D and B

[2006] FMCAfam 437

FEDERAL MAGISTRATES COURT OF AUSTRALIA

D & B [2006] FMCAfam 437

FAMILY LAW – Application to discharge child maintenance arrears – doctrines of res judicata and Anshun estoppel – just cause – circumstances of the parties – arrears varied – recommendation that penalty be waived if arrears paid within say five years.

Child Support (Assessment) Act 1989
Family Law Act 1975, ss.66B, 66C, 66S, 66W

Cameron & Helie [2004] FMCAfam 685
Kelly & Kelly (1996) FLC 92-680
Lutzke & Lutzke (1979) FLC 90-714
P & D [2003] FMCAfam 461
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Reid & Reid (1978) FLC 90-529
Roche & Glenn (2002) FLC 93-123
Spry & Roet (1977) FLC 90-301
Vakil & Vakil (1997) FLC 92-743
Wong v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 242

Applicant: RJD

Respondent: CJB (McGEE)

File Number: CAM 1247 of 2004

Judgment of: Mowbray FM

Hearing dates: 18 February, 6 June, 11 July & 9 September 2005

Date of last submission: 23 September 2005

Delivered at: Canberra

Delivered on: 21 August 2006

REPRESENTATION

Counsel for the Applicant: Mr G Howard

Solicitors for the Applicant: Farrar Gesini & Dunn

Counsel for the Respondent: Ms J Godtschalk

Solicitors for the Respondent: Crowley Clifford Simpson

ORDERS

1. The order of 4 July 2006 staying the father’s liability to pay child maintenance or any arrears of child maintenance be discharged.

2. Pursuant to section 66W(2)(b) of the Family Law Act 1975 the father’s obligation to pay maintenance between 1 July 2000 and 30 December 2004 for the children, DJD born 19 January 1984 and JAD born 30 December 1986, be reduced to that for which he would liable if the formula under the Child Support (Assessment) Act 1989 had been applied to the father’s taxable income for the relevant years.

3. I request that the Child Support Registrar give consideration to waiving all late payment penalties owed by the father if the arrears in maintenance debt are paid within say five years.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
CANBERRA

CAM 1247 of 2004

RJD

Applicant

And

CJB (McGEE)

Respondent

REASONS FOR JUDGMENT

1. The applicant father asks the Court to discharge all of his child maintenance debt or alternatively to reduce the arrears.  At the end of August 2005 he had a child maintenance debt of $8,964.94 and a late payment penalty debt of $4,981.68.  The total outstanding was therefore $13,946.62.  The respondent mother wants the application dismissed.

Background

1. The father was born in June 1955.  He is thus now 51 years of age.  The mother was born in March 1957.  She is now 49 years of age.

2. The parties were married in June 1985 and separated approximately nine months later.  They were divorced in December 1987.

3. There are two children of the marriage, the subject of this application, DJD born in January 1984 aged 22 and JAD born in December 1986 aged 19.

4. The father has two other children, LN born in April 1983 aged 23 and JD born in January 2002 aged 4 years.  LN lives with his mother in P.  The father married JD’s mother, G, in January 1999.  A second child was due in April-May 2006.

5. The mother married LM in 1995 and separated from him in December 2000.  They have two children, ALM born in March 1995 aged 11 and LJM born in November 1997 aged 8.  They live primarily with their mother.

6. In September 1991 the Court of Petty Sessions in L ordered the father to make lump sum and periodic maintenance payments to the mother.

7. In April 1997 consent orders were made in the Family Court in H requiring the father to pay child maintenance of $50 per week for each child commencing in January 1997.  This amount was to be indexed in accordance with the CPI.  Arrears in child maintenance from 10 January 1997 until April 1997 was to be paid by the father within 30 days. 

8. The mother subsequently registered those orders under the Child Support (Registration and Collection) Act 1988.

9. In July 1998 the father filed an application in Cooma Local Court for the maintenance to be reduced to $30 per week per child and for the reduction to be backdated to September 1997.

10. Magistrate Rabbidge reduced the father’s child maintenance to $60 per week in total, $30 for each child, from 17 November 1998.  The Magistrate refused to grant any retrospective relief.

11. The father filed his application in this Court in August 2004 seeking “that the arrears of maintenance be waived”.  This came on for hearing in February 2005 and was adjourned part heard.  The father filed a notice of discontinuance on 1 June 2005 which he was later granted leave to withdraw on 11 July 2005.

12. The father’s liability to pay child maintenance or any arrears of child maintenance was stayed in October 2004.  This stay was discharged in June 2005 and reinstated in July 2006.

The relevant law

1. Section 66W of the Family Law Act 1975, as substituted by item 56A of Schedule 3 to the Family Law Amendment Act 2000, applies to arrears of child maintenance that are outstanding on or after 27 December 2000.  It relevantly provides:

   Recovery of arrears

   (2)  If arrears are due under such an order when the order ceases to be - in_forcein force, the court may, by order, retrospectively:

   (a)  discharge the order if there is just cause for doing so; or

   (b)  vary the order so as to increase or decrease the arrears to be paid under the order if the court is satisfied that:

   (i)  the circumstances of the person liable to pay the arrears are such as to justify the variation; or

   (ii)  the circumstances of the person entitled to receive the arrears are such as to justify the variation; or

2. It is well established that the Court has power to discharge or vary a child maintenance order or arrears of child maintenance upon the child attaining the age of 18 years (Roche & Glenn (2002) FLC 93-123;

   
   P & D

   [2003] FMCAfam 461; Cameron & Helie [2004] FMCAfam 685).

3. Section 66W(2)(a) only allows the Court to discharge an order for child maintenance if there is “just cause” for doing so. In Lutzke & Lutzke (1979) FLC 90-714 at 78,832 Lindenmayer J said that these words are not used “in any broad general sense”, nor do they “import any abstract notions of justice”. Rather before a Court can discharge an existing maintenance order it must be shown to be “right” or “proper” having regard to the other provisions of the Act. That reasoning was affirmed by the Full Court in Vakil & Vakil (1997) FLC 92-743.

4. Alternatively, section 66W(2)(b) allows a Court to vary an order so as to increase or decrease the arrears if the circumstances of either party justifies it.

5. The decisions in Spry & Roet (1977) FLC 90-301 and Reid & Reid (1978) FLC 90-529 emphasise the discretionary nature of orders in matters such as this.

6. In Cameron & Helie Scarlett FM said that arrears of child maintenance are not to be used for lump sum compensation long after the need for the child to be maintained has passed.  He referred to the reasoning of  the Full Court in Kelly & Kelly (1996) FLC 92-680 at 83,060:

   In our opinion, litigants having the benefit of orders for the payment of school fees and other expenses in relation to their children cannot sit back and allow such obligations to accumulate without informing the person having the obligation to pay.

   He also noted the stipendiary or periodic nature of orders for child maintenance or child support.  This is to allow the recipient to meet ordinary regular outgoings for support of the children to whom the order relates.

The issues

1. The major issues that have arisen in this case are:

   ·whether the father is prevented by res judicata or Anshun estoppel from relitigating the question of his arrears

   ·whether the orders under which the arrears are due should be discharged

   ·whether the orders should be varied to decrease the arrears.

Res judicata and Anshun estoppel

1. The mother submits that the father should not be able to relitigate the question of payment of arrears up to 17 November 1998.  As noted above in July 1998 he had filed an application in C Local Court for his maintenance to be reduced to $30 per week per child and for the reduction be backdated to September 1997.  Magistrate Rabbidge reduced the father’s child maintenance to $60 per week in total, $30 for each child, from 17 November 1998.  However, he refused to grant any retrospective relief.

2. The mother says that res judicata does not apply as the magistrate did not determine the same question as that raised in these proceedings.  However the wider principle enunciated in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598 does apply to the arrears which had accrued by 17 November 1998. At the Cooma hearing the father claimed financial hardship as the reason for seeking that the arrears be expunged. The mother asserts that he should not be now permitted to revisit the same subject matter for the same reason before this Court.

3. The principles for res judicata and Anshun estoppel are set out in Wong v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 242. Res judicata constitutes an absolute bar to a subsequent proceeding for the same cause of action.  The entry of judgment on an action extinguishes the right to maintain proceedings based on the same cause of action.  Wong held that it would be an abuse of process to allow parties to litigate repeatedly matters that have been finally determined by the courts.  Once an issue has been determined according to law and all rights of appeal have been exhausted that should be an end to the matter.  The resources of the community ought not to be expended more that once in litigation on the same issue.

4. Both parties accept that res judicata does not apply. I agree. The C magistrate did not adjudicate the same cause of action as that before this Court. The 1998 application was for modification of a child maintenance order under section 66S. That order was then in force. The current section 66W for recovery of arrears after a maintenance order ceases to be in force had still to be enacted.

5. A party may raise the doctrine of Anshun estoppel in relation to every issue that properly belongs to the subject of the earlier litigation and which the parties exercising reasonable diligence might have brought forward at the time of the earlier litigation.  There may be instances however where there are special circumstances which permit a party to raise issues in subsequent proceedings.  Such circumstances must be exceptional.

6. I am not persuaded that this is a case where Anshun estoppel can apply. The cause of action set out in section 66W allowing for discharge of an order under which arrears are due, or alternatively varying an order to change the arrears payable, was created by statute coming into effect in December 2000. There was no similar provision in operation in 1998.

7. As Mr Howard for the father points out he is relying on his current circumstances to support this application, not those at the time of his 1998 proceedings.  These new circumstances include his need to support two children unborn in 1998.  Furthermore the current cause of action only became available when the maintenance order ceased to be in force, that is when JAD turned 18 in 2004.

8. In the result, even if I was satisfied that Anshun estoppel could apply, I would not in the exercise of my discretion rely on it to prevent the father raising the section 66W issues now. Nor do I believe that an issue estoppel arises in relation to any of the disputed questions before me.

Discharge the arrears

1. The father’s primary application is for the order under which the arrears of $8,964.94 arise to be discharged under section 66W(2)(a). This should be done in view of:

   ·his current financial circumstances

   ·the mother’s lack of action to enforce the arrears

   ·the children now being over eighteen. 

2. In his view what the mother is effectively seeking is to convert the arrears of child maintenance into lump sum compensation for her benefit now that the children are off her hands.

3. He says that from the date of the C orders in November 1998 he more often than not met his obligations with regular payments until November 2001.  His financial circumstances from 2001 can be gauged from his taxable income - $28,750 in 2001, $15,090 in 2002, $26,304 in 2003, $25,168 in 2004 and $29,831 in 2005.  His financial statement of August 2005 estimates his yearly income at about $31,000.  He puts his assets at about $160,000 with liabilities of about $91,000.

4. As indicated earlier he has remarried and at the time of the hearing had one young child of that marriage with another due in April - May 2006.  As a consequence he expected that his wife would have to take time off from her work as a teacher, from which she was earning about $37,500 a year.

5. In these financial circumstances he has no source of funds, either capital or income, with which to pay the arrears.  Had he sought to have an assessment of child support based on his taxable income since 2001, his obligation would have been substantially reduced.  In some years it would have been set at the minimum of $5 per week.  

6. The father says that the mother has not done much to recover the arrears.  He asserts that the only court applications since the original maintenance orders have been made by the father.  The mother has not sought to enforce the maintenance orders.

7. DJD turned 18 in 2002 and JAD in 2004.  Child support for DJD ceased in 2000 when he started living with his maternal grandparents.  The mother is therefore under no legal obligation to support either of them.  In the father’s view she should not now be compensated with a lump sum so long after the needs of the children to be maintained have passed.

8. The question then is whether there is “just cause” for discharging the maintenance orders and thereby the arrears.  In the words of Lindenmayer J in Lutzke & Lutzke would it be “right” or “proper” having regard to the other provisions of the Act? 

9. I note in particular the objects in section 66B which include that the parents should share equitably in the support of their children and the principles in section 66C which provide that the parents of children have the primary duty to maintain their children.  This duty takes priority over all other commitments of the parent subject to limited exceptions.

10. In this matter I am not persuaded that there is just cause for discharging the orders and thus completely discharging the father’s arrears:

    ·while I could not be satisfied that the father’s evidence accurately reflected his earnings – at times he was vague and unresponsive, he contradicted himself and also accepted that parts of his affidavit were inaccurate – I accept that the father’s financial circumstances are not prosperous

    ·nevertheless the father is in fact better off than the mother.  She attests to an income of about $20,500 per year.  She has two children in her care from a later marriage but receives little if any financial support from their father

    ·the father had an opportunity in 2003 to repay the whole of the arrears, and a later opportunity in July 2005 to pay about half of the maintenance debt

    ·when he sold his property in R Drive, J, in February 2003 he was left with about $140,000 after discharging his mortgage.  He chose not to repay his maintenance debt but to purchase two new blocks of land in A for $106,000.  In May 2003 he sold one of these lots for $90,000.  He then used these funds with those from a new mortgage to build a house which is still to be completed.  At the time his child maintenance arrears including the late payment penalty was between $8,500 and $9,500.  He testified that he knew he had this debt but his priority was to get another house rather than rent

    ·the father sold his boat in July 2005 for $4,000, with a payment of $3,000 in July and a second one of $1,000 in August.  His conditional offer to the mother of $3,500 was not accepted.  This money was apparently then used to retain a lawyer.  He did not apply any of this amount to reducing his arrears

    ·the father thus did not take up either of these opportunities when he had available capital sums to put towards his maintenance obligations.  He accepted in evidence that he had a choice and he chose not to discharge the arrears

    ·I do not accept the father’s contention that the mother has done nothing to enforce the child maintenance obligations.  She went to court in April 1991 and March 1997 due to the father’s failure to pay maintenance.  She registered the April 1997 and November 1998 orders with the Child Support Agency.  She estimates that she has telephoned the Agency twice a month since April 1997 chasing up arrears.  The Agency confirms that she had contacted it on at least twenty occasions between December 1998 and August 2005.  She has taken the matter up with her member of parliament.  She has sought advice from her then solicitor and twice applied for legal aid in 1997 and 1998 but was refused

    ·on the other hand the father applied twice, to the Local Court in C in 1998 and to this Court in 2004, to vary or discharge his obligations.  He did nothing from 1998 to 2004

    ·in my view that the children are now beyond the age for maintenance is something of a red herring.  The mother in this Court is merely defending her right to have paid to her that to which she is lawfully entitled.

11. The father had a legal obligation to pay maintenance and he has a significant arrears.  The question is whether there is just cause – it would be “right’ or “proper” – for discharging those arrears.  I am satisfied that it would not be proper in the circumstances to do so.

Vary the arrears

1. The father’s alternative submission is that I should vary the orders so as to reduce the arrears to zero or to otherwise reduce the arrears by a lesser amount.  He says that his circumstances justify such a reduction (section 66W(2)(b)(i)).

2. For the reasons given above I am not prepared to totally discharge the arrears.  However, it is necessary to be realistic about the father’s position.  In my view an examination of all his circumstances does suggest some reduction:

   ·his financial circumstances are set out above

   ·his family must now rely on one income which is sporadic and low

   ·he has no capital resources from which to pay a lump sum

   ·he has a new young family

   ·his home although liveable was still incomplete at the time of the hearing.

3. In the terms of section 66W(2)(b)(i) the father’s circumstances do justify some variation.

4. What variation then should be applied? And should I exercise the discretion vested in the Court to make such a variation – see the opening words in section 66W(2), especially the words “the court may”?

5. In reaching my decision I have noted in particular, in addition to the father’s circumstances outlined above, that:

   ·the mother’s financial circumstances are probably worse than the father’s

   ·the mother has had to rely on her father’s financial support on a number of occasions, including for the purchase of a car

   ·the mother has the care of two other children from a later marriage without their father’s support

   ·JAD had a relatively small separate income from December 2002 until he moved out of the mother’s home in February – March 2005

   ·JAD has a medical condition requiring significant medical expenses

   ·Magistrate Rabbidge’s decision in November 1998 not to backdate the reduction in maintenance to September 1997 when requested by the father.

6. Having regard to all the evidence I propose to vary the father’s arrears:

   ·there shall be no reduction in the arrears outstanding at the time of Magistrate Rabbidge’s decision in November 1998

   ·there shall be no reduction in the arrears from November 1998 to 30 June 2000, noting that no evidence was adduced on the father’s income before the 2000 – 2001 financial year

   ·the maintenance obligation between 1 July 2000 and cessation of liability in December 2004 shall be reduced to that which would have resulted if the formula under the Child Support (Assessment) Act 1989 had been applied to the father’s taxable income for the relevant years.

1. In my view this change is appropriate having regard to all the circumstances, in particular the current and foreseeable future needs of both the mother and the father.  But this is not a case where the mother’s financial circumstances are significantly better than the father.  In my view they are probably worse.

Conclusions

1. In summary I conclude:

   ·neither the doctrines of res judicata and Anshun estoppel apply to this case

   ·there is no just cause for discharging the applicable maintenance orders

   ·the father’s arrears up to 30 June 2000 should not be varied

   ·the father’s arrears from 1 July 2000 should be reduced as set out above.

2. I will also ask that the Child Support Registrar give consideration to waiving all late payment penalties if the arrears are paid within say five years.

3. The order of 4 July 2006 staying the father’s liability to pay child maintenance or any arrears of child maintenance will be discharged.

4. This is not an appropriate case for any order for costs.

I certify that the preceding fifty paragraphs are a true copy of the reasons for judgment of Mowbray FM

Associate:  Beau Wilson

Date:  21 August 2006