Frampton and Frampton
[2007] FMCAfam 914
•2 November 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FRAMPTON & FRAMPTON | [2007] FMCAfam 914 |
| FAMILY LAW – Property settlement – binding financial agreement – application to set aside under s.90K – ‘Hardship’. |
| Family Law Act 1975 Family Law (Amendment) Act 1999 |
| In the Marriage of Whitford (1979) FLC 90-612 Simpson & Hamlin (1984) FLC 91-576 S & S [2007] FMCAfam 272 Taylor (1979) 25 ALR 418 |
| Applicant: | MR FRAMPTON |
| Respondent: | MS FRAMPTON |
| File number: | BRC 1579 of 2007 |
| Judgment of: | Baumann FM |
| Hearing date: | 9 August 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 2 November 2007 |
REPRESENTATION
| Counsel for the Applicant: | Ms Scott-Mackenzie |
| Solicitors for the Applicant: | Arcuri Lawyers |
| Counsel for the Respondent: | Mr Hamwood |
| Solicitors for the Respondent: | Reaburn Solicitors |
ORDERS
That the Application to set aside the financial agreement dated 28 April 2006 is dismissed.
Any Application for costs is to be made by written submissions filed and served within 21 days. Any Response to the said Application for costs is to be made by written submissions filed and served within 42 days.
IT IS NOTED that publication of this judgment under the pseudonym Frampton & Frampton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 1579 of 2007
| MR FRAMPTON |
Applicant
And
| MS FRAMPTON |
Respondent
REASONS FOR JUDGMENT
Introduction
After a relationship spanning over 20 years, the parties to this dispute separated on 1 February 2006. Shortly thereafter on 28 April 2006 the parties entered into a binding financial agreement within the meaning of s.90C of the Family Law Act incorporating a superannuation agreement pursuant to s.90MH of the Act.
On 6 July 2007, when responding to an Application by the wife to relocate with one of the parties children [X] (aged 15), the husband applied to have the said agreement set aside pursuant to s.90K of the Act. The wife opposes the agreement being set aside.
If the agreements are set aside, I am asked then to consider what property order does justice and equity to the parties in substitution for the arrangements set out in the said agreement. This is the issue I am required to determine.
Statutory framework
Section 90K(1)(d) was inserted into the Act by the Family Law (Amendment) Act 1999, and contains similar (but not identical) provisions to those contained in s.79A(1) (d) of the Family Law Act 1975, dealing with an application to set aside Court order for property division. Relevantly, section 90K of the Act provides;-
“Circumstances in which a Court may set aside a financial agreement or termination agreement.
(1) A Court may make an order setting aside a financial agreement... if, and only if, that Court is satisfied:-
a)………
b)………
c)………
d) Since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the application has caring responsibility for the child 9as defined in subsection (2), a party to the agreement will suffer hardship if the Court does not set the agreement aside.
(2) For the purposes of paragraph (1)(d), a person has the caring responsibility for a child if:-
a) the person is a parent of the child with whom the child lives; or
b) a parenting order provides that:
(i) the child is to live with the person; or
(ii) the person has parental responsibility for the child”
(Underlining added).
The financial agreement
The agreement (a copy of which is annexure “A” to the Affidavit of the husband sworn 4 July 2007), included the usual provisions, separation declarations and certificates of independent advice required by s.90G of the Act.
Essentially the agreement provided that:-
a)The husband would transfer the house at [omitted] to the wife within 28 days (clause 11)
b)The wife would refinance the mortgage and pay to the husband the sum of $130,000 as follows:-
i)$80,000 contemporaneous with the transfer
ii)within 10 years, the balance of $50,000, such sum to attract interest at a rate of 5% after 5 years have elapsed, calculated and paid on the date of payment of the balance (clause 12 & 13)
c)a superannuation split in favour of the wife using a base amount of $20,060.97 in respect of the husband’s superannuation interest in the [omitted] superannuation fund should occur
Preliminary legal issue
Counsel for the wife drew to my attention a decision of FM Altobelli in S & S [2007] FMCAfam 272 (3 May 2007) where his Honour gave cogent reasons why he believed, in that case, the section 90K application should be dealt with as a discrete issue, separate from any exercise of power to make a property order as a consequence of an agreement being set aside.
I do not disagree with the remarks at paragraphs 17 to 20 of his Honour’s analysis, however in this case the parties consented to the matter being heard together, to accommodate the impending overseas move by the mother. I should also say that it would be my usual practice to deal with an issue to set aside an order under s.79A, as a discreet issue as well, so as to minimise the expenses and costs to the parties by preparing for a full property rehearing, which may not be necessary.
I do not agree with the wife’s submission at paragraph 4.5, that in hearing the s.90K application “all evidence as to the relationship, employment and financial position of the parties” should be precluded. Some of this matter must be considered, in my view, in deciding whether to exercise the discretion.
The Court is empowered to exercise its discretion to set aside an agreement if it is first satisfied that since the date of the agreement:-
a)There has occurred a material change in circumstances;
b)Relating to the care, welfare and development of a child of the marriage; and
c)Which has the result that the child or the applicant (being the child’s father with whom she lives) will suffer hardship if the Court does not set the agreement aside.
Change in circumstances since the date of the agreement
At the time of the agreement, the parties’ two daughters [X] (aged 15) and [Y] (aged 13) lived with the wife. They were both attending private schools. The husband says he had 2 jobs to enable him to assist with private school fees.
After separation the wife re-partnered with an English man who was involved in the same industry as the wife, namely [omitted]. That relationship (which the husband says, but the wife denied, was in existence at the time of separation), has prompted the mother to relocate to the United Kingdom. She filed an application in this Court that she be permitted to relocate with the child [X] only.
Clearly the wife’s decision to move to the United Kingdom has caused significant conflict in the family, contributing in part to the child [Y] deciding to reside with her father and remain in Australia. That change occurred in February 2007, and consent orders made 6 July 2007 formalised the fact that the husband has the care and responsibility for [Y]. The child [Y] has changed schools and now attends a state secondary school so the husband is relieved of contributing to private school fees.
Is the change a material change in circumstances relating to the care, welfare and development of a child
The circumstances set out about, in my view, are a material change within the meaning of s.90K. The submissions of the wife at paragraphs 5.11 to 5.35 argue that;-
a)Mere changes to the living arrangements of a child do not relate to the “care, welfare and development” of a child. I disagree, although a change of living arrangements will not always amount to a material change.
b)Relying on the decision of the Full Court In the Marriage of Simpson & Hamlin (1984) 9 FAMLR 1040 at 1045, it is proper to equate the remarks that “The occurrence of a change in the responsibility for the daily care of a child of the marriage, after the making of a property order under section 79……could not of itself be held to be an unusual circumstance”, with the term “material” in s90K.
I draw a distinction between the use of the word “unusual” or “exceptional” (as that term is used in s.79(4)(1)(d)) and the word “material” used in s.90K(1) (d). The test is less strict under s.90K(1)(d). I reasonably assume that this was the intention of the legislature.
The wife contends that a more liberal interpretation “made indeed open the floodgates to parents and other potentially affected persons every time there is a change of the living arrangements of the child of one of the parties to a binding financial agreement, in their returning to the Court and wanting it set aside”.
It is trite to say that each case must be decided on its own merits.
A mere change in living arrangement will not always amount to a “material” change for the purposes of s.90K. For example, if the child was in an arrangement living predominantly with one parent, but then was to move to a more shared care regime, that might not (without more) amount to a “material” change. I respectfully agree with the Full Court in Simpson & Hamlin (1984) 9 FAMLR 1040 that:-
“The ordinary vicissitudes of life, coupled with the difficulties that parties to a marriage often experience in the task of restructuring their lives following upon the dissolution of their marriage and the division of their assets, and their obligations to the support of each other and the support, care and control of their children, frequently creates situations in which it is desirable, having regard to the children’s welfare, that such a change occurs.”
This case is different. The previous carer of the child has left the country. The effect on the child arising from the wife’s decision includes remaining in the father’s care and his time (and support) with the wife and the child’s sibling. It is a material change in circumstances relating to the care welfare and development of [Y].
Will the child or the husband suffer hardship if the court does not set aside the agreement
The submissions of Counsel for the husband (as paragraphs 10-14) contend that:-
a)As a consequence of the change:
i)The husband has had to relinquish his second job in order to provide an appropriate level of care for [Y], suffering a decrease in income of about 20-25%
ii)The husband has the expense of [Y]’s full time care and he is presently unable to “afford more than $195 per week for [Y]’s maintenance and this is in circumstances where he is able to rent at a concessional family rate”.
b)The husband will receive no assistance in the day to day care of [Y], save for when the child visits her mother and sister in the UK.
c)[Y] will suffer hardship as “there is little prospect that she will be able to enjoy the standard of living that the parties had prior to separation”
The term “hardship” is not defined, however in my view some assistance can be drawn from decisions assessing “hardship” within the context of applications for leave to commence actions under s.44(3) of the Act. In the Marriage of Whitford (1979) FLC 90-612, the Full Court connoted “hardship” to such concepts as “hardness, severity, privation, that which is hard to bear, or a substantial detriment”. It is clear from the main words of the section that the hardship must occur if the Court does not set the agreement aside.
The agreement entered into by the parties was unusual in that, although finality was desired, the terms of the agreement provided the wife with 10 years (5 of them interest free) in which to pay the balance of $50,000. The husband, with the benefit of legal advice, agreed to such a provision. The husband says at the time of the agreement that it was anticipated both children would continue to live with the Wife. He further says, at paragraph 42 and 43 of his final affidavit that:-
“42. By receiving the additional funds that I am seeking in my Amended Response, I will be able to use the funds received as a deposit on the purchase of the property where [Y] and I could continue to live. As I wish to continue to be available to care for [Y] until completion of her secondary schooling, I must continue in my current position as a [occupation omitted]. My earning capacity has therefore been limited as a result of my on-going caring commitments for [Y]. Failing to provide relief from the Financial Agreement, entered into when both children were living with [Ms Frampton], and I was able to work 2 jobs, would result in serious hardship to both [Y] and myself.
43. I very much wish to continue as the primary parent for [Y] in accordance with the recommendations in the Family Report. In order to do this however, I need the additional distribution I am requesting as per my Amended Response to relieve the financial burden which I am under as a result of not being able to work as much as I have previously done. These additional funds will provide me with the opportunity to purchase a property of my own where [Y] and I could continue to live.”
In my view, these paragraphs identify the hardships that he says he will incur if the agreement is not set aside, namely:-
a)Loss of Income
Whilst I accept the husband has more responsibilities in caring for [Y], and that the second job [omitted] at 4.00 a.m. in the morning (for about $50 per day), is no longer maintainable, the husband has not satisfied me that with the change of circumstances his net position is likely to be much worse. He of course has the living expenses of [Y]. He is no longer paying for private school fees and at the time of the agreement he was also making payments of the former matrimonial home. At paragraph 13 of his trial affidavit he confirmed (I infer since [Y] came to live with him), that despite a Nil assessment for child support, he was contributing $200 per week towards [X]’s school fees, school books, school uniforms and other expenses.
The average level of his income fluctuates, as was apparent from his cross examination. As a [occupation omitted], he depends on accumulating hours of [omitted]. It is apparent that the husband could not be described as “unskilled”. He has tertiary qualifications (including a Masters in [omitted]) as well as experience as a [omitted]. I do not accept, even with the responsibilities for [Y] (noting she catches the bus to school of a morning), that he is limited to fluctuating income as a [occupation omitted].
b)Inability to Buy a Home
The impediment to acquiring a home seems to flow, on the husband’s case, from being unable to pay a sufficient deposit on the purchase of a suitable home. It is unlikely he could afford a home of the quality that the parties previously enjoyed. However, the terms of the agreement, and the husband’s agreement to accept payment of $50,000 over 10 years, presents as an additional hurdle. The husband has received $80,000 under the agreement. He has incurred legal fees and he had choices as to how he utilised the funds received.
I accept that if the agreement was set aside, and the wife was ordered either to pay an increased sum, or at least, pay the balance of $50,000 immediately, it would provide some benefit to the husband. I am not satisfied that the hardship he and the child are alleged to suffer has not a nexus with the change of circumstances.
There is no absolute right for parents to own their own home although most desire to do so. There is no hardship necessarily caused to a child by living in rented accommodation rather than in a home owned by a parent.
I am not satisfied, on the whole of the evidence, that the husband has established hardship within the meaning of the Act.
Conclusion
It follows from the reasons above that I propose to dismiss the application to set aside the financial agreement under s.90K.
It follows that it is not necessary to consider whether, in the exercise of my discretion, I would set aside the agreement in circumstances where the husband has not established a ground to do so under s.90K.
The amendments to the Act were designed to provide an alternative to married people to end their financial arrangements by agreement and without expensive litigation. Public policy considerations demand, as does s.81 (and many compelling authorities from the early jurisprudence under the Family LawAct – see Taylor (1979) 25 ALR 418 at 429 for example), that there should be an end to marital conflict and litigation.
Section 90K was properly enacted to provide relief in cases where changes had occurred which created hardship to a parent or child (apart from the other grounds set out in s.90K(1) not relevant to this application).
Unfortunately for the Applicant husband, in my view this is not such a case.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Baumann FM
Date: 2 November 2007
12