Wifes distribution from family trust to pay school fees not added back but treated as a contribution

Wifes distribution from family trust to pay school fees not added back.
Her payment of school fees in advance treated as a contribution under Section 79 (4)

In Alexiou [2012] FamCA 1146 (14 December 2012) a dispute arose over the wife’s unilateral payment of school fees as to which Le Poer Trench J said at paras 155-156:

“The dispute about payment of the children’s school fees falls for determination in this case……..of the $200,000 which she drew down shortly after separation and can reasonably ascribe to the payment of school fees.

The wife’s argument is that prior to separation the parties had agreed the children should attend private schools. There is no dispute about that fact. The parties’ children C and J commenced attending M School in 2006, two years before separation. The child C commenced in year 5 and the child J in Kindergarten. C is now in year 11 and will complete her schooling in 2013. The wife says the children enjoy their school and are achieving well academically. She considers it would be detrimental and very distressing for the children if they were required to change schools. The husband does not assert to the contrary. Following separation, the husband declined to support the children attending M School on the basis that it could not be afforded unless the parties extended their borrowings or otherwise used capital….”

Le Poer Trench continued at paras 158-159:

“Notwithstanding the husband’s present objection to the children attending private schools, he did on 16 August 2010 transfer to the wife’s account $700 with the description ‘Term 3 School fees’.

In relation to the payment of school fees, the wife relies on three authorities: Mee & Ferguson [1986] FLC 91-716; T & T [1984] FLC 91-588; and Farmer & Farmer [2007] FamCA 158. This argument is also relevant to the wife’s application for a child support departure order.”

Le Poer Trench proceeded to examine those and other authorities and relevant provisions of the Child Support (Assessment) Act 1989, such as s 114 (parents to share equitably in the support of their children); 117 (matters relevant to departure from a child support assessment); s 118 (orders which may be made) and ss 111 and 112 (restrictions upon amending assessments more than 18 months old).

Le Poer Trench concluded at paras 182-184:

“Given all the matters relative to the trust as set out above I am of the opinion that on balance the payment of school fees from the sale proceeds of the Queensland properties are or are capable of being categorised as distributions under the trust to the children….

I also consider there is a clear inference from the construction of the trust deed that the parties had anticipated that the trust would primarily benefit their children. The payment of school fees for the children by the trustee is clearly within the scope of the trust deed.

As a consequence of the above I would not accede to the husband’s submission that the sum of $63,970 paid from the proceeds of the sale of the Queensland property for the children’s school fees should be included in the balance sheet as an add-back against the wife.”

The wife had paid a further $116,886 for school fees, which included a payment of $63,524 for “school fees in advance to ensure the children were able to continue in their current school” (para 185) which she drew from her own inheritance.

In respect of the current school fees Le Poer Trench J concluded at paras 196-197, after examining s 117(4) CSAA (whether it would be just and equitable to make the order) and the evidence, including the financial circumstances of the parties:

“I conclude that the parties expected their children to be educated in private education and it is only the advent of the post separation financial circumstances of the parties which has caused the husband to review the proposal and now oppose the private education for the children.

Given all of the above circumstances coupled with the fact that the children’s school fees since the separation have largely been paid for from the parties’ assets I am of the view that they should bear the cost of that education equally.”

The wife’s payment of $63,524 for school fees in advance from her own inheritance was treated as a post-separation contribution under s 79(4) FLA (para 265)

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