Jessup and Jessup
[2010] FMCAfam 124
•17 February 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JESSUP & JESSUP | [2010] FMCAfam 124 |
| CHILD SUPPORT – Application to set aside child support agreement made in May 2006 – agreement “transitioned” to new child support regime – whether “exceptional circumstances” established under s.136(2) – mother’s enforcement of child support agreement. |
| Child Support (Assessment) Act 1989, ss.3, 4, 12, 114, 121, 136 Federal Magistrates Court Rules 1999, r.25A.07 |
| Balzano & Balzano [2010] FamCAFC 11 Christian & Donald [2008] FamCAFC 44 Daley & Daley [2009] FMCAfam 398 In The Marriage of Lutzke (1979) 5 FamLR 553 Simpson and Hamlin (1984) FLC 91-576 |
| Applicant: | MR JESSUP |
| Respondent: | MS JESSUP |
| File Number: | SYC 4589 of 2008 |
| Judgment of: | Sexton FM |
| Hearing date: | 27 January 2010 |
| Date of Last Submission: | 27 January 2010 |
| Delivered at: | Sydney |
| Delivered on: | 17 February 2010 |
REPRESENTATION
| Solicitors for the Applicant: | In person |
| Solicitors for the Respondent: | In person |
THE COURT ORDERS THAT:
The father’s application filed on 20 October 2009 be dismissed.
The mother be granted leave to strike out that part of the Enforcement Summons filed 9 November 2009 as relates to arrears of periodic child support and amend the Summons.
The mother be granted leave to file and serve a further Enforcement Summons in relation to arrears of periodic child support, upon compliance with the notice provisions of s.113A of the Child Support (Registration and Collection) Act.
The mother file and serve an affidavit verifying compliance with the notice provisions in s.113A and a further Enforcement Summons by no later than 5 March 2010.
The father file and serve any material in reply by no later than
19 March 2010.
The matter be listed for hearing before me at 10a.m. on 29 March 2010.
The father have leave to appear by telephone at the hearing, by arrangement at least 7 days in advance with my Associate (email [email protected]) and the father initiate the call to the Court.
IT IS NOTED that publication of this judgment under the pseudonym Jessup & Jessup is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 4589 of 2008
| MR JESSUP |
Applicant
And
| MS JESSUP |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns an application by the father to set aside a child support agreement entered into between the parties on 12 May 2006. The Agreement concerns the parties’ two children, [X] born [in] 1988, now aged 21 years, and [Y] born [in] 1993, now aged 16 years. [Y] attends [S] School in Sydney..
The father seeks an order that the Agreement be set aside and that he pay child support in accordance with the Child Support Agency’s assessment, and that the mother pay his costs of the proceedings. The mother wants the father’s application dismissed and the Child Support Agreement enforced.
The father adduces no evidence as to what his liability would be under an Agency assessment based on each party’s current circumstances.
Each party was unrepresented at the hearing, although the father had been represented until shortly before the hearing.
The parties were married [in] 1988, and finally separated on 31 March 2006. The mother currently lives in East [B] with [Y], who has commenced Year 11 at [S] School. [X] is presently living overseas. The father lives in Hong Kong. He has a son [Z], born [in] 2007, from a subsequent relationship and spends time with him one day each week. The father and [Z]’s mother do not live together and the father is presently awaiting a hearing in Hong Kong as to the father’s liability for [Z]’s financial support. In accordance with the Child Support Agreement, as a result of inflation since May 2006, the father is presently liable to pay into an account for [Y] an amount of $728 per month by way of periodic support, and to pay her school fees directly to [S] School.
The mother has commenced proceedings previously in this Court in relation to enforcing the terms of the child support agreement, and in particular enforcing payment by the father of [Y]’s private school fees. Those proceedings were finalised on 11 September 2009 when the mother withdrew her application after payment by the father of the outstanding arrears. I find the contents of the mother’s affidavit sworn on 9 November 2009, including Annexure C of that affidavit, unclear as to precisely what amount the father paid to discharge those arrears.
On 20 October 2009, the father filed his application in relation to setting aside the Agreement. In support of the application, the father relies on two affidavits sworn by him on 14 October 2009 and
23 December 2009, and a Financial Statement sworn on 23 December 2009. The mother relies on an affidavit and financial statement sworn on 15 January 2010, and a further affidavit sworn on 22 January 2010.
The mother filed an enforcement summons on 9 November 2009, again seeking payment of outstanding arrears in relation to periodic payments and school fees, and in relation to that summons, the mother relies on an affidavit sworn on 9 November 2009.
The father served the Child Support Agency with his Application and supporting material in accordance with Rule 25A.07 of the Federal Magistrates Court Rules 1999.
Each party was self-represented at the hearing, and each cross-examined in relation to the other’s financial position.
Legal principles
The law relating to child support agreements was significantly amended by the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 which commenced operation on 1 July 2008. The amendments to the legislation created two specific types of child support agreements – binding child support agreements and limited child support agreements. Division 6 of Part 6 (which provided for variation of child support agreements) and section 136 (power of court to set aside agreements) were repealed, and a new section 136 was substituted as provided in Item 28 of the Amendment Act. Item 73A(1) in Schedule 5 of the Amendment Act states that the amendments made by Schedule 5 apply in respect of an application made to the Court for an Order, if the application was made after the commencement of Division 3 of Part 1 of Schedule 5, that is after 1 July 2008[1], and the application relates to a period that ends after 1 July 2008[2]. As the father’s application to set aside the agreement was made to this Court after 1 July 2008 (on 20 October 2009), and the application relates to a period after 1 July 2008, the new provisions apply.
[1] Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006, section 2
[2] Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006, schedule 5, item 73A(1)(b)
Pursuant to the changes in the legislation, the Child Support Registrar was required to review all child support agreements in force prior to
1 July 2008[3]. In this case, the Registrar determined that the parties’ Agreement of May 2006 would remain in force after 1 July 2008[4]. It was deemed to be a “binding child support agreement”[5]. Applying the new provisions, a binding child support agreement can only be set aside pursuant to the provisions of section 136(2). Section 136(2) provides:
[3] Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006, schedule 5, item 74
[4] Exhibit 1
[5] Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006, schedule 5, item 75(1)(a)
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) …
(b) ...
or
(c) …
(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.
The father was unsure as to which subparagraph of section 136(2) he relied on, and the mother made no submissions on this issue. However, as the May 2006 Agreement is deemed to be a binding child support agreement, section 136(2)(d) of the Act must apply. The onus is therefore on the father to satisfy the court that exceptional circumstances have arisen relating to himself, the mother or the child since May 2006 when the Agreement was entered into, and because of those exceptional circumstances, the father or the child will suffer hardship if the Agreement is not set aside.
Each party’s circumstances at the time of entering the agreement
The parties separated at the end of March 2006. They reached an agreement as to the children’s living arrangements, and on 12 May 2006 entered into a Binding Financial Agreement in relation to property division. At the same time, the parties entered into the Child Support Agreement (“the Agreement”) the subject of these proceedings, and registered the Agreement with the Child Support Agency. Each party received legal advice about the Agreement. The Recitals to the Agreement state that the parties had shared residence of the two children.
The Agreement provided for the father to contribute, on a weekly basis, $150 per child into a joint account held for the children’s private school associated expenses (including tuition fees, excursion fees, incidental sporting fees, school books, school uniforms and extra-curricular activities), weekly allowances and their general costs of being maintained. The mother was required to contribute on a weekly basis $75 per child for the children’s private school associated expenses and their general costs of being maintained. The Agreement provided for these amounts to be adjusted according to the CPI index for Sydney on 1 July each year. The Agreement provided for a suspension of the payments upon each child completing Year 12, or the happening of a terminating event pursuant to section 12 of the Child Support (Assessment) Act 1989. In addition, the Agreement provided for the father to maintain the family’s medical benefits until 31 December 2006, and to be responsible for paying the private school fees for each child directly to the school until each child completes Year 12.
It is common ground that, at the time of entering the Agreement, the father was employed [in the finance industry] and earned approximately $125,000 per annum. In the property division, according to the Binding Financial Agreement, the father received 50% of the net proceeds of the sale of the former matrimonial home in East [B], a boat (then valued at $100,000), his superannuation entitlements and household effects. The total assets he retained, including superannuation, had a net value of $1,435,144[6].
[6] Annexure B to father’s affidavit sworn on 14 October 2009
The mother does not provide details of her employment in May 2006. However, in cross-examination the mother said that prior to the 2009 financial year, she was earning approximately $95,000 for a number of years. I have therefore concluded that $95,000 was her approximate annual income in May 2006. By way of property settlement, according to the Binding Financial Agreement, the mother received 50% of the net proceeds of sale of the former matrimonial home, her car, her superannuation entitlements, household effects and jewellery. The total assets she retained had a net value of $1,208,503.
Events since the Agreement was entered into
The father contends that the changes in his circumstances between May 2006 and the time of filing his application in these proceedings in October 2009, amount to “exceptional circumstances” which will cause him to suffer hardship if the Agreement is not set aside.
In substance, the father submits:
a)His financial position has significantly deteriorated and he has responsibility for another child in Hong Kong; and
b)The mother’s financial position has significantly improved.
In particular, the father submits:
a)He was retrenched from his position at [H] in April 2009;
b)He was unemployed between April and November 2009;
c)He is on a present annual income of $47,000AUD, substantially less than his income at the time of the Agreement and subsequent to the Agreement;
d)The global financial crisis has limited his future employment prospects in the finance industry, his field of expertise;
e)In December 2007, [Z], his child from a subsequent relationship, was born in Hong Kong;
f)He is providing $100AUD a week by way of child maintenance for [Z], but proceedings in relation to his future maintenance obligations will not be determined in Hong Kong until April 2010, and he expects they will increase;
g)He has a taxation debt in Hong Kong which he must repay over a 6 month period;
h)He has a strata title debt on his property at Property B which he must repay over a 6 month period;
i)His property in Property B is in need of repair;
j)In the 2009 financial year, he made significant losses from a UBS investment and boat hiring operation[7];
k)The mother’s income has increased; and
l)The mother is living in Sydney rent-free in her boyfriend’s residence.
[7] Annexure C of father’s affidavit sworn on 14 October 2009
The mother contends that the father has greater resources than those disclosed in his affidavit material. The mother questioned the father about his holiday to Thailand with [Y] in April 2009 and his trip to Australia in August 2009 to participate in the Hamilton Island race week. In addition, the mother questioned the father about his offer by email to her dated 8 May 2009[8] that [Y] undertake the Baccalaureate instead of the Higher School Certificate and he would continue to pay the fees. The mother submits the father must have had the capacity to meet [Y]’s fees at the time of that offer.
[8] Annexure E of mother’s affidavit sworn on 15 January 2010
In relation to the holidays, the father claims he had paid for the holidays to Thailand and Hamilton Island before he was retrenched in April 2009, and would not have travelled to Hamilton Island had he been able to claim reimbursement of his fares. In relation to his offer in May 2009, the father claims it was his intention at that time that [Y] undertake the Baccalaureate in Hong Kong, and was critical of the mother for refusing to discuss this or other options with him. Although the mother denies the father ever proposed [Y] continue her education in Hong Kong, and says that such a proposal would have been rejected by [Y], I am not persuaded anything turns on either of these issues.
The father’s present circumstances
The father is living in Hong Kong. He has no partner and sees his young son 1 day a week. While the father adduces no evidence as to how often he sees [Y], I am satisfied that since he moved to Hong Kong, the father has not shared the care of the parties’ children, as he did at the time of the Agreement.
The father filed two Financial Statements, one sworn on 14 October 2009, and the other on 23 December 2009. There are a number of errors in the documents, some of which the father acknowledged as “simple mistakes”. For example, in the second statement, the summary page does not reflect the figures in the document. The total of the stated expenses is incorrect, the total of the stated liabilities is incorrect, the total of weekly expenses for the father is incorrect. The mother submitted the court should not be satisfied as to the accuracy of the document.
While I agree with the mother that the father’s Financial Statement was carelessly prepared, given the significance the father places on his financial position, I have had regard to the document.
Income
On the father’s figures, his annual income has dropped from $125,000 in May 2006 to $47,000 in December 2009. He says his annual income was only $24,000 between April and November 2009 when he relied solely on rental income of $461 a week, from his Property B property, while unemployed[9]. According to his evidence, he commenced his salary of $906 a week from an entity in Hong Kong known as [D] in November 2009. He relies on a letter dated 23 September 2009 from Mr C, Operations Director of that company, to verify that income.
[9] Father’s financial statement sworn on 14 October 2009
The father deposes to receiving no rental income in December 2009 because of necessary repairs being undertaken on the Property B property.
The mother questioned the accuracy of the contents of Mr C’s letter. She submitted that Mr C is a friend of the father’s and an income of $27,500HKD per month is unrealistically low by Hong Kong standards. She claims the father was involved in a business well before November 2009. In support of her contention, the mother refers to a website page of [T][10] on which an entry dated 12 May 2009 states that the father is the managing director of that entity.
[10] Annexure B of mother’s affidavit sworn on 22 January 2010
Expenses
The father deposes to total weekly expenses as at 23 December 2009 of $4,977 (my calculation on the basis of the itemised figures in the Form) which, if his income figures are accepted, leaves him with a weekly shortfall of $4,977 - $906 = $4,071. The figures in his Financial Statement have been added incorrectly at No 33, and the figure at
No 32 does not equate to the figure at No 60, as it should. (He has also included $500 for school fees twice so I have included it only once.) The figure of $4,977 includes $500 a week for school fees that the father acknowledges he was not meeting at that time. The father deposes to weekly instalment payments to Hong Kong Inland Revenue for tax owed and for outstanding levies on his Property B unit but does not explain why the weekly figures (and the notes relied on at Part O of the Statement) do not equate to the figures in the Exhibits relating to those expenses[11]. The father says these debts must be repaid within
6 months. He does not provide his anticipated expenses for those items when the 6 month period expires, nor the expiry date.
[11] Exhibit 3 and Annexure B of father’s affidavit sworn 23 December 2010 and Exhibit 4
The father says he can manage to live on his income “but just”. The father deposes to have been drawing on savings to meet the shortfall between his income and expenses. He denies having received any other income during the period April to November 2009. In relation to [T], he acknowledges that he is now the Managing Director but claims it is not a trading entity and was simply a business idea for [D]. He does not explain the May 2009 entry on the [T] website when he says he did not start with [D] until November 2009.
For over a year before April 2009, the father was employed by [H] in Hong Kong, earning an annual income of approximately $214,000AUD. He provides no verification from [H] as to the date he was made redundant or as to his redundancy entitlements, if any. He does not provide a copy of his employment contract with [D], relying solely on a letter from Mr C dated 2 months before his start date. The father would have access to bank statements to verify his income position after November 2009, and possibly payslips. He would have access to bank statements between April 2009 and November 2009 to show that he had only rental income and was drawing on savings to live. He has chosen to provide none of these documents.
The father tells the court his income will shortly increase. He anticipates tenanting his Property B property this month and to receiving approximately $1,000 net a month from that source. Given he deposes to the Property B property being in need of significant repair before it can be tenanted[12], I have concluded the father has completed the repairs, or at least those which prevented it being tenanted, although it is not clear to me from what source the repairs were paid.
[12] Annexure C of father’s affidavit sworn on 23 December 2009
I accept that the father’s income will increase from this month as a result of the reinstatement of his rental income.
Assets
As at 23 December 2009, the father deposes to owning the Property B property with a value of $820,000, $30,913 in savings with [H], shares with a value of $2,379, household contents with a value of $2,000 and a 50% share in a boat with a value of $12,000. He deposes to an approximately $451,304 entitlement to superannuation in a self managed fund. The mother questioned the values to which the father deposed for his Property B unit, his boat and his household contents.
a)In relation to the boat, which the father describes as a small commercial yacht, the father deposes to his share having a value of $12,000, despite the boat being valued at $100,000 in the property settlement in May 2006. In cross examination, the father claims to have sold a 50% share to meet debts about 2 years ago. He based the sale price of $24,000 on an informal valuation from a friend at [E] of $60,000, less $10,000 owed to creditors for repairs. He adduces no independent valuation evidence. The father says the market for second hand boats has fallen as a result of the global financial crisis. In November 2009, Mr F, a friend who works at [E], estimated the value of his share of the boat as $12,000. Although the father plans to lease the yacht for charters in approximately Easter this year, he says repairs at a cost of $20,000 must be completed before it can be re-registered for chartering. The father is a commercial skipper, and says if his financial position in Hong Kong does not improve, he will return to Sydney and skipper the yacht himself. When operational, he expects to achieve a net income of $100 per day. The father agreed with the mother that between 2004 to 2006 his earnings from the yacht were considerably higher.
b)The Property B unit was purchased for $1,010,000. The father says it is now worth $820,000, based on a current estimate from the agent who sold it to him. He adduces no written valuation or market appraisal evidence. The father estimates repairs are needed at a cost of approximately $40,000, based on an architect’s report he annexes to his affidavit. However, as already noted, he plans to re-let the unit this month. The mother adduced no evidence to contradict these assertions.
c)In relation to household contents, the father claims to have sold 80% of the items he received at the time of property settlement which has left him with contents with a value of only $2,000. He claims to have invested the proceeds of sale in a UBS stock loan scheme in November 2007 and lost those and other funds in the global financial crisis.
While I am unable to make a finding as to the precise value of the father’s assets, I accept that their value has diminished since May 2006.
The father says he has made enquiries as to whether his superannuation can be accessed, but has been advised that he is unable to access a lump sum benefit until he permanently retires from the workforce unless he has a significant illness or disability, or faces severe financial hardship evidenced by being in receipt of unemployment benefits for 6 months[13]. I accept this unchallenged evidence.
[13] Annexure D to husband’s affidavit sworn on 23 December 2009
Liabilities
The father deposes to total debts of approximately $290,372 (the figure at Item 55 of his financial statement is incorrect) made up of a mortgage on the Property B property, a tax debt incurred in Hong Kong, a visa credit card debt and legal fees associated with these proceedings. The father deposes to owing tax of $16,248 despite the figures provided by the Inland Revenue Department in Exhibit 3. He does not explain how this tax debt arose. He makes no reference in his Financial Statement to a debt to the Owners Corporation in [B], which he deposes to in his affidavit and which, according to Exhibit 4, is now $12,139.48, not as noted in Part O of his December Financial Statement.
While I am unable to make a finding as to his precise debt position, I am satisfied the father’s net asset position has diminished since May 2006.
The father acknowledges that he owes the mother in excess of $5,300 in school fees for [Y] and is in arrears of periodic child support in the sum of $2,924.50 as at 11 December 2009[14].
[14] Exhibit 2
The mother’s current circumstances
The mother is currently contracted full time as a computer programmer with ING. She deposes to an average gross weekly income of $2,300 and expenses of $3,608, a shortfall of $1,308 a week. At the time of swearing her Financial Statement in January 2010, the mother was not receiving periodic child support. The mother has paid [Y]’s outstanding school fees because she says the school threatened her with legal proceedings. She deposes to day to day expenses for [Y] of $900 a week, including $100 a week on [Y]’s educational expenses and $400 a week on telephone. While the phone expense in particular seems to me excessive, the father did not challenge the mother’s evidence as to either her income or expenses. In any event, on the figures she provides, the mother is in deficit even if that expense is disregarded.
The mother lives in a property rent-free, owned by her boyfriend who is resident [overseas] and visits every few months. She is meeting mortgage repayments of $415 a week for a 5% share in a property in Property A she owns with the parties’ son [X]. [X] is presently living overseas. The mother does not adduce evidence as to whether or not the property is tenanted or as to her financial arrangements with [X]. She deposes to being responsible for 100% of the loan. She says, however, she is trying to help [X] financially to the extent she can.
The mother says she earned $120,000 in the 2009 financial year, her highest annual income to date. She says she has had only one pay rise in four years. She is uncertain about the security of her position because retrenchments have been occurring every few months, and ING has recently been taken over by ANZ Bank.
Having received net assets, including superannuation of over $1.2million in the parties’ property settlement of 2006, the mother now deposes to total net assets (including superannuation which she has been accruing) of less than half of that amount, which includes a loan to her parents of $400,000.
I am satisfied that although the mother’s income has increased slightly since the time of the 2006 Agreement, her overall financial position has diminished.
Are the circumstances exceptional?
The father says neither party contemplated future unemployment in May 2006 when they entered into the Child Support Agreement, nor did either consider the possibility of a global financial crisis which might affect the father’s employment. When he signed the Agreement, the father says he believed he would be in a financial position to perform his obligations under that Agreement.
As already noted, in support of his case that the changes in each party’s situation amounts to “exceptional circumstances”, the father contends:
a)The global economic crisis has made it difficult for him to obtain employment in the banking industry, particularly at aged 58 years;
b)He was unemployed for 6 months in 2009 and has largely depleted his savings;
c)He is presently earning a much lower income than he was earning in May 2006;
d)He has another child, now 2 years of age, and will have an obligation to provide for that child;
e)He has a number of debts including a significant tax liability to the Hong Kong Inland Revenue Department and must comply with his arrangement with the Department to repay the debt over 6 months; and
f)He is trying to find employment at higher rates of pay in either Hong Kong or Sydney but to date, has not been successful.
The father submits that given the mother had the capacity 18 months ago to lend her parents $400,000 and lives rent-free in an East [B] home owned by her boyfriend, the mother is in a far superior financial position to him. The father says he has solely met the children’s school fees since separation, and has paid an amount of over $500,000 in school fees over the last 15 years (a figure which is disputed by the mother) and, given the mother’s financial position, the mother should now pay the school fees until [Y] completes her schooling at the end of 2011.
The father relies on the May 2009 decision of Federal Magistrate Brown in Daley & Daley[15]. In that case, the parties entered into a Child Support Agreement in February 2005. His Honour found the Agreement “is deemed to be a binding agreement.”[16] His Honour found that neither party received independent legal advice before entering into the Agreement. His Honour found that the amount of child support the wife was receiving under the Agreement was approximately 30% of what she would receive if the Agency formula were applied, and further, that had the Agreement been a limited agreement, the wife would have “clearly satisfied a number of the applicable criteria to have it set aside.”[17] Federal Magistrate Brown had regard to the fact that the payer husband was no longer self-employed, but rather a PAYG taxpayer and to the very significant changes in the method of calculation of child support introduced under the amendments from 1 July 2008. His Honour found that the husband was not paying child support to the level of his capacity to do so. His Honour determined that this combination of factors amounted to “exceptional circumstances” and the agreement should be set aside on the basis of hardship to the wife and children.
[15] Daley & Daley [2009] FMCAfam 398
[16] At paragraph 91
[17] At paragraph 94
The father in this case submits that his financial position has worsened by 200 to 300% while the mother’s position has improved. The Court should therefore, as in Daley’s case, be satisfied exceptional circumstances exist.
The mother submits that the father’s temporary loss of employment was not an unforeseeable event and in itself, a period of unemployment does not amount to an exceptional circumstance. She submits that given the father has substantial assets, he has the financial resources to meet his child support obligations under the Agreement. She submits that the father’s claim in his affidavit that he has paid $500,000 in school fees over the years is a gross exaggeration. The mother submits that the father should consider moving to Australia, as he would be in a better position if he claimed unemployment benefits, and cashed in his superannuation to meet his obligations[18].
[18] Paragraph 24 of mother’s affidavit sworn on 15 January 2010
In the very recent decision of Balzano & Balzano (No. 2)[19], his Honour Warnick J considered the meaning of “exceptional circumstances” in relation to section 136(2). He referred to the Full Court’s consideration of “exceptional circumstances” in Simpson and Hamlin[20] [a s.79A application] and to Federal Magistrate Brown’s quoted definition of its meaning in Daley. In Simpson and Hamlin, the Full Court held[21]:
…it was not sufficient that circumstances had arisen of an exceptional nature resulting in hardship to the applicant. The Court must consider in the exercise of its discretion whether that hardship is of such a serious nature and results in such inequity that it can only be rectified by the extreme step of setting aside or varying an existing order.
[19] Balzano & Balzano (No. 2) [2010] FamCAFC 11
[20] (1984) FLC 91-576
[21] At p 79,659
The Full Court continued[22]:
The question therefore was whether the change which occurred in this case was such as to “take it out of and beyond the ordinary circumstances in which such change might be reasonably expected to occur….What amounts to “exceptional circumstances” is very much a question of fact and degree.
[22] At 79,657 – 79,658
The 2008 Full Court decision of Christian & Donald[23], which also related to a section 79A application, cited with approval the interpretation of “exceptional circumstances” applied in Simpson and Hamlin.
[23] [2008] FamCAFC 44
In Daley & Daley[24], Federal Magistrate Brown said:
[24] [2009] FMCAfam 398
For circumstances to be exceptional, they must be unusual, out of the ordinary or special.
His Honour Justice Warnick in Balzano found some assistance in the Explanatory Memorandum in respect of the Bill introducing the present section 136 which stated:
It is not intended that binding agreements should be set aside lightly. This amendment restricts the scope of the setting aside of binding child support agreements….
This application under section 136, must be considered in the context of the objects of the overall child support legislative scheme[25]. Section 3 of the Child Support (Assessment) Act1989 contains the obligation that parents have a primary duty to maintain their children. Section 4 provides that the principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Sections 114 and 121 identify that the further objects of Divisions 4 and 5 of Part VII include:
a)that the children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents; and
b)that parents share equitably in the support of their children.
[25] See In The Marriage of Lutzke (1979) 5 FamLR 553 at 559
I find each party’s net asset position has decreased since May 2006. I find the mother’s income has increased, though only recently and not significantly. I find the mother’s expenses are in excess of her income. While I accept the father’s employment position has changed, I am unable to make findings as to the father’s current financial position on the inadequate evidence he has provided. I do not know what the father’s liability for child support for his youngest son is likely to be.
The father deposes to savings of over $30,000 despite the difficulties he says he has faced in recent months. He now has employment. He is making efforts to find more lucrative employment. He has the option of returning to Australia. I am not persuaded the father’s current difficulties are necessarily long term.
I find the mother has had the majority responsibility for the care of the parties’ children since May 2006, despite the Agreement being based on a shared care arrangement. The mother is uncertain about the security of her employment. While she has loaned her parents a large sum of money, she has only modest additional assets. While she is presently living rent-free, this arrangement has been in place for only 2-3 months and there is no evidence before me as to how long the arrangement is likely to continue.
While I accept that there have been changes in each party’s circumstances, I am not satisfied the father has established that the changes amount to “exceptional circumstances.” I find the facts in this case very different from the factual findings made by the Court in Daly’s case. I find the father’s evidence inadequate as to his income, expenses and asset position after April 2009, given the nature of these proceedings and the basis of his application.
The father bears the onus of establishing that his change in circumstances is of an exceptional kind, such as to satisfy the Court that the Agreement he entered into less than 4 years ago should be set aside on the grounds of hardship to him. Given he relies substantially on the deterioration in his financial circumstances, the onus is on the father to provide a careful analysis of what has happened to him financially since May 2006, and to satisfy the court that the changes when viewed as a whole, should be regarded as exceptional. In my view, he has not discharged this onus. His application to set aside the Agreement will therefore be dismissed.
Enforcement
By a Form 46 enforcement summons dated 9 November 2009, the mother seeks to enforce payment against the father of arrears of periodic child support as well as arrears of school fees, (non-periodic child support) in the total amount of $10,225.00. The father acknowledges he has not being paying child support in accordance with the Agreement, and is not up to date with payment of [Y]’s school fees.
The mother sought to have the Enforcement proceedings determined at the same time as these proceedings.
Section 113A of the Child Support (Registration and Collection) Act 1988 provides for a right of enforcement by the payee of a registrable maintenance liability if the payee has given notice to the agency as required by the section. Section 113A provides that:
(1) A payee of a registered maintenance liability may sue for and recover a debt due in relation to the liability if the payee notifies the Registrar in writing of his or her intention to institute a proceeding to recover the debt:
(a) at least 14 days before instituting the proceeding; or
(b)in exceptional circumstances--within such shorter period as the court allows.
Section 95(2) of the Child Support (Registration and Collection) Act 1988 provides that if a child support agreement has been accepted by the Registrar, and the agreement includes “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”,[26] then the “provisions have effect, for the purposes of Part 5, as if they were an order made by consent by a court under Division 4 of Part 7.” Under section 17(1) of the Act, the father’s liability to pay periodic support for [Y] is a registrable maintenance liability.
[26] Section 95(2)(a),
Section 113A therefore applies in relation to the periodic aspect of the mother’s claim and requires the payee mother to comply with the notice requirements in advance of commencing proceedings in accordance with that provision. There is no evidence to satisfy me that the mother has complied with the notice requirements under s.113A.
The mother also seeks to enforce payment by the father of [Y]’s school fees. The notice requirements under s.113A do not apply to this part of her claim as this relates to non-periodic child support.
I will give the mother leave to strike out that part of the Enforcement Summons which relates to arrears of periodic child support and amend the Summons. I will give her leave to file and serve another Summons after compliance with the notice provisions under s.113A.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Sexton FM
Associate: Skye Owen
Date: 17 February 2010
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