RJL and WJF
[2004] FMCAfam 627
•16 November 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RJL & WJF | [2004] FMCAfam 627 |
| CHILD SUPPORT – Departure orders – duty of parent to maintain a child – failure of husband to give priority to his duty to maintain the child over all other commitments – husband’s earning capacity. |
Child Support (Assessment) Act 1989
Child Support (Registration and Collection) Act 1988
Luton v Lessels (2001) FLC 98-015
Gyselman (1992) FLC 92-279
Hides v. Hatton (1997) FLC 92-759
Ross & McDermott (1998) 23 FamLR 613
Hallinan v. Witynski (1999) FLC 98-009
Chang v Su (2002) FLC 93-117
Mezzacappa (1987) FLC 91-853
Black & Kellner (1992) FLC 92-287
Oriolo v Oriolo (1985) FLC 91-653
Weir (1993) FLC 92-338
Briese (1986) FLC 91-715
Giunti (1986) FLC 91-759
Kannis (2002) FamCA 1150 (reported in (2003) FLC 93-135
Hardman (2003) FamCA 1057;
Rayson (2003) FamCA 1384
DJM & JLM (1998) FLC 92-816
R & R (No.1) (2002) FMCAfam 153
Prpic v Prpic (1995) FLC 92-574
Bendeich (1993) FLC 92- 355
Vaughan (1981) 7 FamLR 379
Anast & Anastopoulos (1981) 7 FamLR 728
Scott (1994) FLC 92-45
Scott v Stauder (unreported judgment delivered 20 November 1996)
| Applicant: | RJL |
| Respondent: | WJF |
| File No: | MLM 7084 of 2002 |
| Delivered on: | 16 November 2004 |
| Delivered at: | Melbourne |
| Hearing date: | 30 May 2003 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Stewart |
| Solicitors for the Applicant: | Kennedy Wisewoulds |
| Counsel for the Respondent: | Mr Weil |
| Solicitors for the Respondent: | Susan Snyder |
ORDERS
Pursuant to s.117 of the Child Support (Assessment) Act 1989, there be a departure from the administrative assessment of child support payable by the husband to the wife for the child L as follows:
(a)for the period from 28 May 2001 to 27 August 2002, the annual rate of child support be set at $10,400.00;
(b)for the period from 28 August 2002 to 27 November 2003, the annual rate of child support be set at $10,400.00; and
(c)for the period from 28 November 2003 to 31 December 2005, the annual rate of child support be set at $10,400.00.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 7084 of 2002
| RJL |
Applicant
And
| WJF |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings presently before the Court relate to child support for the parties’ daughter, L, who is fourteen years old.
Background
The parties were married in December 1988. They separated in September 1991 and were divorced in 1993.
L is the only child of the marriage. She was born on 25 August 1990.
L lives with the wife, and has done so since the parties separated.
Both parties have repartnered. The wife commenced cohabitation with her present husband, P, in 1993, and they married in December 1995. They have a child (T) born in August 1997.
The husband married his present wife (N) in July 2001. There are no children of that marriage.
The wife describes herself as being “engaged in writing and part time secretarial work, but principally in homemaker duties”.
The husband is a trader in fine wines.
History of Child Support Arrangements
The history of the child support arrangements between the husband and the wife is set out (in some detail) in paragraphs 8 to 27 (inclusive) of the wife’s affidavit sworn 12 August 2002. Relevantly, for the purposes of the proceedings presently before the Court:
a)Assessment period 28 February 2000 to 27 May 2001. The husband was initially assessed to pay child support at the rate of $121.92 per month for this period. After a review of the assessment by Senior Case Officer Kirmos, the rate of child support for this period was varied to $16,672.00 per annum (or $1,389.33 per month). This was the maximum rate then applicable under the Child Support Scheme.
b)Assessment period 28 May 2001 to 27 August 2002. The husband was initially assessed to pay child support at the rate of $178.92 per month for this period. Once again, the wife sought a review of this assessment but, on this occasion, Senior Case Officer Sciola decided that the issues raised by the wife’s application were too complex to be dealt with under Part 6A of the Child Support (Assessment) Act 1989 (“the Assessment Act”). Pursuant to s.98E of the Assessment Act, Senior Case Officer Sciola refused to make a determination, and recommended that the application be made to a court of appropriate jurisdiction. After Senior Case Officer Sciola’s determination in that regard, a fresh administrative assessment issued (reflecting a change in the wife’s taxable income). This time, the husband was assessed to pay child support at the rate of $93.50 per month.
c)The wife later lodged an objection to Senior Case Officer Sciola’s decision, but the objection was disallowed.
On 9 January 2003, three further assessments were issued by the Child Support Agency (“CSA”). They cover the period from 28 August 2002 to 27 November 2003. The effect of the assessments is that the husband is obliged to pay child support for this period at the rate of $21.67 per month (being the minimum rate applicable under the child support legislation).
Orders Sought by the Wife
The wife seeks orders to the effect that the administrative assessments of child support for the periods 28 May 2001 to 27 August 2002 (“the First Period”) and 28 August 2002 to 27 November 2003 (“the Second Period”) be departed from in such a way as to provide that the husband pay child support for L at the rate of $200 per week.
The wife also seeks that the husband continue to pay child support at the rate of $200 per week for as far into the future as the Court is prepared to order. Alternatively, the wife seeks that the husband pay “lump sum capitalised child support for such period as is reasonable in all the circumstances”.
The wife also seeks to enforce arrears of child support (relating to the period 28 February 2000 to 27 August 2002).
Orders Sought by the Husband
The only order formally sought by the husband is that all arrears of child support be discharged. He conceded, however, that the more recent assessments of child support are probably inappropriate and that he “should be paying $450.00 per calendar month” or thereabouts in respect of child support.
The Law
The Commonwealth’s legislative scheme for assessment and enforcement of child support liabilities is contained in the Assessment Act and the Child Support (Registration and Collection) Act1988. Certain aspects of this scheme were considered by the High Court in Luton v Lessels (2001) FLC 98-015. In that case, Gaudron and Hayne JJ said (at page 95,659):
The Assessment Act records that the ‘parents of a child have the primary duty to maintain the child’. This duty is said, by the Assessment Act, (a) to be not of lower priority than the duty of the parent to maintain any other child or another person: (b) to have priority over all commitments of the parent other than commitments necessary to enable the parent to support himself or herself and any other child or another person the parent has a duty to maintain: (c) to be not affected by the duty of any other person to maintain the child or any entitlement the child or another person may have to an income tested pension, allowance or benefit. …The principal object of the Assessment Act is said to be ‘to ensure that children receive a proper level of financial support from their parents’.
Part 5 of the Assessment Act (ss 35-79) provides for the administrative assessment of child support. “Child support” is defined as “financial support under [the Assessment] Act, including financial support under [the] Act by way of lump sum payment or by way of transfer or settlement of property”. An administrative assessment of child support requires the application of one or more of several statutory formulae that is, or are, apposite in the particular circumstances. Section 79 of the Assessment Act provides that ‘an amount of child support due and payable by a liable parent to a carer entitled to child support is a debt due and payable by the liable parent to the carer’…
Where there has been an administrative assessment, both the liable parent and the carer may lodge with the Registrar an objection against the assessment. A person aggrieved by a decision on the objection may, pursuant to section 110 of the Assessment Act, appeal to a court having jurisdiction under that Act.
In the same case, Gleeson CJ said (at page 95,653):
The objects of the Assessment Act are set out in section 4. The principal object is to ensure that children receive a proper level of financial support from their parents. To that end, the Act provides for a level of support to be determined in accordance with legislatively fixed standards, and permits carers of children to have the level readily determined without the need to resort to court proceedings.
… It may be observed that, although the legislation is enacted in furtherance of a clearly defined public policy, it creates a distinctly personal liability. The natural and moral obligation of the parent to support a child becomes, by force of the legislation, a legal obligation reflected in a debt, calculated in accordance with the Assessment Act, owing by a parent to a carer of the child.
Gaudron and Hayne JJ continued (at page 95,663):
Part 7 of the Assessment Act (ss 99–146) deals with the jurisdiction of courts under the Act. In particular, provision is made for applications to a court for a declaration about the applicability of the administrative assessment provisions. Provision is made for what are called “appeals” against incorrect administrative assessments and for orders for departure from administrative assessment. (The reference to “appeal”, although similarly used in other contexts, may mislead. The proceeding which is so described is the first application of judicial power; it is an exercise of original, not appellate jurisdiction.) An order by a court for departure from an administrative assessment may be made on the grounds on which the registrar may make a departure determination…
The process involved in the consideration of an application for departure from an administrative assessment of child support was explained by the Full Court in Gyselman (1992) FLC 92-279 at 79,064-5, under the heading “Division 4 – Orders for Departure from Administrative Assessment in Special Circumstances”. The Full Court said (inter alia):
Section 117 is the critical provision.
The structure of that section is that s.117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in subsections (2) to (9). Section 117(1)(b) identifies a clear three-step process:
1. Whether one or more grounds of departure in s.117(2) is established.
2. Whether it is ‘just and equitable’ within the meaning of s.117(4) to make a particular order.
3. Whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order.
It is clear from the careful way in which s.117 has been structured that the Court must address each of those three separate issues...
…Each of those grounds (in s.117(2)) is prefaced by the words, "in the special circumstances of the case". Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. (It has been held) that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases". The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.
In Hides v. Hatton (1997) FLC 92-759, the Full Court said (at 84,352):
It was also made clear in Gyselman that when the Court is considering whether it is just and equitable within the meaning of s.117(4) to make a particular order, the Court is required to undertake the task of considering the matters set out in paragraphs (a) to (g) of that sub-section, and in this regard the Full Court said as follows (at 79,078):
‘However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).’
The Full Court also made it clear in its decision in Gyselman that similar considerations apply to the Court’s determination as to whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order (see at 79,080), and furthermore and very relevantly for present purposes the Full Court emphasised the importance of trial Judges providing adequate reasons for judgment in order to ensure a proper exercise of the discretion under s.117 (see at 79,080).
In the same vein, a differently constituted Full Court in Ross & McDermott (1998) 23 FamLR 613 at 623-4 (paragraph 39) said:
... a practical and flexible approach should be adopted to the task of considering these s 117(4) and (5) matters, that is an approach similar to that which this court has long adopted to the ‘s 68F(2) matters’… in child-related proceedings under the Family Law Act 1975 (Cth), and to the ‘s 79(4) matters’ and ‘s 75(2) matters’ in property settlement proceedings under that Act. Accordingly, we consider it is unnecessary to make any reference to those s 117(4) and (5) matters which have no real relevance in the circumstances of the particular case. We also consider that it would be permissible to group together and consider as a whole, those relevant matters which by their nature lend themselves to such an approach in the circumstances of the particular case, and in the case of those matters which are required to be considered under more than one subsection of s 117, to examine such matters only once, although they may need to be taken into account under more than one subsection.
In Hallinan v. Witynski (1999) FLC 98-009, the Full Court said:
... (The) reasons for answering the two questions posed by s.117(1)(b)(ii) need not be elaborate, but the task of considering, at least broadly, the matters referred to in s.117(4) and 117(5), respectively, and then making a finding as to satisfaction or otherwise in relation to the relevant matter, must be undertaken as a necessary part of the exercise of discretion imposed on the Court by s.117(1).
The Court must follow the three step process described in Gyselman in respect of each year for which a departure order is sought (see Hides v Hatton (1997) FLC 92-759).
I turn now to consider the matters as to which I must be satisfied — pursuant to s.117 of the Assessment Act — before making any order under Division 4 of Part 7 of that Act.
“Special Circumstances” — Section 117(2)
It was conceded by the husband that the wife has established a ground for departure (in respect of both the First Period and the Second Period) within the meaning and contemplation of s.117(2) of the Assessment Act.
Mr Weil (for the husband) confirmed that the only “real question” in the proceedings is the quantum of child support that the husband should be paying for L.
In all the circumstances, I need do no more than record that I am satisfied that one of the grounds of departure in s.117(2) has been established — namely, that, in the special circumstances of the case, adherence to the administrative assessments for the First Period and the Second Period would result in an unjust and inequitable determination of the level of financial support to be provided by the husband for L because of the overall financial position of both of the parties.
“Just and Equitable” — Section 117(4)
Because of the structure of the orders sought by the wife, it is apparent that I must first determine whether it is appropriate to make the orders sought by the wife as her “first alternative” described above. Such an approach is mandated by the provisions of s.123(3) of the Assessment Act — which states that, before hearing an application for provision of child support otherwise than in the form of periodic amounts paid to the carer entitled to child support, the Court must “… hear and determine any pending application made to the Court for an order under Division 4 (orders for departure from administrative assessment in special circumstances) in relation to the child, the carer entitled to child support and the liable parent”. The orders sought by the wife for lump sum (capitalised) child support are orders for the provision of child support otherwise than in the form of periodic amounts paid to the wife, and thus fall within the contemplation of Division 5 of Part 7 of the Assessment Act. Even if that is not precisely how the orders sought by the wife are drafted, I find that that is their practical effect.
It follows from the above that my current consideration of the provisions of s.117(4) is in the context of endeavouring to determine whether it would be just and equitable as regards L, the wife and the husband to make the particular orders sought by the wife varying the periodic payments to be made by the husband.
Priorities
I remind myself of the nature of the duty of a parent to maintain a child (as stated in s.3 of the Assessment Act). This is an important provision in the context of this case. The husband’s duty to maintain L must have priority over all commitments of the husband — other than commitments necessary to enable the husband to support himself (and any other child or person that the husband has a duty to maintain).
The evidence before me reveals that the husband has not given priority to his duty to maintain L. Many examples of the husband’s attitude in this regard arose during his cross examination, but the most startling was the husband’s concession that he (and N) spent $500.00 on a meal at the Flower Drum Restaurant in Melbourne (and gave a tip of $140.00), at a time when the husband had been assessed to pay child support for L at the rate of $21.70 per month. As well, the husband said that his response to the decision of Senior Case Officer Kirmos to increase the quantum of child support that he was then liable to pay (in November 2000) from $121.92 per month to $1,389.33 per month (being the maximum amount payable in respect of one child) was to continue to pay no child support whatsoever. The husband alleges that he was advised by his solicitors not to pay child support “pending negotiations”. I do not accept the husband’s evidence in this regard. It is most improbable that the husband’s solicitors would have advised him to pay nothing at all towards the support of his daughter at that time.
I shall return to the husband’s evidence regarding his financial position (and his credibility) later in these Reasons.
L’s Proper Needs
The wife relied upon the figures set out in her financial statement sworn 5 March 2003 (as amended during the course of her evidence) to establish L’s “proper needs”. She was not cross examined (or not effectively cross examined) in relation to these expenses. Accordingly, I find that the following weekly figures reflect a fair allowance for the costs incurred by the wife in maintaining L, and represent an approximation of her proper needs whilst she is with her:
Food
$ 50.00
Household supplies
7.00
House repairs
10.00
Gas
12.00
Electricity
5.00
Telephone
10.00
Car (petrol)
10.00
Car (registration)
3.00
Car (maintenance)
7.00
Car (insurance)
6.00
Tram fares
11.00
Clothing and shoes
40.00
Pocket money
12.00
Child minding
10.00
Medical and dental
15.00
Entertainment/hobbies
25.00
Holidays
30.00
Education expenses
12.00
Chemist/pharmaceutical expenses
10.00
Gardening/lawn mowing
4.00
Repairs – furnishings/appliances
5.00
Books and periodicals
5.00
Gifts
15.00
Hairdressing, toiletries
5.00
Internet
5.00
Horse riding
22.00
Singing
34.00
Health insurance
10.00
TOTAL
$ 390.00
As indicated above, these figures have as their genesis the average weekly expenses (as they relate to L) contained in the wife’s financial statement sworn 5 March 2003. The total of those expenses was $345.00 per week.
During the course of the trial, however, the wife made certain adjustments to the figures contained in her financial statement. Those adjustments were as follows:
a)the amount for “telephone” was increased from $1.00 per week to $10.00 per week;
b)an amount of $11.00 per week was claimed in respect of L’s tram fares;
c)the amount claimed in respect of L’s internet use was decreased from $10.00 per week to $5.00 per week;
d)an amount of $34.00 per week was included in the list to take account of L’s singing lessons; and
e)the amount of $4.00 per week in respect of L’s basketball expenses was deleted.
In my opinion, many of the amounts claimed by the wife (for example, in relation to food and household supplies, telephone and internet expenses, pocket money and hairdressing/toiletries) are modest when regard is had to L’s age, and to the standard of living of both her parents. Although I have found that the sum of $390.00 per week represents a fair allowance for the costs incurred by the wife in maintaining L, I am of the opinion that her proper needs are slightly higher than this sum. It is impossible to be precise in determining such needs, but I find — on the totality of the evidence before me — that L’s proper needs whilst she is with the wife amount to $400.00 per week.
L’s Financial Position
It does not appear that L has property or financial resources of her own. Neither party suggested that any income that she may be able
to earn, or her earning capacity for that matter, are relevant considerations.
Wife’s Financial Position
The child support assessment for the First Period (issued 18 September 2001) records the wife’s child support income amount as $88,662.00 — being her 1999/2000 taxable income, plus supplementary amounts. The assessments for the Second Period (issued 9 January 2003) record her child support income amount as $95,436.00 — being her 2001/2002 provisional taxable income, plus supplementary amounts.
Senior Case Officer Sciola was unable — based on the information then available — to make “an informed decision in respect of (the wife’s) current earning capacity”.[1]
[1] See Notice of Decision dated 16 August 2000, page 4.
The wife’s 2002 tax return[2] records that the wife’s taxable income was $62,610.00. Of this amount, approximately $20,000.00 comprises the wife’s salary from RWF Medic Pty Ltd, and approximately $39,000.00 comprises distributions from trusts.
[2] Exhibit A2.
In the wife’s financial statement sworn 5 March 2003, she records her salary as $384.00 per week, and her income from the F Family Trust (P’s family trust) at $1,096.00 per week.
During the course of her evidence, the wife said that income is distributed to her through P’s family trust. The amount distributed to her depends upon tax planning arrangements made by P.
Similarly, the wife’s “employer”, RWF Medic Pty Ltd, is a company associated with P. Her income from that source is as a result of “income splitting” arrangements put in place by P.
The wife said that she “does not have to do a great deal” in P’s practice.
The wife and P jointly own the home in which they, their son and L reside. The value of the property is approximately $700,000.00. It is encumbered by a mortgage in respect of which approximately $330,000.00 is owing. As well, at the time that the wife swore her financial statement, approximately $180,000.00 was owing in respect of a line of credit obtained for business purposes.
The wife has the capacity to earn up to $10,000.00 per annum (approximately) from the writing that she undertakes.
I accept that the wife’s financial statement sworn 5 March 2003 is an accurate reflection of her financial position, and I also accept her statement that she and P are “financially overcommitted”.
The wife’s 2002 income tax return records the fact that P’s 2002 taxable income was $144,207.00.
Clearly, P has a significant income. The wife’s taxable income, however, is — to a large extent — “artificial”, in that it does not reflect income actually generated by her. The only income generated or notionally generated by the wife is the amount of approximately $10,000.00 per annum that she has the capacity to receive as a result of her writing activities, and a proportion of the salary that is allocated to her for the administrative tasks that she undertakes (on a part time basis) for the corporate entity associated with P.
In paragraphs 32 and 33 of her affidavit sworn 12 August 2002, the wife said (and I accept) that she “earned no income as a writer” during the financial years ending 30 June 2000 and 30 June 2001. The fact of the matter is, however, that it was conceded on the wife’s behalf that she has the capacity to earn up to approximately $10,000.00 per annum as an author.
I also note that, in November 2001, the wife sold an investment property in Fitzroy (which was registered in her sole name) for $500,000.00. After discharging the mortgage and paying the costs of sale, she realised approximately $70,000.00 from the sale — which she applied to the reduction of the mortgage encumbering the home in which she and P presently reside.
There can be no doubt that the wife and P (and their son and L) enjoy a comfortable standard of living. There can also be no doubt that they enjoy that standard of living because of P’s earnings and earning capacity.
Husband’s Financial Position
It is not in dispute that the husband is a self employed businessman working in the hospitality industry and that, until recently, he had an interest in a number of companies. The companies are set out in paragraph 37 of the wife’s affidavit sworn 12 August 2002. The husband’s disposal of his interest in four of the companies is detailed in paragraph 38 of the wife’s affidavit. The husband conceded that both these paragraphs are accurate.
The husband effectively controls Gainsbridge Pty Ltd (“Gainsbridge”) Mr Weil conceded that Gainsbridge is the husband’s alter ego.
In his affidavit sworn 26 May 2003, the husband purported to explain the transition from his involvement (through Gainsbridge) in a group of restaurants to his present occupation as a trader in fine wines. The husband deposed to the following:
a)He is presently “a consultant to the restaurant and wine and food industry”.
b)He was previously involved (through Gainsbridge) in the ownership of a restaurant known as “The Duck” in Melbourne. The restaurant was sold in or about September 1999.
c)In approximately May 1998, the husband became involved (through Gainsbridge) in a group of restaurants known as the “Bay” group (“the Group”) of restaurants. The corporate arrangements associated with the ownership and management of the Group were complex.
d)Gainsbridge was a minority shareholder in the companies comprising the Group. All of the restaurants operated by the Group were conducted from leased premises.
e)In paragraphs 4 to 10 of the affidavit, the husband described the Group’s involvement in three restaurants in Sydney. Although the husband was a director of the companies that conducted the restaurants, he “ … was not entitled to, and neither did I receive director’s fees or any salary”. The only income which either Gainsbridge or the husband was entitled to receive was from dividends resulting from the shareholding.
f)After the 2000 Olympics, the profitability of the Sydney restaurants deteriorated. One restaurant, in particular, was extremely quiet and, according the husband, was losing money at the rate of $20,000.00 to $30,000.00 per week.
g)The Group eventually decided to sell the restaurant that was incurring the significant losses. According to the husband, “… the capital and trading losses for the brief eight month ownership (of the failed restaurant) was approximately $1,000,000.00.
h)As the position of the failed restaurant had deteriorated, the entities associated with the other restaurants had been obliged to prop it up. Eventually, those entities were unable to pay dividends to their shareholders (including the husband/Gainsbridge).
i)According to the husband, from April 2001 until the husband sold his interest in the Group in February 2002, he received no income whatsoever from any of the restaurant businesses. Nor did he receive director’s fees.
j)In paragraph 16 of his affidavit the husband said:
With no income, I had to start living off capital which had accrued over the previous few years. The capital which I had accrued had been accumulated from my small share of my mother’s estate of approximately $35,000.00 and my share of the proceeds of sale of a restaurant known as “The Duck” of approximately $50,000.00 which I had sold in about September 1999. I initially thought that the dividends would resume reasonably soon but as each month passed, it became clearer that the problems were greater than the shareholders had been led to believe by the management.
k)Shortly after the sale of the failed Sydney restaurant, the Group acquired a restaurant in Melbourne. It follows that the Group then owned two restaurants in Sydney, and one in Melbourne.
l)After the acquisition of the restaurant in Melbourne, relations between the husband and the other members of the Group deteriorated. Eventually, and after what the husband described as a “partnership dispute”, the husband’s “partners” offered to buy him out of all three restaurants and the associated companies. According to the husband, he had “no choice but to accept the best offer which was forthcoming, which was that I receive the sum of $125,000.00 in part in cash and in part in wine stock”.
m)The husband said that, throughout the period from April 2001 to February 2002, he was in receipt of no income. Dividends had ceased and he was living off capital. He added that his “accrued capital had reached a desperately low level (and) in late 2001 (he) had to borrow $25,000.00 from the National Australia Bank in order to keep afloat financially and particularly in order to assist in paying legal expenses involved with the argument with my former partners”.
n)In paragraph 20 of the affidavit, the husband said:
I am attempting to establish a business as a wine broker trading in fine and rare wines internationally. I trade under the name of Gainsbridge. I am one of four directors of another company known as Cellarlist Pty Ltd which has never traded. It was originally set up with the idea of trading wine through the internet but in fact this has never occurred. …In order to remain solvent while establishing the business, I have borrowed money both from my wife and from the National Australia Bank and from my father-in-law. These debts must be repaid.
o)The husband continued:
In order to operate the business, most of the purchases of wine are made through my various credit cards and then once the wine is sold and I receive payment, I attempt to pay off the credit cards as best I can. …
My current financial position is that I am trying to establish a business. At the present time I would estimate that the net profit before tax of the business for this coming financial year (year ending 30 June 2003) would be no more than about $31,000.00 to $32,000.00. I have some equity in the motor vehicle which I lease and some wine in my possession, but otherwise have minimal assets. I owe Visa the sum of approximately $8,000.00, my wife N the sum of $22,000.00, the National Australia Bank the sum of $3,500.00 and my father-in –law … $10,000.00.
The wife asserts that the husband “enjoys a standard of living beyond that which would be afforded by his taxable income”. In support of her assertion in that regard, she refers to a number of matters:
a)The husband drives a luxury motor vehicle. In response, the husband said that the car was purchased new in 1999 for approximately $75,000.00. It is leased.
b)The husband inherited half of his mother’s estate in 1998. In response, the husband said that the amount that he received was approximately $35,000.00, which moneys were paid into company accounts and used as working capital.
c)In 1999, the husband travelled for two months on a first class around the world trip. In response, the husband admitted that this is correct.
d)In 2002, the husband travelled first class to New York for his honeymoon. In response, the husband said that this assertion is incorrect. N’s parents purchased economy tickets for him and N to travel to the United States. Their seats were upgraded to business by the airline.
e)The husband regularly travels business class to Sydney, is a member of the “Golden Wing” club and stays in five star accommodation. In response, the husband confirmed that the “Golden Wing” club no longer exists. He said that he had been to Sydney twice (on discount fares) since June 2001, and had not stayed in any hotel in Sydney since June 2002.
f)The husband regularly holidays at Noosa Heads in Queensland. In response, the husband said that he had been to Noosa twice with N in the past three years. On the most recent occasion, the husband said that they shared an apartment (and costs) with his N’s parents.
g)In 2000, the husband purchased a computer and cable modem service, a ten CD stacker for his car and an expensive mobile phone. In response, the husband agreed that he purchased the computer in 2000 and that he has a mobile phone under contract to Telstra. The husband said that the CD stacker was standard with the car when it was purchased in 1999.
h)The husband lives in a rented apartment in South Yarra, near the Botanical Gardens. In response, the husband said that he has been living in the same apartment for approximately nine years. The husband said that the property is indeed rented, and shared. He said that N and he continue to share with his previous housemate, and that their share of the rent is $250.00 per week. He also said that the property provides a home office for him (and Gainsbridge).
i)The husband eats virtually all of his meals in restaurants. In response, the husband said that, on average, he and N “eat at home approximately three or four nights per week”. He said that they eat at a friend’s home one night a week, and on the other two nights they may eat out. He also said that N is the Deputy Editor of The Age “Epicure” section, and that their eating out is generally associated with her employment.
j)The husband regularly drinks imported wines. In response, the husband said that this is correct, but that “ … the wines that we drink when we are at home are generally half-bottles and the cost rarely exceeds $20.00 per bottle.”
The husband confirmed that N has an income of approximately $50,000.00 per annum.
In August/September 2002, the husband travelled to London for a period of approximately three weeks “to sell wine”. In paragraph 19 of his affidavit sworn 17 September 2002, the husband said:
I am attempting to establish a business as a wine broker trading fine and rare wines internationally. I was able to purchase some European wine in Australia which I then sold in London. As a result of tax arrangements approved by the Australian Tax Office, I was able to obtain a refund of the GST which I had paid on the wine plus one half of the WET (Wine Equalisation Tax) tax applicable to the wine. The refund of the tax effectively provided me with the money for the trip to the United Kingdom and I was able to sell the wine at a profit in London. I hope I will be able to continue to sell wine in this manner but as yet the business is new and the source of income is thus unreliable and unpredictable.
During the course of her evidence, the wife said that the husband is “often paid in expensive wine”. The husband denied this allegation, but I do not accept the husband’s denial in this regard.
Attached to the husband’s affidavit sworn 26 May 2003 is a profit and loss statement for Gainsbridge for the period 1 July 2002 to 31 March 2003. The statement reveals that Gainsbridge received approximately $488,000.00 in respect of wine sold during the nine month period. After deduction of “cost of sales”, the company’s gross profit was approximately $96,000.00 (or approximately $2,600.00 per week). The listed expenses total just under $80,000.00, giving a net profit of approximately $25,500.00 for the nine month period. On the basis of these figures, the husband estimated that his income from Gainsbridge will be in the vicinity of $32,000.00 per annum (gross).
In cross examination by Ms Stewart (for the wife):
a)The husband explained that he buys wine from merchants around Australia, and that he spends all or most of his working day looking for product to buy or sell. Most of his purchases are made through private auction or through a retailer. The husband also uses the telephone and the internet, although, of late, most transactions have been carried out on the internet.
b)The husband confirmed that he travels relatively frequently. In 2002/2003 he travelled overseas on three occasions. He also travelled to Tasmania, and twice to the Barossa Valley in South Australia. As well, he travelled to Sydney. He denied that he travels business class.
c)The husband said that, as his business becomes more established, he believes that he will not have to travel so much.
d)The husband was referred to Gainsbridge’s accounting expenses for the nine month period commencing 1 July 2002 — which expenses amounted to approximately $11,750.00. The husband said that the accounting fees were higher than might ordinarily be the case because his accountants “had to bring all trusts and all entities up to date for the last three years”. I conclude that this item is unlikely to be anywhere near as high in the future.
e)The husband was also asked about the “rent” expense of $5,000.00 appearing in the profit and loss statement. The husband said that the payment relates to his home office. The husband and N pay half of the monthly rental of $2,400.00 for the home that they occupy. The other $1,200.00 is paid by their boarder. Half of the amount paid by the husband and N is treated as a payment of rent on behalf of Gainsbridge. In other words, Gainsbridge pays rent for its share of the residential property at the rate of $600.00 per month.
f)In his financial statement sworn 17 September 2002, the husband stated that his average weekly expenses included $100.00 per week for petrol. During cross examination, the husband conceded that this figure is wrong, and that the correct amount (being the amount for petrol for the husband’s personal use) is $10.00 per week.
g)The husband conceded that he should be paying $450.00 per calendar month for child support. Although the husband said that he formed that view “a long time ago” he did not satisfactorily explain why he had not commenced paying at that amount. Indeed, he said that he should only start paying at the rate of $450.00 per month “from when the proceedings are over and we don’t have to pay legal fees any more”.
h)The husband said that N does not contribute towards the rent for the property in which they reside. Instead, “she pays for groceries”.
i)The husband conceded that exhibit A4 is an accurate record of certain of the payments that he has made through his American Express card between December 2000 and March 2002. The schedule reveals that the husband has spent significant amounts of money at restaurants over that period — including (much smaller) amounts for tips. The list also reveals that the husband has spent significant amounts at a Laundromat.
j)The husband asserted that he is “working for $9.00 per hour”. He said that, because of his age and experience, he is now virtually unemployable. He said that he had applied for three consulting positions before commencing his present venture, but, when pressed, conceded that he had not applied for a position at a large liquor outlet such as Dan Murphy’s.
k)The husband said that the total amount that he and N paid at the Flower Drum restaurant in November 2001 was $500.00, and that they tipped the sum of $140.00. At the same time, the husband was paying $21.70 per month in respect of child support.
l)The husband confirmed that he continued to attend restaurants in the period leading up to the trial, and that he spent considerable amounts on food and wine there.
m)The husband said that he had paid legal fees amounting to $7,500.00 prior to the commencement of the proceedings.
n)The husband said that he and N travelled to New York for their honeymoon in June 2001. They were away for fourteen days, and the holiday would have cost them approximately $4,000.00.
The husband was not an impressive witness. He was opinionated to the point of being arrogant. Although the husband remained calm as he gave his evidence, I am of the view that he was neither open nor candid with the Court. Indeed, he remained wary and guarded throughout his evidence. At times he was non-committal.
I find that the husband is an intelligent, capable and hard working man who is prepared to explore all available avenues to increase his personal wealth. I find that he has not been open and frank regarding the overall financial benefits that he receives from his wine trading business, and that the financial information that he has presented to the Court (both orally, and in his financial statement) is something less than the whole truth.
Although the husband endeavoured to assure the Court that he understands (and has always understood) his obligations in relation to child support, I do not accept his assurances in this regard. After all, if that was the case, then why did the husband not ensure that he paid child support to the wife at the rate (being $450.00 per month) that he considered was appropriate?
I find that the husband is far more concerned with enjoying a comfortable standard of living, and maintaining his professional standing and reputation, than he is with meeting his obligations in relation to the financial support of his daughter. I find that he has deliberately taken steps to obfuscate his financial position (notwithstanding the apparent detail in his most recent affidavit). Whether the issue of child support is or was his only motivation for such obfuscation, I cannot know — but I have no doubt that the existence of the present proceedings was a consideration from the husband’s point of view (from the time that he became aware of such proceedings), and that it was one of the factors that led the husband to enter into the transactions that he did and structure his affairs in the manner that he has.
I accept that the husband has few assets, and some liabilities. I find, however, that his stock of wine is likely to be worth far more than the amount of $7,000.00 that he has estimated (in particular, having regard to the transactions reflected in the profit and loss statement comprising exhibit B to the husband’s affidavit sworn 26 May 2003), and that the husband’s income (or notional income) is likely to be significantly higher than $32,000.00 per annum.
In summary, I am not satisfied that the husband has made full and frank disclosure of his true financial position.
The Husband has not made Full and Frank Disclosure
The duty to make full and frank disclosure of one’s financial position has been set out in a number of cases determined by the Full Court over the years. Those cases were most recently summarised in the decision of Chang v Su (2002) FLC 93-117. For example, where the court cannot be satisfied as to the extent of a party’s property, it can be less cautious than might otherwise be the case when making relevant orders (see Mezzacappa (1987) FLC 91-853, Black & Kellner (1992) FLC 92-287 and Weir (1993) FLC 92-338). Full and frank disclosure is required as a matter of principle in proceedings between spouses or former spouses under the Family Law Act or the Child Support legislation (see, for example, Oriolo v Oriolo (1985) FLC 91-653, Briese (1986) FLC 91-715 and Giunti (1986) FLC 91-759).
That a judge (or federal magistrate) is entitled to take a “robust view” in relation to findings regarding a parties’ financial position (including a party’s capacity to meet any proposed order) — where that party has failed to make full and frank disclosure of his/her financial position — is clear from the authorities referred to above, and from the decision in Chang v Su at paragraphs 71 and 72 (at p.89, 198).
In November 2002, the High Court dismissed an application by the husband in Chang v Su seeking special leave to appeal from the Full Court’s decision. In the course of argument, Callinan J observed:
It does not matter what the principle might be seen to be, a Court has to do the best it can. It does the best it can, having regard to the evidence that is adduced, and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the Court can make.
In Kannis (2002) FamCA 1150 (reported in (2003) FLC 93-135 — but not as to this issue) — the Full Court said:[3]
(It was submitted that) the cases discussed above were authority for the proposition that where there was a finding of deliberate non-disclosure the Court could act more robustly in making findings adverse to the party who had actively misled it. We do not see that the principle should be so confined.
Whether the non-disclosure is wilful or accidental is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied that the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might otherwise be seem to be disadvantaged by the lack of complete candour. This is the course the trial judge adopted. It was a course clearly open to him and one that does not merit appellate interference.
[3] At paragraphs 50 and 51.
Although the cases referred to in the passages cited above deal with issues such as property settlement or costs, there can be no doubt that the obligation to make full and frank disclosure extends to child support proceedings. Indeed, it would be extraordinary if it did not.[4]
[4] See Hardman (2003) FamCA 1057; Rayson (2003) FamCA 1384.
In Hardman (2003) FamCA 1057 (unreported), Coleman J said:
The relevant issue before the learned Federal Magistrate was the financial resources of the appellant, from whatever sources those derived. As decisions of the Full Court of this Court in cases, commencing with Oriolo v Oriolo (1985) FLC 91-653 make clear, where a litigant does not make a full and frank disclosure of his or her financial position, that litigant cannot benefit or rely upon the inability of the opposing party by reason of that failure to disclose to suggest a particular capacity or the existence, identity or location and nature of particular assets or resources. A moment's reflection would reveal why that must be so. Any other course would not only encourage litigants to fail to make a full and frank disclosure, but provide a positive incentive for concealment in that regard.
In Rayson (2003) FamCA 1384 (unreported) Kay J said:
The key findings of the (Chief Federal Magistrate) which are not really challenged before me, is (sic) that it is difficult to pin the husband down as to what is his real earning capacity. This is so because there are years of operating a business without keeping accurate books of account. There is some minor evidence at least of lifestyle inconsistent with supposed inability to make payments. But at the same time I do not think it is an openly elastic exercise of saying 'well, I am not satisfied where the end is so I can be as generous as I like.' It is true that the court can be less than duly cautious where there is not full and frank disclosure (see Weir (1993) FLC 92-338). There is no finding here by the (Chief Federal Magistrate) of lack of full and frank disclosure. There is a finding of being less than cooperative or fully cooperative in the process of producing documents but it does not seem to me, given that the material that the (Chief Federal Magistrate) had and that I have, that takes the matter very far indeed.
Kay J also observed that, in his opinion, certain findings made by the Chief Federal Magistrate were not available on the evidence. Nevertheless, the learned Judge "found himself doing what (the Chief Federal Magistrate) was doing, just guessing", and summarised the process as being "not a very exact science".
During the course of her closing address, Ms Stewart reviewed the husband’s average weekly expenses as set out in his financial statement sworn 17 July 2002, and submitted that many of the expenses are excessive and could comfortably be “trimmed” in order to enable the husband to meet his child support obligations. I accept Ms Stewart’s submissions in this regard. Thus:
a)The husband’s electricity expense can comfortably be reduced from $80.00 per week to $40.00 per week.
b)The husband conceded that his petrol expense should properly be $10.00 per week and not $100.00 per week.
c)The amount claimed by the husband for entertainment/hobbies can comfortably be reduced from $180.00 per week to something in the order of $30.00 to $50.00 per week.
d)Having regard to the amount of travel that the husband does in any event, the husband’s allowance of $40.00 per week for holidays can comfortably be reduced to zero.
I find that the husband’s overall income has been understated, and that his expenses have been exaggerated. I have no doubt that he has the capacity to pay the quantum of child support sought by the wife (being $200.00 per week).
In relation to the husband’s involvement in his wine trading enterprise, it is important to understand that the court must focus on the father’s earning capacity, as much as on his annual (or asserted) income from time to time.
The concept of “earning capacity” was discussed at length in DJM & JLM (1998) FLC 92-816, where the Full Court said (at page 85,272):
Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parents’ “capacity to provide financial support”.
Property adjustment orders have far less focus and are arrived at on the basis of what is “appropriate” after weighing up many competing factors. Spousal maintenance is governed by a test of what is proper and having regard to the reasonable ability of the liable spouse to meet the needs of the other.
In our view, there can be different answers to the same question about earning capacity — depending upon which head of power is sought to be exercised.
A judge might reasonably say that a parent should be working longer hours or in more lucrative employment to meet child support obligations. A spouse is only required to support the other spouse to the extent that he or she is reasonably able to do so. This requirement does not impute the same degree of compulsion about it that the child support and child maintenance tests express …
The Full Court (at para 17.37 of DJM v JLM) indicated that it was “most attracted” by the following tests of earning capacity, as “at least the minimum tests to be applied”. The tests derive from decisions of the Californian Court of Appeal in decisions referred to on page 85,271 of DJM v JLM:
Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good faith efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire…
When the ability to work or the opportunity to work is lacking, earning capacity is absent … When the payor is unwilling to pay and the other two factors are present, the court may apply the earnings capacity standard to deter the shirking of one’s family obligations… A parent’s motivation for reducing available income is irrelevant when the ability and opportunity to adequately and reasonably provide for the child are present.
Once persons become parents, their desires for self-realisation, self-fulfilment, personal job satisfaction and other commendable goals must be considered in the context of their responsibilities to provide for their children’s reasonable needs. If they decide they wish to lead a simpler life, change professions or start a business, they may do so, but only when they satisfy their primary responsibly: providing for the adequate and reasonable needs of their children.
In a similar vein, the Full Court in Scott (1994) FLC 92-457 said[5]:
… Whilst … in some circumstances an unemployed parent without income may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his or her children, (it is not the case that) in all such circumstances, such a conclusion must or should be reached. If (there is) any principle of general application, it is only that being unemployed and without income is not of itself necessarily an answer by a parent to an application for child maintenance. The circumstances in which the parent became unemployed or without income, the reasons for it, the nature of his/her previous employment and the efforts (if any) which he or she has subsequently made to obtain employment are all relevant matters for consideration by the court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity, a parent may be required to pay maintenance for his/her children if he/she has property or financial resources which are or ought reasonably to be available for that purpose.
It is ultimately a question of fact in each case, whether an unemployed parent without income or financial resources has any earning capacity, and if so, the extent of it. However, we are of the view that such an unemployed parent with no particular qualifications or skills for employment could not be held, at least in times of high unemployment … to have a current earning capacity sufficient to support an order for maintenance unless he/she has recently given up, without good reason, secure remunerative employment, or unless having become involuntarily employed he/she has made no reasonable efforts to obtain employment for at least a significant period of time.
[5]At page 80,739.
Finally, in Scott v Stauder (unreported judgment delivered 20 November 1996), Kay J said that the passage from Scott referred to above —
… reads effectively that in some circumstances an under employed parent may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his children and that being under employed and without adequate income is not, of itself, necessarily an answer by a parent to an application for child maintenance.
Both Scott and Scott v Stauder predated the decision in DJM v JLM, and I note that Kay J was a member of the Full Court in the later case. It follows that the tests to which the Full Court was “most attracted” in DJM v JLM (see paragraph 80 above) are of more relevance, and are likely to provide a court of first instance with clearer guidance, than the discussion of the subject contained in Scott and Scott v Stauder.
I am satisfied on the basis of the evidence before me, that the husband has the ability to work in a variety of occupations associated with the hospitality, restaurant and wine trade, and I have been presented with no credible evidence which would suggest that he does not have an opportunity to work in any of those fields. I understand that the husband may wish to become a wine trader and to earn income from that source. But his priorities must be as I have described them elsewhere in these Reasons.
Commitments of the Parties to enable them to Support Themselves and Others
I do not propose to deal with this factor in any detail for the following reasons:
a)Given the ages of the parties, their respective backgrounds and lifestyles, it seems to me that both parties’ living expenses (that is, their living expenses for themselves) should be fairly similar.
b)Both parties have remarried, and both are able to call upon their spouses to contribute to various relevant expenses (in particular, expenses for items from which their spouses may also derive benefit — but not, of course, expenses relating to L).
c)The wife did not suggest that this was a relevant factor in her case. I have already found that the husband has not made a full and frank disclosure of his financial position. I find, however, that the husband has sufficient income to meet such commitments as may be necessary to enable him to support himself — as well as to pay child support at the rate sought by the wife.
In my opinion, none of the other considerations in s.117(4) are relevant to my determination in this matter.
Quantum of Child Support for L
I have already concluded that a fair allowance for the costs incurred by the wife in maintaining L (which allowance represents L’s proper needs whilst she is with the wife) is a total of approximately $400.00 per week. When I take into account the matters set out in s.117(4) of the Assessment Act — which factors have been discussed above — I conclude that it would be just and equitable for the husband to bear approximately 50% of those costs.
I have chosen the above percentage because of the fact that, although the husband’s earning capacity is, in my opinion, significantly greater than that of the wife, the wife has assets and financial resources of greater value than those of the husband. Further, I have found that the husband has demonstrated that he has not been prepared to give any form of priority to his duty to maintain L. I accept the wife’s evidence as to the arrears that have accumulated and accept her evidence that — in the broadest sense — P has for a number of years provided much greater financial support for L than has the husband. Finally, it seems to me that it would be neither just nor equitable to order the husband to pay any less than the percentage to which I have referred.
Fifty percent of $400.00 per week is $200.00 per week.
Whether proposed Child Support Order is “Otherwise Proper”
Having regard to the provisions of s.117(5) of the Assessment Act, I am of the view that the proposed child support order is indeed “otherwise proper”.
Child Support Periods
I confirm that the Court must follow the three step process described in Gyselman in respect of each year for which a departure order is sought.
I am satisfied that the same considerations apply to both the First Period and the Second Period. Factors which relate to L and to the wife’s financial position have remained relatively unchanged. Given my findings regarding the father’s financial position, and his failure to make full and frank disclosure, I am not satisfied that either of the periods should be treated differently from the other.
Lump Sum Child Support
The wife seeks a lump sum payment of child support.
In R & R(No.1) (2002) FMCAfam 153, the Chief Federal Magistrate explained the law relating to lump sum child support as follows:
68.Section 123(1) of the Act provides that application may be made to a Court exercising jurisdiction under the Act for an order that the liable parent provide child support otherwise than in the form of periodic amounts paid to the carer.
69.Before the Court can make an order for substituted support, the Court is required by section 124(1)(b) to be satisfied that it would be just and equitable as regards the child, the carer entitled to Child Support and the liable parent, and otherwise proper to make such an order. The Court is required to have regard to the matters contained in section 124(2) and in determining whether it is “just and equitable” or “otherwise proper” the Court must have regard to the matters contained in subsections 117(4), (5), (6), (7) and (8) of the Act. The Court is not limited by those factors alone (see section 124(5)) which suggests that the Court has a wide discretion in determining the application.
70.The Full Court of the Family Court of Australia in Prpic v Prpic (1995) FLC 92-574 at 81,688 said:
“Capitilisation orders may well be appropriate where there are difficulties in enforcement or where it is proper to sever the financial link between the parties. However, as a general rule, given that payments of child support depend upon circumstances prevailing from time to time, which circumstances cannot be predicted with any significant degree of certainty, it seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised where there are circumstances that make it appropriate to do so. We would endorse the observations of Mushin J in Bendeich (1993) FLC 92-355 at 79,954 where His Honour said:
‘The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and the children may change their living arrangements from one parent to another’
71.It is clear that I have discretion to order a lump sum subject to being satisfied as to the matters which I have identified in the Act, but it is also clear that I must exercise that discretion only when there are circumstances which make it appropriate to do so and that normally it is preferable for periodic support to be paid.
In my opinion, the following matters are relevant to the exercise of my discretion:
a)I have made findings regarding the husband’s credibility and his failure to make full and frank disclosure of all relevant aspects of his financial position.
b)I have also made findings regarding the husband’s failure to give priority to his duty to maintain L (within the meaning and contemplation of s.3 of the Assessment Act).
c)The husband has not paid appropriate child support for L for a significant period of time — and notwithstanding the fact that he conceded that, on his own figures, he ought to have been paying approximately $450.00 per month for her support.
Notwithstanding the above findings, I am conscious of the fact that the husband does not appear to have assets from which a lump sum could be paid. Further, I fully understand that “the longer a lump sum order operates, the greater the chance of circumstances necessitating a variation of that order, thereby making the order unjust”.[6] A lump sum award of maintenance or child support prevents account being taken — on a regular, periodic basis — of “the vicissitudes of life”[7]
[6] See Bendeich (1993) FLC 92-355.
[7] See Vaughan (1981) 7 FamLR 379 and Anast & Anastopoulos (1981) 7 FamLR 728.
In all the circumstances of the present case, I am not persuaded that it is appropriate to make an order for lump sum child support. I propose to order, however, that the husband continue to pay child support at the rate of $200.00 per week until 31 December 2005. In my opinion, that will give sufficient time for the husband’s current business to stabilise, and for the husband to structure his affairs in such a way as to ensure that priority is indeed given to his duty to support L.
Departure Orders
In all the circumstances, I propose to make the following order:
Pursuant to s.117 of the Assessment Act, there be a departure from the administrative assessment of child support payable by the husband to the wife for the child L as follows:
i)for the period from 28 May 2001 to 27 August 2002, the annual rate of child support be set at $10,400.00;
ii)for the period from 28 August 2002 to 27 November 2003, the annual rate of child support be set at $10,400.00; and
iii)for the period from 28 November 2003 to 31 December 2005, the annual rate of child support be set at $10,400.00.
Effect of Orders
I am aware that the effect of the orders that I propose to make will be to create “instant arrears” of child support, as it were. I am satisfied, however, that the husband earned enough (or, alternatively, had practical access to funds that would have enabled him) to have paid the level of child support that I have found to be proper and appropriate. As a consequence of his conduct in failing or refusing to pay child support at such a level, the wife has clearly incurred a financial detriment.
In my opinion, the husband has not been motivated to pay child support at an appropriate level. As I have found, he gave it a very low priority.
Arrears
Argument took place during the trial regarding arrears of child support. Having regard to the fact that the trial was concluded some months ago, and to the fact that I have made orders which have the effect of varying the quantum of child support payable pursuant to the two most recent assessments, I do not propose to fix relevant arrears in this judgment.
I confirm, however, that I have found that the wife’s evidence is to be preferred to that of the husband. It follows that I accept that the wife’s calculation of arrears as at the date of trial is correct.
Orders
I propose to make orders as indicated in paragraph 97 above. The parties’ applications will otherwise be dismissed (save in relation to the issue of arrears brought about by the terms of these orders, or otherwise).
I shall now hear counsel regarding the precise terms of the orders necessary to give effect to this judgment.
I, Barbara Mendleson, certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of Walters FM
Deputy Associate:
Date: 11 November 2004
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