Carr and Vincent (No.2)
[2011] FMCAfam 1308
•1 December 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARR & VINCENT (No.2) | [2011] FMCAfam 1308 |
| FAMILY LAW – Child maintenance – children aged 9 & 8 – father lives in Kuala Lumpur but works for Japanese [business] – father’s employer incorporated in USA – father paid in US dollars – father’s income not liable to tax either in Japan, Malaysia, the United States or Australia – mother lives in Australia – no nexus between father and the provisions of the Child Support Scheme – children’s financial needs must be assessed pursuant to the provision of the Family Law Act 1975 – assessment of the father’s income given his circumstances as an expatriate – issues arising as a consequence of exchange rate and father’s tax free status – father assert has high costs of spending time with children – change of circumstances since interim orders made – what is proper – father high income earner – father has responsibilities towards second family in Malaysia – yardstick of Child Support Scheme and application of formula to a high income family given statutorily based assessment of costs of supporting children – children attending private school – manner in which children are being educated – application to re-open case and lead fresh evidence – capacity of parents to pay school fees – costs following contravention application. |
| Family Law Act 1975, ss.66B; 66C; 66E; 66H; 66J; 66K; 117 |
| Beck v Silwak (1992) 15 FLR 520 Carr & Vincent [2009] FMCAfam 608 Carr & Vincent(No.2) [2009] FMCAfam 648 Vincent & Carr [2011] FMCAfam 633 Ganter & Grimshaw (1998) FLC 92-810 |
| Applicant: | MR CARR |
| Respondent: | MS VINCENT |
| File Number: | ADC 2680 of 2008 |
| Judgment of: | Brown FM |
| Hearing dates: | 6, 7 & 8 September and 23 November 2011 |
| Date of Last Submission: | 23 November 2011 |
| Delivered at: | Adelaide |
| Delivered on: | 1 December 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Noble |
| Solicitors for the Applicant: | Judith Jordan |
| Counsel for the Respondent: | Mr McQuade |
| Solicitors for the Respondent: | Catherine Tucker & Associates |
UPON NOTING that it is the intention and effect of these orders that the interim orders made in respect of child maintenance on 24 June 2011 are to remain in full force and effect until 31 December 2011 and as a consequence thereof the father remains liable for the payment of the children’s fourth term school fees at [S] College, Adelaide and the payment of a monthly sum of child maintenance to the mother in the sum of $1,700.00 for the remainder of 2011.
ORDERS
The orders made on 24 June 2011 be discharged and have no effect from 31 December 2011 onwards.
The father pay the mother child maintenance for the children of the relationship [X] born [in] 2002 and [Y] born [in] 2003 in a monthly amount of $2,250.00 to be paid in advance to a bank account to be nominated by the father to the mother with the first such payment to be made on the 15th of January 2012 and on the 15th of each month thereafter.
The amount of monthly child maintenance specified in order 2 hereof shall be varied annually by reference to the Consumer Price Index for Adelaide published by the Australian Bureau of Statistics in the December quarter of each year commencing with the December quarter of 2012.
The mother pay the father’s costs of the contravention proceedings determined by the court on 8 September 2011 fixed in the sum of four thousand dollars ($4,000.00) within six (6) months of the date of these orders.
All other extant applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Carr & Vincent (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 2680 of 2008
| MR CARR |
Applicant
And
| MS VINCENT |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of amended application filed 13 April 2011, Ms Vincent “the mother” seeks final orders that would result in Mr Carr “the father” paying child maintenance in respect of the parties’ two children, [X] born [in] 2002 and [Y] born [in] 2003 in the following form:
·The children’s tuition fees at [S] College, Adelaide;
·Fifty percent of any “extraordinary costs” arising from the children attending [S] College and incurred in order to comply with the College’s curriculum;
·Fifty percent of the children’s medical and dental expenses, which the mother is not otherwise able to recoup through other sources;
·A sum of $1,500.00 per week.
In his amended response filed 25 May 2011, the father seeks the following child maintenance orders be made in respect of ongoing financial support for [X] and [Y]:
·A sum of A$1,700.00 per month conditional on him maintaining his employment with [A];
·He not be responsible for any further payment of the children’s school fees to attend [S] College;
The father is an [occupation omitted]. He is employed by a company known as [C] (hereinafter referred to as “[C]”), which is based in Honolulu in the United States of America. He is paid in US dollars each fortnight.
Through the aegis of [C], the father has agreed to provide his services exclusively to [J], which is a subsidiary of [A]. He executed an employment agreement with [C] on 1 August 2011. This agreement terminates on 31 July 2016.[1]
[1] See exhibit A
Until late May of 2011, the father lived in Japan. Following the serious earthquake in that country on 9 March 2011, the father in consultation with his current wife Ms S, a Japanese national by birth, has decided to live in Kuala Lumpur, Malaysia with their two children [Z] born [in] 2008 and [T] born [in] 2011.
Mr Carr and Ms Vincent have never been married. They were involved in a de facto relationship between September of 2001 until November of 2007. The period following the parties’ separation has, to say the least, been very difficult. The period following the parties’ separation has, to say the least, been very difficult.
During the latter stages of the parties’ relationship, the mother lived with [X] and [Y] in a property in suburban Adelaide, whilst Mr Carr commuted between Australia and Japan in order to fulfil his contractual obligations to [C]. The father has a capacity to access cheap air travel for himself as a consequence of his employment.
Due in large part to the commencement of his relationship with his current wife and the birth of [Z], the father elected to live in Japan permanently. Due to this significant change of circumstances, complicated issues arose regarding the ongoing financial support of [X] and [Y], who remained living with their mother in Adelaide and attending the school mutually selected by the parties for their education, [S] College.
Accordingly, in the period following the parties’ separation, Mr Carr, although an Australian citizen, was not a permanent resident of this country. He was based in Japan and was paid in US dollars. As such, there was no nexus between him and the legislatively based domestic regime, inaugurated by the Child Support (Assessment) Act 1989, to assess administratively the amount of child support, in Australian dollars, to be paid by Mr Carr to Ms Vincent in respect of the ongoing financial support of [X] and [Y].
In addition, Australia and Japan do not share an international maintenance agreement. The same circumstances apply to Australia and Malaysia. Accordingly, the sum to be paid by Mr Carr to
Ms Vincent by way of child maintenance for [X] and [Y] falls to be calculated pursuant to the provisions of the Family Law Act 1975.
Before turning to the applicable legislative provisions in detail, it is useful to summarise the particular factual and logistical difficulties arising in this case. Mr Carr is paid in US dollars. Necessarily his liability for child maintenance must be calculated in Australian dollars.
Due to the globalisation of the world economy, the Australian dollar floats in value against other currencies, including the US dollar. The exchange rate of the US dollar in respect of other currencies is also subject to variation. Accordingly the value of a US dollar in Australian dollars will be uncertain in future and subject to the vagaries of the world economy.
Mr Carr and his second family live in Malaysia. As a consequence, his necessary living expenses are paid in a third currency, Malaysian ringgit. In addition, there are likely to be differences arising between the consideration of an appropriate standard of living for a person living in Australia and an expatriate living in Malaysia.
One of the significant advantages of Mr Carr’s current situation of working “off shore” for an American company, which provides his services in Japan, is that he is not liable for income tax in Japan, the United States, Malaysia or Australia. Obviously, this is a very significant benefit and was and remains a major motivating factor in respect of how Mr Carr has chosen to manage his financial affairs.
These various factors render it problematic for the court to assess what is a “proper” level of child support payable by Mr Carr.[2] In some circumstances, it is appropriate to utilise the administratively based child support assessment scheme as a “yard stick” to calculate an appropriate level of child maintenance.[3]
[2] See Family Law Act at section 66G
[3] See Beck v Silwak (1992) 15 FLR 520
Given the circumstances of the parties concerned in this case, particularly the expatriate nature of Mr Carr’s situation; the absence of any income tax liability for Mr Carr; and currency issues; any such comparison may be highly artificial.
That is not an end to the areas of complexity in this matter. Both before and after the parties’ separation, the standard of living and education enjoyed by [X] and [Y] have depended on regular and significant financial contributions from Mr Carr.
It is Mr Carr’s position that his financial circumstances have markedly deteriorated of late and his recently negotiated agreement, with [C], has resulted in his recurrent level of income being significantly reduced. This reduction has coincided with his changed familial circumstances, particularly the relocation to Kuala Lumpur and the fact that he is also financially responsible for two other children, namely [Z] and [T].
Ms Vincent does not accept Mr Carr’s assertions in this regard. It is her position that Mr Carr continues to access a comfortable expatriate lifestyle in Malaysia, a country which should be able to supply his family’s material needs, particularly in respect of food, at a fraction of the cost of living in a developed country such as Australia or Japan.
In turn, Mr Carr rejects this notion as simplistic and unsupported by evidence, which he can muster. In particular, it is his case that he will be met by a significant level of expense in moving his permanent place of abode to Malaysia and other expenses in respect of his children [Z] and [T], particularly education, will be significantly more expensive in Malaysia.
In addition, it is Mr Carr’s case that he remains committed to maintaining a significant parental relationship with [X] and [Y]. He would also want the two children concerned to have a relationship with their half siblings, [Z] and [T].
Necessarily, this must entail the various family members concerned, particularly Mr Carr himself, regularly travelling between Malaysia and Australia. This has the potential to entail considerable expense, notwithstanding the father’s access to subsidised air travel.
Arrangements for the father to spend time with [X] and [Y] have been controversial between the parties and have resulted in vitriolic litigation between them. At present, orders have been made which provide for the father to spend time with the children for regular periods each year, provided he gives sixty days notice of his intention to do so.[4]
[4] See Carr & Vincent [2009] FMCAfam 608
It is Mr Carr’s position that these orders, which he advocated and accepts, put him to considerable and regular expense. In the past, he has rented accommodation for himself and the children in Adelaide in order to spend time with them. He has also travelled with the children interstate to visit their paternal grandmother.
It is Mr Carr’s position that these expenses should be factored into the court’s deliberations in order to assess the proper level of financial support, which he should provide to the children on an ongoing and final basis.
As a consequence of the difficult parenting relationship between the parties, Mr Carr has commenced contravention proceedings against
Ms Vincent. These proceedings were contested by Ms Vincent but on 8 September 2011, following a hearing which occupied one day, I found the contraventions established.
The penalty imposed by the Court was that Ms Vincent was placed on a good behaviour bond on the conditions that she obey all orders of the court and undertake a post separation parenting course. As a consequence of this determination, Mr Carr has sought an order for costs to be made in his favour.
The amount sought is $14,220.17. The issue of costs remains to be resolved and has added to the friction in the parties’ relationship. It being the mother’s position that she cannot afford to meet any award of costs made against her.
The most contentious and emotionally fraught issue between the parties concerns [X] and [Y]’s continued attendance at [S] College. Each child has attended [S] since reception. Accordingly, it is the only school environment [X] and [Y] have known.
It is common ground between the parties that they mutually agreed, during their relationship, that [X] and [Y] should attend [S] and it provided a very high standard of education for the children.
At the present time, basic tuition fees alone for the children to attend [S] amount to somewhere in the vicinity of $28,000.00 per annum. It is the father’s position that he simply cannot afford this sum, particularly when the potential educational needs of [Z] and [T] are considered.
Ms Vincent does not accept this assessment. Given the length of time the two children have attended [S] and the mutual decision of the parties to send them there, it is her position that the manner in which the parties expected [X] and [Y] to be education is a factor to which the court must have regard in assessing the financial needs of both [X] and [Y].[5]
[5] See Family Law Act at section 66J(2)
These proceedings have taken some time to be finalised. As a consequence, there have been two interim or provisional determinations in respect of the level of financial support, which
Mr Carr should provide to Ms Vincent for [X] and [Y].[6] The latter decision arose in response to an application from the father as a consequence of his change of circumstances following the Japanese earthquake.
[6] See Carr & Vincent(No.2) [2009] FMCAfam 648 & Vincent & Carr [2011] FMCAfam 633
The reason for the delay in finalising the child maintenance aspect of the proceedings arises because the parties have been engaged in protracted litigation in the District Court regarding the division of property acquired during their de facto relationship. The most significant item of property in this regard has been their former family home situated at Property F, [F].
This property has been and continues to be occupied by the mother, [X] and [Y], although for reasons to which I will come shortly, it has recently been placed on the market by Ms Vincent.
The proceedings in the District Court were finalised by order of Judge Barrett, following a contested hearing, on 21 February 2011. Pending the outcome of those proceedings, the parties agreed that it was inappropriate for final orders to be made in respect of [X] of the ongoing financial support of [X] and [Y].
One of the consequences of the orders of Judge Barrett was that
Ms Vincent acquired Mr Carr’s interest in the Property F property. She was required to pay him a sum of around $82,500.00. In addition, she had to assume responsibility for the existing mortgage on the property.
As a consequence of these orders, at the present time, Ms Vincent has responsibility for a significant mortgage secured against the Property F property in a sum of around $400,000.00, on a property estimated to be worth $680,000.00. Recently Ms Vincent has come to the conclusion that she cannot afford to continue paying the mortgage on the property and it must be sold.
Regrettably, in the period following the taking of evidence in this case and the conclusion of the contravention proceedings (7-9 September 2011), the mother has found herself in the midst of a financial crisis. This led her, on 10 November 2011, to bring an application to re-open her case and call further evidence regarding her current financial proceedings. This application came before the court on 23 November 2011.
Further evidence, which Ms Vincent wishes to call can be summarised as follows:
·The father has failed to pay the instalments of child maintenance due to her following earlier interim orders of the court, particularly the instalments due to her for August and September of 2011;
·In addition, the father has failed to pay the children’s tuition fees at [S] College for term four;
·On 11 October 2011, she received a letter from the finance manager at [S] College indicating that Mr Carr had written to the school, on 11 October 2011, advising that he would no longer be contributing towards the payment of the children’s school fees;
·The amount outstanding for the term is $6,859.00;
·On 23 September 2011, she was involved in a serious car accident;
·She has decided to place the Property F property on the market, so that she could spend more time with [X] and [Y] and because she was experiencing difficulty in financing the mortgage on the property;
·On 5 October 2011, she attended an induction course at Anglicare, to satisfy her bond condition requiring her to attend a post-separation parenting course;
·This caused difficulties at her employment, particularly because she was without a motor vehicle;
·On 28 October 2011, she was informed by her employers, [N], that her employment was to be terminated;
·There has been little interest from prospective purchasers in respect of the Property F property;
·On 26 October 2011, following a meeting with the finance manager at [S] College, she was advised that proceedings would be instituted against her personally in respect of the outstanding school fees;
·She believes that it will be difficult for her to regain employment given her lack of qualifications and due to the fact that she has had five different positions over the last four years, since the parties separated;
·Against this background, she intends to embark on a course of study in 2012 and seek casual employment whilst she does so;
·She remains critical of Mr Carr and believes that he may have decided to truncate his relationship with [X] and [Y].
In addition to her application to adduce this evidence before the court, Ms Vincent seeks enforcement, pursuant to the existing interim child maintenance orders, which provide for Mr Carr to pay her the sum of $1,700.00 per month, together with the [S] College tuition fees. She also seeks an order that Mr Carr pay the costs of this application.
Neither Mr Carr nor those who had previously represented him appeared in court on 23 November 2011. Mr Carr’s solicitors filed a notice of ceasing to act, which advised that their former client’s address was in Japan. No responding affidavit material had been filed in respect of Ms Vincent’s application of 10 November 2011.
In this context, the contents of Mr Carr’s correspondence with [S] College, of 11 October 2011, is relevant. The content of the correspondence was as follows:
“To whom it may concern,
Regrettably, I am no longer financially able support my children [X] and [Y] at [S] college. This has been a long running legal issue that is reaching a conclusion, which may in any case be redundant considering my financial position.
Ms Vincent may wish to contribute or pay the final term of this year herself.
Thanks for your attention.
Mr Carr.”[7]
I am not able to conclude whether there have been any recent changes to Mr Carr’s financial circumstances. However, it was his clear position, during the hearing of 6 & 7 September 2011, that he was no longer in a position to pay the ongoing [S] College fees.
[7] See annexure A to the mother’s affidavit filed 10 November 2011
On 23 November 2011 I decided to admit Ms Vincent’s most recent affidavit into evidence notwithstanding the fact that Mr Carr had not responded to it. I accepted that Ms Vincent had lost her employment and that the fourth term school fees were outstanding. In these circumstances, it seemed all the more pressing that a final determination of Mr Carr’s ongoing financial liability to support [X] and [Y] be made as expeditiously as possible.
With the resolution of the District Court proceedings and the crystallisation of the parties’ respective capital situations, following the end of their relationship, it was appropriate that the court come to finalise the outstanding issue of financial support for [X] and [Y] promptly. Accordingly a hearing was scheduled for May of 2011.
Regrettably, this hearing was delayed by the earthquake in Japan, which prevented the father attending court in Australia for a hearing of the matter scheduled in early May of 2011. It is the father’s position that the funds advanced to him by the mother to purchase his interest in the Property F property have been largely utilised in paying [X] and [Y]’s outstanding school fees and his legal expenses in both this court and the District Court, which have been considerable.
In the period following the parties’ separation, in late 2007, the father agreed to make significant financial provision for [X] and [Y]. This included the payment of the children’s school fees and the ongoing interest only payments arising from the mortgage then secured against the Property F property. In addition, he agreed to pay the sum of A$1,700.00 per month in direct financial support for the children. This amounted to a total maintenance “package” of around A$4,000.00 per month.
As can be seen from Mr Carr’s current proposal, he now advocates paying a significantly reduced amount of child maintenance to
Ms Vincent. The most significant aspect of which is the deletion of the [S] College fees. As previously indicated, this is a controversial and emotive aspect of the case.
I was not prepared to absolve Mr Carr from his liability to pay the [S] fees following the further interim hearing, which occurred in June of 2011. At that stage, I said as follows:
“Given the school fees are currently up to date and the final hearing is imminent, I do not propose to discharge Mr Carr’s liability to pay the children’s school fees, which he initially voluntarily assumed, at this interim stage. I do not think that such an outcome would be in the best interests of the children concerned. If the children are to change schools, because their current level of education is beyond the means of their parents, the issue must be carefully managed, particularly given the volatile and mistrustful relationship currently prevailing between the parties.
The proper time to make such a decision is following the final hearing. In my view, it is premature to make it now. In the short term, Mr Carr has sufficient financial reserves to pay the next term’s school fees and possibly also to the end of the current school year.”[8]
[8] Ibid at paragraphs 69 & 70
Regrettably, up until the date of the September hearing, it was not possible for the parties to “grasp the nettle” of which alternative school the children should attend, if the court determined that Mr Carr did not have the financial capacity to pay [X] and [Y]’s fees at [S] and Ms Vincent herself was of the view that she could not contribute towards those fees.
From the mother’s point of view, Mr Carr must pay all of the children’s school fees for [S] and there is no viable alternative. From the father’s perspective, he wishes to be absolved of direct liability for the school fees and to provide a fixed periodic sum to the mother, which she can allocate as she deems fit. What this may entail, in terms of identifying an appropriate school for the children, remains a loose end.
In the period since the parties separated, the mother returned to the paid workforce. She was employed as an [omitted] by [N] on a salary of around $57,700.00 per annum. It is from this position that she has recently been made redundant. In the absence of a regular wage, it is clear Ms Vincent has no capacity to contribute towards the [S] College fees.
Up to this stage, [X] and [Y] have enjoyed the perquisites of a comfortable middle class lifestyle and education. They have engaged in many activities – horse riding; tennis; art lessons; ice skating; gymnastics; scouts; and sailing. The continuation of the children in these activities and how they are to be funded is likely to be contentious between the parties, whether or not [X] and [Y] ultimately remain at [S] College.
The recent events, particularly Ms Vincent’s redundancy and the outstanding school fees, have shifted the focus of the case somewhat. It seems that the provision of an education at [S] College for [X] and [Y] is beyond the means of the parties at present.
Sadly, the unhappy relationship between the parties and the protracted and bitter nature of the litigation between them indicate that the father and mother have no capacity whatsoever to manage issues pertaining to the children’s ongoing education in a methodical and rationale manner.
However, the focus of the current proceedings is not specifically on the issue of which school the children should attend in the service of their best interests. Nor is it on how parental responsibility in respect of [X] and [Y] should be allocated between the parties.
Rather, the case centres on the provisions of Division 7 of Part VII of the Family Law Act, which deals with child maintenance orders and in particular what is the proper order for maintenance which should be made.
These proceedings are directed to resolving this issue on a final basis, notwithstanding the uncertainty which must surround the father’s financial position given he is paid in a foreign currency and lives overseas, but his liability for [X] and [Y] must be crystallised in Australian dollars by reference to the costs of the children in this country.
The legal principles applicable
The parties’ respective applications must be determined according to the provisions of Division 7 of Part VII of the Family Law Act 1975. This division deals with the making of child maintenance orders and the objects and principles, which are relevant.
Section 66B sets out the objects of the division. These include ensuring that children receive a proper level of financial support from both their parents; that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both parents; and that parents share equitably in the support of their children.
Section 66C places the primary duty of maintaining children upon the parents of those children. This duty has priority over all other commitments a parent has other than those commitments necessary for a parent to support him or herself or any other child he or she has a duty to maintain.
In the present case, the duty to support [X] and [Y] financially resides solely with Ms Vincent and Mr Carr. The court must ensure that this duty is met, as far as possible, equitably by both of them from appropriate shares in each of their respective incomes, assets and financial resources, depending on their earning capacities. In essence, the law requires parents to share the burden of maintaining their children, according to the level of their respective means, so far as this is equitable.
The approach the court must take in assessing a child maintenance order is set out in s.66H. It is essentially a two step process. Firstly, the court must consider the level of financial support necessary for the maintenance of the child concerned. The relevant matters to be considered are set out in specific detail in s.66J.
Secondly, the court must determine what contribution each parent should make to providing that financial support. The matters to be considered specifically in regards to this second step are set out in s.66K.
Section 66J directs the court to assess the “proper” need of the child concerned in fixing an appropriate level of maintenance. In so doing, the court must have regard to the age of the child concerned and the manner in which the child is being, and in which the parents expected the child to be, educated. In appropriate circumstances, in assessing the needs of any child, the court may have regard to any published research relating to the costs of maintaining a child.
Section 66K delineates the matters the court is required to take into account in determining the contributions which parents should make towards the financial maintenance of their children. These matters include the following:
·The income, earning capacity, property and financial resources of the parents concerned;
·The commitments of each of the parents that are necessary to enable that parent to support him or herself or any other child or another person that parent has a duty to maintain;
·The direct and indirect costs incurred by the parent with whom the child concerned lives in providing care for that child;
·Any special circumstances which, if not taken into account, would result in either injustice or undue hardship to any person.
In this case, Mr Carr has both a legal and moral duty to support his wife, [Z] and [T]. This legal obligation to support [Z] and [T] is of equal priority to Mr Carr’s duty to support [X] and [Y]. It is accepted however, that whilst his duty to support [X] and [Y] on the one hand and [Z] and [T] on the other is of equal priority, this duty does not necessarily translate into the equal provision of financial resources between the two families concerned.[9]
[9] See Ganter & Grimshaw (1998) FLC 92-810.
Pursuant to the provisions of s.66E, the court is specifically prohibited from making a child maintenance order if an application for administrative assessment of child support could be made pursuant to the Child Support (Assessment) Act 1989. However, the child support assessment regime may be relevant to the making of a child maintenance order in certain circumstances.
The relevance of the child support formula
As I understand a number of decision of the Family Court, in particular Beck v Sliwka,[10] although I am not bound to follow the Child Support Assessment Scheme in making judgments under the Child Maintenance Provisions of the Family Law Act, in some situations the scheme may provide a useful guide for determining such cases.
[10] Beck v Sliwka (1992) 15 FLR 520
In Beck v Sliwka, (supra) Nicholson CJ and Fogarty J held that:
Whilst it must be emphasised that under the Family Law Act the court is required to consider the facts of the individual case in accordance with the structure in Division 6, nevertheless in the sort of case with which we are concerned now and which is not untypical of many cases litigated both in this court and in the Magistrates Court, and where the issue is the capacity of the non-custodian to make an equitable contribution to the costs of the children, it seems not unreasonable to at least pay regard to the formula in determining the amount of a Stage 1 order.
The law relating to child support has recently been significantly amended by a number of pieces of interrelated legislation, one of which is the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 which, in part, changed the formulaic basis for the administrative calculation of child support.
The intent of the various new applicable formulae was said to be that they would be more reflective of the actual needs of children affected by the child support system, as they would be based on actual empirical research, as well as the capacity of their parents to pay such child support. The amendments concerned were also said to be fairer, as they provided more recognition of the various possible graduations in the division of parenting time between the parties to a child support assessment.
In his second reading speech regarding the new legislative regime, Mr Brough, the relevant minister at the time, said as follows:
“The new formula, on the other hand, will explicitly be based on the costs of children, as drawn from Australian research showing the real cost of children for the level of their parents’ income and the children’s ages. An ‘income shares’ approach will be used so both parents will have the same amount deducted as self-support, both parents income will be taken into account in establishing the costs of the children, and the resulting costs will be apportioned between the parents according to their share of the combined income.”[11]
These aspirations are recognised in section 4(2)(b) of the Assessment Act.
[11] See Hansard (House of Representatives) for Thursday, 14 September 2006 at page 1
The basis of the application of the formula remains the respective taxable income of each parent concerned. Doyle[12] has described the eight step application of the basic child formula as follows:
·Step 1 – Work out each parent’s taxable income for the last relevant year of income. This includes adjustments for other income components including net rental property losses and reportable fringe benefits. Deduct from this sum each parent’s self support amount, which is currently $18,808;
·Step 2 – Work out combined child support income by adding each parent’s child support income;
·Step 3 – Work out each parent’s income percentage for the child. This is each parent’s adjusted taxable income less the self support amount and less allowances for other relevant dependent children. It is regarded as the base level of income available to be contributed towards the support of the children concerned in the applicable assessment;
·Step 4 – Work out each parent’s percentage care for the children concerned. This relates to the number of nights each year a child is the care of each of his or her parents and represents the direct costs a parent is taken to have contributed to any child concerned;
·Step 5 – Work out each parent’s cost percentage care for the children concerned. This relates to a stepped level of care for any child affected by the assessment concerned. It does not relate to the specific number of nights the children spend with each parent. A fixed percentage of 24% applies between 14% and 35% of nights. From 35% the cost percentage increases by 2% for every 1% of nights until it reaches 65% of nights;
·Step 6 – Work out each parent’s child support percentage for the children concerned. This represents the percentage share of the costs that each parent is required to meet based on their share of combined income after deducting care provided directly to the children concerned;
·Step 7 – Work out the costs of the children concerned by reference to the statutory tables contained in section 55G of the Act. These figures are up-dated annually by reference to the Male All Income Average Weekly Earnings Trend published by the Australian Bureau of Statistics [MTAWE]. The cost of children is referenced to the ages of the children concerned and the income bracket into which their parents’ combined child support income falls;
Step 8 – Work out the child support payable. This is done by multiplying the parent’s child support percentage by the statutorily based costs of the child.
[12] Bruce Doyle: Complications and Intricacies of Child Support Post 2008 Reforms Sixth Annual Family Law Summit Brisbane June 2009.
The secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) is required to publish annually tables setting out the costs of children. In 2011, the costs of providing for two children under 12 years of age, where the combined child support income of the parents concerned was over $154,453.00 per annum, was $29,3346.00.
The annual costs of children tables also recognise that it costs parents more to provide financially for older children. Thus the cost of providing for two children aged over 13, in 2011, again where the combined child support income was over $154,453.00, was found to be $35,524.00.
Accordingly, under the formula, it is the costs of children which are capped, as well as the child support income of their parents. The rationale for this capping being that the empirical costs of providing for children level off as parental income increases. Essentially, the dollar costs of children increase with family income but decline as a proportion of that income, with the difference being allocated to discretionary spending. Therefore it represents an unfair distortion to assess child support on the basis of a raw percentage of parental income.
In terms of the maximum amount of child support payable, it will be referenced to 2.5 times the “male total average weekly earnings (MTAWE)” and apply to the parents concerned’s combined income. This figure is also annually calculated by the Australian Bureau of Statistics.
Under the applicable child support legislation there are provided various mechanisms to alter the administratively applied formula if special circumstances exist which warrant such a departure. Applications can be made to the Registrar of the Child Support Agency to depart from the formula and ultimately to a court of appropriate jurisdiction.
It must be demonstrated that it is just and equitable to depart from the applicable child support formulation and one of a specified number of grounds for departure has been met. The grounds for departure include the following: high costs involved in spending time with a child; the manner in which the parents concerned expected the child to be educated; the assessment is not properly reflective of the income, property and financial resources of the parents concerned.
If, hypothetically, the basic formula was applied to the circumstances of these parties in respect of [X] and [Y], the maximum amount of child support which could be assessed as payable by Mr Carr would be just under $30,000.00. However such a formulation would make no allowance for Mr Carr’s responsibility to provide financial support for [Z] and [T].
In addition, no allowance would have been made for the amount of child support which would have been assessed as payable by
Ms Vincent on her child support income. This calculation would have resulted in a percentage attribution, between the parties, of the capped amount of the cost of the children depending on the relative levels of their income.
Finally, the maximum capped amount arising from the published costs of the children would make no allowance for any period of time the children were in Mr Carr’s actual care. These calculations cut in when a parent has care of any child concerned for more than 50 nights per annum.
Accordingly, I acknowledge that it is somewhat artificial to apply the basic formula to the circumstances of the parties. In addition the formula, for obvious reasons, makes no reference to the fact that, in the present case, Mr Carr pays no income tax and his costs of supporting [Z] and [T] are not referable to Australian standards.
Most importantly, in the Australian context, both parties would be entitled to apply – either administratively or to the court – to depart from the formula. In Ms Vincent’s case, in such a context she would be likely to rely on issues germane to the children’s education at [S] and Mr Carr’s likely level of income when regard is had to his income tax free status.
In Mr Carr’s case, he is likely to raise issue relating to his high cost of spending time with [X] and [Y], when regard is had to the fact that he must travel to this country to see them and must pay for his accommodation when he does so.
However, in my view, the Costs of Children Tables, as published each year, are relevant to the exercise of the court’s discretion in a children’s maintenance application under the provisions of the Family Law Act 1975 given the contents of section 66J. Published material, germane to the costs of providing financial support for children in a high income context, may be relevant to establishing, at least in part, what are the proper costs of support any relevant children.
The evidence
The mother relies on the following documents:
i)An affidavit of herself filed 13 April 2011; and
ii)A statement of her financial circumstances filed 13 April 2011;
iii)A further affidavit of herself filed 10 November 2011.
The father relies on the following documents:
i)Two affidavits of himself filed on 25 May 2011 and 31 August 2011 respectively; and
ii)A statement of his financial circumstances filed 31 August 2011.
The parties were the only witnesses who gave evidence in these proceedings. In addition, a number of documents were tendered into evidence. These included a recent payslip of the father and a photocopy of his cheque account statement with the [omitted] Bank from 1 February 2011 to 31 July 2011.
In my assessment, both parties are honest and reliable witnesses in respect of their financial circumstances. In particular, I reject the submission that Mr Carr is a Machiavellian or disingenuous person who will seek to evade his financial responsibility for [X] and [Y] through whatever means are available to him.
In my assessment, Mr Carr has attempted to provide as much detail as possible regarding his current financial circumstances. Given the various currencies in which he is involved – US dollars; Australian dollars; Japanese Yen; and Malaysian Ringgit; - this is not necessarily a straight forward task.
In my view, it is to Mr Carr’s credit that he has continued to provide significant financial support for [X] and [Y] for the vast majority of the period since the parties separated. In the period immediately following separation and prior to the making of the interim maintenance order on 26 June 2009, he continued to pay the [S] College fees and make regular cash payments of maintenance to Ms Vincent.
At this juncture I have received no explanation from Mr Carr as to why he has disregarded his obligation under the further interim orders of 24 June 2011. Notwithstanding the lack of evidence from him about the recent turn of events, it remains my view that the proceedings need to be finalised. I have no concrete evidence to establish that Mr Carr has decided to cut his ties in Australia to [X] and [Y]. Up to this point, my assessment of him is that he is a parent who is very much committed to the two children.
Following the hearing of September 2011, I accepted that Mr Carr has disclosed all relevant financial documents requested of him by the mother. As such, in my view, this was not a case where it is appropriate for adverse conclusions to be drawn against the father’s credit as a result of non or incomplete discovery.
a) The mother’s evidence
The mother is forty-four years of age. She has lived in South Australia for the majority of her life. She met the father in Australia in May of 2001. At that time, he was employed by an [company] based in Mackay Queensland and she worked for [company omitted].
Mr Carr commenced employment with an [omitted] service, based in Hawaii, in late 2001. Since that time, he has been engaged in [occupation omitted] based in Japan. He works on a roster. As such, he does not have to live in Japan specifically to perform his employment.
The parties lived in the Netherlands for a brief period when [X] and [Y] were babies. However, Ms Vincent’s preference was to live in Australia and for the children to grow up in this country. She, [X] and [Y] moved to Adelaide in April 2004.
Against this background, the parties purchased the Property F property. This was registered in Ms Vincent’s sole name. It was advantageous to both parties for Mr Carr not to have a residential nexus to Australia in order to avoid taxation liabilities in this country.
However, from late 2004 onwards, Mr Carr lived in the Property F property, with the mother and children, during his rostered periods off. These amounted to around ten days per month. It seems to be the case that Mr Carr’s salary was able to provide the family with a comfortable standard of living. Ms Vincent was not employed in the paid workforce.
Against this background, I accept Ms Vincent’s evidence that she and Mr Carr embarked upon a joint process of inquiry, in late 2004/early 2005, to determine what was the appropriate school for the children to attend. They attended an interview together at [S] College.
This school was selected because it was a co-educational school, which although non-denominational, provided pastoral care based on the ethos of Christianity. I accept that both parties aspired to the children concerned competing their education at [S] College.
On 7 April 2005, [X] was enrolled at [S] College. He commenced at pre-school. [Y] began attending the school’s playgroup, for three year olds, in March of 2006. She commenced pre-school in September of that year.
Accordingly, both children have had an involvement with [S] from a very early stage of their education. It is the only school the children have ever known. [X] is currently in year 4. [Y] is in year 3. Neither party has any criticisms of the standard of education which has been provided to the children up to this stage or which is likely to be provided to them in future. Both agree that [S] is an excellent school.
The mother’s evidence, which is unchallenged by the father, is that she receives substantial support from the school community at [S] and has developed strong relationships with other families and teachers at the school.
At present [X]’s school fees amount to $3,610.00 per term; [Y]’s fees are also $3,610.00 per term, which is reduced by ten percent as a result of a sibling discount. The children’s fees will increase as they progress through the school. In total, for the school year of 2011, the children’s basic school fees amount to $27,436.00 or $527.61 per week.
As the children progress educationally, they will be required to own laptop computers. They may also be required to participate in an overseas student exchange. These are the extraordinary expenses to which the mother has referred in her application and in respect of which she seeks a financial contribution from the father.
In addition, the mother estimates the cost of the children’s uniforms and shoes to be around $2,500.00 per annum and their books to cost approximately $500.00 per annum. It is to be anticipated that these costs will increase.
Whilst she was employed, Ms Vincent utilised out of hours school care at [S] for the children. Sessions cost $11.00 per child in the morning and $22.00 per child in the afternoon. Ms Vincent estimates that she paid $154.00 per week for out of hours school care.
She was unable to claim any government reimbursement, in respect of these expenses, because [S] is not registered with the relevant authorities for this purpose. The mother’s evidence is that out of hours school care, at [S], is her only viable option, whilst she is in employment. The ongoing viability of these arrangements is obviously highly problematic at present.
The mother has provided details of the various extramural activities, in which the children have engaged in both before and after the parties separated. These activities include swimming; tennis; art lessons; ice skating; sailing; scouts; gymnastics; talent school; ballet; and horse riding.
As is often the case with children of the ages of [X] and [Y], the children have experimented with many of these activities and subsequently discarded them. The mother is a keen sailor herself and she and the children continue to sail together. The costs of sailing equipment, for the children, amounts to $270.00 per annum.
In the earlier reasons for judgment, I commented that my impression was that Ms Vincent aspired to [X] and [Y] having a comfortable upper middle class lifestyle, including a broad and liberal education, which would enable whatever latent talents are available to them are fully developed. I have no reason to alter this assessment.
At present, Ms Vincent assesses the costs of the children’s various activities as being somewhere in the vicinity of $124.00 per week. Accordingly, on the basis of Ms Vincent’s figures, it costs $862.31 to provide for the children’s educational expenses and extramural activities. This is broken down as follows:
·Basic tuition fees $527.61
·Out of hours school care $154.00
·Books $9.60
·Uniforms and shoes $48.00
·Extramural activities $123.70
·Total $862.31
This equates to $44,840.12 per annum. It is to be anticipated that this sum can only increase.
Ms Vincent is not currently inclined to cut any corners so far as the children’s expenses are concerned. She continues to hold significant animus for Mr Carr as a result of the circumstances surrounding the end of the parties’ relationship and her perception that Mr Carr’s behaviour has robbed her and the children of a comfortable lifestyle.
Initially, when she commenced these proceedings for child maintenance, in March of 2009, Ms Vincent sought a lump sum award of child maintenance fixed in the sum of just under $600,000.00. In my view, this was a self apparently unrealistic application, given Mr Carr’s then financial circumstances, particularly his lack of capital assets to satisfy the sum sought.
I appreciate that it is not uncommon for parties involved in proceedings in this court to make ambit claims, but at the outset of the September hearing, I remained concerned that the mother may be out of touch with the reality of both her and Mr Carr’s financial situation. I was particularly concerned that Ms Vincent appeared blind to the possibility that it may be necessary for the children to attend another school and she herself may need to make some unpalatable financial decisions. With her recent decision to sell Property F, it may be the case that she has become more aware of the reality of her financial position.
Ms Vincent’s evidence, at the hearing in September, was that her current personal expenditure exceeds her average weekly income, including when Mr Carr’s current level of child maintenance provision is included. Undoubtedly this position has worsened since her redundancy and given Mr Carr’s apparent withdrawal of maintenance.
It is implicit in her case that she cannot currently afford to make any financial contribution whatsoever towards the cost of the children attending [S]. As previously indicated she has no proposal for an alternative school and is either unwilling or unable to discuss the issue with Mr Carr. Financial necessity may dictate that another school be selected from Term 1 of 2012 onwards.
Prior to her redundancy, the mother’s gross income from her employment with [N] was $1,111.00 per week or $57,772.00 per annum. In addition, she received a car allowance of $150.00 per week and total tax benefits of $101.00 per week.
Prior to this employment, she was employed by [omitted]. As I understand matters, she was employed in [omitted]. Ms Vincent enjoys good health. In my assessment she is an enterprising person. However she has no specific qualifications. Her employment background has been in [omitted].
Ms Vincent’s current position is that she wishes to undertake a course of study to improve her future employment prospects. Her plans in this regard are not particularly well delineated at this stage. She anticipates obtaining casual or part time employment. Financial necessity would seem to dictate that she must obtain some form of employment sooner rather than later.
Although the Australian economy, as a result of global turbulence, seems to be entering a period of uncertainty, rates of unemployment remain relatively low. In these circumstances, I would assess
Ms Vincent as having some income earning capacity. It is difficult to assess what that capacity is in dollar term, given the uncertainty of her plans, stemming from the recentness of her redundancy.
As a result of the conclusion of the proceedings in the District Court, the mother’s most significant asset is the Property F property, which is valued at $580,000.00 but is subject to a mortgage of approximately $400,000.00. She is liable for a weekly mortgage repayment of $625.00 per week.
The mother owns a motor car of modest value and has superannuation worth around $60,000.00. She has a small credit card debt and a liability for legal fees amounting to some $20,000.00. She has a parcel of shares worth $16,000.00.
I accept that Ms Vincent does not have any significant asset backing. She has a significant level of debt, in the form of her mortgage. In addition and importantly, she was a modest income earner until recently. I also accept that, as she has no specialised skills to speak of, it is unlikely that she will be able to improve her income earning capacity in the medium term, unless she undertakes some form of education.
At best Ms Vincent may be able to return to the workforce at a salary in the vicinity of $50,000 per annum. However, she may struggle to find work given the worsening economic outlook in Australia. If she returns to study, her potential income will be much less. As such, at present, I accept her financial position is parlous.
One area of potential contention arising between the parties concerned the mother hosting international students at her home. At present, she is home staying two students from [country omitted], who are attending Year 12 at a nearby High School.
The mother’s evidence is that the moneys which she receives from the South Australian Department of Education are fully utilised in providing for the students daily needs, particularly their daily board. Counsel for Mr Carr did not seek to challenge this evidence. Accordingly, this is not a relevant matter in respect of any assessment of the mother’s financial capacity.
However, notwithstanding this state of affairs, Mr Carr retains some suspicions about the mother’s financial circumstances. In particular, he is aggrieved that Ms Vincent has not provided him with a copy of her application for mortgage finance, which must have been made in the period following the resolution of the District Court proceedings.
For her part, Ms Vincent has indicated that, as the document in question is in the control of her mortgagee bank, she is not in a position to disclose it. An attitude which the father regards as being at best artificially precious and at worst disingenuous. I am unable to resolve this issue other than to say that Ms Vincent does not appear to me to have any undisclosed sources of income or assets.
The mother assesses the weekly cost of maintaining the children as being $430.20.[13] The major expense is food ($100.00); energy ($50.00); motor vehicle expenses ($80.00); and medical and pharmaceutical expenses ($41.00). The mother has also deposed that she contributes $50.00 per week to a savings fund for the children and they buy gifts worth $25.00 each week.
[13] From this sum I have deducted the amounts allocated for the children’s extramural activities and miscellaneous educational expenses, which are $123.70 and $85.00 respectively.
Although I would anticipate that Ms Vincent would not want to depreciate any of these expenses and, as such, she is likely to be more generous than not in her estimation of them, these various expenses do not appear to me to be inherently unreliable. As such, I would estimate the basic costs of the children as being somewhere in the vicinity of $450.00 to $500.00 per week in total.
Pursuant to section 66J(2)(b) the court may have regard to any relevant statistical material in respect of the cost of providing for the children. The secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), pursuant to section 155(2) of the Child Support (Assessment) Act 1989, is required to publish annually a table reflecting the costs of children in Australia. This table is an element of the formula (referred to above) which is utilised to calculate child support pursuant to the administratively assessed child support scheme.
These costs are referable to the combined incomes of the parents of any children concerned and are also referable to information regarding the average weekly earning trend males all employees total earnings “MTAWE” published by the Australian statistician each year.
The costs of children table for 2011 provides a cost of $26,257.00 as being the costs for providing for two children under twelve years of age, when the combined parental income amounts to $123,562.00. This seems broadly in line with Ms Vincent’s basic figures.
Much controversy exists between the parties regarding the mother’s capacity to access the father’s health insurance arrangements in respect of the medical needs of the children. The mother’s position is that she has been compelled to make her own arrangements in respect of health insurance for [X] and [Y], notwithstanding the order made on 26 June 2009 that Mr Carr pay all the costs necessary to ensure that the children have top cover health insurance.
In this regard, Ms Vincent deposes that she pays $55.00 per week in respect of health insurance for her and the children. In these circumstances, she has paid “the gap” which has arisen in respect of what has been provided to her by insurance and the fees charged in respect of [X]’ dentist and [Y]’s audiologist and ENT specialist.
In addition, the mother deposes that she has paid for [Y] to attend upon an educational psychologist and for [X] to attend an allergist, which are expenses not covered by her health insurance fund. I will return to the issue of financial provision for the children’s medical needs when I come to the father’s evidence.
b) The father’s evidence
Mr Carr was born [in] 1966. He married Ms S, who is thirty five years of age, in Tokyo, [in] 2007. As previously indicated the father and his current wife have two children [Z] born [in] 2008 and [T] born [in] 2011.
Ms S is not currently engaged in the paid workforce. She is primarily responsible for providing for [Z] and [T]’s needs. There is no dispute that the father is legally responsible to provide financially for his current wife and two youngest children.
As a consequence of his employment with [C], the father maintained a residence near Tokyo [business omitted] prior to the parties’ separation. It did not suit the father to be regarded as a resident of Australia for taxation purposes. He did not pay tax in Japan. Following the parties’ separation, Mr Carr and Ms S lived together in a flat in a suburb of Tokyo.
This situation came to an end following the earthquake in Japan on 9 March 2011, which coincided with the birth of [T]. Mr Carr and
Ms S were anxious about the possibility of both [Z] and particularly [T] being exposed to harmful levels of radiation and as a consequence they flew from Tokyo to Okinawa with their children and rented temporary accommodation there.
I accept that the father left Tokyo, for valid and readily understandable reasons in circumstances which were beyond his control. There was a very serious crisis in Japan, in the vicinity of Tokyo. This involved serious damage to nuclear reactors and the release of high levels of radiation. In such circumstances, it is understandable that those with an ability to leave the area of Japan so affected would choose to do so.
I also accept Mr Carr’s evidence that it is his and Ms S’s preference not to return to live permanently in Japan for the foreseeable future. This has had some financial implications for the father. He has had short term accommodation expenses in Okinawa. He has also had to make arrangements to accommodate himself in Tokyo, near the [business], so that he can fulfil his employment conditions.
In addition, he has had expenses related to the storage of items of property in Japan and other relocation expenses. It was under these circumstances that, in early June of 2011, Mr Carr and Ms S determined to relocate their family to Kuala Lumpur in Malaysia.
The most significant evidentiary issue in this case concerns the father’s level of income, now he has moved his wife and two younger children there; what are his likely capital expenses, in terms of visas and the like, of his relocation to Malaysia; and what are his reasonable living expenses in Kuala Lumpur, given his circumstances and those of his wife and two younger children.
In 2009, I found that Mr Carr’s weekly income, whilst he lived in Japan was A$5,318.00 or A$276,536.00 per annum. Given he had no liability to pay tax, I found that he had considerable capacity to pay for [X] and [Y]’s financial support, including their school fees at [S].
This was the background to me ordering that Mr Carr pay the sum of A$1,700.00 per month in cash to Ms Vincent, together with the children’s basic school fees. This equated to a “package” of around A$4,000.00 per month. In this regard it should be noted that this was essentially the sum which Mr Carr proposed he would pay by way of child maintenance. He was agreeable to paying the children’s school fees at [S]. In 2009, the controversy arose on Ms Vincent’s side that this package was insufficient.
I accept that the evidence, provided at trial, indicates that Mr Carr has adhered to this order, since it was made. I also accept that prior to the commencement of the order, he paid a significant level of maintenance to Ms Vincent. As such, I do not think that it can be said that he has abrogated his financial responsibility for [X] and [Y] or attempted to exploit his expatriate status in respect of the maintenance issue.
It is now Mr Carr’s position that his financial circumstances have significantly changed since 2009. In particular, his salary has declined; he has greater familial responsibilities, particularly since the birth of [T], and these responsibilities will become more significant as his two younger children grow older; and it is likely to cost him a significant amount of money to secure permanent residency in Malaysia.
It is Mr Carr’s position that he has only been able to continue to pay the [S] College fees, up to this stage (the September trial date), because he has depleted his capital resources as represented by his settlement moneys from the Property F property. Given his significant legal costs, some of which have already been paid, Mr Carr asserts that he has no longer any capital left to fund expenditure on the children’s school fees at [S].
Mr Carr’s evidence is that he has largely expended the moneys received by him as a result of the mother’s purchase of his interest in the Property F property. These moneys have been utilised in paying legal fees and the children’s [S] College fees. Mr Carr deposes that he retains only $4,426.98 of these moneys.
The contents of Mr Carr’s letter of 11 October 2011 to [S] College appears to bear out this position. I appreciate that is Ms Vincent’s case that Mr Carr has ceased payment of the school fees as a tactical manoeuvre. Whether this is so I am unable to ascertain at this juncture.
Of the moneys received from the Property F property, Mr Carr estimates that he has paid around $60,000.00 in legal fees arising from the District Court proceedings; $7,000.00 in school fees to [S] College; and payments of child maintenance to August of 2011 of $6,800.00.
In cross examination, Mr Carr indicated that he had spent approximately $100,000.00 in legal fees in proceedings in this court and the District Court, in addition to the payment of $60,000.00 referred to above. He deposed that he had been able to pay this sum from his recurrent income. Mr McQuade, counsel for the mother, submits that this admission renders it axiomatic that Mr Carr has access to significant sources of income from time to time.
Mr Carr’s evidence is that in 2010, the division of [A] to which he is contracted to provide his services was delisted and absorbed into another subsidiary company of [A], [J]. It is his position that restructure resulted in a decrease in his salary and other changes in his conditions.
I have been provided with a copy of Mr Carr’s employment agreement dated 1 August 2011.[14] It provides for amounts of monthly salary; experience pay; supplemental compensation; and premium pay. Premium pay is paid when the [employee] concerned [works] additional hours. Although Mr Carr has worked for entities related to [A] for many years, I accept his evidence that one of the consequences of the change in corporate arrangements is that he has reverted to being a [position omitted] with one year experience.
[14] Exhibit A
Mr Carr was also paid out his completion bonus, on a pro-rata basis, on his transfer to [J]. At present, Mr Carr’s contracted level of remuneration, in US dollars is as follows:
Monthly basic salary
Experience pay
Supplemental compensation
Premium pay
$12,177.00
$1,115.00
$969.81
$181.10
Accordingly, the maximum level of salary recoupable by Mr Carr is US$14,342.91 per month, which equates to US$172,114.92 per annum. Obviously what that sum will equate to in Australian dollars has the potential to vary markedly from time to time. Other than noting the potential for the Australian dollar and the US dollar to both appreciate and depreciate against one another in terms of relative value, it is beyond the scope of the evidence available to me to attempt to predict what the value of Mr Carr’s salary will be, in Australian dollars, in future.
Mr Carr has also provided an earnings statement for the period ending 31 July 2011 from [C]. This statement includes details of Mr Carr’s pay for the whole of the calendar year to that point. It should be noted that Mr Carr’s contract with [J] began on 1 August 2011 and accordingly his earnings prior to that date were received from [A].
This earnings statement[15] indicates that Mr Carr earned US$21,547.91 in the fortnight ending 31 July 2011. Of this sum $14,467.00 was bonus pay, representing the pro-rata distribution of his completion bonus with [A]. The statement also shows that from 1 January 2011 to 31 July 2011, Mr Carr was paid US$115,234.50. This equates to US$3,841.15 per week or US$199,739.80 per annum. If the completion bonus is excised, it equates to a weekly salary of US$3,338.92 or US$173,623.66 per annum.
[15] See exhibit C
[J] does not [operate in] Kuala Lumpur. In order to provide his services to the [company], it is necessary for Mr Carr to travel to Singapore, which is no great distance. Mr Carr is provided with moneys to compensate for the cost of accommodation, whilst he is working away from his home base.
He is free to allocate this compensation as he sees fit. At present he rents a flat near [omitted] in Japan. In addition, Mr Carr frequently buys airline tickets for himself and his family, particularly so that he can visit [X] and [Y] in Australia. Payment for these tickets is deducted from his salary.
In his statement of financial circumstances, Mr Carr has calculated his gross weekly salary as being A$2,822.00, which equates to A$146,744.00. He also calculates that he receives a commuter/transport allowance of A$419.00 per week and an accommodation allowance of A$320.00 per week, which equates to a total income amount per week of A$3,561.00 or A$185,172.00 per annum.
On the basis of these figures, Mr Carr asserts that his average weekly income exceeds his personal expenditure by an amount of A$152.00. This includes the current level of maintenance paid for [X] and [Y], including school fees, under the current order. This currently amounts to A$4,000.00 per month or about $920.00 per week.
In completing his statement of financial circumstances, Mr Carr has converted the value of his assets, liabilities and recurrent expenses into Australian dollars from Japanese Yen; US dollars; and Malaysian Ringgit, where appropriate. It is his evidence that he has used an exchange rate of A$1.00 being worth US$1.10.[16] This figure was adopted on the assumption that the Australian dollar would appreciate against the US dollar.
[16] See Mr Carr’s affidavit of evidence filed 31 August 2011 at paragraph 37
Mr Carr does not own any real property. He rents accommodation in both [omitted], Japan and Kuala Lumpur, Malaysia, at an estimated cost of A$534.53 per week. He does not currently own a motor vehicle and has modest household contents. He does not own a television set, DVD player or stereo. It is his case that he is compelled to live a constrained lifestyle because of the financial burden arising from the current liability he has to pay maintenance for [X] and [Y].
Mr Carr has deposed that he has savings of around A$26,000.00. He proposes utilising this sum to purchase a motor vehicle for himself and his family’s use in Kuala Lumpur. Whilst the family was living in Japan it was not practicable to own a car. It is easier to do so in Malaysia and he and his wife would no longer be dependant upon taxis for transport.
Mr Carr’s only other significant resource is his accumulated superannuation, in three funds, which amount in value to A$160,000.00. From late 2007, Mr Carr requested that his employee not make contributions to his pension plan. More recently, he has begun paying the sum of A$329.37 as his own contribution to his pension fund. It is his evidence, which I accept, that he needs to make this payment to prepare financially for his retirement.
Mr Carr’s evidence is that he is contributing US$1,570.00 per month to his pension plan, which together with his employer’s contributions will increase his contribution to fifteen percent of his current salary.[17]
[17] See affidavit of the father filed 31 August 2011 at paragraph 13
The major area of contention, between the parties, in respect of
Mr Carr’s financial situation is his cost of living in Kuala Lumpur, for his family and for himself, whilst he is at work. Mr Carr has estimated his living expenses as being A$1,532.00 per week. His own personal expenses amount to A$716.00 per week, in contrast to the expenses for [Z] and [T] of A$341.00 per week and his wife of A$475.00 per week.
It is Ms Vincent’s assertion that these costs are extraordinarily high, particularly given that it is possible to eat cheaply in Malaysia through utilising local produce and market stalls. Accordingly, it is the mother’s position that the father has consciously inflated his living expenses to secure an advantage in these proceedings.
The father’s position is that his personal expenses are necessarily high because, when he is travelling for his employment, he stays in hotels and purchases meals for himself there, often at unusual times, as a consequence of his [employment] schedule. Necessarily, he asserts this means his daily cost of sustenance is more significant than might otherwise be anticipated.
Mr Carr has estimated his food expenses as being A$250.00 per week and A$400.00 per week for his wife and children. He concedes that it is possible to live very cheaply in Kuala Lumpur by eating from food stalls. He acknowledges that he and his family do consume food from these sources from time to time. However, it is his evidence that it is not reasonable to expect him and his family to utilise these food sources exclusively. Mr Carr asserts that expatriate food staples are not any cheaper in Malaysia than in either Japan or Australia.
I do not disbelieve Mr Carr’s evidence in respect of his own idiosyncratic circumstances. It does not seem to me to be inherently unlikely that, given his circumstances, Mr Carr’s day to day living expenses are likely to be significant. I have no other sources of evidence available to me to gauge his living expenses. I also appreciate that necessarily the process of estimating those expenses, for proceedings such as these, is somewhat artificial as prices and levels of personal expenditure can vary significantly from week to week.
Putting aside Mr Carr’s estimate of the costs of food for himself and his family (A$650.00 per week), his other most significant expense is for holidays, which he estimates cost him A$268.00 per week. The most significant component of this expense is his own holidaying, to which he attributes the sum of A$238.00 per week.
Mr Carr was cross-examined about his holidaying in the past. He concedes that he and his wife and [Z] have holidayed in both France and Spain. Given his circumstances as an expatriate international [occupation omitted], with access to subsidised air travel, Mr Carr asserts that these holidays were not unduly extravagant and involved basic accommodation.
Again, I am not in a position to disbelieve this evidence, given my finding that Mr Carr is a credible witness, who is not intent on avoiding his proper responsibilities. More importantly, going into the future, it is Mr Carr’s evidence that he will have significant expenses involved in coming to Australia to spend time with [X] and [Y]. He estimates that this travel has the potential to cost him A$2,800.00 per trip and there is the possibility of four such trips each year.
The evidence indicates that Mr Carr has consistently visited [X] and [Y] each year. I am aware from other proceedings between the parties that these visits have not been without their issues. Mr Carr has rented accommodation for himself and the children during these holidays. He has also travelled interstate with the children. I accept that he will incur expense in visiting [X] and [Y] and there is no obvious mechanism by which these expenses can be ameliorated. Certainly,
Ms Vincent would be disinclined to assist in this regard.
At present, Mr Carr and his family are living in Malaysia pursuant to temporary visas. From Mr Carr’s point of view this is unsatisfactory and he would want to obtain permanent residency for himself and family. He is able to do this via a program operated by the Malaysian government entitled “Malaysia My Second Home”.
Pursuant to this program, successful applicants must make a cash deposit with the Malaysian authorities. The extent of the deposit varies with the nationality of the applicant concerned. In the case of Australian applicants the level of deposit is 1,500.00 Ringgit and access to a cash holding of 500,000 Ringgit. This latter sum equates to around A$150,000.00. The sum concerned may be reduced by fifty percent after one year.
It is Mr Carr’s evidence that he and his wife do not have access to such a liquid sum. I accept this evidence. It is further Mr Carr’s evidence that he is borrowing the necessary moneys from his parents in law in Japan. Again, I accept that this is so. Accordingly, the father’s continued living in Malaysia is not without its own inherent expenses.
Mr Carr’s evidence is that he would like to purchase a property for himself and his family in Malaysia. As he has no savings to speak of, his plans in this regard are not particularly advanced. He has looked at properties worth up to A$200,000.00. He anticipates that he would have to borrow the entirety of any purchase price. Apart from accommodation expenses, it is Mr Carr’s assertion that the cost of living in Malaysia is “relatively the same” as in Japan.
[Z], who is now aged three years of age, has commenced pre-school. Given his background, it is not practicable for [Z] to attend a school provided by the Malaysian authorities. He attends a private pre-school, which costs A$630.00 per term.
Mr Carr has deposed that it will be necessary for [Z] and in turn, [T] to attend private schools in Malaysia. These schools are expensive and require a non-refundable entrants’ fee of around A$5,000.00 together with annual fees of between A$7,000.00 and A$9,000.00 per year at entry level. These fees will increase as the children concerned become older.
It is Mr Carr’s submission that it is unfair that his two older children should in effect receive a more expensive education than his two younger children. Ideally, he would like all four of his children to receive a similar level of education. As previously indicated, it is his position that it is self apparent that it is unviable for him to contribute A$28,000.00 and upwards in respect of the education of [X] and [Y].
In contrast, the mother points to the fact that Mr Carr has demonstrated such a capacity by virtue of the fact that he remains up to date with his liabilities pursuant to the court orders of June 2009, whilst at the same time supporting his second family and incurring substantial legal fees. She is sceptical at Mr Carr’s assertion that he is in dire financial circumstances.
For his part, Mr Carr points to his lack of capital; significant assets; and reduced income; to support his position. It is his case that his work situation is unlikely to change in the short to medium term. His salary with [J] is not subject to CPI increases but does automatically increase by 1.57 percent per year.
The father has deposed that he has made inquiries with other [companies] regarding employment. The effect of his evidence that it would be difficult for him to obtain a senior position with an alternative [company] and it may be necessary for him to retrain before he is accepted by another [company]. In addition, he may have to pay for training prior to commencing with an alternative [company].
Mr Carr’s evidence is that he has obtained health insurance for [X] and [Y] with an American based insurer, AETNA. This company provides global health insurance. I accept that this is so. I also accept that in order to claim on the fund it is necessary to have access to the insurance card issued by the company.
This card remains in Mr Carr’s possession and he is unwilling to provide it to Ms Vincent because he mistrusts her and fears she will not return the card to him. For her part, Ms Vincent asserts that membership of this US based health insurer is not suitable for her and the children’s circumstances.
In particular, she deposes that Australian medical providers are likely to be unfamiliar with the firm and so unwilling to bill services provided by them to it. In addition, she pointed to the fact that, in the absence of the necessary claim card, it will be difficult for her to establish that the children are indeed covered by AETNA.
In my view, this issue of health insurance is emblematic of the unresolved tensions between the parties. They are incapable of communicating constructively about any issue to do with the children. Mr Carr makes arrangements for the children, which are ostensibly beneficial for them, but these arrangements come to naught because of the parties dysfunctional relationship.
In large part, these difficulties stem from the fact that Mr Carr aspires to parent [X] and [Y] from afar. Necessarily, he is out of touch with the day to day reality of the children’s situation. For her part,
Ms Vincent remains deeply resentful that Mr Carr wants “to have his cake and eat it too” in terms of living overseas, whilst aspiring to be a constant presence in the children’s lives.
The arrangement to which Mr Carr aspires can only be achieved with Ms Vincent’s cooperation. She is not willing to provide this cooperation and I doubt that she will ever be so inclined. This means that so far as the children’s American health insurance is concerned, it has no meaning for Ms Vincent and so no application for [X] and [Y]. As such, up to this point, I accept that Mr Carr is not effectively providing health insurance for the children. This burden falls on
Ms Vincent exclusively.
In raw terms, doing the best I can from the evidence available to me, it would seem to me that Mr Carr has a surplus of income over expenses for himself and his family in Malaysia of a maximum amount of $800.00. This figure does not include his current level of liability for child maintenance for [X] and [Y]. It also does not provide him with a particularly lavish or extravagant lifestyle. Accordingly, I accept that the current rate of payment of child maintenance is not sustainable by him given his current financial circumstances.
I appreciate that this is a very artificial exercise. I also accept that
Mr Carr has been living beyond his means for some time. With the conclusion of these proceedings, one aspect of extraordinary expenditure – in the form of legal fees – will, I hope, cease. It may also be possible for him to stop renting the flat in Japan but this will result in him incurring more hotel expenses.
The most artificial aspect of the calculation is that it does not recognise that Mr Carr’s rate of expenditure in Malaysia is likely to increase in the short to medium term, as [Z] and then [T] start school. It also does not recognise that Mr Carr is likely to wish to purchase accommodation for himself in Kuala Lumpur. Finally it makes no provision for the costs of spending time with [X] and [Y] in Adelaide.
Conclusions
a) The financial needs of the children
Up until the parties separated, [X] and [Y] lived in a comfortable and well resourced middle class family. This standard of living was funded by their father’s expatriate employment, in Japan, as an [omitted]. A significant benefit of Mr Carr’s employment was that it was tax free.
Prior to the parties’ separation, both Mr Carr and Ms Vincent endeavoured to ensure that [X] and [Y]’s every need and interest was catered for. Both parents aspired to the children having the best possible education money could buy and for [X] and [Y] to be accomplished and well-rounded children.
In the initial interim child maintenance decision I observed as follows:
“My responsibility, in this case, is not to ensure that [X] and [Y] are provided with an identical or superior standard of living to that which they enjoyed prior to their parent’s separation. Rather it is to assess what are their “proper needs” depending on their respective ages and the standard of education, which their parents have agreed they should enjoy.”[18]
[18] See Carr & Vincent (No.2) [2009] FMCAfam 648 at paragraph 51
I acknowledge that it is potentially highly detrimental for [X] and [Y] to have to leave [S] College. I accept that both children are happy and well settled in the school. I also accept that [S] provides an excellent standard of education. However, in my view, it is axiomatic that the parties cannot continue to afford to send the children to the school and other arrangements will have to be made in 2012.
At present, the children’s basic fees at the school amount to around $28,000.00 per annum. If Ms Vincent continued to be employed, this would be around about fifty percent of her gross income. Even if
Ms Vincent was employed, in such circumstances, she would only have a limited capacity to contribute to the costs involved in the children attending [S]. Now that she is redundant and anticipates only casual employment for herself in future, her capacity to contribute to the fees is effectively nil.
This means, if the children are to continue at [S], Mr Carr must continue to bear the entire cost, as he has done since the parties separated. I accept that his financial circumstances have changed markedly in the last twelve months. In particular, his annual rate of remuneration has reduced and the level of his financial obligations to his second family have increased.
I also accept that he is likely to have a significant level of expense in Malaysia as a result of his application to have permanent residency in that country and in order to provide his younger two children with an appropriate level of education. As is the case with Ms Vincent, I accept that Mr Carr has exhausted his stores of capital and is currently in a state of financial crisis.
Mr Carr remains well paid by applicable Australian comparisons, particularly when it is born in mind that his income is tax free. However, his income is not inexhaustible. At present, I estimate his income as falling somewhere between A$150,000 to A$175,000 per annum. These figures are purposely conservative and will change with changes in the exchange rate, which of late has been unpredictable. Accordingly, the [S] College fees alone have the potential to consume between sixteen and eighteen percent of his income.
In my view, this is unsustainable in the longer term, particularly if
Mr Carr is assessed to pay a recurrent lump sum of child maintenance for [X] and [Y] to Ms Vincent. Although Ms Vincent’s perspective is that [X] and [Y]’s needs should be prioritised over the needs of [Z] and [T], I am not in a position to ignore Mr Carr’s ongoing financial responsibility to maintain not just [X] and [Y] but also [Z] and [T].
Prior to Ms Vincent’s application to adduce further evidence, I was minded to assess a global figure for [X] and [Y]’s ongoing financial needs, which did not specifically reflect the exact quantum of the [S] College fees. I proposed calculating this sum on the basis that both children were members of a prosperous, albeit separated, middle class family, where both parents were in employment and both aspired to the children having a liberal private school education.
I thought it potentially unfair to Mr Carr to allocate to him alone the ongoing financial sacrifice of ensuring that the children continue to attend at [S] College. It seemed to me to be preferable that Ms Vincent should also bear some of the burden, which could only become more intense as the children grew older and progressed through the school. In these circumstances, it seemed to me to be appropriate that Mr Carr be assessed to pay a global amount of child maintenance to reflect both parties’ aspirations for the children and their respective means, but that Ms Vincent determine how much of that sum, if not all of it, should be contributed to school fees.
However, with Ms Vincent’s redundancy, this approach has been overtaken by events. It now seems to me to be self apparent that the fees at [S] College are beyond the means of the parties, either when taken in combination or on an individual basis. Accordingly, it is somewhat difficult to ascertain the proper needs of the children given that it is unclear to me what component their ongoing educational expenses will comprise in their total financial needs.
Excluding their school fees and other extramural activities, including before and after school care, Ms Vincent assesses the costs of the children as being $430.20 per week. This equates to $22,370.40 per annum. This does not seem to me to be an unreasonable figure, particularly when the FaHCSIA costs of providing for children tables are considered. However, as previously indicated, this amount calculated by Ms Vincent makes no allowance for any educational expenses of the children.
As previously indicated, it is highly regrettable that the parties themselves have not been able to manage the issue of which school the children should attend in future. Rather, particularly in Ms Vincent’s case, they have avoided the issue until overtaken by financial crisis. Sadly, the issue remains undetermined and most likely will have to be determined precipitously. This may result in the parties being liable for cancellation fees payable to [S].
I am not in a position to determine which school the children should attend in 2012 other than as I will not be directing Mr Carr continue to pay the school fees at [S]. As a result of the parties’ current circumstances, it is unlikely to be this school or one comparable to it. It remains my view that I should calculate a global sum of child support, reflective of the children’s background and current needs. At this point, I calculate the recurrent financial needs of the children as being met by a sum in the vicinity of A$30,000 per annum.
In reaching this sum, I have accepted Ms Vincent’s assessment of the recurrent financial needs of the children, in broad brush terms and have added a further sum of $8,000 or thereabouts per annum, to reflect their educational and other extramural needs.
In my assessment, a sum of $30,000 per annum reflects the financial needs of two children, of the ages of [X] and [Y], who are growing up in a comfortable middle class family, where at least one parent has a comfortable income and it is anticipated that the children concerned will each receive some form of privately funded education. The more difficult aspect of the case turns on how the parties should be required to fund this amount, given their current conflicted and unusual circumstances.
b) The parties’ capacity to provide for the children’s financial needs
At present, I accept that Ms Vincent has a limited capacity to provide for the children’s needs. She is unemployed. Her future employment prospects are unclear. At this stage, her preference would be to work casually and pursue studies with a view to increasing her income capacity in the longer term.
In these circumstances, the larger proportion of the burden of supporting [X] and [Y] will necessarily fall on Mr Carr’s shoulders, as it has done since the parties separated. I estimate Mr Carr’s income, at the present time, as being somewhere between A$150,000 and A$175,000. In addition, he is paid a per diem allowance by [J] but I accept that the larger proportion of this amount is expended on his necessary living expenses, whilst he is away from home.
I accept his evidence that he currently experiences significant difficulties in making ends meet on his current level of salary. As such, I do not believe it to be the case that his move to Malaysia has significantly reduced his living expenses. I also accept his evidence that, as [Z] and [T] grow older, he will be liable for a significant level of expenditure in respect of their education in Malaysia.
There is evidentiary corroboration for Mr Carr’s assertion that his income, up to this stage, has barely covered his expenditure. I accept that he owns no property, either real or personal, of any significant value. It is also clear that his entitlements from the sale of the Property F property have been utilised, both in the payment of his legal fees and the [S] College fees up to the end of term three 2011.
However, Mr Carr’s financial circumstances are vastly superior to those of Ms Vincent, who is now contemplating the sale of her most significant item of property, namely the Property F property. This will potentially recoup her a sum in the vicinity of $180,000 depending on the ultimate sale price and the costs incurred in achieving it. What Ms Vincent proposes to do with this sum is unknown to me.
As previously indicated, under the applicable child support formula, the cost of providing for children of [X] and [Y]’s age in a high income family – that is one where the combined parental income is over $154,000 – was around $30,000 per annum. Pursuant to the applicable formula, this sum is allocated between the parents concerned, on a pro-rata basis, depending on the percentage shares of the care which they provide to the children concerned and the relativities of their income.
I appreciate that there is an extreme level of artificiality in applying the formula to Mr Carr’s circumstances. For one thing, his income is unaffected by income tax. For another, his living expenses in Malaysia are not reflected in the actuarial basis of the child support formulae, which are derived from Australian data. Finally, this calculation does not reflect Mr Carr’s responsibility to provide [Z] and [T] or the expenses which he will incur when he visits [X] and [Y], as he has done up to this stage.
I accept that there is little independent data available to me to assess what it costs to live in Malaysia. What are Mr Carr’s reasonable living expenses in that country must depend on my assessment of his overall credibility and honesty in respect of the issue. As previously indicated, I believe him to be a credible witness.
I accept his assertion that just because Malaysia is a country with an emerging economy it does not necessarily mean that the costs of living there are negligible in comparison to a first world country such as Australia or Japan. Whilst it may be cheap to eat from street stalls in Kuala Lumpur, I accept that there are significant expenses incumbent in leading an expatriate lifestyle in a country such as Malaysia.
The most significant expenses which are likely to confront Mr Carr in the short to medium term relate to his application for permanent residency status in Malaysia and the costs of educating [Z] and [T]. Given the background of these children, it is not open to them to attend a school in Kuala Lumpur funded by the Malaysian Government. They must be privately educated.
Ms Vincent may feel it grossly unfair that a distinction may potentially arise between [X] and [Y] on the one hand and [Z] and [T] on the other hand. However the situation pertaining to the two sets of children is necessarily different. Although it may be unpalatable to Ms Vincent, in my view, suitable sources of education are available to [X] and [Y], in Australia, which are significantly less expensive than [S] College. I accept Mr Carr’s evidence that he has no wish to differentiate between his various children but his options for education in Malaysia are much more confined than in Australia.
Notwithstanding its lack of specificity to the unusual circumstances prevailing in this case, in my view, the legislatively based child support formula remains a useful yard stick for determining the appropriate level of financial support, which Mr Carr and Ms Vincent should provide for [X] and [Y]’s future financial support, particularly given the congruence between the FaHCSIA costs of children table and the amount which I have calculated is the sum required to support the two children concerned, where the applicable parents have a high combined income of more than $150,000.00, which is the situation pertaining to Mr Carr alone.
I reach this conclusion because the formula is based on the costs of children, which do not necessarily rise exponentially as the income of their parents increase, although, for obvious reasons there is a significant degree of connection between the two. Pursuant to section 66J(2)(b) I am entitled to have regard to published research in relation to the maintenance of children.
In my view, the cost of children research published by FaHCSIA is highly relevant to the circumstances of the parties. This research was inaugurated as a result of major changes to the child support regime in Australia. These changes come about in part in response to a Ministerial Taskforce chaired by Professor Parkinson.[19]
[19] In the Best Interests of Children – Reforming the Child Support Scheme; Report of the Ministerial Taskforce on Child Support – published May 2005.
On of the more fundamental recommendations of the Taskforce was that the basic child support formula should involve first working out the costs of children by reference to the combined income of their parents, and then distributing those costs in accordance with the parents’ respective capacities to meet those costs, taking into account their share of the care of the children involved.
In calculating the cost of children, the Taskforce asserted that the relevant formula should reflect two phenomena primarily. Firstly, expenditure on children rises with the age of the children concerned; and, secondly as income rises, expenditure on children rises in absolute terms, but declines in percentage terms.
The new child support regime continues to recognise that it is potentially arbitrary and unfair to apply a percentage to the income of high wage earners in order to calculate child support amounts. Rather, in keeping with the objects of the applicable legislation, the costs of children should not be calculated strictly by reference to the actual incomes of their parents but should be determined by reference to legislatively fixed standards, which were based on statistical research.
The relevant explanatory memorandum read as follows:
“Child support assessments will be based on the actual costs of children, which have been determined according to Australian research showing that, as parental income rises, spending on children rises in dollar terms but falls as a percentage of income, and that expenditure on children increases as they get older. The costs of children for Part 5 represent the best estimate of the amount that parents, on average, spend on their children according to their income.”[20]
[20] Explanatory memorandum to the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Bill 2006 (circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, The Honourable Mal Brough MP)
As previously indicated, the upper limit for the calculation of child support is now 2.5 times the male total average weekly earnings. As I understand matters, this figure is currently slightly in excess of $150,000.00. Accordingly, if the combined income of the parents concerned exceed this amount, the child support formula will not apply to such sums.
Accordingly, in large part, given the uncertainties surrounding Mr Carr’s financial position, as a consequence of his expatriate status, I propose to approach the matter primarily from what are the likely costs of providing for the children in Australia. I also act on the assumption that Mr Carr should be regarded as a high income earner, in Australian terms, as his income exceeds by more than 2.5 times the male adult wage. It does not seem to me to be improper that there should not be some form of cap imposed on Mr Carr’s liability for child maintenance in the circumstances of this case.
The difficulty with this approach is that it does not deal directly with the idiosyncratic circumstances of the parties, particularly their historical intention that [X] and [Y] should attend [S] for the entirety of their school based education. I acknowledge the potency of this issue but have reached the conclusion that the parties’ current financial circumstances are such that this goal is now beyond their means. Certainly, it would not appropriate to shackle permanently Mr Carr to an obligation which seems destined to crush him financially.
In all these circumstances, it seems appropriate to approach the case on the basis of the costs of the children and build into that calculation some component attributable to education costs. As I say, it will be open to Ms Vincent, depending on her personal assessment of her circumstances, to allocate all or a significant proportion of the monies received by her to the children’s education. In my estimation, she is a resourceful person, who is likely to be able to return to the workforce sooner rather than later. It will also be up to her as to how great a proportion of her income she is willing to put towards providing a standard of education for the children which she judges appropriate.
Bearing in mind the current discrepancy between the parties’ respective levels of income, I have determined that Mr Carr should pay ninety percent of the costs of supporting [X] and [Y], as I have calculated them. This equates to a sum of A$27,000 per annum or around A$520.00 per week. In raw terms, it equates to around eighteen percent of Mr Carr’s lowest level of income, as I have calculated it. I accept that I have approached his salary conservatively. I have done so advisedly, to take into account potential currency fluctuations and also, I hope, not to impose a burden which he cannot meet.
On my calculation, he has surplus funds available to him which are sufficient to meet this amount after the costs of his current commitments in Malaysia and to earn his income are considered. I have also, as I say, approached the issue of his anticipated salary conservatively. At the present juncture, given Ms Vincent’s uncertain employment situation and given that the future costs of the children are an unknown quantity, it also seems proper to me that Mr Carr should bear the vast majority of the cost of supporting the children.
In my assessment, Mr Carr has the capacity to meet this recurrent sum without unduly penalising his second family in Malaysia. I reach this conclusion primarily because he has no recurrent liability for tax. In addition, up to this point, he has been able to discharge a significantly greater liability in respect of the ongoing financial support of [X] and [Y], whilst at the same time funding the not inconsiderable burden of the proceedings in this court and the District Court.
I appreciate however that a significant proportion of his legal fees and indeed some of the [S] College fees have been paid out of his capital entitlements from the Property F property. I also appreciate that his salary has fallen significantly since his contract of employment was renegotiated with [C] and [J].
I am also aware that Mr Carr’s liability for child maintenance in respect of [X] and [Y], which necessarily must be calculated in Australian dollars, whilst he is paid in US dollars, will be affected significantly by the ever changing rate of exchange between the two currencies. At times this may benefit Mr Carr and at others act to his detriment. However, regardless of these difficulties, the court is obliged to set some figure, which it regards as proper, to bring some level of finality to these much protracted proceedings.
In fixing this level of child maintenance, I take into account the fact that Mr Carr incurs significant sums to visit [X] and [Y] in Australia. Offset against these expenses is the fact that he is able to obtain cheap airfares for himself. Up to this point, he has been able to visit the children relatively regularly although Ms Vincent is critical that he has been less regular of late.
It is not beyond the bounds of possibility that, once these proceedings have been concluded, the financial circumstances of both parties will improve. Ms Vincent may return to the paid workforce, as she has done in the past, and return to receiving a salary in the vicinity of $50,000 per annum. This, with the maintenance payments due to her from Mr Carr would give her an annual income of around $70,000 to $80,000 per annum.
It is not unknown for parents, who are in receipt of modest levels of income, to provide their children with an expensive level of education, when their financial circumstances are considered. I accept that Ms Vincent remains committed to the children remaining at [S], if this is at all possible. I also accept that she is gravely concerned at the potential disruption to [Y] and [X] of a change of school.
I will leave it to the parties to determine which school the two children should attend in 2012. In particular, Ms Vincent must consider how much of her income – in percentage terms – she is prepared to commit to the children’s ongoing education. However, given the parties’ current circumstances, it would be neither proper nor reasonable to commit Mr Carr to paying one hundred percent of the children’s ongoing private school fees, as well as an additional recurrent sum of money, for the indefinite future.
But the parties must first determine which school the children should attend, given that at this stage I have reached the conclusion that it is not financially viable for them to attend [S] if it is conditional on Mr Carr paying all the fees as well as providing for the children in other ways. At this stage, it is beyond the scope of these proceedings, for the court to determine which school that should be.
In the past Mr Carr has received a significantly greater level of income. Again, it is not beyond the bounds of possibility that his income will revert to its previous levels. However, at this juncture, I have decided to adopt a measured approach to assessing his liability for child support which is based on his current level of income.
It seems to me to be reasonable that there be some flexibility in the calculation of this sum to reflect both exchange rate movements and his significant costs of spending time with [X] and [Y] in Australia. Overall, I am satisfied that a figure of A$27,000 per annum reflects a proper level of child maintenance for [X] and [Y], given the parties respective financial circumstances.
The orders of 24 June 2011, which stipulated Mr Carr’s ongoing liability to provide maintenance to Ms Vincent for [X] and [Y], at a rate of about $4,000 inclusive per month, were not discharged following the hearing of 6 and 7 September 2011. In the reasons for judgment delivered on 24 June 2011, I indicated my view that the best time for the children to change schools would be at the end of term four 2011.
This was particularly so given Mr Carr’s longstanding commitment to the children attending [S], which he continued to maintain after the parties separated and whilst he continued to live in Japan. In these circumstances, I believe that Mr Carr should remain liable for the children’s school fees up until the end of term four of 2011. However, I do not propose to hold him liable for any fees arising from the late withdrawal of the children from the school.
Accordingly, in all these circumstances, I have determined that the appropriate date on which the new regime should commence is 1 January 2012. Mr Carr remains liable for the children’s school fees, at [S] College, up until the end of term four 2011 and to pay
Ms Vincent a monthly sum of A$1,700.
However, from 1 January 2012 onwards, this monthly liability will be increased to A$2,250.00 from which sum Ms Vincent will be responsible for meeting all of the children’s ongoing education expenses, which will not dependant upon which school is selected for the children in 2012 following discussions between the parties.
It is appropriate that this figure be indexed by reference to any rises (and indeed falls) in the Consumer Price Index “CPI” for Adelaide published by the Australian Bureau of Statistics. Any necessary changes in the rate of child maintenance should be calculated annually by reference for the CPI figures for each calendar year published in respect of the December quarter.
c) The costs of the contravention
For reasons already provided orally to the parties, following the conclusion of the contravention proceedings on 8 September 2011, I am satisfied that Ms Vincent contravened the parenting orders pertaining to [X] and [Y] without reasonable excuse. I am also satisfied that she has maintained a hostile and obstructive attitude towards
Mr Carr spending time with the children in the period following their difficult separation.
The most consistent feature of the proceedings up to this stage has been their unremitting nature and the inability of either party to give the other any quarter. The end of three years of vitriolic litigation between them leaves both Mr Carr and Ms Vincent financially and emotionally exhausted. As such, it is a sad and perplexing case. If only the parties had been able to manage the difficult emotional and financial circumstances surrounding their separation better, neither they nor [X] and [Y] would be in their current precarious circumstances.
However, no matter how regrettable and sad the current circumstances of the parties are, the question of the costs of the contravention proceedings fall to be determined pursuant to the provisions of section 117 of the Family Law Act 1975. Pursuant to section 117(2) the court is authorised to make whatever order for costs it considers “just”. Thereafter, the court is to have regard to the matters delineated in section 117(2A) before making any order for costs.
The matters set in section 117(2A) include the following: the financial circumstances of the parties concerned; the conduct of the parties to the proceedings; whether the proceedings were necessitated by the failure of a party to comply with previous court orders; whether one of the parties to the proceedings have been wholly unsuccessful, and any other relevant matter.
Given the findings of the court in respect to Mr Carr’s contravention application, it is axiomatic that his application be deemed to have been warranted as a result of the finding that Ms Vincent had failed to comply with the court’s orders regarding arrangements for the parenting of [X] and [Y]. For the reasons already provided to the parties, I do not regard
Ms Vincent’s contraventions to be trivial or of little moment.The parties’ parenting relationship is appalling. Ms Vincent sees
Mr Carr as a person to be thwarted wherever possible. In her mind she sees him as an unreasonable person who, by choosing to live overseas and pursue a relationship with another person, has forfeited his entitlement to have a relationship with the children. She is entitled to her opinion of Mr Carr but she is not entitled to let that opinion interfere with the orders of the court regarding Mr Carr spending time with [X] and [Y], notwithstanding her perhaps understandable bitterness at what has befallen her.
Accordingly, I am satisfied that it was justifiable for Mr Carr to bring the contravention proceedings and they were necessary because of the failure of Ms Vincent to obey the orders of the court which were made on 19 June 2009 following a contested hearing.
A more difficult aspect of the case is to determine what contribution, if any, Ms Vincent should make towards Mr Carr’s costs of those proceedings, given that neither party is in receipt of legal aid and as is apparent from these reasons for judgement, she is currently in a parlous financial position having recently lost her employment.
Mr Carr seeks costs, in respect of the one day hearing, in an amount of $14,220.17. These costs have been calculated pursuant to rule 21.10 of the Federal Magistrates Court Rules which establish a schedule of costs relating to the occurrence of fixed events. I do not quibble with the calculation of those costs. It is however a very significant sum so far as Ms Vincent is concerned.
At present she is not working. She is in the process of selling her most significant asset, the Property F property. If the property sells, she will have to make arrangements to rehouse herself and the children. She like Mr Carr has utilised significant funds in the pursuit of legal remedies in this court and the District Court. On any view, her future financial position is uncertain.
Mr Carr is in a significantly better financial position than Ms Vincent in the sense that he is in employment and receives a comfortable salary, albeit that it has many claims upon it, both in terms of his responsibilities towards [X] and [Y] but also [Z] and [T]. However, although he has a regular income and has had for the past few years, he is largely bereft of assets. Whatever capital he was able to recoup from the parties’ failed relationship has been utilised in the payment of either legal fees or school fees.
In all these circumstances, I have reached the conclusion that it would not be just for me to make an order that Ms Vincent pay all of the costs sought by Mr Carr as it is difficult to see how she would satisfy such an order without hardship. However, she should be able to escape the financial consequences of her failure to obey the orders of the court, which put Mr Carr to considerable expenses. In my view it would be proper if Ms Vincent pays a sum of $4,000.00 in costs to Mr Carr within six months of the date of these orders.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding two hundred and sixty-seven (267) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 1 December 2011
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