S and S
[2002] FMCAfam 258
•9 August 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| S & S | [2002] FMCAfam258 |
| FAMILY LAW – Child Support – departure application – “just and equitable” – “otherwise proper” – setting child support level over a long period. Child Support (Assessment) Act 1989 Bendeich v Bendeich (1993) FLC 92-355 |
| Applicant: | R L S |
| Respondent: | K E S |
| File No: | HBM 2259 of 2002 |
| Delivered on: | 9 August 2002 |
| Delivered at: | Hobart |
| Hearing Date: | 7 August 2002 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Ms R Courtney |
| Solicitors for the Applicant: | Piggott Wood and Baker |
| Counsel for the Respondent: | Mr M Trezise |
| Solicitors for the Respondent: | Trezise Lawyers |
ORDERS
That K E S pay child support for the children B L S born 5 September 1990 and R K S born 9 February 1994 for the period commencing
5 March 2002 and ending on 30 June 2006 at the rate of $5,710 per annum as varied by Order No. 2 hereof.That the said child support be varied in accordance with annual variations in the Consumer Price Index (All Groups) for Hobart commencing on 1 July 2003 and annually thereafter.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
HBM 2259 of 2002
| R L S |
Applicant
And
| K E S |
Respondent
REASONS FOR JUDGMENT
In this matter the applicant is R L S (“the father”) and the respondent is K E S (“the mother”). The father seeks orders:
a)
that the mother pay child support for the period commencing 5 March 2002 to 9 February 2012 at a rate calculated by applying child support to the mother's taxable income for 1998/1999 plus the Child Support Agency inflation factor, such inflation factor being applied on
30 June 2002 and annually thereafter;
b)that the mother pay a non-periodic payment of child support for the period commencing 5 March 2002 and annually thereafter, such sum to be half the costs of the children's school fees and piano lessons;
c)that the mother pay all arrears of child support owing forthwith; and
d)that the mother be credited with any child support payments made by her since 5 March 2002.
There were other orders sought by the father but, in essence, he abandoned those after seeing the mother's financial situation.
The application is brought under sections 116, 133 and 141 of the Child Support (Assessment) Act 1989. As I am essentially giving these reasons ex tempore, I will not quote from all the sections of the Child Support (Assessment) Act that are relevant. However, section 116 and also 117 are clearly important sections in relation to what I am about to say.
The respondent opposes the application.
The background is that the parties were married but that are now not married. There are two children of their marriage – a boy born in September 1990 and a girl born in February 1994. Both children live with the applicant father and have done so since 1997.
There was an administrative assessment of child support for the period 1 November 2000 to 31 January 2002, which was at the minimum rate of $260 per annum. The father applied to the Child Support Agency for a departure to increase that amount and the mother cross-applied to reduce that amount.
The bases of the father's application were in relation to the extra costs the he incurred for the care, education and training of the children in the way the parents intended, and that the assessment did not take into account the mother's earning capacity, property and financial resources.
The basis of the mother's cross-application was that it cost her more that 5 per cent of her child support income to have contact with the children.
On 2 September 2001, Senior Case Officer B found all three bases for departure established. She said:
“If (the mother)'s current income was simply substituted in the formula, the annual rate of child support would be approximately $620 without any adjustment for contact costs or special education costs. In relation to the contact costs, it is not simply a case of deducting all contact expenditure from the assessed rate of child support. It is only expenditure in excess of the 5 per cent threshold which may be taken into account and then an adjustment is often made by varying the child support income amount.
Having regard to the matters already outlined and in view of (the mother)'s offer to pay half the school fees and music tuition together with an additional contribution of $150 a year for each of the children (a total of $3,040), I consider it just and equitable and otherwise proper to increase the total annual rate of child support to $3,500. The payments will need to be made through the Agency, and (the father) will then be responsible for the payment of the fees and music requirements.”
I pause there to note that the considerations of being “just and equitable” and “otherwise proper” are also considerations that I am bound by.
It is common ground between the parties that they agreed that the children should be educated in the private school system and have extra music tuition.
Within days of the decision of Senior Case Office B that I have referred to, the mother left her employment. However, the only evidence before the court is the mother's evidence that she had not received a copy of that decision at the time. The father then unsuccessfully lodged an objection to that decision.
In January 2002, the mother applied again for a departure. She sought a reduction to the minimum (i.e. $260 per annum) and, not surprisingly, the father cross-applied for an increase. The mother's basis for her application was that she and her husband had moved to Brisbane from Sydney to set up a business and that she had been required to give up her employment.
The decision in relation to that application to the Child Support Agency was given on 12 March 2002. Senior Case Officer A said, inter alia:
“When pressed, (the mother) said at the conference that she could obtain outside employment, but that would mean that her husband would need to hire somebody else. That indicates to me that she does have an earning capacity, but she has elected to forego that earning capacity, at least in the interim, to commence a new business. She is of the view that it would be approximately three to six months before the business is capable of paying for wages and expenses.”
She went on to say:
“I am not satisfied that (the mother)'s earning capacity has reduced, although her actual income has. I am not satisfied that this reason has been established.”
Later in her decision, when dealing with Reason 8 in relation to the father's cross-application, Senior Case Officer A said:
“To establish this reason, (the father) must show that the relevant assessment is not fair because of the income earning capacity, property and financial resources of (the mother).
(The father) argues that (the mother) is working and that her income should be taken into consideration in the assessment. The current assessment requiring (the mother) to pay child support of $3,500 per year is the amount that would apply under the formula, if (the mother) were earning an income of $25,000 for the year. Based on her previous earning history, I do not consider that her earning capacity is significantly higher than that at this point. I am not satisfied that this reason has been established.”
In my view, the logic behind that is flawed, because the decision to set child support at $3,500 per annum was not based by Senior Case Office B in relation to an earning capacity of $25,000. It was set in relation primarily to the education and music costs of the children, together with a slight reduction because of the costs of contact.
In this particular case, the father is somewhat suspicious that the mother has twice given up employment to work for her husband at times when her child support liability has been increased. He also says that I should not trust her because a psychiatrist has diagnosed her as suffering from “factitious disorder”. That is defined by a medical dictionary that I consulted as
“a mental disorder characterised by repeated, knowing simulation of physical and psychological symptoms for no apparent purpose other than obtaining treatment.”
That may well be the case, but I found her evidence to be direct and she did not appear to evade or avoid any questions she was asked. She also answered some questions in ways that were clearly not in her interests.
Both counsel indicated to me that this is really a case that is all about the mother's earning capacity, and I must say that I agree with that. It was the mother's evidence that she does the bookwork for her husband's business and she has enrolled in a full-time two-year diploma course with the Australian Institute of Professional Counsellors. She was only accepted into that course on 30 July this year and that course will entail a minimum of 25 hours' course work per week plus some extra time for study. By doing that, it is clear that she is not using her full employment potential. It is, therefore, clear to me that the mother has the capacity to work full-time but she chooses not to do so.
The mother has worked as a real estate agent and she has worked in a solicitor's office, both full-time and part-time. It would appear on the evidence available to me that the highest taxable income that she has earned was in the 1998/99 tax year, and that the income for that year was $32,475.
The father and his counsel say that child support until the younger child turns 18 should be based upon that income with adjustments for inflation. In my view, that would not be appropriate. However, I am quite sure that the mother could earn $25,000 per annum if she set her mind to it.
I am, therefore, of the view that her child support income potential should be set at that amount, at least for the purpose of the orders sought by the father in relation to periodic child support payments. That would mean that she would have to pay the approximate sum of $3,500 per annum as noted by Senior Case Officer A.
However, the father's counsel argues that that does not take into account the fact that the parties agreed that the children should be educated in the private school system and have private music lessons.
It seems clear to me from Family Court decisions that the child support formula does not include a component for private school education fees and expenses, but it also seems clear to me that just about every child in Australia incurs some extracurricular expense. In this particular case it is music, but in other cases it may be sport or hobbies and the like. That sort of extra expense is, in my view, taken into account in the child support formula. I shall, therefore, only make an adjustment in relation to the school fees and not in relation to the music tuition.
It is the father's unchallenged evidence that the school fees cost him $85 per week. That is $4,420 per annum. It seems to me that that amount should be shared equitably, but that does not necessarily mean shared equally. The father earns in excess of $38,000 per annum and, as I have said, the mother has an earning capacity of $25,000 per annum. However, the father has a wife and another child to support, and they are also expecting yet another child next month. The father's new wife does not work.
On the other hand, the mother has no real dependents, apart from the children that this child support application is all about. Her husband is able to support himself.
Consequently, I am of the view that an equitable sharing of the private school fees would in fact be an equal sharing. Therefore, I am of the view that the mother's child support liability should be increased by half those school fees, being $2,210 per annum.
Adding the $3,500 per annum referred to previously to the $2,210 per annum in relation to the school fees, the total is $5710 per annum.
I turn now to the question of when that rate of child support should start and when it should finish. The father seeks an order that the departure start on 5 March 2003, which is the date of the application. In my view that is appropriate.
However, it is my view that it is not appropriate to apply that figure for child support to the end date suggested by the father, being the younger child's eighteenth birthday. There are two reasons for that. Firstly, I am setting an actual amount to be paid that relates to two children and not a child support income. Secondly, and more importantly, setting a child support liability for as long as that would be tantamount to giving lump sum child support spread over an extended period.
In relation to lump sum payments, Mushin J said the following in Bendeich v Bendeich (1993) FLC 92-355:
“The rationale underlying the general approach of the court was that the longer a lump sum order operates, the greater the 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.”
Those comments were approved of by the Full Court in Dwyer v McGuire (1993) FLC 92-420 and Lightfoot v Hampson (1996) FLC 92-663.
In my view, that reasoning can also be applied to setting levels of child support over extremely long periods.
In the circumstances, I am of the view that the child support that I have determined should be set for a much shorter than that sought by the father and, in that regard, I consider a period of a little over four (4) years to be appropriate. That will allow the mother to complete her counselling training, if that is what she chooses to do, and it would also allow her a chance to re-establish herself in that profession.
That is, however, a sufficiently long period for inflation to have an effect on the benefit to some degree, so I will also make provision for consumer price adjustments in the orders that I make.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Roberts FM
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