Neville and Neville
[2010] FMCAfam 1162
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NEVILLE & NEVILLE | [2010] FMCAfam 1162 |
| CHILD SUPPORT – Child support agreement set aside – binding agreement – unconscionable conduct – exceptional circumstances and hardship – loss of financial support provided to the Father by his Mother. |
| Family Law Act 1975, s.79A Child Support Legislation Amendment (New Formula and Other Measures) Act 2006 (Cth) (the Amending Act) Child Support (Assessment) Act 1989 (Cth), ss.3, 4, 80C, 80E , 81, 136(2)(d) |
| Leonard v Leonard [2010] 239 FLR 66 Gallup v Gallup [2009] FMCAfam 839 Simpson and Hamlin (1984) FLC 91-576 Daley & Daley [2009] FMCAfam 398 Henricksen & Janz (No.3) [2008] FMCAfam 1343 |
| Applicant: | MR NEVILLE |
| Respondent: | MS NEVILLE |
| File Number: | BRC 3323 of 2010 |
| Judgment of: | Cassidy FM |
| Hearing date: | 6 August 2010 |
| Date of Last Submission: | 6 August 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 26 October 2010 |
REPRESENTATION
| Solicitors for the Applicant: | Self Represented |
| Counsel for the Respondent: | Mr Alexander |
| Solicitors for the Respondent: | McPhee Lawyers |
ORDERS
That the Child Support Agreement (CSA reference number [omitted]) be set aside by the Court.
That child support payments be administered by the Child Support Agency.
IT IS NOTED that publication of this judgment under the pseudonym Neville & Neville is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA ATBRISBANE |
BRC 3323 of 2010
| MR NEVILLE |
Applicant
And
| MS NEVILLE |
Respondent
REASONS FOR JUDGMENT
Introduction – Orders Sought
This is an application by the Father where he seeks the following orders:
a)That the Child Support Agreement (CSA reference number [omitted]) be set aside by the Court.
b)
That paragraph 11 of the Orders BRM8793/2006 agreed
26 February 2007 be set aside by the Court.
c)That child support payments be administered by the Child Support Agency.
d)That the Court Order that 50% of all school fees, school uniforms, booklists and sporting costs be treated as prescribed payments by the Child Support Agency.
Paragraph 11 of the Orders of 26 February 2007 provides
“The father is not able to claim an entitlement to a non agency payment or credit pursuant to s71A and s71C of the Child Support (Registration and Collection) Act in relation to the payment of those school fees, uniforms, book list requirements and health insurance paid for in accordance with the Child Support Agreement a copy of which is annexed to these Orders, such amounts to be treated as amounts which the Registrar is not entitled to credit pursuant to s71D of the Act.”
The Mother seeks that the Father’s application be dismissed.
Background
The parents Ms Neville born [in] 1962, forty-seven (47) years and
Mr Neville born [in] 1961 forty-nine (49) years were married [in] 1991. They have three children, twins [X] and [Y] born [in] 1995 who are fifteen (15) years old and [Z] born [in] 1997. [Z] is thirteen (13) years old.
The parents separated 15 March 2006. The parents entered into consent orders in relation to property and parenting matters on 26 February 2007. The Mother’s outline of case filed 29 July 2010 provides a summary of the Order the parents consented to:
“The parenting Orders in summary provided that [Y] and [Z] live with each parent on a week about basis, and half school holidays and that [X] live with the Mother and spend time with the Father, if she wishes, each alternate weekend from the start of school Friday until the start of school Monday (to coincide with the time that [Y] and [Z] are with the Father) and each alternate Thursday from end of school to start of school Friday (to not coincide with [Y] and [Z]’s time with the Father) and half the school holidays.
The property Orders provided in summary that the Respondent Mother retain the former matrimonial home, a car and a base amount of the Applicant Father’s superannuation, being $59,322. The Applicant Father retain a property at [D], a boat and the remainder of his superannuation.”
The parties entered into a Child Support Agreement on 29 March 2007. The Father summarises this agreement in paragraphs 19.1 and 19.2 of his Affidavit filed 12 April 2010:
“19.1 Part A payments were agreed at $930 per fortnight (based on more recent CSA assessment) with CPI increases annually and ending when the children turn 18. The minimal payment would apply in the event that I received a Centrelink pension or unemployment benefits. No provision was made for changing parenting arrangements.
19.2 Part B included school fees, school uniforms, all requirements for booklists and medical insurance. [Ms Neville] valued these items at $8,600 based on a change in schooling arrangements.”
This summary is consistent with the agreement that the Father annexed to the affidavit at Annexure “O”.
This agreement has been treated as a “Binding Agreement” for the purposes of the Act. On 23 July 2010, Mr M from the Department of Human Services sent the following information to Judy McPhee Lawyers (Exhibit 1)
“Dear Judy,
I wish to confirm that Child Support Agency Case Number [omitted] between Mr Neville and Ms Neville is currently assessed as per the terms of the Binding Agreement made on the 29th March 2007.
The Binding Agreement made between Mr Neville and Ms Neville was lodged with the Child Support Agency on the 5th April 2007.”
The material relied on by the parties
The Father relied on the material set out in his outline of case filed
29 July 2010:
a)his Initiating Application filed 12 April 2010;
b)his Affidavit filed on 12 April 2010;
c)his further Affidavit filed on 22 July 2010; and
d)his Statement of Financial Circumstances filed on 22 July 2010.
The Mother’s material is listed in her outline of case filed 29 July 2010:
a)Response filed 6 May 2010;
b)Affidavit of Ms Neville filed 6 May 2010;
c)Financial Statement filed 6 May 2010;
d)Further Affidavit of Ms Neville filed 22 July 2010; and
e)Orders made 17 May 2010.
I also considered the facsimile from the Department of Human Services listed as Exhibit 1.
Legislative Framework
This application seeks in part to set aside a child support agreement which the parties entered into on the 29 March 2007. This agreement has been accepted as a “Binding Agreement”.
In Leonard v Leonard [2010] 239 FLR 66, Federal Magistrate Lapthorn considered the appropriate legal approach at page 70 of that Judgment.
“25.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) come into force on 1 July 2008. The Amending Act created two types of child support agreements: the binding child support agreements and the limited child support agreements.
26. Section 81 of the Child Support (Assessment) Act 1989 (Cth) (the Act) sets out the general requirements for a child support agreement under the Act:
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 s.80C and s.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 the agreement); and
(c) section 84 (provisions that may be included in agreements).
27. 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.
28. 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.”
The parties in the present case do not take issue with the Registrars decision to classify the agreement as a binding child support agreement.
I have to now consider if this agreement can be set aside.
This was a question that was asked by Federal Magistrate Lapthorn in Leonard v Leonard [2010] 239 FRL 66 at page 72 and I accept the Federal Magistrate’s reasoning and concur that this agreement can be set aside if the basis for setting it aside falls within the statutory framework.
“Section 136 Child Support Assessment Act 1989 (Cth) (“The Act”)
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) 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.”
Application of the Law to the Facts
The Father’s allegations of unconscionable conduct
The Father maintains the Mother’s conduct leading up to signing the agreement on the 29 March 2007 was unconscionable. He summarises his argument at page 14 of his case outline document:
“It is my understanding that the evidence presented represents unconscionable conduct. To summarise, it is my contention that:
o [Ms Neville] intentionally delayed the signing of the Agreement as it remains unsigned, either on the advice of her solicitor, or of her own volition;
o [Ms Neville] did not provide consent to CSA, either on the advice of her solicitor, or of her own volition; by so doing, any changes within the CSA systems were delayed, which maintained pressure on me to re-negotiate the arrangement;
o I inevitably, and probably predictably, then attempted to resolve the matter with the CSA, which resulted in the use of the prescribed payment, as I had no desire to go into arrears; and
o [Ms Neville] and her solicitor used the prescribed payment and the “reverse claim” to leverage maximum pressure on me to change the Agreement.”
The agreement the Father is referring to is the one the parties were considering on the day they entered into the consent orders in relation to property and children’s issues (on 23 January 2007). This particular agreement was not ever executed by the parties. A different one was finally signed on 29 March 2007. The shared care for the boys commenced on 12 February 2007. The Father was still paying child support as assessed with the children living with their Mother. He sought the school fees he paid for the children to be treated as a prescribed payment to decrease his child support liability, after the boys commenced living with their parents on a week about basis.
The Butterworths Legal Dictionary defines unconscionable as:
“unfair, unjust, unscrupulous, unreasonable, or excessive; against the dictates of conscience as recognised by a court of equity. Conduct is deemed unconscionable where it can be seen in accordance with the ordinary concepts of humanity to be so unfair and against conscience that a court would intervene (Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445; ATPR 41-009) or so unreasonable and oppressive so as to affront minimum standards of fair dealing: Commonwealth v Verwayen (1990) 170 CLR 394; 95 ALR 321. A transaction will be set aside as being unconscionable wherever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created: Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; 46 ALR 402; Blomley v Ryan (1956) 99 CLR 362. Also known as ‘unconscientious’. See also Bargaining power; Equitable fraud; Harsh, unjust or unreasonable; Part performance; Undue influence.”
I am not satisfied that any of the conduct the Father complained, amounts to “unconscionable” as defined. I do not accept this limb of his argument as a basis for setting aside the Agreement.
The Father’s allegation of exceptional circumstances and hardship
The Child Support Assessment Act 1989 (Cth) provides at s.136(2)(d):
“(d) in the case of a binding 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 meaning of exceptional circumstances has been considered in a number of cases. Federal Magistrate Demack summarised these in the decision of Gallup v Gallup [2009] FMCAfam 839 at paragraphs [41] – [53]:
“41. The meaning of “exceptional circumstances” was considered by the Full Court of the Family Court in Simpson and Hamlin (1984) FLC 91-576. The case there was focussed on a s 79A (of the Family Law Act 1975) application where the head relied upon by the applicant wife was s 79A(1)(d):
in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order, …
42. At 79,657, the Full Court stated:
The question therefore was whether the change which occurred in this case was such as to “take it out of and beyond the ordinary circumstances in which such change might be reasonably expected to occur”.
43. And at 79,658, the court stated:
What amounts to “exceptional circumstances” is very much a question of fact and degree.
44.The Court then went on to comment that in that case, they may have reached a different conclusion, but they felt that the Trial Judge’s decision properly fell within his discretion and that it would not be disturbed by them on appeal.
45.Bearing in mind that the question before me is one of child support and not property adjustment, it seems to me that it is proper that I consider the application in the light of the objects and principles of the applicable Act.
46. Section 3 of the Child Support (Assessment) Act 1989 provides:
Duty of parents to maintain their children
(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.
47. And the objects of the Act are set out in s 4:
(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.
48. Whether the present situation is exceptional, it seems to me, must be considered in light of these objects.
49. In other parts of the Act, the expression “special circumstances” is used. Is this the same as “exceptional circumstances”?
50.Federal Magistrate Brown in Daley & Daley [2009] FMCAfam 398 at paragraph 88 was:
not persuaded that there [was] any significant qualitative difference between “special” circumstances and “exceptional” circumstances.. In [his Honour’s] view, what [was] 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.
51. In contrast, Federal Magistrate Wilson in Henricksen & Janz (No 3) [2008] FMCAfam 1343 at paragraph 32 found that there was, indeed a difference between the two:
Further, even if the father demonstrated that the financial circumstances had changed, he has to show two additional matters to enliven the discretion in s 136(2)(d) Child Support (Assessment) Act. The first is that the change of circumstances was exceptional. Neither party referred to any judicial or other authority as to what this term meant. The word commonly means unusual or out of the ordinary. It is curious that the word “exceptional” is used in s 136(2)(d) of the Act, whereas “special circumstances” is used in s 117. That phrase has attracted judicial interpretation in cases such as Gyselman & Gyselman (1992) FLC 92-279 and Hides v Hatton (1997) FLC 92-759. Ordinarily consistency in the interpretation of terms in a statute is a fundamental construct of statutory interpretation. The use of a different term would signify that the draftsman of the legislation in s 136(2)(d) intended not to use the concept of special circumstances but rather something different. That view is reinforced by the language of s 136(4)(b), which presupposes a two step process: first, the proof of exceptional circumstances, so as to set the earlier agreement aside; and, secondly, the proof of special circumstances to fix a new method or amount of child support.
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.”
Circumstances at the time of entering the agreement and now
The Father relies on the fact that when he signed the agreement his Mother was prepared to pay for the children’s school fees. She is no longer able to do this. The Father’s evidence in relation to this is set out in his affidavit filed 12 April 2010 at:
“22. As I could not afford to make all these payments from my earnings I gained the following support from my Mother.
22.1 In 2006 I received $12,083 on 26 September 2006 to pay credit card debt.
22.2 In 2007 I received $9,983 on 18 January 2007 to pay school fees, uniforms and booklists for the 2007 school year.
22.3 In 2008 I received $11,981 on 25 January 2008 to pay school fees, uniforms and booklists for the 2008 school year.
23. My Mother also paid all solicitor’s fees.
24. A notation has been entered into my Mother’s will reducing my inheritance by the amount equal to these payments.
25. During this period my Mother’s health deteriorated with increased signs of severe memory problems and the real possibility of a need for dedicated care in the near future. In addition the global financial crisis has reduced my Mother’s portfolio of investments by around 20%. As a result, my family discussed with me the possibility that I should return to court to address the level of child support that I was paying. I agreed that I would not seek assistance for the payment of school fees.”
In his affidavit filed 22 July 2010, he swears
“83. By late 2009 it has become apparent to my family that my Mother’s failing memory would become a major issue and that she was likely to require increased care and support.
84. In January 2009 we visited New Zealand and enjoyed a holiday with my Mother, my siblings and all 11 grandchildren, for the first time since my sister’s death in [omitted] 2000.
85. During our holiday, my sister spent some time re-organising my Mother’s affairs. She attended to my Mother’s medical affairs, recruited a paid carer, arranged for powers of attorney to be drafted and signed and dealt with a number of day-to-day arrangements to ensure that my Mother would be safe and catered for in her home – for example, the daily delivery of medication.
86. I, my sister (Ms K) and my brother (Mr N) are all able to act as power of attorney severally; however we are required to consult with each other relating to decision and there is no express allowance for the authorisation of gifts.
87. In late January 2009 I received a call from my Mother. In the call she explained that she had spoken to Mr N, my brother, and that he was uncomfortable with the current arrangements regarding school fees. She explained that his discomfort circled around her need for the money in the future but also the reality that her investments had deteriorated to some degree. I understood that Mr N had spoken on behalf of not only himself but my sister and, I suspect, others in the family.”
This evidence was not challenged and I accept that the Father’s Mother is no longer able to gift to the Father the costs of the children’s school fees.
The Father argues that the circumstances are exceptional in his case because:
a)His Mother can no longer gift him approximately $10,000 a year;
b)His payment will exceed the assessed amount by $57,727 by the time the children are 18 (excluding school fees which he is to pay);
c)The legislation was amended subsequent to this agreement being signed that made it more difficult to set aside the agreement;
d)The Father signed the agreement without the endorsement of a solicitor which the amended legislation requires.
e)The Father is paying $206 per week more than the amount he would now be assessed to pay.
The Mother’s case is that the Father’s income has increased since he entered into the agreement and this overcomes the absence of financial support from his Mother.
I accept the approach taken by Federal Magistrate Demack in Gallup v Gallup. In the present case none of the factors set out above put forward by the Father are exceptional but cumulatively they take on a different character and I find they cumulatively are exceptional.
Hardship
The Father’s case is that the agreement was not viable without the financial support of his Mother. He also argues that the responsibilities of international students place a disproportionate load on his capacity to sustain himself.
I accept the argument in relation to his Mother’s gifts. I do not accept that the international students creates a hardship anymore onerous then the hardship the Mother has in catering for international students in her household.
I am however satisfied that the loss of his Mother’s financial support has created hardship sufficient to satisfy s.136 of the Act. The Father is unable to pay his current child support debts without accruing debts on his credit card. This problem will be cumulative if the agreement is not discharged.
I will Order:
a)That the Child Support Agreement (CSA reference number [omitted]) be set aside by the Court.
b)That child support payments be administered by the Child Support Agency.
The School Costs
The Father is seeking to discharge an Order made as the property orders the parties agreed to in 2007
“That paragraph 11 of the Orders BRM 8793/2006 agreed 26 February 2007 be set aside by the Court.”
I am not satisfied that it is an Order I can make under the provisions of s.136 of the Act. Rather as it is a property Order, to set it aside, it would be necessary to satisfy one of the limbs of s.79A Family Law Act 1975. This has not been done in the present case so I am not prepared to discharge that Order. Therefore there is no merit in making the final Order the Father seeks which is:
“That the Court order that 50% of all school fees, school uniforms, booklists and sports costs be treated as prescribed payments by the Child Support Agency.”
Consequently I decline to make that Order.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Cassidy FM
Date: 26 October 2010
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