CHILD SUPPORT REGISTRAR & AGNES

[2015] FCCA 570

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHILD SUPPORT REGISTRAR & AGNES [2015] FCCA 570

Catchwords:
CHILD SUPPORT – Enforcement of child support debt – ex parte hearing – debtor’s capacity to pay child support debt – costs orders against debtor.

Legislation:
Child Support Registration and Collection Act 1988, s.166(2)
Federal Circuit Court Rules 2001, r.13.03C
Family Law Act 1975, s.117

Hendy & Deputy Child Support Registrar & Webb [2001] FamCA 632

Applicant: CHILD SUPPORT REGISTRAR

Respondent: MR AGNES

File Number: MLC 10321 of 2014

Judgment of: Judge Newbrun

Hearing date: 23 February 2015

Date of Last Submission: 23 February 2015

Delivered at: Melbourne

Delivered on: 27 February 2015

REPRESENTATION

Counsel for the Applicant: Mr Maat

Solicitors for the Applicant: Australian Government Solicitors

ORDERS

THE COURT DECLARES THAT:

As at 23 February 2015, the Respondent owes the Applicant the sum of $38,981.47 (‘child support debt’) consisting of $31,612.05 in arrears of child support and $7,369.42 in late payment penalties.

THE COURT ORDERS THAT:

1. The Respondent pay the Applicant the child support debt of $38,981.47.

2. The Respondent pay to the Applicant the sum of $4,164.76 towards the Applicant’s legal costs.

3. The Respondent pay to the Applicant the amounts payable under orders 1 and 2 above in the sum of $43,146.23 (total debt) within 90 days of the date of these orders.

Security

1. Until further order of the Court or payment in full of the total debt:

   4.1The Respondent is hereby restrained from assigning, transferring, further encumbering or dealing in any way with his interest in the real property at:

   4.1.1Property K in the State of Victoria, more particularly described in Certificate of Title Volume [omitted];

   4.1.2(1) Property D in the State of Victoria, more particularly described in Certificate of Title Volume [omitted];

   4.1.3(2) Property D in the State of Victoria, more particularly described in Certificate of Title Volume [omitted];

   4.1.4Property B in the State of Victoria, more particularly described in Certificate of Title Volume [omitted]; and

   4.1.5Property C in the State of Victoria, more particularly described in Certificate of Title Volume [omitted].

   (the real property) without the prior written consent of the Applicant.

   4.2The Respondent’s interest in the real property be charged in favour of the Applicant for the total debt (and the Applicant be at liberty to lodge a caveat over the real property to secure the interest created by this charge).

   4.3The Respondent (or any person, company or entity acting as his agent) be restrained from assigning, transferring, encumbering, further encumbering or dealing in any manner whatsoever with his interest in, or the assets of, the following companies, including the sale, transfer, assignment or gifting of any shares in those companies:

   4.3.1[M] Pty Ltd ACN [omitted]; and

   4.3.2[I] Pty Ltd ACN [omitted]

   without the prior written consent of the Applicant.

   4.4The Respondent in his capacity as sole director of [I] Pty Ltd be restrained from taking any steps or causing [I] Pty Ltd to take any steps to assign, transfer, encumber or further encumber by mortgage or change or deal with in any way whatsoever, with the following vehicles:

   4.4.1A 2008 Toyota Wagon (Black), Registration Number [omitted] (“the Toyota Wagon”);

   4.4.2A 2013 Ford Tray and Sides (Silver), Registration Number [omitted] (“the Ford 005”);

   4.4.3A 2013 Ford Tray and Sides (Silver), Registration Number [omitted] (“the Ford 006”);

   4.4.4A 2013 Ford Tray and Sides (Silver), Registration Number [omitted] (“the Ford 007”); and

   4.4.5A 2013 Ford Tray and Sides (Silver), Registration Number [omitted] (“the Ford 008”).

   except in the ordinary course of business, providing the Respondent advises the Applicant 14 days prior to any anticipated dealing, or with the prior written consent of the Applicant.

2. If the Respondent defaults in making any of the payments ordered to be paid under these orders or breaches any of these orders, the amount of the total debt then outstanding shall be immediately due and payable.

AND THE COURT NOTES THAT:

A.If the Respondent defaults in making any of the payments ordered to be paid under these orders or deals with any of the personal property or real property in breach of these orders, the Applicant may proceed to enforce the total debt then owing in accordance with Part 25B of the Federal Circuit Court Rules 2001 (including Subdivision 25B.2.3 – Enforcement warrants, and/or Subdivision 25B.2.4 – Third Party Debt Notice).

IT IS NOTED that publication of this judgment under the pseudonym Child Support Registrar & Agnes is approved pursuant to s.110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT MELBOURNE

MLC 10321 of 2014

CHILD SUPPORT REGISTRAR

Applicant

And

MR AGNES

Respondent

REASONS FOR JUDGMENT

1. On 18 December 2014 the applicant, the Child Support Registrar, filed an Application In A Case seeking final orders and declaratory relief against the respondent, Mr Agnes, in respect to a claimed child support debt, comprising arrears of child support and late payment penalties.  The applicant seeks orders that the respondent pay the child support debt to it and its costs and that the respondent pay those sums within 60 days.  The applicant also seeks security, as set out in its Application In A Case and referred to in orders 4, 5 and 6. 

2. The applicant relies on the affidavits of Ms J, sworn 14 November 2014 and 29 January 2015. The applicant also relies on an up-to-date certificate under section 166,(2) of the Child Support Registration and Collection Act 1988.  The respondent has filed an affidavit sworn 23 January 2015, which the Court has received into evidence on the hearing of the application before the Court.  The respondent failed to appear at the hearing on 23 February 2015. 

3. The respondent had sent an email to the Court at 9.08 am on

   
   

   23 February 2015, which email also enclosed an email sent to

   
   

   Mr Casper Maat at 6.49 am on 23 February 2015, in which he claims to be ill and unable to attend Court.  In his email to Mr Maat, the respondent stated “I am unable to attend Court today due to illness.  I am suffering vertigo from a condition I have called Meniere’s disease.  This prevents me from driving and walking, has me feel nauseous and keeps me bedridden until it passes”.

4. The Court has treated and did treat the content of that email, including the email to Mr Maat, as an application for an adjournment of the hearing.  The Court decided to proceed with the hearing of the application in the absence of the respondent, for the following reasons: It has been the practice of this Court to only consider administrative adjournments by consent.  Consent was not given by Mr Maat on behalf of the applicant.  Further, the respondent did not provide the Court with any medical evidence relating to his alleged illness, which would have prevented him from attending Court. 

5. Further, the respondent was aware of the final hearing on 23 February 2015. He had attended the Court previously in relation to this application on 15 December 2014 and 30 January 2015, at which latter date the application was adjourned for final hearing on 23 February 2015. The Court was entitled to proceed to hear the application in the absence of the respondent, pursuant to Rule 13.03C, subsection (1) (e), of the Federal Circuit Court Rules 2001.  Further, the Court notes from the content of the emails sent by the respondent to the Court and Mr Maat, that reading between the lines, as it were, it would appear the real reason for the requested adjournment by the respondent was to, in effect, buy time to refinance his mortgages.

6. The affidavit of Ms J, sworn 14 November 2014, inter alia, provides evidence as to certain matters.  Firstly, it provides evidence as to the respondent’s knowledge of the child support debt.  Further, her affidavit refers to historical events relating to changes in the administrative assessment of child support by the Child Support Agency. That affidavit further refers to the respondent’s financial circumstances, which indicate that the respondent has the capacity to pay the child support debt.  Such evidence relating to the respondent’s financial circumstances includes his ownership of five properties in Victoria.  The affidavit refers to mortgage balances over those properties with the National Australia Bank as at 5 June 2014, with total indebtedness under those mortgages of some $2,021,000.  That affidavit also refers to the last personal income of the respondent revealed in his 2013 income tax return, which shows a taxable income of some $83,251.  The affidavit also refers to a company in which the respondent has an interest, namely [M] Proprietary Limited.  The affidavit refers to business income of $181,436 and total expenses of $145,444 in relation to that company for the 2013 financial year throwing up a difference of some $36,000.  The affidavit also refers to another company of which the respondent is the sole director, being named [I] Proprietary Limited.  Various financial information relating to that company is set out in the affidavit. 

7. The second affidavit of Ms J sworn 29 January 2015 provides further up-to-date evidence of the National Australia Bank’s last valuations of the five properties previously referred to.  Specifically I refer to the National Australia Bank letter of 27 January 2015 referred to in that latter affidavit of Ms J.  The evidence in that affidavit indicates that those National Australia Bank valuations total some $3,115,000.  In that affidavit there is reference to National Australia Bank correspondence, specifically its letter of 28 January 2015 showing loan account indebtedness of both the respondent and his company [I] Proprietary Limited, including four loan accounts and a credit card debt of some $50,000 throwing up a total of $2,622,939, which includes that credit card indebtedness of some $50,000. 

8. Accordingly, by reference to those up-to-date National Australia Bank valuations and the up-to-date evidence of the indebtedness of both the respondent and that company just referred to, there is some $452,061 equity in the five real estate properties.  That latter figure is calculated by deducting $2,622,939 from the other figure $3,115,000.  I now turn to the respondent’s affidavit sworn 23 January 2015.  One issue that the respondent raises in that affidavit is his contention that the child support debt is without foundation because registration of the liability was contrary to an annotation to property orders made in the Family Court of Australia on 6 April 2011, and the respondent made direct payments to the eligible parent and the children which have not been taken into account. 

9. The applicant contends that such annotation is not a binding child support agreement and did not preclude administrative assessment of the child support.  Further, it contends this issue was considered by the Social Security Appeal Tribunal on 5 March 2013, which rejected the respondent’s objection.  Further, the applicant contends that the respondent did not appeal from the decision of the Social Security Appeals Tribunal.  The Court is of the view that the applicant’s contentions in the above respects are legally correct.  The respondent in his affidavit asserts that he has no capacity to meet the child support debt.  He claims that he has no further equity or capacity to borrow.  He refers to a debt to the Australian Taxation Office of some $130,000.  He disputes the thrust of Ms J’s first affidavit to the effect that he does have a capacity to pay the child support debt.  The respondent refers to his recent offers to repay the child support debt. 

10. The respondent claims that the current restraining order of the Court dated 15 December 2014, preventing him from dealing with his real estate properties, is preventing him from accepting any refinance offer from another lending institution.  However, no explanation is given by him as to why this would necessarily be the case.  The respondent asserts in his affidavit that Ms J’s reference in her first affidavit to total liabilities of some $1,771,984 is understated by other business debt totalling more than $500,000.  At the hearing of the matter, the applicant agreed that the total liabilities should include this business debt referred to by the respondent in his affidavit, this business debt being also secured against the real properties. 

11. The applicant referred to Ms J’s second affidavit, which again annexes up-to-date National Australia Bank correspondence, specifically a letter of 28 January 2015, being exhibit MJ37, showing current indebtedness under the loan accounts held by the respondent and his business [I] Proprietary Limited, including the business debt referred to by the respondent, total the sum of $2,572,939.  The Court notes that when one adds the credit card debt of some $50,000, a total indebtedness of some $2,622,532 is revealed.  Accordingly, the applicant submits that even accepting the respondent’s assertions as to total property values of some $3,131,954, when one deducts total loan balances of some $2,622,532, including the Australian Tax Office debt of some $129,000, there is still an available equity of some $362,000.  The Court notes at this point that the child support debt is about $39,000 in total. 

12. The Court accepts the applicant’s submissions in the above respects and finds that the respondent has a capacity to pay the child support debt presently.  The Court notes that the applicant has referred to an email from the National Australia Bank to the respondent dated 12 November 2014 in which, inter alia, the National Australia Bank officer states that the bank’s current position is that it wants to end the banking relationship and for all debt to be paid back.  The National Australia Bank officer states that the respondent can pay the debt back by refinancing to another bank or selling assets.  He refers to the respondent’s difficulty in meeting regular loan repayments to the bank.  Accordingly, the Court is of the view that it should make the orders sought by the applicant but allow the respondent increased time to pay the child support debt, penalties and costs.  The Court proposes to allow the respondent 90 days to pay the child support debt, including penalties and costs, to the applicant. 

13. The Court determines, pursuant to section 117 of the Family Law Act 1975, that it is just that the respondent should pay to the applicant its costs of the application in the sum of $4164.76. That latter figure is set out in a document detailing how that figure is precisely calculated, pursuant to that section 117 of the Family Law Act and part 2 of schedule 1 of the Federal Circuit Court Rules. In the circumstances of these proceedings, the Court is of the view that the respondent should pay these costs. The respondent was served with the application on 25 November 2014, and the Court refers to the history of these proceedings with appearances on 15 December 2014 and 30 January 2015.

14. In relation to the costs question, the Court was referred by the applicant to the decision of the Family Court of Australia in Hendy & Deputy Child Support Registrar [2001] FamCA 632. The Court notes at paragraph 115 of the judgment various considerations which the initial trial judge in that matter, Jordan J, had identified in relation to making a costs order. Looking at that helpful list of considerations that

    
    

    Jordan J set out, the Court in this case finds that it is just to make the costs order sought by the applicant for these additional reasons:  firstly, there was a debt owing and is a debt owing to the Commonwealth, and the Commonwealth was entitled to bring enforcement proceedings.  When I say “the Commonwealth”, that is the applicant in this case.  The applicant in this case has been successful in securing the remedies that it seeks in its application. 

15. On the evidence before the Court, the Court has accepted that the respondent has a capacity to pay the child support debt and penalties, yet the respondent in these proceedings had sought to re-agitate, at least in part, arguments that he had failed in proceedings in the Social Security Appeals Tribunal back in March 2013. Further, it is a consideration that these proceedings should be more properly perceived as being civil proceedings between the Commonwealth as a third party and the respondent as a citizen, rather than as between parties to a marriage or parties to a relationship covered by the general philosophy of the Family Law Act, which is to the effect that each party should bear their own costs. Further, these are enforcement proceedings. Further, cost orders are frequently made in the civil arena when there is no apparent immediate capacity to meet the orders for costs and the parties. And finally, it would be inappropriate if the tax payer was required to bear the entire burden of this exercise.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Newbrun

Associate: 

Date:  16 March 2015