Reinhold and Casey
[2008] FMCAfam 772
•30 July 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| REINHOLD & CASEY | [2008] FMCAfam 772 |
| CHILD SUPPORT – Application by mother for departure of administrative assessment of child support – leave to make orders sought with respect to assessment more than eighteen months prior to the filing of the application – whether leave should be granted – departure orders sought in respect of periods where leave not required – whether departure order should be made. |
| Child Support (Assessment) Act 1989, ss.98S, 110, 111, 112, 116, 117 & 118 Family Law Act 1975, s.44 |
| Rice v Asplund (1979) FLC 90-725 SPS & PLS [2008] FamCAFC 16 Whitford & Whitford (1979) FLC 90-612 |
| Applicant: | MS REINHOLD |
| Respondent: | MR CASEY |
| File Number: | PAM 3497 of 2005 |
| Judgment of: | Lindsay FM |
| Hearing dates: | 15, 17, 18 & 19 October 2007 |
| Date of Last Submission: | 19 October 2007 |
| Delivered at: | Mount Gambier |
| Delivered on: | 30 July 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr McQuade |
| Solicitors for the Applicant: | O'Keeffe Pithouse |
| Counsel for the Respondent: | Ms Annells |
| Solicitors for the Respondent: | Herman Bersee |
ORDERS
The Amended Application filed on 24 July 2007 do stand dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Reinhold & Casey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MOUNT GAMBIER |
PAM 3497 of 2005
| MS REINHOLD |
Applicant
And
| MR CASEY |
Respondent
REASONS FOR JUDGMENT
This is an application filed by the mother on 24 July 2007.
She was seeking orders for departure from administrative assessment of child support for the period commencing 8 May 2002 and encompassing the assessment in place at the time of the conclusion of the trial.
Because of the breath of that application, consideration has to be given to certain time-limiting provisions of the Child Support (Assessment) Act 1989 (the “Assessment Act”).
The orders that the Court can make in respect of a departure application are set forth in s.118 of the Assessment Act.
Section 118(2B) provides:
A court may only make an order under this Division in respect of a day in a child support period, being a day that is more than eighteen months earlier than the day on which the application for the order is made under section 116, if the court has granted leave under section 112 for the order to be made.
Section 118(2C) goes on to provide:
If the court has granted leave under section 112, the court may only make an order under this Division in respect of a day in a child support period if the day is within the period specified by the court, under subsection 112(6), in the order granting the leave.
The date of application was 24 July 2007.
The effect of those sections is that for the period from 24 January 2006 onwards no leave is required (although there are other pre-requisites to the exercise of the jurisdiction, discussed hereunder).
Section 111(1) of the Assessment Act provides:
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.
The question of the circumstances in which leave is granted under s.111 is dealt with under s.112, which provides:
(1) If an application is made to a court under section 111, the court may grant leave for:
(a) …; or
(b) the court to make an order under section 118.
(2) The court may grant leave for an order to be made under section 118 if the court is satisfied that it would be in the interest of the parties to the proceeding for the court to consider, at the same time as it hears the application under section 111, whether an order should be made under section 118. If the court does so, the applicant is taken to have made an application to the court under section 116 for such an order.
(3) Otherwise, the court may grant leave for the Registrar to make a determination under section 98S.
Sub-section (3A) of s.112 provides:
To avoid doubt, the court may grant leave for the Registrar to make a determination under section 98S, or for the court to make an order under section 118, irrespective of what the applicant applied for under section 111.
So the legislation provides that when an application is made in respect of child support periods that precede the application by more than eighteen months, the Court may grant leave to seek an order under s.118 or to seek a determination from the Registrar under s.98S. Both involve departure applications. Usually, the application to the Registrar precedes the application to the Court, with an intervening objection process procedure to be undertaken. There may be circumstances where it is appropriate when granting the leave for it to be provided only in respect of the s.98S application but it must be thought that it will be attractive to the Court, more often than not, to deal with matters that are already historical and already the subject of an application to the Court in the context of s.118.
In this case, I heard the leave application under s.112 at the same time as hearing the application for the order under s.118. It was expedient to do that because whatever the fate of the leave application I already had before me an application for departure order in respect of those periods that were the ‘less than eighteen months’ part of the application then filed.
Section 112(4) of the Assessment Act describes the matters that the Court must have regard to in considering whether to grant leave. Those matters are as follows:
(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 … if leave is not granted; and
(c) the hardship to the other party or parties … if leave is granted.
Sub-section (5) of s.112 goes on to provide that the Court may have regard to any other relevant matter.
In respect of the application as it relates to the period less than eighteen months prior to the filing of the application, the effect of the order I made on 13 August 2007 was to enable such application to be heard pursuant to the provisions of s.116(1)(b) of the Assessment Act. That section gives the Court a discretion to hear a departure application notwithstanding non-compliance with the provisions of sub-section (1A) which, to state the matter briefly, oblige a party to such an application to go through the process of applying to the Registrar and then, if necessary, to the Objection Officer before bringing the application to the Court.
The proceedings which were otherwise before the Court related to a hotly contested application by the father to spend time with the one child of the relationship, [A] born in 2001. They were proceedings instituted in the Sydney Registry of this Court and transferred to the Adelaide Registry and subsequently to the Mount Gambier circuit of the Adelaide Registry. The parenting order proceedings resolved by way of consent orders being made on 14 August 2007. The effect of the orders is that the parties have equal shared parental responsibility for the child, that the child live with the mother and spend time with the father. The spend time arrangements are very complicated. Initially, the father spends a number of hours on weekend days with the child in Mount Gambier. Initially, too, his time is supervised. There is a gradual progression of his time-spent in Mount Gambier until it begins to encompass daily contact for a period of six weeks during school holidays and then eventually encompassing overnight time and is ultimately time-spent that can be taken anywhere in Australia. The order also provides for on-going telephone communication between the father and the child.
The parties met in 1996. The husband is a [omitted] and they met at one of his musical performances. They began their relationship whilst the mother was living in marriage with another man. She eventually separated from her husband in 1998. It was agreed that the parties have never lived together, their relationship being more in the nature of an on-going sexual relationship whilst the parties lived in Sydney.
The mother re-located from Sydney to Mount Gambier was she was approximately seven months pregnant with the child [A] (ie. in September 2001) and has lived in Mount Gambier since that time. The mother says that following the birth of the child the father offered to pay sixty dollars per week by way of child support.
The mother says the she made her first application for an administrative assessment of child support in May 2002, when the child was approximately five months old.
The mother says that the collection of the child support was placed in the hands of the Child Support Agency in 2005.
She alleges that throughout this period she had no way of knowing what his income was. She knew that he was a [omitted] but she did not know the level of his remuneration.
By 2006 the relationship between the parties had soured to the extent where the father was obliged to bring proceedings in the Federal Magistrates Court in Sydney in relation to his attempts to spend time with the child. During the course of those proceedings, the father indicated in a submission that he had difficulties in travelling to Mount Gambier on weekends to see the child (and thus wanted the time-spent to be varied so as to provide that it occurred during the week instead) because he was servicing a mortgage of $400,000. The mother alleged that she was unaware of the fact that he had such a commitment or that he had the capacity to service it until he made that submission in Court.
Accordingly in February 2007 she instituted Part 6A proceedings before the Registrar for a departure from administrative assessment. The review officer’s determination of 19 April 2007 was before me in evidence.
The administrative assessment that was then operating from 1 October 2006 to 31 December 2007 provided for an annual amount of child support of $1,442.00 based on Mr Casey’s taxable income for the 2006 financial year in the amount of $30,944.00.
Before the review officer, Mr Casey conceded that the income for the then current financial year would be about $68,000.00. He then attempted to rely upon the high cost associated with his spending time with the child in Mount Gambier. It is not an application that found favour with the Registrar, principally because the Registrar was aware that proceedings relating to the time-spent were still before the Court and it was difficult to know what arrangements would continue into the future.
Mr Casey also raised before the review officer the fact that the mother worked for her family business in Mount Gambier. I will come to the detail relating to this issue hereunder but note that the review officer was not satisfied that any income Ms Reinhold earned from that employment would exceed the disregarded income amount then utilised by the Registrar to fix the assessment (an amount of approximately $42,000.00). Ultimately, what the review officer did at that time was to fix Mr Casey’s child support income amount in the amount $67,000.00. That was based on him performing four times per week at an average rate of $350.00 per performance for forty-eight weeks of the year. The Registrar was not prepared to back-date it further than 1 March 2007. The effect of the decision was to increase the annual rate of child support to approximately $4,500.00 and to create some level of arrears.
Once the mother was given the opportunity to agitate child support matters before this Court (see [16] above) she filed a Notice to Produce seeking details of Mr Casey’s booking and agency records relating to his employment as a [omitted]. An order was ultimately made in relation to that Notice to Produce when the father did not comply with it. Subpoena were issued.
A subpoena to the Westpac Bank elicited some applications for finance by Mr Casey that formed a significant part of the evidence or at least of his cross-examination. It was after the subpoena to the Westpac Bank was returned and produced the statement of his financial particulars that the mother sought to enlarge her application so as to take in assessments that arose more than eighteen months prior to the filing of the application. As noted above there will be circumstances where it is appropriate to deal with the leave question as a strict threshold requirement to be satisfied before the hearing proceeds. If the only applications proposed were in relation to assessments more than eighteen months prior to the application that would almost certainly follow but there is a less compelling case for dealing with the matter as a threshold issue when the Court will be embarking, in any event, upon an application relating to departure from administrative assessment of child support in respect of the period less than eighteen months prior to the application. Whether the Court will deal with the matter as a threshold matter will in each case depend upon the nature of the evidence sought to be adduced but in this case I thought it expedient to hear all of the evidence in respect of the applications before determining the leave issue.
It should be noted that the leave that is sought under s.112 of the Assessment Act is the leave for the Court to make an order under s.118. It is not the leave that is sought to bring the application. The task of determining whether leave should be granted, having regard to the matters that need to be considered pursuant to s.112(4), is directed as to whether the order should be made, not the application brought in the first instance. This is another consideration which assists in persuading me that it is not inappropriate to determine the leave issue at the conclusion of the taking of evidence rather than as a threshold matter.
I refer to these matters specifically because I am concerned to avoid any of the complications discussed by Warnick J in his exposition of the rule of Rice v Asplund (1979) FLC 90-725 in SPS & PLS [2008] FamCAFC 16 at [49] - [74]. The tensions identified in the authorities relating to the application of that rule by His Honour were those that related to the issue as to whether the rule was to be determined at the outset of the case or properly reserved for determination once a full parenting order hearing had transpired. It was thought that a failure to apply the rule in all cases as a preliminary issue would mean that the principal utility of the rule - the avoidance of unnecessary litigation – would be thwarted. Ultimately, His Honour, in his careful analysis, was able to demonstrate that while the rule was applied as a preliminary matter it may achieve all of its purposes there was still utility in applying it at the end of a hearing even if only some of its ends would be achieved.
I think the tensions to which I have referred in the application of that rule can be significantly side-stepped in the context of this application by having regard to the fact that the focus is upon the grant of leave for the Court to make an order. It is a rather curious expression. Courts do not often grant leave to themselves but rather to the litigants to bring applications. Nevertheless, I think that the section should be understood as focussing the application of the criteria for the grant of leave to the point at which the order is made not the application brought and this is a significant consideration.
The mother gave evidence and was cross-examined. A number of exhibits were received into evidence, namely:
a)Exhibit 1 - a schedule of payments prepared by Mr Casey indicating the amount of child support paid to the mother from December 2001 to September 2007. The schedule indicates the following payments for the following periods:
i)February 2002 to June 2002 - $1,800.00 at an average of $69.23 per week.
ii)July 2002 to March 2003 - $2,828.00 at an average of $54.38 per week.
iii)July 2003 to June 2004 - $3,280.00 at an average of $63.08 per week.
iv)July 2004 to June 2005 - $3,105.00 at an average of $61.25 per week.
v)July 2005 to June 2006 - $2,849.69 at an average of $54.13 per week. It should be noted that the Child Support Agency began to collect the payments during this period, namely on 20 September 2005.
vi)July 2006 to June 2007 - $2,951.03 at an average of $56.75 per week.
vii)July 2007 to September 2007 - $1,126.00 at an average of $86.62 per week.
b)Exhibit 2 - an email from Mr Casey’s accountant to Mr Casey dated 6 August 2007, in which he provided details of Mr Casey’s gross business income and gross rental income for the years 2002 to 2007. Mr Casey then added in his own handwriting to that document three other columns for those years headed “[C]’s figures”, “[C]’s net” and “Bank/S”. Reference to ‘[C]’ was to a reference to the ‘[S] Organisation’ by whom Mr Casey was provided with work. The columns represented his gross earnings, his earnings net of the commission payable to the [S] Organisation and the total of monies banked into his account. This was dealt with in submissions as “[C]’s net”.
c)
Exhibit 3 - a further copy of the same email which constituted Exhibit 2 save and except there was other handwriting of
Mr Casey added to it about which he was cross-examined.
The remarks appeared to be advice about how he should conduct himself in cross-examination and a note reminding him to indicate that the information he provided to the Commonwealth Bank manager (this will be dealt with in another exhibit shortly) was to “make the loan look good on paper”.
d)Exhibit 4 - a list dated 13 September 2007 under the letterhead of the [S] Organisation indicating payments made to Mr Casey from May 2002 to December 2004. The note contained the following sentence: “Please note that these payments below are GROSS amounts with 10% GST to be added if applicable and 10% agency commissions deducted for each month”. At the conclusion of the evidence there was still significant uncertainty as what that sentence signified.
e)Exhibit 5 - a list of money received by Mr Casey from an employee by the name of “[O]” in the period of March 2007 to June 2007. The amounts shown as having been paid out are inclusive of GST.
f)Exhibit 6 - a schedule of payments received by Mr Casey from an employee know as “[P] Pty Ltd” in the period of January 2006 to June 2006.
g)
Exhibit 7 - comprises the documents relating to the taxation returns for Mr Casey and the company through which he conducted business in 2002. The company (“[L] Pty Ltd”) had a total income for the year of $71,441.00 and expenses of approximately the same amount. The expenses included
Mr Casey’s salary of $45,000.00. His own tax return for the year indicated a total income of $47,543.00, with a net income after expenses of $41,107.00.
Exhibit 7 also contained his 2007 taxation return. His taxable income for that year was $33,732.00. That was arrived at by taking into account the following matters: total business income of $76,313.00 from which was deducted $24,898.00 in expenses. Those expenses included superannuation of $2,400.00 and depreciation of $5,954.00. From that sum was deducted net losses in respect of three negatively geared rental properties, two of which Mr Casey owns in his own name and one of which he owns with another person. Each of the properties presented a loss when the interest on the loans used to acquire them and other expenses were deducted from the gross rent received from them.
h)Exhibit 8 - the personal finance application to the Westpac Bank. That document included an assertion by Mr Casey, under the heading of “income”, that his annual gross income before tax would be $130,000.00. That included his rental income. His base monthly net income was estimated to be $7,350.00 or, if that figure is annualised, $88,200.00. Also before the Court is an annexure to one of the mother’s affidavits which was an earlier loan application by the father (October 2006). In that document he gave his estimate of his annual gross income also as being $130,000.00 but the base monthly amount (net) was a lesser figure of $6,950.00 or $83,400.00 annually.
I was given an ‘Aide Memoire’ by the mother’s counsel at the commencement of closing submissions. It purported to summarise the state of the evidence having regard to the oral testimony of the father and all of the material that had been made available with respect to his financial position. Mr McQuade made it plain that the Aide Memoire was designed only to assist with respect to the child support period in respect of which leave was required. It did not assist in any way with the periods in respect of which leave was not required. The mother’s case in respect of that period was based squarely upon the father’s estimate of his income in the bank documents in the evidence that emerged during his cross-examination.
In respect of the period of 2002 to 2006 (ie. the leave period) the Aide Memoire adds the figure described as “[C]’s net” from Exhibit 2 and then adds the income earned from [O] and, in the 2006 financial year, income earned from [P] Pty Ltd. From that total it then deducts the declared gross business income from the taxation returns to produce a gap for each of the financial years. The mother says that the gap represents the income not declared to the Taxation Office and in respect of the leave period it breaks up as follows:
a)2002 - $56,475.00
b)2003 - $34,193.00
c)2004 - $22,638.00
d)2005 - $6,486.00
e)2006 - $33,565.00
The mother’s contention is that the child support income for those respective years should be the gap figure plus what was declared in the taxation returns, which works out as follows:
a)2002 - $104,931.00
b)2003 - $99,405.00
c)2004 - $85,851.00
d)2005 - $88,533.00
e)2006 - $85,495.00
I should make some other remarks about the calculation of these figures. It will be recalled that in Exhibit 2 the father had provided an indication of all of the money that had been banked into his bank account. There is a discrepancy between that figure in respect of each of the financial years and the “[C]’s net” figures, which represented the payments made to him by the [S] Organisation after they had deducted their commission. In some years the discrepancy was significant.
For example, in the 2004 financial year it amounted to approximately $17,000.00. Cross-examination of the father revealed that the additional money came from cash payments received from other work, that is from contractors other than the [S] Organisation. The father conceded that the cash payments were in the period of 2002 to the end of the calendar year in 2006 and amounted to approximately $605.00 per performance less commission of 10%, that is $544.50 per performance. Mr McQuade’s Aide Memoire purported to add the amount of $544.50 per week annualised at $26,136.00 to each of the financial years as income earned.
The father purported to say that the money earned from [O] was included in the “[C]’s net” figure but if it is recalled that the “[C]’s net” figure is an amount that already has commission due to the [S] Organisation deducted from it then that creates a tension with the suggestion that from the [O] income the father then made a deduction of the commission due to the [S] Organisation and paid it to them. There would be an overlap in the payments, which is not addressed in any of the documents that have been made available.
The mother acknowledged that there was a lack of precision in the estimates given for the father’s income for these periods. The mother said, however, she was doing the best she could having regard to the information that had been made available. An example of the imprecision relates to the father’s contention that he paid GST on the earnings from the [S] Organisation, that is the “[C]’s net” figure.
The father’s evidence was that he paid the GST until he became de-registered with the Taxation Office for GST purposes in 2005. Exhibit 4 was of little assistance to us. The figures provided as gross payments to Mr Casey in that Exhibit more or less co-relate to the “[C]’s gross” figure in Exhibit 2 but it is not possible to determine what is meant by “10% GST to be added if applicable”.
All of this evidence is evaluated, of course, in the context of the father not calling his accountant or anyone from the [S] Organisation to clear such matters up.
In terms of the criteria for the grant of leave the mother emphasised her complete surprise at the information that emerged during the course of the parenting order proceedings, firstly as to the fact Mr Casey had a mortgage of $400,000.00 and secondly as to the estimate of his income. The hardship that Mr McQuade pointed to was the fact that in the leave period the assessments were based upon wrongful estimates of the father’s income and an inadequate amount of child support was paid for those periods. The hardship is that which inured to the child and not to the mother. Mr McQuade emphasised that the legislation did not talk in terms of leave only being granted in exceptional circumstances.
Ms Annells, for the father, began her submissions by providing me with a supplement to the mother’s Aide Memoire, which provided the total of the child support income amounts for the relevant leave periods added to the difference referred to in paragraph [35] above. That gave us child support income amounts for the financial years as follows:
a)2002 - $100,600.00
b)2003 - $73,336.00
c)2004 - $63,105.00
d)2005 - $63,134.00
e)2006 - $98,074.00
It will be recalled that in respect to the 2007 review officer’s determination the father had estimated his taxable income to be $67,000.00. It was a figure that did not make any deductions for the losses arising from his negatively gearing his interests in the rental properties.
In respect of the issue of hardship as it is a criterion for the grant of leave, Ms Annells pointed to the evidence of the mother as to her unutilised earning capacity. It was plain from the evidence of the mother that she was not available to take up opportunities to work more than five hours per week in gainful employment because of the time and energy she devoted to the [omitted] business. This is a business owned by her parents. It was not contended that her earnings from her employment would have carried her significantly into the area where the child support payable by Mr Casey would be reduced.
The point Ms Annells was making was a more general one relating to the one of hardship. It was that I should infer that the loss of the additional income alleged to have been payable by Mr Casey is not something that worked a hardship towards her because her circumstances were such that she could make choices about seeking not to undertake employment. Her decision does not reflect circumstances of pressing financial need. On the contrary, the decision she made to devote her energies, essentially gratis, towards the management of her parents’ business indicates that she is managing reasonably well without the additional income.
Ms Annells said that, by contrast, the hardship that would inure to the father if the leave were granted would be that which arose from the immediate accumulation of arrears. The father is self-employed. He gave evidence that the most common night for him to be employed in his industry is Saturday night and that there were a number of such nights which would be foregone on account of the structure of the time-spent orders which have been made by the Court. The difficulty with that submission, of course, is that the order made was a consent order. The father had the opportunity to press for different orders which would not have an impact on his employment but chose not to do so. That has to be a factor which is taken into account in assessing the extent to which this can be relied upon as a ground of hardship.
Another factor relevant to hardship, according to the father, was his age. His Statement of Financial Circumstances revealed meagre superannuation. He said that his investment in real property, reflected in his interests in three rental properties, was an index of the extent to which he had to begin to acquire assets to support him in his retirement. Ms Annells asked me to infer that the only way he would be able to fund an amount of arrears was by borrowing on his properties. In relation to the Aide Memoire, Mr Casey said that the “[C]’s net” figures did not include deductions for GST so that the calculations relied upon by Mr McQuade had to be reduced by one eleventh of that sum shown as the “C’s net” figure for each financial year (although there was no GST payment made in the 2006 financial year).
I have already noted the father’s submission that the [O] figure shown on the Aide Memoire should be disregarded as already included in the “[C]’s net” figure.
The father also contended that the monthly net income amount shown on each of the loan applications in October 2006 and April 2007 were, notwithstanding the language used in the pro-forma of the document, gross figures. In other words, although there the request was made for a net figure, Mr Casey in each case provided what he understood to be a gross figure.
Such was the state of the evidence and the submissions.
I turn firstly to a question of the leave sought in relation to the child support periods more than eighteen months prior to filing of the Application.
Section 44(3) of the Family Law Act 1975 (“Family Law Act”) provides that applications for settlement of property cannot be instituted following the expiration of twelve months from a divorce order. Sub-section (3A) provides that such proceedings may be instituted after that time with the leave of the Court. Sub-section (4) provides that leave shall not be granted unless the Court is satisfied:
… (a)that hardship would be caused to a party to the relevant marriage or a child if leave were not granted …
Significant differences in the provisions relating to a grant of leave pursuant to s.112 of the Assessment Act are apparent. Section 44(4) of the Family Law Act is mandatory in its terms. Leave is not to be granted unless the Court is satisfied of hardship. Section 112(4) of the Assessment Act posits hardship simply as one of the matters the Court must have regard to. In each case the hardship to which the Court directs its attention is the hardship that would follow if leave were not granted.
In interpreting that section the Full Court of the Family Court said in Whitford & Whitford (1979) FLC 90-612 at 78-145:
In ordinary parlance, hardship means something more burdensome than “any appreciable detriment”. We consider that in subsec.44(4) the word should have is usual, though not necessarily its most stringent, connotations. It is impossible to lay down in advance what particular facts may or may not account to hardship in the relevant sense. As a general proposition it might be said that, the inability of an applicant to pursue a claim which in the circumstances of the applicant or a child of the marriage is trifling, generally will not cause hardship.
And also, further on that page:
Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship.
Reference should also be made at this point to “the simplified outline” of Division 3 of Part VI of the Assessment Act, which appears as s.110 of that Act:
· Normally, the Registrar cannot make a departure determination under Part 6A, and a court cannot make a departure order under Division 4 of this Part, in respect of a day in a child support period that is more than 18 months earlier.
· Under this Division, a liable parent, a carer entitled to child support or the Registrar can apply to certain courts for leave for a determination or order to be made in respect of a day in a child support period that is more than 18 months earlier.
· A court must not grant leave for such a determination or order to be made in respect of a day in a child support period that is more than 7 years earlier.
· If a court grants leave, the court can decide whether the Registrar should make such a determination or the court should make such an order.
In essence the mother’s position is that leave should be granted because during the course of parenting order proceedings she says that she became aware that the father had a greater income than that was revealed in his taxation returns which formed the basis of the administrative assessment of his child support. Having been alerted to the issue by his reference to a $400,000 mortgage, the discovery of the loan application form, she says, revealed the extent of his additional income. The course of the conduct of the hearing before me revealed further information in relation to cash income and banked income from those Exhibits discussed above. I should qualify that finding to the extent that Mr Casey is also deriving gross rental from three rental properties but because of his having negatively geared them they have not resulted in any augmentation to his taxable income. Mr Casey has the same occupation as he had when he and the mother were in a relationship. I use the word ‘relationship’ even though they do not appear to have co-habited at any period and that for some time it was conducted upon the basis of Mr Casey being in a married relationship with another person (with the knowledge of the mother).
The course of the parenting order proceedings before me revealed how embittered is the relationship between the mother and the father. The interlocutory phase of the proceedings, once they were transferred from Sydney, and the trial process itself (before the matter settled by way of consent orders) revealed a deep-seeded hostility on the part of the mother to the father and a profoundly oppositional attitude towards his having a relationship with the child. I take into account that the matter has resolved by way of consent orders and that those orders provide an opportunity for Mr Casey to have a gradually increasing relationship with the child. But all of the affidavits filed, the conduct of the mother whilst self-represented and the submissions made on her behalf indicated to me that from her perspective the optimal position was for Mr Casey to have no relationship with the child. This was a position that was actively promoted by her at an early stage of the parenting proceedings.
In so finding, I think that there is an element of disingenuousness about the mother’s position with respect to the new information that came her way. It should be recalled that each time an administrative assessment of child support was levied the mother had the opportunity to institute Part 6A review proceedings before the Registrar. She did not do so. There was absent from her evidence before me any suggestion as to her having been actively misled by Mr Casey as to his ownership of real property or the extent of his indebtedness. There is no evidence of her having made either formally or informally any inquiries of him as to his asset position. Her lack of knowledge was a function of her not seeking any rather than of Mr Casey’s statements or actions. It is not so much a matter of her becoming acquainted with additional information so much as her interest in his financial position having been excited on account of her prolonged participation in the parenting order proceedings.
Delay in the promotion of alternative child support income amounts by a payee has obvious disadvantages for the payer in terms of immediate and ready access to financial information. To a significant extent,
Mr Casey was obliged to re-construct his financial position for the financial years going back to 2002. He did so in the form of inquiries from his accountant in particular although I find that there was a great deal more he could have done to elicit accurate and complete information from his accountant with respect to a number of the issues agitated at trial. It is far from clear as to the basis upon which commissions were paid to the [S] Organisation and it is especially unclear as to whether or not Mr Casey paid any GST payments to the Taxation Office in respect of income derived from the [S] Organisation. I find that it is more likely than not that he received cash payments in respect of his work at [O] and an employer with the name of [P] Pty Ltd in 2006 but I do not think the amount he received is capable of being determined with the precision that the mother would suggest. It is one thing to draw inferences against the interests of a party who does not produce information that ought be readily available to him but I do not think that it fair in the circumstances to draw that inference against Mr Casey in circumstances were he was required to produce financial information in respect of financial years going back five years from the present. This is another way of saying that I think that there would be hardship visited upon him by permitting an order to be made in respect of these periods and that such hardship is one of the matters that I take into account.
The submission of the father that the circumstances of the mother having under-utilised her capacity for employment in Mount Gambier must be approached with caution. She has seemed in content in recent times to work no more than one day per week in paid employment and even that form of remuneration is being put to one side in her enthusiasm to work gratuitously for her family business. Even though she has does not derive an income from working on behalf of her mother and father’s taxi business I readily infer that they provide significant financial assistance to her when required. The assets she has been able to acquire and retain since her move to Mount Gambier are only explicable in terms of such assistance being available but her income, even if she had worked five days per week (which may not have been possible in any event given her obligations for care in relation to the child the subject of these proceedings and also in relation her other two children), would not have had a significant impact upon the administrative assessment in any event. But I think these circumstances indicate that the reason for her not actively inquiring of Mr Casey as to his income and asset position over these years is at least partly explicable in terms of her being able to manage, and manage reasonably comfortably, without seeking the additional child support that might arise from pursuit of such inquiries. This is another way of saying that I am not satisfied that the refusal of leave to grant the order sought in respect of these years would visit hardship upon the mother and that is another factor to be taken into consideration.
The fact that leave is required is an indication in the legislation that, generally speaking, controversies with respect to administrative assessments of child support should be quelled within a year and a half of the events relevant to the making of the assessment. A year and a half is an arbitrary figure and that arbitrariness explains in part the need for there to be opportunity for applications outside that period to be agitated in appropriate circumstances.
I have indicated that I am prepared to find that in the period of 2002 to 2007 Mr Casey earned cash income that was not included in his taxable income used for fixing his child support income amount but I am unable to fix with any degree of precision the amount of cash so earned. In the absence of any evidence demonstrating any artifice or effort on his part to conceal his true financial position and especially in the absence of any inquiry of any sort from the mother in relation to these matters over that extended period, I do not think it is appropriate to grant leave in these circumstances.
That leaves the application as it relates to the period going back to April 2006.
The evidence relevant to the departure order sought in respect of this period is fundamentally the evidence that emerges from the two loan applications made to the Commonwealth Bank and Westpac Bank respectively. In making his answers to the various inquiries in those documents I readily infer that the father was doing his best to promote a healthly view of his financial circumstances to the institutions concerned. He was not upon his oath in those documents. I think it more likely than not that where he has been asked to provide a net monthly amount of income he addressed his mind to that specific question and that the figure provided represents what he intended to have the bank believe was his net rather than his gross income. That explains why a different and larger figure is used in each document where he is asked to provide a gross annual amount.
The latest administrative assessment of child support in operation as at the date of the trial was one that arose from the review officer’s determination in April 2007, which used a child support income amount of $67,000.00. I think that the methodology used by the review officer to calculate that income was in all of the circumstances appropriate. It disregards any losses artificially generated in respect of the negative gearing of the three rental properties. No doubt future administrative assessment of child support will be calculated upon the same basis.
The case for the mother in respect of the assessments in respect of which leave was not required rested squarely upon her assertions as to the income and financial resources of the father as revealed in the loan application documents. That is the ground upon which she relies pursuant to s.117(1)(b) of the Assessment Act. The special circumstances of the case to which she refers are those that arise from the disparity between what she says is the father’s real income position as revealed in those financial documents and his taxable income as revealed in the relevant taxation returns or as calculated in accordance with the review officer’s determination.
I do not think this ground is made out. I do not think that the facts that emerged in the evidence with respect to the financial documents are such as to give rise to special circumstances requiring a departure from that assessment that operates in the light of the review officer’s determination. That assessment already incorporates concessions the father has made with respect to the impact of negative gearing upon his income position and in relation to the number of “gigs” he might be expected to perform at during the course of a financial year and the amount of income to be derived in respect of each such performance. There was no serious dispute by the mother on the evidence as to those numbers or the payments alleged in respect of the performance.
I was satisfied on the balance of probabilities as to the explanation the father gave me for the information in the bank statements. His representations in them were legitimately the subject of scrutiny in these proceedings but I am satisfied that the picture painted in them is overly-opportunistic and was given to assist in approving the loan. The existing assessment properly looks to the fee per performance and likely number of performances. I am satisfied that it provides a proper and equitable basis for calculating his child support liability.
I am not satisfied that a ground of departure has been made out in respect of the assessment periods in respect of which leave is not sought.
For the foregoing reasons the Amended Application filed on 24 July 2007 is dismissed.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Associate: Ms N. Julius
Date: 30 July 2008