Petrone & Petrone
[2024] FedCFamC2F 1038
•2 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Petrone & Petrone [2024] FedCFamC2F 1038
File number(s): SYC 80 of 2017 Judgment of: JUDGE BOYLE Date of judgment: 2 August 2024 Catchwords: FAMILY LAW - CHILD SUPPORT – Enforcement of a purported Binding Child Support Agreement – Whether the Binding Child Support Agreement is a valid agreement – Binding Child Support agreement found to be void ab initio.
FAMILY LAW - CHILD SUPPORT – Departure Application – Orders sought in the alternative for a Departure of Child Support Assessment – Procedural fairness – Where application not properly pleaded – Application dismissed.
Legislation: Child Support (Assessment) Act 1989
Child Support (Registration and Collection) Regulations 2018
Cases cited: Bassett & Teale [2016] FCCA 2177
Child Support Registrar v AFS19 [2021] FCAFC 207
Thorby & Goldberg [1964] HCA 41; (1964) 112 CLR 597
Division: Division 2 Family Law Number of paragraphs: 77 Date of hearing: 14 & 15 March 2024 Place: Sydney Counsel for the Applicant: Mr Bunning Solicitor for the Applicant: Guazzo Finlayson Legal Counsel for the Respondent: Mr Ford Solicitor for the Respondent: O'Loan Family Law ORDERS
SYC80 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PETRONE
Applicant
AND: MS PETRONE
Respondent
ORDER MADE BY:
JUDGE BOYLE
DATE OF ORDER:
2 AUGUST 2024
THE COURT ORDERS THAT:
1.The binding child support agreement document, signed by Mr Petrone on 18 November 2016 and Ms Petrone on 1 December 2016 is void ab initio.
2.The Amended Enforcement application filed by the mother 23 March 2023 is dismissed.
3.The response filed by the mother 20 December 2023 is dismissed.
4.The mother has leave to file an application for departure of child support assessment within 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BOYLE:
The parties are in dispute with respect to a Binding Child Support Agreement signed by the father on 18 November 2016, and the mother on 1 December 2016.
The mother seeks payment of arrears and interest pursuant to a Binding Child Support Agreement through an Amended Enforcement Application filed 23 March 2023. Orders 1, 2 and 3 of that application are pressed.
The father filed an Amended Application on 4 March 2024, seeking that the Binding Child Support Agreement is void ab initio. He seeks that the Enforcement Application of the mother be dismissed. In the alternate he seeks that the Binding Child Support Agreement be set aside or discharged as and from 10 May 2018. Declarations are sought that the operation of clauses 5 to 16, which set out the payment required, be suspended from 14 April 2020 to the date of the order, or various alternate dates.
The effect of the orders sought by the father in his Amended Initiating Application filed 4 March 2024 is that an administrative assessment issue from the Child Support Agency, and that payments made from 16 December 2016 to the date of these orders be credited against any assessment.
The mother filed a Response to the father’s Application on 20 December 2023, seeking that the orders sought by the father be dismissed. In the alternative, if the agreement is set aside she seeks a departure order from the administrative assessment, and an order for payment of $6,000 per month of periodic child support, and other ancillary costs.
During final submissions counsel for the mother indicated that the departure order should commence from 1 December 2016. No timeframe was specified in the Response.
BACKGROUND
The parties commenced cohabitation in September 2002, and were married in 2004.
The parties have two children: X aged 16 years, and Y aged 14 years. The children attend private schools in years 10 and 9 respectively. They live with their mother, and spend holiday periods with their father.
The mother is employed as a professional for B Company.
The father is by background a professional. As I understand the evidence he has developed expertise in managing entities over periods of corporate change. The pattern of his employment is working for an entity for generally less than five years. The terms of his engagement have usually included significant termination payments, and bonuses. He is well remunerated for his services.
The parties separated on a final basis on 1 September 2014.
In 2016 the parties engaged in mediation to resolve issues of property, parenting and child support. An agreement was reached between them. The parties engaged solicitors to prepare consent orders with respect to property, and a Binding Child Support Agreement. Part of the agreement was that the Binding Child Support Agreement would take effect from the date final property orders were made. The consent orders were made 16 December 2016.
The Binding Child Support Agreement was registered in the Family Court of Australia (as it then was) on 9 January 2017.
The circumstances of the parties at the time of the Binding Child Support Agreement are encapsulated in the recitals. At the time the parties entered into the Agreement, the mother was employed as a professional with C Company. The father was employed as a professional at D Company. The children lived with the parties in an equal shared care arrangement.
The Binding Child Support Agreement provided in summary:
(a)The father pay the mother periodic child support in the sum of $4,750 per month.
(b)That the father pay 100 percent of all school fees and school related expenses for the children, including private school tuition should the parties agree that the children attend a private school.
(c)That the father pay 70 percent of all out of pocket medical expenses for the children, including medical, optical, orthodontic and dental treatment.
(d)That the mother pay for the children’s extra-curricular activity expenses, up to $800 per year.
(e)That the parties otherwise meet the children’s day to day living expenses when the children are in their care.
There are provisions which address what happens if there are changes to the father’s employment and income. There is a dispute is relation to those provisions, which is dealt with later in these reasons.
In mid-2017 the husband entered new employment. He continued to make payments under the Binding Child Support Agreement.
The father’s employment was terminated in early 2018. He received a termination payment of $63,684. He brought an unfair dismissal claim. Those proceedings were settled, subject to a non-disclosure agreement. In late 2018 he received $60,000 from his former employer.
In April 2018 the father stopped making payments pursuant to the Binding Child Support Agreement. In May and June 2018 he paid $1,500 per month to the mother. From July 2018 to March 2020 he paid $450 per month.
In late 2018 the father was self-employed doing contract work. In mid-2019 he was employed on a full-time basis by the entity to which he had provided contract services. in early 2020, the father was made redundant, and received a redundancy package of $100,000.
From early 2020 the father took up employment in New Zealand, where he has resided since. He lives with his partner, and her two children.
From early 2020 the mother had sole care of the children. Once COVID-19 restrictions were lifted the father began spending holiday time with the children in New Zealand and Australia.
On 19 February 2020 the father made an application to Services Australia for a Child Support administrative assessment. The mother advised the Child Support Agency that a Binding Child Support Agreement existed. The Binding Child Support Agreement was registered on 9 April 2020 with the Child Support Registrar, effective from 18 March 2020.
On 27 April 2020 the father requested that the Binding Child Support Agreement be terminated on the basis of his income on 7 October 2020 the agency acceded to the father’s request.
On 2 November 2020 the mother lodged an objection to that decision. On 22 April 2021 Services Australia allowed the mother’s objection and reinstated the Binding Child Support Agreement from 18 March 2020.
On 20 July 2021 the father applied for a review of the decision by Services Australia made on 22 April 2021, with the Administrative Appeals Tribunal (“AAT”). There was a hearing before the AAT in October 2021. Both parties participated.
On 19 October 2021 the AAT affirmed the decision of Services Australia upholding the Binding Child Support Agreement.
On 30 September 2022, the mother filed an Application for Enforcement of the Binding Child Support Agreement in this Court.
On 14 September 2023, the father filed an Initiating Application seeking a declaration that the Binding Child Support Agreement is void ab initio, or in the alternate, set aside from 10 May 2018.
On 20 December 2023, the mother filed a Response to Initiating Application, seeking that the application be dismissed, or in the alternate, that a departure order be made.
At the time of the Final Hearing the father had been residing in New Zealand since early 2020. He ceased being a resident of Australia in early 2020. It was agreed that the father’s residence in New Zealand was not a terminating event for the Binding Child Support Agreement,[1] and that consideration need not be given to s 12(3)(b) of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”).
[1] Child Support (Registration and Collection) Regulations 2018 schedule 1
DOCUMENTS RELIED UPON
The father relied upon the following documents:
(a)Amended Initiating Application filed on 4 March 2024.
(b)Affidavit of Mr Petrone filed on 4 March 2024.
(c)Affidavit of Ms E filed on 4 March 2024.
(d)Financial Statement filed on 4 March 2024.
The mother relied upon the following documents:
(a)Amended Enforcement Application filed 23 March 2023.
(b)Response to Initiating Application filed 20 December 2023.
(c)Affidavit of Ms Petrone filed 6 March 2024 and re-filed 12 March 2024.
(d)Affidavit of Ms Petrone filed 12 March 2024.
(e)Financial Statement filed 18 December 2023.
Each of the parties were cross-examined.
A number of documents were tendered, and are exhibits in these proceedings. I have had regard to those documents.
ISSUES
The issues in this matter are:
·Did the parties enter a valid and enforceable Binding Child Support Agreement?
·If the Binding Child Support Agreement is found to be void, is it appropriate that an order be made for a departure from the Child Support Assessment?
Did the parties enter a valid and enforceable Binding Child Support Agreement?
The father argues that no valid and enforceable agreement was entered into between the parties. He argues that the agreement should be declared void ab initio.
At the outset of the hearing, Counsel for the father indicated to the Court that the application to set aside the Binding Child Support Agreement was not being made pursuant to s 136 of the Assessment Act, but rather it was sought that the agreement be set aside at common law.[2]
[2] Bassett & Teale [2016] FCCA 2177
Sections 80C and 81 of the Assessment Act stipulate the requirements for a binding child support agreement:
80C Making binding child support agreements
(1) An agreement is a binding child support agreement if:
(a) the agreement is binding on the parties to the agreement in accordance with subsection (2); and
(b) the agreement complies with subsection 81(2).
(2) For the purposes of subsection (1), an agreement is binding on the parties to the agreement if, and only if:
(a) the agreement is in writing; and
(b) the agreement is signed by the parties to the agreement; and
(c) the agreement contains, in relation to each party to the agreement, a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him or her, as certified in an annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement; and
(d) the annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided; and
(e) the agreement has not been terminated under section 80D; and
(f) after the agreement is signed, either the original agreement or a copy of the agreement is given to each party.
81 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 sections 80C and 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 agreements);
(c) section 84 (provisions that may be included in agreements);
(d) section 85 (child support agreement must not provide for person who is not eligible carer to be paid child support).
The principles of law and equity apply to the determination of whether there is an agreement, or contract, that could be found to be a Binding Child Support Agreement. As put by Griffiths J:
“the legislative process for finding that an agreement is a child support agreement which is acceptable under section 92 of the Child Support (Assessment) Act 1989 involves only two steps, namely:
(a) is there an agreement (a contract)?
(b) Is there a child support agreement (i.e., either a binding child support agreement or limited child support agreement)?[3]
[3] Child Support Registrar v AFS19 [2021] FCAFC 207 at 36
The father contends that there is no agreement between the parties for reasons including uncertainty and incomplete essential terms.
The father has argued that prior to signing the agreement he received legal advice that the agreement may be unenforceable. He entered the agreement against the advice of his solicitor. The agreement was prepared at the same time as the parties were resolving their property settlement. The father’s evidence is that the housing market was good. He was keen to take advantage of the market, as the property orders provided for a sale of the former matrimonial home. The mother also wanted a sale of the property.
To the extent he argues that he entered the agreement in the belief that it would not withstand any legal challenge, as a basis for finding there was no agreement between them, I reject this argument. It would undermine the basis of any agreement or contract if parties were permitted to argue that they entered an agreement they did not support, in order to achieve a particular benefit. Once that benefit was obtained, in this instance the sale of the former matrimonial home at a good price, they could then seek the agreement be voided.
The father takes issue with clause 18 of the Binding Child Support Agreement, and particularly 18.5. The evidence discloses back and forth negotiations between the solicitors and parties with respect to the terms of the agreement, including different versions of clause 18, prior to the parties signing the Binding Child Support Agreement.
Clause 18.5 of the Binding Child Support Agreement provides:
In the event that the father is re-employed at a subsequent salary package that is more than 30% less than his salary package at the time of entering into this Agreement, the parties agree to terminate this Agreement and enter into a new Binding Child Support Agreement following the submission by the father of his proof of earnings to the mother upon which the parties will need to reach an agreement provided always that they will consider that neither party nor the children shall suffer hardship.
It was submitted on behalf of the father that this clause is an essential term of the agreement that does not provide sufficient detail to enable the agreement to be enforced. The terms specify that the father’s salary package at the time of the Binding Child Support Agreement is his base salary, including superannuation. The method of calculating subsequent salary packages is also set out in the Binding Child Support Agreement: wages, salary, commissions, bonuses or named work related insurance.
Clause 18.5 is intended to provide for circumstances where the father’s salary package falls to more than 30% less than his salary package at the time of entering the agreement. If that were to occur the Binding Child Support Agreement would terminate, and the parties enter into a new agreement “upon which the parties need to reach an agreement”.
There is no power to vary a Binding Child Support Agreement under s 80CA(1) of the Assessment Act. The parties have not included a severability clause within the Binding Child Support Agreement, which may allow for part of the agreement to fail, without affecting the rest of the agreement.
Clause 18.5 purports to not only terminate this Agreement should the father’s salary package fall below a specified level, but to require the parties to enter a new Binding Child Support Agreement. The clause provides “following the submission by the father of his proof of earnings to the mother upon which the parties will need to reach an agreement …” The meaning of this is not clear. It is an agreement for the parties to reach an agreement. It is not possible to bind the parties to enter a Binding Child Support Agreement, the terms of which are unknown, save that “they will consider that neither party not the children shall suffer hardship”.
Counsel for the mother argues that s 84 of the Assessment Act is not an exclusive list of provisions that may be included in agreements. That is, the parties may include in a Binding Child Support Agreement provisions not referred to in the act. I accept the provision in clause 18.5 is not of a type which may be included on the Child Support Agreement under section 84 of the Assessment Act. That was also the assessment of the tribunal member in the AAT proceedings, which is relied on by the mother.
The tribunal member referred to clause 18.5 as being “rather a statement of intent about what the parents propose to do in a specified circumstances”. The difficulty is that the agreement the parties entered stands as a whole. Parts cannot be extracted and the parties’ intention interpreted with respect to those parts.
The argument with respect to the parties reaching an agreement on terms which are then executed as a Binding Child Support Agreement require certainty as to the terms of the agreement. There is no capacity to vary the agreement under the legislation. The parties did not include any severability clause with respect to the agreement.
Menzies J in Thorby & Goldberg [1964] HCA 41; (1964) 112 CLR 597 at 607 noted:
“It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least it’s essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties.”
The member approached clause 18.5 with respect to operating, or not, to terminate the Binding Child Support Agreement. That is not the argument made here. The argument is that clause 18.5 is “an essential or critical term [which] is expressly left to be settled by future agreement of the parties”. The effect of this is that the parties did not enter a binding or enforceable agreement. It goes to the fundamental agreement between the parties to enter into a Binding Child Support Agreement.
The parties have not included any severability clause in the Binding Child Support Agreement, thus that is not an option to be considered. There is no power for the court to vary the Binding Child Support Agreement, pursuant to section 80CA of the Assessment Act. For these reasons I will make a declaration that the Binding Child Support Agreement is void ab initio for uncertainty.
The application by the mother for enforcement of the Binding Child Support Agreement is therefore dismissed, as there is no Binding Child Support Agreement to enforce.
The mother’s application for a Departure from Child Support administrative assessment
On 19 February 2020 the father applied for administrative assessment of child support for the two children. The agency accepted the father’s application on 17 March 2020. The annual rate of child support payable under the assessment was $18,214 per annum, or $1,517.83 per month.
On 18 March 2020 the mother provided the agency with a copy of the Binding Child Support Agreement. The annual rate of child support assessed by the agency payable under the Binding Child Support Agreement was $57,000, or $4,750 per month.[4]
[4] Decision of AAT Mr Petrone and Child Support Registrar and Ms Petrone, October 2021, paragraph 2.
A provisional assessment issued from the Agency on 9 April 2020 providing a monthly rate of child support payable by the father at $2,246.83 per month.[5] The father lodged an objection to this assessment on 6 May 2020.
[5] The father's affidavit dated 4 March 2024, paragraph 214.
On 24 December 2020 an Assessment issued for the period 2 April 2020 to 31 January 2021. This assessed the father’s child support at $2,258 per month.
The father moved to New Zealand in early 2020. Prior to the father relocating to New Zealand the parties had a shared arrangement for the care of the children.
On 2 March 2023 final parenting orders were made. It was ordered that the children would spend time with the father for eight nights during the term one school holidays; in the long summer holidays, in alternating years, 17 nights and 11 nights; and when the father is visiting Sydney for two or three nights on a weekend.
The father’s evidence is that he spent no time with the children between 19 March 2020 and 31 December 2020, nor during 2021, two occasions in 2022 of less than two weeks in total, and three occasions in 2023 of less than three weeks in total. The travel restrictions imposed by both Australia and New Zealand during the COVID-19 pandemic had a significant impact on the children’s time with the father.
As an alternative position should the Binding Child Support Agreement be set aside, the mother sought a departure order from the administrative assessment.
Section 116 of the Assessment Act provides:
(1)A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:
(b) both of the following apply:
(i) the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;
(ii) the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; or
(c) in the case of a liable parent--the administrative assessment of child support payable by the liable parent for the child is made under subsection 66(1).
Section 117 of the Assessment Act provides:
Court may make departure order
(1) Where:
(a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b) the court is satisfied:
(i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division;
the court may make the order.
Grounds for departure order
(2)For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i) the duty of the parent to maintain any other child or another person; or
(ii)special needs of any other child or another person that the parent has a duty to maintain; or
(iii)commitments of the parent necessary to enable the parent to support:
(A) himself or herself; or
(B)any other child or another person that the parent has a duty to maintain; or
(aa)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));
(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i)because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia) because of special needs of the child; or
(ib) because of high child care costs in relation to the child; or
(ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i)because of the income, earning capacity, property and financial resources of the child; or
(ia)because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
Before a court makes an order for a departure under section 117 of the Assessment Act the court must be satisfied that one or more of the grounds for departure referred to in subsection (2) exist; and that it would be just and equitable as regards the child, the carer entitled to child support and the liable parent; and otherwise proper to make an order.
The grounds for departure
During final oral submissions counsel for the mother, for the first time, indicated that she sought a departure order from the assessment of 24 December 2020 to apply from 1 December 2016, being the date of the Binding Child Support Agreement, to the date of the hearing. The orders sought in the Response filed 20 December 2023, and Outline of Case filed 8 January 2024 do not specify any time frame to which a departure order should apply.
Counsel for the father raised the procedural unfairness of seeking to amend the application in this manner. I accept that it is fundamental that a party should know the case they are required to meet.
Without any reference to time frame in the order one might infer that the orders sought a departure from 24 December 2020, that being the date of the assessment. Alternatively, the orders sought refer to a monthly amount of $6,000 to be paid “forthwith from seven days from the date of the orders”. There is no clarity in the mother’s orders as to precisely what is sought.
I accept that both parties have focused in this hearing on evidence and arguments with respect to the Binding Child Support Agreement. The cross-examination of both parties was directed to matters relevant to that determination. The focus was not on grounds for a departure under s 117 of the Assessment Act.
I have the benefit of financial statements filed by both parties, and evidence with respect to their income over a period of time. There is evidence of the attendance of the children at private schools, which has been the case for many years.
I am concerned in the circumstances of this matter that to do as the father urges and remit the matter to the Child Support Agency for an assessment, would not be just and equitable as regards the children, and the mother with whom they reside. There are a number of features of the matter which suggest an application for a departure order should be considered by the court, as opposed to an administrative assessment, to meet the needs of these children, and the parents:
(a)The father earns a high income with a base salary of $490,000NZD, with a “potential salary package” of $612,500NZD. The base salary is the equivalent on his calculation of $575,750.
(b)His pattern of employment involves periods of unemployment.
(c)The children are being educated as the parties intended in private schools.
(d)The shared care arrangement that the parties had in place is now school holiday time, and the mother is primarily responsible for the day to day care of the children.
Section 117 of the Assessment Act requires that in the special circumstances of the case, the court must be satisfied that one or more of the grounds for departure referred to in s 117(2) exist, and that it would be just and equitable as regards the child, and the parents to make an order.
I do not have a case argued by either party that would enable me to determine an application for a departure order where the periods of that departure are properly framed. On that basis I dismiss that application.
The parties have expended significant funds on legal fees up the hearing. The mother paid up to 13 March 2024 $141,500, and the father $69,857. Additionally, they have had the costs of the hearing. In proceedings with respect to any future departure application, I would anticipate the parties would be able to apply to rely on Affidavits filed in these proceedings, in order to minimise costs.
I will grant the mother leave to file an application so that a departure application can be determined on its merits, utilising the evidence already available.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Boyle. Associate:
Dated: 2 August 2024
0
4
2