husband fails to make child support payments; I have not been able to purchase a home; and I will need to pay off a mortgage for the home we end up living in. Again, this doesn’t pass the “just and equitable” assessment. 44 The Husband does not come before this Court with clean hands. There is a history of the Husband foregoing over $100,000 in salary payments until after court hearings; delaying bonuses until after court hearings; receiving side payments from his employer while claiming not to be taking a salary; claiming money problems before court proceedings and receiving $320,000 days later; concealing shareholdings; failing to provide disclosure or providing misleading disclosure (paragraph 4 of My Reply Affidavit). 45 Even currently there are very significant issues with the Husband’s financial position as outlined in his Financial Statement (paragraphs 1-3 of My Reply Affidavit) 46 Again, the Husband has not provided proper disclosure. With respect to his tax documents of 2018, being the year in which he resigned, the Husband first failed to provide anything, and as of yesterday, has only provided incomplete documents. 47 There should be no change to the Final Orders. It is not “just and equitable” to do so. The legislation requires consideration to be given to the “proper” needs of the child including “the manner in which the child is being, and in which the parents expected the child to be educated or trained”. The legislation requires those needs be prioritised. The Husband at all times has known of future child related expenses were coming. He did not act responsibly and put himself in a position to meet his obligations. It is not just and equitable that he seeks to avoid his responsibilities. 48 Despite all this, my application makes provision for the Husband to “come to the table”, get a steady, reliable, paying job, and provide for the children’s educational needs as agreed and ordered. If the Court, despite all of the above, is still not willing to enforce the Final Orders, the $50,000 remaining in Australia with the Husband’s former lawyers (after deductions for money the Husband owes set out below) should be used to pay for school fees. When that money runs out, and if the Husband still does not have a job, I will do the best I can to pay for the children’s educational needs. Conflicted Position 49 It is contended the Husband’s position is full of contradictions and conflicts 50 With respect to coronavirus, for the purpose of the child support matter, he amplifies the apparent impact of it on the economy and his job prospects, but plays down the health implications with respect to the parenting application. 51 With respect to his economic position, he deposes at paragraph 11 of his affidavit of 16 November 2020, to being in a “strong and stable position” when it comes to his parenting application; but then says with respect to child maintenance payments “it is not possible for [X] to attend a fee-paying school” and seeks an administrative assessment having the effect that he pays $0 in child support for two children. FINANCIAL ORDERS Periodic and Non-Periodic Child Support52. There are arrears in periodic child support and non-periodic child support. The Final Orders create those obligations, they have not been complied with. [G School] need to be paid to secure [Y’s] Year 12. I rely on paragraphs 46-48 of My Application Affidavit.

Decision

Reasons for decision

The father is similarly relieved from payment of health insurance, incidental expenses and other expenses due for the children, or one of them, under the departure determination order as and from 1 December 2019. CONCLUSION In this case the father lost his job, did not obtain other employment on an ongoing basis and he cannot pay the child support to which he previously agreed and thought that he would be able to cover into the future. The father let two years elapse between assuming the liability (on 31 October 2018) and making his application on 21 December 2020 seeking orders retrospective to 1 December 2019. He did not move hastily. That doesn’t lessen his claim. Rather, it indicates that has not acted strategically as the mother alleges. Since the father assumed the liability to pay child support, the now only dependent child, X, has moved from the mother’s care (1 August 2022) and into the father’s care (late 2022). Neither parent makes a child support application to this court in relation to the mother as a paying parent and the father as a carer entitled to child support. I conclude that the father is entitled to the relief he seeks in relation to periodic child support. That is retrospective relief from 1 December 2019. If that means there has been an overpayment by him, having regard to an administrative assessment of child support being struck for the child support periods after 1 December 2019, it is not appropriate to require that money to be refunded to him by the mother who would have spent it on supporting the children. If an administrative assessment of child support being struck from 1 December 2019, means that the father is in arrears, those arrears can be satisfied from the monies held in trust by his former solicitors. If there are no arrears, the husband can be entitled to the monies held in trust. I hope these reasons make clear how the order I make is to operate. If the parents, or either of them, encounter difficulty with implementation of this Order either directly or through Services Australia Child Support Agency, they have liberty to apply to me for clarification. That is not an opportunity to re-argue or re-agitate his or her case but to implement the decision to which I have come. For the above reasons, I make the orders set out.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.