Ellis v Ellis
[2012] NSWSC 577
•04 June 2012
Supreme Court
New South Wales
Medium Neutral Citation: Ellis v Ellis [2012] NSWSC 577 Hearing dates: 5 October 2011 Decision date: 04 June 2012 Before: Hoeben J Decision: (1) Appeal allowed.
(2) The orders made by her Honour on 18 October 2010 are quashed.
(3) I direct the parties to prepare Short Minutes within fourteen (14) days of the date hereof which reflect the above findings and which have regard to the following:
(i) In accordance with her Honour's findings, the defendant had no obligation to make any payments pursuant to cl 1.1 of the agreement after the children commenced attending their new school. He does have an obligation to make payments under that clause up to and including the date when the children ceased attending "their current private schools". To the extent that the plaintiff received ASG cheques in respect of that period, i.e. until the children ceased attending "their current private schools", the defendant should receive a credit.
(ii) The defendant is to make payments pursuant to cls 1.2 and 1.3 of the agreement up to and including 16 July 2010, except that there is no obligation to make any payments in respect of the child Jessica after she turned 18.
(iii) The question of what happens to the ASG cheques received by the plaintiff, other than the adjustment referred to above, is not to form any part of the Short Minutes.
(4) In default of agreement, each party is to bring to Court Short Minutes setting out the orders which he or she submits should be made.
(5) Each party should be in a position to make brief submissions as to costs in relation to the proceedings before her Honour and in this Court.
Catchwords: APPEAL - appeal from Local Court to Supreme Court - Local Court Act 2007 sections 39 and 41 - construction of agreement between divorced parents for maintenance of children - whether agreement to change of school to be inferred from conduct of one party - no failure on the part of Magistrate to provide adequate reasons - error in failing to decide all issues placed before court - Notice of Contention - whether agreement between divorced parents subject to Child Support (Assessment) Act 1989 (Cth) - whether and in what circumstances agreement brought to an end - no remittal to Local Court - discretionary grounds. Legislation Cited: Child Support (Assessment) Act 1989 (Cth)
Family Law Act 1975 (Cth)
Local Court Act 2007
Supreme Court Act 1970Cases Cited: Alchin v Daley [2009] NSWCA 418
Baring v Russell Edwards Design Services Pty Ltd [2008] NSWCA 58
Besseler Waechter Glover & Co v South Derwent Coal Co Ltd [1938] 1 KB 408
Bruner v Moore [1904] 1 Ch 305
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247Category: Principal judgment Parties: Helen Patricia Ellis - Plaintiff
Paul Walton Ellis - DefendantRepresentation: Counsel:
Mrs M Bridger - Plaintiff
Mr AM Gruzman - Defendant
Solicitors:
Jo-Anna FS Moy - Plaintiff
Shipton & Associates - Defendant
File Number(s): 2010/372073
Judgment
HIS HONOUR:
Nature of proceedings
The plaintiff (who was the plaintiff in the Local Court) by Summons filed 9 November 2010 appeals on a question of law from a decision of her Honour Greenwood LCM handed down on 18 October 2010. The proceedings before her Honour were heard on 7 and 18 October 2010.
The plaintiff seeks the following orders:
1. Appeal allowed.
2. Judgment and orders of the Court below be set aside.
3. Order that the defendant pay to the plaintiff the sum of $51,877.87 together with interest calculated in accordance with the Civil Procedure Rules.
4. Costs.
The appeal grounds were:
1. The plaintiff contends that the learned Magistrate erred in law in that she failed to consider, determine and provide reasons in relation to the whole of the plaintiff's claim.
4. The plaintiff contends the learned Magistrate erred in law in that she failed to give reasons or, alternatively, adequate reasons.
Grounds of Appeal 2 and 3 were not pressed.
The defendant (who was the defendant in the Local Court) relies a Notice of Contention, filed 26 November 2010, seeking that the decision of her Honour should be affirmed on grounds other than those relied upon in her judgment, but does not seek a discharge or variation of any part of her decision.
The defendant relies upon the following grounds in his Notice of Contention:
1. The learned Magistrate gave adequate reasons for a judgment.
2. The learned Magistrate relied on her finding that there was no agreement between the parties as to choice of school as a basis for her judgment.
3. The learned Magistrate erred in law in finding that the Agreement between the parties was not a Child Support Agreement within the meaning of the Child Support (Assessment) Act 1989 (Cth) and should have found that the Agreement between the parties was a Child Support Agreement within the meaning of the Child Support (Assessment) Act.
4. The appeal grounds 2 and 3 relied upon by the plaintiff refer to findings of fact by the learned Magistrate and are not properly grounds of appeal.
The relevant provisions of the Local Court Act 2007 are:
"39(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.
...
41(1) The Supreme Court may determine an appeal made under section 39 (1) or 40:
(a) by varying the terms of the judgment or order, or
(b) by setting aside the judgment or order, or
(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or
(d) by dismissing the appeal.
..."
Factual background
The plaintiff and the defendant were at one time married and have two children, Jessica and Rachel. They are now divorced.
On 7 June 2007 the parties entered into an agreement that the defendant pay child support and other costs and expenses as specified in the agreement. The agreement was attached to a standard form document headed "Child Support Agreement". In the printed part of the form, the parties identified themselves with the defendant being described as the "payer" and the plaintiff as the "payee". The identity of the children and their dates of birth (Jessica 1992; Rachel 1997) were set out. The form was signed by the parties. Otherwise, no other part of the standard form agreement was completed.
At the end of that part of the standard form agreement completed by the parties, the following recital was set out:
"Terms of the Agreement are:
Attached to this form. You can now send this form to CSA if you have decided to write and sign your Agreement on separate paper and you have completed the form up to this point."
Attached to the standard form document was the following which was headed "Annexure A".
"1. That the parties agree that the Payer (Paul Walton Ellis) shall pay to the Payee (Helen Ellis) periodic child support as assessed by the Child Support Agency for the children Jessica Alexandra Ellis, born --- 1992, and Rachel Katharine Ellis, born --- 1997, from time to time and, in addition to such periodic child support, the Payer shall pay the following:
1.1 The expenses of the children attending their current private schools or such comparable private schools as agreed to by the parties of this agreement. Such expenses to include all school tuition expenses (school fees), school uniforms, excursions, camps, sport uniforms, sports fees and books.
1.2 The cost of extracurricular activities undertaken by the children. Currently tennis, sailing, Nippers, dance and flute tuition for Rachel and basketball, water polo, swimming, band and Duke of Edinburgh for Jessica. In the event that a child wishes to undertake an additional extracurricular activity not listed in 1.2, then such additional activities are to be agreed between the child and the Payer.
1.3 Private Health insurance in relation to the children, including the gap payment on any medical or orthodontic procedure over the sum of $100. Such insurance to cover, but not limited to, medical, orthodontic, ophthalmic and physiotherapy expenses.
1.4 Kumon and ASG fees.
2. That 1.1 through to 1.4 are subject to the Payer retaining any ASG secondary cheques payable to the parties and shall end for each child upon such child attaining the age of 18 years."
At the time of the agreement both children were living in Sydney with the plaintiff, attended a private school and undertook extracurricular activities. On 27 June 2007 orders were made by consent in the Family Court of Australia in relation to property settlement. There was no interdependence between the property settlement and the agreement entered into on 7 June 2007. The agreement was registered with the Child Support Agency (CSA) as a limited child support agreement on 7 July 2009.
In late June 2007 the plaintiff advised the defendant that she was going to move to England to marry. The defendant at that time advised the plaintiff that he did not wish the children to move to England. In February 2008 the plaintiff applied to the Federal Magistrates Court for an order that she be allowed to take the children with her to live in England. The defendant opposed the application and wanted the children to remain in Australia.
On 7 September 2008 the plaintiff filed an affidavit in the Federal Magistrates Court in which she provided details of the Lincoln Minster School, which she proposed the children should attend. On 7 November 2008 Consent Orders were made in the Federal Magistrates Court, whereby the plaintiff was permitted to relocate with the children to the United Kingdom.
Order 18 of the Consent Orders made 7 November 2008 provided:
"That the parties shall forthwith do all acts and things and sign any writing necessary to transfer to the Mother the Australian Scholarship Guardian Fund ("the Fund") held for Jessica and for all tertiary entitlements for the children from the Fund."
At or about the same time, the defendant informed the plaintiff that upon the children living in England he was not going to provide financial support, other than the child support he was assessed to pay. At no time in writing or in conversation did the defendant agree to the children attending the Lincoln Minster School.
The plaintiff cancelled the membership with the ASG, pursuant to the Consent Orders of 7 November 2008, on approximately 13 May 2009 and did not receive any ASG payments after January 2009.
In April 2009 the defendant advised the plaintiff that he would not pay the expenses provided for in the agreement upon the girls moving to the United Kingdom. On 13 May 2009 the defendant informed the plaintiff by email that he wanted the daughters to stay in Australia and finish their education in Australia. On 29 May 2009 the plaintiff invited the defendant to discuss with her the choice of school the children were to attend in the United Kingdom. The defendant did not accept the offer. On 15 June 2009 the defendant's solicitors advised the plaintiff's solicitors that the defendant did not agree to the plaintiff's choice of school.
In response to an application by the defendant, the agreement (to the extent that it was a child support agreement) was terminated on 16 July 2010 pursuant to s 80G(1)(e) of the Child Support (Assessment) Act (Cth) (hereafter referred to as "the Act"). In July 2010 the CSA advised the plaintiff and the defendant that periodic child support for Jessica would cease on 31 July 2010. The plaintiff had objected to the ending of that child support and had requested that it continue until 31 July 2011. That objection was dismissed by the CSA.
Exhibit 7 before her Honour was a letter from the CSA to the defendant, dated 23 August 2010, which relevantly provided:
"We are writing in relation to the contact we had with you on 2nd August 2010 where we discussed the ending of your Limited Child Support Agreement. You requested confirmation that the Agreement has ended.
We can confirm we ceased using your Agreement on 16 July 2010 and that your Child Support case reverted to an administrative assessment on 17 July 2010.
A Limited Agreement can be terminated by either party given written notice of termination to CSA (s 80G(1)(e)), if the Child Support Agreement was made more than three years prior to the Notice. The Agreement will be terminated 28 days after the written notice is received by CSA (s 80G(2)(d)).
Your Agreement was made in June 2007. You notified the CSA in writing on 18 June 2010 requesting the termination of the Agreement and the Agreement was ended on 16 July 2010, 28 days after notification. ..."
The plaintiff and the children have lived in the United Kingdom since the end of 2009. The plaintiff forwarded copies of invoices and receipts for the school fees and extracurricular activities to the defendant who refused to pay them. The plaintiff brought proceedings in the Local Court against the defendant seeking payment by him of the amounts set out in pars 1.1, 1.2 and 1.3 of the agreement. At the hearing before her Honour, the plaintiff was granted leave to amend the amount claimed to $51,877.87.
The findings and orders made by her Honour were as follows:
"I find that the agreement does not meet the specificity requirements of s 84(6).
I find that cl 1.1 to 1.4 are the contract between the parties.
I also find that the real issue in dispute is Cl 1.1 of the Annexure "A" which says that the defendant will pay the expenses of the children attending their current private schools or such comparable private schools as agreed to by the parties.
Annexures "I" and "J" to the defendant's affidavit were persuasive. In his email of 13 May 2009 he says Annexure "A" of the agreement is very unambiguous. The parties are not in agreement:
"I wish the girls to stay in Australia and finish their education here."
In a letter from his solicitor dated 15 June 2009 his solicitor writes:
"Our client does not agree to the choice of schooling."
I note that the defendant visited the UK school with the plaintiff and his children. I am not persuaded that his conduct on the day or at any other time including his agreement to the Federal Magistrates Court Consent Orders could reasonably suggest that he had agreed to the school.
Therefore the plaintiff's claim must fail and is dismissed.
I order the plaintiff to pay the defendant's costs as agreed or assessed."
Submissions and consideration
The Appeal
The plaintiff submitted, albeit faintly, that her Honour had made an error of law in that she failed to provide adequate reasons for her conclusion that the plaintiff could not enforce clause 1.1 of the agreement against the defendant in respect of the period after the children had commenced attending the school in the United Kingdom. The plaintiff submitted that more was required by way of reasons than was provided by her Honour.
The plaintiff referred to the following extract from Alchin v Daley [2009] NSWCA 418 where Sackville AJA (with whom McColl and Young JJA agreed) said:
"35 There was no dispute as to the principles to be applied in determining whether a trial Judge has given adequate reasons for making findings of fact. McColl JA stated the principles, supported by detailed citation of authority, in Pollard v RRR Corporation [2009] NSWCA 110. The principles articulated in that case were summarised in Qushair v Raffoul [2009] NSWCA 329, at [52], per Sackville AJA, with whom Campbell JA and Bergin CJ in Eq agreed (the paragraph references are to McColl JA's judgment in Pollard):
"(i) The giving of adequate reasons lies at the heart of the judicial process, since a failure to provide sufficient reasons can lead to a real sense of grievance because the losing party cannot understand why he or she lost (at [57]): see Beale vGovernment Insurance Office of NSW (1997) 48 NSWLR 430, at 442, per Meagher JA.
(ii) While lengthy and elaborate reasons are not required, at a minimum the trial judge's reasons should be adequate for the exercise of a facility of appeal, where that facility is available (at [56]): see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, at 260, per Kirby P; at 269, per Mahoney JA.
(iii) The extent and content of the reasons will depend on the particular case and the issues under consideration, but it is essential to expose the reasoning on a point critical to the contest between the parties (at [58]): see Soulemezis v Dudley, at 259, per Kirby P; at 280, per McHugh JA. This may require the judge to refer to evidence which is critical to the proper determination of the issue in dispute (at [62]): Beale v GIO, at 443, per Meagher JA.
(iv) Where credit issues are involved, it is necessary to explain why one witness is preferred to another. Consequently, bald findings on credit, where substantial factual issues have to be addressed, may not comply with the common law duty to give reasons (at [65]): Palmer v Clarke (1989) 19 NSWLR 158, at 170, per Kirby P (with whom Samuels JA agreed).
(v) Where an appellate court concludes that the trial judge has failed to give adequate reasons, the court has a discretion whether or not to direct a new trial. If, despite the inadequate reasons, only one conclusion is available, a new trial may not be necessary (at [67])."
36 In Pollard, McColl JA also cited with approval a passage from the judgment of Ipp JA, with whom Mason P and Tobias JA agreed, in Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; 66 NSWLR 186, at 191-192 [28]. The passage, including the succeeding paragraph (at [29]) is as follows:
"It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: 'I believe Mr X but not Mr Y and judgment follows accordingly'. That is not the way in which our legal system operates. ...
Often important issues of credibility involve sub-issues. Often, objective facts, or facts that are probable, are capable of having significant bearing on the sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts, the conclusions to which they have come. This having been done, they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues have assisted them in forming a conclusion on the ultimate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or her successful opponent"."
While the quotation from Alchin v Daley is a comprehensive analysis of the law relating to the giving of adequate reasons generally, the nature of the appeal here under consideration is restricted to "an appeal on a question of law". This is not an appeal such as is provided for in s 75A of the Supreme Court Act 1970. Because this is an appeal restricted to a question of law, the observations of the Court of Appeal in Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 are of considerable assistance. In relation to appeals of this kind, Mahoney JA said:
"In my opinion, the law does not require that a judge make an express finding in respect of every fact leading to, or relevant to, his final conclusion of fact; nor is it necessary that he reason, and be seen to reason, from one fact to the next along the chain of reasoning to that conclusion. (p 271C)
...
Their Lordships did not, I think, suggest as a model of a judgment one in which, having the evidence in mind, the judge does no more than state his final conclusion of fact. Professional skill would suggest that something more be done. But their Lordships did make clear that there is no ground for reversal in the fact that, having made clear the facts on which he based himself, the learned judge did not detail the steps by which he proceeded from
those facts to his final conclusion." (p 272D)
McHugh JA provided the following guidance in that case.
"In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If
no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done. If, for example, the only issue before a court is whether the plaintiff sustained injury by falling over, a simple finding that he fell or sustained injury would be enough, if the decision turned simply on the plaintiff's credibility. But, if, in addition to the issue of credibility, other matters were relied on as going to the probability or improbability of the plaintiff's case, such a simple finding would not be enough." (p 281A)
Before setting out her ultimate conclusions in this case, her Honour summarised the competing submissions of the parties on the question of the application of cl 1.1. It is clear from the way in which her Honour has expressed herself that she was incorporating as part of her reasons the submissions made on behalf of the defendant on that issue.
No more was required of her Honour. It was not necessary for her Honour to make an express finding in respect of every contentious issue before her. Her reasoning is clear, as is the basis for her conclusion. Given the limited nature of the appeal, the reasons provided by her Honour were adequate.
Although it is not necessary for me to express an opinion concerning cl 1.1, it may be of assistance to the parties that in my opinion her Honour was undoubtedly correct in her conclusion on this issue. Clause 1.1 in its terms is clear. It was never suggested in submissions that the defendant ever expressly agreed to a change of schools. The plaintiff's point was that by not reserving his position when Consent Orders were made in the Federal Magistrates Court, and by accompanying the children to the new school on their first day, the defendant's agreement to the change of schools could be inferred from conduct.
The cases where an agreement has been held to be capable of being inferred by conduct (Bruner v Moore [1904] 1 Ch 305; Besseler Waechter Glover & Co v South Derwent Coal Co Ltd [1938] 1 KB 408) dealt with situations where a party had acted to his or her detriment by relying upon the conduct of the other party. That is not the case here. The plaintiff made clear in her affidavit that she well knew that the defendant would hold her strictly to the terms of the agreement (par 13) and that from an early point in time his position was that if she took the children to the United Kingdom, he no longer considered himself liable for their school fees and other expenses (pars 28 and 29).
The second point raised by the plaintiff has more force. She submitted that while her Honour had dealt with cl 1.1 of the agreement, she had not considered the effect of cls 1.2 and 1.3. The error of law was that her Honour had provided no reasons why her finding in relation to cl 1.1 would disentitle the plaintiff from making a claim under cls 1.2 and 1.3.
The plaintiff's submission on this issue must be upheld. These matters were clearly raised in the Statement of Claim and it was necessary for her Honour to deal with them. They raised separate issues to cl 1.1 and her Honour's decision in respect of that clause did not prevent the plaintiff from relying upon her entitlement under the other two clauses.
In fairness to her Honour, it should be noted that in final addresses the argument focused entirely upon cl 1.1 and on the question of whether the agreement could be correctly characterised as a Child Support Agreement so as to be governed by the provisions of the Act. No submissions were made to the effect that even if the plaintiff could not enforce cl 1.1 against the defendant, she could still rely upon cls 1.2 and 1.3.
Accordingly, the plaintiff's second ground of appeal must be upheld. The consequence is that the plaintiff is entitled to enforce against the defendant cls 1.2 and 1.3 of the agreement.
The Notice of Contention
This does not end the matter. It then becomes necessary to consider the Notice of Contention which the defendant submits, if upheld, would have the effect of preventing the plaintiff from relying upon those clauses.
In order to understand the Notice of Contention, it is necessary to set out some sections of the Act.
"80A The following is a simplified outline of this Part:
· Parents (and non-parent carers) of a child can, using a child support agreement, agree between themselves the child support that is to be payable for the child.
· There are 2 sorts of agreements. The first is a binding child support agreement. Each party to the agreement must have received legal advice before entering the agreement, and must also receive legal advice before terminating the agreement.
· The second sort of agreement is a limited child support agreement. An administrative assessment must be in place before a limited child support agreement can be accepted by the Registrar. The annual rate of child support payable under the agreement must be at least the annual rate of child support otherwise payable under this Act.
· Agreements may include provisions that state that child support is to be payable otherwise than in the form of periodic amounts. There are 2 main kinds of such provisions:
(a) non-periodic payment provisions, under which lump sum payments and other non-periodic payments (such as school fees) may be made; and
(b) lump sum payment provisions, under which lump sum payments may be made.
· Payments made under non-periodic payment provisions reduce the annual rate of child support payable.
· Payments made under lump sum payment provisions are credited against the amount payable under the liability of a party to the agreement (rather than reducing the annual rate of child support payable)."
"80(1) An agreement is a limited child support agreement if:
(a) it is in writing; and
(b) it is signed by the parties to the agreement; and
(c) it complies with subsection 81(2); and
(d) either:
(i) it meets the conditions in subsection (2), (3) or (4), as the case requires, (assuming the agreement is accepted by the Registrar); or
(ii) it has been accepted by the Registrar under section 98U.
Note: In addition to the requirements in this section, there must be an administrative assessment in force in relation to the child in respect of whom the agreement is made (see subsection 92(3)).
...
80F(1) A limited child support agreement must not be varied.
...
80G(1) A limited child support agreement (the previous agreement) may be terminated only by:
...
(e) if the previous agreement was made 3 or more years earlier-a party to the previous agreement giving the Registrar written notice of the termination of the previous agreement.
...
(3) If a limited child support agreement is terminated under paragraph (1)(d) or (e), the Registrar must notify in writing the other parties to the agreement of the termination.
...
81(1) An agreement is a child support agreement if:
...
(b) the agreement is a limited child support agreement.
(2) An agreement is a binding child support agreement or a limited child support agreement if it complies with the following provisions:
(c) section 84 (provisions that may be included in agreements).
...
84(1) An agreement is a child support agreement only if it includes one or more of the following kinds of provisions:
(a) provisions under which a party is to pay child support for a child to another party in the form of periodic amounts paid to the other party;
...
(d) provisions (the non-periodic payment provisions) that state:
(i) that a party (the liable party) is to provide child support for a child to another party otherwise than in the form of periodic amounts; and
(ii) that the annual rate of child support payable for the child by the liable party under any relevant administrative assessment is to be reduced, in the manner specified under subsection (6), by the amount of child support to be provided by the liable party;
...
(2) The agreement may include more than one kind of provision in relation to different parts of a child support period and different child support periods.
(3) If the agreement also includes provisions of a kind not referred to in subsection (1), those provisions do not have effect for the purposes of this Act.
...
(6) If an agreement includes provisions of the kind referred to in paragraph (1)(d), the statement referred to in subparagraph (1)(d)(ii) must specify either:
(a) that the annual rate of child support payable under the administrative assessment is to be reduced by a specified amount that represents an annual value of the child support payable; or
(b) that the annual rate of child support payable under the administrative assessment is to be reduced by 100% or another specified percentage that is less than 100%."
The issue before her Honour was whether the agreement, including Annexure "A", was a Limited Child Support Agreement so as to be governed by the Act. Her Honour found that it was not such an agreement.
Before her Honour the plaintiff submitted that only that part of the agreement which dealt with the payment by the defendant of periodic payments was a child support agreement but that the balance of "Annexure "A"" was not a child support agreement, was not governed by the Act and represented a separate and distinct contractual arrangement entered into between the plaintiff and the defendant for the payment of certain amounts by the defendant in respect of the children.
The plaintiff submitted that such a result occurred because of the combination of s 84(1)(d) and 84(6) of the Act. The plaintiff submitted that the payments provided for in cl 1.1 - 1.4 were clearly "non-periodic payments" so that s 84(6) must apply if those payments were to be part of a child support agreement. The plaintiff submitted that to be included in a child support agreement, the non-periodic payment provision in the agreement must specify either:
"(a) that the annual rate of child support payable under the administrative assessment is to be reduced by a specified amount that represents an annual value of the child support payable; or
(b) that the annual rate of child support payable under the administrative assessment is to be reduced by 100% or another specified percentage that is less than 100%.""
The plaintiff submitted that this was a mandatory requirement and was not satisfied by the recital in Annexure "A" that "in addition to such periodic child support the Payer shall pay the following:" As a result, cl 1.1 - 1.4 were outside the ambit of the Act and gained their force purely from the contract which had been entered into between the plaintiff and the defendant.
The defendant submitted to her Honour that the whole of the agreement, including Annexure "A", was governed by the Act. He submitted that the agreement, which included Annexure "A", was in writing and registered with the CSA. He submitted that the effect of the provision in Annexure "A" that the payment of the non-periodic amounts was in addition to the payment of periodic amounts, had the effect of reducing any reduction in those amounts in percentage terms to nil. Since that was the clear effect of the agreement, there was no need for the agreement to be expressed in terms of an actual percentage. In particular there was no need for there to be a statement that the deduction from the periodic payments would be "nil percent".
The same arguments were raised in support of the Notice of Contention when the matter came before this Court. There were, however, some additional submissions made by the defendant.
The defendant submitted that once the order of the Federal Magistrates Court of 7 November 2008 was implemented, i.e. the transfer to the plaintiff of the ASG fund, which occurred in either January or April 2009, the agreement came to an end. The defendant submitted that this result followed from the terms of the agreement in that cl 2 provided that the obligation to make payments pursuant to cl 1.1 - 1.4 was subject to the defendant retaining the ASG cheques. That being so, once the plaintiff received the ASG cheques, the defendant submitted that he was not obliged to make any payments under the agreement other than periodic payments after either January or April 2009.
The defendant submitted that the Family Law Act 1975 applied to the arrangement between the parties and because the agreement was not a financial agreement as defined by that Act, it was of no effect. This submission was made in writing but it was not pursued orally in this Court. Such a submission was not made to her Honour. In any event, the submission is misconceived.
As was set out in the plaintiff's written submissions in reply, child maintenance orders obtained under the Family Law Act applied to children born before 1 October 1989 (the commencement date of the Act) whose parents separated before that date. Assessment of the amount of child support payable for those children was determined by the provisions of the Family Law Act. For children born after 1 October 1989 or whose parents separated on or after that date, the determination of the level of child support payable was governed by the administrative assessment provisions of the Act. There was no issue but that the children were born after 1989 and the separation took place after that date. Accordingly, the provisions of the Family Law Act do not apply to the agreement.
The resolution of whether the agreement constitutes a child support agreement for the purposes of the Act involves a question of statutory construction of s 84(6) of the Act. Clearly the terms of the agreement do not come within the description set out in s 84(6)(a). The issue is whether they come within the description:
"(b) That the annual rate of child support payable under the administration assessment is to be reduced by 100 percent or another specified percentage that is less than 100 percent."
In terms the agreement makes no provision as to the relationship between the periodic payments and the non-periodic payments in percentage terms. Does that mean that there has been a failure to come within the description in s 84(6)(b) because that formula of words, i.e. an expression set out in percentage terms, was not used.
I do not believe that s 84(6) of the Act should be construed so narrowly. In this regard, I accept the submission of the defendant. The clear effect of the agreement was that the non-periodic payments were to be made in addition to the periodic payments. In other words, the percentage deduction from the periodic payments would be nil. Neither side disputed that the agreement has that meaning.
I have concluded that s 84(6) of the Act should not be construed literally, because the other sections of the Act envisage that a limited child support agreement may be entered into with little or no legal assistance. In circumstances where non-legally trained persons are likely to be making such agreements, it would be counter-productive to require literal compliance with s 84(6).
There is another factor which has led me to that conclusion. The agreement Annexure "A" was attached to a standard printed form entitled "Child Support Agreement". That printed standard form contained some examples and guidance to assist persons completing it. Included on that form, which the parties signed, was the following example and explanation.
"Part B
Part B includes payments in a form other than periodic payments. It can include lump sum payments, or payments to a third party. It also allows parents to have a formula assessment that includes some non-periodic payment.
Example: Leah and Matthew have an existing child support assessment of $4000/annum. They sign a Part B agreement that Matthew will pay $2000/annum for their daughter's school fees. These payments are to represent half the assessed child support payments for the period of the agreement.
If parents want to credit non-periodic payments against their child support assessment (or amount payable under a Part A agreement) they must state the annual value that is to be credited ($2000 in the example above), or the percentage of the annual rate that is to be credited (50% in the example above). If one of these options is not specified in the agreement, the paying parent will be required to pay non-periodic payments in addition to the child support assessment (or amount payable under a Part A agreement)."
In this case the parties made it clear that the non-periodic payments were to be in addition to the periodic payments which had the effect of rendering the deduction from the periodic payments to be nil percent.
The next issue is the effect of the order of the Federal Magistrates Court of 7 November 2008 that the parties would do everything necessary to transfer to the plaintiff the ASG fund.
If, as I have found, the whole of the agreement is correctly characterised as a limited child support agreement and therefore governed by the Act, the making of that order and its implementation by the parties cannot operate to bring the agreement to an end. Section 80G of the Act sets out the only ways in which a child support agreement can be terminated. This does not include what appears to have happened here and that is the implementation of an order of a court made pursuant to an agreement between the parties to alter a term of the agreement.
The position is further complicated by s 80F which provides that a child support agreement must not be varied.
There are a number of possible outcomes but none of them involve the termination of the agreement. It could be argued that the operation of the court order is suspended whilst the agreement was on foot. That would mean that the court order would become effective on 16 July 2010 when the agreement was terminated.
Another alternative is to construe the agreement so as to reconcile it with the terms of the court order.
The ASG fund related purely to schooling. It had nothing to do with extra curricula activities or health payments. The agreement provided in cl 1.1 that the defendant was to pay education expenses in relation to the children's current private schools or other schools as might be agreed. That obligation was subject to the defendant retaining the ASG cheques. In the circumstances which developed, the defendant no longer had an obligation to pay those education expenses because no agreement was reached as to a change of schools. Since he was no longer making the payments set out in cl 1.1, there was nothing to stop the ASG cheques being received by the person making the payments, i.e. the plaintiff. That circumstance was confirmed by the court order made as a result of agreement between the plaintiff and the defendant.
The difficulty with that approach is that cl 2 of Annexure "A" makes the payments in cl 1.2 and 1.3 conditional upon the defendant retaining the ASG cheques. That is an odd condition since the ASG payments only relate to education expenses. They have nothing to do with extracurricular activities, nor with medical expenses. In those circumstances, since the agreement was registered with the CSA after the consent orders were made by the Federal Magistrates Court, the agreement could be construed so that the payments under cls 1.2 and 1.3 of the agreement were no longer subject to the retention by the defendant of the ASG cheques from the time when the children commenced attending the new school.
Another alternative is that the orders made by the Federal Magistrates Court, which were consented to by both parties, involved a breach of the agreement by both parties. Such a breach, however, is not one of the circumstances recognised by s 80G of the Act such as would terminate the agreement. Accordingly, on that alternative, the agreement remained in force until 16 July 2010 and could be relied upon by the plaintiff to ground her action.
It is not necessary for this Court to reconcile the effect of the orders made in the Federal Magistrates Court on the agreement, the subject of these proceedings, other than to conclude as I have that those orders and their implementation did not bring the agreement to an end.
This is because that question was not agitated before her Honour, nor was it agitated in the appeal to this Court. The only question raised before her Honour and before this Court was whether the making of the orders by the Federal Magistrates Court and their implementation by the parties had the effect of bringing the agreement to an end. For the reasons I have indicated, it did not have that effect. Whether the making and implementation of those orders might produce some other effect, is not a matter which was before her Honour nor is it a matter which is before this Court.
The agreement came to an end by operation of s 80G of the Act on 16 July 2010. The plaintiff was therefore entitled to bring proceedings in relation to the agreement in respect of the defendant's obligations under the agreement until that date.
It follows that the defendant's Notice of Contention must succeed to the extent that her Honour erred in finding that the agreement, the subject of the proceedings, was not a child support agreement governed by the Act. Success in that Notice of Contention, however, does not bring about the result for which the defendant argued, except that it is now clear that the agreement came to an end on 16 July 2010. The defendant's submission that the implementation of the orders made by consent in the Federal Magistrates Court brought the agreement to an end as of January or April 2009 has not been made out.
Conclusion
Having upheld the defendant's Notice of Contention it is open to this Court to remit the matter to the Local Court for further determination in accordance with these reasons. Given the modest amount involved and the significant costs which have already been incurred, I have decided to allow the appeal in part and to set aside the orders made by her Honour. I propose to set out the findings which I have made and to direct the parties to prepare Short Minutes which accord with those findings so as to enable the Court to make final orders (Baring v Russell Edwards Design Services Pty Ltd [2008] NSWCA 58 at [12] - [16]). This will also give the parties an opportunity to consider the position as to costs, given the findings which I have made.
The orders which I make at this stage are as follows:
(1) Appeal allowed.
(2) The orders made by her Honour on 18 October 2010 are quashed.
(3) I direct the parties to prepare Short Minutes within fourteen (14) days of the date hereof which reflect the above findings and which have regard to the following:
(i) In accordance with her Honour's findings, the defendant had no obligation to make any payments pursuant to cl 1.1 of the agreement after the children commenced attending their new school. He does have an obligation to make payments under that clause up to and including the date when the children ceased attending "their current private schools". To the extent that the plaintiff received ASG cheques in respect of that period, i.e. until the children ceased attending "their current private schools", the defendant should receive a credit.
(ii) The defendant is to make payments pursuant to cls 1.2 and 1.3 of the agreement up to and including 16 July 2010, except that there is no obligation to make any payments in respect of the child Jessica after she turned 18.
(iii) The question of what happens to the ASG cheques received by the plaintiff, other than the adjustment referred to above, is not to form any part of the Short Minutes.
(4) In default of agreement, each party is to bring to Court Short Minutes setting out the orders which he or she submits should be made.
(5) Each party should be in a position to make brief submissions as to costs in relation to the proceedings before her Honour and in this Court.
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Decision last updated: 05 June 2012
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