Wibert and Maxwell
[2008] FMCAfam 216
•14 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WIBERT & MAXWELL | [2008] FMCAfam 216 |
| CHILD SUPPORT – Administrative assessment – departure order application – assessment not in evidence – failure to make full and frank disclosure. |
| Child Support (Assessment) Act, 1989 (Cth) ss.117, 118 Federal Magistrates Court Rules, 2001 (Cth) r. 25A.03(a)(i) |
| Black v Kellner (1992) FLC 92-287 K & M [2007] FMCAfam 524 |
| Applicant: | MR WIBERT |
| Respondent: | MS MAXWELL |
| File Number: | SYC 1201 of 2007 |
| Judgment of: | Lucev FM |
| Hearing date: | 26 November 2007 |
| Date of Last Submission: | 26 November 2007 |
| Delivered at: | Sydney (by Scarlett FM by telephone) |
| Delivered on: | 14 March 2008 |
REPRESENTATION
| Applicant: | In Person |
| Respondent: | In Person |
ORDERS
The Application is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Wibert & Maxwell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 1201 of 2007
| MR WIBERT |
Applicant
And
| MS MAXWELL |
Respondent
REASONS FOR JUDGMENT
Application
On 16 July 2007 the Father filed an application[1] for a child support departure order under s.117 of the Child Support (Assessment) Act, 1989 (Cth).[2] The Child Support Registrar’s decision identified in the application for the departure order is a decision dated 19 June 2007.[3]
[1] “Departure Application”
[2] “Assessment Act”.
[3] “CSR Decision”.
Grounds for departure and orders sought
The grounds for departure in the Departure Application are essentially that in the special circumstances of the case the administrative assessment of child support was unjust and inequitable.[4]
[4] Assessment Act s.117(2)(c).
Attached to the Departure Application is a summary of the orders sought as follows:
“In accordance with the Child Support (Assessment) Act 1989 – Sec 118 (a), I seek an order to vary the rate of Child Support for the relevant period, to be reduced to ‘nil’, or dramatically reduced and based upon my taxable income only. Any other ruling contrary to this would see me suffer extreme and lasting hardship.”
CSR Decision
Rule 25A.03(a)(i) of the Federal Magistrates Court Rules, 2001 (Cth)[5] requires that a copy of any assessment relevant to the application made by the Child Support Registrar be attached to the affidavit that an applicant must file. Reflecting this, the form for a departure application provides that an applicant “attach copies of all relevant Child Support Agency decisions”.[6]
[5] “FMC Rules”.
[6] See the Departure Application, page 1.
The Father has sworn an affidavit dated 4 July 2007 (and filed 16 July 2007) in support of the Departure Application.[7]
[7] “Father’s Affidavit”.
The Father also filed a sworn financial statement (again dated 4 July 2007 and filed 16 July 2007).[8]
[8] “Father’s Financial Statement”.
The CSR Decision identified in the Departure Application is not attached to the Father’s Affidavit, Father’s Financial Statement or the Departure Application.
The Father has therefore failed to put in evidence the CSR Decision in respect of which the Departure Application is made. Without the CSR Decision there is no evidence of it or the assessment made. In those circumstances the Departure Application must be dismissed.
CSR Decision – some evidence
Even if the CSR Decision were in evidence the Court would dismiss the Departure Application for reasons set out in more detail below.
From 21 June 2007 the Father paid $26.67 child support for two successive months: June and July 2007.[9] That followed what the evidence indicates was a re-assessment to “26 bucks - $27 a month”[10] which is consistent with the Departure Application being in relation to the CSR Decision which, according to the Departure Application, was made on 19 June 2007.
[9] The Father made other payments of $53.34 in September and October 2007, and $30.00 in November 2007. The evidence does not disclose why these greater amounts were paid.
[10] Transcript at 12.
The Court therefore proposes to assume that there was an assessment for a sum of $26.67 a month, and deal with the Departure Application as if the evidence related to an assessment of that amount in the CSR Decision.
Father’s Affidavit
Financial information
In the Father’s Affidavit he indicates that:
a)he has a house on which he had received an offer of $350,000.00 but the sale did not proceed;
b)he owes $213,000.00 to Liberty Financial;
c)his “shop” has “outstanding bills” in excess of $100,000.00 (this being a reference to his business J Pty Ltd);[11]
d)he owes his father $30,000.00 from his property settlement with the Mother;
e)he owes $23,000.00 to the Australian Taxation Office (but says that this arises from an incident whereby the Mother wrote herself a cheque for $30,000.00 from his then business account).[12]
[11] “Business”.
[12] Father’s Affidavit, paras. 4-5 and Annexure B.
The Father says that he is not working in the Business to make money but to ensure that he does not lose what he has already put into the Business or his house. He says that he is “paid a pittance” from the Business because the Business needs to pay its creditors and to ensure that he does not lose his house or go bankrupt. This statement supports a conclusion reached below[13] that the Father has not made full disclosure about his income and the source of payments for the mortgage on his house.
[13] See para 36(d) below.
The Father says that his earning capacity is that shown on his tax return.[14] The annexed payment summary for the year ending 30 June 2006 shows that the Business paid the Father a gross sum of $12,592.00, from which tax of $1,439.00 was withheld.[15]
[14] Father’s Affidavit, para 7.
[15] Father’s Affidavit, Annexure C.
The Father asserts that his “house is little more than a shack with much work needed to be done on the inside and the outside” and that the verandah was blown down last year and has remained that way “due to lack of financial recourses.”[16]
[16] Father’s Affidavit, para 8.
The Father says his house is heavily mortgaged, including a loan for the Business, to a total of some $213,000.00.[17] He further says that the Business has to pay creditors, the landlord, utilities, insurance and maintain a loan, and that the commitments of the Business are paid first to ensure that they are not defaulted on, and there is therefore very little left over once those commitments have been met.[18]
[17] Father’s Affidavit, para 8.
[18] Father’s Affidavit, paras 8-9.
The Father says that as a consequence of the last quarterly Business Activity Statement filed by the Business a return was received.
The Father does not say for which quarter this was. However, he points out that it meant that the Business spent more than it sold.[19]
[19] Father’s Affidavit, para 11.
The Father says that he has not been able to afford a solicitor as he cannot borrow money.[20]
[20] Father’s Affidavit, para 12.
The Father asserts that he is “financially embarrassed.”[21]
[21] Father’s Affidavit, para 13.
Annexure B to the Father’s Affidavit is an Aged Payables Summary for the Business. The Summary shows that there are aged payables due of some $117,730.94. Of that sum $79,635.54 is more than 90 days outstanding. The Business has rent outstanding of $17,792.18, and although the Aged Payables Summary shows the total sum being 90 days plus, other documentation contained in Annexure B appears to indicate that the total sum owing to the landlord (R.O.) which is more than 90 days outstanding is in fact only $8,980.85. In the Court’s view that discrepancy must cast some doubt on the accuracy of the Aged Payables Summary.
Also contained as part of Annexure B are the following:
a)a letter of demand on behalf of Wattyl Australia Pty Ltd for $9,873.42 dated 21 September 2006;
b)an account from the Australian Taxation Office indicating a total amount of tax owing (including general interest charges for overdue amounts) of $21,703.06, dated 2 August 2006;
c)a statement from Duralex Paints Pty Ltd with a current balance of $69,715.39, dated 31 May 2007, but broken down as follows:
i)current - $12,316.40;
ii)30 days - $17,810.46;
iii)60 days - $13,722.77; and
iv)90 days - $25,865.76,
which differs from the Aged Payables Summary which says that $56,095.09 is outstanding to Duralex Paints for 90 days plus. Again, that discrepancy must cast some doubt on the accuracy of the Aged Payables Summary;
d)
a loan statement from Liberty Financial Pty Ltd with an end date of 31 December 2006 showing a current debit balance of $214,089.89, but also showing that the opening balance was $215,000.00 as at 1 July 2006, and that the Father had paid $910.11 off the total of the loan during the 6 month period from
1 July 2006 to 15 December 2006, and had been making regular monthly payments by direct debit for sums between $1,531.38 and $1,606.20; and
e)a rates and charges notice form the C Council for a residential rural property (which the evidence indicates is the property on which the house stands)[22] for $1,591.78 based on a valuation amount of $101,000.00 for a property of 4.239 hectares.
[22] Transcript at 18.
Child Support Decision
In the Father’s Affidavit he criticises the decision made by the Child Support Agency in relation to increased child support in May 2005 as not reflecting his earning capacity, property or financial resources.[23]
It is unclear why this is done given that the CSR Decision the subject of the Departure Application is one dated 19 June 2007.
[23] Father’s Affidavit, para 6.
Financial Statement
The summary in the Father’s Financial Statement indicates that the Father:
a)has total average weekly income of $240.00;
b)total personal expenditure of $69.00 per week;
c)owns property to the total value of $11,000.00;
d)has superannuation with a gross value of $30,000.00;
e)has liabilities of $349,000.00; and
f)has no financial resources.[24]
[24] Father’s Financial Statement, Part B.
However, later in the Financial Statement the Father indicates that he has a share in his current house to the value of $169,000.00.[25]
[25] Father’s Financial Statement, Part I.
Although the Father estimates his liabilities at $349,000.00 in the summary of the Financial Statement the liabilities specified in the Financial Statement indicates that his liabilities are as follows:
a)assessed income tax unpaid estimated at $23,000.00; and
b)other personal business liabilities (specified as tax, business loans and creditors) of $349.00.[26]
Therefore, the total of liabilities is $223,349.00 (or thereabouts).
If, however, the figure of “$349.00” is meant to be “$349,000.00” (as it probably is) then the total of the liabilities should be $372,000.00.
[26] Father’s Financial Statement, Part K.
However, the Father has not indicated that there are any liabilities for his house mortgage or any other mortgages. Furthermore, it appears that the figure of $349.00 ($349,000.00) insofar as it relates to “tax” might overlap with the estimate of $23,000.00 in unpaid tax, and, given the omission of any sum for a house mortgage it is not possible to ascertain if this is a correct estimate of the Father’s total personal and business liabilities.
Father’s cross-examination
The Mother cross-examined the Father on the Father’s Affidavit and the Father’s Financial Statement. In an effective cross-examination the Father:
a)was evasive about his earnings and taxable income;[27]
[27] Transcript at 5-6.
b)admitted that he was being paid $240.00 a week net, and not gross as he had claimed, from the Business;[28]
[28] Transcript at 6.
c)admitted that he was not the sole shareholder in the Company, and that he had a business partner;[29]
[29] Transcript at 6.
d)said that he was responsible for all of the debt in the Business (i.e. that his business partner had no liability for any of the debts of the Business);[30]
[30] Transcript at 7.
e)admitted that he had given positive projections to a bank concerning the Business when seeking loans;[31]
[31] Transcript at 7.
f)admitted to having a poor memory;[32]
[32] Transcript at 7.
g)said did not know how much he had paid in child support over the last five years;[33]
[33] Transcript at 8-9.
h)tried to justify a figure of $169,000.00 as his current share of the value of the house on the basis that it was mortgaged;[34]
i)admitted failure to disclose the balance of his Commonwealth bank account (which he then proceeded to say ranged from minus $20.00 to $200.00);[35]
j)admitted failure to declare his interest in the Company or the Business (and hence there is no value ascribed to the Business);[36]
k)admitted failure to include the amounts he had been paying in child support since June 2007;[37]
l)admitted failure to disclose significant other expenditure for items such as food, household supplies, electricity, telephone, dental, medical and hairdressing;[38]
m)claimed the Financial Statement form was “absolutely ridiculous”;[39]
n)said he had no idea what the exact amount of his liabilities was;[40]
o)said that a significant number of the aged payables in Annexure B to the Father’s Affidavit had since been paid;[41]
p)said he did not know how far the Business was now behind in the payment of rent;[42]
q)indicated that “we” pay the monthly repayments on a $214,000.00 loan from Liberty Financial, without indicating who “we” were.[43]
[34] Transcript at 9.
[35] Transcript at 9.
[36] Transcript at 9-10
[37] Transcript at 10.
[38] Transcript at 12-13.
[39] Transcript at 13.
[40] Transcript at 15.
[41] Transcript at 15.
[42] Transcript at 16.
[43] Transcript at 17.
In response to questions from the Court during cross-examination the Father:
a)did not directly answer the suggestion that it was wrong of him to say that he had forgotten to fill out that part of the Financial Statement asking whether he had an interest in a business when he had in fact written “NIL” as the answer to the question;[44] and
b)said the amount of the repayments on the Liberty Financial loan had recently increased.[45]
[44] Transcript at 10.
[45] Transcript at 17.
The overall impression that the Father conveyed in cross-examination was that he was not prepared to fully disclose his financial circumstances and that he did not care if his answers were argumentative, vague or misleading.
Mother’s Affidavit – 26 November 2007
The Mother says that she has complete financial responsibility for the Children.[46] She says that the last regular Child Support payment that she received from the Father was on 28 February 2000 for an amount of $1,000.00 (which was the then usual payment per month).[47] Since an administrative assessment of child support in the amount of $100.00 per week in May 2005 the Mother says that the Father has not once made payment of that amount, and that in the 12 months prior to hearing he made 6 payments as follows:
a)16 May 2007 - $108.00
b)21 June 2007 - $26.67
c)23 July 2007 - $26.67
d)17 September 2007 - $53.34
e)15 October 2007 - $53.34
f)20 November 2007 - $30.00.
The total is $298.02. [48]
[46] Mother’s Affidavit, para.3.
[47] Mother’s Affidavit, para. 5.
[48] Mother’s Affidavit, para 9.
The Mother says that the payments only commenced in May 2007 following the Father being contacted by solicitors for the Child Support Agency with respect to proceedings to collect outstanding Child Support payments.[49]
[49] Mother’s Affidavit, para 10.
The Mother details criticisms of the Father’s Financial Summary.[50]
[50] Mother’s Affidavit, para 14.
Of those criticisms the Court considers that the following are valid:
a)that the Father claims his usual occupation is a sales assistant. The Mother says that he operates the Business;
b)the Father misstates his weekly taxation at $20.00 when based on the last tax return supplied the amount is $27.00 per week;
c)although $19.00 per week is listed for superannuation there are no details of the relevant superannuation plan;
d)no mortgage payments are included in personal expenditure;
e)that the Father provides no detail of child support that he ought to be paying;
f)that the total of all other expenditure is left blank, and the Mother suggests that that is simply not possible;
g)the value of the Father’s home is given as $169,000.00 (actually said to be his current share in the value of the home), whereas a sale of his property has just fallen through at $350,000.00[51] and that the Father owes $213,000.00 to Liberty Financial which the Mother suggests must be secured over an asset of similar value;
[51] Father’s Affidavit, para 4.
h)no details are given of a current balance for the Father’s bank accounts;
i)that the Father has been dishonest in listing his interests in a business as “NIL” when he part owns the Business;
j)that the total value of the property owned by the Father should be at least $361,000.00 without bank accounts and a valuation of the Business;
k)that the Father has not noted his income for the 2006 – 2007 financial year, leaving that space blank;
l)the estimate of $23,000.00 owing to the Australian Taxation Office is inconsistent with annexure B of the Father’s Affidavit which shows a total $21,703.60 owing, but as at 2 August 2006, and the Mother suggests that a more current figure should have been available to the Father;
m)
the Father claims that he has no personal loan, however he provides a loan statement from Liberty Financial dated
31 December 2006 in his name for which the average monthly payment for the 6 months to the end of 2006 was approximately $1,600.00;
n)there is no proof of current outstanding creditors; and
o)the Father has not completed the list of average weekly expenses, and the Mother attaches a copy of the Father’s claim of expenses sworn on 13 February 2004 which itemises food, utilities, telephone and motor vehicle expenses totalling $163.50 per week.[52]
[52] Mother’s Affidavit, Annexure C.
Almost all of these issues were matters which the Mother raised in cross-examination.
Full and frank disclosure
The Father’s Financial Statement is in the usual form, and therefore contains the following provisions:
“(a) I have read Rule 24.03 and I am aware that by law I have an obligation to make a full and frank disclosure of my financial circumstances to the Court and each other party. In particular, I have disclosed in this document or in an affidavit filed by me or on my behalf under Rule 24.02(1)(b) all matters I am required to disclosed under Rule 24.03 …
(a)I have no income, property or financial resources other than as set out in this document or any affidavit filed by me under Rule 24.02(1)(b).”
In Black v Kellner[53] the Full Court of the Family Court of Australia discussed the fundamental nature of the obligation of full and frank disclosure, and the Full Court’s observations are apposite here, but need not be quoted or repeated at length. In short, the obligation amounts to “show and tell” not “hide and seek”.[54]
[53] (1992) FLC 92-287.
[54] K & M [2007] FMCAfam 524 at para 13 per Lucev FM.
It is readily apparent in the Court’s view from the material set out above[55] that the Father has not made full and frank financial disclosure. Some other examples reinforce that view:
a)there is no valuation of the Business or his share in it;
b)there is no information on the revenue of the Business;
c)there is no profit and loss statement provided for the Business; and
d)repayments of approximately $1600 a month (or approximately $19,200.00 a year) are being made on the Liberty Financial loan, which is more than one and a half times what the Father says his taxable income is, and even if some of this amount is for repayment of a portion of business loans it appears likely that that part which is personal (that is, mortgage payments on the house) has not been included by the Father in his personal income.
[55] See paras 24-28 and 32 above.
The Father’s failure to made full and frank financial disclosure is such that even if the relevant child support assessments were in evidence the Court would still have dismissed the Departure Application because it would, through the Father’s fault, not have been in a position to properly deal with the Departure Application.
Conclusion
The Departure Application will be dismissed.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: Rachel Peattie
Date: 14 March 2008
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