Child Support Agency and Valentine - [2004] FMCAfam 265

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CHILD SUPPORT AGENCY & VALENTINE

[2004] FMCAfam 265

CHILD SUPPORT – Enforcement of Child Support liability – order for issue for a warrant to sell land in default – father found to have capacity to pay the arrears.

Applicant:

CHILD SUPPORT AGENCY

Respondent:

MR VALENTINE

File No:

NCM 2295 of 2000

Delivered on:

27 May 2004

Delivered at:

Newcastle

Hearing dates:

8 April & 21 May 2004

Judgment of:

Coakes FM

REPRESENTATION

Counsel for the Applicant:

Mr Bateman

Solicitors for the Applicant:

Australian Government Solicitors Sydney

Counsel for the Respondent:

Solicitors for the Respondent:

ORDERS

By way of declaration that there is owing to the Commonwealth of Australia in respect of amounts owing under Registered Maintenance Liability by the respondent father the sum of $42,667.24 as at 7 April 2004;
That the respondent pay to the Child Support Registrar the sum of $42,667.24 being $34,762.30 by way of arrears of child support and $7904.94 by way of late payment penalties;
That payment of the amounts payable in Order 2 herein be paid to the Child Support Registrar at 121 -125 Henry Street, Penrith, or PO Box 1011, Penrith 2751, by 27 August 2004;
That in the event that the respondent is in default of payment in accordance with Order 3 herein, orders be made under chapter 20, Enforcement of Financial Orders and Obligations, Pt 20.6 of the Family Law Rules 2004, that Ms Giulia Inga, the Official Receiver in the Bankruptcy District of New South Wales, for and on behalf of the Commonwealth of Australia, (“the Trustee”), to be appointed for the seizure and sale of the respondent's interest in property as follows:
(i)the real property situated at and known as Property G in the State of New South Wales, being comprised in Folio Identifier [omitted] (“the property”);
That for the purposes of sale pursuant to Order 4 herein, the respondent shall, within 14 days of being so requested in writing by the Trustee, sign all documents and do all things necessary to transfer his interest in the property to the Trustee to be held on Trust for sale and the property be forthwith sold for the best price reasonably obtainable and the proceeds of sale applied:
(i)in payment of all costs, commissions and expenses of the said Trust, transfer and sale, including all costs incurred by the said Trustee;
(ii)in discharge of any encumbrance upon the property;
(iii)in payment as to her share, either as agreed or subject to a partition order of the balance of proceeds remaining to any other joint tenant owner of the property (“joint tenant”);
(iv)in payment of the total sum referred to in O 2 herein;
(v)in payment of the residue to the respondent;
That in the event that the respondent is in default and Order 4 herein comes into operation, the Trustee or the Registrar of the Court shall be empowered pursuant to s.106A of the Family Law Act (“The Act”)to sign all documents and do all things necessary to transfer the respondent's interest in the property into the name of the Trustee;
That the respondent's interest in the property be charged with the debt set out in O 2 herein until that debt has been paid in full;
That pending further order of the Court or the prior written consent of the Child Support Registrar, the respondent is hereby restrained from making any application to withdraw any moneys from his superannuation fund in which he has an interest, including Superannuation Trust of Australia, (member number [omitted]) of Locked Bag 20, Grosvenor Place, Sydney, New South Wales, 1216;
That the Child Support Registrar is at liberty to serve a sealed copy of these orders upon any Trustee of any superannuation fund in which the respondent has any interest;
That the parties be at liberty to apply herein with respect to the terms and conditions and execution of the sale and the implementation of these orders generally;
That the father pay to the Child Support Registrar, the costs of the Commonwealth in these proceedings fixed in the sum of $3000.00, including GST, and that payment be made by 27 August 2004;
That without the prior written consent of the Registrar of the Child Support Agency the respondent, Mr Valentine, is restrained from making any application to the Westpac Banking Corporation to draw down for his own purposes or for the purposes of any other person any moneys to which he is entitled under loan account [omitted] other than for the purposes of paying moneys due by the respondent to the Child Support Agency, pursuant to the orders made today.

AND THE COURT FURTHER NOTED:

That the Child Support Registrar agrees that, providing the Respondent pays by the due date each of the following:
(a)All arrears of Child Support in the sum of $42,667.24 in accordance with the terms expressed in Orders 2 and 3 herein;
(b)The costs in the sum of $3000.00 including GST in accordance with the terms of orders 11 and 3 herein
(c)Each monthly payment of Child Support as it falls due from the date of these Orders; and
(d)Part payment of the debt in late payment penalties in Order 2 in the amount of $7,904.94 in accordance with the terms of Order 3 hereof;
The Child Support Registrar will remit late payment penalties payable in respect of the arrears of Child Support totalling the sum of $42,667.24, being the sum of $7,904.94 or such amount of late payment penalties as may then be owing.

NOTATION:

Pursuant to Rule 20.08 of the Family Law Rules 2004, these are Enforcement orders being an Enforcement Warrant, an appointment of a Receiver.
The full name and address of the payee is;
The Child Support Registrar
C/- Australian Government Solicitor
Level 23 Piccadilly Tower
133 Castlereagh Street Sydney NSW 2000
GPO Box 2727 Sydney NSW 2000.
The full name and address of the payer is;
Mr Valentine[omitted]
The total amount to be paid is;
$42,667.24

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
NEWCASTLE

NCM 2295 of 2000

CHILD SUPPORT REGISTRAR

Applicant

And

MR VALENTINE

Respondent

REASONS FOR JUDGMENT

These are proceedings brought by the Child Support Agency to enforce arrears of child support due by the father in these proceedings. The father is Mr Valentine. The enforcement proceedings were commenced by the filing of an enforcement summons on 12 August 2003. The then liability was $26,551.54 as at 23 July 2003.
At the time of the hearing on 8 April 2004, arrears and penalties together amounted to $42,667.24. At the hearing on 8 April 2004,

Mr Bateman, counsel instructed by the Child Support Agency, tendered a certificate issued pursuant to s.116(2) of the Child Support Registration and Collection Act. That became exhibit CSA1 in the proceedings. The total amount of $42,667.24 was made up as to arrears of $34,762.30 and late payment penalties totalling $7904.94. That certificate is conclusive evidence of the amount owed to the Child Support Agency by the father, Mr Valentine.
As to background, child support assessments were made against the father in respect of four children, [W], 17; [X] 16; [Y] 14, and [Z] now 12.
A decision was made by the Child Support Registrar on 9 September 2000 following an application by the mother to return the child support payable by the father to an annual rate of $9600.00. For the period commencing 10 December 1999 the father had been assessed to provide annual child support of $4347.00 based upon his estimated income of $23,004.00.
As a consequence of the Child Support Registrar's decision of

9 September 2000, the father was assessed for the period from

10 December 1999 to 30 June of 2002 as having a child support income amount of $39,000.00 per annum.
The father then sought a departure order for the period 14 December 1999 to 30 June 2004. That matter came before Magistrate Jackson in the Newcastle Local Court of New South Wales and the father's application for a departure was refused on 12 December 2002. The father's current child support liability is $789.25 per month or $182.13 per week.
As to the evidence in the proceedings, I have read and take into account, the enforcement summons issued by the Child Support Agency on 12 August 2003, the affidavit of Ms D filed 12 August 2003, she being a public servant and in the employ of the Child Support Agency, and setting out the various relevant assessments and the calculation of the arrears.
The affidavit of Ms H, filed 21 October 2003, a person in the employ of the Child Support Agency, also setting out following her examination of the records held by the Child Support Registrar the amounts owing and various assessments for the relevant periods.
I have also read and take into account and to which I will refer shortly, the father's financial statement filed 24 September 2003 and his affidavit filed 10 October 2003.
There were a number of exhibits in the proceedings which comprised the certificate under s.116(2), to which I have referred, a title search in respect of the real property at Property G of which the father in these proceedings and his present wife, Ms W, are the registered proprietors as tenants-in-common in equal shares. As at 7 April 2004, such title search showed a mortgage, registered number [omitted] to Westpac Banking Corporation.
Also exhibited during the course of the proceedings is the Judgment, bar one page, which seems not to make any significant difference, of the Judgment of Magistrate Jackson of the Local Court at Newcastle on 12 December 2002. That exhibit also comprises the Child Support Registrar's notice of decision of 9 September 2000 to which I have referred.
Exhibit 4 is the Summary of Costs claimed by the Child Support Agency and to which I will refer later. Exhibit 5 is an earlier title search of 23 September 2003 in respect to the same real property at Property G of which the father and his present wife are owners as tenants-in-common in equal shares. That showed a mortgage number [omitted] to HSBC Bank Australia Limited.
Exhibit 6 was a copy of an application made by the father and his present wife to the Westpac Banking Corporation for a loan, and exhibit 7 was a letter from the Westpac Banking Corporation to the father's wife in relation to approval of the loan and disbursement of that loan. Exhibit H1 in the proceedings is an unsigned affidavit by the father tendered during the course of the proceedings.
It is the father's case that he does not agree with the amount now claimed of $42,667.24. The father asserts that the amount which he is liable to pay is the amount referred to in the enforcement summons, to which I have referred. I cannot concur with the father's submission in that respect and it was a submission he made during the course of the hearing. The certificate pursuant to s.116, exhibit CSA1, is conclusive proof of the amount owed to the Child Support Agency.
On 24 September 2003, an order was made by consent that the father pay $400.00 per month to the Child Support Agency from 7 October 2003. The evidence establishes that he paid one payment of $400.00 on 9 October 2003, one of $400.00 on 7 January 2004 and possibly one further payment, but that was the extent of the payments he had made pursuant to that order.
The consent order of 24 September 2003 provided a restraint pending further order or the prior written consent of the Registrar of the Child Support Agency. The father was restrained from disposing of, transferring, leasing, assigning or further encumbering any interest he has in any real property, whether he is the beneficial owner or trustee, including folio identifier [omitted].
It is common ground that the folio identifier, to which I have referred, is the land at Property G owned by the father and his present wife as tenants-in-common in equal shares.
A further injunction was made restraining the father from making any application to withdraw any moneys from his superannuation fund.

I need not refer further to that order in these proceedings. There is no evidence before me that the father has withdrawn any such moneys. The further injunctive orders were made on that day and further procedural orders.
On 29 October 2003 further orders were made by consent, and in particular a notation that Order 1 to Order 6 of 24 September 2003 remained in force and extended to the said hearing date. The hearing date in the orders of 29 October 2003 is said to be specifically

17 February 2004, that is, the hearing of the enforcement summons; it was listed for hearing on 17 February 2004.
The relevance of the notation was that Order 1 contained, amongst other things, the injunction restraining the father from disposing of, transferring, leasing, assigning or further encumbering any interest he has in any real property, including the land at Property G.
The father's occupation in his Form 17 is that of a [tradesman]. It is common ground that he is employed by [R] which has its registered office at [omitted] in Newcastle. It was his oral evidence, when cross-examined by Mr Bateman, that he is the only shareholder in [R] and that his present wife is a director. The father and his present wife married [in] 2003.
As at 23 September 2003, the real property at Property G was subject to a mortgage to HSBC Bank Australia Limited, to which I have referred; exhibit CSA5.
In January of 2004, the father and his present wife made an application to the Westpac Banking Corporation for a loan, for a sum of money. In such application the father's present wife is the primary applicant and the father is the co-applicant.
As disclosed in exhibit CSA6, the father and his present wife relied upon, in support of their application for a loan, their present joint assets and their combined income. The father discloses in such application a base monthly net income of $1448.00 or $334.00 per week. He discloses on such application, in his assets, $85,000.00 by way of property, life insurance or superannuation of $20,000.00 and furniture and personal effects and other (assets) at $51,000.00; a total of $156,001.00. That figure is not denied by the father during the course of his evidence. The income he discloses is inconsistent with his Form 17 to which I have referred. He there shows a gross weekly income of $534.00 and a tax liability of $134.00 and a superannuation payment of $50.00 per week. That leaves a net income of $350.00 per week. He discloses in his form 17 a nil value against all other assets, apart from realty and except for household effects of $100.00. To that extent, the form 17 is inconsistent with the loan application.
In the portion relating to liabilities the father discloses no liabilities at all. The liabilities are disclosed by his present wife. They comprise a mortgage, or a secured liability of $180,559.00; other instalment loans, personal loans or leasing of $48,695.00 and lines of credit of $2859.00. Those liabilities together total $232,113.00. But in his form 17 the Father shows his liabilities as totalling $136,250.00 including mortgage on the home at Property G HSBC, - $84,000.00; Other mortgage Property G Westpac Wallsend - $46,000.00; income tax due 11 June 2003 $1750.00; Solicitors fees - $4500.00.
In support of the application for a loan the father and his present wife disclosed two parcels of real property, one at Property S and the other at Property G, that being the property to which I have referred already.
The property at Property G is assessed as having a market value of $170,000.00. That is not inconsistent with the figure disclosed as the Father's interest in his statement of financial circumstances. It is significant however that the father did not disclose as a liability in Exhibit CSA6 the amount he owed to the Child Support Agency, which as at September of 2003 he knew to be some $26,500.00 pursuant to the enforcement summons which it issued and it had been served upon him.
I am satisfied on the evidence before me that the father's present wife is the proprietor of the property at Property S. The Father says he has no proprietary interest in that property.
On 13 February 2004, the Westpac Banking Corporation wrote to the father's present wife setting out the approval of their loan on

10 February 2004 in an amount of $267,000.00. Set out in that letter, which became exhibit CSA7, is how the loan was disbursed. In particular, an amount of a little more than $171,000.00 was paid to discharge mortgage to the HSBC Bank Australia Limited mortgage and an amount of $24,600.00 odd, was applied to a loan payout, and an amount of a little less than $7000 was paid to the Legal Aid Commission and the surplus funds of $62,638.73 were paid to a loan account[omitted].
The minimum monthly payment in respect of the new loan from WBC is $1674.00 as at the date of the letter and the first payment was due on 10 March 2004. Subsequently, and this forms part of the same exhibit, the bank wrote to the father's present wife indicating an increase in the loan repayment required per month to $1715.00 first due on 10 May 2004.
In the father's statement of financial circumstances sworn

24 September 2003, he refers to his liability to make a mortgage repayment to HSBC of $160.00 per week and a loan account to the Westpac Banking Corporation of $77.00 per week. That is a total of $237.00 per week.
There is no evidence before me of the amount the father presently pays towards the current mortgage to Westpac Banking Corporation, that being the new loan taken out earlier this year, to which I have referred.
It seems to me on the father's evidence that he has, not surprisingly, mixed his financial affairs with those of his present wife who is in paid employment, as referred to in the loan application to the bank. Between them they can jointly meet their liabilities and in all probability combine their respective joint incomes. However, it is with the father and his financial circumstances that I am concerned.
The father made a proposal, in effect, to pay the Child Support Agency a lump sum of $10,000.00 and then a further amount by way of child support and discharge of his current outstanding liabilities. Unfortunately the father may have misconceived the nature of these proceedings and for these reasons. These proceedings are purely and simply an enforcement summons, that is, an inquiry into the father's financial circumstances and then an assessment of the ability he has to meet the arrears of child support in the manner in which the Child Support Agency proposes. The Child Support Agency proposes a period of grace to the father, in three months that is, to pay the amount currently due by way of arrears and penalties.
It seeks orders that if the father fails to pay that three month period then his interest in the property at Property G would be sold. He owns that property, as a tenant-in-common in equal shares with his present wife. It is subject to a mortgage to the Westpac Banking Corporation.
The Child Support Agency seeks orders for sale and these are set out in the notice which became the orders sought by the Child Support Agency at the commencement of the hearing and a copy of which I was told and I am satisfied was given to the father at the commencement of the proceedings.
In the meantime the father's interest in the property is charged with a debt, that being the current arrears, and the father is restrained from making any withdrawal from his superannuation fund under the orders proposed by the Child Support Agency.
The proposed orders go on to provide the penalties could be remitted if the father complies with the existing assessment to pay child support, pays the arrears, which includes the penalties, and pays costs and continues to pay the child support currently due.
The misconception on the part of the father seems to me to be that I can require payment of a lesser sum than the current arrears. The father has not brought in these proceedings a departure application. Consequently I am not able to accede to his request to pay the amount of $10,000.00 and further arrears by instalments.

It remains open to the father to seek a further departure order, if he so wishes, after having gone through the usual procedure which is required of a person liable to pay child support, and that is initially by way of an application to the Child Support Registrar. The father remains in current employment and that was his evidence during the course of his cross-examination.
The father was cross-examined about the loan and the surplus funds and the father's evidence was that at the time of the loan application to the Westpac Banking Corporation he knew of his liability to pay child support.
The father submits that he was not in breach of the order made on

24 September 2003 which restrained him from, in particular, further encumbering any interest he had in the land at Property G. Certainly the effect of the application to the Westpac Banking Corporation was to secure a greater amount over the Property G property than had previously been secured by virtue of the mortgage to HSBC.
The father's submission, which I accept, is that the enforcement summons was listed here on 17 February. The injunctive order was extended to such hearing date, and there is no evidence before me that on 17 February 2004 the injunction was continued. The only orders made on 17 February 2004 were that a further consideration of the matter be adjourned to 8 April 2004. However, the father well knew that there had been a restraint in place, and it was on 13 February 2004 that WBC wrote to the Father's present Wife setting out the establishment of the new loan account on 10 February 2004 and that as directed, the bank had made certain payments on the day the loan account was opened, that is 10 February 2004 (See Exhibit CSA7). The substantive payments are referred to in paragraph 29 above.
The father's evidence adduced during cross-examination is that there is currently a balance of moneys available to be drawn in respect of the loan. The advance provided for in round figures, a limit of $260,000.00, was drawn to about $220,000.00 in round figures, and that left a surplus amount of about $40,000.00. The father gave evidence of how some moneys had been spent.
The father conceded but later resiled from a proposition that he could write a cheque today for the balance of moneys available in that withdrawal facility. The evidence was that as of 8 April 2004 there were available funds of $38,530.56 which could be accessed.
The father then claimed that he did not handle the financial transactions for the family and that his present wife looks after all those matters. He gave evidence there was no chequebook, that he did not have one, and any withdrawals of money were effected by using bank cheques.
On the evidence, I find that the father does have the capacity to pay the amount presently due and owing to the Child Support Agency. That capacity arises from at least two sources.
First, he is in regular employment and there is no evidence before me of the amount which he contributes, if any, to the present mortgage over the Property G property. I have referred to the amount of income tax and superannuation payment together totalling $184.00 which the Father pays. In his form 17 he refers to weekly payments for income tax of $134.00 and superannuation of $50.00. He then refers to a weekly payment of $160.00 to HSBC, which amount the Father no longer pays, consequent upon the discharge of the mortgage to HSBC as referred to in paragraph 29 above. The Father discloses a loan repayment to Westpac Bank of $77.00 per week. There is no evidence before me that the Father has any continuing liability to pay a Westpac Bank loan as this appears to have been discharged when the further loan was obtained from Westpac Banking Corporation and an amount of $24600.00 odd was applied to a loan pay out as referred to in paragraph 29 above. The Father then refers to a weekly payment of $197.00 by way of Child support for [W], [X], [Y] and [Z] but the evidence before me is that the Father is not paying Child support in such an amount, or at all at the present time.
Second, I am satisfied the father has equity in his interest as a one half share in tenant-in-common in the land at Property G.
I am satisfied on the evidence that there is a withdrawal facility pursuant to the mortgage to Westpac Banking Corporation as at 8 April 2004 of approximately $38,500.00 in available funds in round figures. I am satisfied on the evidence that the father and his present wife have merged their financial affairs, it seems to me, to pay respective liabilities and live as a single economic unit. The evidence does not establish as to whose liability they were as between the father and his present wife, at the time of the loan application to Wetspac Banking Corporation.
That is not to say the father's present wife can be made liable for any portion of the current child support arrears owed by the father. She cannot and quite properly that is the case. Nevertheless, I am satisfied on the evidence that the father does have that capacity.
I propose to make orders largely in accordance with the orders sought by the Child Support Agency.
So far as the relevant law is concerned, Part IV of the Child Assessment Act (1989) provides a mechanism whereby a parent can make an application for an administrative assessment to be made by the Child Support Registrar for the payment of child support.
Section 31 provides that the liability to pay child support arises on the acceptance of an application. Jurisdiction under the Assessment Act is conferred upon the Federal Magistrates Court by virtue of s.99 of the Assessment Act. Section 100 provides that the Family Law Act and the Rules of the Court apply.
Under the Child Support (Registration and Collection) Act of 1988 (“The Collection Act”) once an assessment has been made by the Registrar, under that assessment a registrable maintenance liability arises, and those particulars’ are required to be inserted in the Child Support Registry.
The registrable maintenance liability means a liability under s.17 of the Collection Act (s.4). Section 17(2) provides a liability arising under a child support assessment is a registrable maintenance liability.
If the liability is registered under the Collection Act, s.30 makes the amounts payable under the assessment a debt due to the Commonwealth and in accordance with the particulars of the liability entered in the Register.
Section 67 of the Collection Act goes on to provide for penalties in the event that child support is unpaid.
The Federal Magistrates Court has jurisdiction in matters involving enforcement of unpaid child support liabilities. Section 113 allows the Child Support Registrar to recover debts due to the Commonwealth via a Court having jurisdiction under the Child Support (Registration and Collection) Act, and this Court has such jurisdiction (s.104)
I have referred to the s.116(2) certificate which establishes the amount payable. The evidence of the Child Support Officer, Ms H, is conclusive evidence of the entry in the Child Support Register.
An enforcement summons was issued under Order 33 of the Family Law Rules as they then were and that sets out the procedure for the enforcement of an obligation.
Those rules now form part of Chapter 20 of the Enforcement of Financial Orders and Obligations under the amended rules and r.20.07 is applicable, and that sets out the general enforcement provisions of the Court.
I am satisfied there is an obligation. I am satisfied that these proceedings relate to the recovery of a debt due to the Commonwealth.
The Court may order the payment of an amount found to be owing under the obligation and enforce the obligation by an enforcement warrant under rule 20.05. Under that warrant real or personal property may be seized and sold.
Under the former rules Order 33 rule 2(5) enabled an obligation to be enforced by one of several means. They were a garnishment order; an order for seizure and sale of personal property; an order that the estate of a person be sequestrated and an order for the sale of real property.
Pursuant to Pt 25B of the Federal Magistrates Court Rules, rule 25B.05 provides that Order 33 other than rule 10 of the Family Law Rules apply in this Court with the necessary changes to Family Law or Child Support proceedings in the Federal Magistrates Court. I am satisfied that this power now extends to r.20.05 of the Family Law Rules.
I am satisfied on the evidence that the father has the capacity. He has property. He has a facility to pay the amount owed. I propose as I have said to accede to the orders sought by the Child Support Registrar.
In proceedings of this nature it is a question now of recovering the money which is due and owing and the amount of which has not been varied.
These are enforcement proceedings consequent upon the father's failure to pay child support in accordance with assessments against him and which were the subject of a departure application by him which was unsuccessful.
The primary rule is that in proceedings each party pays his own costs and I have been referred to section 117 of the Family Law Act. However these are proceedings in which it is appropriate the father make a contribution towards the Child Support Agency's legal costs.
I am then required to take into account the matters under section 117(2)(a). The financial circumstances of the father on the evidence before me did not indicate that he has surplus funds available to meet a substantial order for costs.
His income is set out in a statement of financial circumstances and he has responsibilities to support himself. He also has a responsibility to pay child support and he has some responsibility to meet a mortgage liability to Westpac Banking Corporation secured by his interests in real property which he owns with his present Wife.
I accept the father's evidence in his form 17 to which I have referred as to the income available to him. However, he does have surplus funds available to him by way of surplus income and moneys borrowed from the bank and he went through a course of refinancing to achieve that outcome, a consequence of which was that more money was borrowed pursuant to the second loan than was owed under the previous loan or loans.
As to the father's conduct, he has failed to pay child support and failed to pay the further amounts agreed to be paid by him pursuant to the orders of 24 September 2003. It is unfortunate the proceedings were not completed on the first occasion.
Having regard to the nature of the proceedings it is not a matter which is unduly complex by itself and I find that an appropriate amount to be allowed for costs is $3000.00 inclusive of GST.

I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Coakes FM

Associate:

Date: