C and C
[2002] FMCAfam 248
•14 August 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| C & C | [2002] FMCAfam 248 |
| CHILD SUPPORT – Variation of Child Support Agreement – husband earning more than capped amount – whether extra income should be considered – whether parties expected their children to have private school education. |
| Applicant: | R J C |
| Respondent: | J M C |
| File No: | (P)MLM 5712 of 2002 |
| Delivered on: | 14 August 2002 |
| Delivered at: | Melbourne |
| Hearing Date: | 30 July 2002 |
| Judgment of: | Bryant CFM |
REPRESENTATION
| Counsel for the Applicant: | Mr C appeared in person |
| Solicitors for the Applicant: | Mr R C 14 Stanhope Grove CAMBERWELL VIC 3124 |
| Counsel for the Respondent: | Mr O’ Shannassy |
| Solicitors for the Respondent: | J Koelmeyer Best Hooper 563 Little Lonsdale Street MELBOURNE VIC 3000 |
ORDERS
IT IS ORDERED
THAT the Application of the Husband filed on 11 June 2002 and the Application of the Wife filed 26 July 2002 be dismissed.
THAT the Husband pay the Wife’s costs fixed in the sum of $5,020.00 payable within 60 days of the date of these Orders
IT IS DIRECTED
THAT the Applications be removed from the list of cases awaiting finalisation
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
(P)MLM 5712 of 2002
| R J C |
Applicant
And
| J M C |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns competing Applications for variation of a Child Support Agreement entered into between the Husband and Wife dated 16 March 2001.
The Husband in his Application filed on 11 June 2002 seeks that the agreement between the parties be varied to provide that the Husband pay the total sum of $1,110.40 per calender month of child support for the two children of the marriage I B C born on 23 November 1992 and B J C born on 29 June 1994.
The Wife’s Application filed on 26 July 2002 seeks variation of the Agreement to provide:
a)THAT the Husband pay the sum of $2,166.00 per calendar month by way of periodic child support;
b)THAT the Husband pay one half of all school fees, levies and charges associated with the enrolment of each of the children at Melbourne Girls’ Grammar School including enrolment fees, annual tuition fees and levies, such enrolment to commence on the date that each child begins her Grade 5 year; and
c)THAT the Husband be required to provide to the Applicant all such documents and details as may be required to allow the Applicant to make a claim in respect of any health insurance policy taken out for the benefit of either of the children.
Existing child support liabilities
By an agreement dated 16 March 2001 (“The Agreement”) which agreement has been accepted by the Registrar pursuant to section 98(1) of the Child Support (Assessment) Act 1989 (“the Act”), the parties reached agreement that the Husband pay child support for the children as follows:
a)By payment of periodic child support in the sum of $1,689.05 per calendar month payable in advance on the first of each month commencing 1 April 2001;
b)all school fees for the children at Malvern Central School or equal value thereof at another school inclusive of tuition fees and levies and all fees for excursions and extra-curricular activities (such as camps and music lessons) associated with the school;
c)private health insurance premiums at or equivalent to or not less than the existing level of health insurance cover for the children with HBA or a similar institution;
d)subscriptions for full ambulance cover for the children; and
e)the difference between any hospital, medical, dental, orthodontic, optical, physiotherapy and any other like expenses in respect of the children and any Medicare or private health insurance refunds in respect thereof (if any).
The Agreement
The agreement provides that the periodic payments shall be paid into the Wife’s St George Bank Account and in relation to non periodic payments direct to the provider upon production of an invoice or to the mother upon production of receipt for payment for the service provided.
Further the agreement provides that it will commence on the 16 March 2001 and remain in effect until 29 February 2004.
Paragraph (4) provides that periodic child support payable pursuant to the agreement shall be automatically adjusted on 30 June each year commencing 30 June 2001 by reference to the Consumer Price Index for Melbourne.
The agreement finally goes on to provide that the obligations of the Husband are to account for 100 per cent of the annual rate of child support payable under any relevant administrative assessment in force.
Finally the agreement provides that the Husband is entitled to cause a maintenance trust established if he wishes in relation to the payment of support for the children.
The pre-requisites for the exercise of jurisdiction
The Child Support Agreement entered into between the parties has been accepted by the Registrar pursuant to Division 3 of Part 6 of the Child Support (Assessment) Act. It has been registered in the Federal Magistrates Court of Australia. Part 6 of the Act deals with consent arrangements between the parties. Pursuant to s95, agreements can only be modified other than by consent, by a Court exercising jurisdiction under the Act under the provisions of Division 4 of Part 7 of the Act. As a result of section 98 (1) the provisions which apply to modification of Child Support Agreement are those provisions which apply to a departure order under s117 of the Act
The relevant law
The obligation to pay child support is created by the provisions of the Act. The objects of the Act are found in section 4. The objects need to be borne in mind when deciding an application under the Act. The objects include that the children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents and that the parents share equitably in the support of their children.
In considering a departure application the Court must follow the three steps and described in Gyselman & Gyselman (1992) FLC 92-279. The Court must be satisfied that in the special circumstances of the case one or more of the grounds for departure in Section 117(2) exist. In this case the Husband relies upon section 117(2)(a)(1) and (3). Those grounds are that in the special circumstances of the case the capacity of the Husband to provide financial support to the children is significantly reduced because of:
a)His duty to maintain his wife and new child; and
b)His commitments to enable him to support himself and his wife and new child.
The Wife’s case is that, in the special circumstances of the case, the application of the child support agreement would result in an unjust and inequitable determination of the level of financial support to be provided by the Husband to the children because of his income, earning capacity, property and financial resources [section 117(2)(c)(1)]. In addition she asserts that the cost of maintaining the children is significantly effected because they should be educated in a manner that was expected by their parents [section 117(2)(b)(ii)], and she seeks that pursuant to Division 4 of part 7 of the Act the Court should make and Order for non-periodic payments in the form of school fees and education expenses.
If a ground for departure is established, the Court must be satisfied that it will be:
a)Just and equitable as regards the child and parties to make a departure order; and
b)Otherwise proper to make a particular order.
Under this Division, in order to determine these two matters the Court must consider the objects of the Act, the proper needs of the children and any income or assets of the children, the income, earning capacity, property and financial resources of each of the parents and their commitments necessary to support themselves or other relevant dependants. Finally, whether any hardship would be caused to either the child or the parents by making or refusing to make the order [section 117(4)].
In determining whether it is proper to make an order the Court must consider whether the carer is in receipt of a pension and accordingly, to what extent the community should be responsible for meeting the costs of the children [section 117(5)].
Before considering an order pursuant to Division 5 for provision of child support otherwise than in a form of periodic payments, the Court must hear and determine any pending application made for a departure order under Division 4.
In considering whether to make an order for the provision of child support other than in the form of periodic payments, the Court must be satisfied that it would be:
a)Just and equitable as regards to the child, the carer entitled to child support and the liable parent; and
b)Otherwise proper to make an order for child support otherwise than in the form of periodic amounts.
In determining the application the Court must have regard to the matters in subsection 124(2) and, similarly to s.117, must determine whether it would be just and equitable as regards to the child, carer entitled to child support and liable parent to make an order [section 124(3)]., and whether it would be otherwise proper to make such an order [section 124(4)].
Finally, if the Court does determine to make an order pursuant to Division 5 it must state in the order whether the child support ordered in to be credited against the liable parent’s liability under any administrative assessment or not, and if it is, then the order must specify either:
a)That the child support has an annual value of a specified amount and that the annual rate of child support payable under any relevant administrative assessment is to be reduced by the amount; or
b)That the child support is to count for a specific percentage of the annual rate of child support payable under any relevant administrative assessment.
c)In considering whether or not the child support is to be credited against the liable parents liability, the Court must determine whether it is just and equitable and otherwise proper to do so.
The husband’s case
The Husband asserts that the amount calculated for the purposes of the agreement was a monthly dollar value based upon what he would have to pay under the child support formula at that time which was calculated by applying the highest income level and the reduction for substantial contact of the two children as defined in the Act.
The provisions for substantial contact are found under s8A(4) of the Child Support (Assessment) Act. Essentially this provision provides that if a carer has care of the child for at least 30 per cent, but less than 40 per cent of the nights in the 12 months immediately after the start of the child support period concerned, he or she is taken to have care of the child for 35 per cent of the nights in the child support period.
Section 8A(3) of the Act provides that if a carer has care of the child for at least 40 per cent but less than 60 per cent of the days in the 12 months immediately after the start of the child support period concerned, he or she is taken to have care of the child for 50 per cent of the days in the child support period and to share the ongoing daily care of the child with another person.
The Husband asserts that his circumstances have changed and as a result of his changed financial position, application of the provisions of the agreement would result in an inequitable and unjust determination of the level of child support payable by him. His reasons were as follows:
a)Whilst substantial contact under the Act is based upon contact of less then 146 days, over the past year between 1 April 2001 and 1 April 2002 and in he has had the children for 146 nights but from 1 July 2002 the next calendar year the children will spend between 146 and 149 nights with him and thus puts him into the “shared care” category of the Act. This means that if the formula was applied the Husband’s liability would decrease
b)The Husband is already paying extras on behalf of the children, for example, school fees, camps and other associated school expenses) which amounts to a total of $233.60 per month.
c)His circumstances have changed since the agreement was entered into because he is now married to R E T who has major care of her daughter from a previous marriage and to whose support the Husband has been contributing.
d)The husband and his new wife have a child born in July 2002 and his wife who is a registered nurse at the Royal Children’s Hospital is on leave from her full time position and will not be returning to work in the foreseeable future.
He asserts that for these reasons he cannot afford to continue to pay child support at the level provided for in the agreement.
The Husband obtained from the Child Support Agency (“the Agency”) a calculation of what his obligation would be if the administrative formula were applied. The Husband’s income is above the current capped income level of $113, 542.00, and the calculations are made based of that capped level. On the basis of the two children being in his shared care and he and his current partner having a dependent child the calculation of the Agency would result in a monthly payment of $1,344.00. From this sum the Husband has deducted the amount of $233.60 which he is currently paying in extras for the children to arrive at his proposal for a payment of $1,110.40 per calender month by way of periodic support for the children.
The Wife’s case
The Wife asserts that on an annual basis the agreement provides that the husband to make the following payments:
a)periodic support of $21,464.40;
b)school fees including excursions $1,130.00; and
c)music tuition of $286.00
being a total of $22, 880.40 per annum.
The Wife also asserts that the Husband has not provided her with details of the private health insurance so that she can claim for the children and arrange for the private treatment.
She seeks an increase of $6,000.00 per annum so that the total payment of child support per annum is $26, 000.00. The periodic payments she seeks will be increased from $194.00 per child per week to $250.00 per child per week. She asserts that the terms of the current agreement do not reflect the income, earning capacity, assets and financial resources of the Husband and are therefore are unjust.
She also seeks that the children be enrolled at Melbourne Girls’ Grammar from Grade 5 onwards, and that the Husband pay half the education expenses. This would mean that I would commence in 2003. She asserts that during the marriage the Husband and Wife agreed that the children would be privately educated for the most part of their schooling.
Background
The parties commenced cohabitation in November 1989 and were married on 9 March 1991. They separated permanently in February 1999. On 15 March 2001, contemporaneously with the execution of the agreement, orders were made finalising property and children’s issues in the Family Court of Australia.
I was born 23 November 1992 and is aged 9 and half. B was born on 29 June 1994 and is aged 8. Both girls attend M C School where I is in Grade 4 and B is in Grade 2.
The Wife’s financial position
The Wife is a full time homemaker and parent. She has no formal qualifications and ceased full time employment in 1994. Before separation she has performed some part time work as a Sales Assistant at R C Stores in her local area whilst others were on holidays. In more recent times, she had obtained some contract work at a promotional agency. She worked as a Public Relations Assistant full time for three weeks following separation but was retrenched. She left her promotional job which she had from mid November 2001 to mid May 2002 because she felt that full time work from 9am to 5pm and being on call was too much responsibility given her obligation to the care of the children. She has some more part time work coming up in the near future. During the time she was working on a contract basis full time, she found it necessary to arrange for after school for the children and the cost of child care impacted upon the financial benefits associated with her working. Her family reside in Adelaide so she is unable to call upon her family to assist her with child care. The likelihood is that the Wife will continue to have part time work available to her from time to time but will not re enter the workforce on a full time basis for some years.
Following the property settlement between the parties the Wife received approximately $750,000.00 of the proceeds of the sale of the former matrimonial home and retained an investment property in St Kilda. After settlement she moved to rental accommodation for 12 months then applied part of her property settlement and borrowed funds to the acquisition of a unit in Queen’s Road Melbourne and secured a mortgage against the property. She and the children are living in this property. The unit cost $532,000.00 and the Wife borrowed $370,000.00. She is paying principal and interest of $462.00 per week.
She has reduced her funds left after the purchase of the unit on items which include her rental for 12 months and the acquisition of a BMW motor vehicle. She has $462,000.00 invested and her income of $617.00 per week is derived from rental from the St Kilda property and interest on her funds invested
The Husband’s financial position
The Husband’s income is as follows.
| Wages | 915.00 |
| Income from investments | 1653.00 614.00 |
| Income from B K (nominees Pty Ltd) | 95.00 |
| Bank interest | 228.00 |
| Per week Per Annum | $3505.00 ($182,260.00) |
He stated his fixed expenses to be as follows:
| Income Tax | 747.00 |
| ING – Superannuation | 58.00 |
| ANZ – Mortgage | 360.00 |
| Bank of Melbourne – Mortgage | 172.00 |
| Rates | 74.00 |
| Insurance premiums | 69.00 |
| Repairs on investment propertys | 62.00 |
| Rent | 450.00 |
| Total | $1,992.00 |
Thus, after payment of fixed expenses, the Husband has left $1513.00 per week or $78,676.00 per annum.
The Husband lists the expenses for his household as follows, his share $535.00, his wife’s share $429.00, the children’s share $609.00 (the children’s share at present includes his wife’s child, the child born to himself and his wife, E W C on 15 July 2002 and his expenses in having the children to stay with him for what he describes as 40 percent of the time).
The Husband says in his Affidavit in support of his Application that his income changes each year and expenses including loan repayments and living expenses exceed his income. He asserts that his income is derived, in the main from his commercial and investment properties, and that his career in the fashion industry ceased due to a number of reasons, mainly his age. He has retrained and is currently working in real estate but earning only an average wage as it is his first job in the industry. He hopes that as his experience and contacts increase, his income levels will increase commensurately. He asserts in his affidavit that he no longer has any interest in a farm / vineyard as the property is owned by a company of which his sisters are the only shareholders. He said in his affidavit which was sworn in response to the Wife’s affidavit on 29 July 2002 that his wife and he had recently purchased a beach house at V B and that a mortgage over his present wife’s property at D has been transferred to this property, leaving the D property unencumbered.
In relation to his present wife’s income, the Husband said that she had taken 7 to 8 months maternity leave and was paid for 6 weeks from
24 May 2002 until July 2002. He is responsible from July 2002 for the support of his wife and their young child. He was unable to identify any other assets of his wife.
Very little cross-examination was directed to the Husband’s income position. The main exploration by Counsel was of the Husband’s assets and financial resources. There was also little challenge to the Husbands expenses.
Assets
The Husband’s position has changed with the acquisition of the V B property and the taking on of the mortgage over D since the Husband’s financial statement was prepared as at 1 May 2002. As at that time he listed his real estate as follows:
| RGC Trust 13 K S, F | 194,000.00 * the Husband asserted in his financial statement this property had a property of 180,000 but then conceded that it was sold for 194.000.00 |
| M E W, M E | 480,000.00 |
| 1/34 M, P D | 479,000.00 |
| HB C Trust: 15 E P, A W 24 E P, A W | 320,000.00 |
| Total | $1,473,000.00 |
All these are income producing properties
Since 1 May 2002 the Husband has sold K S, F for $194,00.00 and purchased a property at V B for $195,000.00. He put in $170,000.00 (from the proceeds of the F property) and the Wife put in $10,000.00. The effect is to remove K S from the list of real estate but to replace it with V B. There is therefore very little change in the gross value of the Husband’s real estate holdings as the Husband substantially owns V B.
The mortgage on D (the Wife’s property worth $275,000.00) was transferred to V B and the Husband has taken on the responsibility of this mortgage. He indicated that the property will be let and therefore there will be long-term tax benefits to him from negatively gearing this property.
The effect of this arrangement is of benefit to his wife in 2 ways. The first is that she now owns an unencumbered property in D worth approximately $275,000.00, and secondly, as they are now letting the property she will have available to her the rental income from that property.
The Husband has the following liabilities in relation to the real estate:
| Mortgage on P D | 143,000.00 |
| Mortgage on D | 103,000.00 |
| Total | $246,000.00 |
Thus, the Husband’s real estate has a net value of $1,227,000.00
Other assets
| Cash V2 Account | 110,000.00 |
| Access Account | 10,000.00 |
| ANZ Access Account | 7,500.00 |
| NAB | 2,000.00 |
| Total | $131,500.00 |
The Husband also lists life insurance policies at $52,000.00 and a Landrover worth $44,000.00.
Thus the Husband has real estate and cash to a net value of approximately $1,238,500.00
The Husband was challenged about other assets, and it is somewhat difficult to get a true picture of the Husband’s financial position. Although on the face of this application the Husband has changed financial circumstances, in that he has, at least in the short term, a dependant wife and now a young dependant baby, his income and asset position needs to be carefully assessed in view of some of the evidence given by him. The context of the Application being now made has to be considered beyond the financial changes raised by the Husband.
On 16 March 2001 the parties reached agreement about distribution of their property and orders by consent were made on that day. The orders dealt with children’s issues and property.
In relation to the children the parties agreed that the children would reside with the Wife and that the Husband would have contact with them:
a)Each alternate weekend from the conclusion of school on Thursday until the commencement of school on Monday morning, save for Public Holidays or curriculum days in which case the children will be returned by the Husband on Tuesday morning;
b)Each alternate week from the conclusion of school on Thursday until the commencement of school on the following Friday morning;
c)One half of each of the term school holidays; and
d)For Christmas, Father’s Day and Birthdays.
In relation to property, the orders provided:
a)The Husband pay to the Wife the sum of $40,000.00;
b)The property at 7 T A, T be sold and from the net proceeds of sale, the Wife receive the sum of $754,000.00 and the Husband receive the balance and if the gross sale proceeds exceeded $1,050,000.00 any excess was to be divided equally between the parties (there was a small excess);
c)The Wife retain the property at 6/26 P S, S K W;
d)The Wife retain the 1994 GL Golf Motor Vehicle;
e)The Wife to assign to the Husband her interest in the C Family Trust and RLC investment trust and relinquish any interest in B K Nominees Pty Ltd, Bingley 11 Pty Ltd or the I and B C maintenance trust.
The orders dealt with chattels and provided for the Husband to indemnify the Wife against liabilities.
At the time of the property settlement, the Husband had declared that he had an interest in B K Nominees Pty Ltd of 100 shares with an estimated market value of $420,000.00. That information appears in his financial statement sworn on 30 August 1999 which is exhibit “W1”. A document was also tendered which was material provided in advance by the Husband for the purposes of a judicial conciliation conference. In that document the Husband indicated that he had 99 shares in Bingley 11 Pty Ltd which he described as “our business” and he described his interest in B K Nominees Pty Ltd – C Family Trust as follows:
“As stated in pre-nuptial – 1/3 share only – other shares my two sisters – various property / cash / shares – 1/3 share approximate value $420,000.00.”
When queried about why he had not now disclosed his interest in B K Nominees Pty Ltd, he said that he no longer had any shareholding and had transferred the shareholding to his sisters, for no consideration. He agreed that he had valued his interest as $420,000.00. When questioned further he said that he had owned a half-interest in B K Nominees Pty Ltd ( as trustee for the C Family Trust) and that his other sister did not really have a third interest.
It was put to him that in negotiations which had taken place at around the time of the property settlement, the Wife had alleged that he had a half interest and that he had refuted that assertion and said that he only owned a third. He conceded that was probably correct. He explained the reason for his changed position on this issue that he had now received legal advice and that in reality he had owned a half interest.
This evidence leaves me in no doubt that at or about the time the parties were negotiating to resolve property matters the Husband represented to the Wife that he had a third interest in B K Nominees Pty Ltd. I infer that this representation was made to financially benefit the Husband (and conversely of course, to financially disadvantage the Wife).
As the Husband has now dispossessed himself of that interest, it might be said that the ownership of B K Nominees Pty Ltd is irrelevant to these proceedings. I would not accept that argument however, for two reasons:
a)The first is that it seems clear that the Husband has been prepared to misrepresent his financial position to the Wife for his own benefit both in the documents filed in the Family Court of Australia and documents disclosing his financial position used for the purpose of negotiating the settlement with the Wife. The effect of this is that I cannot rely on the Husband’s evidence when it comes to financial matters in which he has an interest.
b)Secondly, the Husband said that he had transferred his half interest to his sister for no consideration. It is unclear from the evidence whether it is his half interest which had a value of $420,000.00 or whether that value represented a third and the Husband’s half interest was in fact worth $630,000.00. What is clear however, is that since the property proceedings in 2001, the Husband’s evidence is that he has divested himself of an asset of between $420,000.00 and $630,000.00 to his sister, for no consideration.
The Husband said that he transferred his interest because the benefit of the trust was ultimately the children’s. He produced no documents which would establish whether the trust was a discretionary family trust or a unit trust. Assuming it to be a discretionary family trust, it is highly likely that the Husband was one of the class of beneficiaries that could have benefited. As the Husband brought the asset into account for the property proceedings, it appears that he then considered it to be an asset or resource, of his. He produced no evidence to indicate that he was not a beneficiary and no satisfactory reason as to why he would transfer a valuable asset to his sister.
Bank accounts at the ANZ Bank produced for B K Nominees Pty Ltd as at 1 July 2002 indicated that the balance in the account at that date was $628,000.12. In addition the company has acquired a property at H C in the Y V and the Husband had been undertaking a wine making course to establish a vineyard on this property. Prior to the conclusion of proceedings in the Family Court, the Husband had sworn an affidavit in which he said that in February 2000 he had ceased operating the family business full-time to become a student studying viticulture on a full-time basis. In paragraph (18) of an affidavit sworn by him on 20 September 2000 he said:
“I felt that I had no option but to re-skill in another area. The study that I am doing will enable me to work on the area of vineyard management and to this end, developments being made on the farm at H C which is owned by the company which I share with my two sisters.”
Despite the fact that in September 2000 the Husband informed the Court that he was studying viticulture and intended to run the vineyard, his evidence in the course of these proceedings was that he spends about a day a month at the vineyard and doesn’t have time to put in any extra work and that his sisters were doing a wine making course. He said that he receives a small payment for his work on the vineyard.
Despite the Husband’s evidence that he has transferred his interest in the company to his sisters, he was not able to produce any evidence to corroborate that he had done so. A number of documents were tendered in the proceedings which would suggest otherwise:
a)The bank accounts of B K Nominees Pty Ltd are still sent to the Husband. He said this was so because he had not bothered to change the address and that he didn’t open them he simply sent them on to his sisters;
b)He remains a director of B K Nominees Pty Ltd;
c)The Husband appears to remain liable for a loan in the name of B K Nominees Pty Ltd with a current liability of $60,332.00, the bank statements for which are still sent to the Husband. The Husband’s evidence in this respect was similar to his explanation for the other statements which was that he doesn’t open the mail although it comes to him.
I do not accept that the Husband has disposed of any interest in B K Nominees Pty Ltd. Other than the Husband’s evidence which is unsatisfactory for the reasons that I have described, there is no objective evidence to support this contention. Indeed, all of the objective evidence points to the Husband still being a director and having an interest in the company which he now asserts is a 50 percent interest rather than a third. The trust owns a property in the Yarra Valley with a house and vineyard, has funds in the bank of $628,000.00 and a liability of approximately $60,000.00. Although it is difficult to value the Husband’s interest today, it would appear that in March 2001 when the property matters settled, the Husband’s half interest was worth in excess of $600,000.00 and the likelihood is if he had a half interest as asserted by him, then his interest is no less than that figure. Because the Husband produced no evidence in relation to the precise nature of the trust, and or the beneficiaries, it is difficult to establish whether the asset is a financial resource or an asset in the hands of the Husband.
The evidence is that the Husband’s sister was recently able to borrow $300,000.00 from the trust bank account to purchase a house which she subsequently repaid. The acquisition of a property in the Y V seems to have been in part so that the Husband could pursue some interest in establishing a vineyard. I am satisfied from the evidence that the trust is at least a financial resource to which the Husband may have recourse if necessary.
Proper needs of the children
The Wife sets out the children’s proper needs as being $589.00 per week or $294.50 per child. This does not include school fees. None of the expenses appear on their face to be unreasonable and the Wife was not seriously challenged about the expenses for the children. I note that the published research on the cost of maintaining children pursuant to the Lee scale and updated to the September 2001 quarter based on a one child, one income family with an income of $801.40 gross per week indicates that the cost of maintaining a child aged between 8 – 10 is $251.64 per week. Although there was some cross examination by the Husband on some of the children’s expenses, the Wife was firm in her evidence and I accept the expenses for the children. When considered against the Lee scale in a family which has a far greater income than that on which the scale was based, I am satisfied that the amount of $294.50 per child per week are the proper expenses for these children.
Wife’s necessary commitments
The Wife’s fixed expenditure is as follows:
| Mortgage payments to Homeside Lending | 462.00 |
| Mortgage instalments to St George | 138.00 |
| Rates and levies | 39.00 |
| Body corporate fees | 55.00 |
| HBA Insurance | 23.00 |
| House Insurance | 7.00 |
| Total | $724.00 |
I have disregarded Visa / MasterCard payments of $623.00. These relate to outstanding credit card liabilities of $2,700.00. This is a liability which the Wife can clearly repay now if she wishes from the capital that she has.
The Wife asserts her own weekly expenses to be $624.00. She was challenged about a number of matters and I am satisfied that several of the amounts claimed are excessive:
a)The Wife conceded the Gas bill of $64.00 was twice the size of the last one and probably too high. I intend to reduce the Wife’s portion to $15.00;
b)Telephone expenditure of $15.00 per week for the Wife alone (total household of $69.00 is expensive). The Wife attributed this to making a number of calls to Adelaide. I propose to reduce this to $30.00;
c)The Wife said she spent approximately $107.00 per week in total running expenses for the car including petrol. This includes $18.00 for fares / carparking and appears to be a high figure given that the Wife’s car is normally used in the metropolitan area. I propose to reduce this by $30.00;
Overall, I propose to reduce the Wife’s expenses by $65.00 and find that her necessary living expenses are $558.00. Coupled with her fixed expenditure, her weekly expenses are $1,282.00.
Her income without any earnings consists of rental income of $198.00 and interest of $419.00. This is a total of $617.00. It is clear that the Wife cannot meet her own weekly expenditure from her present income unless she contributes to it with part-time income. The evidence is that she has been receiving a part-time income and has the capacity to continue to do so. In view of the ages of the children and her recent experience with full time work, I am not satisfied that the Wife has the capacity to work full-time at the present time, but certainly she has the capacity to work part-time, particularly as the Husband has the children for a reasonable proportion of the time.
It is apparent that if the Wife had to organise her affairs so that she used the capital she has to pay off her mortgage then she would not have to meet mortgage payments but by the same token, she would not have interest income. There would appear to be little benefit to the Wife in doing so. I am satisfied that she has the capacity to contribute to her income from work and the capacity would enable her to support herself and make a modest contribution towards the support of the children. Once her own commitments are met she does not have a capacity from income to contribute substantially to the support of the children.
Husband’s commitments
The Husband sets out his fixed weekly expenses exclusive of child support, at $1,992.00. He was not really challenged about these expenses. After the deduction of fixed expenses he has $1,573.00 per week. His own living expenses total $535.50 and I note that this is a similar figure to that which I have found the Wife’s weekly expenses to be. The weekly expenses for his wife who has just given birth to their child and who is at present dependant upon him, are $429.00, making a total of $964.00. The Husband has remaining $549.00 per week to meet expenses for his child and the cost of paying child support for the children as well as the children’s expenses when they are with him.
Has a ground for departure been established
Having regard to the proper needs of the children, and the Husband’s income earning capacity as opposed to the Wife’s, in my view it would be reasonable for him to make a contribution of approximately two-thirds to periodic weekly expenses of the children which is a total of $388.00 per week.
Paragraph 1.1 of the Agreement provides for the Husband to pay a total sum of $1,689.02 per calendar month. This produces an annual sum of $20,268.60 or $389.78 per week. This sum equates to about two-thirds of the children’s proper expenses. Leaving school fees aside, the Agreement provides for the Husband to meet private health insurance premiums, full subscriptions for ambulance cover and the difference between any hospital, medical, dental, orthodontic, optical, physiotherapy and any other like expenses in respect of the children and any Medicare or private health insurance refunds. As the Husband would have his own wife and child covered by his medical cover, the real expense to the Husband is the difference between the expenses and the refunds he receives. He also has an obligation to meet education expenses at M C Primary School.
The Husband’s income in this case was not really challenged. Submissions were made by Counsel at the conclusion of the case that I should treat his real income position as being unknown, particularly in view of his asserted disposition of his interest in B K Nominees Pty Ltd and the Family Trust. He pointed to $280,000.00 which he had in a bank account and which he used to purchase the property at V B and has taken over the mortgage on his Wife’s property at D. Counsel submitted that his income had increased significantly since the child support agreement was entered into and that I should “be more generous” because of the Husband’s attitude to the disclosure of his true financial position.
I have indicated that in relation to his assets I do not believe that the Husband has disposed of his interest in the family trust and B K Nominees Pty Ltd, but it is difficult to translate that asset into income. At the time the Husband swore his financial statement in August 1999, he deposed to his weekly income being $3,621.00 or $188,292.00. That is similar to his current position. At that stage he was deriving an income from wages and investments and included from B K Nominees Pty Ltd a weekly income of $279.00. Assuming that income would still be available is some form to him, I am satisfied that he can continue to meet two-thirds of the children’s weekly expenses plus the other payments required by the Agreement.
When the Husband swore an Affidavit on 20 September 2000 he said that his current gross income was $1,983.00 per week or $103,116.00 per annum. To that extent his income now being $182,260.00 per annum is greater than that which it was in 2000, however, the Husband now has the responsibility for the support of his wife and their child. These were commitments he did not have at that date and must be taken into account. I have not taken into account in any way the cost of maintaining his step-child for whom he has no legal obligation. Nevertheless, that child has to be supported and unless his present wife goes to work full-time, any part-time earnings that she might be able to derive in the short-term will undoubtably have to be put towards the support of her child and leave her, at least again in the short term, with little capacity to contribute towards the support of their child.
I have not taken into account the cost of the mortgage on V B as there will be income from D and I would expect that income would either be contributed to the household or go directly to meet the mortgage payments. If that property is sold then no doubt the mortgage can be discharged. That will not materially affect the Husband’s income position. Other assets could be sold but the same argument applies to the Wife.
Whilst pursuant to section 117(2)(c)(1) earning capacity, as well as assets and financial resources are relevant, the Child Support (Assessment) Act 1989 is largely based upon income rather than capital. Where there is sufficient income to meet the reasonable needs of the children, it does not seem to me appropriate that I should require the Husband to meet further payments from capital. I have found having considered the proper needs of the children and the financial position of the parties, the Husband has the capacity to pay something approximating 70% of the children’s expenses, and that given the Wife’s capacity to work, that is a reasonable contribution. Insofar as periodic amounts are concerned, I see no basis on which it would be reasonable to increase the Husband’s proportion of those payments in any event, let alone out of capital.
For the Husband’s part it might be said that there is little income left after these payments are made for support of his own child and the children when they are with him. I take into account however, that there is available to him some income from B K Nominees Pty Ltd and note that he was previously receiving some income of about $300.00 per week from this source, which is likely to remain available to him. There may also be other financial benefits available to him. The credit card spending level in the Husband’s household suggests that they are used to a reasonably high level of expenditure, however, I note that was at a time when his wife was working.
Insofar as the present periodic payments of $1,689.05 required by the Agreement are concerned, and the Husband’s commitment to meet the medical and education expenses, I am satisfied that the existing provisions of the child support agreement are just and equitable provisions in regard to the child, the liable parent and the carer and accordingly, in my view, there are no special circumstances by reason of which there should be a departure from these provisions.
Insofar as the Husband’s application in based upon the application of the formula for administrative assessment, there are three reasons why I reject this argument:
a)He has not established any grounds for departure from the Agreement;
b)His income is in excess of the capped amount; and
c)I am not satisfied that he has disclosed his true income.
Private school fees
The question of private school fees was dealt with by the Full Court of the Family Court in Mee & Ferguson (1986) FLC 91-716. The principles which emerge from the case in relation to school fees can be summarised as follows:
a)When the non-custodian has agreed that the child attend a private school, that person is liable to contribute to the fees involved, so long and to the extent that he or she has a reasonable financial capacity to continue to do so;
b)When the non-custodian has not agreed to the child attending such a school he or she is not liable to contribute to those expenses unless there are reasons relating to the child’s welfare which dictate attendance at that school rather than a non-private school then the non custodian is required to contribute to the extent that he or she has a reasonable financial capacity to do so;
c)The mere fact that the non custodian can afford the fees or is a wealthy as a wealthy are not in itself a reason for opposing that liability.
Although Mee & Ferguson (1986) was decided prior to the introduction of the Child Support (Assessment) Act 1989, the reasoning has been applied to child support cases (Lightfoot and Hampson (1996) FLC 92-663 and Wild and Ballard (1997) FLC92-771).
I am satisfied from the evidence that the Husband and Wife did agree during the marriage that they would send the children to a private school at some stage. The Wife concedes that the girls had their names put down at a number of Melbourne schools including Lauriston, St Catherine’s and Melbourne Girls Grammar. The Wife concedes that during the marriage the Husband made it clear that he did not consider it appropriate that the girls attend these schools until late in their primary education or when they reached secondary school. Subsequently during the marriage he indicated to the Wife that the children would not be enrolled in a private school unless she was prepared to pay for their education by obtaining employment. The enrolment form completed by the parties in 1998, prior to their separation, to Lauriston Girls School suggests that the children would be commencing in Year 7 which would be 2005 and 2007. The Application for Melbourne Girls Grammar also signed in May 1998 indicates a starting time in year 7. The Application to St Catherine’s School which was signed in 1995 states Year (7) or earlier.
The Wife says that they were looking at grade 5 onwards although this is not supported by the documents. She concedes that there was a possibility that the children would go earlier if she paid for it. It is clear from the evidence that the Husband was not agreeable to the children attending private schools prior to Year 7 unless the Wife was prepared to pay. Even if the children were at that point now, the question as to the Husband’s capacity to pay those fees and whether the payment should be made out of capital would arise.
However, in my view it does not arise at this point because any agreement or expectation between the parties was, as the applications for enrolment indicate, that the children would be attending private schools, if at all, when they commenced year 7. That time has not yet come and I am not satisfied that a ground has been established either under section 117(2)(b)(ii), or under Division 5 of the Act..
Conclusion
For the reasons given, I am not satisfied that either the Husband or the Wife has established a ground under the provisions of section 117(2) of the Act, that in the special circumstances of the case there should be a departure from the existing level of child support which is to be found in the Agreement entered into between the parties.
In my view, the provisions of the agreement provide a just and equitable provision of support for the children payable by the Husband to the Wife and accordingly the Applications of both parties should be dismissed.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of Bryant CFM
Associate: Mardi Jarvis
Date: 14 August 2002
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