Cogswell and Calvery - [2010] FMCAfam 172

FEDERAL MAGISTRATES COURT OF AUSTRALIA

COGSWELL & CALVERY

[2010] FMCAfam 172

CHILD SUPPORT – Child support agreement – application to set aside – limited child support agreement – significant change in father’s circumstances – binding child support agreement – exception circumstances and hardship – issues of credit – phoenix company – application dismissed.

Child Support (Assessment) Act 1989, ss.117, 136

Daley & Daley [2009] FMCAfam 398

Applicant:

MR COGSWELL

Respondent:

MS CALVERY

File Number:

SYC 4250 of 2008

Judgment of:

Altobelli FM

Hearing date:

14 October 2009

Date of Last Submission:

14 October 2009

Delivered at:

Sydney

Delivered on:

1 March 2010

REPRESENTATION

The Applicant:

Self-Represented

Counsel for the Respondent:

Mr Crossland

Solicitors for the Respondent:

Legal Aid Commission of NSW

ORDERS

The father’s Amended Application filed 28 May 2009 is dismissed.
The mother must file any application for costs by way of written submissions, such submissions not to exceed 500 words in length, to be filed and served within 28 days.
The father must file any response to an application for costs by way of written submissions, such submissions not to exceed 500 words in length, to be filed and served within a further 28 days.

IT IS NOTED that publication of this judgment under the pseudonym Cogswell & Calvery is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 4250 of 2008

MR COGSWELL

Applicant

And

MS CALVERY

Respondent

REASONS FOR JUDGMENT

Introduction

This case concerns a child support agreement and whether it should be set aside pursuant to the provisions of section 136 of the Child Support (Assessment) Act 1989.
On 14 April 2001, the applicant father and the respondent mother entered into a child support agreement using the standard form which was in use at the time. At the time, there was already in force a child support assessment for the children. The agreement relates to the two children of the marriage, [X], born [in] 1994, and [Y], born [in] 1996. The father agreed that he would pay to the mother by way of child support the sum of $460 for each child, each month, ie, a total of $920 per month.
The parties agreed that the Child Support Agency would not collect the payments but that they would be made into a nominated bank account of the mother’s. The parties also agreed, firstly, that the above payments would be adjusted for inflation on 1 July each year, calculated in accordance with the consumer price index and, secondly, that the amount payable would be varied during periods that the payer received social security benefits and that the total child support would, in that case, be reduced to $50 per week.
The parties agreed that the agreement would end as each child turns

18 years of age. The agreement is signed by each party, and there appears to be no dispute that neither party received independent legal advice before entering into the agreement. However, the information notes attached to the agreement contain the following statement:
Important
A child support agreement accepted by the registrar is a binding contract between the two parties. It can only be changed by another agreement or by a court. If you are unsure about what to put in the agreement or what effect the agreement will have, it may be best if you seek legal advice. Remember, what you agree to now may not be suitable for you in the future.
If the child support agreement was based on the father enjoying a certain level of contact with his children, it does not reflect the same. Moreover, if the agreement was based upon the father earning a certain income at that time, and continuing to earn a certain income, it does not reflect the same. In relation to these points, no evidence was before the court at the final hearing.
Accordingly, as matters currently stand, the applicant father is required to pay to the respondent mother the sum of $920 by way of child support each month. The evidence before the court indicates that, as at 14 November 2008, the father owed by way of child support arrears at least $17,372.34. It is more likely than not that the existence of these arrears, and possible enforcement action by the Child Support Agency against the father, is what precipitated the father’s present application.
By way of an amended case outline document submitted for the applicant father on 10 July 2009, the first date of the hearing in this matter, he sought orders to the effect that the child support agreement entered into by the parties on 14 April 2001 be set aside as from 23 June 2006. He also sought an order that in respect of the period from 23 June to 30 June 2006 the father be liable for child support based on his taxable income for the financial year ending 30 June 2006, namely, $85,424, reduced by any payments made by the father in that period.
For the period 1 July 2006 to 30 July 2007 the father sought that he be liable for child support based upon his taxable income for the year ending 30 June 2007 of $6850, reduced by any payments made in that period. Finally, in relation to the period commencing 1 July 2007 to 30 June 2008, the applicant father sought to be assessed for child support on the basis of his taxable income for the year ending 30 June 2008 of $7436, again reduced by any payments made by him during the relevant period.
In addition, he sought orders that he not be liable for any penalty or interest payments during the relevant periods. In the alternative, the applicant father sought orders setting aside the child support agreement on a date which this court considers appropriate, or an order setting aside the child support agreement generally. I observe that the father’s case to set aside the child support agreement was thus very broadly framed but was, from any perspective, only to operate from the period 23 June 2006.
By way of response, the respondent mother simply seeks an order dismissing the father’s application.
The applicant father’s case is that the agreement in question is deemed to be a limited child support agreement and that, accordingly, section 136(2)(c) applies. Accordingly, because there has been a significant change in the father’s circumstances, it should be set aside.
In the alternative, though this was not really argued with any vigour, the applicant father’s case was that the child support agreement should be set aside under section 136(2)(b)(ii) based on the alleged unconscionable conduct of the respondent mother in resiling from an alleged agreement to vary, suspend or revoke the child support agreement in question.
The respondent mother’s case is that the child support agreement in question is, in fact, deemed a binding child support agreement and thus, accordingly, section 136(2)(d) applies so that the applicant father is required to establish exceptional circumstances that have arisen since the agreement was made or that the father would suffer hardship if the agreement is not set aside.
One of the issues in this case is, therefore, whether the child support agreement is a limited child support agreement, or a binding child support agreement. Once I make that decision, the next issue will be whether there has been a sufficient, significant change of circumstances or, alternatively, sufficiently exceptional circumstances and hardship, that would warrant setting aside the agreement.
In addition, this is a case where I need to make findings as to the credit of the parties. The mother, in her case, submitted that the father’s evidence was not to be believed. It will be necessary for me to make findings of fact about credit in order to determine whether the s.136(2) grounds have been established.

Background

The applicant father and respondent mother married [in] 1995. It is not clear whether they cohabited before then, and nothing turns on this. The first child, [X], was born [in] 1994, and the second child [in] 1996. The parties separated in November 1997 and divorced in March 2000. Whilst nothing turns on this, child support appears to have first become payable in December 1997 and was registered with the Child Support Agency on a private collector basis. Whilst it is not clear from the evidence of either the father or mother, the documents originating from the Child Support Agency and annexed to the father’s affidavit create the impression that the father did not file tax returns for a considerable period of time, and possibly for the period 1998 through to 2006.
The father commenced these proceedings in July 2008. I made an order for substituted service on 3 September 2008. On 13 October 2008 I directed that, by way of substituted service, a copy of the application be sent to the registrar of the Child Support Agency. On 3 February 2009, the respondent mother appeared with her solicitor and the matter was set down for hearing on 14 May 2009. On 12 May 2009, both parties appeared with their legal representatives and the matter was set down for hearing on 10 July 2009, in lieu of the 14 May date that was originally given. The hearing commenced on 10 July and concluded on 14 October. I note that at the end of the evidence on 10 July, the father’s counsel, Ms Bateman, applied for a stay of the father’s obligation to pay child support and, similarly, a stay of any enforcement proceedings pending against him. I summarily dismissed the stay application, having heard the father’s evidence on that date, on the basis that he had not established a prima facie case.
There are two further matters of background where some explanation is necessary in order to fully understand the background and context of this case.
The first matter relates to the involvement of the Child Support Agency particularly, but not limited to, recognising and implementing an asserted agreement between the father and the mother to stay, suspend or revoke the child support agreement. It is the father’s case that in or about June 2006, he and the mother agreed that the 2001 agreement would end and that his liability to pay child support would be based on the application of the statutory formula. The father’s detailed evidence in this regard is set out at paragraph 48 of his affidavit. Indeed, a further issue in this case is whether there was, in fact, any agreement between the parties to vary, stay or revoke the child support agreement in question.
In any event, the father contends that there was a succession of correspondence and communication with the Child Support Agency in relation to this alleged agreement that he says had the effect of ceasing the 2001 child support agreement. He says that, acting on this agreement, the Child Support Agency did in fact issue assessments which were contrary to, and inconsistent with, the existence of a child support agreement. He annexes to his affidavit extensive correspondence to and from the Child Support Agency in relation to this issue. What is important in this regard is not what the father asserts should be the case, or even for that matter what the Child Support Agency may have represented to be the case at various times during the relevant period, but rather what the Child Support Agency’s current position is, and the basis thereof.
In my opinion, the documentation that sets out the Child Support Agency’s final, and current, position is its correspondence to the father dated 17 September 2008 (annexure AR to the father’s affidavit), and the Child Support Agency’s objection decision report dated

14 November 2008 (annexure AT to the father’s affidavit). The latter document, the objection decision report, is in fact particularly comprehensive in its treatment of all of the relevant events, competing assertions, and relevant decisions and assessments made for the period. In short, the Child Support Agency agrees that it received from the father and the mother a child support agreement dated 14 April 2001, which was to commence on 15 April 2001, in terms as set out earlier in this judgment. For reasons that are not explained, however, the CPI increase required by the child support agreement was not processed and, again for reasons that are not stated, as a result of this the child support agreement reverted to formula assessment. On 23 June 2006, the Agency accepted the mother’s application for collection by the Agency. On 22 February 2008, the father lodged outstanding tax returns for the financial years 1999‑2006 and, as a result of this, arrears totalling $20,234.66 were added to the father’s account. By May 2008, the Child Support Agency became aware of its error in 2003 that resulted in the child support agreement “dropping off the assessment” and the decision was made, in consultation with the mother, to implement the agreement “back on to the assessment.” The Agency contacted the father, advised him of the error that had been made, and also advised him of the options available to him, including reaching agreement with the mother, or seeking legal advice. On 24 August 2008, the Agency submitted an assessment under section 75 of the Child Support (Assessment) Act 1989, correcting its error in relation to the child support agreement.
This fresh assessment, if I may call it that, firstly applied the CPI increases that should have applied for the period 1 July 2003 to 30 June 2009. Secondly, the father was given credit for payments made. As at the date of the letter in question, the arrears were calculated at $17,372.34.
There appear to be a number of background issues that are relevant as well. Firstly, it is by no means impossible that some part of the arrears arise for the period prior to the child support agreement, as a result of the father’s late filing of tax returns.
Also, the father asserts that he made a number of direct payments to the wife that have not been taken into account. Both of those issues appear to have been taken into account in the course of the review sought by the father, the objection to the decision made, and the subsequent objection decision.
There was one further important matter that is dealt with by the child support documentation. The father asserts that at some stage the mother and he entered into a written document that confirms their election to end the child support agreement in question. The mother denies this. The Child Support Agency concluded that they had “thoroughly investigated the system and had been unable to locate any documentation that confirms both parties made an election to end the child support agreement.” In this regard, I note that there was no evidence from the father before me of a document confirming this supposed agreement by the mother and himself.
It was necessary to set out this detailed background about the involvement of the Child Support Agency. True it is that the Agency did make a mistake in the sense that, for whatever reason, the child support agreement between the parties was not consistently implemented by it. Based on the documents I have seen, this appears to have been an administrative mistake that was quite properly corrected under s.75 of the Assessment Act.
From my perspective, the father has no reason to have any grievance about the Child Support Agency’s mistake in these circumstances, unless he were able to sufficiently establish that there was some unconscionability on behalf of the mother to which the Agency somehow contributed, or unless he was able to establish that there was, in fact, an agreement to revoke the child support agreement. As it turns out, and as will be discussed at length below, the father has failed to establish either of these things. In any event, whether or not there had been an error by the Child Support Agency is not an issue that I need to decide in this case.
The second matter in respect of which it is necessary to provide some further background is of the father’s own financial circumstances and business dealings during this relevant period. I found it curious indeed that the father provided no relevant evidence about his financial circumstances at the time of entering in to the child support agreement, particularly given that his case necessitated establishing a sufficient significant change in financial circumstances.
In the absence of cogent evidence about his financial circumstances at the time of entering in to the child support agreement, I’m not quite sure how he intended to establish the benchmark from which change would be measured. In the end result, nothing turns on this but it does indicate some lack of thought about the father’s claim. The only evidence before the court about the father’s circumstances at the time of entering in to the child support agreement is correspondence from the Agency to the father, including a letter dated 22 February 2008 (annexed to the father’s affidavit) that indicates that his child support income for the financial year 2000 was $44,630, and for the financial year 2001, $79,106.
His most current financial statement was sworn on 7 October and discloses a gross income of $49,036 per annum. Even just using a rule of thumb for rough comparison, it is by no means clear that there was necessarily, or inferentially, a change in his financial circumstances between the date of swearing his last financial statement and the date that he signed the child support agreement.
In any event, on 17 June 2003, the father became a sole director and secretary of [S] which the father refers to in his affidavit as the “[F] company”. I will adopt this description. The [F] company commenced trading as a commercial [F]business in July 2003 and was initially very successful, generating an income in the 2004 financial year of $233,690, in the financial year 2005 $98,807, and in the financial year 2006 $85,424.
The [F] company experienced, according to the father, cash flow difficulties which the father attributes to losses on projects and unmanageable growth. In 2005, a company called [S] (NSW) Pty Limited (which I will call [S] NSW) also went in to the [F][F] business. [S] NSW was owned and controlled by the father’s new wife, and by Mr L, a previous employee of the [F] company.
The father commenced working for [S] NSW. The father asserts that his new wife was responsible for the administration of [S] NSW, and Mr L for operations. He says that his new wife’s role in the [F] company and [S] was similar.
The [F] company received a statutory demand for tax from the Deputy Commissioner of Taxation for $220,000, and was then sued in the Supreme Court of New South Wales by a creditor. The father became personally liable for nearly $120,000 of the [F] company tax debt. A liquidator was appointed to the [F] company it was wound up in

26 May 2006. The father’s income plummeted to $7,436 in the financial year 2008, though he continued to work for [S] NSW.
In July 2008, the father was still facing the consequences to him of the winding up of the [F] company, including further personal litigation against him. In April 2009, he commenced retraining in the occupational health and safety field. As at 1 July 2009, he was still working for [S] NSW, earning $40,000 per annum, and he deposes to his new wife earning $80,000 per annum.
In order to set further background on this point, as it is an important one in this case and goes to the question of either change of circumstances or exceptional circumstances and hardship, I will set out in general terms the father’s evidence in cross‑examination. Needless to say, the wife’s counsel cross‑examined the father extensively about the creation, operation, and subsequent demise of the [F] company, and the nature of the father’s involvement in [S] NSW. I was left in no doubt whatsoever that the thrust of the wife’s case was that [S] NSW was a “phoenix company” that arose out of the metaphorical ashes of the demise of the [F] company. Even in this introduction, I am able to record my impression of the father’s evidence about these matters. He was less than convincing. Even with the reflection that comes from a careful review of all the evidence several months after hearing this case, I am still left with profound doubts as to the real reason for the demise of what appears to have been a very successful company, and further doubts about the nature of the father’s interest and involvement in [S] NSW.

In cross‑examination, the father agreed that he became a director of [S] NSW, a matter which he does not disclose in his affidavit. He agreed that in the financial year 2007 [S] had retained profits of $261,000, and exhibit W1 indicates that it had retained profits in 2006 of $212,000. In cross‑examination, the father agreed that his wife’s new role was purely administrative, in both companies, and that a number of employees and subcontractors from the [F] company were hired by [S] NSW. He agreed that both companies were in the same business. He agreed that his role in [S] was as an estimator, and that he performed some administrative functions, not dissimilar to that which he was doing in the [F] company. He agreed that he was paid a fixed amount regardless of the hours that he worked for the [F] company.
Further, in cross‑examination, the father agreed that the property he now lives in in [B] was purchased in 2004, but in his new wife’s sole name, and that it was extensively renovated from 2005, at times coinciding with the financial distress that the [F] company and he personally suffered. The father agreed that he contributes to the mortgage and outgoings on the property out of his income, and did so at all relevant times, again even during the period of distress suffered by the [F] company. In cross‑examination, the father deposed that [S] was apparently no longer trading, but that he had established another company, [N], that provides consultancy in occupational health and safety, and the testing and tagging of tools. Apparently, his new wife is also involved in the marketing and administration of this company.

The Issues

The issues that emerge from the above statement of introduction and background are as follows:
a)Is the child support agreement in question a limited child support agreement, or a binding child support agreement, for the purposes of s.136 of the Child Support (Assessment) Act?
b)Depending on the findings I make in relation to the first issue, has there been a sufficient significant change of circumstances, or are there exceptional circumstances and hardship, that warrant the setting aside of the agreement?
c)The case raises issues of the credit of the father and, accordingly, I need to make findings in this regard.
d)Was there any agreement between the father and the wife to vary, stay or revoke the child support agreement?
e)Was there any unconscionability for the purposes of s.136(2) of the Act?
f)Given that s.136(2) provides me with the discretion, how would that discretion be exercised under the circumstances and, in particular, having regard to the overall legislative structure created by the Child Support (Assessment) Act, and in particular s.117?

The Applicable Law

This is an application under section 136 of the Child Support (Assessment) Act which provides as follows:
(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; 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.
(3) Subject to section 145 (Registrar may intervene in proceedings), the parties to a proceeding under subsection (1) are the parties to the agreement.
(4) If:
(a) the court sets aside a child support agreement under this section; and
(b) the court is satisfied as mentioned in paragraph 117(1)(b) (departure orders);
the court may make an order under Division 4 of Part 7 without an application having been made under section 116.
(5) If:
(a) the court sets aside a child support agreement under this section; and
(b) the court is not satisfied as mentioned in paragraph 117(1)(b) (departure orders); and
(c) the payee has received or will receive benefits pursuant to the agreement;
the court may still make an order that departs from the administrative assessment where it is just and equitable to do so, having regard to the benefits that the payee has already received pursuant to the agreement.
I incorporate the statement of applicable law contained at paragraphs 57‑90 of the decision of Brown FM in Daley & Daley [2009] FMCAfam 398 and I record my indebtedness to his Honour for such a thorough and comprehensive analysis and statement of the relevant legal principles to be applied in these cases.

Limited Child Support Agreement, or Binding Child Support Agreement?

I find that the child support agreement in question is deemed by the legislation to be a binding child support agreement because it was expressed to conclude when each of the children referred to therein attains the age of 18 and makes no provision for any other terminating event. I wish to emphasise that, technically, the child support agreement in question does not meet the requirements of s.80C(2) of the Act because of the absence of independent legal advice. Nonetheless, it is deemed to be a binding child support agreement because of the transitional provisions in the Act. As Brown FM noted at paragraph 96 of his decision in Daley, “To a certain extent, it is an administrative fiction that the agreement between the parties in this case is regarded by the Agency as being a binding child support agreement.”
I do record, however, that even if I am wrong and the child support agreement in question is a limited child support agreement, the applicant’s case would fail in any event. As I have indicated before, if it is a limited child support agreement, then the applicant father would have to establish to my reasonable satisfaction there had been a significant change in his financial circumstances. The onus was always on him to establish this significant change, on the balance of probabilities. The starting point must, of necessity, be to set out cogent, relevant evidence about his financial circumstances at the time of entering into the agreement. His failure to do so in the evidence before me would have meant that any case for significant change in financial circumstances was doomed to failure. Again, this reflects the rather limited thought that was applied towards the father’s case. The respondent mother actually did the father a favour by arguing that the child support agreement in question was a binding child support agreement even if the nature of the evidence required was, arguably, different.

Exceptional Circumstances and Hardship

Does the evidence before me establish that, because of exceptional circumstances suffered by the father since the child support agreement was made, he would suffer hardship if the agreement were not set aside? In this regard, the father’s case is based on what I previously described as his plummeting income from the dizzy heights of $233,690 in the 2004 financial year down to a taxable income of $6850 in the financial year 2007, and $7,436 in financial year 2008.
It is important to note that at all relevant times the onus of proof was on the applicant father in this regard. Moreover, at all relevant times he bore the onus to fully and frankly disclose to the court truthfully, and comprehensively, his financial affairs.
Regrettably, the father has failed to do so. By way of summary and overview, before a more detailed treatment of this issue, I found the father’s evidence less than convincing in relation to the circumstances of the demise of the [F] company, and of the true nature and extent of his interest in [S] New South Wales. I find that the father has so structured his financial affairs that almost all of his assets were placed in the name of his new wife, probably so that they would not be exposed to the claims of creditors.
Moreover, I find that he has structured his income in such a way that most of it is derived in the name of his new wife, even though it was principally earned by him, or through the exertion of his knowledge, skills and experience in the [F] industry. For all practical purposes, I accept the thrust of the wife’s case to the effect that [S] NSW was the phoenix company arising out of the ashes of the [F] company. It follows, accordingly, that the applicant father has failed to establish exceptional circumstances and hardship, for the purposes of s.136(2).
My findings in this regard are based on the evidence of the father, and his wife Ms C. The father relied on two affidavits, his main one filed

1 July 2009 and a later one filed 7 October 2009. In addition he filed two financial statements on the same dates. Ms C swore an affidavit that was filed on 1 July. They were both cross-examined by counsel for the respondent mother. There was also a considerable volume of subpoenaed material which was tendered in evidence. All of the above evidence forms the basis of my comments.
The evidence establishes that the [F] company was a successful company but for non-payment of tax and a number of creditors. The father was not able to explain in cross-examination why it was not possible to, for example, borrow money from the company’s bankers in order to meet the claims of the tax office and creditors, particularly in circumstances where the evidence clearly indicates there was substantial cash surpluses created from the company’s profits.
The father admits to the existence of these substantial cash surpluses in cross-examination. I find that the necessity for the demise of the [F] company was questionable, and it was more motivated to protect its assets, probably its work in progress plus the accumulated cash surpluses. The work in progress was, for all practical purposes, taken over by [S] NSW. The cash surpluses were, for all practical purposes, placed in the name and control of the father’s wife, Ms C.
Notwithstanding this, the father’s evidence before the court was that he was only nominally involved in [S] NSW and that he received none of the benefits but all of the liabilities arising out of the demise of the [F] company. I do not accept this. It is inconsistent with the evidence before the court.
There is an obvious similarity in the names of the [F] company. The father’s role in both companies, in terms of the work undertaken, was similar if not identical. Even his wife conceded in cross-examination that his role as an estimator was essential to [S] NSW. By contrast, the role of the father’s wife, Ms C, in both the [F] company and its phoenix, [S] NSW, was a nominal one and was limited to administration.
The father asserted in his evidence, and this was indirectly supported by his wife, that he suffered from a depressive type illness arising from the demise of the [F] company which disabled him from continuing to work, or work to his capacity, and which continues to do so. The onus of proof was on him in this regard. No cogent admissible evidence was adduced by him to support this contention.
I am satisfied from the evidence that [S] NSW enjoyed the benefit of substantial cash surpluses from its trading activities in the first two years of its life which can only be explained by reference to the work it took over from the [F] company. The evidence indicates that this cash surplus was paid to its shareholders, Ms C, and Mr L. Whilst I am sceptical about whether Mr L actually received the benefit of these dividends, I cannot make a finding to this effect.
It is clear, however, that the father’s wife did receive the benefit of these surpluses. The [F] company, and its phoenix, enjoyed identical employees, and subcontractors, though the scale of employment and contracting appears to have reduced in the transition between the companies. I find that the renovations undertaken to the [B] home of the father and his wife are quite inconsistent with the thrust of the father’s evidence about the substantial deterioration in his financial affairs.
The ownership of a Harley Davidson motorcycle in the name of the wife is a striking example of the father’s willingness to structure his affairs in such a way as to protect his assets from creditors, including the child support registrar. The evidence satisfies me that the Harley was purchased for $35,000 in 2003 and placed in the father’s wife’s name. Whereas the father’s evidence is that both his wife and himself ride the motor vehicle, his wife insisted that she was merely a passenger. In all likelihood, this is an asset that is owned and controlled by the father.
The father was cross-examined about a joint application for finance made to Westpac to fund renovations to the [B] property. In this application, his wife discloses substantial cash assets. The father conceded in cross-examination that at least some of the cash that she discloses was earned through his company.
Indeed, he eventually conceded that a “fair amount came from my company.” He openly conceded in cross-examination that excess profits from the [F] company was put in the wife’s name.
It is clear from the evidence that both the father and his wife give that the protection of assets was very much on their minds in the context of the transition from one company to another, and even subsequently. For example, when [S] NSW was established the father was a director, and the wife and Mr L were shareholders, and the wife conceded that the basis for this was to protect the shareholders from any liabilities of this company.
Conversely, of course, the father had no assets to protect. In cross-examination, the father’s wife agreed that the father was needed to do the estimating for the new company and that he was required to secure arrangements with existing suppliers, particularly the extension of credit in this regard. Furthermore, in cross-examination, the father’s wife conceded that the father was the public face of [S] NSW and that he was involved in discussions about which jobs to undertake.
The father was selective in his disclosure of relevant information to the court. For example, it was his wife who disclosed in cross-examination about the true extent of his role in [S] NSW. It was his wife who explained that the home at [B] was purchased using the sale proceeds of a property previously owned by the father at [P], and that these sale proceeds represented about two-thirds of the deposit in the [B] property. Again, in the context of such a substantial asset being held in the name of the father’s wife, one would have thought that this evidence was relevant and should have been disclosed by the father in his evidence.
The manner in which the father’s wife gave evidence left much to be desired. Her poor recollection of the precise circumstances of the establishment of [S] NSW, and the financial investment that she and Mr L were supposed to have made, is evidence which is more consistent with a witness not being prepared to disclose, rather than a witness not being able to remember these details.
All of the above leads me to conclude that the father has not been able to establish to my reasonable satisfaction, and on the balance of probabilities, that any exceptional circumstances exist or that he would suffer hardship if I do not set aside the child support agreement. Indeed, my impression of the father’s true current financial situation is that his income is far in excess of that which he states and that his asset position is much greater than he would have the court, or indeed the child support registrar, believe. His true interest in the [B] property and the Harley motorcycle is far greater than he asserts.
It is particularly interesting to note the changes in the father’s position between the first date of the hearing in July and the last date in October. In his affidavit of 7 October he explains that he has suffered further substantial changes in his personal circumstances in that he ceased employment for [S] on 1 July 2009 because the company had ceased trading. Moreover, on 17 July 2009 the father says that his wife told him that his marriage was over.
I must say that given the potential significance of the evidence of [S] NSW ceasing to trade on 1 July 2009, that it might have occupied more time on 10 July 2009 than it actually did. One would have expected it to be a significant issue in respect of which, for example, leave to adduce evidence-in-chief might have been sought. Such a significant event might have received more than just a fleeting reference in cross-examination.
In any event, the father asserts that as a result of the breakdown of his marriage to his wife Ms C that he has no access to what he describes in paragraph 5 as “the family assets.” The rest of his affidavit goes on to explain, at least inferentially, what the family assets are. One cannot resist the inference that these are the assets that form the pool of assets for property settlement purposes between the father and his wife Ms C.
At paragraph 6 he explains that his includes the property at [B] and a weekender at [H], again in the wife’s name. At paragraph 6 of his last affidavit he expresses the hope that the sale of these properties would net “around $1 million.” He does give evidence about a number of liabilities and that “it is quite possible that Ms C and I may need to set aside the vast majority of the proceeds from the sale of [H] and [C] to cover these potential liabilities.” This is very curious indeed because the evidence on 10 July gave no indication of the possible existence of liabilities totalling $1 million.
Quite frankly, I do not know what to make of the father’s evidence about the breakdown of his marriage to his wife Ms C. Given the evidence that I have referred to above, it is not out of the question that this, too, is a sham the purpose of which might be to avoid the claims of creditors. I stress that I can make no findings about this, but the totality of the evidence does at least raise the possibility that all is not all as it seems with the father, and his wife.
Even if that is not the case, however, the further evidence about the financial circumstances of the father, and his wife Ms C, does tend to confirm that he has clearly misrepresented or understated to this court the true nature and extent of his interest in the [B] home, and other assets.
It needs to be remembered that the father sought orders in relation to the setting aside of a child support agreement and for child support assessment based on taxable income for a period ending on 30 June 2008. His current financial circumstances are therefore not strictly relevant except to the extent that it provides some context, and insight, into the more substantive issues raised in this case about hardship and exceptional circumstances, as well as matters of credit.

To put the matter beyond any doubt, however, even if I am wrong and the child support agreement in question is a limited child support agreement, none of the factual findings that I have made would support the father’s assertion that there has been a significant change in his financial circumstances.
Having regard to the matters set out above the father has failed to establish on the evidence, and on the balance of probabilities, that the section 136, subsection (2) ground has been established.

Credit

It must necessarily follow from the matters that I have set out above that there are real issues of credit relating to the evidence given by the father, and his wife Ms C. Accordingly, to the extent that it is an issue, where the evidence of the applicant father and the respondent mother conflict, I prefer the evidence of the respondent mother. However, my credit findings are much more pertinent to the issue of whether I accept the father’s case, and clearly for the reasons set out above I do not.

Was there an agreement to vary the child support agreement?

The father’s evidence about an alleged agreement between him and the mother to vary the child support agreement is contained at paragraph 48 of his first affidavit. He says that he said to her: “I have been experiencing financial problems and I can’t pay the amount in the child support agreement any more.” The father asserts that the respondent mother said: “That’s okay, I’ll contact the Child Support Agency and we can arrange for them to start collecting again.”
There are a number of significant problems with the father’s evidence, and his contention. Firstly, on its face, even if the mother said what the father says she did, it by no mean constitutes an agreement to vary, suspend or revoke the child support agreement. The mother’s response, as asserted by the father, is at most ambivalent. In any event the respondent mother’s evidence is that there was no such discussion, and certainly no agreement, and in all the circumstances of this case even if I had to decide this issue purely by reference to credit, I would accept her evidence over that of the applicant father’s, for reasons set out above. In any event, the father’s evidence is inherently implausible. His own evidence is that in the financial year 2006, meaning 30 June 2006, his income was $85,424. That is hardly consistent with the “experiencing financial problems” that he asserts. Indeed, the only objective evidence that is consistent with the father’s assertion is that fact that on 23 June 2006 that the Child Support Agency records that it accepted an application for collection by the respondent mother. The father asserts that, at least inferentially, that this act by the respondent mother is consistent with her statement that, “We can arrange for them to start collecting again”. However, it is equally consistent with the response of a mother who has just been told that the father can’t pay child support, and who wishes under the circumstances to have the Agency collect. Thus, the mother’s application for collection by the Agency, as opposed to the private collection that existed hitherto, is not a matter consistent with the agreement asserted by the father.

Unconscionability?

Section 136(2) says that the court may set aside the agreement if it is satisfied that another party to the agreement, or someone acting for another party, has engaged in unconscionable or other conduct. Despite this assertion, very little was actually said about this during the case. Taken at its highest, this limb of the father’s case would be that if there was an agreement, then, under the circumstances, it would be unconscionable for the mother to resile from the same. However, I have already found that there was no such agreement, and hence that no unconscionability can arise.

Conclusion

Having regard to all the matters set out above, the father’s case clearly fails. He has not established that s.136(2) of the Act applies. I dismiss the father’s amended application filed 28 May 2009. If any application for costs arises out of these orders, such application should be made in the form of written submissions not exceeding 500 words and to be filed by the applicant for costs within 28 days of the publication of these reasons. The respondent to the application for costs has a further 28 days to provide written submissions not exceeding 500 words by way of response.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of Altobelli FM

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