Rawlings and Rawlings
[2010] FMCAfam 65
•2 February 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RAWLINGS & RAWLINGS | [2010] FMCAfam 65 |
| CHILD SUPPORT – Application for departure for period between July 2000 and June 2008 – whether leave should be granted in respect of administrative assessments more than eighteen months old – matters to be considered – reasons for delay – balance of hardship – special circumstance – capacity to earn – just and equitable – costs. |
| Child Support (Assessment) Act 1989, ss.98B, 98S, 111, 112, 114, 116, 117, 118 Family Law Act 1975, s.117 Federal Magistrates Court Act 1999, s.3 |
| Briginshaw v Briginshaw (1938) 60 CLR 336 Browne v Green 29 Fam LR 428 at 432 Explanatory Memorandum – Reform of the Child Support Scheme (Initial Measures) Bill 2006 |
| Applicant: | MR RAWLINGS |
| Respondent: | MS RAWLINGS |
| File Number: | ADC 6320 of 2007 |
| Judgment of: | Brown FM |
| Hearing dates: | 22 July & 19 August 2009 |
| Date of Last Submission: | 18 September 2009 |
| Delivered at: | Adelaide |
| Delivered on: | 2 February 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Childs |
| Solicitors for the Applicant: | Adey Lawyers |
| Counsel for the Respondent: | Ms Ross |
| Solicitors for the Respondent: | Doyle Kingston Swift |
ORDERS
The application of Mr Rawlings filed 12 December 2007 is dismissed.
The father Mr Rawlings pay the mother Ms Rawlings’ costs in respect of the application filed 2 December 2008 fixed in the sum of $2,000.00.
IT IS NOTED that publication of this judgment under the pseudonym Rawlings & Rawlings is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 6320 of 2007
| MR RAWLINGS |
Applicant
And
| MS RAWLINGS |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to child support. In particular, whether the court should decrease the amount of child support administratively assessed to be paid over a period of eight years, being from 1 July 2000 to 30 June 2008.
Mr Rawlings “the payer” is the applicant in these proceedings. He and Ms Rawlings “the payee” are the parents of three children: [X] born [in] 1991; [Y] born [in] 1994; and [Z] born [in] 1995.
The parties married in December 1988 and separated in February of 1997. The children have lived predominantly with the payee since separation and she has sought a number of administrative assessments of child support.
Ms Rawlings lives in [B], where she is employed part-time [in the Financial Industry]. She earns around $31,000.00 per annum currently. In the past, her income has been significantly less.
Mr Rawlings lives at Property P, a 75,000 hectare grazing property approximately 200km north of [B]. The property is owned by his father, Mr R.
Mr Rawlings’ position is that he works on the station, from time to time, for his father and runs some cattle, which he owns, on it. However, he asserts that he receives no or very little income as a result of his efforts.
Further, it is his position that Property P has been in the grip of drought for the past decade or so. As a result, his only source of direct cash income has been an exceptional circumstances relief payment received by him from the Commonwealth Government, through the Agency of Centrelink.
Exceptional circumstances relief payments are available to farmers and those who derive their income in ways related to primary production and who live or farm in an area of Australia which has been certified as exceptionally affected by drought.
The area of Western New South Wales in which Property P is situated has been certified as such an area for the last decade or so. The rate of exceptional circumstances payments are equivalent to those available to the unemployed on Newstart Allowances.
In addition, Mr Rawlings asserts that he suffers from a significant level of physical disability since injuring his back in 1984. As a result of this injury, his limited skills and isolated location, it is Mr Rawlings position that he has no capacity to earn any form of income away from Property P.
Mr Rawlings has filed income tax returns for the years in question, which have largely reflected the exceptional circumstances relief payments which he has received. It is his case that these income tax returns are a proper reflection of his income and should form the basis for the assessment of any child support payable by him.
Ms Rawlings does not agree. She asserts that Mr Rawlings receives significant non-cash benefits from his father and is in effect running Property P on his father’s behalf or at least in a clandestine partnership with him.
In the past, Ms Rawlings has successfully applied to vary child support assessments pertaining to herself and Mr Rawlings through the administrative departure process mandated by the provisions of the Child Support (Assessment) Act 1989.
It being her case that Mr Rawlings does derive income from his labours for his father on Property P and would be capable of earning an income away from the station, if he chose to do so. She asserts that
Mr Rawlings has arranged his affairs, in cahoots with his father, to avoid liability for child support.
As a result of the administrative departure process, Mr Rawlings has been assessed to pay a greater amount of child support for [X], [Y] and [Z] than would have been payable by him on the basis of his declared taxable income. However, until the instigation of these proceedings in December of 2007, he has not sought an order from a court of appropriate jurisdiction to challenge these various assessments.
Mr Rawlings is currently significantly in arrears in respect of child support. As at 1 July 2009, his arrears stood at $22,022.46. As I understand matters, the Child Support Agency has also imposed levies on him as a consequence of the late payment of the sum in question.
Because the majority of these assessments are more than eighteen months old, the father requires the leave of the court to have the assessments reviewed, particularly whether there should be any court ordered departure from their operation. These proceedings deal with the father’s application for this leave and if granted, what is the appropriate level of child support which should be fixed for the periods in question.
Ms Rawlings’ position is simple. She wishes the payer’s application for leave to proceed with his application to be dismissed. In addition, it is her position that no special circumstances exist and it would be neither just nor equitable for there to be any form of departure from the various applicable child support assessments.
There is one other issue which arises between the parties. In June of 2008 [X] applied to be an exchange student through [omitted], with each of her parents’ written consent. In August of 2008, she was allocated a place in [Europe], leaving Australia on 14 February 2009.
Obviously, [X] required a current Australian passport to be able to take up her exchange scholarship. Ms Rawlings alleges that Mr Rawlings was recalcitrant in executing the necessary forms. As a result, on 2 December 2008 she brought an application to permit [X] to travel internationally, notwithstanding Mr Rawlings had not formally consented. Ms Rawlings now seeks the costs of this application.
These proceedings are directed to resolving the various issues between the parties, including the issue of whether Mr Rawlings should be granted leave to pursue his application to seek a departure from administrative assessments of child support, which are more than eighteen months old.
The documents relied upon
The payer relies on the following documents:
i)A statement of his financial circumstances filed 12 December 2007; and
ii)An affidavit of himself filed 13 July 2009.
The payee relied on the following documents:
i)A statement of her financial circumstances filed 11 March 2008; and
ii)An affidavit of herself filed 20 July 2009.
In addition, a number of documents were tendered into evidence. These documents included a report from Mr Rawlings’ chiropractor; a number of his taxation documents; and material from the Child Support Agency.
Background and chronology
Ms Rawlings was born [in] 1959. Mr Rawlings was born [in] 1964. The parties married [in]1988.
There is no dispute between the parties that they finally separated on 3 February 1997. Following their separation, there were lengthy proceedings between the parties, in the Family Court, regarding arrangements for the care of their three children and the division of property.
The impression I have is that these proceedings were bitterly contested. This impression is not displaced by the parties’ current presentation in these proceedings, which was marked by extreme levels of suspicion and antipathy.
The property aspect of the proceedings were finalised by Dawe J on 27 November 1998.[1] Her Honour found that the parties’ net pool of assets amounted to $185,894.00. She ordered that this pool be divided 60/40 percent in the wife’s favour.
[1] See exhibit D
In particular, Dawe J found that the section 75(2) factors favoured the wife. She said as follows:
“… the husband has a significant earning capacity as a station hand or rural contractor.
The evidence concerning the amount the husband has actually earned was far from satisfactory, the evidence as to the arrangements he makes with his parents in relation to his financial circumstances were also unclear. Notwithstanding that, I find that the husband has a significant earning capacity because of his years of experience working on the station. It is true that his income may be affected by the seasons, but he also has a capacity to adjust his taxable income in accordance with standard procedures for self-employed rural contractors. He is, on any view of the matters, financially in a much better position than the wife is or is likely to be in the immediate future.”
The payee first sought an administrative departure from the applicable assessment of child support on 17 March 1998. At this stage, the payer had been assessed to pay an annual amount of child support of $620.00 on the basis of a default income of $10,943.00.
On 6 May 1998, the child support review officer concerned found that there should be a departure from the 1997/1998 assessment of child support. He fixed the annual rate of child support payable by
Mr Rawlings in the sum of $3,600.00 from 17 March 1998 to
31 December 1998.
In January of 1999, Mr Rawlings was calculated to pay child support at an annual rate of $4,786.00 based on a child support income of $24,000.00. This amount was fixed by departure, although I have not been provided with a copy of the relevant decision.
On 10 September 1999, Mr Rawlings sought to depart from this assessment on the basis of the high costs incurred by him as a result of having contact with the three children concerned. The application was refused.
On 6 May 2002, Ms Rawlings sought to depart from the applicable assessment on the basis it did not properly take into account
Mr Rawlings’ earning capacity, property and financial resources. As such, she sought an increase in the amount of child support payable by him. At the applicable time, Mr Rawlings had been assessed to pay the statutory minimum amount of child support of $260.00 per annum.
Mr Rawlings chose not to take part in the departure application. Nevertheless the senior case officer concerned accepted Ms Rawlings’ submission that Mr Rawlings contracted his services, as a farm hand to his father and also derived substantial financial benefits from being able to live on premises erected on his parents grazing property rent free. In these circumstances, the annual rate of child support payable by Mr Rawlings was fixed at $4,650.00 between 1 July 2002 and 31 December 2004.
Mr Rawlings initiated the fifth change of assessment application on 19 February 2004, seeking to revert to the statutory minimum of child support. The basis of his application was simply put:
“I’m now living on exceptional circumstances relief payments and can’t afford child support payments of $387.50 per month.”
Ms Rawlings did not accept the claim and sought an increase in the monthly amount payable to $500.00. Once again, she asserted that
Mr Rawlings was clandestinely working on his parents’ property, and as such, had not fully disclosed his income and related benefits.
On 14 April 2004, the senior case officer dealing with the application declined to change the assessment, as she was not satisfied that there had been any material change in the circumstances of either of the parties concerned.
In February of 2003, Mr Rawlings met his current wife, Ms R who was formally a national of the Russian Federation, through an introduction agency. She has a daughter from an earlier relationship, [B] born [in] 1992.
In October of 2004, Ms R and her daughter arrived in Australia from Russia. In December 2004, Mr and Ms R married.
It is the payee’s case that this marriage and the expenses associated with it, when coupled with the fact that Ms R and her daughter, as a condition of their visa entry to Australia, are ineligible for social security payments, is indicative of the fact that the payer has undisclosed financial resources.
Mr Rawlings does not agree. It is his case that the costs of Ms R’s and her daughter coming to Australia were paid by Ms R. Further, it is his position that his parents paid for the costs of the wedding. He also asserts that Ms R has her own source of income.[2]
[2] See payer’s affidavit filed 13 July 2009 at paragraph 29(c)
At the conclusion of the assessment set by departure on 3 July 2002, the assessment reverted to the statutory minimum on 1 January 2005, on the basis of a default child support income of $13,722.00 for the payer. This led to a further application being brought by Ms Rawlings, which was determined on 3 February 2005.
Ms Rawlings was successful in her application, with the relevant senior case officer assessing Mr Rawlings as having a child support income of $30,000.00 for the period from 1 January 2005 to 31 December 2007. In the relevant decision, the senior case officer wrote as follows:
“From a government maintained web site I find the typical weekly income of a farmhand in New South Wales is currently an amount of $525 or an annual income of $27,300. As best I can judge
Mr Rawlings works well beyond the standard 38-hour week and if he were paid at the award rate his salary would be in excess of the average income of farmhands stated above. In addition to any salary received by Mr Rawlings from his employer, he also benefits from free accommodation and payment of all utilities. In my view taking account of the income Mr Rawlings might earn from a salary based on the award rate and the value of non-cash benefits he receives I find it is reasonable to attribute to
Mr Rawlings financial resources equivalent to a child support income of $30,000.”[3]
[3] See exhibit G of Ms Rawlings’ affidavit filed 20 July 2009
Mr Rawlings objected to this decision and, as a result, it was reviewed on 6 May 2005. The objections officer declined to change the original decision. At the conclusion of the objection decision is this statement:
“Either parent may apply to a court for a change to the assessment if they believe this decision does not provide for a fair assessment of child support payable for the children in the case.”
In February 2006, Mr and Ms R’s child [C] was born. As a result, on 23 June 2006, Mr Rawlings made an application to change the applicable child support assessment on the basis of his legal duty to maintain [C]. At the time of this application, Mr Rawlings also apparently stated that he was financially supporting Ms R and [B].
Mr Rawlings was successful in his application and, for the period between 24 February 2006 and 22 June 2006 the annual rate of child support payable to Ms Rawlings was decreased to $1,651.00 on the basis of his liability to maintain [C] alone. Subsequently it seems this annual rate of assessment was extended to 31 December 2006.
From 1 January 2007 onwards, there have been various child support assessments, including those which have followed the institution of the new child support regime. These various assessments have been based on a child support income, for Mr Rawlings, of between $17,000.00 and $20,000.00 per annum. They have resulted in him being assessed to pay monthly amounts of child support of between $28.25 and $31.25.
It is also common ground that, for extended periods in 2007 and 2008, [Y] lived with Mr Rawlings at Property P. The periods in question seem to have amounted to around twelve months. It is Ms Rawlings’ evidence that [Y] has been employed on the station from time to time.
I have been provided with a transaction statement in respect of
Mr Rawlings payments to child support between 27 September 2000 and 1 July 2009.[4] It shows the payer has paid $6,976.82 in the period in question. On my calculations, the period in question is 455 weeks, leading to the conclusion that the average weekly amount of child support paid is $15.34.
[4] See annexure R to the payee’s affidavit filed 20 July 2009
As at 1 July 2009, the arrears of child support owed by Mr Rawlings amounted to $22,022.46. As at 19 June 2009, the penalties for late payment in respect of this sum amounted to $18.251.62.[5] Accordingly, an amount slightly in excess of $40,000.00 is owing by Mr Rawlings in respect of outstanding child support.
[5] See exhibit F
It appears to be the case that the Registrar of the Child Support Agency has never taken any formal steps to recover these arrears, in a court of appropriate jurisdiction. I assume that most of the payments of child support, received by the Agency, but not all, have come about as a result of direct deduction from Mr Rawlings’ social security entitlements.
Mr Rawlings commenced these proceedings on 12 December 2007. He seeks a departure from the various administrative assessments, for the period between 1 July 2000 to 30 September 2009, so that his child support income is fixed at the same amount as is contained in his income tax returns.
Each of those income tax returns have been tendered into evidence and can be summarised as follows:[6]
[6] See exhibit E
Financial Year Ending
Taxable Income - $
30 June 2001
11,470.00
30 June 2002
13,226.00
30 June 2003
9,712.00
30 June 2004
10,900.00
30 June 2005
16,559.00
30 June 2006
19,076.00
30 June 2007
19,164.00
30 June 2008
E20,175.00
I have not been provided with evidence regarding Mr Rawlings’ likely level of income for the year ending 30 June 2009, but anticipate it will be similar to past years. I assume that the effect of substituting the various income figures, set out above, for Mr Rawlings’ child support income in the various assessments in question will result in there either being nil assessments or that he pay the statutorily based minimum amount of child support, which is tied to social security entitlements.
This will discharge the arrears and penalties relating to them. Whether it will also result in Ms Rawlings having some form of liability to
Mr Rawlings, as a result of a consequential level of overpayment, is unclear to me and was not a topic raised by counsel for either party.
As previously indicated, it will be necessary for Mr Rawlings to have the leave of the court to proceed with departure applications, which have been in place for more than eighteen months. The relevant provisions are contained in section 111 and 112 of the Child Support (Assessment) Act1989 “the Assessment Act”.
Division 4 of Part VII of the Assessment Act deals with departure orders from administrative assessments in special circumstances. Pursuant to section 118, the court is empowered to vary, amongst other things, the annual rate of child support payable by a parent; make an order varying a parent’s child support income; or otherwise vary the various components of the child support formula to the particulars of any given case.
However, the entitlement to make an application for departure pursuant to section 118 is limited. Pursuant to section 111(1) a party to a child support assessment may only apply to the court for an order under section 118 of the Act in respect of any day in a child support period, which is more than eighteen months and less than seven years earlier than the day on which the application is made with the leave of the court.
Mr Rawlings made his application to the court on 12 December 2007. Accordingly, on my calculations, he requires the court’s leave to proceed with any applications to depart from administrative assessment of child support, which relate to periods prior to 11 June 2006.
The payer seeks to depart from the applicable child support assessment for the period from 1 July 2000. Accordingly, the period from this date until 11 December 2007 is more than seven years prior to the date of Mr Rawlings’ application.
Accordingly, given the terms of section 112 of the Assessment Act, I do not believe that I have jurisdiction to deal with this particular period, which of course is brief in the overall context of the case.[7]
[7] See Assessment Act at s.112(6) & (7) which direct the court to specify, in any order which it makes, the period for which leave is granted but which specifically prohibits it from specifying a period more than seven years earlier than the day on which the relevant application is made.
Mr Rawlings’ position can be simply put:
·The proper basis for any child support assessment can only be his actual taxable income, which is a true reflection of the moneys received by him;
·He refutes any suggestion that he has any clandestine arrangement with his parents, or that he is receiving income – either directly or indirectly – from Property P;
·It is his case that he commenced these proceedings because he is wearied and stressed as a result of being constantly chivvied by the Child Support Agency for payments of the arrears and he can stand this state of affairs no longer.
Ms Rawlings’ position can easily be simply put:
·It is her case that it is transparently obvious that Mr Rawlings receives all manner of financial benefits from Property P and is likely to be constructively managing the Property P;
·In addition, she contends that Mr Rawlings is committed to ensuring she receives as little financial support as possible from him for [X], [Y] and [Z] for reasons related to his antipathy for her;
·She contends that Mr Rawlings has provided no logical or compelling reason as to why he has delayed bringing these proceedings;
·In this regard, she contends that it is ludicrous for Mr Rawlings to assert that he was unaware he could bring such proceedings, given his ready recourse to litigation in the past, including review mechanisms provided by the Child Support Agency and the fact that he must have received numerous pieces of correspondence from the Agency advising him of his entitlements in this regard;
·She concedes that it is unlikely that she will be paid any of the arrears, in the short to medium term, given Mr Rawlings circumstances and the apparent unwillingness of the Agency to pursue the matter.
·
However, it is her case that, at some stage in the future,
Mr Rawlings is likely to either inherit Property P or be enriched in some other manner;
·On this occurrence, she hopes to be able to receive the arrears of child support, to which she is currently entitled and it would constitute a considerable hardship to her, if she was deprived of such an avenue.
Regrettably, it has taken some time for these proceedings to be resolved. One major reason for the delay was that the parties hoped to be able to resolve the proceedings consensually and reach some accommodation regarding the question of arrears. Neither party is legally aided and, as a result, these proceedings have constituted a considerable financial burden for them each.
In order to assist the parties to reach a resolution, they were referred to a financial mediation conference, with a registrar of the court. As I understand matters, some provisional agreement was reached. Necessarily, this agreement had implications, in respect of past social security entitlements for the wife arising from any potential alterations of the previous child support assessments.
On 20 November 2008, with the acquiescence of counsel for both parties, I made an order that Mr Rawlings have leave to apply all departure orders from child support assessments pertaining to the parties’ three children made after 12 December 2000.
I was told that such an order was a necessary prerequisite for the parties reaching an agreement with one another, which would be satisfactory to the Child Support Agency and would enable the payee to receive a lump sum payment of child support and discharge previous arrears arising from the past assessments.
Unfortunately, this proved to be unfounded. Ms Rawlings was informed, by the Family Assistance Office that, if she elected to take a lump sum of child support, she would be in breach of one of the eligibility criteria relating to her receipt of social security, in the sense that she would be held not to have fully pursued her entitlements to obtain maintenance for the children from their father.
Accordingly, any agreement between the parties failed to materialise and the matter proceeded to hearing. Initially it was listed for one day in Adelaide. However that day was insufficient to complete the necessary oral evidence and the case concluded in [B], which was more convenient to each of the parties concerned.
However, the case has resulted in each party incurring considerable legal costs. The payee estimates her costs at around $15,000.00 or about half of her annual salary. She believes Mr Rawlings is likely to have incurred a similar liability, a fact which he concedes.
Given the absence of any settlement in the matter and the fact that there had been no substantive determination of the issues raised by section 111 of the Assessment Act, at the outset of the hearing, I determined that it would be fundamentally unfair to the payer to continue the operation of the order made on 20 November 2008 and it was accordingly discharged.
The irony of the case is that, whatever its ultimate outcome, it will not change the immediate financial circumstances of the parties (other than that both will have large legal bills). If the payer is successful, a debt he claims to have no means of ever paying will be quashed.
For her part, the payee is resigned to the fact that she is unlikely to receive anything of the arrears outstanding because the Agency can locate no property of the payer, against which to execute and, apart from a quasi social security payment, he has no income stream, which can be garnished.
Accordingly, these proceedings have little, if any, relevance in regards to how the costs of [X], [Y] and [Z] being clothed, fed, educated and housed, in the next few years, are to be allocated. In these circumstances, the vitriolic and expensive struggle between the parties seems to be analogous to “two bald men, fighting over a comb”.[8]
[8] The metaphor attributed to the Argentinean writer Jose Luis Borges to describe the Falklands War.
The evidence
The major evidentiary issue arising in this case concerns the nature of the payer’s relationship with his parents, who are the legal proprietors of Property P. Essentially, is it a commercial relationship, such that
Mr Rawlings is effectively working for his parents and receiving significant benefits from them in return?
Associated with this issue is an examination of Mr Rawlings’ attitude towards Ms Rawlings, particularly in terms of providing money to her for the financial support of the children concerned. It is the payee’s case that the determination of this issue has implications for the overall credibility of Mr Rawlings in this case.
Finally, the court must examine the evidence surrounding the reason for the delay in the institution of these proceedings and whether that reason is sufficiently valid to justify leave being given, in the context of the balance of hardship arising between the payer and payee respectively.
These proceedings are fundamentally different in nature to the earlier proceedings between the parties before the various senior case officers concerned, regarding whether there should or should not be a departure from the applicable child support assessment. Those proceedings were administrative in nature.
The current proceedings are judicial. As such, they involve the taking of evidence on oath and its scrutiny through cross-examination. As a result, I am placed in a position where I am both required and able to make assessments of the credibility and truthfulness of each of the parties concerned.
Pursuant to section 140 of the Evidence Act1995 (Cth) the standard of proof to be applied in this case is the balance of probabilities. As a result of section 140(2), without limiting the matters which the court can take into account in determining whether it is satisfied regarding any particular matter on such a balance, the court may also take into account the following:
“(a) the nature of the cause of action or defence; and
(b) the nature of the subject-matter of the proceedings; and
(c) the gravity of the matters alleged.”
These criteria take into account what was said by Dixon J (as he then was) in the case of Briginshaw v Briginshaw[9] as follows:
“The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences.”
[9] Briginshaw v Briginshaw (1938) 60CLR 336 at 362
The parties have been involved in litigation or disputation with one another over arrangements pertaining to the division of their matrimonial property and arrangements for the care and financial support of their children since February of 1997. The proceedings in the Family Court concluded in July of 2003. As has previously been indicated, there have been around six applications made for departure from child support assessments.
In all these circumstances, I have no difficulty in reaching the conclusion that there is little love lost between the parties. Indeed, this was my impression of each of the parties. Not to put too fine a point on it, the parties detest one another.
This was particularly pronounced in the case of Mr Rawlings, whom I did not find to be an impressive witness. He attempted to present himself as a simple and unsophisticated person. I did not find him to be so. Rather, he seemed to me to be shrewd and calculating in his intelligence.
Ms Rawlings has no regard for Mr Rawlings, whom she believes has largely abrogated his financial responsibilities for the three children concerned. These proceedings are as much a matter of principle for her, as anything else.
Very often, such a state of affairs has consequences for the objectivity of any witness concerned. I did not find this to be the case with
Ms Rawlings, who seems resigned to the fact that it is unlikely she will ever receive any significant child support from Mr Rawlings.
The parties in financial proceedings brought in this court, both in terms of family law legislation and the child support regime, have an obligation to make a “full and frank disclosure” of their financial circumstances. This follows from the requirement to file a statement of financial circumstances in support of each child support application.[10]
[10] See Federal Magistrates Court Rules at Rule 24.03
In my view, this duty is fundamental both to the adjudication of property matters pursuant to the Family Law Act and any applications regarding departure from administrative assessment from child support brought pursuant to the relevant legislation.[11]
[11] See Briese & Briese (1986) FLC 91-713 and Black & Kellner (1992) FLC 92-287 at 79,133
If there is not proper and full disclosure, the court is not in a position to exercise its proper authority and make orders which it considers to be proper pursuant to both the Family Law Act and the Child Support (Assessment) Act.
In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure.
In this case, it is my overall finding that Mr Rawlings has not been completely frank with the court. He has been disinclined to call any witnesses, who are likely to have been able to dispel some of the mists of uncertainty surrounding his financial relationship with his parents and how his step daughter’s education expenses are met, namely Ms R and his parents.
They could have dispelled any suggestion that Mr Rawlings receives significant financial benefits from his parents or is likely to take over the running of the property in due course.[12]
[12] See Jones v Dunkel (1958) 101 CLR 298. In its simplest exposition the rule expressed by the case is that the court may draw an inference adverse to a party who fails to call a witness whose evidence is likely to put a true complexion on the facts germane to the court’s deliberation and provides insufficient explanation as to why the witness has not been called.
I acknowledge that Property P is located within an area of New South Wales, which has been declared by the Minister for Agriculture, Fisheries and Forestry to be subject to exceptional circumstances because of prolonged drought and has been for many years. As a person involved in primary industry, on a property covered by such exceptional circumstances, Mr Rawlings is entitled to receive benefits from Centrelink.
In the applicable exceptional circumstances certificate, Property P is described as a “cropping/beef or sheep mixed (dry land) property”[13]. Although the property is effected by drought, it is still stocked with sheep and cattle.
[13] See exhibit I
Mr Rawlings deposed that the property is currently carrying between 100 and 150 beef cattle and around 3,000 sheep, which are kept for their wool. It has a capacity to carry up to 10,000 head of sheep in good times.
It is Mr Rawlings’ evidence, which I accept, that this livestock belongs to his parents. He personally owns approximately 40 head of Poll Hereford, which he runs on the property. The price of these cattle varies. Mr Rawlings deposed that he would be “doing well” to get $500.00 per head.
Property P has been in Mr Rawlings’ family for some time. Originally, Mr Rawlings’ father purchased the property from his grandmother in 1961. He believes the property is currently worth somewhere between $3 million and $3.7 million.
Mr Rawlings has two siblings – a brother, who works in [B] and a sister, who lives on the property. His father is currently aged 73 and his mother is 65. It is Mr Rawlings’ evidence is that his father has “no plans to retire”.
The payer deposes that his father manages the property and he
(Mr Rawlings) does not get paid anything. He lives on a house at the property with Ms R, [B] (when she is not at boarding school) and [C].
Mr Rawlings has been involved in the life of the property, since he left school at the age of fifteen. Immediately following his leaving school, Mr Rawlings worked as a station hand, for his parents, for a period of around five or six years. He was paid a wage during this period of time.
In his evidence, the payer deposed that he suffered a serious accident, when he was thrown from a horse in the mid-1980s. As a result he suffers from sciatica, from time to time, as a result of having “four squashed discs in [his] lower spine”.
The only medical evidence, in respect of this injury, is provided by a chiropractor, Dr M, who practices in [B].[14] Dr M writes of episodic instances of left leg pain and left leg weakness, with a particularly serious episode in 1988. In his report, Dr M opines as follows:
Over the ensuring years there were episodes of lower back problems involving the lumbopelvic area around the weakened L5/S1 disc, however never to the extent of the 1988 incident.
It is most likely that this disc would have continued to deteriorate, however without current diagnostic MIR images, to what extent couldn’t be speculated
Mr Rawlings has learnt to manage a lot of his spinal complaints by working within his limits, which has reduced his visits to only a handful in the last ten years.
[14] See exhibit A
Mr Rawlings flies an ultralight aircraft, which he uses to check stock on Property P. He rigorously refuted any suggestion that the aircraft belonged to him, stating it was his parents’ property.
In addition, Mr Rawlings deposed that his father was “slowing down”, so far as work on the station was concerned. Mr Rawlings asserted that he (the payer) was able to ride a motorcycle on Property P to round up stock; shear sheep; and climb and repair windmills. In addition, he assisted with lambing, calving and treatment and care of stock on the property. In particular, he assisted with mustering.
Mr Rawlings is the oldest child of his parents. His brother works as a [tradesman] in [B]. From time to time he has worked as [omitted].
Mr Rawlings’ evidence is that he would want to stay on Property P, if his parents go.
Mr Rawlings deposed that he did not know what his parents’ testamentary intentions were. He did not call his parents to give any evidence in respect of this issue. In addition, it was his evidence, about which I am highly dubious, that he had no knowledge of any managerial decisions regarding the property and what was its overall financial viability.
It would seem to me that Mr Rawlings is integral to the running of the station. He is able to perform all the necessary tasks inherent in the station’s operation. Given the age of his father, it seems more likely than not that he is doing more rather than less work, as times goes on.
I do not accept that he is medically incapacitated to work on the station. Although his back injury may cause him difficulty from time to time, it does not seem that Mr Rawlings has been incapacitated for any significant periods of time. He has not sought treatment for some time. In this regard, Mr Rawlings deposed that he did some form of work, on the station, each day.
Mr Rawlings deposed that he and his family never talked about money and he had no idea what his father’s income was, although he did not believe he (Mr R Senior) was in receipt of any exceptional circumstances payment.
When questioned, Mr Rawlings conceded that he was interested in anything to do with rural affairs. In particular, he knew what was the general value of a bail of wool at the present time – somewhere between $600 and $1,000 a bail depending on the quality of the wool involved.
When pressed further, he acknowledged that his father had probably sold about 100 bails of wool from Property P, in the last season, although he further indicated that he had no idea what was the value of his father’s wool cheque. He also had knowledge about the value of stock.
I accept that Mr Rawlings leads a frugal rural lifestyle. He grows his own vegetables. He slaughters goats for meat. He produces his own eggs. In addition, he lives in a house on the property, which is about 100 metres from his parents’ home. His parents do not require him to pay rent for the accommodation.
It also seems to be the case that Mr Rawlings’ parents pay most of the utility expenses related to the property, as there is no separate meter for the property concerned. In addition, from time to time, Mr Rawlings drives vehicles, which are owned by Property P and fuel for these vehicles is also supplied by Property P.
Accordingly, on any view, Mr Rawlings receives significant benefits from his parents. It also seems to me to be the case that he provides considerable services to his parents. As such, it appears to me to be self apparent that, if another person was supplying labour and services to Property P, equivalent to those supplied by Mr Rawlings himself, he or she would have to be paid by Property P.
Although I did not hear evidence from Mr and Mrs R Senior, I have no difficulty in reaching the conclusion that it suits them to have the relationship, which they do with Mr Rawlings. In addition, it is my finding that it also suits Mr Rawlings not to appear as a formal employee of Property P, in part because he has no wish to provide anything other than the minimum level of child support to the payee.
It was open to Mr Rawlings to call his parents to give evidence, in these proceedings, if he had so wished. They each attended court, at [B], with Mr Rawlings. In particular, no evidence was called by
Mr Rawlings to refute the possibility that he will inherit a significant portion, if not all, of Property P in due course.
Although I accept that Property P is in an arid zone of New South Wales and has been effected by drought for many years, it does not necessarily follow that the Property P itself is incapable of producing any form of income whatsoever. Indeed, the evidence of Mr Rawlings himself is that it is stocked with sheep and cattle, which are utilised for their wool and meat respectively.
As previously indicated, it was open to Mr Rawlings to call his father to give evidence as to what income the property actually produced. In my view, this evidence would have been relevant in shedding some light on what is the true employment relationship between
Mr Rawlings and his parents. On the evidence, which has been provided to me, it seems more likely than not that Mr Rawlings is employed on a de-facto basis by his parents and receives considerable benefits from them.
Mr Rawlings gave evidence that his current wife has an independent source of income. However, he was unaware what this level of income was. This issue is relevant because Ms R’s daughter [B] attends boarding school in Adelaide. She has been awarded a half scholarship but Mr Rawlings deposed that he was unaware how her other education expenses were met.
This evidence seems to me to be extraordinary. I do not accept that the payer does not know what his wife’s income is or how his step daughter’s school expenses are met. It reinforces my perception that Mr Rawlings has not been fully frank with the court about his financial circumstances.
It does not seem to me to be inherently unlikely that his parents are not making some contribution to [B]’s education expenses, as Ms Rawlings asserts and this is part of some surrogate salary package which
Mr Rawlings receives from his parents.
Mr Rawlings conceded that [Y] had been employed on Property P by his grandfather. He was paid around $500.00 per week and earned $1,550.00, over a period of around three weeks. The payer also conceded that [Y] did the same type of work, on the Property P, as he did. It seems incongruous that [Y] would be paid for his labour but not Mr Rawlings.
I accept that Mr Rawlings lives many hours travel away from [B] and, as such, although his parents own a house in the town, it is not practicable for him to seek employment in [B]. I also accept that it is likely to be difficult for him to obtain work on any neighbouring station to Property P.
However, it seems to me to be the case that Mr Rawlings provides labour to his parents and receives considerable benefits from them in return. It suits both Mr Rawlings and his parents that no cash appears to change hands between them. The current award for a senior station hand, in New South Wales, is around $597.50 per week.
It seems incontrovertible that the major burden of providing financially for [X], [Y] and [Z], since the parties separated, has fallen on the payee’s shoulders. I reject any suggestion that the children, through part-time work, have been substantially self-supporting.
Prior to travelling the [Europe] on her [omitted] Scholarship, [X] worked [in the Retail Industry]. In the year ending 30 June 2008, she earned $6,101.00. The previous financial year she earned $4,657.00. I accept that she has utilised most of this income, on her own expenses, particularly costs involved in travelling to [Europe] and small non-essential items for herself.
Between 6 November 2008 and 30 June 2009,[Y] earned $2,378.00. This was in addition to moneys earnt by him at Property P, in respect of which he has not as yet been provided with a group certificate. [Z], who has recently turned fourteen, also has some part-time work.
Ms Rawlings herself continues to work part-time [in the Financial Industry]. When she commenced her employment, she worked fourteen hours per week. This has now been increased to twenty-seven hours per week. In the financial year ending 2008 she earned approximately $35,000.00.
She estimates her legal costs as being in excess of $14,000.00. She has financed these costs through the use of her credit card; liquidation of her savings; and a loan from her mother.
Mr Rawlings estimates his legal costs at around $15,000.00. He asserts that he is funding the proceedings through his credit card and through whatever earnings he may make from the sale of cattle owned by him.
In respect of why he instituted these proceedings, Mr Rawlings denied that he had any ulterior motive asserting he “just wanted to put it right”. He denied having any personal knowledge of what he described as “a statue of limitations” in respect of any child support issue.
It was his case that he had “never stopped objecting” to the various child support assessments in question but had recently become tired of being “harassed” by representatives of the Child Support Agency, who were seeking payment of the arrears from him.
This harassment took the form of letters of demand sent by the Agency and telephone calls to him. However, as has previously been indicated, no specific steps to secure enforcement have been commenced by the Agency.
The only action which the Agency has taken against Mr Rawlings, of a formal nature, is the issue of a prohibition departure order, which prevents Mr Rawlings leaving Australia without the Agency’s consent, presumably after some satisfactory arrangement has been made in respect of the debt. Mr Rawlings deposed that he was not greatly bothered by the order and had no plans to travel overseas in future, notwithstanding his wife’s Russian nationality.
The legal principles applicable
The law relating to the calculation and collection of child support in Australia is complex. It has been subject to recent comprehensive amendment, particularly as a result of the Child Support Legislation (Reform of the Child Support Scheme – New formula and Other Measures) Act 2006.
The rationale for much of the legislative amendment to the child support regime flowed from the recommendations of a Ministerial Taskforce chaired by Professor Parkinson, which published a report to government in May 2005.[15]
[15] See: In the Best Interests of Children – Reforming the Child Support Scheme: Report of the Ministerial Taskforce on Child Support – published May 2005
In simple terms, an administrative assessment of child support can be amended or departed from in two ways. Firstly, the Registrar of the Agency can make such a determination pursuant to section 98S of the Child Support (Assessment) Act 1989 “the Assessment Act”. Secondly, the court may make such a decision pursuant to section 118 of the Assessment Act.
These powers both engage the provisions of section 111(1) of the Assessment Act, which deals with the process in respect of child support periods which have been in place for more than eighteen months. Section 111(1) reads as follows:
“ (1) A liable parent, or a carer entitled to child support, (the applicant) may apply to a court having jurisdiction under this Act for leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118;
in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.”
Pursuant to section 112(1) of the Assessment Act, the court is granted a discretion in respect of applications made to it arising from the operation of section 111. This section reads as follows:
“(1) If an application is made to a court under section 111, the court may grant leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118.”
Section 112(4) sets out the matters which the court must have regard in exercising its discretion under subsection (1). It reads as follows:
“(4) In considering whether to grant leave under subsection (1), the court must have regard to:
(a) any responsibility, and reason, for the delay in:
(i) making an application under section 98B or 116; or
(ii) making a determination under section 98S;
as the case requires; and
(b) the hardship to the applicant (other than the Registrar) if leave is not granted; and
(c) the hardship to the other party or parties (other than the Registrar) if leave is granted.”
Sections 98B and 116 respectively are the machinery provisions relating to the departure process within the Agency itself and in the court, after any applicant for a departure from an administrative assessment of child support has exhausted his or her review rights within the Agency and the Social Security Appeals Tribunal (S.S.A.T).
Pursuant to section 112(5) of the Assessment Act, the court may have regard to any relevant matter in its determination whether or not to grant the necessary leave. However, pursuant to section 112(8), the granting of leave, of itself, does not imply that the Registrar of the Agency is required to make a determination under section 98S or that the court is required to make a departure order under section 118.
The relevant administrative assessments, in this case, span the period from 1 July 2000 to 30 June 2008. Accordingly, Mr Rawlings requires the court’s leave to proceed with any application to proceed with any application to depart from administrative assessments of child support, which relate to periods prior to 11 June 2006, as his original application was filed on 12 December 2007.
In summary, pursuant to section 112 of the Child Support (Assessment) Act 1989, the court has a discretion to grant such leave and then proceed with any dependant application pursuant to section 118. The matters which are to inform this discretion are set out in subsections (4) & (5) of section 112. The court must have regard to the responsibility and reasons for the delay; any hardship which may be occasioned to the applicant and any other party; and any other matters, which the court considers relevant.
The legislative provisions, which relate to the amendment of any administrative assessment of child support that is more than eighteen months old were inaugurated following the recommendations of the Ministerial Taskforce on Child Support, chaired by Professor Parkinson. The Taskforce was concerned to limit retrospective applications in respect of child support and the government accepted its recommendations in this regard.
The Taskforce reported as follows:
“An application for change of assessment may currently be made for a virtually unlimited time. This is highly undesirable, as it may open periods to re-examination which have long past, to the detriment of the other parent who finds past child support obligations being retrospectively reviewed. Particularly where a parent wishes to avoid complying with large outstanding child support debts, a belated application to reduce the assessment may be available, undermining the CSA’s ability to enforce debt. In practice, most decisions are not retrospective. However, the currently open discretion to make an application to vary past periods should generally be limited to the immediately preceding child support period.
However, there may be some exceptional circumstances where a parent has a legitimate reason for delaying their application for a change to a past assessment. One such reason is because information has only recently come to light about a payer’s hidden income. In such cases, a process should exist to enable this general limit on retrospective applications to be eased. A court is in the best position to consider the past ‘rights’ of the parties, and determine whether making an exception is appropriate. For this reason the Taskforce proposes that an application should be made to a court (in practice this would be the Federal Magistrates Court), to grant leave to apply out of time. This would be similar to the existing process under s.44 of the Family Law Act 1975 in relation to property and spousal maintenance applications.
Where such application has been made to a court, and the court is inclined to grant it, the court may have before it much of the necessary information and evidence from the parents to consider making a departure order. It may be inefficient to require the parents to return to the CSA to seek administrative determination of the application. In such cases, the court should have a discretion on application by a parent to proceed to determine the substantive departure application itself.”[16]
[16] ibid at page 195
If leave is granted, the court has authority to deal with any resulting departure application at the same time, rather than referring the matter back to the Registrar of the Child Support Agency.
The relevant provisions of the Assessment Act, which deal with court ordered departure orders, is set out in Division 4 of Part VII of the Child Support (Assessment) Act1989.
The objects of the Assessment Act are described in section 4(2) as being intended to ensure:
“a)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; and
b)that the level of financial support to be provided by parents for their children should be determined in accordance with costs of the children; and
c)that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them;”
Division 4 of Part VII has its own additional and particular objects, which are set out in section 114. They are as follows:
(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.
The provisions of section 117 of the Child Support (Assessment) Act 1989 empower a court to make an order for departure from an administrative assessment of child support in special circumstances. Section 117(1) provides as follows:
Where:
(a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b)the court is satisfied:
(i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii)that it would be:
1. just and equitable as regards the child, the carer entitled to child support and the liable parent; and
2. otherwise proper;
to make a particular order under this Division;
the court may make the order.
Accordingly, the section provides three specific pre-conditions for the making of a departure order. They are as follows:
Ø an applicant must establish one or more of the grounds for departure as specified in section 117(2);
Ø thereafter the court must be satisfied that it is just and equitable to make a departure order. In so doing, the court must consider the matters set out in section 117(4);
Ø the court must then be satisfied that it is otherwise proper to make a departure order and in so doing must consider the matters set out in section 117(5).”
If the three conditions as set out in section 117(1) of the Act are satisfied then the court may make the departure order sought. The proviso to any departure application is that special circumstances should exist.
In Savery and Savery[17] His Honour Justice Kay held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. In the Marriage of Gyselman[18], the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that 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.”[19]
[17] Savery and Savery (1990) FLC 92-131
[18] In the Marriage ofGyselman (1992) 15 Fam LR 219
[19] (supra) at page 225
In Gyselman[20] the Full Court of the Family Court as follows:
“As we have already indicated, the exercise under section 117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in subsection 2 has been made out. The legislation then requires the court to consider whether any proposed order is ‘just and equitable’ and ‘otherwise proper’.”
[20] In theMarriage ofGyselman (supra) at 240
In support of his application for departure, the payer relies on the ground set out in section 117(2)(c) of the Assessment Act, which reads as follows:
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to the 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 the child; or
(ia)because of the income, property and financial resources of either parent; 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;
In addition, the payer also relies on the grounds provided by section 117(2)(a)(iii)(B) because of his legal liability to maintain his daughter [C], born [in] 2006.
In considering whether it would be just and equitable to depart from an administrative assessment of child support [the court must consider the matters set out in section 117(4) of the Assessment Act. This provision reiterates the obligation of parents to support their children financially, according to their capacity to do so and in particular direct the court to have regard to;
(d)The income, property and financial resources of each parent who is a party to the proceeding; and
(da)The earning capacity of each parent who is a party to the proceedings;
It is essentially the payee’s case that Mr Rawlings has a greater capacity to earn income than he is presently utilising or, in the alternative, he has access to a financial resource, in the form of benefits paid to him by his parents, which should be taken into account in any proper and equitable assessment of child support.
Cases regarding a parent’s capacity to earn are complex. The Ministerial Taskforce on Child Support,[21] the recommendations of which formed the basis of the currently applicable legislation distinguished between two categories of earning cases – “capacity to earn” cases and “capacity to pay” cases.
[21] In the Best Interests of Children – Reforming the Child Support Scheme – Report of the Ministerial Taskforce on Child Support - published 14 June 2005
In the former case, it is accepted that the parent concerned’s income is as stated by him or her in the child support assessment process but that parent has the capacity or ability to earn a higher income. As a consequence, in order to meet both the financial needs of any child concerned and satisfy considerations of overall fairness, it may be appropriate to levy child support on a nominated higher income than that currently being actually earned by the parent in question.
In the latter case, the issue in question is usually whether the parent concerned’s child support income actually reflects what that parent earns. In this category of case arguments often arise, regarding income minimisation schemes, such as salary sacrifice or the channelling of income through trusts or companies.
The legislative provisions regarding “capacity to earn” cases have been significantly modified as a result of the report of the Ministerial Taskforce on Child Support. The Taskforce recommended that a parent’s income should only be increased on the basis that that parent had a higher capacity to earn income if three criteria were satisfied:
·The parent was unwilling to work despite having ample opportunity to do so or had reduced his or her level of normal full-time work below that which was normal in the industry in which he or she was employed;
·The decision of that parent to work less hours was not based on caring responsibilities or the state of health of that parent;
·On the balance of probabilities, a major purpose for the parent’s decision, in respect of his or her employment, was to affect the level of child support assessed.
The legislature has adopted these recommendations. Section 117(4) of the Child Support (Assessment) Act has been amended and subsections (7A) and (7B) have been inserted. The aim of the new legislation is to distinguish between parents who change their income earning patterns for legitimate reasons and those who do so to escape or reduce their child support liabilities.
The relevant sections of the explanatory memorandum indicate as follows:
“The new method of assessment is intended to be flexible enough to allow parents whose earning capacity has been assessed for child support purposes to make decisions about their work and life, for example, choosing to pursue a different career or reducing work hours due to caring responsibilities, in the same way as parents in intact families. However, it is also important to take account of whether a parent, either payer or payee, whose earning capacity is assessed for child support purposes, makes changes to his or her work, where a major purpose of those changes was to affect the assessment of his or her liability. Therefore, the Schedule introduces provisions that allow a court to make an order that a parent has a greater capacity to earn than he or she is presently exercising if the parent has not demonstrated that affecting his or her assessment for child support was not a major purpose of that decision. That is, the court may make an order that a parent has a capacity to earn greater than he or she is presently exercising if the parent cannot show that he or she had an appropriate reason for his or her decision about work changes.”[22]
[22] See explanatory memorandum – Reform of the Child Support Scheme (Initial Measures) Bill 2006 at page 8
In determining whether it is just and equitable to depart from an administrative assessment of child support, the court is required to have regard to the income, property and financial resources of each parent [section 117(4)(d)] and the earning capacity of each parent, who is a party to the proceedings [section 117(4)(da)].
Pursuant to sub-section 7(A) the court is required to have regard to the capacity of parents to derive income, including any assets, under the control of or held for the benefit of a parent that do not produce but are capable of producing income for that parent.
Sub-section 7(B) provides the relevant criteria to which the court must have regard in determining whether parent’s earning capacity is greater than that which is reflected in his or her income for the purposes of the child support assessment scheme. The section is crucial in “capacity to earn” cases and reads as follows:
“(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a) one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent’s caring responsibilities; or
(ii) the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.”
Riethmuller FM has considered the new implications of the new provisions in the context of earning capacity cases.[23] He proposes a four step process as follows:
·Step 1 – Does a person have a greater earning capacity?
·Step 2 – Does the earning capacity fall within section 117(7B)(a)?
·Step 3 – Are the lower earnings justified?
·Step 4 – Has the payer proved that avoidance is not a major purpose?
Should leave be given to the payer to proceed with his applications for departure from administrative assessments of child support in place prior to 11 June 2006?
[23] How to decide earning capacity cases and more … : A review of the 2006 amendments to the child support scheme – paper delivered by Riethmuller FM on 16 July 2008
There have been child support assessments in place between the parties, since July of 1997. The first departure decision, concerning the parties, was made in May of 1998.
Since that time, the issue in dispute between the parties has been a constant one. It concerns what is the true income, earning capacity and financial resources of Mr Rawlings given that he has significant work experience as a grazier and rural contractor, both of which occupations are amenable to self employment and more recently, he has lived on his parents’ property, ostensibly receiving no income from them but providing services, in which he is skilled, on the property concerned and receiving some benefits in return.
Ms Rawlings has long been suspicious that the payer has no commitment to providing her with financial support and is intent on frustrating her applications for child support. It is difficult for her to know exactly what is the payer’s true financial position, given his antipathy for her, a sentiment which is reciprocated in return.
The payee has been generally successful in her various objections, certainly in the period prior to September 2006. As a result, arrears of child support have mounted steadily since 2000, to a point where a significant sum remains outstanding. The Child Support Agency, as it is legislatively entitled to do, have calculated penalties on these arrears.
Mr Rawlings has made no personal attempt to pay these arrears. His position has always been consistent. He asserts that he does not “believe” he has a child support debt and accordingly he need not pay it.
In this regard, I am reminded of Humpty Dumpty, who famously said “when I use a word, … it means just what I choose it to mean – neither more nor less.” In the case of Mr Rawlings, there is a child support debt, whether he personally regards it as valid or not. It cannot be characterised, in any way, as being a provisional debt. In addition, he has known about it for many years and has been aware of its gradual increase over time.
Although, representatives of the Agency have advised Mr Rawlings, in the past, of his entitlement to seek a review of departure decisions in this court and the Family Court, Mr Rawlings has not sought to exercise his options in this regard. As such, Ms Rawlings remains entitled to the level of child support, calculated by reference to the various determinations, which favour her.
In the past, it does not seem to be the case that Mr Rawlings has been shy in bringing proceedings against Ms Rawlings. In addition, it is self apparent that he has been well aware of the growing arrears of child support against him.
In all the circumstances of this case, I find it difficult to reach any other conclusion that Mr Rawlings was well aware there was little the Child Support Agency could do to compel him to make the payments required. In my assessment, he is no fool and was well aware that the Agency would not be able to find any property, against which it could execute.
In all these circumstances, it seems to me to be fanciful for
Mr Rawlings to suggest that he was becoming increasingly stressed by the letters and telephone calls, which he was receiving from the Agency about the arrears. For the past decade or so, these representations have had little, if any, actual effect on Mr Rawlings.
Accordingly, in this case, I cannot see that there are any new facts or circumstances, which have recently come to the attention of
Mr Rawlings, which justify the judicial re-examination of the relevant determinations. The essential circumstances, in issue between the parties, have remained the same since 2000.
In addition, the attitude of Mr Rawlings himself remains the same. He is disinclined to pay child support for [X], [Y] and [Z]. Knowing that there was little the Agency could do, he allowed the debt against him to grow.
I agree with the view of the child support taskforce, outlined above, that it is “highly undesirable” for a parent to be able to retrospectively review obligations, arising out of long past child support determinations. This is particularly so if the application comes after substantial arrears of child support have arisen.
The object of section 111 of the Assessment Act, in my view, is to prevent the re-examination of past assessments of child support, for unlimited periods of time, without strong cause. If there was such a facility, it would undermine the integrity of the overall system.
In my view, significant controversy about a factual situation does not constitute such a strong cause. In the past, Mr Rawlings has taken part in the review and objection process within the Agency. He has not been denied the opportunity to put his case.
In these circumstances, it is my view that there must be something exceptional to justify the court’s revisiting of decisions, which were made more than eighteen months ago. The fact that there are arrears outstanding of child support is not of itself such an exceptional circumstance.
The reason for the delay in this matter is solely attributable to
Mr Rawlings. Although he may not have been aware of some specific “statue of limitations” about the issue, he was aware of the various decisions of the Agency and chose not to take any specific action in respect of them.
Pursuant to section 112(4) I am required to consider the hardship, which would be occasioned both to the payer and the payee if leave is respectively not granted or granted. Accordingly, the court is required balance possible hardship between the parties concerned.
In Whitford & Whitford[24] the Full Court, in a different context, considered that, where a court was legislatively required to consider potential hardship being occasioned to one party by it not making a particular order and the hardship to be occasioned to the other party if the order in question was made, the exercise involved the balance of “any appreciable detriment financial, personal or otherwise” between the parties concerned. In Cantrell & Jennings[25] Baker FM considered that the same exercise applied to the application of section 112(4) of the Child Support (Assessment) Act. I respectfully agree.
[24] Whitford & Whitford (1979) FLC 90-612 at 78,145
[25] Cantrell & Jennings [2009] FMCAfam 229
The hardship, which will fall upon Mr Rawlings, if he is not granted leave to proceed with his departure application, is that the arrears of child support will remain at their current level.
He has no proposal as to how those arrears will be paid and, at this juncture, unless there is some major change in his financial circumstances, it is difficult to see how they will be paid.
The only possible means of payment would appear to be if
Mr Rawlings formalises his employment situation with his parents, in some way, or if the whole or a portion of Property P is transferred to him.
Accordingly, in the short to medium term, I cannot see that there is any great hardship, which would be occasioned to Mr Rawlings, if leave was not granted. His situation will essentially remain as it has done for the past few years.
Having seen him in the witness box, I assess him to be phlegmatic by nature and I do not accept that he has been unduly stressed by the various forms of correspondence, which he has received from the Child Support Agency.
In any event, the way in which the proceedings have been conducted, has allowed an examination of the evidence, which each party has led regarding their financial and employment situation since they separated. In this regard, I do not think that Mr Rawlings has demonstrated a strong or compelling case.
I do not think exceptional circumstances exist, which warrant a departure from any of the assessments prior to 11 June 2006 occurring. I am satisfied that the financial resources, in the form of benefits advanced to him by his parents, which have not resulted in him receiving a wage, justified child support being set at a higher rate that which would have been otherwise calculated by reference to his income alone.
Ms Rawlings accepts that, in the short to medium term, it is unlikely that she will receive any of the arrears of child support currently owing to her. It is her position that her best chance of receiving any of the arrears is if and when Mr Rawlings inherits Property P. I agree with her. In these circumstances, I consider that it would constitute a greater hardship to her if leave was granted to Mr Rawlings than if the converse occurred.
Accordingly, I have come to the view that the payer’s application for leave to proceed pursuant to the provisions of section 111 of the Child Support (Assessment) Act should be refused. This deals with assessments of child support made prior to 11 June 2006.
Should there be a departure from administrative assessments of child support in place since 11 June 2006?
Since June of 2006, the applicable assessment of child support have taken into account Mr Rawlings legal responsibility to support his detail [C], born [in] 2006. As a result, for the bulk of 2006, the assessment concerned resulted in Mr Rawlings being assessed to pay child support, for [X], [Y] and [Z] at a rate of $31.75 per week.
The assessments which have followed have provided for broadly similar amounts of child support. Accordingly, the major proportion of the burden for providing for the children financially has remained on the payee’s shoulders. In addition, the amount assessed has been modest and either been the statutorily calculated minimum or close to it.
In all these circumstances, it seems to me clear that the payer has not demonstrated any special circumstances, arising from section 117(2) of the Assessment Act which justify a departure from the application administrative assessments. In addition, in my view it would be neither just and equitable nor proper for the court to tamper with the applicable child support assessments.
Conclusions
For all these reasons, I have come to the conclusion that Mr Rawlings’ application filed on 12 December 2007 should be dismissed.
In practical terms, the effect of this decision is that Mr Rawlings will remain liable for the arrears of child support, which have accumulated since 2000. The larger proportion of this sum arose in the period prior to June 2006, the period for which Mr Rawlings required the court’s leave to proceed.
For the reasons provided, I am not prepared to grant such leave. However, even if the issue of leave had not been engaged, I do not believe that the circumstances of the case would have made it just and equitable to depart from any of the applicable administrative assessments.
In particular, in the period in question, I am satisfied that Mr Rawlings received significant financial resources, in the form of free accommodation; subsidised utilities; and other benefits; from his parents, which would have made it unfair and improper to depart from the various assessments in question.
In addition, I am satisfied that Mr Rawlings had a capacity to earn a significantly high income in the period in question but was unwilling to do so. He could have sought a more formal employment arrangement with his parents, which would result in him being paid an actual wage rather than the de-facto employment relationship which suited both him and his father. On balance, I am satisfied that the major purpose of this arrangement was so that Mr Rawlings could avoid paying a reasonable level of child support to Ms Rawlings.
As I hope these reasons for judgment demonstrate, it is my finding there is a significant level of artifice surrounding how Mr Rawlings garners financial support for himself. This has resulted in a high level of uncertainty as to what exactly has been Mr Rawlings’ income. This state of affairs has suited Mr Rawlings and he has done little to dispel it.
The legal principles underlying the departure provisions of the Assessment Act are that children should have their proper needs met from adequate shares in the income, earning capacity, property and financial resources of both of their parents and that parents’ should share equitably in the financial support of their children.
The circumstances of this case indicate that Ms Rawlings has born the vast majority of the responsibility for providing for [X], [Y] and [Z] over very many years. Mr Rawlings has provided very little support. In all these circumstances, in my view, it would not be fair to
Ms Rawlings or to the community that the various child support assessments in question should be retrospectively altered so as to eliminate Mr Rawlings’ liability.
Whether there is any prospect of the arrears of child support ever being collected is unknown to me. As indicated, I am uncertain as to the express reason why Mr Rawlings brought his application such a significant period of time after the arrears began to accumulate. However, I do not believe that it was as a result of his feeling stressed by the correspondence received by him emanating from the Child Support Agency. I suspect some other motivation.
Costs
The final issue for determination concerns the costs of Ms Rawlings’ application filed on 2 December 2008. She seeks her costs, fixed in the sum of $2,000.00, in respect of the application.
[X] applied for the exchange student scholarship on 26 June 2008. To apply for the scholarship she required the consent of both her parents, which was provided in writing.[26]
[26] See annexure “B” attached to Ms Rawlings’ affidavit filed 2 December 2008
[X] was granted the scholarship on 20 August 2008. The letter advised that she had been allocated to the [omitted] Program to [Europe] and would be departing Australia on 14 February 2009.
In the letter informing her that she had obtained the scholarship, she was advised that she should start applying for, or renewing her passport. Clearly it was an essential pre-requisite of [X] travelling to [Europe] that she have a current passport.
I accept that Mr Rawlings was also aware of this fact and assume, by necessary implication, he consented to [X] leaving Australia to take up the scholarship otherwise he would not have agreed to her applying for it, in the first place.
Ms Rawlings’ evidence, which I have no reason to disbelieve, is that she requested Mr Rawlings sign the necessary passport form, on a number of occasions, between August and November of 2008. However, Mr Rawlings would not sign the document in question.
This was notwithstanding the fact that both [X]’s parents had signed the document outlining the terms and conditions of her scholarship in late August of 2008.
This impasse led to Ms Rawlings asking her solicitor to formally write to Mr Rawlings’ solicitor on 17 October 2008. The letter concluded with the following paragraph:
“If your client is unwilling or unable to sign the passport application then we foreshadow that we would receive instructions to bring proceedings before the court to obtain orders that a passport be issued and seeking costs.”[27]
[27] See annexure “E” to Ms Rawlings’ affidavit filed 2 December 2008
This was the background to Ms Rawlings’ application, which was initially listed before the court on 17 December 2008. On this occasion orders were made that directed Mr Rawlings to sign the necessary documents to enable a passport to issue for [X] by 19 December 2008 and failing compliance with this direction authorised Ms Rawlings to be the sole signatory for [X]’s passport application.
The necessary orders were made in the presence of Mr Rawlings’ solicitor, who indicated that his client did not consent to the necessary orders being made but did not oppose them. Mr Rawlings had not formally filed any material in response to the application.
In all the circumstances of the case, as I have outlined them, it seems to me that it would be inevitable that the mother’s application would be successful. Essentially, it seems impossible that Mr Rawlings could successfully argue that the travel envisaged by [X] would not be in her best interests, particularly as he had consented to her application for the scholarship concerned.
The making of a costs order is governed by section 117 of the Family Law Act which provides as follows:
Costs
(1)Subject to sub-section (2) and sections 117AA and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under sub-section (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.”
Section 117(1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[28]
[28] See Browne v Green 29 Fam LR 428 at 432
In my view, in this particular case, there are circumstances which justify the court’s departure from the normal rule that each party, in proceedings before it, should bear their own costs. In particular, I accept that Ms Rawlings was put to considerable costs as a result of the failure of Mr Rawlings to execute [X]’s passport application promptly.
In this case, I have been able to analyse the parties’ respective financial circumstances. Earlier, I have expressed some uncertainty about
Mr Rawlings’ true financial position. However, there can be no doubt about Ms Rawlings’ financial circumstances.
She is a part-time worker, who receives a modest salary. In addition, she has three children largely dependant upon her for their financial support.
[X] seems to be something of a self-starter. She has obtained part-time work for herself, in [B] as soon as she has been able to do so. She has been able to save money and provide, in part, for her own support.
In addition, she seems to have been the instigator of her application for the exchange scholarship. It is to her credit that she was able to obtain the scholarship. I hope her experience of living and studying in [Europe] has been a rewarding one for her.
When I made the orders in relation to her overseas travel in December of 2008, I observed that it was likely to be the case that she would have memories of her time in [Europe] for the remainder of her life. It is invariably the case that teenage children benefit from such overseas experience and become rounded and self-reliant individuals as a consequence.
Certainly in December of 2008, Ms Rawlings herself was anxious that [X] not be impeded in her ambition to take up her scholarship.
In addition, it was implicit in her position that she (Ms Rawlings) was also of the view that [X] would gain inestimatable benefits from her time in [Europe].
I do not think that Ms Rawlings can be criticised for being unduly precipitate in the timing of her application. No doubt, she was mindful of the bureaucracy involved in such passport obligations and delays which potentially might arise because of the Christmas break.
It has also been her experience that Mr Rawlings has been difficult to deal with in respect of all manner of issues to do with the children. In those circumstances, it was prudent of her to bring her application, when she did.
Ms Rawlings was wholly successful in her application. Mr Rawlings himself has never formally provided any reason why he elected to execute the necessary documents concerned. In all these circumstances, I am satisfied that it is appropriate that an order for costs be made in Ms Rawlings’ favour.
The Court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02(2) of the Federal Magistrates Court Rules:
“In making an order for costs in a proceeding, the Court may:
a) set the amount in costs; or
b) set the method by which the costs are to be calculated; or
c) refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
d) set a time for payment of costs, which maybe before the proceeding is concluded.”
However, pursuant to Rule 21.10:
“Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
a) Costs in accordance to schedule 1; and
b) Disbursements properly incurred.”
In section 3(2) of the Federal Magistrates Act, the legislature sets out the objects of the Federal Magistrates Court as follows:
“(a)to enable the Federal Magistrates Court to operate as informally as possible in the exercise of judicial power; and
(b)to enable the Federal Magistrates Court to use streamlined procedures; and
(c)to encourage the use of a range of appropriate dispute resolution processes.”
No doubt, the intention of the legislature in this regard was to reduce the cost of court proceedings pursuant to Federal legislation and provide litigants with a cheap and cost effective means of accessing justice within the Federal jurisdictional sphere. Rule 21.10 creates a scale of costs by reference to the occurrence of fixed events. In my view, the creation of such a scale was designed to help achieve these objects.
Pursuant to schedule 1, an amount of $1,465.00 is the lump sum cost amount provided for an interim family law proceeding. This amount is subject to an additional amount calculated by reference to any necessary court attendance.
The hearing fee for a short mention is $240.00. In this particular case, Ms Rawlings’ solicitor is located in [B]. As a result, for the hearing on 17 December 2008, he retained Ms Ross of counsel to appear.
In all these circumstances, I assess $2,000.00 as being an appropriate amount to fix for the costs incurred by Ms Rawlings flowing from her successful application filed on 2 December 2008.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding two hundred and thirty-nine (239) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 2 February 2010
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