S and S
[2001] FMCAfam 190
•16 October 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| S & S | [2001] FMCA fam 190 |
| Family Law – Child Support – Departure from Assessment – Lump Sum Order – “special circumstances” – “just and equitable” – “otherwise proper”. Luckie and Luckie (1989) FLC ¶92-036, Bendeich and Bendeich (1993) FLC ¶92-355, Gyselman & Gyselman (1992) FLC 92-279, Dwyer v McGuire (1993) FLC ¶92-420 and Lightfoot v Hampson (1996) FLC ¶92-663. |
| Applicant: | K W S |
| Respondent: | B W S |
| File No: | ZH2819 of 2001 |
| Delivered on: | 16 October 2001 |
| Delivered at: | Launceston |
| Hearing Dates: | 25 & 26 September 2001 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Mr. P. Fitzgerald |
| Solicitors for the Applicant: | Legal Aid Commission of Tasmania |
| Counsel for the Respondent: | Mr. D. Grey |
| Solicitors for the Respondent: | Zeeman Kable & Page |
ORDERS
That the rate of child support payable by B W S for T W S born 16th December, 1999 and L W S born 22nd March, 1993 be varied from $260.00 per annum to $10,400.00 per annum for the two year period commencing on 1st October, 2001 and concluding on 30th September, 2003, being a total for the two year period of $20,800.00.
That the said $20,800.00 be paid to the mother K W S in one lump sum from the funds held to the credit of the said B W S by his solicitors, Messrs. Zeeman Kable & Page.
That Order No. 2 of the 26th September, 2001 be otherwise discharged.
That the matter be otherwise removed from the Active Pending Cases List.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
ZH2819 of 2001
| K W S |
Applicant
And
| B W S |
Respondent
REASONS FOR JUDGMENT
Background
The Applicant, K W S (“the mother”) and the Respondent, B W S (“the father”) commenced a relationship in early 1983. They married on 7th November, 1987 and separated finally on 13th August, 1996. There is some dispute between them as to the exact dates of earlier separations but that is not material to this decision. The parties are now divorced.
The parties concluded a property settlement in late 1997.
There are two children of their marriage, T W S born 16th December, 1999 and L W S born 22nd March, 1993. The children live with their mother and have done so since separation. They currently attend a State School not far from Devonport in Tasmania.
The mother resides with the children near Devonport and the father resides at St. Helens in Tasmania.
In late June, 1996 the husband had a serious car accident and received a disability support pension from Centrelink thereafter. He took legal action in relation to his motor accident and he obtained a Judgment for $220,000.00. It was generally agreed by counsel for the mother that after he has paid various costs from the Judgment sum, the father will have available to him a total in the vicinity of $177,500.00.
Applications
On 8th June, 2000 the mother filed a Form 63 Application in the Family Court of Australia seeking interim orders to restrain the father and his solicitors from disposing of the proceeds of his personal injuries claim. Orders were made by consent in that Court on 23rd June, 2000 restraining the father from dealing with the proceeds of any such payment but allowing for payments to be made to the Health Insurance Commission, Centrelink and medical and legal costs associated with the claim. Further, the father’s solicitors were restrained from distributing any funds to the father. At the conclusion of the hearing before me on 26th September, 2001, those Orders were discharged and an Order was made which limited the injunction to $40,000.00.
By the Application filed 8th June, 2000, the mother sought departure orders relating to particular periods up until the youngest child turns eighteen and that the amounts so payable be paid in a lump sum of $49,000.00. On 21st August, 2001 the father filed a Response essentially seeking the dismissal of the mother’s Application. The proceedings were transferred to this Court on 13 August 2001.
On 22nd August, 2001 the mother filed an Amended Application but the details of that Amended Application are not particularly relevant now. This is because counsel provided details of the orders now sought at the start of the hearing. The orders sought are in essence as follows:
(a) That there be a departure from administrative assessment for the period 1st July, 2000 to 30th June, 2007 so that child support is paid at the annual rate of $3,694.08
(b) That there be a departure from the administrative assessment so that child support payable for the period 1st July, 2007 to 16th December, 2007 be at the annual rate of $2,462.72
(c) That there be a departure from the administrative assessment so that child support be paid for the younger child only for the period 16th December, 2007 to 16th December, 2010 at the annual rate of $3,694.08
(d) That there be a departure from administrative assessment for the younger child for the period from 16th December, 2010 to 22nd March , 2011 so that child support is paid at the annual rate of $663.04
(e) That the above sums be capitalised and paid to the mother in a lump sum
The father opposed these orders as well.
I should say at this point that I do not understand the logic behind the annual rates set out in sub-paragraphs (a) to (d) of paragraph 9 above. They reflect weekly amounts per child (to the nearest dollar) of $36.00, $24.00, $71.00 and $13.00 respectively. There seems to be no logical rhyme or reason for that.
The Law
It was agreed by both counsel that the Court has jurisdiction in that all steps necessary to review the assessment of child support by the Child Support Agency have been exhausted.
The objects of the Child Support (Assessment) Act 1989 are set out in section 4. It reads as follows:
SECTION 4 OBJECTS OF ACT
4(1) [Principal object] The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
4(2) [Particular objects] Particular objects of this Act include ensuring:
(a) that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
(b) that the level of financial support to be provided by parents for their children should be determined in accordance with the legislatively fixed standards; and
(c) that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
(d) that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
(e) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
4(3) [Private arrangements for financial support] It is the intention of the Parliament that this Act should be construed, to the greatest extent consistent with the attainment of its objects:
(a) to permit parents to make private arrangements for the financial support of their children; and
(b) to limit interferences with the privacy of persons.
It is clear that the primary purpose of Australian child support and child maintenance legislation is to ensure that a parent caring for children receives regular financial support from the other parent to help meet the day to day needs of the children.
Under the Family Law Act 1975 there is a clear preference for periodic payments of child maintenance. That preference is explicitly stated in section 66K(5) of that Act. In Luckie and Luckie (1989) FLC ¶92-036 the Full Court said that section 66K(5) makes it clear that the preferable order for the payment of maintenance is for periodic payments and the Court is not to consider other methods of payment unless it has first considered the capacity of a party to make periodic payments. The Full Court said: "A number of cases decided under the superseded child maintenance legislation were to the effect that save in exceptional circumstances the most appropriate order for child maintenance was a periodic order rather than a lump sum order anticipating the long term future. These decisions include Spano v Spano (1979) FLC ¶90-707, V and G (1982) FLC ¶91-207, Racine and Hemmett (1982) FLC ¶91-277 and Vartikian and Vartikian (No.2) (1984) FLC ¶91-587.''
While the Child Support (Assessment) Act 1989 makes no specific reference to a preference for “periodic” support in the objects set out in section 4, the preference for periodic support is clearly an underlying presumption of the Act because:
(a)the Act provides for periodic assessment as the automatic first calculation of support;
(b)periodic support is provided for by way of administrative assessment, whereas lump sum support is only available by agreement or court order (see section 123); and
(c)a court can only make an order for non-periodic payments if there is already an assessment for a periodic amount and it is satisfied of the matters set out in section 124.
It is clear that, in relation to Court ordered child support, lump sum orders are likely to be the exception rather than the rule. Mushin J explained the rationale in Bendeich and Bendeich (1993) FLC ¶92-355. He said: "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 children may change their living arrangements from one parent to another.'' In Dwyer v McGuire (1993) FLC ¶92-420 and Lightfoot v Hampson (1996) FLC ¶92-663, the Full Court of the Family Court of Australia approved of those comments.
In this case, the father has been assessed at the minimum annual rate for child support, being $260.00 per annum or $5.00 per week. I need hardly refer to tables detailing the costs of raising children to know that $2.50 per week per child is hopelessly inadequate. It is therefore not surprising that the mother is seeking a departure to increase the child support.
The mother’s Application is pursuant to Division 4 of the Child Support (Assessment) Act 1989 and the additional particular objects of that Division include ensuring:
(a)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
(b)that parents share equitably in the support of their children. (See Section 114).
Section 117 sets out the matters as to which the Court must be satisfied before making an order for departure. In bringing her application, the mother must convince the Court of three separate matters. They are:
(a)that there are special circumstances in the case [See subsection 117(2)];
(b)that the proposed departure order is “just and equitable” [See subsection 117(4)]; and
(c)that the making of such an order is “otherwise proper” [See subsection 117(5)].
It is clear to me from Sections 124 and 141 of the Child Support (Assessment) Act 1989 that I have the power to make a lump sum order, subject to the overriding considerations that I must be satisfied that it would be just and equitable, and otherwise proper. In general, lump sum orders are considered where there are difficulties in enforcement of periodic payments or where the liable parent is asset rich and income poor. However, they are not limited to those two situations.
Evidence and Findings
The mother’s counsel sought to convince me that the special circumstances of this matter are:
(a)the special educational needs of the older child (and possible the younger child); and
(b)the fact that the father is quite “asset rich and income poor”, which results in a significant disparity in the financial circumstances of the father and mother
The mother’s evidence is that “whilst (the older boy) has normal needs he does have learning disabilities at school. I have been advised by his teachers that he will need tutoring next year because of these learning disabilities. I would like to send him to St. Brendan Shaw College because there is a special learning there (sic). It will cost me $1,300.00 a year for this.”
In her oral evidence, the mother indicated that the older boy is below average in his school work “across the board”. He cannot read or write at his level. She said that he reads “at about age six”. Although he likes science and art, he is still below average in those areas.
She indicated that she become aware of these difficulties when the older boy was in Grade 2.
The mother also indicated that the younger boy appears to be following on in his older brother’s footsteps in relation to his progress at school. She would like him to go to Our Lady of Lourdes School, which is a Catholic feeder school to St. Brendan Shaw College. It is the mother’s evidence that it will cost her $1,300.00 per year to send the older boy to St. Brendan Shaw College and between $900.00 and $1,300.00 to send the younger boy to Our Lady of Lourdes.
To his credit, the father did not actively seek to discredit the mother’s evidence in relation to the boys’ difficulties and I find that their difficulties are a special circumstance for the purpose of subsection 117(2).
The father’s financial circumstances are that he and his defacto wife are currently renting premises in St. Helens. His defacto wife earns an average weekly income of $318.00 and the father receives a Disability Support Pension and rental assistance. I accept his evidence that his defacto wife subsidises their general living expenses. Indeed, it is quite clear that she pays more than her share of their joint expenses.
As can be seen above, the father will have in his control approximately $177,500.00 as a result of his personal injuries damages award. His evidence is that he wishes to purchase a block of land and build a house that is suitable to his needs, following his injury. He would like to have a house where he does not need to climb any stairs. Further, he wishes to purchase a new motor vehicle, because his current vehicle is “barely roadworthy”.
The father says that after he has purchased the vehicle and built his house, he should have approximately $40,000.00 to invest. However, it is his evidence that he is not able to return to his former occupations as a boiler attendant or in the fishing industry. In his affidavit he says: “the injuries that I have sustained in the motor vehicle accident are as such that I am now in receipt of a Disability Support Pension and I am presently not able and in the foreseeable future not able to return to work as a fisherman. I do not believe that I would be able to work as a Boiler Attendant and further even if I were fit, positions as Boiler Attendants have become scarce as a consequence of the computerisation of the systems.” The father’s evidence was not really shaken in cross-examination in relation to that.
Having said that, it is clear that the Court should not assume that the father will never work again. However, if he does, the procedures for administrative assessment of child support are available to the mother.
I do not really need to examine the mother’s financial situation in critical detail, because she is clearly not getting enough financial support from the father for the two children. She owns a house and her evidence is that the government valuation is $41,000.00. However, in cross-examination it became clear that the house is probably worth closer to $90,000.00. She admitted that she has insured her car and her house and contents for $100,000.00. Her car is worth less than $10,000.00 and she values her household effects at $2,000.00.
The mother owes approximately $41,000.00 by way of mortgage secured over her home and she has other debts that are not excessive. Indeed, she is to be commended for the way in which she has managed her meagre income, considering that she has two boys to support.
Currently, the mother is working for only three hours per week and she receives meat from the butcher for whom she works rather than cash. She says that she declares the value of those “earnings”.
The mother used to work four days per week until a few months ago when her hours were cut.
Having compared the relative financial positions of the parties, it seems clear to me that the father is not particularly “asset rich”. However, his situation will be that he will have an unencumbered house, a relatively new motor vehicle and approximately $40,000.00 to invest. On the other hand, the mother has an encumbered house of lesser value and an old vehicle. Further, she is almost entirely responsible for the support of the two children. This means that in relative terms, there is a significant disparity in the financial situations of the parties.
Counsel for the father conceded that I may come to the conclusion that the older boy has some learning disabilities and that these are special circumstances to warrant a departure from assessed child support.
In Gyselman & Gyselman (1992) FLC 92-279 the Full Court of the Family Court of Australia said at page 79065:
“Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words, “in the special circumstances of the case”. Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.”
In my view, there are two special circumstances in this particular case, and if I ignore them, the application of the administrative assessment formula results in “an unjust and inequitable determination of the level of financial support to be provided by the liable parent”. Those two special circumstances are the special educational needs of the children and the fact that the entirety of the father’s damages award is not taxable so it will not have any effect upon an administrative assessment.
I am therefore forced to the conclusion that there should be a departure from administrative assessment. To do otherwise would be neither “just and equitable”, nor “otherwise proper”.
A reference to the Lovering and the Lee tables leads me to a conclusion that $100.00 per week per child is a reasonable level of support that the father could be paying. Such could be paid from the $40,000.00 that he will have to invest.
Bearing in mind the quotation from Mushin J’s Judgment in Bendeich above, I am of the view that I should not order a change in the assessment for more than two financial years. One hundred dollars per week per child is $10,400.00 per annum so it is therefore my intention to order that there be a departure for two financial years and that the payments be made by one lump sum of $20,800.00.
Because two years is a relatively shortly period, I can see no reason for discounting the capitalisation.
The payment of $20,800.00 to the mother as a lump sum, would enable her to invest that sum and draw it down as needed for the children’s education if she wished to do so. However, it is not my intention to compel the mother to do that. Because of the manner in which she has been able to support the children in the past, I have confidence that she will do what is in the best interests of the children.
I will make orders to provide for what is set out in these reasons.
I certify that the preceding forty four (44) paragraphs are a true copy of the reasons for judgment of Roberts FM
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