Child Support Registrar and Jonsberg
[2011] FMCAfam 593
•17 June 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHILD SUPPORT REGISTRAR & JONSBERG | [2011] FMCAfam 593 |
| CHILD SUPPORT – Enforcement of child support debt. |
| Family Law Act 1975, s.106 Child Support (Registration and Collection) Act 1988, s.105 Transfer of Land Act 1958 (VIC), s.89A Family Law Rules 2004, r.20.05 Federal Magistrates Court Rules 2001, rr.1.05, 25B.05 |
| Weir and Weir (1993) FLC 92-338 |
| Applicant: | CHILD SUPPORT REGISTRAR |
| Respondent: | MR JONSBERG |
| File Number: | MLC 1047 of 2011 |
| Judgment of: | Hughes FM |
| Hearing dates: | 20 and 30 May 2011 |
| Date of Last Submission: | 30 May 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 17 June 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Boughton |
| Solicitors for the Applicant: | Australian Government Solicitors |
| Counsel for the Respondent: | in person |
| Solicitors for the Respondent: | in person |
IT IS DECLARED
As at 30 May 2011 the Respondent owes the Applicant the sum of $10,071.14 (“the child support debt”) consisting of $7,393.72 in arrears of child support and $2,677.42 in late payment penalties.
IT IS ORDERED THAT
The respondent shall pay to the applicant the sum of $20,982.39 (“the total debt”) being the sum consisting of the child support debt declared above, plus the sum of $1,320.00 ordered to be paid for costs on
18 March 2011 and the sum of $9,591.25 towards the applicant’s costs relating to the enforcement summons as calculated in accordance with the Federal Magistrates Court Rules 2001.
The total debt shall be paid by the respondent as follows:
(a)
By equal weekly instalments of $150.00, with payment due on
24 June 2011 and weekly thereafter until 31 December 2012; and
(b)On 31 December 2012 payment in full of any balance of the total debt then outstanding.
Until the final payment of all amounts owing pursuant to these orders, the respondent is restrained from selling, assigning, transferring, further encumbering or dealing in any way with his interest in the real property known as Property LProperty L in the State of Victoria, and being the whole of the land more particularly described in Certificate of Title Volume [omitted] (“the Property L property”), without the prior written consent of the applicant.
The respondent’s interest in the Property L property is charged in favour of the applicant for the total debt and the applicant is at liberty to lodge a caveat over the Property L property.
Until the final payment of all amounts owing pursuant to these orders, the respondent in his capacity as the sole director of [Jonsberg] Pty Ltd, ACN [omitted], (“[Jonsberg Pty Ltd]”) is restrained from selling, assigning, transferring, further encumbering or dealing in any way with its interests in any motor vehicles, without the prior written consent of the applicant.
The respondent in his capacity as sole director of [Jonsberg Pty Ltd] shall execute, upon presentation to him by or on behalf of the applicant, such documents as the applicant may require for the purpose of [Jonsberg Pty Ltd] charging its interest in the [Jonsberg Pty Ltd] motor vehicles in favour of the applicant for the total debt, whereupon the applicant is at liberty to secure the interest created by such charge.
Withdrawal of Caveat
The respondent shall forthwith take all steps necessary, including making an application to the Registrar of Titles pursuant to section 89A of the Transfer of Land Act 1958 (Vic), to achieve the removal of caveat number [omitted] registered on Certificate of Title Volume [omitted] in favour of the respondent’s mother, Mrs J.
If the respondent fails to comply with any part of these orders or deals with the Property L property or any motor vehicles in breach of these orders:
(a)The total debt will be immediately due and payable.
(b)The Sheriff of the Supreme Court of the State of Victoria ("the Sheriff") and her servants and agents may seize and realise, in accordance with Order 33 Rule 5 of the Family Law Rules 1984 (which applies by virtue of Rule 25B.05 and Schedule 5 of the Federal Magistrates Court Rules 2001), such of the respondent’s personal property, not being prescribed personal property, as the Sheriff or her servants or agents may consider sufficient to meet the reasonable costs of the Sheriff and discharge in full all amounts owed by the respondent under orders of this Court in this proceeding, and, in particular, the Sheriff or her servants or agents may seize and realise any motor vehicles of the respondent.
(c)The Sheriff and her servants and agents may seize and sell any motor vehicles owned by [Jonsberg Pty Ltd], pursuant to Rule 20.05 of the Family Law Rules2004 (which applies by virtue of section 105 of the Child Support (Registration and Collection) Act 1988 (Cth) and Rule 1.05 of the Federal Magistrates Court Rules 2001), as the Sheriff or her servants or agents may consider sufficient to meet the reasonable costs of the Sheriff and discharge in full all amounts owed by the respondent under orders of this Court in this proceeding.
For the purpose of carrying into effect these orders, the respondent and/or any director of [Jonsberg Pty Ltd] (as applicable) shall give the Sheriff, and her servants and agents, peaceful entry to any premises in which personal property of the respondent or [Jonsberg Pty Ltd] respectively is located and shall deliver to the Sheriff, her servants or agents, upon request, the keys to any motor vehicle(s) or other property for which keys are reasonably required for operation or removal.
The respondent and/or any director of [Jonsberg Pty Ltd] (as applicable) shall, upon the request of the Sheriff, do all acts and execute all documents necessary to transfer to the Sheriff all of the respondent’s and/or [Jonsberg Pty Ltd] (as applicable) right, title and interest in such of the respondent’s personal property and/or the [Jonsberg Pty Ltd] motor vehicles (as applicable) as the Sheriff or her servants and agents may seize pursuant to these orders.
If the respondent and/or any director of [Jonsberg Pty Ltd] (as applicable) defaults under the immediately preceding orders, the Sheriff is hereby empowered to sign all documents and do all things necessary to transfer to the Sheriff all of the Respondent’s and/or [Jonsberg Pty Ltd]’s rights, title and interest in the personal property and/or the [Jonsberg Pty Ltd] motor vehicles (as applicable) seized pursuant to these orders and an affidavit of the Sheriff attesting to the default shall be sufficient proof of the default for the purpose of this order.
The Sheriff shall, as soon as reasonably practicable, sell the Respondent's personal property and/or the [Jonsberg Pty Ltd] motor vehicles (as applicable) seized pursuant to these orders, for the best price reasonably obtainable and shall apply the proceeds of sale in the following order:
(a)first, in payment of the reasonable costs, disbursements and expenses of the Sheriff or her servants or agents, including reimbursement to the Applicant for any fees paid to the Sheriff ("the Sheriff fees");
(b)second, in discharge of prior encumbrances on the personal property or the [Jonsberg Pty Ltd] motor vehicles;
(c)third, in payment of such sums as are then outstanding to the Commonwealth pursuant to any order of this Court in respect of the child support debt and the applicant’s costs; and
(d)fourth, in payment of any residue to the respondent and/or [Jonsberg Pty Ltd] (as applicable).
Pursuant to Order 33, Rule 7 of the Family Law Rules 1984 (which applies by virtue of Rule 25B.05 and Schedule 5 of the Federal Magistrates Court Rules), the Official Receiver on behalf of the Commonwealth (“the trustee”) is hereby appointed trustee for the sale of such of the respondents interest in the Property L property.
The respondent shall, upon the request of the trustee, sign all documents and produce the relevant Certificate of Title in his possession, custody or control and do all things necessary to transfer to the trustee the respondent’s interest in the Property L property.
If the respondent defaults under the immediately preceding order, a Registrar of the Federal Magistrates Court of Australia shall be and is hereby empowered pursuant to section 106A of the Family Law Act 1975 to sign all documents and do all things necessary to transfer the respondent’s interest in the Property L property to the trustee.
The trustee shall, as soon as reasonably practicable, sell the respondent’s interest in the Property L property for the best price reasonably obtainable and shall apply the proceeds of sale in the following order:
(a)first, in payment of all costs, commissions and expenses of the said trust, transfer and sale including all costs incurred by the said trustee;
(b)second, in discharge of any encumbrance upon the Property L property;
(c)third, in payment to Ms M, the joint tenant of the Property L property, being her share of the balance of proceeds remaining;
(d)fourth, in payment of such sums as are then outstanding to the Commonwealth pursuant to any order of this Court in respect of the child support debt and the Applicant’s costs; and
(e)fifth, in payment of any residue to the respondent.
The parties have liberty to restore the matter to the Court list upon
7 days notice in respect of compliance with these orders.
Otherwise all extant applications are dismissed.
AND THE COURT NOTES THAT
A.Any monies payable by the Respondent pursuant to these orders are in addition to his ongoing liability to pay child support as assessed or varied from time to time.
IT IS NOTED that publication of this judgment under the pseudonym Child Support Registrar & Jonsberg is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA ATMELBOURNE |
MLC 1047 of 2011
| CHILD SUPPORT REGISTRAR |
Applicant
And
| MR JONSBERG |
Respondent
REASONS FOR JUDGMENT
These are enforcement proceedings brought by the Child Support Registrar against the respondent in relation to a child support debt.
The proceedings were conducted over two days on 20 and 30 May 2011. As at 30 May 2011 the respondent had arrears of child support in the sum of $7,393.72 plus late payment penalties $2,677.42, making a total child support debt of $10,071.14. In addition, the Child Support Registrar sought costs of $9,591.25 relating to these proceedings and the recovery of previously ordered costs against the respondent of $1,320. The total amount sought, therefore, was $20,982.39.
The respondent is the father of a child subject to a child support assessment. The respondent is the liable parent.
The respondent is a self employed [omitted] and asserts that his child support liability has long been assessed according to a deemed taxable income well in excess of his actual taxable income. He has not, however, fully availed himself of the administrative procedures available to challenge the administrative assessment and, accordingly, the arrears have mounted.
Background
Mr Jonsberg worked as a [omitted] for his mother’s [omitted] business from September 1996 until 2003. He said he left his mother’s employment voluntarily because, at the time, he was a union delegate and a major company with whom his mother had contracts refused to allow him into the yard from that time. He said his mother had to get another [employee] for that work and he decided to leave. I note in passing the respondent’s resignation from his mother’s employment after 7 years happened to coincide with action first taken against him by the Child Support Registrar.
The respondent said he had no paid employment between 2003 and early 2005. He said he and lived on credit cards supplied by his mother and other funds advanced to him by her. He is a qualified [omitted] and did not explain why he did not obtain other work.
In 2005 the respondent was offered a job through a friend but needed a truck and a trailer to do the work. He said he tried to obtain finance but was unsuccessful. His mother then loaned him the money to buy the truck. The respondent registered his business, [Jonsberg] Pty Ltd on
22 March 2005. The truck was purchased at the end of April 2005 and registered in June 2005.
The respondent has always been, and remains, the sole director, shareholder and secretary of the Company. For some time he was also the sole [occupation omitted]. He employed his mother and his current de facto partner at different times to assist with the book keeping. The respondent said all income earned by the Company went into the business account from which fuel, registration and other expenses were paid. He said he also drew a wage approximately $50,000 to $60,000 per annum from the business account.
After the respondent had been working as a sole [omitted] for a few years he was persuaded by an acquaintance to commence interstate [omitted] work. His business then expanded rapidly. He employed four permanent [workers] in addition to himself in the busiest periods. The rapid growth in the gross income of the business for each financial year between 2007 and 2010 can be seen in the following table:
2007
$151,569.44
2008
$158,486.48
2009
$590,416.87
2010
$678,092.00
The respondent said he got into financial difficulties in 2010 because, while the gross income had increased significantly, so had the fuel and maintenance costs. He said that by 2010 the maintenance costs, in particular, were enormous and he realised that he had not properly understood what the business into which he had expanded. He said the combined impact of the higher costs with the global financial crisis resulted in his business suffering a dramatic downturn in 2010. He sold trucks and laid off workers in order to pay the bills. He is now back to being the sole [omitted] for the Company.
The respondent still has one truck and a utility vehicle. He said he had had no work in the two weeks leading up to 30 May 2011 and last had two weeks of solid work about six prior to that.
It was suggested to the respondent in cross examination that he would be able to obtain work [omitted] for some other company or using this tool making skills elsewhere. He said he did not want to do that as still owes money on his truck and wants to use it to build up his business again.
The current proceedings
The proceedings first came before the Court on 18 March 2011. The respondent did not attend Court on that date but participated by telephone link. Orders were made adjourning the proceedings to
20 May 2011 for hearing. Pending the hearing, the respondent was required to pay $100 per week from 25 March 2011 towards the arrears of child support plus a lump sum of $6,000 before 1 April 2011. The respondent was ordered to file material upon which he sought to rely and produce certain documents by 18 April 2011. He was restrained from disposing of various assets and his interest his real property was charged in favour of the Child Support Registrar. The respondent was also ordered to pay the applicant’s costs of $1,320.
The respondent paid the $6,000 lump sum and four of the $100 instalments required by the Orders of 18 March 2011. On one occasion he paid $200. He missed five other payments. On 20 May 2011 the respondent asserted that he had in fact made more payments than that but could not explain why they had not been received by the Child Support Agency. The matter was adjourned part heard to 30 May 2011. Although he had 10 days to produce evidence of the payments he said he had made, he failed to do so. This was consistent with his failure throughout the life of these proceedings to produce relevant material.
The respondent was not a very credible witness. He clearly felt aggrieved that the Child Support Agency has assessed the level of child support payable by him based on an income which, he felt, was well in excess of his actual taxable income. Although there have been numerous applications for change of assessment, the respondent has not fully pursued the administrative avenues available to him to have any adverse decisions reviewed. Instead, he has simply ignored his obligations and failed to pay child support over long periods. He has then seen enforcement action taken by the Child Support Registrar as a persecution of him, rather than the fulfilment of the statutory obligations of the Registrar.
During cross-examination it was put to the respondent that he had told an officer of the Child Support Agency during a telephone conversation on 15 October 2010 that he refused to pay the arrears because they were based on inaccurate income figures, that he would not pay a cent and that the Child Support Agency would have to take him to Court if they thought otherwise. The respondent conceded that he may have made those statements. He said he was heavily medicated with anti-depressants at the time. He also conceded that he had said to another officer on 27 December 2010 that he would die before paying any child support. He conceded that, following that conversation, another officer rang him to discuss his comments and to encourage him to pursue some of the options that were available to him. He agreed he told the officer that the advice was a waste of time.
The respondent’s financial circumstances
The respondent assesses himself to be in parlous financial circumstances. He said his business owns a Kenworth truck and a Nissan Navajo Ute. He said that both vehicles are subject to finance and he is two payments behind in relation to each. He and his de facto partner own their own home but the respondent said they are struggling to make the mortgage payments and have recently been granted three months grace in relation to those payments.
The respondent’s home was purchased in October 2005 for $380,000. In cross examination it was suggested to him that the property would now be worth approximately $550,000. The respondent vehemently disagreed with that. He said he estimated its current value to be approximately $430,000. He said it needs a lot of work. The current annual rates notice in relation to the property gives an improved capital value of the property of $460,000. The mortgage is approximately $292,000, leaving net equity of $138,000 on the respondent’s figures or $258,000 on the figure suggested by the counsel for the Child Support Registrar.
The respondent said he had no other significant assets. He was cross examined about an application he and his de facto partner made for a loan in January 2010. The application form was annexed to the affidavit of Ms W filed on behalf of the Child Support Registrar on
7 March 2011.
In that application the respondent and his partner declared assets of $671,000, liabilities of $277,500 leaving net assets of $393,500. The value of their home was declared to be $480,000. The other assets comprised cars, furniture, boats and a truck. The respondent said that all of the boats were disposed of in order to pay his and his partners debts and to support their respective businesses.
Although the respondent produced a bundle of documents evidencing various debts of his, he did not satisfy the requirements under the Federal Magistrates Court Rules 2001 for full financial disclosure, nor did he produce the documents set out on the originating summons. In those circumstances, the Court need not be too cautious about making findings in favour of the applicant.[1] The respondent said that many of his financial documents are held by an accountant previously engaged by him but, because they have a dispute about fees, the accountant is refusing to release the documents.
[1] Weir and Weir (1993) FLC 92-338
The respondent did not call his defacto partner although she was at Court each day; nor did he call his mother. His mother attended Court on the first day in answer to the subpoena to give evidence issued by the Child Support Registrar but she returned on the second day in support of her son. Both his partner and his mother had done bookkeeping for the respondent’s business and could have given evidence for him about his financial circumstances.
Notwithstanding the debate about the value of the property owned by the respondent with his fiancée, I am satisfied there is sufficient equity in the property to comfortably meet the Child Support debt. However, there is a caveat on the property lodged by the respondent’s mother, Mrs J, and registered on 9 March 2011.
The caveat
Mrs J was subpoenaed to give evidence by the Child Support Registrar. She said that she lodged the caveat over her son’s house in order to secure personal loans she had made to him, amounting to just over $145,000. She said she had been lending her son money since 1995 and had kept a running total of what he owed. She produced documents which, on their face, corroborate that claim. I am satisfied that the documents are genuine. They begin with entries in a journal written by hand which document advances made to her son and regular repayments by him deducted from his wages while he was working for her. The entries are made in different pens and are annotated with various comments.
From January 1999 the record of the loans was maintained on a computer. From January 2010 Mrs J got her son to sign an ‘IOU’ every time she lent him money.
Mrs J had collated the figures and gave evidence that, up until April 2004, the outstanding debt was $25,239.25. Further amounts were loaned in 2004 and 2005; significantly, $57,000 in 2005 for the truck for the respondent to commence his business. The respondent agreed in cross-examination that he only paid $32,000 for the truck but said the balance of $25,000 was spent on repairs and improvements to ensure the truck was able to be operated effectively.
During the 2010 calendar year, Mrs J loaned a total of $54,747.77 to her son. The total amount outstanding on loans between 1996 and December 2010 was $145,419.82.
On 3 December 2010 the Child Support Registrar wrote to the respondent to advise that enforcement proceedings would be commenced if the arrears of child support were not paid promptly.
In January 2011 the respondent and his mother entered into what purports to be a loan agreement drawn up by Mrs J’s solicitors for the sum of $145,419.82. No interest is payable on that loan and the termination date is said to be “at the expiration of Thirty (30) days from the date in notice writing (sic) is made by the Lender for payment, whereby any principal outstanding will become due and payable.”
On the strength of this loan agreement Mrs J registered a caveat on the respondent’s real property. However, on the evidence before me, Mrs J has no caveatable interest. Neither the respondent nor his mother asserted that she had any legal or equitable interest in the real property and the loan agreement does not create a charge over the property. A significant amount of the debt is statute barred, in any event, being greater than six years old. The respondent, appropriately, feels a strong moral obligation to pay the debt but that does not mean his mother has an interest in his property. The Child Support Registrar sought orders requiring Mrs J to remove the caveat. Given she is not a party to the proceedings I have no power to order her to do so.
When Mrs J gave evidence she said that she did not really ever expect to be repaid the money. She said she lodged the caveat under pressure from her other children. It is quite apparent on all the evidence that the formal loan agreement was drawn up in an effort to protect the respondent’s assets from the enforcement action taken by the Child Support Registrar. It is clearly an attempt to prioritise the repayment to the respondent’s mother over his payment of child support. I will order the respondent take all steps necessary to apply to have the caveat removed.
As a result of the attitude adopted by the respondent in relation to his obligation to pay child support, the penalties and costs sought by the Child Support Registrar now well exceed the child support arrears. The court costs, in particular, have mounted in circumstances in which a simple agreement to repay the amounts owed would have avoided them.
I am satisfied that the respondent does genuinely have some financial difficulties and significant debts. I am satisfied on the evidence, however, that the respondent’s resentful attitude to the whole issue of child support has meant that he has not applied himself as fully as he might to generating sufficient income to pay those debts. At the end of the proceedings, the respondent essentially conceded that point. He said that he was confident about building up his business again and said that he was willing and able to immediately pay $150 per week and estimated he could pay the total amount owing payable within
18 months to 2 years, even though that would require payments significantly in excess of $150 per week. If he had volunteered that information earlier, he might have saved himself a lot of money.
The Child Support Registrar sought orders requiring the respondent to make minimum payments of $100 per week but for the total amount to be paid within 12 months. I am prepared to give the respondent an additional 6 months but will require the higher weekly amount he offered.
Costs
The Child Support Registrar provided a schedule of costs sought. The cost schedule is in accordance with the Federal Magistrates’ Court Scale of Costs. I am satisfied that the costs are reasonable.
During submissions I queried the amount of $3,750 sought for preparation for final hearing because a very lengthy affidavit was filed by the Child Support Registrar on 7 March 2011 and no substantial material was filed after that date. However, the caveat lodged by the respondent’s mother was registered on 9 March 2011, after the proceedings had begun. This necessitated additional work by the Registrar’s legal representatives, including the issue of a subpoena requiring the respondent’s mother to attend Court to give evidence. Given the lack of material produced by the respondent, extensive cross-examination of Mrs J was required in order to establish that there was no caveatable interest.
Accordingly I will allow the costs sought by the Child Support Registrar in the sum of $9,591.25.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Hughes FM
Date: 17 June 2011
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