F & S
[2003] FMCAfam 531
•25 November 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| F & S | [2003] FMCAfam 531 |
| CHILD SUPPORT – Application for departure from administrative assessment of child support – whether father should be liable to pay school fees and expenses for child to attend Jewish school – both parties observed the importance of the orthodox Jewish faith – father's income and earning capacity – whether he had the capacity to meet the share of school fees and expenses – father has available to him property which can be made available to him to meet fees and expenses – father ordered to pay one half of school fees assessed and calculated in line with his current capacity to do so on the basis of his current child support commitments. |
Child Support (Assessment) Act 1989 (Cth), ss.117, 117(2), 117(4), 117(2)(b)(ii), 117(2)(c)(i), 123, 124
Family Law Act 1975 (Cth)
Gyselman & Gyselman (1992) FLC 92-279
Mee v Ferguson (1986) FLC 91-716
Lightfoot v Hampson (1996) FLC 92 663
Wild v Ballard (1997) FLC 92 771
| Applicant: | L F |
| Respondent: | L S |
| File No: | MLM 3168 of 2000 |
| Delivered on: | 25 November 2003 |
| Delivered at: | Melbourne |
| Hearing Dates: | 19 & 20 November 2003 |
| Judgment of: | Bryant CFM |
REPRESENTATION
| Counsel for the Applicant: | Mr R. Weil |
| Solicitors for the Applicant: | Wilmoth Field & Warne |
| Counsel for the Respondent: | Mr G.R. Atkinson |
| Solicitors for the Respondent: | Susan Snyder |
ORDERS
By way of non-periodic child support pursuant to section 123 of the Child Support (Assessment) Act 1989, the father pay one half of the education costs for the child at the child's College as follows:
(a)by payment to the child's College one half of her tuition fees, subject levies, books and stationery, camps and excursions as billed by the school as and when they fall due commencing for the year 2004;
(b)a payment of one half the costs of uniforms, either as billed by the school or upon presentation of invoices for payment by the mother.
The educations costs set out paragraph 1 hereof are not to be credited against the liable parent's liability pursuant to any administrative assessment of the child support.
The mother's application otherwise be dismissed.
The exhibits to be returned to the parties tendering same.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 1368 of 2000
| L F |
Applicant
and
| L S |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings commenced with an application by the husband for variation of contact orders and by the wife for departure from administrative assessment of child support. In relation to the contact issues, the husband commenced the current proceedings in the Family Court of Australia on 6 April 2000.
On 5 May 2000 orders were made providing for the child to live with the wife and for the husband to have interim contact with her. Further interim orders were made on 17 May 2001 extending the father's contact with R and enabling the wife to take her on holiday. The orders sought by the husband now seek a commencement of overnight contact, first one night and extending to two nights each alternate weekend, some time during school holidays and a sharing of the Jewish holidays. To their credit, the parties have agreed upon the orders for contact and specific issues which will be made by consent.
The wife's application was filed on 16 December 2002. The orders that she seeks as now amended are as follows:
"(a) for the assessment period, 29 October 2000 to 22 November 2001, the husband pay in addition to the amount assessed one half of the costs of child's education
(b) for the period 23 November 2001 to 28 January 2002:
(i) the husband pay child support based on child support income of $52,800 per annum, and
(ii) one half of the costs of R's education;
(c) for the period from 29 November 2002 to 28 April 2003, the husband pay child support based on a child support income of $52,800 per annum plus one half of the costs of R's education.
(d) for the period 29 April 2003 to 31 October 2003 and thereafter, the husband pay child support based on a child support income of $52,800 plus one half of the costs of the child's education, together with one half or incidental expenses incurred by the wife in relation to her education."
Background
The father is 46 and the mother is 33. R was born on 30 November 1998 and is 5. The parties separated a little over a year after the marriage and less than a year after R's birth. The mother enrolled R at B R in three-year-old kindergarten in 2002 and for pre-school in 2003. If she remains there, she will be in her prep year in 2004. It is common ground that the enrolment was done by the mother without consultation with the father.
The mother's case
The mother contends that:
a)the father's income for child support purposes should be fixed at $52,800 per annum rather than the slightly lesser child support income which is the subject of the current assessment; and
b)that R is being educated in a manner that was expected by her parents pursuant to section 117(2)(b)(ii) of the Child Support (Assessment) Act 1989 (the Act). Consequently, the mother contends that the father should be contributing to one half of the child's fees and other related expenses at school.
The previous child support departures
On 17 December 2001 a departure was made fixing the child support income for the father at $52,800 from 23 November 2001 to 28 April 2003. The father has not sought to depart from this assessment. For the period 29 April 2003 to 28 July 2004, the father's child support income amount has been fixed as his current taxable income for the year 2001/2002 at $46,290. The mother's income is below the threshold amount.
On 27 March 2003 the mother sought that there be a departure so the father pay school fees and expenses for R by way of a departure using the administrative provisions of the Child Support (Assessment) Act. The case officer dealing with the matter was aware that there were proceedings before the court and refused to make a determination on the basis that the matter was too complex and was currently before the court. Further application by the mother on 9 July 2003 was similarly refused on the same basis.
As the father has not objected or sought to depart from the assessment of child support income of $52,800 pursuant to the child support assessments between 23 November 2001 and 298 April 2003, the mother's application is effectively now for a departure from the assessment commencing on 29 April 2003 in relation to the father's child support income and, of course, is also for the father to pay one half of the school fees and expenses for R.
The father's case
The father's case is first that the child support income is being currently assessed in accordance with the provisions of the Child Support (Assessment) Act and that there are no grounds established under the Act to warrant a departure from this assessment. Secondly, that in relation to school fees and expenses for R the parties did not expect that she would be educated at a private school, at least in her primary school years, and in any event the cost of sending her there is beyond the financial capacity of the parties.
I have referred to that portion of the mother's application which relates to payment of school fees and that part of section 117 which is relied upon. As far as the fixing of the father's child support income is concerned, the mother relies upon the provisions of section 117(2)(c)(i) that in the special circumstances of this case, application of the formula, and in particular application of the formula relating to the child support income, results in an inequitable determination of the level of child support because the father's income is in fact $52,800 and not $46,290 as in the assessment.
The law
The provisions of section 117 of the Child Support (Assessment) Act empower a court to make an order for departure from administrative assessment in special circumstances. In considering a departure application, the court must follow the three steps as described in Gyselman & Gyselman (1992) FLC 92-279.
The court must be satisfied that in the special circumstances of the case, one or more of the grounds of departure in section 117(2) exists. If a ground for departure is established, the court must be satisfied that it would be:
i)just and equitable as regards the child and parties to make a departure order; and
ii)otherwise proper to make a particular order.
Under this Division, in order to determine these two matters, the court must consider the objects of the Act, the proper needs of the children and any income or assets of the children, the income earning capacity, property and financial resources of each parents and their commitments necessary to support themselves or other relevant dependents, and finally whether any hardship would be cause to either the child or the parents by making or refusing to make the order. In determining whether it's proper to make an order, the court must consider whether the parent is in receipt of a pension and accordingly to what extent the community should be responsible for meeting the costs of children."
The question of payment of school fees was dealt with by the Full Court of the Family Court in Mee v Ferguson (1986) FLC 91-716.
The principles that emerged from the case in relation to school fees can be summarised as follows:
a)where the non-custodian has agreed to the child attending a private school, that person is liable to contribute to the fees so long and to the extent that he or she has a reasonable financial capacity to continue to do so;
b)where the non-custodian has not agreed to the child attending such a school, he or she is not liable to contribute to those expenses unless there are reasons relating to the child's welfare which dictate attendance at the school rather than a non-private school. Then the non-custodian is required to contribute to the extent that he or she has a reasonable financial capacity to do so; and
c)the mere fact that a non-custodian can afford the fees or is a wealthy person is not in itself a reason for imposing that liability. Although Mee v Ferguson was decided prior to the introduction of the Child Support (Assessment) Act, the reasoning has been applied to child support cases [see Lightfoot v Hampson (1996) FLC 92 663 and Wild v Ballard (1997) FLC 92 771]."
The evidence
Both parties observe the orthodox Jewish faith and they and their extended families keep a Kosher home, observe Jewish religious days and strictly observe the Sabbath. The parties had originally considered another school as a possible school for R, although there is disagreement as to when she would have commenced. B R is a more religious school, celebrates all Jewish religious holidays and R would be mixing with other children whose parents keep a Kosher home.
The mother asserts that she would not contemplate R attending a state primary school. The father would prefer R to attend B R but asserts that it cannot be afforded by the parties and that the other primary school offers an acceptable alternative. He concedes that the parties contemplated other schools when they were together but contends that he made no commitment during R's primary school years because he did not consider that it could be afforded.
The father contends that the other primary school offers an acceptable alternative. Whilst it is a state school, because it is located in an area in which many Jewish people live, the school is sensitive to cultural issues and has many Jewish students attending and other religious teaching which is not available at the school can be obtained through lessons at the synagogue at weekends. When there was discussion about R originally attending another school, the mother conceded that she was made aware by the school that the father had told them that he could not pay the fees.
The mother's financial position
The mother received the sum of $55,000 by way of property settlement in 1999 from her settlement with the father. She retained those funds and used them to acquire the unit in which she and R are about to live. She purchased the property for $279,000. Apart from the $55,000 she had from her property settlement, she borrowed from the bank and from her parents. The mortgage secured on the property commercially borrowed is for $109,000. The repayments are $700 per month but the mother has been paying an extra $300 per month to reduce the borrowings. Her parents lent her a further $110,000 to complete the purchase. That sum is not repayable for 20 years and is the subject of a written agreement between the mother and her parents.
The financial statement sworn by the mother indicates that she has a weekly income of $600 and child support from the father, which brings that sum up to approximately $800. She has employment as a sales manager. She has a weekly expenditure of $1132 including school expenses. Without the school expenses, her weekly expenditure is $1082. Even allowing for the mother to cut back on some of her expenditure, I find that she would have difficulty in paying one half of the school fees and expenses herself. She said that she would do anything to send R to B R, although she had not asked her parents for assistance, it is difficult to imagine how she could pay her share of the fees without assistance from her parents.
The father agreed that there were discussions about R going to another school when the parties at an earlier stage but that was in the context of the parties being together. Since separation, the father says that he has paid $55,000 to the mother, paid legal fees and is now paying child support, and with two homes to run, he contended that there is insufficient left for the parties to afford school fees at a private school. He conceded that he was happy for R to attend B R and that she was enjoying the school environment. He said that in the perfect world he would send her to B R but their financial circumstances did not enable them to do so.
The father's financial position
The father is an employee accountant earning a gross salary of $49,400 per annum. He owns three properties. He has a mortgage of $103,500. In his financial statement sworn 17 November 2003, he values the property at $230,000 but concedes that it is probably worth about 280,000. Secondly, he owns a flat. That property has a mortgage of $67,000 and is let for $190 per week. The father valued the property at $160,000 but conceded that it was probably worth about 250,000. The third property owned by the father was left to him by his aunt and is still in the name of the estate. He valued this property at $100,000, which was its value when he became entitled to it in 1994. He conceded that its real value is probably $250,000 on today's market.
According to the tax return for the husband for the year 2000/2001, which were the latest figures produced by him, the property provided a net profit of $361. The other property generated a profit of $5581, which is a total of $5942. The father has some deductions such as income protection insurance and other related deductions which gives him a net income of approximately $52,800 and hence is the genesis of the wife's departure application. His financial statement shows income of $1300 per week from his employment and the properties. He has fixed expenses of $732, including his current child support commitment of $120, which leaves him with $568.
His other expenditure set out in his financial statement is $484. This is $95 less than the amount set out but he conceded that he had counted twice for some of the expenses on the rental properties. That would leave him, on a weekly basis, surplus of $84. However, his expenses include legal fees of $110 a week for the proceedings. He has some savings of $6100 and says that he may have to borrow from his parents to meet his legal fees. Access to funds from his parents, for this purpose at least, appear to be no impediment to him and in terms of his ongoing commitments, it seems to me unlikely that he would have the weekly commitment of the legal fees of $110 as he contends. If that were deducted, then he would have a surplus of $194 per week in order to put towards child support in one form or another.
The child's expenses and fees
There was no dispute between the parties about R's expenses and no real issue taken about them. As far as the departure application itself was concerned, the focus was on the father's taxable income and the payment of school fees. The fees for R between prep and year 12 at the moment amount to a sum of $7380 per annum for fees in prep and $13,120 per annum in year 12. The total cost with uniforms and books is anticipated in her prep year to be $8019 per annum. One half of that sum is $4009.50 or $77 per week. Even allowing for repayment of legal fees, the father has a present capacity to pay that sum.
This is not a case which fits neatly into the principles that emerge from Mee v Ferguson in relation to school fees. It is not a case where the non-custodian has agreed to R attending a private school. In fact, he has not agreed. However, notwithstanding what the Full Court said in Mee v Ferguson as to the first of the principles which was on agreement for the child to attend a particular school, "agreement" is not in fact the word that is used in the Act. What section 117(2)(b)(ii) says is:
Because the child is being cared for, educated or trained in the manner that was expected by his or her parents.
There can be, in my view, an expectation imputed in this case to the parents that R would have a religious upbringing. That is consistent, in a sense, with the evidence of the father which was that in a perfect world he would like R to continue at B R. His objection is it could not be afforded, and I have found that not to be the case.
It could also be said, in my view, that this case falls within the second identified principle in Mee v Ferguson, that there are reasons relating to the child's welfare which dictate attendance at this school rather than at a non-private school. Whilst there is no reason, insofar as R's particular needs or education is concerned, why she could not attend a state school, there is no doubt, on the evidence, that B R provides an appropriate environment for children whose parents wish them to live an orthodox Jewish life. All of the evidence in this case supports that the parties and their extended families wish R to grow up in that environment and that the only real way that that can occur in an educational sense is by her attending B R.
I am satisfied for the Reasons that I have indicated that there is a capacity shown by the father on the available financial material put forward by him to meet his share of R's school expenses and for the Reasons that I have expressed, in my view this is an appropriate case in which he should do so. I have taken into account that the fees will increase as R grows up and proceeds through the school. However, the father has available to him property from which he could obtain a better return than he is currently receiving and it is available to him if necessary to alter the manner in which those assets are held to produce a better return. The Act requires that I have regard not only to income but also to earning capacity.
If he sold the two flats which are used for investment purposes at the present time for $500,000, after deduction of the mortgage, he would have about $430,000 left. After deduction of capital gains tax, he would have about $365,000. A four per cent return would yield him $14,600 per annum. After tax he would still have close to $8000 per annum and allow his capital to remain intact. Whilst that is not significantly higher than the return he is presently getting, in the context of what he would have to find to contribute to school fees, it is an amount which would enable him to meet his share of the school fees, even in the years in which they will be greater than they are now.
I am therefore satisfied that he can contribute to one half of the fees and that the attendance of R at B R is, in fact, compatible with the lifestyle and observances of both the mother and father and is something that was expected in R's education and upbringing. The mother seeks that the father pay one half of the costs for R. In my view, it is appropriate to pay one half and it would not be appropriate for him to be responsible for the entirety of those fees. As I have indicated, I doubt that the mother can meet her share of the fees from her own resources but she has obviously been able to borrow sums from her parents to enable her to meet other expenses and she makes this application in the knowledge that she will have to fund one half of the fees. As it is clear to me that she cannot do that from her own income, I infer that she has resources available to her from her parents to meet her share of the fees.
I turn then to the question of whether there should be any retrospectivity in payment of school fees. In my view, there could have been no expectation that R would attend B R prior to the normal commencement of primary school and the choice to enrol her there in kindergarten was clearly that of the mother. There is no basis, in my view, for requiring the father to make any contribution to fees in previous years.
I turn to the question then of whether there should be a departure from the current administrative assessment of child support. Having regard to what I have found to be the father's current income of about $52,800, it is clear that the child support income amount in the current assessment is less than this sum. This, prima facie, provides special circumstances under section 117(2) whereby the application of the formula would result in an unjust result. However having determined that there are special circumstances I am required to consider under section 117(4) whether it is just and equitable to make an order departing from the administrative assessment.
As I intend to provide for the father to pay one half of R's school fees and I have assessed his capacity to do so on the basis of his current child support commitment it would, in my view, not be just and equitable were I to impose upon him any further requirement to pay child support greater than the amount that he is presently paying. The amount that he is paying, in fact, accords with the child support formula in any event. Having regard to the commitments that he will have to R's education expenses, it would not be just and equitable to make any further order for departure.
The provision for payment of school expenses is made under Division 5 of the Act and, in particular, under sections 123 and 124, I am required when making an order to consider whether that order which will provide for non-periodic child support in the form of school fees should be credited against the present administrative assessment or whether it should be in addition to it. For the Reasons that I have set out, in my view, it should be an amount payable in addition to the present assessment of child support and should not be credited against that assessment. It is a just and equitable amount to be paid when I have regard to R's needs and the lifestyle expected for her by her parents. I am satisfied that the father has the capacity to meet the one half of the expenses. I am also satisfied in this case that it is otherwise proper in all the circumstances for the order to be made.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Bryant CFM
Associate: Peter Smith
Date: 5 December 2003
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