R & R (No.1)
[2002] FMCAfam 153
•4 July 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| R & R (No.1) | [2002] FMCAfam 153 |
| CHILD SUPPORT – Income earning capacity – husband found to have income earning capacity notwithstanding he had not sought work – husband found to have funds available to him to contribute to child support from his late father's estate, although husband claimed to have alienated his interest – consideration of whether private school fees should be paid – lump sum ordered where child support otherwise unlikely to be paid. Child Support (Assessment) Act 1989; ss.3(2)(a), 4, 117(2), 117(2)(b)(ii), 117(2)(c)(i), 117(2)(e)(ii), 117(4)(5)(6)(7) and (8), 123, 124, 123(1), 124(1)(b), 124(2), 124(5) Gyselman & Gyselman (1992) FLC 92-279 |
| Applicant: | P A R |
| Respondent: | N R |
| File No: | (P)MLM 2131 of 2002 |
| Delivered on: | 4 July 2002 |
| Delivered at: | Melbourne |
| Hearing Date: | 7 March 2002 |
| Judgment of: | Bryant CFM |
REPRESENTATION
| Applicant appeared in person. | Mr P R |
| Counsel for the Respondent: | Ms Cook |
| Solicitors for the Respondent: | Ms Julie Earle |
ORDERS
THAT the Administrative Assessment Child Support for the children M L R born 14 April 1988 and R N R born 11 October 1990 for the following periods be departed from:
(a)1 December 2000 to 28 February 2002;
(b)17 January 2001 to 28 February 2002;
(c)2 March 2001 to 28 February 2002;
(d)10 May 2001 to 28 February 2002;
(e)1 October 2001 to 31 December 2002.
THAT in lieu of the Assessments departed from:
(a)For the period from 1 December 2000 to 13 June 2001 the Father’s annual child support income be fixed at $82,485.00;
(b)For the period from 14 June 2001 to 30 June 2002 the Father’s annual child support income be fixed at an amount equal to average weekly earnings during that period.
THAT the Registrar of the Child Support Agency give effect to the departures from the administrative assessment in Orders (1) and (2) hereof.
THAT for each 12 month period 1 July 2002 to 30 June 2007 the Father’s annual child support income be fixed at an amount equivalent to average weekly earnings (adjusted from time to time) and otherwise assessed in accordance with the administrative provisions of the Child Support (Assessment) Act (1989).
THAT the Father forthwith pay to the Mother’s solicitors, M H A the sum of $50,000.00 to be held on trust by them in the names of the Mother and Father as trustees upon trust to:
(a)Firstly, to pay to the Child Support Agency on a monthly basis the amount due pursuant to Child Support Assessments created by the Child Support Agency in accordance with these Orders;
(b)Unless otherwise ordered by a Court exercising jurisdiction under the Child Support (Assessment) Act 1989 as at 1 July 2007 disburse any monies then remaining:
(i)firstly in payment of any outstanding fees to the Child Support Agency; and
(ii)any balance then remaining to the Father.
THAT the Wife’s amended Application filed on 4 February 2002 otherwise be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
ZM 2131 of 2002
| P A R |
Applicant Father
And
| N R |
Respondent Mother
REASONS FOR JUDGMENT
Introduction
This is the Mother’s application for departure from child support assessments for the two children, M L R born 14 April 1988 and R N R born 11 October 1990. The period in which the Mother seeks to depart includes assessment periods dating from 12 November 2000 through to 2007. The mother claims that the father has income earning capacity, property and financial resources which would enable him to pay significantly more child support than the amounts assessed. She further claims that he should pay the cost of private education for the children on the basis that there is an expectation that the children would be educated at private schools, and the father has the capacity to pay the fees. She seeks that the future child support and school fees be paid in a lump sum.
The application is opposed by the father.
Applications
The Wife expanded upon the Orders specifically sought by her in her amended application, by setting out the precise orders sought in her affidavit filed 28 February 2002. The precise orders sought by her are as follows:
(a)During the period 10 November 2000 to 16 January 2001 the Child Support Assessment be departed from and the Father’s liability for Child Support be based upon a salary of $82,485.00 per annum;
(b)That the Father pay the Mother a lump sum of $1,080.00 for Child Support for the period 10 November 2000 to 16 January 2001;
(c)That for the period 17 January 2001 to 1 March 2001 the Father pay to the Mother the sum of $1,449.10 unpaid Child Support;
(d)That the Father’s pay to the Mother the sum of $4,216.60 being unpaid Child Support for the period 2 March 2001 to 9 May 2001;
(e)That for the 10 weeks from 10 May 2001 to 13 June 2001 the Father pay to the Mother unpaid Child Support of $3,193.80;
(f)That for the period 14 June 2001 to 7 August 2001 the Father pay to the Mother unpaid Child Support of $150.13 per week, being $1,201.04;
(g)That for the period 8 August 2001 to 5 September 2001 the Father pay to the Mother the sum of $1,277.52 unpaid Child Support attributable to the four weeks pay he received through his eligible termination payment;
(h)That for the 13 weeks from 6 September 2001 to 18 December 2001 the Father pay to the Wife the difference between his liability as determined by reference to an income equivalent to average weekly earnings and the $5.00 per week that she has been paid, being a total of $1,951.69;
(i)That the Father pay to the Wife $153.13 per week for the 13 weeks from 19 December 2001 to 7 March 2002 being a total of $2,015.69;
(j)That the Father pay to the Mother a further sum of $500.00 being his share of the children’s educational expenses for the year 2001;
(k)That the Father pay to the Mother annual Child Support of $8,066.76 per annum for the next 5 years in a lump sum of $40,333.38; and
(l)That the Husband pay to the Mother a further lump sum of $20,000.00 being one half of the anticipated children’s education expenses for the next 5 years.
Relevant child support liabilities
The relevant child support assessments are as follows:
a)1 December 2000 to 28 February 2002 (issued 12 November 2000)
During this period the monthly assessment was $935.08. This was based upon child support income of $52,042 being the Father’s 1999/2000 provisional taxable income.
b)17 January 2001 to 28 February 2002 (issued 17 January 2001)
The relevant monthly assessment during this period was $169.17. This was based upon a child support income of $18,000 being an estimate by the father of his taxable income.
c)2 March 2001 to 28 February 2002 (issued 2 March 2001)
The monthly assessment was $151.17. This was based upon a child support income amount of $17,199 being the father’s estimate of his taxable income.
d)10 May 2001 to 28 February 2002 (issued 10 May 2001)
The monthly amount was assessed at $21.67. This was an annual rate of $260.00 and is the minimum rate applicable, because the father’s estimate of his taxable income was below the exempt amount.
e)10 October 2001 to 31 October 2002 (issued 6 September 2001)
The monthly amount was assessed at $21.67 on the basis of a taxable income below the exempt amount.
Prerequisites for an application to the court
By application made 19 February 2001, the mother applied to the Child Support Agency for a departure from the existing assessment of $169.17 per month. She relied upon the fact that the children were being educated at fee paying schools in the way the parents intended and that the assessment did not take into account the income-earning capacity, property and financial resources of the Father. The decision of the case officer was that there was no basis to change the assessment and the Mother’s application was unsuccessful. Pursuant to s.98X of the Act, the Mother objected to the decision and the original decision was confirmed.
That procedure provides a jurisdictional basis for an application to this Court together with the issue of school fees which can only be determined by a Court exercising jurisdiction under the Child Support (Assessment) Act 1989.
Background
The parties were married in 1986 and separated in 1997. The children have always lived with the Mother. In 1987 the Father commenced employment with B and joined the B Superannuation Fund. In 1988 he joined a second fund. In January 2001, the father ceased employment with B and received a termination payment. He then obtained part-time employment with A P which he resigned in May 2001. He has not been in employment since that time.
Upon separation the parties entered into a child support agreement under which the father was to pay $100 per week child support until the former matrimonial home was sold, and $200 per week thereafter.
On 10 December 1998 the child support agreement was discharged and the Father was ordered to pay $5,000 to the mother. On 24 December 1998 the Child Support Agency (“the Agency”) administratively assessed the child support payable by the Father.
The Father’s father died and between 1999 and 2002 part of his late father’s estate was distributed between the eight beneficiaries, including the Father.
Relevant law
The obligation to pay child support is created by the provisions of the Child Support (Assessment) Act 1989. The objects of the Act are found in s.4. The objects need to be borne in mind when deciding an application under the Act. The objects include that the 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 a departure application, the court must follow the three steps as described in Gyselman & Gyselman (1992) FLC 92-279. The court must be satisfied that in the special circumstances of the case one or more of the grounds for departure in s.117(2) exist. In this case, the Mother asserts that because of the income, earning capacity, property and financial resources of the Father, the application of the relevant administrative assessments of child support in relation to the children results in an unjust and inequitable level of financial support to be provided by the Father [s.117(2)(c)(i)]. In addition, she asserts that the costs of maintaining the children are significantly affected because they are being educated in a manner that was expected by their parents [s.117(2)(e)(ii)].
If a ground for departure is established, the court must be satisfied that it would be:
a)just and equitable as regards the child and parties to make a departure order; and
b)otherwise proper to make a particular order.
Under this division in order to determine these two matters, the court must consider the objects of the Act, the proper needs of the children and any income or assets of the children, the income, earning capacity, property and financial resources of each of the parents and their commitments necessary to support themselves or other relevant dependants; and finally whether any hardship would be caused to either the child or the parents by making or refusing to make the order [s.117(4)].
In determining whether it is proper to make an order, the Court must consider whether the carer is in receipt of a pension and accordingly to what extent the community should be responsible for meeting the costs of children.
Issues
The issues identified by the parties are:
a)Are the relevant assessments unfair and inequitable because the father has, and has had, a greater income than that on which the assessments were based, plus property and financial resources which have not otherwise been taken into account. This involves making findings in relation to each child support period in which a departure is sought in relation to the father’s income, earning capacity, property and financial resources.
b)Was there an expectation that the children would be educated at private schools, so that the Father should contribute to the cost of school fees.
If a ground is established, then it becomes necessary to consider the proper needs of the children, their potential income and earning capacity, the Mother’s financial position and finally whether an order should be made.
An assessment of the evidence as to the Father’s financial position is most conveniently done by considering each period in which it is sought to depart from the assessment.
Period 1 – Assessment for the period 1 December 2000 – 28 February 2002 (actual period 1 December 2000 to 17 January 2001)
By a decision on 12 November 2000 the Agency reduced the Father’s child support liability from $16,868 per annum to $11,221 per annum ($935.08 per month). This was calculated on the 99/2000 provisional taxable income plus any supplementary amounts, which resulted in a child support income amount of $52,042. Although the assessment period was 1 December 2000 to 28 February 2002, it was superseded by another assessment on 17 January 2001. Thus, the real period of the assessment was 1 December 2000 to 17 January 2001. During this period the Father was fully employed with B on an annual income of $82,485.80. That sum represented his annual salary free of “salary sacrifice” arrangements. The Father conceded that this was his income during that period, and that sum should be regarded as his child support income for that period. Within that period the mother also seeks a lump sum of $1,080.
In the 6 months before his liability was reduced the Father deposited $128,400 from his father’s estate into his Commonwealth bank account. However, if his child support income is fixed at $82,485, the child support payable will provide a reasonable level of support and I see no reason to take into account in this period any other assets of the Father.
Periods 2 & 3 – Assessments for 17 January 2001 to 28 February 2002 & 2 March 2002 to 28 February 2002 (actual period 17 January 2001 to 10 May 2001).
On 20 December 2000 the Father paid $100,000 from his father’s estate into his bank account. On 15 January 2001 the Father ceased employment with B. Following his dismissal, he lodged an unfair dismissal claim. On 15 January the father had $105,079.36 in the B Superannuation Fund. On termination he was entitled to immediately access $60,445.28 in superannuation and that sum remained available until 28 May 2001. The remainder of $44,634.08 was preserved. At the time of his termination, the Father had a further $45,866.84 in the STA Fund preserved until he was 56 years of age.
On 17 January 2001 the Agency issued an assessment of his liability at $2,030.00 per annum ($169.17 per month) based on a child support income of $18,000 being the Father’s assessment of his income for the period to 28 February 2002.
On 19 January 2001 the Father received $33,366.86 gross being $20,682.46 net by way of termination pay from B. This was based on an annual salary of $82,485.80. The termination payment included $24,051.17 gross long service leave, $6,345.04 being four weeks salary in lieu of notice, $2,980.69 being 65 hours sick leave, and unpaid salary of $1,609.60. The total sum received by the Father on
19 January 2001 represented the equivalent of 21 weeks’ salary. He was effectively paid $1,586.26 (his previous weekly income) until
13 June 2001.
On 30 January 2001, 11 days before receipt of his termination payment, he estimated his child support income at $26,000. This resulted in a child support liability of $4,318.00 per annum.
On 1 March 2001 the father commenced work part-time with A P. He was contracted until 30 June 2001 on a salary of $661.75 per fortnight. If the funds received by the father by way of termination payment, representing 21 weeks of salary, are added to his weekly income from A P then the Father notionally had income of $1,917.13 per week. The Father said that he was not living on these sums but had applied the lump sum to reduce the mortgage over his house. I am satisfied that from March up until his resignation from A P in May 2001 the Father was receiving a notional income of $1,917.13 per week. He chose to use it on payments other than child support.
On 2 March the Agency notified the Mother that the Father’s child support liability had been further reduced to $1,814.00 per annum for the period 2 March 2001 to 28 February 2002. This was based upon his assessment of his child support income of $17,199.00 per annum.
The same reasoning applies to this period. The Father had effectively received 21 weeks’ salary from B which took him up to 13 June. He was still earning from A P until May and his notional income when these figures are added together is $1,917 per week ($99,684.00 p.a.).
The Mother seeks that during periods 2 and 3 the Father’s income be assessed at the annual rate of $82,485.00 which represents his previous annual salary.
Throughout these two periods, that is periods 2 and 3, it is reasonable to treat his child support income at the level that it was at the time that he was employed by B, namely $82,485. In fact, he had the following available:
·Notional weekly income of $1,586.26 paid in a lump sum of $20,682.46 net received in January 2001;
·Inheritance of $100,000.00 received in December 2000 which he used to reduce his mortgage;
·Unpreserved superannuation of $60,445.00;
·Income from A P between March and May 2001 of $661.75 per fortnight.
Period 4 – Assessment period 10 May 2001 to 28 June 2002
(actual period 10 May 2001 to 10 October 2001)
On 10 May the Agency issued a new assessment for the period 10 May to 28 February 2002. This was the second period that was ultimately replaced by another assessment on 11 October 2001. The Father’s liability for child support was assessed at $260 per annum based on estimated income of nil.
On 11 May 2001 the father officially ceased his employment with A P and has been unemployed since that time. On 28 May 2001 the Father failed to notify the B Superannuation Fund of his wishes in regard to obtaining the unpreserved portion of his superannuation entitlement with the result that the unpreserved sum of $60,443.28 was rolled over and became unavailable to the father. In addition, the termination payment from B covered this period up to 13 June and effectively provided the father with an income of $1,586 per week, at least to 13 June.
On 6 August 2001 the Father settled an unfair dismissal claim against his previous employer. He received $10,000 in settlement of his claim being an eligible termination payment of $6,500 and legal costs of $3,500. The eligible termination payment represented four weeks’ salary at $1,625 per week.
The Father chose to leave his position with A P. He said that after child support and tax were taken out, it was not worthwhile working. During this period he was paying child support at the rate of $5.00 per week. His income and financial resources during that period and close to it were as follows:
a)A few months before the assessment was made, he deposited $100,000 into his bank account from his father’s estate;
b)He had access, if he wished it, to $60,445.28 in unpreserved superannuation;
c)He received the equivalent of his full salary up until mid-June;
d)He received $6,500, or another four weeks’ salary (at an annual rate of $82,485.00) for another four-week period.
The Mother asserts that the period between 10 May and 10 October should be split into different segments as follows:
a)10 May to 13 June — the Father receiving termination payment equivalent to $1,586 per week;
b)14 June to 5 September — the Mother said Father should be treated as having full salary for four weeks of $1,586 and for the remaining eight weeks had the capacity to earn a salary of at least equal to average weekly earnings. In addition he had substantial financial resources and assets in the form of superannuation which he could have accessed and had money from his father’s estate. She asserts that the liability from 14 June to 7 August be determined by income equivalent to average weekly earnings of $41,241.
c)8 August to 5 September — the Mother asserts that as a result of the Father’s unfair dismissal claim he is notionally in receipt of four weeks’ salary as if employed by B and having a weekly income of $1,586.
Having regard to the amounts received by the father together with the superannuation available to him and the money from his father’s estate, I am satisfied that the Mother’s proposals are reasonable and his child support income should be assessed largely as she proposes, save that I propose to apply an earning capacity of average weekly earnings for the period 14 June to 10 October.
Period 5 – 10 October 2001 to 31 December 2002
By reason of an assessment which occurred on 6 September 2001 (which took effect from 10 October 2001) the Father was required to pay $21.67 per month because his child support income was below the exempt amount.
On 2 July 2001 the Father had received a further $100,000 from his father’s estate which he deposited into his account. The Father said that he gave this sum to his sister. He said that it went into his bank account but was really his sister’s. He conceded that he was entitled to it pursuant to the terms of his father’s Will, but asserted that he had not “accepted the money” and had given it to his sister because “she needed it”. He conceded that he was entitled to have been paid at that time a total of $264,000 but had received only $164,000, the other $100,000.00 having been diverted to his sister.
There is another $1,300,000 net to be distributed between the eight beneficiaries within the next 12 months. The Father indicated that he did not have to accept the next distribution, and implied that it may also find its way to his sister.
The Father was cross-examined about bank records which indicated that he had withdrawn money from an account which he described as being his sister’s account. He said that she had deposited one of her cheques from a partial distribution in an account in his name for safekeeping and that he had borrowed the money from her and could withdraw money over the phone. He asserted the account was his sister’s account and it was her money. He said that his sister had a gambling problem and he had to keep an eye on her funds and this accounted for his having access to her account.
I do not believe his explanation. It seems incredible that the Father who, in July 2001, was paying child support of $5 per week should relinquish his share of $100,000 from his father’s estate to his sister, and then in some complex family arrangement have access to one of her bank accounts. I find it more likely on the balance of probabilities that the Father did not relinquish his interest in the estate but merely arranged for the money to go to his sister so that it would not be taken into account in any assessment of child support. His ability to withdraw funds from his sister’s account and the intermingling of their finances makes this even more likely.
In any event, whatever his motivation in relation to his sister, it is clear that the Act places a primary obligation on parents to contribute to the support of their children (DJM v JLM (1998) FLC 92-816 and section 3(2)(a) of the Child Support (Assessment) Act 1989 ) and that the Father should be regarded as having received $100,000 from his father’s estate in July 2001.
Furthermore, despite the fact the Father says he has had no employment since that time, he is not in receipt of Centrelink payments and has been able to adeq uately support himself without the need to apply for any sort of pension. The Father simply said it was his choice not to receive any government payments and that he was looking for work. He led no evidence about actively seeking employment. He is obviously well skilled and experienced. There is a long work history and he had no difficulty getting employment with A P, at least on a part-time basis, when he left his previous employer. He was offered shift work by A P but rejected it because of his contact arrangements with the children. He appears to have chosen to remain out of the workforce, possibly with the motive of avoiding child support. His failure to apply for Centrelink payments suggests also that he is not prepared to put himself forward as a potential candidate for employment as would be required were he to receive an unemployment benefit.
On 18 December 2001 the Mother received the last child support payment from the Father and has received no child support since that date. She seeks that for the period 6 September to 18 December the Father’s child support liability should be assessed on the basis of average weekly earnings and that from 19 December to the date of the judgment, his child support should be assessed at the equivalent of average weekly earnings. Given the capital funds available to him in this period and his unwillingness to seek employment, I am satisfied that this is a fair basis upon which to assess child support.
As a consequence of these findings, I find that there is a ground proved under s.117(2)(c)(i) of the Act and that the relevant determinations of child support result in an unjust and inequitable level of financial support by the Father because of his earning capacity, property and financial resources.
Future child support
The Mother seeks that the Father pay child support for the children for the next five years, assessed on the basis of the child support income of average weekly earnings ($41,250.00 approximately per annum) which produces approximately $155.00 per week. In having regard to section 117(c)(2) I must consider whether in the special circumstances of the case the provisions of administrative assessment from now onwards would result in an unjust and inequitable determination of the level of financial support to be provided by the Father because of his income, earning capacity, property and financial resources. I have made findings that the Father has no present income. He has an earning capacity equivalent to average weekly earnings. I am also entitled to take into account his property and financial resources. He has a home and has paid $100,000.00 from funds received from his father’s estate to reduce his mortgage. He was entitled to receive in the year 2001 the sum of $100,000.00 from his father’s estate which he alleges he has diverted to his sister. He will soon be entitled to receive another $165,000.00 approximately.
It is clear that the Court has the power to make an order beyond the year of assessment (Dwyer v McGuire (1993) FLC92-420). I am satisfied that in the special circumstances of this case were I not to depart from administrative assessment for a prospective period, the likelihood is that the father will not work by his own choice and continue to be assessed at the rate of $5.00 per week. This in my view in light of his earning capacity and his assets and financial resources would be inequitable and unjust. Accordingly, this ground is established.
Is it just and equitable to make an order?
I am satisfied that having regard to the financial position of the Father and the objects of the Child Support (Assessment) Act 1989, the level of child support which will be provided and the cost of the child which I have already referred to it is already just and equitable as between the parties and the children that a prospective departure should be made for a period of 5 years.
Is it otherwise proper to make the order?
I am also satisfied for reasons that I have already given that it is proper to make such an order, particularly having regard to the nature of the parents obligations to support their children.
Following the hearing, but before judgment was delivered, the Mother made application to the court seeking an injunction to restrain the Father from dealing with the remaining funds due to him from his father’s estate. She indicated her belief that the payment to the Father of the final distribution, or part of it, was imminent. I granted an injunction to preserve these funds until judgment, which I am able to deliver two days later.
The Father is entitled to receive in the vicinity of $165,000 from the estate. He gave no indication that it’s receipt was imminent, and even suggested that it may be delayed due to potential litigation.
Was there an expectation the children would be educated at private schools?
The Mother seeks that the Father pay a lump sum of $1,500 being one-half of the children’s educational expenses for the year 2001 which includes fees and levies for M in Year 7 at T C C, which is a fee-paying college. She further seeks that he pay one-half of the children’s educational expenses (of $20,000.00) for the next five years.
M, who is 14, commenced at T C C C in 2001. The Father signed an enrolment form for M to attend T C C on 22 November 1999. It is common ground that the form was presented to the Father and his solicitors during proceedings at the Family Court and he was asked to sign it. There was no discussion at the time about who would pay the fees or that the Father was being asked to do any more than sign the enrolment form so that the Mother could make arrangements to enrol M. The Mother asks the court to infer that his signing the enrolment form was consent to be responsible for part of the fees and that his acquiescence in her subsequent enrolment of the child at the school, together with his capacity at that time to pay the fees, creates an expectation that he would be educated at a private school in the terms specified in the Act. I do not accept this submission. The Mother did not ask the Father to contribute to M’s fees during the year 2001 because when he commenced she felt she was receiving appropriate child support and could cover the fees herself. When the Father ceased his employment with B and obtained a redundancy package, there was no discussion between the parties as to M’s fees, presumably because the Father had not hitherto been asked to pay them.
The Mother admitted she has not spoken with the Father directly about payment of school fees, and that her only formal contact with him on the issue was receiving the signed enrolment form when he was requested to sign it. In fact, she asked M to speak with his Father and said that she believed from M that his Father was not unhappy about him attending T C C.
Although the Mother has not spoken directly to the Father about schooling or progress, he gets school reports and is kept informed by the children. At no time did the Mother and Father have any discussion between themselves as to the basis upon which M was attending and would attend, a private school, and whether the Father would pay the fees. It is clear, in fact, that because of the amount of child support the Mother was receiving when she enrolled M, she intended to meet the fees from that payment.
The Mother conceded that there has been no discussion at all about the younger child, Robert, attending a private school. The Mother conceded this was the case but said she believed “he’d want the same for Robert”. In this case there is no dispute that there are additional costs incurred in educating the children at a private school. The fees and levies are approximately $3,500 per child and this figure was not seriously challenged.
The Mother bears the evidentiary onus of establishing that the education of the children at a private school was expected by their parents. The Mother’s evidence falls short of establishing that fact. The parties never discussed the schooling. The only positive act done by the Father was to sign an authorisation enabling the children to go to private schools when requested to do so by the Mother. It is clear that he was being asked to facilitate the children’s enrolment. There was no discussion as to whether he would be responsible for the fees and as the Mother clearly wanted to send M to a private school, the fact that the Father did not actively take steps to prevent her cannot, in my view, lead to an inference that he agreed to pay the fees or created an expectation that he would be educated privately in circumstances where the Father would be responsible for his fees. It would have been easy enough for the Mother to seek some commitment from him, either verbally or in writing, but this never occurred.
The question of school fees was dealt with by the Full Court of the Family Court in Mee v Ferguson (1986) FLC 91-716. The principles that emerge from the case in relation to school fees can be summarised as follows:
a)Where the non-custodian has agreed to the child attending a private school, that person is liable to contribute to the fees involved so long and to the extent that he or she has a reasonable financial capacity to continue to do so;
b)Where the non-custodian has not agreed to the child attending such a school, he or she is not liable to contribute to those expenses unless there are reasons relating to the child’s welfare which dictate attendance at that school rather than a non-private school. Then the non-custodian is required to contribute to the extent that he or she has a reasonable financial capacity to do so;
c)The mere fact that a non-custodian can afford the fees or is a wealthy person is not in itself a reason for imposing that liability.
Although Mee v Ferguson was decided prior to the introduction of the Child Support (Assessment) Act 1989, the reasoning has been applied to child support cases (Lightfoot and Hampson (1996) FLC 92-663 and Wild v Ballard (1997) FLC 92-771).
In this case the Mother conceded in her evidence that she had not directly asked the Father to pay the fees and that she had been paying them from the child support she was then receiving. No doubt she had an expectation that child support would continue at that rate but nevertheless she did not obtain agreement from the Father that he would pay or contribute to the fees. When he was retrenched from his employment, the child support upon which she had relied was no longer available to her. It was clearly implicit at the time when the Father signed the enrolment form by the fact that there was no discussion between the parties, that the Mother would meet the fees from the child support she was receiving. There was no agreement that the Father would do so either directly or by implication.
I have considered whether there is any reason relating to M’s welfare which dictate his attendance at a private school. The Mother’s evidence was that he was not doing as well scholastically as she anticipated. The only reason she advanced was that he struggles with major change. This is not in my view, sufficient reason to require his continuing attendance at a private school where the Father’s agreement to pay has not been given.
The Mother asserts, and I have determined that the Father should be treated for the reasons explained, as having a continuing ability to earn average weekly earnings. It is not asserted that he has the ability to earn at the rate that he was previously earning at B. That being so, I would not be inclined to find that he had the capacity from his income, albeit notional income, to pay the school fees. He has had and will have lump sums of money available to him. I take into account the money he gave to his sister which he could have retained, and he has further sums to come from his father’s estate. The fact, however, that the Father will have lump sums available to him does not, in this case, make it follow necessarily that he should pay the school fees. As the Full Court in Meev Ferguson said, “The mere fact that the non-custodian can afford the fees, or indeed if he or she is a wealthy person, is not in itself a reason for imposing that liability.” In this case, in my view, there are no facts which lead to the conclusion that the children’s welfare requires that they attend a private school rather than a non-private school. The Mother has the evidentiary onus of establishing that there is some benefit to M which could only be met by his attending a private school and she has failed to discharge that onus.
Should a departure order be made
Whilst I am not satisfied that the mother has established a ground under s.117(2)(b)(ii) of the Act, I am satisfied that under s.117(2)(c)(i) she has established a ground in the special circumstances of this case. Having determined that the ground exists, I must then apply the three-step process described in Gyselman to consider whether:
a)it is just and equitable as regards the child and the parties to depart from the relevant assessments, and
b)whether it is otherwise proper to make a particular order under this division.
Children’s proper needs
The expenses for the children are set out in a statement of financial circumstances sworn on 4 January 2002 by the mother. That statement indicates that the children have expenses of $219 per week and was not challenged, however, the expenses include educational expenses of $60.00. The school fees from the exhibit tendered, appear to be $1,845 per annum being tuition fees of $35.00 per week. This sum should be deducted from the education expenses of $60.00 and the balance of the cost of maintaining the children, as asserted by the Mother, is accordingly $184.00 per week. When I have regard to the Lee scale for the cost of maintaining children the amount claimed by the Mother seems extraordinarily low, but she did not seek to vary that figure in her evidence.
Financial circumstances of the mother
The Mother is a Customer Service Officer at the Commonwealth Bank in Werribee and earns before-tax income of $600 per week. This is equivalent to an annual income of $31,200 gross. At the moment she is entitled to receive $5.00 child support for the two children from the Father. The Mother is living in a de facto relationship and her partner has a weekly income of approximately $893. He of course has no responsibility for the support of the two children. The only significant asset that the Mother has is her current home in which she and the children live, which she estimates has a value of $130,000 and is encumbered by mortgage of $80,000. She has a sum of superannuation in a roll-over fund. Her income is fully committed.
The father’s income
I have indicated in these reasons for judgment that in my view the Father should be treated as having an income equivalent to average weekly earnings. This is approximately $41,000.00 per annum. I have made that finding because the Father has a capacity to work and has not satisfactorily explained why he is not currently employed. Furthermore, he has capital resources which could be employed in various ways to assist him in earning an income.
Whether it is just and equitable to make the orders
A Child Support income equivalent to average weekly earnings would produce a weekly child support payment of approximately $155.00. Having regard to the proper expenses of the children which I have found to be $184.00 per week, (which in my view is an unrealistically low sum ) I am satisfied that this contribution by the Father is just and equitable as regards the Father, the children and the Mother.
I take into account that in some of the periods in which a Departure Order is sought, I have found that the Father has an income commensurate with the income that he was previously earning. That produces a higher level of child support payable, however, it is reasonable to infer that the Mother’s present level of expenditure on the children is, as a result of her present circumstances less than it previously was when there was more income coming into the household. It is also reasonable in my view, to take into account as part of the children’s expenses (although not to require the Father to contribute specifically) the private school fees during earlier periods when the Father’s income produced a child support figure which made it reasonable for the Mother to undertake that expense herself. I am therefore satisfied that for each of the relevant departure periods, it is just and equitable having regard to the parents and the children to depart from the administrative assessments as proposed.
Is it otherwise proper for a departure order to be made?
For similar reasons I am satisfied that it is otherwise proper for an order to be made. Although the Wife is not reliant upon any government pension for support of the children, it is appropriate that both parents contribute to the support of their children.
The effect of the determination
The effect of the determinations I have made up until the date of judgment will, in all likelihood, result in the creation of arrears due by the Father once the Child Support Register has been adjusted. At present the liability of the Father is a registrable maintenance liability pursuant to section 17 of the Child Support (Registration and Collection) Act1988. Whilst it is so, any liability is a debt due to the Commonwealth pursuant to section 30 of the Child Support (Registration and Collection) Act1988. Whether the Mother choses to have the agency collect the arrears on her behalf or whether she choses to make arrangements which will enable her to collect privately is a matter for her to determine.
Lump sum child support
Insofar as the determination I have made will have a prospective effect, the Mother seeks a lump sum payment of child support pursuant to section 123 and 124 of the Child Support (Assessment) Act1989. She seeks that the father pay annual child support of $8,066.76 for the next five years a total of $40,033.38.
Section 123(1) of the Act provides that application may be made to a Court exercising jurisdiction under the Act for an order that the liable parent provide child support otherwise than in the form of periodic amounts paid to the carer.
Before the Court can make an order for substituted support, the Court is required by section 124(1)(b) to be satisfied that it would be just and equitable as regards the child, the carer entitled to Child Support and the liable parent, and otherwise proper to make such an order. The Court is required to have regard to the matters contained in section 124(2) and in determining whether it is “just and equitable” or “otherwise proper” the Court must have regard to the matters contained in subsections 117(4), (5), (6), (7) and (8) of the Act. The Court is not limited by those factors alone (see section 124(5)) which suggests that the Court has a wide discretion in determining the application.
The Full Court of the Family Court of Australia in Prpic v Prpic (1995) FLC 92-574 at 81,688 said:
“Capitilisation orders may well be appropriate where there are difficulties in enforcement or where it is proper to sever the financial link between the parties. However, as a general rule, given that payments of child support depend upon circumstances prevailing from time to time, which circumstances cannot be predicted with any significant degree of certainty, it seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised where there are circumstances that make it appropriate to do so. We would endorse the observations of Mushin J in Bendeich (1993) FLC 92-355 at 79,954 where His Honour said:
‘The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and the children may change their living arrangements from one parent to another’
It is clear that I have discretion to order a lump sum subject to being satisfied as to the matters which I have identified in the Act, but it is also clear that I must exercise that discretion only when there are circumstances which make it appropriate to do so and that normally it is preferable for periodic support to be paid.
The facts relevant in this case to the exercise of the discretion are in my view as follows:
a)That the Father is not exercising any earning capacity despite having been offered shiftwork and has chosen not to obtain any unemployment benefits for reasons which have lead me to infer that he does not wish to obtain employment, but nevertheless has the capacity to do so;
b)The Father would have the court believe that he has divested himself of significant cash assets being a fund from which he might otherwise be required to meet child support obligations. This occurred when the Father ‘relinquished’ $100,00.00 of his entitlement from his father’s estate which he says he gave to his sister. The fact that he was also able to withdraw funds from an account in his sisters name suggests this gift is a fiction;
c)The fact that the Father had the opportunity to obtain in excess of $60,000.00, being his unpreserved superannuation benefit, but failed to seek the release of those funds so that they have now become unavailable to him;
d)When the Father received approximately $164,000.00 from his father’s estate, he chose to reduce his own mortgage rather than meet any child support payments for his children;
e)The Father sought to reduce his child support payments by estimating a low annual income at a time when he was receiving redundancy payments and termination payments, commensurate with his previous level of earning; and
f)The fact that the Husband intimated during his evidence that he might also relinquish any further entitlement to his share of his father’s estate, thereby removing the possibility of funds being available for the support of his children.
From the Father’s conduct in this matter, the only logical inference that can be drawn is that he has done his utmost to ensure that he has no income or assets from which he could pay child support and unless a lump sum is ordered he will continue to act in a manner which makes it difficult, or even impossible for the mother to recover adequate and appropriate support for the children. This is a case in my view, in which the circumstances make it entirely appropriate for a capitalisation order.
The Mother seeks that the child support be capitalised for the next five years, which she calculates at $40.333.38. I must be satisfied that to make such an order would be just and equitable as regards the children and the parties. It is important, in my view, that there be a fund available for payments of the father’s obligations in circumstances in which I do not consider that he will otherwise meet make them. However, it is possible that there could be circumstances which might create an unfairness to the Father or to the Mother if there is no ability within that period to seek a departure. Those conditions would have to be significantly different from the present. Any potential injustice however, can be overcome by providing that the Father deposit the appropriate lump sum into a trust account in the names of the Mother and Father to be held by the solicitors for the Mother, upon trust to pay to the Mother annually in advance, the child support assessed by the Agency for that year. In the event that either party was successful in having the Court at some future time depart from the existing orders, then the remaining funds will be available and no potential injustice can arise. I am satisfied that if this occurs, it is just and equitable as between the parties and the child. The sum payable should be $50,000 as the average weekly earnings are likely to increase in each year.
If there is any balance remaining at the end of the period it can be returned to the Father.
I am also satisfied that it is otherwise proper to make such an order, for the reasons that I have previously given.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Bryant CFM
Associate: Mardi Jarvis
Date: 4 July 2002
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