Aspen and SELBY - [2010] FMCAfam 1130

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ASPEN & SELBY

[2010] FMCAfam 1130

CHILD SUPPORT – Enforcement – application by payee for order that payer pay arrears of child support to Registrar – proof of arrears – exercise of discretion.
COSTS – Costs of respondent to unsuccessful stay application – exercise of discretion.

Child Support (Registration and Collection) Act 1988, ss.113A, 116(2)
Family Law Act 1975, s.117

Applicant:

MR ASPEN

Respondent:

MS SELBY

File Number:

SYM 2718 of 2005

Judgment of:

Halligan FM

Hearing date:

9 September 2010

Date of Last Submission:

10 September 2010

Delivered at:

Parramatta

Delivered on:

10 September 2010

REPRESENTATION

Counsel for the Applicant:

In Person

Counsel for the Respondent:

Ms Bridger

Solicitors for the Respondent:

Jo Anna F S Moy

ORDERS

I make the following order:

The father’s application filed 6 July 2009 is permanently stayed in relation to paragraphs 1 and 2 of the relief sought therein.
Paragraph 3 of the relief sought in the father’s application filed on

6 July 2009 is struck out.
The mother’s response filed on 11 February 2010 is dismissed;
The father shall pay to the mother or her solicitors within three months $5025 for the mother’s costs of the father’s stay application.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of Federal Magistrate Halligan delivered this day will for all publication and reporting purposes be referred to as Aspen & Selby.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PARRAMATTA

SYM 2718 of 2005

MR ASPEN

Applicant

And

MS SELBY

Respondent

REASONS FOR JUDGMENT

This is the hearing of the wife’s application contained in her response filed on 11 February 2010 in which she sought, relevantly for the issue I am now determining, that within 28 days of the date of the order, the husband pay the Child Support Registrar the total amount due and payable by him in respect of the registered maintenance liability due to the mother.
The order ultimately pressed has changed somewhat. The order that I am ultimately asked to make excludes penalties and other charges that are part of the child support debt and is limited to the actual amount of child support arrears. And what I am asked to order is that within

28 days of the date of the order, the husband pay to the Child Support Registrar the amount of $93,148.99 due and payable by him in respect of a registered maintenance liability due to the mother. In the alternative, I am asked to make an order that within 28 days of the date of the order, the husband pay to the child support registrar the amount of $31,369.81, being the amount due and payable in respect of the registered maintenance liability for the period from 1 July 2005 to

30 June 2007.
The mother's application is brought under s.113A, Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act). I am satisfied the mother gave the Registrar the requisite notice under that section.
I will deal with the alternative relief sought first, although ultimately it was not seriously addressed in any submissions I heard. The calculation of the amount sought in the alternative claim is, in my view, entirely uncertain. Attempts have been made, as I understand it, to calculate that amount by reference to the payee’s statement of account with the Child Support Agency and other information provided by the Child Support Agency in relation to the child support liability, including a letter from the Child Support Agency dated

27 November 2009 indicating the amounts of child support that were payable for the periods that would cover the time mentioned in the alternative order.
The difficulty I have with that – and this was nowhere addressed in the evidence or submissions – is that the evidence proves that payments have been made in relation of the child support liability subsequent to 30 June 2007. How the Child Support Agency has chosen to attribute those payments in satisfaction of the accruing child support liability is not demonstrated in the evidence. Prima facie, therefore, payments would be allocated to satisfy the oldest liability first. The evidence does not establish a period of time over which the entire liability arose, or how it arose over time, or how payments made after 30 June 2007 may have affected the arrears attributable to the limited period covered by the alternative order of 1 July 2005 to 30 June 2007. Hence, in the circumstances, I am not satisfied that it has been proven that the amount claimed is in fact due and owing in relation to that period.
Turning now to the primary application, there is a certificate under section 116(2) of the Registration and Collection Act which is in evidence as exhibit H, establishing that as at 7 September 2010, the father owed the Child Support Registrar, on behalf of the Commonwealth, $63,148.99 in relation to the registered maintenance liability for child support.
The evidence that the father put before me clearly demonstrates that that is not the entirety of his debt to the Child Support Agency. He put into evidence his monthly statement for the period to August 2010. And that clearly indicates that, as at 20 August 2010, the total amount that he owed was $92,397.09. That was broken down on the statement to be $62,529.99 in child support and $29,871.10 in penalties and other amounts.
Thus, if I were to make the order the mother seeks and if the father paid the required sum, it would not eliminate the entirety of the father’s debt to the Child Support Agency. Whether, if he made the payment in accordance with any order that was made, he would be able to successfully seek remission of penalties and other charges and reduce or eliminate the balance of the debt, I do not know. But that, in my view, is not relevant to the matter before me.
It is put on behalf of the wife that the debt has accrued over a significant period of time. It is a very significant debt and the father has consistently not paid the amount that he should have. He himself gave evidence that, for an unspecified period of time, he used the child support calculator on the Child Support website to work out the amount that he thought he should have been paying and the inference was that he paid that amount rather than the actual assessed amount.
The actual amount of the child support has been a matter of considerable controversy between the parties, at least for a period from 2005 to 2008. I yesterday dismissed, for reasons I then gave, an application by the father to change the child support for a 16 month period from 1 July 2007 to 30 October 2008. I indicated, broadly, that the reason for that was I was satisfied that the issue had been dealt with by Lindsay FM when he entertained a departure application by the father which was remitted for rehearing after a successful appeal following an earlier hearing of that application where it was dismissed and in which Lindsay FM was prepared to order a departure by changing the father’s child support amount but for a limited period, a period of 12 months. The controversy that the father sought to ventilate before Lindsay FM was over a much broader period, even allowing for the period where I declined to hear his application yesterday. He has not subsequently sought to challenge the decision of Lindsay FM.
The father believed, based on statements by his Honour in his reasons, that he had a remedy through the Social Security Appeals Tribunal. But when he sought to exercise what he thought was that remedy, the Social Security Appeals Tribunal indicated it had no jurisdiction. He thereafter has not sought either to challenge the decision of the Social Security Appeals Tribunal as to lack of jurisdiction, or to seek leave to appeal the decision of Lindsay FM, now well and truly out of time. The father suggests that he is without funds to pay for a lawyer and finds the task of seeking to further litigate the issue too daunting to embark upon without legal representation.
But be that as it may, the fact remains that there have been processes, despite the father’s dissatisfaction with them, whereby he has sought to challenge the usual formula basis for assessment of child support and decisions by the Child Support Agency under a change of assessment process under Part 6A of the Child Support (Assessment) Act 1989 (the Assessment Act) as it then stood, an objection to that process under Part 6B of the Assessment Act as it then stood, followed, as I say, by proceedings in this Court. While I accept that the father is dissatisfied with the upshot, the fact remains that these matters have been extensively considered and the ultimate decision is one that results in the current arrears.
I am not satisfied that I can hear the father to, in effect, argue that I should go behind the current amount of arrears which seem to be the point of his submission. He suggested, as I understand it, that at least for the 16-month period where I refused to entertain his application yesterday, from 1 July 2007 to 30 October 2008, I should reduce the amount of the arrears by the amount that exceeded the amount that he felt he should have paid in child support for that period. But he was not in a position to put to me any such figure. Even if he was, I am not satisfied the amount should be reduced at all. I am, therefore, satisfied that the debt is as indicated in the certificate and that is the amount that the Court should look to. It is a liability and, prima facie, it should be paid and it should be enforced.
However, that is a prima facie proposition. The Court’s power to make the order is a discretionary one. I note that the mother has not sought to use the more usual method of enforcement, that is, an enforcement summons, nor has she sought any form of enforcement against any specific asset of the father. That may well be because the evidence suggests that he has little or no assets.
The evidence is that the father is employed by a company of which he is the sole shareholder and director. He is an [occupation omitted]. That company conducts the business that the father runs and, for that purpose, I am satisfied that in conduct of the business, it is simply his alter ego. However, in establishing his financial affairs in that manner, he has to deal with certain funds that he borrowed through the company to meet prior legal costs in a particular way, I infer to avoid them being treated as income and taxable, as such, in his hands. That is, he must repay the amount borrowed through the company at the rate of $15,000 per annum to ensure the borrowed sum is repaid in seven years. That evidence was not challenged and I accept it.
There is no evidence that the company is the beneficial owner of any asset other than a car which the father uses. The company does own other property. It is the registered proprietor of a strata title business premises said to be worth $250,000. But the evidence is that it is not the beneficial owner of that property. The beneficial owner of the property is a unit trust, established, I infer, by the father. The units in that unit trust are themselves then owned by the company but not beneficially. They are owned by the company in trust for a superannuation fund of which the father is the sole member.
The father’s financial affairs are run through his company. It is his employer. It is the means by which he makes his services available to people who retain them. It is the vehicle by which he owns his business premises and those business premises are owned for a self-managed superannuation fund for his ultimate benefit.
I emphasise that it is for his ultimate benefit. It is in a self-managed superannuation fund. It has not been put to me, on behalf of the mother, that the father presently is able to access the superannuation fund. There is, thus, no evidence that the father currently has the capacity to pay the sum sought.
It was put, on behalf of the mother, that he can borrow the sum. It was never put to him in cross-examination that he could do so. I am not satisfied that the evidence establishes he could do so. He is aged 60. He has no assets that have been identified. His income, for taxation purposes at least, is in the vicinity of $50,000 per annum. He must make repayments to the company of $15,000 per annum with another $35,000 of the borrowed funds yet to be repaid to the company. I do not accept that he has a capacity to borrow over $60,000.
Ultimately, my concern is whether the order sought is enforceable. When I raised this matter yesterday, counsel suggested that it would be used as the basis for a bankruptcy petition. But, ultimately, I would have thought that the point of any order for enforcement is to increase the prospects of the money being paid. On the evidence before me, I cannot see that prospect.
I do not accept the submissions that were made by the father seeking to rely upon the various objects sections in the Assessment Act suggesting, as he put it, that the amount for which he was assessed was not a fair or reasonable amount. That matter, as I say, has been the subject of proceedings and has been dealt with.
Nonetheless, I am concerned about making an order which, on the face of it, is unenforceable. The suggestion that it may be enforceable by a bankruptcy application, in my view, is not the answer. The order itself must be enforceable through this Court prima facie.
I am not suggesting that the Court would never make an order for the payment of a sum of money unless a specific fund was identified or specific property was identified from which the payment could be made. For example, in property settlement proceedings where the Court finds that a party has deliberately misrepresented their financial circumstances or failed to make proper financial disclosure, the Court may, in appropriate circumstances, make an order for the payment of a sum of money the means of payment of which cannot be readily identified.
A similar principle could well apply in proceedings of this kind for enforcement. However, it has not been suggested that the father has deliberately misrepresented his financial circumstances. It was put to me, on behalf of the mother, that he has not disclosed his financial circumstances. It has not been put to me that, under the rules, he was obliged to. Certainly, there was a means open to the wife in seeking enforcement that would have obliged a financial disclosure and would have made the father explicitly available for cross-examination in relation to his financial affairs, that is by means of an Enforcement Summons. The mother chose not to use that process. I am not suggesting that the mother had to proceed in that fashion. It is up to the applicant to choose the relief they seek and the means of seeking from the Court. In the circumstances of the way the mother sought to prosecute her claim for relief, I do not accept that there has been a material failure of disclosure by the father.
The father has put historical financial records in relation to both himself and the company before the Court in evidence. He has put before the Court his most recent tax assessment. He was available for cross-examination and was cross-examined in relation to his financial affairs, and at the end of the day I am satisfied, not that he is hiding his financial circumstances or that there is otherwise a fund from which the money he owes may be paid, but that he does not have the capacity to pay it.
In the circumstances, I find it unnecessary to refer to evidence suggesting that he had made a payment arrangement with the Child Support Agency to repay the arrears at $65 per week, which might have affected the exercise of this Court’s discretion. As I say, in the circumstances where I need not address that matter, I will not make any clear finding on it.
Ultimately, I am satisfied that in the exercise of the discretion of the Court, the order should not be made.
ORDERS DELIVERED
RECORDED : NOT TRANSCRIBED
Application has now been made in relation to costs for the mother for one day in relation to the father’s departure application which I dismissed yesterday, and the mother’s costs in relation to a stay application the father filed on 5 January this year. I am asked to order that the father pay to the mother, or her solicitors presumably, a total of $6625, being $400 for an attendance on 30 November 2009 in relation to the departure application and costs of $6225 in relation to the stay application.
During submissions there were concessions made in relation to the total amount of costs that would be pressed, in that costs in relation to an attendance on 19 March 2010 of $400 were no longer pressed and the costs for the solicitors’ attendance on 17 February of $1600 was halved, thus reducing the sum sought by $1200 to $5025.
In relation to the $400, this relates to an attendance on 30 November 2009. This was, as I understand it, the second occasion that the father’s departure application came before the Court. It was first listed on

8 October 2009 when the matter came before me and the matter was adjourned until 30 November, there being no appearance by or on behalf of the respondent mother. On 30 November 2009 there was an appearance by a solicitor for the mother, the husband appearing unrepresented. On that occasion the proceedings were undefended. However, it was indicated that the mother wished to defend the proceedings and I further adjourned the matter, setting it down for final hearing but directing that the mother file and serve a response, financial statement and affidavit evidence within 14 days.
The attendance on that occasion being in circumstances where the mother had not in fact responded in the time that she should have, I am not satisfied that there are reasons which would be sufficient to support a costs order.
I have regard to the provisions of section 117 of the Family Law Act 1975 which governs the issue of costs. The starting point is that each party pays his or her own costs. The party seeking a costs order bears the onus of establishing grounds that would support the making of the order. In determining whether costs order should be made, the Court must have regard to the matters set out in subsection 117(2A) that are relevant in the particular case. One of those matters is the conduct of the parties in relation to the proceedings. In my view, the conduct of the mother in relation to the proceedings up to that point disentitles her to a claim for costs on that occasion.
There was then the stay application filed by the father on 5 January. The matter came before the Court first before Henderson FM on

17 February 2010. There appeared to be an issue as to whether her Honour dealt with the matter just before lunch or late in the day. Costs originally sought on behalf of the mother were on the basis of it being a whole day attendance. To abbreviate the matter, the claim for a whole day was reduced to a claim for a half day in relation to this occasion, reducing the claim for $1600 for the solicitor to $800. I note that the whole day entitlement under the costs schedule is $1760 and the half day is $880. Counsel’s fees remained at $1750 on the basis that it was said that counsel had charged only a half day brief fee although it was asserted that counsel had been present all day.
On 17 February the matter was adjourned to 15 March. On 15 March the matter was adjourned until 19 March to await the transcript of his Honour’s reasons of 29 April 2009. On 19 March, because of suggested confusion as to the time of listing, the matter was dealt with by his Honour in the father’s presence but with there being no appearance on behalf of the mother. Nonetheless, despite there being no appearance on behalf of the mother, the father’s stay application was then dismissed. In my view, that is a not insignificant matter. The fact that even on the basis of the application on the day being undefended, the father failed in his application suggests very strongly that it was singularly lacking in merit.

The matter was then re-listed in circumstances where the mother’s side felt that they had not had an appropriate opportunity to be heard even though the father’s stay application was dismissed on 19 March, and the matter was re-listed and dealt with by telephone link by Lindsay FM on 17 May 2010. That was a brief telephone hearing and, on that occasion, all the outstanding applications at that time were adjourned to trial and his Honour made the following order:
2. Liberty to the wife to make representations to the associate to Federal Magistrate Halligan for the purpose of the allocation of a date to hear an application to summarily determine the husband’s application.
3. The question of the costs relating to the hearing of 15 March 2010 be reserved to trial.
The trial is the one listed yesterday and today. The costs that are sought relate to attendances on 17 February 2010, reduced in the manner that I have mentioned, 15 March 2010, and 17 May 2010, in the total of $5025.
I am satisfied that the solicitors fees are claimed at a rate less than the prevailing Federal Magistrates Court’s scale. In relation to counsel’s fees, which relate to 17 February and 15 March dates only, $1750 each day, I am not satisfied they are excessive on a party/party basis, the amount sought each day being a half day brief fee. The brief fee, of course, includes preparation time for the matter on the day, a matter that perhaps is not appreciated by a lay litigant. I also note that in relation to the attendances for this matter, the solicitor too was entitled to charge a preparation fee that has not been charged and I say this to emphasise that, in my view, there is no legitimate challenge to the quantum of the amount that is sought.
The question, however, remains whether an order should be made, it being discretionary, and the onus being upon the applicant for the order to demonstrate why the order should be made.
It has been put on behalf of the applicant for the costs order that the application for the stay was never served on the Child Support Agency, although it was served on the mother. It was also put that a stay was an inappropriate remedy to obtain relief from a departure prohibition order, which was one apparent concern of the father, but it was rightly conceded in submissions on behalf of the mother that that was not the sole basis that could be argued for the stay, there then being proceedings before the Court seeking a departure order and there being a significant amount of arrears and some threat of enforcement action against the father.
It was put that the mother is on a disability pension and that the father is employed. I take account of the evidence that he gave previously in relation to his income being generally in the vicinity of $50,000 per annum subject to a loan repayment to his company of $15,000 per annum, PAYE tax deductions, and his child support payments. He suggested that he was left with about $16,000 to $17,000 per annum to live on and he suggested that that was about the pension level.
Otherwise it was put on behalf of the mother, as I understand it, that the father’s stay application was wholly unsuccessful.
The father opposes the costs order. He alleged that there were occasions when he turned up at court and that the mother’s side did not. I have referred to one date, and it was not identified by the father, when he attended and the mother did not. That was in relation to his departure application. I have already dealt with the costs sought by the mother in relation to the departure application, for 30 November. However, I do take account of the fact that the father’s application for a stay was interlocutory in nature in the course of the departure application proceedings, and therefore I accept that this is a matter that I am entitled to take into account. However, it arose before the stay application was filed, and in the circumstances I am not satisfied it is such as should weigh in the balance in determining whether the costs order should be made.
The father referred to the fact that on 30 November, as I have already alluded to, I ordered the mother to file and serve a response within

14 days and that she filed the documents well after that time limit expired. I fail to understand the bearing that that has on the costs incurred by the mother in meeting the subsequent application for a stay that was brought by the father.
It was put that the mother’s side did not attend the hearing on

19 March 2010 and the father did. But the mother's costs claim for that date has been withdrawn.
As I understand it, the father submitted that the re-listing of the matter on 17 May 2010 was in consequence of the failure of the mother’s side to attend on 19 March 2010. With that submission I agree. It was put on behalf of the mother that the failure of the mother’s representatives to attend before the Court when the Court dealt with the matter on

19 March 2010 was not their fault, but arose because of some miscommunication or misunderstanding with the court as to the time of listing on 19 March 2010.
But, be that as it may, and accepting for the moment that that is the reason for the non-attendance, I do not see why the father then should be responsible for any added costs arising from the non-attendance. However, I am not satisfied that these are in fact added costs, because no claim has been made for costs of 19 March 2010. The only way it could be argued that they are added costs is if it relates to something that could have been dealt with on 19 March 2010. The argument or the inference is that it could and should have been dealt with on

19 March 2010, but to have been dealt with on that date would have required an attendance for which a claim could be made against the father. On balance in the circumstances, I am not satisfied that there are reasons why I should disregard either the specific amount sought for costs of 17 May or why I should take this matter into account as an argument against a costs order more generally.
Ultimately then, the situation is that the mother has been put to considerable legal expense to meet an application brought by the father on 5 January 2010, which ultimately was unsuccessful and it was unsuccessful in circumstances where on the day it was determined it was not opposed. In my view, that suggests that the application was singularly lacking in merit, a comment I have already made, and that in my view is a relevant consideration in determining whether a costs order should be made. As I have already alluded to, I have regard to the financial circumstances of the father as has dealt with in the evidence that has been given already before me in the enforcement application, and I am satisfied that it is proper that a costs order be made against the father. These costs should never have been run up. They were run up because of an unmeritorious application.
ORDERS DELIVERED
RECORDED : NOT TRANSCRIBED

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Halligan FM

Date: 19 October 2010