Slattery and Deegan
[2017] FCCA 3036
•6 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SLATTERY & DEEGAN | [2017] FCCA 3036 |
| Catchwords: CHILD SUPPORT – Setting aside of a binding child support agreement. |
| Legislation: Child Support (Assessment) Act 1989, ss.136A, 136(1)(a), 136(2)(d) Family Law Act 1975, s.79A(1)(d) |
| Cases cited: Baker v The Queen [2004] 223 CLR 513 Balzano & Balzano [2010] FamCAFC 11 Gallup & Gallup (2009) FLC 839 Garnett & Director-General, Department of Community Services Child Safety and Disability Services & Anor [2013] FamCAFC 28 Gyselman & Gyselman (1992) FLC 92-279 Hardman & Hardman [2003] FamCA 1057 Keane & Keane and Ors [2013] FamCA 332 Oriolo& Oriolo (1985) FLC 91-653 |
| Applicant: | MR SLATTERY |
| Respondent: | MS DEEGAN |
| File Number: | SYC 4570 of 2016 |
| Judgment of: | Judge Henderson |
| Hearing date: | 17 October 2017 |
| Date of Last Submission: | 17 October 2017 |
| Delivered at: | Sydney |
| Delivered on: | 6 December 2017 |
REPRESENTATION
| Counsel for the Applicant: | Applicant in Person |
| Counsel for the Respondent: | Mr McCulloch |
| Solicitors for the Respondent: | Legal Aid NSW Parramatta Family Law |
ORDERS
The Binding Child support agreement entered into between the parties on 25 May 2010 be and is set aside as and from 2 July 2016.
IT IS NOTED that publication of this judgment under the pseudonym Slattery & Deegan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 4570 of 2016
| MR SLATTERY |
Applicant
And
| MS DEEGAN |
Respondent
REASONS FOR JUDGMENT
This is an application by Mr Slattery to set aside a Binding Child Support Agreement (the agreement) entered into by the parties on 25 May 2010. That application is opposed by the mother.
The agreement relates to the parties’ child, X, born (omitted) 2002. He is currently 15 years of age. There is some issue as to whether he is:
a)Continuing to attend school at the present time; and/or
b)Living with his mother or his father.
The material I read was as follows:
a)For the father:
i)Affidavits of 21 July 2016, 16 February 2017 17 October 2017. The latest affidavit related to the father’s position regarding the current and changed circumstances of his child’s living and schooling arrangements;
ii)Financial statement of 16 February 2017;
iii)I was referred to his financial statements of 21 July 2016 and 21 April 2010. The 2010 document was relevant to his financial position at the time the agreement was entered into; and
iv)Initiating application filed 21 July 2016;
b)For the mother:
i)Affidavits of 1 March 2017 and 11 October 2017;
ii)Financial statement of 3 March 2017; and
iii)Response filed 3 March 2017.
Mr Slattery was self-represented. The mother was represented by Mr McCulloch, solicitor.
Only father was cross-examined.
Mr Slattery represented himself which placed him at a significant disadvantage in a difficult matter such as this as the test to satisfy the court to set aside such agreements is very high.
The law is well settled. The party seeking to set aside the agreement has the onus of proof. I refer, in particular, to a decision of his Honour Justice Watts in Keane & Keane[1], where his Honour delivered a most thorough and helpful judgment traversing the meaning of the words exceptional circumstances across a range of acts and judgments.
[1] Keane & Keane and Ors [2013] FamCA 332
The section of the Act[2] that relates to these matters is section 136A of the Act[3]. That section provides generally that Mr Slattery must satisfy the court that exceptional circumstances have arisen which would cause the court to exercise its discretion under section 136(2)(d) of the Child Support (Assessment) Act[4] and set the agreement aside.
[2] Child Support (Assessment) Act 1989
[3] Child Support (Assessment) Act 1989, s 136A
[4] Child Support (Assessment) Act 1989, s 136(2)(d)
That section is as follows[5]:
(1) A party to either of the following agreements may apply to a court having jurisdiction under this Act for the Court to set aside the agreement:
(a) a child support agreement that has been accepted by the Registrar under section 92 or 98U.
[5] Child Support (Assessment) Act 1989, s 136(1)(a)
This agreement was accepted by the Registrar and is currently in the implementation period.
Section 136(2) of the Act[6]:
(2) If a party has applied under subsection (1), the Court may set aside the agreement in accordance with the application if the Court is satisfied:
(a) that the party’s agreement was obtained by fraud or a failure to disclose material information; or
(b) that another party to the agreement, or someone acting for another party:
[6] Child Support (Assessment) Act 1989, s 136(2)
(i) exerted undue influence or duress in obtaining that agreement; or
(ii) engaged in unconscionable or other conduct;
to such an extent that it would be unjust not to set aside the agreement; or
(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.
His Honour Justice Watts J in Keane & Keane[7], said at paragraph 40 that in considering what constitutes exceptional circumstances under section 136(2)(d) of the Act[8] and when considering whether or not exceptional circumstances exist the whole of the circumstances are to be taken into account.
[7] Above, note 1
[8] Above, note 5
Paragraph 40.2:
It may be that one circumstance alone cannot be described as exceptional, but the whole of the circumstances when looked at cumulatively might be described as exceptional (Gallup & Gallup (2009) FLC 839[9]).
[9] Gallup & Gallup (2009) FLC 839
Paragraph 40.3:
Within a particular context whether something is exceptional is a matter of fact and agreed (Simpson & Hamlin (1984) FLC 91-576[10]).
[10] Simpson & Hamlin (1984) FLC 91-576
Paragraph 40.4:
Care must be taken to avoid placing any gloss on the word exceptional as used in legislation (see Garnett & Director-General, Department of Community Services Child Safety and Disability Services & Anor [2013] FamCAFC 28[11])
[11] Garnett & Director-General, Department of Community Services Child Safety and Disability Services & Anor [2013] FamCAFC 28
Paragraph 40.5:
The words, “that have arisen since the agreement was made”, in section 136(2)(d)[12] direct the Court’s attention to the circumstances that existed at the date the agreement was made and towards an inquiry as to what exceptional circumstances have arisen since the date of the agreement which would result in the applicant or the child suffering hardship if the agreement is not set aside.
[12] Above, note 5
Paragraph 41:
Exceptional can have nuanced meanings in different context and what is meant by exceptional is to be judged not in the abstract but within the context in which that word is used in a particular piece of legislation. The phrase, “exceptional circumstances”, is used in different context within the Child Support legislation and the Family Law Act[13]. The height at which the bar is set by the word “exceptional” can vary depending upon the legislative context.
[13] Family Law Act 1975
Paragraph 42:
The word “exceptional” creates a tough test when used in the context of setting aside final orders for alteration of property or in the context of an application to discharge a return order in a Hague proceeding.
His Honour referred to the former Justice Stephen O’Ryan who was commenting on the word exceptional in section 79A(1)(d) of the Family Law Act[14] and said:
Change in caring arrangements must be so exceptional as to take it out of the normal vicissitudes of life.
[14] Family Law Act 1975, s 79A(1)(d)
His Honour referred to Justice Callinan’s decision in Baker v The Queen[15] at paragraph 173 where his Honour said:
We must construe exceptional as an ordinary, familiar English adjective and not as a term of art. It describes a circumstance which is such as to form an exception which is out of the ordinary course or unusual or special or uncommon. To be exceptional a circumstance need not be unique or unprecedented or very rare but it cannot be one that is regularly or routinely or normally encountered.
[15] Baker v The Queen [2004] 223 CLR 513
Again Honour Justice Watts in Keane & Keane[16]:
[16] Above, note 1
This is a tough test to pass and the bar is high and the onus is on the husband.
I add it is not an impossible test.
In the marriage of Gyselman[17], the Full Court of the Family Court was describing the word special circumstances in terms of Child Support legislation:
Whilst it is not possible to find with precision the meaning of that term as a generality, it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary – that is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.
[17] Gyselman & Gyselman (1992) FLC 92-279
A decision of Justice Austin in Venson & Venson[18] was referred to by his Honour Justice Watts and is as follows:
The deterioration in the father’s financial circumstances which occurred after the Child Support Agreement was made did not constitute exceptional circumstances and that is, in fact, the law. However, a feature of the father’s financial circumstances was the failure of B Company to continue to provide him with the income stream that both parties assumed would continue when they entered into the agreement. Both parties agreed that this was a failure of a fundamental condition of the agreement and this fundamental condition his Honour held did constitute an exceptional circumstance.
[18] Venson & Venson (No. 2) [2010] FamCA 963
In Balzano[19], Justice Warnick was asked to find that a special circumstance supporting the setting aside of a binding financial agreement was the husband’s incarceration. However, as his Honour said:
The husband was in jail because of his criminality, being his attempt on the wife’s life. To then justify that as a special circumstance would not be a just and equitable decision.
[19] Balzano & Balzano [2010] FamCAFC 11
Thus I must not only find a special circumstance, the decision I make must be just and equitable as well.
Honour Justice Watts referred to the decision in the marriage of Scott & Scott[20]:
Being unemployed and without income is not of itself necessarily an answer by a parent to an abrogation for child maintenance. The circumstances in which the parent became unemployed or was without income, the reasons for it, the nature of his or her previous employment and the efforts which he or she has subsequently made to obtain employment are all relevant matters for consideration by the Court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity a parent may be required to pay maintenance for his or her children if he/she has property or financial resources which are or ought reasonably be available for that purposes.
[20] Scott & Scott (1994) 17 FLR 420-444
In a first instance decision I delivered in the matter of Telama & Telama[21] I accepted the husband’s application to set aside a binding financial agreement. This decision was overturned by the Full Court. I found that special circumstances existed to support my finding, being that the husband was maximising his income capacity, that he had been so doing for some time and was unable to earn the income he had earned when the agreement was entered into which was 3.5 times greater than his current income, had sold virtually all the assets he had possessed, even if he paid his former wife all his current net income he could not met his obligation under the agreement, was on his knees financially and not to do so would cause hardship to him.
[21] Telama & Telama [2016] FCCA 2375.
Their Honours say at paragraph 29.
However, in this case the primary judge did indeed make findings as to exceptional circumstances and hardship to the respondent, notwithstanding his inadequate disclosure.
There is no doubt in the matter of Telama[22] the husband’s failure of disclosure was flagrant. He had failed to disclose property he sold, a limited binding child support agreement he had entered into with his now estranged second wife, sale of shares etc. He brought documents to Court on the day of the hearing and had been derelict in his obligation to provide full and frank disclosure of his financial position.
[22] Above, note 2.
Their Honours went on to say:
In our view, where the fact of non-disclosure was so obvious in the material, it was necessary for the primary judge to explain how and why the respondent’s oral evidence and unsworn explanations were sufficient to meet that deficiency and resolve the confusion created by his failure, for example, to produce necessary and requested documents.
Her Honour’s reasons do not address that conundrum and in circumstances where the legal onus sat with the respondent, the findings as to exceptional circumstances and hardship were not available.
Their Honours relied, in part upon a decision of Coleman J in Hardman & Hardman[23]. Where his Honour said:
The relevant issue before the learned Federal Magistrate was the financial resources of the appellant from whatever sources they were derived. As decisions of the Full Court of this Court in cases commencing with Oriolo[24] make clear, where a litigant does not make a full and frank disclosure of his or her financial position, that litigant cannot benefit, or rely upon, the inability of the opposing party, by reason of that failure to disclose, to suggest a particular capacity, or the existence, identity or location and nature of a particular asset or resource.
A moment’s reflection would reveal why that must be so. Any other course would not only encourage litigants to fail to make a full and frank disclosure, but provide a positive incentive for concealment in that regard.
[23] Hardman & Hardman [2003] FamCA 1057.
[24] Oriolo (1985) FLC 91-653.
His Honour went on to say:
The difficulty which the appellant faces in this appeal is that by virtue of his failure to make a full and frank disclosure of his finances, the learned Federal Magistrate was not able to determine just what level of hardship, if any, the proposed orders involved for the present appellant. The reason for that was the appellant himself had failed to make a full and frank disclosure of his finances. The appellant bore the onus in those areas. It was not for the respondent to facilitate his discharge of that. To the extent that the sale of the property is known, one would be forgiven for saying that such is the case by virtue of the cross-examination of the appellant by counsel for the mother in that regard.
The matter of Hardman[25] concerned an appeal by a husband of a trial judge’s decision to order lump sum child support in lieu of periodic support as part of a property decision. The appellant challenged the trial Judge’s exercise of discretion to so order, in part on the basis that the trial Judge and been unable to adequately consider the balance of hardship incurred by appellant. The challenge rested in part on the appellant’s failure to provide full and frank disclosure at the trial. The trial Judge found that the appellant had greater financial resources than those disclosed.
[25] Above, note 23.
His Honour referred to Oriolo v Oriolo[26] and expounded the principle that a party who does not make a full and frank disclosure cannot then rely upon the inability of an opposing party to suggest particular capacity or existence of a particular asset or resource in answer to the claim. As his Honour stated a moment’s pause would give reason why this must be so for to do otherwise would not encourage full and frank disclosure but a positive incentive to conceal.
[26] Above, note 24.
On one reading of the decision in Telama[27] it is authority for the proposition that if there is not full and frank disclosure a trial Judge is unable to make a finding of special circumstances and hardship in favour of the party failing to disclose even if in the judgment the Trial Judge specifically sets out their findings.
[27] Above, note 21.
I do not on my reading of Hardman[28] find support for such a proposition. It cannot be that Telama[29] is authority for the proposition that that no finding of exceptional circumstance and hardship can be made where there is a failure of disclosure. To so find would unfairly limit the Trial Judge’s discretion when such a factual issue must be matter of degree.
[28] Above, note 23.
[29] Above, note 21.
What are the facts in this matter?
On 25 May 2010, the parties entered into a binding child support agreement. That agreement stated that the husband’s occupation was a (occupation omitted) and that the wife was studying (omitted). The father is still a (occupation omitted).
That the father would pay child support for the child by way of periodic payment in the sum of $600 per week with the amount to increase by way of the CPI, pay for all expenses for the child to attend the (omitted) School, or such other private school, pay private health insurance, one half of all medical, dental and optical expenses.
The husband was cross examined on his financial statement of 21 April 2010. Looking at that document and the income he discloses of gross $925 a week the husband had absolutely no capacity whatsoever to pay $600 per week for the support of his son, let alone the additional private school fees at (omitted) School and other amounts he agreed to pay and support himself which he is his entitled to do.
His income, as disclosed, was $925 a week. His personal expenditure was $750 a week. The total value of property he owned at that time was $7000.
The husband has, and did manage, to pay his obligations under the child support agreement for a period of time from the date of the agreement up until about September 2015.
The husband says in his affidavit of 16 February 2016 that in 2010 he was earning $60,000 per annum and able to meet his obligations. Even at $60,000 per annum he could not met the obligations under the agreement. However, the 2010 financial statement discloses an income of $46,000 per annum. The husband could not explain this discrepancy.
The only circumstance that has changed since Mr Slattery entered into the binding child support agreement is that his income has decreased from $60,000 per annum he asserted it was at paragraph 8 of his current affidavit, to currently at the time of filing his application nil, as he was on a Newstart allowance and currently on his most recent financial statement filed 16 February 2017 to, $434 per week or $22,560 per year. His expenses are currently $538 per week. Thus he has a deficit of expenses over income. He has assets of $2,522.
He has a tax debt of $5000 odd which he pays off at the rate of $120 a week. He said his tax returns are up to date and there was no challenge to this. Mr Slattery attached current bank statement and other financial material to his financial statement and produced his last three years’ tax returns at the hearing.
There were discrepancies in the bank statements relating to unknown deposits.
In relation to the bank statements and unknown deposits he said he has received rent on occasions on behalf of the owner of the unit he lives in. He lives in one bedroom of a 3 bed room apartment owned by a friend who runs the place at which he works as a (occupation omitted), which is a (employer omitted) at (omitted). He says at times he receives rent from other tenants who rent bedrooms in the apartment and then he on pays this rent to the owner. His bank statements supported such an arrangement and his oral evidence was believable. Other money deposited into his account of sums such a $100 or $50 is money from his mother or sister to assist him to support himself. His sister was in Court with him. These discrepancies were not disclosed in his affidavit and only revealed in cross examination.
His oral evidence was that his mother paid his son’s school fees and helped him pay his child support obligations. That his sister helps him out financially as well. He described a solitary impoverished life and lifestyle. He does not socialise and eats with his mother most nights due to his impecuniosity. He lives alone in one bedroom of a 3 bedroom apartment.
He is a very thin, nervous man who broke into tears regularly. He presented as living a straightened and modest life. I accept his evidence of an impoverished and socially isolated life. His capacity for any other employment is doubtful and he is in the same job he was in 2010 working reduced hours. I find he is maximising his earning capacity at present. His presentation in Court was consistent with a depressed mood, anxiety and lack of robustness which combined with his age of 48 and lack of any training are all factors militating against him obtaining any other employment at this time.
However, neither his mother, sister nor his employer was on affidavit to support his story. Why? Because he was not represented. Why he was not represented is because he has no funds to pay a lawyer. He said in cross examination he did not know he had to do this, i.e. file affidavits from his mother, sister and employer to support his story.
The onus is on the father.
The mother is of the view that the father has minimised his income, has not disclosed what his true income is, and that he is, in some way, seized of assets of great wealth. That he has trips overseas and left Australia 63 times in the last 10 years. He denied this and no evidence was tendered to support such a claim.
The father said he, his mother and sister went to (country omitted) in 2015 to see family and this was the last time he went overseas. He said he had paid a deposit to take a cruise in in 2016 but did not take the cruise. That he had had a girlfriend in 2016 but never a de facto.
The mother’s late filed affidavit of 11 October 2017 suggested his father had paid their son $4,800 for wages as an apprentice something denied by the father. His father said when he collected his son on 29 September 2017 his son had $4,800 which he said he had saved from working and asked his dad to put it into his (omitted) Bank account to keep it away from his mum.
X is a troubled child on both parents’ evidence. No evidence was tendered to back this up, however, the mother does not have has the onus of proof it is the father’s onus to discharge.
I accept that all this man has is the income that he earns from his work. I accept that Mr Slattery has absolutely no other assets, income or financial resource other than what he earns as a (occupation omitted) and his car worth $1,000 or so and his disclosed financial resource of his mother and sister.
However, merely a drop in income is insufficient to show an exceptional circumstance within the meaning of the Act[30] and as the Courts say, it is a very high bar and test to overcome. Mr Slattery is currently in arrears of child support of $24,000. He has, on his own evidence, no capacity to pay that sum. If I do not set the order aside, the hardship will be that the debt will continue to increase as he has not paid the debt and has no capacity to pay that debt presently or into the future. Additionally, he now says his son lives with him.
[30] Child Support (Assessment) Act 1988.
If his son is living with him he can make application to the Child Support Agency in relation to those issues and a different outcome may result. A range of options are open to him if the circumstances of his sons care have so changed. That is not a matter relevant to my task today.
If I set the agreement aside, hardship will continue for the mother who has been without child support or a reduced level of child support for some time now. Her chances of ever recovering the arrears are slim indeed. Her financial statement revealed she too has no assets and is supported by Centrelink.
I must be satisfied that exceptional circumstances have arisen since the child support agreement was entered into that would cause me to set the agreement aside. I find they have.
On the father’s own evidence which I accept as it supported by a sworn financial statement, when he entered the agreement he had no capacity to pay the amount agreed to be paid and I accept his evidence his obligations were discharged for as long as they were due to his mother assistance and his income. His failure to call his mother to support his story is due to his lack of legal representation which he cannot afford due to his impoverished lifestyle.
He is virtually destitute and cannot pay for his own extremely modest needs let alone pay child support under the agreement. He lives in one bedroom of a three bedroom flat and his presentation would work against him obtaining any other work or undertaking training for other work. His occupation in 2010 was a (occupation omitted) and this continues today. The discrepancy in his bank statements which he attached to his March 2017 financial statement was explained by him and is accepted by me and has the ring of truth.
His March 2017 financial statement discloses he earns $430 a week. He pays his landlord $160 per week. He says he pays $100 a week for the benefit of his son. Not the amount he should be paying. He pays tax of $18 per week. He has a car which he pays registration for at $25.00 a week. He has a debt to the Australian Taxation Office paying that off at a rate of $120 a week. He has other expenditure of $115 per week. That is costs of $538 per week, on an income of $434. He said the shortfall of income over expenditure is made up by his mother and his sister and despite them not being on affidavit, I accept this is the case.
There is no material non – disclosure in this matter unlike the matter of Telama & Telama[31]
[31] Above, note 21.
For all the above reasons I am satisfied that is there are both exceptional circumstances in existence and that it is just and equitable that I set aside the child support agreement as at the date the application was filed which was 2 July 2016 and I will so order.
I certify that the preceding sixty–six (66) paragraphs are a true copy of the reasons for judgment of Judge Henderson
Date: 6 December 2017
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