Richardson & Older (No. 2)
[2008] FamCA 512
•30 June 2008
FAMILY COURT OF AUSTRALIA
| RICHARDSON & OLDER (NO. 2) | [2008] FamCA 512 |
| FAMILY LAW – CHILD SUPPORT – Application for departure – Appeal from a decision made in the Local Court where the father’s application for orders departing from a child support assessment was refused – Section 117(2) of the Child Support (Assessment) Act 1989 (Cth) – Orders made for the departure from the child support assessment and recalculation of child support FAMILY LAW – COSTS – Federal Proceedings (Costs) Act 1981 (Cth) |
| Family Law Act 1975 (Cth) Child Support (Assessment) Act 1989 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
| Gyselman and Gyselman (1992) FLC 92-279 Johnson and Johnson (1999) FLC 98-004 |
| APPLICANT: | Mr Richardson |
| RESPONDENT: | Ms Older |
| FILE NUMBER: | NCC | 2211 | of | 2001 |
| DATE DELIVERED: | 30 June 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Justice Fowler |
| HEARING DATE: | 11 - 12 June 2008 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Drake |
| SOLICITOR FOR THE RESPONDENT: | Mr Nash |
Orders
That the assessment of child support for the periods 1 July 2003 to
30 September 2004, and 1 October 2004 to 31 December 2005 and for the period 1 January 2006 to 31 March 2007 be departed from and that child support for each of those periods be recalculated on the basis that the taxable income of the father is as set out below for each of the periods specified below, namely:
(a) for the financial year ending 30 June 2003 the sum of $21,884.00
(b) for the financial year ending 30 June 2004 the sum of $27,218.00
(c) for the financial year ending 30 June 2005 the sum of $17,772.16
(d) for the financial year ending 30 June 2006 the sum of $20,707.00
(e) for the financial year ending 30 June 2007 the sum of $9,010.00.
There be no order as to costs.
IT IS NOTED that publication of this judgment under the pseudonym Richardson & Older is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: NCC 2211 of 2001
| MR RICHARDSON |
Applicant
And
| MS OLDER |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings before me are an appeal from a decision of His Worship Railton SM made in the Local Court of New South Wales in which he refused an application by the father for orders departing from Child Support Assessment made on 17 January 2006.
The hearing before me was commenced following leave which I granted in that regard by order on 15 January 2008.
The Child Support Assessment appealed from was that assessment made by a child support review officer on an application by the mother for a departure from an administrative assessment for the years 2004, 2005 and 2006 and for the period ending 29 March 2007.
The proceedings before me proceed as a hearing de novo of the father’s application for departure brought under the provisions of section 117 of the Child Support (Assessment) Act 1989 (Cth) and in particular s 117(2)(c)(ia) and (ib).
It is clear from the authorities that the onus of satisfying the court that the departure should be granted lies upon the applicant appellant father.
In order to succeed he has to satisfy me:
“That in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ia) because of the income property and financial resources of either parent; or
(ib) because of the earning capacity of either parent.”
Whilst the application before me is one which relates to the decision of the Child Support Registrar last made, some regard ought to be had to the history of this matter. I note that the Full Court in the matter of Johnson [1998] FamCA 1519; (1999) FLC 98-004 said:
“85. We agree with Kay J that the Act does not provide for a review or appeal from the decision of the reviewing officer as effected by the Child Support Registrar. However, we do not think that it makes sense to treat such reasoning as irrelevant. The fact that it is obviously flawed may give substance to a proposition that there are special circumstances requiring a departure order to be made under s 117. On the other hand it may provide sound reasons why a departure order should not be made. While it is true that it is the decision and not the reasoning that led to it that is under consideration, we do not think it reasonable to pay no regard whatever to such reasoning.”
Background Facts
In this matter the parties commenced cohabitation in 1991.
A son was born of their relationship in December 1992.
In 1994 the parties purchased a property at V.
In October 1997 a daughter was born of the relationship.
In 1998 the parties separated.
In September 2003 the applicant sold the property at V and after payment of the mortgage, outgoings and an amount of some $15,000 to the respondent’s parents which had been advanced to enable the parties to acquire the property and whose repayment was protected by a caveat lodged against the title, the father retained the whole of the net proceeds of sale.
Following the parties’ separation a child support assessment was made.
The child support assessment was with respect to certain periods of time made upon deemed income of the father but the father having lodged taxation returns, the child support assessment was adjusted and the father for that reason in January 2005 fell into credit with his payments and remained in credit until November 2005.
In October 2005 the mother applied for a review of the child support assessment.
As a result of her application (in the determination of which the father did not participate) the child support review officer deemed that the father had income in excess of that revealed in his income tax returns and the child support review officer deemed that his child support income was at the following levels:
a)for the period 1 July 2003 to 30 September 2004 - $38,555
b)from 1 October 2004 to 31 December 2005 - $40,001.
c)for the period 1 January 2006 to 31 March 2007 - $44,772.
The child support income amount was adjusted accordingly and so was the child support assessment.
The father objected to the decision of the child support review officer.
He provided full details of his 2004-2005 tax return as well as the company return of the company W Pty Ltd which he had incorporated as a vehicle through which to conduct his business as a tradesman.
He also provided some evidence of payments made for goods and services for the children.
The child support review officer did not take those payments into account as a credit against any arrears accruing under the assessment and neither do I. They appear to be largely reflective of his view of how he wishes to benefit his children when they are in his company.
The child support review officer relied upon the fact that payments had been made at the higher assessment and that for that reason the payments were within the capacity of the father and accordingly having demonstrated that capacity found that he had an income greater than his returned taxable income.
In considering the history of this case there needs to be taken into account the functional literacy of the father. His evidence is that whilst being educated to Year 10, he had constantly changed schools, approximately once each two years and that as a consequence his education suffered. He had difficulty particularly with reading and he had to have things read to him.
It seemed to me that in the witness box he had difficulty following documents. His reading processes were very slow and he was ready to give up and accept somebody else’s statement as to what the document said rather than expend the effort to struggle through in a situation which he would otherwise have found embarrassing.
His evidence as to his capacity to read and his need to call on others to assist was borne out by his partner of some years who confirmed that she indeed had had to read documents to him in this case from time to time.
I observe that the Child Support Agency is there to protect the rights of the most vulnerable in our community, namely our children. It seems to me a pity if its processes do not take also into account that some of those who come under its consideration as liable parents are also vulnerable by reason of disability, including educational and literacy disability. I would hope this case is unique and that it does not betoken a flaw in the system.
I accept the evidence on this aspect by both the father and his partner and I do not place either the literacy or the effective level of education of the father at a very high level. That is not meant to be critical of him; it is simply a fact.
It was also evident that the father recognised his own lack of ability and for example consulted both lawyers and accountants in relation to his business affairs and these proceedings. He said simply words to the effect, “I lay bricks; that is what I do. I get accountants to deal with the figures. That is what I pay them for. I get lawyers to write affidavits. That is what I pay them for.”
Where there have been inaccuracies disclosed in his evidence, particularly his written evidence, and where he has conceded those inaccuracies saying that he did not read the relevant document, I accept this as being a probable explanation. Equally I think his lack of education means that the information supplied to his accountants is probably less than well prepared.
Having said that of course that does not excuse him, or those assisting or representing him, to ensure so far as they possibly can that the information brought in one case to the Taxation Department and in the other the Court, is in the highest order of accuracy that it can be.
It seemed probable from the outset of these proceedings that the income of the father deemed to have been his by the child support review officer was unlikely to be his actual income. Equally, it was apparent fairly early on that clearly there were deficiencies in his income tax returns in that there was no allowance for interest which he had earned.
When the father sold the property which was the former joint home of the parties and received the net proceeds of sale they were placed to the credit of a joint account (joint with his present partner) with AXA at interest.
It is clear that interest was earned on that sum and the balances of it remaining which were deposited to the credit of that account from the date of its deposit until later exhaustion of the sum. Those amounts were clearly not declared by the father as income in his taxation returns.
In addition the father said that he could not explain why the amount declared as the gross income of himself and the business operated by him through a company called W Pty Ltd was not identical to the sum total of the credits in an account to which he asserted he deposited only the income derived by him as a bricklayer or by the company which he had incorporated to contract him as a bricklayer.
The father asserts that the following adjustment would need to be made to account for inaccuracies in returns and interest:
a)for the year 2002-2003 his income should total $14,634 as revealed in his tax return
b)in the year 2003-2004 the father asserts that in lieu of the taxable income shown in his return of an amount of $24,774.43 should be shown representing the addition of one half of the interest accrued to the funds in the joint account with his partner for that year and amounting to $814.43
c)for the year 2004-2005 the father asserts that his income of $8,678 specified in his tax return should be increased by $1,987.40 being one half of the interest accrued in the joint account in that year making a total income of $10,665.40 for the year.
d)in the year 2005-2006 in which the father’s income in total should amount to $20,707 and
e)for the year 2006-2007 his returned income of $9,010 should not be adjusted at all.
In argument Mr Nash, the solicitor for the mother, put before the court in an aide memoir a calculation of the differences he asserted from a consideration of the account into which the income of the father or the company had been paid. It appears that aid-memoire proceeded upon a consideration of that income being as set out in an affidavit of the father filed in the proceedings and constituting Exhibit 2 but that affidavit dealt with figures calculated on a different basis.
Clearly however for the tax year ending 30 June 2003 it seems that an amount of $32,669 was returned as gross income whereas the gross income before expenses calculated by reference to the bank account in which it was placed was an amount of $39,919.28; a differential for that year of some $7,250.00.
In the period to 30 June 2004 it appears that the gross income before expenses was returned to be $39,060 whereas the actual income deposited to the credit of the bank account appears to be an amount of $41,504.07; a differential of $2,444.00.
In the period ending 30 June 2005 the credits to the account amounted to $29,115.16 as against declared gross income before expenses of $22,009; a differential of $7,106.16
The corrected income figure for the year ending the 30 June 2006 appears to be in the order of $20,707.00
The father’s income after expenses for the 2007 year is returned at $9,010.00.
Adjusting above the actual income to those figures for the father for those years as set forth the income would reveal a net income after expenses is:
| Financial Year | Amounts ($) | Total ($) |
| 2002 – 2003 | 14,634 + 7,250 | 21,884.00 |
| 2003 – 2004 | 24,774.43 + 2,444,00 | 27,218.43 |
| 2004 – 2005 | 10,665.40 + 7,106.76 | 17,772.16 |
| 2005 – 2006 | 20,283.00 + 424.04 | 20,707.04 |
| 2006 – 2007 | As per return | 9,010.00 |
It seems clear that the father received the net proceeds of the sale of the V property and this amounted to $112,880.00. This amount was received in October 2003 by the father and it is agreed that it was subsequently fully expended by the father.
The expenditure included an amount of an outstanding tax assessment referred to in a Notice of Demand tendered at the hearing amounting to $35,266.35.
The father asserted in his evidence that the balance of the capital fund which he procured was utilised in expenditure apart from the payment of the tax assessment for the establishment of his business and in ordinary living expenses at times when his income was otherwise low. It appears that the company he incorporated had assets the acquisition of which utilised his capital further. Those assets included a vehicle and barrows and mixers.
It is the evidence of the father’s partner that throughout their relationship they were living on a daily basis although she concedes whilst things were not sparkling they were “less tough” when the proceeds of the sale of the property came to the father’s and her joint credit account.
It seems that apart from establishing his business a consideration of his bank accounts leads to the conclusion that money was withdrawn from time to time to meet living expenses.
There are from that account unexplained withdrawals but that is not surprising given the passage of time and the proclivity of the father not to keep documents which, given his level of reading capacity, is probably also not surprising.
I have no doubt that some of the expenditure of that money was unwise and that perhaps for example the payment of outstanding child support should have rated higher in priority than the expenditure of monies on a motorbike for the child but overall I find the father’s explanation for his expenditure as plausible.
The mother has given evidence that she is presently employed and working most industriously at two jobs. There is no doubt that she and her partner have been the major support of these two children and that without them, their condition would be parlous indeed.
The failure of the father’s business and his obviously very limited capacity to earn income has cast that burden clearly and unevenly upon her.
The Law
The law as set out in the statute is further discussed in the case of Gyselman and Gyselman (1992) FLC at ¶92,729. That case found a three-step process in s 117:
a)Whether in the special circumstances of the case a ground for departure has been established
b)Whether it is just and equitable to make the proposed order within subsection, or alternatively whether it is unjust and inequitable to allow the determination to stand
c)Whether it is otherwise proper to make the order.
(a) Whether in the special circumstances of the case a ground for departure has been established
In this case a ground for departure has in my view been established namely that the assessment was made on the ground that the applicant’s tax returns did not reflect his income and that it was appropriate that he be deemed to have income greater than that he returned. The evidence before me demonstrates that the income of the father was indeed greater than the income returned but lower than the income he was deemed to have. The ground for departure is made out in those circumstances namely that his income was lower than that forming the basis for the assessment.
(b) Whether it is just and equitable to make the proposed order within subsection, or alternatively whether it is unjust and inequitable to allow the determination to stand
It will be unjust and inequitable if the deemed income assessed by the child support registrar had only the effect of creating an unpayable debt and bear no reality to the father’s capacity to support his children.
It has been argued by the mother that the father had available to him the capital he had derived from the sale of his home.
She asserted that it was agreed between them at the time that the father would apply a share of the proceeds of the sale of the property to the use of the children.
There is no written agreement to that effect and the father denies any such agreement. There has been no attempt by the mother to enforce any such agreement as is alleged.
In any event the father, it appears, has applied the capital he derived from the sale of the property to the payment of income tax, the establishment of his business from which he sought an income and in his reasonable living expenses.
To the extent that it is at all relevant, some of those funds were applied to the benefit of the children. The level of spending of the father was not unreasonable.
I note that in considering the relative position of the parties I cannot take into account the income and resources of a person who is not liable to support the child and accordingly I cannot take into account either the capital or income of the father’s partner. In these circumstances his income was modest indeed and required supplementing with the available capital to produce a reasonable standard of living for him.
His partner’s description of their present financial position is “tough” and living from “day to day”. She asserts it was “less tough” when capital was available, not scintillating or lavish but simply “less tough”, but that capital has been fully spent. I do not believe that with the capital available the father was able to do much more than meet the commitments which were necessary to reasonably support himself, and to meet some of his child support commitments.
Having said that, I do believe that the father’s application should not be acceded to in the terms in which it is phrased but that there should be a departure from the present assessment which is based on deemed incomes to one based on the actual incomes for the relevant periods calculated as set forth above.
(c) Whether it is otherwise proper to make the order
In making this decision which I believe to be otherwise proper the obligation of the father will be matched to his income, property and financial resources to the level which is appropriate in all the circumstances of this case. The children will have the benefit of a proper level of support from the father having regard to his means without denying to the father the capacity to reasonably support himself.
I accordingly make the orders set forth above.
Costs
The mother seeks an order that the father pay her costs of and incidental to these proceedings and the father seeks an order that there be no order as to costs but that certificates be issued pursuant to Federal Proceedings (Costs) Act 1981 since the proceedings before me are an appeal from a State court.
As far as the application made by the mother is concerned that application is dealt with under the provisions of section 117 of the Family Law Act.
I take into account in relation to that section that ordinarily each party would pay and bear their own costs unless I made an order under it.
In considering whether I should make such an order I am obliged by the section to take into account:
(a) the financial circumstances of each of the parties to the proceedings
The financial circumstances of the father are parlous indeed. Those of the mother are marginally better but, in any event, neither of them have any capacity in my view to meet an order for the costs of the other.
(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
Neither party is so far as I am aware in receipt of an assistance by way of legal aid.
(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
To my view, the conduct of the mother in relation to the proceedings has, in all the circumstances, been reasonable. The father’s case was, at times, frustratingly presented, particularly in relation to the written material. Notwithstanding that his evidence was on occasions obscure and unreliable, nevertheless given his substantial disability in literacy, it will not be just and fair for him to bear a costs burden by reason of that frustration and those difficulties.
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
These proceedings were necessitated by the father’s failure to effectively deal with the mother’s application for a departure from a Child Support Assessment and to provide accurate and up to date information to the mother and to the Child Support Registrar.
However, I once again note the father’s particular disabilities and so that in large measure I think that that has been responsible for his failures. Whilst it is true that that cannot be seen as falling in any way at the feet of the mother, I think that the results of his failure have to be borne in a general way rather than by him alone, they being a vicissitude of life.
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings
The proceedings before me have been partially but not wholly successful.
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
So far as I am aware no offer has been made in writing to the other party to these proceedings to settle them.
(g) such other matter as the court considers relevant
I find no such matters.
In the circumstances, I decline to make any order as to costs.
I turn now to the consideration of the costs in Federal Proceedings (Costs) Act 1981.
It is clear on High Court authority that in order to make an order for costs on an appeal, I have to be satisfied:
a)that the appeal is within the meaning of the Acts definition of a Federal Appeal
b)that the appeal is successful and
c)that the appeal is successful on a question of law
and that a Federal Court had heard the appeal.
There is no doubt in my mind that the appeal before me is a Federal appeal that has been heard by a Federal Court.
It is however an appeal from a decision of a State Magistrate brought by leave and a hearing de novo.
In the order granting leave I indicated that leave to appeal should be granted upon a consideration of the facts before the learned Magistrate but also the evidence which could be adduced on appeal.
The facts before the Magistrate were different from those used on appeal. Therefore, it is essentially an appeal based on fact. It is the determination of the facts before the appellant court which has brought about the conclusion that I came to.
The appeal therefore, in my view, fails the definition required by the Federal Proceedings (Costs) Act 1981 of being an appeal which was successful on a question of law.
Accordingly, there is no order as to costs.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.
Associate:
Date: 30 June 2008