Child Support Registrar and Kringas

[2010] FMCAfam 274

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CHILD SUPPORT REGISTRAR & KRINGAS [2010] FMCAfam 274

CHILD SUPPORT – Costs applications – enforcement summons and departure application – both parties seeking costs – father seeking costs against the Child Support Registrar as a non-party.

Federal Magistrates Court Rules 2001
Child Support (Assessment) Act 1989 (Cth), ss.98B, 98C, 100, 116(3), 117(7B), 145
Child Support (Registration & Collection) Act 1988 (Cth), ss.30, 105, 116(2)
Family Law Act 1975 (Cth), ss.117, 117(2A)

Hendy v Child Support CSR & Webb (2001) 164 FLR 236
ReJJT & Ors, Ex parte Victoria Legal Aid (1998) 195 CLR 184
Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 203
Bischof v Adams (1992) 2 VR 198

Applicant: CHILD SUPPORT REGISTRAR

Respondent: MR KRINGAS

File Number: MLC 668 of 2007

Judgment of: Hartnett FM

Hearing date: 16 March 2010

Delivered at: Melbourne

Delivered on: 24 March 2010

REPRESENTATION

Counsel for the Applicant Ms Berry

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Mr MacFarlane

Solicitors for the Respondent Flitner & Company

THE COURT ORDERS THAT:

1. The respondent father pay the costs of the Child Support Registrar on the enforcement summons proceedings with such costs fixed in the sum of $6,143.19.  There be a stay of three months on such payment.

2. Otherwise all extant applications are dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLC 668 of 2007

CHILD SUPPORT REGISTRAR

Applicant

And

MR KRINGAS

Respondent

REASONS FOR JUDGMENT

1. On 19 January 2007 the applicant filed an enforcement summons in these proceedings. On 14 March 2007 orders were made between the parties being by consent and of an interim nature. Included in those orders was an order that the respondent father file a departure application and by 30 April 2007. The respondent did not file this application until 17 August 2007 and in October 2007 that application’s hearing was adjourned because the father (respondent to the enforcement proceedings and now applicant in the departure application) had not served the respondent mother reasonably in advance of the hearing. The departure application filed by the father was not served upon the Australian Government Solicitor (acting for the applicant in the enforcement proceedings) nor the Child Support Registrar at any time. The enforcement summons hearing was then held in abeyance pending the hearing of the departure application.

2. On 26 February 2008 the departure application was commenced and then adjourned part-heard to 6 May 2008 as a result of the hearing extending beyond the anticipated time allocation. In May 2008 the respondent mother requested an adjournment of the matter as her father had died. The matter was again adjourned in August and October of 2008 for reasons not relevant here and on 27 November 2008 the hearing continued to 28 November 2008 and conclusion. Judgment in the departure application hearing was handed down on 24 April 2009.

3. On 9 June 2009 the enforcement summons was returned to Court. The respondent father then disputed an administrative change of assessment decision made by the Registrar some 12 months earlier, namely on

   
   

   2 June 2008. Interim orders were made by consent adjourning the enforcement summons to allow the respondent father to file the necessary application to dispute the relevant assessment. On 11 August 2009 the respondent father filed an application with the Social Security Appeals Tribunal for an extension of time within which to file an objection to the change of assessment decision of 2 June 2008. On

   
   

   2 October 2009 the respondent was granted such extension of time and on 25 November 2009 the objection decision was handed down putting in place a formula calculation from 6 June 2008 of the father’s ongoing child support liability.

4. Once again, the enforcement summons proceeding was able to be listed for hearing and on 11 December 2009 it was agreed between the parties that the child support debt of the respondent at that time and after the many proceedings, was nil. Both parties then made an application for costs. That matter was listed for hearing subsequently and in fact proceeded on 16 March 2010.

5. The applicant sought an order that the respondent to the enforcement summons proceedings pay the sum of $6,863.19 toward the applicant’s legal costs. Those costs are claimed in accordance with Schedule 1 of the Federal Magistrates Court Rules 2001. No challenge was made to the calculation of those costs claimed. The Court however finds the quantum to generally accord with the scale save as to the claim made for 9 June 2009 in a total sum of $3,360 being a full day hearing fee of $1,760 and a counsel fee of $1,600. This is an excessive amount and a total sum of $2,640 is more properly allowed. Accordingly the quantification of the amount should be $6143.19.

6. Should the applicant recover these costs? In the same enforcement summons proceedings the respondent makes an application for his costs to be paid by the applicant and fixed in the sum of $20,018.10. The quantification of these costs is said also to be in accordance with the relevant schedule scale of costs. I determine that the applicant Child Support Registrar should succeed on its application and for the reasons set out in the following paragraphs.

7. Pursuant to section 100 of the Child Support (Assessment) Act 1989 (Cth) and section 105 of the Child Support (Registration & Collection) Act 1988 (Cth), the Family Law Act 1975 (Cth) (“the Act”) and the related Federal Magistrates Court Rules 2001 apply to these enforcement and departure application proceedings. Thus section 117 of the Act is applicable to these proceedings and in particular those matters set out in section 117(2A) of the Act are matters to which the Court shall and does have regard.

8. In looking to those matters (set out in section 117(2A)) the following is apparent:

   a)the financial circumstances of each of the parties is as set out in my earlier reasons of April 2009 which are not repeated here but to which I refer and include in my reasoning;

   b)the respondent father is not in receipt of legal aid;

   c)those considerations set out in section 117(2A), (c) and (d) are particularly pertinent in these proceedings and they refer to the conduct of the parties and whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court. At the time the enforcement summons was filed there was a child support debt owed by the respondent to the Child Support Registrar in the sum of $21,396.37 (inclusive of penalties) and in relation to which a section 116(2) (of the Child Support (Registration & Collection) Act 1988 (Cth)) certificate was produced being prima facie evidence of the debt. The prior history of the matter is relevant here. It is:

   i)on 14 April 1999 the respondent’s liability with respect to his three children commenced, such liability being registered for collection with the Child Support Agency;

   ii)on 26 November 2002 there was a change of assessment decision for the period 21 November 2002 to 30 April 2004 where the child support amount determined to be payable was $8,346 per annum. In 7 June 2004 there was a further change of assessment decision for the period 1 May 2004 to 31 July 2005 such that the rate payable was $8,346 per annum;

   iii)the respondent father filed applications for departure for four periods commencing on 21 November 2002 and concluding on 31 July 2005. Orders in the Family Court of Australia at Melbourne by Justice Watt fixed the rate payable by the father in the sum of $260 per annum in each period;

   iv)following the expiration of the final period to which the orders of Justice Watt applied and on 14 October 2005 a further change of assessment decision was made. This was for the period 1 August 2005 to 5 March 2007. It set the respondent’s income at $65,000. The respondent lodged an objection to the decision which was disallowed on 16 May 2006. On 30 November 2006 the Australian Government Solicitor wrote to the respondent father demanding payment of his child support debt then being in the sum of $18,467.70. No response was made by the respondent. In the absence of any communication from the respondent and in the respondent’s failure to address the issue of his debt at the time the applicant performed its statutory function pursuant to s.30 of the Child Support (Registration & Collection) Act 1988 and filed an enforcement summons. This was not a vexatious nor oppressive proceeding. At the time of filing, no appeal against the 16 May 2006 decision had been made by the father. Those proceedings were then significantly drawn out in part by the respondent’s delay in filing a departure application, delay in the serving of same, delay in the production of documents and the delay in the filing of an application with the Social Security Appeals Tribunal.

9. The respondent argued that the applicant had been unsuccessful in the proceedings in that it had made patently erroneous decisions causing a need for proceedings to be instigated with such proceedings resulting in the child support debt being pursued by the Child Support Registrar becoming nullified as a result of departure orders and an objection decision. However the need for the proceedings to be instituted arose out of the respondent’s failure to comply with administrative assessments made in accordance with the relevant legislation or to challenge such assessments in a timely way and thus to address the accruing debt. The respondent’s conduct throughout leads the Court to conclude that were the proceedings not issued, the respondent would have taken no positive action to address the arrears of child support calculated to be owing.

10. On 10 December 2009 the Child Support Registrar offered by letter to settle the proceedings upon payment of an amount of $7,189.68 toward their legal costs as calculated in accordance with the Federal Magistrates Court Rules 2001. That offer was refused. Further costs were then incurred by both parties. Given the above history it would be inappropriate in this case if the taxpayer was required to bear the entire burden of the enforcement proceeding (Hendy v Child Support CSR & Webb (2001) 164 FLR 236).

11. The award of costs is a discretionary matter. There must of course be circumstances justifying the making of such orders. In the exercise of that discretion and in considering those matters as set out in section 117(2A) of the Act, the Court will accede to the application of the Child Support Registrar with regard to the enforcement proceedings.

12. I turn now to the costs claim of the father with respect to those proceedings in which he was the applicant namely his departure application filed on 17 August 2007. The other party to that proceeding was the mother of the three children of the marriage. Throughout these proceedings the mother appeared as a litigant in person opposing the father’s application. The father makes an application for costs against the Child Support Registrar, a non-party to those proceedings who was not at any time served with a copy of the proceedings. No application was made at any time by either the mother or father to join the Child Support Registrar to those proceedings. The Child Support Registrar did not seek to intervene. The amount of costs claimed by the father is in the sum of $26,452.40.

13. The father’s application sought departure from the administrative assessment of child support payable by him in respect of the parties three children for the periods:

    a)1 August 2005 to 5 March 2007 by attributing to the applicant father a child support income amount of $8,346 (the first period); and for the period

    b)6 March 2007 to 5 June 2008 (the second period) by attributing to the applicant a child support income amount of $13,082.

    The father was successful in that application. Included in the order made 24 April 2009 was an order that there was liberty to apply with respect to the question of costs. The father makes application for costs of the proceedings but against the Child Support Registrar and not the other party whom in terms of income receipt is relatively impecunious.

14. The applicant father argues with respect to the first period that at the time the Child Support Agency received the mother’s application on

    
    

    23 June 2005 seeking an administrative assessment of the father’s child support liability for the period commencing 1 August 2005 based on an alleged earning capacity of the father of $65,000 per annum gross, it should not have ignored the decision of Justice Watt of February 2005 nor gone behind His Honour’s orders. It is argued on behalf of the father that the administrative decision makers were required by law to accept that as at February 2005 and for the period from 2002 until 31 July 2005 the husband’s child support liability was properly $260 per annum. What the Senior Case Officer and Objections Officer did however was to look to the period after the expiration of the period provided for in the orders of Justice Watt and consider the income and circumstances of the father at that time which included an historical perspective. In doing so, the decision makers determined an income amount of $65,000. This amount derived in part from the Australian Government Jobsearch website which indicated average weekly earnings for [occupation omitted] to be $1,250 per week and that unemployment in the field was below average. Other relevant matters were also considered.

15. As to the second period the applicant father argues that the decision makers failed to apply the provisions of section 117(7B) of the Child Support (Assessment) Act 1989. Furthermore, notwithstanding the provisions of section 117(7B) the Child Support Agency on 2 June 2008 made further administrative assessments for the period 6 June 2008 – 5 September 2009 based on an imputed income of the applicant of $65,000. Mr Kringas lodged an objection to this assessment on

    
    

    16 June 2009 together with a request for an extension of time in which to lodge the objection. The request for an extension was refused by the Child Support Agency but subsequently granted by the Social Security Appeals Tribunal on 6 October 2009. The Child Support Agency then considered Mr Kringas’s objection to the decision made on 2 June 2008 and allowed his objection. Mr Kringas’s child support assessment was amended to be calculated on an income of $17,367.

16. The arguments raised by the applicant father go to questions of administrative decision making judicial review. This is not appropriate in these circumstances. The mother, the person to whom any payment is to be made, was the respondent to the proceeding without reference to the third party. She had the carriage of the argument against the applicant. The question of costs in these proceedings is dealt with in section 117 of the Act. The question must be posed, what are the circumstances that justify this Court making an order for costs as envisaged in section 117 of the Act and against a non-party. Certainly, there is power to make such an order (ReJJT & Ors, Ex parte Victoria Legal Aid (1998) 195 CLR 184) but generally it is inappropriate to do so (Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 203).

17. The Child Support Registrar and/or Agency cannot be said to have an interest in or connection in that sense with the quantum of payments made by the father to the mother. Its role is amongst other things to apply a statutory regime in the calculation of an assessment; consider applications to vary the assessment and to collect monies on behalf of the Commonwealth (section 30 of the Child Support (Registration & Collection) Act 1988) from those liable to make payments. It did not advise or finance either party in respect of the father’s departure application.

18. Counsel for the father referred the Court to the decision in Bischof v Adams (1992) 2 VR 198 wherein Gobbo J said at pages 204-205:

    “The review of the authorities provides only limited guidance as to the approach to an exercise of discretion in a case like the present which does not fit within prior categories or decisions. It can, however, be said in the light of dicta in the Burns Philip Case (Burns Philip & Co. Ltd. v Priestley & Morris v Haribhagat (unreported, Full Court, 31 January 1992))) that there is an obligation to find a connection between the non party and the proceedings. Given that there must at least be a connection between the non party and the proceedings, what form must this connection take?

    It is not practicable to lay down a set of parameters in advance for there may be cases where the interest of justice support an order for costs even though the connection is slender. Thus if a witness deliberately refused to answer to a subpoena and thereby causes the case to be adjourned and so increases costs to the parties, I would have thought that it was very much arguable that he should bear these extra costs. There would seem to be no connection in the ordinary sense of that word between that witness and the proceedings, beyond the fact that he was a potential witness. It may be said, however, that there is a causal connection between the non party and the incurring of the costs, a matter that bears directly on the justice of whether he should be made to pay costs that he has caused to be incurred.

    Again, there may be cases where the connection is significant but not material to the issue of costs. Thus a person may benefit greatly from a particular proceeding but may not have any real part in supporting the proceeding.

    The most convenient course is, in my view, to look at both factors in considering the connection between the proceedings and the non party, namely, the connection between the non party and the proceedings and secondly, the causal connection between the non party and the costs. I have concluded that, without limiting myself to these two matters, I should take both factors into account in any exercise of discretion.  The connection must be real and direct and it must be material to the issue of costs. The mere fact that a person may benefit from the litigation will not, without more, suffice.”

19. Counsel for the father, as to these matters, submitted the following:

    “The connection between the Child Support Registrar and the proceedings is obvious both in relation to the first (1 August 2005 to 5 March 2007) and the second period (6 March 2007 to 5 June 2008). The Child Support Agency in failing to take into account only relevant matters in relation to the first period and in fact taking into account irrelevant matters made a patently erroneous decision the consequence of which was that Mr Kringas was assessed for child support based on an income of $65,000 per annum.

    The Child Support Agency in failing to apply the provisions of the legislation, namely section 117(7B) of the Child Support (Assessment) Act 1989, in relation to the second period again made a patently erroneous decision the consequences of which were again to assess Mr Kringas’s income for child support purposes at $65,000.

    The causal connection between the Child Support Agency and the costs incurred by Mr Kringas is again obvious. Had the Child Support Agency considered the various applications made by

    
    

    Mr Kringas in the light of only relevant matters and in the light of section 117(7B) it would not have made the assessments it did. The corollary of this is that there would have been no need for any proceedings to be instigated by Mr Kringas and hence no costs incurred. The decision of Federal Magistrate Hartnett and the later decision of the Child Support Agency made on 25 November 2009 are illustrative of the failure of the Child Support Agency in this matter. Furthermore, the conduct of the Child Support Agency in refusing to grant Mr Kringas leave to object out of time in relation to the Child Support decision made on

    
    

    2 June 2008 is again indicative of its attitude to Mr Kringas and is in itself also supportive of such a costs order as sought. The Child Support Agency at the time of refusing the application for an extension of time was well aware of Federal Magistrate Hartnett’s decision and aware of the provisions of section 117(7B). Notwithstanding this, the Child Support Agency refused the request for an extension of time. Mr Kringas was required to appeal to the Social Security Appeals Tribunal. The SSAT handed down its decision granting an extension and shortly thereafter the Child Support Agency reviews Mr Kringas’s objection in relation to the 2 June 2008 decision and allows his objection.”

1. These submissions raise questions as to whether the circumstances of this case are exceptional. Is there, as is said an “attitude” on the part of the Child Support Agency toward Mr Kringas such that a costs order should be made? I think the answer to both questions is no. Following the expiration of a period in relation to which orders of the Family Court of Australia operated, the mother made application under section 98B of the Child Support (Assessment) Act 1989 for a determination by the Registrar being an administrative departure (Part 6A) from the provisions of the Act relating to administrative assessment of child support in relation to the three children. Upon being satisfied of those matters set out in the Act under section 98C the Registrar made a determination which remained unchanged after the completion of the father’s subsequent objection in an administrative review. The father was notified, given a right of reply and an opportunity to be heard throughout.

2. The determination made was within power and written reasons were provided. No payment was made by the father and arrears of child support payments commence to accumulate. The father did not then take any action which was open to him in accordance with the Child Support (Assessment) Act 1989. He did not do so until many months after the filing of the enforcement summons and following the assessment calculated for the second period. The subsequent departure application proceedings were between himself and the mother and in relation to these proceedings the Child Support Agency and/or Registrar had no involvement nor sought to intervene (section 116(3) and section 145 of the Child Support (Assessment) Act 1989). The Scheme set out in the Child Support (Assessment) Act 1989 does not envisage that as a matter of public policy in the carrying out of its statutory obligations the Child Support Registrar should become liable for every successful Social Security Appeals Tribunal or Court review that finds in favour of a departure application made by a party. There is not before me evidence of dishonest or capricious conduct on the part of the Registrar or a delegate of the Registrar in the making of administrative decisions in this matter. Rather there is a compliance with the Registrar’s obligations under the child support scheme as set out in the Child Support (Assessment) Act 1989 and the Child Support (Registration & Collection) Act 1988.

3. The application of the applicant father for costs against the non party Child Support Registrar is refused.

I certify that the preceding (twenty-two) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Associate:  Andrea O’Halloran

Date:  24 March 2010