Child Support Registrar & Rawlings
[2013] FCCA 370
•30 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CHILD SUPPORT REGISTRAR & RAWLINGS & ANOR | [2013] FCCA 370 |
| Catchwords: CHILD SUPPORT – Administrative assessment – enforcement – child support debt. CHILD SUPPORT – Determination – Application for leave – where applicant applies for leave for a determination under Child Support (Assessment) Act 1989 (Cth) s.118 – delay by payer in lodging income tax returns – where amended assessments of income tax issued – where leave sought for a period longer than 18 months prior to the date of the application – where application for determination not made until after the commencement of enforcement proceedings. DELAY – Where payer failed to seek a determination for nearly a year – whether delay unwarranted – where delay poorly explained. COSTS – Whether there are circumstances that justify making an order for costs – First Respondent wholly unsuccessful. |
| Legislation: Family Law Act 1975 (Cth) s.117 |
| Cases cited: Bagala & Bagala [2009] FMCAfam 953 followed Bauer & Becker [2009] FMCAfam 480 followed Cantrell & Jennings [2009] FMCAfam 229 followed Re Commonwealth of Australia: Ex parte Marks (2000) 177 ALR 491 Hacherl & Berrios [2010] FMCAfam 668 followed The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 Moore & Moore [2012] FMCAfam 577 Whitford & Whitford (1979) 4 Fam LR 754; FLC 90-612 |
| Applicant: | CHILD SUPPORT REGISTRAR |
| First Respondent: | MR RAWLINGS |
| Second Respondent: | MS VINGE |
| File Number: | SYC 5105 of 2012 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 14 May 2013 |
| Date of Last Submission: | 14 May 2013 |
| Delivered at: | Sydney |
| Delivered on: | 30 May 2013 |
REPRESENTATION
| Solicitor for the Applicant: | Ms Jones |
| Solicitors for the Applicant: | Australian Government Solicitor |
| Solicitor for the First Respondent: | Mr Warren |
| Solicitors for the First Respondent: | Andrew Warren Associates |
| Solicitor for the Second Respondent: | Ms Thomson |
| Solicitors for the Second Respondent: | Clarke Rideaux Solicitors |
ORDERS
The Amended Response to an Application in a Case filed by the First Respondent on 21 January 2013 is dismissed.
The First Respondent is to pay the costs of the Applicant Child Support Registrar and the Second Respondent in an amount to be fixed by the Court.
The Applicant and the Second Respondent are each to file and serve an affidavit setting out particulars of the costs and disbursements that they seek by 7 June 2013.
The Application is adjourned to Tuesday 11 June 2013 at 11:30 am for hearing.
The solicitor for the Second Respondent is granted leave to attend Court by telephone on the next occasion.
IT IS NOTED that publication of this judgment under the pseudonym Child Support Registrar & Rawlings & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 5105 of 2012
| CHILD SUPPORT REGISTRAR |
Applicant
And
| MR RAWLINGS |
First Respondent
| MS VINGE |
Second Respondent
REASONS FOR JUDGMENT
Application
The substantive Application is an Application by the Child Support Registrar to enforce the payment of a child support debt totalling $18,063.29 at the date of commencement of the proceedings. However, the First Respondent, by his Amended Response, seeks leave from the Court under s.118 of the Child Support (Assessment) Act 1989 (Cth) to vary his adjusted taxable income for the 2008 to 2011 financial years.
The debt arises from a registered liability with the Child Support Registrar for collection of payments in respect of the Respondents’ child A[1], who was born in 2002. The liability arises from an assessment of child support made on 14th June 2002 and registered for collection the same day.
[1] The child’s name is not published.
As at 27th August 2012, the date of commencement of the proceedings, the amount sought was made up as follows:
a)arrears of $16,781.70; and
b)late payment penalties of $1,281.59.
Those figures were certified by a Certificate under sub-section 116(2) of the Child Support (Registration and Collection) Act 1989 (Cth) annexed to the affidavit in support of the Application.
Background
The background to the matter immediately before the Court has been clearly described by Ms Jones, the solicitor for the Child Support Registrar, in her written submission on behalf of the Registrar. I have drawn on the information set out at paragraphs [4] to [9] of the Submission for the purpose of setting out the relevant background facts.
The First Respondent’s child support liability for the child A to the Second Respondent commenced on 14th June 2002.
Prior to 13th September 2008, the assessment of the First Respondent’s child support liability was calculated using his taxable income as it appeared in the tax returns which he lodged with the Australian Taxation Office.
In 2008, the First Respondent failed to file his income tax return on time and his liability for the child support period 14th September 2008 to 13th December 2009 was based on a deemed taxable income. This was also the case for the child support periods covering the financial years ending 30th June 2009, 2010 and 2011, as the First Respondent did not file his income tax returns for those years.
On 10th November 2011 the Australian Taxation Office made default assessments for the First Respondent for the financial years ending in 2008 and 2009. The taxable incomes declared in the default assessments were higher than the deemed taxable incomes calculated by the Department of Human Services. Under the provisions of s.58A(2)(b)(i) of the Child Support (Assessment) Act, the Registrar retrospectively amended the administrative assessments for the period from 14th September 2008 to 31st August 2010 so that they would be based on the income declared by the Australian Taxation Office.
Section 58A provides at (1) and (2):
(1)The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:
(a)the assessment was made on the basis of a determination under section 58; and
(b) either:
(i) the Registrar subsequently ascertains the amount of the parent’s adjusted taxable income for the last relevant year of income; or
(ii) the Registrar makes a later determination under section 58; and
(c) either:
(i) if subparagraph (b)(i) applies – the amount that was subsequently ascertained is different from the amount that was determined under section 58; or
(ii) if subparagraph (b)(ii) applies – the later amount that the Registrar determines is different from the earlier amount determined under section 58.
(2) Retrospective determinations If:
(a)at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953); or
(b) paragraph (a) of this subsection does not apply and:
(i) the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or
(ii) the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or
(c)neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent;
then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent’s adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained or later determined (as the case requires).
As Ms Jones succinctly points out, the effect of s.58A(2)(b)(i) where the Registrar makes a determination under s.58[2] and subsequently ascertains an adjusted taxable income which is higher than the deemed taxable income, then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent’s adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained.
[2] Section 58 allows the Registrar to make a determination where a parent’s taxable income for the last relevant year of income in relation to the period has not been assessed under an Income Tax Assessment Act or the Registrar is unable to ascertain whether it has or not.
The Registrar’s retrospective amendment of the administrative assessments for the period from 14 September 2008 to 31 August 2010 resulted in an increase to the First Respondent’s child support liability in the sum of $15,282.76.
In 2012 the First Respondent filed tax returns for each of the financial years ending in 2008, 2009, 2010 and 2011. These tax returns reported taxable incomes which were lower than the Australian Taxation Office (default) assessment and the Department of Human Services’ deemed taxable incomes which had been used to calculate the First Respondent’s child support liability for the relevant periods. Under the provisions of s.58A(2), these adjusted taxable incomes could not be retrospectively applied to the assessments because the First Respondent had not filed his income tax returns by the date required under Part IV of the Income Tax Assessment Act 1936 (Cth) and because his reported taxable income for these years was lower than the taxable income on which he was originally assessed (see s.58A(2)(a)).
The First Respondent is seeking to have his child support assessments retrospectively amended to reflect his reported taxable incomes. He is unable to apply to the Registrar to make a determination under s.98S of the Child Support (Assessment) Act because he is seeking a determination in respect of a day in a child support period that is more than 18 months earlier than the day on which he has made his application. He can only apply to the Court under s.111 for leave under s.112 to amend administrative assessments that are more than 18 months old.
Litigation History
The Application was commenced on 28th August 2012, against the First Respondent only. It was returnable on 9th October 2012.
On 9th October, the parties agreed to Interim Orders providing that:
a)the Respondent was to file any departure application he wished to file within 21 days;
b)the Respondent was to pay $100.00 per month towards the child support debt;
c)the Respondent was to lodge his outstanding personal income tax return for the financial year ended 30th June 2012 by 6 November 2012;
d)the Respondent was restrained from selling, assigning, transferring, further encumbering or dealing in any way with:
i)his interest in real property at [M], New South Wales;
ii)his interest in a Ford Falcon Station Wagon; and
iii)his interest in a Toyota Panel Van.
The Respondent filed an affidavit on 9th October 2012.
He filed a further affidavit, a Financial Statement and a Response on 2nd November 2012.
He filed an Amended Response on 21st January 2013, in which he sought:
a)leave of the Court to make an Order under s.118 of the Child Support (Assessment) Act 1989 (Cth) reducing his adjusted taxable income for the period 1st July 2007 to 1st May 2011;
b)dismissal of the Registrar’s Application; and
c)that the Mother of the child be joined as Second Respondent.
On 11th February 2013 the Mother was joined as Second Respondent and the Application was adjourned to 12th March for further mention. The Second Respondent was ordered to file and serve an affidavit, which she did on 2nd May 2013.
The parties have all filed written submissions and the Application was adjourned to 14th May 2013.
Evidence and Submissions
The First Respondent relies on the following documents:
a)his affidavit of 4th October 2012;
b)his affidavit of 30th October 2012;
c)his Amended Response to an Application in a Case
d)his Submissions.
The Registrar relied on the following documents:
a)the affidavit of Ms M of 27th August 2012;
b)the affidavit of Ms W of 1st March 2013; and
c)Applicant’s Submissions.
The Second Respondent relied on the following documents:
a)her affidavit of 29th April 2013; and
b)her Submissions.
The First Respondent, by his Amended Response, seeks the following Orders:
1. That leave be granted to the Respondent Father for the Court to make an Order under Section 118 of the Child Support (Assessment) Act 1989 in respect of the period 1 July 2007 – 1 May 2011.
2. That the Respondent Father’s adjusted taxable income be reduced to:
a)For the period 1 July 2007 – 30 June 2008 to $46,068
b)For the period 1 July 2008 to 30 June 2009 to $32,655
c)For the period 1 July 2009 – 30 June to $7,223
d)For the period 1 July 2010 – 30 June 2011 to $5,541
3. That the Application in a Case filed by the Child Support Registrar on 28 August 2012 be dismissed.
4. That the Mother be joined to the proceedings as the Second Respondent.
The Mother has already become the Second Respondent. In her affidavit of 29th April 2013 she states that she opposes Orders 1, 2 and 3 sought by the First Respondent.
The Registrar opposes the Orders sought by the First Respondent.
In his affidavit of 4th October 2012 the First Respondent deposed that:
a)He had made regular child support payments since 2002;[3]
b)Until the 2008 taxation year he had maintained regular on-time lodgements of his personal taxation returns;[4]
c)His father passed away suddenly in 2008 and it was necessary for him to travel to Queensland regularly to deal with his late father’s financial affairs;[5]
d)From that time his own financial affairs were neglected;[6]
e)His de facto partner was diagnosed with an aggressive form of breast cancer in 2009, requiring major surgery, which in turn led to his neglect of his own affairs;[7]
f)He was not in a position to put all his financial affairs into order until early in 2012.[8]
[3] Affidavit of Mr Rawlings 4.10.2012 at paragraph [3]
[4] Ibid at [5]
[5] Ibid at [7]-[8]
[6] Affidavit of Mr Rawlings 4.10.2012 at [9]
[7] Ibid at [10]
[8] Ibid at [12]
In particular, the First Respondent deposed:
11.From 2011 I have been in regular communication with the Child Support Agency in respect of my child support liability. I have maintained that the assessment of my income derived from the Australian Taxation Office Records overstated my income. This was because the Australian Taxation Office assessment was a provisional estimate made in the absence of taxation returns lodged by me.
…
13.In 2012, I caused my accountant to prepare and lodge all outstanding tax returns such that tax returns have now been lodged in respect of the 2008, 2009, 2010, and 2011 taxation years. The tax return for the 2012 financial year is currently in the early stages of preparation.[9]
[9] Ibid at [11] & [13]
Annexed to the affidavit marked “A” and “B” respectively are Notices of amended assessment for the years ended 30th June 2008 and 30th June 2009.
The Notice of amended assessment for the year ended 30th June 2008 shows a date of issue of 22nd May 2012 and states:
Your previous taxable income was $71,854
Your amended taxable income is $46,068[10]
[10] Ibid Annexure “A”
The Notice of amended assessment for the year ended 30th June 2009 shows a date of issue of 13th June 2012 and states:
Your previous taxable income was $63,481
Your amended taxable income is $32,655[11]
[11] Affidavit of Mr Rawlings 4.10.2012 Annexure “B”
In his affidavit of 30th October 2012, the First Respondent deposed at paragraphs [3] and [4]:
3. As a consequence of my failing to lodge my income tax returns for the years ending 30 June 2008, 30 June 2009, 30 June 2010, and 30 June 2011 the Australian Taxation Office assessed my default tax payable for the years ended 30 June 2008 and 30 June 2009 on 10 November 2011.
4. In addition, I incurred substantial penalties and interest as a result of my failure to lodge my taxation returns.[12]
[12] Affidavit of Mr Rawlings 30.10.2012 at [3]-[4]
Annexed to the affidavit is a copy of the First Respondent’s Income Tax Statement dated 21st November 2011 setting out the penalties and interest which he had to pay, as well as amounts of default tax.
The First Respondent went on to depose that after he received that Income Tax Statement he received from the Child Support Agency “a notice of assessment which adjusted the child support payable by me by adding arrears to my account of $11,717.92 and $3,564.84, a total of $15,282.76”.[13]
[13] Ibid at [6]
The First Respondent states that he telephoned the Agency and spoke to an officer to explain that he was behind in filing his tax returns. He claims that the unnamed officer said to him words to the effect of:
“When you get your tax returns filed, then you can make an application for a review of the assessment”.[14]
[14] Ibid at [8]
He further deposed that he instructed his accountant to prepare the outstanding returns for the financial years ending 30th June 2008, 2009, 2010 and 2011. They were lodged on the following dates:
a)23rd March 2012;
b)30th May 2012;
c)29th June 2012; and
d)29th September 2012.
The First Respondent received a Notice of Assessment for the year ended 30th June 2012, a copy of which is annexed to his affidavit. The Notice of Assessment bears a date of issue of 8th October 2012 and states:
Your taxable income is $7,223[15]
[15] Affidavit of Mr Rawlings 30.10.2012 Annexure “B”
The First Respondent deposed that he anticipated that his Income Tax Return for the financial year ending 30th June 2012 would be lodged on or before 6th November 2012.
He further claimed that until 12th November 2011, his child support payments were “generally up to date or close thereto”.[16] He refers to the Child Support Payer Transaction Statement forming Annexure “B” to the affidavit of Ms C of 27th August 2012, filed on behalf of the Registrar. That statement shows a debit balance of $833.76 as at 31st October 2011, with two adjustments of $$11,717.92 and $3,564.84, bringing the balance to a debit balance of $16,116.52.
[16] Ibid at [15]
The First Respondent went on to depose:
Until I was told by my solicitor Andrew Warren on 29 October 2012 that I was required by virtue of section 81 of the Child Support (Registration and Collection) Act 1988 to object to the decision of the Registrar of the Child Support Agency made 12 November 2011 by 30 November 2011, I was not aware that a statutory time limit to lodge such an application existed.[17] I thought, as a consequence of my telephone conversation with the Child Support Agency officer referred to in paragraphs 7 and 8 herein of this my Affidavit, that when I lodged my tax returns I would be able to then have the decision reviewed.[18]
[17] The time limit on lodging an objection under s. 81 is in fact 28 days.
[18] Ibid at [17]
The First Respondent submits that:
a)The Court has power under s.118(1)(g) of the Child Support (Assessment) Act to make an order varying a parent’s adjustable taxable income;
b)The Court only has power to make an order in respect of a day in a child support period more than 18 months earlier than the day on which the application is made if leave is granted under s.112.
The First Respondent submitted that applications for leave under s.112 have been considered in Bagala & Bagala[19] and Moore & Moore.[20]
[19] [2009] FMCAfam 953
[20] [2012] FMCAfam 577
It is further submitted that the First Respondent’s reasons for delay in bringing his application are explained by the facts that:
a)he did not know there was a time limit in objecting to the decision of 12th November 2011; and
b)he was misled in his conversation with an officer of the Child Support Registrar into believing that he could make an application for review when he had filed his income tax returns.
The decisions in Bagala and Moore, it is submitted, can be distinguished on the facts. The First Respondent had met all his obligations except for those related to the amended assessment.
It is further submitted that the First Respondent had given reasons for his delay in lodging his income tax returns over the period from 2008 to 2012. Those reasons were:
a)his father’s sudden death in 2008;
b)his consequent need to travel to Queensland regularly to deal with his late father’s affairs;
c)the cancer suffered by his de facto partner, requiring major surgery; and
d)the effect of those matters which led to his neglecting his own financial and business affairs.
It was further submitted that the First Respondent would suffer financial hardship if he were not to be granted leave. Against this, there is no evidence that hardship would be occasioned to the Second Respondent if the Court were to grant leave.
The First Respondent appears to accept that he faces an order for costs, whatever the outcome of the proceedings. The First Respondent’s solicitor submits that:
Any prejudice that the Applicant has suffered as a result of being obliged to bring these proceedings because of the Respondent’s delay in filing his tax returns can be cured by costs orders, although his financial circumstances are clearly relevant to the quantum of any costs he may be obliged to pay.[21]
[21] Submissions on behalf of First Respondent at [30]
The First Respondent submits that it is relevant that:
a)If he had filed his taxation returns on time he would not have been assessed to pay the amount of child support sought; and
b)If leave were to be denied, the Second Respondent would receive a “windfall” to which she would not otherwise have been entitled.
The Second Respondent sets out in her affidavit of 29th April 2013 that her income is derived from NewStart allowance and the “sporadic” child support payments. She has a number of debts.
The Second Respondent deposed that:
11.The father’s child support payments are often late and in irregular amounts. For example, sometimes I receive a payment for the month and then nothing for the next two months. I am never sure when I will receive a payment or how much it will be.
12.The payment that I am supposed to receive is $662 a month.[22]
[22] Affidavit of Ms Vinge 29.4.2013 at paragraphs [11]-[12]
The Second Respondent also deposed:
18.I am reliant on the money owed by the father, without it I cannot provide adequate medical, dental and educational services my daughter requires. For example my daughter currently requires:
a)Tooth extraction under anaesthetic and bracers;
b)Laser eye therapy for severe lazy eye;
c)Assistance to integrate into the mainstream schooling system; and
d)Psychological assistance.[23]
[23] Affidavit of Ms Vinge 29.4.2013 at [18]
The Registrar submits that it would be open to the Court to find that it is inappropriate for the First Respondent to take no action either to object to the child support assessments based on deemed incomes or the amended child support assessments based on ATO default taxable incomes until after the commencement of enforcement proceedings.
In her submission on behalf of the Registrar, Ms Jones refers to the decision of Brown FM[24] in Bauer & Becker[25], where his Honour held at [73]-[74]:
…it is “highly undesirable” for a parent to be able to retrospectively review obligations arising out of past child support determinations solely because he or she wishes to avoid the payment of substantial amounts of child support arrears.
74.The object of section 111 of the Assessment Act is to prevent the re-examination of past assessments of child support for unlimited periods of time. If there was such a facility, it would undermine the integrity of the overall system.[26]
[24] As his Honour then was
[25] [2009] FMCAfam 480
[26] [2009]FMCAfam 480 at [73]-[74]
It was conceded on behalf of the Registrar that the First Respondent could not have applied to the Registrar without leave of the Court for administrative review of the assessments based on his taxable income in 2008 and 2009 because the relevant child support assessment was more than 18 months old at the time that the Australian Taxation Office made the default income tax assessments. The relevant delay to be considered is a period of approximately 11 months from the time that the First Respondent received notice of the default assessments by the Australian Taxation Office on or about 21st November 2011 until he filed his original Response on 2nd November 2012.
The Registrar submits that it was open to the First Respondent to lodge an application for a change of assessment for the child support periods that were assessed on deemed taxable incomes, which were provided to him in 2008 and 2009. Had he done so at the time, he would not have needed to seek leave of the Court.
The Registrar noted the First Respondent’s claim at paragraph [9] of his affidavit that, whilst he first instructed his accountant in relation to lodging the outstanding income tax returns shortly after he received the Income Tax Statement of Account on or about 21st November 2011, but:
Because the taxation returns required were so old, it took me some time to locate the necessary documentation.[27]
[27] Affidavit of Mr Rawlings 30.10.2012 at [9]
However, it is submitted that it would be open to the Court to find that this is not a reasonable explanation for the delay.
Further, it is submitted that the First Respondent’s claims that the death of his father in 2008, which necessitated frequent visits to Queensland to deal with his late father’s financial affairs, and the illness and surgery of his de facto partner in 2009, which necessitated his having to care for her, do not provide an adequate explanation for his failure to lodge income tax returns or make objections to his child support assessments for a period of four years.
The Registrar also relies on the affidavit of Ms W of 1st March 2013 showing that, in the period from 30th April 2008 to 22nd May 2012 the First Respondent consistently filed his quarterly Business Activity Statements in respect of his business [D]. This, it is submitted, is inconsistent with the First Respondent’s claim that his own financial affairs were neglected over that period.
It is further submitted that the First Respondent has not demonstrated hardship. In Bauer & Becker[28], Brown FM held that considering potential hardship to one party if leave were granted and potential hardship to another if leave were not granted was an “exercise (that) involve(s) the balance of “any appreciable detriment financial, personal or otherwise” between the parties concerned”[29] (see also Whitford & Whitford[30]; Cantrell & Jennings[31]).
[28] supra
[29] [2009] FMCAfam 480 at [84;
[30] (1979) 4 Fam LR 754; FLC 90-612
[31] [2009] FMCAfam 229
Ms Jones also relies on the decision of this Court in Bagala & Bagala[32], where Riethmuller FM[33] held that a court should not exercise its discretion to permit a party to apply for a review of their child support liability through the Court, rather than following the procedure for administrative departure provided by Part 6A of the Child Support (Assessment) Act after enforcement procedures have already commenced. Riethmuller said at [22]:
The applicant had real opportunities, prior to the Child Support Registrar filing the enforcement summons, to seek a review of his child support liability. He chose not to do so and has not provided any evidence of a reasonable excuse for not doing so.[34]
[32] supra
[33] As his Honour then was
[34] [2009] FMCAfam 953 at [22]
The Second Respondent submits that the evidence of the Child Support Payer Transaction Statement annexed to Ms M’s affidavit shows that First Respondent’s payments were sporadic and often late. The Second Respondent’s solicitor, Ms Thomson, notes that the First Respondent had 30 late payment penalties imposed on him for the period 17th June 2003 and 13th August 2012.
It is submitted that the First Respondent has not provided an adequate explanation for his delay. There is no evidence that he was not aware of his obligation to lodge an annual income tax return or that he was not aware that his child support assessments were calculated on his tax returns. He had a legal obligation to file his tax returns which he wilfully refused to do. The consequences of his non-compliance should be borne by him.
It is also submitted that the First Respondent has declared substantial assets, which does not support his claim of inability to meet the debt owing to the Child Support Registrar.
Ms Thomson submits that her client would suffer hardship if the First Respondent were to be granted leave. She has provided in her affidavit evidence of severe financial hardship that she has endured for a number of years. She has been totally reliant on a Centrelink pension and charity handouts as a way to provide for her daughter. She is living below the poverty line, it is submitted.
Further, Ms Thomson submits that any inconvenience that the First Respondent may suffer as a result of a costs order being imposed upon him is of his own volition. It was he who failed his legal obligation to file his tax returns on time and it is he who seeks relief under s.112 of the Act. Any costs should be borne by the First Respondent alone.
Consideration
Section 112 of the Act empowers the Court to grant leave either for the Registrar to make a determination under s.98S or the Court to make an order under s.118.
Subsection 112(4) provides that:
Matters to be considered In considering whether to grant leave under subsection (1), the court must have regard to:
(a) any responsibility, and reason, for the delay in:
(i) making an application under section 98B or 116; or
(ii) making a determination under section 98S;
as the case requires; and
(b)the hardship to the applicant (other than the Registrar) if leave is not granted; and
(c)the hardship to the other party or parties (other than the Registrar) if leave is granted.
The Court may have regard to any other relevant matter.
Unwarrantable delay justifies the withholding of relief. The exercise of the Courts’ discretion to deny relief for delay has been considered in a number of decisions of the High Court, including The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd[35], and Re Commonwealth of Australia; Ex parte Marks.[36]
[35] (1949) 78 CLR 389
[36] (2000) 177 ALR 491
The predicament in which the First Respondent finds himself is entirely of his own making. Whilst the Court can accept that the sudden death of his father in 2008 and the serious illness leading to surgery of his de facto partner in 2009 placed a considerable strain on the First Respondent, these unfortunate events and their aftermath are far from a complete explanation for the First Respondent’s delay in lodging his income tax returns for a period of four years from 2008 to 2012.
It should by now be clear to people with an obligation to pay child support under an administrative assessment that it is essential that they lodge their income tax returns within the time required. That is an obligation that applies to taxpayers generally. In cases of hardship, a taxpayer may be granted an extension within which to lodge a return. However, repeated and continuing failure to lodge income tax returns will lead to adverse consequences, for which parties can expect to receive little sympathy from the Court.
In Hacherl & Berrios[37], Roberts FM[38] considered an application for leave under s.112 where an applicant had previously failed to file income tax assessments for a period of seven years. His Honour refused leave and dismissed the application, holding at [37]:
The delay in relation to lodging those returns must lie solely at the feet of the father.[39]
[37] [2010] FMCAfam 668
[38] As his Honour then was
[39] [2010] FMCAfam 668 at [37]
His Honour went on to say at [41]:
In this particular matter, the father does not come to court with clean hands in relation to the lodgement of his tax returns. He should not therefore be allowed to rely upon his own dilatory behaviour to obtain relief in relation to a period when the Child Support Agency was hampered by his failure to lodge tax returns for a number of years.[40]
[40] [2010] FMCAfam 668 at [41]
In this case, the First Respondent has been guilty of a lengthy pattern of delay since 2008. Not only was he most dilatory in relation to lodging his income tax returns for a period of four years, he did not take appropriate action on or after 21st November 2011 when he received the Notice of amended assessment from the Australian Taxation Office or the subsequent notification of an amended assessment by the Child Support Registrar.
It is not a sufficient explanation, let alone an excuse, for the First Respondent to claim that he relied on a statement by an anonymous officer on the telephone:
“When you get your tax returns filed, then you can make an application for a review of the assessment”.[41]
[41] Affidavit of Mr Rawlings 30.10.2012 at [8]
Assuming that such a statement was in fact made, and there is no way for the Registrar to verify that claim, what does it mean? One obvious meaning is that, upon obtaining an amended assessment of income tax, the First Respondent could make an application to the Court under s.111 for leave to be granted under s.112.
However, the First Respondent did not take that step until after the Child Support Registrar commenced enforcement proceedings.
The First Respondent annexes to his affidavit a copy of a Notice of amended assessment for the year ended 30th June 2008 which he received after he had started belatedly submitting his income tax returns[42]. That Notice shows its date of issue as 22nd May 2012, a date three months earlier than the date that the enforcement proceedings were commenced.
[42] Ibid Annexure “A”
Similarly, the Notice of amended assessment for the year ending 30th June 2009 shows its date of issue as 13th June 2012, over two months prior to the date that the enforcement proceedings were commenced.
The First Respondent did not make any application to the Court until after the Registrar had commenced enforcement proceedings, by filing an Application on 28th August 2012. The First Respondent filed his original Response seeking relief on 2nd November 2012.
In my view, there is a clear line of authority in this Court, in the decisions of Cantrell & Jennings, Bauer & Becker, Bagala & Bagala and Hacherl & Berrios[43] which should be followed. The First Respondent has been guilty of unwarranted and poorly explained delay.
[43] All supra
Whilst he claims that he will suffer hardship if leave is not granted, I am satisfied that there is evidence that he has assets that can be realised if he has to meet the claim of enforcement of arrears of child support.
I am also satisfied, from the affidavit evidence of the Second Respondent, that she will suffer hardship if leave is not granted. She has few assets and relies on social security payments and child support payments for her income. Keeping her out of receiving child support payments would be a source of hardship to her and the child.
Following the decision of Roberts FM in Hacherl & Berrios at [41], I conclude that the First Respondent should not be allowed to seek a variation of his adjusted taxable income in relation to any period more than 18 months prior to filing his application. Consequently, leave under s.112 of the Act should not be granted.
Costs
Costs in child support proceedings do not necessarily follow the event. The Court is required to follow the provisions of s.117 of the Family Law Act 1975 (Cth). Where the Court is of opinion that there are circumstances that justify it in doing so, the Court may make an order for costs, subject to the considerations in s.117(2A).
I have taken the financial circumstances of the First and Second Respondents into account. Neither party is in receipt of assistance by way of legal aid, at least as far as I am aware. It is the First Respondent who has brought this particular interlocutory application and sought to join the Second Respondent as a party.
The First Respondent has been wholly unsuccessful in his application.
The circumstances of the case clearly justify an order that the First Respondent should pay the costs of the Applicant and the Second Respondent. They will be required to file and serve affidavits setting out the costs and disbursements which they claim within 7 days.
The Application for Enforcement
The Application will be adjourned to 11:30 am on Tuesday 11 June, on which date the Court will consider the quantum of the costs orders and any submissions as to time to pay. The Court will also proceed with the substantive application to enforce payment of the child support debt. The Child Support Registrar should produce to the Court a certificate under s.116(2) of the Child Support (Registration and Collection) Act on the next occasion.
In order to minimise costs, the solicitor for the Second Respondent will be granted leave to attend Court by telephone on the next occasion.
I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 28 May 2013
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