Leroy and Moreau
[2010] FMCAfam 903
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LEROY & MOREAU | [2010] FMCAfam 903 |
| CHILD SUPPORT – Whether Child Support Agreement entered into before 1 July 2008 can be varied or terminated – agreement terminated 28 August 2008 – departure for period from 28 August 2008 until all children turn 18 considered and ordered. |
| Child Support (Assessment) Act 1989, s.80CA(1) Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 Family Law Act 1975, s.79 |
| Daley & Daley (2009) FLC 98-093 Gyselman& Gyselman (1992) FLC 92-279 Savery & Savery (1990) FLC 92-131 |
| Applicant: | MS LEROY |
| Respondent: | MR MOREAU |
| File Number: | SYC2986 of 2007 |
| Judgment of: | Baumann FM |
| Hearing dates: | 18 May & 17June 2009; 13 August 2010 |
| Date of Last Submission: | 13 August 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 25 August 2010 |
REPRESENTATION
| Counsel for Applicant: | Mr Stewart (18 May 2009); Mr Dura (13 August 2009) |
| Solicitors for the Applicant: | Stacks Family Law |
| Counsel for the Respondent: | Mr Batey (18 May 2009; Mr Gould (13 August 2009) |
| Solicitors for the Respondent: | Gayle Meredith & Associates |
ORDERS
A declaration that the Child Support Agreement between the Applicant Mother and the Respondent Father dated 16 May 2005 (“CSA”) has been terminated pursuant to clause 4.8.2 effective from 28 August 2008.
That in relation to each of the children [Y] and [X] (“the children”) that until such time as there is a child support terminating event pursuant to section 12 of the Child Support (Assessment) Act in relation to each child that the Father pay child support for each child as follows:
(a)For the period 28 August 2008 to 30 June 2009, the sum of $250 per week per child;
(b)For the period 1 July 2009 to 30 June 2010 the sum of $280 per week per child;
(c)For the period 1 July 2010 to 30 June 2011 the sum of $330 per week per child adjusted on 30 June 2011 and each relevant year thereafter in accordance with the weighted average variation in the Consumer Price Index for Sydney based on the previous March quarter;
(d)The private education costs of the children until the completion of their year 12 secondary education for each of their attendances at [S] School, and the expression “private education costs” shall mean:
(i)all school tuition fees;
(ii)uniforms including sports uniforms;
(iii)books and school stationary expenses;
(iv)school camps and excursions which are part of the curriculum; and
(e)the premiums in relation to a private medical insurance policy covering the children at the current level.
That within 7 days of the Mother providing to the Father receipts for any medical, dental and/or related expenses in relation to the children that she has paid, that the Father submit those receipts to his private medical insurance insurer and all necessary in order to claim rebates from the insurer and that within 7 days of the husband receiving any rebates that he pay those rebates to the Mother.
That the parties have liberty to apply for any orders for enforcement or arrears or any orders pursuant to s.143 of the Act, for repayment of any overpayments.
Any application for costs be filed and served within twenty-eight (28) days.
All applications in the matter otherwise be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Leroy & Moreau is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC2986 of 2007
| MS LEROY |
Applicant
And
| MR MOREAU |
Respondent
REASONS FOR JUDGMENT
Introduction
Although these proceedings really relate to the level of child support that the Respondent Father MR MOREAU is required to pay to the Applicant Mother MS LEROY, the focus of the litigation has been directed towards the financial capacity of each parent.
The parents have a low trust, almost toxic relationship since they separated in July 2004. Regrettably, for a number of reasons which it is unhelpful; to explore completely, the Mother’s initial application for variation of a child support agreement filed on 26 April 2007 was not heard until 18 May 2009. Thereafter, submissions were made in June 2009. The Court with some regret, was not in a position to deliver its reasons for judgment until 4 June 2010, however, the Mother made an Application to re-open the proceedings on 2 June 2010, which was granted, and further evidence was heard (and cross-examination permitted) on 13 August 2010.
The two delightful children whose needs are the subject of this dispute are [X] (born [in] 1993 – now 17 years old) and [Y] born [in] 1996 – now 14 years old). These two children are hearing impaired. An older child, [Z] (aged 22 years), is of course no longer the subject of any child support jurisdiction but is mentioned at times in these reasons.
The parents enjoyed a comfortable lifestyle when a family and the Father still enjoys a good income as a [occupation omitted] although he says less than he previously enjoyed. The Mother, who has remarried a [occupation omitted], is a highly qualified [occupation omitted] but says her income is very modest (for reasons explored below), and that she is forced to rely unfairly upon the generosity of her husband
Mr Leroy, to enable their new family unit (including [X] and [Y]) to maintain a reasonable and appropriate standard of living.
Part of the delays in this matter were occasioned by an Application for Termination of the Agreement being granted by the Child Support Registrar on 23 October 2008. This caused proceedings ready to proceed on 28 & 29 October 2008, to be thrown into jurisdictional confusion. Subsequently, on or about 5 February 2009, the Child Support Registrar reinstated the Agreement effective 23 October 2008, and ultimately the applications proceeded to hearing.
Orders sought
On 13 August 2010, both parties being legally represented, contended for the following orders:-
“MOTHER
1.A declaration that the Child Support Agreement entered into by the parties and dated 16 May 2005 continues to be in force and enforceable.
2.That the Order of 17 June 2009 be discharged.
3.That arrears of Child Support, interest and any applicable penalties be paid by the Respondent to the Applicant within 28 days.
4.That the Respondent pay the school fees necessary for the children, [X] and [Y], to complete their secondary education at the [S] School, or such other school as the parties may agree in writing including but not limited to:
4.1All school tuition fees
4.2All uniform expenses, including sports uniforms and equipment
4.3Books and stationary expenses, and
4.4School camps, activities and excursions.
5.That the Respondent pay the premiums for the children’s private medical and dental insurance at the current or higher level.
6.That for the purpose of Order 5, the Respondent to obtain or cause the relevant health fund to issue a separate card or authority to enable the Applicant to claim medical and/or dental rebates through HICAPS at the time of incurring the expenses.
7.In the alternative to Order 1 above, that the Respondent pay to the Applicant by way of Child Support the sum of $3,500 per calendar month.
FATHER
1.A declaration that the Child Support Agreement between the Applicant mother and the Respondent father dated 16 May 2005 (“CSA”) has been terminated effective from 30 January 2006.
2.In the alternative to order 1, a declaration that the CSA terminated as from one of the following dates:
2.1.1 July 2006;
2.2.16 October 2007; or
2.3.28 August 2008.
3.That any arrears of child support interest and/or penalties as at this date be discharged.
4.That in relation to each of the children [Y] and [X] (“the children”) that until such time as there is a child support terminating event pursuant to section 12 of the Child Support (Assessment) Act in relation to each child or each of the children cease to live with the mother for more than 50% of the time, that the father pay child support for each child as follows:
4.1.the sum of $600 for each child per month, such sum to be adjusted on 1 July 2011 and each relevant year thereafter in accordance with the weighted average variation in the Consumer Price Index for Sydney based on the previous December quarter.
4.2.the private education costs of the children until the completion of their year 12 secondary education for each of their attendances at [S] School, and the expression “private education costs” shall mean:
4.2.1.all school tuition fees;
4.2.2.uniforms;
4.2.3.books;
4.2.4.school camps and excursions which are part of the curriculum; and
4.3the premiums in relation to a private medical insurance policy covering the children at the current level.
5.That within 7 days of the mother providing to the father receipts for any medical, dental and/or related expenses in relation to the children that she has paid, that the father submit those receipts to his private medical insurance insurer and all necessary in order to claim rebates from the insurer and that within 7 days of the husband receiving any rebates that he pay those rebates to the mother.
6.That the mother pay the father’s costs.
7.All applications in the matter otherwise be dismissed.”
Arising from those minutes, the following issues arise for determination:-
a)Can the said Child Support Agreement be varied and/or set aside and/or terminated?
b)If it can, does the evidence establish that it should be, and if so from what date?
c)How should any arrears (if any) be paid?
d)If the agreement is terminated or varied, what is the just determination of the liable parent’s payment for child support or the appropriate level of variation?
e)Should the assessment of child support payable be fixed or otherwise set to until a period when [Y] turns 18 or there is an earlier terminating event?
Child Support Agreement
Before turning to these issues, it is it is appropriate that the Court record the provisions in the Child Support Agreement dated 16 May 2005 (“the said child support agreement”) and thereafter consider how legislative changes to the Child Support (Assessment) Act 1989 (“the CSAA”) affect the Court’s jurisdiction in this matter.
The said child support agreement formed part of a resolution of financial issues between this previously married couple – including consent property orders under s.79 of the Family Law Act 1975. It is common ground that the said child support agreement was registered by the Child Support Registrar and was binding on the parties having the effect of removing them from the process of administrative assessment (and review) under the CSAA.
The said child support agreement is Annexure “A” to the affidavit of the Mother filed 21 October 2008. Some of the provisions of this contract between the parties are particularly relevant to the dispute now:-
a)The Father (described as the Husband) was to pay to the Mother (described as the Wife):-
i)$3,500 per month by way of periodic child support (clause 4.1) to be adjusted annually by CPI (clause 4.2);
ii)In addition the Father was to pay “20% of the net amount if (sic) any performance bonus paid to him” (clause 4.3);
iii)In addition the Father was to pay various school fees and other school expenses as defined, for [Z] attending “[omitted]” and for [X] attending “[S] School” (clause 4.4);
iv)Private health insurance premium at their present level (clause 4.5);
v)The difference between the amount charged and the Medicare and private health insurance rebates for major medical expenses (clause 4.6);
The agreement recorded at clause 4.7 that the “payments referred to in clauses 4.4, 4.5 and 4.6 have present annual estimated value of $35,000”.
b)Clause 4.8 of the said child support agreement provided the contractual basis when the agreement would terminate, and because of the importance of this clause to these proceedings the clause is reproduced as set out in the agreement:-
“4.8This Child Support Agreement will terminate upon the earliest of the following events:-
4.8.1the wife’s taxable income exceeding $40,000 per annum, and for the purposes of this clause the wife’s income shall mean and include her salary or personal exertion earnings, investment income and bonuses;
4.8.2any of the children ceasing to reside with the wife on a full time basis;
4.8.3any of the children commencing employment on a full time basis;
4.8.4the husband’s income increasing or decreasing by an amount greater than 20%, and for the purposes of this clause, the husband’s income shall mean and include his salary or personal exertion earnings, investment income and bonuses.”
Legal principles applicable to child support agreements
Brown FM in Daley & Daley (2009) FLC 98,093, at paragraphs 57 to 90 extensively reviewed the law relating to the variation or discharge of the provisions of child support agreements, by court order. I agree that a significant change occurred from 1 July 2008 by reason of the operation of the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006. For ease of description, this Act will be referred to as “the 2006 Child Support Reform Act”
Because of the uncertainty created by the 2006 Child Support Reform Act, the Child Support Registrar was directed by the legislation to undertake a review of all child support agreements in force prior to 1 July 2008 (see Item 73(1)). I am satisfied that pursuant to Item 74 of the 2006 Child Support Reform Act, the Registrar reviewed the said child support agreement and on 8 July 2008 issued a determination accepting the agreement.
Although a right of appeal against such a determination existed, the Court is not aware of any successful appeal by either of the parties. Considering the determinations of the Registrar (admittedly somewhat confusing from the determination made on 23 October 2008, which was then revoked on 5 February 2009), in my view the said child support agreement should, for the purposes of the hearing on 18 May 2009, be found to be a binding child support agreement in effect from 1 July 2008.
By s.80CA(1) of the CSAA, a binding child support agreement cannot be varied. I agree with submissions of Mr Batey (then Counsel for the Father) at paragraphs 5.3, 5.4, 5.5, 5.6 and 5.7 of the written submissions, the effect of which is that this Court has no jurisdiction to vary the new binding child support agreement.
In so finding, I reject the contention by the Mother that as the Mother commenced proceedings in April 2007 the “legislative regime previously in place remains applicable”, including the operation of former s.98(1) of the CSAA. The submission which seeks to rely upon the interpretation of the agreement having the effect as an order of the Court, is flawed and fails to properly construe, in my view, the clear transitional arrangements identified in the Father’s submissions as identified.
The Father submits that clause 4.8 of the said child support agreement “became a ‘Termination Agreement’, effective form 1 July 2008”. This submission relies upon s.80D of the CSAA which provides relevantly that:-
“80D(1) A binding child support agreement (the previous agreement) may be termination only by:-
(a)…
(b)the parties to the previous agreement making a written agreement (a termination agreement)
(i) that is binding on the parties in accordance wit subsection (2); and
(ii) to the effect that the agreement is terminated; on
(c)court order setting aside the previous agreement under section 136.”
No submissions were received as to whether the requirements of s.80D(2) were complied with in respect of this binding child support agreement. On the face of the agreement, as produced to the Court, ss.80D(2)(c) and (d) have not been complied with as no certificate of independent legal advice is annexed to the agreement.
The Court finds that the transitional arrangements which caused and allowed the said child support agreement to be determined as a binding child support agreement (without apparent compliance with the new provisions in s.80C(2)(c) and (d)) apply so as to allow clause 4.8 as a “termination agreement”, without strict compliance with s.80D(2)(c) and (d), such that s.80D(1)(b) applies.
It follows that it may be open on the evidence to consider whether the binding termination agreement is terminated by operation of s.80D(3)(b) which provides that:-
“80D(3) A binding child support agreement is terminated:-
(a)…
(b)if paragraph 1(b) applies – on the day set out in the following paragraph
(i) if the termination agreement specifies a day on which it takes effect – that day;
(ii) otherwise – the day on which the termination agreement is signed; and
(c)………”
The Husband submits the Court has jurisdiction to terminate the agreement prior to 1 July 2008. However, Item 74 of Schedule 5 of the Child Support Reform Act relevantly provided that:-
“74. Registrar to review all agreements
(1) Before 1 July 2008, the Registrar must:
(a)review every child support agreement made before that day that will be in force:
(i) immediately before that day; or
(ii) after that day; and
(b)determine in writing whether each such agreement is:
(i) to be taken to be a binding child support agreement; or
(ii) to be terminated.
(2) If, in accordance with subitem 73(5), the Registrar accepts a child support agreement on or after 1 July 2008 under the Assessment Act as in force immediately before that day, the Registrar must:
(a)review the agreement; and
(b)determine in writing whether the agreement is:
(i) to be taken to be a binding child support agreement; or
(ii) to be terminated.
(3)After the Registrar makes a determination under subitem (1) or (2), the Registrar must serve notice in writing of the determination on each of the parties to the agreement.
(4)The notice must include, or be accompanied by, a statement to the effect:
(a)that the party may, subject to the Registration and Collection Act, object to the decision (the original decision); and
(b)that if the party is aggrieved by a later decision on an objection to the original decision (no matter who lodges the objection), the party may apply, subject to that Act, to the SSAT for review of the later decision.
…”
As previously recorded, the Registrar has made a determination under Item 74, that the agreement is “to be taken to be a binding child support agreement”, and the Court is entitled to accept that despite the Father’s claims prior to the 1 July 2008 that the Agreement should be terminated, the Father was unsuccessful in persuading the Registrar to do so. In my view, if the Father was aggrieved by that decision (either to find the Agreement was a binding child support agreement or not to terminate the agreement), then his remedy lay with the process set out in Item 74(4). If following that process the Father was aggrieved by the ultimate decision of the SSAT, then limited judicial review on a question of law was available.
In my view therefore, as a matter of statutory interpretation, this Court does not have jurisdiction to “terminate” the agreement prior to 1 July 2008. It may however consider the evidence and determine whether the binding child support agreement should be terminated after 1 July 2008, which is what the Court now proposes to do.
The Court has answered the first question posed by paragraph 7(a) of these reasons above, namely that the Court has no jurisdiction to vary the agreement but does have the power to terminate the agreement, effective after 1 July 2008.
When, if at all, should the agreement be terminated
As a result of the earlier findings, the Court is able to consider, on the evidence, whether clause 4.8.2 of the agreement applies.
The Father says that on 28 August 2008, [Z] moved out of the Mother’s home. The Mother does not contest that evidence, but rather contends that:-
“For the purposes of the agreement, the meaning of ‘child’ and ‘children’ are difficult to reconcile. There was nothing in the agreement to suggest that it was intended for the entire agreement for all children to cease when [Z] (then aged 17) leaves home on a full-time basis…”
and further that:-
“As a consequence, it is submitted that the agreement was intended to subsist until all children were over 18 years and all children ceased to be eligible children under child support legislation.
It is submitted that any other interpretation propounded by learned counsel for the Father, creates a nonsense of the agreement and makes it internally inconsistent.”
I reject the Mother’s submissions. The agreement should be given its plain and ordinary meaning and must also be interpreted in the context of the obligations that parents hold to meet the reasonable costs of their children equitably (see s.4 of the CSAA).
In my view clause 4.8.2 became operative when [Z] moved out of the Mother’s home. In some ways this might be a generous interpretation to the Mother as [Z], by that date was 20 years of age – well past being an “eligible child” under the CSAA.
To find otherwise would be to support an interpretation that the Father was liable to pay the same amount of periodic child support whether one child or three children lived with the Mother. That would be an inequitable and unconscionable interpretation, as the Mother’s obligation to meet the children’s costs would have significantly changed and the excess would more likely be for the Mother’s support – not the children’s support.
The Court therefore finds, and will declare, that the binding child support agreement dated 16 May 2005 terminated on 28 August 2008.
How should any arrears (if any) be paid
As a result of the decision to find the agreement was terminated from 28 August 2008, it is not possible for me to calculate what arrears (if any) that are payable. Furthermore, now having to consider to what extent the administrative assessment of $1,650 per month should be departed from, the ultimate liability less the amount paid (as a result of the conditional stay order made 17 June 2009) will need to be calculated. If, once calculated by the Child Support Registrar, some arrears or, for that matter, over payment arises, I shall give the parties liberty to apply to me for further orders for enforcement and/or for an order under s.143(1) of the Act if the parties cannot reach agreement.
The Court will now consider the competing departure applications. In so doing, the Court records that the parties were invited at one stage of these proceedings to undertake mediation with the possibility of entering into another child support agreement or a consent order. The parties through a mediation conducted privately were unable to resole the matter.
Departure application
Clearly, as a result of the order that the Court will make terminating the Agreement, the issue that arises as to the level of child support payable by the Father from 28 August 2008.
Because of the actions of the Child Support Registrar to terminate the Agreement and then to allow an objection to that decision at the time of the hearing on 18 May 2009 there was some confusion as to whether an administrative assessment was still in existence. Certainly the Court was aware that after the Father was successful in arguing that the said child support be terminated, the Registrar caused an administrative assessment to issue for the period from 24 October 2008 to 10 February 2009 (see Exhibit B tendered by the Child Support Registrar on 29 October 2008).
The result of the assessment, based it seems on the Father’s percentage of care being 35 percent and the Mother’s percentage of care being 65 percent, was:-
a)[X] – annual child support rate of $8,979
b)[Y] – annual child support rate of $8,979
This is equivalent to a total monthly rate of $748.25 per child.
I use the word “confusing” because:-
a)In his original written submissions (at paragraph 3.5) it is asserted that “the administrative assessment is currently set at $1,650 per month”. The Court cannot find such an assessment in the evidence tendered.
b)The administrative assessment of a total of $1,496.50 per month may have been withdrawn when the Registrar allowed the objection to the earlier decision to terminate the agreement. Again the Court has not received any evidence to that effect.
c)The Mother’s affidavit filed 22 July 2010, attaches (as Annexure “K”), a Child Support Assessment dated 28 May 2010 for the period 1 March 2010 to 31 May 2011 of $12,691 per annum for each child. This is based on the formula adopting the Mother’s care percentage of 65 percent. The total monthly assessment is $2,115.17.
The parties, as their final minutes of order reflect, seek a “departure” to a fixed amount if the agreement is no longer effective. The proceedings proceeded on the basis there was an administrative assessment in existence and, for the purposes of this decision the Court adopts, as the best evidence, that the administrative assessment at 18 May 2009 was the assessment commencing 24 October 2008 and the further “underlying” assessment beginning 1 March 2010. The alternate position is that there is no current assessment, such that as the Court has now determined that the child support agreement terminated on 28 August 2008, the Mother would be obliged to seek an administrative assessment before the Court had jurisdiction to consider to depart from it.
Neither party raised any jurisdictional impediment to the Court proceeding by way of departure if the said child support agreement was terminated. Although the minutes of order set out at paragraph 6 of these reasons expresses the relief differently, I regard the competing claims to be:-
a)The Mother seeks child support in the periodic sum of $3,500 per calendar month together with payment of school fees (as defined) and the highest level of medical and dental insurance (see orders 4, 5 and 7).
b)The Father seeks, by order 4, a departure to a level of $600 per child per month together with school fees (as defined) and private medical insurance. The orders sought make it clear that it is the expectation of the parents that the children be privately schooled. The orders drafted are very similar. Furthermore, it is agreed that the Father will pay private health insurance (which includes dental cover), although the parents disagree as to how that refund should be activated and facilitated.
The critical issue clearly becomes whether, in the special circumstances of this case (being a threshold issue) the administrative assessment should be:-
·reduced to $1,200 per month as the Father seeks; or
·increased to $3,500 per month as the Mother seeks; or
·set at a different rate
Principles to be applied
The relevant stationery framework is set out in s.117 which the Full court in Gyselman & Gyselman (1992) FLC 92-279 found involved a three step process, namely provided it is established that special circumstances exist in the case, the Applicant must establish a ground for departure set out in s.117(2) and that it would be just and equitable and otherwise proper to make an order to depart from the assessment.
The grounds for departure as set out in s.117(2) of CSAA are:-
‘(2)For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i) the duty of the parent to maintain any other child or another person; or
(ii) special needs of any other child or another person that the parent has a duty to maintain; or
(iii) commitments of the parent necessary to enable the parent to support:
(A)himself or herself; or
(B)any other child or another person that the parent has a duty to maintain; or
(iv) high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;
(aa)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));
(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i) because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia)because of special needs of the child; or
(ib)because of high child care costs in relation to the child; or
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of the child; or
(ia)because of the income, property and financial resources of either parent; or
(ib)because of the earning capacity of either parent; or
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.”
Submissions and evidence
The original submissions made by Counsel for the Mother Mr Stewart, contended that “to find special circumstances in the present case, one needs look no further than the hearing disability of the children, its impact upon their practical needs, its impact upon the responsibilities of the Mother in meeting their special needs, and its practical (not theoretical) impact upon the earning capacity of the Mother”.
I agreed, using the often quoted remarks of Kay J in Savery & Savery (1990) FLC 92-131, that the peculiar facts in this case “set it apart from other cases” and I find that special circumstances exist.
Before turning to findings on the evidence, the Court records that it has now had two separate occasions to observe the parties under cross-examination. Both are intelligent and articulate people with training and qualifications in [omitted]. The Father works as a [omitted] with significant responsibilities; the Mother’s curriculum vitae is most impressive with a string of academic achievements and, at the very least, recognition as a qualified [occupation omitted]. It was perhaps not surprising that the parties’ Financial Statements were exacting and the calculations of the costs of living very strictly analysed. For my part on more than one occasion during the history of this litigation, I saw glimpses of the financial competitiveness between the parents blurring, however, one wishes to interpret the objects of the CSAA, namely the obligations on parents to meet the reasonable needs of their children subject to their capacity to do so. At times there were hints of both bitterness and exaggeration in the evidence and demeanour of both parents – however I essentially regarded each of them as people in a continual unhealthy conflict, trying genuinely to be truthful and honest.
It follows from the findings already made, that the Court is concerned with the period from 28 August 2008. Some of the evidence transversed at the first part of this hearing in May 2009 related to events and issues prior to 28 August 2008, which are no longer relevant.
Furthermore, although there have been disputes about schooling, the Father has committed to paying for private school fees previously and continued to pay them. He has paid school fees for the children’s current schools since January 2010, and his order contemplates him continuing to do so. This evidence supports the submission previously made by his Counsel that the Father believes it would be detrimental to the children, emotionally, socially and academically if they were not, in effect, privately schooled. This is the position of the Mother as well. For this reason, a ground of departure is already established (s.117(2)(b)(ii), namely that the children are being educated in the manner expected by their parents.
The more difficult issue is to consider the evidence of the parents now spanning two separate hearings (18 May 2009 and 13 August 2010), in respect of the following grounds of departure, namely:-
a)Section 117(2(a)(iii)(A) – the Mother’s capacity to provide financial support for the children is significantly reduced because of commitments to support herself.
b)Section 117(2)(b)(ia) – the costs of maintaining the children are significantly affected because of the special needs of the children.
c)Section 117(2)(c)(ia) & (ib) – the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the Father because of the income, property, financial resources and the earning capacity of either parent.
These additional grounds of departure require the Court to make findings which can broadly be described as:-
·the needs of the children
·the financial position of the Mother
·the financial position of the Father
The needs of the children
Because of the almost agreed departure relating to the children’s private education, those expenses are notionally excluded from the children’s needs as assessed.
Most relevantly, the Mother was the subject of cross-examination on her Financial Statements filed 15 May 2009 and 3 August 2010. In these statements, at PART N are details of the children’s expenses:-
-at 15 May 2009 - $1,180 per week
-at 3 August 2010 - $1,352 per week
Before making a finding as to the children’s needs, it is appropriate to note that these hearing impaired children do require regular audiology visits (for example at paragraph 27 of her recent affidavit the Mother deposes to nine visits between 23 February 2010 and 21 June 2010) and hearing aids. The Mother had purchased hearing aids in 2008 for $4,000 for each child. The evidence was that these would need replacement every three years. Only a proportion of the costs of these aids is recoverable from medical insurance. In March 2010, [X] lost his hearing aid, and in April 2010 [X] received “Government subsidised hearings aids”. The Mother (at paragraph 10 of her affidavit filed in support of her application to reopen) says these hearing aids “are not as sophisticated”. No expert evidence to establish the current subsidised hearing aid is of inferior quality has been provided to the Court.
The Mother further asserts that [Y] requires orthodontic work. This was an issue raised at the May hearing, however no probative expert dental evidence was offered to the Court then, or now. Having made that observation, I am prepared to accept the Mother’s evidence at paragraph 9 that [X] has had orthodontic treatment and, at paragraph 10, that [Y] has an appointment on 25 August 2010 to see an orthodontist for a revised estimate of the costs of treatment. Obviously, at the time of delivery of these reasons the Court has no evidence of the revised costs or nature of the treatment.
Apart from these special needs, the costs of the children as identified by the Mother over the two separate Financial Statements are as follows:-
Weekly expenses
Item
May 2009
Aug 2010
Food
260
350
Household supplies
26
33
House repairs
40
40
Electricity/Gas
15
14
Telephone
25
25
Motor vehicle (petrol/maintenance)
133
140
Fares/car parking
2
20
Clothing/shoes
65
82
Children’s activities
90
60
Medical/Dental/Optical
209
92
Entertainment
50
55
Holidays
50
50
Education expenses
0
33
Chemist/Pharmacy
7
8
Gardening
6
7
Cleaning
25
33
Repairs
20
30
Dry cleaning
2
5
Books/Magazines
20
20
Gifts
25
40
Hairdressing
10
16
Other commitments
- Annual trip to UK
144
- Share Pet/Vet
20
- Pocket money
35
TOTALS:
$1,180
$1,352
The extra costs of food, the Mother says, arises now from both the age of [X] (17 years) and the fact that since October 2009 he has not spent overnight time with the Father. The Mother, again in a mathematical sense, says at paragraph 8 of her recent affidavit that to the end of June 2010, [Y] has spent 105 nights with her Father in the previous 12 months. One might hope that the parties might soon be relieved of the need for them to count the nights the children do, or don’t, spend with each other.
I take these factors into account and the special needs of the children.
I accept living expense vary from week to week and that a level of artificiality intrudes when trying to complete PART N of a Financial Statement. Also, there are levels of discretionary expenditure when raising children, often as the Mother claims in her household, arising from an expectation of the children. The Mother says that the children’s lifestyle has reduced and is only maintained at the current level through the generosity of her husband – who, I accept, holds no legal duty to maintain the children.
On the evidence, I find the needs of both of the children to be approximately $900 per week for the 12 months to 30 June 2009 and $1,000 per week for the 12 months to 30 June 2010.
I regard food expenses as slightly high; regard the claim for house repairs as excessive for the children; view the claim for motor vehicle expenses (arising in part from the Mother’s decision to take a novated leave via her husband’s employment) as an excessive adjustment against the children; assess the claim against the children for pet food as “penny pinching”; regard the Mother’s desire for an annual trip to the UK to see her elderly parents as understandable, but the expense for the children as entirely discretionary.
Father’s income earning capacity and financial resources
The Father’s Financial Statements before the Court were filed on 26 September 2008 and 21 July 2010.
The accuracy of the Father’s Financial Statements was not seriously challenged. They show the same level of precision demonstrated by the Mother’s Statements. A comparison of the two relevant Financial Statements, and the cross-examination, support the following findings:-
a)The Father’s gross weekly income in September 2008 is estimated (including a car allowance of $480 per week) to be $4,922. However, this amount does not include the discretionary work bonus. The Father anticipated the bonus to be paid in February 2009 would be a gross of $45,000. Based on this amount being taxed at the highest marginal rate, the net benefit to the Father received have been in the vicinity of $500 per week – an income of $5,422 per week.
b)The Father’s claimed weekly expenses were $6,357, however this included $1,635 for “payments made for the benefit of [Z], [X] and [Y]”. To assist in determining, on the Father’s Financial Statement, his capacity to pay periodic child support these expenses should be reduced by $881 plus the bonus of $149 = $1,030. This would reduce the total expenses to $5,327. When this amount is deducted for the income calculated above, the Father has $95 per week available for periodic child support. Clearly, the expenses for the children claimed at PART N, much like the Mother’s, show some creative accounting of the adjustment for the children for some of the expenses. I find that although the payment of school fees ($605 per week) and funds for [Z] ($150) had the impact, still the Father had a much higher capacity than $95 per week to contribute to the children’s child support.
c)The same analysis of the 2010 Financial Statement requires the weekly income of $5,362 to be increased by the net bonus (see Item 14) of $38,000 or $730 per week, making a total of $6,092. The expenses claimed of $5,613 should be reduced by the child support payable as a result of the stay order – namely $382 per week, or a figure of $5,231. On this basis, the Father has an excess of income over these expenses (but after paying school fees) of $861.
d)I take into account the asset and liability position as revealed in the Financial Statements (excluding non accessible superannuation). Because of the borrowings from his Father, (explored at the recent hearing), the Father claims an excess of liabilities over assets. Certainly on the basis of assets and liabilities, the Mother appears to be in a superior asset position to the Father. I note the Father claims 40 percent of the home but is liable for 50 percent of the mortgage.
e)I accept the Father’s work bonus is discretionary, however it appears form the Father’s evidence he has usually received a bonus.
Mother’s income, earning capacity and financial resources
The Mother’s Financial Statements before the Court were filed, as previously noted in these reasons, in May 2009 and August 2010.
A comparison of the two relevant Financial Statements, and the cross-examination, support the following findings:-
a)
The Mother’s asset position has not significantly altered, in that her major asset is her 60 percent interest in the home at [omitted] which she values at $870,000 in both May 2009 and in August 2010. It is common ground that the Wife utilised the proceeds of her property settlement with the Father to make this contribution. The Father says that the Mother’s decision to utilise the totality of her funds for this purpose represents her placing her own interests before the needs of the children. Although it would, no doubt, have been possible to acquire a cheaper home even in Sydney, the home represents the home of the children as well and is, in a very direct way, a significant contribution to their needs. The Mother’s interest in the home is unencumbered. She only has minimal debts and despite her claim that her husband
MR LEROY has contributed over $67,000 to the children’s care, no loans to him are asserted. No doubt, although under no legal duty to do so, her husband has assisted the Mother with many expenses.
b)The Mother claims an income from personal exertion as an [omitted] in her 2009 Financial Statement of $236 per week and in her recent Financial Statement of $414 per week. I am satisfied that an impediment to the Mother seeking additional paid employment included the terms of the said Child Support Agreement where clause 4.8 would have operated to terminate the agreement if the “wife’s taxable income exceeded $40,000 per annum”. In the first part of the trial, the Mother was cross-examined about how her taxable income was close, but she claimed just under $40,000 per annum after allowances for tax deductions. I am convinced the Mother was keenly alert to that figure.
c)Now that the Child Support Agreement is terminated, no such consequence arises. From the evidence produced to the Court I am comfortably satisfied the Mother will earn income and has the capacity to earn income exceeding $40,000 per annum. She has options in the market place as an employee which she has not really explored. She prefers, as she is entitled, to work for herself. I am sure she can manage that in a tax effective regime. The Father did not offer probative evidence by which it could be established what level of income the Mother may generate. Although the Mother points to the children’s special needs as an impediment to income generation, I do not regard it as a substantial impediment when I consider:-
i)The ages of the children and their capacity for self management.
ii)The limited (perhaps monthly) visits to the Audiologist required.
iii)The nature of the Mother’s work which, apart from seeing clients, can easily be undertaken out of school hours or at night.
I am satisfied that the Father’s income will be superior, but that the Mother’s net assets at this time exceed the Father’s.
Orders that should be made
The parties because of their background and because the child support formula is so based on mathematical methodology, may expect that the Court should make a precise calculation. However, it is clear that the determination is an exercise of discretion based on the findings made. As I have formed the view that it is in the interest of the children and the parties to make an order which continues until the children are no longer covered by the CSAA (noting that [X] will leave school in December 2011 when he will have turned 18 years) the order I propose to make is not capable of precise calculation.
In my view, in the special circumstances of this case, the grounds for departure under s.117(2)(b)(ia) and s.117(2)(c)(ia) and (ib) have been established and it is just and equitable and otherwise proper in accordance with the definition of those terms in the Act, to depart from the administrative assessment which would otherwise apply because of the termination of the Child Support Agreement, as and from 28 August 2008 as follows:-
a)For the period from 28 August 2008 to 30 June 2009 the Father should pay to the Mother the sum of $250 per week per child.
b)For the period from 1 July 2009 to 30 June 2010 the Father should pay to the Mother the sum of $280 per week per child.
c)For the period from 1 July 2010 to 30 June 2011 the Father should pay to the Mother the sum of $330 per week per child adjusted thereafter annually on and from 30 June 2011 in accordance with the CPI variation for the preceding March quarter.
d)The Father shall pay school fees and private health insurance as both parties have agreed and the order which I have made adopts parts of both the Father and the Mother’s draft.
e)The Mother should be entitled to access the Father’s family health insurance so as to claim rebates and in circumstances where the Father’s family privacy is protected. It is astonishing that the conflict between the parties has been so profound that the Mother has not yet claimed rebates for both hearing aids and orthodontic work because the parents cannot agree how it should be done. In my view, because of the Father’s concerns, his preferred approach at proposed Minute of Order 5 is adopted by the Court.
Otherwise all applications will be dismissed and if either party wishes to make an application for cost, they should bring an application within twenty-eight (28) days.
The Court’s preferred approach would be that any application for costs be dealt with by written submissions.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Baumann FM.
Date: 25 August 2010
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