Cutler and Warwick and Anor

[2016] FamCA 277

FAMILY COURT OF AUSTRALIA

CUTLER & WARWICK AND ANOR [2016] FamCA 277

FAMILY LAW – CHILD SUPPORT – INTERIM PROCEEDINGS – Application for a stay of the collection of arrears arising from a decision of the Administrative Appeals Tribunal to increase the father’s annual rate of child support – Application for a stay of the collection of any additional child support as a consequence of that decision – Where the father has not filed an appeal against the Tribunal’s decision – Where the parties have competing child support departure applications which are yet to be determined in these proceedings – Consideration of section 111C of the Child Support (Registration and Collection) Act 1988 (Cth) – Where the Court finds it appropriate to only stay the collection of arrears.

Child Support Legislation Amendment (Reform of the Child Support Scheme - New Formula and Other Measures) Act 2006 (Cth)
Child Support (Registration and Collection) Act 1988 (Cth) s 111C

Aldridge & Keaton (Stay Appeal) (2009) FamCAFC 106

Yewen & Child Support Registrar and Anor [2014] FCCA 2399

APPLICANT: Mr Cutler

FIRST RESPONDENT: Ms Warwick

SECOND RESPONDENT: Department of Human Services

FILE NUMBER: SYC 1668 of 2013

DATE DELIVERED: 7 March 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 7 March 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Levy

SOLICITOR FOR THE APPLICANT: Macpherson & Kelley Lawyers

SOLICITOR FOR THE FIRST

RESPONDENT:

Ms Perla of Diana Perla & Associates

SOLICITOR FOR THE SECOND RESPONDENT: Ms James

Orders

THE COURT ORDERS PENDING FURTHER ORDER THAT:

1. The Department of Human Services be restrained until further Order from collecting any child support arrears arising from the decision of the Administrative Appeals Tribunal made on 27 October 2015.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Cutler & Warwick and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1668 of 2013

Mr Cutler

Applicant

And

Ms Warwick

First Respondent

And

Department of Human Services
Second Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. This matter concerns an application to restrain the Department of Human Services (“the Department”) from collecting child support payable by the father arising from the decision of the Administrative Appeals Tribunal dated 27 October 2015.  That decision required the father to pay additional child support to share the burden of private school fees payable in respect to the parties’ daughter, B (“B”). I intend to make an order restraining the Department from collecting the arrears payable by the husband but I will not make an order suspending the father’s obligation to pay additional ongoing child support in accordance with the decision.

2. The mother is currently 48 years of age.  The father is currently 51 years of age.  The parties commenced cohabitation in March 2000 and were married in 2001. There are two children of the marriage, namely, B who was born in 2002 and is currently aged 13 years, and C (“C”), who was born in 2005 and is currently aged 11. 

3. The issue in these proceedings essentially concerns the child support obligations of the father in respect to the child, B, as opposed to her brother, C. This is because, in proceedings before Loughnan J on 11 November 2013, there was an agreement reached that the mother would be responsible for C’s private school fees.

4. The father’s application before me today is made pursuant to section 111C of the Child Support (Registration and Collection) Act1988 (Cth) (“the Registration and Collection Act”). Relevantly, that section provides:

   Stay orders

   (1) This section applies if a proceeding has been instituted:

   (a) in a court having jurisdiction under this Act; or

   (b) before the Registrar under Part VII; or

   (c) before the AAT for an AAT first review; or

   (d) under Part 6A or 7 of the Assessment Act.

   (2) A party to the proceeding may, subject to the Family Law Act 1975:

   (a) in the case of a proceeding instituted in a court--apply to that court for an order under this section; or

   (b) otherwise--apply to a court having jurisdiction under this Act for an order under this section.

   (3) Pending the hearing and final determination of the proceeding, the court may make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of the persons who may be affected by the outcome of the proceeding.

   (4) The court may, by order, vary or revoke an order made under subsection (3).

   (5) An order under subsection (3):

   (a) is subject to such terms and conditions as are specified in the order; and

   (b) operates for:

   (i) such period as is specified in the order; or

   (ii) if no period is specified--until a decision of the court, the Registrar or the AAT determining the proceeding becomes final.

5. It is common ground between the parties that each of them have made child support departure applications pursuant to sections 116 and 117 of the Child Support (Assessment) Act 1989 (Cth). In those circumstances, sub-section 111C(3) of the Registration and Collection Act empowers the Family Court to make the orders as sought by the father. In considering whether to make those orders, I am required to take into account the interests of persons who may be affected. Clearly B is such a person.

6. It is noted that sub-section 111C(3) of the Registration and Collection Act gives the Court a broad discretion to:

   …make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of the persons who may be affected by the outcome of the proceeding.

7. I do not exercise this discretion within the prism of considering whether the decision maker made an error of law. This would necessarily have been the case if the father had elected to pursue an appeal to the Federal Circuit Court pursuant to the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”).

8. Further, making an application for orders pursuant to section 111C of the Registration and Collection Act does not face the same twenty-eight day time constraint, set out in section 44(2A) of the AAT Act, for filing an appeal.

9. In my view it would be appropriate for the legislature to give consideration to whether the broad power that this Court has pursuant to section 111C of the Registration and Collection Act is consistent with recent amendments that empower the Federal Circuit Court of Australia and, in the event of an appeal, the Federal Court, to review administrative decisions made under the Child Support (Assessment) Act 1989 (Cth).

10. In my view the preferable course of action for the father to have followed would have been, as was indicated to the father in a covering letter from the Administrative Appeals Tribunal dated 5 November 2015, to have appealed to the Federal Circuit Court of Australia. In that event, the application would have been for a stay pursuant to section 44A of the AAT Act.

11. The reason I am of that view is that since the Child Support Legislation Amendment (Reform of the Child Support Scheme - New Formula and Other Measures) Act 2006 (Cth), it has been the intention of Parliament that child support disputes should primarily be dealt with by way of administrative determination rather than the more complex and costly process that tends to occur in the court system because of the adversarial nature of proceedings.

12. In that context, I note and agree with the analysis of Judge Brown who considered the history of that legislation in Yewen & Child Support Registrar and Anor [2014] FCCA 2399 at [76]-[79].

13. If the matter had been approached on the basis of section 44A of the AAT Act, then the considerations that apply to the granting of a stay as set out in the decision of Aldridge & Keaton (Stay Appeal) (2009) FamCAFC 106 (“Aldridge”) at paragraph 18 would have been applicable.

14. I agree with counsel for the father that, whilst those principles do not directly correlate to an application for orders pursuant to section 111C, the principles adumbrated in Aldridge provide a useful guide in the Court exercising its discretion in this matter. 

15. In support of the father’s application, counsel for the father indicated that there are essentially three reasons why the orders sought should be made. 

16. Firstly, it was argued that neither party can meet their existing day-to-day living expenses and it was therefore impractical for B to remain at a private school. In that context, reference was made to the Financial Statements filed by each of the parties in the proceedings as indicating there was a surplus of expenditure over income. Reference was also made to Exhibit 4 which, it was submitted, indicates that, after paying the revised child support amount of $1 439.92 per fortnight, the father would be left with available funds of $278.56 for his living expenses. 

17. Secondly, the father would be prejudiced if he was required to draw on available capital to meet B’s school fees. It is common ground between the parties that the potentially available capital arises from an inheritance that the father received from his late father, the grandfather of the children.  The prejudice was said to be essentially four-fold;

    i.It would reduce the father’s ability to re-accommodate after finalisation of the Family Court proceedings; 

    ii.It would remove any argument as to how to characterise the father’s inheritance and, specifically, the ability of the father to argue at final hearing that the Court should adopt the two pool approach in assessing the respective contributions of the parties; 

    iii.Depleting the capital would remove the source for payment of the father’s legal fees; and

    iv.It would reduce the availability of funds to meet the vicissitudes of life including, for example, the fact that the father had to recently replace a motor vehicle and also underwent hip surgery. 

18. Counsel for the father also argued that, in terms of accessing capital, the mother should consider drawing upon funds that are available to her. In that respect it was argued that the mother’s Financial Statement filed 11 December 2015 indicates that she has available funds of approximately $330 000.

19. In response the solicitor for the mother indicated that it was a joint decision of the parties to send B to a private school. That decision was made during her first year of life. It was noted that both parties signed the application for B to attend the private school. 

20. It was also noted that the mother is already incurring the burden of meeting C’ private school fees in accordance with the undertaking she provided to the Court on 11 November 2013 to which I have referred. In that context, it was argued that the mother would face equal financial hardship to that which would be borne by the father.

21. Finally, it was argued on behalf of the mother that a situation should not occur where B’s education is disrupted because of the current disputation between the parents. 

22. As noted above, while I have construed section 111C as giving the Court a broader discretion than would be the case in simply considering whether to stay a decision pending an appeal, I have nonetheless had regard to those principles set out in Aldridge that are apposite to the consideration of this matter. Those principles which are relevant are as follows:

    (1)  “The onus to establish a proper basis for the [Court granting a stay] is on the applicant”. In this case, that is the father.

    (2) “A person who obtained a judgment”- in this case, the decision of the AAT - “is [prima facie] entitled to the benefit of that [decision]”. In this case, that is the mother. 

    (3) “The person who obtained a judgment”- in this case, that is the mother - “is entitled to presume the decision is correct”.

    (4) In considering “the bona fides of the applicant”, I have had regard to the financial circumstances of the father. 

    (5) “A stay may be granted on terms that are fair to all parties”. In that context, I consider that to restrain the Department from recovering the arrears, but refrain from making Order 2 of the father’s proposed orders, will ensure that B can remain at the private school pending the determination of the Family Court proceedings. 

    (6) In this case there is no issue of “an appeal being rendered nugatory”. However, if the father is required to pay child support arrears, it would require him to utilise his capital and that is a relevant factor.

    (7) In assessing the prospects of succeeding in a departure application at final hearing I consider that, having regard to the income and expenditure of the parties, there is at least a viable argument that a departure order should be made.

    (8) In terms of the period of time within which the child support departure applications can be heard, depending on the parties filing their material in time, it may be possible for hearing dates to be allocated before the end of this year. Accordingly, requiring the father to make ongoing child support payments would provide some confidence that B could remain at her present school at least until the end of this school year.

    (9) Finally, in Aldridge, the Court considered the best interests of the child in assessing the impact of staying the decision there in question. That is also appropriate in this case. As noted, I consider that it is in B’s best interests for her to be able to remain at her present school until the parties’ competing applications can be heard. 

23. Having regard to the principles set out in Aldridge and the provisions of section 111C to which I have referred and, in particular, the impact on B, I have determined that it is appropriate for the father to continue to meet the ongoing child support obligations as set out in the decision of the AAT. I note in that respect that at paragraph 87 Member Cuthbert said:

    The tribunal finds that it would be just and equitable for [Ms Warwick] and [Mr Cutler] to contribute equally to the additional costs associated with [B’s] education.  The tribunal proposes to increase the annual rate of child support payable by [Mr Cutler] by 50% of [B’s] tuition fees of $13,494 for 2014, $15,500 for 2015 and $16,000 (allowing a slight increase) in 2016. 

24. I will not stay the decision of the AAT, but rather will restrain the Department of Human Services from collecting the arrears of child support payable by the father in respect to the 2014 and 2015 school years. This means that the father will have an ongoing obligation to pay child support at the higher rate as set out in the decision but, pending final determination, will not be required to utilise his capital to pay the arrears.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 7 March 2016.

Associate: 

Date:  28 April 2016