SCHOFIELD & KEAM - [2010] FMCAfam 700

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SCHOFIELD & KEAM

[2010] FMCAfam 700

FAMILY LAW – Child maintenance – children now aged 21, 20 & 18 – children resident in Australia since 1992 – parties finally separated in mid 1992 – father departed Australia in 1992 and is now resident in Thailand – mother applied for child support assessment in 1992 – father has source of income originating in Australia – Child Support Agency successfully collected child support pursuant to recurrent assessments between 1994 and 2009 – in 2008 father objected to child support assessment on basis he was no longer resident in Australia – terminating event – child support assessments found to be terminated in 1977 – mother’s objection rejected by SSAT – mother overpaid $44,500.00 as a result of void assessment – mother seeks award of child maintenance pursuant to Family Law Act to extinguish debt arising from overpayment – whether proper to make such order.

Family Law Act 1975, ss.66B; 66C; 66E; 66F; 66G; 66H; 66J; 66K; 66L; 66P
Child Support (Assessment) Act 1989, ss.3; 12

Smith; St. James; Smith v Wickstein (1996) FLC 92-714
Beck and Silwka (1992) FLC 92-296

Applicant:

MS SCHOFIELD

Respondent:

MR KEAM

File Number:

ADC 5609 of 2007

Judgment of:

Brown FM

Hearing date:

8 June 2010

Date of Last Submission:

8 June 2010

Delivered at:

Adelaide

Delivered on:

7 July 2010

REPRESENTATION

Counsel for the Applicant:

Ms Hallows

Solicitors for the Applicant:

Legal Services Commission

Counsel for the Respondent:

No Appearance

UPON NOTING THE FOLLOWING:

A.That a child support case commenced pursuant to the Child Support (Assessment) Act 1989 on 10th August 1994 whereby the respondent father had a liability to pay child support to the applicant mother for the parties’ children, X, Y and Z.
B.That on 12th August 2009 the Social Security Appeals Tribunal made a determination that the father was a resident of Thailand effective from 1st March 1997.
C.That pursuant to section 12 of the Assessment Act, when a person ceases to be a resident of Australia a terminating event happens.
D.That the child support case thereby ceased as of 1st March 1997 and all child support monies paid to the mother from that day onwards (being a total of $44,545.40) are characterised as overpayments within the meaning of section 79(1)(b) of the Child Support (Registration & Collection) Act 1988 and are recoverable from the mother.
E.That the mother has applied to this court for a maintenance order for the period 1st March 1997 to 2nd January 2010 pursuant to the Family Law Act 1975.
F.That by these maintenance orders, the court hereby intends to create a maintenance liability totalling $44,545.40 payable by the father to the mother.
G.That it is the court’s intention that this maintenance liability should offset the overpayment of child support currently remaining on the mother’s account with the Child Support Agency.
H.That the intention of these orders is to adjust the Child Support Register such that there be no further child support or maintenance owed by the father and there be no overpayment of child support payable by the mother.

That, in essence, these orders thereby reflect that the child support/maintenance already paid by the father represents his contribution to the financial support of the children over the period 1st March 1997 – 2nd January 2010.

ORDERS

Pursuant to section 66G of the Family Law Act 1975, the respondent father do pay maintenance to the applicant mother for the children X born (omitted) 1988, Y born (omitted) 1989 and Z born (omitted) 1992 in the amount of $3,500 (three thousand five hundred dollars) per annum for the period 1 March 1997 to 28 February 2009 and the amount of $2,545.40 (two thousand five hundred and forty five dollars forty cents) for the period 1 March 2009 to 2 January 2010 being a total amount of $44,545.40 (forty four thousand, five hundred and forty five dollars, forty cents) for the entire period.
All applications are otherwise herein dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Schofield & Keam is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT ADELAIDE

ADC 5609 of 2007

MS SCHOFIELD

Applicant

And

MR KEAM

Respondent

REASONS FOR JUDGMENT

Introduction

This is a complex case to do with the financial support of three children, over many years, and the inter-relationship between the provisions of the Child Support (Assessment) Act and the child and adult child maintenance provisions of the Family Law Act.
Ms Schofield “the mother” and Mr Keam “the father” are the parents of X born (omitted) 1998; Y born (omitted) 1989; and Z born (omitted) 1992.
The mother was born in the Philippines on (omitted) 1963. She migrated to Australia, with the father and X and Y in October 1991 and has lived in this country ever since. She is now an Australian citizen. Z was born in Australia. The children have lived in the mother’s predominant care since 1992.
The father was born in Germany on (omitted) 1921. Currently, he lives in (omitted), in Thailand. He left Australia in 1992, initially returning to the Philippines, via Singapore. He has returned to Australia intermittently since 1992.
The parties met in the Philippines in 1987. They have never been married. The father had lived in Australia prior to meeting the mother. When he met the mother in Manilla, he was apparently employed by the (omitted) as an (occupation omitted).
It is common ground between the parties that they regard mid-1992 as the date of their final separation. Records from the Department of Immigration indicate that Mr Keam left Australia, for Singapore, on 23 October 2002.[1] One of the issues arising in this case is centred on Mr Keam’s residency status for both the child support regime and the Australian taxation system.
[1] See Child Support Agency objection decision dated 11 November 2008 page 1 being exhibit D to the mother’s affidavit filed 9 December 2009
As a result of his employment at the (omitted), or possibly as a result of something which occurred during his earlier residency in Australia, the father has access to a stream of income, which originates in Australia.
This stream of income appears to take the form of benefits paid to him regularly by Comcare, the Commonwealth Government statutory authority responsible for overseeing the payment of compensation to former Australian Government employees, who are injured or incapacitated whilst in the Government’s employ.
On 10 August 1994, the mother applied to the Child Support Agency for an administrative assessment of child support payable to her, from the father, for X, Y and Z. As a result, Mr Keam was assessed to pay child support for the children to Ms Schofield.
The mother requested the Child Support Agency to collect the moneys due under the applicable assessments, on her behalf, as Mr Keam had a source of income from Australia from Comcare, the Agency was able to collect the child support due regularly.
Between 10 August 1994 and 30 November 2009, the father has been assessed to pay in excess of $56,000.00 in child support. These moneys have been collected and disbursed to the mother, largely as a result of the interception, by the Child Support Agency, of tax returns due to Mr Keam and his benefits from Comcare.
On 19 August 2008, the father objected to the various assessments of child support, which had been made in respect of him. The basis of his objection was that he was not a resident of Australia for child support purposes.
On 11 November 2008, the delegated objection officer upheld Mr Keam’s objection. The officer concerned concluded that Mr Keam was not a resident of Australia for the purposes of the child support regime but rather was a resident of Thailand.
Ms Schofield was aggrieved by this decision and sought to review it in the Social Securities Appeal Tribunal (the SSAT). The SSAT delivered its decision in respect of the appeal on 17 August 2009. Although this case is not an appeal from the decision of the SSAT, it is the reason why the mother has instituted the current proceedings in this court.
Essentially, the SSAT found that the father had not been a resident of Australia since 1 March 1997 and his departure from Australia, on that date, had been a “terminating event” for the purposes of the applicable child support assessment.
The result of this decision was that the mother had effectively received child support from the father, after 1 March 1997, to which she had not been legally entitled as Mr Keam had not been liable to pay child support to her. The amount which the mother has been overpaid, pursuant to the voided assessments, is $44,545.40.
The mother is employed as a (omitted) at the (omitted) Hospital. She earns approximately $44,800.00 per annum. She lives in rented accommodation and has modest assets. Accordingly, the sum concerned is one which she cannot meet in a lump sum payment.
Ms Schofield is fearful that the Child Support Agency will seek to garnish her wages in future or divert any tax return to which she is otherwise entitled to satisfy the debt arising from the over payment of child support to her. From her perspective, this will result in a great injustice, particularly as there can be no doubt that X, Y and Z have been in her sole care and so financially dependent upon her for many years.
Currently, Y is in the third year of a (omitted) degree, which she expects to complete by mid-2011. She receives a youth allowance of $116.00 per week and continues to live at home with her mother. Y is not currently in any form of paid employment.
X commenced a degree in (omitted) in 2009 but has discontinued it. At present, she works part-time earning between $100.00 and $150.00 per week. She also continues to live at home with her mother.
Z finished secondary school at the end of 2009 and is currently having a “gap year”. He plans to commence an (omitted) degree in 2011. He works part-time, earning between $120.00 and $150.00 per week. He too continues to live at home with his mother.
It is Ms Schofield’s position that she continues to provide financially for the children and has done so for many years. It is her case that she has no means to repay the moneys forwarded to her by the Child Support Agency and it would be unfair for moneys to be collected from her in future.
This is the background to the mother’s application. She seeks retrospective awards of child maintenance for the children from 1 March 1997 to the respective dates of each of their eighteenth birthdays and thereafter awards of adult child maintenance be made which will in total will amount to $44,545.40, which will have the affect of extinguishing the debt owed by her to the Child Support Agency.

The applications

The mother commenced these proceedings on 9 December 2009. She seeks the following orders:
“1.Pursuant to section 66G of the Family Law Act 1975, the respondent father do pay maintenance to the applicant mother for the children X born (omitted) 1988, Y born (omitted) 1989 and Z born (omitted) 1992 in the amount of $3,500 (three thousand five hundred dollars) per annum for the period 1 March 1997 to 28 February 2009 and the amount of $2,545.40 (two thousand five hundred and forty five dollars forty cents) for the period 1 March 2009 to 2 January 2010 being a total amount of $44,545.40 (forty four thousand, five hundred and forty five dollars, forty cents) for the entire period.
2.Pursuant to section 66G and 66L of the Family Law Act 1975, the respondent father do pay maintenance to the applicant mother for the adult children X born (omitted) 1988, Y born (omitted) 1989 and Z born (omitted) 1992 at the rate of $50 per week per child for all periods commencing 4 January 2010 and continuing until the said children complete their secondary or tertiary education.
3.The said maintenance payments in paragraph 2 herein be increased on 1 July each year in accordance with variations in the consumer Price Index (March quarter) for Adelaide, save and except that the CPI shall not be applied if this would result in a decrease in the rate of maintenance payable.
4.The said maintenance be paid to the applicant mother via the Child Support Agency.”
The father responded to the application on 12 April 2010. Mr Keam has prepared his own answering documentation. It is clear that he seeks the dismissal of the mother’s application. In his response, he writes as follows:
“I seek a Court Order that gives effect to the decision made on 12 August 2009 by SSAT that I was from 1 March 1997 onwards to the present a resident of Thailand. As a resident of Thailand I was exempted from paying child support. I had pointed out to the court of SSAT that unknowingly of that rule I had paid Child Support to CSA. The SSAT decision should have been accepted and implemented by Schofield – CSA within the 28 day period given by law, which means they should have refunded me the sum of money due to me. I dispute that the sum is $44,545.40.”[2]
[2] See father’s response filed 12 April 2010 at page 2
Accordingly, it is apparent that Mr Keam is aware of Ms Schofield’s application. However, his current situation has precluded him from taking an active part in the proceedings or instructing counsel to appear on his behalf. For all intents and purposes, the proceedings have been undefended.
In his response, Mr Keam has indicated that he suffers from prostate cancer and is in poor health. It is his position that he is in a parlous financial position and it is impracticable for him to come to Australia for the case.

The decision of the SSAT

The hearing before the SSAT took place on 10 June 2009. Ms Schofield appeared in person and Mr Keam was represented by his granddaughter. This situation came about because the SSAT found it impracticable to contact Mr Keam by telephone in Thailand and, as such, the Tribunal encouraged Mr Keam to send along a proxy for the hearing.
The SSAT identified the issue for it to determine as being whether Mr Keam had ceased to be a resident of Australia, and if so, the date on which this had occurred. The Tribunal had evidence before it from the Australian Taxation Office regarding Mr Keam’s nominated place of residency and records from the Department of Immigration & Citizenship regarding the dates on which Mr Keam had entered and left Australia.
This latter record showed that since 1992, Mr Keam had not spent any periods greater than two months in Australia. He had not been in Australia between 23 October 2002 and 20 April 2008. In addition, he had been outside of Australia between 20 March 1994 and 9 January 1998.
The Tribunal also had access to a copy of Mr Keam’s passport. This passport contained a number of visas, which granted Mr Keam an entitlement to remain in Thailand. The SSAT accepted that this record corroborated Mr Keam’s contention that he had been a resident of Thailand since 1997.
Although Mr Keam had submitted tax returns in Australia and received payments from Comcare in this country, the SSAT concluded that Mr Keam was not currently an employee of the public sector, in Australia, and accordingly, the superannuation payments were not relevant for determining his residency status. The Tribunal considered that Mr Keam was not an Australian resident and had not been for some time.
The Child Support (Assessment) Act 1989 creates a requirement for there to be a residential nexus between Australia (or a jurisdiction with which Australia has reciprocating child maintenance obligations) before any parent can be liable to pay child support pursuant to the child support regime created by the legislation.
Thailand and Australia do not have any international treaty or non-treaty arrangements between them which relate to maintenance obligations arising from family relationships, parentage or marriage.
As a corollary of this residential requirement, the legislation also creates the concept of a “terminating event”, which is an occurrence which automatically brings any applicable child support assessment to an end. Section 12(3) of the Assessment Act provides:
(3)A child support terminating event happens in relation to a person who is a liable parent in relation to a child if:
(a) the person dies; or
(b) the person ceases to be a resident of Australia.
The SSAT found that Mr Keam ceased to be a resident of Australia on 1 March 1997 and accordingly, this was a terminating event, so far as the applicable child support assessments for X, Y and Z were concerned.
This decision of the SSAT is not subject to any challenge by Ms Schofield. By necessary implication, she accepts that the child support regime had no application to her and the children’s circumstances following Mr Keam’s permanent departure from Australia, as a resident, in March of 1997.

The provisions of the Family Law Act 1975 dealing with financial maintenance for children

Prior to 1 October 1989, the legislative regime applicable to the calculation of maintenance for children of separated parents, in the Australian context, was provided by division 7 of Part VII of the Family Law Act. It was on this date that the provisions of the Child Support (Assessment) Act came into force, but these provisions did not specifically abrogate the earlier child maintenance provisions of the Family Law Act.
However, it should be noted that, pursuant to section 66E of the Family Law Act, a court such as this one is prohibited from making a child maintenance order if it is open to the applicant for such an order to apply for an administrative assessment of child support, under the provisions of the Assessment Act.
This provision does not apply to Ms Schofield’s circumstances. As Mr Keam is no longer a resident of Australia and Thailand is not a country with which Australia has reciprocating child maintenance obligations, it is not open to her to bring an application for an administrative assessment of child support for the children concerned in these proceedings and it has not been open to her since March of 1997, when Mr Keam departed Australia.
For ease of distinguishing between the two legislative regimes available to provide mechanisms for the calculation of recurrent financial support for the children of separated parents within Australia, it is usual to refer to matters arising under the earlier Family Law Act provisions as stage 1 matters and those arising under the later Child Support (Assessment) Act provisions as being stage 2 matters.
One of the distinctions between stage 1 and stage 2 matters is that stage 1 matters do not require a residential nexus between the parent from whom child maintenance is sought and Australia. Pursuant to section 66F of the Family Law Act, an application for a child maintenance order may be made by either of a child’s parents or any other person, who is concerned with the care, welfare or development of that child.
Section 66G of the Family Law Act authorises the court to make any child maintenance order, which it considers “proper”. Accordingly, the court has a wide discretion regarding such orders. However, this discretion must be exercised in light of the overall structure of division 7.
Section 66B sets out the objects of the division. The principle object is to ensure that children receive a “proper level of financial support from their parents.” More particularly the court is to ensure that children have their “proper” needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents; and that parents share “equitably” in the support of their children.
Section 66C places the primary duty of maintaining children upon the parents of those children. This duty has priority over all other commitments a parent has other than those commitments necessary to support him or herself or any other children he or she has a duty to maintain.

The approach the court must take in assessing a child maintenance order (including an adult child maintenance order) is set out in section 66H. It is essentially a two step process. Firstly, the court must consider the level of financial support necessary for the maintenance of the child concerned.
The relevant matters to be considered are set out in specific detail in section 66J. In particular, the court must consider the proper needs of the child concerned, bearing in mind the age of the child; the manner in which the child is being, and in which the parents expect the child to be, educated or trained; and any special needs of the child concerned.
In addition, the court must have regard to the capacity of the child to earn or derive an income but it must specifically disregard “any entitlement of the child or any other person to an income tested pension, allowance or benefit” [section 66J(3)(b)(ii)].
Secondly, the court must determine what contribution each parent should make to providing that financial support. The matters to be considered specifically in regards to this second step are set out in section 66K.
In particular, the court must consider the income, earning capacity, property and financial resources of the parents concerned and his or her necessary expenses. Again, the court must disregard any entitlement of the child concerned, or the person with whom the child lives, to receive an income tested pension, allowance or benefit [section 66K(4)].
Section 66L deals with the maintenance of children aged 18 years and over. It reads as follows:
“(1)A court must not make a child maintenance order in relation to a child who is 18 or over unless the court is satisfied that the provision of the maintenance is necessary:
(a) to enable the child to complete his or her education; or
(b)because of a mental or physical disability of the child.”
It is clear from authority that the expression “child” used in section 66L refers to a concept based on relationship rather than age. As such, it has been held by the Full Court of the Family court that the other legislative provisions, contained in Division 7, apply to applications brought under section 66L.[3]
[3] See Smith; St. James; Smith v Wickstein (1996) FLC 92-714
It is clear from the provisions of section 66P that the court has a wide discretion in respect of the form of any order which it makes for child maintenance. These powers include the payment of child maintenance in a lump sum or by means of the transfer of items of property. Importantly, in the context of this case, the court has authority to make whatever order it considers “appropriate” [section 66P(1)(j)].

Conclusions

There is no legal impediment to Ms Schofield bringing an application for child maintenance for X, Y and Z, notwithstanding such an application will have a retrospective quality and there have previously been in place child support assessments, which have been subsequently rendered nugatory by reason of the decision of the SSAT.
The applicable legislation does not stipulate a time frame in which such applications are to be brought or require the parent from whom financial support is sought to be resident in Australia. The existence of a child support assessment is a bar to such proceedings, but no such assessment is in force between the parents in this case.
One of the consequences of the decision of the SSAT, made on 17 August 2009, was to void all child support assessments in respect of the children in this case from March of 1997 onwards. However, this decision did not negate the legal obligation, incumbent upon Mr Keam and Ms Schofield to support their children financially.
In my view, division 7 of Part VII of the Family Law Act is clear that this duty remains extant regardless of whether one of the parties is resident in Australia or elsewhere or whether there has or has not previously been a child support assessment in place.
The obligation on the court, created by division 7, is to make the child maintenance order which it considers is proper in all the circumstances of the case. In this context, I do not think it would be improper for me to make the orders which Ms Schofield seeks merely because of the prior and now void assessments of child support.
In this regard, I am satisfied that no mala fides can be said to attach to Ms Schofield’s actions in bringing the current proceedings. As the caring parent for X, Y and Z, she was entitled to apply for child support for the children concerned. She deceived no one in respect of either her personal circumstances or the children concerned in bringing her application. She did not trick Mr Keam in any way.
To the contrary, Mr Keam, in his Australian tax returns from 1997-98 onwards, has indicated that he was a resident of Australia, at least for taxation purposes.[4] In addition, it was not until June of 2006 that Mr Keam wrote to the Child Support Agency and informed it that he had moved permanently to (omitted).[5]
[4] See SSAT reasons for decision at paragraph 47
[5] Ibid at paragraph 4
Accordingly, it is my view that Ms Schofield has acted in good faith through out and, as such, it would not be appropriate to dismiss her application on the basis of any equitable doctrine of estoppel. I do not think that it can be said that she has unnecessarily delayed her current application.
At first blush, there seems a significant level of artificiality about the mother’s application, which in effect is a device to extinguish her debt to the Child Support Agency and so indirectly to Mr Keam himself. As such, the question which arises is, is the application an abuse of process.
I do not accept that it is, when the purpose of division 7 itself is considered. The purpose of the division is to ensure that the proper financial needs of children are met fairly and equitably form their parents’ financial resources. In this case, the now extinguished child support assessments resulted in Mr Keam providing financially for the children.
If Ms Schofield’s application is dismissed, it will effectively mean that Mr Keam has lent her money to support the children, during their infancy, which she is now compelled to repay. In my view, this would also be a highly artificial outcome, which would be contrary to the ethos of the child maintenance provisions of the Family Law Act.
In my view, the issue of artificiality arising in this case is not that Mr Keam should provide financial support for X, Y and Z, rather it is calculating the level of what that support should be over a period of some thirteen years, when evidence about the parties’ financial circumstances and the needs of the children, in financial terms, is scant.
As previously indicated, in determining what is the proper child maintenance order to be made in division 7 proceedings, the court is required to follow a two-step process. The first step is to assess the financial needs to any child concerned in dollar terms. The second step is to determine how each parent should contribute to that sum. The essential nature of child maintenance being that it is periodic, and as such, amenable to change, if the circumstances of either the child concerned or the parents should alter.
I can understand why Mr Keam would find it galling that those advising the mother would urge the court to reach an outcome which has the same consequence as the voided child support assessments. In such circumstances, it is only to be expected that he would consider such a process to amount to a piece of legal legerdemain.
I share those concerns but consider that they can be deflected upon a proper consideration of the rationale behind the calculation of stage 2 child maintenance orders. In my view, the assessments, although void, remain relevant, so far as the calculation of maintenance due to Ms Schofield, pursuant to her stage 1 maintenance application.
The respective rationales underlaying the operation of stage 1 and stage 2 child maintenance matters have much in common. Both regimes have as their central ethos that it is parents who should maintain their children financially and this duty should have primacy over other financial obligations which the parents may have.
Pursuant to section 3 of the Child Support (Assessment) Act, the parents of children have the primary duty to maintain their children. This duty has priority over all other commitments a parent may have, other than the necessary commitments to enable the parents to support him or herself, or any other child that parent may have a duty to maintain. This object is congruent with the objects of division 7 of part VII of the Family Law Act, contained in section 66B.
The law relating to the calculation of stage 2 child support has recently been subject to extensive legislative amendment. These amendments have not changed the essential basis of the child support scheme that a formula is applied to the respective incomes of the liable and caring parent to ascertain what amount of financial support should be provided from one to the other, depending on the manner in which the applicable children are being cared for.
Accordingly child support assessments are based on the capacity of parents to provide financial support to their children. They are also calibrated by reference to the generic costs of maintaining children. As such, I am satisfied that the previous child support assessments in respect of X, Y and Z provide an exact yardstick for the court to calculate maintenance due for them to their mother pursuant to the provisions of the Family Law Act.
In addition, I do not think that it would be an abuse of process for the court to follow such a procedure. Ms Schofield has undoubtedly borne the burden of supporting the children since Mr Keam departed Australia. In my view, it would be unfair to her if Mr Keam was able to escape his own obligations to support the children financially by reason of some ability to exploit anomalies arising between the application of the stage 1 and stage 2 schemes to his circumstances.
In reaching this conclusion, I bear in mind what was said by the Full Court of the Family Court in Beck and Silwka[6] as follows:
“While the two separate stages established by the Parliament must continue to be recognized, nevertheless, many cases falling either side of the line have virtually identical features and in those cases assistance may usefully be obtained in stage 1 cases by reference to stage 2 outcomes.”
[6] Beck and Silwka (1992) FLC 92-296 at 79,262
In this case Mr Keam undoubtedly has the capacity to pay the maintenance order sought by Ms Schofield – he has already contributed the sum in question to the Child Support Agency. In addition, bearing in mind the ethos of the formula, I am further satisfied that the sum sought represents the financial needs of the children concerned over the period in question. Accordingly, I am satisfied that it is proper to make order one of the orders sought by the mother, together with the various notations prefacing such order.
I can see no utility in making the other orders sought by the mother in respect of ongoing financial support for the three children concerned, who are now each adult. The reality is that the father, now aged nearly ninety, will not honour any such orders and the process of enforcement will be torturous.
Although I am satisfied it is proper to make orders in respect of retrospective maintenance arrangements for the children, considerations of pragmatism also guide the decision. It is both just and pragmatic that the court make orders extinguishing the mother’s liability to the father, as a result of the voided child support assessments. This will end the parties’ financial relationship with one another in respect of the children.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Brown FM

Date: 7 July 2010