Balzano & Balzano - [2010] FamCAFC 11

FAMILY COURT OF AUSTRALIA

BALZANO & BALZANO

[2010] FamCAFC 11

FAMILY LAW - APPEAL – FROM A DECISION OF A FEDERAL MAGISTRATE – Appeal in relation to Child Support – Leave to appeal required – Appellant submitted that the Federal Magistrate misconstrued the nature of the application and erred in not providing reasons at or shortly after judgment – Federal Magistrate’s approach was unduly technical and misconstrued the application – Lengthy delay between judgment and written reasons may impact on the readiness of appellate court to interfere with findings – Leave to appeal granted in light of error in addressing the application
FAMILY LAW – APPEAL - CONSEQUENCE OF GRANT OF LEAVE – Father sought the assessment be set aside for the exceptional circumstance that he was unable to earn income whilst imprisoned – Consideration of the circumstances of imprisonment and the balance of not importing abstract notions of justice and public policy – Father’s imprisonment does constitute an exceptional circumstance – Father carries a debt owing – Child Support Registrar has discretion to remit late payment penalties – Not satisfied the father faces hardship if the child support agreement is not set aside – Application for setting aside of Child Support Agreement is dismissed

Child Support (Assessment) Act 1989, s 4; s 116; s 117; s 136
Child Support Legislation Amendment (Reform of the Child Support Scheme - New Formula and Other Measures) Act 2006
Child Support (Registration and Collection) Act 1988 s 68

Daley & Daley (2009) FLC 98,039
DJM v JLM (1998) FLC 92-816
Hendy v Deputy Child Support Registrar (2001) 27 FamLR 641
In the Marriage of Lutzke (1979) 5 FamLR 553
In the Marriage of Scott (1994) 17 FamLR 420 at 444
In the Marriage of Spinks (2001) 29 FamLR 259
Nilsson & Child Support Registrar & Nilsson (2006) 35 FamLR 165
Rollings & Rollings [2009] FamCAFC 87
Sandrk and Sandrk (1991) FLC 92-260
Vakil & Vakil (1997) FLC 92-743

APPELLANT:

Mr BALZANO

RESPONDENT:

Ms BALZANO

APPEAL NUMBER:

122

2009

FILE NUMBER:

SYC

3973

2008

DATE DELIVERED:

2 February 2010

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Sydney

JUDGMENT OF:

Warnick J

HEARING DATE:

19 January 2010

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

19 August 2008

LOWER COURT MNC:

[2009] FMCAfam 1226

REPRESENTATION

SOLICITOR FOR THE APPELLANT:

Ms Bassant

SOLICITORS FOR THE APPELLANT:

Legal Aid NSW

RESPONDENT:

No appearance by, or on behalf of, the respondent

Orders

That the father have leave to appeal the orders of Federal Magistrate Jarrett made in the Federal Magistrate’s Court of Australia on 19 August 2008.
That the appeal be dismissed.
That the application of the father filed 6 January 2010 be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Balzano and Balzano is approved pursuant to s 121(g) of the Family Law Act 1975 (Cth).

IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: EA 122 of 2009
File Number: SYC 3973 of 2008

Mr BALZANO

Appellant

And

Ms BALZANO

Respondent

REASONS FOR JUDGMENT

Should a payor of child support under a child support agreement be relieved of liability for arrears, which accrued while he was in prison, convicted of “soliciting to murder” the payee, mother of the children concerned?
That becomes the critical question in this application for leave to appeal by the payor father, though it was not a question determined in the proceedings from which the proposed appeal arises.
The parties, Mr and Ms Balzano, have two children, B born in August 1995 and L born in August 1997. Following the breakdown of their marriage in about April/May 2001, on 22 November 2001, the parents resolved various issues relating to parenting and their financial affairs, by consent order made in the Family Court of Australia at Parramatta. That order included a notation, part of which was as follows:
16.It is noted that the parties have agreed to execute a Child Support Agreement to vary the existing child support assessment…
On or about the same day, the mother and father entered into a child support agreement, in accordance with which the father commenced payments.
However, on 27 June 2003, the father commenced a period of imprisonment arising from the conviction earlier described.
While still incarcerated, on 7 July 2008, the father filed in the Federal Magistrates Court in Sydney, an application for final orders, the nature of which has been contentious. The application was prepared by solicitors acting on his behalf. In that part of the form asking about the type of orders sought, the “box” for “children (parenting – with whom a child lives, spends time or communicates)” was marked. No other boxes were marked. Those boxes included one for “child support”. However, in another part of the application, reference was made to the Child Support Agreement, though none of its terms were set out. But, then, in the “final orders” sought section, was the following:
1.That the Child Support Assessment be reduced to nil as at the date to which it stands paid.
2.Such further or other Orders the court deems fit.
No parenting orders were sought. It was thus a poorly drawn document, a feature which was significant to its fate.
The father’s application came before Federal Magistrate Jarrett, sitting in Sydney, on 19 August 2008.
The learned Federal Magistrate dismissed the father’s application and it is that dismissal which the father, after being granted an extension of time within which to do so, seeks to challenge. At the hearing before me, Ms Bassant represented the father. The mother provided written submissions, but did not appear at the hearing.
Though the transcript indicates a “JUDGMENT DELIVERED” no formal reasons of the Federal Magistrate were published at or near the time of dismissal of the father’s application, though, through exchanges between bench and bar, the transcript indicates the approach of the Federal Magistrate. Reasons were published some 16 months later and arguably, the approach there taken differs from that anticipated from the transcript.
There are five grounds in the proposed appeal, but they can be reduced to two.
·that both on 19 August 2008, and in his reasons of 20 November 2009, the Federal Magistrate misconstrued the application and so did not address the facts or law correctly;
·that the Federal Magistrate erred in not providing reasons for judgment at or shortly after judgment.
The father seeks that this court exercise the jurisdiction that Jarrett FM had, to determine his application, and set aside the child support agreement. That request squarely raises the issue of what, if any, significance should be given to the reason why the father was not in a position to earn income during the period for which he seeks relief.

Did Jarrett FM, in either or both of the hearing on 19 August 2008 and his reasons of 20 November 2009, misconstrue the father’s application and if so, not address the facts and/or law correctly?

In support of his application, the husband filed a financial statement, indicating that he was still in prison, that he had no income and no property interests of which to speak.
In an affidavit in support, the husband deposed to entry into the Child Support Agreement and to its essential terms. The child support agreement itself is handwritten and undated. It provided for child support pending the sale of a parcel of real estate owned by the parties and for other provision once sale had been effected. From that time, the father was to pay school and after school care fees for B and day care fees for L, school fees for L once he commenced school, the periodic sum of $200.00 per month per child adjusted for CPI increases, the gap between health fund cover and actual expenses for medical and dental and the fees for certain lessons for the children. The Agreement was said to vary a then existing assessment and to provide that no arrears be payable under that assessment. The question of the meaning of the term “after-school care” was clarified, so that the husband was responsible for fees to 5.00pm, after which the fees were the wife’s responsibility.
The father also deposed to his eligibility for parole on 26 December 2008. He then deposed:
3.I have paid at the time of my imprisonment 6 months in advance in the amount of $400.00 per month for that six month period. The Child Support Agency also took my tax funds cheque which was approximately $2,545.81.
4.Apart from the above payment I have not been able to make any further Child Support Payments due to my incarceration because I have no income.
5.The Child Support Agency has been accrued and its is now in arrears.
…
7.In view of the change of circumstances I have not earned income and the Court set aside the Child Support Agreement of 22 November 2001 and discharged all arrears and penalties occurring thereto. (emphasis added)
8.On 23 January 2004, I instructed Ms. Karen Shea from the Child and Family Advocacy Service of Legal Aid to forward a letter to the Respondent Mother, and the Respondent Mother replied on the cover of a letter dated 4 February 2004, declining to consent to the discharge of the Child Support (emphasis added).
The transcript of the proceedings on 19 August 2008 indicates a Mr Hawkins announcing his appearance to the Federal Magistrate on behalf of the Child Support Registrar “in all of the matters in today’s list”. The matter of Balzano is mentioned and Jarrett FM enquires whether anybody appears. Mr Hawkins says “not as I understand a child support matter, is it?” to which the Federal Magistrate responded “I don’t now, it could be. Anybody here in [Balzano]? While we are hunting down Mr [Balzano] what’s the first matter on your list?”.
What immediately then transpired is not transcribed but it seems that another matter was interposed and then the Federal Magistrate again turned his attention to the matter of Balzano. He said:
In the absence of appearance on behalf of the applicant the application filed on 7 July 2008 is dismissed.
Another matter was then dealt with, after which, it appears, the matter of Balzano was again mentioned. At that time, a Mr Cohen appeared and the following exchange occurred:
MR COHEN: I apologise, I was up trying to do a divorce list and I am in another list for a transfer. Mr [Balzano] is in gaol. It’s an application for the child support agreement to be set aside and the arrears to be reduced to nil. The affidavit in support of my client’s application reveals that there was a letter sent to the mother asking her to consent to the setting aside of the child support agreement because he was unable to proceed with that commitment due to the fact that he was in gaol. (emphasis added)
I have a letter, two letters here, or faxes, from the Child Support Agency confirming (a) they’ve received the documents, and also they’ve forwarded the documents on to the mother.
FEDERAL MAGISTRATE: I take it that’s an application for me to set aside the orders I’ve already made.
MR COHEN: Yes, I do.
FEDERAL MAGISTRATE: On what basis would I set them aside? You were in some other Court, why is that a basis? This matter was listed at 9.30.
MR COHEN: Sir, I apologise for not being here and I was trying to actually get the letter from the Child Support Agency to confirm service so that I could proceed with the application, and I do apologise for that.
FEDERAL MAGISTRATE: Yes, all right hand up those documents.
Shortly after, the Federal Magistrate asked whether Mr Cohen sought a hearing of the application in the absence of the mother and Mr Cohen confirmed that he did so. After the Federal Magistrate had read the material, Mr Cohen made submissions, in which he referred to the Child Support Agreement, the incarceration of the father subsequently and the incapacity of the father during that time to make any payments. He again advised that a letter had been sent to the mother seeking consent to set aside the agreement in view of the father’s incarceration and the receipt of a negative response. Mr Cohen continued:
MR COHEN: …We’re now asking that the Court take into account that he has been in gaol and has tried to meet his payments as he could, but because he’s in gaol with no income, he could not do so, and hence the child support agreement in effect is now – there’s a significant change of circumstances because it wasn’t contemplated he’d be incarcerated or even be charged at that stage. I’d ask if you would grant the application on that basis. His financial statement also reveals no income. We’ve asked that the child support agreement be reduced to nil, as at the date it stands paid. (emphasis added)
FEDERAL MAGISTRATE: He seeks an order that the child support assessment be reduced to nil. So that’s an application for a departure order isn’t it?
MR COHEN: I suppose it is, yes, I’m sorry.
FEDERAL MAGISTRATE: Has he made an application to the SSAT or the child support review office, or any of those other things that you’re required to do under Part VI(a)?
MR COHEN: No.
FEDERAL MAGISTRATE: They’re preconditions to jurisdiction, aren’t they?
MR COHEN: Not that I’m aware, no.
FEDERAL MAGISTRATE: Read section 116(2) in the Act.
The Federal Magistrate then read to Mr Cohen part of s 116(2) of the Child Support Assessment Act (1989) (Cth), immediately after, saying:
He’s making this application isn’t he?” After which he said “And on it goes. None of those things are complied with, are they?
MR COHEN: No, he’s made no application to the Registrar as far as the Child Support Agency, as far as I’m aware.
It is then that the transcript, as earlier indicated, shows that a judgment was delivered.
The reasons delivered on 20 November 2009, for the orders made on 19 August 2008, are as follows:
1.This is an application for an order that the child support assessment be reduced to nil as at the date at which it stands paid. It is also an application for such further or other orders as the Court deems fit. The application and the material filed in support of it reveal that there is an administrative assessment for child support in place in respect of the applicant by which he has to pay child support. The administrative assessment is based upon an accepted child support agreement entered into between the applicant and the respondent in this case. The child support agreement is set out as annexure A to his affidavit filed on 7 July 2008.
2.The Child Support (Assessment) Act 1989 permits parties to come to an agreement and indeed encourages parties to come to an agreement about child support if they are able to do so. It permits the acceptance by the Registrar of agreements relating to child support.
3.Once an agreement has been accepted then the mechanisms under the Act take over and an administrative assessment of child support is issued which reflects the child support agreement entered into between the parties. The child support agreement itself can be set aside, discharged or otherwise dealt with by the Court pursuant to s.136 of the Act, but it is necessary to understand what s.136 permits the Court to do and in what circumstances it permits the Court to do those things.
4.Section 136(2)(a) and (b) perhaps reflects the general law in respect of contracts. It provides that the Court might set aside an agreement for child support if it was obtained by fraud or there was a failure to disclose information, or it was entered into in circumstances where there was undue influence or duress in obtaining that agreement, or it was obtained where one or other of the parties engaged in unconscionable conduct. There are some grounds available to set aside a child support agreement where that agreement is a "limited child support agreement" for the purposes of the Act, and then there is a provision which provides for the Court to set aside a binding child support agreement which -
because of exceptional circumstances, relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.
5.That there is a difference between the child support agreement and the assessment issued upon the basis of that child support agreement is picked up in s.136(4) of the Act. That section provides:
If:
(a)the Court sets aside a child support agreement under this section; and
(b)the Court is satisfied as mentioned in para. 117(1)(b) (departure orders);
the Court may make an order under div. 4 of pt. 7 without an application having been made under s.116.
6.That section clearly identifies that there is really two steps to the process if a party is applying to have child support reduced and a child support agreement discharged. In this case no application is made and on the material there is no basis to support the discharge of the child support agreement under s.136 of the Act. The application simply seeks that the child support assessment be reduced to nil. The Court's power to make that order is found in s.116 and 117 of the Act, but s.116(1) proscribes the jurisdiction of the Court by requiring parties to have made applications under pt. 6A of the Act before coming to Court. (emphasis added)
7.Section 116(1)(b) of the Act permits the Court to make an order for departure under s.116 and 117 if the applicant is a party to other proceedings that are presently pending before the Court having jurisdiction under the Act. If there was another pending application before this Court, an application under 116 or 117(2) might piggyback, for want of a better expression, upon that application (see cases like McGuiness & Cowie (2002) 29 Fam LR 441). But that is not the case here. There is no such application upon which this one might piggyback. There is no application which is before the Court in respect of which the Court has jurisdiction.
8.The application must in the circumstances be refused. The application filed on 7 July 2008 will be dismissed.
In my view, in the light of the material that was before the Federal Magistrate, it was a misconstruction to say, as the learned Federal Magistrate did in paragraph 6 above, that no application was made for the discharge of the Child Support Agreement, under s 136 of the Act. The approach taken was, in my view, unduly technical and unfair to the father.
However, it is appropriate to acknowledge that the solicitor for the father prevaricated as to the basis of his application, the Federal Magistrate was conducting a busy list, hampered by the failure of the father’s solicitor to appear at the time the matter was called. Nonetheless, what the father was really seeking was plain.

Did the Federal Magistrate err in failing to provide reasons for judgment at or shortly after the orders were made?

In her written summary, the father’s legal representative submitted:
26.In July 2009 the applicant received a letter from the Court informing him there were no formally pronounced reasons in existence.
27.The applicant commenced this appeal proceeding on 13 October 2009.
28.At the first Court date in this appeal proceeding on 1 December 2009 the applicant’s solicitor became aware of the reasons for judgment.
…
30.A court is obliged to publish reasons for a decision at the time of the decision or very soon thereafter. It is submitted that 16 months after judgment cannot be considered “very soon thereafter”.
31.It is further submitted that the delay in providing reasons for judgment vitiates his Honour’s conclusion, at para 6 of his reasons, that in this case:
6.…no application is made and on the material there is no basis to support the discharge of the child support agreement under s136 of the Act. …
32.A comparison of his Honour’s reasons for judgment with the transcript reveals, it is submitted, a particular point of contrast and a quite different process of analysis.
33.The point of contrast is the attention his Honour affords s136 in his reasons, as opposed to his Honour making no mention of s136, or in relation to s136, at hearing.
34.The different process of analysis is that, as mentioned above in relation to Ground 4, his Honour appears in his reasons to consider the application of s136 and then moves on to consider the application of s116 (albeit incorrectly in the applicant’s view) but in the transcript his Honour’s focus appears to be singularly on the application of s116.
35.Overlapping with Ground 4 above, it is submitted that at hearing his Honour failed to correctly identify s136 as being the primarily relevant section of the statute to be applied.
36.Whilst it is accepted that delay of itself cannot form a ground of appeal, it is submitted that, as noted in para 30 above, his Honour’s delay in providing reasons for judgment vitiates his Honour’s conclusive finding that there was before him no application to set aside a child support agreement. (footnotes omitted)

In view of my conclusions already expressed, I think little needs to be said about this argument. I make just two observations.
In relation to the submission that a court – in particular the Federal Magistrates Court of Australia – is obliged to publish reasons for orders made at the time thereof or very soon thereafter, I doubt that that proposition is maintainable in the light of the views expressed by the Full Court of this Court in Rollings & Rollings [2009] FamCAFC 87, especially at paragraphs 114 – 129. However, I think there is no doubt that a lengthy delay such as occurred here, may impact on the readiness of an appellate court to interfere with findings of the court below, that, as most findings do, depend on an assessment of the material at hearing. That observation reinforces my view of the erroneousness of the conclusion of Jarrett FM in paragraph 6 of his reasons of 20 November 2009, namely that:
No application is made and on the material there is no basis to support the discharge of that Child Support Agreement under s 136 of the Act.

Conclusion as to leave to appeal

The decision appealed being one made under the Assessment Act, leave to appeal is made necessary by the terms of s 102A(1)(a) of that Act. As to the principles to be applied, I have in mind what was said of such leave applications in Hendy v Deputy Child Support Registrar (2001) 27 FamLR 641.
In my view, leave should be granted, because the learned Magistrate erred in principle by failing to address the application before him, which the father was entitled to have heard.

Consequences of a grant of leave

What I have said of the Federal Magistrate’s erroneous approach means that there is merit in the appeal. In that circumstance, as indicated, the father seeks that I exercise the jurisdiction of the Federal Magistrate, hear his application and set aside the child support agreement. The father also seeks “That leave is granted for the Registrar of the Child Support Agency to make a determination under s 98S of the Act for the period 27 June 2003 to 26 December 2008”.
While in her written submissions the mother argues that the father “not be granted leave to have the Agreement set aside”, she does not specifically address what should be done if leave is granted. However, there is no sign that she opposes a re-exercise of jurisdiction and it is clear that she asks that the father’s application be dismissed.

Should the agreement be set aside?

As it now stands and as it stood as at 19 August 2008, s 136 of the Assessment Act, in relevant parts, provides:
136Power of court to set aside child support agreements or termination agreements
(1)A party to either of the following agreements may apply to a court having jurisdiction under this Act for the court to set aside the agreement:
(a)   a child support agreement that has been accepted by the Registrar under section 92 or 98U;
(b) …
(2)If a party has applied under subsection (1), the court may set aside the agreement in accordance with the application if the court is satisfied:
(a)   …
(b) …
(c) …
(d) in the case of a binding child support agreement – that because of exceptional circumstances relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.
…
(4)If:
(a)   the court sets aside a child support agreement under this section; and
(b) the court is satisfied as mentioned in paragraph 117(1)(b) (departure orders);
the court may make an order under Division 4 of Part 7 without an application having been made under section 116.
It is the highlighted subsection, 136(2)(d), upon which the father relies.
Ms Bassant submitted, and I accept:
2.The child support agreement is a creature of Part 6 of the Child Support (Assessment) Act 1989 (“the Act”) which provides for parents to agree between themselves the child support payable. The child support agreement was made on 22 November 2001 and therefore pre-dates the current version of the Act which commenced 1 July 2008 and provides for two classes of agreement: limited and binding. By Schedule 5, Part 2 – Application and transitional provisions of the Child Support Legislation Amendment (Reform of the Child Support Scheme - New Formula and Other Measures) Act 2006 (“the Amendment Act”) the child support agreement was transitioned to a deemed binding agreement.
The power to set aside is clearly one the exercise of which is discretionary and, in my view, because of the words in subsection (2) “…may set aside…if…”, an application to set aside may be refused, even if the terms of ss 136(2)(d) are met.
Nonetheless, the exercise of discretion must not be arbitrary, but must be judicial and exercised in the context of the Assessment Act. Though not in reference to the power under discussion, what was said in relation to similar powers, in the following cases, supports this view.
In In the Marriage of Lutzke (1979) 5 FamLR 553 at 559, speaking with regard to an application to discharge an order for maintenance of children, Lindenmayer J said:
…However, the Act is silent as to what may constitute “just cause” for the discharge of an order. In my opinion, however, the words “just cause” are not used in any broad general sense, nor are they intended to import any abstract notions of justice, “Palm tree” or otherwise, into the determination of applications for discharge. In my opinion those words must be interpreted in the context of the Act as a whole and in particular with regard to the other specific provisions of the Act which relate to maintenance. Thus a “cause” for the discharge of an existing maintenance order will be “just cause” only if, having regard to the other provisions of the Act, particularly those relating to maintenance, it can be said that it is “right” or “proper” that the order should be discharged.
The above passage was considered by a Full court (of which Lindenmayer J was a member) and after examination of numerous authorities, that Full Court said:
5.23Having regard to all of that authority we think that the above-quoted dicta of Lindenmayer J in Lutzke (supra), which appear to have received no judicial criticism over the last eighteen years, probably define the concept with as much precision as it is possible to give it in this context. Thus we conclude that, having regard to the current wording of s.83(7) (supra), the question whether there is “just cause” for discharging an order, including one made in a reciprocating overseas jurisdiction and registered in Australia under the Regulations, is to be determined as an exercise of judicial discretion by reference to notions of what would be regarded as “right” and “proper” in Australia, having regard (inter alia) to the provisions of ss.72 and 75 of the Act. However, we are of the view that the effects of s.83(7) is not such as to preclude regard also being paid to provisions of the Act other than ss.72 and 75, to the extent that they may be considered relevant in the circumstances of a particular case, and that may include, for example, s.81 and s.43(a). [Vakil & Vakil (1997) FLC 92-743)
The term “exceptional circumstances” has been considered in a number of cases, not necessarily in relation to its use in the Assessment Act. These include Sandrk and Sandrk (1991) FLC 92-260, where Gee J said (at 78,750):
What amounts to exceptional circumstances is very much a question of fact and degree and the question in this case, as in that case, is whether what occurred subsequent to my orders of 22 May 1989 were such as to take it out of and beyond the ordinary circumstances in which such a change might be reasonably expected to occur.
A feature in Simpson and Hamlin (supra) which Lambert J, saw as significant, and indeed as did the Full Court in agreeing with his Honour in this respect, was whether or not the change occurred unexpectedly and quickly after the making of the property order so that it could not have been regarded within the reasonable contemplate or expectation of the parties. It seems to me that that is the situation in this case [emphasis added]
Recently, in Daley & Daley (2009) FLC 98,039, Brown FM said:
85. Exceptional is defined by the New Shorter Oxford English Dictionary as follows:
Of the nature of or forming an exception; unusual, out of the ordinary; special; (of a person) unusually good, able, etc.
86. Accordingly, for circumstances to be exceptional, they must be unusual, out of the ordinary or special. In the child support context, in respect of an application for departure, Kay J held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. [see Savery & Savery (1990) FLC 92-131]
Some little assistance, perhaps more as to the “tenor” of the term “exceptional circumstances” rather than its meaning, might be gleaned from the explanatory memorandum in respect of the Bill introducing the present s 136. At that time, the Assessment Act provided:
136Power of court to set aside child support agreements or termination agreements
(1) A party to either of the following agreements may apply to a court having jurisdiction under this Act for the court to set aside the agreement:
(a)a child support agreement that has been accepted by the Registrar under section 92;
…
(2)If a party has applied under subsection (1), the Court may set aside the agreement in accordance with the application f the Court is satisfied:
(a)…
(b)…
(c)that because of a significant change in the circumstances of one of the parties to the agreement or a child in respect of whom the agreement is made, it would be unjust not to set aside the agreement; or
(d)in the case of a child support agreement – that the agreement provides for an annual rate of child support that is not proper or adequate, taking into account all the circumstances of the case (including the financial circumstances of the parties to the agreement). (emphasis added)
The explanatory memorandum stated:
Setting aside binding agreements
As currently drafted, courts could set aside binding child support agreements (made with legal advice) in a range of circumstances, including circumstances that may have been contemplated and dealt with in the agreement. It is not intended that binding agreements should be set aside lightly. This amendment restricts the scope for the setting aside of binding child support agreements, by specifying that exceptional circumstances relating to one of the children or parties to the agreement must have arisen since the making of the agreement, and that the child or party would suffer hardship if the agreement were not altered or set aside. (emphasis added)
As to the “facts”, I accept that, as the father deposes in an affidavit filed 6 January 2010, for the period of his incarceration the husband had virtually no income. I accept that he currently has no property to speak of. He has also taken on the commitments of a child, born in November 2008 to himself and Ms D, whom the father married while he was still in prison, in April 2008. A further child, said in the material to be due to be born in February 2010, was, I am advised from the bar table, born within the last fortnight.
The father obtained employment in July 2009 (I was also told from the bar table he has now lost that position). As the father had obtained work he commenced paying $183.98 towards the maintenance of B and L. He deposes that he currently owes the Child Support Agency $27,706.76 in child support and $11,601.26 in late payment penalties. According to his statement of financial circumstances his average weekly income is (was) $689.00. He has property of $15,500.00, comprised of a car and household contents.
The mother puts no deposition before me, however the father does not contend that anything in her financial circumstances assists him in obtaining the setting aside of the agreement.
In a “Further Submission” supplied by the mother she makes assertions about the father’s prospects, but I place no reliance on them.
Ms Bassant, for the father, articulates the arguments on his behalf as:
·   that the objects of the Assessment Act indicate an intent that the amount of child support is determined by the parents’ capacity to pay, as it stands at the time liability is assessed or agreed;
·   that not to expunge the arrears accrued during the period of imprisonment would leave the father in a very onerous state of affairs, having regard to the continued accrual of penalties and his current commitments;
·   that to require payment of arrears and penalties has the character of compensating the mother, rather than of the father making a contribution for child support;
·   the father does not have a history of avoidance of child support obligations;
·   the father is suffering hardship as the amount he is paying for B and L represents approximately 20-25% of his net income (presumably, as it was);
·   that without limiting the father’s primary duty to maintain B and L, his duty to maintain the children of his current marriage is not of lower priority. The child of his current marriage born in November 2008 and the child recently born are not taken into account in the child support agreement.
In her written submissions, the mother argues:
15.The fact of the Appellant’s imprisonment should not be considered exceptional circumstances.
…
18.Exceptional circumstances must surely amount to circumstances which had not been contemplated by either party when the Agreement was entered into. It was the Appellant’s own conduct that caused him to be incarcerated. Any person who commits a crime, does so in the knowledge that if they are caught and convicted, it is highly likely they will go to prison. The legislation would not have intended for criminal activity to be considered an exceptional circumstance. If the Appellant is found to have satisfied the criteria for exceptional circumstances on the basis of his incarceration, then surely this allows him to benefit from his own criminal behaviour and criminal behaviour of a most heinous type, that of Soliciting to Murder, directed at me, the other party to the Agreement. It is not in the public interest for criminal conduct, particularly in the context of Family law situations and Binding Agreement, to be seen to be rewarded.
I made some observations about reliance on “public policy” in matters like the present case, in Nilsson & Child Support Registrar & Nilsson (2006) 35 FamLR 165. There, a Federal Magistrate had alluded to “public policy”, in relation to an issue over enforcement of child support arrears, as follows:
32.In paragraphs 41 to 43 of her reasons (quoted earlier), the Federal Magistrate said:
“41.For this Court to permit the husband to completely disregard the legal obligations imposed upon him by the Arizona Orders and to behave in a manner which totally disregarded that order and the rights which flowed properly to the wife under the orders as he has done, on the basis that he made a conscious decision to take no proper and available legal action in the United States, would not be proper. … I am satisfied that to do this would breach important public policy considerations for Courts (wherever they may be situated) to ensure that they respect each others laws and orders.
42.Whist it may be that the husband now brings evidence before this Court, that he failed to bring before the Arizona Court, that he always lacked capacity to pay (and I do not find he necessarily has that may establish a cause for discharge or variation) but it does not establish a “just” cause. The word “just” imports with it the concept of justice. It would not be providing justice as between the parties to permit the husband to in effect go and lie (sic) in a country such as the United States with his wife, enjoy the benefits that country offered to then for a number of years but then when proper legal processes were invoked against him, permit him to leave the country, behave in a contemptuous manner when orders were made, and then permit him to ignore both the orders and consequences of his actions upon the wife by completing negating the effect of the Court orders by discharging the arrears of spousal maintenance from the date of the order until the point in time when he realised those consequences had caught up with him by a change in Australian law in 2000. (emphasis added)
…
33.What the learned Magistrate seems to have done in paragraphs 41 to 43 was to import into the consideration of whether “just cause” had been established, concepts of “public policy” referred to in, among other places, paragraph 41, which she saw as so significant that they rendered it unnecessary to make findings about matters directly relevant to the application to discharge or vary the orders, namely whether from the date the orders were made or at any subsequent time up to 16 July 2004, the husband had capacity to pay.
34.While, as said in Vakil, it was open to the Federal Magistrate not to permit section 83(1)(c):
“…to be used as a back-door method of appealing from or obtaining a second hearing (on the same factual circumstances) in respect of the original order…”
the court in Vakil immediately continued:
“…the court should not seek to impose additional barriers to the exercise of the jurisdiction to discharge an order beyond those flowing from the proper interpretation and application of the statutory requirement for “just cause” to be shown.”
35.It may be that her Honour has imported into the notion of “just cause” an extraneous principle of “justice”.
Turning to the father’s lack of income during his imprisonment, that a failure to earn income during a relevant period may not be an “exceptional circumstance” I think follows from what was said in cases such as In the Marriage of Scott (1994) 17 FamLR 420 at 444:
In summary whilst the above cases establish that in some circumstances an unemployed parent without income may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his or her children, they are not authority for the proposition that in all such circumstances, such a conclusion must or should be reached. If they establish any principle of general application it is only that being unemployed and without income is not of itself necessarily an answer by a parent to an application for child maintenance. The circumstances in which the parent became unemployed or without income, the reasons for it, the nature of his/her previous employment and the efforts (if any) which he or she has subsequently made to obtain employment are all relevant matters for consideration by the court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity, a parent may be required to pay maintenance for his/her children if he/she has property or financial resources which are or ought reasonably to be available for that purpose.
The last sentence also makes a point that militates against Ms Bassant’s contention that child support is only to be payable when income capacity, contemporaneous with the accrual of liability, exists.
In DJM and JLM (1998) FLC 92-816, the Full Court said:
17.36 Thus the test of “earning capacity” in Californian child support cases seems to be the ability to work and an opportunity to work. There are limitations in applying decisions as to earning capacity in child support cases. Such cases are concerned in ensuring an appropriate support for a child, and because the duty to support children is generally recognised as a duty higher than any other duty other than self-support, child support cases need to be looked at in a different light to spousal support and property cases.
…
17.40 …Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parent’s “capacity to provide financial support”.

Finally, in In the Marriage of Spinks (2001) 29 FamLR 259, Chisholm J, after considering what was said in DJM and JLM, stated:
[32] …the authorities provide guidance as to the sort of factors that are important when the court comes to consider what weight to give to the person’s earning capacity as distinct from the actual income. It is clear that where the person deliberately weakens his or her financial position in order to reduce liability for child support, the court may focus on the earning capacity…
[37] …Ultimately, although the judges’ language varies from case to case, the decisions seem to turn on whether the person acted reasonably in all the circumstances in taking the step that led to the reduced income…[footnote omitted]
I approach the determination of whether the father’s imprisonment and its consequences amount to “exceptional circumstances” bearing in mind:
·the danger of importing “abstract notions of justice” or generalised ideas of “public policy”. In particular, in this case one must avoid reaching a result in condemnation of the father’s actions which led him into prison.
·as a guide only, whether the father’s, imprisonment was “within the reasonable contemplation or expectation” of the parties.
·what was said in the cases cited, of “earning capacity”.
·that what amounts to exceptional circumstances is very much a question of fact and degree
In the instant case, once imprisoned, the father had neither the ability nor the opportunity to work.
While I note that in Scott, the court referred to the relevance of the circumstances in which a parent became unemployed, the remark was in the context of whether a capacity to earn nonetheless remained.
For present purposes, though I have no doubt contrary arguments cannot lightly be dismissed, I accept that the father’s imprisonment and consequent inability to earn, constitute exceptional circumstances. In my view, the “criminality” of the father’s actions, their deliberate nature and his “culpability” are best considered, if at all, in relation to the overall exercise of discretion, not in considering whether an “exceptional circumstance” arose.
The conclusion that the father’s incarceration and its effect on his ability to earn constitute exceptional circumstances, leaves two further aspects arising from the terms of s 136(2)(d), for consideration, namely:
Whether, (firstly) because of the exceptional circumstances, (secondly) the father “will suffer hardship”
As to the first further question, I accept that the father’s present child support debt occurred because he lost the opportunity to earn through his incarceration and that he is unable to pay the child support debt at this time.
As to the second further question, and the question of the discretion overall, as already seen, Ms Bassant submits that the objects of the Assessment Act focus attention on the earning capacity – and so, the capacity to provide child support – of parents, as those capacities existed from time to time and that, therefore, a liability which can be seen, in retrospect, to have accrued disproportionately to the then current capacity to pay, ought be discharged.
The mother submits:
19.In addition, if the Appellant is successful in this application, I will suffer further financial hardship, having supported my children, financially and emotionally for the last 7 years.
20.I would respectfully submit that the Appellant should not be granted leave to have the Agreement set aside from 27 June 2003. The Appellant should be required to pay the debt incurred, over a suitable period of time, which reflects his current circumstances, with the ability to amend the repayment schedule, as the Appellant’s circumstances improve. While it conceded that this debt may cause the Appellant some hardship, the repayment terms could be arranged to accommodate his financial circumstances.
Application to enter into new Child Support Agreement
21.The Appellant seeks to enter into a new Child Support Agreement, determined by the Registrar of the Child Support Agency and assessed as to the appropriate administrative formula.
22.The agreement did not contemplate what would happen if the Appellant re-partnered and had further children. While it is not conceded that the fact of the Appellant’s remarriage and children constitute exceptional circumstances, in an effort to be reasonable and resolve this issue, I would accept that the Agreement dated 22 November 2001 be set aside from the Appellant’s release from incarceration on the 26 December 2008 and that a new Child Support Agreement be entered into, determined by the Registrar of the Child Support Agency and assessed as to the appropriate administrative formula.
I do not accept that the objects of the Assessment Act are directed as narrowly, that is, to earning capacity contemporaneous with the accrual of liability, as Ms Bassant suggests. Section 4 of the Assessment Act, in part, provides:
4 Objects of Act
(1)The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
(2)Particular objects of this Act include ensuring:
(a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
…
(d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
…
The terms of the above paragraphs do not limit examination of the issue of a capacity to pay, that exists, is expected to exist, or which did exist, to the same time as that during which liability accrues, is to accrue or accrued. I note also that the term “capacity to provide financial support” is broader than “earning capacity”.
Thus, though at a particular time a payer might not have had capacity to meet a level of child support, that circumstance is far from conclusive as to whether arrears should be “expunged”.
All that the father carries is a debt owing. He does not, at this point, face any other interference with his financial affairs. I am unaware of any current enforcement proceedings. Under s 68 of the Child Support (Registration and Collection) Act 1988, the Registrar has a discretion to remit late payment penalties. In this regard, I have found that “exceptional circumstance” existed in relation to the accrual of the arrears.
I am not satisfied that the father will suffer hardship if the child support agreement is not set aside.
I think two relevant questions in the overall exercise of discretion are these: What is the justice, not as a matter of public policy or condemnation, but as bearing on the justice of the alternatives available, of relieving the husband of his obligations under the agreement, when the very basis of his application arose from a criminal act of which the mother was the intended victim? How fair would it be to the mother, having carried alone the financial burden of raising the children for four years, if the father prospers, [as he well might - though I make no finding that he will] but has been relieved of any obligation to reimburse the mother?
In my view, justice between the parties can be adequately addressed if and when any enforcement proceedings are brought, when the capacity to pay at that time and the circumstances in which the debt occurred, can be weighed and balanced.

Conclusion

I note what the mother offered in relation to a new agreement. However, I consider that I am restricted to either setting aside the agreement in its entirety, or not.
I would dismiss the father’s application that the child support agreement be set aside. Accordingly, his appeal against the Federal Magistrate’s order of 19 August 2008, dismissing that application, fails. The related application for leave to obtain a determination from the Registrar should, consequently, also be dismissed.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Warnick.

Associate:

Date: 2 February 2010

Notation:

Subsequent to the delivery of this judgment, the Federal Magistrates Court advised that information given to the father by that Court in July 2009 that no formal reasons for judgment had been pronounced on 19 August 2008, was given in error and that the reasons for judgment dated 20 November 2009 were the settled reasons delivered ex tempore on 19 August 2008.

Associate:

Date: 9 March 2010