Cao & Trong
[2023] FedCFamC1A 40
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Cao & Trong [2023] FedCFamC1A 40
Appeal from: Cao & Trong [2022] FedCFamC1F 754 Appeal number(s): NAA 252 of 2022 File number(s): MLC 2555 of 2016 Judgment of: AUSTIN, WILLIAMS & HOWARD JJ Date of judgment: 30 March 2023 Catchwords: FAMILY LAW – APPEAL – CHILD SUPPORT – Majority judgment – Setting aside a binding child support agreement – Appeal against orders providing for a portion of funds held in trust to be paid to the Child Support Registrar – Where the appellant sought to set aside a binding child support agreement, pursuant to s 136 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”), or a declaration the agreement was not binding because of non-compliance with s 80C(2)(c) of the Assessment Act – Where the primary judge fell into error in not hearing the totality of the appellant’s case – Inconsistency within the reasons – Lack of reasons given for findings – Errors of law – Errors of fact – Leave to appeal granted – Appeal allowed – Matter remitted for rehearing – Costs certificates ordered for the appeal and rehearing. Legislation: Child Support (Assessment) Act 1989 (Cth) Pt VII, Div 4, ss 80C, 92, 118, 136
Child Support (Registration and Collection) Act 1988 (Cth) s 116
Family Law Act 1975 (Cth) s 79
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 28, 35
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 8, 9
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.31, 13.39
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Australia Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40
Australian Securities and Investment Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18
Balenzuela v De Gail (1959) 101 CLR 226; [1959] HCA 1
Bhatt & Acharya (Costs) [2017] FamCAFC 71
Blomley v Ryan (1954) 99 CLR 362; [1956] HCA 81.
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 76
Child Support Registrar v AFS19 (2021) 287 FCR 52; [2021] FCAFC 207
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390; [1955] HCA 27
Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2
Coroneo v Kurri Kurri (1934) 51 CLR 328; [1934] HCA 21
Dakhyl v Labouchere [1908] 2 K.B. 325
Eames & Eames (2018) FLC 93-866; [2018] FamCAFC 204
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Hughes & Hughes [2018] FamCA 1079
Lane & Nichols (2016) FLC 93-750; [2016] FamCAFC 234
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Piper & Talbot & Anor [2021] FCCA 511
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28
Rice & Asplund (1979) FLC 90-725
Ryan v Ross (1916) 22 CLR 1; [1916] HCA 43
Saltern & Mink [2020] FamCAFC 320
Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9
Number of paragraphs: 186 Date of hearing: 28 February 2023 Place: Heard in Melbourne, delivered in Sydney Counsel for the Appellant: Dr Ingleby Solicitor for the Appellant: Westminster Lawyers Pty Ltd The First Respondent: Litigant in person Counsel for the Second Respondent: Mr Grant Solicitor for the Second Respondent: Hunt & Hunt Lawyers Counsel for the Intervener: Mr Mazloum Solicitor for the Intervener: Australian Government Solicitors ORDERS
NAA 252 of 2022
MLC 2555 of 2016FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR CAO
Appellant
AND: MS TRONG
First Respondent
CHILD SUPPORT REGISTRAR
Second Respondent
COMMISSIONER OF TAXATION
Intervener
order made by:
AUSTIN, WILLIAMS & HOWARD JJ
DATE OF ORDER:
30 March 2023
THE COURT ORDERS THAT:
1.Leave to appeal is granted.
2.The appeal is allowed.
3.The Notice of Contention filed 24 February 2023 is allowed.
4.The Application in an Appeal filed on 24 February 2023 is dismissed.
5.Orders 2(a)(ii) and 2(b)(ii) made by the primary judge on 11 November 2022 are set aside.
6.The appellant’s application for a declaration under s 80C(2) of the Child Support (Assessment) Act 1989 (Cth), as is contained within the Statement of Claim filed 17 June 2019 and the Further Amended Initiating Application filed on 15 October 2019, is dismissed.
7.All remaining applications be remitted for rehearing before a judge of the Federal Circuit and Family Court of Australia (Division 1) other than the primary judge.
8.The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
9.The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
10.The Court grants to each party a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of the costs incurred by each party in relation to the new trial granted by these orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cao & Trong has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN & WILLIAMS JJ:
By an Amended Notice of Appeal filed 9 February 2023, the appellant husband appeals from Orders 2(a)(ii) and 2(b)(ii) of orders made by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 11 November 2022 (“the November 2022 orders”) which provide for a portion of funds held in a controlled monies account to be paid to the Child Support Registrar.
The appellant did not apply for leave to appeal until the hearing, once alerted to the need.
The appeal is ostensibly from those orders, but the complaint arises from the primary judge’s determination not to set aside a binding child support agreement, pursuant to s 136 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”), or to make a declaration the agreement was not binding because of non-compliance with s 80C(2)(c) of the Assessment Act. The primary judge did not actually make any orders disposing of applications for orders in those terms, even though that was expressly intended (at [119] and [125]).
The appellant contended in the appeal the reasons of the primary judge were infected by numerous legal and factual errors.
The first respondent wife resisted the appeal.
The second respondent, the Child Support Registrar filed a Notice of Contention and an Application in an Appeal.
The Commissioner of Taxation intervened in the proceedings at first instance, but was not joined to the appeal, did not seek to intervene in the appeal, and was not heard in the appeal.
For the reasons that follow, leave to appeal will be granted and the appeal must be allowed.
BACKGROUND
The appellant and the respondent cohabited from 2003, married in 2010, separated in March 2016 and divorced in August 2017. Their three children were born in 2004, 2010 and 2013.
The appellant during the marriage operated a business in Australia and internationally. He also engaged in extensive share trading and was a managing director of an ASIC listed company.
As a result of the appellants’ business acumen the family enjoyed an opulent lifestyle with substantial assets. However, during the marriage the appellant accrued taxation liabilities arising from his commercial activities which remained outstanding at separation.
On 24 March 2016, shortly after separation, the appellant filed an Initiating Application seeking parenting orders. On 5 August 2016, the respondent filed an Amended Response seeking both parenting orders and an adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
As from 21 November 2016, the appellant was assessed as liable to pay child support in relation to the three children, with the liability registered for collection as a registrable maintenance liability by the Child Support Registrar.
Concurrently with the court proceedings, the appellant and the respondent entered into three child support agreements. The first version was executed on 15 November 2017, it was later amended by a second version executed on 12 February 2018. There was no copy of the second version in evidence, but the trial proceeded on the basis the second version was the same as the third version, minus the handwritten amendments.
The third version of the child support agreement was the same typed text as the second version and dated 12 February 2018, with handwritten amendments to it made on 1 March 2018 (Transcript 27 May 2021, p.256 lines 1–37).
The first agreement dated 15 November 2017 was sent to the Child Support Registrar on 16 November 2017, but was not accepted as it was not accompanied by the requisite application. On 3 April 2018, the third agreement was accepted for registration by the Child Support Registrar as a binding child support agreement.
The consequence of acceptance of the agreement was that the appellant became liable to pay child support from:
(a)3 April 2018 to 31 December 2018 at a monthly rate of $15,000; and
(b)1 January 2019 to 2 October 2020 at a monthly rate of $15,309.
At the date of the commencement of the trial in March 2020, the family assets had been significantly depleted. The only remaining asset was $3,099,868 held in a controlled monies account from the balance of proceeds of sale of a property (at [89]).
The applications before the primary judge at trial were as follows:
(a)an Application under s 79 of the Act by the appellant seeking the funds in the controlled monies account be paid to discharge his taxation liability, with any surplus to be equally divided between the parties;
(b)a Response by the respondent seeking various orders pursuant to s 79 of the Act, including the funds in the controlled monies account be paid to her lawyer for legal costs and the balance to be paid to the respondent;
(c)the appellant’s application for a declaration that the three child support agreements were not binding because of non-compliance with s 80C(2)(c) of the Assessment Act and in the alternative, to set aside the three agreements pursuant to s 136(2) of the Assessment Act;
(d)the applications by the respondent for departure orders under Pt VII, Div 4 of the Assessment Act in the event the binding child support agreement was set aside, spousal maintenance and an injunction restraining the appellant from leaving Australia;
(e)the claim by the Commissioner of Taxation for outstanding tax and penalties of approximately $7,000,000. The Commissioner of Taxation intervened in the proceedings on 8 August 2016; and
(f)an Application in a Case filed by the Child Support Registrar on 20 December 2019, seeking orders for payment of the appellant’s outstanding registered maintenance liability out of the matrimonial assets. The child support debt then due was $240,248 arrears of child support and $14,570 in late payment penalties.
Although the appellant referred to three binding child support agreements in his application before the primary judge and orders sought in the appeal, the Child Support Registrar acted upon the third agreement (accepted for registration on 3 April 2018), as the relevant binding child support agreement.
The primary judge determined the appellant and the respondent should not receive any funds from the controlled monies account, and thereby effectively determined their respective s 79 applications (at [2] and [181]).
The primary judge held (at [125]) both the appellant’s applications to challenge the binding child support agreements failed, the respondent’s departure application was otiose and because the appellant owed the Child Support Registrar a monetary debt in respect of his outstanding registered maintenance liability, the debt should be satisfied from the matrimonial assets. The primary judge failed to deal with the respondent’s application for spousal maintenance and departure prohibition in either the reasons or by the orders made, which is itself an error.
Because the combined claims of the Child Support Registrar and the Commissioner of Taxation far exceeded the funds available for distribution, it was common ground as between the Commissioner of Taxation and the Child Support Registrar that the respective debts should be paid rateably from the matrimonial assets, a position which was accepted by the primary judge (at [81]).
Rather than specifically dismissing the extant applications of the appellant and the respondent, the primary judge made orders providing for the distribution of the funds in the controlled monies account to the Commissioner of Taxation and the Child Support Registrar. The orders providing for payment of the monies to the Child Support Registrar are the appealed orders.
LEAVE TO APPEAL
Section 28(3)(b)(i) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) provides that leave is required to appeal a judgment of the Federal Circuit and Family Court of Australia (Division 1) exercising jurisdiction under the Assessment Act.
Because the Amended Notice of Appeal did not apply for leave to appeal, counsel for the appellant made an oral application for leave. The application was not opposed and proceeded on the basis relevant submissions would be made in the context of the substantive appeal.
The test to be applied in applications for leave to appeal is whether, in all of the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered by the appellate court, and whether substantial injustice would result if leave were refused, supposing the decision to be wrong (Medlow & Medlow (2016) FLC 93-692 (“Medlow”)). In Eames & Eames (2018) FLC 93-866, at [81]–[82] the Full Court affirmed Medlow as the appropriate test to be applied in child support matters noting that it “has the flexibility to take into account, where necessary, any particular matters arising out of the fact that the proceedings concern child support”.
Because the merits of any proposed appeal are relevant to the success of the appeal, we will address the proposed grounds before returning to the question of leave to appeal.
THE APPEAL
The Amended Notice of Appeal extends to five grounds, as follows.
Ground 1
This ground provides:
The learned trial judge erred in finding (Reasons for Judgment paragraph 33) that “no party in this case relied on the words ‘or other conduct.’”
In his Further Amended Initiating Application filed 15 October 2019, the appellant sought the following final order:
3.… [T]he Binding Child Support Agreements between [the appellant] and [the first respondent] dated 15 November 2017, 12 February 2018 and 1 March 2018 be set aside pursuant to Section 136(2) of the Child Support Assessment Act 1989 (Cth).
Section 136(2) of the Assessment Act provides:
(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)that the party’s agreement was obtained by fraud or a failure to disclose material information; or
(b)that another party to the agreement, or someone acting for another party:
(i)exerted undue influence or duress in obtaining that agreement; or
(ii) engaged in unconscionable or other conduct;
to such an extent that it would be unjust not to set aside the agreement; or
(c) in the case of a limited child support agreement:
(i)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
(ii)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); or
(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.
(Emphasis added)
At [33] of the reasons, the primary judge said:
Here, s 136(1) provides that a party to an agreement prescribed by that section may apply to set aside the agreement. Under s 136(2), if a party has applied under sub-section (1), the court is empowered to set aside the agreement if the court is satisfied that (moving to s 136(2)(b)(ii)) another party to the agreement or someone acting for another party “engaged in unconscionable” or other conduct. No party in this case relied on the words “or other conduct”. …
Contrary to the statements of the primary judge at [33], the appellant contended in the appeal he specifically relied on the words “or other conduct” both during the trial and in his written closing submissions.
The appellant relies upon statements of his counsel, the primary judge and exchanges between them which occurred during the trial.
On 16 March 2020, the first day of the 19 days of trial before the primary judge, counsel for the appellant said:
[COUNSEL FOR THE APPELLANT]: Now, we say that there was primarily unconscionable or other conduct.
(Transcript 16 March 2020, p.6 lines 46–47)
and further:
[COUNSEL FOR THE APPELLANT]: … but I was saying that I don’t actually strictly need to fall within unconscionable because the statute says “unconscionable or other conduct”. Now, what is the conduct? The conduct is set out in my client’s affidavit.
(Transcript 16 March 2020, p.7 lines 23–26)
On the same day, the primary judge said:
HIS HONOUR: … ultimately it’s a matter of statutory construction for me as to what the words “conduct” include, and you heard [counsel for the appellant] ask whether I was inquiring about its construction eiusdem generis, but there must be some learning somewhere that speaks of what the words “conduct” or “other conduct”, as has been quoted, in the context of a general discussion of equitable principles that unravel an agreement.
(Transcript 16 March 2020, p.18 lines 2–7)
On 27 May 2021, the following exchange occurred:
HIS HONOUR: It’s unconscionable, isn’t it? Isn’t that the pleading?
[COUNSEL FOR THE APPELLANT]: Unconscionable or other conduct.
HIS HONOUR: I see
(Transcript 27 May 2021, p.259 lines 40–44)
On 2 June 2021, counsel for the appellant said:
[COUNSEL FOR THE APPELLANT]: It goes to unconscionability. Because if privileged information was in the hands of Ms [LL], that goes to unconscionable or other conduct within the terms of section 136 that I’m relying on.
(Transcript 2 June 2021, p.466 lines 1–3)
On 3 June 2021, the following exchange occurred:
[COUNSEL FOR THE APPELLANT]: Your Honour, can I just say it’s going to be part of my case that it’s unconscionable or other.
HIS HONOUR: No, I understand that.
(Transcript 3 June 2021, p.545 lines 14–17)
On 3 November 2021, the following exchange occurred:
[COUNSEL FOR THE APPELLANT:] Now, I say you look at section 136[(2)] and it says:
Unconscionable or other conduct.
My learned friend [counsel for the first respondent] says to you that – and he makes this point at 165 and I am just going to stay straight out I disagree with him and your Honour is going to have to decide which way you go. He says that because there’s no definitional section, as you get in ASIC and in Australian Consumer Law, he says because there’s no such equivalent in the Child Support Act, [Kobelt] and other cases do not assist and you have to look only at equitable unconscionability. I say there is no proper basis for that submission. I say that if section 136 had been expressed to refer to equitable unconscionability it would have said so. The words “or other” would be redundant were that to be the case. If there were words like “void voidable” again, that might indicate equitable. You don’t have those words. You do have them in other parts of the family law legislation that deal with unconscionable.
(Transcript 3 November 2021, p.571 line 40 to p.572 line 7)
The appellant also relies upon paragraph 3 of his written closing submissions filed 23 September 2021 which refer to “other conduct” and the acknowledgement in paragraph 168 of the first respondent’s written closing submissions that there was an issue to be determined:
168.An issue arises as to the meaning of the section in that the Court must determine the significance of the words “or other conduct” that appear next to the word “unconscionable”.
(First respondent’s written closing submissions filed 12 October 2021)
In addition to the exchanges during the course of the trial and the statements in the appellant’s written closing submissions, paragraph 97(b) of the appellant’s Statement of Claim filed 17 June 2016 seeks that the binding child support agreement should be set aside pursuant to s 136(2) of the Assessment Act on the basis the respondent’s solicitor engaged in unconscionable or other conduct to such an extent that it would be unjust not to set aside the agreement. The Further Amended Initiating Application also seeks relief pursuant to s 136 of the Assessment Act.
The statements of the appellant’s counsel during the trial, the exchanges between him and the primary judge, the Statement of Claim, the Further Amended Initiating Application and the appellant’s closing written submissions are irreconcilable with the statement of the primary judge (at [33]) that no party relied on the words “or other conduct”. The appellant clearly did so.
At [30] of his reasons, the primary judge correctly refers to applicable canons of statutory construction, including (at [30(f)]), “when construing a statute, a court must strive to give meaning to every word of the relevant provision” and (at [30(g)]) “no sentence, clause or word is superfluous, void or insignificant if by any other construction they may all be made useful and pertinent”.
The appellant contended in the appeal the primary judge did not follow the identified canon of statutory construction by failing to consider every word within s 136(2) of the Assessment Act upon which the appellant explicitly relied. The primary judge thus fell into error in finding that the appellant did not rely on the phrase “or other conduct” when the parties clearly proceeded on the basis that he did.
We accept that submission. It was incumbent on the primary judge to address in his reasons both unconscionability and other conduct, which he did not do.
The appellant bears the onus of not only demonstrating error, but that a different result might have flowed had the legal error not occurred (Allesch v Maunz (2000) 203 CLR 172; Saltern & Mink [2020] FamCAFC 320).
As to the second limb, the appellant submitted the error of the primary judge effectively renders the words ‘or other’ to be “superfluous, void or insignificant” within the canon referred to by the primary judge (at [33(g)]) which is sufficiently material to impugn the entirety of the primary judge’s reasons in relation to s 136 of the Assessment Act. The primary judge (at [81]) rejected the appellant’s contention about s 136 of the Assessment Act, without considering what those contentions were. We accept that submission.
We are satisfied there has been a legal error which is material to the appellant’s case. There is merit in this ground.
Ground 2
This ground provides:
The learned trial judge erred in finding (Reasons for Judgment paragraph 70) that “[The appellant] did not descend into the minutiae of his unconscionable conduct assertion”.
Counsel for the appellant contended in the appeal that the Court could uphold the appeal without needing to decide this ground. Notwithstanding that contention, he submitted this ground is the failure to consider the evidence as a whole, which failure is not redeemed by the ambiguous nature of [78] of the reasons. The combination of Grounds 1 and 2 amounts to an assertion that the primary judge did not hear the totality of the appellant’s case and that the finding the appellant did not particularise his allegations, cannot be sustained.
In support of this ground, counsel for the appellant relied upon paragraphs 22–73 and 92 of the appellant’s written closing submissions as providing an organised particularisation constituting such descent. He also submitted paragraphs 172–219 of the respondent’s written closing submissions responded to the appellant’s particularisation.
An examination of the appellant’s written closing submissions demonstrates a detailed analysis of the issues in dispute pertaining to the child support agreement and relevant evidence supporting the appellant’s submission. The submissions addressed the misrepresentation as to the availability of shares, the misrepresentation about flexibility of the ‘binding’ child support agreement, features of unconscionable or other conduct in the proceeding, including the agreements contained terms which the author knew to be false, particularisation of the false statements, the false urgency, the link between parenting and child support, access to privileged information and the arrangements for the agreement to be certified by another solicitor.
The respondent’s written closing submissions demonstrate she was aware of and responded to the appellant’s case although it is obvious she did not agree with the appellant’s position.
We do not accept the correctness of the finding expressed at [70] of the reasons for judgment, where the primary judge said:
[The appellant] did not descend into the minutiae of his unconscionable conduct assertions.
The appellant’s closing written submissions, which are not referred to in the reasons, comprehensively particularise his claim. There is merit in this ground.
Ground 3
This ground provides:
The learned trial judge erred in finding (Reasons for Judgment paragraph 80 that “At the core of [the appellant’s] contentions in relation to unconscionable conduct … was the need for him to demonstrate that he was at the relevant time subject to a “special disadvantage””.
At [80] of the reasons, the primary judge said:
At the core of [the appellant’s] contentions in relation to unconscionable conduct as a component of his argument concerning s 136(2)(b)(ii) of the Child Support (Assessment) Act was the need for him to demonstrate that he was at the relevant time subject to a “special disadvantage” which “seriously affects the ability of the innocent party to make a judgment as to his or her own best interest.” I am not at all persuaded that [the appellant] suffered from a special disadvantage. Nor am I persuaded that by reason of such a special disadvantage, he was unable to make a judgment about his own best interests. He was a sophisticated, well-educated, astute businessman.
The appellant contends the statement of the primary judge at [80] is capable of two interpretations, first a material error of law and the second, a material error of fact.
First, if the statement at [80] imports a legal requirement to establish special disadvantage, in a consideration of unconscionable in s 136 of the Assessment Act, that statement is inconsistent with the statements of the primary judge at [38(m)] and [44].
At [38(m)], the primary judge said:
[S]tatutory unconscionability permits, but does not require, a consideration of special disadvantage and the taking of advantage of that special disadvantage and, like other open-textured criteria such a [sic] “unfair” or “unjust”, there is no baseline moral standard for what constitutes “unconscionable”…
At [44], the primary judge said:
It is apparent from the above analysis of the various reasons in Kobelt that debate continues to abound concerning whether statutory unconscionability requires (as opposed to, might include) concepts of special disadvantage and the uncontentious exploitation of that special disadvantage.
The appellant contended, and we agree, the statements at [38(m)] and [44] are more accurate statements of legal authority than the primary judges’ comments at [80]. If the primary judge decided the issue as set out in [80] of the reasons for judgment, as his Honour appears to have done, then the conclusion is vitiated by the internal inconsistency within the reasons.
Secondly, if the statement at [80] is construed as the case put by the appellant at trial, it is an error of fact because it is inconsistent with paragraphs 12 and 14 of his written closing submissions filed 23 September 2021.
Paragraph 12 of the written closing submissions provides:
Although [the appellant] submits that a position of ‘special disadvantage’ is not required to invoke section 136, his alternative submission is that there was such a relationship and that [Ms LL], as [the first respondent’s] agent, did take advantage of it.
Paragraph 14 provides:
The phrase “or other conduct” in s 136(2)(b) is broader than unconscionable, by reason of which it does not import the requirement (to the extent that there is one) of exploitation: as per Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301…
Those statements make it clear the appellant’s position at trial was there was no requirement to establish special disadvantage to obtain relief under s 136 of the Assessment Act.
Counsel for the appellant submitted the primary judge erred because he either misconceived the appellant’s case or required him to establish special disadvantage, which he was not required to establish. We agree with the submission.
There is merit in this ground.
Ground 4
This ground provides:
The learned trial judge erred in finding (Reasons for judgment paragraph 61(b)) that “if “unconscionable” conduct … requires the proscribed conduct to be so far outside of societal norms of acceptable behaviour as to warrant condemnation as conduct that is offensive to conscience, then again the conduct in this case was not properly so characterised” by omitting consideration of such conduct and/or not giving reasons for such finding.
The primary judge (at [61]) said “[a]s is explained below, in this case I am of the view that” – prior to making the statement at [61(b)] referred to in the preceding paragraph.
As correctly identified by counsel for the appellant and conceded by the respondent, nowhere in the reasons did the primary judge examine the conduct complained of by the appellant, nor did he give reasons for his finding.
There is merit in this ground.
Ground 5
This ground provides:
The learned trial judge did not hear and determine [the appellant’s] Application for a declaration that the Binding Child Support Agreements did not comply with section 80C(2)(c) of the [Assessment] Act.
At paragraph 2 of his Further Amended Initiating Application filed 15 October 2019, the appellant sought a declaration that all three of the binding child support agreements between himself and the respondent are not binding because of non-compliance with s 80C(2)(c) of the Assessment Act.
The primary judge (at [116]) noted the appellant contended at trial that for the purposes of s 80C of the Assessment Act, it was necessary for the parties to actually receive legal advice to the effect set out. The appellant relied upon a decision of Piper & Talbot & Anor [2021] FCCA 511. The first instance decision was subject to appeal and was determined by the Full Court of the Federal Court on 19 November 2021: see Child Support Registrar v AFS19 (2021) 287 FCR 52 (“Child Support Registrar v AFS19”).
At [116], the primary judge referred to the decision and at [118] stated the decision in Child Support Registrar v AFS19 provides an answer to the appellant’s application for declaratory relief pursuant to s 80C(2)(c) of the Assessment Act.
We agree with the statements of the primary judge at [116] and [118] which demonstrate he considered and disposed of the appellant’s application for declaratory relief.
There is no merit in this ground.
NOTICE OF CONTENTION AND APPLICATION IN AN APPEAL
On 24 February 2023, the Child Support Registrar filed a Notice of Contention and an Application in an Appeal.
The ground relied upon in the Notice of Contention was the declaration sought by the appellant, under s 80C(2)(c) of the Assessment Act, should have been refused in the exercise of the court’s discretion, for the reasons set out at paragraphs 28–37 of the Child Support Registrar’s written submissions filed 1 November 2021.
We have determined there is no merit in Ground 5 of the appeal and will thus allow the Notice of Contention. Because the primary judge failed to make an order dismissing the appellant’s application for a declaration under s 80C(2)(c) of the Assessment Act when that outcome was plainly intended (at [119]), we will dismiss the application.
The Application in an Appeal sought two orders. First, an order pursuant to r 1.31 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) to dispense with the time prescribed by r 13.39. Secondly, if the Court set aside the agreement pursuant to s 136 of the Assessment Act, to adduce further evidence in the appeal, specifically an updated certificate pursuant to s 116(2) of the Child Support (Registration and Collection) Act 1988 (Cth).
At the hearing, counsel for the Child Support Registrar clarified the intention was to adduce further evidence only if the appeal was successful and the Court elected to re-exercise discretion, not to adduce evidence under s 35(b) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) either in support or rebuttal of the appeal. In such circumstances the Child Support Registrar would be entitled to lead such evidence (Allesch v Maunz at 183 and 191–192) and so the application was not necessary.
For the reasons that follow, we intend to remit the matter for rehearing and the Application in an Appeal will be dismissed.
CONCLUSION
Given the merit in grounds 1–4, we are satisfied that substantial injustice would be suffered by the appellant if he were denied an opportunity to have his applications pursuant to s 136 of the Assessment Act properly determined.
Leave to appeal will be granted and the appeal allowed.
DISPOSITION
In the event the appeal succeeded, the appellant primarily sought for his application to be reheard by this Court and for orders to set aside the binding child support agreements pursuant to s 136 of the Assessment Act. Counsel for the appellant contended the weight of evidence in support of his allegations as to unconscionable or other conduct is so overwhelming, this Court can and should make the orders sought. As to the respondent’s application for departure from an administrative assessment of child support (application pursuant to s 118 of the Assessment Act), which the primary judge did not determine, the respondent could avail herself of the administrative assessment, review and appeal process. The primary judge did not address the disposition of the Child Support Registrar’s enforcement application. Counsel’s secondary submission was this Court should determine the application pursuant to s 136 of the Assessment Act and remit any residual applications.
As the respondent was not represented in the appeal, she relied on her Summary of Argument filed 27 February 2023 and did not wish to be further heard. Her Summary of Argument contends an order setting aside the agreements requires a review of the evidence, which could be undertaken with the assistance of the outlines of submissions of both the appellant and respondent, which were before the primary judge.
The Child Support Registrar did not take a substantive position about whether this Court should determine the appellant’s application to set aside the agreements.
The appellant and respondent both made comprehensive submissions to the primary judge about determination of the discrete application brought under s 136(2) of the Assessment Act, but it was only one aspect of the overall dispute concerning the former spouses, the Child Support Registrar and the Commissioner of Taxation. When it is necessary to remit all of the remaining applications for rehearing, comprising the Child Support Registrar’s child support enforcement application, the respondent’s contingent application for child support departure orders, and the respondent’s unresolved applications for spousal maintenance and an injunction restraining the appellant’s departure from Australia, we see no advantage in separately rehearing the appellant’s application for relief under s 136(2) of the Assessment Act. We are persuaded that remitter of all outstanding applications for rehearing together at first instance is the better course.
COSTS
If the appeal succeeded, counsel for the appellant initially sought the respondent pay indemnity costs of $52,308. Indemnity costs were not pressed and party/party costs of $36,747 were subsequently sought. It was submitted an order for costs was justified because the legal and factual errors identified in the reasons for judgment were so obvious, the respondent should have conceded the appeal at a much earlier point in time.
The respondent resisted an order for costs and primarily relied on her poor financial circumstances.
Costs were not sought by the Child Support Registrar or the Commissioner of Taxation.
Impecuniosity is not necessarily an impediment to a costs order (Bhatt & Acharya (Costs) [2017] FamCAFC 71), but the respondent’s financial circumstances are indeed modest and, in any event, she successfully resisted part of the appeal. We are not satisfied the circumstances justify a costs order in the appellant’s favour.
As the appeal succeeds in part on an error of law, the appellant and respondent are granted cost certificates in relation to the appeal and the rehearing.
HOWARD J:
This appeal is brought by the husband against orders made by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 11 November 2022. The orders were made at the conclusion of a trial which ran for 19 days.
In the husband’s Further Amended Initiating Application filed on 15 October 2019, he sought, inter alia, a declaration that three “Binding Child Support Agreements” are not binding. The declaration was sought on the basis of non-compliance with s 80C(2)(c) of the Child Support Assessment Act 1989 (Cth) (“the Assessment Act”). In the alternative, the husband sought an order that the three “Binding Child Support Agreements between the husband and the wife dated 15 November 2017, 12 February 2018 and 1 March 2018 be set aside pursuant to Section 136(2)…” of the Assessment Act. The primary judge dismissed both of these applications.
The husband’s Amended Notice of Appeal was filed on 9 February 2023. I agree with the majority that leave should be granted to the husband to appeal from the judgment at first instance. Such leave is required by s 28(3)(b)(i) of the Federal Circuit and Family Court of Australia Act 2021 (Cth).
It is convenient to first of all deal with Ground 5 of the husband’s notice of appeal. This ground relates to the husband's application for a declaration pursuant to s 80C(2)(c). His Honour provided reasons which showed an intention to dismiss the application – but no order disposing of the application was made. I agree with the reasons of the majority in relation to Ground 5 of the appeal and I agree with the order proposed by the majority – namely that the husband’s application made pursuant to s 80C(2)(c) should be dismissed.
As to the remaining grounds of appeal (Grounds 1 – 4 inclusive), I will consider each ground in turn. These grounds relate to the husband’s application pursuant to s 136(2) of the Assessment Act.
Ground 1
This ground states:
The learned trial judge erred in finding (Reasons for Judgment paragraph 33) that “no party in this case relied on the words ‘or other conduct’”.
It is apparent from the husband’s written submissions that were filed on 23 September 2021 (“the husband’s trial submissions”) that he did rely on the words “or other conduct”. By stating in [33] that no party in the case had relied on the words “or other conduct”, his Honour erred. Having made that statement – his Honour made no further mention of the words “or other conduct”, nor did his Honour address the husband’s submissions in relation to those words. Failure to address this aspect of the husband’s case amounts to an error of law.
Ground 2
This ground states:
The learned trial judge erred in finding (Reasons for Judgment paragraph 70) that “The husband did not descend into the minutiae of his unconscionable conduct assertion”.
It was submitted on behalf of the husband at paragraph 46 of the husband’s written submissions filed in this appeal on 9 February 2023 (“the husband’s appeal submissions”) that, between paragraph 23 – 73 of the husband’s trial submissions, the husband did provide particulars of his assertion that the conduct was unconscionable. The husband maintains that the first sentence in [70] shows that the primary judge did not properly hear and determine the husband’s case. There is merit in this complaint.
Grounds 3 & 4
Ground 3 states:
The learned trial judge erred in finding (Reasons for Judgment paragraph 80) that “At the core of the husband’s contentions in relation to unconscionable conduct … was the need for him to demonstrate that he was at the relevant time subject to a “special disadvantage””.
This was not at the core of the husband’s contentions. There is merit in this complaint.
Ground 4 states:
The learned trial judge erred in finding (Reasons for judgment paragraph 61(b)) that “if “unconscionable” conduct … requires the proscribed conduct to be so far outside of societal norms of acceptable behaviour as to warrant condemnation as conduct that is offensive to conscience, then again the conduct in this case was not properly so characterised” by omitting consideration of such conduct and/or not giving reasons for such finding.
I agree that his Honour did not provide adequate reasons relating to the “conduct” which was the subject of the husband’s application under s 136(2)(b)(ii).
In my view, there is merit in Grounds 1, 2, 3, and 4 of the Notice of Appeal. Each ground has identified an error of law.
A real review of the trial
This litigation has been ongoing for seven years. The applications relating to the binding child support agreement/agreements formed only one part of the proceedings before the primary judge. Section 79 proceedings were also ventilated before the Court at first instance – along with the claim by the Commissioner of Taxation for $7,000,000 and various other applications. At first instance, the primary judge determined that the only property of the parties (approximately $3,000,000 contained in a solicitor’s controlled monies account) – be paid rateably to the Commissioner of Taxation and to the Child Support Registrar.
This appeal is conducted by way of rehearing.[1] This Court is in as good a position as the primary judge to decide the application under s 136 of the Assessment Act.[2] This much is accepted by the appellant husband.[3] The husband was represented by counsel at the trial and on the hearing of the appeal. The husband did not seek to put any further evidence before the Court. The wife was represented at the trial but not at the appeal. The wife did not seek to put any further evidence before the Court – but, as will be seen, the wife will suffer no prejudice in this instance. In paragraph 43 of the appeal submissions of the second respondent (the Child Support Registrar) no opposition is expressed to this Court, on appeal, deciding the application under s 136 of the Assessment Act. The Registrar stated that it did not “take a substantive position” as to the outcome of the application under s 136. I am mindful of what the High Court said in Allesch v Maunz at [31]. In the particular circumstances of this case, the Court (in deciding the application under s 136 of the Assessment Act) is required to consider the evidence of the interactions of the husband and the wife (and her lawyer) in the short window of time between October 2017 and March 2018. Evidence as to “circumstances as they exist at the time of the appeal” is not relevant in this application.[4] For the reasons stated, in my view, it is appropriate to proceed to decide the matter by re-exercising the discretion under s 136(2) of the Assessment Act. There needs to be finality to this litigation – at least in relation to the time-consuming and expensive application under s 136.
[1] CDJ v VAJ (1998) 197 CLR 172 at [111] (“CDJ v VAJ”); Allesch v Maunz (2000) 203 CLR 172 at [22] (“Allesch v Maunz”).
[2] Note generally Fox v Percy (2003) 214 CLR 118 at [25] per Gleeson CJ, Gummow, and Kirby JJ; Warren v Coombes (1979) 142 CLR 531 at 551 per Gibbs ACJ, Jacobs, and Murphy JJ.
[3] The husband’s appeal submissions at paragraphs 74 and 75.
[4] The Court’s task in deciding an application under s 136 of the Assessment Act is fundamentally different from the cases in the family law jurisdiction relating to applications for property settlement under s 79 and applications for parenting orders under Part VII of the Family Law Act 1975 (Cth).
Re-exercise of the discretion under s 136(2) of the Assessment Act
The husband and the wife were married in 2010. They have three children: X, born in 2004; Y, born in 2010; and Z, born in 2013. Final separation occurred in March 2016. Later that month, litigation between the husband and the wife commenced. In October/November 2017, the husband and the wife commenced negotiations to finalise outstanding issues. A binding child support agreement formed part of the process. There was more than one version of the child support agreement.
Before embarking on a detailed consideration of the relevant evidence and submissions – it is important to clarify the situation in relation to the operative binding child support agreement. Between November 2017 and March 2018, the parties entered into three separate agreements. The first agreement was dated 15 November 2017. It is contained at p.251 of the Appeal Book. That agreement was amended and the parties entered into a second agreement dated 12 February 2018. Certain handwritten changes were made to the second agreement. It is accepted between the parties that the handwritten changes were made and initialled on 1 March 2018. Hence, it is said throughout the record (including during the course of the trial and at the hearing of the appeal) that the third agreement was dated 1 March 2018 – even though the third agreement still bears the date on the front of 12 February 2018. The third agreement can be found from p.264 of the Appeal Book. The only agreement that was accepted by the Child Support Registrar is the third agreement. This is the only operative binding child support agreement between the husband and the wife. The third agreement was accepted (under s 92 of the Assessment Act) by the Child Support Registrar for registration on 3 April 2018. The Registrar has acted on the third agreement. In these reasons for judgment, I will refer to the agreement dated 1 March 2018 (accepted by the Child Support Registrar) as “the third agreement”. As can be seen from s 136 (below), the jurisdiction of the Court under s 136(2) to set aside an agreement – only arises in respect of an agreement that has been accepted by the Registrar. In this case, the jurisdiction of the Court only arises in respect of the third agreement.
Section 136 of the Assessment Act relevantly provides:
Power 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)a termination agreement, or a written agreement referred to in paragraph 80G(1)(b), 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 if the court is satisfied:
(a)that the party’s agreement was obtained by fraud or a failure to disclose material information; or
(b)that another party to the agreement, or someone acting for another party:
(i) exerted undue influence or duress in obtaining that agreement; or
(ii) engaged in unconscionable or other conduct;
to such an extent that it would be unjust not to set aside the agreement…
In the event that the Court is satisfied that another party to the agreement – or someone acting for another party – engaged in “unconscionable or other conduct” – that is not the end of the matter. The Court still needs to be satisfied that the conduct was engaged in to such an extent that it would be unjust not to set aside the agreement.
A significant amount of time was devoted by the parties to the construction of the words “unconscionable or other conduct” in s 136(2)(b)(ii). Taking into account the submissions of the parties, and the various cases referred to, the principles to be applied can be stated as follows:
(a)The word “unconscionable” is not defined in the Assessment Act. It should be given its ordinary meaning.[5] It means doing what should not be done in good conscience.[6] In this appeal, it is not necessary to decide whether the use of the word “unconscionable” in this statutory provision requires proof of “special disadvantage” and “exploitation”.[7]
(b)The construction of the words “or other conduct” begins by examining the context in which those words appear.[8] Sections 136(2)(a) and 136(2)(b) make reference to various types of conduct – all of which is conduct from which a court of equity may grant relief. The conduct listed includes: fraud; failure to disclose material information; undue influence; duress; unconscionable or other conduct.[9] The context in which this legislative provision appears leads to a conclusion that, to come within s 136(2)(b)(ii), the “other conduct” must be conduct which exhibits some similarity to conduct from which a court of equity may grant relief.[10]
[5] See the approach of Kiefel CJ and Bell J in Australian Securities and Investment Commission v Kobelt (2019) 267 CLR 1 at [14] (“Kobelt”).
[6] Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133 at [87] (“Quantum”); and note paragraph 15(i) of the husband’s trial submissions.
[7] As required in accordance with ordinary equitable principles under the general law: Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Blomley v Ryan (1954) 99 CLR 362. In Kobelt and in Quantum, the two Acts under consideration contained provisions which are quite different from the Assessment Act – but the views expressed by the High Court and the Federal Court are of assistance in construing s 136(2)(b)(ii). In Hughes & Hughes [2018] FamCA 1079, Cronin J, when considering an application under s 136(2)(b)(ii) of the Assessment Act, appears to have proceeded on the basis that “special disadvantage” and “exploitation” were required. His Honour did not have the benefit of reasoned argument on this issue.
[8] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] per McHugh, Gummow, Kirby and Hayne JJ; Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397 per Dixon J.
[9] It is also important to note that the words “or other conduct” appear immediately after the word “unconscionable”.
[10] The appeal submissions on behalf of the Child Support Registrar filed 24 February 2023 are of assistance.
In the husband’s Further Amended Initiating Application[11] and in paragraph 1 of the husband’s trial submissions, the husband seeks orders from the Court "to set aside the three binding child support agreements dated 15 November 2017, 12 February 2018, and 1 March 2018". But only the third agreement is amenable to being set aside pursuant to s 136 of the Assessment Act. This failure of the husband to focus on the precise jurisdiction of the Court has resulted in the husband providing many submissions which focus on evidence that is irrelevant to the third agreement[12] and, hence, are irrelevant to the Court’s jurisdiction under s 136.
[11] Filed 15 October 2019.
[12] Including the formation of the third agreement.
The husband’s trial submissions direct the Court to the evidence upon which he relied to support his application under s 136(2)(b)(ii). At paragraph 18, the husband submitted "that a close consideration of the whole course of dealing highlights 7 features of unconscionable conduct”. At paragraph 20 of the husband's trial submissions, he then sets out the seven features of conduct about which he makes complaint.
Immediately before paragraph 22 of the husband's trial submissions – there is the following heading:
Features of unconscionable or other conduct in this proceeding 1: the flexible misrepresentation as to the availability of the [B Ltd] shares
Reference is made to an email sent by the wife’s solicitor dated 10 November 2017. This email is (at least in part) contained in paragraph 162 of the husband’s trial affidavit filed 15 October 2019. In that paragraph the husband states:
On 10 November 2017, the wife’s solicitor sent me an email which stated, inter alia:
I requested your cooperation to agree to terms for the parenting and child support documents by this Sunday, 12 November - so that the documents can be drafted and you can sign the same on Tuesday, 14 November upon your return to Melbourne. I explained and you agreed that both the documents can contain the terms in principle, but allow flexibility depending on the practical day to day circumstances and requirements. For example, the parenting document may allow you weekly contact with the Children, but in practice you may only wish to exercise contact one weekend in the month due to travel out of Victoria for work. For another example, the Trust may have the [B Ltd] shares sale proceeds for 2 years of child support such that you only needs [sic] to make deposits in the 3rd year onwards.
The husband's trial submissions at paragraph 28 state that the B Ltd shares were not available to meet the liabilities pursuant to the binding child support agreement because those shares were, at that time, the subject of an injunction in favour of the Deputy Commissioner of Taxation.
But the third agreement specifically addresses this issue of the injunction. Clause 11 of the third agreement states:
Sale of B Ltd Shares
11.Subject to the injunction (made on 18 May 2016 and varied on each of 5 October 2016 and 24 April 2017 (Injunction) by which, inter alia, the parties are restrained from dealing in the Wife’s [B Ltd] shares other than for the specific purposes identified in the orders made on 24 April 2017) being discharged by the Family Court of Australia and payment having been made to the legal practitioners as contemplated by the orders made on 24 April 2017, if requested by the Father in writing, the Mother will agree to sell the [B Ltd] shares registered in her name to the Father or his nominee at a price nominated by the Father. If the Father makes such request and the said shares are sold, the net proceeds of sale of such shares (less any anticipated tax liability of the Mother arising from such sale) may (at the election of the Father) be applied by the Father towards his obligation to pay child support under the New Arrangement.
(Emphasis in original)
Clause 11 makes it clear beyond any question or argument that the issue concerning the injunction was addressed before the parties entered into the third agreement on 1 March 2018. At no point, neither in the husband’s trial submissions nor in the husband’s appeal submissions, is any mention made of clause 11 of the third agreement.
In paragraph 24 of the husband’s trial submissions, the Court's attention is drawn to the cross-examination of Ms LL (Transcript 3 June 2021, p. 532 line 17–30). Ms LL, under cross-examination, referred back to the email of 10 November 2017. A close reading of the evidence of Ms LL from 3 June 2021 leads me to find that her statement contained in that evidence concerning “flexibility” related to the use of the B Ltd shares.
The email from Ms LL dated 10 November 2017 and the conversations between Ms LL and the husband (which were the subject of the cross-examination referred to above) – all took place before clause 11 was drafted and inserted into the third agreement.
There is a complaint by the husband that Ms LL was trying to convince the husband to enter into the agreement. It is not surprising that Ms LL was trying to do so. Part of Ms LL’s role as the lawyer for the wife was to achieve a binding child support agreement on behalf of her client. Because that is part of the role of a lawyer – the legislation requires independent legal advice (for both parties) before the agreement will be binding (s 80C(2)(c) of the Assessment Act).
The “unconscionable or other conduct” referred to in s 136(2)(b)(ii) must be conduct which relates to the agreement which is amenable to the Court’s jurisdiction. The conduct complained of under this heading in the husband’s trial submissions is not relevant to the third agreement. Clause 11 of the third agreement provides a complete answer to the husband’s submissions in relation to the conduct he has particularised.
There is no merit in paragraphs 22 – 28 of the husband’s trial submissions.
The next tranche of submissions contained in the husband’s trial submissions are under the heading:
Features of unconscionable or other conduct 2: the flexible misrepresentation in relation to ‘Binding’ child support agreement
In paragraph 31 of the husband's trial submissions, it is submitted that the word "binding" was not used in writing until 14 November 2017. Reference is made in paragraph 32 of the husband's trial submissions to an email sent by Ms LL to the husband on 6 November 2017. But, in the husband's own evidence-in-chief (paragraph 160 of the husband's trial affidavit filed 15 October 2019) he expressly states, inter alia:
160.On 6 November 2017, the wife’s solicitor sent to me by email a proposed Binding Child Support Agreement and Parenting Plan, with a request to sign and return the documents if they were in satisfactory form.…
On the husband's own admission he received an email on 6 November 2017 which attached a proposed “Binding Child Support Agreement”[13].
[13] Emphasis added.
The point is made that there was no mention of independent legal advice being necessary until an email of 14 November 2017 (paragraph 33 of the husband's trial submissions). Even if that is correct, this was prior to the date that the husband entered into the first agreement (15 November 2017) – let alone the only relevant agreement – namely, the third agreement (1 March 2018).
None of these submissions are actually relevant. The only operative binding child support agreement is the third agreement. The weight of the evidence leads me to find that, prior to 1 March 2018 (the date of the third agreement):
(a)The husband knew that the child support agreement was a binding agreement;
(b)The husband knew that the B Ltd shares were subject to an injunction; and
(c)The husband knew that he needed to obtain independent legal advice before signing the agreement.
As to the finding in (a) in the preceding paragraph, the husband was educated in Australia (at both secondary and tertiary levels) and the husband is a man of considerable business experience in Country DD, Country JJ, City MM and Australia. I find that the husband is well able to read and write English. The transcript of the trial – including the cross-examination of the husband – reveals as much. Each version of the agreement states that it is a “binding” agreement. Relevantly, the third agreement[14] has the following heading on the front page in capital letters and bold type “Binding Child Support Agreement”.
[14] As with the previous two versions of the agreement.
In relation to finding (b) above – by the time the husband signed the third agreement, clause 11 had been inserted to address the injunction issue.
In relation to finding (c) – before the husband signed the third agreement, he knew he was required to obtain independent legal advice. The husband had already consulted Mr KK.
The submission contained in paragraph 35(i) of the husband's trial submissions is not remarkable. The husband was in the middle of a negotiation. It is hardly surprising that he was stating to the wife’s representatives that he was not able to afford to pay the child support figure sought by the wife. Nonetheless, the husband did sign the agreement – in particular the third agreement. As to the submission contained in paragraph 35 (ii) regarding whether or not, on 13 November 2017, the husband had “gone into details” concerning the agreement – this is a matter for the husband. The third agreement was not signed until three and a half months after that date. The inference which is open on the evidence (and which I draw) is that the husband, because of his level of education and the extent of his business experience, was well able to read the terms of the agreement and he had plenty of time to “go into the details”.
The conduct complained of was not unreasonable. It was certainly not conduct that would come within the expression “unconscionable or other conduct” for the purposes of s 136(2)(b)(ii) of the Assessment Act.
The submissions contained in paragraphs 29 – 35 (inclusive) of the husband's trial submissions are without merit.
The husband's trial submissions (paragraphs 36 – 56 inclusive) are an attempt to convince the Court that the "agreements" contain terms which are false and which their author (Ms LL) knew to be false. The heading in the husband’s trial submissions is:
Features of unconscionable or other conduct in this proceeding 3: the agreements contained terms which their author knew to be false.
The husband, at paragraph 36, maintains that the agreement prepared by Ms LL “contained two statements which were false”. The husband’s trial submissions then contain the following heading:
False statement 1: Husband represented in the negotiation of the agreement.
Paragraph 37 of the husband's trial submissions states:
37.The agreement recites (at clause 15(c)) that the Husband was represented by [Mr KK] in relation to the negotiation of the agreement. This is simply incorrect.
Reference is made in paragraph 37 to "the agreement". Which agreement? The only operative binding child support agreement is the third agreement.
Paragraph 37 of the husband’s trial submissions refer to “paragraph 15(c)”. Whichever version of the three agreements this submission is meant to refer to – it is wrong.
I presume that the reference in paragraph 37 of the husband’s trial submissions is meant to be paragraph 15(e) of the third agreement (the operative agreement). In paragraph 15(e) of the third agreement, it is stated:
(e)that in the preparation of this Agreement, the Father has been represented by [KK] & Associates and the Mother understands and acknowledges that those lawyers do not represent her in relation to this matter, nor have those lawyers made any representations to her concerning this Agreement,
Paragraph 37 of the husband’s trial submissions misstates the wording contained in the third agreement.[15] None of the agreements (importantly, not the third agreement) state that the husband was represented by Mr KK in relation to the “negotiation”.
[15] And, indeed, in the first two agreements.
The word actually used in paragraph 15(e) of the third agreement is the "preparation" of this agreement. The "preparation" of the agreement is an altogether different concept to the "negotiation” of the agreement.
It may be the case that Mr KK did not draft the third agreement. But, in relation to the preparation of the third agreement – including the consultation Mr KK had with the husband – it can rightly be said that Mr KK “represented” the husband (see Annexure “B” to the third agreement).
Again, a close review of the evidence reveals that the husband's trial submissions (in this case those submissions contained between paragraphs 36 and 46 inclusive) are without merit. None of the conduct complained of under this heading could be said to be “unconscionable or other conduct” for the purposes of s 136(2)(b).
The next heading in the husband's trial submissions is:
False statement 2: Agreement represents the entirety of the agreement
In relation to paragraphs 47 and 48 of the husband's trial submissions, it is stated:
47. The second false statement in the agreement records (at clause 15(c) in all drafts see eg Wife’s Exhibits to Trial Affidavit, page 760/895) that neither party relied on any representation or promise made by the other.
48. This statement is also demonstrably incorrect; and known to be so by the author of the document.”
These submissions are without merit. It cannot be said that the husband relied on any representation relating to the sale of the B Ltd shares (and the use of the sale proceeds to pay child support) in deciding to enter into the third agreement. Clause 11 of the third agreement addressed the issue. Furthermore, if the word “representation” in paragraph 47 of the husband's trial submissions is meant to be a reference to his earlier submissions relating to the use of the word "flexible" – these submissions have already been addressed in these reasons for judgment.
In paragraph 49 of the husband’s trial submissions, it is said that: “There were 3 sets of representations/ promises which are not contained in the agreement.”
The husband's trial submissions at paragraphs 50 and 55 contain submissions relating to what is said to be an "agreement" to relax the injunction or apply to the Court to discharge the injunction. These paragraphs of the husband’s trial submissions state:
50.The first is the “agreement” to relax the injunction/apply to court to discharge the injunction.
…
55.For a solicitor to prepare a document which:
(i)either contemplates a breach of injunction or omits reference to an agreement to seek discharge of the injunction; and/or
(ii)contain statements known by her to be false, must fit within the category of “unconscionable or other” conduct.
There is no merit in these submissions. Clause 11 of the third agreement specifically references the B Ltd shares. It is implicit in clause 11 that the parties intended or were hopeful that there would be a discharge of the injunction "by the Family Court of Australia".
The husband's trial submissions state that Ms LL prepared a document which contemplated a breach of injunction. This submission is wrong. The third agreement in no way contemplates a breach of injunction. Further, it is submitted that the document omitted a reference to an agreement to seek a discharge of the injunction – but on any fair reading of clause 11 of the third agreement – it is implicit that the parties intended to, or were hopeful of, a discharge of the injunction by the Family Court. I have taken into account the fact that the husband’s trial submissions at this point may well be referring to the first agreement. If that is correct – then they are irrelevant.
There is no substance in the submissions contained in paragraphs 51 – 53 of the husband’s trial submissions. In relation to the “purpose of the children’s trust” – the point is made that there was apparently a conflict between the wife and Ms LL as to what they understood was the “purpose” of the trust. The parties are bound by the terms of clause 12 of the third agreement. As to what any individual person may have thought was the "purpose of the trust", is not persuasive when it comes to the argument that the wife or her lawyer engaged in "unconscionable or other conduct".
The submission contained in paragraph 52 relates to the source of funds for the husband to pay the school fees. The parties are bound by the terms of the third agreement in relation to this issue. Clause 10 of the third agreement sets out the husband’s obligations concerning the payment of school fees. Reference is made to the payment of school fees at D School. Paragraphs 52 to 54 of the husband’s trial submissions are not persuasive. Neither is paragraph 56 persuasive. It is irrelevant. I draw attention to my earlier reasons in relation to clause 11 of the third agreement.
The husband’s trial submissions under this heading are without merit. None of the conduct referred to is conduct which can be described as “unconscionable or other conduct” within s 136(2)(b)(ii).
The next heading in the husband’s trial submissions is:
Features of unconscionable or other conduct in this proceeding 4: the false urgency
There is no weight in this submission. The husband, in his trial affidavit filed 15 October 2019, made it clear at paragraph 159 that:
159.In or about October/November 2017, the wife and I entered into direct discussions with respect to a settlement of matters between us.
There is evidence that the husband spent a good deal of time working outside of Australia. In the transcript of 31 May 2021 at p.322 lines 4-9, the wife provides evidence in relation to this issue. These facts are not contested. I find that the conduct of the wife and the conduct of her lawyer, in trying to get the husband to reach an agreement while he was present in Australia – was not unreasonable. In any event, once again, the husband’s trial submissions have focused on a period of time relating to October/November 2017. The submissions are directed to that period of time leading up to the first agreement. However, the only relevant agreement is the third agreement. This was not executed until 1 March 2018.
In paragraph 60 of the husband's trial submissions, it is submitted that the situation was analogous to the conduct of a vacuum salesman in Australia Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 (“Lux Distributors”). I do not consider this to be an appropriate analogy. The husband is a well-educated man with significant experience in the world of business.
None of the conduct outlined in the submissions of the husband under this heading can be described as “unconscionable or other conduct” for the purposes of s 136(2)(b)(ii). My conclusion is that the “false urgency” submission is without merit.
The next heading in the husband's trial submissions is:
Features of unconscionable or other conduct in this proceeding 5: the link between parenting and child support
The husband gave evidence that, in October/November 2017, he and the wife commenced negotiations to finalise outstanding issues. A binding child support agreement was one of those issues. Another issue related to the parenting plan. The conduct of the wife and her lawyer in seeking to have both the binding child support agreement and the parenting plan finalised at, or about, the same time was not unreasonable. The husband’s own evidence supports this finding – namely that the intention was “to finalise outstanding issues”. The precise complaint of the husband appears to be focused on his contention that the mother’s agreement to the parenting plan was conditional upon the parties entering into a binding child support agreement. But the husband already had the benefit of an interim parenting order. In the oral submissions made by counsel for the wife[16] and in the wife’s trial submissions[17] the point is well made that there had been interim parenting orders in place since 18 May 2016. This fact is confirmed by reference to the court record. There is no evidence from the husband that the wife was refusing to allow him to see the children in accordance with the interim parenting order.
[16] Transcript of 4 November 2021, p.703.
[17] Page 182 of the appeal book.
On 20 November 2017, the husband’s parenting application was ended (the order of Cleary J). The husband filed a Notice of Discontinuance in respect of his parenting application. No parenting order was made by the Court. If the husband was not happy with the terms of the third agreement – then he ought not to have signed that document. He could very easily have filed a new parenting application – the rule in Rice & Asplund[18] was not an impediment. The husband did not take this approach. The husband went ahead and signed the third agreement.
[18] (1979) FLC 90-725.
The conduct of the wife (and her lawyer) in seeking to make the parenting plan conditional upon a binding child support agreement was not, in the particular circumstances of this case, unreasonable. It was not conduct that could be described as “unconscionable or other conduct” for the purposes of s 136(2)(b)(ii). The father already had the benefit of an interim parenting order. There is no suggestion that the mother had not been complying with the interim parenting order. There is no merit in the husband’s trial submissions under this heading.
The next heading in the husband’s trial submissions is as follows:
Features of unconscionable or other conduct in this proceeding 6: access to privileged information
The evidence in this regard is confined to the wife apparently having access to the husband’s emails post-separation and, in particular, the wife becoming aware of certain information relating to the husband’s taxation issues as a result of her access to those emails.
In the husband’s evidence (Transcript 25 May 2021, p. 111) – he states that the wife knew from 2008 that he had not been complying with his taxation obligations. He says that the wife knew this because he and the wife sought advice from Mr ZZ. The advice from Mr ZZ was to the effect that, because of the husband's residency status (he apparently was in Australia pursuant to a 457 Visa), the husband was not required to include offshore income in his taxation return in Australia.
The husband’s submissions on this issue are at odds with his other submissions in this case. The whole thrust of the argument put forward in the husband’s trial submissions is that he was not represented by lawyers in relation to the binding child support agreement. I understood the husband's case to be that this was a particular point of grievance so far as he was concerned. The inference which I draw from the evidence (and having regard to the submissions) is that the conduct complained of (i.e. the wife having access to the husband’s emails) occurred at a much earlier point in time and certainly at a point in time that is not relevant to the Court’s consideration of the formation of the third agreement. If it were the case that the conduct complained of occurred at a point in time that was relevant to the negotiations between the parties for the formation of the third agreement – it would require the closer attention of the Court. It does not relate to that period of time. The conduct complained of is not “unconscionable or other conduct” within s 136(2)(b)(ii). On the husband’s own evidence, the wife (from as long ago as 2008) had the information relating to the husband’s non-compliance with his tax obligations. There is no merit in the submissions under this heading.
The final heading under this part of the husband's trial submissions states:
Features of unconscionable or other conduct in this proceeding 7: the arrangements for the agreement to be certified by Mr KK
There is no merit in this submission made on behalf of the husband. All that is required (pursuant to s 80C of the Assessment Act) for the agreement to be binding is that, before the child support agreement is signed by a person, there needs to be a statement to the effect that the person has been provided with independent legal advice from a legal practitioner in relation to the effect of the agreement on the rights of that party and as to the advantages and disadvantages to that party of making the agreement. This is to be certified in an annexure to the agreement. It has been. Such certificates are included in annexure "A” and annexure “B” of the third agreement (1 March 2018). The fact that Ms LL may have known Mr KK professionally is irrelevant. Indeed, even if Ms LL recommended Mr KK – that is still not conduct that could be described as “unconscionable or other conduct”. It cannot be the case that a pre-existing professional relationship between lawyers prevents those lawyers from acting for opposing parties in relation to the formation of a contract. The submissions for the husband under this heading amount to little more than suspicion or conjecture.
Further Matters
The husband's appeal submissions do not take the trial submissions any further in relation to the evidence concerning the allegations of "unconscionable or other conduct".
In these reasons for judgment, I have already made several findings. Many of the facts in this case are undisputed. This is particularly so in relation to the husband’s education and the husband’s career as a businessman. In addition to the findings already made, I find as follows:
(a)The husband came to Australia for the completion of his secondary school education;
(b)In 1989, the husband completed tertiary studies;
(c)The husband worked at AH Company upon his return to Country DD after finishing university in Australia;
(d)In 2000, the husband commenced his own business in Country DD providing advice to corporate entities;
(e)The husband operated his business in Country DD, Country JJ and City MM;
(f)The husband is an professional, with extensive experience in business administration, in both Country DD and Australia;
(g)The husband’s expertise relates to the restructuring and financing of corporate entities.
CONCLUSION IN RELATION TO THE HUSBAND'S APPLICATION PURSUANT TO S 136 (2) OF THE ASSESSMENT ACT
In order to persuade the Court to exercise its discretion and set aside the binding child support agreement (the third agreement), the husband must prove that the wife or someone acting for the wife – engaged in “unconscionable or other conduct to such an extent that it would be unjust not to set aside the agreement”. As can be seen from these reasons for judgment, there is no evidence that either the wife or her lawyer engaged in “unconscionable or other conduct” as that expression is used in s 136(2)(b)(ii). Further, there is no evidence that either the wife or her lawyer engaged in “unconscionable or other conduct” which, in any way, could be said to be relevant to the agreement which is amenable to the Court’s jurisdiction under s 136(2)(b)(ii) (namely the third agreement).
Further, there is no evidence of any conduct that could be said to have been engaged in “to such an extent” that it would be “unjust” not to set aside the agreement. The husband was well educated in Australia at secondary and tertiary levels. The husband, at all material times, was an experienced and accomplished businessman. The husband is proficient in the reading, writing, and comprehension of English. There is no evidence of any circumstances or conduct that would lead the Court to conclude that it would be “unjust” not to set aside the agreement.
The husband’s application under s 136(2)(b)(ii) of the Assessment Act should be dismissed.
DISPOSITION OF THE APPEAL
Errors of law have been identified. In re-exercising the discretion under s 136(2)(b)(ii) of the Assessment Act, I have come to the conclusion that the husband’s application (under that section) should be dismissed. This is the same conclusion reached by the trial judge. Notwithstanding the identification of appellable errors of law, the conclusion I have reached is that there has been no miscarriage of justice. The judgment at first instance dismissing the application under s 136(2) of the Assessment Act should not be disturbed: Conway v The Queen (2002) 209 CLR 203;[19] Lane & Nichols (2016) FLC 93-750;[20] Balenzuela v De Gail (1959) 101 CLR 226;[21] Coroneo v Kurri Kurri (1934) 51 CLR 328;[22] Ryan v Ross (1916) 22 CLR 1;[23] Dakhyl v Labouchere [1908] 2 K.B. 325.[24]
[19] At 208.
[20] At [73]. A consideration of s 36 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) leads to the conclusion that the same long established common law principle referred to in Conway continues to be applicable to the appellate jurisdiction of this Court.
[21] At 234 per Dixon CJ.
[22] At 345 per Rich, Evatt and McTiernan JJ.
[23] Per Isaacs and Gavan Duffy JJ.
[24] Per Lord Loreburn L.C. at 327.
In my view, the appeal against orders 2(a)(ii) and 2(b)(ii) made by the primary judge on 11 November 2022 should be dismissed.
Other matters
Because the primary judge has made credit findings against the husband – the following existing applications should be remitted for hearing before a different judge. Those applications are:
(a)The wife’s application for spousal maintenance (contained in the wife’s Amended Response filed 12 January 2020);
(b)The wife’s application for an injunction to restrain the husband from leaving Australia (contained in the wife’s Amended Response filed 22 January 2020);
(c)The Child Support Registrar’s Enforcement Application.
The wife had also sought a departure order under s 118 of the Assessment Act. Because of my conclusion that the appeal should be dismissed – that application is no longer relevant.
The Child Support Registrar’s application seeking the leave of the Court to adduce further evidence should be dismissed. The orders of the judge at first instance (in particular contained in paragraphs 2(a)(ii) and 2(b)(ii)) should remain undisturbed. The Child Support Registrar’s Enforcement Application is to be remitted. There is no utility in granting the Child Support Registrar leave to adduce new evidence.
I certify that the preceding one hundred and eighty-six (186) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Austin, Williams & Howard. Associate:
Dated: 30 March 2023
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