N and B
[2006] FMCAfam 298
•30 June 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| N & B | [2006] FMCAfam 298 |
| CHILD SUPPORT – Application to vary an agreement – rectification – agreement – containing error – rectification available. |
| Child Support (Assessment) Act 1989, ss.81, 82, 83, 84, 85, 92, 94, 95, 97, 98, 117, 136, 137 Family Law Act 1975, s.79a Federal Magistrates Court Rules 2001, r.16.05(2)(e) |
| Australasian Performing Right Association Ltd v Austrarama Television Pty Ltd [1972] 2 NSWLR 467 Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, 4th edition, LBC Sydney |
| Applicant: | S V N |
| Respondent: | B E B |
| File Number: | MLM 10082 of 2005 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 5 June 2006 |
| Date of Last Submission: | 5 June 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 30 June 2006 |
REPRESENTATION
| Advocate for the Applicant: | In person |
| Advocate for the Respondent: | In person |
ORDERS
That the child support agreement entered into between the parties in June 2005 be varied by deleting the words ‘$600 per month’ and substituting the words ‘$150 per week’.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 10082 of 2005
| S V N |
Applicant
And
| B E B |
Respondent
REASONS FOR JUDGMENT
The applicant brings an application to set aside or vary a child support agreement entered into between the parties on or about 30 June 2005. The agreement provides for child support at the rate of $600 per month for the period 1 July 2005 to 31 December 2006 without adjustment for inflation or unemployment.
Whilst the application sought to attack the agreement on a variety of bases, after conciliation the parties agreed to proceed on the basis of two limited issues: first, whether or not the child support agreement contains an error in setting the monthly rate at $600 per month rather than $150 per week; and second, whether the end date of the agreement ought to have been 30 June 2006. In substance that applicant sought rectification of the agreement.
The respondent filed no material and did not seek to cross‑examine the applicant on her affidavit. The applicant sought to cross‑examine the respondent, which I granted her leave to do, in order to obtain evidence from him which would not otherwise have been available to her.
The matter has had a lengthy history. The parties separated in 1996 after a marriage of around six years. The applicant has three children:
JSH, born August 1986; JAB, born April 1991; and DEB, born
November 1992. The respondent is the father of the younger two children.
The parties have had extensive proceedings with respect to child contact issues in the Family Court, from May 1997 until February 2000. The existing regime is governed by orders of Carter J made on 18 June 1998 and Fitzgibbon R made on 15 February 2000. For the purpose of this decision, it is not necessary to recount the terms of those orders.
For the 2004/2005 financial year, the parties had entered into a child support agreement. On 15 May 2005, the respondent sent an email to the applicant seeking to negotiate a further agreement to continue an arrangement of paying $150 per week in child support. It also commenced some negotiations with respect to contact handover arrangements.
This email was responded to by the applicant on 18 May 2005, addressing the issue of the quantum of the child support that would be required. On 19 May 2005, the respondent replied by email advising that the Child Support Agency would accept an agreement of $150 per week if the parties agreed to that rate, and further material relating to the contact issue.
The discussions as to whether or not the Child Support Agency would accept an agreement of $150 per week (which was then said to be less than the formula assessment that would issue) were continued in an email by the applicant to the respondent on 21 May 2005.
On 31 May 2005, the respondent forwarded to the applicant a child support agreement form in the mail for her to fill in. That particular document was not available at the hearing however, it was not ultimately completed by the applicant in any event.
On 17 June 2005 the respondent followed up the applicant about whether or not she was prepared to agree to the form of agreement that he had sent to her (having previously received an email from her advising, ‘I am still in the process of reviewing the agreement document and will notify you as soon as possible on this matter’).
On 27 June 2005 the applicant forwarded an agreement that she had drafted for the respondent to consider, advising that if the agreement she had forwarded was rejected, the parties might still be able to come to some other mutually acceptable arrangement.
The agreement as drawn by the applicant is the one that was ultimately signed by the respondent on 30 June 2005. It provides in clauses 3 and 8 as follows:
3. The Parties agree that the Payer will pay periodic child support to the Payee at a reduced rate of $600 per month. This represents a payment of $300 per month for each child.
…
8. The parties agree this Agreement will end on 31 December 2006.
The applicant says that these clauses were drawn in error, in that she had overlooked the fact that $600 per calendar month would be less than $150 per week, and had intended that the agreement end on 30 June 2006, not 31 December 2006.
The applicant cross‑examined the respondent who, during the course of his evidence, agreed that he realised that clause 3 of the agreement was a mistake on the part of the applicant, and that she never intended to accept less than $150 per week.
With respect to the end date of the agreement the applicant says that, as the previous agreement was for one year, it would be assumed that the current agreement would also be for one year. The respondent said that he does not recall the parties ever having a discussion as to the particular end date that would be agreed, and thought that the date on the document was the offer the applicant intended.
The respondent explained in evidence that at the time the applicant sent him the agreement she had drawn he was becoming increasingly concerned that the previous agreement would shortly come to an end and a future agreement was not yet in place. He signed the agreement forwarded by the applicant on the basis that he was prepared to accept the terms she had sent to him rather than running the risk that further negotiations would result in the parties not being able to reach an agreement. In effect, his evidence is that he accepted the terms proposed by the applicant rather than running the risk of not having an agreement at all, although being aware that the rate of $600 per month must have been in error and the rate of $150 per week was intended by the applicant and acceptable to him.
The agreement was ultimately registered with the Child Support Agency and currently governs the terms of the administrative assessment of child support as between the parties.
Part 6 of the Child Support (Assessment) Act 1989 governs the operation of child support agreements. A child support agreement is defined in s.81, by providing that the agreement must be in writing and a number of matters that the agreement must contain (set out in ss.82 to 85). The agreement in this case appears to comply with those provisions. The agreement, it appears, was subsequently accepted by the Child Support Registrar under s.92 and therefore governs the child support assessment, as a result of s.94. Section 95 of the Act provides that the terms of an agreement that make provision for the periodic rate of child support have effect as if they were an order made by consent by a court under division 4 of part 7.
Variation of child support agreements is provided for under s.97 (by way of a subsequent child support agreement) and 98, which provides as follows:
98Variation etc. of provisions of child support agreement by court order
(1) Where:
(a) under section 95, provisions of a child support agreement have effect, for the purposes of Part 5, as if they were a court order of a particular kind; and
(b) the agreement, or those provisions of the agreement, are registered in a court having jurisdiction under this Act;
the provisions may be discharged, suspended, revived or varied by the court in the same manner and in like circumstances as the court could discharge, suspend, revive or vary an order of that kind made by it.
(2) Where any difficulty arises in the application of subsection (1) in or in relation to a particular proceeding, the court exercising jurisdiction in the proceeding may, on the application of a party to the proceeding or of its own motion, give such directions, and make such orders, as it considers appropriate to resolve the difficulty.
Sections 136 and 137 of the Act also provide for a power to set aside a child support agreement in limited circumstances. Those sections are in the following terms:
136 Power of court to set aside agreements
(1)A court having jurisdiction under this Act may set aside a child support agreement that has been registered in the court if the court is satisfied, on application by a party to the agreement, that the concurrence of the party was obtained by fraud or undue influence.
(2)Subject to section 145 (Registrar may intervene in proceedings), the parties to a proceeding under subsection (1) are the parties to the agreement.
137Court may make orders consequential on setting aside of agreement
(1)This section applies where a child support agreement made in relation to a child is set aside under section 136.
(2)A court having jurisdiction under this Act may make such orders (including orders for the transfer of property) as it considers just and equitable for the purpose of preserving or adjusting the rights of the child or a party to the agreement.
(3)An order under subsection (2) may be made in the proceeding in which the agreement is set aside or in another proceeding brought on the application of a party to the agreement.
(4)In the exercise of its powers under this section, a court must have regard to the interests of, and must make any order proper for the protection of, a bona fide purchaser or other person interested.
In this case, there is no evidence before the court to show that the agreement was obtained by fraud, nor does the affidavit of the applicant appear to me to show a case of undue influence. In any event, these issues were not pursued before me in this matter. Section 136 therefore has no application in this case.
The principles applicable to determining whether or not a written document should be rectified are set out in Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336. In that case, issues relating to unilateral mistake known to the other party to the transaction did not arise for determination, the court simply stating (at 351):
An alternative argument was advanced by the appellant based on a series of authorities which are said to decide that if one party to a transaction knows that an instrument contains a mistake in his favour but does nothing to correct it, he will be precluded from asserting that the mistake is unilateral and not common: see Whiteley v Delaney [1914] AC 132; Monaghan County Council v Vaughan [1948] IR 206; and George Cohn Sons and Co Ltd v Docks and Inland Waterways Executive (1950) 84 Lloyd's Law Reports 97
Whilst rectification generally requires a mutual mistake, it is nonetheless available in the case of a unilateral mistake, provided that the other party to the agreement has knowledge of the mistake and remains silent: see Johnstone v Commerce Consolidated Pty Ltd [1976] VR 463 at 468-9 (affirmed on appeal [1976] VR 724 at 731-2), and Johnston v Arnaboldi [1990] 2 Qd R 138 per Connolly J at 144 (with whom Carter and Moynihan JJ agreed). In Thomas Bates and Sons Ltd v Wyndham's (Lingerie) Ltd (1981) 1 WLR 505, there was a difference of opinion as to whether or not the mistake must benefit the non‑mistaken party. In this case the mistake clearly benefited the non‑mistaken party, and therefore this question of law does not need to be determined here. Whilst the applicant prepared the document, rectification can be granted in favour of the party who prepared the document: see Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4th ed) (LBC: Sydney, 2002) at 896.
Rectification is available with respect to a wide variety of documents including: a marriage settlement (see Cogan v Duffield [1878] 2 Ch D 44) and a consent order (see Huddersfield Banking Co v Henry Lister and Son Ltd (1895) 2 Ch 273). However, rectification is not available to alter the articles of association of a company because the articles take effect on registration and bind not only the parties to the articles agreement, but all other members of the corporation: see Santos Ltd v Pettingell (1979) 4 ACLR 110 at 118. (relying on Scott v Frank F Scott (London) Ltd [1940] 1 Ch 794 at 802.
A child support agreement takes effect upon registration as if it were an order of the court. Whilst at first blush it only appears to affect the interests of the parties to the agreement it may also affect social security payments to the carer: this is one of the reasons that the Registrar must exercise her discretion in determining whether to accept the agreement: see s.92 of the Act. The operative power or effect of a child support agreement comes from its acceptance by the registrar, not simply the agreement of the parties: see generally Harris v Caladine [1991] HCA 9, (1990) 172 CLR 84 at 104 and De Lasala v De Lasala [1980] AC 546 at 560 with respect to property orders reflecting consent arrangements.
In this sense it is different from a contract. The Registrar accepted the agreement on its face, not an agreement in the rectified terms. This militates against rectification being available for the same reasons as are set out in Santos Ltd v Pettingell (1979) 4 ACLR 110 at 118.
However, on registration of the agreement if can be varied as if it were a court order: see s.98(1). Court orders can be amended or rectified in limited circumstances. Most commonly orders are amended under the ‘slip rule’. The breadth of the rule was discussed in some detail by Lockhart J in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385; 133 ALR 206 where his Honour said at [24] to [25]:
24. It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court's order was made, or judgment given. It extends to the intention which the Court would have had, but for the failure that caused the accidental slip or omission: Symes v Commonwealth of Australia (1987) 89 FLR 356. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party's legal representative: Fritz v Hobson (1880) 14 ChD 542 at 561-2; Chessum and Sons v Gordon (1901) 1 QB 694; Tak Ming Co Limited at 304; Shaddock per Mason A.CJ, Wilson and Deane JJ at 594-5; and Gould v Vaggelas at 274-275.
25. The circumstances in which the slip rule has been applied are numerous and varied. Examples of the application of the rule include amendments, to allow a proper order for costs: Armitage v Parsons (1908) 2 KB 410; to increase the amount of an award of damages: Storey and Keers Pty Limited v Johnstone (1987) 9 NSWLR 446; to permit a proper calculation of interest: Ninnis v Miller (1905) VLR 669; to permit a claim for interest to be added to the amount of the judgment: Shaddock; to order repayment of monies previously paid by the defendant where the subsequent appeal was upheld: Commonwealth of Australia v McCormack (1984) 155 CLR 273; to alter a wrong date or figure in the orders, where the parties and the Court both used the same wrong date or figure, but the correct figure had been available at the relevant time: Re J W Challand Pty Limited (1945) 62 WN (NSW) 166; and, to limit the time of an injunction's application: Shipwright v Clements (1890) WN 134. See also the Supreme Court Practice 1995 (UK) (the White Book) pp. 385-6, Notes 20/11/3 and 20/11/6.
This power of correction has also been reflected in r.16.05(2)(e) of the Federal Magistrates Court Rules 2001 which says:
16.05 Setting aside
(2) The Court may vary or set aside its judgment or order after it has been entered if:
….
(e) the order does not reflect the intention of the Court;
In these circumstances, the appropriate principles to be considered are those applicable to varying a consent order. In H & G Group v Pilot Developments [2002] NSWSC 257 Austin J said that:
[28] … a consent order may be varied where the underlying simple contract is amenable to rectification, just as a consent order can be set aside where the underlying contract is voidable on equitable grounds.
In Harris v Caladine (1991) 172 CLR 84 the High Court considered the intersection of the principles of contract and family law with respect to an order reflecting an agreement of the parties, saying:
12. A consent order under s.80(1)(j), though made in accordance with the parties' contract, takes effect as an order of the Court and is enforceable as such rather than as a contract to be sued on in a separate action: De Lasala v. De Lasala [1980] AC 546, at p 560 ...
3. Impugning a consent order.
13. When the parties to a contract choose to have the contract embodied in a consent order of the court, the court "will only interfere with such an order on the same grounds as it would with any other contract": per Lord Denning M.R. in Siebe Gorman Ltd. v. Pneupac Ltd. (1982) 1 WLR 185, at p 189; (1982) 1 All ER 377, at p 380. And see Harvey v. Phillips (1956) 95 CLR 235, at pp 243,244; Huddersfield Banking, at p 280. …
There is no reason why, on a review of a consent order made by a Registrar or on an application under s.79A, the Family Court should not exercise a jurisdiction to set aside a consent order obtained by fraud, duress or mistake. By neither procedure would the statutory objective of securing a final determination of financial relationships (s.81) be frustrated: cf. Dinch v. Dinch [1987] 1 WLR 252; [1987] 1 All ER 818.
Thus, at least with respect to consent orders made in the exercise of the discretion provided for under the Family Law Act 1975, rectification will be available, in addition to the remedies provided for in s.79a. Indeed, this must be the case as there are many cases where final consent orders are later amended to correct slips or omissions, which were never within the contemplation of the judge, federal magistrate, or registrar at the time the order was made.
It appears to me that the intention of parliament in enacting s.98 of the Act was to ensure that when dealing with a child support agreement the court had all of the powers that it would have had with respect to a consent maintenance order or consent departure order under the Act. Indeed, even when a variation of a child support agreement is sought via s.117(2), the original agreement’s effect even confers the benefits of, effectively, an issue estoppel as at the date of the agreement:
A change in circumstances since the agreement must be shown before a departure is provided, see Bryant & Bryant (1996) FLC ¶92-690 and Toms & Toms [2004] FMCAfam 688 at [13]. Thus, the court has a discretion to correct mistakes in child support agreements, just as it could correct mistakes in consent departure orders. The one important caveat is that an important factor when considering the exercise of the discretion to order rectification is to have regard to whether the agreement would have nonetheless been accepted by the child support registrar, or alternatively made as a consent order by the court on a departure application.
In this case the respondent was aware of the error about the rate of child support and knew of the applicant’s true intent in drawing the agreement. He earlier offered the rate of $150.00 per week. The parties held ‘identical contractual intention on each side’ at the relevant time: see Australasian Performing Right Association Ltd v Austrarama Television Pty Ltd [1972] 2 NSWLR 467 (per Street CJ), as approved in Hooker Town Developments Pty Ltd v Director of War Service Homes (1973) 47 ALJR 320 at 323. I therefore find that rectification of the child support rate would be available if this were a contract.
With respect to the end date of the agreement, I do not accept that the responded was aware of this error, nor that it would have been apparent to him at the time. He did nothing to cause the error to arise. There was no earlier ‘identical contractual intention on each side’. I therefore find that rectification would not be available to the applicant with respect to the end date of the agreement.
The variation sought in this case is an increase in the rate of child support. As this would have no adverse effect on the cost to the social security system, in comparison to the existing agreement, it would have nonetheless been accepted by the Child Support Registrar.
It is therefore appropriate to vary the agreement in this respect in order to effect the rectification.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Associate: Jessica Beck
Date: 7 July 2006
0
12
3