Caley and Wreford
[2008] FMCAfam 303
•18 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CALEY & WREFORD | [2008] FMCAfam 303 |
| FAMILY LAW – Child maintenance – application to discharge arrears – father’s dire financial position – no fund from which arrears can be paid. |
| Family Law Act1975 (Cth) s.66W(2) |
| Kelly & Kelly (1996) FLC 92-680 Cameron & Helie [2004] FMCAfam 685 Spry & Roet (1977) FLC 90-301 Mathieson v Hamilton (2006) FMCA Fam 238 Hamilton v Nowak (1988) FLC 91-981, (1988) 12 Fam LR 704 |
| Applicant: | MR CALEY |
| Respondent: | MS WREFORD |
| File number: | HBC 495 of 2007 |
| Judgment of: | Roberts FM |
| Hearing date: | 18 March 2008 |
| Date of last submission: | 18 March 2008 |
| Delivered at: | Launceston |
| Delivered on: | 18 March 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr McGuire |
| Solicitors for the Applicant: | Ian Guest & Associates |
| The Respondent was not represented by a lawyer |
ORDERS
That any arrears of maintenance payable by MR CALEY pursuant to orders of the Family Court of Australia of 3 June 1991 are discharged.
IT IS NOTED that publication of this judgment under the pseudonym Caley & Wreford is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
HBC 495 of 2007
| MR CALEY |
Applicant
And
| MS WREFORD |
Respondent
SETTLED EX TEMPORE REASONS FOR JUDGMENT
The application
The application before the court was filed by MR CALEY (“the father”) on 18 September 2007, in which he seeks an order that arrears and penalties in relation to maintenance payments for the two children be discharged. As indicated earlier, I do not believe I have the power to discharge any penalties. However, it has been my experience that, if arrears are discharged, the Child Support Agency generally waives the penalties.
The Respondent to the application is MS WREFORD (“the mother”) and the parties are the parents of K born in 1985 and R born in 1986.
The maintenance order
The maintenance is payable pursuant to orders made by consent in the Family Court of Australia in 1991. At that time the parties’ lawyers, Bay Legal Practice on behalf of the mother and her then husband,
Mr Milne, and McGrath Guest on behalf of the father, had signed a consent memorandum on 22 May 1991 and Registrar Court made orders in terms of that memorandum on 3 June 1991.
I will say at this point that the consent memorandum was unusual, in that the parties to the action were the mother and her then husband, and the father. The orders provide that:
·The mother and Mr Milne would have joint custody and guardianship of the children;
·the father would pay $50 a week ($25 a week per child) by way of maintenance until such time as the children reached the age of 18, with a proviso that if the father became unemployed at any time the payments would cease until re-employment; and
·the maintenance would be indexed in accordance with the inflation factor in the regulations to the Child Support (Assessment) Act 1989.
There was also a somewhat unusual provision that the respondent father be granted access to the children as mutually agreed between him and the Milnes “provided that it is a condition that he be introduced to the children as their natural father and be known by his first name”.
I will say no more than that the first order which provided guardianship and custody to the Milnes simply on the basis of a consent memorandum would not be made today. However, it is the maintenance order that I am dealing with in this matter (“the order”).
It is clear, not only from the law but also from the order, that the final date upon which maintenance would be paid was the 18th birthday of the younger child, R, and therefore the liability to pay maintenance ceased on 15 November 2004.
Background
The catalyst to the application was an Enforcement Summons issued by the Child Support Registrar on 13 April 2007. That document claims that as at 12 April 2007 the father was indebted to the Commonwealth for $7,846.14 by way of maintenance and a further $7,011.92 by way of late payment penalties.
I say it was the catalyst because it is quite clear that the father then made his application to have the arrears discharged. It was also clear this morning that the logical order in which to deal with matters was firstly to deal with the application to discharge the maintenance arrears. That is because if there are to be no arrears then the Child Support Registrar would presumably not seek to proceed with the Enforcement Summons.
Documents and evidence
The documents that I have had before me are the Application, an affidavit and a Financial Statement by the father filed on 18 September 2007. He also gave oral evidence.
There was no Response filed on behalf of the mother. However, there was an affidavit which had been prepared by her then lawyer, as well as a financial statement, both filed on 11 December 2007. Notwithstanding that there was no Response filed, it was clear that the mother was opposing the discharge of the arrears.
The father gave evidence about his current financial situation which his counsel described as “dire”. He gave detailed evidence as to his liabilities primarily in relation to the transport business that he and his wife operate. It appears from the evidence before me that it is subject to contracts with Gxxx Ltd, and he has purchased equipment with the assistance of finance. In addition he has a home loan of $196,147.
I will not detail all of the liabilities that he has. He has set them out in detail. CBFC, Esanda, the National Australia Bank and Flexirent (a personal loan of another $20,000) are all owed money relating to his business. When I add up all of those liabilities (including the home loan), they are just short of one million dollars, being $986,946. That is an awful lot of money in fixed liabilities.
In addition, he has continuing liabilities of the business which he and his wife operate. He detailed a number of accounts today for oil and mechanical matters, accountants, Telstra and the like; all of which added up to $31,928.
His evidence was that he purchased his transport business in June 2005 with contracts with Gxxx Ltd. Although, he did not use the words, his evidence was essentially that he regrets having done it. He says that he does not have any money from which he could pay arrears.
The mother gave evidence of her financial position, which is not good either. She has debts essentially relating to a motor vehicle, a personal loan and also a credit card.
She is employed but she says that, since she swore her Financial Statement on 7 December 2007, her situation has deteriorated in that she is earning less per week than she was then. She said that that was up to $200 a week less and she was at that time earning $640. Although her evidence was that it varies from fortnight to fortnight depending on the number of hours that she works.
There was disputed evidence by the parties about the enforcement or the attempts at enforcement of the arrears. The father said in paragraph 8 of his affidavit:
I had no contact with the children until about nine years ago when I received a telephone call from Ms Wreford when she advised me that she did not want any more Child Support. She told me that she and her Husband owned a business in Hobart. I subsequently received a nil assessment from the Child Support Agency about three or four weeks after she phoned.
He then goes on to say:
About three years ago I started to receive demands for payment even though liability for K had ended and that for R was almost coming to an end. I believe from what Ms Wreford told me that she had separated from her then Husband although she did not disclose to me any of the financial circumstances.
Although there was disputed evidence in relation to the telephone call nine years ago, as to whether the mother said or did not say that she did not want any more Child Support, it seems to me that it is quite possible that a nil assessment nine years ago could have been just as likely to do with unemployment as any other reason.
Discussion
I was referred to a number of decisions and I should refer to them now.
Mr McGuire referred me to Kelly & Kelly[1]. I will not go to the full detail, but it is clear that in the headnote the CCH editors summarise what their Honours Baker, Lindenmayer and Hannon JJ had to say:
Litigants having the benefit of orders for the payment of expenses in relation to their children cannot sit back and allow them to accumulate without informing the person having the obligation to pay. The husband was entitled to arrange his affairs on the basis of his known obligations.
[1] (1996) FLC 92-680
Although that decision related to the payment of private school fees and the like, it seems to me that in principle it is as applicable to the payment for private school fees as it is to payment of a maintenance liability.
I was also referred to the decision of my brother Federal Magistrate Scarlett in the decision of Cameron & Helie[2]. His Honour said this at paragraph 97:
It appears to me that the mother is seeking some form of compensation for the fact that she had to bring up her son without the support of the Applicant, even though she had the generous support of her own mother. The purpose of “maintenance”, which is a term with a very wide scope, has been defined by Dr. Anthony Dickey QC in his text, Family Law (4th ed.) at page 456 in this way:
It signifies any form of material provision that will enable an adult to live a normal life and a child to be brought up properly.
[2] [2004] FMCAfam 685, delivered on 26 November 2004
He went on to say in paragraph 98:
Child maintenance arrears are not to be used as some form of lump sum compensation to a party long after the need for the child to be maintained has passed.
Then he quoted from the decision of Kelly to which I have already referred. He went on to discuss those matters further from paragraph 101 onwards and dealt specifically with section 66W(2), which is the section upon which the father is relying today.
He also referred in paragraph 103 to the decision of Frederico J in Spry & Roet[3]. That was a decision in which Frederico J was dealing with spousal maintenance, but it seems to me the principles are the same. His Honour said at page 76,593:
It is thus clear that the Court has a discretion not only as to the period in respect of which accumulated arrears under an order for periodic maintenance will be enforced, but as to whether they should be enforced at all.
Despite the general practice of limiting enforcement to a period of only twelve months, there are cases in which, having regard to the circumstances, the court will enforce payment of arrears of maintenance falling due over a more lengthy period.
…… the court should be very cautious not to encourage people against whom maintenance orders have been made to sit back and disobey those orders and keep on disobeying them hoping for the best. .
[3] (1977) FLC 90-301
Mr McGuire referred me to what used to be known as “the twelve month rule” and for his benefit I refer to a decision of another of my brothers, Federal Magistrate Walters, in Mathieson v Hamilton[4]. It is a very lengthy decision. To save anybody reading far more than they need to he commences at paragraph 193, and dealing with “the twelve month rule” he says:
By 1986, however, the tide had begun to turn (as it were). In Truscott (1986) FLC 91-761, the Full Court said:[5]
Although the recognition accorded it in the past varied from State to State …, the “ 12 months rule” is a useful practice approach in maintenance enforcement proceedings which has been expounded on in a number of reported cases over the years, both here and in England… However, it is not a “rule” in any strict sense and must give way to the circumstances of each case when those circumstances warrant it.
[4] (2006) FMCA Fam 238
[5] At page 75,567.
Walters FM went on to refer to other decisions, including that of Hamilton v Nowak[6] in which Mullane J declined to apply “the twelve month rule”. Mullane J’s reasons for doing so included the following:
a)the husband's reasons for having ceased the payment for maintenance were inadequate;
b)the husband's conduct was such that the court could conclude that the frustration of the relevant maintenance order was his main motivation for concealing his precise whereabouts from the wife for a period in excess of two years;
c)the wife and the children had been living throughout the period of the arrears in circumstances of serious need. The wife had maintained the children alone and had to refinance the mortgage alone on their home;
d)the husband was in no doubt throughout the relevant period that the wife was seeking payment of all arrears;
e)the wife had made all reasonable efforts to collect arrears through the relevant period;
f)the husband had not been open and frank in relation to his financial decision.
[6] (1988) FLC 91-981, (1988) 12 Fam LR 704
In my view not very many of those reasons are applicable here.
Certainly the court could not conclude that frustration of the maintenance order was the father's main motivation. He had not hidden his precise whereabouts from the mother. In that respect I have some doubts about the mother's evidence in relation to his whereabouts. I conclude from her evidence that she was still in touch with his family and, had she made any effort, she could have found out where he was. She did so nine years ago quite easily and it seems to me that she could have done so at other times.
She gave conflicting evidence in relation to the filing of tax returns by the father. The suggestion initially in her own evidence was that she had been told that the father could not be found because he had not filed any tax returns. She backed away from that a bit when she was confronted with a list of withholdings of income tax refunds over a period of years. In addition, when she wanted to she was able to contact him by making inquiries through his family.
I have no evidence that the mother was living throughout the period of arrears in circumstances of serious need. These arrears are now in excess of three years old, in that no maintenance has been payable since 15 November 2004, and when the application was filed the enforcement summon was filed they were two and a half years old.
The evidence of the mother does not fall into the same category as that that was before Mullane J in Hamilton v Nowak. There is no evidence that the mother had to refinance a mortgage or anything of the like. Indeed the debts that she gave evidence about are debts that have been incurred since and are not debts that have arisen solely because she had to maintain the children.
The evidence in relation to whether or not the father knew that the arrears were payable is in my view a little confusing. There seems to be no dispute that approximately three years before he swore his affidavit, at a time when maintenance was not payable any more for K but was still payable for R and about to come to an end, the efforts to collect maintenance increased a bit.
There seems to have been some contacting of the Child Support Agency by both parties. However, in my view, there were not any vigorous attempts on behalf of either the mother or the Child Support Agency to collect the money until such time as the Enforcement Summons was filed.
I generally accept the mother’s version that she did not say to the Child Support Agency; “Look, well, if there’s some there I’ll have it. That will be nice.” I accept her evidence that she always knew there were some arrears payable and that she was relying on the Child Support Agency to collect it.
In the decision of Mullane J of Hamilton v Nowak he referred to the fact that the husband had not been open and frank in relation to his financial position. I do not find that at all in relation to this case. There is no suggestion that he is hiding anything or that he has got “a pot of money” somewhere. Consequently, that is not applicable in this particular case.
Conclusions
Section 66W(2) of the Family Law Act 1975 refers to the retrospective discharge or variation of an order and states (in part):
If arrears are due under such an order when the order ceases to be in force, the court may, by order, retrospectively:
(a) discharge the order if there is just cause for doing so; or
(b) vary the order so as to increase or decrease the arrears to be paid under the order if the court is satisfied that:
(i) the circumstances of the person liable to pay the arrears are such as to justify the variation; or
(ii) the circumstances of the person entitled to receive the arrears are such as to justify the variation; ……
Clearly, the court has power to discharge the order and the arrears.
In this particular case it seems to me that the main deciding factor is that there is no fund from which the father can pay these arrears.
There is no evidence before the court that the mother’s debts have increased arising out of her support of the children. I am not being critical of her in any way. We all know it is expensive to raise children and clearly she was doing that with little financial support from the father. However, it appears that she did have financial support from other partners from time to time, and it would appear that at the time that the order was made she was receiving support, not only financial but other support from Mr Milne to the point that he would become a guardian and custodian of the children. As I have said that is type of order that I would take some convincing should be made today.
Overall, however, there is no fund from which these arrears can be paid. I accept that the father’s financial position is “dire” and that he and his wife are having great difficulty in meeting their liabilities to banks and lending organisations. Even if my maths is wrong the figures are fairly dramatic.
I think I can take judicial notice of the fact that interest rates are rising and the likelihood is that interest rates will continue to rise for a little while yet. That will only make the father's position even more “dire” than it is today.
When I look at the financial positions of the parties it seems to me that the financial position of the father is considerably worse than that of the mother, although I do not for a moment say that the mother’s financial position is good. I just say that the father's financial position is worse. On that basis I am of the view that the arrears should be discharged.
As I have indicated I will be discharging the arrears under the order. However, I do not need to discharge the order itself because it is an order that is no longer operative.
I certify that the preceding forty six (46) paragraphs are a true copy of the reasons for judgment of Roberts FM
Associate:
Date:
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