YATHOPOULOS & KOMINE
[2015] FCCA 687
•26 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| YATHOPOULOS & KOMINE | [2015] FCCA 687 |
| Catchwords: FAMILY LAW – Whether father contravened parenting orders without reasonable excuse – whether father should be fined/mother compensated. |
| Legislation: Family Law Act 1975, Part VII Division 13A, ss.70NAD(b), 65N, 70NAC, 70NAE, 70NAE(2), 65DAC, subdivisions E and F of Part VII, Div.13A, 70NEB, 70NAF, 70NEC, 70NFB(2), 70NEB(1) Child Support (Assessment) Act 1989, ss.117, 117(1)(b), 117(2), 117(4), 117(2)(c)(ia)(ib), 117(5), 117(5)(b), 141 |
| Gyselman and Gyselman [1991] FamCA 93 RJL v WJF (2004) FMCAfam 627 Cottle & Cottle [2005] FMCAfam 185 DJM & JLM [1998] FamCA 97 Spinks and Spinks [2001] FamCA 197 Skinner and Cluny [2013] FamCA 301 Mathieson & Hamilton [2006] FMCAfam 238 Yathopoulos & Komine & Anor [2013] FCCA 267 |
| Applicant: | MR YATHOPOULOS |
| Respondent: | MS KOMINE |
| File Number: | MLC 13656 of 2007 |
| Judgment of: | Judge Jones |
| Hearing date: | 17 September 2014 |
| Date of Last Submission: | 12 November 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 26 March 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Tatti |
| Solicitors for the Applicant: | WMB Lawyers |
| Counsel for the Respondent: | Mr Henenberg |
| Solicitors for the Respondent: | Barry B Moshel Solicitors |
THE COURT DECLARES THAT
The applicant father is guilty of counts 1, 2 and 4 of the contravention application filed on 17 July 2013 without reasonable excuse being proven.
THE COURT ORDERS THAT
All arrears of child support payable by the Applicant, Mr Yathopoulos to the Respondent Ms Komine for the child, X born (omitted) 2001 pursuant to the Order made by the Federal Magistrates Court on 2 November 2009 accrued up to the date of this new order be discharged in full.
The Order made on 2 November 2009 be discharged.
Otherwise, all extant applications be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Yathopoulos & Komine is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 13656 of 2007
| MR YATHOPOULOS |
Applicant
And
| MS KOMINE |
Respondent
REASONS FOR JUDGMENT
Introduction and Background
This decision concerns applications made by Mr Yathopoulos (“the father”) and Ms Komine (“the mother”) as follows:
a)orders are sought by both parties pursuant to the Child Support (Assessment) Act 1989 (Cth) (“the CSA Act”);
b)the father seeks an order from the Court pursuant to the Family Law Act 1975 (Cth) (“the Act”) that he be permitted to obtain a passport for a daughter of their relationship, Y without the consent of the mother (“the passport order”);
c)the mother has filed a contravention application and seeks a fine or an order of compensation pursuant to Division 13A of the Act in respect of the alleged contraventions.
The mother has informed the Court, in her written submissions that, as Y is shortly to turn 18 years of age, she does not oppose the passport order sought by the father. As Y is now 18 years of age it is unnecessary for an order to be made.
By way of background, the parties commenced cohabitation in (omitted) 1993 and were married on (omitted) 1995. They separated on (omitted) 2003 and divorced on 26 November 2004. There are two daughters of the relationship:
a)Y (“Y”) born (omitted) 1997; and
b)X (“X”) born (omitted) 2001.
Following separation both daughters resided with the mother. On 19 April 2010 consent parenting orders were made which provided that the parties have shared parental responsibility for Y and X, that Y live with the father and X live with the mother. The orders provided that the mother spend time and communicate with Y by mutual agreement between them. The orders provided that the father spend time and communicate with X during school term each alternate week from Saturday to the commencement of school on Monday and in the other week, overnight each Thursday; and for half school holidays.
The mother has remarried and she and her husband have two young children. The father has re-married and he and his wife, Ms S have two young children.
History of Proceedings
By consent, a Departure Order was made pursuant to section 117 of the CSA Act on 2 November 2009. Paragraph 2(a) provided that the annual rate of child support payable by the father be set at $13,000 per child being the equivalent of $500 per week and that the amount in respect of each of the children was $250 per week for Y and $250 per week for X. This amount was under paragraph 2(b) to be adjusted annually on 1 July each year in accordance with movements in the Consumer Price Index.
On 20 December 2012, the Child Support Agency issued a Departure Prohibition Order (“the DPO”) in respect of a child support debt. The arrears in child support payments commenced on 22 August 2012 [1] when the father ceased paying child support payments altogether. On 21 December 2012 the father filed an application seeking a variation of the amount of child support payable, the discharge of his child support debt and for a stay order in respect of the DPO pursuant to section 111C of the Child Support (Registration and Collection) Act 1988. The application for a stay of the DPO was dismissed by her Honour Judge Whelan on 20 May 2013[2]. Her Honour noted that, in his affidavit filed on 1 May 2013, the father deposed to his financial difficulties and the necessity for him to travel to (country omitted) where his business suppliers are located to salvage the financial viability of his businesses. Her Honour stated:
7. “The Applicant sought a Departure Authorisation Certificate from the CSA, which was denied on 29 April 2013.
8.From the material before the Court, the Applicant currently has a child support debt of $10,575.00 and owes an amount (including penalties) of $10,937.46 (certificate under s.116(2) of the Act). He has a history of being in arrears with his child support payments.[3] Two previous DPO’s have been made against the Applicant, both of which were discharged when the Applicant was able to make lump sum payments.
9. The Applicant deposes to being currently unemployed and according to his financial statement (of 21 December 2012) he has no income. He deposed to owning no property and to owing $200,000.00.”
[1] Mother’s affidavit filed 9 July 2013, Exhibit K13.
[2] Yathopoulos and Komine & Anor [2013] FCCA 267
[3] Exhibit R2-1.
Her Honour declined to issue the stay order on the basis that the evidence before the Court was not sufficient to satisfy her that there was a sufficient likelihood of success to justify the Departure Order sought by the father, his evidence for travelling to (country omitted) (where his wife’s family reside) had changed and was vague and that, given the father’s financial circumstances, he posed a flight risk. Consequently, even if the Court was satisfied there was a serious question to be tried the balance of convenience did not favour the order sought[4].
[4] Yathopoulos and Komine [40] to [45], [47] to [52].
On 9 July 2013, the father filed an amended initiating application seeking orders that:
a)the orders made on 2 November 2009 be varied to reduce the amount of child support payable by the father;
b)the amount of child support currently owed by the father to the mother be wholly discharged, or in the alternative, varied;
c)he be permitted to apply for an Australian passport for the child Y born on (omitted) 1997 without the need for the consent of the mother.
On 17 July 2013, the mother filed her response in which she sought that the father’s application be dismissed and that he pay child support as a lump sum payment of $102,992 in respect of X. She also filed, on that same day, an Application in a Case seeking an order that the father pay security for costs pursuant to section 117(2) of the Act together with a contravention application alleging contraventions by the father during 2012 of consent orders made on 19 April 2010 (“2010 Orders”).
On 3 October 2013, the mother filed a further Application in a Case seeking the following orders:
a)that pursuant to section 111(1) of the CSA Act, the Court grant leave to her, being a carer entitled to the child support for the Court to make an order under section 118 in respect of a child-support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made;
b)that pursuant to section 112(2) of the CSA Act, the Court grant leave for an order to be made under section 118 at the same time as it hears this application under section 111, and that the mother is taken to have made an application to the Court under section 116(1)(b);
c)the Court set aside notations in the Final Order of the Federal Magistrates Court dated 19 April 2010 referring to the child-support interim order of the Federal Magistrates Court dated 5 November 2009;
d)that the amount of child support be increased to reflect the recently discovered undisclosed financial resources of the father;
e)that the father pay the applicant mother the costs of these proceedings.
The mother filed a further Application in a Case on 19 February 2014 seeking an order that the net proceeds of sale of a property owned by Ms S be frozen pending a determination of the substantive proceedings in relation to departure orders. An Amended Application in a Case was filed by the mother on 10 September 2014 seeking orders that Ms S be joined as a party to these proceedings and that from the net proceeds of the sale of that property, the sum of $160,000 be held on trust pending the determination of these proceedings and that the father pay the mothers costs incidental to these proceedings. On 17 September 2014, an order was made, inter-alia, that until further order, Ms S be joined as a party to these proceedings and that the mother’s Amended Application in a Case be listed for interim hearing on 3 December 2014. On 3 December 2014, I dismissed the Application in a Case made on 19 February 2014 and the Amended Application in a Case filed on 10 September 2014 with a right of reinstatement and ordered that Ms S notify the mother of the outcome of proceedings being heard in the County Court in relation to the property the subject of the mother’s Amended Application in a Case.
Hearings were conducted during the course of 2014 for the purpose of adducing evidence in relation to the applications for Departure Orders, a passport order and the contravention application. Written submissions and submissions in reply were then filed by the parties in relation to their respective applications.
Departure orders and Discharge of Arrears
The father seeks orders that:
a)the Departure Order made by the Court on 2 November 2009 be discharged;
b)pursuant to section 118 of the CSA Act the annual rate of child support for the child X born (omitted) 2001 be reduced to Nil;
c)pursuant to section 118 of the CSA Act the amount owing by him to the mother in child-support arrears be discharged.
The father relies on his affidavits filed on 1 May 2013, 14 June 2013, 3 October 2013, 6 February 2014 and a Financial Statement sworn by him and filed on 21 December 2012.
The mother seeks orders that:
a)the father contravened paragraphs 2.1, 2.2 and 12 of the Final Orders of the Court made on 19 April 2010 without reasonable excuse;
b)the father be fined for contravening the consent parenting orders made on 19 April 2010[5]. I note here that, although the word “fine” is used by the mother, in her written submission the mother seeks compensation for anguish and emotional pain and the time, effort and expense incurred as a consequence of the alleged contraventions;[6]
c)leave be granted to the mother to apply under section 118 of the CSA Act for an increase in the child support annual rate as determined in the Departure Order dated 9 November 2009 for X born (omitted) 2001;
d)The father pay the mothers solicitors, the sum of $119, 563.73 to be held on trust in the parties’ names as trustees upon trust to:
i)Firstly, to pay the Child Support Agency on a monthly basis, the amount due for X pursuant to the Departure Order dated 2 November 2009 in addition to any additional amount as determined by the Court;
ii)Secondly, unless otherwise ordered by a Court exercising jurisdiction under the Act, disburse any monies then remaining:
i.i) firstly, in payment of outstanding fees to the Child Support Agency; and
i.ii) secondly, any balance then remaining to the father.
[5] Respondent’s Final Submission at[1(a)].
[6] Ibid at [33].
The mother relies on her affidavits filed on 9 July 2013, 17 September 2013 and 3 October 2013. The mother states in her written submission that she also relies upon contemporaneous notes taken during Court hearings by Mr Philip Henenberg, her solicitor. However, as those notes are not before the Court in a proper form, I fail to see how these can form a basis for her evidentiary material.
The mother also relied on the following Exhibit, M1 – (omitted) Casino, player rating transactions, 1 January 2012 to 31 January 2014; W2 – (omitted) Casino and W1– (omitted) DVD, (omitted) Casino, November 2013.
The Legislation
Section 117 of the Child Support Assessment Act (“CSA Act”) sets out the circumstances in which a Court may make a departure order:
(1)Where:
(a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b)the court is satisfied:
(i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B)otherwise proper;
to make a particular order under this Division;
the court may make the order.
The Full Court of the Family Court in Gyselman and Gyselman [1991] FamCA 93 at paragraph [34], held that there is a three-stage process in the Court determining whether or not a Departure Order ought to be made under the CSA Act:
The structure of that section is that 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (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.
If so:
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
The father, in this case relies on s.117(2)(c)(ia) and (ib) of the CSA Act. In the alternative, he also relies on section 117(2)(a).
Sections 117(2)(c)(ia) and (ib) of the Assessment Act provide:
Grounds for departure order
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
…
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of the child; or
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or …
In order to consider a person's income, earning capacity and property and financial resources there is an onus upon them to produce to the Court the relevant documents and material to enable a proper assessment to be made or run the risk of an inference being drawn against them to the effect that a failure to produce such material was because the material would not have been likely to assist them.
Evidence and Submissions
The father submits that since the making of the 2009 Departure Order his financial circumstances and his family’s have seriously altered to their detriment such that in the special circumstances of this case, the failure to discharge the arrears in child-support and to vary the 2009 Departure Order to a Nil assessment would result in an unjust and inequitable financial support to be provided by him.
The father’s evidence is that historically he has derived his income from the companies of which he has been both Director and Shareholder, supplemented by income derived from his winnings from gambling at casinos.
(omitted) Business
The evidence is that his business activities have been conducted through the auspices of (omitted) Business, a (omitted) retail business. It appears that the parties established this business, with both the father and mother being directors of (omitted) Business, the main trading company. Following separation, the mother resigned as director and subsequently, the father’s current wife, Ms S, became involved in the business as director and shareholder of the various corporate activities. It appears that, following the involvement of his current wife, a complex corporate structure was established under which interrelated companies, with the father and the current wife as sole directors and shareholders, were incorporated with later changes in their business names. During this period, the father and his current wife opened various retail outlets. The father deposes to the following stores from which the (omitted) Business traded over the years:[7]
[7] Father's affidavit filed 3 October 2013 at [45].
a)two stores in (omitted) Shopping Centre, (omitted);
b)(omitted) Shopping Centre;
c)(omitted) Shopping Centre;
d)(omitted) Shopping Centre;
e)(omitted) Shopping Centre;
f)two stores in (omitted) Shopping Centre;
g)(omitted) Land (sic);
h)(omitted) Shopping Centre, in New South Wales.
The father deposes that the stores historically did very well, however, this changed dramatically for various reasons, including the increased popularity of online shopping. He says that the only stores which remain in operation are one (omitted) store, the (omitted) store, the (omitted) store and the (omitted) store, although some will close when the leases expire. His evidence is that each of these premises are operated by (omitted) Pty Ltd (formerly (omitted) Business). On–line sales for (omitted) Business businesses are now conducted through this company. His wife, Ms S, is the director of this company.[8]
[8] Father's affidavit filed 3 October 2013 [48] and [65].
(omitted) Business became (omitted) Business. The father was director and shareholder until 2000, whereupon his wife became director and shareholder. In September 2012, she resigned as director and the father was appointed as sole director. On 5 October 2012, (omitted) Pty Ltd was placed into Administration and a Deed of Company Arrangement passed at a creditors meeting.[9]
[9] Father's affidavit filed 14 June 2013, Exhibits Y-03 and Y-04.
The company’s tax returns and financial statements record for the year ending 2008 an operating loss of $140,979 and for the year ending 2009, an operating loss of $59,438. Salary and wages expenses for the year ended 2008 are recorded as $428,747 and for the year ending 2009 as $386,792. Consultancy fees are minimal for both years. Liability exceeds assets in the year ending 2008 in the amount of $1,063,546 and in the year ending 2009 in the amount of $1,122,984. A loan from the (omitted) Company represents more than half of the non-current liabilities for each of those years.[10]
[10] Father's affidavit filed 24 February 2014, Exhibits Y-63 and Y-64.
A company tax return for the year ending 2011 records an operating loss of $179,338. Financial statements for the year ending 30 June 2011, record an operating loss in 2010 of $78,634 and a loss in 2011 of $179,338. Expenditure on salaries and wages in the year ending 2010 is recorded as $147,717 and in the year ending 2011 as Nil. Consultancy fees for both years are minimal. In the year ending 2010, the deficit in equity is recorded as $1,201,618 and in the year ending 2011 as $1,380,956. In 2010 a loan from (omitted) Company represents around half the current liability, In the year 2011 a loan from the (omitted) Company and the (omitted) Bank represents around half of the current liability.[11]
[11] Father's affidavit filed 24 February 2014, Exhibits Y-65 to Y-68.
Financial statements for the year ending 30 June 2010 record a operating loss of $59,438 for the year ending 2009 and $78,634 for the year ending 2010. Salaries and wages are recorded as $386,792 for the year ending 2009 and $147,717 for the year ending 2010. In the year ending 2009, the deficit in equity is recorded as $1,122,984 and in the year ending 2010, as $1,201,618. In each of those years a loan from (omitted) Company represents more than half of the non-current liabilities.[12]
[12] Ibid, Exhibits Y-69 and Y – 70.
Ms S’s evidence was that:
a)the father did not earn money from her businesses. Consultancy fees were not paid to him. She could not remember who the fees were paid to;
b)although her aunties and uncles worked for the (omitted) Company, no relative had an interest in the ownership of that company. She said that there was no pressure from the company to repay the loan;
c)the salary and wages increased as a consequence of their decision to open a number of stores but this decision did not work out.
The father deposed that the reasons for placing the company into administration were its substantial debts and its involvement in two litigations. The first instituted by (omitted) Company and (omitted) Pty Ltd, in relation to a claimed debt of $290,382[13] and the, second, instituted by (omitted) Pty Ltd for $27,999.40.[14]
[13] Father's affidavit filed 14 June 2013, Exhibits Y-05 and Y-06.
[14] Father's affidavit filed 14 June 2013, Exhibits Y-05 and Y-07.
In a report to the Australian Securities and Investments Commission prepared and signed by the father on 9 October 2012, he identified the remaining unsecured creditors as himself (in the amount of $24,553), Ms S (in the amount of $36,852), (omitted) Company (in the amount of $1,135,514), (omitted) Business (in the amount of $5,000) and (omitted) Business in (the amount of $5,008).[15]
[15] Ibid, Exhibits Y-05
Mr R was appointed as administrator pursuant to the Corporations Act. On 1 November 2012, Mr R provided a written report (“the first report”) to creditors pursuant to section 439A of the Corporations Act[16]. An updated report was provided by Mr R on 22 November 2012.[17] Annexure A to the first report[18] discloses the numerous retail premises from which the company traded, whose leases were not renewed over the period 2009 to 2010. The father estimates that the company traded at up to 12 locations during its history. He deposes that the company has been locked out of or surrendered the deeds to various premises at locations in Victoria and New South Wales.
[16] Ibid, Exhibits Y-03
[17] Ibid, Exhibits Y-04
[18] Ibid, Exhibits Y-03
The first report identifies net trading losses for the company in the year ending 30 June 2010 at $78,634 and in the financial year ending 30 June 2011 at a $125,028. The report further identifies a deficiency in equity for the year ending 30 June 2010 in the amount of $1,201,618 and for the year ending 30 June 2011 in the amount of $1,326,646.[19] I note that in the updated report, Mr R identified a material issue being whether (omitted) Business, Limited, a creditor claiming an amount of $1,135,514, is related for the purposes of section 600A of the Corporations Act. Mr R noted that the lawyers for the company had advised that (omitted) Business is not related. Mr R, however, stated he was unable to reach a concluded view as to whether (omitted) Business is related creditor.[20]
[19] Ibid, Exhibits Y-03, pages 5 to 6, Exhibit Y-09
[20] Ibid, Exhibits Y-04.
(omitted) Business was placed into liquidation by order of the Supreme Court in late 2012.[21]
[21] Ibid, Exhibits Y-08.
The father’s evidence is that he is also director and shareholder of the following companies:
a)(omitted) Business, formerly known as (omitted) Business and (omitted) Business. (omitted) Business is trustee for (business omitted) Trust (t/a (omitted) Business). He has produced profit and loss statements which disclose that for the year ending 30 June 2010 the operating loss was $46,975 and for the year ending 30 June 2011 the operating loss was $681,140. The deficit in equity of the company increased from $46,875 for the year ending 30 June 2010 to $728,015 for the year ending 30 June 2011.[22] The profit and loss statement for the year ending 30 June 2012 discloses a loss of $48,590.03.[23] Wages and salaries for that financial year were $581,228.87. A statutory demand was sent by the Australian Tax Office (“ATO”) on 22 May 2013 in respect of the debt of $160,053.86.[24] There is a demand dated 7 June 2013 for the payment of arrears in rent in the amount of $155,661.27 for premises in (omitted) Shopping Centre, New South Wales. The demand notes that Ms S is the guarantor.[25] The father has produced penalty notices issued by the ATO to him as director of the company in respect of PAYG withholding amounts from 1 June 2011 through to 30 June 2012.[26]
b)A.C.N 106 267 645 Pty Ltd (formerly (omitted) Business) which the father deposes does not presently trade and has no assets. He deposes that the company has recently been served with a notice from the ATO notifying of their intention to commence debt recovery proceedings for an amount of $41,672.33;[27]
c)(omitted) Business and (omitted) Business. Additional tax information for 2011 for the (business omitted) Trust disclosing a net business income loss of $681,140, a depreciation schedule for (business omitted) Trust for 2011, financial statements for (business omitted) Trust for the year ending 30 June 2010 and 30 June 2011 disclosing an operating loss for the year ending 2010 of $46,975 and a negative equity of $46,875; and an operating loss for the year ending 2011 of $681,140 and a negative equity of $728,115.[28] On 14 June 2013, the local Court of New South Wales gave judgment against (omitted) Business in favour of (omitted) Business in the amount of $31,753.59. The father deposes this order remains outstanding.[29] (omitted) Business has served a creditors statutory demand for payment of said debt pursuant to the Corporations Law;[30]
d)(business omitted) Holding Trust;
e)(omitted) Business;
f)(omitted) business.
[22] Ibid, Exhibits Y-10.
[23] Father's affidavit filed 24 February 2014, Exhibit Y-41.
[24] Father's affidavit filed 14 June 2013, Exhibits Y-12.
[25] Father's affidavit filed 14 June 2013, Exhibits Y-14.
[26] Father's affidavit filed 14 June 2013, Exhibits Y-19.
[27] Ibid at [62].
[28] Father’s Affidavit filed 24 February 2014 Exhibits Y44 to Y-46.
[29] Father's affidavit filed 3 October 2013, Exhibit Y-29.
[30] Ibid, Exhibit Y-30.
The father produced financial statements for (business omitted) Holding Trust, (omitted) Business and (omitted) Business including:
a)the profit and loss statement of (business omitted) Holding Trust for the period July 2012 to June 2013 which records a net loss of $30,248.47 and a negative equity of $34,281.78;[31]
b)the ATO tax agent portal for (omitted) Business dated 9 December 2013 recording quarterly activity statements for the years ending June 2013, 2012, 2011 and 2010.[32]
c)copies of activity statements for the period from 1 July 2011 to 31 December 2012 recorded on the ATO tax agent portal for (omitted) Business on 20 December 2013;[33]
d)Trust tax return for (omitted) Business for 2011 which record for the year ending 2011 a net loss of $681,140.[34]
[31] Father's affidavit filed 24 February 2014, Exhibit Y-39.
[32] Ibid Exhibit Y-40.
[33] Ibid Exhibit Y-42.
[34] Ibid Exhibit Y-43
The father produced the following financial statements for (omitted) Business:[35]
a)company tax returns for the years 2011 and 2012 recording a taxable income of Nil and a loss in 2010 of $11,257;
b)balance sheet as at 30 June 2011 and 30 June 2012 recording net negative equity of $33,663;
c)rental property statement, profit and loss statement and balance sheet for the year ending 30 June 2010;
[35] Ibid Exhibits Y-50 to Y-56
The father produced the following financial statements for (omitted) Business:[36]
a)copies of the ATO agent portal dated 9 December 2013, being the activity statement for the company from July 2012 to September 2012 recording Nil sales;
b)income tax return for (omitted) Business for the year ended 30 June 2012 recording a loss of approximately $20,009;
c)financial statement for (omitted) Business for the year ending 2012 recording an operating loss for the year 2011 in the amount of $28,208 and for the year ending 2012 in the amount of $20,009 as well as a deficit in equity for the year ending 2011 in the amount of $48,720 and for the year ending 2012 in the amount of $68,729; and
d)company tax return and financial statements for (omitted) Business recording an operating loss for the year ended 2010 in the amount of $20,502 and for the year ending 2011 in the amount of $28,218, as well as in negative equity for the year ending 2010 in the amount of $20,501 and for the year ending 2011 in the amount of $48,720.
[36] Ibid Exhibits Y-57 to Y-59 and Y-62.
The father deposes that his wife is a director of the following companies which he says are also in financial difficulties:[37]
a)(omitted) Business;
b)(omitted) Business;
c)(omitted) Business;
d)(omitted) Business;
e)(omitted) Business; and
f)(omitted) Business (formerly (omitted) Business).
[37] Father's affidavit filed 3 October 2013 at [63]:
The father deposes that other than (omitted) Business, none of these companies are trading. He deposes that (omitted) Business has been locked out of a premise in (omitted) Shopping Centre by (omitted) Property Group because of unpaid arrears.[38] He deposes that this company is behind in payment for supplies and other bills and is on the brink of insolvency.[39]
[38] Father's affidavit filed 14 June 2013 at [30], Exhibits Y-15.
[39] Father's affidavit filed 3 October 2013 at [68]
Ms S’s evidence was that:
a)her businesses stopped making profits a long time ago;
b)the (omitted) Business store had been transferred to a person called Mr M but she did not know when;
c)she never derived a salary from her businesses. The office accountant would, after business expenses were paid, pay the family’s bills and give her some cash. This happened weekly or fortnightly.
The father has produced copies of Default/Demand notices from the (omitted) Bank addressed to:[40]
a)Ms S, (omitted) Business and (omitted) Business dated 6 January 2014;
b)(omitted) Business dated 23 January 2014 in respect of a guarantee given to secure loans to (omitted) Business;
c)(omitted) Business dated 23 January 2014 in respect of a guarantee given to secure loans to (omitted) Business;
d)(omitted) Business dated 19 November 2013 for the amount of $1,420,628.53 as guarantor for a home loan in the name of Ms S.
[40] Father’s affidavit filed 24 February 2014, Exhibits Y-71 to Y-75.
The father has produced copies of Default/Demand notices from (omitted) Bank to (omitted) Business as trustee for the (business omitted) Holding Trust dated 20 November 2012 and 24 December 2013.[41]
[41] Ibid Y-75 and Y-76
The father and his wife’s evidence is that the (omitted) and (omitted) motor vehicles were leased by his wife’s businesses, (omitted) Business and (omitted) Business,[42] in 2009. He says that the (omitted) vehicle has been re-possessed and the (omitted) vehicle is shortly to be re-possessed.[43] The evidence is that only the husband drove both vehicles as the wife does not drive.
[42] Ibid Y-76
[43] Transcript of Proceedings, 6 February 2014, T40.
The father deposes that, as a consequence of the “dire financial circumstances of the business” and the fact that his wife has acted as guarantor for his businesses, she has been forced to sell all three properties she owns on the market for sale in an attempt to pay out company debts for which both are liable due to guarantees executed by each of them. These properties are Property M Victoria (the residential home), Property S, Victoria and Property W, Victoria.[44]
[44] Father's affidavit filed 14 June 2013, at [36] to [37].
The property at Property S, Victoria was sold on 19 May 2013, and settled on 2 September 2013. The purchase price was $1,808,000 and from the net proceeds of sale an amount of $1,592,761 was paid to the (omitted) Bank to discharge the mortgage, and a further amount of around $43,644.74 to discharge debts to the Council, South East Water, the State Revenue Office and the wife’s solicitors.[45]
[45] Father's affidavit filed 24 February 2014, Exhibits Y-35 and Y-36.
The property at Property W, Victoria was sold on 18 and July 2013 and settled on 29 November 2013. The purchase price was $1,500,000 and at settlement $1,332,226 35 was paid to the (omitted) Bank to discharge the mortgage.[46]
[46] Ibid, Exhibits Y-37 and Y -38.
Presently, the wife is engaged in litigation in relation to a default judgment made by the County Court for possession of the residential home by the mortgagor, the (omitted) Bank.[47] Her evidence is that she will, nevertheless, have to sell the house. The outstanding mortgage to the (omitted) Bank is around $2.8 million and a number of creditors have placed caveats on title to the property.[48]
[47] Father's affidavit filed 24 July 2014, Exhibit Y-80.
[48] Father's affidavit filed 24 July 2014, Exhibit Y -78 and Y -79.
The father deposes that upon the sale of the residential home he anticipates that he, his wife, their two children and Y are likely to reside in his mother’s garage as there is no money to pay rent.[49]
[49] Father's affidavit filed 3 October 2013 at [82].
In his affidavit filed in 14 June 2013, he deposed to various demands being made against him personally. He has subsequently been declared bankrupt on 31 March 2014. On 2 July 2014, a sequestration order was made against the father’s estate. He deposes that he is unemployed, on Centrelink benefits and that although he assists his wife in the running of her businesses given his experience, he is not employed.[50] He deposes that (omitted) Business does not generate sufficient income to pay his wife wages and that he and his wife rely on loans from her parents to survive, to buy food and other living expenses.[51]
[50] Father's affidavit filed 3 October 2013 at [48].
[51] Ibid at [49].
The father submits that he and the mother each share responsibility for one daughter from the marriage and that the mother and her husband are healthy, educated individuals who are capable of working.
The father submits that the financial evidence before the Court is uncontested and ought to be accepted. He submits that the financial documents produced to the Court in relation to the father’s companies support a conclusion that none of the companies show a profit and all show significant liabilities. Further, numerous demands have been made of the father in his capacity as guarantor and from creditors. In addition, demands have been made by the ATO utilising its powers under law to transfer the debts of a company to an individual. The father has been declared bankrupt and the fact he is in dire financial circumstances with outstanding debts which will not be paid is evidenced by the sequestration order and the satisfaction of the Court that he has committed at least one act of insolvency.
The father submits the resources available to him, being assets owned by his current wife, have either:
a)in the case of corporate entities, no capacity or limited capacity to generate income;
b)in the case of real property, either been sold to pay debts owing to the (omitted) Bank, or going to be sold to do the same.
The father submits that in the context of the three steps required by Gyslemen, the most important issue for the Court to consider is the present financial circumstances of the father. He submits that he has no funds, assets or financial resources available and no income which allows him to pay child support.
The mother’s case is that the father has had and continues to have access to undisclosed financial resources. She claims this can be inferred from:
a)the establishment of a complex corporate structure, with interrelated companies of whom the father and his current wife are directors;
b)the failure of the current wife to properly explain, or explain at all, the financial matters of the companies of which she is director and shareholder; and
c)the failure of the father to provide full and frank disclosure.
The mother also claims that the father’s access to undisclosed financial resources is evidenced by his significant gambling activities since 2009 and ongoing, together with his luxurious lifestyle he enjoyed during the relevant period including prestige motor cars and extensive travel.
The mother accepted that she was unable to challenge the content of the various company tax returns and financial statements as she was not privy to the operation of those companies and the accounting methods used. She did say, with some perspicacity, that these figures did not disclose the whole picture because in her experience in the (omitted) industry there is a lot of cash in hand. I say with some perspicacity because Ms S’s evidence is that she receives amounts in cash from her businesses and that she (with assistance from her father) pays for all the family’s household expenditure.
The mother makes the following submissions with respect to the father’s evidence regarding his and his wife’s businesses:
a)the father failed to provide timely full and frank disclosure notwithstanding numerous requests by her solicitors for same. She argues the father’s explanation that his failure to make proper disclosure in a timely manner was due to the fact that he had no accountant or that he had not paid his accountant’s fees is not acceptable;
b)the manner in which the father produced documents to the mother was inconsistent with the concept of proper disclosure. In this, she refers to the fact that, in late December 2013 after her solicitor’s offices had been closed for the year, the father delivered 30 or so boxes of documents which were not indexed or organised in any fashion;
c)it took some three affidavits sworn by the father to provide, in appropriate form, financial documents relating to his companies;
d)in any event, the financial documentation produced, being the company tax returns and financial statements are not sufficient to provide an accurate picture of the father’s and his businesses’ financial circumstances. This is particularly so in circumstances where that information shows consistent losses across all the businesses and contradicts the maintenance by the father at the relevant time of a “luxurious lifestyle”.[52] In particular the mother submits:
“by not providing business activity statements that readily indicate the level of cash flow in the numerous retail outlets operated by the (omitted) Business Group over the previous years, the applicant has sought to alienate his personal services income by creating a complex corporate web within which to hide his real income.”[53]
e)the father’s evidence was that he could not assist with questions regarding the running of the businesses because, on the one hand there was nothing left in them and, on the other, he had given over the running of those businesses to his current wife;
f)his wife, Ms S’s, evidence in relation to the renaming and restructuring of the companies, the professional and administrative staff at the businesses, the operation of the businesses, financial documents relating to those businesses revealed a director completely unable to give any useful evidence with respect to any aspect of the operation of the companies or their finances or accounts.
[52] Respondent’s Submissions in Reply at [62].
[53] Respondent’s Submissions in Reply at[49].
The mother submits that this evidence together with the father’s repeated failures to make full and frank disclosure:
“… Leaves it open for the Court to draw the inference that the applicant has at all relevant times remained heavily involved in the running of the businesses, and further that the transfers of directorships to his current wife, the third respondent, of some 8 companies were a sham intended to obfuscate the true nature of the business, which was in fact operated by the applicant.”[54]
[54] Ibid at [45]
The mother relies on findings made by senior case officers of the Child Support Registrar regarding the complexity of his corporate structure, and the continued involvement of the father in the wife’s businesses.[55]
[55] Affidavit of the respondent filed 1 October 2013 at[40], [42] and [47] and Affidavit of the respondent filed 18 December 2007, Annexure A and B
The mother submits that the father’s claim that he is “effectively bankrupt” and cannot satisfy any portion of his outstanding child support debt, while having maintained a life of luxury until at least the end of 2013 is contradictory. The mother submits that it is clear from the evidence of lifestyle, overseas travel and gambling that the applicant does in fact have “more than what he says he has”.[56] The mother points to the failure of the father, despite numerous requests to:
a)provide any details of how he was provided with luxury motor vehicles;
b)provide any details about how he funded the millions of dollars spent on gambling and his overseas travel;
c)provide any details regarding loans or gifts made for his benefit.
[56] Respondent’s Submissions in Reply at [50]
The mother also points to the submissions of the Child Support Registrar, during proceedings in relation to the fathers application to stay the DPO. In particular at [43] of these submissions which refer to the father’s very frequent travel and states that, “the applicant has chosen to spend his money on travel rather than on the maintenance obligations owed towards his children.”
The mother submits that the passport of the applicant annexed as Y-07 in his affidavit sworn 14 June 2013 indicates that he travelled on each of the following years:
a)2007 to (country omitted);
b)2008 to (country omitted) and (country omitted);
c)2009 to (country omitted);
d)2010 to (country omitted);
e)2011 to (country omitted);
f)2012 to (country omitted).
The mother submits that the onus is not on her to identify the undisclosed financial resources and but rather on the father, by providing full and frank disclosure, to “paint the financial picture consistent with the life he has led during the period which the child assessment was made, which he now seeks to depart from.” [57] The mother submits that the father has failed to do this.
[57] Ibid at [68]
The mother submits that the father has failed to provide cogent evidence with respect to his income and earning capacity. She submits that he has provided no evidence that he has “attempted to earn an income based on his considerable experience in the (omitted) industry”. Nor, she argues, has he explained adequately the fact that his pursuits have involved extremely high expenses in excess of $3.8 million from the time of separation, of which $1.2 million was gambled from 2009 until January 2014, the period in which he seeks to depart from the child-support assessments. She submits that having regard to his age, status as remarried with young children of the new marriage and extensive business experience, it is highly probable that his future income earnings is substantial. She submits that this is a factor that weighs against the discharge of the child support debt, as it remains a real possibility that the debt can be satisfied in the future before X, who is 13 years old completes school.[58]
[58] Ibid at [the mother deposes that in January 2014, after the father ceased paying child support his wagering activity 82] to [83]
Finally, the mother submits that the evidence contained in the Annexures to her affidavit filed 10 September 2014, which discloses the father making a payment in 2007 of approximately $121,500 in cash as a deposit for the purchase of the property at Property M, was a payment made in the period for which the father now seeks to have the child support debt discharged.
She further maintains that, as a consequence of this transaction, the father holds a proprietary interest in the property of at least 5% of the value of the property, which was valued in 2010 at $3,250,000. His current proprietary interest would be, she says, at least $162,500 which is nearly 6 times the current child support debt. This proprietary interest is, she submits, another factor weighing against discharge of the father’s child support debt.
Gambling Income
The mother deposes that she was unaware of the extent of the father’s gambling activity until she was in a position to peruse subpoenaed documents from (omitted) Casino, (omitted) Casino and (omitted) Casino. As noted earlier, the mother claims that the father’s access to undisclosed financial resources is evidenced by his significant gambling activities since 2009 and ongoing. I consider here the evidence regarding the father’s gambling activities.
The mother subpoenaed records of the father’s gambling activity from (omitted) Casino, (omitted) Casino and (omitted) Casino copies of which she annexed respectively as K1, K2 and K3 to her affidavit filed 3 October 2013. Exhibit M1 also contains records of player transactions on the father’s (omitted) Casino membership card for the years 2012 to 2014.
The records produced by (omitted) Casino contained in Exhibit K2 and Exhibit M1 include a legend which relevantly provides that:
·Buyin - indicates the amount of cash and Chip Purchase Vouchers tendered by a player at a gaming table;
·Act/Win – indicates a player’s wins and losses. Where a figure is prefixed by a negative symbol, this indicates a win for the player. Any figure not prefixed indicates a win for (omitted) Casino.
The Yearly Transaction Reports for the years 2005 to 2014 record:
Year
Buyin
Act/Win
2005
$660,990
$110,994
2006
$236,240
$138,141
2007
$234,030
$153,801
2008
$466,955
$209,207
2009
$23,350
-$2,305
2010
$92,650
$56,421
2011
$511,230
$226,833
2012
$145,800
$122,328
2013
$15,340
$55,761
2014
$63,500
$9,512
The mother submitted that in January 2014, the father’s wagering activity at (omitted) casino was approximately $68,000.
The mother deposes that the father’s reported gambling expenditure (in the relevant period) at (omitted) Casino is $13,227 in 2009 and $62,208.80 in 2012. The player transaction record for 2009 shows that in 2009, a wager was made on 9 March 2009 and the father lost overall $1,345. The player transaction record for 2012 records wagers made over the period 29 March 2012 to 1 April 2012.
The mother deposes that the father’s reported gambling activity at (omitted) Casino in 2011 was $174,320.00. The record shows this gambling activity occurred over the period 18 January 2011 to 21 January 2011.
The mother relies on an investigation conducted by (omitted) Pty Ltd. Mr P, Director, deposed that he was engaged by the mother in November 2013 to conduct surveillance on the father. He deposed that the father was identified by information, including a photograph of the father provided by the client.[59] He and another investigator, Mr H conducted the investigation. He deposed that:[60]
·on 26 November 2013, the father departed his residence in a dark (omitted) vehicle arriving at (omitted) Casino;
·the father was observed to enter the casino and operate poker machines;
·a video recording was made of the father commencing at around 9.30pm for around 12 minutes and then resuming at 10.30pm for around 40 minutes; and
·the same (omitted) vehicle was seen and photographed in the casino car park at around 12.40am on 27 November 2013.
[59] Affidavit of Mr P filed 31 January 2014 at [5].
[60] Ibid at [13]-[29].
The DVD of the video recording made by (omitted) Pty Ltd was tendered and is Exhibit W1. Mr P gave evidence in cross-examination:
·The photograph provided to him by the mother was 10 years old;
·The video recording was made by Mr H in the (casino omitted). He was not in the (casino omitted) during the recording. Mr H showed him footage from the video. A still or photograph from the footage was sent by him to the mother, who then confirmed it was the father;
·He was not 100% certain that the person in the photograph and the father (who was present in the Court room) were the same people.
Mr H gave oral evidence and was cross-examined. Extracts of the DVD (W1) was shown immediately prior to his cross-examination. When asked whether the person in the photograph (taken from the DVD recording and sent to the father) and the father (sitting present in the Court room) were the same person, Mr H stated he could be 80% sure although not absolutely certain.
In response to the mother’s affidavit in which she deposed to the husband’s gambling activities, the father had this to say in his affidavit filed 3 October 2013 at [72] to [75]:
[72] I used to be a heavy gambler. I used to raise money without any issue for this.
[73] The money I won from gambling at the Casino was utilised to fund the business, pay my debts, and pay my child support. When I wasn’t winning, I would borrow more money without ability to pay it back.
[74] I owe money to people all around the world, and I cannot raise anything towards gambling whatsoever.
[75] Part of the gambling funds were used to pay the child support. Now, I can’t even raise one cent for gambling, and using gambling to pay child support is no longer an option. My financial circumstances are hard enough as it is, and I can’t afford to pay someone else, and now need financial support myself.
With respect to his gambling, the father gave the following evidence:
a)he had a heavy gambling problem. If he won he would apply the winnings to child support or to the business. For example, he says a loan from him to (omitted) Business in the amount of $24,553[61] is one such example.[62]
b)he had not gambled using his own money since the end of 2012. Initially, he took out an Exclusion Order which lasted until the end of 2013;
c)$145,800 gambling activity in 2012 reflected his gambling prior to the Exclusion Order;
d)he denied that he was the person recorded on video footage taken by investigators hired by the mother of a person gambling in the (casino omitted) of the (omitted) Casino;
e)the records produced by (omitted) Casino under subpoena which recorded activity on his (omitted) Casino membership card was not evidence that he was using his own money to gamble. He stated that, after the listing of the Exclusion Order, he regularly went to the gaming rooms at (omitted) Casino and gave his membership card to others to use so that he could earn points to allow him to retain access to the (casino omitted) and obtain certain benefits from (omitted) Casino, for example, redeem money and free meals.[63] He said this was standard practice at (omitted) Casino. He said he went almost every day to (omitted) Casino to do this because his only source of income was his Centrelink benefits;
f)after the lifting of the Exclusion Order he and his wife also attended the (casino omitted). They adopted a practice by which she would request International (country omitted) visitors to place bets on top of the bets they were making on their behalf. If there was a win, they retained the winning proportion of that bet. If there was a loss, his wife would inform the visitors to speak to her father, who resides in (country omitted). He said he went to the (casino omitted) twice a week or as much as possible.[64]
[61] Father’s Affidavit filed 24 February 2014, Exhibit Y-65.
[62] Transcript of proceedings 6 February 2014, T50.
[63] Ibid T26, T50-, T54 to T57.
[64] Ibid T61 to 64.
Ms S confirmed that recently, she and the father went to the (casino omitted) at the (omitted) Casino. She says she would ask (country omitted) visitors, whom she knew, to top up bets they were making. She would not give them her money to do this. If it proved a winning bet, she kept the winnings. If there was a loss, she would tell them to see her father. As far as she was aware, her father had not been required to cover any loss. She said she had been to the (casino omitted) around 10 times during January 2014.
The father submits with respect to the evidence regarding his alleged undisclosed financial resources from gambling as follows:[65]
[65] Applicant's Final Submissions at [21] to [24].
[21.] The only potential ‘source’ of funds which the Respondent was able to point to is what is said to be gambling the Applicant has engaged in. However, the Applicant submits as follows:
a.The Applicant has given evidence that he did in the past gamble significantly, and that he used those funds to pay child support;
b.The Respondent sought to rely on evidence given by two private investigators, both of whom were cross-examined, as to their purported video footage of the Applicant in the (omitted) at (omitted) Casino. Both conceded under cross-examination that they could not be certain the person on the footage was the Applicant. The Applicant invited each of them to look at the Applicant in Court, and compare to the footage. It is submitted that this is clearly not the Applicant;
c.The (omitted) casino records produced under subpoena indicate that the Applicant used his (omitted) Casino membership card during the period of arrears on numerous occasions, and records the dollar value of the same. The Applicant gave evidence that:
i. He did not use his own money;
ii. He gave his card to others to use so that he could earn points to allow him to obtain certain benefits from (omitted) Casino; and
iii. In the (casino omitted), he and his current Wife would ask persons to place bets for them using their own money.
d.In relation to the evidence in (c), no evidence produced by the Respondent contradicted the Applicant’s account; and
e.In any event, the Respondent has been unable to identify any source of funds, nor during cross-examination of the Applicant determine where any funds would be available. It is the Applicant’s submission that the documents produced and referred to above show the true position of the Applicant.
[22.] The observations made by the Trial judge, as extracted by the Full Court, In Marriage of Gilmour (1995) FLC 92-591 at 124 are apt. Following the Wife making submissions in that case that the husband must have had more funds than he had declared, His Honour found:
That may be the case and it may be that there are other areas of income which he has but, unfortunately, even though I may be bold, I am unable to point to anything where it could be suggested that Mr Gilmour has more than what he says he has.
[23.] The Full Court (Ellis, Finn and Maxwell JJ.) held on appeal (at 124):
In our view, his Honour was perfectly entitled to reach the conclusion which he did on the matter of the husband’s financial circumstances.
[24.] Essentially, it is a matter for the evidence, and the Applicant respectfully submits that the same conclusion is warranted here; despite thorough cross examination by the Respondent, there is no evidence which suggests that the Applicant has ‘more than what he says he has.’
The mother submits that the father’s explanation regarding the use of his (omitted) Casino membership by others and the placing of bets by his wife through (country omitted) patrons is implausible. She claims the wife and father’s evidence regarding the amount of times they went to the (casino omitted) was contradictory. Consequently, she submits the father’s explanation regarding the activity recorded on his (omitted) Casino membership card should be dismissed and the Court should find that he has gambled since the end of 2012 using money he has not disclosed.
Consideration
I turn now to consider the three steps as outlined in Gyslemen.
Is there one or more ground in s.117(2) which is established ?
In Gyslemen, the Court considered the meaning of special circumstances and stated (at [39]):
“Whilst it is not possible to define with precision the meaning of that term (‘special circumstance’), as a generality it is intended to emphasize 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. ... In Savery's case (1990) FLC ¶ 92-131 (p 77,897), Kay J ... said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
With respect to the question of the father’s earning capacity, I am also mindful of the comments of the Court in RJL v WJF (2004) FMCAfam 627, that:
78. The concept of “earning capacity” was discussed at length in DJM & JLM (1998) FLC 92-816, where the Full Court said (at page 85,272):
Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parents’ “capacity to provide financial support”.
Property adjustment orders have far less focus and are arrived at on the basis of what is “appropriate” after weighing up many competing factors. Spousal maintenance is governed by a test of what is proper and having regard to the reasonable ability of the liable spouse to meet the needs of the other.
In our view, there can be different answers to the same question about earning capacity – depending upon which head of power is sought to be exercised.
A judge might reasonably say that a parent should be working longer hours or in more lucrative employment to meet child support obligations. A spouse is only required to support the other spouse to the extent that he or she is reasonably able to do so. This requirement does not impute the same degree of compulsion about it that the child support and child maintenance tests express …
79. The Full Court (at para 17.37 of DJM v JLM) indicated that it was “most attracted” by the following tests of earning capacity, as “at least the minimum tests to be applied”. The tests derive from decisions of the Californian Court of Appeal in decisions referred to on page 85,271 of DJM v JLM:
Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good faith efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire…
When the ability to work or the opportunity to work is lacking, earning capacity is absent … When the payor is unwilling to pay and the other two factors are present, the Court may apply the earnings capacity standard to deter the shirking of one’s family obligations… A parent’s motivation for reducing available income is irrelevant when the ability and opportunity to adequately and reasonably provide for the child are present.
Once persons become parents, their desires for self-realisation, self-fulfilment, personal job satisfaction and other commendable goals must be considered in the context of their responsibilities to provide for their children’s reasonable needs. If they decide they wish to lead a simpler life, change professions or start a business, they may do so, but only when they satisfy their primary responsibly: providing for the adequate and reasonable needs of their children.
80. In a similar vein, the Full Court in Scott (1994) FLC 92-457 said[66]:
… Whilst … in some circumstances an unemployed parent without income may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his or her children, (it is not the case that) in all such circumstances, such a conclusion must or should be reached. If (there is) any principle of general application, it is only that being unemployed and without income is not of itself necessarily an answer by a parent to an application for child maintenance. The circumstances in which the parent became unemployed or without income, the reasons for it, the nature of his/her previous employment and the efforts (if any) which he or she has subsequently made to obtain employment are all relevant matters for consideration by the Court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity, a parent may be required to pay maintenance for his/her children if he/she has property or financial resources which are or ought reasonably to be available for that purpose.
It is ultimately a question of fact in each case, whether an unemployed parent without income or financial resources has any earning capacity, and if so, the extent of it. However, we are of the view that such an unemployed parent with no particular qualifications or skills for employment could not be held, at least in times of high unemployment … to have a current earning capacity sufficient to support an order for maintenance unless he/she has recently given up, without good reason, secure remunerative employment, or unless having become involuntarily employed he/she has made no reasonable efforts to obtain employment for at least a significant period of time.
81. Finally, in Scott v Stauder (unreported judgment delivered 20 November 1996), Kay J said that the passage from Scott referred to above –
… reads effectively that in some circumstances an under employed parent may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his children and that being under employed and without adequate income is not, of itself, necessarily an answer by a parent to an application for child maintenance.
82. Both Scott and Scott v Stauder predated the decision in DJM v JLM, and I note that Kay J was a member of the Full Court in the later case. It follows that the tests to which the Full Court was “most attracted” in DJM v JLM (see paragraph 80 above) are of more relevance, and are likely to provide a Court of first instance with clearer guidance, than the discussion of the subject contained in Scott and Scott v Stauder.
[66]At page 80,739.
The structure of these two subdivisions is such that the Court must decide whether subdivision E or F is the appropriate subdivision in the circumstances. Subdivision E applies where the person who has contravened an order without reasonable excuse has previously not had a sanction imposed on him or her for contravention of a parenting order or acted with serious disregard of that order: see s.70NEB. In considering whether to make certain orders under subdivision E or subdivision F, such as a bond , community service orders, fine or a sentence of imprisonment, I must be satisfied beyond reasonable doubt that the grounds for making the order exists: s.70NAF(3).
Where the Court is not satisfied that there has been serious disregard by a person of their obligations under a parenting order and a sanction has not previously been imposed, then the orders that can be made in less serious cases include:[75]
i)an order to attend a post-separation parenting program to better understand the obligations created by parenting orders;
ii)a bond under s.70NEC of the Act; and
iii)a costs order.
[75] Subdivision E, particularly s.70NEB of the Act.
Where the Court is satisfied that there has been serious disregard by a person of their obligations under a parenting order and a sanction has previously been imposed, then the orders that can be made include:[76]
i)a community service order;
ii)a bond;
iii)a fine not exceeding 60 penalty units;
iv)a sentence of imprisonment; or
v)a costs order;
[76] Subdivision F, particularly s.70NFB(2) of the Act.
In her submissions, the mother seeks an order of compensation pursuant to section (2)(f)(iii) and or (g) of s.70NFB of the Act. She seeks compensation for the following:[77]
a)Anguish and emotional pain suffered as a result of being denied the opportunity to exercise her shared parental responsibility as ordered by this Court;
b)Emotional pain upon learning that another person namely, Ms S, was assisted by the father to make out to (omitted) Grammar School and the (omitted) Cultural Exchange that she was either the parent or legal guardian of Y;
c)Time, effort and expense incurred in tracing her daughter overseas;
d)Time effort and expense in bringing the contravention application, where after a day of oral examination, the applicant admitted to three contraventions.
[77] Respondent’s Final Submission at [33].
In order to accede to the mothers application for orders, I need to be first satisfied whether the contraventions are most appropriately dealt with by way of subdivision E or subdivision F.
The father has not had a previous sanction imposed on him for failing to comply with a parenting order. I am not satisfied that the contraventions amounted to serious disregard of his obligations which arise from the provision of equal shared parental responsibility. The obligation imposed on the father (and the mother) is an obligation to communicate and consult not to refrain from making a decision about long term issues affecting the child. The father’s contravention was a failure to communicate and consult. This failure occurred in the context of a lack of communication between both parties over many years. The father’s actions were, in my view, ones of indifference rather than a serious disregard of his obligations. That is to say, I am satisfied that he intended for the mother to be aware of the issues affecting Y, in the sense that he did not intend to deliberately keep the mother “in the dark” but left it to Y to engage in the communication and consultation. While he is to be criticised for leaving it to his 15 year old daughter to communicate and consult with the mother, I am not satisfied in the circumstances that this reaches the standard of a serious disregard of his obligations.
I am satisfied that, if an order is to be made, it would more appropriately be made under subdivision E.
I further add that I agree with the father’s submission that the mother’s application for an order of compensation, whether it is made under subdivision E or F,[78] is misconceived as both of those sections concerning contraventions regarding the spending of times with a parent. Further, there is no evidence before the Court as to the calculation of the mothers emotional anguish or pain or her alleged efforts to trace where her daughter was.
[78] S.70NEB(1)(e) and s.70NFB(2)(f).
Finally, I note that the opening words of s.70NEB is expressed in permissive terms. That is that the Court may make any or all of the following orders. In the circumstances of this case I have considered whether, in my discretion, I should make any orders at all. I have decided that I should not for the following reasons:
a)The contraventions relate to the father’s obligation under an order to which provides for equal shared parental responsibility. An order that I make would of necessity be directed towards ensuring compliance with this obligation;
b)The contraventions occurred in 2012. The mother did not make her contravention application until 17 July 2013. The contravention applications were made in the course of lengthy child support proceedings, which were completed in late 2014;
c)Y will is now 18 years of age and completed Year 12 in 2014. It is futile to make an order directed to ensuring compliance with the 2010 Orders;
d)Given my findings in relation to the father’s application to discharge his child-support arrears and the departure order, particularly, having regard to the fact that he is a bankrupt, I am not satisfied that it would be appropriate to make an order that requires payment of money on his behalf. To do so would impose significant hurdles in terms of enforcement.
Both parties seek costs orders made against each other. Section 70NEB(1) relevantly provides that the court may make an order for costs as follows
(f) make an order that the person who committed the current contravention pay some or all of the costs of another party, or other parties, to the proceedings under this Division; and
(g) if the Court makes no other orders in relation to the current contravention--order that the person who brought the proceedings in relation to the current contravention pay some or all of the costs of the person who committed the current contravention.
I am not satisfied that I should award costs against either party. The father seeks costs be awarded on the basis that the mother did not seriously bring her application in that she failed to articulate, until her written submissions, the orders that she sought, that the order she sought of compensation was misconceived and finally, the father claims she made a contravention application responsive to the father’s child-support application and not earlier.
I reject the father’s submissions. The mother was entitled at all times to bring a contravention application and, in any event, the father admitted to the contraventions the mother pressed.
I am not satisfied that I should award costs against the father for the mothers’ contravention application. Although I have found that the father contravened order 2 of the orders made on 19 April 2010 I have made no further orders. The mother has provided no satisfactory explanation as to why she waited until July 2013 to make her contravention application. In those circumstances, I am not satisfied I should award any costs against the father.
Costs
In her written submissions the mother seeks that the father pay costs of these proceedings on an indemnity basis. The grounds in support of this application and statutory power to award costs were not addressed in any detail.
Section 117(1) of the Act provides for the general rule each party shall bear their own costs. S.117(2) provides that where the Court is of the opinion that there are circumstances that justifies doing so it may make such order as to costs as the Court considers just. S.117(2)(a) prescribes the matters that the Court must have regard to in considering what order (if any) should be made.
I am not satisfied that I should make any order for costs because:
a)the mother has been wholly unsuccessful in relation to the child support proceedings;
b)I am satisfied that the father ultimately made full and frank disclosure;
c)I am satisfied that both parties have contributed to the lengthy nature of the proceedings. Although the father may not have provided full and frank disclosure in a timely manner, this is not the only factor that has affected the course of the proceedings. Other factors, are the mother’s failure to respond to the father’s initiating application until the day the proceedings were first listed for final hearing and her contravention application made in June 2013;
d)I am satisfied that each party to the proceedings are in difficult financial circumstances.
Conclusion
For the reasons set out in my judgment make the orders above.
I certify that the preceding two hundred and fourteen (214) paragraphs are a true copy of the reasons for judgment of Judge Jones
Associate:
Date: 26 March 2015
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