Balakin and Dobrow and Anor

[2020] FCCA 57

FEDERAL CIRCUIT COURT OF AUSTRALIA

BALAKIN & DOBROW & ANOR [2020] FCCA 57

Catchwords:
CHILD SUPPORT – Application pursuant to s.112 of the Child Support (Assessment) Act for leave to apply for orders pursuant to s.118 of the Act – child support assessment periods more than 18 months old – application for leave to apply granted.

Legislation:

Child Support (Assessment) Act 1989 (Cth) ss.111, 112, 117 & 118

Cases cited:

Cawthorn & Cawthorn (1998) 144 FLR 255

Hacherl & Berrios [2010] FMCAfam 688

Bagala & Bagala [2009] FMCAfam 953

Applicant: MR BALAKIN

First Respondent: MS DOBROW

Intervener: CHILD SUPPORT REGISTRAR

File Number: ADC 1304 of 2007

Judgment of: Judge Cole

Hearing date: 5 November 2019

Date of Last Submission: 5 November 2019

Delivered at: Adelaide

Delivered on: 21 January 2020

REPRESENTATION

Counsel for the Applicant: Ms Cocks

Solicitors for the Applicant: White Berman

Counsel for the First Respondent: Ms Smith

Solicitors for the First Respondent: Legal Services Commission (SA)

Counsel for the Intervener: Mr Bishop

Solicitors for the Intervener: Mills Oakley

ORDERS

1. That pursuant to s.112 of the Child Support Assessment Act 1989 (Cth) leave is granted to the applicant to apply for a departure order for the period 1 July 2013 to 11 January 2018.

2. That the applicant and first respondent provide informal disclosure within twenty-one (21) days NOTING the first respondent has requested a number of specific documents.

3. That the proceedings are adjourned to 18 February 2020 at 9:30am for directions.

4. That the applicant’s departure application be listed for hearing on 2 April 2020 at 2:15pm, NOTING that the enforcement application remains adjourned pending the outcome of the departure application.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 1304 of 2007

MR BALAKIN

Applicant

And

MS DOBROW

First Respondent

And

CHILD SUPPORT REGISTRAR

Intervener

REASONS FOR JUDGMENT

Introduction

1. The applicant seeks a departure order in respect of various child support assessments concerning the children Ms B born in 2000 and Mr C born in 2001 for the periods between 2013 and 2018.

2. The applicant brings this application before the Court following the institution of enforcement proceedings by the Child Support Registrar (‘the Registrar’) on 27 September 2018 in respect of his outstanding child support debt and ensuing costs.[1]

   [1] Intervener’s Affidavit filed on 4 September 2019 at [8].

3. In reply to the applicant’s subsequent departure application, the Registrar filed a notice of intervention and response contending, on the basis of its original assessments, that the applicant has an outstanding debt of $18,384.18 comprising arrears and penalties.[2]

   [2] Intervener’s Affidavit filed 4 September 2019 at [8].

4. In her response, along with the Registrar, the respondent seeks orders that the father’s initiating application filed on 12 July 2019 be dismissed and that the debt as calculated by the Registrar be enforced against the applicant.

5. Orders were made listing the matter for argument on 5 November 2019 with both the enforcement proceedings and the leave to apply for departure orders being listed contemporaneously.

6. It was agreed between the parties that oral argument would be heard only in respect of the leave application pursuant to ss.111 and 112 of the Child Support (Assessment) Act 1989 (Cth) (the ‘Assessment Act’) with the departure order application pursuant to ss.117 and 118 of the Assessment Act to be heard at a later date.

7. Orders were made reserving Judgment in respect of the departure application and the enforcement proceedings were adjourned to 18 February 2020 at 2:15pm.

8. For the Reasons that follow, I find that leave should be granted for the applicant to apply for departure orders.

Background

1. The father is a tradesman and currently 44 years of age.

2. The mother is casually employed and currently 43 years of age.

3. The parties married in 1999 and were finally separated in 2001 on the father’s account, and 2002 on the mother’s account.

4. There are two children of the relationship, namely Ms B who is aged 19 this year and Mr C who is aged 18 this year.

5. Following separation, the respondent registered for child support with collection of the payments commencing on or about 12 October 2006.[3]  Child support ended on 24 August 2019 when the youngest child, Mr C, turned 18.

   [3] Ibid [5].

6. Parenting orders were made on 4 June 2014 before Judge Mead (as she then was) which provided for amongst other things the children to live with each parent on a week about basis.  Despite these orders, there remains a dispute as to the actual care arrangements for the said children during the relevant period.

7. Enforcement proceedings for child support were filed on 27 September 2018.  The applicant filed an initiating application on 12 July 2019 seeking departure orders in respect of child support assessments.

The evidence

1. The applicant seeks to rely on:

   a)His initiating application filed on 12 July 2019;

   b)His affidavit filed on 4 July 2019; and

   c)His affidavit filed on 12 July 2019.

2. The Registrar seeks to rely on:

   a)The notice of intervention filed on 4 September 2019;

   b)The response filed on 4 September 2019; and

   c)A supporting affidavit filed on 4 September 2019.

3. The respondent seeks to rely on:

   a)Her response filed on 22 October 2019; and

   b)Her affidavit filed on 22 October 2019;

4. Counsel for each party provided written submissions and addressed these orally in court.

The law

1. Section 111 of the Assessment Act provides as follows:

   (1) A liable parent, or a carer entitled to child support, (the applicant) may apply to a court having jurisdiction under this Act for leave for:

   …

   (b) the court to make an order under section 118;

   in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made

2. Upon the making of an application pursuant to s.111, s.112 sets out further considerations to which the Court must have regard before leave is granted:

   (1) If an application is made to a court under s.111, the court may grant leave for:

   …

   (b) the court to make an order under section 118.

   (2) The court may grant leave for an order to be made under section 118 if the court is satisfied that it would be in the interest of the parties to the proceeding for the court to consider, at the same time as it hears the application under section 111, whether an order should be made under section 118.  If the court does so, the applicant is taken to have made an application to the court under section 116 for such an order.

   …

   (4) In considering whether to grant leave under subsection (1), the court must have regard to:

   (a) any responsibility, and reason, for the delay in:

   (i) making an application under … section 116;

   (b) the hardship to the applicant … if leave is not granted; and

   (c) the hardship to the other party or parties … if leave is granted.

   (5) the court may have regard to any other relevant matter.

3. Overarching these considerations are the principles of equity.  In the matter of Cawthorn & Cawthorn,[4] the Court noted:

   To obtain the relief that he seeks the husband must establish to the Court that his cause is just and equitable.  One of the principle maxims of equity is “he who comes into equity must come with clean hands”.  The husband’s hands are, in our view in the circumstances of this case, very far from clean.  We would accordingly decline to grant relief…

   [4] (1998) 144 FLR 255, 266.

4. I will refer to this later in these reasons.

The relevant child support period

1. Counsel for the Registrar points out that s.111 of the Assessment Act permits an application for leave to have a retrospective departure order made in respect of a day in the child support period that is more than 18 months but less than 7 years earlier than the day on which the application is made.

2. Leave is sought in respect of the period 1 July 2013 to 30 June 2018.  The application for leave was filed on 12 July 2019.  The submission is that leave can only be granted in respect of the period 1 July 2013 to 11 January 2018.  I accept that submission.

3. The Registrar submits the intent behind restricting retrospective variations was to encourage paying parents to meet their child support responsibilities on time, seek variation to the liability in a timely manner and prevent the frustration of enforcement.

4. I am referred to the provisions of s.112(4) of the Assessment Act which requires the Court to have regard to:

   a)Any responsibility and reason for delay in making an application;

   b)Hardship to the parents if leave is or is not granted;

   c)Whether the applicant has a prima facie case for departure; and

   d)The overarching principles of equity (Hacherl & Berrios [2010] FMCAFam 688).

5. There appears to be common ground that:

   a)The child support assessments for the years ending 30 June 2014 to 2018 inclusive were calculated on an estimated income;

   b)The applicant has now filed his tax returns for the relevant periods; and

   c)The taxable income is less than the estimated income and less than the self-support allowance for all but the first year in issue.

Responsibility and Reason for Delay

1. The applicant concedes that he failed to file his tax returns.

2. He refers to his evidence of the back and knee injuries that he sustained which have the effect of restricting his ability to do his job and subsequently impacting upon his income. 

3. His evidence is that he worked as a tradesman on a subcontract basis with various builders.  Payment was irregular.

4. In addition work was not necessarily available, with a number of builders going out of business.

5. His evidence is he was experiencing bad leg and knee pain for at least three years.  This meant a reduction in his hours of work.  Tests occurred and in 2016 he found out that he had three hairline fractures in his leg.  In addition he had sustained a cyst from walking on the injury.

6. This in turn impacted upon his ability to pay for the services of an accountant to complete his tax returns.

7. He acknowledged receiving correspondence from the Department of Human Services Child Support (‘the Department’) however could not understand the letters.  Attempts to contact the Department were frustrated when he could not get through to them.

8. The Registrar submits there was plainly delay by the applicant and the responsibility for that delay lies with him.

9. His explanation for the delay is, it is submitted, unsubstantiated by any corroborating evidence and does not explain the delay in bringing the departure application until well after enforcement proceedings commenced.

10. The evidence of the mother does not provide any assistance when considering the explanation for the delay incurred by the father.

11. The best available evidence is that the father was struggling and the injuries he sustained impacted on his work which meant a reduction in employment which combined with the reduced availability of work therefore his income was reduced which had an effect on his ability to seek advice and take appropriate steps in respect of the child support issue.

12. Implicit in those submissions, is the fact that ultimately he was responsible for the delay.  However, taking his evidence at its highest he has set out reasons for that delay.

Hardship to applicant

1. There is no dispute that the assessment is based on the estimated income of the applicant.  The applicant has now filed his tax returns.  In nearly all of the assessment periods the declared income is less than the estimated income.  In a significant number of the assessment periods, the applicant’s taxable income is less than the self-support allowance, and is in fact less than the self-support allowance for all but the first year in issue.

2. This means that the applicant’s assessment is calculated on income that he did not earn, and does not have.

3. The applicant is criticised in respect of the medical information provided to the Court which it is submitted provides no insight into his conditions and their impact.  This submission requires me to assume, in the absence of evidence, that the applicant was or may have been capable of earning and did earn more than the declared amount.  I have difficulty with that submission.

4. The best evidence available to me supports a conclusion for the purposes of this issue that he did not.

Hardship to respondent

1. The respondent correctly submits that due to the applicant’s failure to engage with the system, she has had to cope without child support for a significant period.

2. She seeks payment of the arrears and there is no argument that should occur.  The issue concerns the assessment which is based on an estimated income that appears not to have been received.

Overarching principles of equity

1. The Registrar notes that the applicant ultimately seeks a departure application be made in relation to the period 1 July 2013 to 20 June 2018.  The applicant however fails to identify in the application the grounds of departure relied upon or the actual departure order sought in the event that leave is granted.

2. Whilst the criticism may have some merit, I do not have any difficulty in ascertaining from the applicant’s documents that the departure application will be made on the basis of the actual taxable income received by the applicant and/or the care arrangements for the children.

3. The criticism of the application being made in respect of the care arrangements is noted and in particular the submission that:

   a)There is no relevant ground of departure under s.117(2) of the Assessment Act;

   b)The Assessment Act creates a comprehensive scheme for the determination of a person’s percentage of care including rights of administrative review; and

   c)An increase in a person’s percentage of care can only be applied from the date of notification, and therefore any departure premised on the applicant’s failure to notify of the change in care would be contrary to the intended operation of the Act.

4. Clearly the application for a departure based on the care arrangements with the children faces some issues, which the applicant addresses in part in the written submissions supplied to the Court.  The application for departure based on the applicant’s income however remains.

5. The criticism that the applicant did not file his tax returns until 15 April 2019 and therefore must be seen as the author of his own misfortune in relation to the difficulties in assessing child support has some merit.

6. I am not convinced however that it addresses the fundamental criticism that for all but one year of the assessment periods in dispute, the applicant was receiving less than the self-supporting allowance.

7. I note the level of the applicant’s actual income is conceded by the Registrar.[5]  I also note there appears to be no controversy in respect of the total showing the comparison between the estimated income and the actual income received by the applicant for the disputed periods, that is:[6]

   [5] Affidavit of Ms D filed on 4 September 2019, [16].

   [6] Applicant’s Written Submissions, [3](f).

Year	Estimated Income ($) (by reference to page numbers from Ms D’s affidavit)		Actual Income ($)
30/06/2014	17/03/2013 – 30/11/2013 (p.56) 01/12/2013 – 24/08/2014 (p.59)	22,801 44,758	28,797
30/06/2015	01/12/2013 – 24/08/2014 (p.59) 25/08/2014 – 10/12/2014 (p.62) 11/12/2014 – 31/01/2015 (p.65) 01/02/2015 – 30/04/2016 (p.68)	44,758 44,758 24,624 28,797	8,176
30/06/2016	01/02/2015 – 30/04/2016 (p.68) 01/05/2016 – 09/06/2016 (p.71) 10/06/2016 – 21/06/2016 (p.74) 22/06/2016 – 31/07/2017 (p.77)	28,797 29,143 29,143 29,143	21,169
30/06/2017	22/06/2016 – 31/07/2017 (p.77)	29,143	22,517
30/06/2018	22/06/2016 – 31/07/2017 (p.77) 01/08/2017 – 15/03/2018 (p.80) 16/03/2018 – 31/10/2018 (p.83)	29,143 48,308 48,308	19,429

1. There is, I consider, a prima facie case to be put for a departure application.  The evidence that is now available to the Court would justify a conclusion that it is just and equitable for the applicant to put that case to the Court.

2. I am conscious that the applicant’s initiation of these proceedings followed the commencement of enforcement proceedings by the Registrar.  I am correctly referred to the authority of Bagala& Bagala [2009] FMCAfam 953 where his Honour Federal Magistrate Riethmuller (as he then was) discussed an application for leave made in response to enforcement proceedings and stated at (23):

   By waiting until the child support agency issued proceedings for enforcement before seeking a departure decision, the applicant is also circumventing the substance of the legislation scheme which provides for all departure decisions to be administrative, and only to be heard in court on appeal on the SSAT or if other proceedings are pending.  The legislature would not have expected the payee to be drawn into expensive litigation at this stage.  By waiting until now, the applicant has placed the payee in the position of facing significant legal costs or compromising her entitlements…

3. The point is well made however I am not convinced that it cannot be addressed when considering the issue of costs.

4. For the Reasons set out above and in particular the disparity between the estimated income and income received, I consider it appropriate that leave be granted for the applicant to apply for an order under s.118 of the Assessment Act.

5. I therefore make the orders as set out at the commencement of these Reasons.

I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Judge Cole

Associate: 

Date: 21 January 2020