CHILD SUPPORT REGISTRAR & CARPENTER
[2012] FMCAfam 829
•14 August 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHILD SUPPORT REGISTRAR & CARPENTER | [2012] FMCAfam 829 |
| CHILD SUPPORT – Enforcement – child support debt – late payment penalties – where arrears of child support paid prior to the final hearing – delay – where unwarrantable delay in seeking enforcement. COSTS – Where Applicant seeks costs – whether costs order appropriate – costs do not follow the event in enforcement proceedings. |
| Child Support (Registration and Collection) Act 1988 (Cth), ss.30, 67, 68, 105, 116 Family Law Act 1975 (Cth) ss.117, 117AB Federal Magistrates Court Rules 2001 Sch.1 |
| Breen & Breen (unreported) 13 June 1996 Child Support Registrar & Stewart [2010] FMCAfam 38 Davis v Insolvency and Trustee Service Australia (No.1) [2009] FCA 562 Frei & Frei-Suter (unreported) 12 March 1996 Hendy v Deputy Child Support Registrar (2001) 27 Fam LR 641; [2001] FamCA 632 The King v Commonwealth Court of Conciliation and Arbitration; Ex Parte Ozone Theatres (Aust.) Ltd (1949) 78 CLR 389 Laurie v Child Support Registrar [2009] FamCAFC 183 Mathieson & Hamilton [2006] FMCAfam 238 |
| Applicant: | CHILD SUPPORT REGISTRAR |
| Respondent: | MR CARPENTER |
| File Number: | SYC 5036 of 2011 |
| Judgment of: | Scarlett FM |
| Hearing dates: | 15 May & 12 June 2012 |
| Date of Last Submission: | 12 June 2012 |
| Delivered at: | Sydney |
| Delivered on: | 14 August 2012 |
REPRESENTATION
| Solicitor for the Applicant: | Ms Jones |
| Solicitors for the Applicant: | Australian Government Solicitor |
| Solicitor for the Respondent: | Ms Pilkinton |
| Solicitors for the Respondent: | Legal Aid NSW |
ORDERS
All previous Orders are discharged.
The Court declines to order that the Respondent pay any amount to the Applicant by way of late payment penalties.
The Respondent is to pay the Applicant’s costs fixed in the sum of $1,500.00 by instalments of $60.00 per month, the first payment to be made ONE (1) month from the date of these Orders and monthly thereafter.
IT IS NOTED that publication of this judgment under the pseudonym Child Support Registrar & Carpenter is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 5036 of 2011
| CHILD SUPPORT REGISTRAR |
Applicant
And
| MR CARPENTER |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the Child Support Registrar for a declaration that the Respondent owes an amount of late payment penalties arising from arrears of child support that have since been paid. The Child Support Registrar also seeks an order for costs.
Background
On 19th August 2011 the Child Support Registrar filed an Application in a Case seeking a direction that the Respondent owed an amount in respect of arrears of child support and late payment penalties as evidenced by a certificate issued under s.116(2) of the Child Support (Registration and Collection) Act 1988. The Application was supported by an affidavit showing that the child support was payable in respect of the Respondent’s daughter who was born [in] 1989.
On 13th March 2012 the Child Support Registrar filed in court proposed Minutes of Orders Sought seeking a declaration that as at that date the Respondent owed a child support debt of $21,404.92 made up of:
a)arrears of child support in the sum of $6,181.18; and
b)late payment penalties in the sum of $15,223.74.
The Child Support Registrar sought orders that the Respondent pay the child support debt of $21,404.92 and the sum of $3,163.00 towards the Registrar’s legal costs within 30 days.
On 8th May 2012 the Respondent paid the outstanding arrears of child support in full. On that same day, through his solicitor, he sought a remission of the late payment penalties.
The Application was heard on 15th May and 12th June 2012.
Orders Sought
By a Minute of Order filed in Court on 12th June 2012, the Child Support Registrar seeks a declaration that the Respondent owes the Applicant the sum of $15,341.98 in late payment penalties (the child support debt).
The Child Support Registrar seeks orders that:
a)the Respondent is to pay to the Applicant the child support debt of $15,341.98;
b)the Respondent is to pay to the Applicant the sum of $4,906.50 toward the Applicant’s legal costs;
c)the Respondent is to pay to the Applicant the total debt within 90 days;
d)the Respondent is to be restrained from selling, assigning, transferring, further encumbering or dealing in any way with his interest in the real property at [address omitted], [D], without the prior written consent of the Applicant;
e)the Respondent’s interest in the real property is to be charged in favour of the Applicant for the total debt and the Applicant is to be at liberty to lodge a caveat over the real property to secure the debt;
f)the Respondent is to be restrained from assigning, transferring, further encumbering or dealing in any way with his interest in his 1981 Toyota Hilux;
g)the Respondent’s interest in the vehicle be charged in favour of the Applicant for the total debt and the Applicant is to be at liberty to lodge an encumbrance[1] over the vehicle to secure the debt; and
h)if the Respondent defaults in making any payments, the total debt will become immediately due and payable.
[1] Which is misspelled on the Minute of Order
The Respondent seeks orders that:
a)all orders made to date be discharged;
b)the Application filed on 11th August 2011 be dismissed;
c)if the Court exercises its discretion not to enforce penalties, that there should be an order for costs against the Child Support Registrar;
d)in the alternative, there should be no order for costs;
e)that the Court recommend to the Child Support Registrar that the penalties owing be remitted in accordance with s.68 of the Child Support (Registration and Collection) Act 1988;
f)that the Court recommend to the Child Support Registrar that consideration be given to the development of guidelines regarding enforcement of child support;
g)in the alternative, if an order is made for the payment of penalties, that this order be stayed pending the outcome of any application made by the Respondent to the Social Security Appeals Tribunal or other Court or Tribunal; and
h)any order as to the payment of penalties or costs provide for payment by instalments.
Evidence
The Child Support Registrar relied on the following affidavits:
a)the affidavit of Ms G affirmed on 11th May 2012;
b)the affidavit of Ms N affirmed on 10th April 2012;
c)the affidavit of Ms Jones affirmed on 29th September 2011; and
d)the affidavit of Rebecca Jones affirmed on 3rd November 2011.
Ms G gave oral evidence. The evidence of Ms N was not pressed. Ms Jones was not required for cross-examination.
The Respondent relied on the following:
a)his affidavit sworn on 22nd March 2012;
b)his affidavit sworn 29th March 2012;
c)the affidavit of Ms S sworn or affirmed on 22nd March 2012; and
d)the Respondent’s Financial Statement sworn or affirmed on 29th March 2012.
The Respondent gave oral evidence. Ms S was not required for cross-examination.
Ms G deposed in her affidavit that she had read an earlier affidavit by another Litigation Officer in the Child Support Agency, Ms O, affirmed on 18th August 2011, which affidavit she annexed to her own. Ms G stated that she was satisfied that the contents of Ms O’s affidavit were true and correct.
The annexed affidavit of Ms O stated that the Respondent had a registered liability for collection of maintenance payments in respect of his daughter, whose date of birth is [omitted] 1989. Ms O deposed:
The liability commenced on 7 December 1989 and was registered for collection with the CSA on 7 December 1989. From 7 December 1989 to 23 October 1990 the liability was collected by the CSA. From 4 November 1994 to 20 March 1995 the liability was collected by the parties privately. From 21 March 1995 to the present, the liability was again collected by the CSA. The liability ended on [date omitted] 2007.[2]
[2] Affidavit of Ms O 18.8.2011 at paragraph [5]
The affidavit of Ms O went on to state that letters of demand that as at the date of the affidavit a search of the child support register showed that a total of $21,222.20 was owing by the Respondent, made up of:
a)$6,440.03 for arrears; and
b)$14,782.17 for late payment penalties.
Ms O deposed that letters of demand had been sent to the Respondent on 4th February and 11th July 2011.
Ms G was cross-examined by Ms Pilkinton, who appeared for the Respondent, about whether any steps were taken by the Child Support Registrar to enforce payment of the child support debt before the child reached her eighteenth birthday. Deductions were made from the Respondent’s wages between 2 March and 6 October 2004. In addition, the Respondent’s income tax refunds were intercepted on the following dates:
a)4th March 2002;
b)1st September 2005;
c)20th July 2009; and
d)3rd August 2009.
The Child Support Payer Transaction Statement annexed to Ms O’s affidavit showed that the Respondent had a nil child support balance at 8th March 1995.
Ms G said that there had been negotiations to settle the matter prior to commencing court proceedings.
The affidavits of Ms Jones, a solicitor employed by the Australian Government Solicitor, dealt with correspondence and telephone conversations with the Respondent about his attendance at Court and the orders that were being sought by the Child Support Registrar.
In his affidavit of 22nd March 2012 the Respondent deposed that he was living in a de facto relationship with Ms S and had been since March 2007. He is a full-time parent, calling himself a “house Dad”, caring for Ms S’s two children for a previous relationship, who were born [in] 1995 and 1998, and their daughter who was born [in] 2009. He has another child, a son aged 15, from a previous marriage. This boy stays with them for periods of time, usually for the entire school holidays.
Ms S is employed as a [omitted] for [employer omitted].
The Respondent is not in paid employment and does not receive a Centrelink benefit.
The Respondent set out in his affidavit the history as he knew it of his child support payments for the child the subject of the child support assessment.
He deposed that the child was born [in] 1989 and he lived with the child’s mother until they separated in March 1993. He deposed that he had “no recollection of ever receiving a letter from the CSA in 1989 telling me that I had to pay child support”.[3]
[3] Affidavit of Mr Carpenter 22.3.2012 at paragraph [18]
He went to state that he remembered finding out “some time before 1993” that he was supposed to be paying child support, but he could not understand that because he was still living with the child’s mother at the time. His mother, who died [in] 2003, had a close relationship with the child and between March 1993 and March 1995 he would give his mother $50.00 each fortnight to give to the child’s mother. He claimed to the Child Support Agency that these payments should be regarded as non-agency payments but the mother denied that these payments had been made.
The Respondent deposed that he was aware that the Child Support Agency had intercepted his income tax refunds to apply towards child support payments. He deposed that he thought that those payments would be sufficient to meet his child support obligation, along with the payments of $50.00 per fortnight he made to his mother for the child.
The Respondent moved from [D] to [omitted] in 2004 and lived and worked there until 2007. He then returned to [D].
The Respondent deposed that he did not have a job and did not receive any benefit from Centrelink. He denied that he had any undisclosed income. He deposed that he had debts amounting to $116,927.58, made up of:
a)Mortgage on his home in [D] $77,894.36
b)[D] Council outstanding rates $7,988.73
c)GE Creditline $9,639.57
d)Child support arrears $6,181.18
e)Late payment penalties $15,223.74.
The Respondent deposed that he spoken to Ms G at the Child Support Agency before the matter went to Court in an effort to resolve the matter. He had also spoken to Ms Jones at AGS. He was unable to borrow any money to pay the child support debt, nor was ha able to access his superannuation.
The Respondent went on to state:
61.If the orders as sought by the Child Support Agency are made, I am not confident that we can raise the money that is sought as soon as the CSA wants it paid. This could end up in my house being forcibly sold. This will have a devastating effect on my family, as outlined in Ms S’s affidavit. It will also mean that we have to try to find a four bedroom house in [D], and I understand that these are really hard to come by. I attach marked with the letter “H” pages from realestate.com.au that show that it would cost $260 per week to rent a three bedroom house. This is $85.00 per week more than we pay now in mortgage for a four bedroom house.
62.My debts are currently so high that if the house was sold, the equity in our house may not cover the amount I owe, meaning that the house is sold for no good reason…
…65.I am prepared to pay the child support in instalments, but Ms S and I can really only afford $10 per week in instalment payments.[4]
[4] Affidavit of Mr Carpenter 22.3.2012 at [61]-[62], [65]
The Respondent’s partner, Ms S, deposed in her affidavit that she works [occupation omitted] whilst the Respondent looks after the children. She can earn more money than the Respondent. She pays all the family bills as the Respondent has no income. She deposed that she pays $357.00 per week towards the Respondent’s debts made up as follows:
a)GE Finance (two separate debts): $100 a week
b)Arrears of rates: $50 a week
c)Child Support debt: $10 a week
d)Home loan: $157 a week.
Ms S deposed that her son aged thirteen has special needs, having been diagnosed with Asperger’s Syndrome, Executive Functioning Difficulties – Attention Deficit Hyperactivity Disorder type. She stated that it is important to make the child’s life “as predictable and ordered as possible. This helps him focus on what he needs to do and not become distracted by unimportant things”.[5]
[5] Affidavit of Ms S 22.3.2012 at paragraph [26]
She went on to depose that it has helped the child to be living in the same house for the past five years:
He likes being in the same routine day in and day out and around the house and I can se that he is calmer living for a long period living for a long period in the one house.[6]
[6] Ibid at [28]
Ms S deposed that her daughter, aged sixteen years, has suffered from depression due to her “very personal medical issues”. The Respondent plays an important role in accompanying the child for x-rays, ultrasounds and medical appointments.
Ms S also set out in some detail her efforts to borrow the sum of $6,000.00 to pay out the arrears of child support. She was not able to borrow the amount necessary to pay off the amount owing in late payment penalties.
Ms S attended Court but was not required for cross-examination.
Submissions
The Court had the benefit of two carefully prepared submissions from the solicitors for the Child Support Registrar and the Respondent.
The Child Support Registrar noted that the Respondent had paid the outstanding child support arrears in the sum of $6,440.03 shortly before the hearing commenced. However, the Registrar still seeks:
a)a declaration of the penalties owing;
b)an order that the Respondent pay those penalties; and
c)an order for costs.
The submission is that the Court should make an order for payment of the penalties in circumstances where the Respondent was aware of his obligation to pay the debt and had capacity to meet his obligation during the relevant assessment period. To the extent that the Registrar’s action in enforcing the debt is relevant to the Court’s exercise of discretion, it was submitted that the evidence demonstrates that the Registrar took various measures to enforce the debt from as early as 1998 by intercepting the Respondent’s tax refunds, garnishing his wages and deducting money from his Centrelink entitlements.
Ms Jones for the Registrar submitted that the Respondent had given oral evidence that he first received a notice of assessment from the Child Support Agency in relation to his liability for the child in 1997 and had continued to receive them approximately every 16 months after that. He was aware that the Child Support Agency was intercepting his tax refunds from at least 1999 onwards. Thus, he was aware of his obligation to pay child support and understood that he had to pay money to the Child Support Agency.
Despite his awareness, the Registrar submits that the Respondent did not make a voluntary payment to the Child Support Agency until 10th December 2011, after the enforcement proceedings had commenced.
It was submitted that the Child Support Agency had taken various steps to recover outstanding amounts prior to commencing proceedings. There was no fault on the part of the Registrar in commencing proceedings at that time as there remained an obligation on the Respondent to pay his child support on time.
As to the Respondent’s submission that his current financial position should weigh against the enforcement of the penalties, the Child Support Registrar relies on the fact that the Respondent is the sole registered proprietor of the real property at [D] in which he resides, which has an estimated value of $177,000.00. The amount outstanding in relation to the mortgage over the Respondent’s property is approximately $77,152.31, leaving him with an estimated equity in the property of $99,847.69.
It was further submitted that the Respondent had not successfully explained a number of cash payments into his two bank accounts at a time when he was unemployed, allowing the Court to draw the inference that the Respondent was receiving some sort of income at that time. It was also submitted that it was open to the Court to find that the Respondent was not a truthful witness.
The Child Support Registrar seeks an order for costs in accordance with the scale set out in Schedule 1 of the Rules. It was submitted that the mere fact that only late payment penalties were no sought is no bar to the awarding of costs (see Child Support Registrar & Stewart[7] at [27]-[31], [62]-[71]).
[7] [2010] FMCAfam 38
It was submitted that the Respondent paid the child support arrears in full some nine months after the proceedings were commenced. The Registrar had made two offers in writing to settle the proceedings, in September and November 2011, a factor that should be taken into account under s.117(2A)(f).
The Child Support Registrar also submits that it is relevant that these are enforcement proceedings necessitated by the Respondent’s failure to pay child support as is his moral and legal duty to his child (Davis v Insolvency and Trustee Service Australia (No 1)[8] per Foster J at [75]).
[8] [2009] FCA 562
Further, the Registrar submits that the Court should consider that enforcement proceedings should be more properly perceived as being civil proceedings between the Commonwealth as a third party and the Respondent as a citizen, rather than as between parties to a marriage or parties to a relationship covered by the general philosophy of the Family Law Act that parties should bear their own costs (see Hendy v Deputy Child Support Registrar[9] ).
[9] (2001) 27 Fam LR 641; [2001] FamCA 632
It is also submitted that if the Court were to find that the Respondent was not a truthful witness, s.117AB of the Act requires that a costs order should be made.
The solicitor for the Respondent, Ms Pilkinton, submitted that the Respondent had paid the child support debt of $6,440.03 in full as at 8th May 2012, but only by selling household items which will need to be re-purchased.
Although the Respondent has requested that the Child Support Registrar remit the penalties of $15,163.60, this request has been refused. The Respondent acknowledges that the issue of remission of penalties is not one for the Court to consider and will pursue the remedies of an objection and appeal to the Social Security Appeals Tribunal.
A late payment penalty is a debt due to the Commonwealth (Child Support (Registration and Collection) Act, s.67(2)). It is a matter of the Court’s discretion whether an order is made requiring payment (see Mathieson & Hamilton[10] per Walters FM at [196]-[198]; Frei & Frei-Suter[11] per Chisholm J; Breen & Breen[12] per Chisholm J).
[10] [2006] FMCAfam 238
[11] Chisholm J (unreported) 12 March 1996
[12] Chisholm J (unreported) 13 June 1996
When considering the exercise of discretion, the Court should consider all the circumstances, in particular:
a)whether the person entitled to the order has taken timely enforcement action;
b)the apparent ability of the person liable to make payments over the relevant period; and
c)the financial position of the parties.
Ms Pilkinton submitted that the evidence showed that the Child Support Registrar had not put the Respondent on notice of his child support liability for various periods from 7th December 1989 to 1st January 1994 and, more relevantly, in the years commencing 1st January 1996 and 1st January 1997.
It was further submitted that there is unchallenged evidence from the Respondent that he did not recall receiving telephone calls from the Child Support Agency telling him to pay ongoing child support for the Child, nor did he receive correspondence prior to 1997. There was no evidence led of any efforts by the Child Support Registrar to inform the Respondent of his obligation or pursue the Respondent for payment before the child concerned reached her eighteenth birthday.
It was submitted that the evidence did not show the Respondent to be a man who actively sought to avoid his obligation to pay child support for his child.
Ms Pilkinton submitted that the Child Support Registrar had not properly exercised all the powers available to obtain collection for the payee prior to the child’s eighteenth birthday. The Respondent had been working for a company called [omitted] at [D] from March 1995 to September 2004. The Respondent also worked for a company called [omitted] in [D] from 9th January 2008 to 24th February 2010.
Thus, it is submitted that the accumulation of penalties for non-payment of child support has in part been brought about by the failure of the Child Support Registrar to keep the Respondent properly informed of his obligation to pay child support. Further, given the failure of the Child Support Registrar to pursue enforcement of child support actively prior to the child’s eighteenth birthday, when child support would have been of direct benefit to her, the appropriateness of the Court enforcing payment of penalties is questionable.
The Respondent accepts that he had to pay the child support owed for the support of his daughter. He made substantial efforts to raise the money to do so, including selling various household items.
The Court, it is submitted, must consider the parties’ financial position. It is not in issue that the Respondent is currently engaged full-time in caring for his family. He has no income. His partner, Ms S, is the full-time wage earner for the family. She is currently meeting the entire family expenses.
It is further submitted that the Child Support Registrar is seeking orders that would allow the Respondent’s only substantial asset, his residence, to be sold if he does not make payment of the penalties and costs within 60 days. If he were forced to sell his house, the amount remaining after the mortgage had been paid out would be unlikely to be sufficient to cover the penalties.
If the Respondent were obliged to dispose of his motor vehicle, a 30 year old Toyota Hilux, it would not raise any substantial sum, as the vehicle is valued at between $800.00 and $2700.00. It is not in the public interest to require a man living in a regional area with limited public transport to sell his only vehicle to meet a penalty payment or a costs order. The Respondent has no other means of transporting himself or his family.
The Respondent submits that the Court should consider broader issues, being the impact on the Respondent’s family if he were forced to dispose of his residence. The Respondent lives in that home with his partner and three children, one of whom has special needs.
Conclusions
This is a case about the enforcement of late payment penalties and the payment of costs. However, it is not quite as simple as that may sound, as the proceedings were originally commenced to enforce the payment of an outstanding amount of child support. That amount was paid in full only about a week prior to the final hearing date.
Why, then, should the Court not make an order for costs against the Respondent?
The Respondent’s child support liability was for the maintenance of his daughter, who was born on [date omitted] 1989. The daughter attained the age of 18 years on [date omitted] 2007, so the Respondent’s ongoing liability to make child support payments ceased the day before.
For some of that time, the payments were collected by the Child Support Agency, and for other periods the Child Support Registrar’s records that the payments were to be collected privately. The evidence is vague about the circumstances in the earlier years, but it is clear from the Child Support Payer Transaction Statement that forms Annexure “B” to the affidavit of Ms O, which affidavit is itself annexed to the affidavit of Ms G, that the Respondent had a “nil” balance as at 8th March 1995.
According to Ms O’s affidavit at paragraph [5]:
From 4 November 1994 to 20 March 1995, the liability was collected by the parties privately. From 21 March 1995 to the present, the liability was again collected by the CSA.
Curiously, the Child Support Payer Transaction Statement shows no entry between 8th March 1995, when the outstanding child support was discharged, and 30th July 1995. It was not until 31st July 1995 that the statement shows the Respondent incurring a child support liability of $134.08. There were subsequent amounts added each month and then on 13th December 1995 a penalty of $11.17 was added for an amount overdue.
The statement shows a continuation of amounts of child support being added each month, along with penalties for amounts overdue, until 28th February 1997. The Respondent is not recorded as having made any payments during that time.
On 14th March 1997 some minor adjustments were made to the late payments penalties, by way of reductions of relatively small amounts ranging from 33 cents to 61 cents.
The statement shows the following payments being made:
·12 August 1998 $ 292.72
·03 November 1999 $1,023.50
·24 March 2000 $ 10.00
·07 April 2000 $ 10.00
·14 June 2000 $ 20.00
·16 June 2000 $ 10.00
·30 June 2000 $ 10.00
·14 July 2000 $ 10.00
·28 July 2000 $ 10.00
·11 August 2000 $ 10.00
·25 August 2000 $ 10.00
·08 September 2000 $ 10.00
·22 September 2000 $ 10.00
·06 October 2000 $ 10.00
·20 October 2000 $ 10.00
·03 November 2000 $ 10.00
·17 November 2000 $ 10.00
·01 December 2000 $ 10.00
·04 January 2001 $ 10.00
·12 January 2001 $ 10.00
No payments are shown as being received until a one-off payment of $98.00 on 3rd December 2001.
The statement shows that Tax Refunds were intercepted on the following dates:
a)4 March 2002 $1,485.44
b)1 September 2005 $1,662.92
c)20 July 2009 $ 946.40
d)03 August 2009 $ 461.34
e)21 October 2010 $2,476.51
The statement also shows that amounts were credited to the Respondent as “salary deductions” on the following dates:
a)02 March 2004 $ 91.99
b)07 April 2004 $ 121.99
c)07 April 2004 $ 121.99
d)07 April 2004 $ 121.99
e)05 May 2004 $ 121.99
f)05 May 2004 $ 121.99
g)03 June 2004 $ 121.99
h)03 June 2004 $ 121.99
i)08 July 2004 $ 121.99
j)08 July 2004 $121.99
k)05 August 2004 $121.99
l)05 August 2004 $121.99
m)06 September 2004 $121.99
n)06 September 2004 $121.99
o)06 October 2004 $121.99
p)06 October 2004 $121.99
q)06 October 2004 $121.99
The statement also shows payments of various amounts of $10.00, $12.28, $2.43, $13.00, $38.97, $41.40 and $42.54 being made between 13th December 2005 and 20th April 2011. These payments are not explained in the statement and there was no evidence, but a reasonable inference is that they were deductions from fortnightly Centrelink payments.
I am satisfied that these various payments between 12th August 1998 and 20th April 2011 show that the Respondent must have been aware that he had an ongoing child support liability. This ongoing liability ceased on [date omitted] 2007 when his daughter turned 18, but it is clear from the fact that the Respondent’s Income Tax Refunds were being intercepted between 20th July 2009 and 21st October 2010 that he must have known that his child support payments were in arrears. Not only that, there were payments of $12.76 or more from 25th October 2007 through to $42.54 on 20th April 2011 that could only be due to arrears, as his ongoing liability had finished.
The Respondent had been sent letters of demand on 4th February and 11th July 2011.
I am satisfied that the Respondent was aware that he had an ongoing liability for child support up till 23rd October 2007. He was aware that payments of child support were in arrears from 25th October 2007.
Thus, it was appropriate for the Child Support Registrar to take proceedings to enforce payment of those arrears. There is no challenge to the fact that letters of demand were sent on 4th February and 11th July 2011. The proceedings were commenced on 19th August 2011. On 13th March 2012 the Court listed the Application for hearing on 15th May 2015.
The Respondent paid the arrears of child support on 8th May 2012, a week before the hearing. It was therefore appropriate for the Child Support Registrar to seek an order for costs when the matter came before the Court on 15th May 2012.
Section 105 of the Child Support (Registration and Collection) Act provides that the Family Law Act 1975 and the Federal Magistrates Court Rules apply to proceedings under the Act as if the proceedings were proceedings under the Family Law Act (s.105(1)). Thus, s.117 of the Family Law Act applies to applications for costs in proceedings under the Child Support (Registration and Collection) Act.
The Child Support Registrar submits that the Court should follow the decision in Hendy v Deputy Child Support Registrar[13], stating:
The Full Court of the Family Court (Ellis, Kaye and Mullane JJ) cited with approval the comments of the trial judge including the statement that enforcement proceedings should be more properly perceived as being civil proceedings between the Commonwealth as a third party and the respondent as a citizen, rather than as between parties to a marriage or parties to a relationship covered by the general philosophy of the Family Law Act, which is to the effect that each party should bear their own costs.[14]
[13] supra
[14] Applicant’s Submissions page 4 at [16]
The Child Support Registrar submitted that the factors cited by Jordan J in Hendy had been positively noted by later judges of the Family Court (see Laurie v Child Support Registrar[15] per O’Ryan J at [123]-[125]).
[15] [2009] FamCAFC 183
Lest it be thought that the decision in Hendy places costs orders in favour of the Child Support Registrar in a different category from other costs orders under s.117 of the Family Law Act, it is helpful to consider what the Full Court actually said:
[115] Jordan J identified the following matters as relevant to the exercise of his discretion on the costs issue:
·Mr Hendy was unsuccessful in his Form 63 application
·There was a debt owing to the Commonwealth; the Commonwealth was entitled to bring enforcement proceedings.
·The Agency was only partly successful in securing the remedies sought.
·The Form 63 was entirely unsuccessful.
·Mr Hendy is currently in very poor financial circumstances.
·It could well be argued that the proceedings were necessitated by the failure of the respondent to comply with previous requirements relating to administrative assessments, “although I note that sub-paragraph (d) refers to previous orders of this Court”.
·These proceedings should be more properly perceived as being civil proceedings between the Commonwealth as a third party and the respondent as a citizen, rather than as between parties to a marriage or parties to a relationship covered by the general philosophy of the Family Law Act, which is to the effect that each party should bear their own costs.
·These are enforcement proceedings.
·Costs orders are frequently made in the civil arena when there is no apparent immediate capacity to meet the orders for costs and the parties (sic).
·It would be inappropriate if the taxpayer was required to bear the entire burden of this exercise.
[116] His Honour concluded:
65 Finding a balance between all of those competing considerations, I have determined that I should further order that the respondent pay 40 per cent of the applicant’s costs of an including such costs as agreed and, failing agreement, as taxed.
[117] The limited circumstances in which an appellate court may interfere with the exercise of a judicial discretion is well settled: see House v R (1936) 55 CLR 499. It is well established that a trial judge has a wide discretion to make an order for costs; see Penfold v Penfold (1980 FLC 90-800 at 75,054. We detect no error in the manner in which his Honour dealt with the costs issue.
Once these remarks are seen in context, it is clear that the Full Court was not endorsing, any more than Jordan J was advocating, with respect, a departure from the principles set out in s.117 of the Family Law Act. The decision in Hendy should not, for example, be seen as establishing the principle that costs should follow the event, as is normally the case in civil proceedings.
What the decision does mean is that the fact that proceedings of this nature are enforcement proceedings between the Commonwealth and a citizen is a factor that may be considered by the Court in exercising its discretion to award, or not to award costs. In my view, it would clearly be a matter to which the Court shall have regard under paragraph 117(2A)(g) of the Act:
(g) such other matters as the court considers relevant.
In my view, before considering the exercise of the Court’s discretion in respect of costs, the Court should examine the application to enforce the late payment penalties.
Following the decisions of Chisholm J in Frei & Frei-Suter[16] and Breen & Breen[17], which were followed by Walters FM in Mathieson & Hamilton, I propose to consider whether the Court should exercise its discretion by following the principles set out in those cases:
a)whether the person entitled to the benefit of the order has taken timely enforcement action;
b)the apparent ability of the person liable to make payments over the relevant period; and
c)The financial position of the parties.[18]
[16] supra
[17] supra
[18] [2006] FMCAfam 238 at [197]
It seems clear that a lengthy period of time elapsed before the Child Support Registrar took proceedings to enforce payment either of the arrears of child support or the late payment penalties. The child concerned became an adult on [date omitted] 2007. However, the Child Support Registrar only commenced court proceedings by sending a letter of demand on 4th February 2011, some three years and four months later. The Application was not filed at the Court until 19th August 2011, only two months short of four years after the child attained the age of 18 years. There is no issue that the Respondent was living at his present address in [D] the entire time. He and Ms S had been living together at that address since 10th March 2007.
In my view, the Child Support Registrar has not shown any explanation for a delay of nearly four years in seeking to enforce payment of the late payment penalties. If a party has been guilty of unwarrantable delay in seeking a remedy, the Court may in its discretion refuse relief (see The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust.) Ltd[19] at 400).
[19] (1949) 78 CLR 389
The Respondent’s evidence is that his financial position is currently strained, although he was in employment previously. He became unemployed on 24th February 2010 and has not been employed since that date.
There is clear evidence that the Respondent’s current financial position gives him very little ability to pay the outstanding later payment penalties. It is also clear that, if the Respondent were forced to sell his house, his only substantial asset, his de facto wife, her children and the parties’ child would all suffer hardship. I take particular note of the circumstances of Ms S’s son who has special needs, and would benefit from remaining in a stable living environment. Her evidence was unchallenged.
In short, there appears to be little benefit in enforcing the payment of the late payment penalties some four years late, and the potential hardship caused by such an order would outweigh any benefit there might be. Having considered those matters, I propose to exercise the Court’s discretion to enforce payment of the late payment penalties.
In my view, the Child Support Registrar should consider remitting the late payment penalties under s.68 of the Child Support (Registration and Collection) Act.
Turning to the question of costs, the Court’s powers are prescribed by s.117 of the Family Law Act. Whilst it is provided by s.117(1) that, subject to certain sections, each party to proceedings shall bear his or her own costs, the Court may, if it is of opinion that there are circumstances that justify it in doing so, make such order as to costs as the Court considers just (s.117(2)).
In considering what order, if any, should be made under subsection (2), the Court shall have regard to the matters set out in paragraphs (a) to (g) of subsection 117(2A).
The financial circumstances of the Child Support Registrar are not in question. The Respondent’s financial circumstances can be described as poor; he is not in employment, he is heavily in debt, and he is reliant on the income of his de facto wife to support himself and three children.
The Respondent is in receipt of assistance by way of legal aid. He has been ably represented in these proceedings by Legal Aid NSW.
The conduct of the parties to the proceedings in relation to the proceedings is a matter to which the Court shall have regard (paragraph 117(2A)(c)). It is significant that the Respondent paid the arrears of child support after the proceedings had commenced and about a week before the final hearing.
The proceedings were not necessitated by the failure of a party to the proceedings to comply with previous orders of the Court. He failed to comply with an administrative assessment of child support which is not a court order.
Neither party has been wholly unsuccessful in the proceedings. The Respondent did pay the arrears of child support, and it is reasonable to infer that he would not have done so had the Child Support Registrar not commenced enforcement proceedings.
The Child Support Registrar’s application to enforce the payment of late payment penalties has not been successful.
The Child Support Registrar made two written offers to the Respondent to settle the proceedings. They form Annexures “A” and “B” to the affidavit of Ms Jones of 29th September 2011. It will be noted that both of those offers seek payment both of the arrears of child support, which the Respondent paid, and payment of an amount of $14,846.57 by way of late payment penalties. Payment of that latter amount is not being enforced for the reasons given above.
The Court shall have regard to such other matters as the Court considers relevant (s.117(2A)(g)). In my view, it is relevant that these are enforcement proceedings, brought by the Child Support Registrar to enforce payment of arrears of child support (see Hendy v Deputy Child Support Registrar). As stated above, it is a reasonable inference that arrears of child support in this case would not have been paid unless the Child Support Registrar had commenced proceedings, even though after a considerable period of time had elapsed before the proceedings were commenced.
In finding a balance between those competing considerations, I am satisfied that it is appropriate that the Respondent should pay an amount towards the reasonable legal costs of the Applicant Child Support Registrar. The costs will be fixed in the sum of $1500.00, payable by instalments of $60.00 per month, with the first payment to be made one month after the date of these Orders.
In my view, the Child Support Registrar should give consideration to commencing proceedings to enforce payment of arrears of child support whilst the child for whose benefit the assessment was made is still a child, or within a reasonable time after the child attains the age of 18 years.
I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 10 August 2012
0
7
3