W and H
[2004] FMCAfam 67
•8 January 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| W & H | [2004] FMCAfam 67 |
| CHILD SUPPORT – Departure from child support assessment – husband received benefit of personal injuries claim – deposit of monies for the husband to meet future child support obligations. |
Family Law Act 1975, s.117B
| Applicant: | W |
| Respondent: | H |
| File No: | BRM6736 of 2003 |
| Delivered on: | 8 January 2004 |
| Delivered at: | Brisbane |
| Hearing date: | 19 December 2003 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Burridge |
| Solicitors for the Applicant: | K.L. King & Associates |
| Counsel for the Respondent: | Mr Reithmuller |
| Solicitors for the Respondent: | Guides & Elliott Solicitors & Notary |
ORDERS
That Orders Four (4) to Seven (7) inclusive of the Order of the Warrnambool Magistrates Court on 4 April 1997 be discharged.
That an injunction be issued restraining the Respondent Husband from dealing with Fifty One Thousand Dollars ($51 000) of the monies held by his Solicitors in trust and otherwise discharge the obligations created by any further Order of the Court until such time as the Respondent Husband has met these obligations.
That the Respondent Husband sign all such documents as may be necessary to direct Thirteen Thousand, Six Hundred and Twenty Two Dollars and Sixty Six Cents ($13 622.66) be paid to the Applicant Wife forthwith.
That on the sum referred to in paragraph 5 of these orders being exhausted, the child support assessment be departed from and the annual rate of child support set at five dollars per week thereafter.
That for the purpose of securing payment by the father of the amounts referred to in paragraph 3 of these orders:
a)The father is hereby ordered to do all acts and things to execute all deeds, documents, instructions in writing, as may be necessary to cause to be deposited the sum of $33,000 into an interest bearing investment account in the joint names of the father and the mother.
b)The father and the mother are hereby ordered to do all acts and things and execute all deeds, documents, and instructions in writing and as may be necessary to cause an automatic monthly disbursement to the child support agency of the amount necessary to meet the father’s liability each month pursuant to the terms of the administrative assessment, as departed from in accordance with order 3 herein.
c)The father and the mother are hereby ordered to do all acts and things, and execute all deeds, documents and instructions in writing as may be necessary to cause any balance held in the investment account after 30 June 2010 to be paid to the father.
The parties are at liberty to file submissions in support of an application for costs within fourteen days (14) days.
THE COURT NOTES:
That the payments under paragraphs 1 and 2 of this order have been made from the funds released to the applicant wife under the order made 19 December 2003.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISANE |
BRM6736 of 2003
| W |
Applicant
And
| H |
Respondent
REASONS FOR JUDGMENT
The facts of the dispute between the applicant mother, W, and the respondent father, H, about child support for their daughter, L, born 28 May 1992, raises some interesting issues for determination.
The historical facts are not significantly in contest. The parents had a short relationship of some months during which L was conceived. The parties separated before her birth and have not cohabited since separation. The respondent has not had any contact with the child.
Orders in the absence of the respondent were made on 12 November 1992 in the Magistrates Court of Victoria that:
“1. The respondent is declared to be the father of the child.
2. The respondent pay the applicant child maintenance of $1000.
3. The respondent pay the applicant's costs fixed at $1303.50.”
I am not aware what evidence was offered at the time to support the declaration of paternity. However subsequent DNA testing completed 12 months ago confirmed that the respondent is L's biological father.
The respondent has not paid the sums under the order. The applicant sought payment with interest. Although an administrative assessment was made in December 2002 by the Child Support Agency the respondent had not paid any substantial periodic payments. In 1997 the applicant became aware that the respondent had a common law damages action on foot in Queensland arising from a work accident in 1991. The applicant sought and obtained an injunction in the Magistrate's Court of Victoria on 4 April 1997 restraining the respondent from dealing with the proceeds of his personal injuries claim.
The respondent says that his WorkCover claim was finalised at a settlement conference on 1 May 2002 for $352,475 and after refunds to WorkCover, the amount of $337,777.34 was received by solicitors on 26 July 2002. After adjustments for costs, an amount of $321,312.11 was invested and remains invested together with interest, although no exact balance of the sum invested with interest accrued at the time of trial was available to the Court. From the evidence an amount of approximately $338,800 is available to the respondent.
At paragraph 23 of the respondent's affidavit, he sets out the basis of his settlement drawn from his counsel's notes made at the mediation. Of the sum received the following future loss components were identified:-
Economic loss $155,000
Gratuitous assistance with interest $ 16,105
Future medical expenses $ 4,000
Future surgical expenses $ 3,000
Total$178,105
The applicant filed proceedings seeking relief under the Child Support (Assessment) Act 1989 (“the Act”) on 29 September 2003 and in particular orders for:-
d)Payment of the amount for child bearing expenses together with interest.
e)A departure of past child support assessments and payment of the sum forthwith.
f)Departure from the current assessment to be extended to the child's 18th birthday with such payment to be secured by the deposit of an amount into an interest bearing joint account.
After final submissions it was clear that the parties agreed that:
a)The respondent should pay the child bearing expenses of $2305.50 forthwith.
b)The sum of $11,319.16 should be paid for the aggregate of previous years agreed child support, which sum is not to be credited against the liable parent's liability under any administrative assessment. This sum represented accrued child support at an agreed rate to 19 December 2003. I ordered after submissions this sum to be paid to the applicant from the moneys in trust, and save for the sum of $51,000, effectively discharged the injunction over the balance of the personal injuries settlement proceeds.
As the parties had agreed on the manner by which future child support was to be secured I was required to determine:
(a)On what basis should the interest on child bearing expenses be assessed.
(b)What the appropriate rate of departure should be for the current assessment. The respondent says $49.77 per week and the applicant says $120 per week.
(c)The amount to be deposited to secure future payments of child support.
Principles
Both counsel acknowledged the applicable three step process identified in s.117 of the Act and enunciated by the Full Court in decisions such as Gilmore v Gilmore (1995) FLC 92591 and Gyselman v Gyselman (1992) FLC 92279. No useful purpose is served in these oral reasons in reciting the observations of the Full Court save to say that this case raises facts which clearly satisfy the threshold test of "special circumstances" existing.
I have considered the ground for departure set out at s.117(2)(c)(i) and the factors under s.117(4) and (5) of the Act.
Interest
Relevantly s.117B of the Family Law Act 1975 provides as follows:
“(1) Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:
(a) the date on which the order is made; or
(b) the date on which the order takes effect;
whichever is later, on so much of the money as is from time to time unpaid.
(2)A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first-mentioned order or may order:
(a) that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of Court; or
(b) that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1).”
It is clear that a power is vested in the Court making an order to determine whether a monetary sum payable is to attract interest at a particular rate or on any specified condition (see s.117B(2)). That condition could include that interest be calculated on a compounding basis with say, monthly, quarterly or yearly rests. No such specification was ordered.
In the absence of any particular order for how interest is to be payable interest applies at the "default" rate specified by the legislation from time to time under Order 40 Rule 1. In this case it may well have been anticipated that payment would have been made within a reasonable time. No date by which payment was to be made was set and by the operation of s.117B(1) the interest will run from the date the order was made.
I found no authority which would support a view that over such a long period of time interest on a compounding basis is appropriate. It seems usual for interest to be calculated on a simple interest basis on the amount unpaid from time to time. If the order required payment of instalments or where part payments of an outstanding obligation had been made voluntarily, then it is clear interest would be calculated on the reducing principal. That is not the case in this matter. Similarly, if the order required interest to be paid on a regular basis and it was not, compounding interest would accrue.
Counsel for the respondent says I should adopt a rate of interest of 10 per cent being the rate received by the respondent on components of his personal injuries award which relate to past losses. I do not believe that s.117B gives a discretion to the Court (other than the Court ordering the payment) to vary the applicable interest rate set by Order 40 Rule 1 from time to time. It is clear that a discretion to be exercised judicially is available under s.105 of the Family Law Act when a Court is being asked to enforce an obligation including payment of accrued interest. (See for example Riggs v Padilla (FCA unreported Faulks J 10 October 2002) and Maragopoulos v Sirios (FCA unreported Rose J 6 September 1999)).
I would in this case apply the rate from time to time set by Order 40 and adopt the calculation at paragraph 4 of the respondent's written submissions. Interest to 19 December 2003 on the principal sum of $2,303.50 amounts to $3,220.55.
Current and future departure
I am invited by both parties to determine a current rate of departure and then to order that rate shall apply (subject to yearly adjustments for CPI) until the child turns 18 on 28 May 2010. Both parties are aware that by doing so administrative departure for future events would not be available. They would have to file an application in a Court seeking a variation. They agree that on the sum invested being exhausted, the child support assessment be departed from and the annual rate of child support be then set at the current legislative minimum of $5 per week. This condition impacts, for reasons I shall mention shortly, on the amount to be secured.
In respect of the departure application I make the following findings on the evidence.
(a)The applicant describes her occupation as a –
“pensioner/artist”
Her main source of income is a single parenting payment and family tax benefit. She has no assets of significance apart from a car and 2000 shares in CPI Limited. Apart from credit card debts she claims to owe $7000 for HECS fees.
(b)The mother was not challenged on her estimate of the child's weekly needs at $163 (excluding any allowance for accommodation or transport expenses). The applicant pays rent of $130 per week and claims $38 per week for motor vehicle expenses. Assuming that those expenses were shared equally between the applicant and the child that would suggest the child's weekly needs were approximately $247 per week. This estimate is at the lower range of the Lee and Lovering tables. I adopt the figure of $247 per week as reasonable.
(c)The respondent's primary source of income, as it has been for 10 years, is as a Sydney taxi driver. His estimate of weekly gross income is $650. He did not provide to the Court any previous taxation returns or other corroborative evidence save for a copy of the BAS return for the quarter to September 2003 which revealed a gross income of $14,723 for the period. This represents an annualised gross income of $58,892 (approximately $1100 per week). On the evidence I propose to adopt an annual gross income amount of $55,000 from this source for the father.
(d)The respondent estimates he will have available from the personal injuries award after payment of his credit card debts, loan from his brother and total discharge of his house mortgage a sum of approximately $140,000. This balance makes allowance for a sum being invested to secure future child support payments. At a rate of 5 per cent, the additional annual income available to the respondent is a gross amount of $7000.
(e)After payment of his debts and securing the future child support liability the respondent’s asset position will be significantly superior to that of the applicant being:
Money available for investment $140,000
Half share of the current home (at least) $125,000
Total $265,000
(f)I accept the respondent’s evidence that he did purchase his current home with his wife in February 1994 for $120,000 and that his wife contributed to the modest deposit of $15,000. The respondent has three children as a result of his marriage, T (aged seven); A(aged five) and S (aged three). His wife is a full time mother and has no income. I observe, of course, that the respondent's duty to support his four children the same. He claims also to have an obligation to support his wife.
(g)Based on his financial statement sworn on 18 December 2002 and disregarding expenses for mortgage and credit cards (which will soon be discharged) I find his current weekly expenses as follows:
Tax on income of $62,000 per annum $271
Superannuation $15
Rates $54
Insurance $10
Living expenses claimed
(together with his wife) $184
Total $534
I regard the respondent's claim for the personal living expenses for he and his wife as a bare minimum. The applicant herself claims $210 a week.
The expenditure claimed by the respondent reflects his current financial circumstances. Clearly his position significantly improves when he has access to his personal injuries award. However he does not have the level of assets or income which would satisfy me that he falls within that category of payer who is an “income poor asset rich” person. (See Dwyer v Maguire 1993 FLC 92420). He has a continuing disability which he says prevents him from resuming employment as a carpenter. He has some future medical expenses for injuries suffered.
The obligation to consider the respondent's property and financial resources (see s.117(2)(c)(i)) is not an invitation to undertake a property division. The respondent has waited almost 10 years to receive the benefits of a sizeable personal injuries award. He has during this period, it is reasonable to infer, suffered the daily effects of the injuries justifying his award. His wife and the household similarly have supported him with gratuitous assistance. He is, as a matter of equity, entitled to enjoy some of the fruits of his litigation.
Based on these findings and in the special circumstances of this case which are established I regard it as just and equitable and otherwise proper to depart from the minimum current administrative assessment of $260 per annum and set the yearly child support liability at $5200 per annum ($100 per week). In so doing I take into account that the administrative assessment of the respondent (adopting a gross income of $62,000 per annum) and after allowance for three infant children in his care would be approximately $108. I would have estimated a realistic surplus for support of his four children from his income of $1200 per week would be calculated as follows.
Income $1200
Tax $271
Super $15
Rates $54
Insurance $10
Living expenses
(inc. household maintenance and the like) $360
Total $710
Net $490
Amount to be secured
The respondent says the amount to be deposited should be discounted by a rate of three per cent. The applicant says that a simple lump sum calculation should be adopted based on the child support liability I have determined as appropriate. The competing sums to be invested would be either the respondent’s estimate (adopting 3 per cent table for six and a half years) $30,600; or the applicant’s estimate of $33,300 (using an aggregate method).
Whilst most States have shifted away from the 3 per cent discount rate decided upon by the High Court in 1981 (see Todorovic v Waller (1981) 150 CLR 482) there are still differences across the country (see for example the 5 per cent rate adopted in s.57 of the Civil Liability Act 2003 (Qld)).
The purpose of using a discount table is to attempt to calculate the present value of a periodic sum for a specific period on the basis that the sum is withdrawn from the capital at weekly intervals and adopted interest is credited to the fund at quarterly intervals on the lower balance in the quarter. I would have adopted the discount rate of 5 per cent save for the following factors:
(a)The current child support payment over the next seven years is to be increased by CPI.
(b)It would not be appropriate at a time when the child's needs will be at its highest (in 7 years time) for the rate to be reduced to the minimum of $260 because the funds are exhausted. It would be more equitable if the funds are not totally used and, because of the accumulation of interest for the respondent to receive a small refund at the end of the period having properly met his financial obligations to L. As a result I will order the sum of $33,000 to be secured.
Form of order
Otherwise the form of order was agreed and is set out at the commencement of these reasons which are to adopt Mr Reithmuller's Schedule A with the adjustments made for these reasons.
I will give the parties 14 days to file any submissions in support of an application for costs.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
Date:
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