Maher and Walsh
[2016] FCCA 2932
•16 November 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MAHER & WALSH | [2016] FCCA 2932 |
| Catchwords: FAMILY LAW – Setting aside a Binding Child Support Agreement – no exceptional circumstances – enforcement of Binding Child Support Agreement – mother seeking for father to pay private school fees. |
| Legislation: Australian Child Support Commentary Child Support (Assessment) Act 1989, ss.95(3), 136(2) Family Law Act 1975 |
| Cases cited: Jessup & Jessup [2010] FMCAfam 124 McNicol & McNicol [2009] FMCAfam 1034 |
| Applicant: | MS MAHER |
| Respondent: | MR WALSH |
| File Number: | BRC 9510 of 2012 |
| Judgment of: | Judge Cassidy |
| Hearing date: | 19 September 2016 |
| Date of Last Submission: | 19 September 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 16 November 2016 |
REPRESENTATION
| The Applicant appeared in person |
| The Respondent appeared in person |
ORDERS
That the husband pay the wife $3,923.76 plus interest being the sum owing pursuant to the Child Support Agreement dated 13 February 2013, by on before 12 December 2016.
That the husband pay the wife the sum of $8,110 plus any further sum for school fees that have accrued for the 2016 year, by on or before 12 December 2016.
That in the event that the husband does not pay the payments by the set date in accordance with paragraphs 1 and 2 hereof the husband forthwith sign all documents and do all things to affect the sale out of Court of the real property situated at Property L, title details (omitted) in the Parish of (omitted).
Upon the completion of the sale, the proceeds of the sale be applied:
(i)firstly to pay all costs, commissions and expenses of the sale;
(ii)secondly to discharge any mortgage and any other encumbrance affecting the real property;
(iii)thirdly so much of the payment as is then outstanding together with interest thereon at a rate prescribed under the Family Law Act1975 (Cth) adjusted monthly from the date of this Order to the wife;
(iv)fourthly the balance to the husband.
Pursuant to s.106A of the Family Law Act 1975 (Cth) if either party refuses or neglects to sign any document necessary to implement these orders within 14 days of a request in writing to do so, a Registrar of the Family Court of Australia is appointed to execute such document on behalf of that party.
That all extant applications be otherwise dismissed save that there be liberty to apply reserved to approach Judge Cassidy’s Associate within 28 days of the date of this order with respect to any application for costs arising out of these proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Maher & Walsh is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 9510 of 2012
| MS MAHER |
Applicant
And
| MR WALSH |
Respondent
REASONS FOR JUDGMENT
Introduction
The wife in her application seeks to enforce the Binding Child Support Agreement that the parties entered into on 13 February 2013.
The wife seeks a sum, as at 27 April 2016 (the date her application was filed), totalling $12,005.06 with interest. I note that the school fees would have continued to become due and owing during the school year, so in my view I would be entitled to consider enforcing the entirety of the school fees for this year.
The husband on the other hand seeks to set aside the Binding Child Support Agreement.
Material
The wife relied upon the following material:
a)The amended application in a case filed on 9 August 2016;
b)The affidavit of the wife filed on 9 August 2016;
c)The affidavit of the wife filed on 31 May 2016;
d)The financial statement of the wife filed on 31 May 2016; and
e)The affidavit of the wife filed on 27 April 2016.
The husband relied upon the following material:
a)The response to the application in a case filed on 16 May 2016;
b)The affidavit of the husband filed on 16 May 2016;
c)The affidavit of the husband filed on 14 September 2016; and
d)The financial statement of the husband filed on 14 September 2016.
Background
The wife in these proceedings was born on (omitted) 1971 and is presently 45 years old. The husband was born on (omitted) 1968 and is presently 48 years old.
There are two children of the relationship, Y born on (omitted) 2006 and she is presently 10 years old, and X born on (omitted) 2007 and he is presently 9 years old.
The parties separated on a final basis on 19 April 2012 and they were divorced on 4 August 2013.
On 13 February 2013 the husband and wife entered into a Binding Child Support Agreement which was registered with the Child Support Agency on 25 February 2013 and registered with the Federal Circuit Court of Australia on 2 October 2015.
The wife seeks enforcement of the Binding Child Support Agreement and as at 31 May 2016, she seeks outstanding amounts totalling $12,033.76 of which $8,110 are the Redeemer school enrolment and tuition fees up to 22 April 2016 and $3,923.76 which is for miscellaneous items. The wife submits that these items come under the Binding Child Support Agreement and therefore that the husband should pay those costs.
I consider that it is appropriate to deal with the husband’s application first. The husband is seeking to set aside the Binding Child Support Agreement.
Setting aside the Binding Child Support Agreement
The Law
The parties entered into a Binding Child Support Agreement and what is being sought to be enforced are non-periodic payments for child support, and hence they are not subject to collection by the Child Support Agency. However, an agreement containing these clauses can be registered with the Court and that has occurred with this matter.
Section 95(3) of the Child Support (Assessment) Act 1989 (Cth)(‘the Assessment Act’) deems the clauses in the Binding Child Support Agreement to be an order and therefore the clauses become enforceable by the Court.
The wife is seeking to enforce in relation to the non-periodic payments for various medical and pharmaceutical costs, and the costs of school uniforms and school fees. These payments can be included in the Binding Child Support Agreement and can be enforced by the Court.
Section 136(2) of the Assessment Act provides:
“(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.”
The only relevant provision that the husband can rely on is s.136(2)(d) of the Assessment Act which is:
“(d) in the case of a binding child support agreement--that because of exceptional circumstances, relating to a party to the agreement or a child in respect of whom the agreement is made, that have arisen since the agreement was made, the applicant or the child will suffer hardship if the agreement is not set aside.”
The Australian Child Support Commentary provides:
“[16-130] Change in circumstances — binding child support agreements
The test for setting aside a binding child support agreement on the basis of a change in circumstances is difficult to meet. This is the balance that government has set between allowing sufficient certainty, while still making provision for cases where there has been a change in circumstances. Section requires the applicant to show that the change in circumstances are: “exceptional circumstances” — that have arisen since the agreement was made, resulting in “hardship”. Clearly, this is intended to be a more difficult test to satisfy than those in s , or any analogous test in s . In Haoucher v Minister for Immigration & Ethnic Affairs [1990] HCA 22; (1990) 169 CLR 648, McHugh J considered the term, saying:
“[23] No doubt the term ‘exceptional circumstances’ is vague. [however] … mere disagreement … does not constitute ‘exceptional circumstances’.”
The term is used in other contexts: see for example Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489; Cabal v United Mexican States [2001] HCA 42; (2001) 180 ALR 593; Carr v The State of Western Australia [2007] HCA 47. In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 217 CLR 315; 201 ALR 359; 77 ALJR 1853, Kirby J, when speaking of the phrase as used in equity pointed out (at [106]):
“In judging whether the circumstances are ‘exceptional’, regard must be had to the entire relationship between the parties, the concern of equity being with substance, not form. The entire circumstances must be judged as exceptional.”
More poetically, in Nikac & Ors v Minister for Immigration and Ethnic Affairs [1988] FCA 400, Wilcox J said (at [56]):
“Like beauty, ‘exceptional circumstances’ lies in eye of the beholder.”
In Balzano & Balzano ; [2010] FamCAFC 11, Warnick J said:
“38. The term ‘exceptional circumstances’ has been considered in a number of cases, not necessarily in relation to its use in the Assessment Act. These include Sandrk and Sandrk , where Gee J said (at 78,750):
‘What amounts to exceptional circumstances is very much a question of fact and degree and the question in this case, as in that case, is whether what occurred subsequent to my orders of 22 May 1989 were such as to take it out of and beyond the ordinary circumstances in which such a change might be reasonably expected to occur.
A feature in Simpson and Hamlin (supra) which Lambert J, saw as significant, and indeed as did the Full Court in agreeing with his Honour in this respect, was whether or not the change occurred unexpectedly and quickly after the making of the property order so that it could not have been regarded within the reasonable contemplate or expectation of the parties. It seems to me that that is the situation in this case.’ [emphasis added]
39. In Daley & Daley , Brown FM said:
‘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”. [see Savery & Savery [1990] FamCA 30; ]’
…
41. The explanatory memorandum stated:
‘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)”
Warnick J also referred to Simpson v Hamlin (a case with respect to the term as it appears in s 79A of the Family Law Act).
“Exceptional circumstances” must, as a matter of construction, mean something different to “special circumstances”. In Gallup & Gallup [2009] FMCAfam 839, Demack FM considered the term, saying:
‘52. “Exceptional”, it seems to me, carries with it something more than “special”. In its most basic sense, “exceptional” is derived from “except”. This provides the starting point for understanding that the word is meaning to exclude or create a barrier. Circumstances, then, which are “exceptional”, must be outside the normal experience, in such a way that they are the exception and something more than a minor abnormality. As the exceptional circumstances are arising in the context of change, the expression in Simpson and Hamlin op cit seems apt: that the change was such as to “take it out of and beyond the ordinary circumstances in which such change might be reasonable expected to occur.
53. The legislation clearly contemplates the relevant circumstances being in the plural, and I may well consider that although severally no circumstance was exceptional, jointly, their character changed to create exceptional circumstances.’”
Importantly, her Honour found that it was appropriate to consider the whole of the circumstances of the case in order to determine whether sufficient has been established. In Gallup her Honour summarised the relevant circumstances saying:
“The father would have me take into account the following cumulative factors to demonstrate that the circumstances here are exceptional:
a. His pre-existing mental health which was worsened by the breakdown of the matrimonial relationship and the loss of time with the children and the subsequent impact upon his capacity to find employment bearing in mind his history of self-employment;
b. Due to the longer than expected period of unemployment, his need to use his capital to support himself;
c. His new relationship with his now wife having to be facilitated between Australia and Thailand;
d. That his new wife’s visa restrictions mean that she will remain a financial burden to the father for at least the first two years of her time in Australia;
e. That the father and his new wife have a child together, for whom, only the father can receive government benefits and his wife cannot contribute at all financially;
f. That the father’s new child is a legitimate cause for expenditure by the father and should be taken into account;
g. That the main capital base of the father’s was a share portfolio, and that is now worthless following the downturn in the share market due to the present global financial crisis.
…
90. It seems to me that none of the factors, of themselves, put forward by the father are exceptional but that cumulatively they take on a different character, which I find to amount to exceptional circumstances. It could not have been within his knowledge or contemplation that he would lose the ability to supplement his income through his share portfolio due to the downturn in the share market at the same time as having difficulty finding work, while still responding emotionally to the end of a marriage and the loss of regular meaningful face to face contact with his children, made more difficult because of his history of misusing alcohol and being depressed, whilst forming a new relationship with a woman who has no lawful capacity to assist with bringing income into the household, and who bears him a child, thus creating a further financial burden.” ”
In Jessup & Jessup [2010] FMCAfam 124, a period of unemployment was not an unforeseeable event and in itself does not amount to an “exceptional circumstance”. In McNicol & McNicol [2009] FMCAfam 1034 it was said that “remarriage or more children “may not be out of the ordinary””.
In the Australian Child Support Commentary the practical issues that are recommended to consider are:
“Practical Issues
When bringing an application to set aside a child support agreement there is a number of practical matters that should ordinarily be covered in the affidavit material:
• What would the formula assessment have been at the time of the agreement?
• What were the circumstances of the parties at the time of the agreement?
• What are the financial circumstances of the parties now?
• If it is a culmination of factors case, what is the list of factors to be relied upon?
• What would a formula assessment produce now?
• From what date is the agreement to be set aside, and will this require refunds or leave debts for either of the parties?
• Does the case require a departure from the formula assessment (a s application) that will replace the agreement if it is set aside?
In many cases it may be clear that the agreement should be set aside form a date that leaves neither debt nor refund payable by either party, yet be unclear as to what is the appropriate assessment for the future. In such cases, it may be more cost effective to set aside the agreement, allow a formula assessment to be issued and engage in administrative departure process to seek to have the formula assessment adjusted.”
Formula Assessment
The husband currently pays $1,792 per month in child support. The husband has always earned a high income, so I accept he has always paid the maximum scheduled amount in child support under the assessment for periodic child support.
Financial circumstances of the parties now
Husband’s financial circumstances
The husband’s financial statement filed on 14 September 2016 has his average weekly income at $5,170. The husband’s total personal expenses are $4,621. However, the husband has not included any expenses for Part N of the financial statement. Given the wife’s expenses for Part N total $318 I will allow that in addition to the $4,621. This brings the husband’s claimed expenses to $4,939. Thus the husband has $231 per week available to meet his child support responsibilities under the Binding Child Support Agreement.
I also note that the (omitted) Super is not $780 but $385.98 per fortnight. This equates to $192.99 per week. Thus there is another $192.99 per week available for these expenses. The husband also gave evidence that he has stopped paying life insurance premiums of $130 per week.
The husband therefore has available $553.99 to pay the expenses claimed by the wife if I enforce the Binding Child Support Agreement.
Wife’s financial circumstances
The wife’s weekly income is $1,194.40 and her weekly expenses are $1,165 per week. Thus her income is significantly less than the husband’s. The wife’s expenses were not challenged (including expenses claimed under the Binding Child Support Agreement) and I consider them to be reasonable.
Circumstances at the time of agreement
In the present case the Binding Child Support Agreement has been in place from 13 February 2013 until the present time. The circumstances at the time of the agreement were that the parties entered into the Binding Child Support Agreement at the same time as they entered into a property settlement consent order under the Family Law Act 1975 (Cth)(as amended ‘the Act’).
The circumstances at the time the parties entered the Binding Child Support Agreement are not in evidence to any extent. However, the wife says she agreed to a less favourable order in the property settlement because the parties entered the Binding Child Support Agreement at the same time. This evidence was not challenged by the husband. I accept this evidence.
The factors relied on to set aside the Agreement
The husband’s case is that he pays every single child expense as well as the highest nationally scheduled rate of child support. This is what the husband agreed to do when he entered into the Binding Child Support Agreement and he had legal advice at the time.
The husband in particular objects to the wife’s application for him to pay the private school fees. The husband also submits that his legal fees have exceeded $200,000 over the last four years and that that is something I should take into account. The husband says that he has borrowed $40,000 from friends, but that amount has now reduced to $5,000. The husband further says that he only has $2,500 in the bank and has a large mortgage on his home with repayments of $4,500.
I note that a number of circumstances collectively can amount to exceptional circumstances. In the present case I do not accept that private school fees are not covered by the Binding Child Support Agreement, as they were clearly contemplated when the agreement was drafted because the agreement specifically notes:
“4. That:
4.1 The Mother and the Father shall pay to the other parent by way of Child Support, the amount as assessed from time to time by the Agency pursuant to the Act, with such amounts to be paid on the due date stipulated for payment.
4.2 The Father shall pay all educational expenses for the children including but not limited to the costs of the school fees for any fee paying schools the children may attend;
4.3 The Father shall pay the costs of school uniforms and school shoes for the children as required to attend the schools and as required in sporting, cultural and other activities the children may be involved in at the schools, together with the cost of text books, stationary, compulsory excursions and camps associated with the children’s attendance at their schools;
4.4 The Father shall pay the costs of any extra-curricular activities in which the children are enrolled;
4.5 The Father shall pay the cost of the health insurance policies for the children as and when they fall due, and ensure that these health insurance policies remain current.
4.6 The Father will be responsible for the cost of any medical treatment of the children including the cost of any gap between the cost of any medical treatment and the cover provided by the health insurance policies, together with the cost of any pharmaceutical or prescription medicines for the children;
4.7 The payments referred to in clauses 4.2-4.6 shall not be taken into account by the agency when making the assessment of child support referred to in clause 4.1”
Clearly school fees are contemplated given that 4.2 of the agreement the parties entered into provides for “school fees for any fee paying schools the children may attend”
I note in the evidence that the husband gave during the hearings, that the parties had contemplated (omitted) School (‘(omitted)) and (omitted) College. Both of these schools are private schools and were discussed during the time the parties were together. The Binding Child Support Agreement was signed after the parties had separated. I therefore do not accept the husband’s submission that his wish for the children not to go to a private school is an exceptional circumstance that would justify setting aside the Binding Child Support Agreement.
The husband’s legal fees were a matter for him and a decision he made. In terms of the father’s financial statement filed on 14 September 2016, the legal fees do not seem to still be a current expense. I can conclude from that that the husband has paid off the substantial amount of $200,000 in legal fees. This therefore frees up funds that can be used to support the children.
The factors that the husband raises as exceptional circumstances were circumstances that were in existence at the time he entered into the Binding Child Support Agreement for the most part, or circumstances that arose as a consequence of decisions he made, for example to engage lawyers in relation to the property settlement and parenting proceedings. I do not consider that any one of these circumstances, or the total collective of them, amounts to an exceptional circumstance or circumstance that would justify setting aside the Binding Child Support Agreement. Therefore, I will dismiss the husband’s application to have the Binding Child Support Agreement set aside.
Enforcement
The wife seeks as at 31 May 2016, enforcement of:
a)$3,923.76 for items that she says fall within the Binding Financial Agreement including pharmaceutical and prescribed medicines, educational expenses, school activities, school uniforms and various other expenses; and
b)$8,110 in school enrolment and tuition fees until 22 April 2016.
None of the items the wife claimed, as set out in her affidavit filed on 31 May 2016 in annexure “M-1”, were challenged by the husband.
I accept that the claimed amounts all fall within the Binding Child Support Agreement. I am satisfied that the husband has a responsibility to pay for school fees as and when they fall due under the Binding Child Support Agreement.
Enforcement of a Binding Financial Agreement
I can enforce the Binding Child Support Agreement as if it were an order of the Court. The wife is seeking enforcement of $12,033.76 of expenses. This is approximately $230 per week. I consider the husband on his own evidence has that amount of money available to fund the expenses.
The only asset available to sell to fund the expenses is the former matrimonial home. I note the children reside in that home five nights a fortnight. The wife has a very humble home valued at $400,000. The husband’s home is valued at $1,000,000 so if it is necessary to sell it to enforce the Binding Child Support Agreement there will be more money available in the future for the children.
I will therefore order that the husband pay the arrears of school fees for 2016 and the other expenses claimed by the wife. I will order the husband to pay those expenses with interest by on or before 12 December 2016 and if he fails to do so I will order the sale of his home in default.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Judge Cassidy
Date: 16 November 2016.
0
11
4