D and B
[2005] FMCAfam 90
•18 February 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| D & B | [2005] FMCAfam 90 |
| CHILD SUPPORT – Non-agency payments – whether application is an appeal against Child Support Registrar’s decision – whether application is an application to vary child maintenance. |
| Applicant: | J R D |
| Respondent: | J J |
| File No: | BRM6281 of 2001 |
| Delivered on: | 18 February 2005 |
| Delivered at: | Brisbane |
| Hearing date: | 2 May 2003 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Applicant: | Self Represented |
| Solicitors for the Respondent: | Quinn & Scattini |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRM 6281 of 2001
| R J D |
Applicant
And
| J J B |
Respondent
REASONS FOR JUDGMENT
The applicant husband, J R D, and respondent wife, J J B, are no strangers to litigation. Since they separated in February 1989, now over 16 years ago, they have had not less than 21 appearances before a Court as wide in the judicial spectrum as the Southport Magistrates Court and the Full Court of the Family Court of Australia.
I directed the solicitors for the wife to provide an accurate summary of the major orders made and on 8 May 2003 they did so. That chronology of orders which I adopt as accurate will be appendix 1 to these reasons.
In short, as a result of the combination of earlier orders for both spousal maintenance and child maintenance (stage 1) the wife asserts the husband is indebted to her in a sum exceeding $222,000. Part of that sum, according to the Child Support Agency of course, are penalties imposed administratively over which I have no control.
The husband by his application filed on 6 November 2002 seeks that:
(1)“That arrears of maintenance (child support) and penalties attributable thereto be discharged.
(2)In the alternative that such arrears of maintenance and penalties attributable thereto be reduced to effect payments made by the applicant for and on behalf of the children.”
Although the husband was initially legally represented, at the hearing he represented himself. As these reasons reflect, to a large degree the application is misconceived.
The wife merely asks that the application be dismissed. She does not concede any credits or circumstances which would result in a reduction of the accumulated liability. At the commencement of these proceedings she was unrepresented, however, at the hearing she was represented by Mr Howarth, a solicitor advocate.
Both parties filed enormous amounts of material principally copies of receipts, invoices and alleged expenses over this long history. The Court was, in a sense, being asked to undertake an accounting exercise and to wade through over 20 centimetres of documents. For the reasons set out I did not do so completely and I do not regard that as the function of this Court in this matter.
Critical facts not apparently in dispute
The parties are now both 53 years old and that during the course of the marriage of 16 years, (dissolved in 1990), two children were born; A born 19 July 1982 who therefore turned 18 in 2000 and An born 10 December 1983 who therefore turned 18 in 2001.
The children enjoyed private education and have subsequently commenced tertiary studies. They maintain relationships with both parents. It is a clear feature of the history of this matter that despite orders for payment of child maintenance to the wife (who was the carer of the children) the husband chose to make at times numerous other payments to third parties or to the children directly which he says ought be credit against his accruing liability.
The antipathy between the parties after 14 years of constant litigation was obvious to me in the hearing. The debt (before addition of penalties imposed by the Child Support Agency) is alleged to exceed $175,000. The enforcement and recovery of that Commonwealth liability has been the subject of extensive litigation and more recently reasons for judgment delivered by me (Child Support Agency v D [2004] FMCAfam 739 delivered 24 December 2004). Those proceedings are not finalised and await further submissions before orders can be made.
The husband asserts it is relevant that at the time of his bankruptcy in April 1998 (discharged in 2002) the outstanding balance was only $80,000.
The husband's case
The husband relied on affidavits filed 8 November 2002, 28 January 2003 and 17 March 2003. He was the subject of cross-examination. The husband broadly asserts that since separation in 1989 he has:
a)paid "substantial private education expenses and related costs for both children including boarding fees". He concedes not all these payments were made by him but some were paid by "my family and maternal grandparents".
b)"had extensive costs associated with interstate contact of the children".
c)"paid extensive medical and dental expenses including physiotherapy costs of both children". He conceded the expenses were to a large extent covered by "private health fund MBF".
d)"made a number of direct payments to the children at their request in circumstances where the children informed me that their mother would not assist with their day to day needs".
The father provided a breakdown of these expenses for the period of May 1994 to July 2002 in annexure "JD1" to his first affidavit. My analysis of that document breaks the payments into the following basic categories of, school expenses, contact costs, medical and dental expenses and direct allowances to children. The husband says the ex parte order made in October 1993 that he pay $315 per week for each child was more than he could afford and "it was these orders and my state of earnings in the years 1990, '91 and '92 that started the accrual of arrears to the Child Support Agency".
He has not referred to the consent order made by Registrar McGrath in the Family Court on 26 February 1996 which require the husband to pay:
“Half of school tuition fees, books and school camps which are approved by the husband for the children at St Hilda's and Toowoomba Grammar School”.
It appears that that order was subsequently discharged through subsequent litigation.
His affidavit of 17 March 2003 attaches invoices and other records on those expenses which he claims, as well as correspondence from the Child Support Agency importantly including a letter dated 13 December 2002 which shows a payment history for the period 10 April 1989 to 11 December 2002. It summarised the position of the debt as being maintenance debt of $163,879.58, a late payment penalty of $61,522.35 and a cost debt of $4,321.50. A total $229,723.43.
Interestingly, the payments reveal there was no debt at November '94 (although the balance fluctuates widely over the period with large payments seemingly credited, remitted and at times re-applied). The evidence I heard was insufficient to enable me to explain adequately most of these major adjustments. Certainly, the wife says in her evidence that she was surprised and did not know of some of the credits which had been given to the husband.
The husband says "some of the orders obtained were outside my ability to pay” and that this has caused his health to suffer greatly (see the report of psychiatrist Dr T L). For reasons which I give later and to the extent it is purported that his application is an application for a retrospective discharge of the child maintenance order, I do not believe it is just to vary the orders.
The crux of the husband's case seems to be raised in paragraph 25 of his affidavit filed 28 January 2003, namely:
“The amount of money paid for the benefit of the children that has been rejected by the wife as they were non agency payments from my family trust amounts to some $30,000 and included school fees. The current child support enforcement proceedings before the Court against me for arrears for large amounts that the trust has paid and been rejected by the Child Support Agency already confirms my belief that this matter defies logic as the Child Support Agency is now seeking that the family trust and my alter ego but have rejected the same from these sources as my wife ruled they were not for the benefit of the children”.
The husband says (see paragraph 4 of the affidavit filed 17 March 2003) that:
“The annexure "JD3" shows that between 1990 and 1998 the husband has sought credit for some $80,928.63 paid and $41,615.80 credited leaving $39,313.45 which was for the children's benefit and not credited”.
The wife's case
The wife was originally unrepresented but by the hearing she was represented by a solicitor advocate, Mr Howarth. An affidavit filed 9 April 2003 (repaginated copy being exhibit 3) was the primary evidence relied upon. The wife was not required for cross-examination. The wife's case essentially is that the payments for which credit as non agency payments are sought should not be permitted for a number of reasons including:
a)Many expenses claimed had been previously the subject of a request for credit, but had been rejected by the Child Support Agency in 1998.
b)Allowances the father chose to pay to the children were not agreed to by the mother and were not necessary.
c)Holiday expenses claimed were again a unilateral decision of the father who did not seek agreement from the mother to credit against child support payments.
d)The husband seeks a credit for expenses after the children turned 18.
e)The mother will not accept payments made by entities associated with the father but not paid by him personally. The mother asserts a significant amount of the school expenses fall into this category with a large proportion paid by a company M Holdings Pty Ltd. The wife asserts that some of the moneys actually represented funds to which the children have some entitlement as beneficiaries of the trust established by the father's late father, Dr D. In respect of those issues I have already made findings in relation to that trust in my earlier decision referred to at paragraph 10.
f)The father seeks crediting for the full amount of some medical expenses when they were proportionally covered by a private health insurer, the father was not required to maintain private health insurance cover for the children.
g)The father has not met the evidentiary burden of establishing with bank records that payments have in fact been made by him. The mother does not accept a cheque butt alone.
h)The mother seeks a dismissal of the application as I have already mentioned.
Is the application an application to vary?
Although not specifically pleaded the application by the father and the evidence in part relied upon may be regarded by him as an application to vary or discharge earlier orders pursuant to s.66S of the Family Law Act 1975. At the time the application was made the children had turned 18. The order was therefore no longer in force and although some authorities of single Judges of the Family Court of Australia (referred to at paragraph 11 of the Full Court decision in Roche v Glenn (2002) FLC 93-123) differed as to the effect of the provision, certainly s.66W of the Family Law Act now applies. That section was amended by the Family Law Amendment Act of 2000 which came into force on 27 December 2000 and now provides relevantly that:
“66W(1) [Effect of provisions] Nothing in subsection 66L(3), or in this Subdivision (art from subsection (2) of this section), affects the recovery of arrears due under a child maintenance order in relation to a child when the order ceases to be in force.
66W(2) [Retrospective discharged or variation of order] If arrears are due under such an order when the order ceases to be in force, the court may, by order, retrospectively:
(i) discharge the order if there is just cause for doing so; or
(ii) vary the order so as to increase or decrease the arrears to be paid under the order if the court is satisfied; or
(iii) in the case of an order that operated in favour of, or that was binding on, legal personal representative – the circumstances of the estate are such as to justify the variation”.
I would not regard it as just to discharge or vary the orders which found the liability in circumstances where these proceedings are brought:
a)In A's case more than two years after she turned 18 and in An's case nearly 12 months;
b)More than four years after the father was declared bankrupt;
c)More than four years after the father made an application to the Child Support Agency for the crediting of a range of non agency payments;
d)Nearly eight years after An first began boarding school - an event which the father asserts was a significant change in circumstances which made the order of October 1993 inappropriate and no longer fair; and
e)In circumstances where the father has been engaged in continual litigation in the Family Court of Australia and could have raised such issues with Barry and Bell JJ at least.
It may be that some of the orders of the previous judicial officers in the Family Court which reviewed the order (also with Bell J viewing the order of Registrar McGrath to effectively re-instate the 1993 order) operate as some form of issue estoppel to the current proceedings in part or wholly. I did not receive any submission on behalf of the wife to that effect and did not therefore consider that issue.
Legislative framework
The obvious provisions which are of primary relevance in this decision are those provisions of the Child Support (Registration and Collection) Act 1989 and particular ss.71 and 71A which provides as follows:
“SECTION 71 DIRECT PAYMENTS TO PAYEE
71(1) [Direct payment to payee to be credited against payer’s liability] Subject to section 71D, if:
(a) the payee of an enforceable maintenance liability received fro the payer an amount intended by both payer and the payee to be paid in complete or partial satisfaction of an amount payable under the liability in relation to the child support enforcement period; and
(b) the payer or the payee applies to the Registrar to have the amount received by the payee treated as having been paid to the Registrar;
the Registrar shall, in spite of section 30, credit the amount received by the payee against the liability of the payer to the Commonwealth in relation to the amount payable under the liability.”
SECTION 71A PAYMENTS TO THIRD PERSON BY PAYER
71A Subject to section 71D, if:
(a)the payer of an enforceable maintenance liability pays a third party an amount that partially or completely satisfies a debt owed by:
(i)the payee of the enforceable maintenance liability; or
(ii)the payer; or
(iii)both the payer and payee; and
(b)the payer or the payee applies to the Registrar, in a manner specified by the Registrar, to have the amount, or party of the amount, received by the third party treated as being been paid to the Registrar; and
(c)the amount paid, or a part of the amount paid, was intended by both the payer and the payee to be paid in complete or partial satisfaction of an amount payable under the enforceable maintenance liability in relation to the child support enforcement period;
the Registrar must, in spite of section 30, credit the amount, or part of the mount, received by the third party against the liability of the payer to the Commonwealth in relation to the amount payable under the enforceable maintenance liability.”
If a person is dissatisfied with the agency decision they can appeal the decision to the Court under s 88. The current application is not, in my view, an appeal.
Submissions
The father in final submissions referred me to the evidence of:
a)his inability to pay during his bankruptcy.
b)the failure for credit to be given for "food components" and allowances.
c)the lack of consistency by the Child Support Agency in dealing with his requests.
d)the overwhelming benefit the children derived from his payment for education, holidays, medical expenses and general lifestyle support.
He did not, in my view, in his evidence or submissions grasp the fundamental principle that when a Court had ordered him to pay to the mother funds for the support of the children that he does not have a unilateral right or option to choose to pay to or for the benefit of the children expenses which he can demand be credited against his ongoing child support liability created by the Court order.
This is not a case where the mother has refused to allow credits. She clearly has. The father conceded in his evidence that the mother had not agreed to the expenses he claimed, being credited. That was, in my view, a critical concession. The father seeks me to effectively determine whether the mother's refusal to accept certain payments was reasonable. But that misunderstands the intention of the legislation. The history of litigation and correspondence which passed between the father and the Child Support Agency over many years makes it abundantly clear to me the father was well aware of the risk that payments would not be credited. He chose to disregard that risk it seems to me. Perhaps he did so to show to his children his support of them. It seems he preserves an intact relationship with them as does the mother. However, that is not the issue for this Court.
Mother's submissions
I was given the benefit of written submissions by the solicitor advocate for the mother and I will refer particularly to paragraph 10 and 11 of those submissions which I shall incorporate in these reasons as follows:
“10 Analysis
– Has there been an agreement?
There has been no agreement between the husband and wife that any of the payments sought to be credited be credited. The husband conceded this in cross-examination.
The application should be dismissed altogether.
– When were the payments made?
Firstly, the husband cannot get credit for payments ($14,561.74) made before 28 October 1996 when the debt was registered. (See In he marriage of CR and SA Stauss 22 Fam LR 653).
Secondly, Amy turned 18 on 19 July 2000. Anthony turned 18 on 10 December 2001.
Part AMY3 shows the payments made after Amy’s 18th birthday ($15,642.56).
Part ANT3 shows the payments made after Anthony’s 18th birthday ($3,586.28).
The husband claims payments ($19,901.15 for Anthony and $6,651.76 for Amy) between the children leaving school to their respective 18th birthdays.
These payments were made after the child maintenance obligation expired. They should not be credited to the husband. There is no evidence that they were paid to reduce the debt created before the respective 18th birthdays. The fact that these types of payments were made both before and after the birthdays show that they were just a continuation of payments that the husband chose to make quite apart from his child maintenance obligations.
–Have there been payments by the husband?
The section requires that payments be made by the husband.
The payments highlights in yellow in PART 8 ($2,834.58) have been paid by another entity and not by the husband. He cannot get credit for these.
There are other payments where the identity of the payer cannot be determined by the evidence provided by the husband ($53,950.42). The husband has not discharged his onus of proof for these items.
[See also JJB4 and JJB5 of Affidavit of Jennifer Joan Bradfield sworn 8 April 2003]
–Have there been payments at all?
The husband has to show that he has actually made the payments.
The husband has produced some cheque butts, sone receipts and some invoices. These have been colour coded in Part 4 and Part 5.
The items where no documents have been produced are left unhighlighted ($27,844.10). The wife submits that the husband has not discharged his onus of proof regarding these items. The husband could have called the children (who have been witnesses in previous proceedings) but chose not to do so. The wife submits that an adverse inference be drawn regarding the children not being called (Jones v Dunkell (1959) 101 CLR (298).
The items where only a letter is produced are highlighted in pink, in Part 4 ($3,462.60). The wife submits that the husband has not discharged his onus of proof regarding these items.
The items where only an invoice has been produced are highlighted in green, in Part 4 ($17,881.88). The wife submits that the husband has not discharged his onus of proof regarding these items.
The items where only a miscellaneous document is produced are highlighted in yellow, in Part 5 ($4,761.30). The wife submits that the husband has not discharged his onus of proof regarding these items.
The items were only a MBF statement is produced are highlighted in pink, in Part 5 ($3,091,.05). The wife submits that the husband has not discharged his onus of proof regarding these items.
The items where only a Medicare statement is produced are highlighted in purple, in Part 5 ($4,761.30). The wife submits that the husband has not discharged his onus of proof regarding these items.
The items where only a cheque butt is produced are highlighted in blue, in Part 4 ($18,594.63). The wife submits that the husband has not discharged his onus of proof regarding these items.
The items were a receipt has been produced are highlighted in yellow, in Part 4 ($6,937.76). These are the subject of further submissions.
The items where a deposit slip has been produced are highlighted in purple, in Part 4 ($1,443.57). These are the subject of further submissions.
The items where only a Credit Card statement is produced are highlighted in green, In Part 5 ($9,256.63). These are the subject of further submissions.
The items were a bank statement has been produced and highlighted in blue, in Part 5 ($5,752.99). These are the subject of further submissions.
The husband has produced photocopies. The husband needs to produce original copies to discharge his onus of proof, particularly when the court has previously expressed concern about his gambling activities and possible breaches of the Social Security Act, the bankruptcy laws, tax fraud and money laundering (see Orders and Reasons for Judgment of Judge Barry dated 2 August 1999.)
– Were the payments child maintenance?
The payments came in the following categories:
Amy’s expenses
(a)school fees and school related expenses (green colour, Part AMY1) ($38,836.36)
(b)holidays (yellow colour, Part AMY1)($4,135.22)
(c)access costs (blue colour, Part AMY1)($2,313.60)
(d)gifts (pink colour, Part AMY1)($2,441.55)
(e)clothing (purple colour, Part AMY1)($551.90)
(f)medical insurance (green colour, Part AMY2)($5,573.25)
(g)allowances (yellow colour, Part AMY2)($611.57)
(h)car maintenance, registration, insurance (blue colour, Part AMY2)($4,973.32)
(i)university fees (purple colour, Part AMY2)($7,598.92)
Total $67.035.69
Anthony’s expenses
(j) school fees and school related expenses (green colour, Part ANT1) ($23,382.46)
(k)holidays (yellow colour, Part ANT1)(see AMY1)
(l)access costs (blue colour, Part ANT1)($2,574.40)
(m)gifts (pink colour, Part ANT1)($1,830.06)
(n)clothing (purple colour, Part ANT1)($752.47)
(o)medical insurance (green colour, Part ANT2)($15,180.70)
(p)allowances (yellow colour, Part ANT2)($5,414.97)
(q)car maintenance, registration, insurance (blue colour, Part ANT2)($0.00)
(r)university fees (purple colour, Part ANT2)($5,052.61)
Total $54,187.67
The following are not maintenance payments:-
-allowance
-clothing
-holidays
- gifts
-access costs
-car maintenance, registration and insurance
-mobile phones
(see for example In the marriage of CG and MS Berechree (1992) FLC (92-307))
The husband was expressly obliged to pay school fees and expenses (see Order dated 20 February 1996, Family Court Brisbane, Registrar Smith and Order dated 25 March 1996, Family Court Brisbane, Bell J).
The university fees are not part of the maintenance requirements. There has been no application to make them part of the obligations.
Medical insurance can be child maintenance. In this case, the husband paid a family private health insurance premium. Had the husband obtained a single cover he would still have incurred a premium, so he should only get credit for the difference.
The husband has sought credit for payments made by the health insurer. He cannot be given that credit.
11 General comments
Since CSA received the Court Orders regarding the child maintenance on 10 April 1989, the husband has paid a total of $1,635.00 to the CSA. The husband has blatantly refused to pay maintenance to the CSA.
On 3 February 1995, the husband was again advised by CSA that all maintenance payments are required to be paid directly to the CSA.
The husband was informed by the CSA on 24 December 1997 that the wife was not accepting payments for pocket money and general clothing to the children in lieu of child support.
On 6 January 1998, the husband wrote to CSA notifying the CSA that he was aware of the Consent Orders dated 20 February 1996 and 13 October 1993.
The husband has previously attempted to set aside the Court Orders for child maintenance, together with a waiver of all arrears. The husband’s application was unsuccessful. The husband was found not to have fulfilled his obligations to the children (see Reasons for Judgment and Orders of Judge Barry date 2 August 1998).
The husband was informed by the CSA on 9 December 1998 that payments not made by him could not be credited under section 71A.
Those submissions reflected a thorough analysis of the issues and the careful breakdown of the voluminous material produced. It appears that the quantification of the various categories of past payments are broadly accurate although I can say that I have not added up every category in its entirety.
Conclusion
A recent helpful analysis of the law and proceedings relating to non agency payments was undertaken by the Full Court in its judgment in Furnari and Clarke v The Child Support Registrar (2003) FCA 458, and in particular the reasons of Finn J adopted by the Court at paragraphs 66 to 80. To the extent that the application of the father purported to be in appeal under s 88 it is defective as to form and is well outside the time limits imposed by O 31 r.19 of the Family Law Rules.
On the evidence the payments made by the father have not been shown to the requisite standard of proof as being "intended by both the payer and the payee to be paid in complete or partial satisfaction of an amount payable" under the relevant child support liability. Accordingly, if I had properly been empowered under s.88 (which I do not believe is the case) then I would not find the Registrar's decision in upholding an objection by the payee to the crediting of a non agency payment against the payer's liability was wrong.
Furthermore, any payments for which credit has not been sought from the Registrar under the Act and therefore has not been the subject of determination by the Registrar (or an objection under s.85) cannot form part of an appeal to this Court as no pre-requisite decision has been made. Some of the alleged payments fall into that category. No discretion is given to the Court to consider whether it is fair to the father that he get a credit as it seems the father seeks. The legislative requirements are clear and specific.
I am not satisfied that the child support liability has been increased by the father's obligation to pay school fees such that he suffers from an increase in liability without the benefit of fees paid. It is apparent the wife with family help did contribute significantly as well to school fees. In general, in addition, I adopt the submissions set out by the mother as to:
a)payments made prior to the registration of the child support liability.
b)payments made after the children individually reached 18.
c)failure of the husband to meet the evidentiary standard of proof.
Costs
Costs should in this case and after consideration of s.117(2A) of the Family Law Act and particularly the fact that the husband has been wholly unsuccessful, follow the event.
I will provide that the mother provide written submissions within 28 days as to the quantification of her costs in this matter considering the Federal Magistrates Court scale and that the husband have 28 days thereafter to respond.
I should indicate that I was invited by the mother in her application to make an order which effectively prevented the husband from having an appeal against this order. That is not an order which I am entitled as a matter of law to make.
I make the orders set out at the commencement of these reasons.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate: R. Carter
Date: 17/12/2007
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