BERTRAM-POWER & POWER

[2013] FamCA 520

FAMILY COURT OF AUSTRALIA

BERTRAM-POWER & POWER [2013] FamCA 520

FAMILY LAW – CHILD SUPPORT – Application for interim child support departure order – the children are being cared for in a manner that was expected by both parents – high standard of living – the husband earns a high income – the husband has capacity to meet child support departure order

FAMILY LAW – SPOUSE MAINTENANCE – Application for interim spouse maintenance – the wife has a need – whether the wife should access the property, capital or resources of the parties to support herself before making an application for maintenance – the husband has capacity to meet spouse maintenance order

Child Support (Assessmen)t Act 1989 (Cth) ss 116(1)(b), 117(2)(b)(ii), 117(2)(c)(ia)
Family Law Act 1975 (Cth) ss 72, 75(2)

Chorn v Hopkins (2004) FLC 93-204
Mitchell & Mitchell (1995) FLC 92-601

APPLICANT: Ms Bertram-Power

RESPONDENT: Mr Power

FILE NUMBER: CAC 503 of 2013

DATE DELIVERED: 15 July 2013

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks DCJ

HEARING DATE: 21 May 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Not applicable

SOLICITOR FOR THE APPLICANT: Mr D Holmes, KDB Holmes Solicitors

COUNSEL FOR THE RESPONDENT: Not applicable

SOLICITOR FOR THE RESPONDENT: Mr D Farrar, Farrar Gesini Dunn

Orders

Until further order:

1. The husband pay to the wife $1,285 per week by way of spouse maintenance, such payments to be directly deposited into the wife’s account.

2. Pursuant to ss 116 and 117 of the Child Support (Assessment) Act 1989 (Cth), the periodic rate of child support payable by the father for the children be varied by setting the weekly rate of child support at $1,251.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bertram-Power & Power has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 503 of 2013

Ms Bertram-Power

Applicant

And

Mr Power

Respondent

REASONS FOR JUDGMENT

1. Pending the division of the property of the parties in a final hearing which will have an effect upon any issue about spouse maintenance and to some extent, the amount of child support which should properly be paid, I am asked to make interim determinations about questions of spouse maintenance and child support. 

Child support departure order

Whether this Court should hear an application for child support departure order

1. Section 116(1)(b) of the Child Support (Assessment) Act 1989 (Cth) permits a parent to apply for a child support departure order in the Family Court where the parent is already a party to an application pending in the Family Court and the Court is satisfied that it would be in the interests of the parties for the Court to consider child support departure “in the special circumstances of the case”.

2. In the circumstances of this case, it is appropriate that I exercise the discretion conferred by s 116(1)(b) in favour of considering whether a child support departure order should be made. Any child support assessment or order would have an effect on the parties’ property proceedings. Rather than having parallel proceedings in which the parties seek a review of the existing assessments, it would be more efficient and in the best interests of the parties if the application for a departure order were considered at the same time as the parties’ property proceedings.

Relevant law

1. The grounds for departure, pursuant to s 117 of the Child Support (Assessment) Act, are as follows:

   Grounds for departure order

   (2)For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:

   (a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:

   (i)   the duty of the parent to maintain any other child or another person; or

   (ii)  special needs of any other child or another person that the parent has a duty to maintain; or

   (iii) commitments of the parent necessary to enable the parent to support:

   (A)    himself or herself; or

   (B)any other child or another person that the parent has a duty to maintain; or

   (iv) high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;

   (aa)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));

   (b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   (i)  because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or

   (ia) because of special needs of the child; or

   (ib) because of high child care costs in relation to the child; or

   (ii)  because the child is being cared for, educated or trained in the manner that was expected by his or her parents;

   (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

   (ii)  because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.

Discussion

1. The evidence before me relating to the child support assessment are a Child Support Assessment issued on 16 April 2013 in respect of the assessment period 8 April 2013 to 7 July 2014[1] and a letter from the Child Support Agency (“the CSA”) to the wife notifying her that the CSA accepted her estimate of her income for the 2012-2013 financial year[2].  The weekly rate payable by the husband, as assessed by the CSA, was $675.51.[3]  However, on 22 April 2013 the CSA notified the applicant wife that her estimate of her income for the 2012-2013 financial year, being $14,374, had been accepted and that meant that the wife would be entitled to receive child support at a rate of $774.63 per week.[4]  The husband discloses in his Financial Statement that he is paying $785 per week.[5]  I am not able to explain on the evidence before me that discrepancy.  The wife, in her Financial Statement, nominates expenses for the children on a weekly basis of $1,251[6] and seeks a departure order pursuant to s 117 of the Child Support (Assessment) Act in that sum.  This would mean an increase in child support payments of about $466 a week. 

   [1] Exhibit W1.

   [2] Exhibit W2.

   [3] Exhibit W1, 1.

   [4] Exhibit W2, 1 and 3.

   [5] Husband’s Financial Statement, filed 22 April 2013, Part G.

   [6] Wife’s Financial Statement, filed 12 April 2013, Part N.

2. The CSA calculated the husband’s taxable income in the 2011-2012 financial year to be $446,546.[7]  After deducting the amount used by the husband for his own support ($22,379), this left the husband with a child support income of $424,167.[8]  The husband’s income for the 2012-2013 financial year (thus far) is a salary of $225,000 per annum, plus a bonus of 300,000. The $300,000 bonus includes $44,700 worth of shares bought by his employer on his behalf. The husband’s total income for the 2012-2013 year is approximately $525,000.[9]  Admittedly, $44,700 of that was not in accessible income and hence $480,300 would be an appropriate figure to accept as the husband’s income.  Taking into account the husband’s self-support amount, the husband’s child support income would be $457,921 ($480,300 - $22,379). This amounts to $33,754 more than the amount upon which the CSA assessment was calculated, or about $649 per week. 

   [7] Exhibit W1, 1.

   [8] Exhibit W1, 1.

   [9] Husband’s affidavit, filed 22 April 2013, [111].

3. I am satisfied on an interim basis, until such time as a final division of property might be held, that the expenses for the children are as indicated by the wife, that is $1,251 per week.

4. Taking into account s 117(2)(b)(ii), these are privileged children to some extent and they have been the beneficiaries of the combined substantial income of their parents over some time. The standard of living indicated by the parents in their Financial Statements is reflected in the figure claimed by the wife in relation to her part of the children’s expenses. This figure, as I have indicated before, is $466 more than the current assessment. On that ground alone, it would be reasonable, given a capacity to pay, that there be an adjustment - at least until such time as the property division of the parties is effected.

5. It was submitted that, in addition (s 117(2)(c)(ia)), there had been an unjust determination because the husband’s income was substantially greater than the amount being taken into account in the assessment.  An annual additional sum of $33,754 was the difference I calculated on the evidence I had before me.  This is a sum which in my opinion is significant and does also justify a departure. 

Other resources

1. It is part of the husband’s case that the wife is entitled to, and has in the past received distributions from her parent’s family trust.  The trust on such evidence as I had before me is a discretionary trust.  Hence she has no entitlement except when a distribution is made.  She maintains, as do her parents, that any distributions in the past have not actually been received by her but have been in effect lent back (or given) back to the trust.  This is an issue which undoubtedly will receive attention in the final division of property between the parties. But it suffices to say that I am (at this point) not able to make any finding that the wife is entitled to any additional resources from this source.

2. I note however, that in addition to the income the husband receives he also receives from $44,700 worth of shares.  These are not immediately accessible to him so far as I am able to determine but they nevertheless constitute an increase in resources in his hands. 

3. It is appropriate to acknowledge that the husband’s annual bonus is discretionary.  It has been paid each year for the last four years in steadily increasing amounts.  It may not be paid in future.  It has been paid this year on the husband’s evidence, and is appropriately taken into account in these interim proceedings.

4. In my opinion, an adjustment to provide child support, at least on an interim basis until such time as property division is effected, of $1,251 is appropriate and it would be just and equitable to make such an adjustment. 

5. There are no matters which would mean that such an order was not otherwise proper by reference to the imposition by either party on the public purse.

6. I make orders accordingly. 

Spouse maintenance

Relevant law

1. The wife’s potential entitlement to spouse maintenance arises, under s 72 of the Family Law Act 1975 (Cth) which provides:

   (1)A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   (a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b)by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c)for any other adequate reason;

   having regard to any relevant matter referred to in subsection 75(2).

2. Put in plain terms, it is not simply the need of a party that generates an entitlement to maintenance, it is also the capacity of the party from whom the maintenance is sought to make such a payment that needs to be taken into account.  “Reasonably able to do so” means after payment of fixed expenses and other reasonable living expenses. 

3. The Court has the power to make an interim spouse maintenance order[10] and to make such order as it considers appropriate.[11]

   [10] Family Law Act 1975 (Cth), s 80(1)(h).

   [11] Family Law Act 1975 (Cth), s 74(1).

4. I was referred by counsel to the decision of the Full Court in Mitchell & Mitchell:[12]

   The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself ''adequately''. Where the line is to be drawn will depend upon the circumstances of individual cases.

   [12] (1995) FLC 92-601, 81,995.

The husband’s capacity

1. The husband applies his bonus (received in March this year) towards income.  I find that it is reasonable he should do so. Making provision (as was submitted on behalf of the wife) for income tax in the sum of $189,685 and the Medicare levy of $7,204[13] his weekly income available for expenditure would be $5,450.21 (= ($480,300 - $189,685 - $7,204)/52). 

   [13] Wife’s submissions, handed up on 21 May 2013, [13].

2. The husband’s total expenditure as set out in his Financial Statement (including rent for two premises, one in Canberra and one in Sydney) and excluding tax and child support comes to $1,914 (= $940 + $80 + $894).  This sum includes some $243 of additional expenses he says he incurs for the children and weekly expenses on his part of $651 which includes $200 for entertainment and hobbies and $25 as an allowance for holidays. 

3. This means the husband has about $3,536 per week ($5,450.21 - $1,914) (to the nearest cent) to meet any order that might be made on an interim basis for spouse maintenance and child support.  These calculations, while necessarily not precise, give full faith and credit (for the purposes of these interim proceedings at least) to the husband’s own statements about his commitments. The wife seeks a total of $2,636, being $1,385for spouse maintenance and $1,251 for child support.

4. For the reasons set out above, it is clear that the husband in this matter has capacity to meet the additional payments on a weekly basis.  Indeed, I understand him to have conceded that is so. 

The wife’s outgoings

1. The wife claims outgoings, (including “mortgage repayment or rent” in respect of the property in which she is living with the children of $650) of $902.[14]  In addition, the wife claims personal expenses of $761 a week, which includes a holidays allowance of $100 a week.[15]  The husband for his part discloses personal expenditure of $651 a week.[16] I believe that, at least on an interim basis, the wife’s figure for holidays should be excluded, leaving $661 or a total outgoing by the wife for her expenditure of $1,563 (=$902 + $761 - $100).  When her income is deducted from that amount a figure of $1,285 (= $278 - $1563) is the shortfall.  The wife seeks $1,385 by way of interim spouse maintenance. 

   [14] Wife’s Financial Statement, filed 12 April 2013, Part G.

   [15] Wife’s Financial Statement, filed 12 April 2013, Part N.

   [16] Husband’s Financial Statement, filed 22 April 2013, Part N.

2. It would appear given the wife’s expenses, which I accept as being $1,563 per week, and her current income, she has a need for spouse maintenance. However, the question arises as to whether she is “unable to support herself adequately” given the funds and property available to the parties.

Whether the wife should access the property of the parties to support herself

1. The wife discloses in her Financial Statement and also through her lawyer that she has some $337,000 in term deposits and shares of about $34,000.[17]  These amounts, particularly the term deposits, may only be accessible with some penalty as to break fees and are part of the property of the parties for the purposes of property proceedings.  At this point the husband seeks that the term deposit accounts be transferred to joint accounts. 

   [17] Wife’s Financial Statement, filed 12 April 2013, Part I.

2. The husband’s preliminary argument is that the wife has access to these funds and he would permit her to access them to meet her expenses and those of the children pending a final division of property between the parties.  Although he would not necessarily put it this way, it could reasonably be said that in accordance with the principles in Chorn v Hopkins[18] any such money expended by the wife should not be the subject of what is popularly[19] referred to as an ‘add back’ because it is being spent on reasonable living expenses.

   [18] (2004) FLC 93-204.

   [19] Probably erroneously

3. In practical terms this would mean that the $1,251 sought by the wife in child support and the $1,285 I have referred to above in respect of the wife’s own expenses would diminish the capital and property of the parties on a weekly basis until an order was made for division of property.  It was submitted (not necessarily in these terms) that the wife should apply those resources to which she has access before she calls on the husband for additional child support or for spouse maintenance.

4. I accept, based at least in part upon Mitchell & Mitchell, that it is not necessary for the wife to completely exhaust her access to other funds before making a claim for maintenance. 

5. This proposition is reinforced in the submissions made on her behalf to the effect that it would be unfair to diminish the capital of the parties and hence her share ultimately of that capital, by applying money towards her and the children’s expenses when the husband has a capacity from his income to make the payments sought and otherwise justified. 

Section 75(2)(b) – the income , property and financial resources of the parties

1. The incomes of the parties are vastly different, with the husband’s being far greater than the wife’s.

2. The calculations set out above demonstrate that even allowing the husband full credit for the expenses he has claimed, there are sufficient funds on a weekly basis for him to meet the spouse maintenance order sought by the wife. Indeed, even if the husband were to meet the amounts as they are sought by the wife (being $1,385 for spouse maintenance and $1,251 for child support), the husband has surplus of $900 (= $5,450 - $1,385 - $1,251 - $1,914).

Section 75(2)(c)

1. The wife has the primary care of the three young children of the marriage and, because of this, is unable to work full-time as the husband does.

Section 75(2)(o) – any other fact or circumstance which the justice of the case requires to be taken into account

1. Given this matter has already been allocated a trial date[20], although at the time of dictating this judgment it appears that date may not be adhered to, in my opinion, it is reasonable to say that “the line is to be drawn” outside the wife’s need to draw on the assets of the parties for her support.  The situation may have been quite different if in fact the income of the husband was inadequate to meet his own expenses and other commitments.  If, notwithstanding his sworn Financial Statement, his financial situation is less favourable than is set out above, the onus of establishing that has rested with him and has not been discharged.

   [20] 31 July to 2 August 2013.

2. It follows that there should be an order for interim spouse maintenance in the sum of $1,285 per week in favour of the wife. 

3. I make orders accordingly.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Justice Faulks delivered on 15 July 2013.

Legal Associate: 

Date:  15 July 2013