S & S
[2005] FMCAfam 78
•3 March 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| S & S | [2005] FMCAfam 78 |
| CHILD SUPPORT – Agreements – departure from agreement – change in circumstances – relevant considerations – change in income – change in contact arrangements. CHILD SUPPORT – Agreements – departure from agreement – special circumstances – income and earning capacity – change in employment – reduction in hours worked – ‘lifestyle change’ – whether applicant has opportunity to exercise earning capacity. CHILD SUPPORT – Agreements – departure from agreement – special circumstances – change in care arrangements – whether change sufficient to demonstrate a ‘special circumstance’. |
| Child Support (Assessment) Act 1989, ss.4, 98, 117, 141 |
| Bryant & Bryant (1996) FLC ¶92-690 DJM v JLM (1998) FLC ¶92-816 Gilmore & Gilmore (1995) FLC ¶92-591 Gyselman & Gyselman (1992) FLC ¶92-279 Ross & McDermott (1998) FLC ¶98-003 |
| Applicant: | RWS |
| Respondent: | NJS |
| File Number: | MLM 3280 of 2003 |
| Judgment of: | Riethmuller FM |
| Hearing dates: | 14 October & 10 December 2004 |
| Last Submission: | 23 December 2004 |
| Delivered at: | Melbourne |
| Delivered on: | 3 March 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ham |
| Solicitors for the Applicant: | Westminster Lawyers |
| Counsel for the Respondent: | Mr Cronin |
| Solicitors for the Respondent: | Marshalls & Dent |
ORDERS
That the husband’s application filed 5 April 2004 be dismissed.
That costs be reserved and adjourned to 29 March 2005.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 3280 of 2003
| RWS |
Applicant
And
| NJS |
Respondent
REASONS FOR JUDGMENT
The applicant applies to vary or discharge a child support agreement entered into with the respondent on 26 September 2002.
The parties have three children, EVS born 1996, ZCS born 1998 and SAS born 1999.
The parties married on 18 May 1990 and separated on 27 March 2002 (remaining under the same roof until 7 May 2002). The child support agreement was entered into on the same date as consent orders were made with respect to division of property, 26 September 2002. The child support agreement provides, inter alia:
2.1 The father will pay or cause to be paid for the support of the children the sum of $200 per child per week, being $600 per week and being $31,200 per annum.
2.2 The mother will meet all of the expenses of the children, including but not limited to, all private school and pre-school (of any kind) education costs, including but not limited to fees, uniforms, books, and all extra curricular expenses, all nannies expenses for any nanny arranged by the wife and all expenses related to sporting and musical activities arranged by the wife.
2.3 The family medical cover is to be maintained in the current form until the renewal due in April 2003, at which time the wife shall take out separate cover for herself and the children.
2.4 The child support will be paid to the mother, payable monthly in advance on or before the 27th day of each month, by direct debit into an account nominated by the mother or as otherwise agreed between the parties, the first payment to be made on 27 September 2002.
2.5 The child support is intended to be increased each year by reference to the increase in the Consumer Price Index for Melbourne for the previous year, to commence on 1 October 2003 and yearly thereafter.
2.6 The parties agree the monies paid towards the care of the children by each of them pursuant to this agreement are to be credited against any liability of each of them under any relevant child support assessment of child support as 100% of the annual rate of child support payable by either of them pursuant to any assessment.
2.7 Liability to pay Child Support under this agreement will continue until the first of the following events;
2.7.1 31 December in the year that the child completes VCE (irrespective of whether the child turns 18 prior to that date)
2.7.2the child ceases to reside with the mother;
2.7.3the child leaves school and obtains full time employment or otherwise becomes self supporting.
2.8 That the mother will forthwith make application to the Child Support Registrar for acceptance of this agreement under the provisions of Section 88 of the Child Support
2.9 That the father shall forthwith do all things necessary to register Family Court of Australia pursuant to the provisions of Order Family Law Rules.
The substance of the applicant’s case is set out in his affidavit filed
5 April 2004:
3.Since the Agreement was made, the children now stay with me for more of their time than before, my income has reduced substantially, and the expenses that I incur in respect of the children have increased. The time that the children spend with the Respondent has reduced, her income would have increased, whilst the expenses that she incurs in respect of the children would have reduced since the Agreement.
Background
During the marriage both parties relied heavily upon nannies to assist with the care of the children and maintaining the household. The parties continued to use nannies to care for the children for a large part of the time leading up to 26 September 2002 when the child support agreement was entered into.
It was only through the use of nannies that the parents were able to work full-time in their occupations as actuaries. The parents earn considerable incomes.
After separation the husband was having contact four nights out of fourteen up to 10 February 2002 and for two evenings per fortnight from 5.00pm or 6.00pm to 8.00pm.
On 21 November 2002 the parties obtained orders from a Registrar in the Family Court changing contact to five nights out of fourteen. The husband’s substantive application was amended after July 2003 to seek a change in care arrangements to nine nights out of fourteen. This application was listed for hearing before Justice Joske of the Family Court of Australia on 10 February 2004. Consent orders were entered into by the parties on 11 February 2004 in the following terms:
1.That all extant child related orders be discharged.
2. That each of:
2.1EVS born 1996;
2.2ZCS born 1998; and
2.3SAS born 1999
the children of the marriage reside with the wife who, whilst
the said children are with her, be solely responsible for their day to day care, welfare and development.
3.That the husband have contact with each of the said children:
3.1 During school term time:
3.1.1 from 5pm on Friday 13 February 2004 to before school on Monday 16 February 2004;
3.1.2from 7.50 am on Wednesday 18 February 2004 to before school on Thursday 19 February 2004; and
3.1.3 each alternate weekend from after school on Wednesday to before school on Monday, commencing 25 February 2004.
3.2 In the event that the children are with:
3.2.1 the husband pursuant to paragraph 3.1.3 hereof on Mother’s Day, the husband return the children to the wife at 7pm on the previous Saturday evening and the residue of that contact period be forfeited by the husband;
3.2.2 the wife on Father’s Day, the husband have contact with the children at 7pm on the previous Saturday evening until the commencement of school on the day after Father’s Day if it is a school day or 10 am in the event that it is during a holiday.
3.3 In the event that:
3.3.1 the children are with the husband on a day which coincides with the wife’s birthday. contact with the husband be suspended from after school in the event that the day is a school day or 7pm if the day is a weekend on the day prior to the said birthday until 10am on the day after the birthday, or to the commencement of school on the day after the birthday in the event that that day is a school day;
3.3.2 the children are with the wife on a day which coincides with the husband’s birthday, the husband have contact with the children from after school in the event that the day is a school day or 7pm if the holiday day on the day prior to the said birthday 10am on the day after the birthday, or to the commencement of school on the day after the birthday in the event that that day is a school day.
3.4In the event that the birthday of E or Z:
3.4.1 Falls on a school day when the children are with the wife on the morning of that day then the husband have contact with all of the children from after school until 7pm on that day;
3.4.2 Falls on a school day when the children are with the husband other than on a Wednesday then the wife have contact with all of the children from after school until 7.00 pm on that day;
3.4.3 FaIls on a Saturday or a Sunday:
(a) If the children are with the husband then the wife have contact between 12.00 noon and 5.00 pm;
(b) If the children are with the wife then the husband have contact between 12.00 noon and 5.00 pm;
3.5 In the event that Easter does not coincide with the school holidays of any of the children, the parties each have the children for one half of the Easter holiday period and failing agreement the husband have the first half and the wife the second half.
3.6 In the event that parties are unable to agree as to school term holiday contact the husband have contact with the children for the first half of each school term holiday.
3.7 As to annual school summer holiday, in the event that parties are unable to agree as to annual summer school holiday contact:
3.7.1 In respect of the period between the end of the school year and 24 December:-
(a) The husband have the children commencing at 5pm on 19 December, and
(b) The wife have the children from 5:00pm 19 December until 3pm on
24 December.
3.7.2 In the year 2004 and in each alternate year thereafter the husband have the children from:-
(a) 3pm on 25 December to 5pm on 31 December, excluding 12 noon to 5pm on S’s birthday on 28 December; and
(b)5pm on 14 January to 5pm on a day being four clear days prior to the date of any one of the children recommencing school
3.7.3 In the year 2005 and in each alternate year thereafter the husband have the children from:
(a) 3pm on 24 December to 3pm on 25 December in the event that the wife is spending Christmas in Melbourne; and
(b) 12 noon to 5pm on S’s birthday in December in the event that the wife is spending Christmas in Melbourne, and
(c) For two weeks from 5pm on 31 December to 5pm on 14 January.
3.7.4 In the year 2005 and every fourth year thereafter, the Wife have the option to spend Christmas interstate with her family, and in that event contact pursuant to paragraph 3.7.3 (a) and (b) be forfeited by the husband provided that the wife notify the husband in writing of her intention to exercise this option not less than one calendar month prior to 25 December in that year. In the event that the wife exercises the said option contact pursuant to paragraph 37.3 (c) be extended to 5:00pm 21 January.
4. For the purpose of determining the division of school term (other than summer school holidays):
4.1 The first half shall commence at 5pm on the last day that any one of the children is at school;
4.2 The second half shall conclude at 5pm on the day before the first of the children returns to school;
4.3 The first half shall conclude and the second half shall commence at 5:00pm on the day that results in an equal number of nights in each half of those holidays and in the event that this calculation results in an odd number of nights in total then the additional nights shall be added to and form part of the second half of those holidays.
5. During any such school holiday period the party who does not have the children with them during that period shall be entitled to telephone the children on the children’s mobile telephone number between 7:00pm and 8:00pm on each third evening during that period; and
5.1The parent who has the children during that period shall:-
5.1.1 Do all such acts and things necessary to facilitate the children receiving that call or each such call including but not limited to ensuring that the children’s mobile telephone is accessible to them.
5.1.2 In the event that for any reason mobile telephone contact is not available or accessible to provide to the other parent an alternate telephone number at which the children can be telephoned.
5.2 Each parent shall notify the other of them in the event that the children mobile telephone number is changed and give particulars of the changed telephone number.
6. Unless otherwise specified in these Orders or agreed to by the parties or unless contact changeover is due to take place at the children’s school, contact shall commence at and conclude at McDonalds Burke Road Camberwell.
7. That all extant applications be dismissed and all applications be removed from the pending cases list.
8. That there be no orders as to costs (including costs previously reserved).
9.Pursuant to S65DA(2), the particulars of the obligations these particulars of the consequences that may follow if a person set out in Annexure A and these particulars are included in these orders.
In May of 2003 the husband commenced working in a new position at the X Bank (he had previously been employed in a related entity). The new position is 28 hours per week, and therefore represents a significant reduction in working hours and income.
Despite the changes in care arrangements and income the husband didn’t notify the wife that he sought a reduction in child support, or take any steps to seek a change to the child support agreement (before these proceedings, which were filed on 5 April 2004). In evidence the husband said that he delayed in seeking a reduction as he was advised it was better to wait until after the contact/residence proceedings before making an application to the Court to change the child support agreement.
In the children’s trial the case for the husband was effectively that the wife relied upon nannies and that he wouldn’t have to.
The husband’s evidence
The husband gave evidence, and called three witnesses; Mr A, Ms L and Mr S. Mr A is his current supervisor and a personal friend of the husband. Ms L and Mr S were called as recruitment specialists in the actuarial industry.
The husband gave evidence that his group certificates for last financial year showed $134,625.00 and $38,575.00 totalling around $173,000.00. These group certificates form part of Exhibit ‘1’. He explained that he was paid fortnightly and produced pay slips for various dates. The first pay slip dated 8 October 2003 shows an income of around $107,000.00 per year. The second pay slip for 17 December 2003 shows that an extra $31,000.00 was received by way of some incentive payments (a bonus) and a further bonus of $12,068.00. The husband explained that the further bonus of $12,068.00 related to his current job and that the other incentive payment related to his previous job.
The husband’s group certificates also included a large sum of annual leave ($21,000.00) which was described in a letter from the X Bank which forms part of Exhibit ‘2’. He was also paid for three fortnights in his new job at full-time equivalent pay having regard to his part time hours before the bank adjusted his salary. The bank did not seek to recover that salary paid in error.
His current salary is $115,000.00 plus a bonus of up to 10 percent. He said that he is not earning $170,000.00 any longer.
He said that his financial statement was correct except as to shares. He was cross examined at length about this and had put to him the detailed examination and summary of his financial outgoings prepared by the wife. It appears that the husband’s expenses are overestimated.
He said that he was told that the company (a corporate subsidiary of
X Bank) was closing down and that he should look around for alternative work. As a result he applied for and obtained his current position which he undertakes part time. In cross examination it transpired that the company that the husband was working for (when he was working full time) was continuing to trade and hadn’t yet closed down, although around 90 percent of the staff were gone. The husband was under no compulsion to leave that company at that time, and would have had a reasonable amount of time to find alternative employment at a high level.
It became clear that the Husband would not undertake full time work even if it were offered at the previous pay rate as he preferred part time employment to give him more time with the children. It seems that the husband applied for the job on the basis that he could only work part time and has applied for no other jobs since then. Indeed, as he stated before Joske J, he applied for the current position only on the understanding that he would only be available for part-time work and not full time work.
The husband said that a full time job in his profession would be in excess of 50 hours per week and although his part time job was 28 hours per week he usually works around 33 hours per week. He says that he could work longer hours if he sacrificed time with his children.
The current care arrangements are that the husband collects the children on Wednesdays after school and returns them to school on Monday each fortnight. Whilst the youngest child is at kindergarten at present all three will be at primary school from next year. The school time starts at around 8.30 a.m. or 9.00 a.m. and runs through to around 3.00-3.15p.m.
The husband is a member of the Institute of Actuaries and receives their monthly email list of jobs, although the bulk of the jobs available are in Sydney.
This means that his chances of getting a job full time are better in Sydney than in Melbourne. He had not considered or inquired into other part time work such as with WorkCover or the university (although it seems generally accepted that the university pay rates would be much lower) explaining that he did not have any more time to be able to work as his time with the children would suffer if he worked longer hours. Indeed he did not even attempt to obtain work as a course leader with the Institute of Actuaries when an advertisement to this effect was placed in August 2004.
The husband says that he is unlikely to take a job in Sydney even if the wife was agreeable to moving to Sydney with the children as this would require the children to move and he did not think that it would be in their interests. He also said that he wouldn’t take a job on $180,000.00 per annum if it meant full time work.
The husband pays a cleaner $60.00 a fortnight, explaining that he does some cleaning himself but also pays a cleaner to do some of it. He explained that he did receive a bundle of clothes for the children in the earlier part of the year from the wife. It appears that it was sent as there was some dispute about him returning children’s clothes. The wife provided him with a basic wardrobe for the children.
The parties have used nannies extensively throughout the relationship in order to assist with the children. The first time that the husband came to the view that it was preferable not to use nannies appears to be after separation and after the child support agreement was entered into by the parties. Until then he worked long hours like the wife.
The husband said that he had over ten years post qualification experience as an actuary and that his role could be described as life insurance and investment finance, although mostly he does banking work which would put him in the category of ‘other’ for the purpose of the statistics referred to by his expert witness Ms L.
The husband has not attempted to obtain full time employment as he does not wish to undertake full time work. Nor has the husband sought any consultancy work or other work related to his profession.
He explained that he hadn’t yet paid rates on his new house and therefore they were missing from the wife’s detailed analysis of his expenses. However he agreed that his estimate of expenses was more ‘a guesstimate’, as it was based on his estimates only and not a financial analysis (as was undertaken by the wife using the discovered documents).
The husband estimates that the costs of the children, whilst in his care, are around $12,470 per annum. He also has mortgage repayments of $443 per week, part of which are referable to ensuring that he has a reasonable residence for contact.
In his opening before Joske J in the children’s trial, Senior Counsel for the husband made a number of comments (later confirmed by the husband in evidence) that bear upon the issues in this case:
ØBasically, your Honour, what he [the Husband] says is that in the present circumstances he has made a quality of life decision since he separated and it was a deliberate decision to cut back on his working hours so he could spend more time with the children…
He takes the view, you Honour, that given the parties are now separated, he has pulled back in his work requirements, the wife has continued, and if it’s a choice between nannies and him, that he should succeed…
ØAs a result of that, as Your Honour might readily expect, a salary which had previously been in the nature of about 180,000 a year has been reduced at his election. In a sense, he didn’t elect that reduction in salary, He elected to take a job that effectively had a reduced salary as you might expect, and he earns now in the nature of 115,000. A lot by community standards, your Honour, but significantly less than he would have been earning if he had taken the job on a full-time basis as he was offered…
There are other sacrifices that were needed to be made, mostly of a financial nature, that the Husband knew and accepted that, and as I keep saying, your Honour, it was a lifestyle decision. (p 21)
ØI have indicated to your Honour that he maintained his obligation to continue to pay child support and at that stage, your Honour, the husband was looking to buy a house which he ultimately did. As your Honour would essentially understand it, his capacity to buy a house quite as grand or as large as he would have liked, was significantly diminished because of the reduction in income …
Were not going to ask your Honour to cry tears of blood over the fact that he could only borrow 800 against a million, but the fact is, your Honour, it is not, and I don’t believe it will be suggested – this was not a light hearted decision made without real thought and real decision as to what impact it would have on him. (at 24)
He purchased a home in Melbourne after the reduction in hours and before these proceedings. At the time he did not tell the wife that he was leaving his higher paid job or buying a house, or suggest that he was intending to make a ‘lifestyle’ change. The husband assumed responsibility for a mortgage requiring repayments of $443 per week. At no time during 2003 did he suggest to the wife that an adjustment to the child support agreement was appropriate or sought. However, when he made his home loan application in May 2003 he added the following notation:
* Will reduce after Family Court hearing in December
The husband presented as an evasive witness. He often did not answer questions in a straight forward manner on the first occasion. His conduct with respect to the issue of child support was lacking in candour, in order to present his residence case in a better light.
Mr A
Mr A was called on behalf of the husband. Mr A was an impressive witness who was open in stating that he was a close personal friend of the husband. His is the husband’s supervisor at present. He confirmed the husband’s income as $115,000.00 per annum plus bonuses and that he was not yet able to say how much in bonuses would be paid in the current year. He explained that his department has budgeted only $120,000.00 per annum for that position and that therefore he could not afford the husband at 100% of full time, as actuaries earned more than $120,000.00 for the year.
He had been at the time of trial an actuary for nine years. He had worked in superannuation, financial services, banking and investment. At present he has a banking specialty but said that could change in the future.
He explained that the husband sought this particular job as he was interested in this area and wanted a role in which he could have more time with his daughters.
He confirmed that there was more work available in Sydney than in Melbourne and that if he were looking for work himself he would talk to other actuaries and talk to recruitment agencies. It appears clear that recruitment at higher levels operates substantially through word of mouth and head hunting. He agreed that at some levels the bank would give effectively twelve months notice and that it seems that the husband would have been likely to receive reasonable notice.
He said that he would be reasonably confident getting a job if he needed to and that given time the husband would probably get full time work in Melbourne. He expected that the salary range for the husband was between $160,000.00 and $200,000.00 per annum given the husbands experience and that, when one had regard to the particular skills of the husband, the husband would be likely to attract a salary in the mid to upper end of the range. He said however that he was not aware of any recent jobs in Melbourne in the husband’s range.
I accept the evidence of Mr A.
Ms L
Ms L was also called on behalf of the husband to give evidence with respect to the availability of work for actuaries. In her affidavit she set out that she had worked in actuarial recruitment for around 10 years. She said that in her opinion the current employment market is more difficult than it has been for the last 10 years, and that in her view the main reasons for the downturn in the employment market were;
a)there was a strong focus on expenses in the financial services organisations;
b)there has been consolidation of insurance markets in Australia;
c)the supply of actuarial graduates has increased in recent years
Ms L annexed to her affidavit a copy of a document headed ‘2004 Actuarial Salaries Survey’. The document, which she said that she prepared in conjunction with colleagues shows that fellows of the Institute of Actuaries, with an equivalent number of years of experience to the husband have an average salary range of between $150,000.00 to well over $200,000.00. Of those surveyed, 18% were from Victoria and 80% from New South Wales, split 71% in corporate employment and 29% in consultancy work.
During cross-examination Ms L agreed that it would be very difficult for an actuary to obtain employment if they were only seeking part-time work. She also stated that in her opinion it would be very difficult to obtain employment in Melbourne in the current market at an income greater than that currently being earned by the husband for the hours worked for the husband. Ms L agreed that a number of jobs are ‘headhunted’ rather than advertised and filled from applicants. She said that she was aware of a number of positions in the range around $200,000 per annum that were currently being headhunted. She stated that those positions were mainly in Sydney and were for full time employment.
Ms L was aware that an international recruiting firm had set up an office in Melbourne and placed a staff member in that office. However, that staff member was not called to give evidence and Ms L was not able to offer any specific and information as to the arrangements (at least within her knowledge).
When specifically asked if she thought the husband had prospects of obtaining better paid employment if he were prepared to do what was necessary to obtain that employment, she thought that it would be very difficult in the short term but hard to predict beyond six or 12 months. When asked specifically about the figures in the data attached to her affidavit she stated that her personal view was that the salary model proposed by those figures was ‘actually a bit high’. Ms L was unable to say what proportion of actuaries with 10 years or more of experience are unemployed or underemployed. Furthermore, she did not appear to have turned her mind to whether or not the figures annexed to her affidavit provided a reasonable representation of actuaries generally, but could state that of those surveyed around 50% were probably ‘younger’ or students. This is consistent with the proposition that employment at the upper levels is substantially through word of mouth and head hunting.
I did not find Ms L a particularly convincing witness. Her evidence was based upon her impressions of the marketplace, and in at least one respect different to the figures annexed to her affidavit. Her apparent knowledge of the market and her evidence generally leads me to conclude that most of the jobs in the industry at the higher level that the husband would be considering are ‘head hunted’ rather than employed through an agency such as hers.
I was not assisted by Ms L’s evidence as to the potential availability of employment for a person with the husband’s experience.
Mr S
Mr S also gave evidence on behalf of the husband. Until recently he was working in actuary employment, but has now returned to a position as an actuary.
Mr S stated that he believed that the husband’s prospects of obtaining full time employment earning substantially more than his current income were slim as a result of his diverse experience and the nature of the market.
When asked whether positions are generally advertised for actuaries with 10 years or more experience he stated that, ‘some of them are, a lot of them aren’t’. It seems that Mr S thought that vacancies requiring an actuary with more than 10 years experience would normally be ‘headhunted’, but not by an agency. Mr S’s evidence was that the actuarial profession, particularly at the more senior levels is ‘quite small’ and that therefore people tend to know each other and often approached each other with employment opportunities
Mr S was of the view that most employers would not be interested in employing an actuary who only wanted to work part-time. Furthermore, he felt that the Melbourne market had shrunk in recent years, and that he had in fact stopped flying to Melbourne to conduct interviews, preferring to conduct them by telephone. He was also aware that the agency had opened an office with a consultant in Melbourne. He, like Ms L, thought that the consultant specifically wanted to work in Melbourne, but acknowledged that the agency obviously decided it was still worthwhile having a consultant operate from Melbourne.
I did not gain much assistance from the evidence of Mr S as to the current availability of full time employment.
The wife’s evidence
The wife’s case is that the husband made a voluntary decision to reduce his income, and that the changes in care arrangements would have minimal impact upon the husband’s expenses as she continues to meet all of the school fees and extra-curricular activity costs.
The wife estimated that at the time of the agreement she was incurring around $75,000 per annum in children’s expenses, and that this has now increased to around $92,000 per annum. A large part of these expenses are nanny costs and school fees.
The wife gave evidence that the cost of a nanny to assist in caring for the children is around $460 per week. The nanny also assists around the home, which would be expected and required for the wife to continue as the primary carer. I accept that the wife may receive a rebate of $25 to $30 per week as submitted by counsel for the husband, thus potentially reducing the nanny expenses to around $430 per week, or around $22,000 per annum. As the children grow older the school fees will increase as the years go by.
The husband submits that it would be unworkable for the nanny to be required to assist at his household whilst the children are in his care, if he is working full-time. I do not see any great difficulty in the nanny be required to work at the husband’s household on some days of the week. I do not accept that the parties could not co-operate to this extent to ensure continuity of the nanny.
Education expenses for the children are around $550 per week, and will continue to increase as the children reach higher grades at school.
The wife says that the costs of maintaining the children, including the costs of the nanny and schooling, is around $1768 per week (around $91,936.00 per annum. Whilst this figure included some double counting and some items that could be seen as extravagant (as highlighted by counsel for the husband), I accept that the cost to the wife of maintaining the children in a lifestyle similar to that which they were accustomed prior to separation is nonetheless more than twice the current rate of child support payable under the agreement.
In addition the wife has a large mortgage, requiring payments of around $715 per week. At least in part the accommodation cost must be seen as part of the costs of caring for the children.
I accept the evidence of the wife.
Variation of Child Support Agreements
In the cases leading up to Gilmore & Gilmore (1995) FLC ¶92-591 there was some uncertainty as to the law relating to an application to change a child support agreement. The Court in Gilmore’s case made clear that a child support agreement is not to be varied or discharged merely by way of showing some specific changed circumstance by reference to sections of the Family Law Act 1975 or section 141 of the Child Support (Assessment) Act1989. Rather, the change of circumstance must be aground under section 117 of the Child Support (Assessment) Act1989.
Furthermore, as was made clear in Bryant & Bryant (1996) FLC ¶92-690, there must be some difference in circumstances from the time that the agreement was made in order to show a ‘special circumstance’ under section 117 of the Act. This is because the agreement takes effect as if it were an order of the court (see s.98 of the Act). An order of the court will not be varied or discharged unless there is some change in circumstances to show that that order is no longer appropriate as was discussed. This issue was discussed in Bryant & Bryant at pages 83,169 to 83,170.
The considerations relevant when determining whether or not the agreed amount ought to be altered are those set out in the departure process provisions available under section 117 of the Act, using the approach set out in Gyselman & Gyselman (1992) FLC ¶92-279. In Gyselman the Full Court of the Family Court said (at 79,078):
As we have already indicated, the exercise under s 117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in sub-section (2) has been made out. The legislation then requires the Court to consider whether any proposed order is ‘just and equitable’ and ‘otherwise proper’.
Earlier, at page 79,065 the Court said:
Whilst it is not possible to define with precision the meaning of that term [‘special circumstance’], as a generality it is intended to emphasize 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 Savery's case (1990) FLC ¶ 92-131 (p 77,897), Kay J ... said that ``special circumstances'' were ``facts peculiar to the particular case which set it apart from other cases''.
It is clear that each of the three steps must be addressed by the court, namely:
a)whether one or more of the grounds of departure in section 117 is established; and if so:
a)whether it is ‘just and equitable’ within the meaning of section 117(4) to make a particular order; and
b)whether it is ‘otherwise proper’ within the meaning of section 117(5) to make a particular order.
Each of the grounds of departure provided for in section 117 commences with the words: ‘that, in the special circumstances of the case’. As such a ‘special circumstance’ must be established.
The fact that the amount payable under a child support agreement differs from a formula assessment will not, of itself, be a ‘special circumstance’ under s.117: see Ross & McDermott (1998) FLC ¶98-003, at [21].
Similarly, the fact that the agreed rate may differ from published research on the costs of children is not, of itself, a basis for departure. In this case the published research is of little assistance, for example the Lee figures indicate weekly costs of a child is around $235 per week for a single income family on $906 gross per week. In this case the parents enjoy far greater financial resources (which are being enjoyed by the children) and have elected to have the children attend a relatively expensive private school.
The Act recognizes that parties to a child support assessment may enter into a private arrangement in order to regulate their legal relationship. This is given specific recognition in the Act as follows:
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.
…
SECTION 98 VARIATION ETC. OF PROVISIONS OF CHILD SUPPORT AGREEMENT BY COURT ORDER
98(1) [Where court may vary etc. agreement] Where:
(a)under section 95 , provisions of a child support agreement have effect, for the purposes of Part 5 , as if they were a court order of a particular kind; and
(b)the agreement, or those provisions of the agreement, are registered in a court having jurisdiction under this Act;
the provisions may be discharged, suspended, revived or varied by the court in the same manner and in like circumstances as the court could discharge, suspend, revive or vary an order of that kind made by it.
98(2) [Orders and directions court may make to resolve difficulty in application] Where any difficulty arises in the application of subsection (1) in or in relation to a particular proceeding, the court exercising jurisdiction in the proceeding may, on the application of a party to the proceeding or of its own motion, give such directions, and make such orders, as it considers appropriate to resolve the difficulty.
98(3) [Section 95 not limited by implication] Subsection (1) does not limit by implication the operation of section 95 .
In order to determine whether a ‘special circumstance’ arises in the context of this application I must consider the terms of the agreement, not simply the rate of child support provided for in the agreement. To attempt to consider what would amount to a ‘special circumstance’ without regard to the terms of the agreement would be to ignore a relevant factor. This is not to say that if changes are contemplated in some form by the agreement they will thereby be incapable of amounting to a ‘special circumstance.’
In this case the child support agreement was entered into for a lengthy period (the entirety of the children’s minority) for a weekly amount linked to CPI increases. The parties are well educated and capable adults who were assisted by lawyers at the time of the agreement. There is no suggestion that either failed to understand the implications and ramifications of the terms of the agreement at the time that it was entered into. The terms of the agreement are clearly such that a figure was struck that would operate for many years, and thereby provide significant financial certainty for both of them with respect to their respective child support obligations and entitlements. Small changes in income, expenses and care arrangements must have been expected by the parties. Significant changes in care arrangements are provided for in clause 2.7 of the agreement, resulting in the agreement ending.
The husband’s income and earning capacity
In DJM v JLM (1998) FLC ¶92-816 the Full Court of the Family Court discussed issues relevant to determining income and earning capacity in great detail. Whilst it is ultimately a question of fact in each case, it is appropriate to identify relevant considerations in determining this question of fact. In this regard, relevant considerations will generally fall within the following categories:
a)the ability to generate income;
b)the opportunity to generate income; and
c)whether the parent's pursuits are appropriate in the circumstances.
Ability to Generate Income
There is no doubt that the husband is a man of significant abilities. He is a qualified actuary with many years experience.
His capacity in his profession is demonstrated by the fact that his current manager accepts that he fulfils the requirements of a full time job earning around $120,000 per annum despite only working part time hours.
I am satisfied, on the evidence, that in a position that fully utilizes his capacity the husband would earn between $160,000 and $200,000 per annum.
Whether Husband’s pursuits are appropriate
I am mindful of the comments of the Full Court in DJM v JML (1998) FLC ¶92-816, particularly that:
17.40 ... Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parent's ``capacity to provide financial support'' .
17.41 Property adjustment orders have far less focus and are arrived at on the basis of what is ``appropriate'' after weighing up many competing factors. Spousal maintenance is governed by a test of what is proper having regard to the reasonable ability of the liable spouse to meet the needs of the other.
17.42 In our view there can be different answers to the same question about earning capacity depending on which head of power is sought to be exercised.
17.43 A judge might reasonably say that a parent should be working longer hours or in more lucrative employment to meet child support obligations. A spouse is only required to support the other spouse to the extent that he or she is reasonably able to do so. This requirement does not impute the same degree of compulsion about it that the child support and child maintenance tests express. Thus a parent may be required or expected to work long hours or at more than one job if the parent has the capacity and opportunity to do so, and if the children need greater support than they would receive if the parent was only to work shorter hours. At the same time it might not be reasonable to expect an estranged spouse to avail himself or herself of such opportunities so as to provide maintenance for the other spouse. In the latter case it is a question of what is reasonable in the circumstances.
Of course, the balance between direct care for children, and earning income to support them financially is always difficult. This balance must inevitably be struck in almost every family as there are few households in Australia where there is no financial imperative for at least one, and in more recent times both parents to engage in employment. In considering this issue the path chosen by each family before separation is significant, as are the needs of the children after separation, and the capacity of the parents to meet those needs and engage in employment.
The husband does not wish to work full time and has not pursued full time employment, either informally through people he knows in the profession or formally through employment and placement agencies. Similarly the husband has not pursued contract work.
I accept that the husband can work full time if he chose to. There is a nanny available for the times when he has the children. The use of nannies was the arrangement before separation and continues to be the arrangement in the wife’s household. This arrangement was the reason for the husband’s residence application before Joske J, which was settled on the basis that the children continue to primarily reside with the wife in light of the fact that heavy reliance upon nannies in the wife’s household continues. The reasons for the settlement are not matters that need to be explored in this case, it is sufficient that the care arrangements are such that reductions in work hours to care for children are not, in the circumstances of this case, required.
The nanny that the wife employs works full time. The wife is agreeable to the nanny assisting the husband on the days that the children are with him, to enable him to continue in full time employment.
Opportunity to generate income
The case for the husband was put on the basis that even if the court found that he ought to be able to pursue full time employment, there is now simply no opportunity for him to earn an income similar to that which he was earning at the time of the child support agreement. In this regard he relied upon the evidence of his witnesses.
I find that many positions at the level at which the husband would be seeking work are ‘head hunted’ rather than being filled through an agency. It appears that the employment agencies deal more with junior staff and that their evidence as to senior positions is not of great weight.
In this environment, the husband’s conduct in making known that he only seeks part time work and not making known to appropriate colleagues that he was seeking a position at a level of pay equal or greater than his previous position, would have the result of him not receiving offers or even becoming aware of opportunities. In a sense the husband’s desire to work part time is a type of self fulfilling prophecy: that is, the very act of declaring that he only wishes to work part time necessarily results in a significant loss of opportunity for employment.
The husband is without evidence of any attempts to secure employment at a greater remuneration, which is usually the best evidence of the opportunity (or lack thereof) to work. The husband is therefore heavily reliant upon the evidence of Mr S and Ms L. In all of the circumstances I am not satisfied that the husband does not, on the balance of probabilities, have the opportunity to work in a position at a salary equivalent to his previous position, having regard to the nature of the profession, the husband’s skill level, the nature of the employment market in the profession and the evidence of Mr A as to his expectations of the profession in Melbourne.
I am, therefore, not satisfied that the husband’s income and earning capacity is different to his capacity at the time of the agreement. The choice of the husband to cease full time employment, and its consequent impact upon his income and employment prospects does not appear to me to be a ‘special circumstance’ under the Act.
The Wife’s income and earning capacity
In this case there is no dispute that the wife’s income and earning capacity is appropriately reflected by her current salary package.
The wife’s income package at the time of the agreement was around $234,500. The agreement was entered into in 2002. The parties provided for increases in accordance with the CPI each year. The increase in the wife’s income package that has brought her to around $252,000 per annum is not a surprising increase over the period, given the salary range. If such a change were sufficient under section 117, then a ‘special circumstance’ would arise in almost all child support agreement cases each two to three years: as a result it can not, of itself, be considered a ‘special circumstance’.
I am not satisfied that the changes to the income package of the wife in this case are a ‘special circumstance’ (as provided for in sec 117).
Changes in care arrangements
The agreement itself makes provision for changes in care arrangements in clause 2.7.2 (supra). This clause covers a situation where the children no longer reside with the mother. In this case the children do still reside with the mother pursuant to court orders.
The fact that the husband’s contact has included 5 nights per fortnight and holiday contact for half of the school holidays does not alter the fact that the children continue to primarily reside with the mother.
The changes in care arrangements during the school week have resulted in the children remaining in the husband’s care for an extra night each fortnight. However the children were with him for 1 to 2 evenings per week before the extra night came into effect. There has also been an increase in school holiday contact such that he now has contact for half of the school holidays, an increase of around 3 nights per fortnight during the holiday weeks.
I have carefully considered the terms of section 117(2) and had some real difficulty determining which, if any, of the subsections refer to an increase in the amount of contact with the child. Sections 117(2)(a) and (b) refer to ‘other’ children or persons. Section 117(c) does not refer to amount of time with children, only whether the amount of child support is ‘just and equitable’ having regard to the income, earning capacity and financial resources of the parties. Presumably section 117(2)(c)(i) is sufficiently broad to cover this type of change: see Portillo and Portillo (1994) FLC ¶92-484 and S and C (1997) FLC ¶92-750.
I do not accept that in the context of this case a change from 4 nights and one to two evenings per fortnight to 5 nights per fortnight is more than a minor change in care arrangements. Even if one factors in the changes to the school holiday periods I am satisfied that the orders made in 2002 provide for only a relatively minor change in care arrangements.
I am satisfied that the change in times, per se, does not amount to a ‘special circumstance’. The fact that the formula alters when care levels are above 30% or 40% of nights (as opposed to days or evenings) is simply the product of the broad presumptions as to how costs of children are shared between parents with those levels of care, and does not create a presumption in departure cases. What is required under section 117 is a consideration of the impact of any change upon the costs of caring for the children. Of course, if the changes had resulted in effective sharing of expenses for the children, a different result would necessarily flow, however this is not the case here: the husband is protected from most of the significant expenses as a result of the terms of clauses 2.2 and 2.3 of the child support agreement.
I cannot identify any specific expense to the husband that has altered (more than in a minor way) as a result of the changes in care arrangements. The wife still meets all of the school, children’s extra-curricular activity and medical expenses, as well as paying for the nanny: this is in accordance with the terms of the agreement.
I am not satisfied that this is a ‘special circumstance’ in the context of this particular case.
The factors taken together
I have also considered whether a ‘special circumstance’ has been established if the changes in the income of the wife and the changes to care arrangements are taken together rather than viewed in isolation from each other.
Even when taken together the changes do not appear to me to be outside the usual variations in circumstances that must have been expected in a case such as this.
The changes, even if taken together do not appear to me to be a special circumstance that amounts to a ground under the Act.
Conclusion
In the circumstances I therefore dismiss the husband’s application.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
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