Child Support Registrar and Atkins and Ors
[2017] FCCA 905
•24 May 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CHILD SUPPORT REGISTRAR & ATKINS & ORS | [2017] FCCA 905 |
| Catchwords: HELD – Application of the First Respondent dismissed. First Respondent to pay the Child Support debt within sixty (60) days. The purported charge between the First Respondent and Second and Third Respondents be set aside in accordance with section 72C(1) of the Child Support (Registration and Collection) Act 1988. COSTS – Application by the Child Support Registrar for the First Respondent to pay the Applicant’s costs of these proceedings pursuant to Schedule 1 of the Federal Circuit Court Rules 2001. In circumstances where the First Respondent was found to be “wholly unsuccessful” in his claim and where the First Respondent only conceded the section 72C(1) issue at the conclusion of evidence an order is made for the First Respondent to pay the Applicant’s costs fixed in the sum of $23,093.50 within sixty (60) days. |
| Legislation: Family Law Act 1975 (Cth) ss.117(1), 117 (2) Child Support (Registration and Collection) Act 1988 (Cth), ss.72C(1), 116 (2) Federal Circuit Court Rules 2001 (Cth) |
| Cases cited: Jones & Dunkel (1959) 101 CLR 298 Hendy v Child Support Registrar & Webb [2001] FamCA 632 Mathieson & Hamilton [2006] FMCAfam 238 Oxenham & Oxenham [2008] FamCAFC 199 | ||
| Applicant: | CHILD SUPPORT REGISTRAR | |
| First Respondent: | MR ATKINS |
| Second Respondent: | MS ATKINS |
| Third Respondent: | MS PERKINS |
| File Number: | MLC 3703 of 2015 |
| Judgment of: | Judge Bender |
| Hearing date: | 5 April 2017 |
| Date of Last Submission: | 6 April 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 24 May 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Clarke |
| Solicitors for the Applicant: | Hunt & Hunt |
| Solicitor for the First Respondent: | Mr Bacon |
| Solicitor for the First Respondent: | Manby & Scott |
| Solicitor for the Second Respondent: | Self-Represented |
| Counsel for the Second Respondent: | Self-Represented |
| Solicitor for the Third Respondent: | No appearance |
| Counsel for the Third Respondent: | No appearance |
THE COURT DECLARES THAT:
The First Respondent owes the sum of $153,083.76 (“Child Support Debt”) consisting of $114,690.64 in arrears of child support and $38,393.12 in late payment penalties.
THE COURT ORDERS THAT:
The First Respondent pay to the Applicant the Child Support debt.
The First Respondent pay to the Applicant the sum of $23,093.50 towards its legal costs fixed in accordance with Schedule 1 of the Federal Circuit Court Rules 2001.
The First Respondent pay to the Applicant the amounts payable under order 1 and 2 above within sixty (60) days of the date of these Orders.
The purported charge between the First Respondent and the Second Respondent over the real property located at Property T in the State of Victoria more particularly described in Certificate of Title Volume (omitted) Folio (omitted) (“Real Property”) and Caveat No. (omitted) lodged by the Second Respondent over the Real Property, be set aside forthwith in accordance with s 72C(1) of the Child Support (Registration and Collection) Act 1988 (Cth), as instruments or dispositions that have been made to reduce or defeat the First Respondent’s ability to pay child support.
The purported charge between the First Respondent and the Third Respondent over the Real Property, and Caveat No. (omitted) lodged by the Third Respondent over the Real Property, be set aside forthwith in accordance with s 72C(1) of the Child Support (Registration and Collection) Act 1988 (Cth), as instruments or dispositions that have been made to reduce or defeat the First Respondent’s ability to pay child support.
IT IS NOTED that publication of this judgment under the pseudonym Child Support Registrar & Atkins & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3703 of 2015
| CHILD SUPPORT REGISTRAR |
Applicant
AND
| MR ATKINS |
First Respondent
AND
| MS ATKINS |
Second Respondent
AND
| MS PERKINS |
Third Respondent
REASONS FOR JUDGMENT
Background
These proceedings are before this Court by way of an Application in a Case filed by the Child Support Registrar (“the Applicant”) on 29 April 2015 and supported by an Affidavit by Ms R (“Ms R”), Litigation Officer with the Australian Government Department of Human Services sworn 27 April 2015 and filed 29 April 2015.
The proceedings relate to the Child Support arrears owed by the First Respondent for his two children X born (omitted) 2011 (“X”) and Y born (omitted) 2005 (“Y”) since 21 February 2008.
The Applicant seeks that the First Respondent pay the Child Support debt fixed in the sum of $153,083.76 consisting of $114,690.64 in arrears of child support and $38,393.12 in late payment penalties. A certificate pursuant to section 116(2) of the Child Support (Registration and Collection) Act 1988 (“the Registration and Collection Act”) was provided fixing the Child Support debt at $153,083.76.
The Applicant is seeking enforcement of this debt on behalf of Ms L (“the payee”), the Mother of X and Y.
By way of a further Application in a Case filed by the Applicant on
15 February 2016 the Applicant is seeking the Court declare the charge between the First Respondent and the Second Respondent and between the First Respondent and the Third Respondent over the property situated at Property T, in the State of Victoria more particularly described in Certificate of Title Volume (omitted) Folio (omitted) (“the real property”) be declared a sham.
The Applicant further seeks that the Caveats lodged by the Second and Third Respondent over the real property be set aside in accordance with section 72C(1) of the Registration and Collection Act as instruments that have been made to reduce or defeat the First Respondent’s ability to pay child support.
Finally, the Applicant is seeking the First Respondent pay its costs of the applications in the sum of $24,570.58 within 60 days of the date of these Orders.
In response to the Applicant’s applications, the First Respondent seeks Orders that the Court exercise its discretion, whether wholly or in part, and decline to enforce the Child Support arrears on the following basis:
i)The assessments issued by the Child Support Registrar (the CSR) which lead [sic] to the current arrears were based on incomes for the 1st respondent which were much higher than his actual incomes…
ii)The payee of child support was (and currently is) in a much stronger financial position than what the CSR understood her to be in when the relevant assessments were issued…
iii)The arrears of child support the 1st respondent is said to owe are just that, arrears. They have accumulated over many years without the payee having done anything to enforce them. She has gone through the past periods involved without any apparent financial difficulty. Child Support is not intended to be used as some type of lump sum compensation to payees for periods distant in the past.
iv)The relevant children live with the 1st respondent on a (roughly) week about basis. The 1st respondent pays 70% of the children’s school fees and incurs all the usual costs in caring for his children when they are with him..
v)The only asset which the 1st respondent has which could possibly be used to pay the child support arrears is his (and the children’s) home. It is submitted that it is not appropriate for that home to be sold…
The First Respondent is seeking full and final discharge of the Child Support debt owing to the Applicant by way of a payment of $10,000 to be made within 90 days.
Ms Atkins is the Second Respondent in these proceedings (“the Second Respondent”) and is the First Respondent’s Mother.
A title search conducted by the Applicant revealed that on 23 June 2015 the Second Respondent lodged a Caveat over the real property, particularised by Caveat number (omitted).
It is the position of the Second Respondent that she has joined the proceedings to:
“…ensure that my assets are fully protected and that the caveat remain on Mr Atkins’ property until the full and final payment of the loan of approximately $100,000 is paid in full.”
A search conducted by the Applicant revealed the grounds of claim recorded on the caveat to be an “Agreement” with the registered proprietor, the First Respondent, dated 16 June 2015.
It is the Second Respondent’s evidence that in 2013/2014 she took out a reverse mortgage with (omitted) Bank against her home for approximately $87,000 to assist the First Respondent to purchase, move and renovate the real property. Whilst the First Respondent has made some payments and continues to make some payments in relation to the loan, regular payments have not been made and the amount currently owing on the loan is approximately $100,000. The Second Respondent is an aged pensioner and unable to service the loan herself.
The Third Respondent is Ms A (“the Third Respondent”). Ms A is the former de-facto partner of the First Respondent.
It is the position of the Third Respondent that she and the First Respondent were in a relationship for approximately four years and resided together during this period.
On 1 March 2015 the Third Respondent and First Respondent executed a loan agreement where it is asserted:
“…that I have loan [sic] and will continue to lend Mr Atkins of (omitted), $200,000 (two hundred thousand dollars).”
A title search conducted by the Applicant revealed that on 23 June 2015 the Third Respondent registered a Caveat over the real property (number (omitted)). The grounds of claim recorded on the Caveat refer to an agreement with the First Respondent dated 1 March 2015.
The Third Respondent joined these proceedings to protect her interest in the real property. However, aside from the Affidavit sworn by the Third Respondent on 19 September 2015 the Third Respondent has not participated in these proceedings.
The matter proceeded to final hearing on 5 April 2017 and ran for two days. The Third Respondent did not appear at the final hearing.
At the conclusion of the final hearing, the solicitor for the First Respondent advised the Court that the First Respondent and Second Respondent did not oppose the orders sought by the Applicant, that the charge between the First and Second Respondent be declared a sham and that the Caveat lodged by the Second Respondent over the real property be set aside.
Further, the solicitor for the First Respondent advised the Court the First Respondent did not oppose the orders sought by the Applicant that the charge between the First Respondent and the Third Respondent be declared a sham and the caveat lodged by the Third Respondent over the real property be set aside.
The issue for determination is therefore whether the Court should exercise its discretion and limit the Child Support liability of the First Respondent to $10,000 as proposed by the First Respondent.
The Applicant also seeks orders that the First Respondent pay to the Applicant its costs of these proceedings as determined in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 (Cth) in the sum of $24,570.58.
At the conclusion of the final hearing, the solicitor appearing for the First Respondent was given leave to respond to the application for costs by way of a written submission to be filed within fourteen days. In the written submission to Chambers, the First Respondent submits that in Child Support matters, the question of costs should be approached with caution and submits that any costs payable by the First Respondent be limited to $12,838, plus any claimed disbursements.
Child Support History
Prior to proceedings commencing in this Court, the matter had a lengthy history in the Child Support Agency. There have been numerous Applications for Review in relation to the First Respondent’s Child Support Assessments.
On 23 April 2015, the First Respondent submitted an appeal to the Administrative Appeals Tribunal.
The history of the child support applications is outlined succinctly in the Affidavit sworn by Ms R on behalf of the Applicant on 29 April 2015. The extensive history of litigation in this matter is summarised as follows:
·On 24 November 2010, the receiving parent made a change of assessment application. On 11 April 2011, Senior Case Officer H made a decision to set the First Respondent’s adjusted taxable income for the period from 1 January 2011 to 31 March 2012 at $243,000.00.
·On 14 July 2014, the First Respondent made a change of circumstances application. On 30 October 2014, Senior Case Officer J refused that change of assessment application pursuant to section 98A of the Registration and Collection Act because the issues subject of the application were too complex for a Registrar to determine.
·On 23 July 2014, Her Honour Judge Stewart granted the First Respondent leave under section 112 of the Registration and Collection Act to apply to the Registrar for a determination under section 91S of the Registration and Collection Act for the period 1 January 2011 to 14 March 2013.
·On 6 February 2014, Ms L made a change of assessment application. On 9 May 2014, Senior Case Officer E made a decision to set the First Respondent’s adjusted taxable income for the period 6 February 2014 to 31 December 2016 at $165,195.00.
·On 30 January 2015, the First Respondent lodged an objection to Senior Officer H’s decision dated 11 April 2011 along with an extension of time application. On 5 March 2015, Senior Case Officer A set aside that decision and substituted a new determination as follows:
a)for the period 1 July 2011 to 30 June 2012 the First Respondent’s adjusted taxable income be set to $197,357.00 per annum;
b)for the period 1 July 2012 to 30 June 2013 the First Respondent’s adjustable taxable income be set to $106,753.00,
·On 30 January 2015, the First Respondent lodged an objection to Senior Case Officer E’s decision dated 9 May 2014. On 6 March 2015, Senior Case Officer A set aside that decision and substituted a new determination as follows:
a)For the period 1 July 2013 to 31 August 2013, the adjusted taxable income for the First Respondent be set at $183,860.00;
b)For the period 1 July 2014 to 31 October 2015, the adjusted taxable income for the First Respondent be set at $127,609.00.
·On 23 April 2015 the First Respondent filed an application with the Administrative Appeals Tribunal (“AAT”) seeking to review an objection decision made on 5 March 2015 and 6 March 2015, along with an application for an extension of time to make that application for review.
·On 25 September 2015 the AAT handed down its decision in relation to the First Respondent’s application. The AAT set aside the objection decisions made on 5 March 2015 and 6 March 2015 and in substitution decided that:
a)The First Respondent’s adjusted taxable income is varied to:
i)
$153,100.00 per annum from 1 January 2011 to
31 December 2011;
ii)
180,100.00 per annum from 1 January 2012 to
31 December 2012;
iii)
$153,100.00 per annum from 1 January 2013 to
31 December 2013;
iv)
$136,900.00 per annum from 1 January 2014 to
30 June 2016;
b)Ms L’s (“the payee”) adjusted taxable income is varied to:
i)$27,142.00 per annum from 1 July 2011 to 30 June 2012;
ii)$28,558.00 per annum from 1 July 2012 to 30 June 2013;
iii)$32,763.00 per annum from 1 July 2013 to 30 June 2014;
iv)$30,171.00 per annum from 1 July 2014 to 30 June 2016.
·
On 17 January 2017, on the application of Ms L, a delegate of the Applicant made a decision to change the administrative assessment of child support for the period 10 November 2016 to
9 November 2018. The following decision was made:
c)for the period 10 November 2016 to 9 November 2018:
i)the First Respondent’s adjusted taxable income is set at $185,000.00;
ii)Ms L’s (the receiving grant) adjusted taxable income is set at $43,627.00.
Litigation History
Whilst the matter has a lengthy history before the Child Support Agency and the AAT, the matter first came before the Federal Circuit Court of Australia in the Enforcement List on 18 June 2015.
The Respondent failed to appear on 18 June 2015. Orders were made for substituted service of the Applicant’s Application in a Case filed
29 April 2015, the affidavit in support affirmed by Ms R on 27 April 2015 and a sealed copy of the orders made 18 June 2015.
On 8 July 2015, the matter was listed for a directions hearing at which time Mr Bacon, solicitor, appeared on behalf of the First Respondent.
On 8 July 2016 interim consent orders were made restraining the First Respondent from dealing with the real property and restraining the First Respondent from assigning, transferring, encumbering or dealing in any way with his interest in his personal property being his Honda Sedan registration number (omitted) and (omitted) Motorcycle registration (omitted).
Orders were also made by consent restraining the First Respondent from giving, loaning, paying or dealing in any way with the funds obtained by way of mortgage granted over the real property to (omitted) Pty Ltd.
Orders were also made for full and frank disclosure in relation to the caveats lodged by the Second and Third Respondent over the real property.
The matter came before the Court on 7 August 2015, at which time Orders were made by the Court formally joining Ms Atkins as the Second Respondent and Ms Perkins as the Third Respondent.
The matter was set down for a mention on 2 October 2015 to afford the Second and Third Respondent the opportunity to advise the Court whether they intended to participate in these proceedings. Procedural orders were made requiring the Second and Third Respondents to file any affidavit material outlining their interest in the real property. The matter was also listed for final hearing on 24 August 2016 with an estimated hearing time of two days.
The matter returned to Court on 2 May 2016 where orders were made listing all extant applications for final hearing on 14 September 2016.
The matter was unable to be reached on 14 September 2016. Orders were made listing the matter for final hearing, with priority, on 5 April 2017, with an estimated hearing time of three days.
The parties were also restrained from filing any further material without first obtaining leave of this Court.
The final hearing commenced on 5 April 2017. The Applicant called only one witness Ms R, Litigation Officer with the Australian Government Department of Human Services. Ms R was the subject of brief cross-examination.
The First Respondent was required for cross examination. The Second Respondent was required for cross examination in relation to the Caveat issue. The Third Respondent did not appear at the final hearing.
The Evidence
The Applicant
The Applicant relies on the following documents filed in these proceedings:
(a)Application in a Case/Initiating Application filed 29 April 2015;
(b)Affidavit of Ms R filed 29 April 2015;
(c)Affidavit of attempted service filed 29 May 2015;
(d)Affidavit of attempted service filed 9 June 2015;
(e)Affidavit of attempted service filed 16 June 2015;
(f)Application in a Case seeking orders for substituted service against the First Respondent filed 17 June 2015;
(g)Affidavit in support of Application in a Case;
(h)Affidavit of Service filed 23 June 2015;
(i)Application in a Case filed 30 June 2015;
(j)Application in a Case filed 31 July 2015;
(k)Affidavit of Ms R filed 31 July 2015;
(l)Application in a Case filed 15 February 2016;
(m)Affidavit of Service on First Respondent filed 21 March 2016;
(n)Affidavit of Service on Second Respondent filed 21 March 2016;
(o)Affidavit of Service on Third Respondent filed 21 March 2016; and
(p)Affidavit of Ms R filed 8 September 2016.
As noted above Ms R swore a number of affidavits on behalf of the Applicant.
Ms R was briefly required for cross-examination and was questioned by the solicitor for the First Respondent as to the delay in issuing proceedings.
It is Ms R’s evidence that the First Respondent had made some Child Support payments and the matter had been the subject of numerous Applications for Review.
It is Ms R’s further evidence that the Child Support Agency had forwarded a number of letters of demand to the First Respondent commencing in 2015 which the First Respondent did not respond to. Because the First Respondent did not respond to the letters of demand, enforcement proceedings were commenced in 2015.
The First Respondent
The First Respondent relies on the following documents:
(a)Financial Statement of the First Respondent filed 14 July 2015;
(b)Affidavit of Mr Atkins filed 31 July 2015;
(c)Affidavit of Mr Atkins filed 2 September 2015;
(d)Affidavit of First Respondent filed 16 August 2016; and
(e)Affidavit of Mr B filed 16 August 2016.
It is the evidence of the First Respondent that the assessments issued by the Child Support Registrar are based on income figures that are much higher than his actual income.
In support of this contention, the First Respondent took the Court to paragraph 16 of his affidavit sworn 31 July 2015 wherein the First Respondent annexes copies of his income tax assessments for the last seven years. The First Respondent deposes as follows:
16. …They show that my true taxable income over the years from 2008 until 2013 were much lower than what my child support income (as used by the Agency) was. For instance, from
13 November 2009 until 31 December 2010 my income as used by the Agency was over $153,000 per annum. From 1 January 2011 until 31 March 2012 the income for me used by the Agency was $243,000 pa. My actual taxable income figures for the relevant years were, 2009/2010; - $8,501 pa, 2010/2011; $7,232 pa, and 2011/2012; $47,619pa. It is clear that my actual incomes over these periods were much less than those figures as used by the Agency.”During cross examination, Counsel for the Applicant asked the First Respondent to detail the various deductions he alleges were not considered by the Child Support Agency when determining his income.
It is the First Respondent’s evidence that because he is self-employed, additional expenses were incurred that were not taken into consideration by the Child Support Agency. When asked specifically about these additional expenses, the First Respondent was only able to indicate the sum of approximately $100.00 per month for the internet and the costs for his motor vehicle as being those matters not considered in the assessment of his income by the Child Support Agency.
The First Respondent also made reference to the fact that as he is self-employed, he is not paid for periods of leave and is required to set aside 10 per cent of his income to make payment of GST.
Counsel for the Applicant appropriately directed the Court to the most recent change of assessment decision made on 17 January 2017 wherein Ms M states at page 4:
Mr Atkins asserted as a self-employed person he was not paid for period of leave and as such the AAT allowed an unpaid four week period in their calculations for unpaid annual leave. They also adjusted the income figures by 10% to account for Mr Atkins being required to pay GST. At the time of the AAT decision, Mr Atkins was not contributing toward a superannuation fund even though he argued that he was required to meet this cost, and therefore, the AAT did not consider any reduction on account of unpaid superannuation for Mr Atkins, as they were satisfied he was spending this money elsewhere.
Counsel for the Applicant notes that the First Respondent was unable to produce any receipts for his alleged deductions and that many of the matters raised by the First Respondent were considered in detail by the AAT who concluded that the First Respondent overstated his deductions and failed to provide further information to substantiate his claims.
The First Respondent challenges the financial position of the payee asserting that the:
“…payee of child support was (and currently is) in a much stronger financial position than what the CSR understood her to be in when the relevant assessments were issued.”
In support of this assertion, the First Respondent relies on a single posting by the payee on social media which refers to a holiday the payee had in (omitted) where she stayed in allegedly “extravagant” accommodation. The First Respondent alleges this holiday would not be possible if the payee’s financial position was as she claims. Additionally, the First Respondent refers to the payee’s current living arrangements, claiming she resides in a “lifestyle estate in (omitted)” as proof her income is higher than claimed by her on the basis the payee could not live in this accommodation if her income is as claimed by her.
The First Respondent further relies on the affidavit of the payee’s former de-facto partner, Mr B, in support of his assertion the payee is in a much stronger financial position than reflected in the assessments of the Child Support Agency. This affidavit consisted primarily of hearsay, speculation and conjecture. Mr B was not available for cross-examination at the final hearing.
It is the First Respondent’s evidence that he enjoys a positive relationship with his two children, X and Y, and they live in a “roughly” week-about arrangement with each of the parties.
When the First Respondent was questioned further by Counsel for the Applicant, the First Respondent conceded that whilst he had enjoyed a positive relationship with his two children and that he had not seen them for a period of approximately three months prior to the date of the final hearing as he and his children had fallen out.
It is the First Respondent’s evidence that if he was to be ordered to pay the full Child Support arrears, he would be required to sell the real property at great personal loss to both himself and his children. The First Respondent argues that an order that will result in the loss of the children’s home is a further factor that the Court should consider when determining whether to exercise its discretion not to enforce his Child Support arrears.
The Second Respondent
The Second Respondent relies on her affidavit sworn and filed
23 September 2015. The Second Respondent gave viva voce evidence at the final hearing.
The Second Respondent is a loving, caring and generous Mother who has taken out a reverse mortgage over her home to assist the First Respondent.
It was evident from the Second Respondent’s evidence that the monies borrowed by her for the First Respondent were not conditional on the First Respondent providing her with a charge over the real property.
It was also clear from the Second Respondent’s evidence however that she had no knowledge of there being a caveat lodged against the real property on her behalf. She at no time instructed solicitors to lodge a caveat over the real property. It was the First Respondent who instructed solicitors to lodge a caveat over the real property and he did so only after he received letters of demand and threats of enforcement proceedings from the Applicant.
As such there is no doubt that the caveat lodged on behalf of the Second Respondent over the real property is a sham and that it should be set aside in accordance with section 72C(1) of the Registration and Collection Act as an instrument made to reduce or defeat the First Respondent’s ability to pay Child Support.
The Third Respondent
The Third Respondent did not attend the final hearing. She filed an affidavit in this proceeding on 1 October 2015 in which she alleged she had “loaned” the First Respondent $200,000 during their relationship.
It is apparent from the First Respondent’s evidence that much of the monies allegedly lent to him by the Third Respondent related to normal living expenses incurred by the Third Respondent in payment of rent and utilities on a property rented by her. Any other amounts allegedly loaned to the First Respondent by the Third Respondent are not explained in detail or supported by independent proof of payment.
The caveat lodged by the Third Respondent was prepared at the same time and by the same solicitor who lodged the caveat for the Second Respondent. At this time the Third Respondent was not living in Australia. It is clear that the instructions for the lodging of the caveat on behalf of the Third Respondent were given by the First Respondent only and that this was done after he received letters of demand and threats of enforcement proceedings from the Applicant.
In these circumstances I am satisfied that the caveat lodged on behalf of the Third Respondent was a sham and that it should be set aside in accordance with section 72C(1) the Registration and Collection Act as an instrument made to reduce or defeat the First Respondent’s ability to pay Child Support.
The Law
In Mathieson & Hamilton [2006] FMCAfam 238, His Honour Federal Magistrate Walters (as he then was) outlined the factors to be taken into account when considering whether the Court should exercise its discretion to enforce, wholly or in part, child support arrears presently outstanding. His Honour stated at paragraph 228:
.....in exceptional cases it might be possible for a liable parent to demonstrate that he or she has changed his or her financial circumstances to his or her detriment, whilst at the same time acting in good faith, due to the actions (or unexplained inaction) of the residence parent. Other circumstances can be envisioned, but they will always be exceptional. The Court should not lightly relieve a liable parent from his or her demonstrated obligation to support his or her children. But if the facts support such a conclusion or result, then there is no doubt that the Court has to power to make orders.
At paragraph 230 of Mathieson (supra), His Honour outlines the principles which are of relevance and to be applied in enforcing arrears. His Honour stated as follows:
In my opinion, it is possible to distil the following principles, considerations or factors relating to the enforcement of arrears of maintenance or child support:
a)The "”12 months rule" is extinct. It was, in any event, never more than a discretionary guideline or rule of practice, and the 12 months period was an arbitrary one.
b)The Court has a discretion, not only as to the period in respect of which accumulated arrears of maintenance or child support will be enforced, but as to whether they should be enforced at all.
c)The Court is not prevented from enforcing arrears of maintenance or child support simply because the time for payment of the same has long since passed, or because (in the case of child maintenance or child support) the relevant child has long since left school, commenced paid employment or otherwise ceased to require such child maintenance or child support.
d)In considering whether to enforce arrears (and, if so, for what period), the Court's discretion is unfettered, but the following considerations (at least) might be considered to be of relevance:
i)whether the party who was obliged to pay the maintenance or child support ("the Payer”) knew or ought to have known of his/her obligation to pay maintenance or child support;
ii)whether the party entitled to maintenance or child support ("the Payee”) pressed or pursued – directly or indirectly – his/her rights to the same, and whether the Payee did so in a timely fashion;
iii)whether, by words or conduct, the Payee led or permitted the Payer to form a reasonable view that the Payer’s obligation to pay maintenance or child support would not be enforced, and whether (and in what way) the Payer was thereby induced – whilst acting in good faith – to change his/her financial position;
iv)whether, by words or conduct, the Payer led or permitted the Payee to form a reasonable view that the Payer’s obligation to pay maintenance or child support would be met, and whether (and in what way) the Payee was thereby induced – whilst acting in good faith – to change his/her financial position;
v)whether the Payer had (other) appropriate or adequate reasons for failing or refusing to pay;
vi)the financial circumstances of the Payer, the Payee and the children during the period of the non-payment, and at the time that the enforcement of the arrears is sought (including the Payer’s ability to pay at all relevant times);
vii)whether the Payer has made a full and frank disclosure of his/her financial position at all relevant times; and
viii)whether the Payee has made full and frank disclosure of his/her financial position at all relevant times.
e)The Court should be very cautious not to encourage a Payer to metaphorically sit back and ignore his/her liability for maintenance or child support, and to continue to ignore such liability "… hoping for the best."
His Honour’s reasons have been cited recently with approval in the matter of Child Support Registrar & Garaty [2016] FCCA 2078 and previously by the Full Court in Wreford & Caley [2010] FamCAFC and Oxenham & Oxenham [2008] FamCAFC 199.
Section 72C of the Registration and Collection Act provides that the Court may set aside any instrument that has been created with the purpose of defeating an enforceable liability.
Sections 72C(1) and (2) of the Registration and Collection Act state as follows:
Transaction to defeat maintenance liability
(1) The court may, of its own volition or on application by the Registrar:
(a) set aside an instrument or disposition that has been made; or
(b) restrain the making of an instrument or disposition that is proposed to be made;
by or on behalf of, or by direction or in the interest of, a payer of an enforceable maintenance liability.
(2) If the court is satisfied that the instrument or disposition has been made or is proposed to be made (as the case may be) to reduce or defeat the payer's ability:
(a) to pay child support; or
(b) if there is an enforceable maintenance liability in respect of the payer:
(i) to pay any child support debt under the enforceable maintenance liability; or
(ii) to meet the enforceable maintenance liability;
the court may set aside the instrument or disposition or restrain the making of the proposed instrument or disposition as the case requires.
Conclusion
It is unequivocally the Applicant’s position that the Child Support arrears should be enforced by this Court in full and paid by the First Respondent within 60 days, failing which the Applicant be entitled to take enforcement action against the First Respondent. The Applicant is also seeking its costs incidental to this application.
The Applicant also seeks that the Caveats held over the real property by the Second and Third Respondent be declared a sham and orders be made to set aside the caveats pursuant to section 72C of the Registration and Collection Act.
The First Respondent seeks the Court exercise its discretion not to enforce the Child Support arrears in their entirety but rather order he pay the sum of $10,000 within 90 days in full payment of his Child Support orders.
The First Respondent argues that the child support assessments as they stand are based on an income that is much higher than his actual income during the assessment periods. It is the position of the First Respondent that both the Child Support Agency and the AAT have failed to take into account all relevant deductions when determining his income.
The solicitor for the First Respondent directs the Court’s attention to paragraph 13 of the decision of the AAT where they state “there was little reliable and up-to-date information before the tribunal” as supporting the First Respondent’s claim the Child Support Agency did not properly assess his income.
It is submitted on behalf of the First Respondent that the payee is in a much stronger financial position than that which the Child Support Registrar understood her to be when the relevant assessments were issued.
It is the submission of the First Respondent that the payee could not afford her current lifestyle if the assessments accurately reflected her income.
The First Respondent relies on a web itinerary posted on social media outlining a holiday to support his claim the payee has an income greater than that reflected in her child support assessment. Additionally, the First Respondent notes that the payee resides in a lifestyle estate in (omitted) which the First Respondent asserts is inconsistent with the financial position recorded by the payee and forms part of a “litany of expenses” which simply would not be possible on the income reported by the payee.
The solicitor for the First Respondent also argues that this is a matter where the principle in Jones & Dunkel (1959) 101 CLR 298 can apply and that the Court should draw a negative inference because the payee has failed to pursue the child support debt and participate in these proceedings.
There is a conspicuous absence of receipts and independent evidence which supports the First Respondent’s claim that the Child Support Agency have failed to take into account appropriate deductions and expenses when determining his income. When the alleged deductions were explored with the First Respondent, at most these expenses amounted to $200 per month for internet charges and motor vehicle usage.
I am therefore satisfied that the Child Support Agency have fully and carefully considered the First Respondent’s financial circumstances and that their determination as to his income for the purposes of the assessment of his child support liability is appropriate.
I find the submission of the First Respondent in relation to the payee’s income to be highly speculative. He relies on a single social media posting, speculation as to the payee’s housing and the untested evidence of the payee’s former de-facto partner to support this claim. The First Respondent has not placed any substantive evidence before the Court that challenges the findings of the Child Support Agency as to the payees’ income.
It is the further submission of the First Respondent that the Child Support arrears have accumulated over many years without the payee having taken any action to recover the arrears. It is the submission of the First Respondent that an adverse inference should be drawn against the payee for this.
His Honour Federal Magistrate Walters in Mathieson (supra) stated at paragraph 219, cited with approval in Wreford & Caley [2010] FamCAFC 21 and Child Support Registrar & Garaty [2016] FCCA 2078 , as follows:
“I conclude, on the basis of the authorities discussed above, that the “12 months rule” (if it ever was a rule) is – like the thylacine – extinct…”
The evidence of the Applicant is they had been correspondence with the First Respondent about the payment of Child Support arrears for some time prior to the current proceedings. It was because the First Respondent failed to respond to their correspondence that the Applicant was left with no option but to issue proceedings.
The First Respondent further contends that if orders are made as sought by the Applicant, he will lose his home, and more importantly X and Y’s home.
If orders are made as sought by the Applicant, the First Respondent’s home may well have to be sold if he does not discharge the Child Support debt.
The First Respondent has only made intermittent payments of child support for X and Y since separation. Whilst the First Respondent may lose his home, regular ongoing child support is what will provide the greatest assistance to X and Y.
In circumstances where the First Respondent:
·is fully aware of the child support payable by him given his long history of challenging the assessments;
·has chosen not to pay the assessed amounts because he does not agree with the amount assessed;
·has offered no additional reason for not paying the assessed child support other than he does not agree with the amount assessed;
·makes allegations that the payee’s financial circumstances are better than assessed by the Child Support Agency that are not supported by independent evidence but are based on speculation and supposition;
·was unable to place before the Court any independent evidence that the Child Support Registrar erred in its determination of his income,
·has a positive finding made by the Court that the caveats lodged by the Second and Third respondent were a sham and put in place by the First Respondent to defeat his ability to pay Child Support.
·where there has been no undue delay by the Child Support Agency and payee in pursuing arrears of Child Support such that any adverse inference is drawn;
I am of the view this is a matter where it is not appropriate for the Court to exercise its discretion not to enforce the entirety of the First Respondent’s arrears of maintenance.
Accordingly, orders will be made in the terms sought by the Applicant that the First Respondent pay the whole of the Child Support debt as set out in the certificate issued under s.116(2) of the Registration and Collection Act being $153,083.73.
Orders will also be made that the caveats lodged by the Second and Third Respondents are a sham and that they be set aside pursuant to section 72C of the Registration and Collection Act as instruments made to reduce or defeat the First Respondent’s ability to pay child support.
Costs
At the conclusion of the hearing, Counsel for the Applicant sought an order that the First Respondent pay its costs of these proceedings.
It is the submission of the Applicant that a costs order should be made in favour of the Applicant in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 (Cth) as follows:
Professional Costs
1
Initiating Application up to completion of first court day (Application in a Case filed 29 April 2015)
$2,157.00
2
Daily hearing fee for short mention [item 6 (a)] and advocacy loading for solicitor on 18 June 2015
$403.50
3
Daily hearing fee for short mention [item 6(a)] and advocacy loading [item 5] for solicitor on 8 July 2015
$403.50
4
Daily hearing fee for short mention [item 6(a)] and advocacy loading [item 5] for solicitor on 7 August 2015
$403.50
5
Daily hearing fee for short mention [item 6(a)] and advocacy loading [item 5] for solicitor on
1 October 2015.$403.50
6
Initiating Application up to completion of first court day (Application in a Case filed 15 February 2016)
$2,157.00
7
Daily hearing fee for short mention [item 6(a)] for instructing solicitor on 2 May 2016
$403.50
8
Daily hearing fee for short mention [item 6(a)] for instructing solicitor on 2 May 2016
$269.00
9
Preparation of final hearing for a matter of 2 or more days for instructing solicitor [item 2]
$1,117.00
10
Preparation of final hearing for a matter of 2 or more days for Counsel [item 2]
$1,117.00
11
Daily hearing fee for a full day [item 6(a)] and advocacy loading [item 5[ for Counsel on
14 September 2016$3,129.00
12
Daily hearing fee for full [item 6(a)] for instructing solicitor on 14 September 2016
$2,086.00
13
Daily hearing fee for full day [item 6(a)] for instructing solicitor on 5 April 2017
$3,129.00
14
Daily hearing fee for full day [item 6(a)] for instructing solicitor on 5 April 2017
$2,086.00
15
Daily hearing fee for full day [item 6(a)] and advocacy loading [item 5] for Counsel on
6 April 2017$3,129.00
16
Daily hearing fee for full day [item 6(a)] for instructing solicitor on 6 April 2017
$2,086.00
Total Professional Costs
$24,479.50
Disbursements:
Service fees
$91.08
Total Disbursements
$91.08
TOTAL PROFESSIONAL COSTS
$24,479.50
TOTAL DISBURSEMENTS
$91.08
TOTAL:
$24,570.58
In reply, it is submitted on behalf of the First Respondent that in the ordinary course a Court should be reluctant to make any order as to costs in a Child Support matter.
The First Respondent also relies on the decision of Federal Magistrate Reithmuller (as he was then known) in Lilley v Child Support Registrar (SSAT Appeal) [2010] FMCAfam where at paragraph 24 his Honour notes that “child support litigation is a category of litigation where careful regard needs to be had before making costs orders.”
The First Respondent relies on some of the policy considerations noted in Lilley (supra) including the emotional difficulty litigants are often confronted with when dealing with the Child Support Registrar.
The First Respondent submits that if costs are to be ordered, then they should be awarded in accordance with the following matters set out in Schedule 1 of the Federal Circuit Rules 2001.
Item 1
$2,277
Item 3
$1,179
Item 4
Solicitor’s attendance for 2 days with a 50 per cent loading
$852
Item 6
This matter appears to have been before the Court on 5 occasions not including the trial, all were short mentions.
$1,420
Item 6
Two day trial with a 50 % loading
$6,258
Total payable submitted to be
$12,838.00 plus disbursements
In response to the First Respondent’s submissions, the Applicant argues the Court should distinguish the matter from Lilley v Child Support Registrar (SSAT Appeal) [2010] FMCAfam 378 on the following basis:
“…Lilley was an appeal against a decision of the then Social Security Appeals Tribunal, not an enforcement matter where a debtor has failed to meet his child support obligations and thereby necessitating the instigation of enforcement proceedings.”
The Applicant submits that the Court be guided by the decision of the Full Court in Hendy v Child Support Registrar & Webb [2001] FamCA 632 where the Full Court awarded costs to the Child Support Registrar, noting that:
….by operation of section 100 of the Child Support (Assessment) Act 1989, section 105 of the Child Support (Registration and Collection) Act, the enforcement proceedings are proceedings as if they were brought under the Family Law Act 1975”
Section 117 of the Family Law Act (1975) (Cth) is the relevant provision governing the Court’s jurisdiction to order costs.
His Honour, Judge Scarlett, in Child Support Registrar v Bancroft [2016] FCCA 2053 states that when determining whether to make an orders for costs one must have regard to the following general principles:
“37. The general principles that govern the Court’s discretion to award costs under s.117 of the Family Law Act were explained by the High Court of Australia in Penfold v Penfold [(1980) 144 CLR 311] …
38. The weight to be attached to the considerations in s.117(2A) of the Family Law Act is wholly discretionary and while no single factor out-ranks any other, there is nothing preventing one or other of them from being the sole foundation for a costs orders…in the absence of any countervailing consideration, the fact that a party was “wholly unsuccessful” will ordinarily [justify] the making of a costs order against that party….
Section 117(1) of the Family Law Act 1975 (Cth) provides that as a general rule each party shall bear their own costs of Court proceedings.
Section 117(2) provides however that if the Court is of the opinion that there are circumstances that justify doing so, the Court may make such orders as to costs as it thinks just which includes the power to make an order that a party pay the other party’s costs.
In the matter of Michail v Michail (No.2) [2010] FamCAFC 193 at [32] a Full Court of Justice Boland sitting as a single Judge held:
“The discretion to be exercised in making an order for costs is a wide one, and I refer to the decision of the High Court in Penfold v Penfold (1980) 144 CLR 311. The Court may depart from the usual rule that each party pay his or her own costs if it is satisfied there are circumstances which justify doing so. In considering whether there are, such circumstances the Court has regard to the factors in s 117(2A).”
Section 117(2A) of the Act provides as follows:
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
In this matter the First Respondent was unsuccessful in his claim to reduce the Child Support liability owed by him. Thus, the First Respondent has been wholly unsuccessful.
Prior to closings on the second day of trial, the solicitor for the First Respondent advised the Court that the application of the Child Support Registrar to set aside the Caveats lodged by the Second and Third Respondents on the real property pursuant to section 72C(1) of the Registration and Collection Act was no longer opposed by the First Respondent.
As set out in paragraphs 64-69 of this judgement, the Court found that it was the First Respondent who instructed solicitors to place caveats on the real property on behalf of the Second and Third Respondents without either of those persons knowing he had done so. The Court is satisfied that the caveats were lodged by the First Respondent in order to reduce or defeat his ability to pay his arrears of Child Support.
It is therefore clearly apparent that the Applicant has been put to unnecessary additional costs because of the manner in which the First Respondent conducted the proceedings.
Given the manner in which the First Respondent has conducted the proceedings and that he has been wholly unsuccessful in all applications made by him in these proceedings, I am satisfied that orders should be made he pay the whole of the Applicant’s costs of these proceedings.
In calculating the Applicant’s costs in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 (Cth), I am satisfied the written submission of the Applicant best reflects the scale costs save for two items. Using the numbering of the Applicant, item 8 and item 10 are disallowed. I am not satisfied attendance of a second instructing solicitor was necessary on 2 May 2016 or that a preparation fee for solicitor and Counsel is justified.
Accordingly an Order will be made that the First Respondent pay the Applicant’s costs fixed in the sum of $23,093.50 within 60 days.
I certify that the preceding one hundred and sixteen (116) paragraphs are a true copy of the reasons for judgment of Judge Bender
Date: 24 May 2017
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