E & M
[2002] FMCAfam 47
•26 February 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| E & M | [2002] FMCAfam 47 |
| CHILD SUPPORT – Method of registering agreement – Orders 26 and 31B of Family Law Rules – Rules 1.05 and 1.06 of Federal Magistrates Court Rules – "just and equitable" and "otherwise proper" – variation or discharge of Child Support Agreement. Bertuch and Lynch (1998) FLC 92-796, Harris v Harris (1999) FLC 98-010, De Smeth v De Smeth (1993) FLC 92-349, Liesert v Nutsch (1996) FLC 92-665, Bryant and Bryant (1996) FLC 92-690, Gilmour and Gilmour (1995) FLC 92-591 |
| Applicant: | W T E |
| Respondent: | C B M |
| File No: | ZH 3194 of 2001 |
| Delivered on: | 26 February 2002 |
| Delivered at: | Hobart |
| Hearing Date: | 8 February 2002 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Mr. M. Bowman |
| Solicitors for the Applicant: | Hobart Community Legal Services Inc. 166 Macquarie Street HOBART TAS |
| Counsel for the Respondent: | Mr. M. Trezise |
| Solicitors for the Respondent: | Trezise Lawyers DX 242 HOBART TAS |
ORDERS
That the Child Support Agreement between W T E and C B M (formerly E) dated 13th December 1999 and received by the Child Support Agency on 21st December 1999 ("the Agreement") remain in full force and effect until 1st August 2004.
That the Agreement be otherwise discharged with effect from
1st August 2004.That any arrears payable under the Agreement be paid within sixty days of the date of these orders.
That the Form 63 Application filed on behalf of W T E on 11th December 2001 be otherwise dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
ZH3194 of 2001
| W T E |
Applicant
And
| C B M |
Respondent
REASONS FOR JUDGMENT
Background
W T E (“the Father”) and C B M (“the Mother”) were married in Hobart on 13th January 1990. They separated in April 1999 and there are two children of the marriage, S N E born 7th March 1994 and A T E born
4th September 1996 (“the children”).The children continue to reside with the Mother and the Father has contact almost every weekend.
At the request of the Mother, the parties entered into a Child Support Agreement in December 1999 which provided for the Father to pay periodic child support at the rate of $50.00 per week per child subject to the inflation factor based on movements in average weekly earnings. That was to continue until each child turns eighteen years of age.
In addition, the Father was to pay “100% Hospital Cover and Full Dental Health Insurance for (the children). School fees to be paid each term for (the children)”.
It was agreed that the Agreement would take effect from 1st January 2000.
At the time that the parties entered into the Child Support Agreement (“the Agreement”), the Father was working as a fabricator for a well known Hobart company (“the company”) and the Mother was working as a nurse.
At the time of entering into the Agreement, the Father was earning $38,000.00 per annum. However, in February 2001 his employment was terminated as part of a settlement with the company and its insurers arising from injuries suffered by the Father. As a result of that agreement he received $81,000.00 clear of his expenses.
Almost immediately after his employment with the company was terminated, he obtained other employment as a trainee cleaner. His income reduced to approximately $19,500.00 per annum. However, he is hopeful that at the end of his traineeship, he will be offered permanent employment and his income will increase to nearly $24,000.00 per annum.
The Mother earns approximately $25,000.00 per annum and her new husband earns approximately $59,000.00 per annum. However, he pays child support for the children of his previous relationship.
In September 2001, the Father reduced the periodic payments to the Child Support Agency to $50.00 per week for both children.
Applications
On 11th December 2001 the Father filed an Application seeking a final order that the Child Support Agreement between the parties be discharged. He sought an interim order staying the operation and/or implementation of the Applicant’s liability under the agreement and I made such an interim order on 14th December, 2001.
The Father’s case can really be summed up in his own words from paragraph 8 of his affidavit. He said: “It is my request that the existing child support agreement be ended and that I pay child support on the basis of the income that I am in fact receiving. As indicated, it was my belief that when I entered the previous agreement that my employment at (the company) would remain in place and that I would continue to receive a salary of $38,000.00.”
The Mother opposes the Application on the grounds that:
a)The Father made no provision from his compensation payment of $81,000.00 to provide for his children and she relied upon the decision in Harris v Harris (1999) FLC 98-010; and
b)She says that the Agreement has not been registered in this Court.
The law and findings
It is important to deal with the apparent "technical defence" raised by the Mother’s counsel in relation to registration of the Agreement first, notwithstanding that her counsel did not raise it until after raising the other objections to the Application.
In relation to the question of whether the Agreement has been registered, the Mother’s counsel relied upon the provisions of Order 26 of the Family Law Rules in relation to registration of maintenance agreements.
In Bertuch and Lynch (1998) FLC ¶92-796, Fogarty J said at the foot of page 84,937:
“Where the child support agreement relates to stage 2 children, registration under s 86 or s 63E of the Family Law Act is an essential first step for its subsequent enforcement, variation or discharge. Section 98 of the Assessment Act empowers a relevant court to discharge, vary, suspend etc., a child support agreement accepted under that Act provided that the agreement is one which has been ''registered in a court having jurisdiction under this Act''. Once a stage 2 agreement is accepted under the Assessment Act it may be enforced by either party in a court having jurisdiction under that Act (see s 95 referred to later).”
Counsel for the Mother relied upon the reasoning of Fogarty J in that case and argued that the agreement had to be registered in accordance with Order 26 of the Family Law Rules. However, that ignores the fact that at the time of the hearing Order 31B rule 33(1) provided that if the provisions of a child support agreement that have effect under section 95 of the Assessment Act as if they were a court order, the agreement containing those provisions, could be registered in a court by filing a copy of the agreement and an affidavit of a party to the agreement (or the party’s lawyer) verifying the copy as a true copy of the agreement.
Order 31B rule 33 has been amended with effect from 21st February 2002. The relevant part now reads
(1)This rule applies to a child support agreement, or provisions of a child support agreement, that may be registered in a court having jurisdiction under Part VII of the Act or under the Assessment Act.
(1A)A child support agreement, or provisions of a child support agreement, may be registered in a court mentioned in subrule (1) by filing in a registry of that court:
(a)a copy of the agreement, or of the provisions of the agreement, to be registered; and
(b)an affidavit of a party to the agreement, or the lawyer for that party, verifying that the copy mentioned in paragraph (a) is a true copy of the original.
As a consequence of Rule 1.05 and Schedule 3 of the Federal Magistrates Court Rules, I can apply Order 31B of the Family Law Rules “with necessary changes”. Further, Rule 1.06 of the Federal Magistrates Court Rules provides that the Court “may in the interests of justice dispense with compliance, or full compliance, with any of these Rules at any time”.
In this particular case, the Father refers to the agreement in paragraph 3 of his affidavit and he annexes a copy marked with the letter “A”. In her affidavit in reply, the Mother admits the contents of paragraph 3 of the Father’s affidavit. Consequently, I find that there is no significance in the fact that the Father does not actually use the words “true copy of the original” in his affidavit, because the Mother clearly accepts that it is a copy of the original.
I am therefore prepared to accept that in this case the agreement has been registered in this Court for the purposes of the application before the Court.
It is also quite clear that the agreement in this particular case has been accepted by the Child Support Agency and it acts in substitution for formula based assessments.
Subsection (1) of Section 98 of the Child Support (Assessment) Act 1989 ("the Act") provides as follows:
98(1) [Where court may vary etc. agreement] Where:
(a) under section 95, provisions of a child support agreement have effect, for the purposes of Part 5, as if they were a court order of a particular kind; and
(b) the agreement, or those provisions of the agreement, are registered in a court having jurisdiction under this Act;
the provisions may be discharged, suspended, revived or varied by the court in the same manner and in like circumstances as the court could discharge, suspend, revive or vary an order of that kind made by it.
The powers of the Court are clearly wide. They are set out in subsection (1) of Section 141 of the Act. It reads as follows:
141(1) [Powers of court] In exercising its powers under this Act, a court may do all or any of the following:
(a) order payment of a lump sum, whether in one amount or by instalments;
(b) order payment of a weekly, monthly, yearly or other periodic amount;
(c) order that a specified transfer or settlement of property be made;
(d) order that payment of an amount ordered to be paid be wholly or partly secured as the court specifies;
(e) order that any necessary deed or instrument be executed, and that such documents of title be produced and such other things be done, as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;
(f) order that payment be made to a specified person or public authority or into court;
(g) make a permanent order, an order pending the disposal of proceedings, an order for a fixed period, an order until a child attains a specified age or an order until further order;
(h) make an order expressed to be retrospective to such day as the court considers appropriate;
(j) subject to section 129 (Modification of orders under Division 5), make an order:
(i)discharging an order; or
(ii)suspending the operation of an order wholly or in part and either until further order or until a fixed time or the happening of a future event; or
(iii)reviving wholly or in part the operation of an order that has been suspended; or
(iv)varying an order in any way;
(k) make an order imposing terms and conditions;
(m) make an order by consent;
(n) make any other order (whether or not of the same kind as those referred to in paragraphs (a) to (m) (inclusive)) that the court considers appropriate;
(p) make an order at any time.
It is clear that a properly registered Child Support Agreement has the same effect as an order of the Court providing for child support.
In De Smeth v De Smeth (1993) FLC ¶92-349 Finn J said at page 79,692:
“The effect of section 95 essentially is to provide that a child support agreement has effect for the purposes of Part 5 of the Act (that is, the part of the Act which provides for the administrative assessment of child support) as if it were an order made by consent by a court being, and depending on the provisions of the agreement, either an order for departure from administrative assessment (under Division 4 of Part 7 of the Act) or an order for child support provision other than in the form of periodic amounts to be paid to a custodian of a child (under section 124 of the Act). In other words, the terms or provisions of a child support agreement take the place of the administrative assessment that would otherwise apply in the particular case, just as if a court had made an order by consent under Part 7 of the Act either for departure from the administrative assessment or for support to be payable in a form other than periodical amounts payable to the custodian of the child.”
The approach that this court must adopt in relation to periodic child support has been well settled by the three decisions of the Full Court of the Family Court of Australia in Gilmour and Gilmour (1995) FLC ¶92-591, Liesert v Nutsch (1996) FLC ¶92-665 and Bryant and Bryant (1996) FLC ¶92-690. In each of those cases, the Full Court held that the court must apply the same three-stage process which is required under sec 117 of the Assessment Act. The Court must satisfy itself:
·whether one or more of the grounds for departure in sec 117(2) is established;
·whether it is “just and equitable'' within the meaning of sec 117(4) to make a particular order; and
·whether it is “otherwise proper'' within the meaning of sec 117(5) to make a particular order.
It is also clear that an applicant does not have to meet a threshold test, such as a change in circumstances.
However, the situation is different in relation to child support in a form other than periodic amounts (such as the payment of mortgage payments or health insurance). Section 129(3) provides as follows:
129(3) [When court may vary order] The court must not, by order under subsection (1), vary an order unless it is also satisfied:
(a) that making the variation is justified because of a change in the circumstances of the child, the carer entitled to child support or a liable parent concerned since the order was made or last varied; or
(b) that the carer entitled to child support has made an application under section 128 and the order is no longer proper or appropriate; or
(c) that making the variation is justified because of a change in the cost of living since the order was made or last varied; or
(d) in a case where the order was made by consent – that the order is not proper or adequate; or
(e) that material facts were withheld from the court that made the order or from a court that varied the order, or that material evidence previously given before such a court was false.
There is clearly a threshold test in relation to any variation of orders (or agreements) in relation to child support that is not in the form of periodic payments.
It is my view that in this case the Father’ s circumstances have so changed as to meet any threshold test. At the time that he entered into the agreement he was earning $38,000.00 and he is now earning approximately half that amount.
However, that is not the end of it. The Mother’s argument based upon Harris v Harris (supra) is a strong one. The sum of $81,000.00 received by the Father was admitted by him to be the equivalent of three to four years after tax income that he would have received if he had stayed with the company. As a consequence, he has received a substantial sum of money and he has not made any provision for the support of his children from that capital sum. It is his evidence that he paid off his mortgage of approximately $68,000.00 and spent the balance on various living expenses and repaying loans to his mother.
Counsel for the Father points out that the factual situation in this case is not as extreme as that in Harris v Harris. That is quite true. The capital sum that he has received was less than that received by Mr. Harris and the child support that he must pay is greater. However, I find that the principles in Harris v Harris are very sound principles to apply to this case.
If the Father had put away approximately 20% of his compensation of $81,000.00, he would have had a capital sum which would have enabled him to pay child support at the required rate for approximately three and a half years without having to draw upon any of his diminished income. I am therefore of the view that he should continue to pay child support for his two children in accordance with the agreement for a period of three and a half years from the date on which he received his compensation. Correspondence produced as an exhibit during the hearing shows that he received his compensation payment on or about 6th February 2001. It is therefore my view that the agreement should not be discharged until 1st August 2004. At that time, child support will revert to administrative assessment.
While it may be possible for the Father to establish one or more of the grounds for departure in subsection (2) of section 117 of the Child Support Assessment Act 1989, it follows from the above that he has not convinced me that what he is seeking is either “just and equitable” within the meaning of section 117(4) or “otherwise proper” within the meaning of section 117(5).
The Husband may wonder how he will afford to pay the child support that is required. The answer is that he may have to borrow against his property that recently became unencumbered as a result of the way that he used his compensation payment.
I will make orders to give effect to my decision in this matter.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Roberts FM
Associate:
Date: 26th February 2002
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