L and H
[2002] FMCAfam 4
•22 March 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| L & H | [2002] FMCA fam 4 |
| CHILD SUPPORT – Child over 18 years. |
| Applicant: | V I L |
| Respondent: | S J H |
| File No: | ZD2636 of 2001 |
| Delivered on: | 22 March 2002 |
| Delivered at: | Darwin |
| Hearing Date: | 18 March 2002 |
| Judgment of: | Brown FM |
REPRESENTATION
| Applicant: | In Person |
| Respondent: | In Person |
ORDERS
That pursuant to section 66L of the Family Law Act 1975 the respondent S J H pay maintenance for the child M T H born the 7th of May 1982 in the sum of $563.00 per month, the first payment to fall due on the first day of January 2002 and on the first day of each month thereafter, such payments to be made directly to the said child.
That the maintenance for the said child is to be paid during the continuance of his full time course of study at G University and to conclude upon the completion of his current course of study or the cessation of his full time studies, whichever is the earlier.
That the application and response be dismissed and that the matter be otherwise dismissed from the Pending Cases list.
Liberty is granted to each party to apply on giving 21 days written notice in respect of these orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
ZD2636 of 2001
| V I L |
Applicant
And
| S J H |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application under section 66L of the Family Law Act in respect of maintenance for a child over 18 years of age. The applicant in the proceedings is V I L (hereinafter referred to as “the applicant”). The respondent is S J H (hereinafter referred to as “the respondent”). The parties are the parents of M T H who was born on the 7th of May 1982 and who is the subject of this application.
Applications
The applicant filed her application initially on the 19th of September 2001. On the 4th of December 2001 she filed an amended application for maintenance. In this subsequent application she seeks the following order:
1)“Maintenance payments of $296.00 per week, being full contribution of costs for maintaining 19 year old child at university.”
The respondent filed his response to the application on the 6th of November 2001. In his response he seeks the following orders:
1) “That the orders sought by the applicant not be granted.
2) That S J H pay to his son M a total of $3,860.00 per annum towards maintaining him at G University in Brisbane. Such payment to continue up until and including semester 1 2004.
3) The annual amount is to be paid in two instalments at the start of each semester. Prior to the payment being made, M is to provide his father with a copy of his results from the previous semester. If M has not maintained a full time enrolment for a semester then no payment is to be made for the following semester.
4) Costs”
In support of her application the applicant relied on two affidavits sworn by herself and filed with the Court on the 19th of September 2001 and the 4th of December 2001 respectively. In support of his position the respondent relied on an affidavit filed by him on the 1st of November 2001.
Both parties appeared on their own behalf at the hearing before the Court on the 18th of March 2002. The applicant gave additional sworn evidence and was cross-examined by the respondent. The respondent also gave additional sworn evidence and was cross-examined by the applicant. Ms L appeared before the Court in Darwin and arrangements were made for Mr H to appear by way of a video link from the Family Court in Melbourne.
Background
The parties married on the 21st of February 1970 and separated on the 10th of September 1988. A decree nisi was granted in respect of the marriage between them on the 25th of May 1990. Besides M, there are two other children of the marriage, namely B H, who is aged 26 and
E H who is aged 24.
The applicant lives in Darwin with her present husband A L. Both E and B live with her and Mr L.
The respondent lives in Melbourne with his current wife A H. The respondent and Mrs H do not have any other children.
It is common ground between the parties that M is currently enrolled in a Bachelor of Arts course at G University in Brisbane. He is majoring in digital media studies. It is a three-year undergraduate course. Initially M began studying environmental studies at G University at the start of the 2001 academic year. However he subsequently withdrew his enrolment and began his present studies in the second semester of 2001.
The course of study M has undertaken is a full-time course and requires him to have 15 contact hours per week. In addition he is required to undertake group work with other students during the week.
In the second semester of 2001, M successfully completed four subjects in which he gained two distinctions – one credit and one pass. Accordingly at the present time there is no reason to believe that M will not continue his course to its completion.
Neither the parties nor M is currently responsible for any tuition fees in respect of M’s course of study at G University. He has elected to defer the payment of his tuition fee pursuant to the Higher Education Contribution Scheme (HECS). To date the applicant has supported M financially during the period he has been attending G University.
Initially when M commenced his tertiary studies he resided at a residential college associated with G University. However, more recently, he has moved into a rented house which he shares with two other students. He is thus living independently of any institution associated with the university.
As has already been indicated, the respondent lives in Melbourne. In the past, both E and B attended tertiary institutions in Melbourne and lived in part at least with the respondent. I understand that it was the respondent’s wish that M too would choose to study either at university or some other institution of higher education in Melbourne. However, M has chosen to study at G University. The reason for this seems to be his preference for the course he has chosen for himself and because his girlfriend is also studying in Brisbane. I accept that the respondent is disappointed by this decision. However, to his credit, he accepts the reality of the situation and recognises that it cannot be changed now.
During the long vacation of 2001/2002 M returned to Darwin and lived with the applicant in her home. He was able to secure some temporary employment during the vacation with the Northern Territory Police in its Firearm Control section. He was able to earn approximately $2,500.00 during the vacation. This money has been used by him to assist in establishment cost in respect of the accommodation he shares in Brisbane.
The law
The law in relation to child maintenance is set out in subdivision (b) of Division 7 of Part VII of the Family Law Act. Section 66H sets out the approach to be taken in proceedings for child maintenance. This section provides that the Court must:
a)“Consider the financial support necessary for the maintenance of the child and;
b)determine the financial contributions, or respective contributions, towards the support which should be made by the parties.”
In considering the financial support necessary for the maintenance of the child, the Court must apply section 66J. That section provides that the Court must take into account: firstly, the matter mentioned in section 66B; secondly, the proper needs of the child; and thirdly, the income, earning capacity, property and financial resources of the child. Section 66B sets out the objects of the Division, which is to ensure:
“…children receive a proper level of financial support from 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 their parents; and that the parents share equitably in the support of their children. In considering the proper needs of the child the Court must have regard to the age of the child, the manner in which the child has been, or the parents expect the child to be educated or trained, and any special needs of the child.”
In considering the financial contributions that should be made by the parties, the Court must have regard to the matters in section 66K. That section sets out that the Court must consider not only the objects of the act to which I have referred, but the principals in section 66C which are that, firstly, the parents of the child have a duty to maintain the child; secondly, that duty is not of lower priority than the duty of the parent to maintain any other child; and that it has priority over all other commitments of the parents, other than commitments necessary for that parent to support him or her self.
In considering the financial contributions to be made by the parties, the Court must have regard to the income, earning capacity, property and financial resources of the parties and their commitments to support themselves, together with any special circumstances which, if not taken into account, would result in injustice or undue hardship.
Section 66L, which relates to maintenance for children over 18, provides that a Court must not make a maintenance order in relation to a child who is over 18 unless the Court is satisfied that the provision of the maintenance is necessary to enable the child to complete his or her education or because of mental of physical disability. A Court must not make a maintenance order which extends beyond the child’s eighteenth birthday unless it is satisfied that the provision of maintenance is necessary for the purposes to which I have referred.
Evidence
In this case it is implicit in the positions that each of the parties have taken that they recognise that maintenance is necessary for M to enable him to complete his tertiary education. The issues before me are the financial extent of that contribution and how it should be divided by the parties. On the one hand, the applicant says that M’s needs will be met by the sum of $296.00 per week and that this sum should be totally borne by the respondent. On the other hand, the respondent contends that M’s needs will be met by provision of an annual amount of $7,720.00 and of this, he should pay one half, amounting to the sum of $3,860.00 per annum. It is the resolution of these issues that is currently before the Court.
It was a bone of contention between the parties that M is currently living in privately rented accommodation. The applicant gave evidence that it was her belief that M did not enjoy his experience of living in student accommodation at the university and that as a result she did not believe such accommodation was suitable for him. The reason for this is that in her view M has a tendency to withdraw and to become introverted and depressed. For that reason she believed it was more appropriate for him to live in a shared house environment rather than in university halls where, she says it is easy for a person of M’s disposition to become isolated. She further deposed that M was currently living with a friend and his girlfriend and, as a result, had become much more confident and outgoing. The respondent did not seek to challenge this evidence. However, part of his case is that if M was living in a residential hall associated with the university, M would only be liable for accommodation expenses for thirty-nine weeks of each year. The applicant’s proposal envisages that rent for the privately rented accommodation M currently occupies would be paid throughout the year. I accept the applicant’s evidence that at the present time it is appropriate for M to live in shared accommodation away from the university.
In her evidence, the applicant gave a detailed breakdown of her calculations of M’s weekly living expenses whilst at university. She indicated that she has averaged these expenses over the entire year. As has been indicated, these expenses include those incurred by M during holidays and when he is not otherwise attending university. However, the applicant recognises that in all likelihood M will return to Darwin during at least a part of the university vacations. In her calculation of M’s living expenses she has included the cost of twice-yearly plane tickets.
In her most recent affidavit the applicant deposes that she estimates that M’s living expenses are as follows:
EXPENSE
ANNUAL AMOUNT
WEEKLY AMOUNT
Accommodation
$ 4,160.00
$ 80.00
Living expenses
$ 7,280.00
$ 140.00
Telephone
$ 520.00
$ 10.00
Post box
$ 80.00
$ 1.50
Books and other materials
$ 780.00
$ 15.00
Medical/dental/ orthodontic
$ 260.00
$ 5.00
Clothes
$ 500.00
$ 10.00
Air fares
$ 1,820.00
$ 35.00
TOTAL
$15,400.00
$296.00
In calculating these figures the applicant deposed that currently M was paying $80.00 per week rent. This amount did not include electricity, telephone or any board.
In calculating M’s living expenses she had allowed a sum of $82.00 per week for food, which sum included lunches taken at the university, a sum of $10.00 for household expenses, a sum of $16.00 for bus fares to and from the university, a sum of $6.00 for electricity, a sum of $6.00 for excess water and a sum of $20.00 for entertainment.
In respect of the expense allocated for a post-box, the applicant indicated that this expense was no longer relevant.
In respect of her calculations in respect of M’s textbooks and other materials, she indicated that it was her belief that he would require a number of textbooks as well as replacement ink cartridges and things of that nature for his computer during the year. In addition she believed it would be necessary for M to use the Internet through the G University portal at a sum of $10.00 per week. I believe that her calculations in this regard are likely to be conservative.
In respect of M’s medical expenses, the applicant indicated that they were based on twice yearly visits to the dentist and four yearly visits to the doctor and a one yearly visit to the optometrist. She deposed that she has private health cover and her estimate of the cost was on the basis of the gap between the fee that would be imposed and the level of her insurance. M does not have any particular health problems apart from wearing glasses and as a result having to update his prescription each year and having some minor orthodontic difficulties.
The amount allocated for airfares is on the basis of two return airfares from Brisbane to Darwin at a cost of $910.00 each fare.
It is the respondent’s position that these costs are unnecessarily inflated, particularly in view of the fact that M is no longer living in university accommodation. At the beginning of 2001 the applicant provided him with other figures in respect of M’s living expenses whilst at university which reflected his expenses whilst living at B K, the university hall at G University he attended in 2001. The respondent’s position in respect of the maintenance for M is based on these figures in respect of B K. The respondent also objects to the inclusion of airfares in the calculations as he argues that he too must provide airfares for M to visit him in Melbourne.
The respondent bases his proposal for the calculation for the maintenance of M whilst at university on a weekly accommodation fee of $170.00 at B K for 39 weeks of each year, together with a number of other expenses. Initially in January of 2001 the applicant estimated the cost of maintaining M at university during 2001 as being $9,370.00 if he was accommodated at B K. It is on the basis of this fee, less an amount relevant to the cost of the provision of a computer, that the respondent says is the basis of his offer to pay maintenance in the sum of $3,860.00 per annum for M, being half of the applicant’s initial estimation.
However, the respondent did not seek to challenge the applicant in respect of her calculation of M’s weekly expenses, other than the airfares. Nor did he seriously argue that it was not appropriate for M to live in shared accommodation as he currently does.
In my view, I must deal with the reality of the situation as it is, which is that M is living independently and is liable to pay rent of $80.00 per week. In my view, it would be unreasonable to either expect him to leave his current living arrangements or to calculate them on the basis of a situation that no longer exists. Similarly, in my view, there is no evidence to indicate that the other expenses that have been outlined in respect of M’s living and educational expenses are unreasonable.
However, I do not believe that it is appropriate for allowance to be made for his airfares to and from Darwin to be included in the maintenance nor obviously, as it is no longer applicable, for the amount to be allowed in respect of the post-box. Accordingly, on that basis, I fix the weekly amount required to maintain M during the university semesters as being $260.00 per week.
In my view, it is appropriate to allow such a sum for each week of the year. In my view, it is artificial in the extreme to say that M’s expenses reduce when he is not at university. Accordingly on that basis I propose fixing the amount required to maintain him on an annual basis in the sum of $13,520.00.
It is now necessary to determine how the payment of that sum should be divided between the parties.
The applicant’s financial position
The applicant is employed as a manager in the public sector. She earns a gross salary of $77,000.00 per annum. In addition she owns two rental properties which provide her with income of $15,860.00 per annum.
She owns shares with her current husband that are worth some $29,000.00 of which her share is one half or $14,500.00. She has interests in real estate as well as a motor car and some money available to her in bank accounts. She has a gross amount of superannuation of $111,000.00. In total she estimates her gross assets as being worth $541,500.00. In respect of this amount she currently owes some $80,000.00 in respect of a home loan, investment loan and to a credit card provider. Accordingly at present her net worth is $461,500.00.
There is no evidence before me to indicate that she is not likely to remain in the paid work force at a relatively comfortable salary for the foreseeable future, although her present husband is scheduled to retire in the next one or two years.
It seems to me that she has some aptitude with financial matters. Certainly in my view she is currently comfortably off financially. It also seems to me that she is actively planning for her future retirement.
The essence of her case that it is appropriate for the respondent to assume complete responsibility for providing maintenance for M can be put as follows. As has already been indicated, the two older children of the relationship, E and B live with her. Both are currently in receipt of Centrelink payments. I was told that B suffers from an anxiety condition and as a result is in receipt of sickness benefits.
E has a neck injury and as a result is in receipt of a Newstart allowance, currently fixed at $388.60 per fortnight. Of the two older children only B pays board of $30.00 per week. It is the applicant’s position that the expenses she pays on behalf of these two adult children are considerable. It is common ground between the parties that the respondent does not contribute towards the care of these two children.
I accept that in all probability the fact that E and B are living with the applicant causes her to incur some expenses. However, both B and E are in receipt of some income. No detailed evidence was provided to me in respect of the extent of their medical conditions and what the likely prognosis was for them in respect of entry to the workforce. In my view, it is not appropriate to take E and B’s position into account in assessing what is the appropriate level of maintenance payable for M and how this should be divided between the parties. In reaching this conclusion, I bear in mind that the applicant has not sought maintenance in respect of either B or E from the respondent pursuant to section 66L of the Family Law Act.
The respondent’s financial position
The respondent was born on the 23rd of August 1945 and accordingly is currently 56 years of age. He holds a Bachelor of Economics degree with honours. Until recently, he was employed as a university lecturer at S University. Unfortunately he has recently been made redundant.
The respondent and his current wife are members of a self-managed superannuation fund which has a current accumulated balance of $569,640.00. Mr H has elected at the present time not to allow this balance to vest. He remains hopeful that in future he will be able to obtain some part-time work or consultancies relating to the teaching of economics. If he does elect to allow his superannuation to vest it will mean that he will have retired from the workforce and as a result will not be able to obtain such work in future. This is a course he wishes to avoid.
In addition to his superannuation, the respondent owns a portfolio of shares worth $183,311.78. He owes some $130,294.00 in respect of investment loans which relate to the purchase of these shares.
He also owns a house, two cars, a 28-foot sailing boat and personal items and furniture valued at $238,000.00. He has some $27,236.00 available to him in bank accounts.
The respondent’s current wife, A H, is the major breadwinner in his household. She is also a potential beneficiary to his superannuation and has contributed some monies towards that fund by way of her interest in the proceeds of the sale of their former matrimonial home which was rolled into the fund.
At the present time, the respondent’s share investments provide him with a net income of $8,300.00 per annum or $159.61 per week. The respondent has estimated his weekly living expenses as being $315.00 per week.
It is the respondent’s position that if his income was assessed pursuant to the child support formula, he would be liable to pay a comparatively small amount of child support. He also argues that because of the applicant’s high annual salary she precludes M from claiming a Youth Allowance from the Commonwealth Government for his support during his tertiary eduction to which he would be entitled if assessed on the respondent’s income alone.
In my view, it is only necessary to analyse the respondent’s potential and actual assets to realise that these arguments are flawed to a large degree. The respondent’s financial statement reveals that he owns assets and has access to financial resources amounting to $1,181,087.78 and has net liabilities of $130,294.00 leaving him with a net worth of $887,893.78. In my view it is important that his assets and financial resources be taken into account in order to assess the amount of maintenance that he should pay in respect of M. In my view, it is artificial in the extreme to apply as a guide the simple child support formula, even if it was applicable for adult child maintenance, to the position of the respondent.
I accept the respondent’s evidence that his superannuation and other assets must support him for a lengthy and indefinite period. I also accept that in the best possible of all worlds it would be preferable for him to avoid vesting his superannuation. The respondent asserts that it is unlikely that he will gain either part-time or full-time employment in the near future. In this regard the only evidence that has been provided is the respondent’s assertion of the fact. In these circumstances it is not possible for me to make a positive finding as to the likelihood or otherwise of the respondent gaining either part-time or limited consultancy work. However, in my view, it is unwarranted for the respondent to rely on a “Catch 22” situation in which he argues on the one hand that he has no income and as a result will have difficulty providing maintenance and on the other for him to assert that he has no wish to vest his superannuation because it will prevent him from gaining employment.
In my view the respondent can be described as being asset rich but income poor.
Conclusions
Over the last long university vacation M was able to obtain some employment and was able to earn some $2,500.00 which he has subsequently used to provide for his own support. No evidence has been provided to me which indicates that in future it is either likely or unlikely that he will gain some form of employment in future either on a part-time basis during the university year or in a block during the long university holiday. Accordingly it seems to me that in those circumstances he must look to his parents to provide for his support during the period in which he pursues his tertiary studies.
It is common ground that both M’s parents wish him to pursue every opportunity available to him to undertake tertiary studies. I can well understand the respondent’s wish for M to pursue his studies in Melbourne, however the reality is that he has chosen to study in Brisbane at G University. It may well be the case that if M had continued to live in a residential hall associated with the university that this would have resulted in him incurring less expense in respect of his accommodation and living expenses. However, I accept the evidence provided by the applicant as to the reasons for M wishing to move out of this accommodation. As I have already found, I believe that the expenses as calculated by the applicant in respect of the cost of maintaining M each week are reasonable expenses. They equate to the sum of $260.00 per week. In my view, given the fact that M is living away from the homes of both of his parents and has to provide for himself, this is not an inflated sum and cannot be said to provide a lavish lifestyle for him. In my view quite the contrary position prevails.
As has already been indicated, the objects of the child maintenance division of the Family Law Act provide that children, including adult children should have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents and that parents share equitably in the support of their children.
In this regard, it is my view that both the parties have, no doubt through hard work and financial discipline, been able to accrue substantial assets. The respondent has greater assets than the applicant, however he is no longer in employment whereas the applicant has a comfortable salary and can anticipate remaining in employment for some time into the future.
In my view, the appropriate course in this case is for the Court to make orders as a result of which the parties will bear equally the costs of providing for M during the period of time during which he is pursuing his tertiary studies. Accordingly, I propose to make orders that the respondent pay the sum of $130.00 per week for the maintenance of M whilst he is engaged in his full time course of study at G University.
It is the applicant’s position that all maintenance paid in respect of M should be paid directly to her. She is particularly anxious to avoid M receiving a large lump sum of money at either the commencement of each year or mid-yearly. The basis of her concern is she fears that M does not have sufficient maturity or skills to budget for a lengthy period of time.
The respondent wishes to avoid having to make payments to the applicant. He wishes to make his payments directly to M himself in order to maintain his parental connection with his son.
In my view there is merit in the position of both the parties. I do have some concerns about M receiving his maintenance in a large lump sum. In these circumstances I propose making orders which will require the respondent to pay monthly amounts of maintenance to M in the sum of $563.00.
In my view the appropriate date for the commencement of the payment of these sums is from the 1st of January 2002.
As the reasons for judgment in this matter are being delivered electronically to each of the parties, liberty is granted to each of them to apply on giving 21 days written notice in respect of these orders.
The respondent made application for costs in the matter. In the circumstances I do not believe that it is appropriate that any order for costs be made.
Accordingly in this matter I make the following orders as set out at the beginning of these reasons for judgment.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: Lynnette Chin
Date: 22 March 2002
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