Keane & Keane
[2013] FamCA 332
FAMILY COURT OF AUSTRALIA
| KEANE & KEANE AND ORS | [2013] FamCA 332 |
| FAMILY LAW – CHILD SUPPORT – where the parties entered into an agreement that transitioned into a binding child support agreement pursuant to subsequent legislation – where the father seeks to set the agreement aside – the meaning of “exceptional circumstances” – whether the subsequent legislation that transitioned the agreement into a binding child support agreement is of itself an “exceptional circumstance” – where it was held that no “exceptional circumstances” had arisen since the agreement was made that would warrant the agreement being set aside – where the father would have satisfied the threshold for hardship – where even if exceptional circumstances existed, the Court would not have exercised a discretion to set aside the binding child support agreement – application dismissed. FAMILY LAW – DECLARATION – where the third respondent (the father’s new wife) seeks an order that she be declared to have an 80 per cent interest in the property she owns jointly with the father – where the third respondent asserted that 60 per cent of the father’s legal interest was held by him as a trustee for her in a constructive trust – where that assertion was rejected and the application dismissed. FAMILY LAW – INJUNCTIONS – where in 2009 the father entered into a costs agreement with his solicitor that provided security for legal fees by way of a charge over the father’s property – where in July 2012 orders were made that the father not further encumber his property – where the father’s solicitor subsequently sought to rely upon the 2009 charge for work done in the matter after the date of the injunctive order – the meaning of encumber – where the court has power to make an order restraining the father’s solicitor from aiding and abetting a breach of a court order – solicitor restrained from relying upon the charge for work done after the injunctive order. |
| Child Support (Assessment) Act 1989 (Cth) Federal Court of Australia Act 1976 (Cth) |
| Baker v The Queen (2004) 223 CLR 513 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Gallup & Gallup [2009] FMCAfam 839 Kamay v Miss X (1986) FLC 91-754 Khalil & Tahir-Ahmadi (2012) FLC 93-506 Waterhouse v Australian Broadcasting Corporation (1986) 6 NSWLR 716 |
| APPLICANT: | Mr Keane |
| RESPONDENT: | Ms A Keane |
| 2nd RESPONDENT: | Child Support Registrar |
| 3rd RESPONDENT: | Ms L Keane |
| 4th RESPONDENT: | Mr R |
| FILE NUMBER: | SYC | 279 | of | 2011 |
| DATE DELIVERED: | 10 May 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 11-12 September 2012; 1 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Johnston |
(Appearance only on 11-12 September 2012)
| SOLICITOR FOR THE APPLICANT: | R Firm |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms De Vere |
(Appearance only on 11-12 September 2012)
| SOLICITOR FOR THE 1ST RESPONDENT: | Watts McCray |
(Appearance only on 11-12 September 2012)
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Lenehan |
| SOLICITOR FOR THE 2ND RESPONDENT | Australian Government Solicitor |
| COUNSEL FOR THE 3RD RESPONDENT: | Mr Wong |
(Appearance only on 11-12 September 2012)
| SOLICITOR FOR THE 3RD RESPONDENT | Rafton Family Lawyers |
(Appearance only on 11-12 September 2012)
| COUNSEL FOR THE 4TH RESPONDENT: | Mr Garnsey QC and Mr Dupree |
(Appearance only 1 March 2013)
| SOLICITOR FOR THE 4TH RESPONDENT | R Firm |
Orders
The father’s application filed 3 July 2012 be dismissed.
The application by the 3rd respondent filed 29 August 2012 be dismissed.
It is declared that the father owes the Child Support Registrar an amount in respect of arrears of child support and late payment penalties (“the child support debt”) as at 10 September 2012 the sum of $78,295.82 ($69,416.89 + $8,878.93).
The father pay the child support debt to the Child Support Registrar within 60 days of the date of these orders.
Until further order of the court or payment in full of the child support debt:
5.1.The father is hereby restrained from assigning, transferring, further encumbering or dealing in any way with his interest in the real property at G in the State of New South Wales more particularly described in Certificate of Title Folio … (“the G property”) without the prior written consent of the Child Support Registrar.
5.2.The father’s interest in the G property be charged in favour of the Child Support Registrar for the child support debt (and the Child Support Registrar be at liberty to lodge a caveat over the G property to secure the interest created by this charge).
If the father defaults in making any of the payments under these orders or deals with the G property in breach of these orders the following orders shall take effect:
6.1.The Official Receiver on behalf of the Commonwealth, the Marshal of the Court and their delegates, servants and agents shall be appointed as Enforcement Officers.
6.2.Pursuant to rule 20.05(a) of the Family Law Rules2004 (Cth) an Enforcement Officer shall seize and sell under an enforcement warrant the father’s interest in the G property and use the net proceeds of sale to meet the reasonable costs of the enforcement officer and to discharge (in full if there is sufficient amount) the child support debt.
It is noted that any monies payable by the father pursuant to these orders are in addition to his ongoing liability to pay child support.
The Child Support Registrar have liberty to apply in relation to the implementation of these orders.
It is declared that the father has a debt to the mother in the sum of $18,964.41 arising out of the non payment of non-periodic amounts for which the father is responsible under the agreement between the father and the mother dated 1 March 2004.
The mother have liberty to apply in order to enforce the debt referred to in order 9.
Notwithstanding that Mr R was, on occasions during the proceedings on 1 March 2013 described as the 2nd respondent, he is in fact the 4th respondent in these proceedings.
Leave granted to the 4th respondent to make an oral application that I disqualify myself.
The 4th respondent’s oral application that I disqualify myself be dismissed.
Leave granted to the 4th respondent to make an oral application that the Child Support Registrar’s Application in a Case filed 20 September 2012 be summarily dismissed.
The 4th respondent’s oral application for summary dismissal of the Child Support Registrar’s Application in a Case filed 20 September 2012 be dismissed.
The 4th Respondent (including through his law firm, his employees and his agents) be restrained from relying on the encumbrance and charge:
16.1.created by the Costs Agreement dated 21 October 2009 between the father and the 4th respondent; and
16.2.against the father’s interests in the G property
except to the extent the encumbrance and charge relate to legal fees arising under the above-mentioned agreement that were outstanding as at 10 July 2012 and which have not since been paid.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Keane & Keane and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 279 of 2011
| Mr Keane |
Applicant
And
| Ms A Keane |
Respondent
And
| Child Support Registrar |
2nd Respondent
And
| Ms L Keane |
3rd Respondent
And
| Mr R |
4th Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The father in these proceedings seeks an order pursuant to s 136(2)(d) Child Support (Assessment) Act 1989 (Cth) (“CSAA”) to set aside a child support agreement dated 1 March 2004 on the basis that exceptional circumstances have arisen since the agreement was entered into resulting in hardship to the father. As a result of subsequent legislation, the agreement entered into by the parents on 1 March 2004 became a binding child support agreement. The father seeks that that agreement be set aside from the date to which payments have been made under that agreement.
The father opposes any departure from the administrative assessment once the agreement is set aside so that the father would in effect pay virtually no child support from the date the agreement stands paid.
The mother opposes the orders sought by the father.
The Child Support Registrar (“the Registrar”) relies on s 113 of the Child Support (Registration & Collection) Act 1988 (Cth) (“the Collection Act”). That section provides that the Registrar may sue for a debt due to the Commonwealth in a court having jurisdiction under the Collection Act. The Registrar seeks that the father pay the total amount of the child support debt owing in accordance with the binding child support agreement dated 1 March 2004. The orders sought are set out in the Amended Application in a Case filed by the Registrar on 31 July 2012. The declarations and orders sought are in the following terms:
THE COURT DECLARES THAT:
The Respondent [referring to the father] owes the Applicant [the Registrar] an amount in respect of arrears of child support and late payment penalties (the child support debt) as at the date to be specified in the orders made and as evidenced by a certificate issued under s 116(2) of the Child Support (Registration and Collection) Act 1988.
THE COURT ORDERS THAT:
1.The Respondent pay to the Applicant the child support debt.
2.The Respondent pay to the Applicant a contribution to its costs to be fixed in accordance with Schedule 3 to the Family Law Rules 2004 (Rules).
3.The Respondent pay to the Applicant the amounts payable under orders 1 and 2 above (the total debt) within 60 days of these orders.
4.If the Respondent defaults in payment of any monies ordered to be paid by these orders, then the total debt shall become immediately due and payable.
Security
5.Until further order of the Court or payment in full of the total debt:
5.1The Respondent is hereby restrained from assigning, transferring, further encumbering or dealing in any way with his interest in the real property at [G] in the State of New South Wales more particularly described in Certificate of Title Folio … (real property) without the prior written consent of the Applicant.
5.2The Respondent’s interest in the real property be charged in favour of the Applicant for the total debt (and the Applicant be at liberty to lodge a caveat over the real property to secure the interest created by this charge).
5.3The Respondent is hereby restrained from assigning, transferring, further encumbering or dealing in any way with his interest in his personal property, without the prior written consent of the Applicant.
5.4The Respondent’s interest in his personal property be charged in favour of the Applicant for the total debt (and the Applicant be at liberty to lodge an encumbrance over the personal property to secure the interest created by this charge).
Enforcement orders
6.If the Respondent defaults in making any of the payments under these orders or deals with any of the personal property or real property in breach of these orders the following orders shall take effect:
6.1The Official Receiver on behalf of the Commonwealth, the Marshal of the Court and their delegates, servants and agents shall be appointed as Enforcement Officers.
6.2Pursuant to rule 20.05(a) of the Rules an Enforcement Officer shall seize and sell under an Enforcement Warrant such of the Respondent’s interest in real property and personal property, not being prescribed personal property, as the Enforcement Officer may consider sufficient to meet the reasonable costs of the Enforcement Officer and to discharge in full all amounts owed by the Respondent under the orders of this Court.
AND/OR
6.3Pursuant to rule 20.05(b) of the Rules, an order for the attachment of earnings and debts, including under a Third Party Debt Notice.
AND THE COURT NOTES THAT:
A.Any monies payable by the Respondent pursuant to these orders are in addition to his ongoing liability to pay child support as assessed or varied from time to time.
The declaration is sought pursuant to rule 20.07(a) Family Law Rules 2004 (Cth) (“FLR”). Section 95 CSAA provides that provisions in an accepted child support agreement have effect as if they were an order made by a court. Rule 20.07(b) FLR allows the court to make the order for the father to pay the child support debt. Sections 111B(1)(j) and (l) of the Collection Act provide power to make the order for security sought in Order 5. The general power for enforcement is contained in s 105 Family Law Act 1975 (Cth) (“FLA”) (imported by s 100 CSAA and s 105 Collection Act). The enforcement order can set out a period of time in which the payment is made (rule 20.07(b) FLR). Rule 20.07(d) FLR allows the court to make an order in aid of the enforcement of an obligation. Section 111B(1)(c) and (d) of the Collection Act provides power to order that a specified transfer or settlement of property be made and to order that payment of an amount ordered to be paid be wholly or partly secured as the court specifies. The enforcement orders sought by the Registrar seek the appointment of enforcement officers. The FLR define “enforcement officer” to include the Marshal, a delegate of the Marshal or any other officer of the court or a person appointed by the court for the purpose of enforcing an order. The general and specific provisions in relation to enforcement warrants are set out in Part 20.3 FLR.
In addition or in the alternative, the Registrar also seeks an order for the attachment of earnings or debts including a third party debt notice but the Registrar did not identify during the hearing where the father might have money deposited or what earnings might be payable to him. In any event, the third party debt notice procedure under Part 20.4 FLR is initially available without notice to the payer.
Rule 20.05(a) FLR allows for enforcement by the seizure and sale of real or personal property, including under an enforcement warrant. Rule 20.24 FLR allows for particular orders to be made in relation to real estate.
The father opposes all the orders sought by the Registrar.
The third respondent is the current wife of the father. Pursuant to accrued jurisdiction, the third respondent asserts a constructive trust so that her title in the property at G, folio identifier … (“the G property”) is increased from 50 per cent to 80 per cent and the third respondent further seeks that her share in the G property be quarantined from any enforcement action by the Registrar.
Mr R is the father’s solicitor. The father and Mr R entered into a costs agreement in 2009 which contains a clause which charges the father’s property as security for fees incurred from time to time by the father for Mr R’s services. An order was made by a Federal Magistrate on 10 July 2012 restraining the father, inter alia, from further encumbering the G property. Mr R asserts that he is entitled to rely upon the 2009 charge for work done by him for the father after the date of the injunctive order. The Registrar seeks an order restraining Mr R from doing so except to the extent that the charge relates to legal fees which were outstanding as at 10 July 2012 and which have not since been paid.
BRIEF CHRONOLOGY
The father was born in 1960 and is currently 52 years of age.
The mother was born in 1962 and is currently 50 years of age.
The mother and father married in January 1999.
There are two children of the relationship, J born in 1996 (currently 16 years of age) and C born in 1998 (currently 14 years of age).
The parties separated on 18 July 2003.
In March 2004 the parties entered into an overall settlement of all outstanding financial matters. As part of that settlement, the parties entered into a child support agreement on 1 March 2004 and entered into consent orders in relation to property and parenting matters on 2 March 2004.
On 21 October 2004 the child support agreement was accepted for registration by the Child Support Agency.
In January 2006 the father failed to pay one half of the children’s extra curricular activities in regards to piano lessons.
On 11 June 2006 the parties’ divorce became final.
On 30 October 2006 the father sent the mother an email stating:
You and I both know very well the monies that I pay to you each month is [sic] well and truely [sic] above an [sic] beyond what a single mother with two children is entitled too [sic] ….
On 1 February 2007 the father failed to pay one half of the costs of the children’s swimming lessons.
In February 2007 the father failed to pay one half of the costs for C’s soccer and J’s rugby league.
By the end of February 2007 the father had stopped all payments towards the children’s extra curricular activities.
In May 2007 the father married Ms L Keane (“the third respondent”).
In March 2008, the father left his employment with M Company and took up a position with H Company.
In July 2008, the parties’ agreement dated 1 March 2004 transitioned into a binding child support agreement.
The father and third respondent’s son was born in April 2009.
In September 2009, the father’s employment with H Company was terminated.
In November 2009, the father made a child support payment of $2,007.50.
The father and third respondent’s daughter was born in April 2010.
Exhibit 6 is a certificate under s 116(2) of the Collection Act showing that as at 10 September 2012 the father has an unpaid child support debt of $69,416.89 and penalties of $8,878.93.
THE REFORM ACT
On 6 December 2006 assent was given to Sch 5 of the Child Support Legislation Amendment (Reform of the Child Support Scheme – New formula and Other Measures) Act 2006 (Cth) (“the Reform Act”). Part 2 of Schedule 5 of the Reform Act commenced on the day it received assent. Item 74 in Schedule 5 provided that before 1 July 2008 the Registrar must review all child support agreements made before that date which will be in force immediately before that date or after that date and determine in writing whether each such agreement is to be taken as a binding child support agreement or to be terminated. The criteria which applied across the board to all agreements by the Registrar was that if agreements did not, on their face, terminate obligations prior to the 18th birthday of the child or children who were the subject of the agreements then those agreements would be taken as being binding child support agreements. As a result of the transitional provisions of item 74 of schedule 5 and the administrative decision of the Registrar in relation to all child support agreements, the parties’ 2004 child support agreement became a binding child support agreement and attracted the provisions of the new legislation in relation to what was required if either party sought to set aside the agreement.
On 8 February 2008 a letter was sent by the Registrar to the parties, informing them the child support agreement had been reviewed and noting it would continue notwithstanding the legislative changes that were to occur in July 2008. It is common ground between the parties that as a result of an administrative action by the Registrar pursuant to the transitional provisions in the Reform Act, the child support agreement which the parties entered into on 1 March 2004 became a binding child support agreement under the new legislation.
SETTING ASIDE A BINDING CHILD SUPPORT AGREEMENT
The provisions to set aside a binding child support agreement are contained in s 136(2)(d) CSAA which is in the following terms:
The court may set aside the agreement in accordance with the application if the court is satisfied:
….
(d) in the case of a binding 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. [emphasis added]
It is the father’s case in these proceedings that exceptional circumstances relating to himself have arisen since the agreement was made and because of those exceptional circumstances, he will suffer hardship if the agreement is not set aside.
In final submissions, counsel for the father articulated that it was not one particular circumstance that was relied upon to satisfy the test of “exceptional circumstances” but rather the cumulative effect of the circumstances.
Those circumstances were identified as being:
37.1.the father was made redundant and has not obtained new employment;
37.2.the father has remarried and has two children with the third respondent.
The mother argues that neither of these circumstances either by themselves or cumulatively can be described as exceptional.
The father also in his material alludes to the fact that he has “health issues”. The health issues referred to are high blood pressure and high cholesterol. The father however exercises at a gym up to five times a week and takes medication to control his conditions. He conceded in oral evidence that these conditions were not significant factors preventing him from obtaining employment. The father has not established that he has any “health issues” which would be relevant to my determination.
WHAT CONSTITUTES “EXCEPTIONAL CIRCUMSTANCES”?
When considering whether or not “exceptional circumstances” exist:
40.1.the whole circumstances have to be taken into account;
40.2.it may be that one circumstance alone cannot be described as exceptional but the whole of the circumstances, when looked at cumulatively, might be described as exceptional (see Gallup & Gallup [2009] FMCAfam 839);
40.3.within a particular context whether something is exceptional is a matter of “fact and degree” (see Simpson & Hamlin (1984) FLC 91-576);
40.4.care must be taken to avoid placing any “gloss” on the word “exceptional” as used in legislation (see Garning & Director-General, Department of Communities, Child Safety and Disability Services & Anor [2013] FamCAFC 28);
40.5.the words “that have arisen since the agreement was made” in s 136(2)(d) CSAA direct the Court’s attention to the circumstances that existed at the date the agreement was made and towards an inquiry as to what exceptional circumstances have arisen since the date of the agreement which would result in the applicant or the child suffering hardship if the agreement was not set aside.
“Exceptional” can have nuanced meanings in different contexts and what is meant by “exceptional” is to be judged not in the abstract, but within the context in which that word is used in a particular piece of legislation. The phrase “exceptional circumstances” is used in different contexts within the CSAA and the FLA. The height at which the bar is set by the word “exceptional” can vary depending upon the legislative context.
The word “exceptional” creates a tough test when used in the context of setting aside final orders for alteration of property or in the context of an application to discharge a return order in Hague proceedings.
Section 79A(1)(d) and s 90SN(1)(d) FLA (setting aside final orders for alteration of property) provides that a court may vary or set aside a property order if, inter alia, “circumstances of an exceptional nature” have arisen relating to the care, welfare and development of a child. Justice Mason in Taylor v Taylor (1979) 143 CLR 1 commented that the court would be “extremely reluctant” to exercise a discretion to set aside property orders that had been made on a final basis. The Honourable Stephen O’Ryan, when commenting[1] upon the word “exceptional” where it appears in s 79A(1)(d) FLA, says, “[a] change in caring arrangements must be so exceptional as to take it out of the normal vicissitudes of life”. Examples are where a parent died and the change of custody occurred because of the death; Public Trustee v Gilbert (1991) 14 Fam LR 573; where soon after consent orders were made children who were with the husband were delivered by the husband back to the wife (Simpson & Hamlin (1984) FLC 91-576). The word exceptional in these circumstances is read particularly in the context of the words of ss 81 and 90ST FLA which mandate that the court shall, as far as practicable, make an order that would finally determine the financial relationships between parties to a marriage or de facto relationship and avoid further proceedings between them.
[1] LexisNexis Butterworths, Australian Family Law, vol 1 (at Service 168) [s 79A.29]
In the context of Australia fulfilling its obligations under the Convention on the Civil Aspects of International Child Abduction, the threshold test set by the word “exceptional” is again high. Regulation 19A(2)(c) of the Family Law (Child Abduction Convention) Regulations1986 (Cth) provides that a court may make an order discharging a return order, or part of a return order, only if it is satisfied that:
…(c) exceptional circumstances exist to justify the return order being discharged
When considering the meaning of the phrase ‘exceptional circumstances’ in the context of an application to discharge a return order in Hague proceedings, Forrest J said:[2]
19. In Ustinov, at [11], Dawe J considered that “exceptional circumstances” “requires the finding of something unusual or something in the nature of exception.” In Soysa, at [174]-[178], Thackray CJ respectfully discussed the issue further. Whilst he pointed out that there is “eminent authority to support her Honour’s view”, his Honour went on to say that he “would be inclined to treat the everyday meaning of the word “exceptional” in reg 19A, as being something more than “unusual”[”]. His Honour gave his reasons for that at [177], saying:
When construing the word “exceptional” in the context of reg 19A, I consider it would be proper to have regard to the strength of the language employed in those other parts of the Regulations that allow a court discretion not to order the return of a child. ….The strength of the language used elsewhere leads me to conclude that accepting something “unusual” as sufficient to activate the discretion in reg 19A would not be a construction that pays regard to the objects of the Convention. This is particularly so because, in my experience, cases arising under the Regulations commonly already possess “unusual” elements. [footnotes omitted]
[2] Garning & Department of Communities, Child Safety and Disability Services and Anor (Discharge Application) [2012] FamCA 839
Justice Forrest went on to say:
21. …The circumstances need to be quite different from those that generally present in this sort of case to make them “exceptional” and there clearly must be something about the “exceptional circumstances” that makes it appropriate to discharge the return order; that justifies, substantiates or warrants doing so, particularly having regard to the purpose and scheme of the Convention and the basis upon which the return order was originally made.
On appeal[3] the Full Court made the point that care must be taken to avoid placing any “gloss” on the word “exceptional” as used in the Regulations. However, the Full Court found that Forrest J’s own expressed views about the meaning of “exceptional circumstances” did not introduce an irrelevant consideration into his decision making. The Full Court held that his Honour’s views were no more than an explanation as to how he proposed to apply that expression in the circumstances of the case. In that case, the mother relied upon her stated intention not to return to Italy with the children, the children’s objection to returning, and the manner in which they had expressed those objections as cumulatively amounting to “exceptional circumstances”. The Full Court examined his Honour’s analysis of the factual matrix relating to these matters which the mother said made the case “exceptional”. The Full Court was not persuaded that his Honour was in error in reaching the conclusion that a combination of all those matters did not, in the context of discharging a return order made in Hague proceedings, constitute “exceptional circumstances”.
[3] Garning & Director-General, Department of Communities, Child Safety and Disability Services & Anor [2013] FamCAFC 28
The word “exceptional” is used in s 69ZT(3)(a) FLA to describe the circumstances which need to be satisfied if certain rules of evidence are to apply in child related proceedings. The Full Court recently considered the meaning of the word “exceptional” in s 69ZT(3) FLA in Khalil & Tahir-Ahmadi (2012) FLC 93-506 at [95]. The Full Court referred with approval to a previous statement about the meaning of the word “exceptional” by Callinan J in Baker v The Queen (2004) 223 CLR 513 (at paragraph 173). In that case, Callinan J referred with approval to a statement of Lord Bingham of Cornhill CJ in the case of R v Kelly (Edward) [2000] QB 198 where at page 208 his Honour said:
We must construe ‘exceptional' as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.
As the Full Court commented at paragraph 95:
95. …This construction has been quoted in decisions of the Family Court including Segur v Segur [2010] FamCA 556, State Central Authority v Ustinov (No.4) [2008] FamCA 987 and Emmett & Emmett (No. 2) [2010] FamCA 57.
Other words used to describe a particular threshold test
The circumstances required in particular threshold tests are described in different terms in different parts of the CSAA and FLA. It is useful to bear in mind the following list of terms:
50.1.“Exceptional circumstances” (for example s 136(2)(d) CSAA)
50.2.“Special circumstances” (for example ss 117(1) and (2) CSAA)
50.3.“Significant change in circumstances” (for example s 136(2)(c)(i) CSAA)
50.4.“Material change in circumstances” (for example s 90K(1)(d) FLA)
The use of the word “exceptional” in the CSAA
There are at least two first instance decisions in the Federal Magistrates Court (as it then was) which have contended that there is no qualitative difference between the expressions “exceptional” as used in s 136 CSAA and “special” as used in s 117 CSAA.
In Daley & Daley (2009) FLC 98-039, Brown FM says at paragraphs 85 – 88:
85. Exceptional is defined by the New Shorter Oxford English Dictionary as follows:
“Of the nature of or forming an exception; unusual, out of the ordinary; special; (of a person) unusually good, able, etc.”
86. Accordingly, for circumstances to be exceptional, they must be unusual, out of the ordinary or special. In the child support context, in respect of an application for departure, Kay J held [in Savery & Savery (1990) FLC 92-131] that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
87. In… [In the] Marriage of Gyselman [(1992) FLC 92-279], the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find [sic] with precision the meaning of that term, as a generality it is intended to emphasise [sic] that the facts of the case must establish something that [sic] is special or out of the ordinary. That is, the intention of the legislature [sic] is that the Court will not interfere with the administrative formula result in the ordinary run of cases.”
88. I am not persuaded that there is any significant qualitative difference between “special” circumstances and “exceptional” circumstances. In my view, what is required, in the case concerned, is for it to be out of the ordinary run of cases and to be marked by some characteristic which render it unusual or something other than commonplace. [bold emphasis added, italics emphasis in original, footnotes omitted]
Federal Magistrate Hughes (as she then was) in M & M [2009] FMCAfam 1034 at paragraph 38 says the following:
38. In the case of Daley & Daley [2009] FMCAfam 398…Brown FM analysed the meaning of the words “exceptional circumstances” in section 136(2). I agree with his analysis and conclusion that there is no qualitative difference between the phrase “exceptional circumstance” used in section 136 and “special circumstances” referred to in other parts of the legislation, including section 117 of the [Child Support (Assessment)] Act, relating to departure orders. The latter has been the subject of extensive Full Court consideration and has been found to mean “something that is special or out of the ordinary”.[4]
[4] Gyselman & Gyselman (1992) FLC 92 - 269
The Full Court in In the Marriage of Gyselman (1992) FLC 92-279, when talking about the words “in the special circumstances of the case” said:
Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words, ''in the special circumstances of the case''. Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasize that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. In Savery's case (p. 77,897), Kay J, adopting the view in Philippe and Philippe (1978) FLC ¶90-433 at p. 77,202 in a different context, said that ''special circumstances'' were ''facts peculiar to the particular case which set it apart from other cases''. The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification. [emphasis added]
The views of Brown FM and Hughes FM that there is no qualitative difference between the expressions “exceptional” and “special” as used in the CSAA gathers some support from the statement of Callinan J in Baker v The Queen, which adopts the word “special” as a synonym for the word “exceptional”.
On the other hand, Riethmuller FM (as he then was) writing extra-curially and referring to the test of “exceptional circumstances” in s 136(2)(d), says:
…Clearly, this is intended to be a more difficult test to satisfy than those in s 136(2)(c), or an analogous test in s 117.[5]
…
‘Exceptional circumstances’ must, as a matter of construction, mean something different to ‘special circumstances’.[6]
[5] See CCH Australia, Australian Family Law Child Support Handbook, vol 1 (at update 57-4-10) ¶16-130
[6] See CCH Australia, Australian Family Law Child Support Handbook, vol 1 (at update 57-4-10) ¶16-130
The “matter of construction” to which his Honour refers, is the maxim expressio unius est exclusio alterius which provides that where legislation includes provisions relating to similar matters in different terms, it is to be assumed that it was the deliberate intention by the legislature that these terms would mean different things. This rule of statutory construction is to be used with caution but it is worth bearing in mind when considering the history of the purposes for which the words “special” and “exceptional” have been introduced into the CSAA.
The words “in the special circumstances of the case” and “exceptional circumstances” were inserted by Parliament at different times and for different purposes. The word “special” was contained in s 117 from the introduction of the CSAA in 1989. The word “exceptional” in s 136 CSAA was inserted in 2008.
Since 1989 the use of the phrase “in the special circumstances of the case” in s 117(2) CSAA has been applied extensively in practice to allow orders to be made to depart from the administrative assessment once a ground has been established in a particular case. The most often encountered grounds for departure are s 117(2)(c)(ia) and (ib) CSAA, where the liable parent has income, property, financial resources or earning capacity significantly beyond what is contemplated by the parameters by which the administrative assessment is calculated.
There has been a modern trend by Parliament to allow parties to privately order their financial arrangements in a binding way. In 2000 the concept of binding financial agreements was introduced into the FLA.
Parliament set different standards for setting aside different types of agreements. Section 136(2)(c) CSAA sets out a different and less onerous threshold test for the purposes of setting aside a limited child support agreement. That test is “significant change in circumstances” and is to be contrasted with the expression “exceptional circumstances”. Upon the introduction of the exceptional circumstances test by way of amending legislation in 2007, the explanatory memorandum made it explicit that the provision was introduced because “[i]t is not intended that binding agreements should be set aside lightly”.[7]
[7] Explanatory Memorandum, Families, Community Services and Indigenous Affairs Legislation Amendment (Child Support Reform Consolidation and Other Measures) Bill 2007 (Cth)
The legislative intent of s 136(2)(d) CSAA has to be judged in the context of the whole of the CSAA. The Objects of the CSAA (section 4) provide, inter alia:
(2) Particular objects of this Act include ensuring:
(a) that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support;
…
(3) It is the intention of the Parliament that this Act should be construed, to the greatest extent consistent with the attainment of its objects:
(a) to permit parents to make private arrangements for the financial support of their children…
Section 136(2)(d) CSAA evidences a legislative intent to allow private ordering which is not to be interfered with lightly. This is particularly important if (as in this case) the parties were settling all their future financial matters.
An analogous circumstance arose when Part VIIIAB Financial Matters relating to De Facto Relationships was introduced into the FLA in 2008. Valid financial agreements under State law were recognised as binding financial agreements even though, as was the case in Queensland, valid agreements did not require legal advice or a certificate. Importantly, when Parliament introduced that transitional provision, Parliament provided a lower threshold test to set aside these agreements that had now been deemed to be binding (see s 90UM(1)(k) and s 90UM(5) FLA). The test introduced for those transitional agreements was one that allowed them to be set aside if they were “unjust and inequitable”. This test did not require the demonstration of any change since the agreement was made. That was a lower test than the normal tests to set aside binding financial agreements where the formal requirements had been properly observed.
By way of further analogy, the FLA starkly draws a distinction in the test to set aside property orders as compared to setting aside financial agreements where circumstances have changed relating to the care, welfare and development of a child. For property orders, the change needs to be “circumstances of an exceptional nature” in s 79A(1)(d) and s 90SN(1)(d). For financial agreements, the test in s 90K(1)(d) and s 90UM(1)(g) FLA is “a material change in circumstances”.
I find that there is considerable merit in the view that there is in fact a qualitative difference between the expressions “exceptional” as used in s 136 CSAA and “special” as used in s 117 CSAA.
Can the retrospectivity of the legislation constitute ‘exceptional circumstances’?
In passing the Reform Act, the Parliament retrospectively provided for the conversion of a large number of child support agreements, many of which may have been entered into without legal advice (not the facts in this case), into binding child support agreements and at the same time retrospectively imposed the test of “exceptional circumstances” to enable a court to set aside such agreements.
In Daley, the child support agreement ‘transitioned’ as a result of the Reform Act and became a binding child support agreement. The result was that the husband was paying significantly less than he would have been if he was paying according to an administrative assessment.
Federal Magistrate Brown (as he then was) said:
102. I do not think that it can be conceivably possible that the parties, when they entered into the child support agreement in February of 2005, foresaw the possibility that the legislature would so radically modify the method of calculation and collection of child support in Australia or the extent of the changes made to the legislative provisions in respect of child support agreements.
…
107. In my view, the combination of these factors takes this case out of the ordinary run of cases and make it an exception. The child support agreement, which the parties entered in early 2005 cannot be regarded as being strictly analogous to a binding child support agreement entered into after 1 July 2008, particularly in the absence of independent legal advice. Exceptional circumstances have arisen which justify it being set aside.
108. In this sense, with no intention to be disrespectful to the Registrar of the Child Support Agency and its officers, it seems to me there is some level of artificiality in the manner in which the parties’ child support agreement has been taken to a transition to the new child support regime. However, having said this, I accept that the Registrar was, in reality, presented with no proper alternative to such a transition.
So, his Honour took the method by which the agreement was originally contracted, as a circumstance relevant to the assessment of “exceptional circumstances”.
Federal Magistrate Riethmuller (as he then was), writing extra-curially says:
In cases involving agreements that have become binding child support agreements, it appears that a relevant circumstances [sic] will be that the parties entered into the agreement at a time when the Child Support (Assessment) Act 1989 (the Act) did not make it so difficult to set the agreement aside, and without the benefit of the legal advice that must accompany a binding child support agreement entered into after the amendments: see s 80C(2)(c). The impact of these considerations can be seen in Daley & Daley (2009) FLC 98-039 [2009] FMCAfam 398.[8]
[8] See CCH Australia, Australian Family Law Child Support Handbook, vol 1 (at update 57-4-10) ¶16-130. It is unclear as to whether the author is endorsing or simply reporting the views of Brown FM.
I am of the view that if the legislature had intended that the court be able to take into account the fact that a child support agreement was not binding at the time the parties entered into it as a relevant circumstance when assessing whether exceptional circumstances existed, the legislation would have either:
72.1.indicated that that was a factor to take into account when making that determination;
72.2.or created a different test for transitional agreements (as they have done for transitioning State de facto financial agreements (see s 90UM(1)(k) and s 90UM(5) FLA)).
The legislature did neither of these things. When considering setting aside a binding child support agreement, the legislation draws no distinction arising from the method by which a child support agreement has become binding. I do not think the retrospective nature of the legislation is a relevant matter when considering the “exceptional circumstances” test.
Does a subsequent relationship with children constitute “exceptional circumstances”?
In M & M, Hughes FM (as she then was) said at paragraph 39:
In the present case, the fact that one of the parties has remarried and has more children may not be out of the ordinary.
Federal Magistrate Riethmuller (as he then was) said:
In [M & M] [2009] FMCAfam 1034, it was said that “Re-marriage or more children ‘may not be out of the ordinary’”. This seems to state the proposition at too high a level as:
(a) The Child Support scheme strives to treat all children equally, and
(b) Subsequent children do not get less support because they are from second marriages.
Prima facie subsequent children must be a circumstance that is likely to satisfy the provision, subject to the ‘hardship’ test. [9]
[9] CCH Australia, Australian Family Law Child Support Handbook , vol 1 (at update 57-4-10) ¶16-130
I prefer the view of Hughes FM to that of Riethmuller FM (as they both then were). The circumstances of a party to an agreement arising from a second marriage/relationship and having children during that marriage or relationship is not “out of the ordinary course, or unusual, or special, or uncommon”. It is a circumstance which is “regularly”, “routinely” and “normally” encountered. Whilst remarriage with children may in most cases be a material change in circumstances, it is not in most cases an exceptional circumstance.
Looking at the whole circumstances
Whilst having a second marriage/relationship and having children during that marriage/relationship may not be an exceptional circumstance, it still might be a circumstance when combined with other circumstances that allows a finding to be made that exceptional circumstances exist when the whole of the circumstances are taken into account.
In Venson & Venson (No. 2) [2010] FamCA 963 the father’s financial circumstances had become parlous. Justice Austin found that the deterioration in the father’s financial circumstances, which occurred after the child support agreement was made, did not constitute “exceptional circumstances”. However, a feature of the father’s financial circumstances was a failure of B company to continue to provide him with the income stream that both parties assumed would continue when they entered the agreement. Both parties agreed that this was a failure of a fundamental condition of the agreement. The Registrar nonetheless pressed for enforcement. His Honour held that a failure of a fundamental condition of the agreement did constitute “exceptional circumstances”.
In Balzano & Balzano (2010) FLC 98-048, Warnick J considered whether or not the inability to earn income during a period of time that the father was in prison constituted exceptional circumstances. At paragraph 49 his Honour set out the passage from In the Marriage of Scott (1994) 17 FamLR 420 at 444:
…being unemployed and without income is not of itself necessarily an answer by a parent to an application for child maintenance. The circumstances in which the parent became unemployed or without income, the reasons for it, the nature of his/her previous employment and the efforts (if any) which he or she has subsequently made to obtain employment are all relevant matters for consideration by the court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity, a parent may be required to pay maintenance for his/her children if he/she has property or financial resources which are or ought reasonably to be available for that purpose.
In Balzano the father had been imprisoned as a result of a criminal offence. His Honour concluded:
56. For present purposes, though I have no doubt contrary arguments cannot lightly be dismissed, I accept that the father’s imprisonment and consequent inability to earn, constitute exceptional circumstances. In my view, the “criminality” of the father’s actions, their deliberate nature and his “culpability” are best considered, if at all, in relation to the overall exercise of discretion, not in considering whether an “exceptional circumstance” arose.
In M & M, the change that had happened in the parties’ circumstances since the agreement had been entered into was that the husband had been offered a position in Singapore and had moved there. Although the husband’s salary in Singapore was significantly higher than when the parties had entered into the agreement, his living expenses in Singapore were also significantly higher. The husband had the costs of supporting a new wife and two children as well as significant travel costs in order to spend time with the older children (the children to whom the agreement related). Federal Magistrate Hughes (as she then was) concluded:
39. In the present case, the fact that one of the parties has remarried and has more children may not be out of the ordinary. However, the fact of a move to another country with a much higher cost of living and the consequent significant cost of travel to spend time with the children are out of the ordinary and set this case apart from other cases. There are, therefore, exceptional circumstances.
THE FACTS IN THIS CASE
There was considerable focus at the hearing in relation to whether or not the father had made a genuine attempt to obtain employment since he was retrenched.
The mother referred to s 117(7B) CSAA which, although not strictly relevant to the application to set aside the agreement, provides some guidance when considering whether the father is exercising his earning capacity. In the context of a s 117 CSAA application, a determination that a parent’s earning capacity is greater than that being exercised should only be made if the court is satisfied that:
(a)one or more of the following applies:
(i)the parent does not work despite ample opportunity to do so;
(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i)the parent’s caring responsibilities; or
(ii)the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
Counsel for the father in cross examination of the mother had her concede that at the date the agreement was made, the father had been in his job since 1977; that he was in a help desk support position; and that the agreement had been entered into by the parties who were then secure in the knowledge that the father had secure work and in the anticipation that his work would continue. Even if both parties didn’t think that the father would lose his employment when they entered into the agreement, the fact that he did does not necessarily mean that that is an exceptional circumstance.
The father put some emphasis on the fact that he had secure employment with M Company and he had chosen to leave it and go to H Company where his employment was terminated a short time after him starting there. The father asserted in oral evidence that when he decided to leave M Company his role at M Company was being “offshored” to India.
The father conceded in cross examination that he had not personally made any job applications. He had registered with a number of agencies. In 2012 those agencies had on his behalf made job applications on five occasions. In 2011 five job applications in all were made on his behalf.
The father presented himself as having a very narrow band of specific skills which eliminated him from applying for any job that had been identified during the course of the hearing. The father was shown a variety of job advertisements during the hearing. In response to being shown each advertisement, the father’s oral evidence was that there was some element in the required job description that he was unable to fulfil as a result of his current skills.
The father has not made any serious attempt to retrain in the period. He said that he had used some of his time to attempt to increase his skills by using free resources available on the internet.
The father at the current time seems to have two free days a week as well as weekends available where he does not have significant duties in terms of parenting and/or the third respondent is available to look after the two children of their marriage. The father said that he went to the gym two to three days per week plus weekends. I took it from what he said that he was going to the gym five days a week. The father conceded that he was pretty fit.
I was reasonably underwhelmed with the father’s application to the task of attempting to obtain new employment. The father said that he had not thought about getting a job that was a lower paid job than the one that he had previously had. He mentioned that he had never applied for something like a help desk consultant role and agreed that a call centre was within his skill set.
The father did not complete the high school certificate but finished high school and obtained a job in the work force immediately. The father has done on the job training and has managed to make himself valuable to an employer for all his working life up until 2009. I am unable to explain the father’s lack of motivation in his job searching in the last three years except to find that it has been a convenient arrangement between he and the third respondent knowing that an amount (and probably a significant amount) of what the father might earn would end up being paid by way of child support to the mother.
In addition, the chronology set out above shows that the father in fact stopped making payments pursuant to the agreement prior to him becoming redundant and that the father had commenced to form a view that the agreement was over generous to the mother. The father asserted in 2006 he did not have any say in what the extra curricular activities were going to be and therefore he decided not to pay them. The father also curiously asserted to the Court that he assumed that the word “school” in the agreement only referred to primary school and that he had no responsibility under the agreement to pay the children’s schooling fees once they went to high school.
I find that the father has decided not to work in paid employment at all; that that decision is not justified on the basis of his parenting responsibilities or his health and he has not demonstrated that avoiding his responsibilities under the child support agreement was not his major purpose.
CONCLUSION ABOUT EXCEPTIONAL CIRCUMSTANCES
In this case the father’s counsel argued that the redundancy was unexpected after the father’s long standing employment throughout his working life and in particular with M Company. However, redundancies are not unusual. Nor is it unusual for a party to repartner after the breakdown of a marriage and to also have children with that partner.
Given that neither circumstance is an exceptional circumstance by itself, I have to consider whether or not the father’s redundancy coupled with having extra children constitutes “exceptional circumstances”. In the circumstances of this case, I am unable to say that a combination of those two factors could be considered to be “exceptional circumstances”.
Accordingly, I find that the threshold test that the father needs to satisfy under s 136(2)(d) CSAA is not satisfied and I shall dismiss the father’s application filed on 3 July 2012 to set aside the binding child support agreement.
HARDSHIP
Assuming I am wrong about that, I will consider the issue of hardship.
Section 136(2)(d) CSAA requires the court to only consider whether the exceptional circumstances which have arisen causes the party making the application to set aside the agreement or a child to whom the agreement relates, to suffer hardship if the agreement is not set aside. Hardship to the respondent is not considered as part of the threshold test. Consequently the questions to the mother about her financial circumstances are not directly relevant to whether the threshold test in s 136(2)(d) CSAA is satisfied but will be relevant to the exercise of discretion under that section.
The effect of the orders sought by the Registrar, if made, is to confirm a debt which will then underpin the Registrar’s further application to create a security over the home in which the father currently resides with his current wife and their two children. The mortgage on the property owned by the father and the third respondent is made up of three loans. The potential hardship is the potential loss of that home if the father and the third respondent are unable to refinance the debt that they have. I find the hardship requirement is satisfied.
DISCRETION
Again, assuming I am wrong about the lack of exceptional circumstances, having found hardship, I will consider whether I would have exercised my discretion to set the agreement aside.
In Balzano, Warnick J, when considering the overall exercise of discretion, found the father’s incarceration was a relevant matter and concluded:
66. ….. What is the justice, not as a matter of public policy or condemnation, but as bearing on the justice of the alternatives available, of relieving the husband of his obligations under the agreement, when the very basis of his application arose from a criminal act of which the mother was the intended victim? How fair would it be to the mother, having carried alone the financial burden of raising the children for four years, if the father prospers, [as he well might - though I make no finding that he will] but has been relieved of any obligation to reimburse the mother? [unedited]
The mother’s financial position is relevant to discretionary considerations. The mother is not currently working 35 hours a week. She works part time and earns $739 gross per week. She travels for one and a half hours each way to get to her job. She could work closer to home and do a 35 hour week but that would mean abandoning a job that she loves doing and impact upon her position as primary carer for the children. The mother’s capital is greater than the father’s. She retains an interest in her home and inherited an interest in another property which she holds with her brother. Her combined equity in these properties is about $535,000.
The father has not exercised his earning capacity since 2009. Had he done so, his financial circumstances would have been brighter.
I find in all the circumstances that I would not have exercised my discretion to set aside the binding child support agreement even if I had found the existence of exceptional circumstances.
SHOULD AN ENFORCEMENT WARRANT BE ISSUED?
The father submitted that the court should not make an order that preferences the debt due to the Commonwealth over other creditors the father asserts that he has; namely the Commonwealth Bank of Australia in relation to a credit card debt, and his lawyers.
That argument is without substance. The Registrar has sought orders by way of enforcement. He primarily seeks a liquidation of the father’s interest in the G property to satisfy the debt due. The legislative basis for that application is set out earlier in these reasons. Particularly s 111B(1)(d) of the Collection Act gives the court power to secure the debt. No issue of preferencing the Registrar over other creditors arises in the proceedings before me. I take into account the discussion above relating to the financial circumstances of the parties and in particular the father’s earning capacity.
Given that the child support agreement remains in force, there is no viable argument raised by the father that would lead me to refuse to exercise discretion to enforce the provisions of the agreement. I conclude that the orders as sought by the Registrar should be made in order to enforce the father’s obligations under the agreement.
THE MOTHER’S APPLICATION FOR A DECLARATION IN RELATION TO NON PERIODIC PAYMENTS
Counsel for the mother submitted that the application by the Child Support Registrar only relates to arrears of periodic payments under the agreement. The mother also, in her own right, seeks in her Amended Response filed 11 July 2012 a declaration that the father is liable for non periodic amounts under the child support agreement. Counsel for the mother asserted these were in the sum of $19,338.41.
It is unclear how the mother has reached this precise figure. In her affidavit sworn 10 July 2012, the mother says the father failed to pay:
School fees owing to S Primary School $985.00
(paragraph 54)
School fees owing to N College $8,137.50
(paragraph 55)
Excursions $1076.50
(paragraph 58)
Textbooks $1370.66
(paragraph 59)
Extra-curricular activities $7796.75
(paragraph 53 and Annexure K)
Swimming lessons $330.00
(paragraph 50)
TOTAL $19,696.41
The mother conceded that the father had made payments of $732 towards J’s school fees at N College in 2009. However, even with that concession, the total does not add up to what the mother asserted ($19,696.41 - $732 = $18,964.41). In cross examination, the father conceded that the mother’s record of these amounts would be correct.
I find that a declaration should be made that the father has a debt to the mother in the sum of $18,964.41 arising out of the non-payment of non-periodic amounts for which the father is responsible under the agreement between the father and the mother dated 1 March 2004.
CLAIM BY THE THIRD RESPONDENT
The third respondent seeks an order that she be declared to have an 80 per cent interest in the G property.
For the third respondent to make a claim arising from a resulting trust, she has to point to payments made by her at the time of the acquisition of the property.
It is common ground that the purchase price of the property was $605,000. The legal fees and stamp duty paid were another $22,000. The overall costs for the acquisition of the property were therefore in the sum of $627,000. The third respondent made a contribution of $35,000 from her own funds. The father contributed approximately $242,000. The borrowing on the property was in the sum of $350,000.
Accordingly, the third respondent provided from her own funds, 5.6 per cent of the acquisition costs; the father provided 38.6 per cent of the acquisition costs and the balance of 55.8 per cent of the acquisition costs came from joint borrowings.
The property is currently worth $620,000. There is no basis for the third respondent to make the claim that she does in the property by way of resulting trust. Counsel for the third respondent conceded that that remedy was not available by way of an argument pursuant to a resulting trust. In fact arguably, it is the father who could claim a resulting trust as against the third respondent.
There is however the presumption of advancement to consider and once that presumption is considered, then one is led back to the title of the property which is held as to one half between the father and the third respondent.
Counsel for the third respondent raised an argument in respect of a constructive trust. Improvements were made to the property but those improvements were jointly paid for out of the joint savings of the parties. The third respondent claims she has since September 2009 been exclusively paying the mortgage from her personal exertion income. That argument seemed to rely upon mortgage payments that had been made in the last three years during a period of time when the father was not working. I am unable to understand those arguments which could only be described as “novel”. The fact is that it is the father’s case (with no demur from the third respondent) that the father and the third respondent, by way of a mutual endeavour, have organised their marriage so that the third respondent is the primary breadwinner and the father primarily fulfils the homemaker and parent role. Accordingly, I am unable to determine any of the father’s interest in the G property is held by way of constructive trust by him for the third respondent.
In those circumstances, the third respondent’s application for a declaratory order must fail.
THE REGISTRAR’S APPLICATION TO RESTRAIN MR R
On 12 September 2012 an issue arose during the hearing about a caveat lodged on the G property by Mr R (“the 4th respondent”). Mr R acts for the father. The interest claimed in the caveat arises from an assertion by Mr R that he is entitled to rely upon the charge created in the 2009 costs agreement to secure payment of his fees incurred after 10 July 2012 in priority to the charge created by the Federal Magistrate in the Registrar’s favour on 10 July 2012. The Registrar seeks an order restraining the 4th respondent from relying upon the charge clause in his costs agreement in that way.
On 12 September 2012 I gave the Registrar leave to make an application for an injunctive order restraining Mr R from relying upon the charge contained in his 2009 costs agreement to secure legal fees incurred by the father past the date of the order of the Federal Magistrate, namely 10 July 2012.
Mr R requested that the application be put in writing and I ordered that that happen. On 20 September 2012 the Registrar filed an application in a case which named Mr R as a respondent and sought the following order:
1.The [4th] Respondent (including through his law firm, his employees and his agents) be restrained from relying on the encumbrance and charge:
1.1.created by the Costs Agreement dated 21 October 2009 between the [father] and [the 4th] respondent; and
1.2 against the [father’s] interests in the real property at [G] in the State of New South Wales, more particularly described in Certificate of Title Folio …;
except to the extent the encumbrance and charge relate to legal fees arising under the above-mentioned agreement that were outstanding as at 10 July 2012 and which have not since been paid.
Mr R sought to make two preliminary applications.
DISQUALIFICATION APPLICATION
The 4th respondent was granted leave to make an application that I disqualify myself. That application was heard and I dismissed the application and reserved my reasons and now provide them.
In support of the application that I disqualify myself, counsel for the 4th respondent relied upon the following matters:
124.1.At page 51 of the transcript of 12 September 2012, I indicated a “preliminary view” that if a Federal Magistrate made an order that the father not further encumber the property at G, then it was inappropriate for the father’s solicitor to rely upon an existing charge to do work which would have the effect of further encumbering the property and I expressed a “preliminary view” and a “concern” that the solicitor should have taken the position that he could no longer rely upon the charge to incur further fees and that some other arrangement in relation to costs should have been made between the father and the 4th respondent. I expressed a “concern” that he had not done this.
124.2.At page 58 of the transcript of 12 September 2012, I inquired of counsel representing the father (who was calling the 4th respondent as a witness) as to whether or not he needed Mr R to be warned. Counsel for the father indicated that he did and I provided a warning to the 4th respondent. This was on the basis that there was, at least on a prima facie level, the potential for the 4th respondent to be charged with aiding and abetting the father in breaching the order made 10 July 2012 by acting in a way that would further encumber the G property after the date the order was made.
Relevant principles
In Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, the High Court said:
Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge…a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide [emphasis added]. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial.
…..
…Judges do not choose their cases; and litigants do not choose their judges. If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case.
…if the mere making of an insubstantial objection were sufficient to lead a judge to decline to hear or decide a case, the system would soon reach a stage where, for practical purposes, individual parties could influence the composition of the bench. That would be intolerable.
I find that none of the matters referred to by counsel for the 4th respondent would lead a fair-minded lay observer to reasonably apprehend that the Court might not bring an impartial mind to the resolution of the Registrar’s application for injunctive relief. What had been established was in the nature of a prima facie case on the facts which did not seem in dispute. The 4th respondent was to be given every opportunity to answer that case.
SUMMARY DISMISSAL APPLICATION
On 1 March 2013 the 4th respondent was granted leave to make an oral application that the Child Support Registrar’s application in a case filed 20 September 2012 be summarily dismissed. Argument was heard about that matter and that application was dismissed. I reserved my reasons and now give them.
Counsel for the 4th respondent submitted that the Registrar’s application filed 20 September 2012 should be summarily dismissed because of “procedural unfairness and irregularity”.
Counsel for the 4th respondent first submitted that the Registrar’s application was in the nature of a contempt or contravention application and consequently attracted the provisions of rule 21.02 FLR which required the application to be on a specific form rather than a general application in a case.
I do not accept that submission. The application brought by the Registrar against the 4th respondent is an application for an injunction under s 114(3) FLA (and in the alternative under s 34 FLA) in aid and support of the original application which the Registrar had brought by way of enforcement against the father. The action is brought against the 4th respondent as a third party but more particularly, as the father’s lawyer on the record. Injunctive relief can be sought relying upon the provisions in the FLA in aid of the primary application under the Collection Act given the provisions of s 105 Collection Act. Consequently the application is brought upon the correct form. If I am wrong about that, pursuant to rule 1.12 FLR, I dispense with any rule relating to the form upon which the application is made.
The next submission made by counsel for the father was that “in light of the serious allegations”, the 4th respondent was entitled to a statement of particulars as to the basis of the relief sought.
On 12 September 2012, the Registrar identified all the evidence upon which the Registrar sought to rely in support of the application. There was no need to provide “full particulars” of what it was the Registrar was relying upon in circumstances where all the facts relied upon were known. The issue was whether or not those facts provided a sufficient basis for granting the injunctive order against the 4th respondent.
The Registrar’s evidence, when taken at its highest, provided an arguable basis for the granting of the injunction sought. Accordingly, summary dismissal is not appropriate and I find that the matter should proceed to be heard.
On 12 September 2012 the 4th respondent indicated that he could reply to the evidence that had been led in support of the Registrar’s application within 2 to 3 weeks. He was given 28 days to do so. He was also given sufficient time to arrange counsel of his choice to be available for the continuation of the hearing.
BASIC FACTS
The evidence upon which the Registrar relied in support of the application filed on 20 September 2012 was identified on 12 September 2012. There was in fact no disagreement as to the basic facts which were:
135.1.The father entered into a costs agreement with the 4th respondent on 21 October 2009. Clause 16A of that agreement provides:
16A CHARGING CLAUSE
By entering into this agreement, the client acknowledges that in respect of any unpaid costs that the firm shall be entitled to lodge a caveat against any property, interest or title of the client which is in the client’s name and shall be entitled to maintain such a caveat on the title until such time as all of the fees and disbursements owing to the firm have been discharged. The client expressly charges the property held by the client with the payment of outstanding legal fees and expressly consents to the lodgement of a caveat by the firm at any time to secure such payment of such fees.
135.2.On 9 November 2011 the Child Support Registrar filed enforcement proceedings against the father (Mr R’s client).
135.3.I am unaware as to when the father, the third respondent and Mr R became aware of the application for enforcement orders sought by the Registrar but I infer it was before 17 February 2012.
135.4.On 17 February 2012 Mr R lodged the first caveat (“the first caveat”) against the title of the G property.
135.5.On 29 June 2012 Mr R withdrew the first caveat. Mr R says, “A manager of the bank telephoned me, indicated that [the third respondent] had given me – her my number and that she was going to advance the funds to [the third respondent] – they were ready – but she couldn’t do it unless I removed my caveat for a couple of days”.
On 10 July 2012 Federal Magistrate Scarlett made an order in the following terms:
Until further order, the court orders that:
2.The respondent is restrained from selling, assigning, transferring, encumbering or dealing with in any way his interest in the real property at [G], NSW, described in Certificate of Title Folio … (“real property”), without the prior written consent of the applicant.
3.The respondent’s interest in the real property be charged in favour of the applicant for the total debt (and the applicant be at liberty to lodge the caveat over real estate to secure the interest created by this charge). [The applicant referred to in this order was the Child Support Registrar]
Mr U, an employed solicitor from Mr R’s office, was present in court when that order was made. There is no question that Mr R is plainly aware of the order that had been made by the Federal Magistrate. The gist of it was conveyed to him by Mr U. In Mr R’s oral evidence, he indicated that there may have been some doubt in his mind about the length of time the order was in place but that was made clear when Mr R obtained a sealed copy of the order shortly after it was made. He plainly knew the terms of the order at the time of this hearing.
At no stage has any application been made by the father or Mr R to the court to have the injunctive order made on 10 July 2012 varied. The orders have been registered in this court following the transfer of the proceedings to this court.[10] Counsel for Mr R indicated that there was no issue in relation to the order being treated as if it was an order made by this court.
[10] See Reg17 Family Law Regulations 1984 (Cth)
Exhibit 2 shows that on 12 July 2012 (two days after the injunctive order by Federal Magistrate Scarlett), the father and the third respondent received from their financial institution, “Top Up Loan Funds Drawn” in the sum of $20,000. Some of this money was paid by the father and the third respondent to Mr R.
Mr R continued to do work on behalf of the father after 10 July 2012.
On 17 July 2012 Mr R signed a second caveat which was stamped on 18 July 2012 and presumably lodged on the title of the G property on or shortly after that date.
THE LOAN APPLICATION OF 29 JUNE 2012
Counsel for Mr R emphasised that the loan had been approved on 29 June 2012, some ten days before the orders were made. As I have said, it is probable that Mr R was aware of the Registrar’s application for enforcement prior to this time. Nonetheless, it is clear that no draw down on the loan facility was made until two days after the order was made.
The original application made to the bank, which led to the approval on 29 June 2012, misinformed the bank as to the purpose of the loan. The application asserted that it was for alterations and additions to the G property when in fact none of the money was used for that purpose. The loan application made it clear that there were some documents that had to be completed (although it is not clear whether or not additional security documents had to be completed).
PAYMENTS AND AMOUNTS OUTSTANDING TO MR R
There seems to be an inconsistency in Mr R’s evidence about the amount of fees that have been paid as at the date of the swearing of his affidavit on 6 September 2012.
Paragraph 4 of that affidavit is in the following terms:
4.The total amount my firm has billed the applicant/husband in these proceedings to date is the sum of $41,399.81 and the applicant’s wife, [the third respondent], has paid the sum of $28,667.26 in partial satisfaction of those fees.
Paragraph 6 is in the following terms:
6. On 20 August 2012 I forwarded to the applicant/husband a letter setting out a cost estimate in relation to complete the proceedings, advising him that a further sum of approximately $20,000.00 will be due and payable. Annexed hereto and marked “D” is a copy of the letter dated 20 August 2012.
Annexure D is in the following terms:
We refer to the ongoing and continuing litigation in this matter. Pursuant to our obligations under the Family Law Act, we indicate to you that the further costs in respect to [sic] the preparation and hearing of this matter, including briefing Counsel, will cost approximately a further $30,000.00.
We note todate [sic] that you have been billed $41,399.81 and there is still an amount of $28,667.26 outstanding.
We note that your wife, … has made all payments on your behalf and we would appreciate some indication as to when further payments can be made.
Annexure D is a letter dated 20 August 2012 addressed to “Mr Keane & Ms L Jones” (a reference to the father and the third respondent).
I take it from this evidence that as at 20 August 2012, the total amount that the father had been billed by Mr R in relation to these proceedings was in the sum of $41,399.81. There is confusion in Mr R’s evidence, however, as to the amount that had been paid by 20 August 2012. Paragraph 4 of his affidavit says the amount was $28,667.26. However, the letter of 20 August 2012 indicates that that was the amount outstanding, not the amount paid.
When giving oral evidence on 12 September 2012, Mr R indicated that he had been told by his office on that day that outstanding legal fees as at 10 July 2012 were in the sum of $18,548.21.
The father gave evidence (which with the third respondent agreed) that some of the monies that were received by way of draw down from the new facility on 12 July 2012 were paid to Mr R. I do not however have any evidence about how much of the $20,000 was paid to Mr R.
Mr R has chosen not to tender in evidence copies of his office trust ledgers nor redacted memorandum of accounts that he has sent to the father. I can only assume that was a tactical decision and that that material would not have advanced Mr R’s position in the case.
In relation to the Jones & Dunkel point, counsel for Mr R asserted that that point is answered because the onus was on the Registrar who could have subpoenaed Mr R’s records (and perhaps other bank records) in respect of the primary documents that related to movement of funds from either the bank or the father and the third respondent to Mr R. Whilst I accept the submission that the Registrar could have subpoenaed documents and I understood the general submission that was being made, I do not accept it. I do not however have to place any weight on the Jones & Dunkel point. It is clear that money was drawn from the facility by the father and the third respondent after the order was made and some of it was paid to Mr R.
JURISDICTION TO MAKE THE ORDER SOUGHT
The Registrar submitted that the jurisdictional basis for the order sought was s 114(3) FLA, and in the alternative, the Registrar relied upon s 34(1) FLA.
Section 114(3) FLA provides:
(3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.
I raised with the parties the provisions of s 90AF FLA. That section deals with making injunctive orders under s 114 against third parties. Section 90AF(2) provides:
(2) In proceedings under section 114, the court may make any other order, or grant any other injunction that:
(a) directs a third party to do a thing in relation to the property of a party to the marriage; or
(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.
Injunctions made under s 90AF(2) FLA are subject to the conditions in ss 90AF(3) and (4) which provide:
(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b) if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d) for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e) for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).(4) The matters are as follows:
(a) the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b) the taxation effect (if any) of the order or injunction on the third party;
(c) the social security effect (if any) of the order or injunction on the parties to the marriage;
(d) the third party's administrative costs in relation to the order or injunction;
(e) if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
(f) the economic, legal or other capacity of the third party to comply with the order or injunction;
(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters;
(h) any other matter that the court considers relevant.I invited both parties to address me about the effect of s 90AF FLA. The only submission counsel for Mr R made on that section was in relation to procedural fairness (s 90AF(3)(c) FLA), which I have already dealt with above.
Counsel for the Registrar made two submissions about s 90AF FLA. The first was that the order that was being sought is an injunctive order to prevent an anticipatory breach of another order and does not interfere with Mr R’s legitimate rights under his original charge. I accept that is so and consequently the provisions of s 90AF(2) do not apply in this case.
If I was wrong about that and the orders the Registrar seeks do alter Mr R’s rights, then counsel for the Registrar submitted there are no matters in s 90AF(3) or (4) FLA that were a relevant impediment to making the orders sought given the factual matrix of the case. I do not accept that submission. The power under s 90AF(2) is circumscribed by sub-s (3)(a). These are not s 79 FLA proceedings. Section 90AF(3)(b) is also a significant obstacle. The father has substantial liabilities, and depending on the value of the G property, his assets may not be sufficient to cover them all. I have already found that the father has an earning capacity that he is choosing not to exercise. However, despite such capacity, it may be foreseeable that the father may struggle to pay off his debt to Mr R for work done after 10 July 2012.
The second submission made was that if there is a difficulty in applying s 90AF FLA, counsel for the Registrar’s fallback position is that s 34 FLA is available.
Counsel for the Registrar submitted that s 34 FLA is analogous to s 23 Federal Court of Australia Act 1976 (Cth) which has been used to restrain by injunction a threatened breach of orders. This is not a case where the Registrar seeks to punish Mr R for aiding and abetting any past or anticipated contravention of an order. Counsel for the Registrar relied on Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation (1982) 152 CLR 25 where Gibbs CJ said:
A superior court which has power to punish contempts, and which also has power to issue injunctions, may grant an injunction to restrain a threatened contempt…The Federal Court, which by s. 23 of the Federal Court of Australia Act is empowered to grant an injunction, clearly has power to restrain by injunction a threatened contempt. [citations omitted]
The Family Court is clearly empowered to punish contempt of court (s 35 FLA) and to otherwise impose sanctions for failure to comply with orders (Parts XIIIA and XIIIB FLA). The Court’s power to issue writs (section 34 FLA) is almost identical to s 23 Federal Court of Australia Act 1976 (Cth). I am of the view that the introduction of s 90AF FLA did not “cover the field” in relation to injunctions involving third parties. Section 90AF FLA specifically relates to injunctions made in the context of effecting property division between the parties.
Alternatively, I find the Court has inherent jurisdiction to control its process in aid of the administration of justice (see Re P’s Bill of Costs (1982) FLC 91-255 at 77,417; Kamay v Miss X (1986) FLC 91-754 at 75,499).
I find the court has jurisdiction to grant an injunction to restrain a threatened contravention of court order (see Gibbs CJ in Victoria v Australian Building Construction Employees’ and Builders Labourers’ Federation; Young J in Waterhouse v Australian Broadcasting Corporation (1986) 6 NSWLR 716 at 721).
STANDARD OF PROOF
Counsel for Mr R submitted that it was a serious matter to interfere with the agreements between a party and its legal advisers. Counsel for Mr R asserted that the standard of proof in this case was on the civil standard in accordance with the Briginshaw v Briginshaw (1938) 60 CLR 336 test and that s 140(2) Evidence Act 1995 (Cth) applied. Whilst I accept, given the seriousness of what is asserted, that that may well be the test, it is of no great moment given that there are sufficiently known uncontroversial facts to allow me to determine the Registrar’s application. No finding needs to be made as to whether or not Mr R will rely upon the charge in his fee agreement to secure fees for work done after 10 July 2012. He said he is going to do it. Consequently, there is a real risk that Mr R will wish to assert that his encumbrance gives him priority. That he will do so is not a remote possibility (see Hammond v Commonwealth (1982) 152 CLR 188).
THE MEANING OF THE WORD “ENCUMBERING”
Counsel for Mr R submitted that the word “encumbering” refers to completely new and independent transactions, not merely drawing down under the terms of an instrument, which does not require anything further to enable the draw down.
In response to this contention, counsel for the Registrar relied upon the Full Court’s decision in Inthe Marriage of Hay (1998) 23 Fam LR 247.
In that case, an injunction had been granted by the Western Australian Court of Petty Sessions restraining the husband in that matter from, amongst other things, encumbering by way of mortgage or charge his interest in a property. After that order was made, the parties agreed to a further order that allowed the husband to borrow a small amount of money against the property and for a mortgage to be lodged on the property for that purpose. Subsequently however, the husband had the bank advance him $400,000 with the bank relying upon the existing mortgage and paying the additional required stamp duty on the mortgage. This was notwithstanding the fact that an injunctive order was in place and the bank had given an undertaking not to further “encumber” the property. The husband was dealt with for contempt. On appeal he argued that he had not encumbered, by mortgage, the subject property. At paragraph 32, the Full Court refers to the trial judge’s conclusion:
The word ‘encumbrance’ in its ordinary connotation, means that a person or estate is burdened with debts, obligations or responsibilities. As was pointed out in Wallace v. Love (1922) 31 CLR 156 at 164 the word is, in law, especially used to indicate a burden on property, a claim, lien or liability attached to property.
It seems clear enough to me that what the husband has done is borrow a sum of $400,000 from the bank. The bank has secured repayment of that debt by upstamping its original mortgage and the property has, therefore, become encumbered to the extent of a further $400,000. The only way that the property has become encumbered is by virtue of the upstamping and, no doubt, by virtue of a clause in the original mortgage similar to that in the case upon which counsel relies. To that extent, therefore, the land has become further encumbered to the extent of $400,000 by way of mortgage. If the husband had not sought further funds on the security of that mortgage, the land would not have become further encumbered. In my view, what the argument of counsel for the husband overlooks is that the order did not say that the husband was restrained from encumbering by a further or new mortgage. In my view, the fact that the property was encumbered by virtue of the upstamping of the original mortgage, does not alter the fact that the property was encumbered by mortgage, albeit by the already existent mortgage.
The Full Court explained:
33.We were informed by counsel that the expression “upstamped” used by his Honour is understood in Western Australia to mean that further stamp duty was payable on the existing mortgage document in order to cover the subsequent advance.
At paragraph 43, the Full Court expressly agreed with the trial judge’s application of the definition of ‘encumbrance’ provided by the High Court in Wallace v Love (1922) 31 CLR 156, where the High Court said:
As to whether Holden CJ. was correct in applying the definition of “encumbrance” provided by the High Court in Wallace v. Love, we consider that he was. In its joint judgment in that case the court said (at 164):
The word “encumbrances”, in its ordinary connotation, means that a person or estate is burdened with debts, obligations or responsibilities. True, the word is in law especially used to indicate a burden on property, a claim, lien or liability attached to property (see Oxford Dictionary, under title “Encumbrance”).
During submissions, I put to counsel for Mr R the hypothetical situation: Somebody has a registered all monies mortgage with a bank that covered advances from time to time. An order is made restraining that person from further encumbering the property until the overall proceedings in respect of alteration of property was finalised. That person then goes to the bank and says “please give me another $100,000”. The bank says “fine, we will rely on our existing security to do so”. I asked counsel for Mr R whether or not he thought the injunction had been breached. His reply was that the bank had not, but they may have aided and abetted a breach, depending on what the bank knew. I invited counsel for Mr R to explain the difference between that situation and the current facts. Counsel for Mr R said the difference was that the father was not going to Mr R and saying “give me more money”. I find that in effect that is exactly what the father has done. He has gone to Mr R and said “give me more work, give me more of your valuable time”.
To extend the hypothetical example, it would be further encumbering of the property if there was an unused line of credit under an existing mortgage facility and a party drew on that line of credit in the face of an order that restrained that party from further encumbering the property. A movement in debt under a mortgage further encumbers a property notwithstanding no new document has to be signed with the lender.
The circumstances in this case are more analogous to an existing mortgage being extended than somebody accessing an existing line of credit. That is because in this case, Mr R has to actively participate in the process by providing his time and legal services after the injunctive order was made.
Counsel for Mr R asserted that Mr R was not doing anything to change the costs agreement nor was the father doing anything to change the agreement. The submission is that no new dealing or transaction was being entered into. I do not accept that submission. The new transaction that was being entered into was fresh work being done by Mr R after the date of the order by the Federal Magistrate, the cost for which was to be secured by the charge.
CONCLUSION IN RELATION TO THE REGISTRAR’S APPLICATION TO RESTRAIN MR R
Mr R has continued to offer his services to the father after 10 July 2012 for which services he will require payment from the father. Counsel for Mr R asserted that nobody knew what it was that the Child Support Registrar feared Mr R would do. He talked of Mr R’s fees after 10 July 2012 being “theoretically” subject to the charge. It did not appear to me that there was anything “theoretical” about what Mr R was asserting. Mr R asserts that the charge clause in his current costs agreement is available to secure debt that the father incurs by way of using Mr R’s services after 10 July 2012. Mr R asserts that it will then be a matter of competing priorities in relation to the debts incurred and Mr R will assert that his 2009 charge would rank in priority over the charge created by the Federal Magistrate by way of order on 10 July 2012 insofar as the charge is said to secure fees incurred after 10 July 2012.
I conclude that the father and Mr R were required by the injunctive order made 10 July 2012 to act in a way that did not further encumber the G property. If Mr R and the father were to continue their solicitor/client relationship, there needed to be a renegotiation of the terms upon which the legal services were being provided so that the property was not further encumbered under the charge after 10 July 2012. If that was not possible, the father could have sought the services of another legal practitioner who was prepared to accept the retainer on some other basis, or alternatively the father could have acted on his own behalf in the proceedings.
The Registrar is entitled to the order sought against Mr R.
I certify that the preceding one hundred and seventy eight (178) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 10 May 2013.
Associate:
Date: 10.5.2013
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