GARDE & HOMER - [2013] FMCAfam 167

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GARDE & HOMER

[2013] FMCAfam 167

CHILD SUPPORT – Application to set aside a binding registered child support agreement – whether there are exceptional circumstances – whether hardship arises.

Child Support (Assessment) Act 1989, ss.3, 136

Balzano & Balzano (2009) FLC90-048
Daley & Daley (2009) FLC98-039
O’Brien (1981) FLC91-694

Applicant:

MR GARDE

Respondent:

MS HOMER

File Number:

SYC 6817 of 2007

Judgment of:

Altobelli FM

Hearing date:

4 February 2013

Date of Last Submission:

4 February 2013

Delivered at:

Sydney

Delivered on:

5 March 2013

REPRESENTATION

Counsel for the Applicant:

Self Represented Litigant

Counsel for the Respondent:

Self Represented Litigant

ORDERS

The Applicant’s Amended Application filed 21 December 2010 be dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYC 6817 of 2007

MR GARDE

Applicant

And

MS HOMER

Respondent

REASONS FOR JUDGMENT

Introduction and Background

By way of an Amended Application filed 21 December 2010 the applicant seeks an order that the Child Support Agreement made 19 December 2007 be set aside. The said application initially sought other orders, but all other issues have been resolved. In her Response filed 3 August 2011 the respondent asks that there be no change to the existing orders.
The applicant is 51 years old, is a (occupation omitted), and lives in (omitted). The respondent is 46 years old, lives in (omitted) with their two children aged 17 and 13, and worked as a (occupation omitted).
The Child Support Agreement dated 7 December 2007 requires the applicant to, in effect, pay periodic child support as well as non periodic payments relating to private school and sporting fees and health insurance premiums.
The applicant contends that he can no longer afford to pay in accordance with the said Agreement. He proposes that it be set aside and that the court order him to pay periodic child support of $1051 per month in total for the children, and non-periodic support in the form of half the school fees for the children. The respondent contends that there is no basis for changing the existing arrangement.
Both parties represented themselves at the hearing. They are clearly both intelligent and articulate people though remain quite emotional about these issues.
The applicant also contended that there was an issue about what he described as excess payments. The respondent disputes this. There are jurisdictional issues about the court’s ability to deal with this part of the dispute.
When the parties entered into the Child Support Agreement, he was living in (omitted), but she was living in Australia with the children. In January 2011 the mother and the children relocated to (omitted). By way of orders made 28 January 2011 Rose J in the Family Court of Australia made certain orders as regards the children spending time with the father both in (omitted) and (omitted).

Applicable law

Section 136 of the Child Support (Assessment) Act1989 states:
Power of court to set aside child support agreements or termination agreements
(1) A party to either of the following agreements may apply to a court having jurisdiction under this Act for the court to set aside the agreement:
(a) a child support agreement that has been accepted by the Registrar under section 92 or 98U;
(b) a termination agreement, or a written agreement referred to in paragraph 80G(1)(b), that has been accepted by the Registrar under section 92.
(2) If a party has applied under subsection (1), the court may set aside the agreement in accordance with the application if the court is satisfied:
(a) that the party's agreement was obtained by fraud or a failure to disclose material information; or
(b) that another party to the agreement, or someone acting for another party:
(i) exerted undue influence or duress in obtaining that agreement; or
(ii) engaged in unconscionable or other conduct;
to such an extent that it would be unjust not to set aside the agreement; 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.
The Agreement in question is clearly and obviously a binding child support agreement for the purposes of s.136(2)(d).
When the court required the applicant to identify precisely the basis of his application he relied on:
a)S.136(2)(b)(i) that another party to the agreement…exerted undue influence or duress in obtaining that agreement; and
b)S.136(2)(d) that there were exceptional circumstances relating to him that have arisen since the agreement was made such that he will suffer hardship if the agreement is not set aside.

Evidence

The applicant relied on his affidavits of 8 August 2011 and 14 December 2012, and his Financial Statement on 14 December 2012.
The respondent relied on her affidavit of 16 March 2012 and her Financial Statement of the same date.
Both gave oral evidence and asked questions of each other.

Undue influence and duress claim

This part of the applicant’s claim may be disposed of quite quickly. It was not pursued with much vigour. The applicant was represented at the time of the agreement by a senior family law practitioner. The evidence that he gave on this basis of his claim goes nowhere near establishing that there was undue influence or duress. There was no evidence of illegitimate means of persuasion which was a reason for entering into the agreement: O’Brien (1981) FLC91-694 per Baker J at 76,657.

Exceptional circumstances

Before the children relocated with their mother to (omitted) in January 2011, there is no evidence before the court of exceptional circumstances. Indeed the applicant seemed to eventually concede that it was the relocation and the new parenting order made on 26 January 2011 that was the real cause of financial hardship to him. That is unquestionably correct. The applicant’s affidavit sworn 8 August 2011 seems to raise two possible bases for setting aside the agreement: the “false pretences” referred to in paragraph 14, and the “extremely stressful circumstances” surrounding the signing of the agreement referred to in paragraph 17. Neither survives critical scrutiny. The ‘false pretences’ alleged are neither in the character of fraud, or of a failure to disclose material information. The real issue is whether the changes amount to exceptional circumstances. The “extremely stressful circumstances” ignore the countervailing effect of the legal representation the applicant was receiving.
What ‘exceptional circumstances’ arose after January 2011? Balzano & Balzano (2009) FLC90-048 and Daley & Daley (2009) FLC98-039 provide some guidance in this regard. A change must occur unexpectedly, unusually and not within reasonable contemplation. The court accepts that the respondent’s relocation with the children was an unexpected event that could not be reasonably foreseen in December 2007 when the Agreement was entered into. But this is not enough per se as s.136(2)(d) also requires that the applicant suffer hardship if the agreement is not set aside. What ‘hardship’ does the applicant assert that he suffers?
Regrettably the applicant’s affidavit of 14 December 2012 does not adequately focus on this. Most of his evidence speaks of his general dissatisfaction with his child support commitments. To the extent that the applicant relies on his ‘new living arrangements’ with his fiancé since 2009, the court cannot discern any hardship in this regard. The disputes with the respondent about the non-periodic child support predates and postdates the relocation to (omitted) so does not demonstrate hardship. The fact that the respondent might have found employment in (omitted) is not hardship to the applicant. His frustration about her conduct in the present proceedings is not hardship.
The applicant’s oral evidence, in conjunction with his Financial Statement sworn 14 December 2012, is more relevant in this regard. He explained that the high costs of him exercising contact with the children was causing hardship to him. Indeed the orders made by Rose J in January 2011 made the possibility of contact much more frequent compared to when the children were living in Australia. It went from 4 weeks each year to up to once a fortnight, a frequency apparently made realisable because of the frequent and direct air links between (omitted) and (omitted).
The applicant gave evidence that the cost of exercising contact pursuant to the orders was about $1500 per week, and he claimed a further $400 per week as the cost of holidays for them. He maintained that there was no duplication in these expenses but did concede that some part of the $1500 did include the cost of bringing his partner on contact visits. Regrettably there is no evidence of how the $1500 is calculated. Moreover there was no systematic testing of the applicant’s asserted expenses in his Financial Statement which would have been essential in establishing whether or not there was hardship. The court is left to accept the evidence as it is. This is a consequence of self-representation.
The applicant’s weekly income is $5407. His expenses total $7663 weekly. He explained on oath that his Financial Statement incorrectly omitted the item 60 expenditure of $2052, and that there was no overlap between the $1500 already inserted at item 32. If the applicant’s evidence is accepted, therefore, he has a weekly deficit of $2256. In determining whether there is hardship, however, the court must scrutinise these expenses. The sum of $400 per week for holidays for the children amounts to $20,800 per annum, a sum the court finds excessive. A more reasonable allowance would be $200 per week. Moreover the claim for $2052 includes $514 for “other adults”, presumably the applicant’s partner. His evidence at paragraph 14 of his affidavit sworn 14 December 2012 is that she has her own income of at least $30,000 per annum. In these circumstances the cost to the applicant of meeting expenditure related to her cannot be considered as a hardship to the applicant when the context is child support for his children. The amount of $2052 should be reduced to $1538 weekly. In considering whether the applicant suffers hardship the claim of $1500 weekly for contact expenses must also be scrutinised. The court will reduce this by 20% in light of the applicant’s concession that some of this expense relates to his partner.
The applicant’s expenditure is therefore reduced, for present purposes, by $1014 to $6649, still resulting in a deficit of $1242 weekly.
Hardship cannot be determined simply by reference to income and expenditure. One must have regard to the entirety of the applicant’s financial circumstances. In this regard he has a surplus of assets over liabilities of $1,007,000. Significantly, he has $218,000 cash in bank accounts and $42,000 in shares.
In Balzano & Balzano (2010) FLC98-048 Warwick J referred at paragraph 41 to the explanatory memorandum pertaining to s.136 of the Act. He noted that “it is not intended that binding agreements should be set aside lightly. This amendment restricts the scope for the setting aside of binding child support agreements.”
The emphasis of s.136(2)(d) is not just on exceptional circumstances, which the court is prepared to find, but on hardship to the applicant which the court is not prepared to find. There is no hardship to the applicant, even with a weekly deficit of $1242 weekly, in circumstances where he has $218,000 cash in the bank. The duty of parents to maintain their children is clearly articulated in s.3 of the Act.
Duty of parents to maintain their children
(1) The parents of a child have the primary duty to maintain the child.
(2) Without limiting subsection (1), the duty of a parent to maintain a child:
(a) is not of lower priority than the duty of the parent to maintain any other child or another person; and
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; and
(ii) any other child or another person that the parent has a duty to maintain; and
(c) is not affected by:
(i) the duty of any other person to maintain the child; or
(ii) any entitlement of the child or another person to an income tested pension, allowance or benefit.
The legislation prescribes a very high threshold for setting aside child support agreements. There must be exceptional circumstances and hardship, and even then the relief is discretionary. The applicant entered into a solemn, binding agreement in 2007. He agreed that it was “fair and reasonable” in the circumstances (paragraph 2.9). He was advised not just independently by his lawyer, but specifically as to the “advantages and disadvantages…of entering into the agreement” (paragraph 2.11). He is bound now by that agreement.

Discretion

Even if the court is wrong, and hardship were to be established, the court would still not exercise its discretion to set aside the agreement. If the court were to make the order sought by the applicant the respondent would be left to pay one-half of the private school fees. There is nothing in the respondent’s evidence to suggest that she has the capacity to do so. Her weekly deficit is sworn to be $2837. Whilst she has substantial net assets ($743,704) very little of it can be easily liquidated. Even though the court has reservations about the expenses she claims, the deficit is so substantial that it is hard to imagine finding the capacity to pay the thousands of dollars required each year to educate the girls in the private schools to which they agreed in 2007.
Another reason not to exercise discretion in the applicant’s favour is the paucity of the evidence. It would have been helpful to know, for example, what the formula assessment would have been in 2007, 2011 and now. It would have been helpful to understand the respective financial circumstances of the parties in 2007 and 2011 as well as currently. In the absence of this evidence, and on the basis of the evidence before the court, it would be difficult if not impossible to undertake the very systematic analysis required under s.117 of the Act in order to determine the appropriateness of the applicant’s proposal.

Decision

Having regard to the matters set out above the court must dismiss the Amended Application filed 21 December 2010. This means that the applicant and respondent continue to be bound by their Child Support Agreement dated 7 December 2007. The court has no jurisdiction, therefore, to deal with any controversy between the parties about whether child support stands paid in advance or in arrears. That is not a justificiable controversy that arises out of the Amended Application now dismissed.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Date: 5 March 2013