Issued
2018
Decision
04 May 2018
Court
NZCA
Appeal Status
Not appealed

Family Dispute Resolution Act Mediated Agreement Not Privileged/Confidential

The Appellant appealed the High Court judgment which found that an agreement produced through mediation under the FDRA was not privileged and/or confidential

Case
McKay v Commissioner of Inland Revenue [2018] NZCA 138
Legal terms
Privilege, confidentiality, child support, mediated agreement

Summary

The Appellant appealed the High Court judgment which found that an agreement produced through mediation (“the Mediated Agreement”) under the Family Disputes Resolution Act 2013 (“the FDRA”) was not privileged and/or confidential, and was therefore available for the Commissioner of Inland Revenue (“the Commissioner”) to use when making an assessment under the Child Support Act (“the CSA”). The Court of Appeal agreed with the High Court that the Mediated Agreement was not privileged or confidential, allowing the Commissioner to rely on that document as proof of parentage when making a CSA assessment.

Impact

This case confirms the Commissioner’s position that Family Dispute Resolution (“FDR”) mediation agreements are not privileged or confidential so as to preclude her from using them to make child support assessments under the CSA.

Facts

In 2014 the Appellant had a brief liaison with a woman, A. In 2015, A gave birth to a son, B. A DNA report (“the DNA Report”) commissioned by the Appellant very strongly supported the Appellant being B’s biological father. On 23 July 2015, the Appellant and A entered into the FDR process under the FDRA which culminated in the Mediated Agreement. The Mediated Agreement included an acknowledgement by the Appellant that he was B’s father. On 3 August 2015, the FDR provider gave A and the Appellant a form recording the outcome of the FDR (“the FDR Form”), under ss 12(7) and (8) of the FDRA. The FDR Form did not attach the Mediated Agreement, but included a reference to the matters agreed upon within it.

On 25 August 2015, the Commissioner received a child support application from A naming the Appellant as the father of B and attaching the DNA Report and the Mediated Agreement. The Commissioner assessed the Appellant for child support on the basis the Mediated Agreement included a written statement by the Appellant acknowledging that he was the father of B, under s 7(1)(e) of the CSA.

The Appellant filed a notice of objection to the Commissioner’s assessment under s 90(1) of the CSA stating, inter alia, that the Mediated Agreement was privileged under s 14(2) of the FDRA and that he had not agreed to its disclosure.

Decision

The High Court Decision

The High Court held that the Mediated Agreement was neither privileged nor confidential and that the Commissioner was entitled to take it into account in her child support assessment.

Discussion

The Court of Appeal found the High Court was correct in concluding that s 14 does not confer privilege on the Mediated Agreement. It agreed with the High Court’s observation that the underlying purpose of the privilege conferred by s 14(2) was to encourage parties engaged in settlement negotiations to speak freely, and to facilitate out of court resolution.

In addition, the CSA contemplated the use of mediated agreements by the Commissioner in making determinations on the liability of parents to pay child support under the CSA [s 15(1) and (3)]. Therefore such agreements were not “statements” for the purposes of the application of s 14, with the result that the Mediated Agreement was not privileged.

The Appellant also argued that s 14(2) of the FDRA applied because the Commissioner was a “person acting judicially” when making child support assessments. However, the Court of Appeal found the only inquiry required of the Commissioner under the FDRA is to be satisfied that the statutory definition of ‘parent’ applies to the Appellant. Such an inquiry was purely administrative.

The Court did not accept the Appellant’s further submission that the terms of the Mediated Agreement were confidential. The Mediated Agreement did not contain any agreement between the parties to that effect and there was nothing in the statutory scheme to justify inferring it. The fact that the contents of the Mediated Agreement may be included in the FDR form prepared by the FDR provider and subsequently given to the Family Court under s 13 of the FDRA provides clear indication that the document is not confidential to the parties. The Court reached that conclusion even though there may have been a misunderstanding of the legal position about confidentiality on the part of the Appellant.

The Court further stated that the Commissioner is under a statutory duty to exercise her functions under the CSA so as to achieve the legislative objects. Once the Commissioner was satisfied that the Appellant was B’s parent within the statutory definition the Commissioner was under a duty to exercise the functions of assessment contemplated by the CSA.

Costs

The Court of Appeal did not order costs on the appeal. While not a test case, there was an element of public interest in the outcome of that case. In addition, the Court acknowledged the Appellant had been misled into believing that the Mediated Agreement was privileged and confidential and that he would not have signed it if he had known that it would be used by A to make him liable to pay child support without any court proceeding being undertaken. The Court also found the Appellant had not unduly enlarged the work of the Commissioner in the proceeding.

Child Support Act 1991 ss 4, 7, 15 and 90; Family Disputes Resolution Act 2013 ss 12 and 14