RAN & CAR

[2006] FamCA 73

[2006] FamCA 73

FAMILY LAW ACT 1975

IN THE FULL COURT

OF THE FAMILY COURT OF AUSTRALIA

AT BRISBANE   Appeal No. NA 26L of 2004

File No. TVF 680 of 2001

IN THE MATTER OF:

RAN

Appellant

- and -

CAR

Respondent

REASONS FOR JUDGMENT

BEFORE:                   Bryant CJ, Finn and Holden JJ
HEARD:  8 October 2004
JUDGMENT:              22 February 2006

APPEARANCES:    The appellant appeared in person

The respondent appeared in person

APPEAL SUMMARY

MATTER:RAN & CAR

APPEAL NUMBER:  NA 26L of 2004
(TVF 680 of 2001)

CORAM:Bryant CJ, Finn and Holden JJ

DATE OF HEARING:  8 October 2004

DATE OF JUDGMENT:  22 February 2006

CATCHWORDS:                FAMILY LAW – APPEALS – LEAVE TO APPEAL – CHILD SUPPORT – DEPARTURE ORDER – EARNING CAPACITY – where lifestyle choice has reduced father’s earning capacity – where father sought substitution of actual income earned during assessment periods for imputed notional earning capacity – where father alleges no evidence to support assessment of earning capacity – whether ‘special circumstances’ established

STATUTE LAW CITED:

Child Support Assessment Act 1989 (Cth), ss. 4, 102, 114, 117

CASE LAW CITED:

Wild v Ballard (1997) FLC ¶92-771

Hendy v Deputy Child Support Registrar (2001) 27 Fam LR 641

STP v MIF [2004] FamCA 651

Gyselman & Gyselman (1992) FLC ¶92-279

Leave to appeal refused

Introduction

1. This is an application for leave to appeal by the father against orders made by Barry J on the 12 December 2003 dismissing an application by the father for a departure from the administrative provisions of child support pursuant to section 117 of the Child Support (Assessment) Act 1989 (“the Act”).  The application was filed on 13 December 2002.

2. In his application filed on 13 December 2002, the father sought that “all assessments made by the CSA (Child Support Agency) be set aside, including arrears of payment; that the child support amount be calculated on his actual income; and that the respondent pay the applicant’s costs.”  However at trial, and before us, the orders sought by the father were as follows:

   “1.       That I pay the $242 owing for assessment period 1.

   2.        That I not be deemed at any rate other than my actual earning.

   3.        That I commence paying child support from April 3 2002, commensurate   with when I resume working.

   4.        That we continue the present arrangement of garnishing my wage at 20% of gross earnings.

   5.        That I pay a total of $2144 outstanding of the above arrangement.

   6.        That all present accrued debts and penalties from previous CSA     calculations be cancelled.”

3. In dismissing the father’s application, the practical effect was the continuation of the assessment of Senior Case Officer Riethmuller made on 29 July 2002.

Background facts

1. The background facts, which we do not understand to have been in dispute, may be summarised as follows.

2. The father was born in 1958 and was at the date of the hearing a medical practitioner employed in private practice in North Queensland.  The mother was born in 1959 and was, at the time of hearing, an occupational therapist. 

3. The parties commenced cohabitation in June 1985 and separated in August 2000.  There are two children of the marriage; J aged 12 years and D aged 9 years.

4. In the three years immediately prior to separation the father was working at a 24 hour medical centre in North Queensland.  The parties were using a company as a vehicle for payments from the holding company operating the 24 hour medical centre.  In the three years prior to separation, the company under the control of the parties was paid the following sums for the father’s work at the 24 hour medical centre:

   ·$286,955 for the 97/98 year

   ·$328,664 for the 98/99 year

   ·$323,624.45 for the 99/2000 year

5. The father ceased employment in October 2000, two months after separation indicating he was suffering stress from the break-up.

6. In November 2000 the mother applied to the Supreme Court of Queensland for injunctions regarding their financial assets and on 15 December 2000 the father filed a debtor’s petition in bankruptcy and a sequestration order was made in relation to his estate on 15 December 2000. 

10.The mother first applied for a Child Support Assessment in November 2000.  By the time of hearing, there had been four assessments.

11.The first assessment was replaced by an assessment based upon income the father was then receiving by way of disability pension after he had ceased work.  That assessment of $5.00 per day remained until early 2000 when the father commenced working.  The mother applied for a change of assessment in May 2000.  Sometime after that the Child Support Agency re-assessed the father’s child support obligations for the period February 2002 to June 2002 based on his tax return for the year 2000-01 which showed a taxable income of $88,000.  Most of that sum was earned in the first part of the year, the father having ceased working in October.

12.On 29 July 2002 Senior Case Officer Reithmuller set the child support amount at $18,700 per annum from 1 July 2002 to 30 September 2004.  It is apparent that the father asserted that he was earning about $40,000 per annum whilst the mother contended that he had a capacity to earn about $300,000 per annum.  The father acknowledged that he had earned a very significant sum as a general practitioner but by then had joined a family medical centre and did not wish to return to the busier practice at the 24 hour medical centre.  In addition, in the period following separation he had lost his vocational registration as he did not maintain his points and had not decided whether to undertake the necessary steps to become vocationally registered again.  The father contended this reduces the amount he is able to be reimbursed per patient. 

13.The gravamen of the decision of the Senior Case Officer was that the father had the capacity to earn very significant sums each year as a general practitioner and that his current income represented a lifestyle choice.  The Senior Case Officer ultimately concluded from the material before him that it was not unrealistic to expect the father to be able to generate an income of $70,000 per annum.  He assessed the child support on this amount to $15,700 per annum.  He noted that there were private school fees of $4000 for which it was realistic to expect the father to contribute three quarters on the basis of his far greater income and earning capacity and therefore the Senior Case Officer set the child support rate at $18,700 per annum or $1580 per month ($360 per week).

14.Prior to the order of Senior Case Officer Riethmuller, the father had reached an agreement with the Child Support Agency that it would garnishee 20 per cent of the father’s gross earnings.

Judgment of the trial Judge

15.In considering the application the trial Judge looked at the information before him as to the father’s actual income and found it to equate to about $42,000 a year.  He calculated that the assessment on an income of that amount would be about $170 per week. 

16.The trial Judge recorded the orders sought by the father and noted that:

“To accede to the application, in effect, is to accept that a medical practitioner, in private practice with 20 years experience, has a capacity only to earn an annual income of some $42,000 to $44,000 per annum.  I note that the average adult income in Australia for a full-time employee is currently about $48,000 a year.  That is a statistic that is readily available from government sources.”

17.Having then noted that the actual child support assessment (made by Senior Case Officer Riethmuller) was $18,700 , his Honour continued

“This equates to a weekly sum of support for two children of $360 per week, which is more than double the amount that is currently deducted.  It is more than double what the applicant contends should be a reasonable sum.  A citizen, liable to pay child support, would need to earn about $81,500 taxable income to have a liability of $360 a week for two children.”

18.His Honour considered that the issue for determination then was “whether the applicant has a capacity to earn that sum of money on an annual basis”.

19.In relation to the father’s capacity, the trial Judge said:

“He suggests that pre tax earning for a year would be $1600 x 23 to bring a total of $36,800.  He concedes in the proceedings before me that $40,000 to $42,000 is the genuine extent of his capacity to earn income.”

20.The trial Judge then noted the written reasons given by Senior Case Officer Riethmuller in his determination of 29 July 2002 and considered that the methodology or reasons for his decision, at page 4 of the determination, was:

“It is clear that the lifestyle of the parties led prior to separation was particularly affluent as can be seen by the opportunities and experience outlined by [the mother] in the material.  However, it is well known that after separation the parties’ lifestyles generally reduce in affluence as there must be two households maintained.  From the material available to me I came to the conclusion that it is not unrealistic to expect [the father] to be able to generate an income of $70,000 per annum.”

And later:

“The child support assessment on this income amount comes to around $15,700 per annum.  In addition there’s a private school fee of $4000 for which it is realistic to expect [the father] to contribute three quarters on the basis of his far greater income and earning capacity. “

21.On that basis Senior Case Officer Riethmuller adopted the rate of $18,700 per annum.  The trial Judge considered the decision of Senior Case Officer Riethmuller to represent a significant departure from what the father might otherwise have been paying had he continued to earn what he did earn during the relationship.

22.Having considered the father’s evidence, and the findings of Senior Case Officer Riethmuller, the trial Judge went on to say at paragraph 18:

“In order to succeed in this application the applicant must firstly establish a ground of departure as set out in section 117 of the legislation, and furthermore, must show that it is just and equitable for the payer, the payee, and the children, and the community at large that there should be a departure from what would be the ordinary assessment.”

23.The trial Judge observed that the father had adopted, by choice, a different lifestyle which he said the Court should endorse in effect, by acceding to his application.  We observe that the effect of this choice resulted in a diminution of the father’s income earning capacity and at trial the father relied on a swathe of material depicting other medical practitioners who had elected, for a variety of reasons, to downsize their medical practices.   The trial Judge noted:

“No-one is expecting the applicant to earn a taxable income of $250,000 to $300,000 a year as he previously did at the time prior to separation…However, it is not unrealistic to expect a general practitioner with 20 years experience practicing in ‘C’, North Queensland to earn an income of $80,000 a year.  I would expect from reading the medical positions section of The Australian newspaper of a weekend where I see young medical practitioners being employed by government in hospitals earning in the range of $75,000 to $80,000 a year.  In private practice in an area like ‘C’, North Queensland I just refuse to accept that a general practitioner would be earning less than the current average adult wage.”

24.As a result, he concluded:  “I am not satisfied the applicant meets the stringent tests set out under section 117 that there should be a departure from the departure order already made by Senior Case Officer Riethmuller”.  He said further: 

“In my view, Mr Riethmuller’s reasoning was sound.  He arrived at the same result by a slightly different route by taking into account private school fees.  I take the issue globally and find that it is reasonable for a medical practitioner in the position of the applicant to have the capacity to earn a taxable income of about $80,000 a year.”

25.Accordingly, the trial Judge dismissed the father’s application with the effect that the current assessment would operate until September 2004.

Proposed grounds of appeal

26.In this case, both the father and the mother are self-represented. 

27.The appellant did not annex a Draft Notice of Appeal to the affidavit.  His grounds as identified in his summary of argument are:

1.Discrimination

2.Disregard for process of law.

3.Errors of fact.

4.Evidence was ignored

5.Infringement of my basic rights

6.Wasn’t fair to both parties

7.Made presumptions

8.Inadequate rationale for the judgements (sic)

9.Inconsistent attitude between judges

10.Included irrelevant material

28.Although the father then went on in his summary of argument to elaborate on each of these grounds , it became clear in his oral argument  that his principal or essential complaint  was that the trial Judge imputed to him a notional earning capacity, without taking into account that in earning his actual income he was working full time, in a reasonable practice,  earning a sum commensurate with his vocational registration and that there was no evidence to support the amount found by his Honour to be his earning capacity.

29.The father’s argument relied upon the following:

1.That he was not entitled to charge the same fee as a vocationally registered general practitioner as a result of allowing his registration to lapse following separation.

2.That he belonged to a practice which bulk billed.

3.That he had not been working full time because of the continuing litigation between he and the mother regarding his contact with the children.

This was in reality a re-agitation of his position before the trial Judge.

30.However, the father conceded in argument before us that he saw more patients than he had originally admitted, by seeing extra patients at weekends, and was doing procedures which increased his income.  He conceded to the Court that he earned $42,000 in the period in which he was not working full-time and that if he had worked full-time he could have earned more than $42,000.  He further conceded that he did not consider it appropriate for the Child Support Agency or the Court to impute to him a higher income capacity when he chose not to work full time because he had other issues to attend to.  Those issues he identified as the litigation in which he was involved with the mother in the Family Court.  The import of his concessions were that the figures he had presented in particular at page 90 of the Appeal Book were incorrect given his concession that he saw more patients at weekends and did procedures which he had not included in his calculations.

Principles on application for leave to appeal

31.Section 102 of the Child Support (Assessment) Act 1989 provides that an appeal from a single judge exercising jurisdiction under that Act lies only with leave of the Full Court.

32.The applicable principles have been discussed in a number of cases and it is unnecessary for us to revisit those principles in this case.  Leave to appeal may be granted if the appellant can establish that his or her substantive rights have been significantly affected by an error of principle made by the trial Judge or a substantial injustice (Wild v Ballard (1997) FLC 92-771, at 84,488, Hendy v Deputy Child Support Registrar (2001) 27 Fam LR 641 and STP v MIF [2004] FamCA 651).

Discussion

33.The relevant provisions of Section 117(2) of the Child Support (Assessment) Act 1989 are as follows:

(a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:

i.the duty of the parent to maintain any other child or other person; or

ii.special needs of any other child or another person that the parent has a duty to maintain; or

iii.commitments of the parent necessary to enable the parent to support:

a)himself or herself; or

b)any other child or another person that the parent has a duty to maintain; or

iv.high costs involved in enabling a parent to have contact with any other child or another person that the parent has a duty to maintain;

(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

i.because of:

a)high costs involved in enabling a parent to have contact with the child; or

b)special needs of the child; or

c)high child care costs in relation to the child; or

ii.because the child is being cared for, educated or trained in the manner that was expected by his or her parents;

(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

i.because of the income, earning capacity, property and financial resources of either parent or the child; or

ii.because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child; or

iii.because an amount (the additional amount) of a liable parent’s child support income amount was earned, derived or received by the liable parent for the benefit of a resident child or resident children of the liable parent; or

iv.because an amount (the additional amount) of an entitled carer’s child support income amount was earned, derived or received by the entitled carer for the benefit of a resident child or resident children of the entitled carer.

34.In considering the application of section 117 of the Act, his Honour was obliged to follow the strictures of the Full Court in Gyselman & Gyselman (1992) FLC 92-279, where it was said:

“the structure of section 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in subsections (2) – (9).  Section 117(1)(b) identifies a clear three step process:

i.that one or more of the grounds for departure from section 117(2) is established; if so

ii.whether it is “just and equitable” within the meaning of section 117(4) to make a particular order; and

iii.whether it is “otherwise proper” within the meaning of section 117(5) to make a particular order.

It is clear from the careful way in which section 117 has been structured that the Court must address each of those separate issues”. 

35.When considering section 117(1), (2) and (3) and the provisions of section 117(4) the Court must also bear in mind the general objects of the Act and the particular object of orders made under the departure provisions. The relevant objects are to be found in sections 4 and 114. What are particularly important in relation to a departure application are the objects set out in section 114, namely:

(a)       that children have their proper needs met from reasonable and adequate   shares in the income, earning capacity, property and financial resources    of both of their parents; and

(b)       that parents share equitably in the support of their children.

Conclusion

36.In this case the issue at trial was the earning capacity of the father and whether having regard to the facts found by his Honour and the objects of the Act, there were any special circumstances that made the result arrived at by the Senior Case Officer unjust and inequitable.

37.It is apparent to us that the trial Judge in making reference to section 117 in paragraph 22 of the Reasons for Judgment, but without explicitly saying so, was referring to section 117(2)(c)(i), and identifying the ground relied upon by the father in section 117, namely that the assessment of his earning capacity (rather than his actual earnings) determined by the Senior Case Officer as the basis for the calculation of child support, would lead to an unjust and inequitable outcome. That was the manner in which the father presented his case at trial. In dismissing the application and leaving in place the assessment based upon the reasons of the Senior Case Officer Reithmuller, the trial Judge was clearly rejecting the submission of the father that there were special circumstances that existed to make it appropriate to depart from the Senior Case Officer’s assessment. As he found no ground was made out under sub-section 117(1)(b)(i) the trial Judge was not required to consider the matters in subsections (ii)(A) and (B).

38.It is important to remember that this is an application for leave to appeal, and to succeed in this application the father must establish either an error of principle or a substantial injustice.  As we have just discussed, there has been no error of principle demonstrated on the part of the trial Judge in the approach which he adopted to the father’s application for a departure from the existing assessment.  Further, the concessions made by the father about his income and earning capacity in the course of argument before us, only serves to reinforce the proposition that no injustice is caused to the father by refusing leave to appeal and leaving the Child Support Assessment in place for the relevant period.

Costs

39.Although invited to do so, neither party wished to make an application for costs irrespective of the outcome of the application for leave to appeal.

Orders

That the application for leave to appeal by the father be dismissed.

I certify that the preceding 39
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.



Associate