D and D
[2001] FMCAfam 139
•13 September 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| D & D | [2001] FMCA fam 139 |
| CHILD SUPPORT – Departure application – Sections 116, 117, 118 and 123 – Child Support (Assessment) Act 1989 |
| Applicant: | J D D |
| Respondent: | J P D |
| File No: | ZM4811 of 2001 |
| Delivered on: | 13 September 2001 |
| Delivered at: | Melbourne |
| Hearing Dates: | 27, 28 and 29 June 2001 |
| Judgment of: | Hartnett FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Stewart |
| Solicitors for the Applicant: | Kenneth Robin Harrison of Robin Harrison & Associates |
| Counsel for the Respondent: | Ms Smallwood |
| Solicitors for the Respondent: | David Schetzer of Pearsons |
ORDERS
THAT the wife’s application pursuant to Division 4 of the Child Support (Assessment) Act 1989 for departure from administrative assessment for the child support periods commencing 1 July 1999 to the current assessment period be dismissed.
THAT pursuant to Division 5 of the Child Support (Assessment) Act 1989 the husband pay the following amounts to the wife by way of non-periodic amounts. Such payments are not to be credited against the husband’s liability:
(a)One half of all orthodontic and dental treatment undertaken for S and/or R to continue until the said children complete their secondary school education, the husband to reimburse the wife upon production by the wife of an account rendered and a receipt as to payment by her. The husband is to pay his one-half share within seven (7) days of being rendered the account by the wife;
(b)The sum of $1,100 being the husband’s contribution to S’s trip to the US, such payment to be made within seven (7) days hereof;
(c)The total cost of a new computer and printer for the child S, the husband to purchase same and provide it to the said child within thirty (30) days hereof. The type of computer and printer to be as recommended by M Girls’ High School;
(d)One half of the cost of R’s trip to New Zealand including costs of passport and travel insurance and other incidentals associated with the trip, such payment to be made by him to the wife within seven (7) days hereof;
(e)One half of all music and sporting lessons, school camps and trips intrastate, interstate and/or overseas undertaken by the said children or either of them including uniforms, equipment, books, cost of tuition and exams, and entry fees to continue until the said children complete their secondary school education. Such payment to be made by the husband to the wife within seven (7) days of any account/invoice in relation thereto being presented to him.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
ZM 4811 of 2001
| J D D |
Applicant Wife
And
| J P D |
Respondent Husband
REASONS FOR JUDGMENT
Transfer
By Order No. 1 of the orders made by Justice Kay on 12 April 2001 in the Family Court of Australia at M, the wife’s Form 63 application filed 1 March 2001 was transferred to this Court for hearing and determination.
Applications
The wife commenced proceedings by the filing of a Form 63 application on 1 March 2001. She subsequently amended this application by Amended Application filed 29 May 2001. Her application was brought under sections 116, 117(2)(b)(ii); 117(2)(c)(i) and 123 of the Child Support (Assessment) Act 1989. She sought departure from administrative assessment of child support for the parties’ two children from 1 July 1999 until each respective child attained 18 years or completed his or her education, whichever was the later. The amount sought by the wife was in the sum of $200 per week per child, varied annually with the inflation factor. In addition, she sought the husband pay one half of:
a)All school fees; and
b)Orthodontic and dental treatment; and
c)The cost of a printer and computer; and
d)The cost of school trips undertaken by the children to New Zealand and to the United States.
She sought the husband pay her costs.
In support of this application, the wife relied upon:
a)Her financial statement filed 1 March 2001 and 29 May 2001; and
b)An Affidavit of Evidence-in-Chief filed 29 May 2001.
The husband responded with a Form 63 application filed 21 June 2001 seeking the wife’s Amended Application be dismissed and that the wife pay his costs. His application was brought under sections
95, 98, 116, 117 and 118 of the Child Support (Assessment) Act 1989. The husband relied upon his statement of financial circumstances filed 21 June 2001 and his Affidavit of Evidence in Chief filed 21 June 2001. In opening, however, Counsel for the husband indicated the husband’s willingness to :
a)Pay child support at the rate of $164 in total each week; and
b)Purchase a computer and printer for the children; and
c)Pay one half of all orthodontic expenses of the children.
Each of the parties were cross-examined and exhibits were tendered in evidence by each.
Background
The wife was born on 30 December 1954 and is now aged 46 years. The husband was born on 10 March 1956 and is now aged 45 years. The parties married on 22 November 1975 and separated on 1 April 1994 after a cohabitation period of some 19½ years. There are two children of the marriage, both of whom are the subject of the wife’s application, namely: S J D born on 16 October 1986; and R J D born 14 June 1988.
S is 14 years of age and R is 13 years of age. Both children live with the wife pursuant to final orders made by consent in the Family Court of Australia at M on 30 August 1995. The husband has contact with the said children on a regular basis being each alternate weekend from 5.00 pm Friday until 5.00 pm Sunday and one half of all school holidays, together with other special occasion days. S currently attends M Girls’ High School and is in Year 9. It is proposed by the parties that she continue her attendance at that school. This is not an issue between them. R attends B H High School and is in Year 7. The question of his future schooling is an issue between the parties.
The wife and children currently reside at 18 R Crescent, R, although the wife is hopeful of moving into premises being presently constructed by her and situate at 181 M A Road, M A. The husband currently resides at 82 H Road, H, such that the parties are very close to each other geographically, and even consequent upon the wife’s move, their residences shall remain in reasonable proximity. They share the transportation of their children between their respective homes.
The wife is employed as a primary school teacher at B Park Primary School in receipt of income of approximately $52,620 per annum gross. The husband is employed as a secondary school teacher at M High School in receipt of income of approximately $52,620 per annum gross. Each of them have been so gainfully employed since separation. The wife is in receipt of other income by way of net rental receipts from real properties; the payment of a family allowance; and the payment of child support from the husband in the former sum of $71.00 each week (but now $600 each month), giving her a total income on an average weekly basis of $2,130. Her statement of financial circumstances indicates that her fixed expenditure totals $2,079. Likewise, the husband’s statement of income in his financial statement is considerably higher than his receipt of income from his teaching position, because it includes income being rental receipts from real properties owned by him. However, he incurs a loss in net terms on his rental receipts but this negative gearing is not taken into account when determining his child support amount. His income as stated is in the sum of $1,922 per week and his expenses as claimed are $1,583 each week. The parties agree that each of them has significant assets in the form of equity in real properties. Amongst the husband’s real properties is one at 24 C Avenue, C W from which he elects to receive no income but which he keeps available for the use of himself and the children on weekends and holidays. In addition, he has a block of land at Lot 788 G Avenue, T which is not income-producing.
Amongst her real properties, the wife has 181 M A Road, S H upon which a home is currently being constructed. It is not complete and she has been advanced the sum of $130,000 by a Mr T M whom she describes as a ‘friend’. The mortgage between herself as mortgagor and Mr T M as mortgagee is dated August 2000 and provides for the principal sum to be repaid in monthly repayments of $2,000 each, the first payment to be paid on the first day of the next month, following issue of Certificate of Occupancy in respect of the dwelling house under construction on the land, and calendar monthly thereafter until 1 June 2005 when the whole of the principal sum outstanding is to be repaid in full. No interest component is provided for. No repayments have commenced. When they do commence, the wife will pay $2,000 a month, by her election, in capital reduction rather than a lesser sum in interest repayments or a bank loan of which she could have availed herself.
Orders were made in the Family Court of Australia by consent on
30 August 1995. They provided, amongst other things, that the husband and wife would each be liable for and pay one half of tuition fees and reasonable expenses relating to each of the children’s attendance at a private school, that school to be agreed upon by the parties from the commencement of the 1997 academic year. The reality has been that neither of the parties has completed an enrolment for the children in a private school in any year from 1997 including the current year, namely 2001. Indeed the parties propose that their daughter, S, continue in the State school system. The wife proposes that R be educated at a private school at some point in the future. The husband proposes for R, the school at which he teaches, namely M High School, commencing 2003. Likewise, at the time of the making of the orders, the parties contemplated a child support agreement wherein the husband would pay a total amount of $130.00 each week for the support of the children. Further, the husband was going to make a contribution to S’s orthodontic and dental expenses. Again, the agreement did not eventuate and a child support assessment has been in place ever since and continues to be in place. The husband has not been in arrears with respect to his payment of child support, save when provisional assessments are overridden by actual assessments retrospectively.
Evidence
Findings of fact in these reasons are on the balance of probabilities. Statements of fact should be taken as findings of fact throughout the reasons.
Both the husband and wife gave evidence that it was the wife who refused to enter into a child support agreement following the making of the property orders in August 1995. The husband, shortly after the making of the orders, had purchased three properties and increased his level of debt in so doing by approximately $340,000. This caused the wife anxiety as to the husband’s earlier disclosure of his financial position, although I find that anxiety to be unwarranted.
At the time of the orders in August 1995, each of the parties retained real properties. Not long after the making of the orders, the husband purchased a further property at 45 C Road, D with borrowings as to the entire purchase price. In the following year he purchased a property at 24 A Street, D and a property in T. Again, all purchase monies were borrowed. To secure the borrowings, mortgages were taken over the C Road and A Street properties and properties of the husband in L T and S A. It is these borrowings which the wife refers to when she alleges that the husband, within a few days of agreeing to the orders in 1995, had increased his level of debt by approximately $340,000. In fact, he had increased his level of debt some time in 1995 and 1996 in order to acquire further properties.
The wife, as a consequence, refused to enter into the child support agreement as anticipated by the orders of the Family Court made
30 August 1995. This to date has been to her detriment. An administrative assessment then issued in relation to which the wife sought a review. The child support agency then determined the matter too complex. Thereafter the wife had to issue an application for departure in the Family Court at M. That assessment was based on the husband’s income, gross, in relation to which he negatively geared his rental properties. The husband offered to pay child support at a rate determined without regard to his negative gearing. The wife, at that time, alleged the husband was running loss-making enterprises in the form of a fencing business and a computer business. The Honourable Justice Morgan, who heard the matter on 21 March 1997, at page 8 of her reasons, found that the wife had failed to satisfy her on the balance of probabilities that the husband had undisclosed income from those enterprises. She found the evidence of the husband, despite the calling of numerous subpoenaed witnesses and lengthy cross-examination, was by no measure shaken. In relation to the wife’s allegation that the husband derived income from a business known as S Computer Technology, she found that the husband’s evidence that no income had been derived from that source since the financial year 1994/1995 was also entirely unshaken. Despite these earlier findings, the wife continues to assert in her affidavit before this Court filed 29 May 2001, (paragraphs 7 and 15), that the husband was running loss-making businesses in the form of a fencing business and a computer business. I find it inexplicable that she could continue, in the face of earlier findings, to allege this in affidavit material as a matter of fact. As to the present, the husband denies the wife’s assertions and, save for the husband’s evidence that he built fences on four occasions between 1 July 1998 and 30 June 1999 for no net gain, I find no evidence to support the wife’s claims.Upon the expiration of Her Honour’s orders in June 1997, a further administrative assessment issued. The wife applied for a review. That review application was partially successful with the child support assessment for the 1997/1998 and 1998/1999 child support years being increased to $130 per week for the two children. The wife had sought an increase beyond the $130 each week. The husband contended in this Court that his position was that his liability should be based on his income without regard being had to the negative gearing, resulting in an amount of $130 each week. I do not find that to have been the case, and indeed find that the husband put forward a position wherein he would suffer a reduced income because he proposed to take leave towards the end of the then year, resulting in him not being on full pay. The review officer found that to be an optional arrangement organised by the husband rather than employment not being available to him. Once again, the parties’ respective ability to support their children in a reasonable manner, given their financial resources appears to have been significantly understated by each of them.
The child support assessment which issued for the year commencing 1 July 1999 to 30 September 2000 had no regard to the negative gearing of the husband. It was in the sum of $440.92 each month. The assessment by the agency for the period from 1 October 1999 to 31 December 2000 was in the sum of $424.67 each month. The current assessment for the period from 1 January 2001 to 31 March 2002 is a monthly amount of $600.25. The earlier issued assessment for the same period was $308.33 monthly – then retrospectively altered. It is unfortunate the husband can avail himself of provision assessments.
The wife alleges that it is necessary for her to relocate herself and the children from R Crescent, R East to M A Road. She has borrowed the sum of $130,000 from a friend, interest-free, to assist her in the building of a home on the property at 181 M A Road. The husband deposes to that property having a value of approximately of $1,000,000 when completed. The wife’s evidence is that it currently has a value of $470,000. The wife’s evidence is that it is necessary for her mother, who is a diabetic and blind, to reside with her on a partial basis consequent upon the move. The husband disputes this and I have no other evidence before me as to the health and/or circumstances of the grandmother. The property in which the wife currently resides with the children measures approximately 25 squares and since the making of the orders, the wife has purchased another two properties and developed two units on 16 R Crescent, R. I do not find it necessary that the wife relocate to the M A Road home. Upon her relocation, the wife proposes to tenant R East for $190 each week.
Each of the parties dispute the valuations placed upon the various real properties by the other, but they do agree that they each hold numerous pieces of real property and that their net asset position respectively is comfortable. They have each increased their wealth since the making of the 1995 orders.
The wife receives rental income from two units on 16 R Crescent, R East; from 10 W Road, H; from 2 R Close, W; and from 1 P Street, D. She resides in 18 R Crescent, R East and currently M A Road is unoccupied.
The husband owns properties at 5 W Drive, S A; 2 L A Street, L T, 82 H Road, H, in which he resides; 45 C Street, D; vacant land at T; a holiday house at P I which is unoccupied and he uses on contact occasions with the children; 84 H Road, H and 24 A Street, D. Although the wife alleged the husband's equity in these properties to be in excess of $2,000,000, the husband denies this and I have no valuations before me to make any findings. The husband receives rental receipts from these properties. The husband deposes as to total assets, ignoring his liabilities, being in the sum of $1,114,505 and liabilities being approximately $430,000. Net = $684,505. The wife deposes as to total assets of $1,353,145 less liabilities of $533,500. Net = $819,645.
The wife claims to have received no money from the husband for the children’s dental and orthodontic work and no financial assistance at all for their other extra expenses. The husband’s response is that the wife has not at any time sought contributions from him for school fees, dental, orthodontics and like expenses. She clearly has by the very filing of these proceedings and by her earlier applications for review of earlier assessments. It is completely unbelievable for the husband to suggest that the reason for his non-payment of incidentals is because payment has not been requested of him.
Whatever disagreement preceded S’s attendance at M Girls’ High School I do not consider to be particularly pertinent to the current determination which I must make. The parties agree that she is progressing well and will continue to attend at that school. The wife seeks that the husband pay one half of the expenses paid by her for S’s 2001 school year which at the time of her swearing her affidavit were in the sum of $1,162. In addition, she sought reimbursement for one half of the camp fee already paid by her. The husband’s evidence is that he has never previously seen the accounts annexed to the wife’s affidavit and in any event, he believes that such accounts are normal school expenses which are already incorporated in calculations to arrive at a child support liability amount.
R is currently attending B H High School in Year 7 and the wife seeks once again that half of his school fees and expenses be paid by the husband. The husband argues the same case which is that he has not seen any of the expenses as claimed by the wife and that they are normal expenses which should be borne by the wife and in relation to which he pays a child support assessed amount in the current sum.
R was to attend M Boys’ High School but the wife alleges that R has chosen not to attend there at this stage as a Ms D R teaches at the school. The husband denies any romantic relationship with his school friend, Ms R, who resides with her partner P C. The wife now seeks that the husband pay one half of private school fees for R on the basis that it was anticipated in the 1995 orders that the children would attend private schools and that they would each be liable for those expenses. The wife provides no further particulars as to which year; which school; cost; enrolment or the like. Neither of the parties has done anything in the intervening period since 1995 to secure the attendance of either child at a private school, save for the half-hearted attempt with respect to S’s attendance at G College. The husband is of the view that R may still well transfer to M High School at the commencement of Year 9 in 2003, Year 9 being the first year of intake of M High School. This appears to me the most likely outcome, as neither party have made any genuine attempts to enrol R in any private school to the present time and he has not had the benefit of a private school education at all as was originally envisaged by the parties.
The law
It is incumbent upon me to first hear and determine the application for departure under Division 4 of the Child Support (Assessment) Act 1989. I propose to firstly address the wife’s application for departure on the basis of the administrative assessments in place since 1 July 1999 and taking into account the administrative assessment currently in force. The wife must satisfy me on the balance of probabilities that I should accede to her application.
It is particularly pertinent in the circumstances of this case to refer to s4 of the Child Support (Assessment) Act 1989 and in particular s4(2)(a), (b), (c) and (d) and in particular in (a), “… that parents with a like capacity to provide financial support for their children should provide like amounts of financial support” and (b), “… that the level of financial support to be provided by parents for their children should be determined in accordance with the legislatively fixed standards” and (c), “… that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to Court proceedings” and (d), “… that the children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them.”
In order for the wife to obtain a departure from the administrative assessments in place since 1 July 1999, I must be satisfied that one or more of the grounds as set out in s 117(2) of the Child Support (Assessment) Act 1989 are established by her. If I find that to be the case, then I must be satisfied thereafter that it is both “just and equitable” and “otherwise proper” to alter the assessment/s. Do the facts in this case produce “special circumstances” being “something which is special or out of the ordinary”? (See Gyselman [1992] FLC 9–379.)
The intention of the legislature is that otherwise, the Court should not interfere with the administrative formula. I am entitled to have regard to the parties’ respective incomes, earning capacities, property and financial resources. It is appropriate for me to look to the real cash flow of the parties unimpinged by the application by then of legitimate accounting devices which reduce then income. However, the husband’s assessment is based upon his real cash flow without regard to the impact upon his income (i.e. the reduction thereof) of his negative gearing of investment properties.
Firstly, therefore I shall consider whether there are special circumstances in this case which satisfy one of the grounds as set out in s 117(2).
a)i) Neither party is required to maintain any other child or person other than their own two children;
ii)Neither S nor R have special needs. Whilst there are no words of limitation in the legislation as to what are in fact “special needs” (see Blamey [1995] FLC 92–556), neither child appears to have difficulties nor particular skills outside the ordinary range for school-aged children. The wife gave evidence that S requires laser treatment with respect to the removal of her body hair. Her evidence was that the child would often not go swimming. The wife described this as “long-term expensive treatment”. No further particularity was provided to the Court. No evidence was given as to the necessity for such treatment; when it might be anticipated – if at all – to be undertaken; the cost of same; and its current impact upon S which would result in an expert concluding that it was necessary for the child’s well-being. In response, the husband tendered photographs of the child in a swimming pool with him looking happy and unselfconscious. If indeed it is – or becomes a problem for S – then hopefully the husband will be suitably receptive to providing financial assistance. I would have to conclude to the present that he is never so inclined (without a trade-off) and I accept the wife’s assertion that only a Court order might compel him, but that is a matter for the future. I simply cannot find, on the evidence before me, that S has special needs;
iii)Each of the husband and wife have similar commitments necessary for their own support and each have managed to increased their wealth since 1995. Their incomes are similar; the husband pays child support to the wife and the husband has frequent and regular contact with the children and he provides for them at those times;
iv)Is not applicable to these parties.
Section 117(2)(b)(ii) is relied upon by the wife. I refer to those paragraphs above which deal with the children’s schooling. The children are not attending private schools nor has that been the parents’ expectation in the intervening years since 1995, save for the debacle which occurred between them with respect to S’s proposed attendance at G College. There is no concrete proposal put forward by the wife as to R’s attendance at a private school. There is nothing out of the ordinary with respect to the schools at which the children are attending and the school at which R is likely to attend.
Section 117(2)(c)(i) is also relied upon by the wife. The children themselves have no income, earning capacity, property or financial resources. The parties’ position as referred to in the above paragraphs is one of equality save that the husband produces a loss in relation to his investment properties and the wife produces a small profit. The wife’s asset base is also slightly larger. The husband contributes to the support of the children in fairly equal measure with the wife when considering his expenditure on them of $127 a week, on average; his payment to the wife of the assessed amount and the $390 each week that the wife expends on the children. The wife’s support of the children in provided in an environment where she is able to increase her asset base; attend to progress payments on her home in M A; and borrow funds from a friend requiring more onerous repayments of capital – which I find her clearly to have a capacity to meet despite the evasive answers she gave to questions asked of her as to the source of the monies already paid by her in progress payments to date. Having observed both these parties in the witness box, I find that each are intent on acquiring capital assets. The wife impressed as a witness who would apply any extra weekly sum paid by the husband to debt reduction.
I am satisfied that it would be unjust and inequitable to depart from the administrative assessments. I am not satisfied that the necessary prerequisite of “special circumstances” and the grounds as set out in s 117(2) are met as to any of them. Accordingly, I shall dismiss the wife’s application for departure from administrative assessment in any of the years to which her application relates.
I now proceed to a consideration of division 5 of the Act and the payment by the husband of an amount/s other than in the form of periodic payments. I must be satisfied that such an order is “just and equitable” and “otherwise proper” pursuant to s 124. Should I make such an order as I propose to do, I must state and hereby do so that these payment are not to be credited against the liable parent’s liability (see s 125). This order shall be both retrospective and continue to operate until each of the children complete their secondary education, so as to perhaps avoid repeated applications between the parties as to the fact of child support payable.
Orthodontic and dental
The husband is willing to pay one-half of the children’s orthodontic expenses. I am of the view that this should include their general dental expenses which may be more onerous than usual given their need for orthodontic treatment. There are annexed to the wife’s material reports indicating that both children will require significant treatment. These expenses are in my view not contemplated in the calculation of child support assessment and I am satisfied that it is just and equitable and otherwise proper for the parties to share equally in this cost.
Trips
I am satisfied that the husband has contributed in approximately equal measure to the cost of S’s trip to New Zealand in 1997. He did pay an amount of $1,100 to the agency by way of contribution to S’s trip to the United States, but ultimately used that sum as credit for the subsequent payment of his child support obligation. The wife was left to pay for this special event in its entirety and made that payment some years ago now. The husband has a clear capacity to meet his earlier agreed half-share and should do so promptly. This falls into the same category as R’s trip to New Zealand which again he had said he would make a contribution toward. In the end, he attempted to offset such cost by the purchase by him of a guitar and amplifier for his son. I agree with the wife that it is difficult to extract any money from the husband for any extras for the children. Why, given his asset base and income, he could simply not gift his son a guitar and amplifier is a question to be asked. My view formed is that each of the parties is equally tight-fisted when it comes to spending money on their children. Once again, the wife is being paid retrospectively and thus the husband benefits. It is just and equitable and otherwise proper for the husband to meet this expense in equal proportion to the wife and he should do so promptly.
Extra tuition
The children have had music lessons and participated in sporting activities and school camps and travel at additional cost to the wife. I find it reasonable that their children be afforded these opportunities and that they do not necessarily form part of the expenses ordinarily incurred by a residence parent. The wife should be in a position where she can enrol the children in these extra activities, safe in the knowledge that the husband shall pay one-half of all associated expenses. Again, I am satisfied that such an order is just and equitable and otherwise proper and on each occasion I find so it is for all of the reasons as contained herein. The husband should be liable for such payments retrospective to 1 July 1999 and ongoing.
Computer
Each of the parties agree the children need a computer and printer. The wife wishes to purchase same and allow the children to have an input. She would limit the husband’s contribution to $2,000. The wife says the husband, if he is to purchase same, will purchase the cheapest without regard to the children’s needs and desires. The husband is a computer and mathematics teacher by occupation and has a sound knowledge of the computers that are recommended by S’s school. He anticipates a total cost of approximately $1,800 for a new computer and printer. I find he is in a far better position to make an appropriate choice. In the running of the matter he indicated that he would pay the entire cost but chose then, unfortunately, to offset same against S’s 1997 US trip. His evidence was that he is now not prepared to pay the $1,100 and the cost of the computer and printer but “in lieu of the US trip (he) would pay for the computer”. The wife paid the US trip cost in 1997. He has proposed a far cheaper computer and printer purchase than that proposed by the wife. Given the wife’s payment of all other extra expenses at the point of the incurring of same and the delay in the contribution by the husband, together with the slightly extra expenditure of the wife with respect to S’s New Zealand trip, I am satisfied that the husband should meet this expense in its totality and that such an order would be just and equitable and otherwise proper as between the parties and in accordance with the legislative intent.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Hartnett FM
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