Boyd and Boyd
[2012] FMCAfam 439
•17 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BOYD & BOYD | [2012] FMCAfam 439 |
| CHILD SUPPORT – Enforcement proceedings – binding financial agreement – issues raised regarding enforceability – separation declaration – financial agreement provides for the payment of school fees – whether provision void because of failure to quantify amount of maintenance to be provided –application by carer to collect arrears of child support – matters to be considered – whether appropriate to entertain application to change children’s place of schooling in enforcement proceedings. |
| Family Law Act 1975, ss.60B; 60CA; 60CC; 66R; 84(5); 90B; 90C; 90D; 90DA; 90DB; 90E; 90G; 90K; 90KA; 117 Child Support (Registration & Collection) Act 1988, ss.30; 105; 111F; 113; 113A; 116(2); 117 Federal Magistrates Court Rules, Rule 21.10; 21.15; 21.22 and 25B.2 |
| Black & Black (2008) FLC 93-171 Re G: Children’s Schooling (2000) FLC 93-025 AMF v AIF (1999) FLC 92-852 Eden & Eden-Proust [2011] FamCAFC 138 Re: AM (Adult Child Maintenance) (2006) FLC 93-262 Bendeich & Bendeich (1993) FLC 92-355 |
| Applicant: | MS BOYD |
| Respondent: | MR BOYD |
| File Number: | ADC 4142 of 2010 |
| Judgment of: | Brown FM |
| Hearing date: | 25 January 2012 |
| Date of Last Submission: | 25 January 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 17 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bowler |
| Solicitors for the Applicant: | Fittock Barristers & Solicitors |
| Counsel for the Respondent: | Mr Childs |
| Solicitors for the Respondent: | Morgan Ward |
ORDERS
It is declared that clause 20 of the financial agreement between the parties made on 27 May 2010 regarding the payment of P School fees by the respondent husband is binding and enforceable between the parties.
It is ordered pursuant to the provisions of section 90KA(c) of the Family Law Act 1975 that the aforementioned provision of the financial agreement is to be enforced as if it was an order of the court on the application of the wife made on 20 September 2011.
IT IS FURTHER ORDERED:
The respondent husband pay to the applicant wife the following sums within twenty-eight (28) days of the date of these orders:
(a)The sum of $9,980.25 in respect of P School fees for 2010;
(b)Interest on the aforesaid sum calculated at $1,422.18;
(c)The sum of $18,266.00 in respect of P School fees for 2012;
(d)Costs in the sum of $5,290.00.
Being a total sum owing by the respondent to the applicant wife of $34,958.43
It is further declared that the respondent husband owes the Commonwealth of Australia the sum of $16,091.24 being his registered maintenance liability in respect of child support owing by him as at 9 December 2011 and pursuant to section 113(A)(1) of the Child Support (Registration & Collection) Act 1988 the applicant wife is entitled to sue and recover the aforesaid sum from the respondent husband.
It is therefore ordered that the husband pay to the wife the further sum of $16,091.24 within twenty-eight (28) days of today’s date.
Pending payment by the husband of the total amount owing by him being $51,049.67 the respondent husband is hereby restrained from selling, assigning, transferring, further encumbering or dealing in any way with his interest in the real property at Property 1, in the State of South Australia and being the whole of the land described in Certificate of Title Volume 5776 Folio 264 (hereinafter referred to as the (“real property”) without the prior written consent of the applicant wife.
The respondent husband’s interest in the real property be charged in favour of the applicant wife for the total debt owed by him (and the applicant be at liberty to lodge a caveat over the real property to secure the interest created by this charge).
Enforcement orders
In the event the respondent husband fails to comply with orders (3) and (5) hereof or deals with the real property in breach of these orders the following orders shall take effect:
(a)The total debt shall be immediately due and payable.
(b)The Official Receiver, the Sheriff of the Federal Magistrates Court, and their servants and agents shall be appointed as Enforcement Officers.
(c)Pursuant to rule 25B.11(a) of the Federal Magistrates Court Rules an Enforcement Officer shall seize and sell under an Enforcement Warrant the real property to discharge in full all amounts owed by the respondent husband under the orders of this court.
Pursuant to section 111F(1) of the Child Support (Registration & Collection) Act 1988 upon recovery of the registered maintenance liability owed by the respondent husband pursuant to order (4) hereof the enforcement officers appointed herein pay the sum so recovered to the Registrar of the Child Support Agency.
All applications are otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Boyd & Boyd is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 4142 of 2010
| MS BOYD |
Applicant
And
| MR BOYD |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment are concerned with the validity or otherwise of a binding financial agreement. If the financial agreement is valid, the wife seeks to enforce its provision regarding the payment of school fees to the P School.
Ms Boyd “the wife” and Mr Boyd “the husband” married on (date omitted). They are the parents of two children, X born (omitted) 1995 and Y born (omitted) 1999. X and Y live with their mother and attend P..
There is no controversy between the parties that they finally separated in late August 2009. It is also clear that the wife commenced divorce proceedings on 1 November 2010. These were dealt with by the court on 14 December 2010, with a divorce order being granted on this date, which became effective on 15 January 2011.
The financial agreement in question was made on 27 May 2010, some seven or eight months prior to the parties’ divorce. The agreement is extensive and each party was represented during its preparation and each was, ostensibly at least, advised of its consequences.
In this regard, the financial agreement concludes with two statements in identical form, save for the identification of the actors concerned, which are each headed “lawyer’s certificate”.
These statements indicate that each party had received and further acknowledged having receiving advice regarding the effect of the financial agreement on his or her rights and the potential advantages and disadvantages of this agreement from each of their perspectives. The wife acknowledged receiving such advice from her solicitor Ms Bland and the husband acknowledged receiving such advice from his solicitor, Mr Trianios.
The provision in the financial agreement, which leads to these proceedings, reads as follows:
“The parties agree that the children’s school fees will be paid as follows:
The Husband and the Wife shall share the cost of the children’s private school fees for the 2010, 2011 and 2012 school years.
The Husband will pay for all of the children’s private school fees from 2013 onwards until each child has completed high school.
The Husband will pay for all reasonable school related expenses such as uniforms, books, excursions and the like from the date of this Agreement until the children each complete high school.”[1]
[1] See clause 20 of the Binding Financial Agreement
The husband contends that this provision of the financial agreement is void as a consequence of the provisions of section 90E of the Family Law Act 1975. This section provides that a provision of a financial agreement, relating to the maintenance of a child, is void unless the provision in question specifies both the identity of the child or children for whose maintenance provision is made and the amount provided for the maintenance of such child or children.
The husband has not paid any portion of X and Y’s school fees, at P., for 2010. His counsel, Mr Childs, contends that he is under no obligation to pay these school fees because the financial agreement in question was not operative during 2010 because there was no separation declaration as required by section 90DA(1) of the Act.
A separation declaration is essentially a documentary precursor required before a financial agreement becomes effective, which is executed by parties who are not as yet divorced, in order to provide corroboration of the fact that the parties concerned are separated and there is no reasonable likelihood of them resuming cohabitation.
The wife commenced these proceedings on 28 March 2011. In her application she seeks both interim and final orders. On an interim basis, she seeks the enforcement of clause 20 of the binding financial agreement “as if it was an order” of the court.
In addition, she seeks interest on the sum of $9,980.25, which she asserted was the sum which she had paid to the P School, in lieu of the husband, for the 2010 academic year’s fees. Finally, she seeks that the court direct an enforcement summons to the husband requiring his attendance at court.
On a final basis, the wife seeks orders which would require the husband to sell a property owned by him at Property 1 for a minimum of $900,000.00 or appoint a person to sell it on his behalf.
On the sale of this property, she seeks orders which would see the proceeds of sale being distributed, after the discharge of a mortgage registered against the property and the costs of selling it, so that she would be reimbursed the moneys paid by her for the 2010 P School fees; a sum of $16,389.50 in respect of the 2011 P School fees; and she would be entrusted with a sum of $115,000.00 to cover anticipated school fees at P. for the 2012, 2013, 2014, 2015, 2016 and 2017 school years.
In addition, the wife seeks to be paid any arrears of child support outstanding as at the date of the enforced settlement of the Property 1, property. It is her position that the husband has never paid any child support to her for X and Y and this is, of itself, evidence of his recalcitrance in respect of discharging his financial obligations towards the children.
It was not until a significant period later that the husband responded to this application. He did so on 21 November 2011. In his response he seeks the dismissal of the wife’s application, so far as enforcement of the financial agreement is concerned. In addition, he seeks orders in respect of the future education arrangements in respect of X and Y.
Essentially, it is his position that X should attend P., in 2012, only if he intends to pursue a tertiary education, otherwise he should attend a public school. So far as Y is concerned, it is proposed that she should attend a public school for Years 7, 8 and 9 of her education (she will commence Year 7 in 2012) and only when she is undertaking Years 10, 11 and 12 of her education should it be privately funded.
The wife applied for an administrative assessment of child support, in respect of X and Y, in May of 2010. It is her position that Mr Boyd has never paid any child support to her in respect of this assessment. As at 9 December 2011, Mr Boyd had a registered maintenance liability to the wife in the sum of $16,091.24.
Mr Boyd does not appear to challenge the quantum of this maintenance liability. Certainly, so far as I have been informed, he has not taken any steps to seek a departure from the applicable administrative assessment, either through the Child Support Agency’s internal review mechanisms or externally through court process. Rather, Mr Boyd seeks that he be able to pay any arrears of child support and any monies he may be adjudged liable to pay in respect of the children’s school fees by monthly instalments of $500.00.
These reasons for judgement are concerned with determining the issue of the validity or otherwise of the financial agreement entered into by the parties and, if valid, what steps should be taken to enforce the husband’s obligations under it, particularly in respect of financial obligations which have not as yet crystallised pursuant to it. Related to these issues is the question of what steps are open to the wife to enforce payment of monies owing by the husband, pursuant to the administrative assessment of child support made in her favour.
Background
The husband was born on (omitted) 1965. He describes himself as an (occupation omitted). The wife was born on (omitted) 1967. She is currently employed as a (occupation omitted).
The parties began to live together in the early 1990’s.[2] As indicated earlier, they separated in August of 2009. Accordingly, on any view, their relationship and subsequent marriage must be regarded as being of significant duration.
[2] The husband says the relationship began in June 1992. The wife says it began in June of 1990. The binding financial agreement indicates the latter date.
Following the parties’ separation, they entered into a process of negotiation to divide their marital assets, which in total had a significant value. Both parties were legally represented during this process.
As a result of these negotiations, a binding financial agreement was produced, which the parties executed on 27 May 2010. The agreement is a professionally prepared one of some sixteen pages. In its recitals it is described as a financial agreement under section 90C of the Family Law Act 1975. The concluding paragraph of the agreement reads as follows:
“The parties acknowledge that this Agreement constitutes a Certified Financial Agreement pursuant to Section 90C of the Family Law Act (1975) and that the Court’s power to set aside or vary this Agreement may be excluded.”[3]
[3] See Binding Financial Agreement at clause 42
The husband has deposed that at the time the parties began their relationship, he was employed at (omitted) on the (omitted) production line, whilst the wife carried out (omitted) work for (omitted). At this time neither party had been long in the workforce and neither was in a strong financial position.
The wife had minimal assets, whilst the husband owned a property at Property 1, which was subject to a significant mortgage. He also had an interest in a property at Property H, to which his parents had significantly contributed.
At the time, the husband’s parents also owned what has been described by the husband as “(omitted)” to the north of Adelaide at Property W. In 1994 the husband began to operate this property as a (omitted) selling (omitted). Over time, this evolved into a business known as (omitted).
At the time of the parties’ separation, both the husband and wife were engaged in the business. The wife did bookkeeping and worked in the (omitted). The husband was involved in the actual cultivation of the (omitted).
The parties’ various assets, at separation, are set out in the recitals to the agreement with values ascribed to them, with one exception. These assets and their related liabilities can be summarised as follows:
Assets One third share Property 2 $280,000 Property 1 $900,000 Property H, $800,000 Unquantified interest in olive farm at Property W $340,000 (omitted) Not valued ANZ bank account $1,000 Other ANZ bank accounts 241,000 Toyota (omitted) motor vehicle 40,000 Total assets 2,602,000 Superannuation Husband’s superannuation 7,870 Wife’s superannuation 8,690 Superannuation assets total 16,560 Total Assets 2,618,560 Liabilities Mortgage on Property 1 89,000 Business overdraft 45,000 Higher purchase debt on Toyota (omitted) 38,000 Total Liabilities 172,000 Net Liabilities 2,446,560
Pursuant to the agreement, the wife retained the property at Property H; the Toyota motor vehicle subject to its debt; her superannuation; the ANZ bank accounts holding the sum of $241,000; leaving her with net assets to the value of $1,051,690.00, if the figures in the agreement are accepted.
On the other hand, the husband retained his interest in Property 2; his interest in the real property of the (omitted); Property 1; his superannuation; $1,000.00; and the business. He also retained responsibility for the business overdraft and the mortgage on Property 1. On the basis of the values available to me, this left him with net assets to the value of $1,394,870.00.
The (omitted) business was not valued. It remains the wife’s position that it is an asset of significant value, as it produced a comfortable income for the parties during their marriage.
The husband takes a different view. It is his position that the olive business has suffered a significant downturn of late and orders have been reduced by about ninety percent. He attributes this downturn to the liquidation of his major client (omitted) and a change in business direction of another client, (omitted).
The recitals to the financial agreement recognised that the husband had made contributions to the assets of the marriage, which were referrable to members of his family. The recitals also recognised contributions attributable to an inheritance received by the wife. No specific rationale is provided for the actual mechanics of the division.
The agreement also recognised that X and Y were living with the wife and would continue to do so. It seems to be agreed between the parties that the children do not currently spend much time with their father, although they disagree as to why this situation has come about. From the husband’s perspective it is a source of considerable bitterness.
In the recitals to the financial agreement, the parties acknowledge that the agreement itself does not change the obligations of either party to provide support to any child of the marriage. In addition, clause 27 of the agreement provides for the on-going effectiveness of the agreement, if one of its provisions is found to be invalid, void or unenforceable by a court of competent jurisdiction.
The children’s school fees are apparently required by P. to be paid in advance. X’s fees for 2012 are anticipated to be in the vicinity of $20,000.00 and Y’s to be around $16,000.00. There is also an administration fee levied in respect of each child in an amount of $400.00.
The date stipulated by the school for the payment of fees for children attending the school in the 2012 academic year is 24 February 2012, if the fees are to be paid in a lump sum. Arrangement can also be made to pay the fees in three instalments arranged to fall in February, May and August or by an arrangement of monthly direct debits.[4]
[4] See Exhibit A
Payment of school fees to date and the history of the proceedings
X and Y attended P. in 2010. Their fees for the year were $30,094.50. The wife paid $15,000.00 on 23 March 2010. The husband paid $5,067.00 on 1 July 2010. Thereafter the wife asserts that she chivvied the husband for the balance but to no avail. Under sufferance, she paid the school $10,000.00 in December of 2010. The source of the funds was the monies retained by her pursuant to the financial agreement.
The wife commenced proceedings to enforce the financial agreement on 18 March 2011. She wished to be reimbursed for the monies she had paid to P. in late December of the previous year. She also wished to put in place a mechanism to secure the husband’s necessary contribution towards the 2011 school fees and all subsequent years up to 2017. This mechanism was the sale of Property 1, which the husband had retained following the completion of the financial agreement.
On 23 February 2011, the wife’s solicitor wrote to the Child Support Agency to inform the Agency that her client intended to institute enforcement proceedings against the husband to secure compliance with the financial agreement, as well as to enforce the husband’s outstanding child support liability.[5]
[5] See Exhibit DAB 11 to the wife’s affidavit filed 17 March 2011
At the first return date of the wife’s application, the husband was ordered to file a response within 28 days. He failed to comply with this order. In addition, the husband failed to appear on the next adjourned date, which was 8 June 2011. In these circumstances, the wife’s application was fixed for an undefended hearing on 13 September 2011 and arrangements were made to give the husband formal notice of this hearing.
The husband appeared in person on 13 September 2011. On this occasion he provided his personal cheque in the sum of $16,403.25 to the wife’s representative. This sum represented one half of the P. fees for 2011. The cheque was subsequently cleared. Up to this stage, the husband had still not as yet filed any answering material to the wife’s application, which dealt to a significant degree with the prospective payment of school fees, as well as the shortfall for 2010.
Given the husband’s failure to provide any formal response in the matter, I formed the view that it was more expedient to proceed with the issues in question through the mechanism of an enforcement summons, which would involve the oral examination of the husband.
Such an enforcement summons was issued on the wife’s behalf and made returnable on 19 October 2011. On this occasion, the husband was represented by his solicitor Mr Morgan, who informed the court that he had only recently received instructions from his client and was therefore not in a position to provide comprehensive advice to his client without more time to consider the relevant material.
However, at this stage, Mr Morgan indicated that his client took issue with the validity of the binding financial agreement. In particular, it was asserted by Mr Morgan that there were irregularities in respect of two handwritten amendments to the agreement, which appeared in reference to clause fifteen of it.
Particular weight was attached to the fact that the handwritten amendments appeared to have made in ink of different colours suggesting that they had been made as separate times. It was further asserted that it was possible that the amendments had been made after each party had been given independent legal advice in respect of the effect and possible implications of the agreement and this state of affairs had consequences in respect of the enforceability of the agreement.
In these circumstances, over the strenuous opposition of counsel for the wife, the proceedings were adjourned to allow the husband to file formal affidavit material in support of his contention that the agreement was not valid as a consequence of these purportedly unauthorised amendments. This material was filed on 21 November 2011.
In this response, the husband sought the following orders:
·The court refuse to enforce paragraph 20 (the clause dealing with the payment of school fees) of the binding financial agreement of 18 March 2011;
·Y attend a public school for years 7, 8 & 9 of her schooling;
·The parties share X’s school fees only if X intended to pursue tertiary studies;
·The parties share Y’s private school fees for years 10, 11 & 12 of her schooling;
·The husband pay for all reasonable school related expenses of the children’
·The parties pay their respective portions of future school fees as and when they fell due;
·The husband pay his current arrears of child support and school fees by way of monthly instalments of $500.00.
In support of these orders, the husband deposed that his financial position had worsened since the binding financial agreement had been made. He deposed that he had extended the mortgage on Property 1 and the level of his overdraft so that his level of indebtedness had increased by $220,000.00. He also indicated that he had experienced difficulties in tenanting the property.
In these circumstances, I fixed the matter for hearing at the earliest opportunity which was on 25 January 2012. The wife filed an affidavit in answer to the husband’s complaints regarded the alleged irregularities arising from the handwritten amendments to the binding financial agreement. It was her position that these amendments were initiated by the husband’s solicitors and she agreed to them to save time. She denied that there was anything untoward in the amendments.
It was also the wife’s position that the Child Support Agency would not take any action to recover arrears of child support from the husband until such time as her current application had been dealt with by the court.
To this end, she provided a certificate issued pursuant to section 116(2) of the Child Support (Registration and Collection) Act 1988 (hereinafter referred to as the Registration Act) which indicated that as at 9 December 2011 the husband’s child support debt was $16,091.24.
Ms Boyd has also recently filed an affidavit in which she sets out her perspective on what are the children’s views regarding which school they should attend. Essentially it is her evidence that both X and Y are happy at P. and are deeply upset at the prospect of leaving the school.
No detailed evidence has been canvassed in respect of which school the children should attend in future. In particular, given the manner in which the case has proceeded, no attempts have been made to obtain the views of the children, in an objective and professional setting, regarding their scholastic preferences.
The legal principles applicable
Pursuant to section 105 of the Family Law Act 1975 any decrees made under the Act may be enforced in a court having appropriate jurisdiction. A decree is defined to include both a judgement and order of the court. In addition the Court is authorised to make rules dealing with the enforcement of such decrees. In the case of the Federal Magistrates Court, the applicable rules are contained in Division 25B.2 of the Federal Magistrates Court Rules.
Pursuant to section 30 of the Registration Act a maintenance liability is a debt to the Commonwealth upon its registration by the Child Support Agency. In the exact words of section of 116 of the Registration Act “the mere production” of a document “purporting” to be a copy of an entry in the Child Support Register is prima facie evidence that such a liability is a registrable maintenance liability; has been duly registered; and the particulars entered thereon are correct.
As indicated earlier, the wife has provided such a certificate, pursuant to section 116(2) which indicates that the husband’s registrable maintenance liability was $16,091.24 as at 9 December 2011. The husband does not seek to challenge this amount. I have not been told of any proceedings or applications which seek to depart from the administrative assessments which led to this liability.
Pursuant to section 113A(1) of the Registration Act:
“(1) A payee of a registered maintenance liability may sue for and recover a debt due in relation to the liability if the payee notifies the Registrar in writing of his or her intention to institute a proceeding to recover the debt:
(a) at least 14 days before instituting the proceeding; or
(b)in exceptional circumstances--within such shorter period as the court allows.”
Pursuant to section 113 of the Registration Act a registered maintenance liability may be sued for and recovered in a court having jurisdiction under the Act. This court has such jurisdiction. Pursuant to section 105 the Federal Magistrates Court Rules apply to such proceedings.
Part VIIIA of the Family Law Act 1975 is the part of the Act dealing with financial agreements between parties who are or have been married to one another. As the financial agreement, which is the subject of these proceedings was made prior to the divorce of the parties, section 90C is applicable.
The section stipulates what matters may be included in a financial agreement made during marriage. In particular section 90C(2)(a) & (b) provides as follows:
“(a)how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties at the time when the agreement is made, or at a later time and during the marriage, is to be dealt with;
(b) the maintenance of either of the spouse parties:
(i) during the marriage; or
(ii) after divorce; or
(iii) both during the marriage and after divorce.”
Importantly, in the context of the current controversy between the parties, section 90C(3) provides that such an agreement may also contain “matters incidental or ancillary” to those mentioned above.
Section 90DA deals with separation declarations. It reads as follows:
“(1)A financial agreement that is binding on the parties to the agreement, to the extent to which it deals with how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties:
(a) at the time when the agreement is made; or
(b)at a later time and before the termination of the marriage by divorce;
are to be dealt with, is of no force or effect until a separation declaration is made.
Note:Before the separation declaration is made, the financial agreement will be of force and effect in relation to the other matters it deals with (except for any matters covered by section 90DB).
(1A) Subsection (1) ceases to apply if:
(a) the spouse parties divorce; or
(b) either or both of them die.
Note:This means the financial agreement will be of force and effect in relation to the matters mentioned in subsection (1) from the time of the divorce or death(s).
(2)A separation declaration is a written declaration that complies with subsections (3) and (4), and may be included in the financial agreement to which it relates.
(3)The declaration must be signed by at least one of the spouse parties to the financial agreement.
(4) The declaration must state that:
(a)the spouse parties have separated and are living separately and apart at the declaration time; and
(b)in the opinion of the spouse parties making the declaration, there is no reasonable likelihood of cohabitation being resumed.
(5) In this section:
"declaration time" means the time when the declaration was signed by a spouse party to the financial agreement.
"separated" has the same meaning as in section 48 (as affected by section 49).”
Section 90G(1) sets out the prerequisites of a binding financial agreement. In summary, it is necessary for the parties to adhere to the following formalities:
·the agreement is in writing;
·each of the spouses to the agreement has been provided with independent legal advice about the effects of the agreement on the rights of the party concerned and about the advantages and disadvantages arising from making the agreement;
·the legal practitioner providing this advice gives a signed statement to this effect;
·this statement is annexed to the financial agreement concerned;
·the agreement in question has been neither terminated nor set aside by a court.
Section 90G(1A) modifies this section by allowing for the enforceability of a financial agreement notwithstanding a failure to comply with all of the formalities set out in section 90G(1). The court may nonetheless declare a financial agreement to be binding if it is satisfied that it would be unjust and inequitable if the agreement was held not to be binding. It is also open to the court to make such orders for the “enforcement of a financial agreement that is binding on the parties to the agreement as it thinks necessary.”[6]
It is important to note that, in the context of the proceedings, Mr Boyd has expressly abandoned any claim that the relevant binding financial agreement is vitiated as a result of any non-compliance with section 90G.
Section 90K sets out the circumstances in which the court may set aside a binding financial agreement. They include, amongst other things, the following:
·the agreement was obtained by fraud including the non-disclosure of a material matter;
·the agreement was entered to defeat a creditor;
·the agreement is void, voidable or unenforceable;
·a material change in circumstances have occurred relating to the care, welfare or development of a child of the marriage, since the agreement was made, which would render hardship to that child or the person caring for the child;
·unconscionable conduct.
Again, although in his affidavit material Mr Boyd has asserted his financial circumstances have deteriorated since the agreement was made, it is important to note that he has not expressly sought to set aside the agreement pursuant to any provision arising in section 90K.
In Black & Black[7] the Full Court examined how the Courts were to approach the interpretation of financial agreement. It noted that parties to a marriage had not been traditionally able to contract out of the right to institute proceedings to determine how marital property was to be divided. As such, the Full Court determined that
“…care must be taken in interpreting any provision of the Act that has the effect of ousting the jurisdiction of the court. The amendments to the legislation that introduce a regime whereby parties could agree to the ouster of the court’s power to make property adjustment orders reversed a long held principle that such agreements were contrary to public policy.”
[7] Black & Black (2008) FLC 93-171
In terms of how Part VIIIA was to be interpreted in this context, the Full Court went on to say:
“… we are of the view that strict compliance with the statutory requirements is necessary to oust the court’s jurisdiction to make adjustive orders under section 79.”
As has been indicated earlier, it is the husband’s position that the relevant portion of the financial agreement between the parties dealing with the payment of school fees is void because it has not complied with the provisions of section 90E. This section reads as follows:
“A provision of a financial agreement that relates to the maintenance of a spouse party to the agreement or a child or children is void unless the provision specifies:
(a)the party, or the child or children, for whose maintenance provision is made; and
(b)the amount provided for, or the value of the portion of the relevant property attributable to, the maintenance of the party, or of the child or each child, as the case may be.”
Section 90E was inserted into the Act by means of the Family Law Amendment Act 2000. The relevant explanatory memorandum reads as follows:
“Subsection 90E will provide, in similar terms to existing section 66R in respect of the maintenance of children and section 87A in respect of maintenance of a party, that if a provision in a financial agreement deals with the maintenance of a party or a child or children, it will be void unless the provision specifies the person who is to be maintained and the amount or value of the maintenance to be provided.”
Section 66R (previously section 66L), which deals with child maintenance orders and section 87A, which deals with maintenance agreements made in substitution for rights enforceable under the Family Law Act 1975, are in similar terms to section 90E. Both sections were inserted into the Act by the Family Law Amendment Act 1987.
The relevant explanatory memorandum indicates that the primary purpose of both section 66R and section 87A “is to enable the income-testing for social security purposes of maintenance received other than by way of periodic sums.” Accordingly, it would seem apparent that the Legislature’s intention, in enacting section 90E, was to require any provision in a financial agreement dealing with maintenance to be amenable to means testing, in a social security context, or otherwise to be void.
Essentially, the Legislature requires that any consent order or financial agreement specify which portions of any lump sum or property order conferred there under are for either spousal or child maintenance, so that the social security implications of such an order or agreement is apparent. Essentially any lump sum or property order, which purports to be for a maintenance purpose, must be capable of being converted into a cash sum.
Division 25B.2 of the Federal Magistrates Court Rules provides the applicable regime for the enforcement of financial obligations arising under both the Family Law Act 1975 and the Collection Act.
Pursuant to Rule 25B.07(1) a number of specified obligations may be enforced pursuant to Division 25B.2. These obligations include an obligation to pay money, which is defined to include a provision requiring a payer to pay money under: an order made under the Family Law Act 1975, the Registration Act; or the provisions of a financial agreement; or a debt due to the Commonwealth under section 30 of the Registration Act; or a child support liability.
Prior to any enforcement proceedings, in respect of a financial agreement, the person seeking to enforce any obligation arising under that agreement must first obtain an order under section 90KA(c) of the Family Law Act.[8]
[8] See Rule 25B.08
Section 90KA reads as follows:
“The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a)subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b)has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c)in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.”
Section 90KA provides that when the court is called upon to determine the validity of a binding financial agreement it is required to apply the principles of law and equity applicable to the interpretation and enforcement of contracts.
In addition, the supplementary explanatory memorandum to the Family Law Amendment Act 2000, which introduced this provision, makes it clear that the purpose of section 90KA(c) is to enable financial agreements to be enforced pursuant to the powers available to the court in the usual way as if such agreements are court orders. This power is unaffected by the fact that the financial agreement in question may not have been previously registered by the court itself.
Prior to any enforcement proceedings of a child support liability by a payee the rules provide that such a person must file an affidavit to which is attached a copy of the notice provided to the Child Support Agency of his/her intention to institute proceedings to recover the debt due.[9]
[9] See Rule 25B.09(3)
Rule 25B.10 defines the persons who may enforce an obligation to pay money. They include a person entitled to enforce a child support obligation under the Registration Act. It seems clear that Ms Boyd is such a person. It also seems clear that she has provided the necessary proof of the child support debt and proof that she has given notice to the Child Support Agency pursuant to Rule 25B.11(3)
Rule 25B.13 delineates the general enforcement powers of the court. These include the following:
“(a)an order declaring the total amount owing under an obligation;
(b)an order that the total amount owing must be paid in full or by instalments and when the amount must be paid;
(c) an order for enforcement (see rule 25B.11);
(d) an order in aid of the enforcement of an obligation;
(e) an order to prevent the dissipation or wasting of property;
(f) an order for costs;
(g)an order staying the enforcement of an obligation (including an enforcement order);
(h)an order requiring the payer to attend an enforcement hearing;
(i)an order requiring a party to give further information or evidence;
(j) an order that a payer must file a financial statement;
(k)an order that a payer must produce documents for inspection by the Court;
(l) an order dismissing an application;
(m)an order varying, suspending or discharging an enforcement order.”
Rule 25B.11 delineates the specific enforcement powers of the court in respect of a payee’s obligation to pay money. It provides as follows:
“An obligation to pay money may be enforced by one or more of the following enforcement orders:
(a)an order for seizure and sale of real or personal property, including under an Enforcement Warrant (see Subdivision 25B.2.3);
(b)an order for the attachment of earnings and debts, including under a Third Party Debt Notice (see Subdivision 25B.2.4);
(c)an order for sequestration of property (see Subdivision 25B.2.5);
(d)an order appointing a receiver (or a receiver and manager) (see Subdivision 25B.2.6).”
As a consequence of the provisions of section 90KA(c), when coupled with the definition of enforceable obligations provided by Rule 25B.07, I am also satisfied that I have the authority to apply the provisions of Rule 25B.11 to the enforcement of a financial agreement which is created pursuant to the provisions of Part VIIIA of the Family Law Act 1975 notwithstanding the financial agreement in question has not been previously ratified by or registered with the court.
As previously indicated, it is the wife’s position that both the husband’s child support liability and any financial obligation arising under the financial agreement in question should be enforced by means of an order for the sale and seizure of his Property 1 property.
One of the significant aspect of her application is that she also seeks this remedy in regards to a prospective liability, in respect of which the husband has not as yet failed to comply, namely the payment of the school fees for 2013 and onwards. For obvious reasons, these fees have not as yet been levied by P..
Part 6 of the Child Support (Assessment) Act 1989 provides a comprehensive regime for parents to make private and binding agreements regarding the provision of financial support for their children. Such agreements have the potential to supplant the system for the administrative assessment of child support provided by the Child Support Agency.
There are two categories of such agreements – binding child support agreements and limited child support agreements. So far as the former are concerned, it is necessary precondition that each party concerned has received independent legal advice regarding the pros and cons of such an agreement. In this sense, a binding child support agreement is analogous to a binding financial agreement.
A child support agreement may make provision for the payment of periodic sums of maintenance; lump sum maintenance; and other non-periodic payments, such as school fees. However section 84(5) of the Assessment Act makes clear a child support agreement may be contained in a parenting plan; or a maintenance agreement or financial agreement made under the Family Law Act 1975. This is also implicit from sections 90B(3) and 90D(3) which provide that a financial agreement may deal with any “other matters”.
The Assessment Act also makes provision for there to be a departure from any administrative assessment of child support in appropriate circumstances. The departure process may be initiated by the Registrar of the Child Support Agency; the carer parent; or the liable parent. The departure process can be administrative in nature or can be undertaken in conjunction with judicial proceedings.
In each case, the process of departure is essentially a three step process. It must be both just and equitable and otherwise proper for a departure to be made. In addition, special circumstances must be demonstrated arising from a number of specific criteria delineated in section 117(2) of the Assessment Act.
Relevantly, in the circumstances arising from this case, one of the departure grounds specified in the section is any payments made or to be made to a carer entitled to child support, pursuant to the Family Law Act 1975 or otherwise. It is common ground between the parties that, since May 2010, when Ms Boyd first obtained an administrative assessment of child support in respect of X and Y, Mr Boyd has not sought any departure from this assessment, either on the basis of his liability to pay school fees or otherwise.
As previously indicated, Mr Boyd, in his response filed on 21 November 2011 has sought orders which seek to clarify future education arrangements for X and Y. It is his position that X should continue on to Year 12 at P. only if he intends to pursue tertiary studies and Y should attend the school only for her final three years of secondary education.
The question of which secondary school X and Y are to attend is not solely a financial matter, like all issues pertaining to a child, it is to be determined primarily by reference to X and Y’s interests. The service of X and Y’s best interests is the most important consideration in determining the mode of their secondary education. [Family Law Act 1975 section 60CA]
In determining where those best interests lie, the court must consider the primary and additional considerations set out in section 60CC of the Family Law Act 1975. Pursuant to the objects of Part VII of the Family Law Act 1975, which is the part of the Act dealing with arrangements for the parenting of children, the best interests of children are met by, amongst other things, “ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.” [Family Law Act 1975 section 6OB(1)(d)]
The fundamental task for the court is to determine, bearing in mind both the various considerations contained in section 60CC and the goals and principles contained in section 60B, what is the best outcome for any child concerned, both now and in the future.
Pursuant to section 60CC(3)(m), I am permitted to take into account “any other fact or circumstance that the court thinks is relevant”. This ensures that the infinite variety of individual children’s circumstances can be addressed and an appropriate idiosyncratic order made.
There is no legal presumption in favour of one parent being able to make a decision pertaining to an educational issue, affecting a child, because the child concerned lives more with that parent than the other parent.[10]
[10] See re G: Children’s Schooling (2000) FLC 93-025
Although the best interests of the children are the paramount consideration in determining issues regarding their education, they are not the sole consideration.[11] Accordingly in determining which school a child should attend, it is legitimate for the court to consider the convenience of the parents concerned, including issues pertaining to their respective financial security.[12]
[11] See AMF v AIF (1999) FLC 92-852 at 86,050
[12] See Eden & Eden-Proust [2011] FamCAFC 138 at paragraph 62
The Issues
The case, as summarised thus far, creates seven questions which need to be resolved, namely:
·Can the wife bring proceedings on her own behalf to recover arrears of child support?
·Is the financial agreement of no force during 2010 because it falls foul of section 90DA because of the absence of a separation declaration?
·Is clause 20 of the financial agreement void because it falls foul of section 90E?
·How should any obligation to pay money imposed on the husband as a consequence of these proceedings be satisfied and what should be the quantum of such an obligation?
·Is it appropriate that any contingent liability Mr Boyd has in respect of school fees in years from 2013 onwards be crystallised at this stage into an enforceable financial obligation?
·Is it appropriate to determine issues pertaining to the future secondary education of X and Y in the context of the current proceedings?
·Should there be an order for costs made as a consequence of the outcome of these proceedings?
Question 1
The wife has satisfied the provisions of section 113A(1) of the Registration Act and is entitled to institute proceedings against Mr Boyd, to recover arrears of child support owed by him directly to the Commonwealth of Australia and indirectly to her.
In my view, Mr Boyd has had ample time to pursue any application open to him to depart from the applicable administrative assessments. It is adverse to his credit that he has made no provision whatsoever to provide direct financial assistance for X and Y.
In addition, the wife has provided prima facie evidence of the extent of Mr Boyd’s registerable maintenance liability by production of a certificate emanating from the Child Support Agency. This certificate indicates that Mr Boyd is indebted to the Commonwealth in the sum of $16,091.24 as at 9 December 2011.
Ms Boyd has informed the Registrar of the Child Support Agency of her intention to institute proceedings to recover this debt and she is entitled to seek its enforcement in this court. The answer to question 1 is accordingly, “yes”.
Question 2
The parties separated in August of 2009. The wife commenced divorce proceedings on 1 November 2010. A divorce order was made on 14 December 2010, which became effective or final on 15 January 2011.
Accordingly, when the parties entered the financial agreement on 27 May 2010, they were still married to one another. Accordingly, there is a need for a separation declaration to be made, by at least one of the parties to the marriage, to satisfy the provisions of section 90DA.
In my view, there is clearly a separation declaration in effect at the time when the financial agreement was made between the parties. Accordingly, the provisions of the agreement relating to the payment of school fees during 2010 are engaged.
Section 90DA(2) indicates that a separation declaration may be included in the financial agreement to which it relates. Pursuant to subsection (4) such a declaration must state that the spouse parties have separated and are living apart, with no reasonable likelihood of cohabitation being resumed, at the time of the declaration.
Clause 32 of the financial agreement indicates that the recitals to the agreement are to be deemed to be a part of the agreement. Recital H and recital DD read as follows:
“H.The marriage has broken down irretrievably. The parties have been living separately and apart since 31 August 2009.
DD.There is no prospect of reconciliation. The parties want to amicably settle and divide their accumulated property and to avoid any expense, delay and bitterness arising from litigation.”
In my view, these two recitals, which are incorporated into the agreement, manifestly satisfy the provisions of section 90DA(4). Accordingly, the answer to question 2 is “no”.
Question 3
Clause 20 of the financial agreement cannot be regarded as having been drafted with a high degree of precision. There is, however, no impediment to a financial agreement containing a provision which relates to child maintenance, notwithstanding the fact that the Assessment Act provides a comprehensive regime for child support agreements to be made and in respect of the interaction of such agreements with the machinery pertaining to administrative assessments of child support.
In my view, provision 20 of the financial agreement is clearly a maintenance provision. In Re: AM (Adult Child Maintenance)[13] Carmody J, discussed the meaning of maintenance. He said as follows:
“Maintenance, however, is a term of generous import in the family law context and is commonly understood to mean something more than mere subsistence or necessaries of life. It includes financial provision for all reasonable, current and likely future daily requirements, including out of pocket, adequate housing, health and education related expenses, as well as any special needs. It is not a single concept concerned only with the payment of money. There is no reason in principle why a maintenance order cannot involve, for example, direct provision of goods or services.”
[13] See Re: AM (Adult Child Maintenance) (2006) FLC 93-262 at 80,439
In addition, it is clear from the provisions of Part 6 of the Assessment Act that child support agreements, made pursuant to its provisions, can incorporate arrangements for the payment of non-periodic payments, such as school fees.
In addition, it is a common phenomenon, in both administrative departure applications and court initiated ones, that issues arise regarding the balancing of non-periodic payments, such as school fees and the provision of health insurance, with periodic payments intended to satisfy a child’s immediate day to day financial needs.
In addition, there can be no doubt as to the identity of the children for whose maintenance provision is made by clause 20. The children concerned and indeed the parties themselves are clearly identified in the recitals to the agreement.
The criticism of Mr Childs, counsel for the husband, centres on the application of section 90E(b), as it is asserted that the clause does not ascribe an amount or value for the benefit to be paid on account of the children and so is struck down by the provision.
I do not agree. Although the dollar value of the children’s private school fees will vary from year to year and may also alter if the children change schools, it is possible for an exact amount to be ascribed to the school fees, once those fees have been levied in respect of each year specified in the provision.
As previously indicated, it is a common occurrence in departure proceedings that either the court or the Registrar of the Child Support Agency is called upon to take into account the effect of non-periodic payments – such as school fees – in calculating the just and equitable level of child support to be paid by the parents concerned.
Ultimately, in this case, Mr Boyd may elect to seek some review of the current assessment of child support levied against him on the basis of his liability for school fees. If this be the case, in my view, there will be no impediment to such a departure application because of the lack of precision in the applicable clause of the financial agreement.
In addition, the intention of the legislature, in its insertion of section 90E into the regime to oversee financial agreements, was to protect the revenue of the Commonwealth, particularly in terms of the provision of social security.
Again, in my view, the clause as currently drafted will not prevent either Centrelink or any other government agency from calculating the level of entitlements to which Ms Boyd, X and Y may be entitled to claim in future. Accordingly, the answer to question 3 is “no”.
Question 4
I am satisfied that Mr Boyd is liable to pay Ms Boyd the sum of $9,980.25 in respect of his remaining portion of the 2010 P School fees. The wife claims interest in this sum. She is entitled to interest by virtue of the provisions of section 90KA(b) of the Family Law Act 1975.
The applicable rate of interest is prescribed by section 117B of the Family Law Act 1975. In the period since the school fees fell due, the applicable level of interest has fluctuated between 9.5% and 10.75%. I propose to calculate interest on the lower basis. I will calculate the interest from December 2010, when the wife paid the fees in question. On my calculation, the interest comes to $1,422.18.
In addition, I am satisfied that Mr Boyd is liable for one half of X and Y’s school fees for 2012. The tax invoice from P. dated 27 January 2012 indicates that the total amount of the fees is $36,532.00. Half of this sum is $18,266.00.
In addition, for reasons already provided, the wife is entitled to recover moneys owing to the Commonwealth in respect of child support levied against the husband. Prima facie proof of the husband’s level of indebtedness, as at 9 December 2011, has been provided by the wife. The sum outstanding is $16,091.24.
Accordingly, putting aside any question regarding future school fees, on my calculations the husband is obliged to pay to the wife the sum of $27,493.67. How this obligation to pay money is to be satisfied turns on the content of Mr Boyd’s evidence to the court.
Mr Boyd was not an impressive witness. His evidence about financial matters was uncertain and he was easily flummoxed by questions pertaining to his income and asset backing. He is also obviously bitterly disposed towards Ms Boyd, particularly in respect of arrangements for him to spend time with X and Y, whom he now rarely sees. Undoubtedly, he blames Ms Boyd for the rift in his relationship with the children.
Overall, Mr Boyd presented as a shell-shocked and confused person. He has had no obvious strategy to deal with issues pertaining to his obligations to provide financial support for X and Y and, as his conduct during these proceedings has demonstrated, has proceeded from crisis to crisis. The subtext of his case is that he believes the financial agreement, which he entered into with Ms Boyd, is unfair and weighted against him.
However, his case is not brought pursuant to the provisions of section 90K of the Act simpliciter. Mr Boyd abandoned his assertion that the agreement was unenforceable because of later made additions to it. As set out above, his formal opposition to the financial agreement rests on technical arguments relating to the application of section 90DA and 90E, which have been rejected. Accordingly, the court has no jurisdiction to look behind the agreement and form its own view as to the justice and equity of the financial agreement.
Mr Boyd estimates his weekly income from his (omitted) business as being $1,200.00 per week or around $62,400 per annum. He assets that his personal expenditure exceeds this amount. His recurrent expenses amounting to $613.00 per week and his liability for rates, insurance, tax and other incidental expenses coming to $912.00 per week.[14]
[14] See husband’s statement of financial circumstances filed 21 November 2011
However, Mr Boyd concedes that he owns real property valued at around $1.5 million. The premises at Property 1 also have the potential to be rented, when necessary renovation works have been completed.
Mr Boyd asserts that his level of indebtedness has increased since the global financial crisis and a reduction in the orders for (omitted). He asserts that he is indebted in the sum of $250,000.00 in respect of the business. Property 1 is subject to a mortgage of $253,000.00. He has other debts amounting to around $150,000.00.
Accordingly, in net terms, Mr Boyd has access to assets worth in the vicinity of $1 million. I am also satisfied, on the basis of his oral evidence under cross-examination that he could rationalise his debts better and make greater advantage of his assets to generate a more consistent stream of income.
It is not to Mr Boyd’s credit that he has made no attempt whatsoever to comply with the applicable child support assessment and he has paid a limited component of the children’s school fees only as a result of pressure exerted by the wife through the threat of court proceedings.
In all the circumstances of this case, I find that the husband has property available to him to satisfy his obligations to pay money to the wife as a result of the administrative assessment of child support and the financial agreement to which he is a party. I am also satisfied that it is proper that steps be taken to enforce these obligations. The most obvious source of property to satisfy these obligations is the real estate owned by Mr Boyd at Property 1.
Question 5
Ms Boyd seeks an order that, in the event of an enforced sale of the property located at Property 1, a sum of $100,000.00 be ear marked from the proceeds to fund the husband’s prospective liability for Y’s school fees at P. until 2017.
Her application is predicated on two assumptions – firstly Mr Boyd will remain recalcitrant in respect of future payment of Y’s private school fees; and secondly, Y will continue at P. or an equivalent private school.
As previously indicated the parties in this case did not seek to agree on the specific form of periodic financial support to be provided for the children, by the husband, outside of the parameters of the child support scheme through a child support agreement – either binding or limited.
Accordingly, the amount of child support to be paid by the husband may alter as the applicable assessment changes over time, as the circumstances of the parties and indeed X and Y themselves may change.
In addition, it is open to Mr Boyd to seek a departure from the administrative assessment and one of the considerations relevant to such a departure may be his provision of other financial resources to the children, including in the form of school fees.
The rationale of the child support scheme is that it that it should provide a mechanism for calculating the amount of financial support to be provided for children on a regular and periodic basis, which reflects the financial circumstances of the parties and the needs of the children concerned at the time. Children are entitled to share in the benefits of any improvement in their parents’ financial circumstances. [see Assessment Act at section 4(2)(b)]
For these reasons, the payment of child support in a lump sum is generally eschewed. It being preferable that the provision of financial support for children be provided periodically in order firstly that it be utilised for a child’s immediate financial needs and secondly the amounts payable can be easily changed to reflect changes in circumstances and avoid potential anomalies arising.
It is also potentially unfair to penalise a parent in the event that his/her financial circumstances deteriorate markedly in future for no fault attributable to him/her, such as an illness or incapacity, which severely impacts upon earning capacity, if any lump sum payment was calculated on the basis of an ongoing ability to earn a large income.
In addition, it is not uncommon for the living arrangements of children to change markedly over time. Children may move to live from one parent to the other or their care may become shared, whereas in the past it was concentrated more in one parent.
Accordingly, by means of a process of rolling and periodic assessments, the application of the child support formula has the capacity to adapt to the changing circumstances of those who are affected by it, be they liable parent; caring parent; or financially dependant child.
For this fundamental reason, the legislatively mandated preference is that child support should be provided in a periodic form, following its administrative assessment by the Child Support Agency.
To my mind, similar considerations arise in respect of the wife’s application to capitalise Y’s future private school fees. It is uncertain whether Y will be at P. in 2017. The circumstances of the parties themselves may change dramatically over the next five years or so. These changes may render the capitalisation order sought by Ms Boyd unjust so far as Mr Boyd is concerned.
It is Mr Boyd’s position that, if and when the court comes to consider how the children’s best interests are to be served, so far as their educational needs are concerned, it will conclude that it is not appropriate for Y in particular to have all of her secondary education at P School. Implicit in his case is that the court in determining this matter must have some regard to his financial capacity to provide a private education for her.
In these circumstances, it may render otiose any future consideration of this issue if the school fees are capitalised as sought by the wife. Certainly, it may be potentially unjust to the husband if his real property is sold to give effect to such an order and Y does not ultimately attend the school for all of the years in question.
In addition, although some aspects of Mr Boyd’s conduct can be criticised, it is the case that in 2010 and 2011, albeit under sufferance, he did make some significant contributions to the payment of the children’s school fees. At this stage, I am not prepared to accept that it is a foregone conclusion that Mr Boyd will not pay the school fees as and when they fall due.
In the slightly different context of a lump sum order sought pursuant to the child support regime, Mushin J said as follows in Bendeich & Bendeich[15]:
“The rationale underlying the general approach of the court was that the longer a lump sum order operates, the greater the chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and children may change their living arrangements from one parent to another.”
[15] Bendeich & Bendeich (1993) FLC 92-355
In my view, these comments are apposite to Ms Boyd’s application for a capitalisation of Y’s future school fees. I am of the view that given the lengthy period of time such an order would encompass, it has the potential to create unfairness so far as Mr Boyd is concerned. Accordingly, the answer to question five is “no”.
In addition, I am troubled at the possible implications of the court acceding to the enforcement of prospective obligations, through mechanisms provided by the provisions of Division 25B.2, which do not deal specifically with the enforcement of future financial obligations. In particular, in my view, I must be cautious at the prospect of entertaining any lump sum application through “the back door”.
Question 6
These proceedings are fundamentally enforcement proceedings. The wife instigated these proceedings to secure payment to her of child support and school fees. More recently, the husband has raised issues to do with the validity of the financial agreement in question. His objections to the agreement have changed over time.
Initially, Mr Boyd took issue with additions to the agreement which he asserted had been added after he had executed it. These objections have not been pursued at hearing. Rather on the date scheduled for the hearing of this issue, through his counsel, Mr Boyd has raised other objections to the agreement on the basis of its asserted invalidity because of non-compliance with section 90DA and 90E of the Act. These objections had not been previously raised.
Mr Boyd’s case is a series of inchoate complaints about the circumstances surrounding his execution of the financial agreement and its alleged unfairness to him. However, he has not been able to muster any specific arguments, arising under section 90K of the Act, as to why the agreement should be set aside, particularly that there has been a material change of circumstances resulting in some form of hardship, since the agreement was made. His efforts to have the agreement set aside have been wholly unsuccessful.
It is in this context that the husband’s application for specific parenting orders to be made in relation to the children’s future education arrangements must be examined. This application appears to be ancillary to his main intent to avoid his financial obligations arising under the financial agreement come what may and does not seem to be related to the best interests of X and Y.
On the affidavit material filed, factual issues arise between the parties as to whether the children have any preference as to which school they should attend. I have not been provided with any independent evidence as to the children’s views in this regard. It is also clear that the children have been at P. for a significant period of time and accordingly to change their school at this juncture would be a decision of some moment.
I am not in a position to resolve the various factual disputes regarding the best interests of the children in the context of the hearing which occurred before me, which was centred on legal arguments regarding the validity of the financial agreement in question and how the husband’s obligations to pay money should be enforced.
In any event, I am concerned that the raising of matters by the husband regarding the future educational arrangements of the children, particularly Y, has been done opportunistically and in tandem with his other primarily financially focussed objections to the financial agreement in question. As such, I have come to the view that the current proceedings are not the appropriate vehicle to determine future issues to do with the children’s educational arrangements.
In any event, in my view, given that the financial agreement in question remains in force and both X and Y are attending P. for the 2012 academic year and one of the consequence of these proceedings is that steps will be taken to secure the payment of their fees for this year, it would not be appropriate for them to leave the school part way through the year. The answer to question 6 is “no”.
Question 7
The question of the costs, following these enforcement proceedings, falls to be determined pursuant to the provisions of section 117 of the Family Law Act 1975.[16] Pursuant to section 117(2) the court is authorised to make whatever order for costs it considers “just”. Thereafter, the court is to have regard to the matters delineated in section 117(2A) before making any order for costs.
[16] Pursuant to section 100 of the Child Support (Assessment) Act the question of costs in any proceedings related to child support is also governed by the provisions of the Family Law Act.
The matters set in section 117(2A) include the following: the financial circumstances of the parties concerned; the conduct of the parties to the proceedings; whether the proceedings were necessitated by the failure of a party to comply with previous court orders; whether one of the parties to the proceedings have been wholly unsuccessful, and any other relevant matter.
The wife brought these proceedings to secure payment of monies due to her pursuant to the financial agreement which has not been set aside. Ancillary to this application she has brought proceedings, as she is entitled to do, to secure the payment of child support. Her application was occasioned by the failure of the husband to provide her with financial support for the children.
The husband has taken every step available to him to frustrate the wife’s application and has raised all manner of objections to the financial agreement in question. It is also germane that he has completely abrogated his responsibility to pay child support to the wife since Ms Boyd applied for an administrative assessment of child support.
Although it is possible to feel some sympathy for Mr Boyd, who presents in court like a “rabbit caught in the headlights,” the fact remains he has opposed the wife’s application every step of the way and has so put her to considerable expense. In all these circumstances it is appropriate that an award of costs be made against Mr Boyd.
The Court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.22 of the Federal Magistrates Court Rules:
“In making an order for costs in a proceeding the Court may:
(a) set the amount of costs; or
(b) set the method by which the costs be calculated; or
(c)refer the costs for taxation under order 62 of the Federal Court Rules or under order 38 of the Family Law Rules; or
(d)set a time for payment of costs which may be before the proceedings is concluded.”
However, pursuant to Rule 21.10:
“Unless the Court otherwise orders a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance to schedule 1 and
(b) disbursements properly occurred.”
Pursuant to Rule 21.15 the court may certify that it was reasonable to employ an advocate to appear for a party in a proceedings. As previously indicated, the wife seeks such a certification.
In section 3(2) of the Federal Magistrates Act, the legislature sets out the objects of the Federal Magistrates Court as follows:
to enable the Federal Magistrates Court to operate as informally as possible in the exercise of judicial power; and
to enable the Federal Magistrates Court to use streamlined procedures; and
to encourage the use of a range of appropriate dispute resolution processes.
No doubt, the intention of the legislature in this regard was to reduce the cost of court proceedings pursuant to Federal legislation and provide litigants with a cheap and cost effective means of accessing justice within the Federal jurisdictional sphere. Rule 21.10 creates a scale of costs by reference to the occurrence of fixed events. In my view, the creation of such a scale was designed to help achieve these objects.
In calculating the quantum of costs to be awarded, I am of the view that I should adopt a pragmatic and expeditious approach. The parties are unlikely to be able to agree an appropriate amount for the wife’s costs. The cost of a taxation is likely to be disproportionate to the amount of costs ultimately calculated. In addition, such a taxation is likely to take some time to be finalised.
In these circumstances, it seems to me to be in keeping with the ethos of the Federal Magistrates Act that I adopt the fixed event scale provided by schedule one of the Court’s Rules to calculate the costs due to the wife. On the basis that there have been five short mentions and a one day hearing, I propose fixing an amount of costs to be paid by the husband in the sum of $5,290.00. This sum makes allowance for an advocate’s loading.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and seventy-seven (177) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 17 May 2012