Court Orders for Child Support Other than in Periodic Amounts: Payment of Child Support in a Lump Sum
By Ken McWhinney*
Part VII, Div 5 of the Child Support (Assessment) Act 1989 (Cth) (the Assessment Act) provides, upon application to the court by the carer entitled to child support or the liable parent, a mechanism for the payment of child support in a form other than by way of periodic amounts, such as a one-off payment or payment by way of transfer of property. There are two types of applications that can be made under s 123 of the Assessment Act, being non-periodic payment orders that either replace or supplement the periodic child support amounts payable (ss 123(1)(a) and 124), or an order that a lump sum paid be credited against the periodic amounts of child support payable (ss 123(1)(b) and 123A).
In exercising its powers under Pt VII of the Assessment Act, the court has broad powers (s 140A). Under s 141 these powers include: an order for payment of a lump sum; an order for periodic amounts; or an order for the transfer/settlement of property. The courts may order any amount they determine is appropriate and are not bound by the annual rate of child support payable.
An application for an order for payment of child support in a lump sum to replace the periodic amounts payable for a defined period (s 124) is the focus of this article.
Background
The overall comprehensiveness of the child support formula in the Assessment Act (centralised around both parents’ taxable income) means that most child support cases are assessed within that formulaic structure, for a periodic amount. The stated preference of the legislature is for child support to be paid in periodic amounts, as assessed from time to time. This position reflects the longer standing tradition in relation to both child and spousal maintenance (see, for example, In Marriage of Spano (1979) 5 Fam LR 506; [1979] FLC 90-707; In Marriage of Vartikian (No 2) (1984) 10 Fam LR 165; [1984] FLC 91-587; and In Marriage of Luckie (1989) 97 FLR 103; 13 Fam LR 223; [1989] FLC 92-036).
However, s 123(1)(a) allows for an application to be made to the court for an order that a liable parent provide child support in the form of a lump sum payment in place of periodic amounts for a defined period, in full satisfaction of the child support obligation for that period. A lump sum payment may include a payment by way of transfer or settlement of property.
The court will take into account various matters so that it can be satisfied that it is just and equitable as regards the child, liable parent and the carer entitled to child support; and it is otherwise proper in terms of any burden such a decision places on the taxpayer. The considerations which apply in relation to an application for a lump sum payment of child support are therefore similar to the considerations which apply when a court considers a departure application under Pt VII, Div 4 of the Assessment Act. However, in addition, before making an order for lump sum child support, consistent with its approach to other areas of maintenance, the court will look at specific considerations. For example, what is the history of payment of child support, what is the likelihood of any change in circumstances, and is there a sum available to meet any such order?
The overarching objective of lump sum provisions is to provide the court with another mechanism to ensure that children have their proper needs met.
The court cases
The courts have handed down several decisions in relation to lump sum applications. The Family Court has held that “the court may entertain both a lump sum application and a departure application that are filed within the one document if it chooses to exercise its jurisdiction so to do under section 116†(McGuinness v Cowie (2002) 29 Fam LR 441; [2002] FamCA 461 at [64]).
In a decision of the Federal Magistrates Court, Charlton v Crosby [2010] FMCAfam 207, handed down by Brown FM on 5 March 2010, his Honour made an order for a lump sum payment of $46,000 to cover a period of four years. He stated at [440]:
“I have reached the conclusion that the provision of child support in a lump sum to Ms Charlton is the only available means by which Mr Crosby is likely to ever share equitably in the financial support of the children concerned.”
The court found that the significant factor in this matter was that the father had refused to meet his obligations to pay child support and that this was likely to continue. In setting a lump sum, for a period in excess of four years, the court did not consider that there was an unacceptable risk that the order would lead to an unjust or anomalous situation arising because of potential changes in the financial positions of either of the parties during that time.
In another case, In Marriage of Bolton (1992) 107 FLR 131; 15 Fam LR 615; [1992] FLC 92-309, Cohen J made a lump sum order for child support equivalent to two years support at the rate which he considered appropriate in the circumstances, from the father’s share of the parties’ property. His Honour considered that the liable parent concerned was likely to manipulate his financial affairs in order to receive a low assessment in the future.
Another case, In Marriage of Bendeich (1993) 110 FLR 418; 16 Fam LR 371; [1993] FLC 92-355, looked at the length of time, up to nine years, that the application for a lump sum order sought to cover. Mushin J was concerned that there was a potential for injustice to the respondent father in not being able to access the usual formula provisions and administrative remedies. The applicant mother was also unable to show that the father was a person who had neglected or would neglect to meet his child support obligations. The application in that matter was refused.
In Dwyer v McGuire (1993) 114 FLR 325; 17 Fam LR 42; [1993] FLC 92-420 at [101], Lindenmayer J considered that the circumstances of the case justified a lump sum order to cover a period of eight years. The father had a very poor attitude to meeting his obligations to pay child support. However, his Honour’s decision did not reflect the full amount of the annual child support rate due to the possibility of some change of circumstances during that lengthy period. His Honour ordered a lump sum that would constitute 25% of the father’s prospective child support for the next five years. The remaining child support for that five-year period was to be 75% of the annual administrative assessment.
* Ken McWhinney, Senior Advisor, Child Support Agency.
The citation for this article is (2010) 1 Fam L Rev 99.
