Xu and Loun - [2009] FMCAfam 1522

FEDERAL MAGISTRATES COURT OF AUSTRALIA

XU & LOUN

[2009] FMCAfam 1522

FAMILY LAW – Application to set aside orders for payment of child support.

Child Support (Assessment) Act (1989), ss.3, 4, 136.
Family Law Act (1975)
Child Support (Registration and Collection) Regulations (1988), reg.28A.

Applicant:

MR XU

Respondent:

MS LOUN

File Number:

SYC 2075 of 2008

Judgment of:

Altobelli FM

Hearing date:

26 March 2009

Date of Last Submission:

26 March 2009

Delivered at:

Sydney

Delivered on:

26 March 2009

REPRESENTATION

Solicitors for the Applicant:

South West Sydney Legal Centre

Solicitors for the Applicant:

Legal Aid Commission of New South Wales

ORDERS

The Amended Application filed 29 July 2008 is dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 2075 of 2008

MR XU

Applicant

And

MS LOUN

Respondent

ORAL REASONS FOR JUDGMENT

Introduction

The applicant father in this case is 44 years old. He lives at (omitted) and describes himself as a (occupation omitted). The respondent mother lives at (omitted), is 42 years old, and describes herself as a (occupation omitted).
This is a dispute arising out of an order for the payment of child support that was made by consent on 17 September 2003. In effect, the applicant wants it set aside and the liability arising out of the agreement discharged. The respondent opposes this.

Background

The parties commenced cohabitation in 1996, married on (omitted) 1997, separated in September 2002 and divorced 22 December 2003. The period of cohabitation was about six years. They have two children - X who is nine (9) years old and Y who is seven (7) years old.
On 17 September 2003, about one year after the date of separation, they entered into consent terms of settlement under the Family Law Act in the Local Court Family Matters in Sydney. The orders dealt primarily with property settlement, but also dealt with parenting in that the parents agreed that the mother would have “the sole day-to-day and long-term responsibility for the care, welfare and development of” the children who at the time were four (4) and two (2).
In addition, Consent Order 9 provides as follows:
That the husband continue to pay the wife the sum of $100 per week for maintenance of the children until they attain the age of 18 or finish their higher education, whichever occurs later.
The signatures of both parties to the terms of settlement appear to be witnessed by solicitors, though it seems relatively uncontentious that the applicant father did not have a solicitor representing him in a formal sense during the subject proceedings.
I am satisfied that the child support agreement sought to be set aside is covered by Part VI of the Child Support (Assessment) Act as a consent arrangement which, as a result of the transitional provisions of the amending legislation, is deemed a binding child support agreement.
The application by the applicant father is brought under s.136 of the Child Support (Assessment) Act:
(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;
(b) a termination agreement, or a written agreement referred to in paragraph 80G(1)(b), that has been accepted by the Registrar under section 92.
(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:
(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
(c) in the case of a limited child support agreement:
(i) that because of a significant change in the circumstances of one of the parties to the agreement, or a child in respect of whom the agreement is made, it would be unjust not to set aside the agreement; or
(ii) that the agreement provides for an annual rate of child support that is not proper or adequate, taking into account all the circumstances of the case (including the financial circumstances of the parties to 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.
(3) Subject to section 145 (Registrar may intervene in proceedings), the parties to a proceeding under subsection (1) are the parties to the agreement.
(4) If:
(a) the court sets aside a child support agreement under this section; and
(b) the court is satisfied as mentioned in paragraph 117(1)(b) (departure orders);
the court may make an order under Division 4 of Part 7 without an application having been made under section 116.
(5) If:
(a) the court sets aside a child support agreement under this section; and
(b) the court is not satisfied as mentioned in paragraph 117(1)(b) (departure orders); and
(c) the payee has received or will receive benefits pursuant to the agreement;
the court may still make an order that departs from the administrative assessment where it is just and equitable to do so, having regard to the benefits that the payee has already received pursuant to the agreement.
The application seeks an order that the said agreement be set aside as from 12 October 2003 or, in other words, that for all practical purposes it be set aside from inception.
Ms Morey, the solicitor for the applicant father, submits, and I accept in this regard, that the child support agreement is a deemed binding agreement for transitional purposes and therefore s.136(2)(d) applies. In order to be successful, therefore, the applicant father has to establish on the balance of probabilities 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”.
It should be noted that even if these matters are established to the requisite standard, I still retain a discretion whether or not to set it aside. In the alternative, Ms Morey submits that if the agreement is a limited child support agreement, s.136(2)(c ) applies. I must say I am satisfied that this child support agreement really is a binding one for transitional purposes. But, as it turns out, it would make no difference on the facts of this case.

The Applicant Father’s Evidence

In his affidavit evidence the father does not dispute that he had legal advice but does assert that the consequences of the orders were not properly explained. I conclude that none of the evidence going to the circumstances of the applicant father’s signing of the consent orders give rise to any concerns in my mind about whether he knew what he was doing or gives rise per se to the grounds of relief under s.136(2)(d) or otherwise. The evidence simply goes nowhere towards establishing undue influence, duress, unconscionability or anything of that nature. The real concern of the applicant father is what happened after the consent orders were made.
It seems quite clear that on 13 October 2003, notwithstanding the consent order, the mother lodged an application for administrative assessment of child support. The father was assessed at $21.67 per calendar month for the period October 2003 to July 2006. During this period the father remarried, lived in (country omitted) and then returned to Sydney. He worked for the periods when he was in Australia and, doing the best I can on his evidence, appears to have lived off his share of the property settlement when he was living in (country omitted). He accumulated some child support arrears in this period. In September 2006, he was assessed at $151.25 per calendar month.
On 20 December 2007, the mother registered the consent order with the Child Support Agency. The father says that as a result of this arrears of $18,717.50 were thereby created, in effect backdated to 13 October 2003. The applicant father is not saying, as I understand it, that he has not been credited for the period when he paid in accordance with the assessments. His complaint is that the effect of registration of the consent orders was that at the time when he was actually on top of his liability, indeed slightly ahead of it, a debit of $18,717.50 was entered into his account and, moreover, ever since then he has not been able to pay child support at $434.83 per calendar month in accordance with the consent order.
I record here a curious and possibly important gap in the evidence. Neither party adduced evidence to explain why when the maintenance liability was registered on 20 December 2007 the full amount of arrears was accepted rather than the nine-month period referred to in reg.28A of the Child Support (Registration and Collection) Regulations. It is possible – and I can only surmise this – that the Registrar at the time was satisfied that there were exceptional circumstances at the time. In this regard, I do not know, and after considering all the evidence, I must say I am not sure it makes a difference.
In any event, from the applicant father’s perspective, he says that the exceptional circumstances that led to hardship for him was being suddenly foisted with the child support liability arising under the consent order made 17 September 2003 as a result of its registration over four years later.
I observe at this stage, however, that the late registration only creates hardship if, having regard to his financial circumstances at all relevant times between 17 September 2003 and today, the original maintenance liability was not just and equitable under the circumstances. Hardship might be established, for example, if his financial circumstances at the time of making the order on 17 September 2003 significantly changed. Hence, the onus of proof was at all times on the applicant father to demonstrate the changes to his financial circumstances since 17 September 2003.
The respondent mother’s case is relatively simple. She asks that the applicant father’s application be dismissed. She says that the children, especially X, have special needs which have not changed. She explains the delay in registering the consent order as a registered maintenance liability by reference to advice she got from the Child Support Agency. She acknowledges that the applicant father was not in fact paying $100 per week as from the date of the order, but she says he was paying private health insurance, so she was not motivated to do anything. He then went to live in (country omitted). She challenges the evidence the applicant father gives about his financial circumstances at all relevant times.

Exceptional Circumstances and Hardship

The applicant father’s own evidence is that at the time he signed those consent orders on 17 September 2003 his most current tax assessment for 30 June 2003 showed that he was earning $6,384 per annum. Notwithstanding this, he commits to paying maintenance of $100 per week. The Court is entitled to infer, in the absence of any cogent evidence to the contrary, that the applicant father was confident he could meet this liability. He adduces no other evidence of his financial circumstances at the relevant time.
The consent orders explain that the jointly owned former matrimonial home was on the market for sale at $650,000 just a few weeks before the orders were made. The consent orders provide that when the home was in fact sold the applicant father would receive $50,000 less an adjustment for redraws on the loan facility. The father’s own evidence is that he got this money at a later time. In that regard, the receipt of this lump sum was a change in his financial circumstances, but one for the better.
The father deposes to having remarried in (omitted) 2004 and to living in (country omitted) between 7 March 2004 and 21 December 2005. There is a dispute about the actual period that he was overseas but, quite frankly, nothing turns on this. He deposes to having spent the $50,000 whilst in (country omitted) but he gives no particulars of this. The evidence indicates that he ceased paying child support in the period he was overseas. He produces no evidence to establish any special circumstances or hardship for this period. I note he had $50,000 as a lump sum to live off. He takes no action to vary or suspend the child support that had been assessed at the time. He has failed, in my opinion, to establish any special circumstances or hardship for this period.
The father says he returned to Australia on about 21 December 2005 and found work at (omitted). His taxable income on 30 June 2006 was $20,704, an amount significantly greater than that which he was earning at the time of the consent orders, especially bearing in mind that it was only for six months. Yes, there had been a change of circumstances again, but it was a favourable one from a financial perspective. Yes, he had married but he has no dependent child and the mere fact of remarriage per se does not establish either exceptional circumstances or hardship.
The applicant father’s evidence is that his income for the subsequent period was as follows: in July 2007 it was $350 per week or $18,720 per annum; in October 2007, he was earning $420 per week or $21,840 per annum; in July 2008, he was earning $450 per week or $23,400 per annum; on 30 June 2008, he was earning $368 per week or $19,140 per annum; and currently he earns $450 per week or $23,400 per annum.
The fact is that for the period since the date of the signing of the orders to the current period his income was and is at all times higher, indeed significantly higher, than at the time of the orders, based on his own evidence. Under these circumstances, it is hard to discern the exceptional circumstances and hardship to which he refers. Thus, even on the financial evidence asserted by the father, his application fails. However, the evidence clearly indicates, in my opinion, that his financial circumstances are not what he asserted to the Court and are in fact far better than he discloses. Let me give some examples of this.
Firstly, in cross-examination the applicant mother was able to establish a curious inconsistency between what the father asserted to be his income before the Child Support Agency in a review process and what the applicant father deposed in these proceedings to be his income. The differences were often significant and all the applicant father could say by way of explanation is that he calculated his income on a yearly basis and then converted it to a weekly average figure.
Secondly, documents produced on subpoena by (omitted) established that between 5 January 2006 and 24 January 2007, the father was earning an average of $900 per week or $48,700 per annum. But his PAYG statements attest to lower figures and his evidence before the Court suggests even lower figures for the relevant period.
Thirdly, the Toyota loan finance application tendered by the respondent mother indicates the following information: that on 16 May 2007, he represented he was earning $1,978 net per calendar month or approximately $2,400 gross per calendar month or about $28,800 per annum, significantly greater than he says he earned to the Court. But on 25 July 2007, less than two months later, the applicant father represented to the Child Support Agency that his income estimate was $7523 per annum or about $300 per fortnight.
Fourthly, documents produced on subpoena by (omitted) for his employment for October 2007 to 7 March 2009 show inconsistencies between the records of payment and the mandatory (omitted) work diary which records actual (duties omitted) undertaken. For example, in December 2008 the work diary refers to (omitted), but the pay records only records (omitted).
Fifthly, the applicant father himself gave evidence about the tips he receives from (omitted) and the tips do not appear to be satisfactorily reflected in any of the evidence he gave about his income.
Lastly, as the respondent mother established in cross-examination, the applicant father’s financial statements just do not add up in terms of satisfactorily explaining how his income can support the level of expenses he deposes to.
The bottom line is that this Court cannot have confidence in the evidence about finances adduced by the applicant father. One suspects that he is probably earning much more than he deposes. The applicant father needs to understand that he only needed to be earning about $33,500 per annum at all relevant times since he entered into those consent orders in order to have been assessed to pay child support at the level prescribed by the orders to which he consented. I have real doubts in my mind that he earned less than that amount during the period, particularly after his return from (country omitted).
One must remember that the evidence indicates that these children, especially X, have special needs. The policy of the child support scheme is very clear. It is articulated in ss.3 and 4 of the Child Support (Assessment) Act:
3. Duty of parents to maintain their children
(1) The parents of a child have the primary duty to maintain the child.
(2) Without limiting subsection (1), the duty of a parent to maintain a child:
(a) is not of lower priority than the duty of the parent to maintain any other child or another person; and
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; and
(ii) any other child or another person that the parent has a duty to maintain; and
(c) is not affected by:
(i) the duty of any other person to maintain the child; or
(ii) any entitlement of the child or another person to an income tested pension, allowance or benefit.
4. Objects of Act
(1) The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
(2) Particular objects of this Act include ensuring:
(a) that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
(b) that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of the children; and
(c) that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
(d) that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
(e) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
(3) It is the intention of the Parliament that this Act should be construed, to the greatest extent consistent with the attainment of its objects:
(a) to permit parents to make private arrangements for the financial support of their children; and
(b) to limit interferences with the privacy of persons.

In any event, it was incumbent on the applicant father to properly disclose his financial circumstances to the Court and he has failed to do so.
Accordingly, I dismiss the amended application of the applicant father filed 29 July 2008.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Date: 13 November 2013