Metcher & Vittey
[2021] FCCA 1761
•6 August 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Metcher & Vittey [2021] FCCA 1761
File number(s): NCC 2872 of 2020 Judgment of: JUDGE TERRY Date of judgment: 6 August 2021 Catchwords: FAMILY LAW – property – application to set aside a binding financial agreement– allegations of duress, unconscionable conduct and undue influence – allegation of material change of circumstances – duress, unconscionable conduct and undue influence not made out – where has there has been a material change of circumstances and where as a result of the change the applicant would suffer hardship if the agreement was not set aside – where the court is satisfied that in the exercise of its discretion the agreement should be set aside Legislation: Family Law Act 1975 (Cth) ss 90UD, 90UM Cases cited: Daily & Daily [2020] FamCAFC 304
Scott & Scott (No.3) [2019] FamCA 936
Thorne & Kennedy [2017] HCA 49
Whitford & Whitford (1979) FLC90-612
Number of paragraphs: 104 Date of last submission/s: 23 June 2021 Date of hearing: 9 April and 23 June 2021 Place: Newcastle Counsel for the Applicant: Mr Rugendyke Solicitor for the Applicant: Burke & Mead Lawyers Counsel for the Respondent: Mr Mueller Solicitor for the Respondent: Bilson Law
NCC 2872 of 2020 BETWEEN: MR METCHER
Applicant
AND: MS VITTEY
Respondent
ORDER MADE BY:
JUDGE TERRY
DATE OF ORDER:
6 AUGUST 2021
THE COURT ORDERS THAT:
1.The Financial Agreement dated 9 April 2020 is set aside.
2.The matter remains adjourned to 9.30am on 27 August 2021 for further consideration.
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Metcher & Vittey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE TERRY
INTRODUCTION
On 9 April 2020 Mr Metcher (“the father”) and Ms Vittey (“the mother”) signed a financial agreement under s. 90 UD of the Family Law Act finalising their property matters following the end of their eleven year de facto relationship.
The agreement provided for the father to transfer his interest in B Street, Suburb C to the mother and for the mother to assume liability for the mortgage. The parties were to otherwise retain the assets and superannuation in their possession.
On the same day the parties signed a Parenting Plan which provided for their children X and Y to live in a 50/50 shared care arrangement.
The parenting arrangements broke down after only a few months. On 15 July 2020 X commenced living with the father and on 10 August 2020 he retained Y in his care.
On 13 August 2020 the father filed an application seeking orders that the children live with him and that he have sole parental responsibility for them. On a final basis he proposed that they spend time with the mother on alternate weekends and for a night in the off week provided that they were not at risk of harm in her care. On an interim basis he proposed that the children spend supervised time with the mother.
On 19 August 1920 the father filed an amended application in which he sought orders that the Financial Agreement be set aside. The mother was in the process of selling the B Street, Suburb C property and he proposed that the proceeds of sale be held trust pending determination of his application.
On 1 September 2020 the mother filed a Response. She proposed that the children live with her and spend alternate weekends with the father and that his application to have the financial agreement set aside be dismissed.
Interim orders were made for the net proceeds of sale of B Street, Suburb C to be held in trust pending resolution of the property dispute, and the dispute about whether the financial agreement should be set aside was listed for hearing. Interim orders were also made for the children to live with the father and spend supervised time with mother.
The evidence
The father relied on his Amended Initiating Application and Financial Statement filed on 19 August 2020 and his Affidavit filed on 19 March 2021.
The mother relied on her Response and Financial Statement filed on 1 September 2020 and her affidavit filed on 23 March 2021.
The Financial Agreement was marked as an exhibit and each party tendered some additional documents.
Both parties were cross-examined.
Background
The mother and father commenced living together in 2008 when the mother was 41 and the father 19. They separated on 24 August 2019 and there was no dispute that they were in a de facto relationship between 2008 and 2019.
The parties have two children, X born in 2009 and Y born in 2011. The mother has four older children but for the purposes of this decision that is not a relevant.
The parties commenced cohabitation in a property in Suburb D which was owned by the mother. That property was sold in October 2012 and the mother received net about $150,000.00. The parties then purchased B Street, Suburb C in joint names. The proceeds of the sale of Suburb D were used toward the purchase and the parties also took out a loan which was secured over the home by mortgage.
The father worked full time throughout the relationship. In his affidavit he said that his income was between $50,000.00 and $75,000.00 per annum. That is consistent with his current income of $65,000.00 per annum but he was an apprentice when the relationship commenced so whether his income throughout was in that range I cannot be sure about.
The mother was largely engaged in home duties until she began to work as a tradesperson toward the end of the relationship.
At separation the mother remained in B Street, Suburb C property and the father moved to rental accommodation. He said, and I accept because it is consistent with the information in his Financial Statement, that he borrowed $10,000.00 to help set himself up and buy furniture.
X was 10 and Y 8 at the time of separation. In his affidavit the father said that when the parties separated on 24 August 2019 they came to an agreement to share the care of the children on a week about basis with changeover on Friday. He said that the agreement was generally followed although on several occasions the mother withheld the children for a short time when they were meant to spend time with him.
The parties may have come to that agreement, but the mother said that the father initially had only ad hoc time with the children and that the week about arrangement did not commence until November 2019 when he had satisfactory accommodation. It was common ground at trial that this was correct.
In December 2019 the parties and the children went to Town E on holiday. There was an incident at the campground on 28 December 2019 which led to the police taking out an ADVO for the father’s protection. However the parties attended City F Local Court together on 9 January 2020 and the ADVO was withdrawn.
On 16 January 2020 the mother attended the father’s home when intoxicated. The father said that she was yelling and screaming abuse and the police were called. He said that the mother scratched his car with a rock before driving off. Police later charged her with destroy and damage property and entering inclosed lands and on 23 January 2020 a final ADVO was made for the protection of the father and the children from the mother for two years.
The mother was found guilty of destroy and damage property and a 12 month conditional release order without conviction was made.
As far as I can gather from the parties’ affidavits the week about arrangement continued after that although the father complained that there were occasions when the mother did not adhere to the agreement and withheld one or both of the girls and there was one occasion where he briefly withheld one of them.
It is apparent from the text messages the parties exchanged during February and March 2020 that the father was very keen to have a parenting plan drawn up which provided for the children to live in a 50/50 arrangement. He also raised property matters with the mother and early in the exchanges he suggested that he was entitled to a cash payment if she retained the home.
The mother was adamant that the father was not entitled to anything. In their exchanges she reminded the father that she had brought a home with substantial equity into the relationship and had helped the father out financially and that he was considerably younger than her and had an extra twenty years ahead of him to acquire assets.
After a lot of back and forth the father agreed that he would sign the house over to the mother without requiring payment from her provided that she agreed to a 50/50 shared care arrangement and the mother agreed that if he signed the house over she would agree to the children living in a 50/50 shared care arrangement.
The father had seen a lawyer about drawing up a parenting plan but had decided that it would cost too much. The mother had told the father that she could get agreements drawn up at mates’ rates and he pressed her to make arrangements to get both agreements drawn up. In March 2020 the mother went to see G Law Firm who drew up a parenting plan and a financial agreement pursuant to s. 90UD of the Family Law Act.
In early April 2020 the mother, at the father’s request, made an appointment for the father to see Mr H, a solicitor, with a view to him obtaining independent legal advice and signing the financial agreement and at the same time signing the parenting plan.
An appointment was made for the father to see Mr H on 9 April 2020 and on 9 April 2020 the mother saw her solicitor and signed both documents and delivered them in an envelope to Mr H’s office.
Mr H advised the father against signing the financial agreement which provided for the mother to retain the house without making a payment to him. However he said that he understood that there may be other considerations which made the father feel that it was appropriate to do so such as his greater income earning capacity.
It is unclear to me if Mr H was made aware of the fact that the father had superannuation of about $45,000.00 and the mother had minimal superannuation. Although the financial agreement provided for each party to retain their superannuation, the value of their superannuation was not recorded in the agreement.
The father signed both documents and delivered them to the mother’s solicitors.
Subsequently the father signed documents transferring his interest in the B Street, Suburb C property to the mother.
The week about arrangement for both children continued until 15 July 2020 when the father said that he received a distressed call from X asking him to pick her up because the mother was “going off her brain” and was drinking. He went to the mother’s home and collected X and she has lived with him ever since.
The father saw Y on 28 July 2020 but then did not see her again until he collected her from the mother’s house on 10 August 2020. Later that evening the mother attended at the father’s home. The father said that she was intoxicated and barged into his house demanding that Y leave with her. He said that the mother threw punches at him and hit him in the head. The father called the police.
The mother decamped but she was later charged with breach of ADVO, Common Assault and Destroy and Damage property and was convicted of these charges and placed on a 12 month Community Corrections Order.
On 13 August 2020 the father filed an Initiating Application seeking orders that the children live with him.
On 19 August 2020 the father filed an Amended Initiating Application in which he sought orders that the binding financial agreement be set aside and that property settlement orders be made.
The mother had placed the B Street, Suburb C property on the market and it had quickly sold and on 24 August 2020 an order was made that the net proceeds of sale be held in trust. The property sale settled on 30 September 2020 and $380,949.69 is held in trust.
The children initially they spent supervised time with the mother but in December 2020 an order was made for them to spend alternate weekends with her and to the best of my knowledge that has been occurring.
The mother has moved to Town J near City K which is about 3 ½ hours from City L. The father and the children are still living in City L and alternate weekends are all that is practical.
The parties agreed to pay for the preparation of private family report and that has been prepared and released to the parties but they remain in dispute about final parenting arrangements for the children. However it is noted on those orders that to the best of the courts knowledge the only issue in dispute is the time the mother should spend with the children.
The applicable law
The financial agreement the parties signed on 9 April 2020 was made pursuant to s. 90 UD of the Family Law Act.
Section 90UM of the Family Law Act contains a number of grounds on which financial agreements made pursuant to s. 90 UD may be set aside and the father relied s. 90 UM (1) (e), (g) and (h) which provide as follows:
(1)A court may make an order setting aside, for the purposes of this Act, a Part VIIIAB financial agreement or a Part VIIIAB termination agreement if, and only if, the court is satisfied that:
(e) the agreement is void, voidable or unenforceable; or
…………………………….
(g)since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the de facto relationship) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (4)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or
…………………………
(h)in respect of the making of a Part VIIIAB financial agreement - a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable;
In support of his case that the agreement should be set aside because it was void, voidable or unenforceable the father submitted that he had signed the agreement under duress or as a result of undue influence exerted by the mother. Effectively therefore he relied on four matters and I intend to deal with them in the following order:
(a)Duress.
(b)Unconscionable Conduct.
(c)Undue Influence.
(d)Material Change of Circumstances.
The onus is on the father to establish on the balance of probabilities that one or more of the grounds in s. 90 UM is established, and if he does the court may then in the exercise of its discretion set the agreement aside.
Duress
Mr H told the father on 9 April 2020 that he suspected that the father was signing the agreement because he was under duress, but the way in which that term is commonly used and the way it is used in the legal system differ.
A dictionary definition of duress is threats, violence, constraints or other action used to coerce someone into doing something against their will or better judgment. However in his summary of argument the father’s counsel accepted that on the current state of the law in order to establish duress the father would have to establish that he was the subject of threatened or actual unlawful conduct which applied illegitimate pressure upon him and was an influential factor in him deciding to sign the financial agreement.
In an attempt to establish this the father said as follows in his affidavit:
Prior to signing the Financial Agreement I had indicated to Ms Vittey that I might take the matter to Court both about parenting and property issues. When I said anything like this Ms Vittey said to me “You won’t get that far. You will be done before Court”. I understood by ‘done’ Ms Vittey to mean ‘dead’. I said to her “Are you threatening me?” Ms Vittey’s response was “Karma will get you”.
Ms Vittey also said to me “I have spent $10K to have you done over. You better sleep with one eye open.” I understood this to mean that Ms Vittey had hired a hit man to kill me. [1]
[1] Father’s affidavit paragraph 78 & 79
The father said that he believed that the mother was capable of carrying out the threats.
The difficulty for the father is that I cannot be satisfied on the balance of probabilities that the mother made such threats prior to him signing the financial agreement.
The father attached to his affidavit a text message exchange between the parties on 31 May 2020, after the agreement was signed, where the following was said:
Mother
All good mate. You narisstic (sic) pathology (sic) liar and cheater who turns it all back on me. Lol YOU will regret what you have done to the girls and I
Father
Is that another threat?
Mother
Threat? Not at all mate. Just saying what YOU did to the girls and I and I believe in karma.
There was also another exchange in May 2020 where the father told the mother that calling and saying she would have someone do him over was a breach of the ADVO.
The father alleged that the mother had said “that sort of thing” to him before he signed the agreement but there is no sign of that in the copious text messages tendered by the parties at the hearing.
I cannot be satisfied on the balance of probabilities that this occurred. The father bears the onus of proving this ground and he has failed to do so.
Unconscionable conduct
The father next asserted that his consent to the financial agreement was induced by the mother engaging in behaviour which was in all the circumstances unconscionable.
In Thorne & Kennedy the High Court said as follows:
A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests" The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimization", "unconscientious conduct" or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.[2]
[2] Thorne & Kennedy (Supra) paragraph 38
The father’s counsel submitted that the father’s limited financial means and his desire to secure an equal shared care arrangement and maintain a relationship with his children placed him at a special disadvantage and that the mother was aware of that and took advantage of it to dictate the terms on which she was prepared to enter into a parenting plan.
There is no evidence of the mother unconscientiously taking advantage of the father. The text message exchanges illustrate that she considered that her proposal that she retain the house and make no payment to the father was fair. On 27 March 2020 the following exchange occurred:
Father
And I’ve also worked so hard for the past 13 years but you expect me to walk away with NOTHING? How do you see that as fair?
Mother
I don’t mean to sound hard but it hasn’t been 13 years of you working hard. You came to my house as an apprentice with nothing and I paid and helped you with everything from your licence to first bikes, cars and other material things and supported you because I loved you and trusted you. Gave up my career earnings to have our girls yet you still don’t get that. Again I say $219k to our relationship and $83,331k in things paid for you. At my age still worked nightshift while raising our girls because you couldn’t support us. Please Mr Metcher I shouldn’t have to keep tell you as you obviously don’t see it.
Father
Ok emoji
Mother
See…I speak from my heart and that’s your smartarse response with the emoji.
The matter is by no means simple. Each party had something they wished to secure and they brought high emotion to it as illustrated in the following exchange:
Father
I won’t be seeing Ms M or anyone around the girls. Your threats of taking them away from me and never seeing them again really frightens me and that’s why you leave me no choice but to protect them and my rights by going through court with this and get a parenting court order in place. If you didn’t threaten to take the girls out of my life ten I was happy to let things go, like the damage to the car and possibly the house but if you want to continue to be nasty then you leave me no choice to go for everything that I’m entitled to. I’m sick to death of arguing with you. Just let the girls see me on a 50 50 basis and all this court stuff and worries and the house won’t be a problem for you. It’s your choice how you want to do it but either way you cannot keep them away from me. (my emphasis)
Mother
So you do get what you did was a bad choice and too soon? Thank you. That’s all I wanted from the beginning. I wanted to see how the 50/50 thing went with their behaviour and routine without adding other people in the mix to confuse them and them coming home and blurting all this stuff that’s in their heads. You do know the courts usually rule the father had them every 2nd weekend and a dinner night through the week so it’s very generous if I agreed on 50/50. Just curious why you want 50/50 anyway? You don’t think I’m not frightened? Frightened of you taking the girls off me, frightened I’d have to sell and move away to the country if I was forced to sell. Frightened because you have left me in financial hardship, struggling after sacrificing my health to have the girls at the age I did. Frightened because I have to raise children alone again at my age. You are young enough to start again and have more children with someone new and enjoy your life. I just want to enjoy the rest of what I have let in peace without you continually trying to hurt me more than you already have….
Father
I understand what you are saying and will think about what is best for the girls. Will they be coming to me on Friday? [3]
[3] Tender Bundle Exhibit D pages 64 & 65
The father does not suffer from any mental health issues or drug and alcohol issues. He does not suffer from any language difficulties and it is obvious from the text messages that there are no issues with his cognitive capacity. He gave as good as he got during the parties exchanges, as the following passage illustrates:
Father
Get off the grog for fuck sake.
Trying to move on and get along and be friends but no you can’t do that. You have to get on the piss and abuse me as you’ve done for 13 years. Oh wow I commented on something that my mum posted on Facebook, how dare I do that. This is so pathetic and this is why I need court ordered parenting plan is place otherwise you will never stick to it. It’s as though you are 2 complete different people. Maybe bipolar? I’m not sure but Until you have the correct documents drawn up and registered through the courts then I won’t be signing the house over to you. Have a think about your actions when you drink and how completely different you are and how your mind works against you. It’s not healthy and you need to stop. Another abusive text and I will block you again this needs to stop. (my emphasis)
The father was not above engaging in his own threats to try and get the outcome he wanted, as the following exchange illustrates:
Father
Yeah yeah yeah. Stop believing the lies. I will be contacting a solicitor this week to get the ball rolling to. Terrible time to have to sell the house too but I guess you will have no choice unless you can borrow to pay me out which will be hard when you only work 8 hours a week. I was willing to sign the house over but you want to continue to be nasty and start fights and carry on then we will go through court and settle the property that way.
Mother
You are the one being nasty and starting fights. Now telling me you involved your parents recording me? Ok so you want to cancel the 50/50 agreement for the girls and fight me in court? You want to force me to move away with the girls as I won’t be able to afford to buy here? Have a think about that first instead of threatening me again. You want to spend hundreds and thousands in solicitors fees? I’ll get legal aid now on my 8 hours a week so will cost me nothing. You will end up with end up with standard every second weekend if you do. That’s if they even want to see you. They have both said now they don’t want to go to yours now as they see me upset again. See how you are upsetting them. You need to think about things.
It is simply not open on the evidence for me to find that the mother unconscientiously took advantage of the father, let alone that he suffered from a special disadvantage which caused her to successfully prevail.
Undue Influence
The father’s counsel submitted that the father signed the financial agreement as a result of undue influence exerted by the mother and he said that this was the father’s strongest ground.
In Thorne & Kennedy the High Court discussed at length what constitutes undue influence and referred to a situation where as a result of pressure placed upon them a person
…has no free will, but stands in viculus [in chains].[4]
[4] Thorne & Kennedy (supra) paragraph 31
In his written submissions the father’s counsel referred to the following passage from Thorne & Kennedy:
The question whether a person's act is "free" requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party It is not necessary for a conclusion that a person's free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a "mere channel through which the will of the defendant operated". Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be "markedly sub-standard" as a result of the effect upon the person's mind of the will of another.[5]
[5] Thorne & Kennedy (supra) paragraph 53
He also referred to the following passage from the Full Court decision of Scott & Scott:
Application of the doctrine of undue influence to the evidence is not an exercise of mathematical precision; questions of degree are involved (Thorne at [32], [62], [91], [95]). In the case of matrimonial agreements, the indicia of undue influence for which the High Court suggested the evidence should be searched are the opportunity for negotiation, the emotional circumstances in which the agreement was entered, whether threats of one kind or another were made, whether there was time for careful reflection, the parties’ relative financial positions, the receipt of independent advice, and the time available to reflect on that advice (Thorne at [60]).[6]
[6] Scott & Scott (No. 3) [2019] FamCA 936
The grounds of undue influence and unconscionable conduct can overlap and some of the passages in the text message exchanges that I have referred to when dealing with the issue of unconscionable conduct illustrate why there is also no sign in this matter of the father have been induced by undue influence to sign the financial agreement.
The father’s counsel submitted that the court should have regard to the fact that there was no opportunity for the father to carefully reflect on the financial agreement before he signed it because he was not shown a copy of it until he was in Mr H’s office.
There was a dispute about whether the father saw the agreement beforehand or not; the mother said he did and it was one party’s word against the others and I cannot resolve that dispute. However even if he didn’t, the document he was shown contained exactly what he expected to see: that he would be signing the house over to the mother without receiving any cash in exchange.
The parties had negotiated back and forth about that for over two months. The situation is quite different to the one in Thorne & Kennedy, where the mother was confronted for the first time in her solicitor’s office with a complex agreement setting what she would receive depending on how long the marriage lasted and told that the marriage would not go ahead unless she signed it.
The father submitted that he signed the agreement in the emotional circumstances of the mother having recently withheld the children for a period of time and maintaining that one or other of them did not want to spend time with him. However there was also an occasion before the agreement was signed when the father withheld one of the children. After both occasions the children had resumed spending time with each parent in the week about arrangement.
Both parties were under the influence of strong emotions during the negotiations. The father got what he wanted on 9 April 2020, the parenting agreement, and the mother got what she wanted, the house signed over to her without payment.
I am not satisfied on the father has established on the balance of probabilities that the financial agreement was signed as a result of undue influence applied by the mother.
Material change of circumstances
The final ground relied on by the father was that there had been a material change of circumstance and that as a result of the change, the child, or the father, would suffer hardship if the court did not set the agreement aside.
I am comfortably satisfied that since the agreement was signed a material change of circumstances has occurred being circumstances relating to the care, welfare and development of a child of the de facto relationship.
“Material” is not a term of art. The dictionary definition of the word used in this context is “significant; important.” When the agreement was signed the children were living in a week about shared care arrangement. That ceased for X in July 2020 and for Y in August 2020. Since then the children have lived with the father. Until December 2020 they spent only supervised time with the mother. They are currently spending alternate weekends with her. Nothing more is possible because she has relocated and is now living many hours away from the children.
This is a significant change of circumstances.
The mother’s counsel submitted that it did not qualify as a change of circumstances for the purposes of s.90UM(1)(g) because the parenting matter was still before the court and it was unclear what the final parenting arrangements would be. I do not accept that. The change has been in place for twelve months and it is a significant change of circumstances, whether or not at some future time a different arrangement is made for the care of the children.
The question that then needs to be asked is whether the children or the applicant will suffer hardship if the agreement is not set aside.
I cannot find that the children would suffer hardship if the agreement is not set aside. The father is working. The family are living in rented accommodation. He did not give any evidence in his affidavit to suggest how the children’s circumstances would be different if the agreement was set aside and obtained some cash from the proceeds of sale of the former matrimonial home.
The issue of whether the father would suffer hardship is something else.
The word “hardship” is not defined in the Family Law Act but it is used elsewhere in the Act in context of whether a party should be given leave to commence proceedings out of time. Its meaning in that context was considered in Whitford & Whitford where the Full Court said as follows:
The loss of the right to institute proceedings is not the hardship, to which the subsection refers. It is with the consequences of the loss of that right, with which the subsection is concerned. The requirement, that the Court must be satisfied that hardship would be caused if leave were not granted, implies that it must be made to appear to the Court that the applicant would probably succeed, if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted. If the probable result of the hearing on the merits is that the hardship is not likely to be alleviated, then the Court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted.[7]
[7] Whitford & Whitford (1979) FLC90-612
The usual approach in an out of time application is to consider the prospects that a party will receive a property settlement worth having if they are allowed to proceed with their application. In Daily & Daily,[8] a case involving an application to set aside a financial agreement on the basis of a material change of circumstances, the Full Court said that the court hearing such an application should consider the position of the parties if the agreement was upheld and the position if it was set aside, which is akin to that approach taken in “out of time” cases in order to determine hardship.
[8] Daily & Daily [2020] FamCAFC 304
In Daily & Daily the Full Court said as follows:
It is well settled that the test for hardship within the meaning of subsection 90K (1) (d) requires a comparison of the position of the child, or the person with caring responsibility, if the agreement remains in place and their position if the agreement is set aside (see Fewster & Drake (2016) FLC 93-745 (“Fewster”) at [67] and Frederick & Frederick (2019) FLC 93-900 (“Frederick”) at [24]).
Using the information in the parties financial statements, which is all I can do, if the agreement remains in place the father will have the following:
Description Value Bank N $2,875.00 Bank N $2,200.00 Motor Vehicle 1 $20,000.00 Camper Trailer $1,000.00 Boat – Tinny Nominal Household contents Nominal Motorbike $1,000.00 Super Fund O $45,811.00 Bank N personal loan ($8,621.00) Car Finance ($19,302.00) Total $43,963.00
The father’s total of $43,963.00 will be made up of superannuation of $45,811.00 and a debt of $1,848.00.
The mother will have:
Description Value Proceeds of sale of B Street, Suburb C $380,949.69 Bank N $306.00 Bank N $490.00 Motor Vehicle 2 $1,500.00 Household contents Nominal Super Fund P $921.00 Loan (2,772.00) Total $381,124.69
The mother will have superannuation of $921.00 and non-superannuation assets of $381,124.69.
The mother currently has 89.2% of the assets and the father 10.8%. There is also an asset mix issue. The father’s entitlement is almost all superannuation, and he is only 32.
If the agreement is set aside the father’s application for a property settlement will be determined pursuant to s. 90SM of the Family Law Act. The court will take into account the contributions each party has made to the acquisition, conservation and improvement of the assets and to the welfare of the family. The mother’s initial contribution of the equity in Suburb D will be taken into account but it will be weighed and balanced against all the contributions during the relationship including the father’s contributions as an income earner. The court will consider s. 90SF (3) matters, including the parties age and state of health, earning capacity and care of children.
The father’s contribution to the care of the children for the last twelve months without any child support being paid by the mother will also be taken into account in assessing contributions.
Although the mother’s initial contribution and her age and income earning capacity will be taken into account, the likely outcome for the father if the matter was heard is that he will receive well in excess of 10.8%, and this is so even if the children ultimately return to a shared care arrangement.
However the likelihood of that is slim at present. The children have been in the father’s primary care for twelve months, the mother has moved away, there have been several instances after separation of the mother being charged and/or the police taking out an ADVO for the protection of the father and the children in connection with the mother’s intoxication and the mother did not raise any concerns about the children’s safety in the father’s care.
The father’s counsel submitted that on his worst day the father could expect to receive 15% of the pool on the basis of contributions and a 10% adjustment for s. 90 SF (3) matters if the children remained living predominantly with him. In my view that is a conservative estimate and there is also the asset mix issue. A likely outcome at trial would be that a superannuation splitting order would be made so that the father received a reasonable share of the cash and the mother a reasonable share of the superannuation.
The father did not provide any information about the cost of pursuing a property settlement, and it would have been wise to do so, but given the amount he might potentially receive I am willing to assume that even after the payment of legal costs he would still gain something worth having if the financial agreement was set aside.
If this matter was being determined as an out of time application the father would satisfy the first limb, that he would suffer hardship if he was not given leave to institute proceedings out of time.
The mother’s counsel submitted that the father’s application must nevertheless fail because he did not provide any evidence that he would suffer hardship in the more traditional sense the word is used, in other words deprivation or inability to properly support the children, if the agreement was not set aside.
The mother’s counsel submitted that all that the father had to establish was that he had a claim worth pursuing if the financial agreement was set aside.
I accept that submission.
The court does not set financial agreements aside simply because they are unfair, but the father signed the agreement in circumstances where it was expected that the children would be living with him 50% of the time. For the last twelve months they have been living with him either 100% of the time or 85% of the time. That change occurred only three or four months after the agreement was signed. The father did not contemplate it and I am prepared to find that he would suffer hardship if he was not permitted to apply for a property settlement in the usual way.
I must still consider whether in the exercise of my discretion I should set the agreement aside, and I am satisfied that I should. The father has established hardship, and it is not through any fault of his that there was a substantial change in the care arrangements for the children only a very short time after the agreement was signed. The notation to the orders made on 11 June 2021 in respect of the parenting matter suggests that there is a real prospect of the children remaining substantially in the father’s care.
I intend to set outside the financial agreement. The matter will remain listed on 27 August 2021 and the parties can then consider how to progress the property matter.
I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Terry. Associate:
Dated: 6 August 2021
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