McVie v Woodward [1990] PNGLR 305 (5 July 1990)

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MATRIMONIAL CAUSES - Maintenance order - Variation - Application for - Confined to increase or decrease - Orders sought not within power - Application to be dealt with as application for variation - Inherent residual jurisdiction - Onus of proof - Change in circumstances - Matrimonial Causes Act (Ch No 282), s 76(1), (2).

Under the Matrimonial Causes Act (Ch No 282), s 76(1), the court may vary a maintenance order “so as to increase or decrease any amount ordered to be paid”, and under s 76(2):

“The Court shall not make an order increasing or decreasing an amount ordered to be paid under Subsection (1) unless it is satisfied —

(a) that, since the order was made or last varied, the circumstances of the parties or either of them, or of a child for whose benefit the order was made, have changed to such an extent as to justify its so doing ...”

In 1982, orders were made for the maintenance of a child in the sum of K40 per week to be increased annually in accordance with movements in the consumer price index.

On an application seeking orders for payment of fees and incidental costs involved in sending the child to boarding school in Australia to be secured by payments in advance into a trust fund,

(1) The power to vary an order for maintenance is conferred by s 76(1) of the Matrimonial Causes Act and is confined to making orders which increase or decrease the amount of maintenance ordered to be paid by the original order.

(2) The orders sought which included orders for a lump sum payment were akin to orders fixing maintenance anew and were beyond jurisdiction.

(3) Because the orders sought were, in essence, seeking to obtain an increase in maintenance to cover educational expenses, the application should be so dealt with in the interests of justice under the residual inherent power of the court.

(4) Accordingly, the applicant bore the onus of establishing a change in circumstances since the making of the original order such as to justify a variation.

These were proceedings in which the applicant/wife sought to vary orders for maintenance of a child under s 76 of the Matrimonial Causes Act (Ch No 282).

AMET J.: The parties in this application were married in 1978. The child Dion, whose welfare is at the centre of this application was born on 20 June 1978. The parties were separated in 1981. A decree nisi was granted on 10 May 1982, including an order sanctioning a deed of settlement entered into between the parties and dated 16 February 1982, regarding various financial arrangements between the parties, including maintenance for the child, Dion. Later, on 16 August 1982, the court, on the application of the applicant, made orders in relation to maintenance for the applicant and the child, Dion, specifically as to the method and regularity of payment. The court also ordered “that the applicant be at liberty to apply to vary this order pertaining to educational and medical expenses for the child of the marriage Dion Harcourt Woodward”. The respondent was to pay forty kina (K40) per week for maintenance for the child, to be paid monthly in advance into the applicant’s designated bank account at the rate of one hundred and seventy-three kina thirty three toea (K173.33). This amount was to be increased each year by the movement in the consumer price index.

This is an application in the nature of an application for a variation of the order for the maintenance of the child, pursuant to s 76(1)(j)(iv) and s 76(2) of the Matrimonial Causes Act (Ch No 282). It is useful to set out the terms of the orders sought, as the respondent has objected to them as being in effect new orders and not variation orders. They are in the following terms:

“1. That the respondent be liable to pay for the secondary school fees and all other reasonable and incidental expenses associated therewith of Dion the son of the applicant and respondent.

2. That in particular the respondent pay the fees and incidental costs of sending Dion to board at Kings School Parramatta, New South Wales, Australia.

3. That the respondent pay in addition such other sums incurred as a result of extra curricular activities such as excursions and holiday camps associated with the school, evidence of which is to be rendered to the respondent from time to time as they occur.

4. That the respondent set up a trust fund forthwith to cover the first 6 years of secondary schooling estimated to be in the sum of A$71,572.00 and that the fund be administered by Kirkes Lawyers until further order.

5. Alternatively that the respondent provide security over property either in Papua New Guinea or Australia to such extent as will cover the first 6 years of secondary education.

6. That the respondent pay the sum of K1,000 to Kirkes Lawyers being for the initial cost of uniforms.

7. That the respondent pay the airfares of Dion to and from Australia during all four term holidays and that the estimated costs of these fares being K2,000 per year be paid 3 years in advance forthwith into a trust account in the name of Dion and to be administered by the applicant’s lawyers, Kirkes, until further order.

8. That the respondent produce to the Registrar within 14 days hereof evidence that the school fees have been secured by security over property acceptable to the applicant’s lawyers, or that the trust fund has been set up in a manner acceptable to the applicant’s lawyer and that the first 3 years of term airfares namely, K6,000 have been paid into Kirkes lawyers trust account, and that the initial cost of uniforms, namely, K1,000 has also been paid into Kirkes trust account.

10. That the respondent forthwith pay a sum to the applicant equal to 1 year’s maintenance payments currently based on the Court order of K40 per week.

The principal head of power in maintenance proceedings under the Act is s 73(1) which is as follows:

“(1) Subject to this section, in proceedings with respect to the maintenance of a party to a marriage or of children of the marriage, other than proceedings for an order for maintenance pending the disposal of proceedings the Court may make such order as it thinks proper, having regard to the means, earning capacity and conduct of the parties to the marriage and all other relevant circumstances.”

“(1) In exercising its power under this Part, the Court may do any or all of the following:

(j) in relation to an order made in respect of a matter referred to in Section 73, 74 or 75, whether made before or after the commencement date —

(iv) subject to Subsection (2), vary the order so as to increase or decrease any amount ordered to be paid by the order; or

(k) sanction an agreement for the acceptance of a lump sun or periodical sums or other benefits in place of rights under an order made in respect of a matter referred to in Section 73, 74 or 75, or any right to seek such an order.

(2) The Court shall not make an order increasing or decreasing an amount ordered to be paid under Subsection (1) unless it is satisfied —

A preliminary issue arose as to whether the terms of the deed of settlement entered into between the parties dated 16 February 1982 and sanctioned by the court on 10 May 1982 in respect of the child’s maintenance fell within the terms of s 76(1)(k) of the Act. If it did, that would bar the applicant from making this application. This issue did not arise seriously as counsel for the respondent quite properly conceded, on the strength of overwhelming persuasive Australian case authority on the equivalent Australian provision, s 87(1)(k), that as the deed was not expressed to be in lieu of any rights to an order under s 73 and s 76 of the Act, it could not be said that the court had been asked to sanction an agreement in lieu of rights under the Act within the meaning of s 76(1)(k). The applicant was thus at liberty to apply for variation under the Act.

The respondent has submitted that the power of variation under this provision does not extend to the making of what are, in effect, new orders as are sought by the applicant. It has been submitted that the jurisdiction under this provision is only to increase or decrease the weekly amount ordered by the court in 1982. Reliance was placed on the persuasive authorities of two common law cases: Shaw v Shaw (1966) 84 WN (Pt 1) (NSW) 448 at 453; and Foster v Foster [1964] 1 WLR 1155n; [1964] 3 All ER 541. In Shaw v Shaw, Allen J in the New South Wales Supreme Court was considering s 87(1)(j)(iv) of the Australian Matrimonial Causes Act 1959 (Cth) which is in identical terms to the Papua New Guinea s 76(1)(j)(iv); indeed it is I believe from where we derived our provision. Allen J said (at 453):

“It is, however, important to consider the nature of any variation which may be made and the factors which should be taken into account in deciding the terms of the varied order. If it is accepted, as both parties have submitted, that the court’s power to vary an order is that conferred by s 87(1)(j)(iv), namely, subject to subs (2) already discussed, to ‘vary the order so as to increase or decrease any amount ordered to be paid by the order’, then it would seem that the only variation that could be made is, in the present case, in the quantum of the weekly sum for the applicant herself and/or for one or other of the two children.”

In the textbook Australian Divorce Law and Practice (1962) by P Toose, R Watson and D Benjafield, in the discussion of the court’s power to vary under s 87(1)(j), the authors state thus (at pp 448-449):

“In Shaw v Shaw Allen J catalogued certain important principles applying to the exercise of the power of variation, namely:

(a) proof of change of circumstances is sufficient to found jurisdiction for a variation application;

(b) the powers exercisable under ss 84 and 86 must be exercised in initial determination and if this has not been done those sections cannot be invoked on a variation application;

(d) thus in a variation application there is no power to make an order for a lump sum settlement;

(e) where the applicant seeks to vary the periodic amount previously payable, the means of the parties must be regarded in a broad sense and therefore present income is a primary, but not the only factor to be taken into account;

(f) a general increase in the former wife’s living expenses is not sufficient of itself to justify an increase in a maintenance order.

It follows from those principles that if an applicant wishes to seek an order different in quality from a previous order the leave of the court must first be obtained.”

The English authority of Foster v Foster enunciated the following principle under the English Matrimonial Causes Act 1950, s 28(1) and (3), in relation to power to vary an earlier order. The relevant jurisdiction is to vary not to fix an amount of maintenance de novo, and it is correct to take the original order as a starting point and then to consider to what extent the means of the parties have subsequently altered.

I am of the opinion therefore that I do not have the power to order a lump sum payment. I consider that the orders sought in the application are akin to fixing maintenance do novo. Such new orders should be applied for upon leave being obtained. I am restricted under this provision to making orders only to increase or decrease the amount ordered to be paid by the original order.

I am satisfied however, that the essence of this application is to obtain an increase in the respondent’s maintenance payments towards the needs and for the benefit of the child Dion, specifically his boarding school needs. The orders sought are to achieve this end. Whilst I have ruled that I am not prepared to entertain the grant of the specific orders sought, I consider the Court has residual inherent power in the interest of justice, to consider the application for variation under this section. I propose to consider the application in this way.

It was submitted by the respondent that, if the orders sought were within the jurisdiction of s 76(1)(j)(iv), then it is nevertheless subject to this subsection. I accept that, to found jurisdiction to vary the original order for weekly maintenance by increasing it, the applicant has to discharge the onus of establishing to my satisfaction that since the original order, her circumstances and those of the child have changed to such an extent as to justify my ordering such a variation. It is trite that the court must look at all the circumstances of the parties, including any change in circumstances, which change, however, must be substantial: Cronan v Cronan [1978] PNGLR 207. It is sufficiently established by authority that although a substantial change is an essential prerequisite, there must be many other circumstances also to be taken into consideration: Cronan v Cronan.

I propose now to examine the circumstances of the relevant parties; the child, the applicant and the respondent.

The child Dion Harcourt attended Murray International Primary School in 1989, completing grade VI. Whilst he was attending Murray School, the employer of the applicant husband (Graham McVie) paid his school fees. The applicant mother decided to enrol Dion in first year high school at Kings School, Sydney, Australia, as a boarder. The cost for attending this school as a boarder is the basis for this application. I accept that the circumstance of the cost of Dion’s education at Kings School will change substantially from that at Murray School. He will be boarding and will need airfares to travel to Sydney and back to Port Moresby if the applicant should still be living in Papua New Guinea. Indeed, I understand that the child had commenced boarding at Kings School in the 1990 school year. I will return to discuss the issue of preferences of schools and the matter of relative costs later in my judgment.

When the applicant and respondent were divorced in May 1982, she went back to live in Sydney, Australia. By the deed of settlement dated 16 February 1982 and sanctioned by the court on 10 May 1982, the parties agreed that the respondent would pay maintenance to the petitioner wife an amount of K10,000 per annum for a period of three years. The respondent would pay K40 per week for Dion’s maintenance, to be increased each year by the consumer price index (CPI) movement, and a lump sum settlement of K100,000 in four equal instalments of K25,000 at three monthly intervals. The respondent was also to provide suitable accommodation for the petitioner and the child and be responsible for all rates and other charges until the lump sum settlement had been paid in full.

The applicant purchased a A$126,000 home in Sydney with the help of the respondent. She contributed $50,000 and he agreed to finance the balance of A$76,000 which is evidenced by a deed of guarantee dated 16 May 1984. Early in 1984 the applicant bought a block of land in Sydney valued at A$40,000 with the view to building a home on it. She sold it to her parents for A$45,000 making a profit of A$5,000. She lived in Sydney from 1982 to 1986. She married Mr McVie in 1986 and returned to Port Moresby to reside with him. In 1987, she later sold the home in Sydney for A$132,000. It was not free of encumbrances. She invested $50,000 towards the duplex home unit that she and her new husband bought at Gordons 5 in the National Capital District. She also spent K32,000 to buy a pleasure craft in Port Moresby. The duplex home unit cost about K247,000. She contributed altogether about K110,000. It is mortgaged to the bank to repay the loan for the balance.

In all of these acquisitions of the boat and the duplex unit, Mr McVie contributed nothing. The mortgage to the bank is repaid by the income from one of the units being privately let and a rental allowance from Mr McVie’s employers. The McVie family live in one of the units, and the rental allowance Mr McVie receives goes towards the repayment of the bank loan. The applicant also owns jewellery worth about A$100,000. She has no professional qualification to hold down a job. She worked on an hourly rate with L & A Bricklayers in 1988 to pay for the cost of laying tiles on the duplex by L & A Bricklayers. At the time she could not say whether she was able to hold down a full-time job. There were not too many non-professional jobs available for non-citizen females.

Because Dion’s school fees were paid for by Mr McVie’s employers, the K40 per week maintenance went towards the family upkeep generally. She did not consider that any of the proceeds of the sale of the Sydney house, the lump sum settlement, the money spent investing in the pleasure craft and the duplex unit should be spent on Dion’s education. Rather she did not have the opportunity, because they had been invested for their future.

That is basically her financial circumstance. She has invested the money she had received in settlements from the respondent. She does not work. It was submitted that her financial circumstances have changed markedly to her disadvantage. She and her husband are in deep debt. He is not able to help.

The respondent too has painted a gloomy picture of his financial circumstances. Whilst he is part owner of a diverse group of companies including hotels, they are in deep financial cash flow difficulties. He himself personally earns a net income per month for consultancy work for the Davara group of companies of K2,497 but his expenses total K2,490 per month. He does operate credit cards on company accounts and is able to have access to reasonably large sums of money at short notice but all within a highly complex corporate structure. He is able to have control of and move large sums of money in his capacity as trustee, shareholder and director of a multiplicity of corporations that I cannot pretend to fully understand. He admits to making large cash purchases on his credit cards but they are on the basis of corporate loan arrangements. The respondent contends therefore that he is in no position personally to increase maintenance payments for Dion, let alone pay a lump sum.

Whatever be the precise financial position, I do accept that some financial restructuring has had to take place in the respondent’s financial affairs. Debts and loans have had to be amalgamated and extensions obtained with new conditions imposed. I am satisfied that the respondent’s financial circumstances have changed markedly in relation to his companies. His own personal finances have been so structured in trusts and shareholdings that he does not personally handle and operate a large account, but through his corporate personalities is able to control large amounts of money, even for personal pleasures and acquisitions.

This has been an area of the biggest contention. I have outlined the applicant’s desire to enrol the child at Kings School, Sydney being near where she had relatives to whom Dion could visit on weekends whilst she was still here in Papua New Guinea. There were other factors about the reputation of the School as well. In fact all of this has come to pass, now that the child has commenced boarding at the start of the 1990 school year. The applicant deposed that it was always in hers and the respondent’s contemplation that Dion would attend a private school, and it had always been Kings School.

The respondent has taken very strong objection to Dion attending a boarding school. He does so on the basis of his earlier experience with a daughter of his first marriage who went to a boarding school in Brisbane for a short time. He found that to be a most unsettling experience for his daughter and so is opposed to any of his children attending boarding schools.

The applicant contends that it was always intended that she should have the absolute irrevocable right to nominate whatever school she considered appropriate for Dion to attend. The respondent had abdicated any right by letter to his then lawyer, Mr Graham Francis, dated 26 November 1981.

The respondent has submitted also that whilst the applicant has custody of Dion and lives in Port Moresby, Dion should attend Port Moresby High School, which follows the New South Wales curriculum and has a high standard. It is quite unnecessary for Dion to attend Kings School. The respondent has also submitted that the letter of 26 November 1981 giving to the respondent the right to nominate the school Dion should attend, had been on the then understanding that they were living in Sydney, and that Dion would attend as a day student.

I believe that where parents of a child have separated or divorced and the child is in the custody of one of them, the other does not have the same right or say as the one who has custody, over what school the child should attend, all things being equal. Such a parent may well have a preference, but I think it fair that the parent who has lawful custody should have the final say, all other things being equal.

In this instance I feel it fair that the prerogative should be the applicant’s, to decide what school Dion attends. I think this however, should be qualified by other factors, such as conveniences of finances, travel costs, the school fees, the relative standards of other schools in the nation and relative costs.

The respondent contends that whilst the applicant resides in Port Moresby the child Dion should attend Port Moresby International High School which is a day school, with New South Wales curriculum and has a high standard. This would then be comparable to the applicant living in Sydney and Dion attending high school as a day student. The term fee alone at Port Moresby High School, from my personal knowledge for 1990 is K3,900 without text books, uniforms and all other related costs.

The maintenance payable at the time of trial in July 1989 was K58. With adjustments for CPI movement this will be over K60 in 1990 making an annual sum of over K3,100 which is over A$4,000. The respondent contended that the amount of K40 per week, arrived at in 1982 when the applicant intended to live in Sydney, did not contemplate or take into account boarding and air travel costs which have become necessary as a result of the applicant moving to live in Papua New Guinea with her new husband. The respondent says that it is not unreasonable that these additional costs be borne by the applicant, bearing in mind the benefits that she has received for the child’s benefit.

I am satisfied that there has been much movement and restructuring in the financial affairs of the respondent. There has been and continue to be cash flow difficulties in the management of the diverse group of companies of which the respondent is owner or part owner. This I do not think can be doubted. The respondent has structured his financial affairs in such a way that he does not personally handle large sums of cash but I am satisfied that he has ready access to finance for his personal use for pleasure and entertainment. Such a state of financial security is sufficient for the financial benefits of his child Dion to be considered.

I am thus satisfied I can proceed to consider whether an increase in the weekly maintenance for Dion’s welfare is warranted.

In my opinion, since the original orders in 1982, the applicant’s financial circumstances have improved in terms of assets and investments. I am satisfied that at the time of trial she was not holding a regular job and the prospects of so doing in the future were not bright. She had however, with the financial settlement and assistance that the respondent provided her, been able to invest in a pleasure craft and a duplex home unit which may be valued in excess of K300,000 today. This is a very approximate estimate because the applicant was not able to tell the court what its value was at the time of trial. It would have been easy enough to have obtained a valuation. In the years that Dion’s school fees were paid for by Mr McVie’s employer, the family benefited from the weekly maintenance.

I do not accept that it is reasonable that the applicant and her husband should not feel some moral responsibility to contribute towards Dion’s schooling, from the financial benefits the applicant has had from the respondent, and with which they now enjoy the benefits of asset investments in the pleasure craft and the duplex home unit. The applicant and Mr McVie have not indicated any willingness on their part to contribute towards the boarding school fees. I am satisfied that if they were sincere, they could raise the finance. They are able to add to their loan facility for their duplex home repairs. Is the education of Dion not deserving of some priority, quite apart from the respondent’s obligations?

I am satisfied that, had the applicant continued to live in Sydney, it may not have been necessary for Dion to be a boarder at Kings School. I do not think it reasonable that the respondent should be required to meet such extra costs not in their original contemplation. There are also other factors such as access to schools much nearer to Papua New Guinea in Brisbane and North Queensland. There is no evidence that they have been explored. Right here in Port Moresby of course is Port Moresby International High School which has a syllabus equivalent to New South Wales in Australia and which has a reputation for high standards. It may not have the history and tradition that Kings School has but it has competitive standards. There are of course hundreds of children of Australian parents who are employed in Port Moresby who go to Port Moresby High School.

The applicant has not shown why she had not considered enrolling Dion as a day student at Port Moresby High School except her desire to give Dion a boarding school experience and a personal preference for Kings School’s reputation. I do not believe that the arguments for boarding school preferences such as discipline and better standards and attitude are necessarily true. Attending day high school from home is just as rewarding. Indeed, the parental discipline and guidance at home is far more preferable to handing children over to a boarding school or institution to be reared and disciplined on behalf of parents. It depends on attitude, care and interest of parents in the tuition and welfare of the child at home. I am therefore in agreement with the respondent’s submission that there is no overwhelming reason why Dion should not have been enrolled at Port Moresby International High School. I am of the decided conclusion therefore that the respondent should only be responsible for maintenance that will enable Dion to attend Port Moresby International High School, while the applicant and her husband continue to live and work in Port Moresby.

The applicant and Mr McVie have already enrolled Dion at Kings School. As I find the respondent ought only to have been responsible for the fee equivalent to Port Moresby High School, then the difference in costs between Port Moresby High School and Kings School is for the applicant and her husband to meet. The 1990 school fee for Port Moresby High School is K3,900. This works out to K75 a week. I understand the maintenance as adjusted by CPI is over K60 per week. To allow for uniforms, textbooks and other school costs, I consider a total sum of K100 per week is now warranted, which would make the yearly amount K5,200. I therefore vary the amount of maintenance contained in the order dated 16 August 1982 to K100 per week, for the child Dion, to be paid monthly in advance at the rate of K433.30, paid each calender month to the applicant’s bank account as in the original order of 16 August 1982. As this application was commenced in July 1989 for the 1990 school fees, I propose to make this variation order retrospective to January 1990. I am satisfied I have the authority to make such a retrospective order to do justice in all the circumstances: see Cronan v Cronan. The varied amount of K100 per week is to be inclusive of the CPI adjustments as at 1 January 1990, but subject to yearly CPI adjustments thereafter. The actual amount payable from 1 January 1990 to the date of this varied order is of course the difference between the current and the varied amount.

The parties are at liberty to apply for variation. Costs to follow the event to the applicant to be taxed.

I order no certification for overseas counsel, as I do not consider this application was of such complexity as required specialised counsel.

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Papua New Guinea Law Reports

McVie v Woodward [1990] PNGLR 305 (5 July 1990)

Papua New Guinea Law Reports - 1990