Leonard and Leonard - [2010] FMCAfam 390

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LEONARD & LEONARD

[2010] FMCAfam 390

CHILD SUPPORT – Application to set aside child support agreement – agreement made prior to amendments to the Child Support (Assessment) Act 1989 (Cth) came into effect – whether such agreements can be set aside under s.136 of the Child Support (Assessment) Act 1989 (Cth) – whether ‘exceptional circumstances’ established under s.136(2) of the Child Support (Assessment) Act 1989 (Cth) – whether applicant would suffer ‘hardship’ if the agreement not set aside.

Acts Interpretation Act 1901 (Cth), s.15AA
Child Support (Assessment) Act 1989 (Cth), ss.3, 4, 80C, 80D(1), 80E, 81, 92, 98S(1), 98T, 98U, 136
Child Support Legislation Amendment (New Formula and Other Measures) Act 2006 (Cth), sch.5 items 74, 75
Child Support (Registration and Collection) Act 1988 (Cth)
Family Law Act 1975 (Cth), s.44(4)

Daley & Daley [2009] FMCAfam 398; (2009) 41 Fam LR 351
In the Marriage of Simpson & Hamlin (1984) 9 Fam LR 1040
Sandrk & Sandrk (1991) 15 Fam LR 197; (1991) FLC 92-260
Savery & Savery (1990) 13 Fam LR 812; (1991) FLC 92-131
In the Marriage of Gyselman (1991) 15 Fam LR 219; (1992) FLC 92-279
Balzano & Balzano [2010] FamCAFC 11
In the Marriage of Whitford (1979) 4 Fam LR 754

Applicant:

MR LEONARD

Respondent:

MS LEONARD

File Number:

NCC1334 of 2009

Judgment of:

Lapthorn FM

Hearing date:

22 October 2009

Date of Last Submission:

18 December 2009

Delivered at:

Newcastle

Delivered on:

22 April 2010

REPRESENTATION

Counsel for the Applicant:

Mr Duane

Solicitors for the Applicant:

Envoy Lawyers

Solicitor for the Respondent:

Mr Bithrey

Solicitors for the Respondent:

Burke Elphick & Mead Lawyers

ORDERS

The Application filed 27 May 2009 is dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
NEWCASTLE

NCC1334 of 2009

MR LEONARD

Applicant

And

MS LEONARD

Respondent

REASONS FOR JUDGMENT

Introduction

The parents of [X] and [Y] entered into a child support agreement on

6 November 2006. Their father, Mr Leonard, would like to see that agreement set aside and for an assessment to issue from the Child Support Agency. He is also prepared to pay all the private school fees and sundry expenses associated with the boys attending school.

Ms Leonard, their mother, agrees to the father paying the school fees and sundry expenses but does not want the child support agreement set aside.

Brief history

The parties were married [in] 1995 and separated on 5 March 2005. [X] is 15 years of age having been born [in] 1995. [Y] was born [in] 1997 and therefore is 12 years of age.
The parties were divorced on 12 August 2006. They entered into final property orders by consent on 1 November that year and a few days later they finalised the child support agreement which was subsequently registered with the Child Support Agency. The agreement provided for the father to pay the mother the sum of $200 per week per child along with him paying the private medical insurance for the children, their private school fees along with the associated costs of the children attending the school such as their uniforms.
When the agreement was entered into the children lived primarily with the mother and spent time with their father each Wednesday from

3.00 pm after school until 8.00 am Thursday and on alternate weekends from 3.00 pm Friday until 8.00 am Monday. They also spent half of their school holidays with him. In 2007 the children started spending more time with the father. The mother says that the amount of time varied from time to time where as the father says that in effect the children lived with each party for equal amounts of time.
On 27 May 2009 the father filed an application seeking orders for the children to live with each parent in a week about regime and for the child support agreement to be set aside. The mother in her response filed 2 July 2009 sought to have the father’s application dismissed or in the alternative the children live with each parent in accordance with their wishes. When the matter came on for hearing the parties reached agreement for the children to live with each parent in the week about regime sought by the father and orders were made accordingly. The parties remained in dispute as to the child support agreement.

Issues

For the court to determine this dispute it is necessary to decide the nature of the child support agreement in light of amendments made to the Child Support legislation since the parties entered into the agreement and whether the father has established, on the balance of probabilities, grounds exist for the agreement to be set aside.

Application and evidence

In support of his case the father relied on his Initiating Application filed on 27 May 2009 along with affidavits by him filed on 27 May 2009 and 28 August 2009. The father also relied on his financial statement filed on 27 May 2009.
The mother relied on her response filed 2 July 2009 along with her financial statement also filed that day and two affidavits by her one filed 2 July 2009 and the other filed 28 August 2009.
Both parties gave evidence and I was satisfied that their evidence was given to the best of their recollection and ability. The parties were honest and generally forthright in that evidence. Whilst some of the mother’s evidence was vague I was not persuaded that that vagueness was a result of any deliberate attempt to mislead the court.
A number of documents were also tendered in the hearing they being the taxation estimate of the father for the year ended 30 June 2009;[1] an earlier financial statement of the father that was filed in the Family Court of Australia on 3March 2006;[2] a bundle of financial documents of the mother[3] and three tax invoices from [J] being a business conducted by the mother.[4]
[1] Exhibit H2.
[2] Exhibit W2.
[3] Exhibit W1.
[4] Exhibit H1.
When the parties entered into their agreement they used the form provided by the Child Support Agency’s web site. This pro forma document contains a number of notes. Two notes are of particular importance to this case. Under the heading ‘How do Agreements work?’ this paragraph appears:
An Agreement is a binding contract between two parents. If you are considering signing an Agreement, it is important that you understand it. If you are unsure about anything, you should seek further information or legal advice………
Under the heading ‘Deciding on the length of your Agreement’ the following is noted:
A child support Agreement is a binding contract. It cannot be varied unless the parents agree to vary it, or either parent successfully obtains a court order. For this reason, CSA suggests that when deciding on the length of your Agreement, you should consider how your needs could change in the future.
There was no requirement at that time for the parties to obtain legal advice or annex a certificate of independent legal advice to the agreement.
Both parties are self employed.
The father has organised his financial affairs by way of company structures. [T] Pty Ltd ([T]) is a company controlled by the father. He is the sole director. He and the two children are the only shareholders. He acts as attorney for the children’s shareholdings.
The father runs a trading company called [K] Pty Ltd ([K]). He runs this business from his home and is paid rent from the company. Although the father draws a wage from the company it is sufficient only to cover the cost of medical insurance. He receives dividends from the business however. Part of this company’s income is interest received from [T] through a loan arrangement between the two companies. It was submitted on the father’s behalf that the court should find this income will not be available in the future because [T] lent money to an unrelated company [C] Pty Ltd and that those moneys have been lost meaning [T] can no longer afford to pay interest to [K]. The mother argued that there was insufficient evidence to make that finding. Whilst I do not doubt the father’s honesty in his evidence that the loan was made to [C] Pty Ltd I am not satisfied there is sufficient evidence as to the extent of the purported loss of investment nor that the company does not have any means of recovering such loss. I accept the mother’s submission that to find the funds lent to be ‘lost’ would be speculative.
The father’s financial statement filed in these proceedings on 27 May 2009 indicated he had a total average weekly income of $1,480 and personal expenditure of $1,328. The father valued his property at $2,154,157 plus superannuation of $115,093. He valued his liabilities at $1,261,468. By way of contrast his financial statement filed in the previous property proceedings in the Family Court of Australia on

3 March 2006 listed his average weekly income as $2,357 with expenses estimated at $2,578. He valued his property at that stage at $2,712,492 plus superannuation at $82,310 and liabilities of $833,557.
Mr Bithrey on behalf of the mother submitted that the court would find the father’s financial circumstances to be different to those deposed. He asserted that the father’s income is now greater than that in 2006 when the agreement was entered into.
I was invited to find that the father derives an income of $1,156 more than he did in 2006. This figure was based on an error made by the father in completing his financial statement. I find this error to have been an honest mistake in that the father put in the net figure of rental income received by him after deducting interest on the loan over the property. Further to the rental income from [K] previously referred to he also receives rent from [A] Pty Limited ([A]). In cross examination the husband agreed that he receives gross rental income of $1,617.50 per week from [A] and $742.50 per week from [K].
When these sums are combined with his dividends from [K] I am satisfied that his weekly earnings are around $3,500.
The father’s financial statement also included provision for an estimated $300,000 capital gains tax liability in relation to his property. I accept the mother’s submission that that figure should not be included given there is no evidence that that liability is likely to crystalise in the foreseeable future. This would reduce his liabilities to $961,468 which is around $130,000 more than in 2006. His mortgage over his property increased after the property orders in 2006 as the father borrowed more to meet his obligations under those orders.
Whilst I take into account the father’s increase in liabilities I am satisfied that his current financial position both by way of capital and income is better than when he entered into the child support agreement.
The mother runs her own business from her home. In her financial statement the wife asserted she received an average weekly income of $1,050 per week which included the $400 received from the father as child support for the children. The mother owns her home without a mortgage having received it as part of the property settlement in 2006. The mother estimates the value of the home to be $750,000 and with a motor vehicle and investments she has property worth $836,131 along with superannuation of $78,055. The financial statement indicates the mother estimates her average weekly expenses for herself and the children to be $913 along with other personal expenditure of $197.
During cross-examination it became clear the mother earned $62,000 in the year to 30 June 2009 which is significantly higher than that to which she deposed in her financial statement. She explained this discrepancy as having arisen by her having a lucrative contract in Sydney during that financial year that put her earnings artificially high. I accept the mother was not attempting to mislead the court in her evidence and find that there will be years the mother earns more than in other years.

Legal approach

The law has changed since the parties entered into their child support agreement. The Child Support Legislation Amendment (New Formula and Other Measures) Act 2006 (Cth) (“the Amending Act”) came into force on 1 July 2008. The Amending Act created two types of child support agreement: binding child support agreements and limited child support agreements.
Section 81 of the Child Support (Assessment) Act 1989 (Cth) (“the Act”) sets out the general requirements for a child support agreements under the Act:
81 Child support agreement definition and general requirement
(1) An agreement is a child support agreement if:
(a) the agreement is a binding child support agreement; or
(b) the agreement is a limited child support agreement.
Note: For the definitions of binding child support agreement and limited child support agreement, see sections 80C and 80E.
(2) An agreement is a binding child support agreement or a limited child support agreement if it complies with the following provisions:
(a) section 82 (children in relation to whom agreements may be made);
(b) section 83 (persons who may be parties to agreements);
(c) section 84 (provisions that may be included in agreements).
Under s.80C of the Act a binding child support agreement must be in writing and signed by each of the parties to the agreement, must contain a statement that each party has received independent legal advice in respect of the agreement, particularly regarding the effects of the agreement on the rights of that party, and the advantages and disadvantages, at the time of the making of the agreement, of entering the agreement in question, and must include certification by the person providing the independent legal advice stating that the advice was provided.
Under s.80E of the Act a limited child support agreement must be in writing, signed by each of the parties to the agreement, and for an amount equal to or greater than the rate of child support that would otherwise be payable under an administrative assessment. There is no requirement for provision of independent legal advice for a limited child support agreement.

What type of child support agreement is the one entered into on 6 November 2006?

The child support agreement in question although in writing and signed by the parties did not contain a statement or certification that the parties had obtained independent legal advice. Even if the agreement did contain such statement and certification given the law has changed since the parties entered into the agreement the advice given would have been different to that which would need to be given now that the amendments have come into force.
Schedule 5 of the Amending Act (“Schedule 5”) contains transitional provisions to deal with child support agreements that were made prior to 1 July 2008. Item 74 of Schedule 5 required the Child Support Registrar to review all child support agreements that were made prior to 1 July 2008 and determine in writing whether each such agreement was to be taken to be a binding child support agreement or to be terminated.
Exhibit W1 contains a letter dated 28 September 2009 from the Acting State Manager of the Child Support Agency to the mother advising her that the agreement was considered to be a binding child support agreement. The agreement was not terminated and was conceded by both parties that at least for the purposes of the transitional arrangements their agreement was deemed to be a binding child support agreement.
Counsel for the father submitted the effect of the Amending Act on child support agreements made prior to 1 July 2008 was to create a third type of child support agreement. Mr Duane submitted by operation of Schedule 5, the agreement is taken to be a binding child support agreement for the purposes of creating assessments, calculating arrears, penalties and interest under the remainder of the legislation but not for other purposes such as the setting aside a child support agreement.
Mr Bithrey argued the amendments only provided for two types of child support agreements and this agreement was by virtue of the transitional provisions a binding child support agreement. I accept that submission.
The Amending Act does not expressly require a child support agreement that is taken to be a binding child support agreement under item 74 of Schedule 5 to meet the definitional requirements of a binding child support agreement in s.80C. In Daley & Daley Federal Magistrate Brown considered this issue and described the process of deeming a child support agreement made before 1 July 2008 to be a binding child support agreement under the amended legislation as “an administrative fiction”.[5]
[5] (2009) 41 Fam LR 351 at 364
Further, item 75 of Schedule 5 of the Amending Act sets out the effect of a determination that a child support agreement made prior to 1 July 2008 is taken to be a binding child support agreement under item 74. The effect of sub-items 75(1) and (4) in this case is to provide that the child support agreement is taken to be a binding child support agreement:
·for the purposes of the Act and the Child Support (Registration and Collection) Act 1988 (Cth);
·from 1 July 2008.
I am satisfied that if the legislature intended part only of the Act to apply to a child support agreement that is taken to be a binding child support agreement under item 74 it would have been expressed as such in item 75 of Schedule 5. For this reason I find the agreement is a binding child support agreement and as such can only be set aside or terminated if the provisions of s.80D(1) apply. This provision provides:
80D Terminating binding child support agreements
(1) A binding child support agreement (the previous agreement) may be terminated only by:
(a) a provision being included in a new binding child support agreement made by the parties to the previous agreement to the effect that the previous agreement is terminated; or
(b) the parties to the previous agreement making a written agreement (a termination agreement):
(i) that is binding on the parties in accordance with subsection (2); and
(ii) to the effect that the agreement is terminated; or
(c) a court order setting aside the previous agreement under section 136.
I will discuss the provisions of s.136 below.

Can the Court re-determine the Registrar’s decision to deem the agreement to be a binding child support agreement?

During the course of the hearing I asked the lawyers to make submissions as to what powers if any I may have to re-determine the Registrar’s decision to deem the agreement to be a binding child support agreement.
Mr Duane argued that the outcome of the Registrar’s decision is unfair to the father because in deeming the agreement to be a binding child support agreement the ability for it to be set aside is now much harder than it was when the agreement was entered into and the strict requirements for entering into a binding child support agreement today were not followed when the parties entered into their agreement. He went on to argue that if the court found that the agreement was not a binding child support agreement for the purposes of considering whether it could be set aside then the court could look again at whether it is in fact a binding child support agreement.
Mr Bithrey on the other hand argued that the decision of the registrar is an administrative one requiring a review of administrative action which can not be undertaken in this case as the prerequisites for applying to the court have not been followed. There has been no internal review or appeal to the SSAT in relation to that decision. He also argued that to review the decision would be procedurally unfair to the mother as such a course was not pleaded by the father.
I am satisfied that the decision of the Registrar is an administrative one which can not be re-considered by the court unless the prerequisite internal reviews and appeal have been exhausted. That not being the case here and having found that the agreement is a binding child support agreement for the purposes of the Act I am satisfied that it is appropriate to consider whether the agreement can be set aside notwithstanding it is a binding child support agreement.

Can the child support agreement be varied or set aside?

Unless the parties agree to terminate a binding child support agreement by entering into a new binding child support agreement that also terminates the previous agreement or they enter into a formal termination agreement, the agreement can only be set aside by the court pursuant to s.136 of the Act.[6]
[6] Section 80D(1) Child Support (Assessment) Act 1989 (Cth) and sch.5 item 75(6) Child Support Legislation Amendment (New Formula and Other Measures) Act 2006 (Cth).
In this case, the parents do not agree to terminate the child support agreement. The father seeks to have the agreement set aside under sub-s.136(2)(d) on the grounds that exceptional circumstances have arisen since the agreement was made, and the circumstances are such that he will suffer hardship if the agreement is not set aside.
Section 136 of the Act provides:
136 Power of court to set aside child support agreements or termination agreements
(1) A party to either of the following agreements may apply to a court having jurisdiction under this Act for the court to set aside the agreement:
(a) a child support agreement that has been accepted by the Registrar under section 92 or 98U;
(b) a termination agreement, or a written agreement referred to in paragraph 80G(1)(b), that has been accepted by the Registrar under section 92.
(2) If a party has applied under subsection (1), the court may set aside the agreement in accordance with the application if the court is satisfied:
(a) that the party’s agreement was obtained by fraud or a failure to disclose material information; or
(b) that another party to the agreement, or someone acting for another party:
(i)      exerted undue influence or duress in obtaining that agreement; or
(ii)     engaged in unconscionable or other conduct;
to such an extent that it would be unjust not to set aside the agreement; or
(c) in the case of a limited child support agreement:
(i)      that because of a significant change in the circumstances of one of the parties to the agreement, or a child in respect of whom the agreement is made, it would be unjust not to set aside the agreement; or
(ii)     that the agreement provides for an annual rate of child support that is not proper or adequate, taking into account all the circumstances of the case (including the financial circumstances of the parties to the agreement); or
(d) in the case of a binding child support agreement—that because of exceptional circumstances, relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.
(3) Subject to section 145 (Registrar may intervene in proceedings), the parties to a proceeding under subsection (1) are the parties to the agreement.
(4) If:
(a)the court sets aside a child support agreement under this section; and
(b) the court is satisfied as mentioned in paragraph 117(1)(b) (departure orders);
the court may make an order under Division 4 of Part 7 without an application having been made under section 116.
(5) If:
(a) the court sets aside a child support agreement under this section; and
(b) the court is not satisfied as mentioned in paragraph 117(1)(b) (departure orders); and
(c)the payee has received or will receive benefits pursuant to the agreement;
the court may still make an order that departs from the administrative assessment where it is just and equitable to do so, having regard to the benefits that the payee has already received pursuant to the agreement.
The first issue that arises in relation to the application of s.136 in this case is whether the child support agreement is “a child support agreement that has been accepted by the Registrar under s.92 or 98U”[7] and therefore an agreement that a party may apply to the court to have set aside.
[7] section 136(1)(a) Child Support (Assessment) Act 1989
Section 92 deals with applications for acceptance of child support agreements under the Act. At first glance it appears that this section is not applicable as any such application must have been made after the Act came into force on 1 July 2008.
Section 98U deals with child support agreements entered into between parties who at the time of entering into the agreement have a child support matter awaiting determination by the Child Support Registrar.[8] The relevant determinations the Registrar may make are listed in s.98S(1). These determinations do not include a determination under item 74(1)(b)(i) of Schedule 5 of the Amending Act that an agreement is to be taken to be a binding child support agreement. None of the determinations included in s.98S(1) apply in this case, therefore s.98U is not applicable.
[8] section 98T Child Support (Assessment) Act 1989
There is no specific provision in s.136(1) of the Act for a party to a deemed binding child support agreement under item 74 of Schedule 5 of the Amending Act to apply to have the child support agreement set aside. There is no controversy that the child support agreement was registered with the Child Support Agency and therefore accepted under s.92(1) of the Act as in force at the time of registration. I am also satisfied that by deeming a child support agreement to be a binding child support agreement under sub-item 74(1)(b)(i) of Schedule 5 of the Amending Act the Registrar made a decision that is analogous to acceptance under s.92 and 98U of the Act. If that is not the case there appears to be no provision to set aside such an agreement in the absence of agreement between the parties. This surely could not have been the intention of the legislature.
Section 15AA Acts Interpretation Act 1901 (Cth) provides:
(1) In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.
Section 3 of the Act provides:
(1) The parents of a child have the primary duty to maintain the child.
(2) Without limiting subsection (1), the duty of a parent to maintain a child:
(a) is not of lower priority than the duty of the parent to maintain any other child or another person; and
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; and
(ii) any other child or another person that the parent has a duty to maintain; and
(c) is not affected by:
(i) the duty of any other person to maintain the child; or
(ii) any entitlement of the child or another person to an income tested pension, allowance or benefit.

The Objects of the legislation are set out in s.4 as follows:
(1) The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
(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; and
(b) that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of the children; and
(c) that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
(d) that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
(e) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
(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; and
(b) to limit interferences with the privacy of persons.
There is no suggestion in the Explanatory Memorandum[9] or the Second Reading Speech[10] that the legislature intended to keep forever bound parties to an agreement that was entered into at a time when they could seek redress from the court if they sought to have the agreement set aside. The objects of the Act provide for the children to share in the changes to the standard of living of the parents and for the level of financial support to be determined according to the capacity of the parents to provide financial support. Clearly the legislation contemplates the need to take into account changes in the circumstances of the parties and children. I am satisfied that deemed binding child support agreements are covered by s.136(1) either as having been previously accepted by the Registrar or by the act of deeming under item 74 being analogous to acceptance under s.92 or 98U. To treat deemed binding child support agreements otherwise would lead to a situation not contemplated by the legislature and would be grossly unfair to many parents.
[9] Explanatory Memorandum, Child Support Legislation Amendment (New Formula & Other Measures) Bill 2006 (Cth)
[10] Commonwealth, Parliamentary Debates, House of Representatives, 14 September 2006, 1-3 (Malcolm Thomas Brough, Minister for Families, Community Services and Indigenous Affairs and Minister Assisting the Prime Minister for Indigenous Affairs)
Under s.136(2) of the Act a binding child support agreement can only be set aside in cases where the agreement was obtain by fraud or failure to disclose material information,[11] or where it would be unjust not to set aside the agreement where a party entered into the agreement as a result of undue influence, duress or unconscionable conduct[12] or in exceptional circumstances.[13] For an applicant to be successful in establishing the latter he or she must show that the exceptional circumstances relate to a party to the agreement or a child in respect of whom the agreement was made and have arisen since the agreement was made and that would cause the applicant or the child to suffer hardship if the agreement is not set aside.
[11] section 136(2)(a) Child Support (Assessment) Act 1989
[12] section 136(2)(b) Child Support (Assessment) Act 1989
[13] section 136(2)(d) Child Support (Assessment) Act 1989
The father argued that in this case there have been exceptional circumstances since the agreement was made and that he would suffer hardship if it is not set aside. He argued that the substantial change in care arrangements for the children from 9 days/5days to an equal shared care arrangement is an exceptional circumstance. Mr Bithrey argued that in effect the change amounts to just one day a week more the children would spend with the father.
The father also argued that he would pay in excess of $100,000 more than he would do so if an administrative assessment was made and that should also be considered an exceptional circumstance.
Federal Magistrate Brown in Daley & Daley[14] considered the meaning of ‘exceptional circumstances’. I respectfully adopt his Honour’s view. His Honour said:
[14] (2009) 41 Fam LR 351 at 362-363.
[83] Section 136(2)(d) of the Act speaks of “exceptional circumstances”. In Simpson & Hamlin[15] the Full Court indicated that whether circumstances were exceptional in any particular case was “very much a question of fact and degree”.
[15] In the marriage of Simpson & Hamlin (1984) 9 Fam LR 1040 at 1045.
[84] In the different context of an application to set aside property orders, Gee J indicated the question of whether a change of circumstances was exceptional or otherwise may turn on whether the change which had occurred was one not “within the reasonable contemplation or expectation of the parties” concerned.[16] In these circumstances, it was said that the ordinary circumstances and normal vicissitudes of life ought not be allowed to justify the return of a party to court to seek further property orders.
[16] See Sandrk & Sandrk (1991) 15 Fam LR 197 at 202.
[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 that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.[17]
[87] In the Marriage of Gyselman[18], the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that 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.”[19]
[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.
[17] See Savery & Savery (1990) 13 Fam LR 812 at 815.
[18] See In the Marriage of Gyselman (1991) 15 Fam LR 219.
[19] (1991) 15 Fam LR 219 at 225
Justice Warnick in Balzano & Balzano[20] looked for assistance from the explanatory memorandum. His Honour quoted from the memorandum as follows:
[20] [2010] FamCAFC 11
Setting aside binding agreements
As currently drafted, courts could set aside binding child support agreements (made with legal advice) in a range of circumstances, including circumstances that may have been contemplated and dealt with in the agreement. It is not intended that binding agreements should be set aside lightly. This amendment restricts the scope for the setting aside of binding child support agreements, by specifying that exceptional circumstances relating to one of the children or parties to the agreement must have arisen since the making of the agreement, and that the child or party would suffer hardship if the agreement were not altered or set aside. (emphasis added)[21]
[21] Balzano & Balzano [2010] FamCAFC 11 at [41]
A mere change in the number of nights a parent cares for children may fall into the normal vicissitudes of life especially if the change is only one extra night a week. However, when that is considered along with the changes in the law not being contemplated by the parties when they entered into the agreement, the prospect of the father paying more than $100,000 over that which he would pay if he was administratively assessed and the significant payments made by the father to the children’s private school fees and medical insurance I am persuaded that there are exceptional circumstances within the ambit of s.136(2)(d).
Exceptional circumstances however are not enough. An applicant must also show that he or she or that the child will suffer hardship if the agreement is not set aside. The Full Court of the Family Court has held ‘hardship’ in the context of s.44(4) Family Law Act 1975 (Cth) to be:
“… any appreciable detriment financial, personal or otherwise”.[22]
[22] In the Marriage of Whitford (1979) 4 Fam LR 754 at 760
Mr Duane conceded the husband’s circumstances are not desperate but argued that they are not unlimited. Maintaining the agreement may see the father paying around $100,000 more than he might be required to pay if an administrative assessment issued. Such a sum is significant for most people including the father. However I have already found above that his financial position is better now than when he entered into the agreement. When he entered into the agreement he had already consented to property orders that altered his assets and liabilities and would have had regard to his income at the time. Being satisfied that his financial position is better now than it was then and that the change in caring for the children amounts to only one day a week I am not persuaded he will suffer hardship if the agreement is not set aside. Nor will the children.
For those reasons I will dismiss the father’s application to set aside the child support agreement.

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Lapthorn FM

Associate: Helen Drysdale

Date: 22 April 2010