P & T
[2005] FMCAfam 367
•21 July 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| P & T | [2005] FMCAfam 367 |
| CHILD SUPPORT – Application to vary child support agreement – whether Court has power to vary/substitute ineffective security provision in agreement – whether that provision has affect as an order under Division 4 of Part 7 – no power to vary – variation by way of departure under s.117 – change in father’s income expectation and earning capacity – variation reducing periodic sum – variation to liability for school fees – power to order security consequent on departure – security ordered. |
| Child Support (Assessment) Act 1989 Federal Magistrates Court Rules 2001 |
| Liberatore and Kokkinos (2002) FAMCA 98 De Smith (1993) FLC 92-349 Potter& Potter [2004] FMCAfam 250 Liu & Chen [2003] FMCAfam 322 Gilmour & Gilmour (1995) FLC 92-591 Gyselman & Gyselman (1992) 15 Fam LR 219 at 225 Liesert v Nutsch (1996) FLC 92-665 Bryant (1996) FLC 92-690 Wild v Ballard (1997) FLC 92-771 |
| Applicant: | P L P |
| Respondent: | N D T |
| File Number: | BRM2153 of 2003 |
| Judgment of: | Baumann FM |
| Hearing date: | 21 June 2005 |
| Date of Last Submission: | 21 June 2005 |
| Delivered at: | Brisbane |
| Delivered on: | 21 July 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr De Jersey |
| Solicitors for the Applicant: | Terrence O’Connor |
| Counsel for the Respondent: | Mr Kirk SC |
| Solicitors for the Respondent: | McCormick Lawyers |
ORDERS
That the mother’s Application filed 17 January 2005 be dismissed.
That the child support agreement dated 25 September 2002 be varied as follows:-
(a)Effective 10 May 2005 (being the date of the father’s cross application) the amount specified in clause 4.1 shall be varied to $900 per calendar month for each child and, consequently the amount specified in clause 4.2 shall be varied to $1,800.
(b)Effective 10 May 2005, clause 4.6 shall be varied to provide that the liable parent shall be responsible for 75% of all expenses specified in that clause.
(c)Clause 4.8 shall be varied to provide that the sum of $1,800 is to be varied as specified annually, with the first variation to occur on 1 July 2006 and annually thereafter.
(a) That within 14 days of the date of this Order, the liable parent pay into an interest bearing account in the joint names of the residential pa rent and the liable parent the sum of $50,000 to secure the liable parent’s obligation to pay child support pursuant to a Child Support Agreement between the parties dated
25 September 2002 as varied herein;
(b)That such account be operated jointly by the parties and the deposit to remain in place until such time as the youngest child has turned 18 years of age or such earlier time as may be agreed to between the parties in writing or by an Order of any Court of competent jurisdiction.
(c)That upon the eldest child turning 18 years of age or otherwise no longer being eligible to receive child support to be paid to the residential parent that 50% of the amount invested pursuant to
5 together with interest earned thereon be released to the liable parent;
(d)That upon the youngest child turning 18 years of age or otherwise no longer being eligible to receive child support to be paid to the residential parent that the balance of the amount invested pursuant to 5 above together with interest earned thereon be released to the liable parent.
Any submissions seeking costs are to be filed and exchanged within 14 days, and each party shall be at liberty to reply, by written submission, within 14 days after receiving the other party’s submissions.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRM2153 of 2003
| P L P |
Applicant
And
| N D T |
Respondent
REASONS FOR JUDGMENT
The mother PP and the father NT were in a relationship for approximately 4 years, producing two children S (now aged 8) and A (now aged 7). The parties separated whilst living in Australia on
31 August 2001.On 25 September 2002 the parents signed and ultimately registered, a Child Support Agreement (see Annexure “A” to Affidavit of TO’C filed 7 April 2005). The said child support agreement provided inter alia, for:-
(a)the father to pay the mother $1,100 per child per month (indexed annually be reference to movements in the CPT) (Clause 4.1, 4.2 and 4.8).
(b)Such payments were to be paid until the children attain the age of 18 years or complete their formal education, including tertiary education “but shall not be paid beyond the age of 21 years unless otherwise agreed between the parties” (Clause 4.1).
(c)The father to commence and maintain health insurance cover for the children. He agreed to pay health insurance cover for the mother until such time as she remarried or entered into a bona fide de facto relationship (Clauses 4.4 and 4.5).
(d)The father to be responsible for all expenses incurred by the children attending school for their primary and secondary education (Clause 4.6).
(e)The father was to “secure the payment of this child support and any other sum to be paid by the liable parent pursuant to this agreement by executing a Consent Caveat in favour of the mother over real property at S B” (Clause 4.3).
The mother filed an application on 17 March 2005 seeking a variation to Clause 4.3 of the agreement to, in effect, substitute different “security” for the agreed arrangement. The father opposes that variation and offers in lieu of the current “security” to deposit $50,000 into a IBD in the joint names of the parents “to secure the Liable Parents’ obligation to pay child support pursuant to the Child Support Agreement” as varied.
By Cross Application filed 10 May 2005, the father also seeks a variation to the said Child Support Agreement by:-
(a)reducing the periodic payment to the amount assessed by the Child Support Agency or $700 per child per month, whichever is the greater;
(b)reducing his obligation to pay all of the children’s private school fees, to only half of those expenses.
The mother opposes any such variations as sought by the father.
Variation to provision for security
Clause 4.3 of the said Child Support Agreement provides as follows:-
“The liable parent shall secure the payment of this child support and any other sum to be paid by the liable parent pursuant to his Agreement including his obligations pursuant to Clause 4.6 hereof by executing a Consent Caveat in favour of the wife over the real property owned by him at and known as 31 F Street, S B more particularly described as Lot XX on Registered plan XXXXX being the whole of the land contained in Certificate of Title XXXXX XXX (hereafter known as the S B property) such as Consent Caveat to be prepared by the Solicitor for the liable parent, with the liable parent to pay the reasonable costs of and incidental for the preparation, execution and registration of the said Consent Caveat. The liable parent’s obligation pursuant to this clause shall not be discharged until such time as either he or his Solicitor delivers to the wife’s Solicitors a true copy of the Consent Caveat instrument and a Registration Confirmation Statement issued by the Department of Natural Resources confirming registration of the Consent Caveat. In the even that the liable parent is in breach and remains in breach for a period of 6 weeks of any of his financial obligations pursuant to this Agreement but in particular his obligations pursuant to clauses 4.3 and 4.6, the wife shall be at liberty to make an immediate application to the Family Court without further notice to the husband to obtain an order for sale of the S B property and/or any other relief available to her pursuant to the Family Law Act or pursuant to the terms of this Agreement including an order for costs.”
It is common ground that it was not possible to put the clause into effect as the Queensland Registrar of Titles, did not regard the terms of the Child Support Agreement as capable of creating an interest in the land sufficient to sustain a Caveat. The clause, as a form of security, therefore became totally ineffective. In any event, in the absence of a Consent Caveat (or any Caveat for that matter) the father was able to sell the S B property, and did so. A Caveat was never likely to provide security in a real sense – it would only operate as notice to those searching the Title Register of a claimed interest in the property and would operate to forbid dealings with the interests held by the father as the registered proprietor.
Counsel for the husband, Mr Kirk SC contends as a threshold issues that the mother’s Application to vary the security term (Clause 4.3) must be dismissed as “there is no grounds available under the statute for substituting different forms of security”.
Before discussing this submission, it is important to record that because an agreement has been accepted by the Child Support Registrar (under section 92 of the Child Support (Assessment) Act 1989 (“the Act”), that does not mean that every provision of the Agreement has effect as if they were an order made by consent by a Court under Division 4 of Part 7 of the Act.
Specifically, section 95 of the Act only gives those provisions in the agreement that effect, if the provision relates to:-
(a)Periodic child support (section 95(2)(a));
(b)Variations to the rate of payment of periodic child support (section 95(2)(b));
(c)“any other matter that may be included in an order made by a Court under Division 4 of Part 7 (Orders for departure from administrative assessment in special circumstances)” (section 95(2)(c)).
Section 118 of the Act prescribes the orders that may be made under the relevant Division. None of the categories of orders specified could be so widely interpreted so as to include an order to vary a provision such as clause 4.3.
It follows, in my view, that the Court has no jurisdiction under the Act to vary clause 4.3 of the Child Support Agreement. Section 136 of the Act does not apply in this case in circumstances where it is not suggested that the concurrence of a party entering the agreement “was obtained by fraud or undue influence”.
Leaving aside variations by subsequent agreements (section 97), variations under section 98 require a ground for departure under section 117(2). This is consistent with the remarks of Kay J in Liberatore and Kokkinos (2002) FAMCA 98 where he said:-
“The Court held in Gilmour’s case (1995) FLC 92-591, that in order to enter into the world of variation of child support agreements pursuant to section 98 of the Child Support (Assessment) Act 1989, the gateway is really via section 117”.
(See also the observations of Finn J in De Smith (1993) FLC 92-349 at 79,693).
I have also taken the view that section 141(1)(d) of the Act, which provides that the Court may “order that payment of an amount ordered to be paid be wholly or partly secured as the Court specifies” is of no assistance to the Applicant mother. That provision is not the empowering section capable of expanding the jurisdiction of the Court to vary the Child Support Agreement. Section 141(k) and (n) might be an ancillary power if the Court were to decide to depart from the terms of the agreement after considering section 117. I will return to this issue later in these reasons.
Before I leave this topic, I note that it is not uncommon to see Child Support Agreements which contain provisions in addition to those matters set out in section 95. If, for example, the parties include parenting orders in the Child Support Agreement then they may seek to register those provisions under section 63E of the Family Law Act 1975. Similarly, property orders may attract the attention of parties to possible registration under section 86 of the Family Law Act.
That is not the case here. In case there is any confusion, registration of the Agreement pursuant to Rule 25A.03 of the Federal Magistrates Rules 2001 is not registration for the purposes of the Family Law Act 1975.
As a result of the above analysis, I would dismiss the Application of the Applicant mother.
The father’s cross-application for variation section 117
In Potter & Potter [2004] FMCAfam 250, I identified the relevant law in such matters, and I repeat those remarks again. “I adopt as a succinct statement of the relevant law in matter of this kind the remarks of CFM Bryant in Liu & Chen [2003] FMCAfam 322 where she said at paragraphs 9-12 that:-
9. Pursuant to section 95 and section 98 of the Child Support (Assessment) Act, the child support agreement takes effect as if it was an order of the court and may be discharged, suspended, revived or varied in the same manner and circumstances in which the court could so treat an order of that kind. In other words, the provision in the child support agreement for payment of periodic amounts of money can be varied in the same way as a departure order for the payment of periodic amounts of money made under the Child Support (Assessment) Act.
10. In the case of Gilmour & Gilmour (1995) FLC 92-591, the Family Court of Australia was faced with the task of determining whether or not, by virtue of section 100 of the (Assessment) Act, section 66N(2) of the Family Law Act was imported into the act and therefore required as a threshold the applicant to show a change in circumstances. The Full Court in Gilmour & Gilmour (1995) FLC 92-591 determined that section 100 of the Family Law Act does not apply the principles or provisions in the Family Law Act into a division of the Child Support (Assessment) Act in which those provisions have not been given express legislative statement. In other words, the Full Court concluded that it was not a precondition to a successful application under the Child Support (Assessment) Act to establish that there had been a change in circumstances. Conversely, it seems to me a change in circumstances alone would not necessarily therefore be sufficient to provide a ground on which an agreement may be varied or discharged.
11. The principles to be considered therefore when considering the basis upon which a child support agreement can be varied are those which relate to the variation or discharge or departure from the provisions of a child support assessment made under the Child Support (Assessment) Act in relation to periodic payments of child support. Those provisions are to be found in section 117 of the Child Support (Assessment) Act.
12. In Gyselman & Gyselman (1992) 15 Fam LR 219 at 225 the Full Court set out the manner in which the court must approach an application for departure. The three steps to which I have referred must be addressed by the court each in turn, namely: first, whether one or more of the grounds for departure in section 117 is established. If so, secondly, whether it is just and equitable within the meaning of section 117(4) to make a particular order, and, thirdly, wether it is otherwise proper within the meaning of section 117(5) to make a particular order.”
Such a summary of the law has been confirmed and explained by later decisions of the Full Court in Liesert v Nutsch (1996) FLC 92-665; Bryant (1996) FlC 92-690 and Wild v Ballard (1997) FLC 92-771. Relevantly in my view in Bryant (supra) at 83,169-70 the Full Court observed that:-
“In the case of a child support agreement which has been accepted by the Registrar, and which provides for the payment of periodic child support, such an agreement takes effect as a departure order made by consent (section 95(2)), and before the agreement can be varied by the Court, the Court must, again in our view, be satisfied that there has been some change which would give rise to one of the grounds for departure in paragraphs 117(2)(a), (b) and (c). Again there is nothing in Leisert v Nutsch to the contrary.
If the situation was not as we have just proposed in the last two paragraphs, there would be nothing to stop a party who did not accept the terms of a departure order from immediately approaching the Court to have the matter re-heard, or to stop a party who thought better of the agreement which he or she had made, immediately seeking to vary the agreement”. (Emphasis added).
Further in Wild v Ballard, the Full Court stated, after referring to the Full Court’s determination in the case of Bryant, said at pages 84-492 and 493:-
“The requirements of section 117 as explained in Bryant obliged his Honour, when dealing with the husband’s application for the reduction in his obligation to pay periodic child support, to determine firstly whether by reason of a change of circumstance, a ground for departure existed, and then required his Honour to determine whether it would be just and equitable and otherwise proper to make an order departing from the existing assessment.”
This is the law which must be applied in this case.
Monthly periodic sum
The father contends that the current sum of $1,100 per child per month (the original amount seemingly not having been indexed since the anniversary of the Child Support Agreement in 2003), represents an unjust and inequitable determination of the level of support which he should be liable to pay because:-
(a)Since the agreement, the father has been unable to find employment he anticipated, at a level of $150,000 per annum and has only achieved earnings of $47,000 per annum; and
(b)The child support payable under the agreement is in excess of the reasonable needs of the children.
Before turning to the evidence on these asserted grounds of departure, it is appropriate to identify that the ground relied upon by the father (section 117(2)(c)(i)) requires the Court to consider the “income, earning capacity, property and financial resources of either parent or the child” – not just income.
During the course of the relationship the parties enjoyed a lifestyle that reflected the earnings of the father (up to $400,000 per annum), as an internationally recognised financial journalist with particular interest/expertise in Asian matters. I accept that in May 2001 the family decided to return to Australia – the country of birth of the mother – but not of the father. He is English, but has now sought Australian Citizenship. I am satisfied that pending citizenship being granted, the father has a right of permanent residency in Australia.
The father says that when he returned to Australia he knew he would not achieve the levels of income previously obtained. He says security issues; fears of harm and discrimination in the Philippines all contributed to his desire to leave that country. The mother paints a different picture – however I accept the reasons offered by the father as genuine and most compelling motivations for leaving that well paid employment.
The father returned to Australia in June 2001 and the parties separated on a final basis in late August 2001.
The father says the family came to Australia with the equivalent of net matrimonial resources totalling approximately A$1,800,000. Certain property transactions took place which generated capital gains and it is clear that before any property arrangements were finalised (and the child support agreement entered into), the father continued to financially support the mother and the children. They were effectively living during this period on their cash investments.
After a period (post separation) when the father was required to return to the United Kingdom to arrange affairs as a result of his mother’s death, he returned to Australia in April 2002. An offer for employment during CHOGM (later withdrawn as the father was not an Australian citizen) buoyed the father such that he says that he:-
“was certain I would be able to obtain similar employment with a large company or organisation. Whilst I knew that I would not derive an income of the same level I earned in South East Asia, I anticipated obtaining a position earning a minimum of $150,000 per annum.”
At is true, as the mother asserts, that at the time the Child Support Agreement was entered into, the father was unemployed, and as a result his actual income position now is similar. The father gave evidence of the efforts he had made to secure appropriate employment from late 2002 (see paragraphs 51 to 60 of his Affidavit). Whilst the mother says that opportunities at a higher level of remuneration would have been available in Sydney – no reliable evidence to support this assertion was offered to the Court. I also accept it was reasonable for the father to consider living proximate to his two young daughters to maximise contact opportunities. The decision to reside on the Sunshine Coast rather than in Brisbane does not in my view persuade me otherwise. The father secured a position as an MR Manager at the University of the Sunshine Coast in May 2003 on a gross package of $47,196. I am satisfied that although his nett income from all sources was approximately $3,230 per month and after paying child support and kindergarten fees (pursuant to the Agreement) of $2,305 per month, he was required to draw on his capital resources to meet his reasonable living expenses.
Critically, the father says at paragraph 61 of his Affidavit that in late 2003:-
“I saw the only prospect I had of obtaining remuneration which might let me break even on my then expenditure, rather than expending money from capital which I need for retirement, was to obtain some form of Australian qualification. In January 2004, I applied to do a Masters of Journalism at the University of Queensland. I was accepted into this course and my lectures started on 1 March 2004”.
The father says that he resigned his position at the University of the Sunshine Coast effective 27 February 2005 and that his only current income is by way of interest on his cash investments. He estimates that income to be $533 a week from total cash resources of $486,802 (in Australian bank accounts) and ₤67,600 in accounts in Jersey. The husband says the Australian funds represent the proceeds of sale of his H P property. He acknowledges his decision in February 2004 to sell his F Street property for $950,000 was to “free up more capital so as to provide for myself”. The costs of purchase of the P Road property accounted to $837,027.
The father says that upon completion of his Australian Masters degree, he is hopeful of finding a position paying in the order of $50,000 per annum which will improve, he hopes, to say $75,000 per annum over
five years. Neither party offered any reliable evidence to support what they each believe the father could earn.The mother’s principle contention is that when the father signed the Child Support Agreement he did not have a job. He thereafter knew what his obligations to the children were and he was capable of so organising his available capital (including available proceeds of sale of the H P and S B properties) to ensure he was able to meet those agreed commitments. To a large extent, the mother relies upon the observations I made in Potter (supra) about the importance of preserving the integrity and finality in Child Support Agreements and that the Court “should not lightly interfere with an agreement voluntarily entered into by them”.
In my view the facts of Potter differ quite significantly from the facts in this case.
I accept that the father’s hopes of achieving an income in the order of $150,000 per annum were not realistic. I find he has made genuine and reasonable attempts to secure employment considering what I regard, as a reasonable desire to live in South East Queensland so as to maintain regular contact with his daughters.
Based on both his anticipated income and his other property and financial resources, I regard the current obligation to pay $2,200 per month as an unjust and inequitable determination. I find, as a result of the changes which have occurred in the father’s financial position (and change to his reasonable expectations to generate income) that special circumstances have been established. It is not reasonable, considering the expenses required by the father to support himself, to expect him to draw down on all his capital to meet the current child support liability now and into the future.
At the same time it would not be reasonable for the father to rely only on his income now (in this transitional period) or the anticipated income of $75,000. I have not ignored the father’s obligations he meets for his daughter V (born November 1987); however in the absence of any evidence to corroborate a legal obligation to V beyond her 18th birthday, I do not regard the impact as significant into the future.
I propose, in determining what level of departure (variation) is just and equitable (before testing that preliminary view against the requirements of section 117(4) and section 117(5), I should consider the current needs of the children and the objects of the Act (under section 114) that the children’s proper needs be met and shared equitably by their parents.
This requires a consideration of evidence offered by the mother, relevantly that;-
(a)The children’s reasonable needs are estimated to be $645.60 per week ($33,571 per annum or $2,797.60 per month). The mother’s evidence on how she calculated those expenses was thorough and well founded. She was the subject of cross examination as to certain discretionary expenditure (piano lessons, entertainment and the like) however I am satisfied the expenses are reasonable and that they reflect the lifestyle the children have come to expect.
(b)The mother owns an unencumbered home which she estimates has a current market value of $600,000. Her other assets are modest when compared to those held by the father.
(c)The mother, who describes herself as “mother/teacher of domestic skills” has little income other than the child support and her entitlements to income tested benefits payable by the Commonwealth. Although she operates a small business called “R Skills”, she does not reveal any income from that business – instead revealing a loss in the three months to 31 March 2005 of $2,576.00, although she anticipates a stable income of $500 per week into the future. She estimates her monthly household expenses (which include her personal expenses) at $4,200 per month.
(d)“A reduction of maintenance to the level proposed by Nick will have serious implications for the children’s standard of living and general welfare”. The mother does not say how their current lifestyle would alter. The reasonable needs of the children of $33,571 per annum ought to be reduced by $3,535 being the amount the mother estimates to be the costs of the children attending the H P Primary School (as this is property covered by clause 4.6 of the said Child Support Agreement)..
On this basis the children’s current reasonable needs are approximately $30,000 per annum. At the current rate of payment (non-indexed) of $26,400 per annum this represents the father paying 88% of the expenses. Based on the relative financial positions (including anticipated incomes; property and resources) I do not regard this as just and equitable.
I regard a sharing of expenses as to 75% to the father and 25% to the mother as appropriate. On this basis I would depart from the payment due of $1,100 per month per child to a sum of $900 per month per child.
When I consider the needs of the children and the income available to the mother (which she estimates to be at least $500 per week), I regard the amount as just and equitable and otherwise proper.
For completeness, I observe that I do not regard it as appropriate to make an order which includes the words “such amount as assessed or determined by the Child Support Agency”. The parents elected to take themselves out of the administrative assessment regime. It would not be appropriate to allow them to have a foot in each system. I was not asked to order that the Agreement be set aside entirely and elect not to do so.
School fees
The relevant clause of the agreement provides:-
“4.6 The liable parent shall be responsible for all expenses incurred by he children attending school for their primary and secondary education, such obligation to include actual school fees charged by the school, college and/or educational institution (hereafter “school”) chosen by the parties together with all reasonable extra curricular activities, the costs of books, necessary educational requirements and uniforms as may be determined by the school.”
The clause is uncertain to the extent that it relies upon a school “chosen by the parties”. I am satisfied on the evidence that the parents have agreed that:-
(a)The children attend H P State Primary School for their primary schooling.
(b)The parents have agreed that the girls shall “attend private schools for their secondary education (years 8 to 12) with the choice of school/schools to be determined by consultation between the parties” (clause 3.12).
(c)There is no current agreement that the children attend BGG School. I do not regard the fact that the father has paid a fee of $600 to preserve an opportunity for future enrolment applications to BGG School, as evidence of an agreement to enrol the girls in that school.
Consistent with my findings in respect of the periodic sum, I would vary the agreement to provide that the father be responsible for 75% of all expenses as set out in clause 4.6 of the Child Support Agreement.
I would regard the departure (by way of variation) as just and equitable and otherwise proper within the meaning of sections 117(4) and 117(5) of the Act.
Security
At the time of the entry into the child support agreement there was a degree of uncertainty as to the father’s future employment and residential arrangements as he had not applied for citizenship. He had recently suffered the loss of his mother and, I infer, at least in the mind of the mother she held concerns about whether he would remain permanently in Australia. His daughter V (now aged 17½) resides in the United Kingdom.
In these circumstances at that time, security was sought by the mother and agreed to by the father.
The father’s change of plans and his commitment to remain in Australia are, I believe, genuine. His payment of child support under the agreement is exemplary. This is not a case where I would regard it as necessary to order security.
However the father offers, in his Response/Cross Application to do so. As I have made a departure order, I am satisfied that the Court can then exercise the ancillary powers under section 141 of the Act to order security or conditions attaching to the departure. I propose to make an order in terms of paragraph 6 of the Response filed 10 May 2005 – not as variation to the agreement but as an order of the Court.
I make the orders which appear at the commencement of these reasons.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate: L. Parke
Date: 21 July 2005
0