WGB and CEM

[2004] FMCAfam 17

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WGB & CEM [2004] FMCAfam 17

CHILD SUPPORT – Application for Departure Orders – whether liable parent should pay private school fees – whether child being educated in the manner expected by both parents – where both parties fail to make full and frank disclosure of their respective financial positions – where there has been considerable litigation between the parties and their relationship remains acrimonious – where both parties have seen fit to exercise “self help” – lump sum child support – capitalisation of periodic child support – whether “Budget Standard” or “BSU” method of ascertaining the costs of maintaining children should be considered.

Legislation:
Child Support (Assessment) Act 1989
Child Support (Registration and Collection) Act1988
Family Law Act 1975

Cases cited:
Luton v Lessels (2001) FLC 98-015
Gyselman (1992) FLC 92-279
Hides v. Hatton (1997) FLC 92-759
Ross and McDermott (1998) 23 Fam.L.R. 613
F & S (2003) FMCAfam 531
Mee & Ferguson (1986) FLC 91-716
Chang v Su (2002) FLC 93-117
Mezzacappa (1987) FLC 91-853
Black & Kellner (1992) FLC 92-287
Weir (1993) FLC 92-338
Oriolo (1985) FLC 91-653
Briese (1986) FLC 91-715
Giunti (1986) FLC 91-759
Kannis (2002) FamCA 1150 (reported in (2003) FLC 93-135
Hardman (2003) FamCA 1057
Rayson (2003) FamCA 1384
S & S [2003] FMCAfam 301
R & R (No.1) (2002) FMCAfam 153
Prpic v Prpic (1995) FLC 92-574
Barrell Insurance Pty Ltd v Pennant Hills Restaurant Limited (1981) 34 ALR 162
Tadorovic v Waller (1981) 37 ALR 481
Racine v Hemnett (1982) 7 FamLR 716
Bendeich (1993) FLC 92-355
Vaughan (1981) 7 FamLR 379
Anast & Anastopoulos (1981) 7 FamLR 728

Applicant: WGB

Respondent: CEM

File No: MLM 5891 of 2002

Delivered on: 29 October 2004

Delivered at: Melbourne

Hearing dates: 16, 17 & 18 December 2003

Judgment of: Walters FM

REPRESENTATION

Counsel for the Applicant: Mr Crozier-Durham

Solicitors for the Applicant: Tony O’Brien & Associates

Counsel for the Respondent: Ms Tulloch

Solicitors for the Respondent: Anthony Peterson & Co

ORDERS

1. I propose to make orders to the following effect:

   a)There be a departure from the administrative assessment of child support payable by the husband for the period 2 January 2002 to 30 September 2002 as follows:

   i)by attributing to the husband a child support income amount of $108,732.00 (or such other figure as shall equate to the maximum possible child support income); and

   ii)by attributing to the wife a child support income amount of $32,717.00 (or such other amount as shall equate to the disregarded income amount for that period, less $1,000.00);

   b)There be a departure from the administrative assessment of child support payable by the husband for the period 1 October 2002 to 31 December 2003 as follows:

   i)by attributing to the husband a child support income amount of $113,542.00 (or such other sum as shall equate to the maximum possible child support income); and

   ii)by attributing to the wife a child support income amount of $34,012.00 (or such other sum as shall equate to the disregarded income amount for that period, less the sum of $1,000.00).

   c)The husband do provide child support to the wife for the child B for the period from 1 January 2004 to 7 September 2007 otherwise than in the form of periodic amounts payable to the wife – such child support to comprise a lump sum payment by the husband to the wife of $67,250.00.

   d)The father do pay to the wife the said sum of $67,250.00 referred to in (c) above on or before 5 November 2004.

   e)The order referred to (c) above is an order in Section 124 of the Child Support (Assessment) Act 1989, and all child support to be provided by the husband pursuant to it is to be credited against the husband’s liability under all administrative assessments of child support payable by the husband to the wife that relate to the whole or any part of the period referred to in the said order, and is to count for 100% of the annual rate of child support payable under the said administrative assessments.

   f)The parties’ applications otherwise be dismissed (save in relation to the issue of arrears brought about by the terms of these orders, or otherwise).

2. I shall now hear Counsel regarding the precise terms of the orders necessary to give effect to this judgment.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLM 5891 of 2002

WGB

Applicant

And

CEM

Respondent

REASONS FOR JUDGMENT

Overview

1. The proceedings presently before the Court relate to Child Support for the parties’ son B, who is 15 years old.

2. The husband was born in Australia in 1946. The wife was born in the United States of America in 1958. They married in New Jersey in June 1987. They separated in September 1991 and were divorced in December 1993.

3. B is the only child of the marriage. He was born in September 1989.

4. B has resided with the wife since his parents separated. The husband has not seen B for some two and a half years, but contacts him by email.

5. The husband is a dentist in private practice. The wife operates a retail clothing business.

Background – Child Support Agreement

1. In July 1995 the parties entered into a child support agreement (“the Agreement”). Clause 1 of the agreement provides that it is to operate for “…the whole of the period 1 July 1995 until 1 January 2002”.

2. In 1995, B was in prep at Carey Baptist Grammar School. He had commenced his schooling at Carey at the beginning of that year. He continued on at Carey, completing his primary education (year 6) at the end of 2001. He commenced his secondary education (year 7) at Carey at the beginning of 2002.

3. According to the wife, the parties agreed that the Agreement should lapse on 1 January 2002 precisely because it was in that year that B was to begin secondary school, and because it would be necessary, at that time, to reassess B’s financial needs.

4. According to the husband, there was no “agreement” that the Agreement would lapse on 1 January 2002. The husband asserted that he “did not notice” that the Agreement stopped on that date. He thought that it would continue until B turned 18 — because “…it contained 5% yearly increases”.

5. The Agreement was negotiated and entered into by the parties at a time when they were involved in a trial before Smithers J in the Family Court of Australia at Melbourne. It would appear that both parties had found the trial process stressful, and that the negotiations were intended to resolve all matters then in dispute between them.

6. The husband said that he signed the Agreement at the request of his barrister, and without reading it. He said that the only parts of the Agreement that he actually agreed to were the quantum and the 5% yearly increases.

7. The Agreement is very brief. It recites the dates of marriage and separation, and the fact that B is the only dependent child of the marriage. It also recites that there have been administrative assessments of child support for B and that the parties “…have reached agreement as to the provision of child support for (B) as hereinafter contained…”.

8. Clause 1 of the Agreement deals with the period of its operation. Clause 2 is as follows:

   Commencing immediately and for the operation of this agreement the husband shall pay:

   (a)in the child support year 1995/1996 child support direct to he wife at the rate of $100.00 per week by monthly payments of $430.00…; and

   (b)in each subsequent child support year child support directly to the wife at the rate in the previous year increased by 5 percentum…

9. The other three clauses of the child support agreement are formal, and record (inter alia) that:

   …for the whole of the operation of this agreement the provisions of this agreement for the benefit of (B) are to be in lieu of or credited against and count for 100 percent of the husband’s liability under any administrative assessment of child support…that might otherwise pertain to the period for which the provisions have effect.

10. The Agreement does not refer to school fees. Nor does it contain any reference to the fact that B was then attending Carey.

Private School Fees

1. The wife’s evidence was as follows:

   a)Prior to B’s birth, and during his early years, the parties discussed private school education and agreed that B should be educated at a private school.

   b)The wife believes that the application for B to attend Carey was lodged during the parties’ marriage.

   c)During the trial in July 1995, and at the time that negotiations took place leading to the preparation of the Agreement (and the compromise of the other matters then before the Court) the parties reached an agreement regarding the payment of private school fees for B.

   d)The agreement reached at the time that the Agreement was prepared was as follows:

   i)Whilst the wife believed that B should receive a private school education throughout his primary and secondary years, the husband only felt it necessary that B attend private school at the secondary level. It was agreed that the wife would pay B’s private school fees during his primary education and that thereafter the husband was to be responsible for the payment of all the private school fees during B’s secondary years.

   ii)The Agreement was specifically formulated to lapse on 1 January 2002 to coincide with the time at which B was to begin secondary school, (and the husband was to begin paying the private school fees). At this time, it would be necessary to reassess B’s financial needs.

   e)The husband provided the children of his first marriage (who are now adults) with a private school education throughout their secondary years.

   f)The husband himself attended a private school.

   g)The husband suggested Carey as being an appropriate school for B, as a friend of the husband recommended it.

   h)B has attended Carey since 1995 (when he began his primary education).

   i)B has thrived academically at Carey.

2. The husband’s evidence in relation to the subject was as follows:

   a)At no time did the parties ever discuss private school education for B, and there was never any agreement between them to educate B at a private school.

   b)The husband knew nothing about the lodgment of an application form for B to attend Carey, and if the wife lodged such a form, then it was not done during the marriage.

   c)Although settlement negotiations took place in July 1995, they were carried out by the parties’ legal representatives — and at no time was the issue of private school fees for B ever discussed. It follows that they were never agreed upon.

   d)There was never an agreement dividing up the responsibility of school fees for primary and secondary school periods.

   e)The child support agreement was not specifically formulated to coincide with the time that B was to begin secondary school. The fact that the agreement was to lapse at the beginning of 2002 was “just a coincidence”.

   f)The husband and his first wife financed private education for their sons by way of an insurance bond from their property settlement. The husband’s first wife “felt strongly about private education”.

   g)The husband went to a private school. On the other hand his brother went to a government high school.

   h)According to the husband, “on reflection, (he does) not support private education”.

   i)The husband did not suggest Carey for B. The wife chose the school without prior consultation with the husband, and the husband’s friend did not make a recommendation for the school.

3. Both parties were cross examined at some length regarding the subject of B’s private school education. The husband steadfastly maintained his assertion that the parties had never agreed that B was to attend a private school and, further, that there was no agreement to the effect that the wife to pay all of B’s primary fees whilst the husband was to pay all of his secondary fees.

4. During the course of the wife’s oral evidence she suggested that the parties had discussed private school education for B prior to his birth. She later said that she could not put a time frame on when private school education was discussed between the parties.

5. According to the wife, the decision to the effect that she was to be responsible for B’s primary school fees (and the husband for his secondary school fees) came about because the husband was of the opinion that private school education was more important for B’s secondary education, whilst she believed that it was also important for his primary education.

6. The wife said that the arrangement contained in the child support agreement came about as a result of discussions between the parties held during the course of the trial in July 1995, and following a suggestion by the husband that they go to a coffee shop together to discuss a resolution of the matters then in issue between them. The husband, for his part, did not dispute the fact that the parties had had coffee together and that settlement proposals had been discussed at that time. Both of the parties said that they were under considerable stress at that time. The husband said that this stress caused him to overlook the fact that the child support agreement was to lapse at the beginning of 2002, whilst the wife said that the stress caused her to overlook the fact that the child support agreement did not deal with the issue of private school fees.

7. I paid careful attention to both parties as they gave their evidence, and at other times during the course of the hearing before me. In my view,  neither party gave a balanced account of all matters the subject of their evidence in these proceedings. Neither party was willing to give credit where it was due.

8. It is apparent that both parties bear considerable resentment towards each other and both, in my opinion, are embittered by what they perceive to be an unfair situation. I am satisfied that both parties’ perceptions of relevant events have been distorted by the overlay that adheres as a result of the resentment that each bears towards the other. It follows, and I find, that neither was able to provide an objective and unbiased account of the broad scope of the matters in issue in these proceedings and the respective roles within that factual matrix. I shall return to this subject later in these Reasons.

9. As a result of what I have just said, I find that it is appropriate for me to discount certain of the evidence of each of the parties.

10. In so far as the issue of private school fees is concerned, I find that neither parties’ version of events is wholly accurate. Relevantly, I find as follows:

    a)Given that the parties separated in September 1991, and that B was only just 2 years of age at that time, I do not accept that the parties seriously discussed private school education for him prior to the date of separation. I do not accept that B was enrolled at Carey, or at any other private school, prior to the date of separation.

    b)Although the parties shared residence of B for approximately 12 months after separation, the filing of a form 66 Notice of Child Abuse (or Risk of Child Abuse) by the wife in October 1992, and the husband’s reaction to the filing of that document, meant that the parties’ level of communication deteriorated to the point of non existence from that point onwards. It follows that it is most unlikely that the parties discussed private school education for B at any time prior to the earlier proceedings coming on for trial in July 1995.

    c)At the trial in July 1995, and as a result of a direct request from the husband (which, I find, was linked with the overall settlement negotiations then taking place) the wife “unreservedly” withdrew the allegations contained in the Notice of Child Abuse. Further, the wife acknowledged that B “is not at any risk” with the husband (or either of his sons). The wife’s statement of retraction of the matters contained in the Notice of Child Abuse is annexure GBW3 to the husband’s affidavit sworn 31 October 2003.

    d)Notwithstanding the wife’s “unreserved withdrawal” of the allegations contained in the Notice of Child Abuse in July 1995, the wife said in evidence that she had only withdrawn the allegations “… because she was advised to do so… as part of the negotiations in relation to property settlement”. The implication of the wife’s evidence in this regard is that —

    i)she may still believe that B is at risk with the husband (or, at least, she may still have had that belief at time that she withdrew the relevant allegations); and

    ii)if the wife did consider that B was at risk with the husband in July 1995, then she was prepared to allow the child to remain exposed to the risk (whatever it may have been) in order to achieve a more satisfactory property settlement from her point of view.

    e)Although I accept that the parties had coffee together during the proceedings that were then on foot, I do not accept that B’s education at Carey was discussed at that time. Nor do I accept that the detailed arrangement described by the wife was agreed upon. If the entire agreement as described by the wife was indeed formulated in the coffee shop (which, according to the wife, it was), then, given the level of acrimony and mistrust that then existed between the parties, it is inconceivable that such a detailed arrangement would not have been included in the Agreement as it was eventually drafted.

    f)B had commenced in Prep at Carey at the beginning of 1995. According to the wife, she proposed that she be responsible for all of his primary school fees at Carey, and the husband agreed to accept responsibility for his secondary school fees at Carey. If that was to be the case, then it makes no sense for the Agreement to cease to have effect at the end of B’s primary school education. If, as the wife contended, the husband thought that it was important for B to attend Carey for his secondary schooling, then it is illogical for that arrangement not to be embodied in the Agreement.

    g)In my opinion, it is most unlikely that the issue of B’s education at Carey was mentioned by either party at any time during the period leading up to the preparation and execution of the Agreement. The most likely scenario is one of the following:

    i)The wife was aware that the husband would be unlikely to assume responsibility for part of B’s primary school fees at Carey — and that he certainly would not be prepared to accept liability for B’s secondary school fees at Carey — and hence she was content for the Agreement to cover the period of B’s primary education only. She more than likely hoped that the parties would be able to agree upon a satisfactory arrangement in relation to the costs of B’s secondary education at Carey by the time he finished his primary education. The wife may well have hoped that the level of acrimony and mistrust which then existed between the parties would have subsided by the time that B had completed his primary education.

    ii)The husband (who was obviously aware that B was then attending Prep at Carey) was probably more than comfortable for the subject of B’s school fees not to be dealt with directly, as the wife (with whom he was furious for making the allegations contained in the Notice of Child Abuse) was seemingly prepared to pay the whole of B’s school fees for his primary education at Carey. The husband would have been quite content to allow the entire question of B’s school fees to be deferred as long as possible — and the completion of B’s primary education was sufficiently far away (at that stage) not to concern the husband to any great extent. From the husband’s point of view, if the wife did not wish to include any reference to B’s school fees in the child support arrangements, then that was a matter for her.

    h)I do not accept that the husband suggested Carey as an appropriate school for B, but I do accept that the husband did not object when the wife enrolled B at the school.

    i)The husband was not strenuously opposed to B attending Carey (or any other private school). On the other hand, I find that he never had an expectation that B would attend such a school (irrespective of the fact that he and his elder children had attended private schools).

    j)The husband’s attitude was that he was content for B to attend Carey, provided that he did not have to pay the fees.

    k)To the extent that there was any consensus between the parties in relation to B’s school fees at the time that the Agreement was entered into, it was to the effect that the liability for the fees, and the question of whether B should continue to attend Carey, would be looked at again immediately prior to B commencing his secondary education.

    l)I find that neither party had a “change of heart” (of any form) in relation to B’s schooling at Carey. There was no agreement between the parties that B would attend Carey (or any other private school) prior to separation, or at any time prior to July 1995, and there was no agreement as to who would pay the fees from that date onwards. At some point in time, the wife formed the view that she wished B to be educated at a private school (at Carey, in particular), and she took all necessary steps to ensure that her desire in that regard was fulfilled. The husband was always indifferent to the question of whether or not B attended a private school, and he remains indifferent.

1. In the light of the above findings, I conclude as follows:

   a)The husband has never agreed to B attending Carey, and he has never agreed to contribute to any part of the fees associated with such attendance.

   b)The husband has always been content to allow B to attend Carey and, in that sense, he has acquiesced to the arrangements put in place by the wife — provided that he is not expected to have to contribute to the fees involved.

   c)Although the wife may have had an expectation that B would be educated at Carey, the husband has never had any such expectation.

   d)Although B is being educated in the manner that was expected by his mother, he is not being educated in the manner that was expected by his father.

   e)I shall return to the above findings later in these Reasons.

Child Support Assessments

1. The Agreement ceased to have effect on 1 January 2002.

2. Two child support assessments had issued at the time that the proceedings came on for hearing. The first relates to the period from 2 January 2002 to 30 September 2002 and requires the husband to pay the monthly amount of $400.33. The second assessment relates to the period from 1 October 2002 to 31 December 2003, and requires the husband to pay the monthly amount of $491.08.

Orders Sought by the Husband

1. The husband seeks that the first assessment be varied to provide that he pay child support at the rate of $318.00 per month (instead of $400.33 per month). He seeks that the second assessment be divided into two periods, and that he pay $318.00 per month in respect of the first period (being from 1 October 2002 to 30 July 2003) and $368.00 per month in respect of the second period (being from 31 July 2003 to 31 December 2003).

2. The husband also seeks orders to the effect that he continue to pay child support at the rate of $368.00 per month after 31 December 2003, but that the quantum of child support be varied in accordance with the CPI.

3. In other words, the husband seeks a reduction in the quantum of child support payable pursuant to the two assessments. He opposes any order that he be responsible for B’s school fees, and opposes any suggestion that he should be required to make a lump sum payment of child support to the wife.

Orders Sought by the Wife

1. The wife seeks orders to the effect that both assessments be varied to provide that the husband pay to the wife, by way of child support the sum of $30,000.00 per annum. She also seeks that the husband pay child support at the rate of $30,000.00 per annum until 7 September 2007 (being the date upon which B turns 18), such payment to be linked to the CPI.

2. In addition, the wife seeks that the husband’s payment of child support for the whole of the period from 1 January 2002 to 7 September 2007 be capitalised.

3. The wife also seeks orders to the effect that the husband pay the whole of B’s private school educational expenses until he completes secondary school, and that those fees be capitalised.

4. Finally, the wife also seeks orders that the husband pay all arrears of child support (and all unpaid secondary school fees) to the wife — together with interest.

The Law

1. The Commonwealth’s legislative scheme for assessment and enforcement of child support liabilities is contained in the Child Support (Assessment) Act 1989 (the Assessment Act”) and the Child Support (Registration and Collection) Act1988. Certain aspects of this scheme were considered by the High Court in Luton v Lessels (2001) FLC 98-015. In that case, Gaudron and Hayne JJ said (at page 95,659):

   The Assessment Act records that the “parents of a child have the primary duty to maintain the child”. This duty is said, by the Assessment Act, (a) to be not of lower priority than the duty of the parent to maintain any other child or another person: (b) to have priority over all commitments of the parent other than commitments necessary to enable the parent to support himself or herself and any other child or another person the parent has a duty to maintain: (c) to be not affected by the duty of any other person to maintain the child or any entitlement the child or another person may have to an income tested pension, allowance or benefit. …The principal object of the Assessment Act is said to be “to ensure that children receive a proper level of financial support from their parents”.

   Part 5 of the Assessment Act (ss 35-79) provides for the administrative assessment of child support. “Child support” is defined as “financial support under [the Assessment] Act, including financial support under [the] Act by way of lump sum payment or by way of transfer or settlement of property”. An administrative assessment of child support requires the application of one or more of several statutory formulae that is, or are, apposite in the particular circumstances. Section 79 of the Assessment Act provides that “an amount of child support due and payable by a liable parent to a carer entitled to child support is a debt due and payable by the liable parent to the carer”…

   Where there has been an administrative assessment, both the liable parent and the carer may lodge with the Registrar an objection against the assessment. A person aggrieved by a decision on the objection may, pursuant to section 110 of the Assessment Act, appeal to a court having jurisdiction under that Act.

2. In the same case, Gleeson CJ said (at page 95,653):

   The objects of the Assessment Act are set out in section 4. The principal object is to ensure that children receive a proper level of financial support from their parents. To that end, the Act provides for a level of support to be determined in accordance with legislatively fixed standards, and permits carers of children to have the level readily determined without the need to resort to court proceedings.

   …It may be observed that, although the legislation is enacted in furtherance of a clearly defined public policy, it creates a distinctly personal liability. The natural and moral obligation of the parent to support a child becomes, by force of the legislation, a legal obligation reflected in a debt, calculated in accordance with the Assessment Act, owing by a parent to a carer of the child.

3. Gaudron and Hayne JJ continued (at page 95,663):

   Part 7 of the Assessment Act (ss 99–146) deals with the jurisdiction of courts under the Act. In particular, provision is made for applications to a court for a declaration about the applicability of the administrative assessment provisions. Provision is made for what are called “appeals” against incorrect administrative assessments and for orders for departure from administrative assessment. (The reference to “appeal”, although similarly used in other contexts, may mislead. The proceeding which is so described is the first application of judicial power; it is an exercise of original, not appellate jurisdiction.) An order by a court for departure from an administrative assessment may be made on the grounds on which the registrar may make a departure determination…

4. The process involved in the consideration of an application for departure from the administrative assessment of child support was explained by the Full Court in Gyselman (1992) FLC 92-279 at 79,064-5, under the heading “Division 4 — Orders for Departure from Administrative Assessment in Special Circumstances”. The Full Court said (inter alia):

   Section 117 is the critical provision.

   The structure of that section is that s.117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in subsections (2) to (9). Section 117(1)(b) identifies a clear three-step process:

   1.Whether one or more grounds of departure in s.117(2) is established.

   2.Whether it is ‘just and equitable’ within the meaning of s.117(4) to make a particular order.

   3.Whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order.

   It is clear from the careful way in which s.117 has been structured that the Court must address each of those three separate issues...

   …Each of those grounds (in s.117(2)) is prefaced by the words, "in the special circumstances of the case". Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. (It has been held) that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases". The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.

5. In Hides v. Hatton (1997) FLC 92-759, the Full Court said this (at 84,352):

   ..it was also made clear in Gyselman that when the Court is considering whether it is just and equitable within the meaning of s.117(4) to make a particular order, the Court is required to undertake the task of considering the matters set out in paragraphs (a) to (g) of that sub-section, and in this regard the Full Court said as follows (at 79,078):

   ‘However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case.  It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4).  However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs.  The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).’

   The Full Court also made it clear in its decision in Gyselman that similar considerations apply to the Court’s determination as to whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order (see at 79,080), and furthermore and very relevantly for present purposes the Full Court emphasised the importance of trial Judges providing adequate reasons for judgment in order to ensure a proper exercise of the discretion under s.117 (see at 79,080).

6. A differently constituted Full Court in Ross and McDermott (1998) 23 Fam.L.R. 613 at 623-4 (paragraph 39) said:

   In our view a practical and flexible approach should be adopted to the task of considering these s 117(4) and (5) matters, that is an approach similar to that which this court has long adopted to the ‘s 68F(2) matters’… in child-related proceedings under the Family Law Act 1975 (Cth), and to the ‘s 79(4) matters’ and ‘s 75(2) matters’ in property settlement proceedings under that Act. Accordingly, we consider it is unnecessary to make any reference to those s 117(4) and (5) matters which have no real relevance in the circumstances of the particular case. We also consider that it would be permissible to group together and consider as a whole, those relevant matters which by their nature lend themselves to such an approach in the circumstances of the particular case, and in the case of those matters which are required to be considered under more than one subsection of s 117, to examine such matters only once, although they may need to be taken into account under more than one subsection.

7. The Court must follow the three step process described in Gyselman in respect of each year for which a departure order is sought (see Hides v Hatton (1997) FLC 92-759).

8. In F & S (2003) FMCAfam 531, Bryant CFM (as her Honour then was) said in relation to school fees:

   The principles… in relation to school fees can be summarised as follows:

   (a)Where the non-custodian has agreed to the child attending a private school, that person is liable to contribute to the fees so long as and to the extent that he or she has a reasonable financial capacity to continue to do so;

   (b)Where the non-custodian has not agreed to the child attending such a school, he or she is not liable to contribute to those expenses unless there are reasons relating to the child’s welfare which dictate attendance at the school rather than a non-private school. Then the non-custodian is required to contribute to the extent that he or she has a reasonable financial capacity to do so; and

   (c)The mere fact that a non-custodian can afford the fees or is a wealthy person is not, in itself, a reason for imposing that liability.

9. The principles referred to by the former Chief Federal Magistrate are derived from the judgment of the Full Court in Mee & Ferguson (1986) FLC 91-716 (at page 75,201). Although Mee & Ferguson was decided prior to the introduction of the Assessment Act, the reasoning has been applied to child support cases — see, for example, Wild v Ballard (1997) FLC 91-771 at 84,488-490; see also Butterworths, Australian Family Law (Commentary) at [s.66J.21] and [CS s.117.45], and the cases there referred to.

Neither Party Has Made Full and Frank Disclosure

1. The duty to make full and frank disclosure of one’s financial position has been set out in a number of cases determined by the Full Court over the years. Those cases were most recently summarised in the decision of Chang v Su (2002) FLC 93-117. For example, where the court cannot be satisfied as to the extent of a party’s property, it can be less cautious than might otherwise be the case when making relevant orders (see Mezzacappa (1987) FLC 91-853, Black & Kellner (1992) FLC 92-287 and Weir (1993) FLC 92-338). Full and frank disclosure is required as a matter of principle in proceedings between spouses or former spouses under the Family Law Act or the Child Support legislation (see, for example, Oriolo (1985) FLC 91-653, Briese (1986) FLC 91-715 and Giunti (1986) FLC 91-759).

2. That a judge (or federal magistrate) is entitled to take a “robust view” in relation to findings regarding a parties’ financial position (including a party’s capacity to meet any proposed order) — where that party has failed to make full and frank disclosure of his/her financial position — is clear from the authorities referred to above, and from the decision in Chang v Su at paragraphs 71 and 72 (at p.89, 198).

3. In November 2002, the High Court dismissed an application by the husband in Chang v Su seeking special leave to appeal from the Full Court’s decision. In the course of argument, Callinan J observed:

   It does not matter what the principle might be seen to be, a Court has to do the best it can. It does the best it can, having regard to the evidence that is adduced, and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the Court can make.

4. In Kannis (2002) FamCA 1150 (reported in (2003) FLC 93-135 — but not as to this issue) — the Full Court said:[1]

   (It was submitted that) the cases discussed above were authority for the proposition that where there was a finding of deliberate non-disclosure the Court could act more robustly in making findings adverse to the party who had actively misled it. We do not see that the principle should be so confined.

   Whether the non-disclosure is wilful or accidental is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied that the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might otherwise be seem to be disadvantaged by the lack of complete candour. This is the course the trial judge adopted. It was a course clearly open to him and one that does not merit appellate interference.

   [1] At paragraphs 50 and 51.

5. Although the cases referred to in the passages cited above deal with issues such as property settlement or costs, there can be no doubt that the obligation to make full and frank disclosure extends to child support proceedings. Indeed, it would be extraordinary if it did not.[2]

   [2] See Hardman (2003) FamCA 1057; Rayson (2003) FamCA 1384.

6. In the present case, I find that neither party has made full and frank disclosure of his/her financial position.

7. The history of this case (as reflected in the affidavits of the parties) reveals that there has been considerable litigation between the parties. Without being exhaustive, that has included litigation in relation to parenting issues, property settlement and child support. When it has suited them, both parties have seen fit to exercise “self help”. For example, the wife alleged that the husband failed to make any child support payments for approximately two years after the date of separation — notwithstanding the existence of appropriate assessments.[3] The husband confirmed that he “allowed the arrears to accumulate between 1993 and 1995” because he believed that the wife “… was indebted to my business and me for loans in excess of $100,000.00” and because “… (he) had been forced to pay all child support for the 1991-2 year notwithstanding the fact that (he) had joint custody of B”. As far as the husband was concerned, he was “in credit”.[4] Insofar as the wife is concerned, exhibit H5 comprises a fax dated 18 January 2000 from the wife to the husband. In it, she wrote:

   [3] See paragraph 9 of the wife’s affidavit sworn 7 October 2003.

   [4] See paragraph 8.1 of the husband’s affidavit sworn 31 October 2003.

   Please be advised I have contacted the Child Support Agency regarding your commitment for December and January. I have been informed you have not paid – hence I have not received.

   B will not be spending the next week with you unless you see fit to live up to your parental obligation to contribute to his support prior to Friday of this week.

   Further, I will not allow you any further access until you honour the terms of our “agreement”.

   Too bad you are such a bitter and twisted man.

8. The relationship between the parties is one of obvious high conflict and mutual animosity. The intensity of the conflict and animosity has had the effect, in my opinion, of blunting their objectivity, and diminishing their reliability as reporters of fact.

9. I have felt constrained to regard the evidence of both parties with some caution, and no general credit finding can be made in favour of one party or the other. Such findings as I have made (or will make) in these Reasons will be reached in the context of consideration of particular issues.

The Husband’s Financial Position

1. The husband is a dentist. His dental practice is in a suburb of Melbourne.

2. According to the husband, he works on four days per week. He does not work on Mondays. The husband’s father (who is also a dentist, and who is 85 years old) works — according to the husband — on Mondays and Fridays.

3. Another dentist, Mr D, also works in the practice. He works three and a half days per week.

4. The basis upon which Mr D works in the practice is less than clear. According to a report prepared by Mr Krampel (from KNP Forensic and Investigatory Accountants) on behalf of the wife, the arrangement with Mr D “… seems to be that all fees generated by him are paid to him and in return he pays a rental for the right to use a fully equipped surgery and to have a fully qualified dental nurse available”. It appears that Mr D earned fees of approximately $172,000.00 in the 2003 financial year, and paid “lease rental” of approximately $83,000.00 during the same period. In other words, Mr D retained approximately 50% of the fees that he earns. In the 2002 year, it would appear that Mr D earned fees of approximately $149,000.00 and paid “lease rental” of approximately $81,000.00.

5. The husband said in evidence that Mr D pays 60% of his gross fees by way of “lease rental”, but later said that “he should probably be on 35% to show a profit”.

6. According to the husband’s financial statement sworn 31 October 2003, he is employed as a dentist by GLW Pty Ltd (“GLW”). He asserts that he has a 50% interest in GLW, worth approximately $40,000.00.

1. The husband also has an interest in W Pty Ltd (“W”) which is the trustee of the WGB Family Trust. He refers to the trust in his financial statement under the hearing of “Financial Resources”, but indicates that its value is “NK”.

2. The husband makes no attempt to explain the interrelationship between GLW and the trust (or W) in the two affidavits (both sworn on 31 October 2003) which were relied upon by him in these proceedings. GLW and the trust are referred to in the husband’s financial statement, but without any explanatory details.

3. The husband’s accountant, Mr Taylor, swore an affidavit (in support of the husband’s case) on 15 December 2003. In paragraph 2 of the affidavit he said: “I am the accountant for the applicant husband and his companies”. The companies were listed as GLW, W and AX Pty Ltd. He continued: “I am familiar with the financial position and circumstances of the applicant husband and each of his companies” (emphasis added).

4. Mr Taylor gave evidence before me, and was cross examined. Amongst other things, he was asked to comment on Mr Krampel’s conclusion that the husband had in excess of $53,000.00 available to him in the 2003 tax year as a result of the difference between cash receipts from the practice and wages paid (in cash) from those receipts. In a brief report attached to his affidavit, Mr Taylor had suggested that the shortfall did not exist because he had been “informed by (the husband) that shortfall of cash does not exist as all cash moneys are for wages or petty cash purchases”. Mr Taylor said that the husband does not provide him with receipt books for the practice — only bank statements, master card statements and internally generated financial records. Given that he relies wholly upon information provided by the husband as to cash transactions, he conceded that he could not verify that the shortfall referred to by Mr Krampel (of in excess of $53,0000.00) did or did not exist.

5. Mr Krampel also gave evidence before me. His evidence was balanced and focused. He gave credit where it was due. In my opinion, he was an impressive witness.

6. Mr Krampel conceded that he was not aware that the husband’s father was a shareholder of GLW. According to information made available to Mr Krampel, however, the husband’s father works in the practice on only one day per week.

7. Mr Krampel said that, if the arrangement with Mr D is that he should, in fact, be paying 60% of his fees in respect of the “lease rental”, then further moneys (being the additional 10% above the 50% taken into account by Mr Krampel) could be considered as being available as income for the husband. In the 2003 year, this would amount to approximately $17,000.00.

8. Mr Krampel indicated that he asked the husband or his advisers for documents such as general ledgers and trial balances. They were not made available. Similarly, Mr Krampel was provided with a schedule recording certain payment details and other information in relation to nine staff members who had been employed in the practice. When he asked if more formal wage records were available, however, he was told that the only information that was available is that with which he was provided. Mr Krampel’s conclusion is that the practice employs more staff is necessary.

9. I prefer Mr Krampel’s evidence to that of Mr Taylor, and find that the analysis contained in his report dated 12 December 2003 is fair, and likely to be substantially accurate.

10. Although the husband’s father may have an interest in GLW (and, perhaps, the other entities), Mr Taylor’s evidence confirms that these are, in effect, the husband’s entities. In other words, they comprise his alter ego.

11. The husband confirmed that the practice receives significant amounts of cash, and that the cash is used to make various payments (including for wages). Further, the husband said that he does not use a cheque account “because the Child Support Agency emptied (his) cheque account and because (he) had issues with the Child Support Agency”. He conceded that he ceased using a cheque account only because of his dealings with the Child Support Agency, and for no other reason. He has not operated a cheque account since 1997.

12. The husband also said that, when necessary, he has used a cheque account in his father’s name and that rental income from the husband’s Queensland property was paid into his father’s account.

13. The husband said that the surgery receives payment by credit card, by cheque and in cash. Receipts are recorded in a book. According to the husband, cash receipts amount to approximately $1,500.00 per week. The husband also said that he draws $100.00 per week in cash from the practice.

14. Whilst I accept that Mr Krampel’s calculations based on attributing an hourly rate to the husband for his dental work might be problematical, I find that the husband receives significant cash moneys from his dental practice and that his overall income from that source (including superannuation) is likely to be in excess of $140,000.00 per annum. At the very least, I find that it is comfortably in excess of the payer’s income cap under the child support legislation (currently approximately $126,500.00).

15. Although the husband denied that his overall, notional income is in the vicinity of $140,000.00 per annum, I do not accept his denial, and confirm the findings that I have made in the previous paragraph. In any event, the husband did not dispute that he has sufficient income to enable him to pay child support as assessed. He said that the grounds upon which he relies in support of his application are to the effect that the child support formula is not correct, and that the wife has not shown her true financial position. He did not say that he could not afford to pay any child support that the court might be minded to order him to pay (leaving aside the issue of school fees). The husband said that he wants to have the option of providing B with more than what he is presently willing to pay — but that such a contribution should be voluntary. His view is that, apart from the provision of bare necessities for B, he should have the choice as to how much he pays. One of the factors that the husband believes that he should be permitted to take into account (in determining how much — if anything —he should contribute for B over and above the bare necessities) is the question of his contact with B.

16. I shall deal (very briefly) with the husband’s philosophical objections to the child support scheme later in these Reasons — but it is sufficient, at this stage, to record that the husband did not deny that he has the capacity to pay child support according to the formula.

17. For the reasons already expressed, I have considerable discomfort as to the accuracy of the husband’s financial statement. Nevertheless, I record the following:

    a)The husband said that he resides in a property in Boronia which is “owned by (his) girlfriend and her parents”. He said that he pays board of $149.00 per week.

    b)The husband said that he is “looking at a vacant property in Boronia”, which he believes that he can purchase for approximately $250,000.00. If successful, it is his intention to build a new home on the property.

    c)The husband sold a property in Queensland approximately six months before the trial. The husband also sold a property in Sassafras a few months before the trial. As a result, he had “substantial moneys” in his bank accounts at the time of the trial. According to the husband, the moneys were to be used for the purchase and construction of his new home.

    d)Leaving aside the board that the husband alleges that he pays, his fixed expenditure and average weekly expenses are (except for the claimed payment of $150.00 per week for "telephone") relatively modest.

    e)The husband has a share portfolio valued at approximately $100,000.00 (separate from his superannuation entitlements). He owes approximately $67,500.00 to Colonial, being funds borrowed to acquire the share portfolio.

    f)The husband had approximately $470,000.00 standing to his credit in bank accounts at the time of the trial, and his superannuation entitlements were in the form of a share portfolio worth approximately $311,000.00.

    g)Apart form the moneys owed to Colonial in relation to the share investment, the husband has no significant liabilities.

18. It follows from the above that, not only does the husband have sufficient income to enable him to pay child support in accordance with the formula, (or as ordered by the Court) but he also has sufficient resources to enable him to meet any reasonable lump sum payment that the court might consider is appropriate.

The Wife’s Financial Position

1. The wife was no more forthcoming in relation to details of her financial position in the first of her two affidavits (sworn on 7 October 2003) than was the husband in his affidavit material. Paragraphs 44 to 50 (inclusive) of the wife’s first affidavit are headed “Details of my Financial Circumstances”. The fact of the matter is, however, that the paragraphs contain absolutely no details of the wife’s income, expenditure, assets or liabilities.

2. In paragraph 5 of her first affidavit, the wife said:

   I have been self employed since 1992 operating a retail business through the company, Inntrade Pty Ltd. My taxable income for the 2002/2003 financial year was approximately $15,000.00.

3. In her second affidavit (sworn 28 November 2003) the wife said that Inntrade Pty Ltd (trading as American Rag) then occupied two retail outlets. One of them was soon to close.

4. Inntrade imports used clothing from the USA for sale through its retail outlets.

5. In the wife’s financial statement sworn 28 November 2003, she deposed to receiving an income of $300.00 from Inntrade (and to receiving the benefit of a vehicle — which benefit is valued at approximately $60.00 per week). In cross examination, the wife was referred to a financial statement sworn by her in June 2003. She prepared the earlier financial statement herself. It records that her “salary or wages before tax” were then $500.00 per week, and that the benefits that she was receiving from her employment or business (being “vehicle/petrol”) amounted to $265.00 per week.

6. The wife did not satisfactorily explain the difference between the income figures in the two financial statements.

7. The financial statement sworn 28 November 2003 reveals that the wife owns a half share in the home in which she resides with her present husband. Her half share is worth $551,000.00. The wife values her interest in Inntrade as “nil”.

8. Under the hearing of “Liabilities”, the wife asserted that she owed $210,000.00 in respect of a mortgage encumbering her home. It later became clear that this amount was, in fact, owed by her husband and herself jointly, and the wife’s liability was, accordingly, approximately $105,000.00. The wife had other liabilities (including credit card liabilities) totalling approximately $30,000.00. She asserted that she also owed approximately $40,000.00 in respect of a personal guarantee for a business loan.

9. The wife’s only financial resources were superannuation entitlements valued at approximately $20,000.00.

10. The husband obtained a report from Mr Wilkinson (of Munday Wilkinson, Chartered and Forensic Accountants) relating to the wife’s financial position. It was obtained very late in the context of the proceedings, and is attached to an affidavit sworn by Mr Wilkinson on 15 December 2003.

11. Mr Wilkinson wrote:

    From our review there would appear to be a number of inconsistencies and queries that require explanation or adjustment to determine the actual operating results of the business as opposed to the disclosed financial result.

    Further, the latest financial statements relate to June 2002, some 18 months ago, therefore additional information relating to the current trading results would be required prior to the preparation of any assessment of value or income currently being derived.

12. The additional information required is set out on page 2 of Mr Wilkinson’s report.

13. Mr Wilkinson also set out a series of matters which, in his opinion, “require an explanation”.

14. According to Mr Wilkinson, the average revenues for the three stores then operated by Inntrade were “significantly below industry norms”.

15. The wife said that her capacity to work in the business had been reduced due to her involvement in various child support proceedings over the period of approximately 18 months leading up to the trial.

16. In relation to Mr Wilkinson’s comment that she had failed to provide all relevant financial information, the wife explained that the income tax returns had not yet been prepared, that the BAS statements had not been asked for, that group certificates were provided, that relevant leases could be provided (but were not requested), that supply contracts do not exist, and that she has no formal records of the hours that she has worked.

17. The wife later conceded that relevant group certificates were not provided to Mr Wilkinson.

18. According to the wife, the hours that she works each day, and the days that she works, vary. She could not say how many days per week she works.

19. The wife conceded that her group certificate records her gross income for the relevant year at $10,798.00 (which is lower than her estimated income in both the financial statements referred to above). The wife’s explanation for the discrepancy is that she receives irregular pay cheques, and that she has not been on a fixed salary for the last 2 years. In my opinion, her attempt to explain the discrepancies between the various income figures was unsuccessful and unpersuasive. The wife conceded that her income was approximately $47,000.00 in 2001, and that it had “virtually halved from one year to the next”. She said that the business had not been doing well, but that she hoped it would improve after two of its three retail premises were closed. The main retail outlet is in Southgate. The wife described it as “long established” and felt that it would be more profitable if it were to be run alone.

20. The wife also said:

    a)Her present husband contributes half the mortgage and half the rates payments in respect of the home in which they reside.

    b)He also pays for the family’s food, but does not give the wife any money.

    c)Between 23 November 2001 and 27 October 2003, a total of approximately $81,000.00 was deposited into the wife’s Commonwealth Bank Streamline account.

    d)A company of which the wife and her present husband are directors owned a property outside Melbourne, which property was previously “rented out”. It was sold in 2002 for $345,000.00.

    e)The moneys derived from the sale of the property referred to in the previous paragraph were used to repay a loan to the bank, and the balance was loaned to Inntrade.

    f)The wife has had various overseas trips in the last two or three years (including holidays and business trips to the United States – which include visits with her family, who reside there).

    g)Her present husband’s income is approximately $75,000.00 per annum. He does not pay for expenses for the wife and B beyond those referred to in (a) and (b) above – save for the fact that he paid for a family holiday in New Zealand.

21. When asked how the wife funded what would appear to be a very significant shortfall between her income and her expenditure over the past few years, the wife explained that she had sold certain personal goods for between $1,000.00 and $2,000.00, that she had received a tax refund of between $6,000.00 and $9,000.00, that she had borrowed approximately $40,000.00 (which moneys were deposited into her streamline account), and that she had received her income from the business, child support from the husband and the proceeds of a garage sale of about $1,600.00. When the wife was asked to locate an entry relating to the payment of $40,000.00 into her streamline account, she could not do so.

22. Whilst giving her evidence, the wife was clear, focused and businesslike (as it were) at times, but vague at others. As indicated above, I do not accept that her financial position is as she has described it to be. She and her present husband have a comfortable lifestyle, and their child attends Carey with B. It is not clear to me how the wife has funded her lifestyle – or, indeed, the amount of approximately $61,000.00 that she spent on B’s primary school fees at Carey between January 1995 and January 2002.[5]

    [5] See paragraph 37 of the wife’s affidavit sworn 7 October 2003.

23. I find that the wife’s income is likely to be much greater than that disclosed in her financial statement sworn 28 November 2003. I am unable to conclude with any degree of certainty what her income might be, but I am satisfied that it is likely to be closer to $40,000.00 per annum than $20,000.00 per annum. I find, however, that it is unlikely to be higher than the “disregarded income amount” under the child support formula (which is presently approximately $38,000.00).

24. I turn now to consider the matters of which I must be satisfied —pursuant to s.117 of the Assessment Act – before making any order under Division 4 of Part 7 of the Act.

“Special Circumstances” – Section 117(2)

1. It was conceded by both parties that a ground for departure within the meaning and contemplation of s.117(2) of the Assessment Act has been established. The fact of the matter is that both parties sought that the assessments be departed from.

2. In all the circumstances, I need do no more than record that I am satisfied that one of the grounds for departure in s.117(2) of the Assessment Act has been established.

“Just and Equitable” – s.117(4)

1. Because of the structure of the orders sought by the wife, it is apparent that I must first determine whether or not it is appropriate to make the orders in relation to periodic payments of child support. Such an approach is mandated by the provisions of section 123(3) of the Assessment Act — which states that, before hearing an application for provision of child support otherwise than in the form of periodic amounts paid to the carer entitled to child support, the court must “…hear and determine any pending application made to the court for an order under Division 4 (orders for departure from administrative assessment in special circumstances) in relation to the child, the carer entitled to child support and the liable parent”. Some of the orders sought by the wife are orders for the provision of child support otherwise than in the form of periodic amounts paid to the wife, and thus fall within the contemplation of Division 5 of Part 7 of the Assessment Act.

2. It follows from the above that my current consideration of the provisions of section 117(4) is in the context of endeavouring to determine whether it would be just and equitable as regards B, the wife and the husband to make the particular orders for periodic child support sought by the parties.

3. I remind myself of the nature of the duty of a parent to maintain a child (as stated in section 3 of the Assessment Act).

4. It is extremely difficult to ascertain the proper needs of B from the material presented to me during the trial. In Part F of her financial statement sworn 28 November 2003, the wife estimates that her average weekly expenses for B are $704.00 per week (although the correct total of the figures referred to in the schedule is $707.00). The estimate includes $350.00 in respect of education expenses for B (relating, of course, to B’s fees at Carey). The wife’s estimate (totalling $707.00) was not (or not seriously) challenged by the husband.

5. The wife’s estimate of her average weekly expenses for B does not include any allowance for items such as household supplies, house repairs, motor vehicle expenses and health insurance.

6. I am satisfied that a reasonable allowance for B’s needs (excluding school fees) is something in the order of $400.00 per week.

7. I have already dealt with the financial circumstances of each of the parties. I find that the husband has the capacity to earn in excess of (and, perhaps, significantly in excess of) the payer’s income cap under the child support formula. I find that the wife has the capacity to earn significantly more than she has said that she earns, but not more than the disregarded income amount under the child support formula.

1. I do not propose to deal with the other factors referred to in s.117(4) in any detail – but I have not overlooked them.

2. Taking into the account the provisions of s.117(2) and (4) of the Assessment Act, and having regard to the findings that I have made regarding the parties’ respective financial circumstances, I am of the view that it is just and equitable to make an order varying the appropriate child support formula in each of the two assessments in such a manner as to substitute the payer’s income cap amount for the husband’s child support income amount referred to in each assessment. I recognise that the payer’s income cap will be a different figure for each of the two assessments. Further, the wife’s child support income amount in each assessment should be varied to an amount that equates to $1,000.00 less than the disregarded income amount for each period.

3. In relation to the first assessment (being the assessment for the period 2 January 2002 to 30 September 2002), the calculation will be as follows:

   Husband’s child support income amount: $108,732.00 (equating to the maximum possible child support income)

Exempted income amount:	$11,271.00
Adjusted income amount:	$97,461.00
Child support percentage:	18%
Annual rate:	$17,542.98
Weekly rate:	$337.36

1. In relation to the second assessment (being the assessment for the period 1 October 2002 to 31 December 2003), the calculation will be as follows:

Husband’s child support income amount (being the maximum possible child support income):	$113,542.00
Exempted income amount:	$11,740.00
Adjusted income amount:	$101,802.00
Child support percentage:	18%
Annual rate:	$18,324.36
Weekly rate:	$352.39

1. The wife’s details will be irrelevant in relation to both assessments because the disregarded income amount will be $1,000.00 more than her child support income amount in each case.

“Otherwise Proper” – s.117(5)

1. I have had regard to the factors set out in s.117(5) and conclude that the orders that I propose to make are otherwise proper.

2. I am aware that the Court must follow the three step process described in Gyselman in respect of each year for which a departure order is sought. In the circumstances of the present case, however, the evidence does not reveal that any significant distinction should be drawn between the two assessments. Relevantly, none of the evidence relating to any of the three steps in the Gyselman process is any different when applied to each of the two assessment periods — and neither party sought to draw any relevant distinction between those periods.

School Fees

1. The orders sought by the wife in relation to the payment of school fees fall within Division 5 (Orders for Provision of Child Support otherwise than in Form of Periodic Amounts Paid to Carer) of the Assessment Act. Section 121 of the Assessment Act provides that additional particular objects of Division 5 include ensuring:

   b)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

   c)that parents share equitably in the support of their children.

2. The wife’s application for orders in relation to the payment of school fees is made pursuant to section 123 of the Assessment Act. Before determining her application, in this regard the Court was obliged to determine the issue of periodic child support. This has been done.

3. Section 124(1)(b) of the Assessment Act provides that the Court may make an order for child support otherwise than in the form of periodic amounts paid to the carer where it is satisfied that it would be:

   a)just and equitable as regards to the child, the carer entitled to child support and the liable parent; and

   b)otherwise proper,

   to make the relevant order.

4. Section 124(2) provides that, in determining the application, the Court must have regard to:

   a)the administrative assessment which is currently in force;

   b)any order in force under Division 4; and

   c)whether the applicant is in receipt of an income tested pension, allowance or benefit (and certain matters consequent thereupon).

5. Section 124(2) states that there is a further matter to which the Court must have regard in determining the wife’s application, but it is not presently relevant.

6. Sections 124(3) and (4) refer the Court back to the relevant provisions of section 117 to guide it in determining whether the “just and equitable” and “otherwise proper” tests have been met. Section 124(5), however, states that sub-sections (2), (3) and (4) do not limit the matters to which the Court may have regard.

7. Section 125 obligates the court — where it is minded to make an appropriate order under section 123 and section 124 — to state in the order whether the child support is to be credited against the liable parent’s liability under any relevant administrative assessment.

8. Section 126 of the Assessment Act deals with the Court’s obligation to give reasons for any orders that it may make under section 124 (or statements included in the order under section 125).

9. I have discussed the issue of school fees earlier in these Reasons. I am well aware that B has attended Carey since Prep and that he is progressing well at the school. I am also aware that it would be impractical and inconvenient to remove him from Carey at this stage. Nevertheless, I find that B is not being educated in the manner which was expected by both his parents. The husband has never agreed to B attending Carey (although he has not opposed the child attending the school – provided that he does not have to meet the costs associated with his attendance). Further, there are no reasons relating to B’s welfare which would dictate that he should attend Carey rather than some other (non-private) school.

10. I have already noted that the mere fact that the husband might be able to afford the fees is not, in itself, a reason for imposing such a liability upon him.

11. The evidence reveals that the wife has been able to meet the fees associates with B’s education at Carey to date (notwithstanding the fact that she has often failed to receive appropriate child support payments from the husband). The payment by the husband of appropriate child support (in accordance with the orders that I propose to make) will considerably ease the financial burden that the wife presently carries, and will “free up” funds that the wife would otherwise have had to use to meet B’s day to day (non educational) expenses.

“Budget Standard” or BSU Approach to Child Support

1. The husband’s second affidavit (sworn 31 October 2003) comprises a lengthy submission intended to persuade the Court to adopt what the husband describes as the “BSU” or “Budget Standards” method of ascertaining the costs of maintaining the children.

2. The husband’s submission is a florid, almost incomprehensible polemic, and I do not propose to waste time dealing with it.

3. In any event, the husband’s submission was rejected by Rimmer FM in Swiatek (2003) FMCAfam 301, and by Warnick J (on appeal from her Honour) in Swiatek (2003) FamCA 1133.

4. In paragraph 79 of the first instance decision in Swiatek, Rimmer FM said:

   In summary, the Federal Government of Australia has set out a system of child support assessment which meets the object of that Act.  That is, that it will provide to the parties a formula for calculating child support payable by parents and that it will do so to ensure, where possible, an equitable share of the resources and the income and property interests of parties, taking into account their responsibility to support themselves and also their necessary commitments for others they have a duty to maintain.  That thereafter it will be easily ascertainable for both of the parties and those separating parents in Australia to be able to have determined issues of child support without resort to Court proceedings.

5. Suffice it to say that I am not persuaded that the formula – which is an integral part of the child support scheme established by Parliament – should be abandoned in the circumstances of this case. The financial circumstances of the parties are such as to enable their affairs to be comfortably brought within the purview of the formula, and, in reality, the only “special circumstance” applicable to these parties – leaving aside the issue of the need for child support to be capitalised and paid in lump sum – is the fact that neither party has been open and frank in relation to his/her income and financial position generally.

Lump Sum Child Support

1. The mother seeks a lump sum payment of child support pursuant to ss.123 and 124 of the Child Support (Assessment) Act 1989.

2. In R & R (No.1) (2002) FMCAfam 153, the Chief Federal Magistrate explained the law relating to lump sum child support as follows:

   68.Section 123(1) of the Act provides that application may be made to a Court exercising jurisdiction under the Act for an order that the liable parent provide child support otherwise than in the form of periodic amounts paid to the carer.

   69.Before the Court can make an order for substituted support, the Court is required by section 124(1)(b) to be satisfied that it would be just and equitable as regards the child, the carer entitled to Child Support and the liable parent, and otherwise proper to make such an order. The Court is required to have regard to the matters contained in section 124(2) and in determining whether it is “just and equitable” or “otherwise proper” the Court must have regard to the matters contained in subsections 117(4), (5), (6), (7) and (8) of the Act. The Court is not limited by those factors alone (see section 124(5)) which suggests that the Court has a wide discretion in determining the application.

   70.The Full Court of the Family Court of Australia in Prpic v Prpic (1995) FLC 92-574 at 81,688 said:

   “Capitilisation orders may well be appropriate where there are difficulties in enforcement or where it is proper to sever the financial link between the parties.  However, as a general rule, given that payments of child support depend upon circumstances prevailing from time to time, which circumstances cannot be predicted with any significant degree of certainty, it seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised                   where there are circumstances that make it appropriate to do so.  We would endorse the observations of Mushin J in Bendeich (1993) FLC 92-355 at 79,954 where His Honour said:

   ‘The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater chance of change in circumstances necessitating a variation of that order, thereby making the order unjust.  Those                   changed circumstances might be in relation to the liable parent, custodial parent or the children.  Incomes may increase or decrease and the children may change their living arrangements from one parent to another’

   71.It is clear that I have discretion to order a lump sum subject to being satisfied as to the matters which I have identified in the Act, but it is also clear that I must exercise that discretion only when there are circumstances which make it appropriate to do so and that normally it is preferable for periodic support to be paid. 

3. In my opinion, the following matters are relevant to the exercise of my discretion:

   a)I have made findings regarding the husband’s credibility and his failure to make full and frank disclosure of all relevant aspects of his financial position. The husband has had significant funds invested in his name (or otherwise available to him – including in the form of cash). Notwithstanding that fact, the husband did not voluntary meet his obligations (or, at least, the entirety of his obligations in relation to child support).

   b)There exists a very long history of litigation between these parties – particularly in relation to the issue of child support. The husband is, I find, a determined, intelligent and resourceful person, and any decision on the part of the court to leave future child support assessments in the hands of the Child Support Agency will lead – as night follows day – to further objections, reviews, and (ultimately) litigation.

   c)I find that the husband is likely to manipulate his financial affairs to the extent that he is able to do so, to ensure that his assessed child support is as low as possible – or, alternatively, that it will be as difficult as possible for the Child Support Agency to enforce the payment of any relevant assessment. I refer in this regard, and by way of example only, to the husband’s evidence regarding his decision to cease using cheques.

   d)The husband has a deep seated and long established antipathy to and disdain for the Child Support Agency, and is unlikely to cooperate with it in any meaningful way.

4. In all the circumstances of the present case, I am of the view that it is appropriate to order that child support be capitalised with effect from 31 December 2003 and paid in a lump sum.

5. On the basis of the findings that I have made in these Reasons the husband’s child support obligation for the period following 31 December 2003 would be as follows:

Husband’s child support income amount: (being the maximum possible child support income)	$119,470.00
Exempted income amount:	$12,315.00
Adjusted income amount:	$107,155.00
Child support percentage:	18%
Annual rate:	$19,287.90
Weekly rate:	$370.92

1. I record that I obtained the above figures (for the payer’s income cap and the exempted income amount) from the Child Support Agency web site, and I am prepared to review them if counsel submits that they are inaccurate.

Capitalisation - Calculation

1. B was born on 7 September 1989. He will turn 18 on 7 December 2007.

2. The second child support assessment ended on 31 December 2003. The period from 1 January 2004 to 7 September 2007 is 3 years and 250 days, or approximately 3.7 years.

3. Counsel for the wife submitted that the 3% discount scale should be employed to calculate the present value of a relevant weekly sum until B attains the age of 18 years.[6] Counsel for the husband did not argue to the contrary. According to the CCH Australian Family Law Child Support Handbook, the 3% “multiplier” relevant to a period of 3 years is 148.66. The 3% “multiplier” relevant to a 4 year period is 195.32. The difference between the two multipliers is 46.66 – 70% of which is 32.66.

   [6] See Barrell Insurance Pty Ltd v Pennant Hills Restaurant Limited (1981) 34 ALR 162, Tadorovic v Waller (1981) 37 ALR 481 and Racine v Hemnett (1982) 7 FamLR 716.

4. If 32.66 is added to 148.66 (being the 3% “multiplier” for a 3 year period), then it is possible to determine an appropriate “multiplier” for a period of 3.7 years. The total of 148.66 and 32.66 is 181.32.

5. I intend to use 181.32 as the appropriate “multiplier” for a period of 3.7 years. If, as is my view, an appropriate quantum of child support payable by the father (as at 1 January 2004) is $370.92, then the present value of that periodic sum for 3.7 years (being the period from 1 January 2004 until B attains the age of 18 years) is $67,255.21, which I shall round down to $67,250.00. Subject to the other considerations that I must take into account, I propose to order that the husband pay lump sum child support relating to the period January 2004 until B attains the age of 18 years fixed in the sum of $67,250.00, and that such lump sum is to count for 100% of the child support that would otherwise have been payable by the husband under any relevant child support assessments during that period.

6. Before making the lump sum order, the court is required by s.124(3) to be satisfied that it would be just and equitable with regard to the child, the carer entitled to child support and the liable parent. A lump sum is appropriate for the reasons that I have already outlined. I find that it is the only way that the wife is likely to receive appropriate child support. The husband has a significant excess of assets over liabilities, and he is involved in a business which has the capacity to generate significant income. I am not satisfied that the husband has made full and frank disclosure of his financial position. He should not be permitted to hide behind his conduct in that regard in order to avoid the making of an appropriate order for child support. Whatever the husband’s financial position may be in reality, I have no doubt that he has the ability to obtain the funds necessary to pay the wife the child support that I have determined is appropriate. It is a matter for the husband as to how he decides to arrange his financial affairs, but his obligation to pay child support must take precedence over other commitments beyond those which are set out in the legislation.

7. The court is also required to consider whether it would be “otherwise proper” to make an order for a lump sum payment. I take into account the fact that it is the parents of B themselves who have the primary duty to maintain him. The wife is not in receipt of an income tested pension, allowance, or benefit. In all the circumstances, I am satisfied that the order I propose is “otherwise proper”.

8. Section 125 of the Assessment Act directs the court to state in the (lump sum substitution) order whether the child support ordered to be provided by the husband is to be credited against his liability under any administrative assessment that may apply to the period (or a part of the period) for which the order has effect. As foreshadowed earlier, my intention is that the lump sum is to represent the whole of the husband’s child support liability to the wife for B for the period from 1 January 2004 until B attains the age of 18 years. It follows that the lump sum is to account for 100% of the annual rate of child support payable under all relevant assessments for the period from 1 January 2004 until the date upon which B attains the age of 18 years.

General Observation on Proposed Child Support Orders

1. I am well aware that I have not dealt (in detail) with certain issues, such as an analysis of the commitments of each of the parties that are necessary to enable them to support themselves. I have made no attempt to apportion what might be considered the overall cost of maintaining B between the parties. I have not embarked upon these exercises because, in my opinion, it is unnecessary and inappropriate for me to do so. I have elected to determine – as best I am able – the husband’s relevant child support income (and that of the wife) and to allow the child support formula to then take its course. I have chosen this approach because its effect is to maintain the integrity of the child support scheme in its broadest sense.

2. I fully understand that “the longer a lump sum order operates, the greater the chance of circumstances necessitating a variation of that order, thereby making the order unjust”.[7] A lump sum award of maintenance or child support prevents account being taken on a regular, periodic basis – of “the vicissitudes of life”.[8] But, as ordinarily undesirable as order for lump sum child support may be, such orders can (and should) be made in appropriate circumstances. I regard the circumstances of this case as justifying the making of an order for lump sum child support. Unfortunately, I cannot trust the husband to meet his obligations in relation to the payment of periodic child support at an appropriate rate, and the on-going disputes between the parties as to the appropriate quantum of child support (involving considerable time, effort and expense — not to mention stress and anxiety – for all relevant parties) lead me to conclude that it is proper to sever the financial relationship between them to the extent that I am able to do so.

   [7] See Bendeich (1993) FLC 92-355.

   [8] See Vaughan (1981) 7 FamLR 379 and Anast & Anastopoulos (1981) 7 FamLR 728.

Effect of Orders

1. I am aware that the effect of the orders that I propose to make will be to create "instant arrears" of child support, as it were. I am satisfied, however, that the husband earned enough (or, alternatively, had practical access to funds that would have enabled him) to have paid the level of child support that I have found to be proper and appropriate. As a consequence of his conduct of failing or refusing to pay child support at such a level, the wife has clearly incurred a financial detriment.

2. In my opinion, the husband has not been motivated to pay child support at an appropriate level. He gave it a very low priority.

3. I am satisfied (for the reasons which I have expressed) that the husband has sufficient assets available to him to meet the obligations which will flow from the orders which I am about to make.

Arrears

1. Argument took place during the trial regarding arrears of child support for the period 1 July 1995 to 1 January 2002 (being the period covered by the Agreement) and for the periods covered by the two child support assessments (being 2 January 2002 to 30 September 2002 and 1 October 2002 to 31 December 2003). Having regard to the fact that the trial was concluded some months ago, and to the fact that I have made orders which have the effect of varying the quantum of child support payable pursuant to the two assessments, I do not propose to fix relevant arrears in this judgment. In order to assist the parties, however, I make the following findings:

   a)The total amount of child support payable pursuant to the Agreement (that is, for the period 1 July 1995 to 1 January 2002) was $38,914.00.[9]

   b)The total amount of child support payable by the husband for the period covered by the first assessment (being 2 January 2002 to 30 September 2002) is $13,072.32 (being 272 days at the daily rate of $48.06);

   c)The total amount of child support payable in respect of the second assessment (relating to the period 1 October 2002 to 31 December 2003) is $22,941.40 (being 457 days at a daily rate of $50.20).

   The daily rates referred to in (b) and (c) above are calculated with reference to the annual rate of child support that I have determined is appropriate for the relevant periods.

   [9] And I note that this figure was confirmed by Counsel for the husband at the conclusion of the trial.

Orders

1. I propose to make orders to the following effect:

   a)There be a departure from the administrative assessment of child support payable by the husband for the period 2 January 2002 to 30 September 2002 as follows:

   i)by attributing to the husband a child support income amount of $108,732.00 (or such other figure as shall equate to the maximum possible child support income); and

   ii)by attributing to the wife a child support income amount of $32,717.00 (or such other amount as shall equate to the disregarded income amount for that period, less $1,000.00);

   b)There be a departure from the administrative assessment of child support payable by the husband for the period 1 October 2002 to 31 December 2003 as follows:

   i)by attributing to the husband a child support income amount of $113,542.00 (or such other sum as shall equate to the maximum possible child support income); and

   ii)by attributing to the wife a child support income amount of $34,012.00 (or such other sum as shall equate to the disregarded income amount for that period, less the sum of $1,000.00).

   c)The husband do provide child support to the wife for the child B for the period from 1 January 2004 to 7 September 2007 otherwise than in the form of periodic amounts payable to the wife – such child support to comprise a lump sum payment by the husband to the wife of $67,250.00.

   d)The father do pay to the wife the said sum of $67,250.00 referred to in (c) above on or before 5 November 2004.

   e)The order referred to (c) above is an order in Section 124 of the Child Support (Assessment) Act 1989, and all child support to be provided by the husband pursuant to it is to be credited against the husband’s liability under all administrative assessments of child support payable by the husband to the wife that relate to the whole or any part of the period referred to in the said order, and is to count for 100% of the annual rate of child support payable under the said administrative assessments.

   f)The parties’ applications otherwise be dismissed (save in relation to the issue of arrears brought about by the terms of these orders, or otherwise).

2. I shall now hear Counsel regarding the precise terms of the orders necessary to give effect to this judgment.

I, Paul O’Halloran, certify that the preceding one hundred and fifty-five (155) paragraphs are a true copy of the Reasons for Judgment of Walters FM

Associate: 

Date:  29 October 2004