PVO & RMO

[2005] FamCA 1196

[2005] FamCA 1196

JFPVORMO
FAMILY LAW ACT 1975

IN THE FULL COURT OF

THE FAMILY COURT OF AUSTRALIA

AT HOBART

Appeal No. SA 47L of 2005
File No. HBF 1333 of 2003

IN THE MATTER OF:

PVO

Appellant/Husband

- and -

RMO

Respondent/Wife

REASONS FOR JUDGMENT

BEFORE:  Finn, Coleman & Benjamin JJ
DATEOF HEARING:          5^th day of October 2005
DATE OF JUDGMENT:     12^th day of December 2005

APPEARANCES:                 Mr Foster of Counsel, (instructed by PWB Lawyers, 199 Macquarie Street, Hobart TAS 7000) appeared on behalf of the appellant husband.

Mr Trezise of Counsel, (instructed by Dobson Mitchell & Allport, Solicitors, 59 Harrington Street, Hobart, TAS 7000) appeared on behalf of the respondent wife.

Name of Appeal  PVO & RMO
Appeal Number  SA47L/2005
Date of Appeal hearing  5^th day of October 2005
Date of Judgment  12^th day of December 2005
Coram  Finn, Coleman & Benjamin JJ

Catchwords:   Application for leave to appeal decision dismissing the husband’s application to discharge a Child Support Agreement.

Submission that trial Judge made errors of fact which were material to her exercise of discretion – errors contended either not made out or not found to have impacted on the trial Judge’s determination – De Winter v De Winter (1979)FLC ¶90-605 followed.

Husband’s contention that trial Judge made errors of law in her consideration of whether it was just and equitable to discharge the agreement – trial Judge erred in not considering the wife’s concession that it was not unreasonable for the husband to return to Tasmania and work in a less lucrative industry – trial Judge erred in not considering that the agreement obliged the husband to pay almost double the child’s weekly  needs by way of child support – other asserted errors of law not made out.

Leave to appeal granted – appeal allowed – matter remitted for re-hearing, unless parties reach agreement as to a basis upon which the Full Court can re-exercise the trial Judge’s discretion.

Appeal allowed
Costs certificates ordered

1. By application filed 20 July 2005 the husband sought leave to appeal against orders made by Morgan J in proceedings between the parties on 23 June 2005 in reliance upon Amended Grounds of Appeal. The wife opposed the granting of leave to appeal against Morgan J’s decision.

RELEVANT LAW

1. The law governing the application is not in doubt and does not require re-stating in the context of this application.  Amongst other places, in Hendy v Deputy Child Support Registrar (2001) 27 FamLR 641 the Full Court adopted an approach which is substantially in accordance with the decision of the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 and of the Full Court of this Court in Rutherford and Rutherford (1991) FLC ¶92-255. The application has, with the concurrence of the counsel for both parties, proceeded on the basis that the substance of the proposed grounds of the husband’s challenge to the trial Judge’s orders or its absence, would be decisive of the issue. We propose approaching the application on that basis.

BACKGROUND

1. On 11 November 2002 the parties entered into a Child Support Agreement which was subsequently, it seems on 27 November 2002 registered with the Child Support Agency pursuant to the relevant provisions of the child support legislation.  The agreement related to the child of the marriage who was born in March 2000. 

2. The agreement provided for an “[a]greed amount $2500 per month” with payments to “start 30/11/2002 to be adjusted on 1 July each year”.  The “[i]nflation factor to be used” was 7.5 per cent.  The document stated “[n]ot to vary payment while pyr on benefits.  The agreement end 30/11/2007”. 

3. The agreement provided for “[o]ther than periodic amounts” being “[t]op cover health benefits for mother & Chd plus $100 per month clothing allowance for [the child]”.  Those provisions were said “not to reduce cs assmt and annual rate”. 

4. Subsequent to the making of the Child Support Agreement and until the end of 2004, the husband made payments in accordance with the terms of the agreement. 

5. By 1 July 2005 the effect of the agreement was that the husband was liable to pay $38,468.00 per annum plus the health insurance cover for the child, the totality of those benefits approximating $39,500 per annum. 

6. At the time the agreement was entered into the husband was working as an oil rigger, such employment taking him as far from Australia as the coast of Vietnam.  The husband had been engaged in similar employment prior to the separation of the parties.  For the 2002/2003 income tax year, which included the date upon which the Child Support Agreement was entered into, the husband’s income was $110,000.00 net.  The husband’s employer paid his tax, health insurance and all his working expenses. 

7. In December 2004 the husband voluntarily resigned his employment as an oil rigger, returning to Tasmania where he and a partner set up a building company.  The husband’s estimate at trial was that, to the extent that he could do so with any accuracy, his income was in the order of $450.00 per week, the building company being very much in the early stages of its operations, and having two house construction projects in progress. 

10.  In reliance upon his changed circumstances, the husband applied to discharge the registered Child Support Agreement which the parties had entered into on 11 November 2002 and sought that his obligation be fixed in the sum of $150.00 per calendar month.  The wife opposed the husband’s application.

THE TRIAL JUDGE’S JUDGMENT

11.  The trial Judge, it is common ground, correctly identified the competing applications before her and the law applicable to them.  Her Honour referred to the matters of history recorded above and to the fact that there had been a property settlement between the parties, the effect of which was that the wife received in late 2004 approximately $270,000.00 at which time the husband received approximately $140,000.00. 

12.  Her Honour accepted that there had “been a change in the husband’s financial circumstances, but on the state of the evidence” considered it “not clear to what that has changed” (Judgment, paragraph 14).  She considered whether “a ground for departure exists” (Judgment, paragraph 15) by reference to a number of matters and concluded that:

33.  The evidence establishes that there has been a significant change in income and the law establishes that that may be sufficient to justify departure or in this case to discharge a child support agreement.  That is only so if it results in an unjust and inequitable determination of the level of child support.

13.  The trial Judge identified the husband’s earning capacity as “a critical factor” (Judgment, paragraph 34) in determining whether or not to refuse to discharge the Child Support Agreement which would result in “an unjust and inequitable determination of the level of child support” (Judgment, paragraph 33). 

14.  A number of authorities were referred to by the trial Judge.  Her finding was that there was “no evidence that he [the husband] did this [“voluntarily resigned his lucrative employment”] deliberately to reduce his child support obligations” but the evidence is clear that he “did it without any regard to those obligations” (Judgment, paragraph 39). 

15.  Her Honour rejected as one of the reasons for the husband’s resignation from his employment as an oil rigger his assertion that such employment prevented him from maintaining regular and frequent contact with the child, finding that “he had maintained that job throughout [the child’s] life” and that “there were no difficulties in relation to contact while he was employed” (Judgment, paragraph 40). 

16.  The trial Judge concluded that the husband “had generous contact and virtually whenever he wanted it during his month off” (Judgment, paragraph 40), the evidence establishing that the husband’s employment as an oil rigger was on a month on/month off roster.  Her Honour found that “[a]ny difficult [sic] with contact, on the present state of the evidence, arose only after he resigned and re-partnered” (Judgment, paragraph 41). 

17.  The husband’s suggestion that his health was also a reason for his decision to resign his employment was rejected by the trial Judge.  No aspect of the present application involves any challenge to such rejection. 

18.  The trial Judge was:  

44.  … satisfied that the husband has significant earning capacity within the meaning of the principles expressed in DJM v JLM.  He has not established on the balance of probabilities that he does not have the ability and opportunity to pay child support in accordance with an agreement willingly entered into by him. 

19.  Although the husband had “not passed the threshold requirement”, her Honour proceeded to “consider whether an order that the husband pay $150 per month in child support is just and equitable” (Judgment, paragraph 45).  She concluded that:

49.  … to discharge the agreement would not be just and equitable insofar as the wife is concerned.  Without this child support she will have only a government pension.  She would be reliant upon it to pay [the child’s] fees and complete her studies.  Her evidence was that she elected not to seek spousal maintenance because of the level of child support. 

20.  Her Honour further concluded that:

50.  … the hardship that would be caused to the wife and to [the child] if the order sought by the husband was made outweighs any hardship that may be caused to the husband.

adding:

51.  It is hard to assess the degree of hardship to the husband because of the unsatisfactory nature of the evidence with respect to his income and expenditure.  There is no evidence of his income sufficient to support the order he asks me to make.  

21.  The husband having “not made out his case on the balance of probabilities on the evidence” (Judgment, paragraph 52), the trial Judge dismissed his application. 

THE PROPOSED GROUNDS OF APPEAL

22.  Counsel for the husband argued the grounds of the appeal under two broad headings, they being that “the learned trial judge made errors of fact” in that a number of findings “were not based on the evidence” and that “the learned trial judge made .… errors of law in that in considering whether it was just and equitable to discharge the agreement the learned trial judge failed” to have regard to a number of identified factors (Husband’s Summary of Argument, paragraphs 1 and 2). It is convenient for us to adopt the same approach as counsel for the husband has adopted. 

23.  The law relating to errors of fact in discretionary judgments is not in doubt and does not require re-stating in the context of this appeal.  In De Winter v De Winter (1979) FLC ¶90-605 Gibbs J said at 78,092:

There are many other authorities, from Young v. Thomas (1892) 2 Ch. 134, at p.137, to Australian Coal and Shale Employees’ Federation v. The Commonwealth (1953) 94 C.L.R. 621, at p.627, that recognize that a mistake of fact is a ground for overruling a decision involving discretionary judgment. It may in some cases appear that the mistake of fact has not affected the final result, or that its effect has been negligible, or that in any case the conclusion reached was correct, notwithstanding the error. … The question is whether the invalid reason has influenced the ultimate conclusion, or whether the error was immaterial; if the error did affect the conclusion, the result may nevertheless be so plainly right that it can be allowed to stand notwithstanding the unsoundness of some of its foundations.

24.  On behalf of the husband it was submitted that the errors of fact relied upon were material to the trial Judge’s exercise of discretion.  A number of those errors of fact were not disputed by counsel for the wife whose contention was that such errors of fact were not material to the trial Judge’s decision, and could not have affected the trial Judge’s conclusions.  It is necessary to consider the factual errors which counsel for the husband contends that the trial Judge made. 

25.  Her Honour found that the husband “started his new relationship at the time of resignation” (Judgment, paragraph 43).  There is no doubt that the husband resigned his employment in December 2004.  The husband gave evidence that his relationship had started in August 2004 (Transcript of 21 June 2005, page 11, line 36).  The wife gave evidence in similar terms (Transcript of 21 June 2005, page 48, line 25).  On any view of the evidence, the husband was living with his present partner by October 2004. 

26.  The factual error asserted on behalf of the husband was not seriously disputed by counsel for the wife whose contention was that the error “would not have affected the final result”.  We agree with that assertion.  As the trial Judge correctly identified, the husband’s circumstances having changed and a possible ground for departure having been made out, the focus of the enquiry became the husband’s means.  Absent a finding, which the trial Judge did not make, that the husband terminated his employment to commence his present relationship, it is difficult to see how the trial Judge’s conclusions as to when the husband commenced that relationship could have impacted upon her determination of the proceedings.  We thus do not find this error to advance the husband’s case. 

27.  Complaint was made with respect to the trial Judge’s finding:

That at the time of the husband’s resignation from DO in December 2004 he was enjoying generous contact virtually whenever the husband wanted it during his month off (J40). (Ground 1.b) 

28.  It was submitted that:

Both parties acknowledged that by October 2004 their parenting relationship had broken down and that the husband was not having the usual generous contact with [the child].  (Husband’s Summary of Argument, page 2)

29.  It was inferentially conceded on behalf of the wife that the trial Judge had been in error in the respect complained of but that the “timing of these events was and is inconsequential”, being “but one of the reasons proffered by the husband for his decision to voluntarily resign his employment” (Wife’s Summary of Argument, paragraph 2.1.2). 

30.  There is little doubt that the trial Judge was in error in concluding as she did that the husband had not encountered difficulties in relation to contact prior to his resignation in December 2004.  In our view, whatever the difficulties the husband was having with contact prior to his resignation, they did not provide a reasonable basis for his unilateral termination of the lucrative employment in which he had engaged for what seems to have been the whole of the child’s young life.  If, as the evidence of the husband and wife suggests was the case, the husband was having difficulties with contact to the child, a number of avenues would have been open to him to redress that grievance.  Unilaterally resigning his employment was not one of them.  We thus do not find this error of fact on the part of the trial Judge advances the husband’s case.

31.  Our observations in relation to the preceding two errors of fact apply to the alleged error of the trial Judge in finding:

That any difficulty with contact arose only after the husband resigned and re-partnered (J41), that there were no difficulties in relation to contact while he was employed (J40), and that the husband’s evidence was that he had generous contact virtually whenever he wanted it during his month off (J40). (Ground 1.c)

32.  Complaint was made that the trial Judge had erroneously found “[b]y implication, that the husband had a capacity to abandon his building business and work offshore on an oilrig” (Ground 1.d).  Reference was had in that context to the passage of her Honour’s judgment in which she said:

44.  I am satisfied that the husband has significant earning capacity within the meaning of the principles expressed in DJM v JLM.  He has not established on the balance of probabilities that he does not have the ability and opportunity to pay child support in accordance with an agreement willingly entered into by him.

33.  We are less than convinced that the trial Judge, “by implication” or otherwise, found, as asserted on behalf of the husband, that the husband had capacity to abandon his new business in favour of returning to oilrigging.  The reality is however, as was submitted on behalf of the husband, that the husband and his building partner were engaged in building activities and the husband had mortgaged the land he had purchased from the monies he had received by way of settlement of property as collateral security for the liabilities of the husband and his business partner in relation to their building contract work.  In no passage to which we have been referred did her Honour suggest that the husband’s current business activities were being undertaken other than bona fide, or with an appropriate level of commitment and diligence, nor in any passage to which we have been referred did her Honour find that the husband did not have liabilities and/or obligations by virtue of those activities which he asserted he had.  Being thus unpersuaded that the trial Judge made the findings complained of, it follows that we are not persuaded that any relevant error on her part was thereby involved. 

34.  The complaints that the trial Judge erred (in paragraphs 19 and 20 of the judgment) in finding “[t]hat the husband said he had $50,000 in a bank account in April 2004 (before he received $140,000 in property settlement)” (Ground 1.e) and:

That the husband had “no explanation” as to the application of $140,000 received by him in 2004 from his property settlement and $44,000 to $45,000 in savings (Ground 1.f)

can conveniently be dealt with together. 

35.  It was submitted on behalf of the husband in this regard that the husband had given evidence (Transcript of 21 June 2005, page 24) that he had $50,000.00 in April 2005 but that “this was the balance remaining of the $140,000 received as property settlement” in December 2004.  It was submitted that the evidence made clear that the husband’s case was that the only capital sum from which he could have obtained $50,000.00 to have placed in a bank account was the $140,000.00 which he received by way of settlement of property in late 2004.  It was fairly conceded on behalf of the wife that such was the case, the trial Judge’s reference to April 2004 many months prior to the receipt of the $140,000.00 being described by counsel for the wife as “evidently a slip, intending to be a reference to the Husband’s Financial Statement filed 7^th April 2005” (Wife’s Summary of Argument paragraph 2.1.5). 

36.  The trial Judge thus erred in regarding the husband as having failed to explain the fate of $185,000.00 (the subject of ground 1.f), partly because there had only ever been $140,000.00 to explain the fate of, and partly because, it was submitted, the husband had accounted for the fate of the funds which he received by way of settlement of property.  The husband had purchased land upon which he was constructing a house at TH, utilising for that purpose the $140,000.00 which he had received in late 2004 by way of settlement of property. Nowhere that we have been referred to was the husband asked what portion of the $140,000.00 had been utilised to purchase the TH property.  The husband gave evidence, which does not appear to have been challenged, that he had spent $24,000.00 on plans and clearing for the property, that he had spent $26,000.00 on a Holden utility, which the husband stated in evidence he no longer had (Judgment, paragraph 20).  The trial Judge recorded that the husband suggested the balance of his property settlement monies, other than for the sum of $8,000.00, had been “spent on plans, engineers’ reports and bits and pieces” which the husband had been unable to quantify (paragraph 21). 

37.  Counsel for the wife inferentially conceded that the trial Judge had been in error in relation to the husband’s accounting for the monies which he had received by way of settlement of property, submitting that “the effect of the slip was negligible and did not affect the final result”, and that the husband’s evidence “concerning the dissipation of the amount of $140,000.00 which he received from the property was confused and unsatisfactory” (Wife’s Summary of Argument, paragraph 2.1.5). 

38.  It is instructive to have regard to the husband’s evidence in relation to the fate of the $140,000.00 which he received by way of settlement of property in late 2004.  It is regrettable, as the trial Judge noted, that the husband’s affidavit was not more informative in relation to the issue.  In fact, the husband’s evidence in relation to the fate of the monies emerged almost entirely during the course of cross-examination by counsel for the wife.  The husband agreed that he had received “not less than $140,000” by way of settlement of property in late 2004 (Transcript of 21 June 2005, page 21). 

39.  The husband referred to the purchase of the Holden Commodore ute for $26,000.00.  He further referred to payment of around $20,000.00 which is “about standard for architectural drawings” in relation to the construction of the house on the land that he had purchased at TH and that he had paid “3 or 4 thousand, to get rid of the trees and chop them all up” on that block (Transcript of 21 June 2005, page 22).  The husband explained that he had initially put $60,000 into a fixed term deposit (Transcript of 21 June 2005, page 23). 

40.  It is apparent that, by his earlier evidence, the husband had explained the fate of $49,000 or $50,000 from the $80,000 which remained after the $60,000 fixed term deposit investment was made.  The husband was asked whether he had produced bank statements, it being apparent from the trial Judge’s reasons that the husband had produced a bank statement showing $8,000 in April of 2005 (Judgment, paragraph 19). 

41.  The husband explained that “[e]ngineers, reports, councils” had accounted for “about another $6000” (Transcript of 21 June 2005, page 24).  The husband asserted in the course of that cross-examination “[e]very cent I have has been spent on the house and land in TH” (Transcript of 21 June 2005, page 24).  In no passage of cross-examination thereafter to which we have been referred, or found for ourselves, was the husband either again challenged in relation to how he had disbursed the $140,000.00 which he had received from the settlement of property in late 2004, or asked for documentation evidencing his claims in that regard, although it is clear that none of those monies had been utilised by him for the purpose of paying child support in accordance with the agreement subsequent to the end of 2004. 

42.  We are satisfied that the trial Judge erred in relation to the husband’s absence of explanation in relation to the $140,000.00.  The husband gave an explanation which does not appear to have been seriously challenged, and which is to some extent supported by his ownership of the TH property.  We are not persuaded that the “confused and unsatisfactory” nature of the husband’s evidence in that regard was such as to support a finding, to the extent that the trial Judge made one to that effect, that the husband had failed to properly disclose his financial circumstances.  Nor are we persuaded that the effect of the trial Judge’s error was “negligible” and could not have affected the final result. 

43.  It is not without significance that the trial Judge made the critical findings she did in relation to the husband’s dealings with monies under his control in the course of determining whether there had been a significant change which might justify the discharge of the Child Support Agreement.  We are ultimately not persuaded that these errors did vitiate the trial Judge’s exercise of discretion given that, notwithstanding the view she took of the extent and reliability of the husband’s disclosures, her Honour nevertheless found that the husband had established a ground which may justify a discharge of the Child Support Agreement.

44.  Similar observations apply to the trial Judge’s finding (at paragraph 22 of the judgment) that “[t]he husband failed to comply with the request to produce bank statements” (Ground 1.g), the evidence in that regard falling well short of establishing that the husband had failed to produce any document of which he was in fact given notice or otherwise requested to produce.

45.  The trial Judge’s finding (at paragraph 26 of the judgment) that “[t]here was no evidence that the wife’s brother had any present capacity to repay the wife $120,000 lent to him by the wife” (Ground 1.h) was suggested to have been erroneous in that the wife had acknowledged that her brother was accruing savings for repayment and had already repaid her between $4,000 and $5,000.  If, which we do not think has been established, the trial Judge was in error in this regard, that could not have affected the exercise of her discretion.  Such error if any, as the trial Judge may thus have made does not advance the husband’s case. 

46.  Finally, it cannot successfully be suggested that the trial Judge’s error in quantifying the husband’s current child support obligation at $37,000, when it was clearly acknowledged by the wife to be $39,468.00, was a material error of fact on the part of the trial Judge. 

47.  We are thus not persuaded that any of the errors of fact referred to earlier should in the circumstances be seen as vitiating the trial Judge’s decision.

48.  It is necessary to consider the second category of complaint made on behalf of the husband, namely that the trial Judge made “errors of law in that in considering whether it was just and equitable to discharge the agreement the learned trial judge failed” to have regard to eight factors identified in ground 2. 

49.  The first such complaint was that the trial Judge failed to “[c]onsider the impact on the husband of his abandoning his building business contractual obligations to work offshore on an oilrig” (Ground 2.a). 

50.  There is little doubt that the trial Judge did not expressly refer to the consequences of the husband “abandoning” his building business contractual obligations, but it is equally apparent that the husband failed to adduce compelling or even clear evidence of the nature and extent of such obligations other than by such implications as arose from the fact that he and his partner in the building business had two projects underway. 

51.  As was submitted on behalf of the wife, the trial Judge’s statement that “[i]t is hard to assess the degree of hardship to the husband because of the unsatisfactory nature of the evidence with respect to his income and expenditure” (Judgment, paragraph 51) was reasonably open on the evidence the husband presented.  As was also submitted on behalf of the wife there was “no evidence led by the Husband of any effect upon him of returning to his former employment in his ‘brief and uninformative’ affidavit” (Wife’s Summary of Argument, paragraph 3.1).  The absence of any evidence adduced by the husband of the financial consequences of his “abandoning” his building business precludes him from successfully complaining that the trial Judge failed to have regard to that matter. 

52.  It was further complained that the trial Judge:

Failed to consider the impact on the restoration of the husband’s generous contact with [the child] and the maintenance of their relationship if the husband worked offshore on an oilrig. (Ground 2.a) 

53.  This matter has largely been dealt with earlier.  We agree however that the issue “had no relevance to the three-stage process which the trial Judge was required to undertake” as was submitted on behalf of the wife (Wife’s Summary of Argument, paragraph 3.2).  Moreover, there were other more appropriate ways of addressing any difficulties that the husband claimed to be experiencing in relation to contact which he could have sought to avail himself of.  This complaint does not advance the husband’s case. 

54.  It was further complained that the trial Judge:

Failed to take into account that the wife’s principal concern, that the husband may elect to voluntarily return to working offshore on an oilrig, could be dealt with by the Child Support Agency’s administrative process.  (Ground 2.c)

55.  To the extent that that may have been the wife’s “principal concern”, we do not see how that could have been relevant to the issues which the trial Judge was obliged to determine, which, all parties agree, related primarily to the husband’s earning capacity at present.  Whatever the husband’s earning capacity may currently be, that may change in the future, in which case either party would no doubt take such steps as he or she was advised as a consequence of such change.  This complaint cannot advance the husband’s case. 

56.  The further complaint was made that the trial Judge “[f]ailed to take into account the wife’s concession that the husband was entitled to live and work in Tasmania” (Ground 2.d).  In response to that complaint it was submitted on behalf of the wife that the issue was:

… the determination of how the proper needs of the child should be met from the income, earning capacity, property and financial resources of the parents.  Considerations or views as to lifestyle decisions were necessarily secondary to that determination. (Wife’s Summary of Argument, paragraph 3.4) 

57.  The evidence of the wife in relation to this issue was quite clear.  The wife was asked (Transcript of 21 June 2005, page 51) “[d]o you say that he’s not entitled to re-establish himself in a new business in Hobart?”, to which she replied “[n]o, I don’t say that at all.  No, he is fully entitled to re-establish himself”.  Subsequently (Transcript of 21 June 2005, page 52) the wife was asked “you’re saying that you don’t expect that [the husband] should have to go overseas but you think that he will.  Is that correct?” To which the wife replied, “I think that he will”.  The following exchange then occurred:

But you don’t think he has to.  You’re not saying, “I expect---”?---Well, I can’t – I mean, I can’t dictate to someone what they do.  I never have.  I could never dictate when we were married so I’ve got less chance now.

But he is perfectly entitled to get on with his life here and work as a builder and establish a home for himself and see his daughter?---Yes, that’s correct.

58.  We have not been referred to any other evidence in relation to the issue.  Nowhere in her reasons for judgment did the trial Judge consider the concessions thus made, and fairly made, by the wife.  The position is thus that on the one hand the wife conceded that it was not unreasonable for the husband to have returned to Tasmania and sought to establish himself in business in the state, whilst on the other hand there was no cross-examination of the husband to suggest that either the industry in which he was seeking to establish himself was inappropriate having regard to his qualifications or experience, or that he was in any way failing to apply himself to his business activities with reasonable diligence.  There was no cross-examination of the husband to establish, save a return to oilrigging, any other source of employment or income which the husband might be expected to pursue or investigate pursuing. 

59.  As the authorities make clear, the circumstances in which a parent with an obligation to provide financial support for a child can relinquish employment in favour of less lucrative employment are often difficult to determine.  That does not become an issue in the present circumstances given the wife’s fairly made concession that it was not unreasonable for the husband to return to Tasmania and seek to establish himself in business.  The question thus became whether the husband’s capacity to earn was greater than he asserted.  The trial Judge’s failure to consider this matter, which was squarely raised by counsel for the husband at trial (Transcript of 21 June 2005, page 61), was in our view an error which invites the intervention of this Court.  On the wife’s own evidence, it was not simply a matter of the trial Judge finding, as inferentially she did, that the husband should return to the oilrigging from which he had previously derived a substantially greater income than he was presently capable of earning from his building business. 

60.  The complaint was made that the trial Judge:

Failed to take into account that the parties’ annual child support adjustment rate of 7.5 per cent for Consumer Price Index movements had unintentionally produced a rate of annual increase which was about three times the actual rate of Consumer Price Index movement. (Ground 2.e)

61.  In our view this had no bearing on the matters before her Honour, the parties having agreed, for whatever reasons, years before, that the adjustment would be 7.5 per cent per annum and, for a little over two years, implemented the terms of their Child Support Agreement without demur.  The complaint does not assist the husband’s case. 

62.  It was further complained that the trial Judge:

Failed to take into account that the operation of the agreement (including the annual CPI adjustment of 7.5 per cent) produced a level of child support which was considerably in excess of the needs of the child as claimed by the wife. (Ground 2.f)

63.  It was common ground that the wife’s evidence was that the reasonable weekly needs of the child totalled $387.00, inclusive of school fees of approximately $145.00 per week.  That produced an annual obligation of $20,124.00, plus Health Cover benefit which the husband was obliged to pay under the Child Support Agreement.  As we have earlier noted, exclusive of the Health Cover obligation, the effect of the Child Support Agreement at the date of trial was to oblige the husband to pay $38,468.00 per annum to the wife for the child support.  There was thus a surplus of approximately $18,000 (or $346 per week) over and above what the wife herself claimed to be the child’s reasonable needs. 

64.  Nowhere in the trial Judge’s reasons for judgment did she consider that the wife was, by virtue of the operation of the Child Support Agreement, receiving monies so substantially in excess of what she herself claimed the child’s reasonable weekly needs to be as the evidence reveals to have been the case.  This issue was agitated before the trial Judge by counsel for the husband (Transcript of 21 June 2005, page 64, line 39). 

65.  In our view, the trial Judge should have had regard to the fact that the Child Support Agreement obliged the husband to pay almost double the totality of the child’s weekly needs as claimed by the wife.  We have difficulty seeing on what basis the husband could, in the changed circumstances which the trial Judge correctly found to have been established, have been obliged to make child support payments in excess of $387.00 per week, assuming, which does not appear to have been the case, that the husband was found to have the capacity from his current resources to have made payments of that magnitude.  We are persuaded that the trial Judge erred in relation to the impact of the operation of the Child Support Agreement. 

66.  Submissions were made in relation to the husband’s “earning capacity” including reference to the decision of the Full Court in DJM v JLM (1998) FLC ¶92-816. It is worthwhile to briefly reflect on that decision with regard to the underlying need for fairness to be a consideration in determining a person’s earning capacity within the meaning of s 117(4) of the Child Support (Assessment) Act 1989 (Cth). In that decision the Full Court rightly observed at 85,269:

How one treats the question of voluntary unemployment or under employment is, however, fraught with difficulty.  The Full Court in Scott’s case, supra, said that earning capacity was a question of fact.  The extent to which a person is reasonably able to support another is, in our view, a mixed question of fact and discretion.  But it is a question peculiarly suitable for a trail Judge and thus susceptible to attack by an appellate Court only if the answer is clearly wrong or reached on the application of wrong principles or is against the weight of the evidence.

67.  The Court also said at 85,272:

Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parent’s “capacity to provide financial support”.

68.  In discussing that “mixed question of discretion and fact” the Full Court drew assistance from a number of American child support cases.   In those cases the American Courts balanced the reduction of a parent’s income done in good faith against the financial needs of the child.  This was a balance between fairness and the needs of the needs of the child.  After reviewing those American cases the Full Court concluded at 85,271:

Thus the test of “earning capacity” in Californian child support cases seems to be the ability to work and an opportunity to work.  There are limitations in applying decisions as to earning capacity in child support cases.  Such cases are concerned in ensuring an appropriate support for a child, and because the duty to support children is generally recognised as a duty higher than any other duty other than self-support, child support cases need to be looked at in a different light to spousal support and property cases.

However there is some assistance to be gained from the various tests expounded in the several U.S. jurisdictions referred to above.  We are most attracted by the “ability” and “opportunity tests” applied in California as at least the minimum tests to be applied.

69.  Thus the need to consider the broader question of fairness in the context of that mixed question of discretion and fact ought not be forgotten.

70.  The remaining complaints, namely that the trial Judge:

Failed to adequately take into account the wife’s financial resources and her capacity to increase her income by managing those resources. (Ground 2.g)

and

Gave insufficient weight to the evidence that the husband had always fully complied with his child support obligation until his off-shore employment ended. (Ground 2.h)

can be swiftly disposed of. It is unnecessary, given our conclusions in relation to other challenges, to determine the first complaint, although, if there is a re-hearing of the matter, it may be that the respective capacities of the parties to contribute to the support of the child would be in issue, in which case the wife’s “financial resources” and “capacity to increase her income by managing those resources” may be relevant matters. 

71.  The fact that the husband had “always fully complied with his child support obligation until his off-shore employment ended” was of no relevance in the proceedings before the trial Judge, and nothing raised in relation to such history of compliance before us persuades us otherwise.

CONCLUSION

72.  Having been persuaded that the trial Judge erred by, inferentially at least, accepting that the husband should return to oilrigging, the only employment which it could have been suggested would have given him the capacity to pay anything like the amounts due to be paid by him under the Child Support Agreement, and failed to have regard to the fact that the Child Support Agreement obliged the husband to pay almost twice what the wife claimed the child’s reasonable weekly needs to be, the husband should be granted leave to appeal. 

73.  The Court was informed by counsel for the parties that, in order to impose upon the husband obligations commensurate with those imposed by the Child Support Agreement pursuant to the application of the child support formula, an income of $124,000.00 per annum would have to be demonstrated.  As is obvious, that is some $14,000.00 more than the husband’s highest income from oilrigging appears to have been.

74.  The merits of the appeal were sensibly agitated in the course of hearing the application for leave for appeal.  Everything which could have been raised in the appeal if leave were granted was agitated by counsel for the husband in that process.  For the reasons we have given, the application for leave to appeal and the appeal are entitled to succeed.

EFFECT OF GRANTING LEAVE AND ALLOWING THE APPEAL.

75.  Both parties were understandably anxious to avoid a re-trial of the proceedings.  Counsel for the husband invited the Court to set aside the Child Support Agreement and impose an obligation upon the husband to pay child support of $91.55 per week based on taxable income of $40,000.00 per annum.  Absent that concession, the only figure to which regard could be had by this Court for the purpose of re-exercising the trial Judge’s discretion would be the sum of $450.00 per week which was the husband’s best estimate of his current earnings. 

76.  On behalf of the wife it was submitted that the Court assess an annual obligation of $20,124.00, that being the figure which results from annualising the $387.00 per week which the wife says are the child’s current reasonable weekly needs. 

77.  Other than with the concurrence of counsel for the wife, this Court could not assess child support on the basis of the $40,000.00 taxable income indicated by counsel for the husband.  Conversely, this Court could not find on the evidence before it that the husband had a capacity to pay $387.00 per week, particularly as the only evidence of his current income suggests a figure per week of $450.00.  Other than by an arbitrary process which would be potentially unfair to one party, this Court thus cannot properly re-exercise the trial Judge’s discretion. 

78.  On the evidence before it, the Court would have little difficulty in making the findings necessary to discharge the Child Support Agreement as and from 31 December 2004.  So far as the period subsequent to that date is concerned, the only evidence before this Court suggests the child’s reasonable weekly needs totalled $387.00.  Implicit in that is the recognition that, in the circumstances revealed by the evidence, and not seriously complained of by the husband in the appeal, the incurring of private school fees by way of child care whilst the wife was studying was not unreasonable.  The question of the husband’s capacity to contribute to that sum and the extent to which, in the light of findings in that regard, he should contribute, are matters in respect of which this Court could not make findings on the evidence.  The evidence before this Court suggests the ambit of that enquiry to be $91.55 per week (as offered by the husband) and $387.00 per week (as sought by the wife).  A difference of almost $300.00.  When regard is had to the legal costs of litigating an issue within such narrow confines, the attractiveness of resolving the issue should thus be almost irresistible. 

79.  Absent the Court being invited to re-determine the matter on an agreed basis, there regrettably appears little alternative to a re-trial, unless the Court was to discharge the Child Support Agreement and remit the matter to the Child Support Agency.  The difficulties associated with the latter course are obvious and have been referred to by counsel for the husband.  In our view, to remit the matter for re-hearing before a Judge or Federal Magistrate would be the better of two less than desirable options, albeit we perceive that we could not properly partially re-hear the matter by simply discharging the Child Support Agreement and remitting the real issue for determination we have identified to a Judge or Federal Magistrate. 

80.  The course we propose is to make a self-executing order to provide the parties with the opportunity to reach agreement as to a basis upon which this Court might properly re-exercise the trial Judge’s discretion, failing which orders providing for a re-hearing of the proceedings will take effect.  A period of 28 days for the parties to consider their positions and reach any such agreement, if that be possible, would not seem unreasonable and we will so order.

81.  Included in the husband’s draft Notice of Appeal, but not the subject of any specific submissions before us, was a challenge to the costs order made by the trial Judge.  Such order was presumably substantially the result of the husband’s lack of success before her Honour. Leave to appeal against the substantive orders having been granted, and the appeal allowed, it is difficult to see any possible basis upon which the costs order could survive.  The appeal will accordingly also be allowed with respect to the costs order and such order set aside.

COSTS

82.  Both parties sought that, if the appeal were allowed, costs certificates issue.  In our view there should be cost certificates with respect to the appeal and, as was sought by both parties, the re-hearing should that prove necessary.

ORDERS

1. That the husband be granted leave to appeal the orders made on 23 June 2005 by the Honourable Justice Morgan.

2. That the appeal be allowed.

3. That the orders be set aside.

4. That paragraphs 3 and 4 of the husband’s application filed 2 March 2005 be remitted for re-hearing unless within 28 days of the date of these orders the parties through their legal representatives submit an agreed statement of facts on the basis of which this Court might redetermine the application which is otherwise to be remitted for re-hearing pursuant to this Order. 

5. That the Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.

6. That the Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.

7. That in the event that the matter is remitted for re-hearing pursuant to Order 4 of these orders, the Court grants to each party a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these orders.

I certify that the preceding
82 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Court.
A.C.
Associate
Date: 12/12/2005