Wade and Kaplan
[2007] FMCAfam 1100
•21 December 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WADE & KAPLAN | [2007] FMCAfam 1100 |
| CHILD SUPPORT – Application for lump sum payment of child support – whether departure application – children resident with applicants who are children’s maternal grandparents – children’s mother deceased as a result of unlawful actions of their father – father currently incarcerated – father’s situation results in nil assessment of child support – father has potential access to proceeds of sale of former family home – whether there should be either departure or lump sum substitution order in respect of proceeds of sale – special circumstances – considerations of justice and equity – otherwise proper – whether appropriate to proceed in absence of the father. |
|
| Rasmanis v Jurewitsch and Anor [1968] 2 NSWLR 166 Coon & Cox (1994) 17 Fam LR 692 |
| Applicants: | MR WADE & MS WADE |
| Respondent: | MR KAPLAN |
| File number: | ADC 5104 of 2007 |
| Judgment of: | Brown FM |
| Hearing date: | 14 December 2007 |
| Date of last submission: | 14 December 2007 |
| Delivered at: | Adelaide |
| Delivered on: | 21 December 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mrs West |
| Solicitors for the Applicant: | Moore Law |
| Counsel for the Respondent: | No appearance |
ORDERS
The Moore Law Trust Account is ordered to forward to the Public Trustee for the State of South Australia one half of the proceeds of sale of the property known as Property C in the State of South Australia to be held in trust for the benefit of L born in January 2002 and A born in February 2004 with such sum to be applied to the ongoing maintenance of the aforesaid children.
The sum referred to in order 1 hereof is to be regarded as a payment of lump sum child support for the aforesaid children payable by the father Mr Kaplan to the children’s guardians Mr and Ms Wade.
The aforesaid sum is not to be credited against the father’s applicable administrative assessment of child support for the aforesaid children.
A copy of the orders made today together with the reasons for judgment is to be provided by pre-paid post to the Public Trustee for the State of South Australia; the Registrar of the Child Support Agency; and the father at his last known address.
The application herein be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Wade & Kaplan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 5104 of 2007
| MR WADE & MS WADE |
Applicants
And
| MR KAPLAN |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to an application for a lump sum payment of child support. The circumstances surrounding the application are unusual and tragic.
The applicants, Mr and Ms Wade are the maternal grandparents of the two children concerned in the case – L born in January 2002 and A born in February 2004. The respondent, Mr Kaplan is the children’s father.
The children’s mother, Ms Kaplan died in March 2006. Mr Kaplan has been convicted of her murder and sentenced to life imprisonment with a non parole period of seventeen years. There seems to be no prospect of his release until after each of the children has attained his legal majority.
Since their mother’s death, the two children have lived with their maternal grandparents. On 2 July 2007, orders were made in this court formalising this arrangement. Pursuant to those orders L and A are to live with Mr and Ms Wade, who have sole parental responsibility for them.
The late Ms Kaplan died intestate. L and A are her only children and so the sole beneficiaries of her estate, which is being administered by the Public Trustee. The Public Trustee has already received a sum of around $29,000.00 which relates to the late Ms Kaplan’s superannuation entitlements. The sum is being held on trust for the two children and it is anticipated it will be used for their future education expenses.
The late Ms Kaplan and Mr Kaplan owned Property C. They owned the property as joint tenants. It is a well known principle of equity that considerations of public policy will not permit one joint tenant who feloniously slays his fellow joint tenant to benefit from his own criminal act.[1]
[1] See Rasmanis v Jurewitsch and Anor [1968] 2 NSWLR 166
Accordingly the murder of Ms Kaplan severed the joint tenancy, avoiding the application of the law of survivorship to the property concerned. Ms Kaplan half interest in the property has vested in her estate. Mr Kaplan retains his half interest in the property.
The Public Trustee and Ms B, who is Mr Kaplan’s mother and has been granted his power of attorney, directed that the Property C property be sold. Settlement of the sale occurred on 10 October 2007. A sum of approximately $100,000.00 was realised.
On 8 October 2007, the applicants commenced these proceedings. On an interim basis they sought orders by way injunction restraining
Mr Kaplan and the conveyancing firm concerned from receiving or distributing respectively any of the proceeds of sale of Property C, in Mr Kaplan’s favour, until the final determination of Mr and Ms Wade’s substantive application had occurred.
The substantive application was that Mr Kaplan’s share of the proceeds of sale of Property C be applied to Mr and Ms Wade as a lump sum payment of child support for L and A pursuant to the provisions of the Child Support (Assessment) Act (Cwlth) 1989 “the Act”.
Mr Kaplan was served with the application on 2 October 2008. He was served with the application in prison, where he is apparently serving his sentence. I accept that the solicitors for Mr and Ms Wade had earlier advised him of their clients’ application.
I granted the injunctions sought on 8 October 2007, in the absence of Mr Kaplan. I adjourned the further hearing of the matter to 22 November 2007. I also ordered that Mr Kaplan, his mother Ms B and the Public Trustee be provided with copies of the orders made on that day by pre-paid post at their respective addresses.
Neither Mr Kaplan nor Ms B appeared before the court on 22 November 2007. In addition neither instructed solicitors to appear on their behalf or file any answering material for them. Accordingly on 22 November, I fixed Mr and Ms Wade’s application for final hearing on 14 December 2007 in anticipation that the proceedings would be undefended. Again I directed that Mr Kaplan be provided with a copy of the orders made on 22 November 2007. I am satisfied that he has been so provided.
The Court has an obligation to ensure that the parties to proceedings have an opportunity to participate in the proceedings. Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[2]
[2] See Taylor v Taylor (1979) 143 CLR 1
In this case, I am satisfied that Mr Kaplan has been given more than an adequate opportunity to be heard and to file material on his own behalf. He has chosen not to avail himself of that opportunity. In these circumstances, it is appropriate that Mr and Ms Wade’s application be dealt with on an undefended basis and the proceedings be brought to finality.
Additional Evidence
Although Mr Kaplan did not choose to appear in these proceedings, it does not appear to me to be likely that there are many areas of factual controversy between the parties concerned. Mr Kaplan is not due for release from prison until 2023, by which time L will be twenty-one years of age and A will be nineteen.
Mr Kaplan consented to the orders that the two children concerned live with their maternal grandparents. It is Mr and Ms Wade’s evidence that Ms B has little relationship with the two children concerned.
I have been provided with no evidence which suggests that anyone other than Mr and Ms Wade will be responsible for the care of the children concerned for the foreseeable future. Certainly there are no proceedings currently on foot which seek to disturb the current arrangements for L and A’s care.
Mr Wade was born in August 1947. Ms Wade was born in February 1949. Both enjoy good health. Mr Wade earns around $140,000.00 per annum. He had planned to retire at aged sixty but his recent assumption of financial responsibility for the two children concerned has caused him to put his retirement plans “on hold”. Ms Wade is engaged in home duties. It appears unlikely that Mr Wade will be able to maintain his employment until such time as A is financially independent.
Mr Wade has accumulated superannuation entitlement of around $500,000.00. He and Ms Wade own their home, which is subject to a modest mortgage. They do not own assets of significant value. They cannot be described as wealthy people.
Mr Wade estimates that it costs approximately $361.00 per week to provide for the child’s needs. The major weekly expenses being food at $150.00; clothing and shoes at $40.00; other activities at $40.00; and eduction expenses at $30.00. This equates to an annual amount of $18,772.00.[3] It seems likely that the children’s education expenses will increase as they grow older.
[3] See Mr Wade’s statement of financial circumstances filed 27 September 2007 at paragraph 60.
L is currently attending Sxxx, a private school. The fees are currently $970.00 per annum. A will follow him to the school. The children require school uniforms. Mr Wade estimates the children’s education expenses, over the likely period of their schooling, as being somewhere around $41,000.00. This seems to me to be a modest estimate.
The children have applied to the South Australian Authorities for victims of crime compensation. Their application has not as yet been finalised. Accordingly it is unclear what sum of money they are likely to receive as a result of this application.
Besides his interest in Property C, it is Mr Wade’s evidence that
Mr Kaplan has accumulated superannuation of around $98,000.00; savings of around $5,000.00; and an interest in another property with his grandmother, Mrs K. No specific application is made in respect of these other items of property by Mr and Ms Wade.
Ms Wade has applied for an administrative assessment of child support in respect of L and A from Mr Kaplan. Mr Kaplan’s child support income for the purpose of this assessment has been calculated as being $1,683.00 per annum. Given his present circumstances, this figure cannot be said to be an unrealistic one. When the exempt income figure is applied to it, it results in a nil assessment of child support payable to Mr and Ms Wade for the children.
It seems unlikely that this situation will change in the foreseeable future. Accordingly Mr and Ms Wade will remain responsible for providing for L and A until the children reach financial independence, which is likely to be at least ten years away so far as the older child is concerned and twelve years away so far as the younger. The reality is likely to be the children will be financially dependent for more years than that on Mr and Ms Wade.
In 1989, Donald Lee of Deakin University, working under contract to the Australian Institute of Family Studies, published tables relating to the costs of supporting children, based on an expenditure survey approach. These tables have been regularly up-dated. As at February 2007, the cost of maintaining a child aged between five and seven was estimated to be $266.80 per week. The estimates rise for older children.
Another such estimate of expenditure relating to children, the Lovering Scale gives a per annum figure for the financial support of children aged eight of $4,732.34 in what is described as a “middle income” family. The Lee Scale is generally accepted as providing a more reliable and realistic yardstick for estimating the financial costs of children, as it includes more costs such as housing; medical; dental; transport; and school uniforms.[4]
[4] See Coon & Cox (1994) 17 Fam LR 692
If the current Lee figure is adopted, it translates to a cost to support the children of around $27,000.00 per annum. Over ten years it equates to a figure of around $270,000.00, which even if discounted generously by 50% is still significantly more than the monies available from the sale of Property C. A similar result occurs if the same exercise is conducted on the more modest estimate Mr Wade has made of the financial cost of supporting L and A.
Accordingly, it is my finding that even if all of the monies currently available to Mr Kaplan from the sale of the Property C land are applied towards the financial maintenance of L and A, this sum is not likely to meet the children’s financial needs over the next decade or so of their lives.
In addition, it seems unlikely that any other potential sources of income to which the children will have access in the future, such as crimes compensation and other monies held on trust on their behalf, will be sufficient to meet their future financial needs. In such circumstances the children will remain predominantly dependent upon their grandparents for their on-going financial support.
Applicable legal considerations
Part 7 of Division 5 of the Child Support (Assessment) Act 1989 provides the mechanism for the payment of child support other than by way of periodic payments.
The objects [section 121] of this division include ensuring that:
·Children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents; and
·Parents share equitably in the support of their parents.
Section 123 of the Act provides that an application may be made to the court for a payment of lump sum child support by the carer entitled to child support provided there is an administrative assessment in force. In this case, I am satisfied that Mr and Ms Wade are the carers of L and A and are so entitled to child support in respect of them. There is currently in force a child support assessment in respect of the children. I do not think it matters that this is a nil assessment. Accordingly, in my view, the threshold issues provided by section 123 are satisfied.
I am also satisfied that Mr Kaplan is a proper party to the proceedings. He is the parent of the two children concerned and so is to be regarded as the liable parent. The registrar of the Child Support Agency has accepted an application for child support from Mr and Ms Wade as the carers of the children concerned and that application related to
Mr Kaplan [see section 31].
Section 124 of the Act provides the relevant criteria to be applied before a lump sum order is made. They are as follows:
·The court must be satisfied that such an order would be just and equitable as regards the child concerned; the child’s carer; and the liable parent concerned;
·It must also be otherwise proper for such an order to be made.
·The court is also directed to have regard to the administrative assessment in force in respect of the child concerned. In this case that assessment is nil and likely to remain so indefinitely.
In considering matters of justice and equity, the court is directed to matters contained in section 117 of the Act, in particular the following:
·The duty of a parent to provide financially for his or her child, which has priority over all other commitments a parent has other than to support him or herself [section 3];
·The proper needs of the child concerned;
·The income, earning capacity, property and financial circumstances of the child concerned;
·The income, property and financial resources of each parent who is a party to the proceedings;
·The manner in which the child is being educated.
Applications for lump sum payment of child support are analogous to applications for departure brought under Division 4 of Part 7 of the Act and incorporate many of the same considerations.
The intent of the Act is to provide a readily understood and accessible formula for application to the incomes of the carers and liable parents of children so that each may know what level of periodic child support is to be received and paid respectively by each. The basis of the formula is the annual income of each of the parties to the applicable determination.[5] The formula is not to be departed from unless “special circumstances” exist.
[5] See section 38 of the Act
The applicable formula, when applied to Mr Kaplan’s prison income, gives an amount of child support payable by him of nil. Given the tragic circumstances of this case, I have no difficulty in reaching the conclusion that it is one which is outside the ordinary run of cases and which has facts peculiar to it which justify an interference with the ordinary application of the child support formula.[6]
[6] See Savery and Savery (1990) FLC 92-131 and In the Marriage of Gyselman (1992) 15 Fam LR 219 at 225
In Prpic and Prpic[7] the Full Court of the Family Court of Australia considered the circumstances in which it might be appropriate to make an order for lump sum child support and said:
“Capitalisation orders may well be appropriate where there are difficulties in enforcement or where it is proper to sever the financial link between the parties. However, as a general rule, given that payments of child support depend upon circumstances prevailing from time to time which 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 so to do.”
[7] Prpic and Prpic (1995) FLC 92-574 at 81,688
The grounds for departure provided by the Act from an administrative assessment include that the assessment concerned has resulted in an unjust and inequitable determination of the level of financial support to be given to the child or children concerned because of the income, property and financial resources of one of the parents concerned in the overall special circumstances of the case [section 117(2)(c)(ia)].
If a court determines that a ground for departure is made out, as with applications under section 123, it must then consider whether any proposed departure order is both just and equitable and otherwise proper. The court is required to follow a three step process.[8]
[8] See Gyselman (supra) at page 240
In exercising its powers under Part 7 of the Act, the court has broad powers [section 140A]. Under section 141 these powers include the following:
·The order of a lump sum;
·The order of periodic amounts;
·The order of a specified transfer or settlement of property;
·The order that payment be made to a specific person or public authority;
·An order made in respect of a child until he or she attains a particular age;
·Any order which the court considers appropriate.
If the court makes an order for payment of child support in a lump sum, it is required to state whether or not such payment is to be credited against the liable parent’s applicable administrative assessments. If the court determines that the assessment is not to be so credited, special circumstances must exist to justify this decision and it must be both just and equitable and otherwise proper to do so [section 125].
Conclusions
There are special circumstances in this case, both for the application of section 117(2) and section 125(2) of the Act. As a result of
Mr Kaplan’s criminal behaviour, financial responsibility for providing for L and A has come to rest primarily with Mr and Ms Wade, where it would not have otherwise fallen.
As a result of his actions, Mr Kaplan has put himself in a position where he is not able to provide recurrent financial support for the children and will be unable to do so for the remainder of the children’s infancy. He has also deprived the children of one of their principle sources of financial support – their mother and her income earning capacity. These are all circumstances which put the matter out of the run of ordinary cases and which justify a departure from the current administrative assessment.
The financial needs of the children rest somewhere between $19,000.00 and $27,000.00 per annum. The current assessment results in Mr Kaplan making no contribution whatsoever to this amount.
I accept he has little if any income but he does have access to property, particularly in the form of the proceeds of sale of Property C, which can be utilised for the children’s on-going financial support.
Given his present circumstances, Mr Kaplan has no need for this property and his primary legal responsibility remains his duty to financially support L and A. The love and devotion Mr and Ms Wade clearly have for their grandchildren does not supersede this responsibility. It remains with Mr Kaplan, although he has little capacity to discharge it, apart from his holdings of property.
The property of the children themselves is not great, amounting to the proceeds they have received from their late mother’s estate and their potential entitlements to crimes compensation. I do not believe that it alone would be sufficient to provide for the children over the next ten to twelve years or so.
In all these circumstances, I have come to the conclusion that it is both just and equitable that there be a departure from the current child support assessment and that there be an order for a lump sum payment in substitution for any future periodic payment thereof. The lump sum ordered will relate to the proceeds of sale of Property C, a sum of approximately $50,000.00.
I also think that it would be proper for such an order to be made. Given the ages of L and A currently, nearly six and nearly four respectively, the sum of $50,000.00 will not come close to meeting their ongoing financial needs over the period of the next ten to twelve years and quite possibly longer.
As Mr and Ms Wade grow older and Mr Wade retires from the paid workforce, the financial pressures on them will intensify. They will not be so well placed to provide for L and A. These are also factors which justify the payment of some form of lump sum by Mr Kaplan in respect of the children’s future financial needs.
Mr Kaplan’s future liability in respect of child support for L and A is likely to remain at nil for the foreseeable future. Given this state of affairs, I am satisfied that special circumstances exist whereby it is appropriate that any lump sum payment not be credited against any
Mr Kaplan’s ongoing future liabilities. In any event the distinction between crediting and non-crediting this payment is likely to be essentially meaningless, as Mr Kaplan’s future liability will remain nil.
Given Mr Kaplan’s likely future financial circumstances, his capacity to make periodic payments is not going to change. Accordingly it seems to me to appropriate to make an order for lump sum payment in respect of his only currently accessible financial resource – the proceeds of sale of Property C.
I am also satisfied that I have authority to direct that such sum be paid to the Public Trustee for South Australia for the future benefit of the children [section 141(1)(f)]. It is likely to be of benefit to Mr and Ms Wade, particularly after Mr Wade has retired, that they will have access to a sum of capital to provide for the future financial needs of L and A. I do not think it necessary that they should receive the sum immediately, if they do not wish to do so.
In the special circumstances of this case I will order that a copy of the reasons for judgement in this matter and the resultant orders be provided to the Public Trustee and to Mr Kaplan at his current residential address.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgement.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 21 December 2007
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