Ram and YL - [2004] FMCAfam 435

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RAM & YL

[2004] FMCAfam 435

CHILD SUPPORT – Applicant applies to change assessment set by a departure order – where both parties have considerable wealth – husband shows that wife’s financial circumstances significantly improved – wife shows that husband’s financial circumstances significantly improved – husband’s application dismissed.

Family Law Act 1975
Child Support (Assessment) Act 1989

Gilmour and Gilmour (1995) FLC 92-591
Gyselman and Gyselman (1992) FLC 92-279
Liesert v Nutsch (1996) FLC 92-665
Bryant (1996) FLC 92-690
Wild v Ballard (1997) FLC 92-771
Liu and Chen [2003] FMCAfam 322

Applicant:

R A M

Respondent:

Y L

File No:

Pam2012 of 2004

Delivered on:

15 September 2004

Delivered at:

Parramatta

Hearing date:

19 August 2004 and written submissions

Judgment of:

Ryan FM

REPRESENTATION

Counsel for the Applicant:

Mr J. Levy

Solicitors for the Applicant:

Barkus Edwards Doolan

Solicitor Advocate for the Respondent:

Mr G Watts

Solicitors for the Respondent:

Watts McCray

ORDERS

That the stay order made in this court on 21 May 2004 is discharged.
The husband’s application filed 15 April 2004 is dismissed.
The wife’s response filed 13 July 2004 is dismissed.
The husband pay child support arrears calculated at $15,115.81 as at March 2004, together with any further arrears that have accrued since then within twenty-one (21) days.
Any costs application shall be made upon delivery of these reasons.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

PAM2012 of 2004

R M

Applicant

And

Y L

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application to vary a child support assessment set by a departure order made on 14 August 2000 in the Family Court of Australia.

The applicant husband’s case

R M (“the husband”) filed his application on 15 April 2004. He filed an amended application however it is in his counsel’s case outline document that the orders sought at trial are identified. These are set out below:
1.That order 14 made on 14 August 2000 be and hereby is discharged as at the date to which it presently stands paid.
2.By way of departure from the Child Support Assessment issued by the Child Support Registrar on 6 January 2004 in case number 260791634 in respect of the children Sara born in 1992 and Sam born in 1996 or either of them for the period 14 August 2000 to 15 March 2004, it be declared that the father has paid all amounts liable to be paid by him under any assessment of child support.
3.By way of departure from the Child Support Assessment issued by the Child Support Registrar on 6 January 2004 in respect of the children S and S or either of them for the period from 16 March 2004 until the happening of the child support terminating event in respect of each of the children, the father pay or cause to be paid the following:
a.One-half of the tuition fees payable in respect of the children’s attendance at the local Anglican College or such other private school as may be from time agreed in writing between the parties; and
b.A sum equivalent to the sum payable pursuant to a statutory assessment having regard to the application of Part 5 of the Child Support (Assessment) Act and further that such sum be increased annually by child support inflation factor provided in Regulation 6 of the Child Support (Assessment) Regulations.
4.That the child support payable by the father pursuant to Order 2 is to count for 100% of the annual rate of child support payable by the father under any administrative assessment of child support payable by the father to the mother for the period from the date of the making of these orders until the happening of the child support terminating event in respect of each of the children.
5.That the mother pay the father’s costs of and incidental to this application.
6.That pursuant to section 141(j)(iv) Order 14 of 14 August 2000 be varied to provide as follows:
a.A sum equivalent to the sum payable pursuant to a statutory assessment having regard to the application of Part 5 of the Child Support (Assessment) Act and further that such sum be increased annually by the Child Support inflation factor provided in Regulation 6 of the Child Support (Assessment) Regulations;
b.One half of the tuition fees payable in respect of the children’s attendance at the local Anglican College or such other private school as may be from time to time agreed in writing between the parties.
7.That the child support payable by the father pursuant to Order 6 is to account for 100% of the annual rate of child support payable by the father under any administrative assessment of child support payable by the father to the mother for the period from the date of the making of these orders until the happening of the child support terminating event in respect of each of the children.
8.That, to the extent that there are any arrears of child support owing by the father pursuant to any assessment issued for the period from 14 August 2000 to date arising from the orders made on 14 August 2000, pursuant to section 141(n) of the Child Support (Assessment) Act those arrears are hereby discharged.
9.That the mother pay the father’s costs of and incidental to this application.
After a five day hearing that related to parenting, property and child support matters, Justice Boland made final orders on 14 August 2000. Those orders have been registered in this court and thus the court has jurisdiction to determine the application. Although the husband lodged an appeal concerning aspects of the orders, no challenge was made against the child support orders. The appeal was resolved by consent whereupon additional property orders were made on 11 December 2000.
In relation to the parenting orders the court ordered that the children live with the wife and have substantial contact with the husband. In essence, the court divided the children’s time approximately two-thirds with their mother and the remaining one-third with their father. Insofar as the orders related to child support, the orders provided as follows:
“That the administrative assessment for child support be varied such as the husband shall pay for child support for the children the following:
(a)The sum equivalent to the maximum payable pursuant to a statutory assessment;
(b)Such sum to be increased annually by the child support inflation factor provided in regulation 6 of the Child Support (Assessment) Regulations;
(c)All private school fees for the children’s attendance at the local Anglican College or such other school or preschool that the parties agree that the children shall from time to time attend, together with such reasonable extra curricular expenses associated with the children’s education as the parties may agree from time to time.
In addition to the child support order referred to above, the court ordered that in the event the Director of Court Counselling recommended that S receive counselling, the parties were required to ensure she had it and that each paid one half of the counsellors costs. The child support orders mirror the orders sought by the husband. The order proposed, and made by Her Honour did not have a time restriction on it. Notwithstanding that the wife’s financial position would inevitably improve as a consequence of the s.79 orders, the husband did not ask that his child support departure orders operate for a limited period. The court often sees child support orders that operate for a defined period, for example for a small number of years. It follows that these orders reflect the husband’s contention as to a proper contribution by him towards the children’s expenses incurred by the wife when the children were with her, taking into account the costs he incurred when the children were with him.
The husband claims that the effect of the current child support orders is that he pays a disproportionate share of the children’s expenses. His counsel submitted that since the orders were made the wife’s financial circumstances have significantly improved. In particular, she has substantial income and assets, which should be taken into account when determining the contributions each party should make to their children’s future financial support.
Both parties agree that the children are being educated at private schools in a manner that the parties expected and desire to continue.
The effect of the husband’s application is that a new assessment would be set by departure which would result in his periodic payments calculated by reference to the statutory formula and an order that the parties each pay one-half of the children’s tuition fees.
Unfortunately, the Child Support Agency miscalculated the effect of the current orders, which has resulted in the husband falling into arrears. As at 15 March 2004 the husband is $15,115.81 in arrears. As part of his application, the husband seeks that any arrears are discharged. Basically, he contends that because the arrears have risen as a result of a miscalculation by the Child Support Agency and the wife has supported the children without the benefit of these additional funds, he should be excused from further payment. As will become apparent, the husband has considerable wealth and conceded that if he failed in this aspect of his application, he would make good the arrears without further orders being necessitated.

The respondent wife’s case

Y L (“the wife”) filed her response on 13 July 2004. She accepts the husband’s evidence that he will pay any arrears ordered and abandoned any claim for a garnishee in order to secure the arrears. The wife opposes any variation to the current orders, subject only to a different formulation of the periodic payments. For the purposes of clarifying order 14(a) made on 14 August 2000, she sought an order requiring that the husband pay $951 per month per child as periodic child support. This is the maximum amount presently payable pursuant to the statutory formula and is the amount payable pursuant to the 14 August 2000 orders. Insofar as the husband sought orders reducing his periodic child support, his contribution to the children’s education expenses and repayment of the arrears, the wife opposed his application. In short, she submitted that the current orders result in an appropriate proportional contribution by both parties to the children’s expenses. The wife had previously registered the assessment for collection by the CSA. She later elected to end collection of arrears through the CSA. Pursuant to s.38 of the Child Support (Registration and Collection) Act the registrar varied the particulars in the Child Support Registry at which point all outstanding arrears became debts due to the wife and not the Commonwealth. (Section 38A(3) Child Support (Registration and Collection) Act. She says that the husband ought not to be relieved of his obligation to pay the arrears merely because they arose as a consequence of a miscalculation made by the Child Support Agency.

Changing a child support assessment ordered by a departure order.

In Gilmour and Gilmour (1995) FLC 92-591 the Full Court considered the principles applicable to a variation or discharge of a previous departure order made under the Child Support (Assessment) Act1989. The court was asked to consider, whether or not, by virtue of s.100 of the Child Support (Assessment) Act1989, s.66N(2) of the Family Law Act 1975 was imported into the Child Support (Assessment) Act 1989 and therefore required an applicant seeking to change a departure order to demonstrate that there had been a change in circumstances. The Full Court held, “Whatever might be the purpose or effect of s.100 of the Assessment Act, we do not consider that it can operate to apply the principles of provisions of the Family Law Act 1975 into a division of the Assessment Act in which those principles have not been given express legislative statement in circumstances where such principles are given express legislative statement in the immediately succeeding division”. The very existence of a threshold requirement in Division 5 of Part 7 (Section 129(3)) compared to its absence under Division 4 demonstrated an express legislative intention to impose a threshold requirement in Division 5, but not Division 4. In other words, the Full Court concluded that it was not a precondition to a successful application under the Child Support (Assessment) Act 1989 to establish that there had been a change in circumstances.
In Liu & Chen [2003] FMCAfam 322 Chief Federal Magistrate Bryant (as she then was) concluded, “Conversely, it seems to me a change in circumstances alone would not necessarily therefore be sufficient to provide a ground on which an agreement may be varied or discharged”. The same is true of an application to vary or discharge a departure order in relation to periodic payments of child support. As Gilmour makes clear the approach to such an application is that set out in Gyselman and Gyselman (1992) FLC 92-279. The Full Court in Gyselman set out a three step process that courts must follow in determining an application for a departure order under s.117. The first step whether one or more of the grounds in s 117 are established. If so, the next step is whether it is just and equitable within the meaning of s.117(4) to make a particular order. The final consideration is whether it is otherwise proper within the meaning of s.117(5) to make a particular order.
Later Full Court decisions have confirmed the approach in Gilmour. It is further discussed in Liesert v Nutsch (1996) FLC 92-665, Bryant (1996) FLC 92-690 and Wild v Ballard (1997) FLC 92-771. Although these cases are predominantly concerned with variation of a child support agreement, the Full Court discussed variation of child support assessments set by departure orders as well. In the understatement of the century, in Bryant the Full Court said, “While s.117(2) might well have been more clearly drafted, nevertheless we are satisfied that the expression “The provisions of this Act relating to the administrative assessment of child support” in the subsection must include not only an administrative assessment made by the registrar of the Child Support Agency under Part 5 of the Assessment Act, but also the periodic payment provisions in a child support agreement which has been accepted by the registrar under Part 6 of the Assessment Act, and also any order of a court made under Part 7 for departure from an administrative assessment”. Further on, “It must, however, be recognised that once an order has been made departing from an administrative assessment, before there can be a variation of (or “departure” from) that existing order, it must be established to the court’s satisfaction, that since the making of the existing order circumstances have arisen as a result of which the financial capacity of either party is now significantly reduced s.117(2)(a), or the costs of maintaining the child have been affected s.117(2)(b) or the existing order now results in an unjust and inequitable determination of child support s.117(2)(c). There is nothing Gilmour to suggest to the contrary”. As their Honours explained if it were otherwise, “There would be nothing to stop a party who did not accept the terms of a departure order from immediately approaching the court to have the matter re-heard, or to stop a party who thought better of the agreement, which he or she had made, immediately seeking to vary the agreement”.
In Wild v Ballard the Full Court stated, after referring to Bryant’s case, “The requirements of s.117 as explained in Bryant obliged His Honour, when dealing with the husband’s application, for the reduction in his obligation to pay periodic child support, to determine firstly whether by reason of a change of circumstance, a ground for departure existed, and then required His Honour to determine whether it would be just and equitable and otherwise proper to make an order departing from the existing assessment”.

Special circumstances of the case – has the husband shown a ground for departure?

The husband’s application is based upon s.117(2)(c)(i). The focus of his case is on the wife’s income, property and expenses. I agree with the wife’s contention that the court is required to consider not only her circumstances, but also the husband’s. Whilst she agrees that her financial circumstances have improved, she contends that the husband’s have too, at least by an amount equivalent to her increased wealth. A factor it is submitted that is critical to determination of whether or not a threshold ground for departure has been established.
In order to determine whether the husband has established a ground for departure it is necessary to examine the parties circumstances at the time the departure order was made. The husband contends that the court would consider the special circumstances of the case by reference to an analysis of the wife’s financial circumstances at the time of the first hearing, but not as a consequence of Her Honour’s s.79 adjustment. This submission is flawed because the child support determination was made after the court had completed the s.79 application. A claim for spouse maintenance or child support that is heard at the same time as an application for property adjustment adds an extra step to the process. The sequence of determining the applications is important and the property application must be determined before the other claims are considered. This is to ensure that the terms of any order made in the property claim are considered in the spouse maintenance and child support applications. See Clauson (1995) FLC 92-595. Examination of the reasons shows that Her Honour firstly considered and determined the s.79 application, then the wife’s application for spouse maintenance and finally her child support application. The child support decision is predicated upon the s.79 adjustment. Thus, Her Honour determined the child support application in light of the reduction of the husband’s assets and the improvement in the wife’s situation as a consequence of the property orders made in the wife’s favour. It is plain from her Honour’s finding at par 285“As a result of the orders proposed by me, the wife will have in excess of $1.5million to invest. That sum after tax, will generate an amount sufficient to meet the wife’s spousal maintenance needs in their entirety.” It is clear that Her Honour took into account her earlier findings and orders when determining the departure application. This means that the court took into account that the wife would have about $1.5 million that she could invest and use not only towards her own but also the children’s support. Hence, I am satisfied that the court should examine the parties’ circumstances following upon the s.79 determination and not before it.
As the first step in adjudication the competing s.79 applications, Justice Boland identified the matrimonial assets. At paragraph 227 of her judgment Her Honour found that the matrimonial assets, liabilities and financial resources were as set out in the following table.

ASSETS
Husband’s home (agreed value)	$615,000
The Orchard hills property (agreed value)	$980,000
Husband's St George shares - 297,500 at $11.30	$3,361,750
Husband's Telstra shares - 1,700 at $6,66	$11,322
Husband's TAB shares - 257 at $2,36	$606
Husband's car (agreed value)	$45,000
Wife's car (agreed value)	$16,000
Husband's NAB account	$42,000
Husband's St George account	$723
Husband's cash	$9,000
Husband's money in trust	$40,000
Furniture (agreed value)	$74,715
Jewellery, coins, stamps and notes (agreed value)	$48,500
Husband's tax refund	$4,472
Wife's bank accounts	$3,783
Wife's Testra shares - 1,280 at $6.66	$8,525
Wife's TAB shares - 257 at $2.36	$606
Balance held in National All In One Superannuation Fund in Husband's name	$1,606,752
Add back Husband's legal fees paid	$30,000
Add back Wife's legal fees paid	$13,800
TOTAL	$6,912,554
LIABILITIES
Mortgage to National Australia Bank secured over the property near Penrith	$350,000
National Gold Visa (wife)	$9,630
Dr Waters Fees	$9,000
TOTAL	$368,630
Nett Assets and Liabilities	$6,543,924
FINANCIAL RESOURCES
Advanced Asset Management Superannuation Fund (wife)	$2,500

From the orders the husband received 60 percent of the nett assets and the wife received the balance. The manner by which the court implemented the property adjustment is set out at paragraph 279 of the judgment. The table below identifies the assets received by the wife pursuant to Boland J’s orders. The husband retained the remaining assets. Thus as a consequence of these orders the wife received nett assets worth $2,617,569 and the husband received nett assets worth $3,926,355.

The Orchard Hills property	$980,000
Wife's car	$16,000
Furniture (agreed value - 50%)	$37,357
Wifes bank account	$3,783
Wife's Telstra shares	$8,525
Wife's TAB shares	$606
Wifes Legal fees	$13,800
St George Shares	$1,571,628
TOTAL	$2,631,699
Less one half Dr Waters Fees	$4,500
Less Wife's credit card debt	$9,630
Sub Total	$14,130
Wife's Entitlement – 40%	$2,617,569

The effect of the December 2000 consent orders was that the wife’s s.79 adjustment was reduced and the husband received back $344,000, taken by an adjustment to the volume of St George shares he was ordered to transfer. Overall, this meant that the husband’s s.79 entitlement increased by 5.3 per cent and the wife received a commensurate reduction.
Having completed the contributions phase of the s.79 exercise, Boland J made findings concerning the application of s.75(2). Concerning s.75(2)(b) she held:
“I accept the evidence of the husband that he is retired and that he will not participate again in the paid workforce. The wife asserts that she has been out of the workforce for eight years, not having worked since the birth of S. She has recently commenced some limited desktop publishing work. Based on my findings as to contribution each of the parties will have substantial assets to provide income for them for the future and I make no adjustment under this subsection.”
The wife’s financial circumstances were further examined within the context of her application for spouse maintenance and the findings outlined in paragraph 17 were made. Concerning child support the court held “..the husband is on present figures offering to pay Child Support at the rate of $470.86 per week together with the children’s private school fees and reasonable extra curricular activities. The wife sets out the children’s school fees at an amount of $40 per week and claims a further $20 for excursions and sporting activities. On that basis the husband on his offer would be paying approximately $530.86 per week of total claimed expenses for the children of $609 per week. Given that both parties have an obligation to maintain their children from the reasonable and adequate shares of their income, earning capacity, property and financial resources, I find that the husband’s offer is a generous one and I do not find that the wife’s proposed order for departure over and above that offered by the husband is appropriate. Accordingly I propose to make orders for departure in terms proposed by the husband.”
I find that the husband’s circumstances are as follows. The husband was born on in 1937 and is 67 years old. He retired in about June 1992. As well as the two children who are the subject of these proceedings, the husband has two adult children by his first wife. The husband lives near Penrith, his home is worth $1.5 million and is unencumbered. Putting to one side motor vehicle, personalty and other personal property, the husband has the following other assets:
·St George Bank savings $1,053;
·NAB savings $165,000;
·NAB Term Deposit $900,000;
·188,175 St George Bank shares $3,959,202;
·257 TAB shares $1,182;
·17,000 Telstra shares $7,752.
In total, the husband has property worth $6,604,189. He has $28,740 liabilities, being a BAS payment of $21,740 and the balance relates to home repairs. The husband has nett assets worth $6,575,449. As well as his assets the husband has an MLC allocated pension that he estimates is worth approximately $250,000. Payments pursuant to the MLC pension commenced 27 June 2004 and will produce an annual income of $14,550.
Other than his pension the husband’s income is derived from his investments. During the financial year ended 30 June 2003 he earned an average weekly income of $2,997. In addition to income received from dividends and interest, he received imputation credits in respect of share dividends in the total sum of $64,731. Including the imputation credits in his gross income he received $4,242 per week for the year ended 30 June 2003. I accept that he will have comparable income for the financial year ended 30 June 2004 (plus his pension) in total about $4521 per week. His commitments are detailed in his financial statement. These total $2279 per week, comprising $441 child support, $142 non periodic school expenses, $350 children’s expenses and the balance on taxation and his personal costs.
The wife’s circumstances are as follows. The wife was born on in 1961 and is 43 years of age. S and S are her only children. On 14 February 2004 the wife married G L. She and her husband purchased land at Blue Hills, near Glenmore Park, upon which they are building a new home. Until the home is completed, which the wife anticipates will be before the end of this year, they and the children are living in an investment property the wife owns at Glenmore Park. The wife sold the parties’ former home so that she could purchase the Glenmore Park property and contribute to the Blue Hills property. Because the wife is building the home, there is considerable movement in her bank accounts as funds are drawn upon in order to make progress payments or pay other construction costs. During her cross-examination the wife was plainly irritated by questions concerning the adequacy of her financial disclosure. Her financial circumstances are complex. The manner in which she presented her financial information was confusing, the pro forma financial statement being inadequate for the task. Rule 24.02 of the Federal Magistrates Court Rules 2001 enables a party to file either a financial statement or an affidavit of financial circumstances. It would have been preferable had the wife’s financial disclosure been given using an affidavit. Using an affidavit the wife’s material could have been presented in a more logical and coherent fashion, thereby making her and the court’s task somewhat easier. If she found cross-examination tedious, she only has herself to blame.
Notwithstanding the criticisms made concerning the adequacy of her financial disclosure, I am satisfied that the wife genuinely attempted to make full disclosure of her financial affairs. Most errors occurred predominantly because at present, there are changes to her assets and expenses occurring on an almost daily basis. However there are some matters where the wife paid insufficient attention to the accuracy of the information provided, taking in effect a near enough is good enough stance. In one instance the variable was approximately $50,000 favourable to the wife. Her somewhat glib response that she could not be expected to be fully accurate was unsatisfactory. However as she produced voluminous records that revealed the accurate figure, nothing actually turns on the misinformation.
The wife owns the following assets.
·77 per cent interest as tenants in common with her new husband of her interest being worth $731,500.
·The unit at Stanmore, her interest being worth $240,000. This property was purchased as a residential investment unit in September 2003 with her new husband. The wife and her new husband own the property 50 per cent each as tenants in common. The unit was acquired with funds borrowed from the National Australia Bank. Neither the wife nor her husband contributed any of their own monies towards its purchase. NAB took collateral security over all three properties in which the wife has an interest.
·The wife’s Glenmore Park property in her sole name worth $600,000.
·NAB account - $1,043.41. I accept the wife’s evidence that she overlooked this account and that its omission from her financial statement was a mistake.
·NAB Flexi account at the time she swore her financial statement held $157,000 and not the $40,000 disclosed. This is the current balance. However, the wife had drawn a progress payment of $113,000, which came out of that account only days after she completed her financial statement. Therefore, it was understandable that the wife disclosed $40,000 nett.
·St George Dragon Direct. In her financial statement the wife disclosed $126,008 whereas the balance was $171,000. This is the current balance.
·94,239 St George Bank shares at $21.16 – worth $1,994,097.
·TAB shares worth $3,554.
·Telstra shares worth $5,496. The wife says that these shares and also an investment savings account with a current balance of $1,980 are assets she holds in trust for the children. The wife did not produce any evidence that she had established a trust and the parties took the joint position that the children did not have any assets or income. That being the case the TAB and Telstra shares as well as the wife’s account are treated as belonging to her.
·Honda CRV motor vehicle $32,000.
·BYG Enterprises Pty Limited – Nil.
·Household contents – $20,000.
·Jewellery – $50,000.
·AFR Super Fund $41.
·Retirement Plan $2,805.
·Total assets $3,892,796.
The wife’s liabilities are set out below.
·NAB loan for the Blue Hills property of $3,330. In her financial statement the wife said that she owed $50,000. This was misleading. The wife and her new husband established a joint loan with a $200,000 limit, which was reduced to nil when the wife deposited share sale proceeds. Exhibit C shows that the current balance is $6,529.97. It appears that the larger sum represents the amount that the wife believes will be one of the half of the amount outstanding when the property is completed. I accept her evidence. In this instance she appeared to be double counting as she also claimed a contingent liability for the same purpose in her St George account. As that is allowed the lower figure will be taken into account.
·NAB mortgage over the Stanmore unit– 50 per cent total loan of $450,000 = $225,000.
·NAB mortgage 56-850-262 secured over the Glenmore Park property worth $479,000[1]. The wife raised this mortgage jointly with her new husband. These mortgage funds were entirely applied to the acquisition of the Glenmore Park property. I accept the wife’s evidence that she borrowed the monies with her new husband as, without his participation NAB would not advance her the loan. The husband contends that the court would find the wife’s liability is only $240,000. He rejected any notion that the court would similarly reduce the wife’s interest in the Glenmore Park property by half. I accept the wife’s evidence that as between she and her new husband she has accepted full responsibility for repayment of the mortgage and that in the event of default she would realise assets rather than allow a situation whereby the bank called upon G L to pay half of the loan. As a consequence I find that the wife is fully liable to repay the $479,000.
·The wife has a contingent liability that will be paid from the St George Dragon Direct account towards further costs at the Blue Hills property. These total $121,030.
·Taxation $11,035.
·Total liabilities are $839,395.
[1] Exhibit C
Thus the wife has nett assets worth $3,053,401.
The wife is a fitness instructor and does casual work.. She earns $89 per week salary from the leisure centre and $54 per week from a local college. Her primary source of income is through investments. On a weekly basis these are St George share dividends $1,610, TAB share dividends $1 and Telstra share dividends $78. G L pays her $200 per week as rent on Glenmore Park. As a consequence of the wife’s inquiries with local real estate agents, she believes that she can rent Glenmore Park for about $400 per week. Thus, her new husband pays her the sum identified. This does not include his living expenses. When they move into their home he will no longer pay the wife rent, although she will receive additional income by renting the Glenmore Park property.
The wife claims a nett loss on the Stanmore unit of $185 per week. The property rents at approximately $1,100 per month. The interest only mortgage payments are approximately $2,704 per month, which gives a shortfall of $1,604 each month. However, this property was purchased specifically to create a tax benefit through negative gearing and depreciation, none of which are included in the wife’s calculations. The wife is an astute businesswoman and I am satisfied that this investment has been established because overall it will be financially advantageous to her when the losses and allowances are offset against her income. As a consequence, I will neither take into account her income nor the expenses for the Stanmore unit. This means that I have taken into account that the wife will receive taxation benefits for the 2004 and following years so that her taxation liability will be less than revealed at the time of the hearing.
Excluding child support and without imputation credits the wife’s weekly income is thus $2032. With imputation credits her weekly income is $2744. When child support is added she receives $3181 each week. When Glenmore Park is tenanted her income will increase by about $400 per week. Her average weekly expenses, excluding the Stanmore unit and the children’s expenses are approximately $2266. When the children’s expenses are included her average weekly expenses are about $3277.
The wife’s new husband earns $2423 each week. Other than paying the wife $200 each week rent he does not contribute to her personal expenses. They maintain a joint account into which they contribute their share of daily living expenses, properly apportioned so that the wife pays her and the children’s expenses and her new husband pays his share. The wife does not contribute financially to her husband’s support nor does financially support her.
On 17 August 2004 the wife entered into an agreement with G L and W V whereby they incorporated BYG Enterprises Pty Limited. The primary purpose of the company is to provide a vehicle whereby these three equal shareholders could purchase a franchise agreement to open a Women’s Health Club. The venture is fully funded by borrowings and does not have any nett equity. The shareholders will borrow $750,000 by way of a combination of overdrafts, commercial hire purchase and business loans from NAB. NAB will take security over the director/shareholders property. The wife is the operations manager and it is agreed that the company will employ a full time manager who will report to the wife. She expects that she will work at the centre about six hours a week, performing a combination of management and aerobics instructing. The business partners have located premises and have negotiated a lease for $250,000. On behalf of the company the wife has paid one-half of the franchise plan fee. This was necessary because at that stage the NAB company loan had not yet been approved. It is unclear whether the company will refund the wife’s payment made for the franchise plan fee or whether those monies will become a repayable loan. The company business plan[2] shows that none of the directors will take a salary for the first two years. All profits associated with the business will be channelled directly into the NAB loan as additional payments. The wife and her co-directors hope that the loan will be fully repaid within five years. This coincides with the duration of the franchise agreement. Provided the membership drive results in 600 members, after the first two years the directors hope to produce approximately $210,000 per annum profit, which will be divided equally between them. If the venture is successful, rather than take the profit, the wife says the directors plan to establish a second health centre. While there is good reason to anticipate that this venture will ultimately succeed financially, this outcome is far from certain. Many promising business ventures fail. At this stage it would be premature to conclude that the fitness centre venture, even taking into account other changes, means that the wife’s circumstances have improved to a sufficient extent that the changes amount to special circumstances.

The children’s expenses

[2] Exhibit G

The husband says that the quantum of child support he offered to pay is excessive when compared to the children’s reasonable expenses incurred while in their mother’s care. The wife says that the children’s expenses have increased over the last four years. Not only because they are older but also because although Justice Boland ordered that the children reside with the husband three weekends in four, different contact orders were made on 31 March 2003. The effect of these later orders is that the children have each alternate weekend with their father from after school Friday until the start of school Monday, overnight on Thursday in alternate weeks and half of all school holiday periods.
During those periods that the children live with the husband, he incurs total expenses for them of $492 per week. This includes school expenses (predominantly school fees) of $142 per week. This means that his average expenses, excluding education expenses, for the children are about $350 per week.
I accept the wife’s evidence at question 60 in her financial statement that she spends $506 per week for the children on food, clothing and other expenses particularised on pages 11 and 12 of her financial statement. This does not include the expenses claimed in the final box on page 12 totalling $540 per week. Of these, the wife pays $30 per week counselling for S, not $45; the storage facility fees for furniture of $20 are for a brief period and therefore not taken into account. The contentious items are whether the court should take into account a portion of the mortgage costs, car registration and other insurances. The husband says that because the wife received a home unencumbered, the court would not allow accommodation expenses that are incurred merely because the wife has chosen to upgrade her and the children’s accommodation. I infer, because of its value, that the property was substantial and more than sufficient to provide a good standard of living for the children. However, the children will benefit from the new accommodation and the costs associated with it form part of their necessary living expenses. Necessary carries a wide meaning and differs from family to family. A family with modest means would regard some of the expenses incurred by these parties for their children as luxuries. One cannot lose sight of the fact that these parties have considerable wealth as a consequence of which their children enjoy a comfortable, financially secure and generous lifestyle. I do not accept that the wife cannot have taken into account as necessary expenses for the children a share of the accommodation expenses that she actually incurs merely because she and the children received a property unencumbered. On balance the amount claimed at $475 is a proper share of the additional necessary expenses identified in the wife’s financial statement. The significance of this finding is that the wife is contributing considerably more towards the children’s expenses than she was at the time the departure was made or for a period afterwards. Because of her improved circumstances this increased contribution towards the children’s costs on its own would not have been sufficient to establish special circumstances. However it demonstrates that just as the husband’s contribution towards the children’s expenses has increased so also has the wife’s.

I do not accept the husband’s submission that the wife’s evidence concerning the children’s (nor her own) expenses are grossly distorted. When he gave his evidence it was clear that the husband had a fairly limited understanding of the way the children live while with the wife and took a more modest approach to their reasonable needs. The wife’s approach is not unreasonable and is not profligate. I am satisfied that the wife incurs necessary weekly expenses for the children of $1,011.
Although I am satisfied that the wife’s financial position has improved since the departure order was made, so has the husband’s. He has significantly greater assets and income than the wife. Both parties have adopted sensible and informed investment strategies, which has enabled them to make healthy capital gains and improved their annual income. The Full Court in Gyselman discussed the words ‘in the special circumstances” and said; “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. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases. It has been held that the special circumstances were facts peculiar to the particular case which set it apart from other cases. The approach to the interpretation and application of the particular grounds in section 117(2) must be guided by that qualification”.
Both parties agreed in 2000 that their particular circumstances amounted to “special circumstances”. The relevant circumstance was their considerable wealth and the inequity that could result from the simple application of an income based formula. Because both parties have considerable assets it is plain that income alone would be an insufficient measure of their ability to contribute to their children’s expenses. By reference to the wife’s evidence of the children’s expenses when the departure order was made the husband clearly accepted that notwithstanding the wife’s property and potential income he should contribute more towards their expenses than she needed to. At the first trial he was represented by an experienced team of lawyers and would have been advised that his child support proposal was generous. Even though he has paid generous child support for the last four years he has increased his nett worth by about $2.7 million. The wife’s overall position is significantly improved but not nearly as much as the husband’s has. In these circumstances focussing only on her improved position would be misleading. By s.4(2) of the Act the court is required to ensure “that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support”. This introduces notions of equality and proportionality. These parties circumstances are not equal. Although the wife is wealthy, whether measured by nett assets or income, the husband is considerably more so. Thus the court needs to consider their contributions proportionally. Notwithstanding that the current assessment requires the husband to meet a greater share of the children’s expenses than the wife, his share is not disproportionate to his greater wealth. The greater share he presently pays is not as great compared to the share he willingly proposed in 2000. Other than the changed contact arrangements, which do not increase the time the children spend with the husband and could not themselves amount to special circumstances the parties improved wealth was easily anticipated. When all of these factors are balanced they do not amount to a ground for departure.

Is it just and equitable or otherwise proper to make a departure order?

Because the husband has not established a ground for departure I am not required to consider ss.117(4) or (5). However for abundant caution, if I were wrong in deciding against special circumstances I would not find on the facts before me that it is just and equitable to order a departure. Although there have been significant changes to both parties circumstances, the changes should have been anticipated when the husband asked the court to make the departure order in the terms ordered by Boland J. He could have set time limits to his greater share of child support but did not do so. The order operates as he intended and he is better able to afford to comply with the order than he was when the order was made. Although the husband no longer wishes to abide his earlier proposal he has not established a sufficient basis to be relieved from it.

The application to change to change the non-periodic order?

Section 129(3)(a) requires the husband to show that a variation is justified because of a change in the circumstances of the child, the carer entitled to child support or a liable parent concerned since the order was made. As with his departure application the husband relies on the wife’s improved financial circumstances to justify a variation. For the reasons I have already given I am not satisfied that the change in the wife’s circumstances justifies a change to the school fees order. This order operates as the husband intended it to. Although it sounds peculiar given his wealth, the husband is better able to afford the entire school fees than he was previously. Again, if I am wrong in deciding against a threshold basis for variation, I am not persuaded that it would be just and equitable or otherwise proper to modify the order as the husband proposes. My reasons are as set out in the above paragraph.

The child support arrears

Enforcement of child support arrears is a matter of discretion. There is no legislative restriction on the exercise of this discretion. The most important criteria is whether or not justice and equity is to be done in a particular case. I have already made findings concerning the husband’s income and nett assets. Paying the arrears will not cause him any hardship. The wife will not suffer hardship if the arrears are discharged. The mere fact that the Child Support Agency miscalculated the husband’s liability does not provide a proper basis for the court to discharge the arrears. The fact that the wife has already met the children’s expenses without the additional child support is not the point. Although payment will be made late, the husband must now in effect reimburse the wife for an additional share of the expenses that she has already met. Thus the full effect of the orders made by Justice Boland will be given effect.

The wife’s application to “clarify” the departure orders

The only other matter that requires consideration is the wife’s application to reframe the departure orders. She asks the court to insert a dollar value rather than leave the orders to interpretation by the Child Support Agency. The wife says that she is tired of being in dispute with the husband and the Child Support Agency concerning child support. It is plain both parties find dealing with each other and the agency tiresome. There is no doubt that the parties could try and discuss matters constructively rather than engage is seemingly endless skirmishes. If they did so their disagreements concerning interpretation of the assessments would fade. After this many years it is probably an outcome neither can be bothered to pursue. The change proposed by the wife will not alter the effect of the earlier order but will make the assessment more certain. The wife submits that the order is a clarification order. Precisely what this means is unclear. The difficulty she has is that the departure order is in effect spent. By this I mean that the order has resulted in a child support assessment, which there is no power to vary. Section 141 of the Child Support (Assessment Act) is not an independent source of power. The section confers a wide range of powers which the court may use when exercising jurisdiction under other sections of the Act. Gilmour (supra). Thus the only source of power appears to be pursuant to the slip rule or by departure. There is no argument made in support of the slip rule, an application that would in any event need to be placed before Justice Boland. Although I understand the rationale for the wife’s application, for the same reasons that I have already refused the husband’s departure application I will refuse hers. Section 98X(1)(c) of the Child Support (Assessment Act) appears to give the appropriate remedy. This enables the wife to object to the particulars of as administrative assessment, which objection will be considered by the Child Support Registrar.
For these reasons I make the orders at the start of this judgment.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate: S. Mashman

Date: 15 September 2004