PARSONS & KIDSON

[2014] FamCA 951

FAMILY COURT OF AUSTRALIA

PARSONS & KIDSON [2014] FamCA 951

FAMILY LAW – PROPERTY – Interim – Where the wife seeks the husband pay outstanding credit card debts and school fee arrears from his income – Where the husband seeks and an order is made that those debts be paid from the parties’ joint line of credit – Where the parties’ are restrained from further drawing upon the lines of credit without consent of the other party – Where the parties’ credit cards be cancelled – Where the wife seeks spousal maintenance – Where it is determined the wife has a need to receive funds to meet her weekly expenses – Where it is determined the husband has a capacity to pay – Order made that the husband pay the wife spousal maintenance.
FAMILY LAW – CHILD SUPPORT – Application for departure – Where the wife applies for a child support departure order in respect of non-periodic payments of child support – Consideration of the requirements under the Child Support (Assessment) Act 1989 (Cth) – Where the wife and children would suffer hardship if there was a refusal to make a departure order – Where the husband will not suffer any counter-balancing hardship – Order made that the husband make non periodic child support payments in respect of school fees and associated costs and private health insurance.

Child Support (Assessment) Act 1989 (Cth)

Child Support (Registration and Collection) Act 1988 (Cth)

APPLICANT: Mr Parsons

RESPONDENT: Ms Kidson

FILE NUMBER: SYC 2838 of 2014

DATE DELIVERED: 31 October 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 27 October 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Cummings, SC

SOLICITOR FOR THE APPLICANT: Gordon & Barry Lawyers

COUNSEL FOR THE RESPONDENT: Mr Campton, SC

SOLICITOR FOR THE RESPONDENT: Barkus Doolan

Orders

1. Within 7 days of the date of these orders, the parties do all acts and things and sign all documents necessary so as to cause a payment from the Commonwealth Bank of Australia (“CBA”) line of credit (or failing that the National Australia Bank “NAB” line of credit) to be made as follows:

   1.1.in payment of the husband’s CBA Mastercard with credit card number …647, the sum sufficient to repay the Mastercard;

   1.2.in payment of the husband’s second CBA Mastercard with credit card number …027, a sum sufficient to repay the Mastercard;

   1.3.in payment of the husband’s NAB visa card with credit card number …371, a sum sufficient to repay the visa card; and

   1.4.in payment of all fees presently outstanding to A School and B School.

2. Following the payment of the credit cards referred to in 1.1 to 1.3 of these orders, these credit cards be cancelled.

3. Pending further order of the court, the husband and wife are hereby restrained from further drawing upon the CBA line of credit and the NAB line of credit without the consent of the other party in writing, or order of the court.

4. The husband be permitted to serve a copy of these orders upon NAB and CBA.

5. Pending further order the husband shall:

   5.1.pay all building insurance premiums with respect to the C property sufficient to insure the property to a value of $1,500,000;

   5.2.pay all interest rate payments or amounts and including any arrears as and when they fall due or as they accrue at the end of each month with respect to the C mortgage;

   5.3.pay all council rates, water rates, utility accounts and other outgoings with respect to the C property;

   5.4.pay all interest rate payments or amounts and including any arrears as and when they fall due or as they accrue at the end of each month with respect to the M mortgage;

   5.5.pay all council rates, water rates, utility accounts and other outgoings with respect to the M property;

   and the nature of these payments shall be a matter for determination by the trial judge.

6. Within 14 days of the date the husband, from time to time complies with order 5 herein, the husband shall provide to the wife evidence of his compliance with  order 5 herein.

7. Pending further order, the husband pay to the wife by way of spouse maintenance $1,000 per week.

8. Pending further order by way of departure from the administrative assessment of child support the husband shall pay to the wife by way of non-periodic child support for the children:

   8.1.as from 28 April 2014 all educational expenses, sporting and extra-curricular expenses for the children including school fees/levies/donations, private tutoring fees, coaching fees, tuition fees, text books, stationery, uniforms/shoes, sports uniforms/shoes, dancing costumes, sport fees, camp fees, camp equipment/gear, technology fees and equipment and reasonable excursions and extra-curricular activities and transport costs in respect of the children whilst the children attend their present school or such other school as the children attend; and

   8.2.all instalments at the present scale to the private health fund of which the child is presently a member, or such other fund as the parties agree upon in writing, and in addition hereto pay any private hospital, medical, optical, physiotherapy, dental and orthodontic expenses in respect of the child not able to be recovered from the said fund or Medicare, provided a child shall not undergo any elective procedure, unless urgent, without the parties’ prior written agreement.

9. The amount of any non-periodic child support paid by the husband pursuant to order 8 herein shall not be taken in to account in any administrative assessment of child support for either child.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Parsons & Kidson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2838 of 2014

Mr Parsons

Applicant

And

Ms Kidson

Respondent

REASONS FOR JUDGMENT

1. Each party has applied to the court for a number of interim orders.

2. By way of consent orders made on that day, the majority of those controversies were resolved by agreement between the parties. There, however, remained a number of outstanding matters for determination.

3. The husband continued to press for orders in terms of paragraphs 3 to 7 in his case outline which were in the following terms:

   3.    That within 7 days of the date of these orders, the parties do all acts and things and sign all documents necessary so as to cause a payment from the CBA line of credit (or failing that the NAB line of credit) to be made as follows:

   3.1in payment of the husband’s CBA Mastercard with credit card number …647, the sum sufficient to repay the Mastercard;

   3.2in payment of the husband’s second CBA Mastercard with credit card number …027, a sum sufficient to repay the Mastercard;

   3.3in payment of the husband’s NAB visa card with credit card number …371, a sum sufficient to repay the visa card; and

   3.4in payment of all fees presently outstanding to [A] School and [B] School.

   4.    That the parties do all acts and things to cause all ongoing school tuition, levies and fees in respect of [S]’s attendance at [B] School to be paid from NAB line of credit or CBA line of credit.

   5.    That following the payment of the credit cards referred to in 3.1 to 3.3, these credit cards be cancelled.

   6.    That pending further order of the court, the husband and wife are hereby restrained from further drawing upon the CBA line of credit and the NAB line of credit without the consent of the other party in writing or order of the court.

   7.    That the father be permitted to serve a copy of these orders upon NAB and CBA.

4. The wife agreed to order 5 as sought by the husband, but the method of payment of the credit card still remained in issue. Order 6 as sought by the husband reflected the reality of the current situation between the parties, namely that neither of them can use the lines of credit without the consent of the other. The husband will be permitted to serve a copy of these orders upon the National Australia Bank (“NAB”) and Commonwealth Bank of Australia (“CBA”).

5. The wife seeks orders in accordance with paragraphs 4, 5, 8 and 9 of the interim orders sought in her Amended Response filed 28 August 2014, which are in the following terms:

   4.    Pending further order by way of preservation of property and or maintenance the husband shall: 

   4.1pay all building insurance premiums with respect to the [C] property sufficient to insure the property to a value of $1,500,000;

   4.2pay all interest rate payments or amounts and including any arrears as and when they fall due or as they accrue at the end of each month with respect to the [C] mortgage;

   4.3pay all council rates, water rates, utility accounts and other outgoings with respect to the [C] property;

   4.4pay all interest rate payments or amounts and including any arrears as and when they fall due or as they accrue at the end of each month with respect to the [M] mortgage;

   4.5pay all council rates, water rates, utility accounts and other outgoings with respect to the [M] property;

   4.6be restrained from incurring any further indebtedness with respect to the husband’s credit cards;

   4.7pay sufficient amounts to ensure that the husband’s credit cards do not increase from the level of indebtedness as at the date of commencement of these proceedings by the husband; and

   4.8pay to the wife by way of spouse maintenance $1,000 per week.

   5.    Within 14 days of the date of these orders the husband shall provide to the wife evidence of his compliance with interim order 4.

   …

   8.    Pending further order by way of departure from the administrative assessment of child support the husband shall pay to the wife by way of non periodic child support for the children:

   8.1as from 28 April 2014 all educational expenses, sporting and extra curricular expenses for the children including school fees/levies/donations, private tutoring fees, coaching fees, tuition fees, text books, stationery, uniforms/shoes, sports uniforms/shoes, dancing costumes, sport fees, camp fees, camp equipment/gear, technology fees and equipment and reasonable excursions and extra-curricular activities and transport costs in respect of the children whilst the children attend their present school or such other school as the children attend; and

   8.2all instalments at the present scale to the private health fund of which the child is presently a member, or such other fund as the parties agree upon in writing, and in addition hereto pay any private hospital, medical, optical, physiotherapy, dental and orthodontic expenses in respect of the child not able to be recovered from the said fund or Medicare provided a child shall not undergo any elective procedure, unless urgent, without the parties’ prior written agreement.

   9.    The amount of any non periodic child support paid by the husband pursuant to interim order 8 shall not be taken in to account in any administrative assessment of child support for either child.

6. The interim hearing proceeded before me on the basis that the net pool of assets on the husband’s case was $4.275 million and on the wife’s case, somewhere in the vicinity of $5 million.

7. It was also an agreed fact that the husband’s current level of annual remuneration (including bonuses) is in an approximate gross amount of $660,000 per annum.

8. The husband seeks an order for the payment of his credit cards on the basis that those credit cards have historically, during the parties’ cohabitation and since separation, been used to pay joint matrimonial debts such as outgoings on the parties’ two properties and the children’s school fees. The husband’s argument is simply that there are currently lines of credit with the CBA and NAB totalling $2.6 million. These lines of credit cannot currently be accessed given that both parties are required to consent to their use. The interest rate on the lines of credit is in the order of approximately 5.6 percent. The interest rate being incurred upon the credit cards is in the approximate amount of 19 – 20 percent. The husband simply wants to exchange one debt for another but at a far lower interest rate.

9. The wife’s objection to that is, as I understand it, that the husband will in some way waste his substantial earning capacity (which he should be otherwise be using to pay the credit cards) in a way that will not be able to be accounted for at the final hearing. In that context, senior counsel for the wife was asked what the wife’s application would be at the final hearing. After attempting to get a more precise answer, the best that was obtained was “in excess of 70 percent”. The overall debts on the credit cards are in an approximate sum of $90,000. It is difficult to see how a payment of that amount from the lines of credit would affect any application the wife may wish to pursue at a final hearing. In my view it is a sensible proposal to substitute a debt which has an exorbitant interest rate for a debt which has a far more modest one and I will make an order in the terms as sought by the husband.

10. The parties agreed that the credit cards would be cancelled once the arrears on those cards had been attended to.

11. There is currently approximately $18,000 in outstanding school fees in relation to A School and approximately $24,000 owing to B School. The husband was able to have the Child Support Agency reduce periodic payments of child support as a result of him making payments to arrears of B School fees (apparently as a “prescribed non-agency payment” pursuant to  7A Child Support (Registration & Collection) Act 1988 (Cth)).

12. Given the line of credit of $2.6 million, the current arrears of school fees for A School and B School can be paid from the line of credit as sought by the husband. This will have the effect of ensuring full periodic child support payments to the wife given that I intend to make an order in the terms of order 9 as sought by the wife (see below).

13. I will deal with the husband’s application for ongoing school tuition, levies and fees in respect of S’s attendance at B School, to come from the NAB line of credit or the CBA line of credit, when I deal with the wife’s application that in the future the husband make those payments from periodic income.

14. Ordinarily the wife’s application in respect of child support would be dealt with before dealing with the wife’s application for periodic spousal maintenance, but given the findings I will make about the husband’s capacity to pay, the order in which I deal with the applications is not of any moment and I will deal with the applications in the order in which they were presented.

15. Turning then to the wife’s application for the payment of certain non-periodic specified expenses including periodic spousal maintenance (as contained in order 4 of the interim orders sought by her), senior counsel for the husband did not submit that any of those payments were not properly payable.

16. The wife does not currently have any income from paid employment. The wife has been out of the workforce since approximately November 1996. Her statement of financial circumstances filed 24 October 2014 indicates that her only source of income, apart from a small amount of interest weekly ($95) on an investment of $207,000 in cash at a bank, is $498 per week by way of child support paid by the husband in respect of the two children of the marriage.

17. The wife’s listed weekly expenses (which were not the subject of challenge) are in the sum of $1,656 per week. These expenses include some of the non-periodic payments the wife wishes the husband to pay, namely, rates on the M property ($315); other rates, unit levies on the C property ($79); building insurance on the C property ($16). These amounts total $410 and leave the wife’s stated need at $1,151 ($1,656 - $410 - $95).

18. I consequently conclude that there can be no issue in relation to the need for the payments requested by the wife. Nor can there be any question about the wife’s current inability to meet those needs from her income.

19. Turning then to the husband’s capacity to pay, the husband in his most recent financial statement deposes to the fact that his average weekly income is $6,967. That statement, at item 9 of his financial statement, could be misleading if it was not understood that part of the husband’s remuneration package as a financial professional included regular bonuses. It was not controversial the bonus that the husband expects in March 2015 for the current financial year will be in the approximate sum of $300,000 gross. It follows therefore that the husband’s current annual remuneration is in the order of $660,000 ($6,967 x 52 = $362,284 + $300,000) or approximately $12,692 per week.

20. The husband asserts that his weekly expenses are in the sum of $4,457 per week. However, one amount included in that total sum is legal fees in respect of these proceedings, which the husband writes in as $3,000 per week, but adds that this is “an expense that will cease upon conclusion of the proceedings”. If the husband’s provision for weekly legal fees is ignored, then his actual expenditure on a weekly basis is $1,457 in respect of ordinary living expenses. In addition, the husband pays income tax on his regular income at $2,890 per week; rates in relation to the C property of $60 per week and payment of periodic child support of $498 a week (which I acknowledge will probably increase). I also infer the husband would be required to pay tax on his bonus (of approximately $5,769 per week) at top marginal rate (say $5,769 ÷ 2 = $2,884). The husband’s total expenses are $7,789 ($1,457 + $2,890 + $60 + $498 + $2,884). On this calculation the husband’s surplus income would be $4,903 ($12,692 - $7,789).

21. Under the orders that I have proposed, debts to the husband’s credit cards will be repatriated from the lines of credit. The payment of $419 a week on current credit card debt will therefore cease to exist. Nor will there be a repayment of arrears of school fees as they are to be “refinanced”.

22. The orders the wife seeks would require the husband to pay $1,000 per week for spousal maintenance and $1,679 per week in relation to the mortgages on the M and C properties, plus rates, insurance and outgoings on the property, a total of about $2,679 ($1,000 + $1,269 + $315 + $79 + $16). I am satisfied that the husband has the capacity on an ongoing basis to meet regular periodic payments in respect of all of those payments in relation to which the wife makes applications for interim orders.

23. The husband’s surplus would thus then be $2,224 ($4,903 - $2,679).

24. The wife seeks that the husband provide her with evidence that he is making regular repayments in relation to insurance on the C property; the C mortgage; the C property rates and other outgoings and the M mortgage, rates, utilities and other outgoings in respect of the M property. Given that I will be making an order that the husband meet those payments, it is reasonable that he demonstrate to the wife that he is complying with the order on a regular basis.

25. The wife applies for a child support departure in respect of non-periodic payments of child support.

26. Division 5 of Part VII of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”) allows a carer to seek an order for the payment of child support in a form other than by way of periodic amounts. Section 121 sets out the objects of Division 5 of the Assessment Act (which are similar to those of Division 4):

    26.1.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

    26.2.Parents share equitably in the support of their children.

27. Section 122 of the Assessment Act recognises that it may be appropriate in certain situations to substitute the payment of child support in a manner other than a periodic form for such items as school fees and health insurance.

1. Before making an order dealing with a non-periodic payment of child support, the court must be satisfied that:

   28.1.It is just and equitable as regards the child, the carer entitled to child support and the liable parent; and

   28.2.Otherwise proper.

   (Section 124(1)(b) the Assessment Act)

2. In determining the application the court must also have regard to:

   29.1.The administrative assessment in force; and

   29.2.Any departure order

   (Section 124(2) the Assessment Act)

3. In determining whether it would be just and equitable so far as the child, liable parent and carer is concerned, the court must have regard to the matters mentioned in subsections 117(4), (6), (7), (7A) and (8) of the Assessment Act which are as follows:

   (4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

   (a) the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b) the proper needs of the child; and

   (c) the income, earning capacity, property and financial resources of the child; and

   (d) the income, property and financial resources of each parent who is a party to the proceeding; and

   (da) the earning capacity of each parent who is a party to the proceeding; and

   (e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

   (i) himself or herself; or

   (ii) any other child or another person that the person has a duty to maintain; and

   (f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

   (g) any hardship that would be caused:

   (i) to:

   (A) the child; or

   (B) the carer entitled to child support;  by the making of, or the refusal to make, the order; and

   (ii) to:

   (A) the liable parent; or

   (B) any other child or another person that the liable parent has a duty to support; by the making of, or the refusal to make, the order; and

   (iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

   (6) In having regard to the proper needs of the child, the court must have regard to:

   (a) the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained; and

   (b) any special needs of the child.

   (7) In having regard to the income, earning capacity, property and financial resources of the child, the court must:

   (a) have regard to the capacity of the child to earn or derive income, including any assets of, under the control of, or held for the benefit of, the child that do not produce, but are capable of producing, income; and

   (b) disregard:

   (i) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and

   (ii) any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.

   (7A) In having regard to the income, property and financial resources of a parent of the child, the court must:

   (a) have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the parent that do not produce, but are capable of producing, income; and

   (b) disregard:

   (i) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and

   (ii) any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.

   (8) In having regard to the direct and indirect costs incurred by the carer entitled to child support in providing care for the child, the court must have regard to the income and earning capacity foregone by the carer entitled to child support in providing that care.

4. In determining whether it would be otherwise proper to make an order the court must also have regard to the nature of the duty of a parent to maintain a child, and the fact that it is the parents of a child themselves who have the primary duty to maintain the child. The court must also consider the effect the making of an order would have on any entitlement to the child, or carer, and the rate of any income tested pension, allowance or benefit payable to the child or carer.

5. As can be seen, the application for a payment of non periodic child support is dependent upon the same considerations that apply to departure applications and can be considered together.

6. The parties’ eldest child, W, completes his schooling in the coming weeks. After the arrears are paid to A School, there will not be any cost incurred towards the schooling of W. The child S is currently in year 7 at B School. The husband pays $923 per week in order to meet the outstanding fees payable to B School, but once those arrears are paid in accordance with the orders I have made, it appears (when looking at the school fee invoice annexed to the wife’s affidavit) that term fees are in the approximate sum of $7,327.50 (with additional fees for school excursions/camps/materials etc.)

7. Using a broad brush approach, if each term at B School is likely to cost in the approximate sum of $7,327.50, yearly fees would be close to $29,310. That can be divided into a weekly sum of approximately $564. After paying spousal maintenance, mortgages and other outgoings on the property, the husband has a surplus weekly income of $2,224 per week.  There is little doubt he would not be able to meet the payments of those school fees.

What are the special circumstances of this case?

1. On the face of the untested documents, the husband has recently demonstrated a poor record in paying school fees and associated extra-curricular and sporting costs. He says this is because the arrangement between the parties has always been that the wife paid the fees on the credit card and the husband paid the credit cards from his income or from the joint line of credit. As set out above, the parties’ credit cards have accumulated large debts and following their repayment the parties will both be prevented from using the cards.

2. There is an unlikelihood of any change in circumstances in respect of the living arrangements for the children. The children have not seen their father since early 2014 and live primarily with their mother.

3. The husband has a very substantial income and future earning capacity and I have found will have surplus income in his hands in the order of $2,224 per week.

Are the requirements of making a departure order and order for non-periodic payment of child support under the Assessment Act fulfilled?

1. I have regard to the duty that both parties have to maintain the children.

2. The children are currently engaged in extracurricular and sporting activities. The wife particularises the costs of these in her financial statement for which she says she is currently meeting from the money she has in her bank accounts. Those costs amount to $140 per week.

3. In her affidavit the wife asserts that the amount of $2,165.25 per month for the children is insufficient to cover their expenses (excluding school fees). The wife estimates the children’s total weekly expenses are $1,374.

4. The first child support assessment provided that the amount of child support the husband was to pay until December 2014 was $3,087.50 per month. As discussed above, the Child Support Agency reduced the monthly sum payable by the husband to $2,161.25 per month on the basis that the husband is paying $4,000 per month towards outstanding B School fees. It is not clear whether once those fees are completely paid, the husband will again have to pay the original monthly assessment but I assume that will be the case.

5. The wife has not worked for over 18 years and is currently aged 51 years old. The children are both presently dependent on the wife and require her day to day support.

6. As set out above the husband is employed as a financial professional and his gross salary is approximately $660,000 per annum (inclusive of yearly bonuses). As determined above the husband’s surplus weekly income will be $2,224 per week.

7. The total value of the C property and M property is approximately $5,500,000 (as set out in the wife’s financial statement).

8. The wife holds $477,450 in superannuation and the husband holds $271,317 in superannuation.

9. The wife also holds approximately $200,000 cash in the bank. The husband has approximately $145,178 in various accounts (as set out in Part I of his financial statement).

10. It was agreed between the parties that the child S would continue her high school education at B School. Should those school fees not be paid there is a high risk the child will not be able to complete her schooling.

11. I am unable on an interim basis to accept the husband’s assertion that he does not have the ability to pay the wife’s need for further child support.

12. I find that the wife would suffer hardship, as would the children, if there was a refusal to make the non-periodic order which the wife seeks. The husband does not suffer any counter-balancing hardship.

13. I find that the orders the wife seeks are otherwise proper.

14. Section 125 of the Assessment Act requires me to address whether or not the order for non-periodic payments should reduce periodic payments. The wife seeks an order that any amount of non-period child support paid by the husband pursuant to interim orders should not be taken into account in any administrative assessment of periodic child support for either child.

15. Given the husband’s income and the cost of the children the wife has demonstrated in her financial statement filed 24 October 2014 in the sum of $1,374 (649 + 725) it is just and equitable and otherwise proper that there be no reduction in the assessment of periodic child support arising out of orders I have made in relation to the husband making non-periodic payments. Accordingly an order as sought in paragraph 9 of the wife’s application shall be made.

16. I shall make the orders proposed by the wife in relation to the children’s schooling.

17. The wife also sought an order for the payment of private health fund membership. Senior counsel for the wife could not say whether or not that arrangement was ongoing. I understood it to be uncontroversial that it has up until now been the existing arrangement as between the parties. In those circumstances and given my findings about the husband’s capacity to pay, I will make an order in those terms.

I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 31 October 2014

Associate: 

Date:  31.10.2014