Semple & Tyson
[2009] FamCA 26
•29 January 2009
FAMILY COURT OF AUSTRALIA
| SEMPLE & TYSON | [2009] FamCA 26 | |
| FAMILY LAW – CHILD SUPPORT - application for adult child maintenance to commence after the child attains 18 years – application dismissed pursuant to s66E – the child not having attained 17 years – s66L(1) did not apply FAMILY LAW – CHILD SUPPORT – application for departure from administrative assessment of periodic child support based upon an analysis and determination of the respective incomes of the parents where their taxable income does not reflect their real disposable income FAMILY LAW - CHILD SUPPORT – application for departure from administrative assessment of periodic child support based the special circumstances of a child with health difficulties FAMILY LAW - CHILD SUPPORT – application for departure from administrative assessment of periodic child support based upon the standard of living of the children prior to separation and the unfair application of the formula when both parents earn about or over the capped amount prior to the 2008 changes FAMILY LAW - CHILD SUPPORT – consideration jurisdiction of the court to hear the application for change to some assessments by reason of a determination under s116(1)(b) of the Child support Assessment Act 1989 FAMILY LAW – CHILD SUPPORT – enforcement – collection of arrears – application adjourned pending calculation of arrears after change in periodic child support assessments FAMILY LAW - CHILDREN – ENFORCEMENT – enforcement of a Binding Financial Agreement providing for maintenance for the children of the marriage. Application adjourned pending calculation of arrears after change in periodic child support assessments. | ||
| Family Law Act 1975 (Cth) Child Support (Registration and Collection) Act 1988 (Cth) Corness & Cameron [2005] FMCAfam 558 Fitzgerald & Fitzgerald [2002] FMCAfam 42 WGB & CEM [2004] FMCAfam17 | ||
| APPLICANT: | Ms Semple |
| RESPONDENT: | Mr Tyson |
| FILE NUMBER: | HBF | 1363 | of | 2003 |
| DATE DELIVERED: | 29 January 2009 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Launceston |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 4, 5 & 6 November 2008 & 1 December 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr R Murray |
| SOLICITOR FOR THE RESPONDENT: | In person |
Orders
The wife’s application for adult child maintenance for the child S is dismissed.
There is a departure from administrative assessments of child support for the children, S (born … February 1992), H (born … June 1993) and D (born … February 1995), payable by Mr Tyson to Ms Semple as follows:
(a)from 1 July 2005 to 30 June 2006 the annual rate payable is $18,979.00
(b)from 1 July 2006 to 30 June 2007 the annual rate payable is $18,979.00
(c)from 1 July 2007 to 30 June 2008 the annual rate payable is $18,979.00
There is a departure from the administrative assessments to the extent that;
(a)the adjusted income amount of Mr Tyson, the liable parent is;
i.$152,529.00 for the period from 1 July 2008 to 30 June 2009, and
ii.$ 152,529.00 for the period from 1 July 2009 to 30 June 2010.
(b)the adjusted income amount of Ms Semple, the carer entitled to child support is;
i.$180,000.00 for the period from 1 July 2008 to 30 June 2009, and
ii.$180,000.00 for the period from 1 July 2009 to 30 June 2010.
The application for enforcement of the alleged arrears of child support and alleged arrears under a financial agreement between the parties is adjourned for mention before a Registrar at Launceston at 10.00am on 12 February 2009 by telephone by dialling …
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgement under the pseudonym Semple & Tyson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT HOBART |
FILE NUMBER: HBF1363/2003
| MS SEMPLE |
Applicant
And
| MR TYSON |
Respondent
REASONS FOR JUDGMENT
Ms Semple (“the wife”) and Mr Tyson (“the husband”) had been married for about 12 years when they separated in 2003. They have three children, S aged 16, H aged 15 and D aged 13. They are in dispute with regard to;
· the level of periodic child support paid for the children;
· the present balance of periodic child support, whether the payments by the husband are in arrears or if he has overpaid child support;
· alleged arrears of money payable by the husband pursuant to a binding financial agreement; and
· adult child maintenance for S.
The child support and child maintenance proceedings were heard at the same time as a parenting dispute. The parenting aspect of these proceedings was determined by me when I delivered reasons and made orders on 6 November 2008. The parenting orders included an order that the parents have equal shared parental responsibility and that all three children live with the wife. The children do not spent overnight time with their father.
In May 2005 the parties entered into a binding financial agreement (“BFA”) which provided that each of the parties pay $12,000.00 per year to meet the children’s ‘educational, medical, dental and general expenses’. The BFA was expressed to not have any impact upon child support assessments.
S suffers from significant health problems. A guidance officer’s report, annexed to the wife’s affidavit,[1] says:-
[S] suffers from potentially life threatening attacks of epilepsy, for which he is prescribed daily medication. His mother indicates that it is possible the medication may affect [S’s] ability to concentrate, and may cause drowsiness.
[S] has hemiplegia (paralysis on the right side) and homonymous hemianopia (an impairment of the brain’s ability to receive the information transmitted to it through the eyes). According to medical literature, hemoimophia is described as creating distortions of visual information to the extent that affects daily living skills as well as skills such as reading. [S] particularly has difficulty with vision in his right eye. [S] has undergone surgery to correct deformity in his right foot, and has had botox injections into his right arm to attempt to strengthen his muscles.
[1] Annexure “C” of the affidavit filed 2 September 2008.
A family report was prepared for these proceedings and it was read into evidence without controversy, neither party sought to cross-examine the family consultant. She reported that:-
He [S] attends Grade 10 at [T] High School where he is assisted by an aid for seventeen hours a week due to problems which include paralysis of his right side, partial blindness, epilepsy, and obsessive compulsive disorder.[2]
[2] Paragraph 18 of the Family Report dated 1 May 2008.
The wife says of S’s disabilities:-
34.[S] has very serious and long term medical disabilities. He has cerebral palsy. [S’s] chronological age is sixteen years but Education Department assessments place his functioning at a much lower level (during cross-examination the wife said and the husband agreed, that [S’s] development age is less than that of the girls [H and D]).
35.He is paralysed down one side of his body, partially blind, classified as legally blind and has epilepsy. He also has high blood pressure.
36.[S’s] blindness has deteriorated over time and is currently limited to twenty per cent in one eye in total.
37.Due to the said paralysis to [S’s] body he was diagnosed by Dr [B], paediatrician, at the age of six months with cerebral palsy. As a result of that condition and other health issues that have developed with time, [S] has needed to regularly see health care professionals and specialists throughout his life and has been admitted to hospital approximately fifteen times for up to three weeks at a time. In 2001 [S] spent three weeks in the Royal Children’s Hospital in Melbourne, another two weeks in the said hospital in 2004 and has had numerous other hospital admissions for shorter durations.[3]
[3] Affidavit of the wife filed the 2 September 2008.
The wife asserts that the husband is $20,341.50 in arrears in his payments due under the BFA. In exhibit ‘W8’ the wife set out that between 30 May 2005 and 30 June 2007 the husband has paid $21,658.50 to the girls’ school (which the mother accepts are payments under the BFA). From the date of the BFA to 30 September 2008 the husband should have paid $43,500.00. He has paid to the children’s school $21,658.50 leaving $21,841.50 outstanding. It is not clear to me as to the $500.00 difference between the mother’s calculation and this calculation. At this time that difference is of no significance.[4]
[4] Paragraph 8 of the wife’s written submissions filed 21 November 2008.
The husband says he is not in arrears under the BFA as he has overpaid the Child Support Agency in respect of periodic child support. This was done either by direct payments by him or his taxation refunds seized by the Agency. At the present time the precise calculations of arrears or overpayments are not needed as the amount, if any, due by the husband pursuant to the BFA will be ascertained once the assessments for periodic child support for the period from 1 July 2005 to date are calculated in accordance with my orders. It is likely that there will be some arrears under the BFA.
In her written submissions the wife also asserts that the husband is in arrears of periodic child support of about $4,000.00. The wife discovered this only when the Child Support Agency information was provided in December 2008 and tendered in evidence without opposition[5]. The amount of arrears of periodic child support will be determined when the calculations are undertaken by the Child Support Agency in accordance with these orders.
[5] Exhibit W10.
The wife sought specific amounts for periodic child support from 1 July 2005 to date and into the future. I have adopted that course up to 30 June 2008, after that time I have made declarations as to the income of each of the parties with the knowledge that the new child support formulae will apply from that date.
The wife says that the husband’s real income has been much higher than is set out in his income tax assessments, and that he has significant additional income and financial resources available to him.
The husband asserts that the wife’s income is higher than as set out in her income tax assessments.
The wife seeks periodic child support:
a) $20,000.00 per child (totalling $60,000.00 per year) from 1 July 2005 to 30 June 2008, in addition to the $12,000.00 per year under the BFA;
b) $72,000.00 from 1 July 2008 to 31 December 2010 (being the year when S attains 18 and presumably calculated to include him up to the end of that year as he completes his secondary education);
c) $18,000.00 each for H and D for period 1 January 2011 to 31 December 2011 (a total of $36,000.00 for that calendar year; and
d) $24,000.00 for D from 1 January 2012 to 31 January 2013.
The first of the wife’s assertions is that the expenses in caring for the parties’ eldest child S are such that the rate of child support ought to be higher than otherwise. This having regard to the provisions of s117(2)(b)(ia) Child Support (Assessment) Act 1989 which provides for departure from administrative assessment when in the special circumstances of the case the costs of maintaining the child are significantly affected because of the special needs of the child.
The wife asserted that the girls attend a private secondary school and have a particular interest in horse riding. There is no issue that both parties agree and support the girls attending a private school and that the fees are to be met by the parties in one form or another. There is a dispute as to the level of support the husband should provide to the girls’ equestrian activities, as the cost and involvement of the girls has increased since separation.
The private school fees are currently about $24,000.00 annually, and that therefore the payments required by the husband under the BFA covers only one half of the school fees, and not the medical, dental or general expense the parties anticipated the BFA would provide for.[6]
[6] Paragraph 30 of the wife’s submissions filed 21 November 2008.
The husband says that the children’s special needs are covered by the provision of the BFA which by its terms do not otherwise impact upon the child support assessments.
The husband says his income is not at the high level claimed by the wife and finally that he should not pay adult child maintenance for S.
The issues.
I am to determine:-
(a)The amount of the incomes of the parties from 1 July 2005 to date to underpin any determination I make and, if necessary to provide guidance to the Child Support Agency in regard to future calculations of income of the parents.
(b)The impact, if any, of the provisions of the BFA in terms of child support.
(c)Any departures from assessments of periodic child support from 1 July 2005 to 31 December 2013. Such departure orders, if any, based upon special circumstances of S in regard to his health difficulties and in respect of H and D the cost of their education and their general expenses, including horse riding.
(d)To determine if the amount of periodic child support should be set in the sum sought by the wife or some other sum.
(e)Alternatively, to determine the real income of each of the parties for child support purposes and if appropriate other factors for the application of the various formulae to base the child support assessment.
(f)The question of adult child maintenance for S became irrelevant when counsel for the wife conceded that the application for adult child maintenance was premature and could not succeed.
(g)Determine the arrears, if any, of child support and under the BFA for the purpose of enforcement. I will adjourn that part of the application as those sums will not be known until the Child Support Agency applies these orders to the periodic assessments and calculates any penalties and interest that may apply.
Jurisdiction
In respect of the period 1 July 2005 to the 31 December 2006 there were in place a series of child support assessments. These are set out in paragraph 119 of the wife’s affidavit. There were reviews of the assessments over that period and there was an objection in relation to those assessments over that period. In that regard I note the decision of Senior Case Officer E dated 3 June 2006 in relation to the husband’s assessment.
Under section 115 of the Child Support (Assessment) Act 1989 which was operative at that time, the wife had an entitlement to make an application to this court for a departure from those assessments. Accordingly, the court has jurisdiction to consider the departure application for that period.
From 1 January 2007 to 31 May 2007 there were assessments which were the subject of objections but which had not been the subject of an appeal to the Social Security Appeals Tribunal (“SSAT”).
By this time, the relevant objection and review provisions had been the subject of legislative review, and for the 2007 period (and indeed for present purposes) they are to be found in Part VII (internal objection procedure), Part VIIA (SSAT) and Part VIII (review by courts) of the Child Support (Registration and Collection) Act 1988.
By reason of section 89(1) of the Child Support (Registration and Collection) Act 1988 if the wife was dissatisfied with the outcome of her objections her remedy was to seek a review of the Registrar’s decision by the SSAT. She did not do this.
In January 2007 amendments to both the Child support Acts had created a regime for an independent review body for Child Support Agency decisions through the expansion of the role of the SSAT. Since January 2007[7] the court’s power to hear applications seeking a review of a Registrar’s decision concerning an assessment have been limited to a restricted number of circumstances set out in section 116 of the Child Support(Assessment) Act 1989. The twin requirements to vest jurisdiction are set out in subsections 116(1)(b)(i) & (ii) which provide;
(b) both of the following apply:
(i) the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;
(ii) the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case.
[7] Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formulas and Other Measures) Act 2006 (no. 146, 2006)
In her amended application filed 24 July 2008 the wife sought parenting orders, an adult child maintenance order for S, an enforcement order with respect to the BFA, a costs order, a departure under section 117 of the Child Support Act, as well as child support orders. In his response filed 28 October 2008 the husband sought parenting orders, orders relating to child support, an order that the wife be declared a vexatious litigant (which application was not pursued) and a costs order.
On 6 November 2008 I delivered my reasons dealing the parenting aspects of the proceedings.
The parties were both parties to an application pending and I am satisfied that it is in the best interests of both parties and the children in the special circumstances of this case for me to deal with child support matters together with the balance of the parties’ applications.
In coming to this conclusion in evidence before me was Case Officer E’s decision of the 3 January 2006[8] declining the wife’s departure application on the basis that the contested issues were too complex for any meaningful decision to be reached through agency processes. Thus for at least part, if not all, of the wife’s child support application section 116(1)(aa) would apply to found jurisdiction of this court.
[8] Annexure ‘N’ to the wife’s affidavit filed 12 January 2007.
The wife then sought a departure in relation to the assessments from the
1 June 2007 to 20 March 2008 which is her last assessment. That assessment has not been the subject of review, objection or appeal to the SSAT.I gave consideration to whether I had the power to make orders with respect to child support for future years where no administrative assessment existed for those years.
In Fitzgerald & Fitzgerald [2002] FMCAfam 425, Federal Magistrate Rimmer said:
10….. It is clear that the Court has power to make an order beyond the year of assessment ( Dwyer v McGuire (1993) FLC 92-420).
In Dwyer & McGuire (1993) FLC 92-420 Lindenmayer J said:
In any event, I believe that the structure of the Act is such that once a valid application for departure has been made, it throws open for consideration by the court the question of departure from the administrative assessment provisions of the Act not only in respect of any current or past child support years but also in respect of any future years. Although nothing in the Act says so specifically, I think this is clear by inference from provisions such as ss.118(2), 119(1) and 119(2). S.118(2) provides that in making an order under s.118 the court may make different provision in relation to different child support years. S.119(1) provides that upon a departure order becoming final, the Registrar must immediately take such action as is necessary to give effect to that order "in relation to any administrative assessment that has been made" (my underlining), but s.119(2) then goes on to provide that "in subsequently making an administrative assessment ... while the order is in force, the Registrar must act on the basis of the provisions of this Act as modified by the order" (my underlining). See, also, Regulation 9, which says that the court may make orders containing provisions of various kinds, including "(e) the period for which the variation is to remain in force". I am aware of many reported decisions of the court in which departure orders have been made in respect of future child support years for which an administrative assessment had not been made.
DISCUSSION
It is clear that I have the power to make a prospective order and whether I do so is an exercise of my discretion.
From the point of view of both parties, they need certainly and a determination as to child support from 2005 to date and into the future. In respect of some of the assessments over that period of time the court had clear jurisdiction, the administrative processes having been exhausted. For the remainder the issues are the same or similar. These include the complex financial arrangements of the parties, the determination of income of the parties, the question of the special needs of the children and the impact, if any of the BFA. Having regard to all of those circumstances, I am satisfied that it is in the interests of both parties for the court to consider whether an order should be made for departure from administrative assessments.
For the reasons articulated I am making findings about the parties’ respective income for the relevant periods. I will determine the amount of periodic child support from 1 July 2005 to 30 June 2008. From 1 July 2009 to 30 June 2010 I will determine the income upon which the assessments over that period should be based and the Child Support Registrar will then be able to apply those incomes to determine periodic child support using the formula applicable from that date. There is evidence before me as to the approximate amounts of those assessments[9] and I take judicial notice of the formulae in place from 1 July 2008.
[9] Exhibit ‘W10’.
Until this process is undertaken I am not in a position to determine the enforcement proceedings in respect of the BFA. Once new assessments have issued then the arrears, if any, will be ascertained. There will still be the question of penalties and interest in respect of the Child support arrears, which are matters for the Child Support Registrar. It seems to me that the complexity of the financial circumstances of both parties tied in with the impact of the BFA are such that the circumstances that contributed to the delay in payment were not entirely due to or caused by the husband. However, that is a determination for the Child Support Registrar, in due course.
I will adjourn the enforcement proceedings by the wife of the BFA until after to the outcome of the child support matters.
After hearing the initial evidence in these proceedings I requested particular information from the Child Support Agency. The Agency provided that information by way of letter dated 14 November 2008 which was tendered into evidence and can be summarised as follows:
Husband’s child support liability for 2006
$12, 205.97
Husband’s child support liability for 2007
$13,844.61
Husband’s child support liability for 2008
$22,501.24
Total child support liability for husband for the period 1 July 2008 to 31 October 2008
$ 5,964.62
Total amount of child support paid by the husband between July 2005 and 31 October 2008
$51,331.30
Child support payable by husband if both parents were in receipt of the maximum capped income for the period 1 July 2005 to 30 June 2008
$54,777.00
Child Support payable by husband if for that period the wife was earning $180,000.00 per annum and the husband earning at $80,000.00; $100,000.00; $120,000.00 $140,000.00; and $160,000.00
Period Wife’s income Husband’s income Child support
payable1/7/05-30/6/06
$180,000.00
$80,000.00
$5,281.00
$180,000.00
$100,000.00
$6,881.00
$180,000.00
$120,000.00
$7,258.00
$180,000.00
$140,000.00
$7,258.00
$180,000.00
$160,000.00
$7,258.00
1/7/06-30/6/07
$180,000.00
$80,000.00
$5,228.00
$180,000.00
$100,000.00
$6,828.00
$180,000.00
$120,000.00
$8,421.00
$180,000.00
$140,000.00
$8,421.00
$180,000.00
$160,000.00
$8,421.00
1/7/08-30/6/08
$180,000.00
$80,000.00
$5,170.00
$180,000.00
$100,000.00
$6,770.00
$180,000.00
$120,000.00
$9,964.00
$180,000.00
$140,000.00
$9,964.00
$180,000.00
$160,000.00
$9,964.00
The BFA and its impact on child support
The relevant operative parts of the BFA are;
3 That as and from 30 June 2005 the husband and wife shall commence quarterly payments of $3,000 each, into the account for the educational, medical, dental and general expenses of the children.
4 The husband and the wife shall review the annual sum of $12,000 paid by each of them on 12 May each year, such review to anticipate an increase in the children’s education and general expenses, with such review always continuing to provide that the amounts of their respective quarterly payments will be equal and in the event that the parties cannot agree as to any increase within 30 days of each annual anniversary of this agreement, then either party has liberty to apply to a court to determine this issue.
5 This agreement is to continue until each child’s respective 18th birthday or until each child concludes his or her first tertiary degree, whichever event is later in time.
6 It is specifically declared and agreed that the terms of this agreement are not to be deemed child support, whether periodic or non periodic, in favour of either party for the purpose of any child support assessment.[10]
[10] Annexure “A” of the affidavit of the wife filed the 2 September 2008.
A strict reading of this provision of the BFA seems to provide that the liability of $4,000.00 per year for each child continues indefinitely until that child completes his/her initial tertiary degree. Fortunately, at this time, I do not need to interpret or determine the precise meaning of this clause.
There is no evidence that the wife has sought a review under clause 4 of the BFA. As whether this is an enforceable provision and whether this court or another court has jurisdiction to ‘determine this issue [presumably the annual increase in children’s expenses]’ is likewise not presently a matter for me. In any event s71A of the Family Law Act provides that the jurisdiction of courts under Part VIII of the Act is excluded in respect of financial matters to which a valid financial agreement applies. Section 90KA gives courts exercising jurisdiction under the Act power to declare the validity of a financial agreement and to enforce a financial agreement. Again this is at present not an issue for me to determine.
What is a matter for me is that both parties have submitted that I ought to have regard to the provisions of the BFA, notwithstanding clause 6 of the agreement where the parties say that I should not. In the husband’s case he says that the payment (or his liability) is to prevent a departure based upon the special needs of the children in regard to their education, medical, dental and general expenses. He, in effect, says the terms of the BFA deal with these special needs.
The wife submits that I should take the BFA into account as showing that it is not enough to meet these needs and that I ought to make additional provision for the children by way of higher periodic child support payments to meet their greater needs over and above the $24,000.00 per year, which the wife says just covers the girls school fees.
I find that the BFA was a considered estimate by both parties of the additional education, medical, dental and general expenses of the children. Clause 6 of the BFA, which provides mutual promises, was inserted to prevent the husband from using the payments made under the BFA to reduce his child support liabilities. Insofar as the wife was concerned it was this method by which she was to claim increases in expenditure or needs of the children in regard to education, medical, dental and general expenses. This was to prevent departures such as has occurred since 2005.
I am not bound by the provisions of the BFA, however, I will have regard to the payments in determining what are the additional special needs, if any, of the children under s 117 of the Child Support (Assessment) Act.
I note that there is no application for non periodic child support.
The wife’s income and financial circumstances.
The wife’s financial circumstances were not seriously challenged by the husband except to the extent that he claims she could work greater hours in her profession and the extent of the children’s needs. I find that the wife is working appropriate hours bearing in mind her overall responsibilities to care for the three children of the marriage and in particular S.
I am not satisfied the wife’s evidence of the children’s expenses is entirely accurate. I am concerned it may reflect the level of expenditure that she seeks, rather than actual expenditure.
The wife’s generated net fees from her professional practice;
· for the year ended 30 June 2005 of $184,823.00; and
· for the year ended 30 June 2006 of $188,138.00.
I find that her income for each the financial years ended 30 June 2007 and 2008 was about $180,000.00. Counsel for the wife submitted that I ought to deduct from that income the amount distributed to the children via her family trust. I do not accept that submission as it artificially reduces the wife’s income for the purposes of child support. If I had adopted the wife’s submission that I exclude the money she distributes to her children under the provisions of the trust I would then need to consider this income of the children. The end result is that the money would be counted either way.
For the purpose of child support considerations from 1 July 2005 to 30 June 2008, I find the net fees generated as her income for child support purposes and I find that her income for 2007 and 2008 was $180,000.00. In terms of the child support assessments from 1 July 2008 to 30 June 2008, I find that her income for each those years to be $180,000.00. For the 2009 and 2010 years I accept the evidence of the wife that her income will remain about the same.
In terms of her assets and liabilities, the wife owns a property in Launceston with a value of $850,000.00, she has money in the bank, share investments totalling about $84,000.00, an interest in V Company of about $94,000.00 and household contents of about $15,000.00. The wife has about $272,000.00 in her self managed superannuation fund.
The wife has liabilities of about $435,000.00.
The wife has been able to make discretionary contributions to her superannuation fund of $23,780.00 in 2006 and $46,000.00 in 2007. It is significant that she is able to make these voluntary superannuation contributions despite her claimed high expenses of child care costs.
Assets and liabilities of the husband
The husband was not particularly forthcoming in terms of providing current details as to his financial circumstances. He did not provide income tax returns nor did he provide financial statements to 30 June 2008. Significant parts of the husband’s financial circumstances were provided by the wife in her affidavit after the discovery of documents during the course of these proceedings. Without the wife’s intervention and evidence the financial circumstances of the husband would not have been clear.
The husband did not file an up to date financial statement. In re-examination he said that his income by way of consulting income had diminished and his income from the finance business in which he has an interest had also significantly diminished.
It is possible that husband’s income by way management fees from the finance business could have been affected by the current adverse economic circumstances. However, it was up to the husband to provide this information supported by financial records rather than make a detail free remark as a “throw away line” in re-examination. It did not enable me to determine whether his income had reduced or increased.
The husband should have been able to provide financial information for the 2008 financial year but chose not to do so. It was possible for the husband to provide financial information for the first quarter of the 2008/2009 financial year but he has not done so. I will be treating his income in the previous and current financial year as being the same as I determine for the 2007 financial year (excluding capital gains plus the $40,000.00 he had in the past been paying to his present wife).
The husband earns much of his income through a corporate structure, R Pty Ltd. In terms of his income from R Pty Ltd for the 2006 financial year the husband received $152,643.00 in consulting income, dividends and fees receipts and practice management. In 2007 he was paid $172,704.00. Of this he paid salaries, essentially to himself and to his present wife N.[11] I am satisfied that in 2006 and 2007 the husband paid N income of about $40,000.00. N was not called to give evidence in that regard although the husband gave evidence of her involvement with the business. I accept that evidence but note that he did not pay N an income in 2008, therefore increasing his income by $40,000.00.
[11] Annexure R to wife’s affidavit filed the 2 September 2008.
For the period 1 July 2005 to 30 June 2006 the husband earned about $40,000.00 in salary from R Pty Ltd and in addition it had an operating profit of $59,338.00. I find his income in the 2006 financial year was at least $99,338.00.
For the period 1 July 2006 to 30 June 2007 R Pty Ltd had a profit of $69,956.00 (which I find was essentially income of the husband) plus his wages of about $42,800.00 making a total of $112,756.00. In addition there was a capital gain on the sale of shares totalling $24,979.00. This made the total effective income for the husband in the 2006/2007 financial year of $137,735.00, and I make that finding.
In the 2008 year having regard to the information provided by the wife in her affidavit and the evidence of the parties, I find that the husband earned about $137,735.00 less the capital gains of $24,979.00 plus the $40,000.00 he did not pay to N. I determine his income for 2008 financial year at $152,756.00. In addition I am satisfied that he will earn the same income for the present financial year. It was open for the husband to adduce meaningful evidence to show a change to his income, he did not do so.
The husband has an interest in three real properties: one in Western Australia, one in Hobart and another in Launceston. I find all three properties are subject to mortgages and derive income. The set off between the rents received and the outgoings (including the mortgage repayments) are such that the properties provide a net negative return, the so called “negatively geared” arrangements. The husband concedes and I agree that the income losses arising out of these investments ought not to be set off against his income for the purposes of his child support assessment. I have applied that approach in determining the husband’s income.
The wife was concerned about the money which the husband earned in relation to a property in Launceston. The husband tendered a balance sheet for that partnership[12] which showed that the husband had equity in that property. It showed that the building made a loss of $33,266.00 per year of which the husband was liable for $11,091.00. I have not set that loss off against the income of the husband, in accordance with the submissions made by him in respect of negatively geared properties.
[12] Exhibit H2.
The husband has remarried. His present wife, N, works as a therapist and now earns about $40,000.00 per year. She has four children who live with her most of the time. The children’s father pays child support.
The husband lives with N at her home in L. That is a home which is owned by N. It is situated on seventeen acres of land and has a modern house with swimming pool, stables and sheds. The property was purchased by N in 2005 and the husband and N have spent at least $350,000.00 on improvements to the home since they married about twelve to eighteen months prior to the hearing.
The husband has contributed about $150,000.00 and there is now a mortgage on that property of $200,000.00.
R Pty Ltd owns two hundred thousand shares in W Pty Ltd which has a balance sheet value of $200,000.00. This gives the husband an income of about $20,000.00 per year, which income is included in the profit and loss accounts of R Pty Ltd. [13]
[13] Annexure N to wife’s affidavit 1 September 2008 (page 88).
R Pty Ltd also owns Suncorp Metway shares of about $73,451.00 and plant and equipment (which is primarily the husband’s motor vehicle valued at $28,636.00 less depreciation).
As at 30 June 2007 R Pty Ltd had about $9,000.00 in the bank and owed the husband about $195,000.00 (being the money he lent R Pty Ltd to buy his interest in W Pty Ltd).
In a previous year (2006) the amount owed to the husband was about $374,000.00 but this was repaid to him when he sold C shares and made a capital gain.
The wife asserted the husband may have earned income from his interest in the race horse industry. The husband’s evidence was that he did not earn any income and there was no evidence challenging that. I accept his evidence in that regard. The husband has an interest in a number of race horses, they are a hobby and I accept that they cost him anywhere between nothing and $3,000.00 per year.
Both parties received significant capital on their property settlement and have invested it in different ways to suit their particular needs and interests.
The husband’s evidence is that he needed to borrow $400,000.00 in early 2008 to fund the finance business and that the finance business is paying interest on that land.
I am satisfied the husband’s full financial circumstances are before me.
The children had a good lifestyle when both parties were living together. They were engaged in pony club and the wife has purchased horses and horse floats and other material for them and for their use. They are and were engaged in other significant sporting activities.
The parties knew of the needs of their children when they entered into the BFA requiring the husband to pay an additional $12,000.00 per year irrespective of any child support assessment. In any child support assessment there would of course be included some allowance for education (albeit not private school fees). That sum is payable irrespective of the financial circumstances of the husband.
I am satisfied that the approach adopted by the wife in caring for and providing for the material needs of the children reflects that which was operating in the past but I am not satisfied are such that the assessments need to be varied to the extent sought by the wife.
The responses of the Child Support Agency to the questions posed by me are somewhat confusing. The Agency sets out that if both the husband and wife were receiving the maximum cap income the child support payable by the husband annually in 2005/2006 would be $18,979.00, 2006/2007 $18,269.00 2007/2008 $17,529.00 making a total of $54,777.00.[14]
[14] Exhibit W10.
In the same document the Agency says that if the husband was earning between $80,000.00 and $160,000.00 (slightly under and over the cap) and the wife was earning over the cap the child support payable would be between $2,200.00 per annum and $7,258.00.
In her financial statement filed 2 September 2008 the wife says the costs of maintaining the children on a weekly basis totals some $2,753.00 per week. This includes about $25,000.00 in education expenses, about $12,000.00 in entertainment and hobbies for the children, medical expenses of $10,000.00 and holidays of about $8,000.00 per year. These figures seem somewhat high.
The husband spends very little time with the children and most of their care is left to the wife. I accept that the wife needs to provide for medication for S and that he needs adult supervision. Those needs add to the costs of caring for S although these amounts can vary due to S attending school as he will in 2009 as he has in previous years.
The parties’ daughters are engaged in pony club activities and the wife has purchased a horse for H in 2007 at a cost of $9,200.00 and horse for D in 2007 at a cost of $6,500.00. In addition she has purchased a horse float for $23,000.00 and saddles for the horses of $6,000.00. The wife spends about $185.00 per week on expenses to care for the horses.
This is at a far higher level of expense than was the situation prior to separation. I consider that the husband not ought to be required to meet these high expenses over and above the additional monies he has agreed to pay under the finding financial agreement.
Clearly there are care costs for S although this cost is likely to diminish over the next twelve months and that the amounts referred to by the wife in January/ March 2008 are not likely to continue indefinitely.
The wife claims orthodontic expenses for H and D totalling approximately $11,000.00.
In terms of S’s medical expenses, the wife spends about $20.00 per fortnight on medication (it had been higher in the past) and there is a gap of about $1,000.00 to $2,000.00 for medical expenses.
In terms of S, I am satisfied that there are special circumstances to depart from the child support formula and in particular the operation of a formula as it seems to be in the November 2008 child support letter (item E) would only have the husband paying between $5,200.00 per year and $10,000.00 per year for the care of all three children.
These special needs of S and the reasonably high expenses of the girls would have been reasonably addressed by the $24,000.00 per year fund generated by the BFA. Unfortunately there was a combination of the lack of clarity of the parties’ income and the perverse operation of the former child support formula. The formula reduced the child support that ought to have been paid to meet the special circumstances of the children and reduced the amount the husband ought to have paid bearing in mind the income of the husband and the needs of the children.
By operation of the formula, I note that if the husband was earning in excess of the capped amount (between 2005 and 2008) and the wife not in receipt of income, his child support would have been well in excess of $20,000 per year.
I take into account the high level of support provided to the children up to separation which the parties addressed with the BFA. Having regard to the income of both parties and the needs of the children the combination of the BFA amount and child support of $18,000 to $19,000 per year would have met the special needs of the children, including S and would be reasonable, just and equitable.
However, the high income of the wife meant the amount payable by the husband was substantially reduced. If both the husband and the wife were earning the maximum capped amount the husband would have been liable for child support of $18,969.00 in 2005/2006, $18,279.00 in 2006/2007 and $17,529.00 in 2007/2007. This in itself is strange in that child support reduces in time of at least 3% because of inflation. In fact the husband incurred child support liabilities in 2005/2006 of $12,205.97, in 2006/2007 of $13,844.61 and in 2007/2008 $22,501.24. If I simply applied the incomes and allowed the then formula to apply the husband’s child support liabilities would have been between $6,000.00 and $8,000.00 per year. I have not had regard to this error or his misdescription by the Child Support Agency in determining the amount of child support payable.
Having regard to the special needs of S (I accept and prefer the evidence of the wife, the school counsellor and the family consultant to that of the husband in regard to S’s health) and the standard of living of the children generally I am satisfied that the administrative assessments were too low in 2005/2006 and 2006/2007 and may have been a little high in 2007/2008. In coming to this determination I have had regard to the BFA and I have considered what is just and equitable within the meaning of s117(4) of the Child Support (Assessment) Act. I have also considered whether it is otherwise proper to make these orders.
Each of these parents has a duty to maintain the children.
In terms of the special needs of the children the court has to have regard to the standard of living which was available to the children before separation and that it is reasonable to expect that standard of living to continue provided the parties are able to meet that expense.
S clearly has special needs arising from his medical conditions and disabilities. He suffers from significant health problems including epilepsy, hemiplegia and homonymous hemianopia which create distortions of visual information to the extent that it affects his daily living skills as well as reading. He has undergone surgery to correct a deformity in his right foot and has botox injections in his right arm to attempt to strengthen his muscles. S also requires assistance with his schooling. This was supported in the family report, which was prepared for these proceedings and was not challenged by either party, in which the family consultant reported that S attends grade 10 at T High school where he is assisted by an aid for seventeen hours a week due to problems.
The wife at paragraphs 34-37 of her affidavit, set out earlier in my discussions, details the difficulties S has faced since birth and the ongoing care he has required. I am satisfied S is a child with special needs as he has difficulties outside the ordinary range of school-aged children.[15]
[15] Smith; St James; Smith v Wickstein (1996) FLC 92-714.
The proper needs of S are significant bearing in mind he spends all of his time with the wife and has health difficulties. In terms of the needs of the girls I am satisfied they have special needs and had a reasonably high standard of living, including private school education, up to the time of separation and at that the parents endeavoured to leave in place such reasonably high standards by way of a contribution of $24,000.00 per year (the BFA), in addition to the child support paid by the husband.
In terms of the proper needs of the children I am not satisfied that they are at the level claimed by the wife and that, in particular, the needs of these children and the girls in respect of their horse riding is an expansion of the levels of support for these activities prior to separation, such change is a decision of the wife. In terms of S his needs for adult supervision are less than they were some years ago.
This has to be seen in the context of the parties forming new lives and the additional expense in running two separate households rather than one
Further if the husband contributes about $31,000.00 per year (by the proposed order and by the BFA) that means the total amount provided for the children each year (assuming the mother contributes equally) is about $62,000.00 per year. In the circumstances of this family that is a reasonable allowance.
Each of the parents has significant income. The wife has disposable income such that she can make voluntary contributions to superannuation. The husband has remarried but his present wife has income of her own and support from her former husband in relation to their children.
I am satisfied that the income of both parties reflects their current earning capacity in the circumstances in which they have put themselves. I have had regard to the commitments of each party to support themselves and in the case of the husband provide some level of support for his present wife.
The wife claims significant expenses in relation to the direct and indirect costs in providing care for the children. I have had regard to that material but not at the level sought by the wife.
I believe the child support at the levels provided in particular the period from 1 July 2005 to 30 June 2007 imposes additional expense upon the wife in circumstances where the husband can well afford to provide for his children notwithstanding the provisions of the binding financial agreement.
I have had regard to the provisions of s117(5) of the Child Support (Assessment) Act and in particular the primary duty of the parents to maintain these children. Neither parent is in receipt of any income tested pension, allowance or benefit nor are they likely to into the future.
Having regard to the particular provisions under s117 and what is just and equitable and what is otherwise proper I determine that the child support payable by the husband for the period 1 July 2005 to 30 June 2008 should be $18,979.00 for each of those years.
In terms of the operations of the formula from 1 July 2008 to 30 June 2010 I am aware that it will provide child support at about $17,000.00 to $18,000.00 per annum. This will be the case based upon the income of the husband and wife as I have determined earlier. The evidence of the wife is that the medical expenses of S have now reduced as has the level of child support.
Having regard to all of the matters set out earlier I determine that the child support for those two years (which is some eighteen months or nineteen months from the date of these reasons) is such that when considering the provisions of the binding financial agreement and the relative income of the parties I see no reason to disturb that formula provided the real income for the parties is used to underline those provisions. Accordingly, I make no change to the administrative assessments over that period from 1 July 2008 to 30 June 2010 except to make findings as to the income upon which the formula will be based noting that the children live all of the time with the wife.
It is likely that S will continue his secondary education until the end of 2010 and as such the operation of the formula will continue until then.
Beyond 30 June 2010 there will need to be a further consideration of the incomes of the parties. It is my hope that some of the material set out in these reasons may facilitate an agreement between the parties as to the incomes of which the child support should be based or alternatively provide guidance if there are applications for administrative variations, which is an arduous task.
Just and equitable
Having regard to all of the facts and circumstances I am satisfied that the level of child support for the period 1 July 2005 to 30 June 2008 should be $18,979.00.
In terms of child support for the period from 1 July 2008 I am satisfied that the income of the husband will be about $152,756.00. The affect of this will mean that he will be paying child support for the three children (until S turns 18) at between $17,000.00 and $18,000.00 per annum.
I also need to consider whether such a payment to the mother is otherwise proper. I am of the view that such a payment is.
Private School fees
The law in relation to the payment of school fees is well established. In the decision of F & S [2003] FMCAfam 531 Chief Federal Magistrate Bryant (as she then was) summarised the principles in relation to school fees, identified in Mee v Ferguson (1986) FLC 91-716, 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 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 the 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; and
(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.
Her Honour went onto say
“Although Mee v Ferguson was decided prior to the introduction of the Child Support (Assessment) Act, the reasoning has been applied to child support cases [see Lightfoot v Hampson (1996) FLC 92 663 and Wild v Ballard (1997) FLC 92 771]."
The principles in F & S [2003] has been subsequently applied in the decisions of Corness & Cameron [2005] FMC fam 558 and WGB & CEM [2004] FMCfam17.
In this case the two girls H and D attended private school which was a joint parenting decision made prior to the parties separation. It is clear that the parties intended to continue to educate the children at a private school as the BFA makes provision for both parents to contribute the sum of $12,000.00 each year, subject to a yearly review, with the intention of taking into account any increase in the “children’s educational and general expenses”. [16] The sum provided for by the parties in the BFA clearly envisages the costs the parties would incur as a result of the private school fees as opposed the minimal costs the parties would have incurred if the girls had attended a state school.
[16] Annexure “A” of the affidavit of the wife filed the 2 September 2008.
Further in his written submissions counsel for the wife says “in cross-examination the father was very clearly in favour of the said girls continuing with private education and he said that eh would have preferred [S] to stay in such education”. [17]
[17] Paragraph 17(b) of the wife’s written submissions filed the 21 November 2008.
I am satisfied that it was the intention of the parties that both girls continue to be educated in the manner which they had been prior to separation. To do achieve this end the parties had entered into the BFA.
In addition the effect of these orders insofar as the child support is concerned will mean that the husband will be paying about $18,000 to $19,000 per year periodic child support for the years ended 30 June 2006, 2007, 2008, 2009 and 2010. The wife will be entitled to some arrears of periodic child support and some arrears under the BFA. I am satisfied that this level of child support taken with the amount due by each of the husband and wife under the BFA will meet the reasonable needs of the children, the special needs of S, the educational needs of H and D and some assistance in their equestrian activities. All this bearing in mind the income and financial circumstances of both parents. This is just and equitable and in all of the circumstances.
| I certify that the preceding one hundred and twenty one (121) paragraphs are a true copy of the reasons for judgement of the Honourable Justice Benjamin. Legal Associate: Date:29January 2009 |
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