SATHRA & SATHRA - [2013] FamCAFC 142

FAMILY COURT OF AUSTRALIA

SATHRA & SATHRA

[2013] FamCAFC 142

FAMILY LAW – APPEAL – CHILD SUPPORT – Where the appellant sought leave to appeal against orders dismissing his application to discharge child support departure orders– Whether the appellant should pay half of the children’s school fees and education expenses – Consideration of s 117(2)(c)(ia) of the Child Support (Assessment) Act 1989 (Cth) – Where the Court must determine whether, by reason of a change of circumstance, a ground for departure exists - Whether the appellant’s income and assets had altered since the date of the departure orders such as to make the orders unjust and inequitable – Whether the Court was required to consider the appellant’s liabilities and commitments when determining whether a ground for departure existed – Whether s 117(4) considerations were properly considered – HELD – Failure to consider relevant evidence - Appeal allowed in part.

Child Support (Assessment) Act 1989 (Cth): ss 117, 118, 124, 121, 123, 125, 129

Australian Coal & Shale Employees Federation v The Commonwealth (1993) 94 CLR 621
In the Marriage of Bryant (1996) FLC 92-690
In the Marriage of Gilmour (1995) FLC 92-591
Hides v Hatton (1997) FLC 92-759
Milham and Stanford (2001) FLC 93-073
Ross v McDermott (1998) FLC 98-003
Wild v Ballard (1997) FLC 92-771

APPELLANT:

Mr Sathra

RESPONDENT:

Ms Sathra

FILE NUMBER:

SYF

5076

2003

APPEAL NUMBER:

158

2012

DATE DELIVERED:

16 September 2013

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ainslie-Wallace, Ryan & Rees JJ

HEARING DATE:

20 August 2013

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

2 November 2012

LOWER COURT MNC:

[2012] FamCA 935

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Millar

SOLICITOR FOR THE APPELLANT:

Brian Samuel & Associates

COUNSEL FOR THE RESPONDENT:

Mr Duane

SOLICITOR FOR THE RESPONDENT:

Foat Associates Lawyers

Orders

That the appellant father is granted leave to appeal against Orders 39 – 46 (inclusive) made 2 November 2012.
The appeal is allowed in part.
Order 45 dated 2 November 2012 is set aside.
In relation to the period commencing from 11 April 2012 Orders 39 and 42 dated 2 November 2012 are set aside to the extent that by those orders the father’s application to discharge Orders 3, 4, 5 and 6 dated 19 September 2006 was dismissed.
That the applications of the parties in relation to child support that as a consequence of this appeal remain outstanding be remitted for rehearing by a judge other than the Honourable Justice Watts.
That there be no order as to costs of the appeal.
That the Court grants to the appellant father a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent mother a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by them in relation to the new trial ordered.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Sathra & Sathra has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 158 of 2012
File Number: SYF 5076 of 2003

Mr Sathra

Appellant

And

Ms Sathra

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application for leave to appeal and if leave is given, an appeal against a series of child support orders made by Watts J on 2 November 2012. By those orders his Honour dismissed an application by Mr Sathra (“the father”) to vary child support orders made by consent on 19 September 2006 in relation to the parties’ two children. The trial judge ordered that in addition to the periodic amount payable pursuant to the 2006 orders, the father pay half the children’s private school fees and various education expenses. A declaration was made as to the amount of child support arrears payable by the father in relation to which two properties owned by him were secured. In the event the father failed to pay the arrears within three months, either the Child Support Agency or the mother were authorised to make an application to enforce compliance through a sale of those properties.
Central to the father’s case for variation of the child support orders was his assertion that subsequent to the 2006 orders, his income and assets had fallen dramatically as a consequence of which the 2006 orders had become unjust and inequitable.
Ms Sathra (“the mother”) resists the appeal and seeks to uphold the decision of the trial judge.
As a preliminary matter, the father was granted leave to rely on a further Amended Notice of Appeal. Although three amended grounds of appeal were presented, ground 3 which asserted a failure to afford procedural fairness in relation to the enforcement orders was abandoned.
The remaining grounds of appeal assert:
·that the trial judge failed to take into account relevant evidence and to make necessary findings required by the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”) in relation to the father’s financial circumstances and took into account irrelevant matters; and
·failed to give adequate reasons for the orders made.
So as to comprehend the orders under appeal, it is necessary to first set out so many of the consent orders which the father applied to vary.

Orders dated 19 September 2006

3. That by way of child support departure the husband is to pay child support for [M] born [in] 1998 in the amount of $225.00 per week which is to be adjusted on 1 July of each year in accordance with the annual CPI;
4. That by way of child support departure the husband is to pay child support for [L] born [in] 2000 in the amount of $225.00 per week which is to be adjusted on 1 July of each year in accordance with the annual CPI;
5. That the payments of child support to be paid pursuant to orders 3 and 4 are to be made on a weekly basis commencing on Friday, 22 September 2006 and weekly thereafter until a child support terminating event. Those payments are to be made by direct deposit to the wife’s Greater Building Society account [number deleted];
6. That the husband pay the costs of the children’s private schooling tuition fees, textbooks and all fees for literacy and maths groups for each of the children whilesoever they attend [X School] from Kindergarten to Year 12. That the amounts paid by the husband pursuant to orders 1 - 4 be credited against the husband [sic] liability for child support pursuant to any administrative assessment and to be treated as full satisfaction of his liability.

The orders presented to the court were numbered 1 - 4 inclusive. When these orders issued the numbers had been changed. The significance of the orders being renumbered is that where in Order 6 reference is made to Orders 1 - 4 this should be read as being reference to Orders 3 - 6 inclusive.
Orders 3, 4 and 5 are orders made pursuant to s 117 and 118 of the Assessment Act. That portion of Order 6 which required the husband to pay the children’s school fees and associated expenses at X School was made pursuant to s 124 of the Assessment Act.

Trial judge’s Orders dated 2 November 2012

The orders of the trial judge which are the subject of this appeal are:
39.The father’s application to discharge orders 3, 4, 5 and 6 dated 19 September 2006 and to expunge arrears of child support be dismissed.
40.The amount of child support arrears payable by the father to the mother currently outstanding under orders 3 and 4 made 19 September 2006 be reduced by the sum of $9,589.30.
41.The costs orders in the father’s favour against the mother dated 12 August 2008 ($13,515.80) and 11 November 2009 ($9,246) be discharged.
42.The father continue to pay by way of child support, the sum which he was required to pay pursuant to orders 3 and 4 made 19 September 2006 and those sums be paid in a manner nominated in writing by the mother.
43.The property situated at and known as [O Street] and [N Road] be charged with the father’s arrears in respect of child support and pursuant to that charge, the mother may lodge a caveat on both of those properties until the father pays the arrears.
44.In the event the father has not paid the arrears within 3 months from the date of these orders, the mother or the Child Support Agency (whichever is applicable) may make application for an order for sale by way of enforcement.
45.The father pay one half of the costs of the children’s private schooling tuition fees, textbooks and all fees (if applicable) for literacy and maths groups for each of the children.
46.The mother’s application in relation to the father’s payment of fees to [X School] be dismissed and the mother’s applications relating to financial matters are otherwise dismissed.

Background facts

To give this appeal context, it is necessary to record some brief uncontroversial facts.
The mother was born in 1959.
The father was born in 1961.
The parties were married in 1991 and separated in August 2003. They are divorced.
The parties have two children. Their older daughter, M was born in 1998 and her sister L was born in 2000.
Property settlement and child support orders were made by consent on 19 September 2006. The property orders required that the father transfer to the mother his interest in a property at W Street. W Street was subject to a mortgage which the mother was required to discharge within 12 months, failing which the property was to be sold. In the event that the property was sold, after payment of selling costs and discharge of the mortgage, the balance was payable to the mother. As it transpired, W Street was sold. The mother received $310,000.00 from the proceeds of sale of a different property.
In addition, the orders required the father to transfer to the mother the “[U.S land holdings]” being land held in the United States. This comprised seven parcels of land which, if sold by the mother for more than US $1.7 million, would see any excess shared equally between the parties.
Otherwise, the parties retained property in their respective names and assumed sole liability for any encumbrance secured thereon.
It is not possible to discern from the 2006 orders or the father’s evidence the full extent of the property he retained or its value. Whatever its total net value may have been, it was a “Positive balance”. He at least retained a property at O Street which he purchased in 2006; sole ownership of Z and “the [P Suburb] joint venture”. Z appears to be a series of interlocking entities through which the father conducted a pharmaceutical brokerage business and property development.
The P Suburb joint venture is a residential property development investment which the father said was the major asset retained by him.
A costs assessment order in the amount of $13,515.80 payable by the mother in favour of the father issued on 12 September 2008.
Towards the end of 2008, the father purchased a property at N Road.
Some two years after the 2006 consent orders were made, by his application for final orders filed on 18 December 2008, these proceedings were commenced by the father. That application was amended and culminated in his Amended Application filed on 26 April 2012.
A further costs assessment order in the amount of $9,246.00 issued in the father’s favour on 11 November 2009.
Notwithstanding the father’s opposition, in February 2010, the mother and children moved to Town B where they live with her mother.
This appeal was undertaken without a transcript of the hearing in the court below. There is a strong presumption in favour of the correctness of the decision appealed from (Australian Coal & Shale Employees Federation v The Commonwealth (1993) 94 CLR 621 at [626-627]). The absence of a transcript could not be permitted to undermine the strength of the presumption and necessarily adds a layer of complexity for an appellant who attempts to challenge the adequacy of the reasons given in the decision under appeal. Similar difficulty may not arise where it is said that the trial judge acted on a wrong principle or failed to apply the statute.

The trial judge’s reasons

The proceedings concerned a range of issues in relation to the children and child support. The parenting component was complex and formed part of what his Honour described as “lengthy and highly conflictive litigation”. It would appear that with the assistance of an Independent Children’s Lawyer (“ICL”) and a single expert report provided by a psychiatrist, many of the issues in relation to the children’s living arrangements were resolved. The effect of the parties’ agreement and the parenting orders made by his Honour was that the children would continue to live with the mother who was granted sole parental responsibility.
Provision was made for the children to spend time with the father one weekend each month when they would travel to where he lives and, subject to conditions about notice and the like, one weekend a month in Town B. The orders also made provision for the children to spend time with him during school holidays. These arrangements continue until the end of the 2013 school holidays. Thereafter, the elder child may elect whether or not to spend time with her father and, should she decide not to, the younger child will see him only if this is what she wants. A large number of orders was made to facilitate the passage of information about the children, along with a suite of injunctions designed to protect the children and promote their welfare.
It follows that the trial judge determined the various child support applications on the basis that the children would continue to live with the mother and spend some, but not extensive time, with the father.
After his Honour set out the 2006 orders, he said at [145], “I am not confident that either party has been entirely frank about their financial position”. This resonates with earlier findings made in relation to the parties’ credit. At [13], reference was made to the parties’ heavy investment in the litigation and that at times each “said things which were inconsistent or inherently unlikely”. No challenge is made to these findings.
Under the heading, “The Mother’s Financial Position”, the trial judge commented about her “less than satisfactory” evidence concerning the assets she received pursuant to the property settlement orders. He recorded her opinions that the valuations of the U.S land at $1.7 million and $1.2 million were overinflated and that, in 2006, the property was worth $100,000.00. She deposed that after the global financial crisis, she obtained a quotation which indicated that the land was worth $32,000.00. With the land encumbered by taxes she said she could not afford to pay, the mother’s evidence was that she gave a large portion of the property to friends. In so doing, she discharged a $40,000.00 debt due to the transferees. Notwithstanding the unsatisfactory nature of this evidence, the trial judge said he was unable to find that the mother had any significant interest in real estate in the United States.
His Honour noted that the mother lives in her mother’s home and she appeared to not own any assets. She takes dance classes twice a week on a barter arrangement for which she said she had never been paid. In cross-examination, the mother said that she had been in discussion with the dance school about teaching full time once the proceedings were over.
This exhausts his Honour’s findings in relation to the mother’s financial circumstances. No reference was made to the evidence she gave in her financial statement filed 23 May 2012 about her and the children’s commitments.
His Honour then considered “The Father’s Financial Position” which he said was “equally unclear”. At [151], the father’s work with Z was discussed in relation to which inconsistencies between his personal taxation return and Z’s financial reports were identified. For example, his oral evidence that he received $95,000.00 by way of dividends in the 2010/2011 financial year did not accord with his taxation return in which he said he had not received dividends. That year, S showed a trading loss and the director’s report also indicated that dividends had not been paid.
On the other hand, the father also said that for the same period he earned $78,000.00 from Z. This would appear to refer to evidence contained in his financial statement filed on 4 May 2012.
In that financial statement, in answer to the question “Benefits from employment/business” the father wrote “Nil”. Contrary to this evidence, and, we infer, as a consequence of matters which arose during cross-examination, the trial judge found “[t]he father also receives a range of personal benefits through [Z International Pty Ltd]; a motor vehicle, domestic and international travel, regular cleaning from a housekeeper, a large proportion of gas and electricity bills and office relocation expenses” [151]. This culminated in

his Honour’s findings that he was unable to form a precise view of the father’s income and emoluments.
The trial judge noted that the husband owned two investment properties in N Road and O Street which his Honour said were heavily negatively geared and observed that the father’s evidence was that it was unlikely he would be able to pay the mortgages secured on those properties if the mother’s application to garnishee the rent on those properties was granted.
The father’s ownership of a property in Europe, which had been transferred to him from his mother’s estate and produced a profit of €5 per month, was mentioned. It was noted that in relation to that property the father said he owed his mother’s estate $66,000.00.
Having recorded the submission made by counsel for the father that subsequent to the 2006 orders, the father’s income and property were dramatically reduced, his Honour found; “…I am unable to make a finding about whether or not that is so and certainly I cannot make a finding as to the extent of any reduction in the father’s wealth and income on the material he has provided” [154].
His Honour noted the following matters as being further examples of what the father said were relevant changes to circumstances which occurred after the making of the 2006 orders that the mother had moved to Town B as a consequence of which she had:
·obtained employment;
·lived with her mother; and
·placed the children in less expensive schools.
The trial judge noted that the father relied on the fact that he paid the costs of the expert psychiatrist’s report.
His Honour then set out the principles by which the various child support applications would be determined and referred to In the Marriage of Gilmour (1995) FLC 92-591. The trial judge noted in particular, that in determining an application to vary a departure order it is not necessary to establish, “… [a]s a threshold matter, a change of circumstances or any other matter contained in Section 66N(2) of the Family Law Act … or as contained in Section 83(2) of that Act or Section 129 of the Assessment Act…” [157]. Rather, the three stage process required pursuant to s 117 of the Assessment Act must be followed. This required that the Court determines:
·whether one or more grounds for departure in s 117(2) of the Assessment Act is established;
·whether it is just and equitable within the meaning of s 117(4) to make a particular order; and
·whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.

Because of the nature of the challenge to his Honour’s orders, it is appropriate to record the passage from In the Marriage of Bryant (1996) FLC 92-690 at [83,169] to which he referred namely:
It must however be recognised that once an order has been made departing from an administrative assessment, before there can be a variation of (or “departure” from) that existing order, it must be established to the Court’s satisfaction, that since the making of the existing order circumstances have arisen as a result of which the financial capacity of either party is now significant reduced (s117(2)(a)), or the costs of maintaining the child have been affected (s 117(2)(b)) or the existing order now results in an unjust and inequitable determination of child support (s 117(2)(c)). There is nothing in Gilmour to suggest to the contrary.
Finally, in relation to this topic, his Honour said that the mother’s application to vary the school fees order was governed by s 124 of the Assessment Act.

Father’s application to discharge the 2006 departure order

The trial judge then turned his attention to the father’s application to discharge the 2006 (periodic payment) orders in relation to which the father relied upon s 117(2)(c)(ia) to establish a ground for departure. It is useful to set out s 117(2)(c)(ia):
Section 117 Matters as to which court must be satisfied before making order
Court may make departure order
(1) Where:
(a) application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b) the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division;
the court may make the order.
Grounds for departure order
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
…
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to 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
…
His Honour first considered the father’s evidence that as a result of a failed property venture, he had recently lost about $2.5 million (from the P Suburb development). His Honour was unable to accept this “assertion”. We will consider the P Suburb joint venture later in the reasons. At this stage, it is sufficient to record that his Honour noted the father’s evidence that he may have significant legal claims against the builder and architect whose actions led to “a significant inability to market the properties for a significant period of time” [160].
Importantly, at [162], his Honour said he was not satisfied:
… based upon the father’s evidence about his financial position (as discussed above) that he has established that his income, property and financial resources are such that in the special circumstances of this case the current order is unjust and inequitable …
As will be seen, there was considerably more evidence provided by the father about his financial position than the material to which reference was made by his Honour.
Reference was made by his Honour to s 117(4) of the Assessment Act and the trial judge found that even if the father had established a ground for departure, he failed to establish that it would be just and equitable to depart from the 2006 orders. His Honour did not discuss any of the factors referred to in s 117(4) which must be considered before a finding about whether or not the proposed orders would be just and equitable can be made ( Hides & Hatton (1997) FLC 92-759).

Mother’s application to vary the orders relating to school fees and expenses

His Honour then considered the mother’s application to vary the school fees and expenses order. On this topic, his Honour’s reasons were brief and we set them out in full:
163.It is the responsibility of both parents to pay for the educational costs of the children. In 2006 the father had agreed to take on that responsibility whilst the children were at [X School] (until they completed year 12). He was relieved of that legal responsibility when the children moved. The main matter to take into account is the respective financial capacities of the parties. I have discussed the difficulties in the evidence about that on both sides. I conclude it would be just and equitable and otherwise proper for the father to pay one half of the children’s private school tuition fees, text books and all fees (if applicable) for literacy and maths groups for each of the children.
164.I infer any reduction in the level of support the mother receives from the father would place a burden on the tax payer because the mother would receive some increase in Commonwealth benefits and in the circumstances that would not be otherwise proper.
We pause to observe that we agree with counsel for the father that the basis for his Honour’s statement that both parents have responsibility to pay their children’s educational costs is not apparent. Neither the objects nor principles that govern the Assessment Act or those which underpin Division 4 and 5 of Part 7 contain a statement to that effect.

Arrears of child support and school fees

The father unsuccessfully applied to discharge arrears of child support which, as at 23 April 2012, amounted to $30,528.91. Arrears accrued because rather than pay the periodic amount required by the 2006 departure order the father unilaterally reduced the amount to $923.00 per month. This was his estimate of the amount which, if it applied, he would have been liable to pay pursuant to the child support formula for the administrative assessment of child support. His Honour said the father had done no more than take the law into his own hands.
In relation to the mother’s application to enforce the school fees order,

his Honour found that for Terms 2, 3 and 4 of 2009, arrears accrued in the amount of $13,172.50. The father agreed that he had not paid those fees and the amount outstanding was added to his outstanding child support arrears.
Once the costs orders payable by the mother were offset against the father’s child support arrears and outstanding school fees, his Honour discharged the orders for costs and made an order which reduced the father’s overall child support arrears by the amount of $9,589.31. The trial judge ordered that the mother could take as security for the arrears, the father’s O Street and N Road properties and, in the event that the arrears were not paid within three months, either she or the Child Support Agency would be able to apply for an order for sale.

Discussion - A ground for departure?

As we have said, the father challenges all orders made by his Honour on the basis that he failed to take into account relevant evidence; make necessary findings required by the Assessment Act and failed to give adequate reasons for the orders made.
In order to determine the father’s application to discharge the 2006 departure order (and the child support arrears), as well as the mother’s application to vary the school fees order, the trial judge was required to apply the three stage process set out in s 117 of the Assessment Act to which his Honour referred at [157].
We have already referred to the passage from Bryant, at [83,169] recorded in the trial judgment. For the discussion to be complete, reference should also be made to the following remarks made in Bryant at [83,170]:
If the situation was not as we have just proposed in the last two paragraphs, there would be nothing to stop a party who did not accept the terms of a departure order from immediately approaching the Court to have the matter re-heard, or to stop a party who thought better of the agreement which he or she had made, immediately seeking to vary the agreement.
It follows that when dealing with an application to vary or discharge an obligation to pay periodic child support as required by a departure order, the Court must determine at the outset whether, by reason of a change of circumstance, a ground for departure exists. The Court must then determine whether it would be just and equitable, and otherwise proper, to make an order varying the arrangement established by the earlier departure order (Wild v Ballard (1997) FLC 92-771 at [84,492] – [84,493]).
We therefore reject the submission advanced by the father that whether or not he was able to establish a change of circumstances was irrelevant.
However, the father’s case was argued upon the basis that his financial circumstances had materially deteriorated and he neither had income nor property which enabled him to continue to pay child support (including school fees) in accordance with the 2006 order. Hence, even though we have rejected his argument on the relevance of a change in circumstances, the father’s case was presented so as to meet the requirements set out in Bryant. It might be thought that this is a dry argument. Not so. If the father failed to establish a relevant change in circumstances, at that point his departure application would fail. It follows that the argument advanced by counsel for the father that irrespective of whether the father established a change of circumstances, the effect of s 117(2)(c)(ia) means that it was necessary for the trial judge to consider not just the father’s income and property but also his commitments and liabilities, must also fail.
However, if the father was able to establish a relevant change in circumstances, the question then arose whether the reference in s 117(2)(c)(ia) to “the income, property and financial resources” of either parent, required his Honour to consider all of the property of the father, his liabilities and commitments when in determining whether, in accordance with the legal onus imposed on him, the father had established a ground for departure.
This issue was considered in Ross v McDermott (1998) FLC 98-003 where the Full Court said that it was necessary to consider not just the changed income, property, earning capacity and financial resources but also that person’s commitments in order to arrive at a view that there would be an “unjust and inequitable determination of a level of financial support” (at [95,125]). Reference to commitments includes liabilities. Having undertaken this analysis, the comparison between the parent’s and children’s situations would be considered under s 117(4) and the interests of the community under s 117(5).
Subsequent amendments to the Assessment Act have resulted in the s 117(2)(c)(i) referred to in Ross v McDermott becoming the current s 117(2)(c)(ia). As the amendments to s 117(2)(c) did no more than add an additional ground for departure, the approach to the proper interpretation of s 117(2)(c) established in Ross v McDermott applies to s 117(2)(c)(ia) of the Assessment Act in its current form.
We have already indicated that his Honour was not satisfied the father had suffered a $2.5 million loss on the P Suburb joint venture. However, as counsel for the father submitted, there was much more to the father’s evidence about his income, property, financial resources and commitments than was mentioned by his Honour. It was pointed out that the father relied upon an up to date financial statement which contained detailed evidence concerning his property, liabilities and commitments. Counsel for the father submitted:
This evidence was neither accepted nor rejected as it was not even referred to by the Court. The evidence in the appellant’s financial statement showed that the appellant was in a disastrous financial position when his liabilities were considered against his property. (Appellant’s Summary of Argument filed 25 July 2013, paragraph 7)
Including child support, the father deposed to personal expenditure in the amount of $5,320.00 per week. This included mortgage repayments on N Road and O Street as well as his rent. This vastly exceeded the income declared by him ($2,856.00). It included loan repayments in the amount of $874.00 which the father explained at page 14 of his financial statement:
… are not presently being made for items that indicate interest is being accrued. The amounts shown are weekly calculations and the interest is being added to the principal. The amounts indicated are estimates only. See annexure attached herein.
The annexure revealed that the loan repayments accruing interest which the father was not paying related to:
·private loan on NC;
·private loan to Ms L for Sydney Suburb P;
·private loan from Mr R (for O Street);
·private loan Ms S (for N Road); and
·principal financial insurance policy loan.
The father’s personal expenditure included $567.00 per week for his ($425.00) and the children’s ($142.00) day to day expenses. N Road was rented for $538.00 per week in relation to which the mortgage instalments were $783.00. O Street was rented at $818.00 with its mortgage being $1,731.00 per week. Rates, taxes and levies were incurred for both properties.
In relation to property, the father said that he owned:
·N Road worth $785,313.00 (subject to a mortgage in the amount of $599,937.00);
·O Street worth $1.2 million (subject to a mortgage in the amount of $944,270.00);
·an apartment in Europe worth $66,178.00;
·savings of $5,852.00;
·shares and investments in Z and IAG worth $200.00;
·life insurance policies worth $4,484.00;
·motor vehicle worth $4,000.00;
·household effects worth $2,000.00; and
·miscellaneous assets worth $1,100.00.
In relation to Z, he said its liabilities exceeded its assets by

$8,773,072.00. Z included the P Suburb joint venture.
The father had superannuation worth $37,786.00.
Valuations of the P Suburb joint venture for June 2005 and March 2010 were before the trial judge. According to the father’s case, these demonstrated that P Suburb joint venture had fallen in value from $17.65 million in 2005 to $13.45 million in 2010. However, the former value amounted to no more than an estimate of what the valuer opined the development would be worth upon completion and does not establish its worth in 2005. Evidence was given by the father that, notwithstanding nearly six years of marketing with five different real estate agents, only two apartments had sold. He said that the asking price for the total project had fallen from approximately $23 million to just over $16.7 million. It was the father’s evidence “… we’ll be lucky to obtain more than $14 million in gross sales” (Father’s affidavit filed 26 April 2012, paragraph 12).
Annexures to the father’s affidavit reveal that the development was security for a “mezzanine debt” in the amount of $7.206 million and a “senior debt” at $15.8 million for each of which he signed personal guarantees. At an asking price of $16.7 million the joint venture is worth far less than the amount for which it is security. We accept that it follows that the father’s equity in

O Street and N Road could be at risk.
Evidence before the trial judge was that on 11 April 2012 the Bank appointed receivers to Z and the P Suburb joint venture who had thus taken control of the development. This is a matter of some significance. Considered in conjunction with the father’s evidence that the P Suburb joint venture was the most valuable asset he had received from the property settlement, it can be seen that after the 2006 orders were made he lost control of his most valuable asset. Although the trial judge was not satisfied that the value of the P Suburb joint venture had fallen by $2.5 million, he needed to consider the significance of the property owned by the joint venture and its income now being in the hands of a third party appointed by a secured creditor. In our view this constituted evidence that subsequent to the 2006 orders, the father had suffered a major financial set back.
We accept the submission advanced on behalf of the father that his Honour’s reasons make no reference to this evidence.
Counsel for the father submitted that consideration of the father’s commitments and liabilities demonstrated that he was in a “disastrous” financial position. Whatever adjective might ultimately be applied to the father’s overall financial circumstances, in light of the receivership it was necessary for his Honour to consider those matters in order to determine whether or not a ground for departure had been established. By failing to do so, his Honour fell into error.

School fees and expenses

Because s 124 of the Assessment Act picks up s 117(2)(c)(ia), this issue has an obvious connection to the school expenses order.
In relation to the school fees order, his Honour was required to consider Part 7, Division 5 of the Assessment Act. To a considerable extent, the factors which ss 121, 123 and 124 of the Assessment Act require to be considered overlap with the objects of Part 7 Division 5 and s 117. Many of those findings would logically incorporate findings made under Part 7 Division 4 (Hides v Hatton). But as we have observed, necessary findings were not made.
We agree with counsel for the father that before his Honour made the school expenses order, it was incumbent upon him to address ss 124, 125 and 129 of the Assessment Act. Relevantly, in relation to s 124, his Honour was required to determine whether it would be just and equitable as regards the child, the carer entitled to child support (the mother) and the liable parent (the father) to make an order having regard to the matters mentioned in subsections 117(4), (6), (7), (7A) and (8). Of these provisions, the following factors referred to in s 117(4) of the Assessment Act were relevant:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b) the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g) any hardship that would be caused:
(i) to:
(A)    the child; or
(B)    the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)    to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
…
Proper needs of the child
(6) In having regard to the proper needs of the child, the court must have regard to:
(a) the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained; and
(b) any special needs of the child.
Counsel for the father correctly identified that the trial judge failed to address s 117(4)(b), (c), (d), (e), (f) and (g) each of which was relevant and the subject of evidence. His Honour’s failure to address these matters means that the school expenses order must be set aside.

We agree with counsel that the effect of s 125 of the Assessment Act is to oblige the trial judge to state in the school expenses order whether the periodic payment order was reduced (in whole or in part) by the amount the father would pay towards the children’s education expenses. It is common ground that his Honour did not. Nonetheless it is clear from a reading of his Honour’s reasons that he did not intend the non periodic payments to reduce the annual rate of child support payable by the father. In this regard, the trial judge’s reasons build from his decision to dismiss the father’s application to discharge the 2006 departure order and culminate, at paragraphs 176 and 177, with findings which demonstrate that he must also pay school fees and other expenses. It follows that the orders contain a simple omission which should have been brought to the attention of the trial judge. In our view this was not a matter for appeal and should have been dealt with pursuant to the slip rule (-See Milham and Stanford (2001) FLC 93-073).
The mother submitted that, in the event that we were satisfied that his Honour’s failure to comply with s 125 of the Assessment Act was fatal to the school fees and expenses order, and, if this was the only basis on which the father’s appeal would be allowed, the mother would withdraw her application that the father pay a share of the children’s school fees and expenses. However, as the father will succeed in relation to more than the school fees and expenses order, that order will not be made and it will be a matter for the mother on any rehearing whether or not she maintains her application in relation to school fees.

Arrears of child support and school fees

We turn now to the orders made in relation to arrears of child support including the mother’s application to receive arrears of school fees concerning the 2009 school year. The application to discharge the arrears was an application for a retrospective departure order so that the assessment equated to the amounts paid. None of the factors referred to in s 117(2)(c)(ia), or the balance of s 117 was addressed by his Honour.
As we explained earlier, the trial judge calculated the child support arrears as at 23 April 2012. The change in the father’s financial circumstances which may have established a ground for departure occurred on 11 April 2012. It follows that he failed to establish a relevant change in circumstances prior to appointment of the receiver to the P Suburb joint venture. This means that the amount of the arrears takes into account 12 days of arrears which accrued after the change in circumstance. His Honour’s decision to dismiss the father’s application to vary retrospectively the 2006 departure order up to 11 April 2012 was plainly correct. In our view the subsequent -12 days is de minimus.
In relation to the arrears of school fees, his Honour’s decision is also plainly correct. Appellate intervention in relation to the arrears has not been justified.

Enforcement orders

The procedural fairness challenge to the orders which secured the father’s arrears against O Street and N Road has been abandoned.
The remaining issue which requires consideration concerns Order 44 which enables the mother, or should she defer to the Child Support Agency, the agencies entitlement to bring an application to enforce payment of the father’s child support arrears. Irrespective of the existence of Order 44 they are entitled to commence enforcement action. It follows that the order is otiose but not wrongly made.

Conclusion

Error having been established, leave to appeal will be given and the appeal will be allowed in part. Insofar as the orders dismissed the father’s application to discharge Orders 3, 4, 5 and 6, from when he established a change in his financial circumstances, the orders will be set aside. So to the orders that requires the father after that date to pay one half of the children’s private school fees and the like. In relation to these applications, the matter will be remitted for rehearing before another judge. So that it is clear, it is the payment of periodic and non-periodic child support by the father commencing from 11 April 2012 that is the issue for the rehearing and not the effect of the orders on his obligation to pay child support prior to that date.
Each of the parties has secured a measure of success in the appeal. The mother is in receipt of a grant of legal aid. This is not a matter in which an order for costs against either party is appropriate.
The appeal having succeeded on an error of law, it is appropriate that each party is granted a certificate pursuant to the Federal Proceedings (Costs) Act1981 (Cth) for the appeal and rehearing.

I certify that the preceding eighty eight (88) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 16 September 2013.

Associate:

Date: 16 September 2013