RAMSEY & RAMSEY
[2012] FMCAfam 739
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RAMSEY & RAMSEY | [2012] FMCAfam 739 |
| CHILD SUPPORT – Enforcement – Agreement – Child Support Agreement – application for stay – application to set aside Child Support Agreement – exceptional circumstances – whether exceptional circumstances shown. PRACTICE & PROCEDURE – Enforcement of financial orders – Family Law Rules 2004 r.20.05 does not apply in the Federal Magistrates Court – Federal Magistrates Court Rules 2001 Division 25B.2 applies to enforcement of financial orders and obligations. |
| Child Support (Assessment) Act 1989 (Cth), ss.3, 4, 80C, 136 Family Law Rules 2004, R. 20.05 Federal Magistrates Court Rules 2001, Sch. 3, Division 25B.2, Rule 25B.09 Federal Magistrates Court Amendment Rules 2012 (No.1) |
| Gallup & Gallup [2009] FMCAfam 839; (2010 FLC 98-50 Jones v Dunkel (1959) 101 CLR 298 Spinks & Spinks [2001] FamCA 197; (2001) 29 Fam LR 259; (2002) FLC 98-016; 159 FLR 88 |
| Applicant: | MS RAMSEY |
| Respondent: | MR RAMSEY |
| File Number: | SYC 1968 of 2008 |
| Judgment of: | Scarlett FM |
| Hearing date: | 8 November 2012 |
| Date of Last Submission: | 15 December 2012 |
| Delivered at: | Sydney |
| Delivered on: | 14 August 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Barkus Doolan Kelly |
| Counsel for the Respondent: | Mr Batey |
| Solicitors for the Respondent: | Watts McCray |
ORDERS
The Application by the Respondent for a Stay of the operation of the Child Support Agreement between the parties dated 2 March 2010 is dismissed.
The Application by the Respondent for a Stay of the Enforcement Summons filed on 2 September 2011 is dismissed.
The Applicant is granted leave to file and serve an Application in a Case seeking an order for payment of the amounts owing under the Child Support Agreement between the parties dated 2 March 2010 under the provisions of Rule 25B.09 within twenty-one (21) days.
IT IS NOTED that publication of this judgment under the pseudonym Ramsey & Ramsey is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 1968 of 2008
| MS RAMSEY |
Applicant
And
| MR RAMSEY |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application to enforce payments due under a Child Support Agreement. The Respondent seeks interim orders staying the operation of the Child Support Agreement and staying the operation of the Enforcement Summons. On a final basis he seeks an order setting the agreement aside.
Background
The parties were married on (omitted) 1996 and separated on 26 January 2007. They were divorced by means of an Order made on 20 May 2008.
There are two children of the marriage. Y was born on (omitted) 1999 and X was born on (omitted) 2001. The children live with their mother, who is the Applicant in these proceedings. Y attends (omitted) School and X attends (omitted) School.
On 2 March 2010 the parties entered into Consent Orders in the Family Court of Australia at Sydney resolving the property and parenting issues between them. On that same day they entered into a Binding Child Support Agreement, which provided that the Respondent would, inter alia, pay the children’s school fees at (omitted) School and (omitted) School. The Respondent also agreed to make periodic payments of child support, initially at the rate of $875.00 per month.
On 2 September 2011 the Applicant filed an Enforcement Summons and a supporting affidavit. The Enforcement Summons was returnable on 8 November 2011.
On 11 October 2011 the Respondent filed an Initiating Application seeking to set aside the Child Support Agreement and, in the interim, seeking a stay of the operation of the Child Support Agreement and the Enforcement Summons.
The Respondent filed an Amended Application on 3 November 2011, in which he sought the same orders as before with the addition of orders varying the parenting orders made by consent on 2 March 2010.
The Applicant filed a Response on 7 November 2011, seeking the dismissal of the interim and final orders sought by the Respondent father.
The Court heard brief oral submissions on the child support issues on the first return date, 8 November, but no submissions were made about the Respondent’s Application to vary the parenting Orders. Various documents were submitted as evidence in support of the parties’ claims.
It was agreed that the parties would file and serve written submissions, which they did between 23 November and 15 December 2011.
Orders Sought
The Applicant seeks the following Orders:
· (10.1) That within 7 days the respondent father pay to the mother by way of reimbursement for school fees paid to (omitted) School and by way of enforcement of Clause 21 of the Binding Child Support Agreement dated 2 March 2010 the sum of $17,509.
· (10.2) That the father forthwith direct his employer, (omitted), to deduct from his salary and pay to (omitted) School the sum of $2,000.00 per week until such time as the debt of $13,921.81 is discharged in full.
· (10.3) That following the discharge of the debts owed by the father pursuant to paragraphs 10.1 and 10.2 hereof, the father shall thereafter direct his employer, (omitted), to deduct the sum of $2,000.00 per week from his salary and remit one half of that amount to (omitted) School and the other half to (omitted) School by way of enforcement of Clause 21 of the Child Support Agreement dated 21 march 2010.
· (10.4) That the father’s Interim Application filed on 3 November 2011 be and is hereby dismissed.
· (10.5) That the father pay the mother’s costs of and incidental to these proceedings.
The Respondent father seeks the following orders in his Amended Application filed on 3 November 2011:
Interim Orders
· (1) That the operation of the Child Support Agreement between the parties dated 2 March 2010 be stayed pending final determination of the Application to set aside the Child Support Agreement.
· (2) That the Enforcement Summons filed 8 November 2011 on behalf of the Respondent[1] be stayed until the final determination of the Application to set aside the Child Support Agreement.
[1] i.e. the mother, who is the Respondent to his initiating Application
Final Orders Sought
Child Support
· That the Child Support Agreement executed by the parties on 2 March 2010 be set aside pursuant to Section 136(2)(d).
· (2) That the Husband pay child support for the children of the relationship as assessed by the Child Support Agency.
Parenting
· (3) That Order 17.1.1 of the Orders made by this Honourable Court on 2 March 2010 be varied such that:-
“17.1.1 that the Husband spend time with the children each alternate weekend to commence from the conclusion of school on Wednesday until 5.00 pm on Sunday”
· (4) That Order 17.1.2 of the Orders made by this Honourable Court on 2 March 2010 be discharged.
· (5) That the Wife complete the Centacare, (omitted) course within 2 months of the date of these Orders, noting that the Husband has already completed the course.
Evidence
The Applicant mother relies on the following:
a)The Enforcement summons filed on 2 September 2011;
b)Her affidavit sworn on 1 September 2011;
c)Her Response to Amended Initiating Application filed on 7 November 2011;
d)Her affidavit sworn 7 November 2011;
e)Her Financial Statement filed on 7 November 2011; and
f)The Exhibits tendered at the hearing on 8 November 2011.
In her affidavit sworn on 2 September 2011 the Applicant deposed that the Respondent had failed to pay the children’s private school fees:
Mr Ramsey has failed to pay private school fees in relation to Y’s attendance at (omitted) School. An amount of $17,509 remains outstanding…
Mr Ramsey has also failed to pay private school fees in relation to X’s attendance at (omitted) School. An amount of $13,411remains outstanding.[2]
[2] Affidavit of Mr Ramsey 2.9.2011 at paragraphs [8]-[9]
The Applicant stated that, after an exchange of correspondence between the parties’ solicitors, she met with the Business Manager at (omitted) School on 17 June 2011:
As a result of that meeting, and to prevent Y’s enrolment being terminated, I committed to paying the outstanding fees by 31 August 2011. On 29 and 30 August 2011 I paid the outstanding amount of $17,509 by way of credit card.[3]
[3] Ibid at [16]
In her later affidavit, in which she responded to various matters raised by the Respondent in his affidavit of 11 October 2011, the Applicant stated that:
a)the Respondent has obtained a job with the (employer omitted);
b)the Respondent has not paid periodic child support in accordance with the Child Support Agreement since 1 June 2011, so that he owes her child support in the amount of $10,500;
c)the Respondent was unemployed at the time they signed the Child Support Agreement on 2 March 2010;
d)the Respondent’s current wife Ms K was pregnant with their first child, Z;
e)she denies having displayed hostility towards the Respondent and his current wife, whom she says she has never met; she is unaware of the financial circumstances of Ms K;
f)the Respondent and his current wife have since conceived a second child;
g)she denies not having signed the necessary documents to transfer to the Respondent her interest in a property in the United Kingdom; and
h)she currently earns a salary of $90,000.00 per annum.[4]
[4] Affidavit of Mr Ramsey 7.11.2011 at paragraphs [14], [15] & [19]
The Respondent father relies on the following:
a)His Amended Application filed on 3 November 2011;
b)His affidavit sworn on 11 October 2011;
c)His affidavit sworn on 2 November 2011; and
d)His Financial Statement filed on 11 October 2011.
In his affidavit of 11 October 2011 the Respondent deposed that:
a)He married his present wife, Ms K, on (omitted) 2009;
b)There is one child of that marriage, Z, who was born on (omitted) 2010;
c)Ms K is expecting their second child in mid-January 2012;
d)He estimates the total cost of educating the children Y and X at approximately $47,000.00 per annum; and
e)At the time he entered into the Child Support Agreement he was not earning an income but held certain assets.[5]
[5] Affidavit of Mr Ramsey 11.10.2011 at paragraphs [5], [12] & [13]
The Respondent explains his reasons for entering into the Child Support Agreement in this way:
At the time that I entered into the Child Support Agreement, I was anxious to try to get matters settled with Ms Ramsey as quickly as possible in order to try to reduce the amount of conflict between us and thereby make the situation easier for the children; I was concerned that if I did not reach a settlement by consent the matter would continue to drag on, which would have had an adverse impact on the children. I also could not afford the ongoing legal fees. In effect, I hoped that by agreeing to a generous settlement with Ms Ramsey that she would stop displaying such a high and constant level of hostility towards Ms K and me, which would make it easier for the children generally. I did not give adequate consideration to the fact that I had no income at that time.[6]
[6] Affidavit of Mr Ramsey 11.10.2011 at [15]
The Respondent also deposed that he had established a business called (omitted) in September 2009. He explains:
I expected the business would become very profitable and would restore me to a comfortable financial position to enable me to fulfil my obligations under the Child Support Agreement…I was optimistic that this business would succeed because major banks were short of capital due to the GFC and were interested in selling non-core assets.[7]
[7] Ibid at [19]
The Respondent went on to describe how the business failed:
However initially I was unable to raise enough capital for the business to enable to bid high enough prices for the portfolios; once I was able to raise capital in early 2011 the market prices for such assets had already increased significantly and so I was unable to buy portfolios at prices that were attractive to my investors. In May 2011 my investors informed me that they were not willing to support the operating expenses of the business on an ongoing basis and so I formed the view that the business was unsustainable and could not survive.[8]
[8] Ibid at [20]
The Respondent also deposed that his current wife Ms K was the sole regular income earner from the date of their marriage on (omitted) 2009 until August 2010, when she commenced unpaid maternity leave.[9] She received a bonus of approximately $16,000.00 in November 2010, and he earned about $73,000.00 from (omitted) work between late 2010 and May 2011.[10]
[9] Ibid at [20]-[21]
[10] Ibid at [22]-[23]
His current wife Ms K is on unpaid maternity leave until the end of 2012. She is the primary carer for their first child and will continue in that role for their second child.[11]
[11] Ibid at [24]
The Respondent deposed that he sold various assets to meet his obligations under the Child Support Agreement, including life policies, wine and (vehicles omitted) and (vehicles omitted) motor vehicles, totalling $151,859.00. The (vehicle omitted) was traded against a (vehicle omitted) motor car in about December 2010.[12] The Respondent deposes that he has borrowed various sums from family and friends.
[12] Affidavit of Mr Ramsey 11.10.2011 at [25]
The Respondent deposed that he and his wife Ms K have been looking at ways to reduce their living expenses. They have relinquished their lease on the home in which they have been living in the suburb of (omitted) and have leased a property at (omitted) at a weekly rent of $1,150.00.[13]
[13] Ibid at [32]
The Respondent has obtained a job with (omitted), a subsidiary of the (omitted).[14]
[14] Ibid at [33]
The Respondent’s affidavit of 2 November 2011 deals mainly with his concerns about the parenting issues that he has raised in his Amended Application.
The Respondent and Ms K are now renting a house at (omitted).[15]
[15] Affidavit of Mr Ramsey 2.11.2011 at [19]
Submissions
In her written Outline of Submissions, the Applicant submits that the Child Support Agreement into which the parties entered is a Binding Child Support Agreement under the provisions of s. 80C of the Child Support (Assessment) Act. Clause 21 of the Child Support Agreement provides for the father to meet school fees and educational expenses for the parties’ two children, Y and X at (omitted) School and (omitted) School. The father ceased paying those school fees in or about June 2011. He ceased paying periodic child support at around the same time.
The Applicant submits that an order enforcing Clause 21 of the Child Support Agreement is:
a)justified in the circumstances of the case having regard to the current financial circumstances of the Respondent and the terms of his current employment;
b)necessary so as to allow the children to continue being educated at their current schools where they are well settled and which they have attended with the agreement of the parties; and
c)appropriate having regard to the Respondent’s evidence which fails to establish prima facie that there are exceptional circumstances that have arisen since the making of the agreement that will result in the Respondent suffering hardship if the agreement is not set aside in accordance with paragraph 136(2)(d) of the Child Support (Assessment) Act.
Further, the Applicant submits that the Respondent’s Application for a stay of all child support payments under the Child Support Agreement should be dismissed because:
a)the Respondent has a duty to maintain the children of the marriage (s. 3 of the Act);
b)the only circumstance that has changed is that the father has chosen to have a second child, which is a choice from which he should not be entitled to benefit to the detriment of the children of the marriage;
c)the children will suffer hardship if the payments of child support are stayed;
d)the prejudice to be suffered by the children in not being able to attend their current schools and the prejudice to the applicant in not being able to meet the children’s expenses outweigh the prejudice to the Respondent if he is ordered to pay the school fees;
e)the Respondent’s remuneration package from (omitted), with a potential total remuneration of $535,775.00 per annum is sufficient to enable him to continue to meet:
i)the periodic payments of child support under Clause 19 of the Child Support Agreement; and
ii)the private school fees under Clause 21;
f)the Respondent’s financial circumstances have improved as a result of his obtaining employment with (omitted) as he was unemployed at the date he entered into the Child Support Agreement: and
g)the Applicant will be unable to meet the ongoing costs associated with the children if the payments of child support are stayed.
The Applicant submits that the Court should have regard to:
a)the duty of parents to maintain their children as provided by s. 3 of the Act;
b)the objects of the Act, which are set out in s. 4;
c)paragraph 136(2)(d) of the Act, which provides that a party applying to set aside a Binding Child Support Agreement must show that the applicant or a child concerned will suffer hardship if the Agreement is not set aside.
The Applicant states that Respondent seeks to rely upon exceptional circumstances that have arisen to ground his Application for a Stay, which he claims would cause him hardship if the Agreement were not set aside. However:
This is a matter to be determined at the final hearing.[16]
[16] Outline of Submissions on behalf of Mother page 7 at 4.4
It is submitted that the Respondent failed to disclose the income of his current wife at the time he entered into the Child support Agreement, yet now he claims that the cessation of her income is a significant change of circumstances. There is no affidavit from Ms K in support of that claim and it is submitted that an inference can be drawn that her evidence would not support the Respondent’s case, as set out in Jones v Dunkel[17].
[17] (1959) 101 CLR 298
It is submitted that the Respondent’s remarriage and the birth of his first child from that marriage do not constitute a change of circumstances sufficient to justify setting aside the Child Support Agreement as they were matters already within the Respondent’s knowledge when he entered into the Agreement. It is further submitted that the birth of the father’s second child is a matter of choice by the Respondent.
The Applicant further submits that the Respondent’s financial situation has in fact improved since the Respondent entered into the Binding Child Support Agreement.
The Applicant also submits that the factors being relied on by the Respondent were known to him at the date the Child Support Agreement was entered into and it is not open to him to argue that there is an accumulative effect in that all of the circumstances combined overcome the hurdle set out in the legislation as to what constitutes an exceptional change of circumstances. The number of factors known to the Respondent at the time the Agreement was made clearly distinguish the facts in this case from those set out in the decision of Demack J in Gallup & Gallup[18].
[18] [2009] FMCAfam 839; (2010) FLC 98-050
The Applicant submits that the Respondent has a duty under s. 3 of the Child Support (Assessment) Act to provide financial support to his children. The effect of an Order staying the entire Child Support Agreement would mean that he was providing no financial support for his children from his first marriage, despite having a base salary of $275,775.00 per annum and a possible entitlement to a short term incentive bonus of $260,000.00.
The Respondent father submits that the Application for enforcement by the Applicant mother must fail due to the lack of compliance with the Rules governing the Court’s powers in enforcement proceedings. The submission is that the methods available to the Court in proceedings for enforcement of an obligation to pay money are those set out in Rule 20.05 of the Family Law Rules 2004.
However, as the Applicant points out in her Submission in Reply, the Family Law Rules 2004 do not apply in proceedings of this nature:
Reference is more properly made to the Federal Magistrates Court Rules, and in particular to Division 25B.2 – Enforcement of Financial Orders and Obligations.[19]
[19] Mother’s Submissions in Reply 15 December 2011 page 1 at 1.2
Turning to the Respondent’s application for setting aside the Binding Child Support Agreement and a Stay of his obligations under that Agreement, it was submitted by counsel for the Respondent that Section 136 of the Child Support (Assessment) Act grants to a Court having jurisdiction under the Act the power to set aside child support agreements or termination agreements.
The Respondent relies on paragraph 136(2)(d) for the purpose of setting aside his obligations under the Binding Child Support Agreement, claiming a significant change of his financial position resulting in exceptional circumstances since the Agreement was entered into on 2 March 2010:
The Respondent in his submission refers to the following events:
a. Following the husband’s redundancy in March 2009, and his subsequent loss of an Australian working visa, the husband was unable to find paid employment until July 2011. The husband’s income during the 2 years and 4 months period from March 2009 to May 2011 through his business (omitted) (“(omitted)”) was only $73,000 gross.
b. The failure of the business venture, (omitted), in May 2011. The husband had expected that this business would be successful and generate sufficient income to enable him to meet the significant financial commitments that he undertook in the BCSA. However, as a result of increased competition and the subsequent withdrawal of financial backing, the business venture did not succeed as expected. The husband advised the wife of the failure of (omitted) and his inability to continue to meet the school fees in May 2011 and attempted to make arrangements for the children to attend alternative schools in order to avoid incurring further substantial liabilities that he was not able to meet.
c. The husband incurred significant debts in his endeavours to meet his obligations under the BCSA. Incurring these debts has resulted in significant repayments that reduce his disposable income from his current employment…
d. The husband now has one young child Z born September 2010, and the impending birth of a second child in January 2012.
e. The loss of income by the husband’s new wife, Ms K, following the birth of their 1st child Z, in September 2010 and the impending birth of a second child in January 2012. Ms K was in receipt of approximately $150,000 to $160,000 (including bonuses) before tax, and was the main source of income from which the husband had hoped to meet day to day living expenses. However, other than a bonus of approximately $16,000 paid in November 2010, Ms K has not earned, and is not earning, any income from her employment…
f. The husband’s day-to-day living expenses have increased as a result of having to support his new family.[20]
[20] Husband’s Submissions in Support of Setting Aside Binding Child Support Agreement and a Stay of Payments pursuant to the Binding Child Support Agreement pages 5-6
The Respondent has been employed by the (employer omitted) (or a subsidiary thereof) since 20 July 2011 and his salary has been utilised to meet obligations which, if repayment had not been made, may have resulted in having to file for bankruptcy or a personal insolvency agreement under the Bankruptcy Act.
The Respondent referred the Court to the decision of Spinks & Spinks[21], which was a decision of Chisholm J in an appeal from a decision of the Federal Magistrates Court. In reviewing the authorities, his Honour said:
Ultimately, although the judges’ language varies from case to case, the decisions seem to turn on whether the person acted reasonably in all the circumstances that led to the reduced income.[22]
[21] [2001] FamCA 197; (2001) 29 Fam LR 259; (2002) FLC 98-016; 169 FLR 88
[22] (2001) 29 Fam LR 259 at 269 [37]
It is submitted on behalf of the Respondent that the test to be applied in deciding whether the exceptional change of circumstances is weighing up the accumulation of events that result in the Respondent’s present impecuniosity:
There is little doubt that the husband’s recent marriage is a significant factor leading to his current dire financial circumstances.
Although none of these changes in circumstance in isolation represent a significant change of circumstance, the husband contends that they are a related set of circumstances that, when taken as a whole, constitute an exceptional change in the financial positions and living arrangements of the parties since the date of the BCSA.[23]
[23] Husband’s Submissions page 10
The Respondent relies on the decision of Gallup & Gallup[24] where Demack FM held at [90]:
It seems to me that none of the factors, of themselves, put forward by the father are exceptional but that cumulatively they take on a different character, which I find to amount to exceptional circumstances.
[24] supra
It is submitted that the following factors, considered collectively, constitute exceptional circumstances:
· The unsuccessful attempt by the husband to create and nurture a financial venture to fund his BCSA obligations during his long period of unemployment.
· His deteriorating financial position.
· His lack of any further realisable assets
· His inability to borrow further, or a capacity to service any possible future borrowings.
· The arrival of two young children by January 2012.
· The financial dependence of his new family unit on the husband’s income.
· The wife’s improved financial position.[25]
[25] Husband’s Submissions page 11
Thus, the Respondent submits that the Court would be satisfied that the Binding Child Support Agreement should be set aside and a stay be placed on the husband’s obligations pursuant to the BCSA pending a Child Support Assessment, or a determination by the Court at a later date, of the just and equitable contributions of the parties to the support of the two children.[26]
[26] Husband’s Submissions page 11
Conclusions
As has been submitted, when considering an application to set aside a binding child support agreement, the Court is empowered to do so under paragraph 136(2)(d) of the Act, which provides that:
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.
What an applicant must show is that:
a)there are exceptional circumstances;
b)those exceptional circumstances relate to a party to the agreement or a child in respect of whom the agreement is made;
c)the exceptional circumstances have arisen since the agreement was made; and
d)the applicant or a child in respect of whom the agreement was made will suffer hardship if the agreement is not set aside.
The husband is the Respondent to the enforcement summons. The onus is on him to satisfy the Court that the Binding Child Support Agreement should be set aside. He is not alleging that there are exceptional circumstances relating to either of the children Y or X. He must, therefore, show that the exceptional circumstances relate to him or to the Applicant.
The Respondent must show that the exceptional circumstances claimed have arisen since the agreement was made. In this case, the agreement was made on 2 March 2010, so it must be shown that the circumstances claimed have arisen since that date.
The Respondent was married to Ms K on (omitted) 2009. Therefore, his marriage is not a circumstance that can be taken into account, as it occurred before the agreement was made.
At the time the parties entered into the agreement, the Respondent was unemployed. He had been made redundant in December 2008[27] and lost his Subclass 457 visa in mid-2009.[28] He established his business, (omitted), in September 2009.[29]
[27] Affidavit of Mr Ramsey 11.10.2011 at [16]
[28] Ibid at [17]
[29] Ibid at [18]
This was the situation on 2 March 2010. It is only the events that have occurred since that date that can be considered, and they must be shown to be “exceptional”.
The Respondent’s first child was born on (omitted) 2010. It is a matter of general knowledge that a period of pregnancy lasts for approximately nine months, so the Respondent’s wife Ms K was quite obviously pregnant in March 2010. Thus, it was within the Respondent’s reasonable contemplation that:
a)the child Z would be born in September 2010;
b)the Respondent’s wife Ms K would take unpaid maternity leave in August 2010;
c)upon her taking maternity leave, Ms K’s income would cease; and
d)upon the birth of the parties’ first child their household expenses would increase.
The above facts therefore do not constitute exceptional circumstances.
The Respondent’s second child was due to be born in January 2012. This does not, in my view, constitute an exceptional circumstance. It is not claimed by the Respondent that this was an unplanned pregnancy. Thus, it was within the Respondent’s reasonable contemplation that:
a)Ms K would not be engaged in paid employment until the end of 2012; and
b)The parties’ household expenses would again increase once their second child was born.
These facts therefore do not constitute exceptional circumstances.
What was unplanned was the failure of the respondent’s business, (omitted) in May 2011. The business had been in existence since September 2009. The Respondent deposed that when the business commenced he “had limited capital and no external financial backing”[30] but he intended to find external investors to back the business. However, he was initially unable to raise the capital he needed and it is clear that he did not have that capital to hand at the time he entered into the Binding Child Support Agreement.[31]
[30] Affidavit of Mr Ramsey 11,10.2011 at [18]
[31] Ibid at [19]
This business venture, on the Respondent’s evidence, was highly speculative and it should not have been outside the Respondent’s reasonable expectation that his expectation that the business would become very profitable may not eventuate.
What did happen was that in July 2011, two months after (omitted) closed, the Respondent obtained his current employment with (omitted). This position carries a pre-tax salary of $5,288.00 per week, according to the Respondent’s Financial Statement filed on 11 October 2011.
True it is that the Respondent has suffered a shortfall between his income and his outgoings, but from his evidence this would appear to be temporary. The Respondent’s explanation in paragraph 15 of his affidavit of 11 October 2011 of the circumstances in which he entered into the Binding Child Support Agreement is perhaps summed up by his statement that:
I did not give adequate consideration to the fact that I had no income at that time.[32]
[32] Affidavit of Mr Ramsey 11.10.2011 at [15]
Clearly, the Respondent did not give adequate consideration that his new wife was pregnant with their first child and that she would be obliged to stop work in a few months, whereupon her income would come to a halt. The birth of the child would lead to an increase in household expenses at a time when Ms K was no longer able to earn an income.
It may well be argued that, in those circumstances, the Respondent acted unwisely when he decided to enter into the Binding Child Support Agreement imposing those obligations on him. However, a belated realisation that one has made an unwise decision does not constitute an exceptional circumstance under s. 136 of the Act. It should be noted that the Respondent had legal advice from his then solicitor, who certified that he had advised the Respondent “independently of the other party and before the time at which my client signed the Child Support Agreement, as to the following matters:
1. The effect of the Child Support Agreement on the rights of my client;
2. The advantages and disadvantages, at the time that the advice was provided to my client, of making the Child Support Agreement.[33]
[33] Binding Child Support Agreement 2 March 2010 Certificate of Independent Legal Advice
The Respondent has also argued that the Applicant’s financial situation has improved since she entered into the Binding Child support Agreement. In my view, that does not constitute a circumstance that can be described as exceptional on the limited evidence provided.
Even aggregating the circumstances that the Respondent claims, I am not satisfied that they constitute an accumulation that could amount to the combined exceptional circumstance referred to in Gallup & Gallup.
Accordingly, I am not satisfied that the Respondent has shown that there are exceptional circumstances relating to a party to the agreement which would warrant a ground for setting aside the Binding Child Support Agreement under s. 136 of the Act.
The Interim Application filed by the Respondent on 3 November 2011 seeking a stay of the operation Binding Child Support Agreement and a stay of the Enforcement Summons until the final determination of the Application to set aside the Child Support Agreement will be dismissed.
The Applicant is seeking to enforce payment under the Binding Child Support Agreement. Since this proceeding was commenced, the Federal Magistrates Court Rules have been amended. Rule 25B.09 now applies where a person seeks to enforce payment of a child support liability that is not an order and is not taken to be an order. Subrule (2) provides that:
(2) Before an enforcement order is made, the person must first obtain an order for payment of the amount owed by filing:
(a) an application in a case and an affidavit setting out the facts relied on in support of the application;
Paragraph (b) of Subrule (2) does not apply.
The Applicant has filed an affidavit but has filed an Enforcement Summons, which has been rendered obsolete by the change in the Rules, which took effect as a result of the Federal Magistrates Court Rules 2012 (No.1).
Consequently, the Applicant will now need to file an Application in a Case in compliance with Rule 25B.09 in order to obtain an order for payment of the amount owing. Leave will be granted accordingly.
The Applicant seeks an Order for costs and I will hear submissions on the next occasion.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 14 August 2012
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