Sarah-Jane Ferris Holden v David Christopher Holden
[2022] NZHC 3561
•20 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-001312
[2022] NZHC 3561
BETWEEN SARAH-JANE FERRIS HOLDEN
Appellant
AND
DAVID CHRISTOPHER HOLDEN
Respondent
Hearing: 30 November 2022
Further submissions received 6 and 12 December 2022
Counsel:
K J Crossland for Appellant
G J Angus and G G Edwards for Respondent
Judgment:
20 December 2022
JUDGMENT OF MUIR J
This judgment was delivered by me on 20 December 2022 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: Shieff Angland, Auckland
Morris Legal, Auckland
HOLDEN v HOLDEN [2022] NZHC 3561 [20 December 2022]
Introduction
[1] Ms Holden appeals a decision of Judge Bergseng in the District Court declining summary judgment for specific performance of an agreement to pay child support in the amount of $8,000 per month.1
[2] The appeal raises an important issue, namely, the extent to which voluntary child support agreements must yield to a formula assessment under the Child Support Act 1991 (the CSA).
Background
[3] Mr and Ms Holden were in a relationship for 12 years and six months. For nine of those they were married. They have three children currently aged between 10 and 11.
[4] They separated on 16 April 2018, following which, and over an extended period, they negotiated two agreements. The first was a parenting agreement pursuant to s 40 of the Care of Children Act 2004 (the COCA) and is dated 27 March 2019. It is not directly relevant to the appeal other than that it was referenced in the parties’ second agreement as being part of the parties’ “global agreement”. The second agreement is dated 5 June 2019 and is identified as a s 21A agreement pursuant to the Property (Relationships) Act 1976 (PRA) (the Agreement).
[5] The Agreement provided not only for settlement of a relationship property but also for:
(a)Settlement of Trust property (recital G and cls 13, 15, 22 and 26).
(b)Child support (cl 10(a)).
(c)Attribution of other spending relating to the children (cl 10(b)–(e)).
1 Holden v Holden [2022] NZDC 12990.
(d)Maintenance of a life insurance policy for as long as the child support obligations under cl 10(a) “remain unfulfilled” (cl 13(g)).
(e)Spousal maintenance (cls 9, 11 and 12).
[6] Both parties received legal advice in respect of the agreements from experienced practitioners. Mr Holden is himself a senior commercial lawyer.
[7]Relevantly, the Agreement provided:
10.With regard to the children’s day-to-day care and financial child support with such payments to commence on the Settlement Date:
(a)David will pay to Sarah child support at a rate of $2,666.67 per child (“Monthly Child Support Amount”) until the later of each child leaving high school or reaching 18 years old;
…
…
24. Execution of this agreement by each of the parties shall constitute an immediate full and final settlement and release of all legal, statutory and beneficial rights, claims and demands, whether presently asserted or not and howsoever arising, including but not limited to each party’s potential claim pursuant to Section 182 of the FPA following the dissolution of the parties marriage and against each other.
…
41. This agreement and the parenting agreement signed by parties on or about the date hereof are intended to comprise a global agreement resolving all issues between the parties. If either party should default in respect of their obligations under this agreement, whether in respect of each other or in relation to the children then the party affected shall have the right to seek a review of the terms of the relevant agreement and be compensated for any losses caused by the default.
[8] Following the execution of both agreements, Mr Holden paid child support at the agreed level for approximately two years. However, in March 2021 he applied to the Commissioner of Inland Revenue, pursuant to the CSA, for a formula assessment. He says that he was always cognisant of his ability to do so and only agreed to the child support payments identified in cl 10(a) of the Agreement on the basis that he could at any time seek such an assessment.
[9] The Commissioner subsequently assessed the amount payable as $2,240.70 per month for the three children, that is, $5,759.30 less than the sum specified in the Agreement.2
[10] In her statement of claim, dated 8 November 2021, Ms Holden sought orders requiring the defendant to perform the Agreement by:
(a)paying the child support shortfall to the plaintiff for the months that she received child support under the formula assessment; and
(b)paying her actual legal costs.
[11] She also brought a claim identified as “Equitable Estoppel” and simultaneously applied for summary judgment on the specific performance claim.3
The District Court decision
[12] Judge Bergseng considered that the summary judgment application raised two essential issues:4
(a)Did the Agreement properly construed, prevent or estop5 Mr Holden from applying for a formula assessment pursuant to the CSA?
(b)If Mr Holden was not prevented or estopped from applying for a formula assessment, what then was the impact of the formula assessment on the agreed child support payments, pursuant to the Agreement?
2 Ms Holden calculates that over the life of the Agreement she will, as a result of Mr Holden paying the formula assessment in lieu of the agreed amount, receive $595,128.70 less than payable under the Agreement.
3 For completeness, I note that the Agreement contains various dispute resolution clauses, including an arbitration agreement, in relation to any dispute between the parties “arising out of or in connection with” the Agreement. I have not been addressed on the operation of these clauses and, in light of the defendant’s active participation in the case, proceed on the basis that any right to object to jurisdiction has been waived.
4 Holden v Holden, above n 1, at [17].
5 Although the summary judgment application referenced the specific performance pleading only, the Judge clearly considered that he had to address the estoppel claim at some level to determine that application.
[13] In respect of the first issue, the Judge noted that the equitable estoppel claim was based on cl 10(a) of the Agreement.6 His Honour summarised the claim as follows:
[52] Ms Holden’s argument is that in executing the Agreement, by implication, there is an additional feature to the child support provisions; that Mr Holden would not apply for a formula assessment under the CSA.
[53] That there is such an implied term has not been explicitly pleaded by Ms Holden. This is perhaps explicable in that it is effectively an argument that the parties have contracted out of the provisions of the CSA.
[14] His Honour went on to hold that had the Agreement included a clause to the effect that neither party would apply for a formula assessment, that would have been unlawful as “there is no provision to contract out of the CSA”.7 His Honour noted academic commentary that all child support agreements must now be reached “in the shadow of the Child Support Act”.8
[15] He concluded, therefore, that the Agreement, properly construed, did not prevent Mr Holden from applying for a formula assessment pursuant to the CSA.9
[16] In respect of the second issue, the Judge held that, on a plain reading of s 19(2) of the CSA, Mr Holden’s Agreement to pay child support at the level of $8,000 per month, which constituted an existing liability under a “voluntary agreement”, was suspended during the period that he was liable to pay child support under the formula assessment.10 In that respect he referred to the requirements for a “voluntary agreement” identified in s 47(2) of the Act and the decision of this Court in GBD v CBD,11 in which the relationship between voluntary agreements under the provision
6 The pleading was in terms: “By virtue of negotiating and executing the Agreement the defendant clearly and unequivocally represented that he would pay the plaintiff child support as stipulated in clause 10 and would not apply for a formula assessment or that in the event he obtained a formula assessment, he would not limit the child support payment he made to the plaintiff, to the amount of the formula assessment”. I note that the Agreement does not contain an express restriction on applying for a formula assessment.
7 At [54].
8 At [54] citing B Atkin and others Family Law Service (NZ) (online ed, LexisNexis) at [5.280].
9 At [62]. That conclusion must, in my view, be correct. Section 8 of the CSA gives any parent or carer of a qualifying child the right to apply for a formula assessment. Whether in so doing Mr Holden breached the Agreement and whether that may potentially sound in damages, is a separate issue. There was no such pleading in the statement of claim dated 8 November 2021.
10 At [82].
11 GBD v CBD [2013] NZHC 2054.
that is now s 19 and those under ss 64 and 65 was comprehensively reviewed by Ronald Young J.
[17] His Honour then went on to consider the effect of cl 41 in the Agreement, noting that although the Agreement and the parenting agreement comprised “a global agreement” resolving “all issues”, the case had not been pleaded on the basis that Ms Holden should be compensated for breach.12 He noted Ms Holden’s ability to amend her pleadings or refile in the Family Court in reliance on cl 41.13
[18] He also regarded as irrelevant the issue of whether the child support provisions of the Agreement could be severed, noting that:
[91] The issue of severance is primarily of importance should there be an application pursuant to s 32(d) of the [PRA].14 That is not the situation I am dealing with here. The issue before me is the role of the CSA and Mr Holden obtaining a formula assessment, and its impact on the Agreement.
The arguments on appeal
[19]Mr Crossland, counsel for Ms Holden, pursues two principal arguments:
(a)That s 19(2) only acts to suspend voluntary agreements which have been “accepted” by the Commissioner, and words should be read into the section accordingly.
(b)That the child support clause at issue in this case does not, in any event, constitute a voluntary agreement as it is interconnected with other obligations in the Agreement.
[20] He also raises, by way of a supplementary submission filed on 6 December 2022, a number of additional arguments.
12 Holden v Holden, above n 1, at [83]–[85].
13 At [85].
14 The Judge referred to the FPA, being the Family Proceedings Act 1980. I assume that in this context the correct reference is to s 32(2)(d) of the PRA. Section 32(2) provides that in any proceedings the Court, if it considers it just, may: make an order under the FPA for the maintenance of a spouse or partner; discharge, vary, extend or suspend any such order; make any order in relation to child support under ss 106, 109 or 112 of the CSA; or cancel, vary, extend or suspend a “voluntary agreement”.
[21]I will deal with each of these in turn.
Proper construction of s 19(2) of the CSA
The CSA regime generally
[22] At its most general level, the CSA differentiates between child support under a formula assessment and child support pursuant to a voluntary agreement.
[23] Formula assessments are made by the Commissioner in accordance with criteria set out in s 30 of the CSA.15 Section 8(1) in pt 1 of the CSA provides that:
Any parent or carer of a qualifying child may apply to the Commissioner for a formula assessment of child support payable in respect of the child.
[24] Section 9, in turn, provides that a social security beneficiary who provides at least 35 per cent of ongoing daily care to a qualifying child and who is not already a “receiving carer” in respect of that child must apply for a formula assessment in relation to every parent of the child.16
[25] Voluntary agreements for child support are not specifically defined in the CSA, for the likely reason that the meaning is obvious. That said, s 47(1) and (2) do provide some interpretive assistance in that they identify voluntary agreements for the purposes of pt 3 of the CSA as:
(a)relating to child support;
(b)relating to a “qualifying child”; and
(c)involving, as parties to the agreement, either the parents of the child and/or a carer who is not the child’s parent.
[26] Part 3 of the CSA (comprising ss 47 to 66A) relates to voluntary agreements that the parties want the Commissioner to administer in accordance with the CSA.
15 Including the liable parent’s income percentage, determined under s 33; the liable parent’s care cost percentage, determined under s 16; and the child expenditure amount for a qualifying child.
16 Section 9(1) and (2). This requirement is qualified by the applicability of s 9(5B).
[27] Section 48 describes what voluntary agreements for child support will qualify for acceptance by the Commissioner. In particular, the voluntary agreements need to be made by parties recognised in s 47(2); they need to provide for periodic payments in weekly, fortnightly or monthly instalments; each instalment must be not less than the minimum amount required by s 49; and must be in writing, signed by the parties. The child support arrangements contained in the Agreement would qualify for acceptance against these criteria. In GBD v CBD Young J described agreements that had been accepted by the Commissioner as “registered”.17 I will adopt the same description for convenience.
[28] Under s 64, the person to whom child support is payable under a voluntary agreement that has been accepted by the Commissioner may elect that the liability of any person to pay under the agreement is to end from a specified future date.
[29] In turn, s 65(1) provides that the existence of a voluntary agreement shall not prevent any party in relation to that agreement from applying to the Commissioner for formula assessment of child support under pt 1. In that event, the person to whom the child support was payable is deemed to have made an election under s 64 that “the liability of the other party to the agreement to pay child support in respect of the child under the agreement is to end …”.18 In GBD v CBD, Young J said that in this context, “to end” effectively meant “deregistered”.19
[30] Significantly, s 19(2), which materially re-enacts the former s 20,20 and which sits within pt 1 of the CSA, provides:
19 When liability to pay child support starts
…
17 GBD v CBD, above n 11, at [147].
18 Section 65(2)(a).
19 GBD v CBD, above n 11, at [156]–[157].
20Section 20 provided: Where—
(a) a custodian of a child and a liable parent have entered into an agreement providing for the payment of money towards the support of the child; and
(b) the liable parent becomes liable to pay child support under a formula assessment to the custodian in respect of the child,—
the liability of the liable parent to pay money towards the support of the child under the agreement shall be suspended for such time as child support is payable under the formula assessment.
(2)If a parent becomes liable to pay child support to a person in relation to a child under a formula assessment, any existing liability of that parent to pay child support to the person in relation to that child under any voluntary agreement is suspended between the commencement of liability to pay under the formula assessment and the end of that liability.
…
(emphasis added)
[31] In GBD v CBD, Young J addressed the inter-relationship of these sections in terms which I consider logical, and consistent with the clear meaning of the statutory provisions:
[154] … Section 20 provides that where there is a voluntary agreement and a liable parent becomes liable to pay child support by way of a formula assessment then the voluntary agreement is suspended. This logically follows. The alternative is that the liable parent would be liable to make two separate child support payments for the same children, one under the voluntary agreement the other under the formula assessment. Suspension only is also appropriate because if for any reason the formula assessment ends, then the voluntary agreement should be reactivated.
[155] It therefore makes no sense for s 65 to apply to the very same circumstances; where a voluntary agreement for child support is entered into and subsequently a formula assessment of child support liability obtained. If s 65 applies to voluntary agreements that are not registered, then in contrast to the suspension provision in s 20, s 65(2)(c) provides that liability to pay under the agreement ends as if a s 64 election has been made.
[156] The s 64 election is concerned with an election to end the registration of the voluntary agreement, not the effect of the agreement itself. Similarly “that agreement” in s 65(2) must refer to the registration of the agreement. And so looked at broadly ss 64 and 65 are concerned with registered voluntary agreements where a custodial parent elects to cancel registration of the agreement (in s 64) or where an application is made for a formula assessment (s 65) and there is a registered voluntary agreement. In both cases the liable parent’s liability to pay under the registered agreement ends. The voluntary agreement in both situations is effectively “deregistered”. The Commissioner can no longer be required to enforce the agreement.
[157] Where the s 64 situation applies (where the custodial parent has sought the deregistration) the voluntary agreement continues and so ensuring a continued obligation to pay child support. Where in s 65 a formula assessment is sought, the agreement is deregistered. The Commissioner can no longer be required to enforce the agreement. This logically follows from the fact that the liable parent has an obligation to pay child support under the formula assessment. And in that situation by virtue of s 20 the voluntary agreement itself is suspended so long as the formula assessment applies. The result of this analysis is that ss 64 and 65, therefore, can have no application to the current situation.
Submissions
[32] Mr Crossland says that I should not consider myself bound by Young J’s analysis. He says that GBD v CBD was a very different case in that it involved a mandatory application for formula assessment at the point at which the liable parent’s former spouse, who was caring for their children, became a social security beneficiary. He also says that Young J’s observations were obiter in that he had earlier held the child support agreement to have been validly cancelled (with the result that issues of “suspension” were strictly otiose).
[33] He submits that where s 19(2) refers to “any existing liability” under “any voluntary agreement” as suspended, there is an ellipsis in the statute and that the legislature only intended that liability under any accepted qualifying agreement should be suspended. Mr Crossland argues that because the Agreement was not “registered”, the formula assessment made on Mr Holden’s application did not result in suspension of his child support obligations under the Agreement.
[34] He places considerable emphasis on the frequent references in Hansard to separating parents being encouraged to make their own mutually acceptable arrangements for support of their children21 and says this Court should adopt a narrow interpretation of the section, with the result that as many voluntary agreements as possible are upheld in the face of a formula assessment. He says that the issues raised on Ms Holden’s appeal have wide resonance in the community.
[35] By contrast, Ms Angus, counsel for Mr Holden, says that, in its clear and unambiguous language, s 19(2) has the result of suspending liability under any voluntary agreement where a formula assessment has been made. She says that this is a reflection of wider policy considerations allowing access to assessment by the Commissioner in any case. She says the legislature undoubtedly had in mind situations where, for whatever reason, a voluntary agreement might have to yield in the face of the Commissioner’s calculation pursuant to s 30 of the CSA.
21 See, for example, (8 May 2012) 679 NZPD 2019, 2027 and 2034; (26 February 2013) 687 NZPD
8170; and (27 February 2013) 687 NZPD 8272–8273.
Discussion
[36] Mr Crossland alleges drafting error in respect of s 19(2) and says that I should correct it by insertion of the words “accepted qualifying” before the words “voluntary agreement”.
[37] It is well established that a Court can correct a drafting error by the addition, omission or substitution of words but only if three conditions are satisfied:
(a)the Court must be sure that there is a drafting error;
(b)it must also be sure what Parliament was trying to say; and
(c)the necessary correction must not involve too great a rewriting of the defective language.22
[38] In Air Rescue Service Ltd v Secretary for Internal Affairs, Ronald Young J noted that:23
[18] Ordinarily the words proposed to be added to the provision must not be too extensive or too much at variance with the language used by the legislature. Ordinarily it is for Parliament to fix errors or deficiencies in statutes other than those which are obvious or minor. There is a presumption against Parliamentary drafting error.
[19] Ordinarily the Courts will not add words to a statute. However, the Courts have been prepared, in limited circumstances, to stretch the meaning of the words used to accommodate clear Parliamentary intention.
[39] For words to be added, the case must be one where the true meaning of the text, read in its context and in light of its purpose, is essentially being elicited.24 The Court is, in that sense, not really adding to the section but simply drawing out what is already implied in it.
22 Air New Zealand v McAlister [2009] NZSC 78, [2010] 1 NZLR 153 at [96] citing JF Burrows and RI Carter Statute Law in New Zealand (4th ed, LexisNexis, Wellington, 2009) at 296–317.
23 Air Rescue Services Ltd v Secretary for Internal Affairs HC Wellington CIV-2010-485-1919, 3 May 2011 (footnotes omitted).
24 Police v Emirali [1976] 2 NZLR 476 (CA).
[40] I am not persuaded that I should read in the words suggested by Mr Crossland. My reasons follow:
(a)The structure of the Act does not support the proposition. As indicated, s 19(2) sits within pt 1 of the Act which is billed, “Liability to pay child support under formula assessment”. If the suspension provision in s 19(2) had been intended to apply only to accepted qualifying voluntary agreements then, in my view, it is inevitable that they would have occurred in pt 3 which is directed to such agreements. Section 65 would, in that event, have stated that when a party to an accepted qualifying agreement applied for a formula assessment, the result would be first, to bring the “registration” to an end, and second, to suspend the voluntary agreement for so long as the formula assessment applied.
(b)The appellant’s argument is anchored in principles of sanctity of contract which Mr Crossland says are reinforced by reference to the CSA’s legislative history and, in particular, the proposition that formula assessments should represent a “fallback position” in respect of separating parties. But sanctity of contract applies no less to accepted qualifying agreements than to those voluntary agreements which the parties choose to administer themselves. The fact that the Commissioner acts effectively as a clearing house for receipts and payments for an accepted qualifying agreement, does not change the essential character of that agreement which remains a voluntary one. “Registration” can be brought to an end either on application of the person to whom child support is paid or by any party seeking a formula assessment. Once “deregistered” the agreement still continues to subsist as a voluntary agreement, albeit it will be suspended if a formula assessment is in place.
(c)If s 19(2) applies only to accepted qualifying agreements, then those paying child support would, in every case, seek acceptance of their agreements by the Commissioner. This would be the only predictable
and certain way to ensure that the liable parent could, in the event of a change in either their own or the carer’s circumstances, seek a formula assessment providing for payment of child support at a reduced rate. There is nothing in the Act or its legislative history to indicate that it was Parliament’s intention that the Commissioner should be in a position of having to administer the majority of voluntary child support agreements.
(d)What is suspended by the subsection could not, in any practical sense, be clearer. It is any voluntary agreement. “Any” is a pronoun of unambiguous meaning — “one or some but no matter which”.25 It is inevitable, in my view, that had the legislature intended the qualification for which Mr Crossland argues, it would not have used a phrase which so readily captures “unregistered” voluntary agreements as well as those accepted by the Commissioner.
(e)Amendments to the wording of the provision as it tracked through its various parliamentary stages, support this conclusion. As I have indicated, s 19(2) substantively repeats the repealed s 20. When initially proposed in the Child Support Amendment Bill, the reference was not to suspension of “any voluntary agreement” but to “any other agreement”.26 “Other” was an inappropriate word to have used in that context since it carried the implication that payment under a formula assessment, referenced earlier in the section, was payment pursuant to an agreement. That is not the case. This issue was identified during the committee process and the word “other” was accordingly deleted and the word “voluntary” inserted in its place.27 It is clear, therefore, that the section received considered attention through the law-making process. It is unlikely that a mistake occurred in that context. Moreover, all iterations of the subsection closely mirror the longstanding s 20, present in the CSA at its enactment. If there had
25 JB Sykes (ed) The Concise Oxford Dictionary of Current English (7th ed, Oxford University Press, Oxford, 1982) at 38.
26 Child Support Amendment Bill 2011(337-1), cl 9.
27 Child Support Amendment Bill 2011(337-2), cl 9.
been a mistake, twenty years had elapsed without identification or correction.
(f)If suspension only applies to accepted qualifying agreements, then in every other case where a party to a voluntary agreement exercises their statutory right to seek a formula assessment, twin and overlapping liabilities would arise.28 This is one of the points made by Young J in GDB v CDB.29 As his Honour noted, were it not for the suspension provisions, the liable parent:30
… would be liable to make two separate child support payments for the same children, one under the voluntary agreement, the other under the formula assessment.
(g)The fact that in this case the plaintiff only seeks performance of the voluntary agreement to the extent of the “shortfall” does not detract from the principle. In the result, if the suggested words were read into the section, the Court would also have to read in a further subsection acknowledging suspension of the voluntary agreement to the extent of the formula assessment. But by that point the Court would have embarked on a significant redrafting exercise — one which I consider well beyond its proper remit.
(h)Relatedly, if the legislature had intended that the excess over and above the formula assessment remained payable under any voluntary agreement, that concept could have been simply and easily expressed. By contrast, the section suspends any existing liability under any voluntary agreement in its entirety.
28 In Whitehead v Hopkins [2017] NZDC 14706, [2017] NZFLR 546 at [44], Judge Harrop described this as an “own goal”. A result that Professor Atkin describes as “anomalous”, including for the reason that that the decision “means that a voluntary agreement under the [CSA] is different from one under the [PRA], which has a broad definition in s 2 that would allow the Court to cancel, vary, extend or suspend any such agreement under s 32(2)(d) of the [PRA]”: B Atkin and others, above n 8, at [5.281].
29 GDB v CBD, above n 11.
30 At [154].
(i)Academic commentary does not support the proposition. Professor Atkin observes, for example, that:31
… the existence of a voluntary agreement does not prevent a party from applying to the Commissioner for a regular child support assessment. This rule applies to all existing agreements, whether or not they had been accepted by the Commissioner. … Such agreements must now be reached in the shadow of the Child Support Act.
(emphasis added)
(j)Although the learned author identifies this as a “major deficiency in the legislation and a significant inroad into the integrity of freely negotiated and conciliated arrangements”,32 the reality is that despite academic criticism and the clarity of Young J’s analysis in GBD v CBD, Parliament has not seen fit to amend the provision.
(k)Mr Crossland refers to Inland Revenue’s webpage: “How child support works”.33 There, three different types of child support are recognised: “formula assessment”, “voluntary agreement”34 and “private agreement”. He suggests that this reinforces his argument that the phrase “any voluntary agreement” only refers to accepted qualifying agreements. However, the Inland Revenue’s categorisation is not consistent with the wording of the CSA which in s 47(1) refers to pt 3 applying where “the parties to a voluntary agreement for child support
… want the Commissioner to administer the agreement”. The Act therefore recognises qualifying voluntary agreements (including those subsequently accepted) as a subset of voluntary agreements. To a similar effect is the s 2 definition of “qualifying voluntary agreement”:
… a voluntary agreement that, under section 48, qualifies for acceptance by the Commissioner.
31 B Atkin and others, above n 8, at [5.280] (footnotes omitted).
32 At [5.280].
33 Inland Revenue “How Child Support Works” (12 July 2021) < respect of which the webpage says: “You decide the amount, register the agreement with us and we manage the payments.”
(l)In any event, on a different webpage the Inland Revenue states: “If your private agreement is not working out, you can apply for a voluntary agreement or formula assessment at any time”.35 This belies the suggestion that the Inland Revenue considers what it calls “private agreements” as immune to suspension under s 19(2).
(m)This leads me to my final point — one which draws on some of the points already made. I am unpersuaded that Parliament intended suspension only to apply to accepted qualifying agreements. It may be that broader public policy considerations are at work — namely, that in any matter relating to child support, it is intended that the Commissioner should, if asked, have the final say in terms of what is an appropriate level of payment. It is not, for example, difficult to envisage circumstances where a voluntary agreement may no longer be fit for purpose and yet one party is resistant to variation. The party to whom child support is paid may become ill and no longer capable of fulfilling the parenting obligations envisaged at the point the agreement was signed. Such obligations might have to be assumed by the party paying child support. Likewise, the party paying support might become physically incapacitated or perhaps simply burnt out and unable to generate income at a level sufficient to meet agreed commitments. I note in this respect one of the stated objects of the CSA is to:36
… provide that the level of financial support to be provided by parents for their children is to be determined according to their relative capacity to provide financial support and their relative levels of provision of care.
(n)Indeed, it may be that the legislative purpose of actively encouraging parents and caregivers to enter into voluntary agreements is better served by knowledge that if the agreement is “not working out”, for whatever reason, a formula assessment can be obtained and the voluntary agreement suspended.
35 Inland Revenue “Private Agreement” (24 August 2020) < 4(d).
(o)Mr Crossland suggests that in the event of changes in circumstances, the party paying child support under an “unregistered” agreement might avail him or herself of the provisions in the Contract and Commercial Law Act 2017 relating to frustrated contracts. But I am left uncertain whether, in matters of child support, the legislature intended that parties be expected to meet the exacting requirements of that jurisdiction, and again the question arises, why should parties to a voluntary agreement which has been “registered” be subject to a different standard?
[41] In summary, I am not persuaded that Parliament intended to exclude the countervailing policy considerations I have identified, still less to establish a regime where only those paying child support under a “registered” voluntary agreement are given the superior right to have their obligations recalibrated in accordance with the formula identified in s 30.
A voluntary agreement?
[42] Mr Crossland argues that the obligations expressed in cl 10 were, pursuant to cl 41, part of a global and interconnected agreement and that, for this reason, they cannot be considered “voluntary”. In support of that proposition, Mr Crossland refers to various decisions on applications to vary, cancel or suspend voluntary agreements under s 32 of the PRA.37
[43] I accept that if, for example, an agreement provided for an undifferentiated amount to be payable for both “spousal maintenance and child support”, then s 19(2)
37 Smythe v McSharry [2013] NZFC 5591, [2013] NZFLR; Whitehead v Hopkins, above n 28; and Hopkins v Whitehead [2018] NZHC 1996, [2018] NZFLR 559. These decisions establish that if the part of the voluntary agreement for which review is sought is not severable, then review cannot occur under s 32. Mr Crossland submits that if a voluntary agreement to pay child support cannot be severed from the entirety of the agreement in which it appears, then it likewise should not be considered a “voluntary agreement” for the purposes of the CSA. He says it would be incongruous if unseverable aspects of agreements were treated in a certain way in one legislative context and differently in another. Implicit in his submission must be the argument that the child support obligations in the Agreement are not severable. In Whitehead v Hopkins, the District Court held that s 65(2) applied only to an agreement “to pay child support” under the Act and that the agreement in question “self-evidently” did not specify this (at [31]–[33]). Instead, it used the language of “maintenance” providing for an undivided sum of $11,000 per month for the maintenance of both wife and children (at [2]). The Judge held that it was unclear what portion of the agreed sum related to the children and, if necessary, he would have held that the agreement was not severable (at [45]). The finding in respect of severability was upheld by Dobson J on appeal.
could not discretely operate to suspend any child support obligation without potentially disturbing the interrelated agreement for spousal maintenance. That is, however, not the case here. Clause 10(a) of the Agreement relates solely to child support.38 That obligation can be suspended without affecting any of the other payment obligations in the Agreement.
[44] Moreover, cl 35 of the Agreement expressly recognises severability in respect of any provision found to be “void, voidable, illegal or unenforceable”.39 Section 19(2) operates to make temporarily unenforceable child support obligations under “any voluntary agreement”.
[45] Mr Crossland says the suspension of cl 10(a) has the effect of undermining not only certainty of contract but also the ability of parties to negotiate and enter into contracts that globally settle all issues between them. However, all such agreements occur against a backdrop of multiple statutory provisions which may potentially see the parties’ respective rights and obligations revisited. Section 19(2) of the CSA is one example. Section 32 of the PRA is another. Likewise, the provisions in COCA relating to parenting orders. None of this would, I suggest, be a surprise to experienced counsel negotiating a child support agreement. The effect of s 19(2) has been long recognised in the authorities and in academic commentary. Mr Holden says that his ability to obtain a formula assessment and to thereby effect suspension of his cl 10(a) obligation was “always appreciated and understood” by him and that he would not have agreed to pay child support at the level and in the terms contained in the agreement without that backstop.
Supplementary submissions
[46] In his supplementary submission, Mr Crossland raises several additional arguments, some of which were not before the District Court40 and others of which he
38 I note Ms Holden’s argument that the agreement to pay the sum in cl 10(a) was made partly in consideration for her and the children continuing to reside in Auckland, rather than moving to Tairua. That is denied by Mr Holden. On my review of the Agreement, which has occurred without the extrinsic evidence aiding interpretation which may occur in the context of a full trial, cl 10(a) is clear in its objective meaning in that the quantum identified relates only to child support.
39 Emphasis added.
40 An argument that Mr Holden waived any right to apply for a formula assessment in cl 24 of the Agreement and an argument that he breached cl 18 of the Agreement, an indemnity clause.
said were made to the District Court Judge orally but were not addressed in the judgment.41
[47]All of these arguments must be considered in the context of what is before me
— an appeal from a refusal to grant summary judgment on a claim for specific performance of cl 10 of the agreement.42
[48] On appeal from a defendant’s successful application for summary judgment, the Court of Appeal has recognised an ability to advance alternative causes of action to those considered by the trial Court.43 But particular considerations arise in that context given that a defendant’s successful summary judgment application will terminate the claim and result in an issue estoppel. The same considerations do not arise on a plaintiff’s unsuccessful application for summary judgment.
[49] In the present case, the problem is compounded by the fact that some of the new arguments, for example, the argument under the indemnity provision in cl 18 of the Agreement, invoke a form of relief (damages), totally different to that sought in the summary judgment application. This was the point made by the District Court Judge in respect of an equivalent argument under cl 41 of the Agreement which was advanced on the summary judgment application. His Honour said:
[84] Ms Holden’s submission is that given Mr Holden has failed to pay the agreed child support amount, he is in “default of his obligations under the Agreement”. Even if the court finds that Mr Holden has a legally justifiable excuse for the default, it remains nevertheless he has defaulted and remains liable.
[85] That is not how Ms Holden has pleaded her case. She has sought specific performance as a first cause of action and equitable estoppel as a second cause of action. It may be that Ms Holden is able to amend her pleadings or refile in the Family Court in reliance on clause 41. Those arguments, however, are not available in respect of these pleadings.
41 An argument that the definition of “property” in the PRA is sufficiently wide to capture the statutory right under s 8 of the CSA to apply for a formula assessment and that such right had therefore been “yielded” under the Agreement.
42 The application for summary judgment dated 8 November 2021 sought orders:
a. seeking specific performance of an Agreement entered into [by] the parties on 5 June 2019, in particular requiring the respondent to:
(i)pay any shortfall of child support payments so that the monthly amount the applicant receives by way of child support accords with the Agreement; and
(ii)paying the applicant’s actual legal costs of bringing this application.
43 See Thompson v Turner Hopkins [2018] NZCA 197, [2019] 3 NZLR 299 at [45]–[48].
[50] Ms Holden has now filed an extensively amended claim in the District Court, including a claim for compensation pursuant to cl 41. However, the fact remains that the summary judgment application which was declined and in respect of which I sit on appeal was a claim for specific performance only. It did not even directly invoke what was then the second cause of action claiming an equitable estoppel.
[51] Ordinarily, appeal courts should be entitled to the views of the court from which the appeal is taken and, in the summary judgment context where an unsuccessful plaintiff always has the option of simply progressing the claim to trial on whatever amended pleadings or with whatever additional relief they seek, appellate courts should not be required to deal with significantly amended claims, particularly those seeking different types of relief. That said, I now address the substance of the new arguments.
[52] Mr Crossland’s first point relates to the definition of “property” in the PRA which includes “any debt or any thing in action” and “any other right or interest”.44
[53] He submits that “a right includes a statutory right” and that under cl 24 of the Agreement, Mr Holden “expressly contracted out of his permissible but not mandatory right to apply for a formula assessment”. I have set out cl 24 in para [7].
[54] Mr Crossland says that immediately before the agreement was executed, Mr Holden had an existing statutory right to apply for a formula assessment but that on signing such right was released.
[55] By contrast, Ms Angus says that a statutory right to apply for a formula assessment is not “any other right or interest” for the purposes of the PRA. She refers to the decision of Toogood J in Goldstone v Goldstone.45 In that case, his Honour was not persuaded that a right of a bankrupt to apply for a vesting order under s 119(2) of
44 Section 2 definition of “property”, paras (d) and (e).
45 Goldstone v Goldstone [2019] NZHC 1649. This case was successfully appealed in Goldstone v Goldstone (as administrator of the estate of Reece Clive Goldstone) [2021] NZFLR 883, [2021] NZCA 664. However, the findings to which Ms Angus refers were not the subject of appeal.
the Insolvency Act 2006, could be relationship property under the PRA.46 His Honour observed that although the definition of “property” included any other right or interest:
(a)the right under s 119(2) was a personal right, conferred by statute that could not be transferred; and
(b)it was at best inchoate, conferring no more than an opportunity to make an application to the Court.47
[56] Likewise, in this case, the right to apply for a formula assessment is a personal right which cannot be transferred and which is inchoate until such application is made.
[57] As Ms Angus also points out, the effect of the appellant’s submission would be to prevent a liable parent who entered into a s 21A agreement under the PRA containing a full and final settlement clause from applying for a formula assessment, irrespective of whether the parties had reached any agreement at all on the payment of child support.
[58] Moreover, the parties expressly defined their relationship property in cls 3 and 4 of the Agreement. These contain no reference to explicit statutory rights. Nor does the Agreement in any way purport to divide such rights.
[59] Additionally, it appears to be at least reasonably arguable that the statutory right to apply for a formula assessment only crystalised at the point the parties separated and that, if property at all, it is appropriately characterised as Mr Holden’s separate property.
[60] Mr Crossland’s next argument is that cl 18 of the Agreement provides for an indemnity in respect of debts which is sufficiently wide to capture outstanding liabilities under cl 10(a). He emphasises that an indemnity is an obligation separate from the underlying debt obligation, with the result that “putting to one side the fallacy in the argument that the respondent retained his statutory right to seek a formula
46 At [58].
47 At [58].
assessment, he nonetheless or alternatively becomes liable under the indemnity to meet the difference between the monthly amount and the formula amount”.
[61]Clause 18 of the Agreement provides:
[Mr Holden] shall indemnify [Ms Holden] from and against all liabilities, costs and claims in respect of the debts, for which he shall be solely liable and which are in his sole name, and shall ensure that any and all covenants given by [Mr Holden] in respect of those debts are discharged.
[62] On my review of the Agreement (which has occurred without the extrinsic evidence aiding interpretation which may occur in the context of a full trial), I am not persuaded that the obligations under cl 10 are properly categorised as debts for the purposes of cl 18. Although a debt is not a defined term in the Agreement, there is a reference in recital F to various “revolving, interest-only, floating and fixed debts” owing to Westpac New Zealand Ltd, and cl 4 of the Agreement specifies the following “debts” as owing on the date of separation:
(a)shareholder loans to The Little Gallery Ltd;
(b)the debts owed to Westpac; and
(c)credit card balances owed to Westpac on the cards used by the parties, with a separation balance of approximately $11,500 (now paid in full).
[63] In my view, the likely purpose of cl 18, and the reciprocal cl 17 indemnifying Mr Holden, was to protect both parties against the debt obligations of the other arising following separation.
[64] Next, Mr Crossland argues that cl 24 of the Agreement has the effect of waiving Mr Holden’s statutory right to apply for a formula assessment. This is a variant on the estoppel pleading appearing as a second cause of action in the original statement of claim. I note again that summary judgment was only sought in respect of the pleading for specific performance.
[65] That said, the argument in reality amounts to a claim that the parties can contract out of the CSA and, in particular, the statutory right to apply for a formula
assessment. However, as Professor Atkin notes: “[s]uch agreements must now be reached in the shadow of the Child Support Act.”48
[66] Moreover, cl 24 cannot have been intended as a release of all legal and statutory rights. For example, it cannot have been intended to apply to the ability to enforce the Agreement or set it aside under s 21J of the PRA. I agree with Ms Angus that a more likely construction of cl 24 is that it operated to waive such of the parties’ rights under the PRA as had already accrued (which the parties were entitled to do under s 21A).
[67] Finally, Mr Crossland argues that where s 19(2) talks about suspension of any liability to pay “child support”, the reference is to the defined term “child support” in s 2 of the CSA, namely:
child support means any payment required to be made under this Act by any person towards the support of a qualifying child, whether under a formula assessment or a voluntary agreement or an order of the court.
[68] So, he submits any suspension of the child support agreement in this case relates only to the amount of child support required to be paid under the CSA, being the monthly sum of $2,240.70.
[69] I do not consider that argument persuasive. What is suspended is liability for payment under “any voluntary agreement”. Payment made under a formula assessment is not a payment under a voluntary agreement. Likewise, what is suspended is an “existing liability”. The section clearly contemplates that “existing” liabilities are in contradistinction to the liabilities under the formula assessment which is the catalyst for the suspension.
[70] I have reservations also about whether the phrase “payment required to be made under this Act” limits the definition of child support in s 2 to formula assessments and “registered” agreements.49 Voluntary agreements (whether registered or not) are specifically recognised in the CSA. Under s 28(4) if a carer of a child and a liable parent “wish child support to be paid at a different rate [from that provided in a formula assessment] they may … enter into a voluntary agreement”. Section 47, in
48 B Atkin and others, above n 8, at [5.280].
49 Money payable under the latter being “child support payable under this Act” pursuant to s 58(1)(a).
turn, recognises voluntary agreements at a generic level, a subset of which are those which the parties seek to have administered by the Commissioner. Likewise, the s 2 definition of “qualifying voluntary agreement”.
[71] Moreover, s 19(2) refers to suspension of the liability to pay child support under “any voluntary agreement”, not child support under “a voluntary agreement”, as referred to in s 2. So, it is possible that in s 19(2), the s 2 definition of child support, whatever its proper ambit, is not being specifically invoked.
[72] These reservations are consistent with Young J’s conclusion in GBD v CBD that a parent’s obligation to pay a half-share of his children’s private school boarding fees included in an unregistered voluntary agreement was appropriately considered a “child support payment” and thus “subject to suspension under s 2050 where a formula assessment had been sought and obtained”.51
Result
[73] I am not persuaded that the District Court erred in declining Ms Holden’s summary judgment application. I agree that seriously arguable defences are made out.
[74]I dismiss the appeal accordingly.
[75] I award costs to the respondent on a 2B basis (one counsel), together with usual disbursements. In the event any issue arises as to calculation, memoranda may be filed.
Muir J
50 Now with amendments, s 19(2).
51 GBD v CBD, above n 11, at [173].
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