Seymour and Seymour
[2009] FMCAfam 846
•13 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SEYMOUR & SEYMOUR | [2009] FMCAfam 846 |
| CHILD SUPPORT – Application for departure order – application for child support otherwise than in the form of the periodic amounts – special circumstances – just and equitable – otherwise proper. |
| Child Support (Assessment) Act 1989 (Cth) ss.3, 4, 117, 123, 124, 125 |
| Gilmour and Gilmour (1995) FLC 92-591 Liesert v Nutsch (1996) FLC 92-665 Bryant and Bryant (1996) FLC 92-690 Savery and Savery (1990) FLC 92-131 Gyselman and Gyselman (1992) FLC 92-279 Mercer and Mercer (1976) FLC 90-033 Bendeich and Bendeich (1993) FLC 92-355 Dwyer v McGuire (1993) FLC 92-420 Lightfoot v Hampson (1996) FLC 92-663 |
| Applicant: | MS SEYMOUR |
| Respondent: | MR SEYMOUR |
| File Number: | LNC71 of 2008 |
| Judgment of: | Roberts FM |
| Hearing date: | 5 May 2009 |
| Date of Last Submission: | 5 May 2009 |
| Delivered at: | Hobart |
| Delivered on: | 13 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms A Trezise |
| Solicitors for the Applicant: | Andrea Trezise |
| Counsel for the Respondent: | Mr G Richardson |
| Solicitors for the Respondent: | G A Richardson |
ORDERS
That pursuant to Section 124 of the Child Support (Assessment) Act 1989 (“the Act”) it is ordered that MR SEYMOUR (“the father”) is to provide child support for the children [X] born in 1994, [Y] born in 1996 and [Z] born in 1998 (“the children”) for the period from
1 January 2009 until 31 December 2012 otherwise than in the form of periodic amounts paid to MS SEYMOUR (“the mother”) as follows:
(a)Firstly, the father must pay direct to [S] College in the State of Tasmania;
(i)the entirety of the children’s tuition fees; and
(ii)any reasonable excursion fees and levies incurred as a consequence of the attendance of the children or any of them at [S] College; and
(b)Secondly, the father must maintain private health insurance cover for the children with the Medical Benefits Fund of Australia at the highest scale available until 31 December 2012 or the happening of a “child support terminating event” as defined by the Act, whichever occurs first, and for that purpose Orders No. 1 to 4 inclusive of the Orders of the Federal Magistrates Court of Australia at Launceston dated the 28 July 2008 are to remain in full force and effect.
That, pursuant to section 125(2) of the Act, the Court declares that it is satisfied that, in the special circumstances of the case, it is just and equitable and otherwise proper that the annual rate of child support payable by the father is not to be reduced by the provisions of Order No. 1 hereof.
That save as to costs the mother’s Application filed 14 January 2009 and the father’s Response filed 6 March 2009 are otherwise dismissed.
That all applications for costs are adjourned sine die.
IT IS NOTED that publication of this judgment under the pseudonym Seymour & Seymour is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
LNC71 of 2008
| MS SEYMOUR |
Applicant
And
| MR SEYMOUR |
Respondent
REASONS FOR JUDGMENT
Background
The Applicant is MS SEYMOUR (“the mother”) and the respondent MR SEYMOUR (“the father”).
Both parties are in their forties and, according to the application filed by the mother, they were married in 1991 and divorced in 2005. Their children are [X] born in 1994, [Y] born in 1996 and [Z] born in 1998 (‘the children”).
Orders were made in the Family Court of Australia with the consent of the parties by Hannon J on 9 July 2004. The first twenty of those orders related to the property settlement between them. Orders No.21 to No.29 (“the original orders”) provided for a departure from administrative assessment of Child Support. They read as follows:
21. THAT pursuant to Section 117(2)(c) of the Child Support (Assessment) Act 1989 (“the Act”) it is ordered that the annual rate of child support payable by the husband to the wife in respect of the children of the marriage …… pursuant to the Act based on the income of the husband be varied as follows in terms of Orders numbered 22 to 29 hereof in lieu of the annual rate of child support in all assessments for the child support years from the 1st January 2004 to the 31st December 2008 inclusive.
22. THAT the husband pay or cause to be paid to the wife or to a third party on behalf of the wife, child support made up of four amounts as follows:
a) periodic child support payable to the wife;
b) contributions to private school fees;
c) private health cover;
d) further support.
23. THAT the husband pay or cause to be paid to the wife child support in the sum of $1,666.67 per month per child, the first payment to be made within thirty (30) days of the date of Order and monthly thereafter.
24. THAT the child support payable by the husband pursuant to Order 22a) hereof is to be varied on the 1st March each year commencing 2005 in accordance with the variation in the Consumer Price Index (Hobart) as it stands on the 31st December immediately preceding the date of variation as compared with the same index as at the same date twelve months prior thereto.
25. THAT the child support payable by the husband to the wife pursuant to Orders 22 and 23 hereof be discharged and reviewed as at the 31st December 2008.
26. THAT the husband pay direct to [S] College in the State of Tasmania or such other school as agreed to by the parties for the benefit of the children of the marriage:
a) the entirety of the private school fees (meaning tuition fees);
b) reasonable excursion fees and/or levies incurred as a consequence of the attendance of the children or any of them at the said school
c) the cost of school uniforms, shoes, sports uniforms, books and stationery, to an amount not exceeding $3,000.00 per annum: until the said children respectively complete their secondary education and/or cease to be a school student at the school, whichever is the earlier.
27. THAT the husband shall maintain private health cover for the benefit of the children with the Medical Benefits Fund at the family rate at the highest scale until the happening of a child support termination event as defined by Section 12 of the Act.
28. THAT the husband make further contribution towards the eldest child of the marriage …… by payment of the hire purchase monthly payments to Studio 19 in relation to the piano in the sum of $319.00 per month until determination of the said hire purchase agreement in or about July 2004 and the husband and the wife shall make no claim, in opposition of ownership of the said piano by the (eldest) child …… after determination of the said hire purchase payments.
29. THAT the husband make further contribution to an amount of one half of the balance costs of any orthodontic treatment after the receipt of any benefit payable by the Medical Benefits Funds in respect of such orthodontic treatment, as required by any of the children of the marriage from time to time.
On 8 February 2008 the mother made an application in relation to the MBF private health insurance for the children. On 16 June 2008 the father’s counsel sought to have that application summarily dismissed. However, on 18 June 2008, I dismissed that oral application and set the mother’s application down for hearing on 28 July 2008.
That application was then settled by consent on 28 July 2008 in the following terms:
1. THAT the husband forthwith do all such acts and things and sign all necessary documents and authorities to MBF to authorise the issuing to the wife of separate member cards for each of the children …….
2. THAT the husband forthwith provide to MBF written authorisation for MBF to process and pay pursuant to MBF membership [3] any account rendered by a medical provider to any of the children referred to in paragraph 1 hereof as presented for payment by the wife.
3. THAT in the event that any or all of the said children’s MBF member cards as issued in accordance with paragraph 1 hereof are lost, misplaced or for any other reason require replacement or re-issuing, the husband sign all such documents and things and provide all necessary authorities to MBF (or any fund which succeeds MBF) new or replacement member cards for the children, such cards to be forwarded to the wife.
4. THAT the wife be and is hereby restrained from accessing or attempting to access the MBF account records of the husband, the husband’s current wife and (two named children).
5. THAT the Application for Final Orders filed the 8th day of February, 2008 and the Response filed the 17th day of March, 2008 be otherwise dismissed and removed from the Active Pending Case List.
6. THAT each party pay their own costs of and incidental to the proceedings.
In accordance with Order No.25 of the original orders, the departure from administrative assessment ordered on 9 July 2004 ceased to operate with effect from 31 December 2008.
On 14 January 2009 the mother filed the current application seeking further orders in relation to Child Support, details of which are set out below. At that time she was not aware of the administrative assessment issued by the Child Support Agency for the period 2 January 2009 to
1 April 2010. By that assessment, the father was required to pay $2,968.25 per month.
Applications
In her Application filed 14 January 2009 the mother seeks orders as follows.
1. THAT pursuant to Section 117(2)(c) of the Child Support (Assessment) Act 1989 (“the Act”) it is ordered that the annual rate of child support payable by the father to the mother in respect of the children ……pursuant to the Act based on the income of the father be varied as follows in terms of Orders numbered 2 to 7 hereof in lieu of the annual rate of child support in all assessments for the child support years from the 1st of January 2009 to the 31st of December 2012 inclusive.
2. THAT the father pay or cause to paid to the mother or to a third party on behalf of the mother, child support made up of four (4) amounts as follows:
a) periodic child support payable to the mother;
b) contributions to private school fees;
c) private health cover;
d) further support.
3. THAT the father pay or cause to be paid to the mother child support in the sum of $1,869.34 per month per child,[1] the first payment to be made on the 1st January 2009 and monthly thereafter.
4. THAT the child support payable by the father pursuant to paragraph 3 hereof is to be varied on the 1st March each year commencing 2009 in accordance with the variation in the Consumer Price Index (Hobart) as it stands on the 31st December immediately preceding the date of variation as compared with the same index as at the same date twelve (12) months prior thereto.
5. THAT the child support payable by the father to the mother pursuant to paragraphs 3 and 4 hereof be discharged and reviewed as at the 31st December 2012.
6. THAT the father pay direct to [S] College in the State of Tasmania or such other school as agreed to by the parties for the benefit of the children of the marriage:
a) the entirety of the private school fees (meaning tuition fees);
b) reasonable excursion fees and/or levies incurred as a consequence of the attendance of the children or any of them at the said school;
c) the cost of school uniforms, shoes, sports uniforms, books and stationary to an amount not exceeding $3,000.00 per annum;
[1] A total of $5,608.02 per month.
until the said children respectively complete their secondary education and/or cease to be a school student at the school, whichever is the earlier.
7. THAT the father shall maintain private health cover for the benefit of the children with the Medical Benefits Fund at the family rate at the highest scale until the happening of a child support termination event as defined by Section 12 of the Act and for the purpose of this Order paragraphs 1 to 4 inclusive of the Orders of the Federal Magistrates Court of Australia at Launceston dated the 28 July 2008 remain in force.
8. THAT the father make further contribution to an amount of one half of the balance costs of any orthodontic treatment after the receipt of any benefit payable by the Medical Benefits Funds in respect of such orthodontic treatment, as required by any of the children of the marriage from time to time.
9. THAT the father pay the mother’s costs of and incidental to the proceedings.
In effect, the mother is seeking a continuation of the original orders and, indeed, her counsel used those terms when opening.
The father filed his Response on 6 March 2009. He seeks orders that
·he pay Child Support in accordance with assessments by the Child Support Agency;
·he maintain the children’s MBF health insurance cover; and
·the mother pay his legal costs.
Law to be applied
The Child Support (Assessment) Act 1989 (“the Act) provides that the parents of children have the primary duty to maintain their children[2] and the principal object of the Act is to ensure that children receive a proper level of financial support from their parents.[3] The general intention of the Act is for levels of Child Support to be administratively assessed, based upon the incomes of the parents, taking into account all children to be supported by those parents.
[2] Section 3.
[3] Section 4.
The mother is clearly applying for an order for departure from administrative assessment, in that one of the orders that she is seeking is for the father to pay her $5,608.02 per month ($1,869.34 per child). Section 117 of the Act empowers Courts to make such orders in special circumstances (“departure orders”).
The approach that the court must adopt in relation to applications for departure orders has been well settled by decisions of the Full Court of the Family Court of Australia[4]. It is clear that I must apply the three-stage process that is required under section 117 of the Act and I must be satisfied:
·that in the special circumstances of the case, one or more of the grounds for departure in sub-section 117(2) is established;
·that it is “just and equitable” within the meaning of sub-section 117(4) to make a particular order; and
·that it is “otherwise proper” within the meaning of sub-section 117(5) to make a particular order.
[4] See Gilmour and Gilmour (1995) FLC 92-591, Liesert v Nutsch (1996) FLC 92-665 and Bryant and Bryant (1996) FLC 92-690.
Section 117(2) of the Act sets out the various grounds for departure. In Savery and Savery,[5] Kay J said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases.”
[5] (1990) FLC 92-131
In Gyselman and Gyselman,[6] the Full Court of the Family Court said the following in relation to the phrase “special circumstances”:
Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that 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.[7]
[6] (1992) FLC 92-279
[7] At page 79,065
It is clear that the mother is also seeking orders pursuant to section 123 of the Act for provision of further child support otherwise than in the form of any periodic amounts paid to her. In this regard, she wants the father to pay school expenses direct to the children’s school and keep the children covered by private health insurance. Section 124 of the Act provides that any such orders must also be just and equitable and otherwise proper.
The children’s private school education
The orders sought by the mother would require the father to be entirely responsible for the payment of all expenses associated with the children’s attendance at [S] College (in addition to paying their private health insurance premiums and the sum of $5,608.02 per month direct to her).
[S] College is a relatively expensive private school. For example, the total tuition fees for the three children will be $33,750 in 2010.[8]
[8] See Annexure “A” to the mother’s last affidavit.
When he was cross-examined, the father made it quite clear that he wanted the children to maintain their standard of education and when he was asked whether that should be at [S] College, he said: “Yes”. The mother’s counsel then asked him if he would contribute to, or pay the entirety of their school fees and his answer was:
If it is deemed that I have to pay the school fees, I will pay them, but this is the precise reason we are here, for someone independent to determine that.[9]
[9] Transcript, page 67
Earlier, the father disclosed that he had in fact paid the children’s school fees since February 2009, notwithstanding that the original orders had ceased to operate. He revealed that the only expenditure in relation to their attendance at the school that he had not paid was the account at the school shop.
In response to a question from me, the father said:
The reason that I’m currently paying the school fees … (is) that until this matter is settled, I do not want to see the children - their school fees not being paid, and as a consequence, them being out of school. So as a goodwill gesture, I am paying it in the interim.[10]
[10] Transcript, page 66
Consequently, while it is very clear to me that both parties want their children to continue receiving their education at [S] College, it is also clear that they do not agree about who should pay for that education.
The parties’ financial circumstances
At the time of the hearing the mother was not working in paid employment, but earned her income from rent, interest and dividends. Her taxable income for the year ended 30 June 2008 was $34,442. However, that was after she had paid $50,000 into superannuation and obtained a tax deduction for that amount. Consequently, I find that her real income was in the vicinity of $84,000 for that year. (Indeed, in closing submissions, the mother’s counsel effectively conceded that there should be such an increase in the mother’s notional income for child support purposes.)
The mother is the owner of some significant assets. Applying the Government valuations (provided by the father’s counsel), her real estate is as follows:
·Her Launceston home $680,400
·Her [B] property $336,000
·Her first investment unit $116,400
·Her second investment unit $115,200
The total value of her real estate is $1,248,000. In addition, the mother had $743,000 invested in term deposits and shares worth $1,826, and superannuation worth more than $100,000.
At the time of the hearing her liabilities were estimated by her to be only $17,000, so her net worth at the time of the hearing was in excess of two million dollars.
The father is [employed in the medical industry] earning an income in excess of $450,000 per annum (before any tax advantageous salary packaging)[11], so it was not surprising that he did not dispute that he had the capacity to pay what the mother is seeking.
[11] Exhibit “M2”
At the time of the hearing, the father’s asset situation was in a state of flux. He had recently moved to Hobart to take up employment so he was in the process of selling and buying property. He had sold a holiday home near Launceston and was in the process of trying to sell his Launceston home, which was listed for sale at $469,000. At the same time, he had entered into a contract to purchase a home in Hobart for $825,000, with bank funding of $778,000.
The father also has a plantation investment and superannuation, which he valued at $183,000 and $145,455 respectively.
Unfortunately, both parties had indulged in some “double dipping” when detailing their expenses in their statements of financial circumstances. In my view, however, completion of the approved form itself can lead to that occurring. That is because it is quite common for people today to use their credit cards to pay almost all their living costs (often to maximise reward points). As a result, when parties complete statements of financial circumstances detailing their living costs and their credit card repayments, it is almost inevitable for some double counting to occur. That is exactly what happened in this case.
I do not propose to examine all of the mother’s expenditure in fine detail. Suffice it to say that I consider that she has generally overestimated the children’s general day to day expenditure in “Part N” of her statement of financial circumstances. She says that the expenditure on the three children amounts to $1,585 per week. That is more than $500 per week per child and does not include any of the expenditure relating to the children’s relatively expensive private school education.
I also note that the mother had not included the sum of $682.64 per week that the father had been assessed to pay as Child Support in her statement of financial circumstances.[12]
[12] See item 13.
Further, the mother’s statement of financial circumstances does not reveal that her partner is now living with her. He is [employed in the finance industry]. Her evidence is that he is paying his way in terms of some day to day expenses, such as food, electricity and the partial use of an item of sporting equipment, but he does not pay any rent, nor does he appear to contribute in any way to the capital costs associated with owning a home.
Does a ground for departure exist?
Counsel for the mother sought to persuade me that the fact that the children are having no contact with the father is a special circumstance for the purposes of the Act. As I explained at the time, I have some difficulty with that concept, because the child support administrative assessment formula takes account of the time that each parent spends with the children.
Similarly, I do not consider it to be a special circumstance for the purposes of the Act that the eldest child returned her father’s correspondence in a manner that must have been very hurtful to him. The simple fact is that the father is not spending time with the children and, as mentioned in the preceding paragraph, that is accounted for in the child support administrative assessment formula.
However, while it may not be relevant to what the court must now consider, the children’s relationships with their father could become relevant factors at some stage in the future if, for example, they were to seek adult child maintenance to attend university. In Mercer and Mercer, Watson J said:[13]
Here is an adult who has been granted by legislation the right to seek the financial support of another adult - his father. If he says to his father that the latter has forfeited all paternal rights …… does he not himself destroy the very basis upon which his claim can be founded? An adult son cannot demand a slice of the paternal cake with one breath and spew out filial abnegation with the next. I hold this to be a fact or circumstance which, in my opinion, the justice of the case requires to be taken into account.
[13] (1976) FLC 90-033 at page 75,131
I make no finding about whether or not the mother has influenced the eldest child to behave in the way that she has, but if the statement of Watson J cited above is at all applicable, it must apply as much to daughters as it does to sons.
The mother’s counsel also sought to persuade me that the father’s substantial income was a special circumstance. I find that it is not. This is because the Child Support formula provides for a party’s liability to be capped at a particular maximum figure. As the father’s counsel correctly submitted:
They are capped because once a payment gets to an appropriate amount; the child can live a reasonable lifestyle…[14]
[14] Transcript, page 70.
Consequently, I am of the opinion that one party’s substantial income (when compared with the income of the other) cannot of itself be a sufficiently special circumstance to justify a departure order.
I am, however, of the view that the parties’ common desire to continue their children’s education at [S] College could be a special circumstance for the purposes of the Act. This is because the formula for the calculation of child support does not take account of the payment of private school fees. Consequently, if both parties agree that the payment of private school fees is in the best interests of their children, it must follow that the payment of such fees must be considered by the parents to be something in addition to the normal day-to-day living expenses of their children.
Given what I have said above, it follows that, in the special circumstances of this case, the costs of maintaining the children are significantly affected because they are being educated or trained in the manner that was expected by their parents.[15] Consequently, a ground for departure could exist.
[15] See section 117(2)(b)(ii).
Discussion
In order to decide what order is appropriate, I must have regard to the income, property and financial resources of each parent[16] and the earning capacity of each parent[17].
[16] See section 117(4)(d) and section 124(3).
[17] See section 117(4)(da) and section 124(3).
While it is clear that the father’s income is substantial, it is also clear that, to an extent, the mother is “asset rich but income poor”. However, she does have available to her substantial sums of money (nearly three quarters of a million dollars) in term deposits. Further, she has made two recent financial choices that are relevant in relation to her income and expenditure. They are:
·paying $50,000 per annum into superannuation; and
·subsidising the living costs of her partner who earns his income as an [omitted].
I note that the mother has made no apparent effort to obtain paid employment. In the years following separation, her desire to be available for the children would have been a particularly relevant consideration. However, the youngest child is now aged 11 years, which should provide the mother with some scope to seek employment, at least on a part time basis. Although I am aware that she has been a competent [administration employee] and was successful in [the sales industry] in the past, I have no real evidence of what employment is available to her now or of what she could earn. Consequently, I am not able to assess the mother’s current earning capacity at any more than $84,000 per annum.
Having considered all these matters, I am of the view that an administrative assessment of child support, capped at the maximum rate, will provide sufficient funds for the children’s day to day expenses. However, an administrative assessment of child support clearly will not provide sufficient funds to meet private school fees or health insurance premiums.
The father’s income earning capacity is quite dramatically greater than that of the mother, so I conclude that it is just and equitable for the father to pay:
·child support as assessed administratively;
·the majority (but not all) of their expenses at [S] College; and
·the children’s MBF premiums.
In relation to the children’s expenses at [S] College, I am of the view that the father should not have to pay the cost of school uniforms, shoes, sports uniforms, books and stationary as sought by the mother. That is because the children would normally incur such expenses if they were attending a State school and, as such, those costs would generally be covered by the administrative assessment of child support at the maximum rate. The father’s liability in relation to their attendance at [S] College should therefore be limited to tuition fees and reasonable excursion fees and levies.
I also note that, to his credit the father has been paying the children’s expenses at [S] College this year (other than the school shop account), notwithstanding that there has been no order requiring him to do so. Consequently, it should not have any appreciable effect for the orders that I make to be backdated to 1 January 2009 (thereby providing for continuity from the “expiry” of the original orders).
Although it appears that the youngest child will remain at school until the end of 2016, it is my view that the orders that I make should not extend beyond 2012. The rationale behind not having orders fixed for excessively long periods was explained by Mushin J in Bendeich and Bendeich.[18] He said:
The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater the chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and children may change their living arrangements from one parent to another.
[18] (1993) FLC 92-355
In my view that rationale applies to the orders that I make today, as much as it does to lump sum orders. I also note that the Full Court of the Family Court of Australia approved of Mushin J’s comments in Dwyer v McGuire[19] and Lightfoot v Hampson.[20]
[19] (1993) FLC 92-420
[20] (1996) FLC 92-663
I surmise that keeping the children covered by private health insurance will not cost the father any more than he is now paying to cover his current wife and their child at the family rate. However, even if I am wrong about that, I find that it is just and equitable to keep the children covered (and I understand that members of the medical profession may be offered special rates by MBF, in any event).
Conclusions
In view of what I have said above, it is unnecessary to make a departure order. It is only necessary for me to:
·make orders for additional child support otherwise than in the form of the periodic amounts to be paid to the mother; and
·state that the annual rate of child support payable by the father is not to be reduced.[21]
[21] See section 125 of the Act.
The orders that I propose to make will not create any entitlement for the mother to claim an income tested pension, allowance or benefit, so I consider the orders to be otherwise proper for the purposes of sub-section 124(4), having regard to the matters mentioned in subsection 117(5).
Procedure
I heard this matter in Launceston but I will be delivering this decision in Hobart, because I do not wish to delay its delivery any longer than is necessary. I will not be sitting in Launceston again before 7 September 2009, because I will be on leave from the end of this week.
My Associate will provide copies of these Reasons and today’s Orders to the parties’ legal representatives by electronic means if that is required.
I note that both parties are seeking orders for costs, so I will simply adjourn those applications sine die. If either application is to be pursued, a listing can be arranged by contacting my Associate by telephone.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Roberts FM
Associate:
Date:
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