Syme and Wroe
[2008] FMCAfam 536
•3 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SYME & WROE | [2008] FMCAfam 536 |
| FAMILY LAW – CHILD SUPPORT – Property – whether various add backs including legal fees should be included in the net pool – departure from child support assessment – application for non-periodic child support – school fees. |
| Child Support (Assessment) Act 1989 Family Law Act 1975 |
| Aleksovski & Aleksovski (1996) FLC 92-705 Brew & Brew (2003) FLC 93-140 Carter (1981) FLC 91-061 C & C [1998] FamCA 143 NCH & RCH (2004) FLC 93-204 C& C (2000) FLC 93-220 DJM and JLM (1998) FLC 92-816 F & S [2003] FMCAfam 531 Gollings & Scott (2007) 37 Fam LR 428 Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 In the Marriage of Clauson (1995) FLC 92-595 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Lee Steere (1985) FLC 91-626 In the Marriage of Gyselman (1992) FLC 92-279 Jones & Dunkel (1959) 101 CLR 298 K v K, unreported 2005, 30 August 2005 Mee v Ferguson (1986) FMC 91-716 Norbis and Norbis (1986) 161 CLR 513 AJO & GRO (2005) FLC 93-218 Parshen & Parshen (1996) FLC 92-720 Pierce & Pierce (1999) FLC 92-844 Sippel & Sippel [2004] FamCA 201 Townsend & Townsend (1995) FLC 92-569 Williams v Williams (1985) 10 Fam LR 355 Williams & Williams [2007] FamCA 313 |
| Applicant: | MR SYME |
| Respondent: | MS WROE |
| File number: | SYC 3519 of 2007 |
| Judgment of: | Sexton FM |
| Hearing dates: | 29 and 30 January 2008 |
| Date of last submission: | 30 January 2008 |
| Delivered at: | Sydney |
| Delivered on: | 3 June 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr John Lloyd |
| Solicitors for the Applicant: | Stuart Fowler and Partners |
| Counsel for the Respondent: | Mr Peter Batey |
| Solicitors for the Respondent: | Maclarens Solicitors |
THE COURT ORDERS THAT:
Within 14 days, the wife sign documents and take all necessary steps to transfer to the husband all Telstra shares in which she holds an interest.
Within 14 days, the parties do all things necessary to authorise the payment of funds held in trust on their behalf by Maclarens Solicitors, being the net proceeds of sale of the former matrimonial home and of the parties’ investment properties, as follows:
(a)In payment of $104,344.40 to the husband;
(b)In payment of $803,497.60 to the wife;
(c)In payment of any balance to the wife and the husband such that the wife receives 62% and the husband 38% of the total net pool, having regard to the assets each will receive set out in paragraphs 84 and 85 of the Reasons for Judgement.
Except as otherwise provided in these orders, the husband and the wife retain all other items of property currently in the possession or control of each of them respectively, including but not limited to their superannuation entitlements.
Except as otherwise provided in these orders, the husband and the wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto.
In the event the husband or the wife refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Sydney Registry be appointed pursuant to section 106A of the Act to execute, in the name of the husband or the wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
The husband’s application for departure from the current child support assessment be dismissed.
Until each child completes his secondary education, or attains the age of 18 years, whichever is the later, the husband be responsible for the children’s private health cover.
Pursuant to s.124 of the Child Support (Assessment) Act 1989 the husband pay to the wife 75% of the following expenses of the children relating to their attendance at [X] from 1 January 2008 until each child completes his schooling:
(a)Tuition fees;
(b)Local excursion fees;
(c)Uniform costs including sports uniforms, school shoes and sports shoes;
(d)Other compulsory expenses relating to the children’s attendance at the school;
(e)Extra curricular fees including costs of equipment required for those extra curricular activities, provided that the parties have agreed in writing to the child enrolling in such extra curricular activity.
The payments referred to in Order (8) not to be credited against any administrative assessment for child support for which the husband is responsible to make payment.
The payments referred to in Order (8) not be used by either party as a basis for departure from any Child Support Agency assessment including as a non-agency payment.
The husband pay child support in accordance with the Child Support Agency’s assessment from 1 January 2008, such assessment to be re-calculated from 1 January 2008 to exclude any component for school fees or school related expenses.
Order (8) and (11) be implemented as follows:
(a)The wife forthwith provide the husband with written confirmation of the account name, BSB and account number into which she requires the funds due to her to be paid;
(b)The wife forthwith provide the husband with copies of invoices, receipts relating to expenses listed in Order (8) from 1 January 2008 and the husband to pay the wife the amount owed to the wife to give effect to Order (8) within a further 14 days;
(c)The wife otherwise forward a copy of invoices or receipts (if already paid) within 7 days of her receipt of such invoices or receipts relating to expenses listed in Order (8);
(d)The husband transfer/deposit the amount due to the wife’s account within 14 days of receipt of invoices or receipts;
(e)The husband forthwith serve a sealed copy of these Orders on the Registrar of the Child Support Agency with a request that his periodic child support liability be re-calculated from 1 January 2008 in accordance with these Orders as soon as practicable.
All existing applications be otherwise dismissed save as to any application for costs by either party.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
IT IS NOTED that publication of this judgment under the pseudonym Syme & Wroe is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 3519 of 2007
| MR SYME |
Applicant
And
| MS WROE |
Respondent
REASONS FOR JUDGMENT
Introduction
This case concerns property adjustment and child support. The parties separated in January 2005 after living together for 10 years. They have two sons, [A] who is 8 years and [B], 7 years. At separation, the wife moved with the children from the matrimonial home in Property W to her parents’ home.
The parties resolved parenting arrangements in April 2007 when consent orders were made providing for the children to spend 5 out of 14 nights a fortnight with the father during school terms as well as half school holidays and other special days. The boys have attended [X], a co-educational private grammar school since they were in pre-school.
The parties have not been able to resolve property or child support issues including which party should pay the children’s tuition fees and school related expenses.
The husband is 39 and the wife 41. They started living together when they married in 1995, and separated 3 years ago. The husband works full time for [C]. He lives with his partner of 18 months, Ms O at her home at [K], with Ms O’s two children aged 9 and 5. The wife is a solicitor with a current practising certificate and works full time.
She lives in rented accommodation in [M]. The wife has a boyfriend but says they have no plans to live together.
I find it convenient to deal with the property aspect of the matter first, although the issues of property settlement and child support are interrelated.
Legal principles in relation to property adjustment
The approach to the determination of an application under section 79 of the Family Law Act 1975 is well established by authority[1] and involves consideration of these questions:
[1] In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143
a)What were the assets, liabilities and financial resources of the parties and their values at the time of hearing?
b)What were the financial and non-financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of the property of the parties?
c)What was the contribution made by each party to the welfare of the family including contributions made in the capacity of homemaker or parent?
d)What is the effect, if any, of any proposed order upon the earning capacity of each party?
e)What matters referred to in sub-section 75(2) of the Act are relevant and what adjustment, if any, should be made as a result of these factors?
f)Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
g)After consideration of these matters, is it just and equitable to make the actual orders?
What were the assets, liabilities and financial resources of the parties at the time of hearing and their values?
The parties are in dispute about the assets and liabilities available for distribution between them. I summarise the issues for determination:
a)Should each party’s credit card debts existing at the date of hearing be included in the net pool?
b)Should the funds owed by the husband in relation to the commercial hire purchase agreement for his Saab motor vehicle be included in the net pool?
c)Should the value of the wife’s shares sold by the wife after separation be added back?
d)Should the husband’s paid legal fees be added back?
e)Should the funds withdrawn by the husband from the home loan account in July 2005 be added back?
f)Should the mortgage instalments unpaid from July 2005 until the date of discharge of the mortgage in November 2006, while the husband was living in the home, be added back on the husband’s side?
g)Should the value of the husband’s shares sold by the husband after separation be added back?
(a) Credit card debts at date of hearing. The husband’s counsel submits each party’s credit card debts at the date of hearing should be included in the net pool. The wife’s counsel submits the court should exclude these debts from the net pool, given they accrued after the date of the parties’ separation. It is common ground that each party’s credit card/store card debts accrued after separation. There is a well established principle that the court should identify the net asset pool of the parties at the date of hearing, not at the date of separation. [2] Asset values, including bank account proceeds, are identified at the date of hearing, not at the date of separation. I find that the value of each party’s debts should also be identified at the date of hearing and, as with bank account proceeds, included in the net pool available for distribution.
[2] See Carter (1981) FLC 91-061
The husband says he owes $3,000 on American Express and $1,600 on his St George Visa account, disregarding the amounts on credit card the husband says he borrowed to pay legal fees incurred in relation to these proceedings, which I deal with below. The wife says she owes $750 on St George Visa, $500 to David Jones and $2,000 on American Express. I accept the husband’s counsel’s submission that these debts should be included in the net asset pool available for division.
(b) Saab motor vehicle. The parties agree the Saab has a present value of $29,500 and that the husband purchased the car under a hire purchase agreement. The husband adduced no documentary evidence as to the amount he owes to the hire purchase company. In his Financial Statement sworn in November 2006 [3] the husband deposed to owing Esanda Saab the sum of $50,000. On 11 January 2008 the husband deposed to the debt being $39,000. At hearing on 29 January 2008, the husband claimed to owe $33,000. The husband also says he can claim 50% of the Saab expenses as a taxation deduction. On the basis of this evidence, I am unable to make a finding either as to the amount the husband owes to Esanda Saab, or as to the amount the husband will be required to repay Esanda from after tax earnings. I will therefore attribute a value of nil equity to the husband’s motor vehicle for the purpose of identifying the net asset pool.
[3] Exhibit 8
(c) Shares sold by the wife after separation. In her Financial Statement sworn in January 2008, the wife deposed to selling shares in St George and Macquarie Bank in the previous 12 months, with a value of $25,328. The wife says she used the funds to meet necessary expenses for herself and the children. Although the husband’s counsel initially submitted this amount should be notionally added back to the net pool, counsel did not press the submission once the wife gave evidence as to how the funds were applied. I agree with counsel’s position. I do not find a basis to justify adding back the $25,328 the wife received on sale of shares after separation.
In relation to (d), (e) and (f), the wife’s counsel submits the court should exercise its discretion to include notional assets on the husband’s side of the ledger. The Full Court in AJO & GRO [4] referred to 3 categories of cases where it is appropriate to notionally add back to the pool of assets. They are:
[4] (2005) FLC 93-218 at paragraph 30
a)Where the parties have expended money on legal fees [DJM and JLM (1998) FLC 92-816];
b)Where there has been a premature distribution of matrimonial assets [Townsend and Townsend (1995) FLC 92-569]; and
c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092.
(d) Husband’s paid legal fees. At the date of hearing, the husband had paid $57,139 towards legal fees, approximately $26,600 of which was owed on his Visa credit card. The husband says he paid the majority of the $57,139 by credit card and repayments on his credit card have been paid from his income. The husband’s counsel argues that it would be inappropriate to add back the fees in these circumstances. The wife’s counsel contends the paid legal fees should be added back. Otherwise there is prejudice to the wife who has not yet paid any of her legal fees.
The Full Court in the 1998 decision of DJM & JLM[5] held that the normal approach ought to be to add legal fees already paid back to the pool. The Full Court held that failing to add back amounts spent by parties on legal costs has the effect of defeating the policy under s.117 of the Act which provides for each party to pay his or her own legal costs.
[5] (1998) FLC 92-816
The Full Court in the 2004 decision of NCH & RCH[6] confirmed that the Court has a discretion as to whether or not to include paid legal fees in the pool, but that the court must have regard to the source of the funds for the payment of the fees.[7] The Full Court said that if the funds used were in existence at separation, then they should be added back and any debt incurred to pay the fees should be brought to account.
If however, the funds used to pay legal fees were accumulated after separation, the fees would ordinarily not be added back and any liability incurred to meet those fees would not be taken into account. The Full Court in Gollings & Scott [8] approved this approach.
[6] (2004) FLC 93-204
[7] At page 79,322
[8] (2007) 37 Fam LR 428
As already noted, the court must identify the assets and liabilities as at the date of hearing, not at the date of separation, as the first step in any property case. The parties in this case identified and agreed on many of the assets and liabilities held by each of them at the date of hearing. One of the assets agreed was each party’s savings. Had the husband not paid his legal fees by the date of hearing, one would expect him to have had greater savings, and the wife to have had a share in those savings. Had the wife paid her legal fees as at the date of hearing, one would have expected her to have less savings or greater liabilities which would result in a smaller pool. [9]
[9] See also O’Ryan J in K v K, unreported 2005, 30 August 2005
I agree with the wife’s counsel that it is difficult to make a finding in this case as to the precise source of funds used by the husband to meet legal fees. Even though the husband says he used his credit card to pay the majority of the fees, and paid his credit card debts from his income, it is not clear whether the whole of the funds to meet those debts was accumulated after separation. The husband says he withdrew joint funds of $18,600 from the parties’ loan account after separation and that he withdrew $20,000 from the joint loan account just prior to separation. It is possible the husband used some of these funds to meet his legal fees.
I am satisfied that the husband has been able to pay legal fees, at least in part, because he has earned a high income to which the wife has indirectly contributed. I make no finding as to the precise source of funds used by the husband to meet the legal fees. The wife has not yet paid her legal fees and I am not asked to include her liability for legal fees in the net pool. I find it likely the wife will be required to pay her legal fees from her property entitlement. I am satisfied that to avoid prejudice to the wife, the husband’s paid legal fees should be notionally added back, along with the debt on his credit card of $26,600 incurred to pay those fees. The amount of $57,139 (the paid legal fees) less $26,600 (the debt incurred to meet the fees) which equals $30,539, will be included in the pool.
(e) The ANZ mortgage loan account.
Shortly after separation, on
28 January 2005, the husband withdrew $18,600 from the parties’ loan account which the husband deposited to his own account. The wife’s counsel submits this sum should be notionally added back because it was taken from joint funds.
The parties agree they drew on the loan account from time to time during the marriage and after separation to meet particular expenses.
In December 2004 the husband says he withdrew $20,000 to pay towards credit cards, to meet costs over the Christmas holidays and to pay off debts incurred while the parties were on holidays in October 2004. In September 2005, the parties agree they withdrew funds to pay out the lease on the wife’s motor vehicle. With the $18,600 the husband withdrew at the end of January 2005, the husband says he paid credit card debts and retained the balance of approximately $10,000 in his bank account for a number of months. The husband says this was a similar sum to the $9,800 in joint funds the wife held in an account at separation, which she retained. In cross-examination, the husband conceded his employer reimbursed him for some of the credit card expenses he paid from the funds he withdrew. He does not say he accounted to the wife for those reimbursements.
The husband does not adduce evidence as to how the $10,000 or any part of that sum has since been applied, though it is common ground that the husband continued to meet joint expenses of the parties for a number of months following separation. The wife does not say the husband wasted the funds, but rather that she does not know how the funds were used.
The wife’s counsel relies on Townsend’s case [10] to submit that the $18,600 should be added back. Counsel submits that this withdrawal amounted to a premature distribution of an asset in which the wife “had a legitimate interest”. [11] I do not accept this submission, because I am not satisfied the whole of those funds were retained for the husband’s sole use. The wife did not take issue with the husband’s evidence that at least some of the $18,600 was applied to the joint debts of the parties nor that he continued to meet joint expenses of the family for many months after the funds were withdrawn. I am not persuaded that the $18,600 should be added back. I give further consideration to this factor when dealing with post-separation contributions.
[10] Townsend & Townsend (1995) FLC 92-569
[11] Nicholson CJ at 81,654
(f) Unpaid mortgage instalments from August 2005 November 2006. The wife asks for 15 repayments on the ANZ loan account of $3,600 a month, between August 2005 and November 2006, to be added back to the pool. The wife claims that 15 x $3,600 is the amount of equity lost in the home prior to its sale, as a result of the husband’s failure to make the mortgage repayments.
The husband says he was responsible for the mortgage repayments during the marriage and as a result of applying his earnings, including bonus payments to the loan account during the marriage, the facility was $100,000 in advance at the time of separation. He says he stopped making mortgage repayments in July 2005, and made no further repayments before that property was sold, because he was unable to meet all his financial commitments. The husband’s counsel argues that the husband had no greater obligation than the wife to meet the mortgage repayments and in any event, it would be grossly inaccurate to conclude that 15 repayments of $3,600, had they been paid, would have resulted in an increased equity in the home of $54,000, as submitted by the wife’s counsel. I agree with the husband’s counsel that to multiply 15 by the monthly instalments of $3,600 and conclude that the equity in the home would have been increased by that figure had the instalments been paid, is erroneous. It ignores the interest payable at any time on the outstanding balance. While I accept that the husband’s decision not to make the mortgage repayments after July 2005 must have resulted in less equity in the home at the time of sale, without further evidence I am unable to make a finding as to the difference in that equity had the repayments been made. I do not include a notional add-back of unpaid mortgage instalments. I give further consideration to this issue when dealing with post-separation contributions.
(g) Proceeds of sale of husband’s [C] shares. The husband says in June 2007 he received Notices of Amended Taxation Assessments for the financial years 2003, 2004 and 2005 which included benefits he received under the [C] employee share purchase plan. As a result, the husband says he owed the Taxation Office $39,023.70. The wife did not agree to the husband’s request to pay the tax from the trust funds held for the parties as a result of sales of their properties, so the husband sold shares, as suggested by the wife. On 2 August 2007, the husband says he borrowed an amount of $40,006.81 from his father to discharge the taxation debt. On 29 August 2007, the husband sold 1,350 [C] shares for $48,914.80. He repaid his father. It is not in dispute that the husband will be required to pay capital gains tax on the share sale of $3,704. The husband says he used the net sale proceeds, which on my calculation is the sum of $5,203.99 to meet day to day living expenses. The wife’s counsel submits this sum should be added back to the pool on the basis that the husband prematurely distributed an asset to himself, in which the wife had an interest. I am not satisfied the evidence on this issue is sufficient to justify an add-back. Each party sold shares after separation to meet expenses. Neither party contends the use made of the funds by either party was unreasonable. The Full Court held in C & C [12] that:
…it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.
[12] [1998] FamCA 143 at paragraph 46
Superannuation. The parties agree as to the value of the superannuation entitlements to which each is entitled. Neither party seeks a splitting order. Although the Full Court in C & C [13] preferred the two list approach to superannuation and non-superannuation assets, the majority in that case said there is no binding principle as to the exercise of the Court’s discretion in deciding which approach should be adopted [14]:
Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as ‘the first step’ in the determination of proceedings under s79, whether or not a splitting order is sought in those proceedings.
[13] C & C (2000) FLC 93-220
[14] At 79,645
Neither party’s counsel addressed me on the issue as to whether the court should use the one or two list approach to superannuation and both counsel included superannuation in the single list of assets provided to the court at the commencement of the hearing. I find it appropriate to include the superannuation assets in a single list with the non-superannuation assets.
I am satisfied the assets and liabilities of the parties available for division between them to be as identified in the following table:
| Assets and liabilities at the date of hearing | $ |
| Monies held in trust | 907,842.00 |
| Wife’s share portfolio | 16,542.00 |
| Wife’s Volvo motor vehicle | 31,000.00 |
| Wife’s bank account proceeds | Negligible |
| Wife’s household contents | 10,000.00 |
| Telstra shares owned by husband or parties jointly | 2,346.00 |
| Husband’s [C] share options | 70,906.00 |
| Husband’s [C] system shares | 150,530.00 |
| Husband’s AMP shares | 1,968.00 |
| Husband’s household contents | 10,000.00 |
| Husband’s bank account proceeds | 8,073.00 |
| Value of Saab motor vehicle used by husband | Nil equity |
| Legal fees paid by wife | Nil |
| Add back of legal fees paid by husband (57,139.00) | 57,139.00 |
| Husband’s ANZ Visa card debt relating to legal fees (26,600) | (26,600.00) |
| Husband’s American Express credit card debt (3,000) | (3,000.00) |
| Husband’s St George Visa card debt (1,600) | (1,600.00) |
| Wife’s St George Visa card debt (750.00) | (750.00) |
| Wife’s David Jones debt (500) | (500.00) |
| Wife’s American Express card debt (2,000) | (2,000.00) |
| Husband’s superannuation entitlement | 190,034.00 |
| Wife’s superannuation entitlement [Legal] | 6,696.00 |
| Wife’s superannuation entitlement [IOOF] | 33,690.00 |
| Wife’s superannuation | 22,264.00 |
| Total net assets including superannuation | 1,484,580.00 |
Contributions
The court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family before and after separation. The Full Court said in Aleksovski & Aleksovski [15]:
It is therefore necessary…[to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties.
[15] (1996) FLC 92-705 at 83,437
The court must consider the contributions in an overall sense both before and after separation[16], although it is open to the court to decide how to approach the question. The High Court has held that both an asset by asset or global approach is legitimate[17]. Given the parties accumulated their assets both during cohabitation and after separation, and each party’s counsel asked the court to approach the question of contributions on a global basis, I have adopted the global approach. However, as the parties had been separated three years by the time of hearing, I have separately considered each party’s contributions during cohabitation and after separation before assessing each party’s contributions overall in percentage terms.
[16] Sippel & Sippel [2004] FamCA 201
[17] Norbis and Norbis (1986) 161 CLR 513
Contributions during cohabitation
Financial contributions. Although there are some differences in each party’s evidence as to what each owned at the date cohabitation commenced, the parties agree that the husband owned a property at Property D with equity of approximately $70,000. The wife does not challenge the husband’s assertion that he also owned an Audi motor vehicle, had savings of $6,000, household contents, and acquired AMP shares at approximately this time. The husband adduced no documentary evidence as to the value of his Audi, his shares or his household contents. In addition, the husband had a GIO superannuation entitlement with a value of $19,912, seven months after cohabitation commenced. I am satisfied the husband had property, including superannuation with a value approaching $100,000 when cohabitation commenced.
At the commencement of cohabitation, the wife owned a motor vehicle subject to a loan, and St George Bank shares with a value of approximately $2,500. According to the husband, the wife also had a superannuation entitlement of approximately $2,000. According to the husband the wife had a DEET debt, a HECS debt and credit card debts totalling approximately $10,000. According to the wife, she had only a HECS debt. In cross-examination, the husband conceded he was unable to verify with documents the quantum of debts owed by the wife at the time cohabitation commenced, and accepted the wife had a higher education debt of $2,811.75 and credit card debts of $1,473.95, which he says he paid on her behalf. I accept the husband’s evidence. I am satisfied the wife had minimal, if any, net assets at the commencement of cohabitation.
The parties lived at Property D for 7 years, made substantial improvements to the property and sold it in March 2002 for $620,000, giving the parties a net of approximately $370,000. Those funds were used towards the purchase of the former matrimonial home at Property W for $850,000, where the parties lived together until separation. At the time of sale of Property D, the parties’ children were two and a half years and 12 months of age.
The weight to be afforded to initial contributions is comprehensively discussed in Pierce & Pierce[18] where the Full Court said:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.
[18] (1999) FLC 92-844 at 85,881 and in particular at paragraph 28
The Full Court in Williams & Williams[19] affirmed the principles set out in Pierce again highlighting the need to show what was the ultimate value of the initial contribution to the parties. The Full Court said [20]:
We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
[19] [2007] FamCA 313
[20] At paragraph 26
In the present case, the husband purchased Property D when the parties were in a relationship, although not living together. The wife says she arranged the conveyance of the purchase at no cost. The parties used the net proceeds of sale of Property D in the sum of $370,000 to finance, in significant part, the purchase of the former matrimonial home at Property W. However, the parties used funds acquired after the commencement of cohabitation to substantially improve the property, and though the husband claims to have been solely responsible for the renovations, in cross-examination the husband acknowledged that the wife assisted with some of the necessary tasks. The parties also acknowledge the wife’s role as the primary homemaker following the birth of the parties’ first child in 1999, and second child in 2001 and the consequent contributions she made to the preservation of Property D during the period 1999 until its sale in 2002.
Given the use made by the parties of Property D, while I find the wife made both indirect financial contributions and non-financial contributions to that property, I am satisfied the husband is entitled to an adjustment on contributions in his favour as a result of this and his other initial contributions, but not to the extent submitted by his counsel.
Employment. The parties agree the husband earned significantly more than the wife during the marriage and consequently the husband made the greater direct financial contribution to the acquisition of the parties’ assets.
At the date of marriage in 1995, the husband was working for a software company. In the 1995 financial year he earned a gross income of $148,000. He worked for four different companies until 2000 when he joined [C] where he is still employed. Since the 2002 financial year, the husband has earned in excess of $225,000 gross a year. In the 2004 financial year he earned $460,275; in 2005, the financial year in which separation occurred, according to his amended taxation return, he had a taxable income of $305,898.[21]
[21] Exhibit 1
At the commencement of cohabitation, the wife was working full time as a secretary and studying. Apart from two periods of 12 months maternity leave, until May 2004, approximately 9 months before separation, the wife worked part-time after the children were born. In May 2004 she received a retrenchment payment of $44,410.60 [22] which she deposited to the ANZ mortgage loan account on the Property W home. The wife was then not in paid employment until June 2005,
6 months after the parties’ separation.
[22] Annexure A to wife’s affidavit sworn November 2006
In the absence of any evidence to the contrary, on the authority of Parshen & Parshen[23], I assume both parties contributed their incomes to the benefit of the family.
[23] (1996) FLC 92-720
I find no significant difference in the financial history given by each party in relation to the period of cohabitation. The parties used their joint resources to:
a)Purchase shares;
b)Undertake improvements on the two properties they lived in;
c)Purchase and maintain an investment property at [H]; and
d)Purchase and maintain a half share in an investment property at Property N.
The majority of purchase funds were borrowed for both investment properties. The properties were sold in July 2006, and the net proceeds of sale from both properties, totalling $127,741, remain in trust for the parties pending the outcome of these proceedings.
The husband deposed to applying his employee bonus payments to the mortgage loan account and to the wife contributing her retrenchment payment in 2004 to the same mortgage account. The parties sold the former matrimonial home at Property W in October/November 2006.
On a weighing of all these factors, I am satisfied the husband made the greater direct financial contributions during the period of cohabitation.
Non-financial contributions during cohabitation
The husband’s largely unchallenged evidence is that he took the majority responsibility for the financial management of the household, attending to payment of accounts, banking and preparation of taxation returns. He says he was responsible for the maintenance, registration and cleaning of the parties’ motor vehicles.
The husband deposed to either personally undertaking, or contracting at his expense, an extensive range of tasks in relation to the substantial improvements on the Property D and Property W properties: at Property D the tasks included painting, sanding floor boards, renovating bathrooms, landscaping, creating usable roof space, installing a pergola, building fences and gates, installing a car ramp, closing in the back room and installing a skylight. In relation to Property W, the tasks included rewiring, installing smoke alarms, installing a new gas line, plumbing, moving an electric stove, installing and decorating a professional office, installing curtains, installing security window screens, renovating a downstairs room, re-dying carpets, erecting a new fence, landscaping, installing a new clothes line and installing various whitegoods. In cross-examination, though reluctant to acknowledge any contributing role by the wife to the improvements of either property, the husband did concede the wife gave some assistance in relation to some of the tasks undertaken.
Each party claimed to have been closely involved in the selection and purchase of their two investment properties, the wife in relation to Property N with her mother, the husband in relation to both the Property N and [H] properties. Neither party’s counsel cross-examined the other party on this issue but I am not persuaded anything turns on the difference in the parties’ positions.
I am satisfied the parties made approximately equal non-financial contributions during cohabitation.
Contributions to welfare of the family during cohabitation. The husband says he was actively involved in the children’s care since they were born and assisted with the full range of household tasks. The wife says she was responsible for the vast majority of the children’s care because of the husband’s long working hours and habit of drinking during working lunches several times a week. The wife’s largely unchallenged evidence was that the husband travelled overseas for his employer for 1 to 2 weeks approximately 3 times a year. She says from time to time he also travelled intra-state for 2 to 3 days. The wife alleges the husband “drank heavily on weekends” making him frequently unavailable to assist with the children or domestic tasks.
While I accept the husband’s evidence that he contributed to domestic tasks and took a role in the children’s care, given the difference in the parties’ working hours during the marriage after the children were born, I am satisfied that the wife carried the majority responsibility for the domestic tasks and care of the children day to day during cohabitation, and therefore made the greater contribution to the welfare of the family.
The wife says her mother made a significant contribution to the care of the children when she returned to work after maternity leave. She says the husband’s mother also made a contribution to the care of the children when she returned to work after her maternity leave with [B]. However, as his Honour Justice Mullane points out in Brew & Brew[24], section 79(4)(c), which concerns contributions made by a party to a marriage to the welfare of the family, does not include contributions made by third parties, such as a grandparent. I therefore find no basis for any adjustment as a result of these care arrangements.
[24] (2003) FLC 93-140
The wife’s counsel urges the court to find that each party made equal contributions during cohabitation, taking into account the husband’s initial contribution and the fact that the wife had the majority care for the children and the household, as well as contributing income to the fullest extent of her capacity to do so. The husband’s counsel submits the court should assess the husband’s contributions during cohabitation as significantly greater than those of the wife, because of his substantially greater initial contribution.
On a weighing of the contributions made overall by each party during the course of cohabitation, I assess the husband to have made the greater overall contributions because of his substantially greater initial capital contribution and the way in which the husband’s equity in Property D was used by the parties. However, I find the difference in each party’s contributions assessed at separation is considerably lessened because of the wife’s greater contributions in relation to the running of the household and the care of the children, and because the wife also earned an income which she contributed to the expenses of the family.
Contributions after separation
Financial contributions. In December 2004, just prior to the parties’ separation, the husband withdrew $20,000 from the joint loan account. He says he used the funds to meet outstanding credit card debts and to meet the cash requirements of the family over the holidays. In cross-examination the husband conceded his employer reimbursed a significant proportion of those expenses including $5,000 spent in December. In January 2005, the husband withdrew $18,600 from the joint loan account of the parties, which he used in part to pay credit card debts, but retained $10,000 for his own use. In September 2005 the parties agree they withdrew $53,514 from the loan account to discharge the lease on the wife’s Volvo car and the car was transferred to the wife’s sole name. An amount of $31,000 is included in the net pool for that Volvo car.
The husband continued to work full time after the parties’ separation in January 2005. He had a taxable income of $305,898 in the 2005 financial year and $255,345 in the 2006 financial year. The husband claimed 70% of his Saab motor vehicle expenses against his income[25]. The husband does not provide his taxation return for the 2007 year but Exhibit 5 shows the husband had received a gross income of $217,739 to 31 May 2007. [26] For the first half of the 2008 financial year, the husband has received a gross income of $158,686.51 [27] on a base annual income of $115,000 with bonus incentives and the potential to earn a special bonus at the discretion of the managing director, if the company’s Australian division exceeds its target for the year. He continues to claim the majority of his motor vehicle expenses as a tax deduction.
[25] Exhibit 1
[26] Exhibit 5
[27] Exhibit 4
The wife was not in the paid workforce at the time of separation but commenced working again 4 days a week 5 months later, in June 2005. She has continued in paid employment since then.
The wife lived with her parents until December 2006 when she moved to independent rental accommodation at [M]. From June 2005 she paid her parents board of $2,000 a month.
The husband lived in the former matrimonial home to the exclusion of the wife until November 2006 when it was sold and he moved to the home of his current partner, Ms O, at [K]. In November 2006 he deposed to paying Ms O $2,000 a month towards household expenses.
There was no real challenge to the husband’s evidence that for a few months after separation, he paid the outgoings on the former matrimonial home in which he was living, the lease payments on the parties’ two cars, home and car insurances, car registrations, the shortfall between the income and expenses on the two investment properties, the wife’s mobile phone, school fees for the children at [X], and until the wife commenced work, $500 cash payments each month to the wife. The husband acknowledges contributing funds each month until July 2006 to the employee share purchase plan, for which he received a refund of $11,622 in September 2006. The husband says he did not pay any mortgage instalments on the former matrimonial home after July 2005, because he had contributed to the loan account with his bonus payments so by separation the facility was ahead by $100,000. He says “something had to give…” as he could not meet all his financial commitments which included the school fees. The husband conceded that he had intended to continue to meet the mortgage repayments, and chose not to use money he held in his bank account to meet those payments.
The wife said she used the husband’s credit card to meet expenses for herself and the children until the card reached its limit in May 2005, but then relied in part on her parents and the proceeds of an account in St George Bank of approximately $9,800 she had retained at separation.
The wife complains that while she struggled financially following separation, the husband opened a bank account in his own name with St George in early June 2005 [28] with an opening deposit of $12,000, while he stopped paying mortgage payments in July 2005 and in the same month complained that he could not pay the children’s school fees.
[28] Annexure P to wife’s affidavit sworn November 2006
I do not accept the husband’s explanation for stopping repayments on the mortgage, nor that his decision to do so was reasonable or necessary. The husband was living in the home. The wife had contributed indirectly to the additional payments made on the loan account prior to separation which put the facility in advance. The husband was earning a high income. The wife had the majority care of the children and was largely supporting them. I make a contribution adjustment in favour of the wife as a result of these factors.
Each party has continued to accrue superannuation since separation, the husband to a greater extent than the wife, because his income is much higher and his employer pays 3% above the statutory contribution requirement.
On a weighing of these factors, particularly the fact that the husband withdrew substantial funds from the parties’ joint accounts and did not meet the mortgage payments after July 2005, I am satisfied the parties’ financial contributions after separation favour the wife.
Non-financial contributions and contributions to the welfare of the family after separation
The husband lived in the former matrimonial home after separation and only made repayments on the mortgage for 7 months. The wife paid board to her parents until she moved to her own accommodation in December 2006. Since separation, the husband says he has cared for the children each Wednesday afternoon, each weekend from Saturday until Sunday lunchtime and for half school holidays. The husband says he performed all the necessary tasks associated with their care during these periods. The husband says he has been actively involved in the children’s schooling, attending parent teacher nights, watching their sport, attending special events and assisting with class reading.
The wife says that after separation the children spent from 9 a.m. Saturday until 1 p.m. Sunday with the husband on most weekends and from after school until 7 p.m on Wednesdays. In addition, the children gradually increased holiday time with the husband until they were spending half the holidays with him. Since April 2007, the children have been living with the husband 5 nights a fortnight as well as half school holidays. On the basis of these findings, I am satisfied the wife made the greater contribution to the welfare of the children after separation.[29]
[29] High Court in Williams v Williams (1985) 10 Fam LR 355.
I therefore agree with the wife’s counsel’s submission that after separation, a period of 3 years, the wife made the greater overall contributions.
Conclusion on overall contributions
The husband’s counsel argues that the husband is entitled to 60% by way of overall contributions on the basis of his greater initial capital contributions. The wife’s counsel submits that the wife is entitled to 57.5% by way of contributions and a greater percentage if the unpaid mortgage repayments are not included in the net pool, as I have determined.
On a weighing of each party’s contributions during cohabitation and after separation, I assess the husband’s contributions at 52% and the wife’s contributions at 48% of the net pool available for distribution.
What is the effect, if any, of any proposed order upon the earning capacity of each party?
The orders I propose to make do not affect the earning capacity of either party.
What matters referred to in sub-section 75(2) of the Act are relevant?
I have considered each of the relevant factors listed in section 75(2) of the Act.
The husband is 39 and the wife is 41 years of age. Neither adduces evidence of any health issues.
The husband has a current gross income with entitlements well in excess of $300,000 a year, in addition to a car allowance. The wife earns $92,000 gross a year. The husband may earn substantially more, depending on his bonus entitlements, even though the wife may also receive a more modest bonus payment. Each party receives superannuation in excess of the employer statutory requirement, that figure being greater for the husband as a result of his higher salary.
The Full Court said In the Marriage of Clauson[30] that:
It has long been recognised that in most cases the most valuable “asset” a party can take out of the marriage is a substantial, reliable income earning capacity.
The husband has earned a high income over many years and has worked in the same company for a number of years. I am satisfied the husband is likely to earn a much higher income than the wife in the foreseeable future, and has the potential to earn a higher salary than he does now. I make a significant adjustment in favour of the wife as a result of this factor.
[30] (1995) FLC 92-595
The husband is living with his de facto partner, Ms O. He claims not to know Ms O’s income but to pay $675 towards her weekly expenses. The husband adduces no evidence of Ms O’s financial position. Section 75(2)(m) of the Act provides that the financial circumstances relating to a party’s cohabitation with another person is a relevant factor to be taken into account. Section 75(2)(o) provides that the court should also take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.” Although the wife’s counsel did not address me on this issue, in my view, Ms O’s financial position is a factor to which I should have regard when assessing the future needs of each party, as it is likely to have a direct bearing on the husband’s future needs. The husband adduces no evidence as to why he provided no evidence of Ms O’s financial position. On the High Court authority of Jones v Dunkel [31],
I draw the inference that Ms O’s evidence, if adduced, would not have assisted the husband’s case. As a result, I make a further adjustment in the wife’s favour.
[31] (1959) 101 CLR 298
The husband’s counsel submits that as a s.75(2)(o) factor, the court should take into account the mix of assets the husband will receive. The wife’s counsel agrees this is a factor to which I should have regard. I agree with counsel that on each party’s case, the husband will receive his superannuation entitlements, and his share options, neither of which the husband can access at this time. The wife, on the other hand, will take the majority of her entitlement in realisable assets. I am satisfied it is appropriate to make an adjustment in favour of the husband as a result of this factor.
Mr Lloyd submits that overall there should not be any adjustment on contribution factors as a result of s.75(2) factors. Although I found
Mr Batey’s submission on percentages unclear, I understand Mr Batey submits that at worst, the wife should receive 65% overall, and a greater adjustment under s.75(2) if she fails in her child support application for non-periodic support. Mr Batey then says that the wife would accept the whole of the trust funds held on behalf of the parties, in addition to the assets and liabilities she presently holds, whatever the precise percentage division that would give her.
Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
The husband is presently paying $3,042 per month in accordance with the Child Support Agency’s assessment based on a Change of Assessment decision which includes a component for two thirds of the children’s school fees and expenses. As a result of these Orders, the husband will pay 75% of the children’s tuition fees and school related expenses at [X], currently under $30,000 per annum. He will also pay a periodic sum assessed by the Agency, based on his income presently capped at approximately $113,000, the wife’s income and the amount of time the children spend with him. The husband’s periodic liability will be significantly less than his current periodic liability but he will pay approximately $29,000 per annum in school related expenses.
I take the husband’s greater child support liability into account in assessing the adjustment in favour of the wife overall.
On a weighing of the s.75(2) factors referred to and the husband’s future child support liability, I make an adjustment in favour of the wife of 14%. This will give the wife an overall 62% of the net pool and the husband 38%.
Is the result just and equitable?
Section 79(2) provides that:
The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
The Court must be satisfied that the actual orders provide for a just and equitable distribution of the property of the parties.
The husband is entitled to 38% of the parties’ assets which is equivalent to $564,140.40. Although he will receive nearly half of this entitlement in share options and superannuation, the husband will receive a cash component of over $100,000 and shares with a substantial value. The husband has secure accommodation owned by his de facto partner, the opportunity to share some expenses with his de facto partner, and the husband will continue to earn a high income.
The husband will have assets and liabilities set out in the following table:
| Assets to be retained by husband | $ |
| Cash payment from trust funds held | 104,344.40 |
| Telstra shares in husband’s name and joint names of parties | 2,346.00 |
| [C] share options in husband’s name | 70,906.00 |
| [C] System shares in husband’s name | 150,530.00 |
| AMP shares in husband’s name | 1,968.00 |
| Household contents held by husband | 10,000.00 |
| Saab motor vehicle | Nil equity |
| Bank account proceeds in husband’s name | 8,073.00 |
| ING superannuation in husband’s name | 190,034.00 |
| Paid legal fees | 57,139.00 |
| American Express debt | (3,000.00) |
| St George Visa debt | (1,600.00) |
| ANZ Visa debt which relates to paid legal fees | (26,600.00) |
| TOTAL | 564,140.40 |
The wife will receive 62% of the net assets which is equivalent to $920,439.60. She will have the assets and liabilities set out in the following table, which includes a majority of realisable assets. The wife however, is living in less secure accommodation than the husband and does not have the benefit of a partner with whom to share expenses.
| Assets to be retained by wife | $ |
| Cash payment from trust funds held for the parties | 803,497.60 |
| Household contents held by wife | 10,000.00 |
| Bank account proceeds in wife’s name | Negligible |
| Share portfolio in wife’s name | 16,542.00 |
| Volvo motor vehicle in wife’s name | 31,000.00 |
| Legal super in wife’s name | 6,696.00 |
| IOOF super in wife’s name | 33,690.00 |
| Other superannuation in wife’s name | 22,264.00 |
| St George Visa debt | (750.00) |
| David Jones debt | (500.00) |
| American Express debt | (2,000.00) |
| TOTAL | 920,439.60 |
Having regard to all these circumstances, I am satisfied that the orders set out at the beginning of these Reasons are just and equitable.
Child support
The parties’ two children attend [X], a private grammar school. Each party says tuition fees presently total $31,000 a year for the two children. Each party acknowledges that the children were enrolled there when they were very young and attended pre-school there. Each party acknowledges that he/she wanted the children to attend [X] at the time they were enrolled and while they were living as a family. The husband says however, that because circumstances have changed, although he would like the children to remain at [X], there is a limit to what he can afford to contribute towards the children’s support, and it therefore may not be practicable for the children to remain at [X]. At hearing, the husband was clear that he would prefer the boys to remain at [X] if possible. He agreed the school is a stable component in the children’s lives and that it is in their best interests to remain there.
The parties separated in January 2005. In August 2005 the wife applied for a child support assessment and the first assessment issued on
9 August 2005. Since that time, the Child Support Agency has issued a number of assessments as a result of applications for Change of Assessment including changes in the parenting arrangements for the children. At the time of hearing, the husband had applied for a review at the Social Security Appeals Tribunal of the latest Objection decision. When each party asked the court to decide the child support issue, the husband undertook to withdraw his application for review at the Tribunal.
From September 2005, the husband paid $2,639 a month by way of child support in accordance with the assessment applicable at that time. The wife applied for a Change of Assessment in October 2005 which resulted in an increase in the assessment payable by the husband to $3,476 per month for the period January to December 2006. This assessment took into account one half of the children’s school fees at [X]. The assessment for the period 1 July 2006 to 3 November 2006 then changed to $2,745.50 per month. From 4 November 2006 until
31 December 2006, the assessment was $2,907.17 a month and from
1 January 2007to 3 February 2008, it was $2,041.17 per month.[32] The assessment was adjusted again following finalisation of the parenting arrangements in 2007 which meant a change in the care arrangements for [A] and [B]. The assessment for the period 25 June 2007 to
3 February 2008was $2,871.08 a month.[33] The assessment for the period 4 February 2008 to 30 June 2008 is $3,042.33 a month. This is the decision the husband sought to review. The parties agree that this current assessment includes a component for two thirds of the children’s school fees/expenses. The husband’s employer presently pays the husband’s private health insurance which includes private insurance for the children.
[32] Annexures A to E of husband’s affidavit sworn November 2006
[33] Annexure G of husband’s affidavit sworn January 2008
The husband seeks to depart from the current child support assessment. He asks for an order that he pay child support at an annual rate of $26,400 per annum or $2,200 a month for the current period, rather than $3,042 per month. He says approximately $2,200 a month is what he can reasonably afford.
The wife seeks an order that the husband pay 75% of the children’s school fees at [X] and 75% of other school related expenses in addition to the child support assessment of the Agency, such assessment to take into account the husband’s contributions to school fees and other school related expenses. The wife says that she wants to avoid having to repeatedly apply to the Agency for a Change of Assessment on the basis the children attend a private school. I questioned Mr Batey as to how the orders sought by the wife would achieve the wife’s stated objective of not returning to the Agency, given the likelihood of the husband immediately seeking a Change of Assessment if the Court ordered him to meet a proportion of the school fees. Mr Batey submitted the wife needs certainty in relation to the payment of the school fees and related expenses.
Legal principles - child support
Jurisdiction is conferred on this court by s.99(1) of the Child Support (Assessment) Act 1989. Section 3 of the Child Support (Assessment) Act 1989 contains the obligation that parents have a primary duty to maintain their children. Section 4 provides that the principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Sections 114 and 121 identify that the further objects of Divisions 4 and 5 of Part 7 include:
a)that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents; and
b)that parents share equitably in the support of their children.
Division 4 of Part 7 of that Act governs departure proceedings. Section 116(1) provides that a carer or a liable parent may apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if 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 the court considers that it would be in the interests of the liable parent or carer for the court to consider whether an order should be made under this Division [34].
[34] Section 116(1)(b)(i)and(ii) Child Support (Assessment) Act 1989
Each party asked the court to determine child support issues.
I determined that it was in the interests of both parties for the court to consider each party’s application concerning child support at the same time as the court determined the property proceedings.
The husband brings his application under s.117 of the Child Support (Assessment) Act which gives the court power to make a departure order in special circumstances. The Full Court of the Family Court in In the Marriage of Gyselman [35] set out a three step process that courts must follow in determining an application for a departure order under s.117. The first step is whether one or more of the threshold grounds in s.117(2) is established. If a ground is established, the next step is whether it is just and equitable within the meaning of s.117(4) to make a particular order. The final consideration is whether it is otherwise proper within the meaning of s.117(5) to make a particular order.
[35] (1992) FLC 92-279
The wife brings her application under Division 5 of Part 7 of the Child Support (Assessment) Act 1989. Sections 123(1) and (2) provide that an application may be made that a liable parent provide child support other than in the form of periodic amounts if an administrative assessment is in force in relation to the child. To be satisfied it is appropriate to make an order, the court must be satisfied that it is just and equitable as regards the child, the carer entitled to child support and the liable parent, and otherwise proper[36]. The court must have regard to the administrative assessment and any departure determination in force in deciding the application for non-periodic support[37]. In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a non-periodic child support order the court must have regard to the matters in sections 117(4), (6), (7), (7A) and (8). Those matters relevant in this case include:
[36] Section 124(1)
[37] Section 124(2)
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 and each parent who is a party;
d)The commitments of each parent who is a party necessary to support that party or any other child that party has a duty to maintain;
e)The costs incurred by the carer in providing care for the child;
f)Any hardship that would be caused to the child, the parents, any other child or person the liable parent has a duty to support;
g)The manner in which the child is being, and in which the parents expected the child to be cared for, educated or trained; special needs of the child;
h)The capacity of the parent to derive income, including assets capable of producing income; and
i)Income foregone by the carer parent in providing that care.
Neither party in the present case has a legal obligation to support any other person or any other child.
Before hearing the wife’s application for non-periodic support the court must hear and determine any pending application in relation to departure from an existing assessment[38].
[38] Section 123(3)
Special circumstances – has the applicant husband shown a ground for departure?
Neither party’s counsel was clear as to which subparagraphs of s.117(2) each party relied on. Mr Lloyd, the husband’s counsel said he relied on s.117(2)(c)(i) which relates to the income and financial position of a child. In my view, that was an error on counsel’s part. He then added s.117(2)(c)(ia) which relates to the income, property and financial resources of either parent. He then added s.117(2)(c)(ib) which relates to the earning capacity of either parent, and s.117(2)(c)(ii) which relates to payments or a transfer or settlement of property, made or to be made by the liable parent to the child or to the child’s carer. The husband adduced no evidence and made no submissions as to s.117(2)(c)(ii) and I am not satisfied subparagraph (c)(ii) is relevant to this case.
The husband’s case in relation to child support was focussed on his capacity to pay. I am therefore satisfied the husband relies on section 117(2)(c)(ia) and (ib), although, in relation to (ib), there was no issue raised by either party that the husband was not earning income to the extent of his capacity to do so. Section 117(2)(c) provides:
that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent.
The Court will not interfere with the administrative assessment unless it is satisfied there are “special circumstances”, that is, that there is something out of the ordinary in the facts of the particular case. The onus is on the applicant to establish a ground for departure.
Children’s expenses. In her Financial Statement sworn in January 2008, the wife deposes to expenses for the children of $1,094 a week. This total includes $40 for clothing and shoes, $108 for children’s activities and $596 for education expenses. She was not challenged on these expenses. In the husband’s Financial Statement sworn in January 2008, the husband deposes to expenses for the children of $421 a week. He does not say whether those expenses relate to his own children only, or also to Ms O’s two children. However, if all those expenses are included as applying to [A] and [B], the children’s expenses are $1,094 + $421 a week = $1,515 a week.
Husband’s financial position
. According to his payslips for 11 months of the 2007 financial year[39], the husband received net income of $120,344.76 in that 11 month period, or (taking the average) $131,285.19 net over the full year. In his Financial Statement sworn in January 2008, the husband deposed to a weekly gross income of $6,062 (which is correctly $6,064) made up of $5,798 in salary (based on the first 6 months of the 2008 financial year), $2 in dividends and $264 in superannuation. The husband deposed to a benefit of an estimated $45 a week from his employer for payment of his health insurance premiums, mobile phone and internet expenses. He deposed to a taxation expense of $2,183 a week. If the superannuation component were excluded, on these figures the husband would have income of a net approximately $188,000 over the full year in addition to receiving his employer benefits. However, I find the husband is likely to have an even higher income. In cross-examination, the husband conceded he will claim the majority of his car expenses against his taxable income which will reduce his overall taxation obligation for the 2008 financial year, as in previous years and therefore increase his net income.
In addition, the husband said he may receive additional income by way of a bonus depending on his and the company’s performance over the remainder of the financial year. On the basis of these figures I am satisfied the husband has net income available to him of a minimum of $3,615 a week.
[39] Exhibit 5
According to his Financial Statement sworn in January 2008, disregarding his child support obligation, the husband deposes to expenses of $1,749 a week in addition to car related expenses and minimum credit card payments. The husband says the majority of his car related expenses are tax deductible. I find that to include credit card payments as well as day to day expenses as set out in Item 60 of his Financial Statement is double counting. I therefore find that even if I accept all the expenses set out at Item 60 of the husband’s financial statement, the husband has available to him, net after taxation, a minimum of $1,866 a week [$3,615 - $1,749]. However, in his total of $1,749, the husband includes $675 a week towards Ms O’s expenses, including $335 a week towards her holiday and entertainment expenses. The husband denies knowing what Ms O earns or whether or not she can afford to meet her own expenses. In cross-examination, the husband says he “chose to” pay those expenses for Ms O and does not know whether or not she could afford to meet those expenses for herself. In these circumstances, I do not regard the expense of $335 as reasonable, and exclude it. I therefore find the husband has available to him, net after taxation a minimum amount of $2,201 from which he can meet child support obligations.
At hearing the husband had savings of just over $8,000. As a result of the property settlement the husband will have cash of over $100,000 in addition to shares with a substantial value.
The objects of the child support legislation are clear. The husband and the wife have a primary obligation to support their children. While the husband may choose to provide Ms O with entertainment and holiday expenses, I am not satisfied such expenses should be prioritised as against the children’s necessary expenses. Even if I include a proportion of the husband’s car expenses as an expense he must meet from after tax income, I am satisfied the husband has the financial resources and income necessary to meet the current child support assessment.
Wife’s financial position. In her financial statement sworn in January 2008, the wife deposed to an income of $1,788 gross a week, excluding superannuation and child support payments. She deposed to a taxation liability of $502 a week, and therefore a weekly disposable income of $1,286 a week, without including her child support income. She says she might receive a small bonus in this financial year, but there is no guarantee. According to the figures in her Financial Statement which she had no difficult justifying under cross examination, the wife has weekly expenses of $526 in rent, $28 in car registration and insurances, $20 a week in health insurance and $1,775 in day to day expenses for herself and the children. Her expenses therefore total $2,349. On these figures, the wife has a shortfall of $1,063 a week between income and expenses, met in part by the child support payments she receives from the husband of approximately $711 a week.
At hearing the wife had no savings. In cross-examination, the wife acknowledged purchasing a computer and a flat screen television since moving to independent accommodation in December 2006. She acknowledged travelling overseas with her boyfriend on two occasions and to having had a holiday with her parents and children at a cost of approximately $5,500. She says she manages because she can save for the larger expenses which are not all required to be paid at once.
On the basis of my findings as to the children’s expenses, the husband’s financial position and the wife’s financial position, I am not satisfied the provisions of the Child Support (Assessment) Act 1989 relating to administrative assessment of child support, currently $3,042 a month, would result in an unjust and inequitable determination of the level of financial support to be provided by the husband for the children because of the income, property and financial resources or the earning capacity of the parties.
The onus is on the husband to establish a ground for departure and I am not satisfied he has discharged that onus. I therefore dismiss his application.
Wife’s application for non-periodic child support
The wife’s counsel relied on s.117(2)(b)(ii) of the Child Support (Assessment) Act 1989. The wife contends that the children are being educated in the manner that was expected by their parents. It is common ground that the parties agreed to enrol the two children at [X] and that each party wants the children to continue their education at that school. Even though the husband said the parties’ financial circumstances were different at the time they committed to the children’s private education, when he gave oral evidence at the hearing, the husband acknowledged the importance of the school to the children and his wish to keep them there.
The wife contends that, given the difference in the husband’s income and her income, the husband earning an annual gross income in excess of $300,000 (excluding superannuation) and the wife earning an annual gross income of approximately $92,000, the husband should contribute 75% of the children’s tuition fees and other school related expenses at [X]. The wife says that fixed amount can then be taken into account when assessing the husband’s periodic child support assessment from time to time. The mother seeks these additional amounts pursuant to s.124 of the Act. Mr Batey, the wife’s counsel asks the court not to interfere with the present assessment of the Child Support Agency, but to leave it as it is, accepting that the assessment is likely to change once the father advises the Agency of the order the wife asks the court to make in relation to school fees and school related expenses. As already noted, the current child support assessment for the period 4 February 2008 to 30 June 2008 is $3,042 a month which the parties agree includes a component for two thirds of the children’s school fees/expenses.
The husband’s employer pays his health insurance which includes private health insurance for the children. The husband’s counsel made no submissions in relation to the children’s private health insurance and I propose to order that the husband continue to meet that obligation.
[41] [2003] FMCAfam 531 at paragraph 15
The Full Court in Mee v Ferguson [40] dealt with the question of payment of school fees. I adopt the summary of principles from that case set out by Her Honour Chief Federal Magistrate Bryant (as she then was) in
F & S [41]:
(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. 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].
[40] (1986) FMC 91-716
The provision for payment of school fees is made under sections 123 and 124 of the Act. Under s.125 of the Act, I must decide whether, if such an order is made, it should be credited against the current child support assessment or be in addition to it.
As already noted, I am satisfied the husband has agreed to the children attending [X], and I am therefore satisfied the husband should contribute to the fees to the extent he has a reasonable financial capacity to do so in accordance with the first principle in Mee v Ferguson.
The parties agree the annual tuition fees for the two children are presently $31,000. In relation to additional school related expenses, the wife deposes to the children’s school related activities at $108 a week and their clothing and shoes at $40 a week.
The question is what amount is equitable for each party to pay towards these expenses? I agree with Mr Batey that there is a logic in the wife’s argument that, given the husband earns in excess of 3 times that of the wife, the husband should meet 3 times the share of tuition fees and school related expenses. On the figures available at hearing, this would require the husband to pay 75% of $31,000 a year in addition to 75% of $7,696 a year ($148 x 52), or a total of $29,022 a year. Given my findings as to the husband’s financial position, I am satisfied the husband will experience no hardship meeting 75% of tuition fees and school related expenses and I have decided to order that he do so.
The next question is whether, as submitted by Mr Batey, the amount the husband pays in school fees and related expenses should be credited against the husband’s liability under any relevant assessment. Or in the alternative whether the husband should be liable under the relevant assessment without regard to his contribution to school fees and expenses. Section 125(2) of the Act provides that if the court states the non-periodic child support is not to be credited against the liable parent’s liability under any relevant assessment, the court must be satisfied, in the special circumstances of the case, that it would be just and equitable, as regards the children, the carer and the liable parent, and otherwise proper.
Having regard to the objects of the Act, my findings as to the needs of the children, my findings as to each party’s financial position, my findings as to each party’s commitments, and having regard to any hardship that would be caused to the children or the parties, I have decided it is just and equitable for the husband to pay child support under any relevant assessment without his liability for school fees and school related expenses being credited against his liability under an assessment. I have decided it is otherwise proper to make the statement under s.125(2) having regard to the objects of the Act set out in s.117(5) that it is the parents of the children who have the primary obligation to maintain the children.
I have ordered that the husband pay 75% of school fees and school related expenses from the beginning of 2008. I have ordered that neither party will use the non-periodic order as a basis to depart from any child support agency assessment from 1 January 2008 including as non-agency payments. The husband will pay periodic child support in accordance with the Agency’s assessment from time to time, without a component being included for school fees/expenses, as presently applies. I have ordered that the child support assessment be re-calculated from 1 January 2008 which will give the husband a substantial credit at the Agency. However, the husband will be required to pay to the wife his share of school fees and school related expenses from 1 January 2008 upon receipt from the wife of the relevant invoices and receipts in relation to those expenses.
As already noted, I have had regard to my determination in relation to child support in my determination as to each party’s entitlement to property.
I certify that the one hundred and twenty-two 122 preceding paragraphs are a true copy of the reasons for judgment of Sexton FM.
Associate: Skye Owen
Date: 3 June 2008
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