Parsley and WHITESELL

[2013] FCCA 1139

FEDERAL CIRCUIT COURT OF AUSTRALIA

PARSLEY & WHITESELL [2013] FCCA 1139

Catchwords:
CHILD SUPPORT – Application to set aside a child support agreement made in 1999 – agreement deemed binding following legislative amendments in 2008 – whether because of exceptional circumstances which have arisen since the agreement was made the applicant or child will suffer hardship if the agreement is not set aside.

Legislation:  

Child Support (Assessment) Act 1989 (Cth), ss.80CA, 80D, 136
Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 (Cth), sch.5 Items 74, 75

Daley & Daley [2009] FMCAfam398
Leonard & Leonard [2010] FM CAfam390
Sampson & Hamlin (1984) FLC91-576
Sandrk & Sandrk (1991) FLC92-260
Savery & Savery (1990) FLC92-131

Applicant: MS PARSLEY

Respondent: MR WHITESELL

File Number: NCC 349 of 2013

Judgment of: Judge Terry

Hearing date: 19 July 2013

Date of Last Submission: 19 July 2013

Delivered at: Newcastle

Delivered on: 23 August 2013

REPRESENTATION

Solicitor Advocate for the Applicant: Mr Windus   

Solicitors for the Applicant: Mason Lawyers

The Respondent: No appearance

ORDERS

1. The child support agreement made on 2 December 1999 in respect of the child X born (omitted) 1998 is set aside as of 19 February 2013.

2. As a consequence of Order 1 the parties’ liability for child support in respect of the said child is to be calculated in accordance with the provisions of the Child Support (Assessment) Act1989 from 19 February 2013 onwards.

3. The application filed on 19 February 2013 is otherwise dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Parsley & Whitesell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT NEWCASTLE

NCC 349 of 2013

MS PARSLEY

Applicant

And

MR WHITESELL

Respondent

REASONS FOR JUDGMENT

Introduction

1. MS PARSLEY (“the mother”) and (MR WHITESELL) MR WHITESELL (“the father”) are parties to a child support agreement made on 2 December 1999. The agreement provides for the father to pay $35.00 per week child support for his son X who was born on (omitted) 1998. 

2. The mother would prefer that the father pay child support as assessed by the Child Support Agency and has applied to the court to have the agreement set aside.  

3. The father was personally served with the mother’s application on 26 February 2013. He did not file a response and did not attend court on the first return date of 9 April 2013 and the matter was listed for hearing on 19 July 2013.

4. The father was personally served on 23 April 2013 with the order listing the matter for hearing. He was not present at court when the matter was called on at 10.00am on 19 July 2013 and I heard the matter in his absence.

The evidence

1. The mother relied on her application, affidavit and financial statement filed on 19 February 2013 and she gave some brief oral evidence.

Background

1. The mother is 46 and the father 40. X, 15, is their only child, although the mother has four older children and the father a child from his current relationship.

2. X has always lived with the mother. At present he spends time with the father more or less once per fortnight.

3. The parents signed the child support agreement on 2 December 2009 when X was 18 months old. It provides for the father to pay the mother $35.00 per week, with the amount to reduce to $10.00 during any period the father is unemployed. It is expressed to remain in force until 12 May 2016, the day before X’s 18^th birthday.

4. The mother did not provide any information in her affidavit about how the agreement came to be signed.  In oral evidence she said that had not worried about child support for her older children and initially did not seek child support for X.

5. The mother was pressured by Centrelink however to apply for child support for X and as a result she rang the Child Support Agency and had a discussion with them. The Child Support Agency mentioned the possibility of the parties signing a child support agreement and the mother was told that the Child Support Agency would:

   send out the paperwork and to write down an amount that we (sic) would pay.

6. The parties agreed on $35.00 per week and after the paperwork arrived (which I presume was the Child Support Agency’s pro forma child support agreement in use at the time although a copy of the agreement was not in evidence) they completed and signed the form.

7. At this time the mother was engaged in home duties. She was aware that the father was working, for (omitted) she believed, but she did not ask him about his income.

8. The mother did not receive any legal advice before signing the agreement and said that as far as she knew neither did the father.

9. The mother said that she did not realise that the amount the parties agreed on would not increase for inflation nor did it occur to her that the amount would be “for life.”

10. The mother said that she approached the father six weeks before X’s 14^th birthday and told him that she needed more help. She asked the father to sign a form which would put an end to the agreement and allow child support to be assessed by the Child Support Agency but he would not sign it. She asked the father’s wife to come around to her house and gave his wife a copy of the form and asked her to talk to the father about it which the wife agreed to do but still the father would not co-operate.  

11. The mother told the father that if he did not sign the form she would be left with no option but to see a solicitor and he responded:

    Do what you have to do MS PARSLEY.

12. The mother consulted a solicitor who wrote to the father in May, July and September 2012 but nothing eventuated. As a result the mother filed her application.

13. The mother is a (omitted) employed by (omitted) and earns $40,992.00 per annum. She said that to the best of her knowledge the father worked for (omitted) at (omitted) but that she had no accurate idea of his income.

14. In her affidavit the mother provided some speculative information about the father’s income but she provided no basis for the figures she used.

15. In her financial statement the mother estimated that the cost of supporting X (including a share of the rent) was $317.00 per week although she said that she would spend more on him if she had more to spend. The amounts the mother gave for expenditure on items such as food and clothing for X were modest and some amounts (such as $10.00 per week for entertainment) seem likely to be wildly underestimated.

The applicable law

1. When the mother and father signed the child support agreement in 1999 the law relating to such agreements was very different to the current law.

2. There was only one kind of child support agreement in 1999. There was no requirement for parties to obtain legal advice before signing the agreement and pursuant to s.98 of the Child Support (Assessment) Act the provisions of the agreement had effect as if they were a court order of a particular kind. The court had the power to discharge, review, vary or suspend the provisions of the agreement; it was possible in effect for a court to make a departure order in respect of an assessment based on a child support agreement.

3. Things changed on 1 July 2008 when the Child Support (Assessment) Act was amended by the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006.

4. The amendments created two kinds of child support agreement – binding child support agreements and limited child support agreements. The government intended that binding child support agreements would be difficult to set aside and the amendments required that before signing such an agreement parties receive legal advice about the effect of the agreement on their rights and about the advantages and disadvantages to them of entering into the agreement.  

5. The amendments required the Child Support Registrar to conduct an audit of all existing child support agreements and determine whether they were to be taken to be binding child support agreements or to be terminated. The Child Support Registrar was required in each case to advise the parties of his decision.

6. I was not provided with a copy of any such advice given to the mother and the father but I was provided with a letter from the Child Support Registrar dated 25 May 2012 which confirmed that the parties’ agreement was still in existence. It must therefore have been determined to be a binding child support agreement.

7. Where does this leave the mother?

8. Pursuant to s.80CA of the Child Support (Assessment) Act binding child support agreements cannot be varied.

9. Pursuant to s.80D they can be terminated, but only by a provision in a new binding child support agreement or by a termination agreement. The father has been requested to sign a termination agreement but has declined to do so.

10. They can be set aside by the court, but only if one of the requirements in s.136 (2) of the Child Support (Assessment) Act is met.

11. Some of the requirements in s.136 (2) clearly do not apply in the present case. There was no suggestion that either parties’ consent to the agreement was vitiated by fraud, undue influence, duress or unconscionable conduct, and while the father failed to disclose material information (his income) to the mother, she did not inquire about it and was content to sign the agreement without knowing the father’s income.

12. The only subsection on which the mother could hope to rely is s.136(2)(d) which provides that the court may set aside the agreement if:

    (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.

13. In Daley & Daley[1] FM Brown as he then was had before him an application to set aside a child support agreement made in 2005. He considered the meaning of ‘exceptional circumstances’ and made reference to the dictionary definition of ‘exceptional’ and to decided cases which in summary established that:

    i)Whether circumstances are exceptional is “very much a question of fact and degree.”[2] 

    ii)Whether circumstances are exceptional may turn on whether there has been a change of circumstances which was not “within the reasonable contemplation or expectation of the parties” concerned.[3] Changes which were part of the normal vicissitudes of life might not justify the parties asking the court to set aside the agreement.[4]

    iii)Using the dictionary definition of exceptional the circumstances must be “of the nature of or forming an exception; unusual, out of the ordinary; special; (of a person) unusually good, able, etc.” 

    [1] Daley & Daley[2009]FMCAfam398

    [2] Sampson & Hamlin (1984)FLC91-576 @76,658

    [3]  See Sandrk & Sandrk (1991) FLC 92-260 at 78,750

    [4] Sandrk & Sandrk(1991)FLC92-260 at 78,750

14. The agreement in Daley & Daley provided for the respondent father to pay an amount of child support which he conceded was modest. FM Brown found that the applicant mother had signed the agreement at a time when the father was self-employed and had long been self-employed. The mother had experienced difficulty obtaining child support and had signed the agreement to give herself some certainty that she would at least receive a fixed amount regularly in the future.

15. After the agreement was signed the father ceased being self-employed and took a well-paid PAYG position. If child support was assessed pursuant to the formula in the Child Support (Assessment) Act based on this income the mother would receive a much higher level of child support than was provided for in the agreement.

16. FM Brown took into account that at the time the parties signed the agreement it was possible for a party to make an application analogous to a departure application if they wished to have the agreement changed and it was not necessary for them to demonstrate exceptional circumstances. As a result of the 2008 amendments however and as a result of the agreement being deemed a binding child support agreement as a result of what FM Brown called an “administrative fiction” it was impossible for the mother to have the amount in the agreement reconsidered in the way that it could have been prior to the amendments.

17. FM Brown held that when all these matters were combined he was satisfied that because of exceptional circumstances that had arisen since the agreement was made the mother and the children would suffer hardship if the agreement was not set aside.

18. In Leonard & Leonard[5]  Lapthorn FM had before him an application by a father to set aside a child support agreement made in 2006 with a view to having child support assessed by the Child Support Agency.

    [5] Leonard & Leonard[2010]FMCAfam390

19. The father relied on the fact that the children had commenced living in a week about arrangement in 2009 whereas when the agreement was signed they were living 9 nights with the mother and 5 with the father. He also relied on the fact that the agreement saw him paying $100,000.00 more per annum than he would pay if he was administratively assessed.

20. FM Lapthorn considered that such a relatively small change in the number of nights children spent with a parent might well fall within the normal vicissitudes of life but that the financial impact on the father of the agreement continuing and the fact that the law had changed in a way not contemplated by the parties when the agreement was signed combined to establish that there were exceptional circumstances.

21. FM Lapthorn did not set the agreement aside however because he considered that when the entire financial circumstances of the father were taken into account he could not be satisfied that the father would suffer hardship if the agreement was not set aside and therefore the father had not made out a case which came within s.136(2)(d).

Conclusion

1. The agreement in the case before me was made 14 years ago and even if the amount of $35.00 the father is required to pay was reasonable then (which is doubtful) there is no provision in the agreement for the amount to increase to keep pace with increases in the cost of living.

2. The amount represents just over 10% of the actual cost to mother today of supporting X. The mother is not a high income earner and the extra $35.00 per week does little to assist her to provide for X. It is likely that X misses out on things as a result of the low level of child support being paid.

3. This results in hardship for the mother and X but it is the entirely foreseeable result of the mother agreeing to the terms she did in 1999. Save for one thing the hardship has not been caused by circumstances of an exceptional nature which have arisen since the order was made.

4. The one thing is that the mother could not have foreseen in 1999 the amendments to the legislation in 2008 which changed her agreement into something different.

5. The mother received no legal advice before signing the agreement and she did not intend to opt out of obtaining any greater assistance than $35.00 per week for X for ever more. The form then in use did, to the best of my knowledge, warn parties to be careful about what they were doing in signing it, but prior to the 2008 amendments there was scope for to the mother to apply to vary the amount the father was required to pay.

6. The 2008 amendments changed that. The only way the mother can now obtain a different amount in the absence of the father’s cooperation is if the agreement is set aside.

7. The mother should not be prevented from obtaining a reasonable level of child support because of a change to the law which she could not have anticipated in 1999.

8. I am satisfied that the mother has established that because of exceptional circumstances relating to a party to the agreement or the child in respect of whom the agreement was made the applicant and the child will suffer hardship if the agreement is not set aside.

9. The mother proposed that once the agreement was set aside child support should be assessed by the Child Support Agency. This is the only option available given that the father failed to take part in the proceedings and I do not have sufficient information to allow me to consider making a departure order.

10. The mother does not know the father’s income and there is always the risk that an assessment by the Child Support Agency may be different to the mother’s expectations, but the father is employed and to the mother’s knowledge is supporting only one other child. The mother’s income is modest and it seems very unlikely that she will do worse than $35.00 per week if child support is assessed by the Child Support Agency and she may do very considerably better.

11. I intend to set the child support agreement aside effective from 19 February 2013, the day the mother filed her application. This will create arrears for the father, but he has chosen to bury his head in the sand by refusing to deal with the mother’s application and he must accept the consequences, indeed he should count himself lucky that the mother did not act sooner.

12. For all of the above reasons the orders of the court will be as set out at the beginning of this judgment.

I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for judgment of Judge Terry

Date:  23 August 2013