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Accident Compensation Cases

GCW v JMT (FAMC, 21/10/09)

Judgment Text

Cur Adv Vult
Judge R J Murfitt
Although the Child Support Act 1991 has co-existed with the Care of Children Act 2004 and its predecessor, the Guardianship Act 1968, for 18 years, no decision has directly considered whether or not a parenting order can include a condition that a party pay financial support for a child in addition to that parent's obligations under the Child Support Act 1991. The applicant in these proceedings challenges the court's power to do so, Mr Johnston submitting that the Child Support Act 1991 is a code which governs a parent's obligation to pay money for the support of his children. 
This question arises in the context of a disagreement between the parties about the care of their three children, and in particular whether a condition of their interim parenting order made by consent on 21 November 2008, which relates to the sharing of one daughter's school and activity fees should continue to apply. 
The parties separated in February 2008. They have three daughters aged 13, eight and seven respectively. 
On 21 November 2008 an interim parenting order was made by consent following a lengthy mediation conducted by Mr Lendrum, who was appointed lawyer to assist the court for that purpose. The interim parenting order provided for a variety of shared care arrangements and incorporated a number of conditions and understandings which the parents reached as a part of a comprehensive parenting plan. The oldest and youngest of the girls were to be in the care of their father from Thursday until Tuesday each fortnight in a 5:9 arrangement. The middle daughter, M, was to be in her father's care in alternate weeks commencing on Wednesday. 
Condition 15 of the interim parenting order provided: 
“Each parent will be responsible for costs incurred during M's time at each home and there will be a 50/50 division of her costs such as school and activity fees. Should M spend six days or more in the care of (the father) from the end of the Christmas school holidays there shall be a 50/50 division of her costs (school and activity) between (the father and the mother). ”
In March 2009 I reviewed the interim parenting order which was due to expire that month. By that time the oldest daughter M wanted to trial a 7:7 arrangement. The parents were agreeable to that, but there were differing views as to when the week about care arrangement should start during the week. A mediation conference was convened on 25 May 2009 before me, and the parties agreed to implement a 7:7 care arrangement for all three girls commencing on Tuesdays. 
The parties were able to agree to continue all the other conditions of the interim parenting order except for clause 15 which related to the sharing of additional costs for school and activities. 
Now that the parties are equally sharing the care of the children, each has been assessed to pay child support under the Child Support Act 1991. The applicant father pays $405 per month to the respondent once the formula assessments have been set off one against the other. He objects to paying in addition anything toward school fees and extraordinary expenses such as orthodontist fees, remedial reading, dancing, netball and the like. 
The respondent mother seeks to have a condition similar to Condition 15 incorporated in the parenting order that the parties share school and school-related costs (such as uniforms, books, exam fees) and medical and dental expenses. She is willing to accept sole responsibility to pay activity fees to the extent her own finances permit it, so the children can continue to pursue their netball, dancing and martial arts. She also seeks enforcement of the applicant's obligation under the interim parenting order for expenses which she has incurred for the children in terms of Condition 15. 
The first issue to be resolved is whether the court has jurisdiction at all to incorporate financial obligations relating to the support of a child as a condition of a parenting order. 
Is financial support a permissible condition of a parenting order? 
Section 48 Care of Children Act 2004 enables the court to make a parenting order as to the day to day care of a child or contact with a child. Such orders may be a final order or an interim order. Section 48(5) creates the power for the court to impose conditions of a parenting order. It provides: 
“A parenting order may also be subject to any other terms or conditions (including, without limitation, a condition requiring a party to enter into a bond) the Court determines. ”
These powers are subject to s 50 to s 52 and s 60, which relate to age limits of the child, the importance of considering contact and the restrictions against giving responsibility for day to day care or contact to a violent party. They are not relevant for the purpose of this case. 
On the face of it, s 48(5) conveys a wide discretion as to the nature of the conditions which may be attached to a parenting order. However, any discretionary power must be exercised in the light of the policy of the statute which creates the power, and any other legislation relevant to it. 
Mr Johnston for the applicant submits that the Child Support Act 1991, as a taxing statute, provides a code for assessing a parent's obligation to pay child support. He notes in particular s 4(f) which describes one of the objects of the Act being: 
“To provide legislatively fixed standards in accordance with which the level of financial support to be provided for their children should be determined. ”
So, Mr Johnston submits, the court is restricted from making a condition of a parenting order under s 48(5) Care of Children Act 2004 which in effect obliges a parent to pay financial support for a child where that parent has already been obliged under a formula assessment to pay child support under the Child Support Act 1991. 
Mr Johnston submits that, had the legislature intended to enable the court to alter the statutory scheme for payment of financial support, it could have done so specifically in the same way as it has under s 32 Property (Relationships) Act 1976 which requires the court to pay regard to any maintenance order or child support formula assessment in place and enables the court to make or vary a maintenance order, or to make a departure order under the Child Support Act 1991. 
He draws an analogy with the approach adopted by the Supreme Court in Davies v Police [2009] NZSC 47, [2009] 3 NZLR 189Has partially negative history or cases citing, but has not been reversed or overruled[Yellow]  in which the Supreme Court held that reparation could not be ordered as a top up of the 20 per cent shortfall of Earnings Related Compensation to which a claimant was entitled under the Injury Prevention Rehabilitation and Compensation Act 2001, because the 80 per cent Earnings Related Compensation is the statutory entitlement of a claimant, and s 32(5) of that statute prohibits the recovery of damages for that loss under any rule of law or any enactment. That analogy does not co-relate to this particular case, however, because neither the Child Support Act 1991 nor the Care of Children Act 2004 contain such a clear prohibition as there is in s 32(5) Injury Prevention Rehabilitation and Compensation Act 2001 prohibiting relief being sought through any other avenue. 
Nonetheless Mr Johnston's core submission remains a formidable one in as much as it relies upon the provisions of the two statutes directly relevant here. He submits that if the court is to make a condition requiring a parent to provide financial support for a child in addition to a formula assessment, the court is effectively making a departure order without any statutory basis to enquire into matters otherwise provided by s 105 Child Support Act 1991. These require proof of special circumstances, justice and equity as between the child, custodian and liable parent, and whether the departure order is “otherwise proper”. He submits that s 4 of the Care of Children Act — which relates to the paramountcy of a child's welfare and best interests — provides no answer to this argument, because the obligation to provide financial support does not form any one of the principles relevant to the child's welfare and best interests which, by s 4(5)(b) the court must take into account. 
For the respondent, Mrs MacLeod submits the court does have power to incorporate conditions about meeting financial commitments for children as a parenting order condition under s 48(5) Care of Children Act 2004. She highlights the wording of the section, which allows the court to impose without limitation, a condition requiring a party to enter into a bond”. Certainly s 48(5) is framed in the widest possible terms, allowing the court to impose any other terms or conditions … the Court determines”
She submits that travel and other contact costs are often apportioned as conditions in parenting orders. Such was the case in Workman v Da Silva FC Christchurch FP 009-1660-96, 17 February 2000. In that case the court required Mr Workman to pay airfares and other accommodation costs associated with contact as a condition of the parenting order. Significantly of course Child Support Act assessments do not relate to costs of contact, so a condition of that type would not offend against any principle that conditions of a parenting order should not incorporate financial commitment for child support other than those imposed by the Child Support Act 1991. 
The learned authors of Family Law Service (LexisNexis, Wellington, 1981-), at chapter 6.107, give examples of conditions which have sometimes been applied to parenting orders, but do not note any where financial obligations have been imposed pursuant to a condition. Neither do the authors address the question of whether such a condition is intra vires. 
However, the authors of Brookers Family Law, Child Law (Brookers, Wellington, 2006), at chapter CC48.28 and subsequently, give a fuller analysis of conditions which have been employed by the court to attach to a parenting order. 
Conditions have been imposed routinely to limit the use of alcohol, drugs or other harmful substances, relating to a child's residence, religious instruction or health care, requiring parents to submit to drug screening tests, and a variety of other controls which are desirable to meet the needs of that particular child. The authors note at paragraph CC48.32: 
“It is unusual for the Court to attach a financial condition to a contact order, but this was done in Williams v Williams FC Palmerston North FP 054/427/97, 22 June 1999. ”
In Williams v Williams, Judge Inglis QC imposed a condition on a parenting order as to contact — a requirement that the father pay $150 per week to the mother for the upkeep of the children in addition to his formula assessment under the Child Support Act. In that case the father, a businessman, had so arranged his affairs as to be liable for the minimum child support amount. Judge Inglis was driven by considerations as to what conditions would best meet the welfare and best interests of the children. He did not accept the father's protests of relative poverty, and considered the father's lavish treatment of the children while in his case, and his meanness to them when they are with their mother, was an unhealthy model for them to be exposed to. 
In that case, the father was unrepresented. There was no analysis of the jurisdictional basis for this type of condition. Nonetheless the learned judge was one whose understanding of the principles of family law is unparalleled on the Family Court bench and his judgments always command respect. 
Conditions may certainly be attached to parenting orders which incorporate the requirement of bonds to be paid by either or both parent. Section 48(5) specifically authorises such a condition. Workman v Da Silva (supra) is one example of a bond being required, and in that case the bond was administered by the Registrar. 
In Burnard v Sutherland, FC New Plymouth FAM-2002-043-262, 26 August 2005 at [89], I directed the deposit of a bond by both parents into the trust account of Counsel to Assist with provisions for partial forfeiture to a parent in the event of a default by the other. I held that s 48(5) enables the court to impose a financial bond tailored to meet the needs of the case, and not confined to the type of bond which is specifically provided for in s 70 and which contemplates forfeiture to the Crown. 
To impose a condition of the type sought in this case is a quite different proposition. 
The power conferred on the court to impose conditions is quite deliberately cast in the widest terms. Any judicial discretion, however, must be exercised in the light of the objects and policy of the empowering statute, and not so as to contravene the policy of other statutes. 
One of the purposes of the Child Support Act 1991 is framed thus: 
“To assess the minimum level of financial support payable by certain parents in respect of their children … (emphasis added) ”
The Act does not purport to set maximum levels of support which parents should pay for their children, but rather the minimum levels. However, it does comprise a code for the assessment of a parent's liability to pay Child Support and the court no longer has power to make maintenance orders. 
Specific procedures and jurisdictional guidelines have been established by the Child Support Act 1991 to enable departures from a formula assessment. The Commissioner and the court have been given powers for recovery and enforcement of outstanding child support obligations under that Act. 
It would be anomalous if a parent could be directly liable for imprisonment under s 78 Care of Children Act 2004 for breaching an obligation under a parenting order to pay child support payable under a condition attached to a parenting order, when such direct enforcement is not available under the Child Support Act 1991 itself. 
My view is that the discretion invested in the court under s 48(5) cannot be exercised in a way which compels a party to pay more by way of periodic Child Support than is that party's obligation where a Child Support Act assessment is in place. To do so would be to circumvent the jurisdictional boundaries before an upward departure from the formula assessment can be ordered. If Parliament had intended the court to have such a power, it could have incorporated a specific power as has occurred in s 32 Property (Relationships) Act 1976. 
That does not mean, however, that the court may not make a parenting order subject to a condition that either or both parents meet some financial payment which, in the circumstances of the particular case, the court is satisfied is necessary to meet the best interests of the child. Such a condition will not be one which is enforceable with punitive consequences, nor will any money due — unless it is made by consent — be recoverable as a debt. However, if the condition is not complied with, it may be so fundamental as to make continuation of the division of parenting responsibilities untenable in the future. 
The mere fact that a condition of a parenting order is unenforceable at law is not a sufficient reason to consider it cannot be made. Many conditions do not lend themselves readily to enforcement, such as conditions requiring parents to speak civilly to each other in the presence of the children, to ensure their homework is done regularly, not to associate with another undesirable acquaintance, or a host of other conditions which are routinely used in crafting parenting orders. The consequence of breach of a condition is not to invite sanctions, but to undermine the viability of the order continuing. 
Where, of course, a financial commitment is undertaken by a parent by agreement, and that agreement is incorporated as part of a consent order, then of course the situation is different. A contractual relationship has been created, and a contract debt exists, which is capable of enforcement through civil process. 
So it is then I conclude the court does have power to incorporate in a parenting order a condition that one or both parents make some financial provision for the benefit of the child, whether or not a formula assessment is in place under the Child Support Act 1991. The payment will not be enforceable by sanctions under the Child Support Act 1991, nor as a judgment debt, because the court has no jurisdiction under the Care of Children Act 2004 to fix payment of child support. It has instead a similar effect to a condition precedent, so that providing the financial needs are met, then the parenting arrangements embodied in the order are to take effect. 
The question then arises whether such a condition is necessary if the shared parenting plan which the parties otherwise agree to is feasible. 
The practical impact of family finances on the children's needs 
The parties have agreed the girls should all attend S H College. M is happy and settled there. 
M has special orthodontic needs, requiring braces. At present her father is refusing to contribute to the cost of those extraordinary expenses, taking the view his child support assessment finally defines his obligation. That totally overlooks that her mother could take refuge in the same argument, claiming that her obligation to support M is delineated by her formula assessment. That would leave M in a vacuum where neither parent was prepared to take financial responsibility for what both parents agree are expenses which should be incurred to meet her best interests. 
While I have no direct evidence on the point, I infer it is likely that both parents have signed the enrolment applications for M, and would carry a civil liability to meet the expenses associated with her education. Certainly it is not in M's interests that her education be contaminated by contractual disputes between her school and her parents, and the responsibility rests with both her parents to meet her necessary expenses. 
The effect of the parties' agreement to share the care of all three girls has been quite dramatic in relation to the formula assessments. Prior to the interim care arrangement, the children were in their father's care for five nights per fortnight. He was assessed to pay child support of $933.00 per month and was not entitled to receive Working for Families tax credits. 
Now that they are contemplating an equal shared care arrangement for the future, the applicant father is: 
entitled to cross apply for child support from the respondent, who has been assessed to pay $66.00 per month; 
entitled to a reduction in his own formula assessment, from $933.00 per month to $471.15 per month; 
entitled to a Work for Families tax credit of $126.00 per week. 
The outcome is that he pays a net $405.15 per month to the children's mother, and receives the Working for Families credit. 
In addition, the children's mother has a lower entitlement to a Working for Families tax credit. The outcome is the applicant is $11,413 per annum better off than he was, and the respondent is $5,356 per annum worse off than she was before the parties agreed to enter an equal shared parenting arrangement for all three children. 
The imbalance in the parties' formula assessments is due to one factor; the applicant father is earning a much more substantial income than the respondent mother. That reflects one of the objects of the Child Support Act 1991 detailed in s 4 which is: 
To provide that the level of financial support to be provided by parents for their children is to be determined according to their capacity to provide financial support. (emphasis added) ”
Ms Tyree, for the children, endorses the broad division of parenting responsibility (apart from financial responsibility) as one which fulfils the best interests of the children, and is consistent with their wishes (although the youngest daughter is somewhat ambivalent about that). She considers it would be contrary to M's best interests if she be required to leave her present school, although that is one option for the future. 
I am clearly of the view that the future viability of an equal shared care arrangement depends upon the parties reaching agreement that they will share extraordinary expenses relating to the children, such as school fees and extraordinary medical and dental expenses. 
The children cannot be exposed to a situation where, during the week they live with their father they cannot attend the extracurricular activities which they participate in during the week they are in their mother's care, simply because he refuses to pay the fees. He needs to appreciate that bearing equal responsibility may require a greater sacrifice by one parent or the other according to his or her talents. He has a greater earning capacity than the children's mother, and needs to be generous in relation to his ability to provide money for them. On the other hand, he may be unable to sew sequins on ballet dresses, so the time and skill which the children's mother has will be in greater demand for that type of activity, for example. 
While I cannot direct the applicant to meet financial obligations over and above his formula assessment, neither can I direct the respondent to do so. I can, however, make it a condition of the parenting order that the parents meet those expenses if the parenting order is to be made for alternate weeks in the way that they propose. 
Accordingly, I direct that a judicial conference be convened when the parties can advise the court as to whether agreement has been reached that, in addition to formula assessments in place, they will equally share responsibility for meeting the children's school fees and expenses, and extraordinary medical or dental expenses, including orthodontic expenses. 
If they cannot do so, the fundamental and division of time the children reside with each parent will need to be revisited. 
Enforcement of interim parenting order 
The parties had reached agreement on 21 November 2008 as a condition of the interim parenting order made that day that in fact school and activity fees would be shared in relation of one or (conditionally) two of the children. The respondent claims the applicant has not fulfilled his obligations pursuant to that condition, and her counsel Mrs MacLeod seeks enforcement of the order. 
The Care of Children Act 2004 does not contain any power to enforce monetary obligations of that kind. For example, judgment cannot be given to establish an enforceable judgment debt under that Act. 
However, the agreement which the parties have reached does establish a contractual relationship which is enforceable at law. Condition 15 is simply clear evidence of the agreement which they reached. 
The respondent will need to issue proceedings to enforce payment of the amount she claims to be owed already by the applicant, and I expect then that the amount involved would lend itself to an application to the Disputes Tribunal. However, I have no jurisdiction to determine that issue and grant relief in these proceedings. 
This decision was recalled on 30 September 2010 to correct erroneous and incorrect reference in [9] in which “respondent's obligation” should have read “applicant's obligation”. This error has now been remedied by replacing respondent's obligation with applicant's obligation. 

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