Shaw and Shaw
[2010] FMCAfam 1535
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHAW & SHAW | [2010] FMCAfam 1535 |
| CHILD SUPPORT – Application for child support in a form other than periodic payment – application for departure – costs. |
| Child Support (Assessment) Act 1989, ss.3, 4, 100, 116, 117, 123, 124, 125 Family Law Act 1975, s.117 |
| McGuiness & Cowie [2002] FamCA 461 Mee & Ferguson (1986) FLC 91-716 Lightfoot & Hampson (1996) FLC 92-663 Wild & Ballard (1997) FLC 92-771 DJM & JLM (1998) FLC 92-816 C & G [2002] FMCAfam 361 Hardman & Hardman [2003] FamCA 1057 Carlson & Acuff & Anor [2010] FMCAfam 677 Prpic & Prpic (1995) FLC 92-574 Parrish & Torrey [2009] FMCAfam 274 Bendeich (1993) FLC 92-355 Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 |
| Applicant: | MS SHAW |
| Respondent: | MR SHAW |
| File Number: | SYC 1040 of 2009 |
| Judgment of: | Harman FM |
| Hearing date: | 18 August 2010 |
| Date of Last Submission: | 18 August 2010 |
| Delivered at: | Parramatta |
| Delivered on: | 18 August 2010 |
REPRESENTATION
| Counsel for the Respondent: | Mr Givney |
| Solicitors for the Respondent: | McLaughlin & Riordan |
ORDERS
That the application of Ms Shaw filed 8 March 2010 is dismissed.
All issues are removed from the list of cases awaiting hearing.
The wife shall pay the husband’s costs of these proceedings in the sum of $10,350 such cost to be paid within six months of today’s date.
IT IS NOTED that publication of this judgment under the pseudonym Shaw & Shaw is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
SYC 1040 of 2009
| MS SHAW |
Applicant
And
| MR SHAW |
Respondent
REASONS FOR JUDGMENT
These are proceedings involving competing applications under the Child Support (Assessment) Act 1989.
The proceedings were commenced by Ms Shaw by application filed 8 March 2010. A Response has been filed.
Prior to these proceedings the parties have otherwise been engaged in proceedings before the Sydney Registry of the Court with respect to issues of property adjustment, and final orders were made in those proceedings by Altobelli FM on 7 December 2009, those orders ultimately being made by consent but having been made at the commencement of a scheduled two-day trial. Those orders precede these proceedings by some four months and have some other, greater connection to which I will return.
Jurisdiction
The application that is commenced by Ms Shaw seeks relief in two respects. Whilst it is not spelt out by reference to relevant sections of the legislation, from the terms of the orders sought it is clear that an application is made under s.123 of the Act for the provision of child support in a form other than periodic payment and that in aid of that, it is sought, utilising s.116, to bring an application for departure under s.117 of the Act.
The later issue was addressed at the commencement of the hearing. An application for departure is ordinarily not dealt with by this Court but is dealt with through the administrative processes of the Child Support Agency. Indeed, there are very limited circumstances in which any child support issue can now come before this Court and particularly a departure application.
The ground that is relied upon to found jurisdiction is s.116(1)(b), which allows an application for departure to be brought to this Court and heard by this Court if 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; and
(ii) the Court is satisfied that it would be in the interests of the liable parent and the carer entitled to child support, being both, 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.
There are other exceptions that enable departure applications, but that is the pertinent section that applies for these proceedings.
It is well settled law since the decision of Kay J, sitting as a single judge Full Court, hearing an appeal from a Federal Magistrate in McGuinness & Cowie [2002] FamCA 461, that an application for lump sum or non periodic payment of child support is a sufficient application to ground that exercise of jurisdiction under ss.116 and 117 provided that the Court is satisfied that it is in the interests of both parents to do so.
In that case, Kay J said:
I conclude that:
The legislation provides no jurisdictional barrier to a Court entertaining an application for the payment of child support by way of lump sum.
There is no requirement to first approach by the Registrar via Part VI(A) for relief that the registrar cannot give, it being remembered that the power to make orders for the provision of child support other than by periodic payment is reserved to the Court, and the Child Support Agency and the registrar have no power; and
There is no requirement to then object to the failure of the registrar to grant the relief as a necessary precursor to asking the Court for such relief.
In this case, unusually, at or about the time that the proceedings were commenced, a departure application was, in fact, made to the Child Support Agency. Within a few days that was withdrawn and discontinued and this application lodged.
At the outset of the trial, Counsel for Mr Shaw conceded that on a previous occasion when the proceedings were before Dunkley FM, a concession was made that the matter was properly before the Court and to be determined by the Court, and but for that frank concession, for which I am indebted to Counsel, I would have had some real hesitance in proceeding with hearing the case at all, being of the view that the departure is a matter more appropriate by the Child Support Agency through their administrative process. That is what is envisaged by the legislation.
That was particularly so on the basis that Ms Shaw had indicated, at the outset, that what she sought to achieve was, in essence, the departure and that the lump sum application, whether it proceeded or succeeded, was secondary to that.
In any event, based on that concession, I am satisfied, and particularly as the parties have already been before the Court for some months and, no doubt, have expended substantial costs, that it is appropriate and in the interests of both parties to bring the matter to a conclusion without the need for further administrative address through the Agency.
That is particularly as, whilst I do not feel that I have the power to make an order to the effect, one would hope that any subsequent application for administrative departure from assessment, absent a significant and demonstrated change in circumstances of the parties’ present financial positions, would be declined by the Registrar and on the basis that, absence a substantial, demonstrated change in circumstances such application would inherently involve a re-exercise of this Court’s discretion.
Accordingly, I am satisfied for the purposes of s.116 that the application for departure under s.117 of the Act is properly before the Court.
Legislation
Before I turn to and deal with the application for non-periodic provisional lump sum provision of child support I propose to deal with the application under s.117.
The application and affidavit material filed by Ms Shaw do not, of themselves, make clear to me which of the specific provisions are sought to be relied upon, but doing the best I can from the evidence and submissions that I have, I will cover as many of them as I believe are relevant.
As far back as 1993 the Full Court has made clear in Gyselman & Gyselman (1992) FLC 92-279 that the process under s.117 is a three step lineal approach. Even though the same evidence may have some impact on various elements of the inquiry, it is a step by step approach and to fail at any step is the end of the inquiry. The three steps require that:
(1)A ground under s.117, subsection (1) be established, being one of the grounds for departure mentioned in subsection (2);
(2)The Court be satisfied that the departure is just and equitable as regards the child, the carer and the child support or liable parent; and
(3)The order proposed is otherwise proper as regards the child, the carer, the payer and the community at large (and in that regard considerations with respect to the community extend beyond issues purely of protection of the public purse through to consideration of matters such as eligibility for Centrelink benefits and a consideration of the objects of the Act itself.
The obligation to pay child support is created by s.3 of the Child Support (Assessment) Act 1989. The objects of the Act, as set out in s.4, have some particular importance to all that the Court does in discharging its duties under the legislation. The particulars objects of the whole of the Act are as follows:
a) that the level of financial support to be provided by parents [emphasis added to note that it is a reference to both parents plural] 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;
b) that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of children;
c) that parents who provide ongoing daily care for children should be able to have the level of financial support to be provided by their 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.
In turning to s.117 and the first limb of the inquiry, as has been pointed out in submissions, principles arising from pre-child support assessment case law, cases such as Mee & Ferguson (1986) FLC 91-716, still have some application. Be there any doubt in this regard, one need only to look to long-established authorities, such as Lightfoot & Hampson (1996) FLC 92-663, and Wild & Ballard (1997) FLC 92-771.
Mee & Ferguson has set out clearly, and particularly so with respect to matters in relation to the payment of private school fees and the like, a general approach, and that is all it is, being:
a)where a non-custodial parent, as the legislation then was phrased, has agreed to a child attending a private school, that parent will likely remain liable to contribute to the fees involved so long as, and to the extent that he or she has a reasonable financial capacity to do so; and
b)the mere fact that a non-custodial parent can afford fees, or is a wealthy person, is not in itself a reason for imposing that liability. I hasten to add at this point that it is not suggested that either of these parents is, as indicated in the last portion of the above reasoning, a wealthy person.
Those two portions of the rationale of Mee & Ferguson still have application, as I have indicated, as accepted by the Full Court in a number of authorities since commencement of the Child Support (Assessment) Act 1989.
In considering s.117(2) and the various “special circumstances” grounds that can be relied upon it is clear that special circumstances can be established in at least eight different circumstances . As best as I can discern from the evidence, there would appear to be two grounds relied upon in this case, being subsections (b) and (c).
Subsection (b) provides a ground for departure by establishing that, in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is “…being cared for, educated or trained in the manner that was expected by his or her parents”.
Subsection (c) provides that in the special circumstances of the case, application in relation to the child of the administrative formula would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of “…the income, earning capacity, property and financial resources of a parent or of a child” and whether the earning parent or the caring parent. That would, by inference, appear to have some application to Ms Shaw’s case.
Evidence
With respect to education, there is no dispute factually between these parties that the children of their relationship have, to date, all attended expensive private schools. One of the particularly important and germane issues in this regard, however, harks back to s.4 and the objects, that “children share in changes in the standard of living of both of their parents”, whether or not they are living with both or either of them.
What is clear from the factual history agreed between these parties, and which neither party has sought to seriously challenge, is as follows:
a)The parties were married in 1984;
b)The parties separated on a final basis on 22 May 2008. There is evidence that there had been a number of previous, brief separations, one of about three weeks and possibly as many as two of a few days at a time.
c)The respondent and applicant are 68 and 51 years of age respectively;
d)Both parties are presently employed. Mr Shaw’s employment has varied during the relationship, whereas Ms Shaw has consistently worked for (omitted);
e)The parties had, at an earlier time, (and which time is in dispute but sometime in 2006), effected a brief separation. During that separation an email was sent by Mr Shaw to Ms Shaw. That email has been the subject of substantial evidence and cross-examination, and it appears as annexure C to Ms Shaw’s affidavit filed in these proceedings on 8 March 2010. In addition to that affidavit there is a further affidavit filed in Court this morning, which also annexes the email to which I refer.
The email dated 22 May 2006 purports to be from Mr Shaw to Ms Shaw and reads:
Just to show you I have no intention of shirking my responsibilities, I am putting in writing that, from my proceeds of the sale of the house, I will pay out the boys’ school fees. I should then have sufficient funds from the money I earn to pay X’s fees. I even discussed the possibility of paying her fees with Ms K, who said it was a good idea.
Mr Shaw was cross-examined with respect to that email and made concessions that, at or about the time of the email that he was neither in employment nor earning any income, whereas now there is no serious controversy on Mr Shaw’s evidence, that he is earning around $130,000 in total per annum.
Following that email the parties reconciled and continued to live together for some time, until their final separation in 2008.
What is also clear from the affidavit material, and the most recent affidavit filed by Ms Shaw is that the children and, in particular, the child X, who is really the subject of this application, is fully aware of, and I would go so far as to say, enmeshed in this dispute.
Annexure ‘A’ to Ms Shaw’s affidavit filed in Court today is an email from X to her father, reading in part:
Dad, Mum has just showed me the email you sent her about you not going to be paying my school fees. This is not fair. You have paid for all your children to go to private schools – W, Y, V, and Z – and now you’re saying you’re not going to pay for me. Dad, this is not fair.
It goes on to relate a number of other matters before indicating:
And you’re probably going to send back an email saying that you have no money. What a load of crap. You just got 200,000 from mum and you gave (omitted) 50,000. She isn’t even part of the family and you could be spending that on my school fees.
What is perhaps significant with respect to the contents of the email is that these children are fully aware, not only of the financial arrangements between their parents but the conclusion of financial issues between their parents by property settlement orders made in December 2009, it being remembered that this was about nine months ago.
During the course of cross-examination by Counsel for Mr Shaw a number of questions were put to Ms Shaw regarding both those property adjustment orders and the payment of school fees.
It was put to Ms Shaw that house payments and family costs for various of the children as well as their school fees have, in the past, been paid by Mr Shaw from funds that he received from the proceeds of sale of the home. Ms Shaw’s answer was:
That was his choice and his decision.
Specifically with respect to the email, a number of questions were put and answered as follows:
Question: You said he has your money?
Answer: That’s my view.
Question: He shouldn’t have received it?
Answer: Not once we had separated.
Question: After you had separated, he paid out – he continued to pay the lease on the home you were renting?
Answer: The lease was in his name.
Question: That was paid from May till September 2008?
Answer: That’s right.
Question: He paid school fees from May 2008 until December 2009?
Answer: Again, his promise.
Question: What did you contribute?
Answer: Nothing.
Question: Why?
Answer: I was never asked – sorry, he never asked me to. I was on part time income and that went towards household expenses.
Question: He says he drew on his money to pay the fees?
Answer: That’s right.
Question: You see, then, he was drawing on his capital?
Answer: Yes, no doubt.
Question: Is it reasonable that he did that?
Answer: It was his promise.
Some real context is given to that exchange having regard to the balance of matters that are not factually in dispute between the parties.
It would appear that the separation in 2006 was largely triggered by financial stresses and disputes relating thereto between these parents.
The evidence of Mr Shaw, which is not seriously disputed in these proceedings, is that the parties’ level of indebtedness had grown quite substantially over a period of some years leading up to 2006. During this period of time the parties increased their then indebtedness by several hundreds of thousands of dollars, if not millions. This occurred to meet what would appear to be, at least with respect to school fees and other aspects of lifestyle expenditure, a clear demonstration of people living beyond their means.
In February 2007, the parties affected a sale of their then home at Property W for a sale price of $3.8 million. After payment out of the mortgage, which by then, largely as a consequence of the redraws that had been made to fund lifestyle choices and school fees, the mortgage was $2.233 million.
The parties realised net proceeds of a little over one and a half million dollars. It is deposed by Mr Shaw (and not seriously challenged by Ms Shaw) that Ms Shaw received a sum of $903,793 and Mr Shaw the balance of around $600,000.
What is also not seriously challenged, and which would appear to be borne out by the material which I have read and considered in these proceedings, is that following the sale of that property and the receipt of funds by each of the parents, that:
a)The parties then commenced to reside in rental accommodation at (omitted), paying rental of about $1200 per week;
b)all of the children who were then under the age of 18 years continued to attend private schools with school fees in excess of $20,000 and at times $30,000 per year each; and
c)Following sale and the distribution of those funds and until the time that the parents separated and certainly by the time they reached property adjustment proceedings before the Federal Magistrates Court in Sydney (in December 2009), Mr Shaw’s funds had been substantially, if not completely, eroded. Again, there does not appear to be any serious challenge on the material before me that this was largely accounted for through meeting fees and expenses which, as is suggested in submissions, the parties cannot now afford and which, it would appear as far back as 2006, if not earlier, they could not afford.
What is put with respect to the various expenses and figures and financial positions of these parties is that in May 2008, which predates the property settlement orders entered into between the parties, Ms Shaw still retained savings of $928,000, which would tend to evidence that the funds she had received from the proceeds of sale of the home had not been eroded and had, in fact, increased.
By November 2009, Ms Shaw had savings of at least $790,000 which savings were largely, and in circumstances which are somewhat criticised by Counsel for Mr Shaw but which I need not make any findings about, applied towards the purchase of Ms Shaw’s present home, payment of stamp duty and other associated expenses.
There is no issue that that home was purchased for a figure in excess of $900,000, that a modest mortgage of about $230,000 on a private basis was obtained. It is conceded by Ms Shaw no payments have been made by her of principal or interest since the loan was obtained. Accordingly, there is equity of around $700,000 in that property.
Now, all of those issues would not appear of any great moment in the usual course of events, as one would rightly point to the fact that the parties have entered into property settlement orders and, accordingly, that ends any controversy as to what the parties have or what they do with what they have.
What is of particular significance, however, is that under the orders for property settlement, Mr Shaw received a cash payment from Ms Shaw of $50,000, together with a superannuation split of $150,000.
There is no issue and it is apparent from the terms of those orders that Mr Shaw, at his age, is entitled to access those funds at this time. What is also clear with respect to those orders is what is evidenced in Annexure ‘A’ to Ms Shaw’s affidavit filed in Court today and Ms Shaw’s answers to questions in cross-examination.
Ms Shaw states that she takes the view that the division of property between these parties occurred on the sale of the former home and she takes some offence and indignation to the resultant property proceedings commenced by Mr Shaw seeking orders for property adjustment, which resulted in the above orders.
That attitude is also borne out at paragraph 20 of the wife’s affidavit filed in Court today, which reads and which I feel succinctly summarises the gravamen of this case:
I ask that from the $154,370.07 awarded to the husband from my superannuation and the $51,643.84 I paid to the husband on 3 June 2010 that he continue paying X’s school fees at (omitted) until the end of year 12.
With respect to the administrative assessment of child support and payment of expenses by Mr Shaw generally I note that at the outset of the case I sought to be directed to a relevant child support assessment presently in force, it being remembered that the exercise of jurisdiction under ss.116 and 117 and under ss.123 and 124, is prefaced upon the existence of an assessment. One cannot make an order departing from an assessment, or an order for payment of child support in a fashion other than periodic payment, particularly when one has regard to s.125 of the Child Support (Assessment) Act 1989, which requires me to specify the relationship between any such order and an assessment, without an assessment already having been undertaken.
The assessment was then located and tendered into evidence and is Exhibit ‘F1’.
The assessment in place for the period 28 February 2010 to 2 September 2010 provides for payments of child support by Mr Shaw of $763.92 per month. It is to be remarked that an earlier assessment had required significantly lesser payments by Mr Shaw. The present assessment followed from what would appear to be the provision of more relevant, recent and updated information to the agency by Mr Shaw rather than a departure application.
On the basis of the tendered assessment I am satisfied as to jurisdiction and satisfied that the court is properly seized of the matter.
The child support assessment in force from 3 September 2010, which date is the 18th birthday of the child, Z, who lives in Mr Shaw’s care, will increase that payable by Mr Shaw to an amount of $1265.08 per month, or an amount of around $15,080 per annum. That is an amount of assessed contribution towards expenses for X that will already be required of Mr Shaw in less than one month’s time. That is an amount which, based on the evidence which I have before me, would appear to reflect most of fees which are incurred with respect to X’s school.
A schedule of fees with respect to X’s school attendance at (omitted) is attached to Ms Shaw’s material which suggests that her fees for the present year, in Year 8, are $22,296 per annum, plus additional fees of $2000 per year for dancing and $1100 for swimming. That would make a total of around $25,000 per annum, of which the contribution that Mr Shaw will make through child support, which will come into effect in a little over a fortnight, will be $15,000 of the $25,000 or 60%.
It is also important to note that there is no factual dispute between the parties that:
a)Administrative assessment of child support was first sought by Ms Shaw earlier this year. Previously there had been no administrative assessment;
b)Contemporaneous with application for administrative assessment Mr Shaw had clearly indicated, directly, through his lawyers or both, that he was no longer in a position to, or intending to meet X’s school fees; and
c)There is not any suggestion that Mr Shaw has not attended to payment of child support in accordance with assessments in force from time to time and since first issued.
Those matters have some particular significance when returning to s.117.
Pursuant to s.117 and the first of the grounds that have identified, (being that X is being cared for, educated or trained in a manner that both of his parents expected), I’m satisfied that quite clearly both of these parents intended and expected that X would attend (omitted). She commenced at that school in kindergarten and she is now in Year 8. She has been attending that school for the entirety of her school life.
A number of emotive matters were raised by Mr Shaw with respect to X’s school attendance and the impact that being moved from that school may have upon X. It was indicated by response by Mr Shaw:
It breaks my heart that it might be a reality that she needs to leave that school, but I can’t afford it.
It was also put to me in submissions that X “has every right to expect her father to make every effort to pay her school fees” and that Mr Shaw has demonstrated his capacity to commit to and meet school fees based on the fact that he has previously made that commitment in the email to which I have referred in May 2006.
I accept the commitment was made and expressed. At the time that Mr Shaw made that commitment he was in a lesser financial position. But I must look at what has occurred since then and I must look at the present.
Since that commitment was made in 2006 and until the end of 2009 or beginning of this year, it is not suggested that Mr Shaw has done anything other than be true to his word and meet X’s school fees.
Mr Shaw was cross-examined as to whether he was “an honourable man”. He indicated that he feels he is. Certainly the commitment that he has made to honouring the promise made in May 2006 is extraordinary. However, those fees have largely been funded from capital rather than income. As a consequence of that, and as I have indicated, since the sale of these parties’ last jointly owned home in February 2007, Mr Shaw’s financial position has gone from having $600,000 to now having about $300,000. It must also be remembered that the present amount includes $200,000 that he received by way of property settlement only this year. Thus Mr Shaw has, in a little less than 5 years, expended $500,000 meeting fees as particularised above.
The contribution made by Mr Shaw during this period has been (and there is no dispute that it is so):
a)Paying fees for all of the children (including X) for all of their secondary school attendance [emphasis added];
b)Until recently, assisting the eldest child in meeting rental and other expenses while attending university in (omitted);
c)Assuming the fulltime care of Z and meeting his school fees at (omitted).
The net effect of the above commitments has been to place Mr Shaw into a position that is invidious and deleterious.
Without intending any disrespect to him at all, (and being fully aware of the ageist manner in which many industries within our society are suggested to operate, particularly those which have a public face, such as the media), Mr Shaw is 68 years old. His working life, again with all due respect to him, must be limited, and what he has to fall back upon in retirement is incredibly modest, particularly when one has regard firstly to where he was financially four years ago and the vastly superior income that he was earning 5 years ago.
During the marriage Mr Shaw was employed by (omitted) as their (omitted) and, to a large extent, the public face of (omitted). There is no suggestion that he has, since leaving (omitted), earned income of the nature he had enjoyed in that employment. It is not suggested, in any serious fashion, that Mr Shaw is capable of returning to that level of income. He is earning an income, at present, which is slightly above average weekly earnings but is not in any way extraordinary or extreme.
The other significant aspect of the case, by reference to s.117, is the requirement to have regard to the income, property, financial resources of either parent as is available and which makes the administrative assessment unjust and inequitable. I cannot be satisfied that this is so.
The object of the legislation is for parents, through their income and earning capacity and in extraordinary circumstances their resources other than income, to meet their children’s needs. But it is to be remembered that the legislation has an expectation that both parents [emphasis added] will contribute to needs.
Education is a fundamental human right. It is enshrined in the Declaration of Human Rights 1948. It is as being a fundamental right of members of a civilised, democratic society. But there is no expectation that an education of any particular type will occur.
It is certainly put in Ms Shaw’s case that the elder children have had the “benefit” of a particular type or style of education and it is, thus, asserted that it would be discriminatory for X to not have that “benefit”. There is some force to that proposition and, no doubt, that is exactly as Ms Shaw, and probably through her X, will perceive it.
However, the objects of the legislation point to children sharing in changes of the standard of living of both of their parents and it is both of their parents that I must consider.
It is put to me, in paragraph 20 of Ms Shaw’s affidavit to which I have referred, that Mr Shaw can afford, from that which he has received by property adjustment, to provide a lump sum or to draw upon that on a periodic basis to meet ongoing school fees for X until she completes year 12.
On a rough calculation of those fees, as advanced in Ms Shaw’s case, that would be a sum in excess of $131,000. That is, effectively wiping out the majority of Mr Shaw’s present savings and taking care of the majority of funds he received by way of property adjustment.
That, no doubt, was not the intention of the judicial officer who made the orders nor, I am sure, the intention of the parties or at least Mr Shaw in entering into them.
It was asked of Mr Shaw whether he considers that he has a moral obligation to pay school fees for X. Mr Shaw did not accept this as so.
Whether there is a moral obligation or not, need not concern me for this is a court of law and accordingly, I apply the law as contained in the Child Support (Assessment) Act 1989.
Whilst I am satisfied that the parties, at the time of enrolment, both intended that X would attend (omitted) or a school of similar nature, I am also satisfied, and I find, that certainly since the sale of the party’s home in 2007 and for the last three years, Mr Shaw has made the sole contribution to meeting those fees and at the same time has made the sole contribution to meeting school fees for the elder children.
There may have been expenses met by Ms Shaw (and I am satisfied that there would have been), as well as a commitment by Ms Shaw to facilitating that education embodied in taking X to and from events, in purchasing items and in attending to other matters.
I am not intending to suggest that Mr Shaw has been saint like or that he has made the sole financial contribution to these children’s education. But it is conceded by Ms Shaw that all fees have been paid by Mr Shaw for all children. There is no controversy that since separation all fees were paid by Mr Shaw. In all probability they were paid for from Mr Shaw’s capital, not income, as for a substantial portion while these fees were paid Mr Shaw was unemployed or in fairly poorly paid employment.
Specifically it was put to Ms Shaw that fees of about $58,000 for three children were met in 2007. It was conceded that this was probably correct.
Fees of $32,771 were suggested to have been paid by Mr Shaw in 2008 and, again, it was conceded by Ms Shaw that this was probably correct but with the caveat, “I don’t know what it costs, he paid all of that.”
When it was put to Ms Shaw that money to meet those fees, in all probability, came from the funds Mr Shaw received from the proceeds of sale of the house, it was conceded that it came from his money from the house but “it was his promise”.
I had indicated to Ms Shaw, during the course of the matter that this court is not a court which is bound in application of the Child Support (Assessment) Act 1989 by promissory estoppel and cannot so act and I do not.
Whilst I am satisfied that the parents both intended, at the time of her enrolment, that X would be educated in this fashion, I am also satisfied, having regard to authorities such as Mee & Ferguson, Gylesman & Gylesman and DJM & JLM (1998) FLC 92-816 that there is no real possibility of that expectation being maintained on any sustainable basis without entirely or substantially eroding the resources of one or both parents and to the extent that it is desired that this level of education continue, that it is open to Ms Shaw to fund it (or contribute to it), should she so wish.
It is also open to Mr Shaw to contribute to the ongoing cost should he so wish and should he fee he has the ability to do so at some point in time in the future. I fear from what I have read, particularly the email, Annexure ‘A’, addressed by X to her father, that there will be some real angst with her father if he is perceived to not be meeting all or most of the cost. However, that is damage which I feel and sense, from that Annexure, is already done.
Thus and for the reasons above the claim pursuant to the expectation of education will fail.
The second ground is based on the allegation that Mr Shaw has income, earning capacity, property or financial resources available to assist in contributing to these costs.
Bearing in mind that there is an administrative assessment in force and the application I am asked to deal with is a departure from that assessment I am, in effect, asked to increase Mr Shaw’s child support obligations from about $15,000 per annum and to then also impose upon him the total cost of X’s school fees which would make it a child support liability of about $47,000 per annum.
Although it is conceded by Ms Shaw that she would be content with an order purely for the school fees rather than any other amount (and accordingly that would be about $25,000 a year), I am satisfied that it is simply not sustainable, by recourse to income or any earning capacity, for Mr Shaw to meet that amount. It would be funded entirely from capital and substantially capital that was received by way of property settlement only some nine months ago.
I am not satisfied that this ground is made out nor that it could possibly be just and equitable.
Even if those grounds were established, and I am not satisfied that they are, I am then required to turn my mind to subsections (4) and (5) that deal with whether it is just and equitable as regards the carer, the child and the payer and, by subparagraph (5), whether a departure order is otherwise proper.
In dealing with whether it is just and equitable, I am directed by subsection (4) to the following:
(a) The nature of the duty of a parent to maintain a child.
(b) The proper needs of the child.
(c) The income earning capacity, property and financial resources of the child [of which there is none];
(d) The income, property and financial resources of each parent who is a party to the proceedings.
(da) The earning capacity of each parent who is a party to the proceedings.
(e) The commitments of each party necessary to enable them to support themselves or any other child.
I am not satisfied that it is just and equitable to make the departure as sought nor to order any departure at all.
Mr Shaw is presently supporting X’s elder sibling Z. Although that legal obligation will shortly end with Z turning 18 Mr Shaw will still be supporting that child.
Mr Shaw has paid, since separation, and is still paying, school fees for Z. Mr Shaw has, until recently, been paying allowances and other amounts for the eldest child and for some years past has paid school fees and other expenses for all three children.
I am satisfied that Mr Shaw does not have the income or earning capacity to fund a greater level of child support.
I am also satisfied that in two weeks’ time the Child Support Assessment will require payment from Mr Shaw, as I have observed, of a little over $15,000 per year which represents the majority of the school fees that would be incurred for X. That is not to suggest that her only expenses are school fees. She must be housed, clothed, fed, entertained and, no doubt, as a child who is used to a comfortable middle class existence, they would be matters that have some expense. But the legislation requires that both parents contribute.
It is not up to Mr Shaw to meet all of the costs and he is not in any better and I would, in fact find he is in an inferior financial position, to meet those needs or to meet them solely. He will be contributing in accordance with the Child Support Assessment and I am not satisfied that it is just and equitable to depart therefrom.
Lest I am wrong in that regard, I must also be satisfied that it is otherwise proper to depart from the assessment. Subsection (5) directs me to consider the nature and duty of a parent to maintain a child and the effect that making an order would have on any entitlement of the child or a carer to a pension, the rate of that pension [I have no evidence that this is relevant], the child’s proper needs and other matters.
It is also relevant in this regard that the power under s.117 is a broad discretion that is not limited entirely by the legislation but also by the fact that there would appear to be a substantial if not total breakdown in X’s relationship with her father. I can glean as much from Ms Shaw’s material.
Contemporaneous with the school issues being raised and payments ceasing, X has not seen her father. She has only seen her father twice since June 2009. She barely communicates with her father. There are text messages that pass from time to time but there are not very often responses received and, of course, I have Annexure ‘A’, X’s email, which does not do credit to Ms Shaw. This child has clearly been involved in the intricate financial workings of the separation of these parties and their separation and that is always regrettable.
In any event, I am not satisfied that it would be otherwise proper to make the order sought and on that basis the application pursuant to s.117 must, in my view, fail on all three grounds.
In dealing with the application for payment other than his period payments, I am satisfied, similarly, that that application must fail. In that regard to turn to authorities such as the decision of then Federal Magistrate Ryan in C & G [2002] FMCAfam 361 and to Coleman J’s decision in Hardman& Hardman [2003] FamCA 1057 (and the erudite elucidation and summary of relevant principles by each) and to like authorities some of which are quoted in submissions in Mr Shaw’s case.
In particular, in Mr Shaw’s case, attention is drawn to Carlson & Acuff & Anor [2010] FMCAfam 677 and to Prpic & Prpic (1995) FLC 92-574. Both of those cases warn against the use of capital as a means of meeting a child support liability. I specifically refer to a passage from Parrish & Torrey [2009] FMCAfam 274:
A person’s residence, at least to the extent that it commensurate with their economic resources, would not ordinarily expected to be sold or rented as it is where the party lives. Similarly, the Social Security Legislation does not require applicants for pensions to first sell their homes and exhaust their proceeds before providing relief. Thus a person’s home would not usually be considered as asset yielding less than an ordinary rate of return.
In Prpic the Full Court had this to say:
Capitalisation orders may well be appropriate where there are financial difficulties in enforcement or where it is appropriate to severe the financial link with the parties. However, as a general rule given the payments of child support depend upon circumstances prevailing from time-to-time but circumstances cannot be predicted with any significant degree of certainty. It seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised when there are circumstances that make it appropriate to do so.
In this case I am not satisfied it is appropriate order capitalisation. There is no dispute that there has been, at any time, a failure by Mr Shaw to provide financial support. Indeed, I am satisfied and I so find that sums of some hundreds of thousands of dollars were expended by Mr Shaw from funds received from the proceeds of sale of the matrimonial home in 2007 and to date in meeting exactly such fees and expenses for all three children.
X is the last child for whom those expenses will occur. It might be put, in Mr Shaw’s case, that perhaps it is Ms Shaw’s turn to pay. Nothing much would turn upon that other than to observe that as regards the capital position of each of the parties, Ms Shaw is clearly ahead.
It is clear that Mr Shaw has not only met financial obligations, (indeed, until the property settlement orders between these parties, he has met well in excess of anything that would have been assessed of him), he has also made all payments as and when required with respect to child support assessment once issued.
In those circumstances it is difficult to understand how it could be suggested that it is necessary to secure future payment and, indeed, I take some comfort in that finding and the concession made at the outset by Ms Shaw, that what she really seeks is the departure, whether the payments are then made periodically or as a lump sum is a matter of lesser consideration.
I also take some comfort in that regard from the comments of Mushin J in Bendeich (1993) FLC 92-355 wherein his Honour said:
The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater a chance of a change in circumstances necessitating a variation thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, the custodial parent or the children. Incomes may increase or decrease. Children may change their living arrangements.
Indeed, one of these children has changed their living arrangements.
I do not know what the future holds for X but from what I have seen it is highly unlikely that her relationship with her father will be repaired or encouraged or supported to be repaired any time soon.
It is certainly put in Ms Shaw’s case that Mr Shaw’s position has bettered since his initial promise in 2006.
That may be so as regards employment and income and one could take from it that he has demonstrated a degree of honour in meeting that promise for four years notwithstanding his then poor financial position and the capital reduction eventuating.
The most significant change in circumstances happened many years ago. These parties have lived beyond their means for a very long time and it is regrettable that X may now be perceived to bear the brunt. That is not so. In any event it is not the role of the Court to ignore reality and to order parties to live beyond their means until impoverished (and, in this case, if orders were made as sought, such burden being exclusively imposed on one parent with no consideration of mutuality of responsibility).
I hasten to remind both parents that, in fact, the financial contribution that will be made by Mr Shaw on an annual basis is in excess of $15,000. This represents $15,000 of the $22-25,000 of fees for X.
If continuing X in such private school education is a matter of such high priority and importance for Ms Shaw then she should contribute to it from her resources. I am satisfied Mr Shaw has no greater capacity to do so that he is presently.
Accordingly, I am satisfied that the application under ss.123 to 125 and incorporating s.141 for payment of a lump sum of child support must also fail.
I should, for the sake of completeness and lest there be any dispute, also make a formal order discharging all prior orders in these proceedings. Those orders provide restraints pending further order and I do not want anyone to be under any misapprehension that this judgement does not extinguish those orders. I so order.
An application for costs is also made consequent upon the orders that have just been made.
The response filed by Mr Shaw at an early stage in these proceedings, having been filed on 14 April 2010, the first return date of the proceedings, seeks an order that the wife pay the husband’s costs on an indemnity basis.
Certainly on 14 April, costs in the sum of $4,500 were reserved by Dunkley FM being expressed as costs calculated on an indemnity basis.
Case law with respect to indemnity costs, arising from authorities such as Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225, require that it be demonstrated that a cause of action is so fundamentally hopeless or incapable of being successfully prosecuted that it would be proper for an order to be made to restore the successful party to the position they would have been in but for the fact of having to deal with the proceedings at all.
In relation to costs generally I am satisfied that the costs provisions of s.117 of the Family Law Act 1975 apply (by reference to s.100 of the Child Support (Assessment) Act 1989).
The Federal Magistrates Court Rules 2001 contain an indicative scale of costs in Schedule 1 of those Rules.
Under that indicative scale of fees there would be an entitlement to costs as follows:
a)Stage 1(a) being a lump sum for “opposing an application that includes interim and final relief” $2,200;
b)Appearance at interim hearing $2200 (which is daily fee plus advocacy loading which I consider appropriate and certify as such);
c)Stage 5 preparation for hearing of $3,750 (for a one day hearing);
d)Daily hearing fee $2,200.
I am not satisfied that indemnity costs would be appropriate and particularly noting that Dunkley FM, in his reasons for judgment at the time that injunctive relief was granted on 14 April, expressed the view that he was not satisfied that the cause was “hopeless”. I concur with that view.
I do not have any further detail of the evidence or submissions put to Dunkley FM but I do not seek to go behind a finding made by another Federal Magistrate and, in any event, concur with that view.
In turning to s.117, subsection (2A), I am required to have regard to the following:
Financial circumstances of each of the parties
I have addressed in my reasons with respect to the determination of the substantive proceedings the evidence as it stands with respect to the financial circumstances of each party.
Both parties are in employment. Each party has funds available to them whether equity in a property, savings or a combination of the two.
Whether any party is in receipt of legal aid
I am advised no one is.
Conduct of parties in relation to the proceedings.
No submissions are put with respect to this factor and it would not appear relevant.
Whether the proceedings are necessitated by failure to comply with a previous order
This is not relevant.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
It is put in Mr Shaw’s case that Ms Shaw has been wholly unsuccessful and I accept that it cannot be viewed otherwise.
Offers
With respect to offers, no submissions are put as being relevant.
Such other matters as the court considers relevant.
I note that the gravamen of the application is, as set out in paragraph 20 of Ms Shaw’s most recent affidavit, seeking to secure ongoing sole contribution by Mr Shaw to school fees for the one child who remains under the age of 18 years and until she completes year 12.
The application, it must be remembered, would have had the effect of imposing the entirety of that obligation upon Mr Shaw and in circumstances where his financial position is far from optimistic as regards his age, present employment and future employment prospects. Such application was never just and equitable nor reasonable in the circumstances.
I am also satisfied, by reference to the matters set out above that the commencement of the proceedings was motivated, at least in part, by a sense of entitlement and an enduring sense of having been wronged which, whether misplaced or not, was an ill-advised and inappropriate basis for proceedings.
In the above circumstances I am satisfied that an order for costs should be made.
The general process of litigation is that a litigant should not be deprived of the fruits of their litigation and the costs as put to me and as sought are refreshingly modest.
If one were to apply the indicative scale of costs under this court’s rules that would suggest an entitlement to costs of $10,350 representing the lump sums for preparation for the initial stage and final hearing as well as appearance on two days of hearing when applications have been moved before the court together with advocacy loading which I consider is appropriate in the circumstances.
I certify that the preceding one hundred and forty-five (145) paragraphs are a true copy of the reasons for judgment of Harman FM
Date: 2 September 2013
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