FERRIS & DOUGLAS (No.2)
[2017] FCCA 2035
•30 August 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FERRIS & DOUGLAS (No.2) | [2017] FCCA 2035 |
| Catchwords: HELD – Orders made for a stay of the collection and enforcement of the Father’s child support payments pending the final hearing of his departure application. |
| Legislation: Child Support (Registration and Collection) Act 1988 (Cth), s.111C |
| Cases cited: Jones v Child Support Registrar [2007] FCA 1732 Onder & Child Support Agency & Spencer [2010] FMCAfam 693 |
| Applicant: | MR FERRIS |
| Respondent: | MS DOUGLAS |
| File Number: | MLC 4364 of 2013 |
| Judgment of: | Judge Bender |
| Hearing date: | 3 August 2017 |
| Date of Last Submission: | 3 August 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 30 August 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Constantinou |
| Solicitors for the Applicant: | Schetzer Constantinou |
| Counsel for the Respondent: | Mr Wilson |
| Solicitors for the Respondent: | Cantwell Family Lawyers |
ORDERS
Pursuant to section 111C of the Child Support (Registration and Collection) Act 1988 (Cth), there be a stay on the collection and enforcement of arrears of child support accumulated up to and including the date of this order, payable by the Applicant to the Respondent, for the children [X] born (omitted) 2006, [Z] born (omitted) 2008 and [Y] born (omitted) 2009, until
30 April 2018.
IT IS NOTED that publication of this judgment under the pseudonym Ferris & Douglas (No.2) is approved pursuant to s.110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 4364 of 2013
| MR FERRIS |
Applicant
And
| MS DOUGLAS |
Respondent
REASONS FOR JUDGMENT
Introduction
This is the Father’s application pursuant to section 111C(3) of the Child Support (Registration and Collection) Act 1988 (Cth) (“the Act”) for orders staying the collection and enforcement of child support by the Child Support Agency pending the determination of his application pursuant to section 117 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”) that there be a departure order from the assessments in respect of which the Child Support Agency made a Notice of Decision dated 16 March 2017.
The Mother opposes the Father’s stay application. In the event the Court gives the Father the “indulgence of a stay order”, the Mother seeks the Court order the Father pay child support at the rate of $100 per child per week; a total of $1,300 per month, pending the determination of the Father’s departure application.
Background
These parties have a long and tortured history of acrimonious litigation before the Court. This is best shown by the fact theirs is currently a “three box file”. This application continues the saga.
By way of brief background, the Father was born on (omitted) 1967 and is currently aged 49 years. He is a (occupation omitted) and (omitted) owner. He has repartnered and he and his partner are expecting their first child later this year.
The Mother was born on (omitted) 1970 and is aged 46 years. She undertakes home duties. The Mother has not repartnered.
The parties married on (omitted) 2005 and separated on 28 April 2013. There are three children of their marriage: [X] born (omitted) 2006 (“[X]”), [Z] born (omitted) 2008 (“[Z]”) and [Y] born
(omitted) 2009 (“[Y]”).
After separation, [X], [Z] and [Y] lived with the Mother and spent time with the Father. After considerable ongoing litigation between the parties in relation to [X], [Z] and [Y]’s living arrangements, final parenting orders were made by consent on 19 May 2017. Those orders provide for the parties to have equal shared parental responsibility for [X], [Z] and [Y], for them to live with the Mother and spend 4 nights per fortnight with the Father as well as half school holidays and special occasions.
On 17 March 2016 Judge Riethmuller made final property orders after a seven day final hearing. My understanding of His Honour’s orders is that he divided the parties’ property 65%-35% in the Mother’s favour.
Judge Riethmuller’s orders provided that the Mother retain the former matrimonial home subject to her being responsible for the mortgage on that property and a further loan of $247,500. The Father retained three corporate entities: Business A (as trustee for
the Business A Trust), Business B (as trustee for the
Business B) and Business C, through which (Business C) in (location omitted) were conducted. These entities were subject to two loans of $580,000.
There was a flurry of applications following his Honour’s decisions, including an Appeal by the Father against the property orders. Some of these applications were resolved by way of an order by Judge Riethmuller on 12 October 2016 that the Father pay the Mother the sum of $60,000. There is a notation to his Honour’s orders that simultaneously with the orders being made, the Father would withdraw his appeal without any orders as to costs.
In September 2016 the Father sold the (Business C) to his (employee omitted) for $1,000,000.
If is the Father’s evidence that the “proceeds of sale were entirely applied to debt”[1].
[1] Paragraph 16 of the Father’s affidavit sworn 25 November 2016; paragraph 12(a) of the Husband’s affidavit sworn 11 May 2017; and paragraph 24 of the Husband’s affidavits sworn 19 July 2017.
In paragraph 24 of the Father’s affidavit sworn 19 July 2017 he deposes to the proceeds of sale from the (Business C) being utilised as follows:
a)to pay suppliers;
b)loan repayments;
c)car insurance;
d)credit card debt;
e)part payment of taxation liability; and
f)$60,000 to the Mother pursuant to the 20 October 2016 orders.
Nowhere in the Father’s affidavits does he set out with any specificity the exact amounts or to whom the payments set out in the preceding paragraph were paid.
On 24 November 2016 the Father purchased a new business in (omitted), now called “Business D”, for $200,000. It is the Father’s evidence the entirety of the purchase price was borrowed from his partner Ms T. Whilst he deposes to executing a loan agreement with Ms T in October 2016, it is not annexed to any affidavit filed by him in support of this application.
It is the Father’s evidence that since the purchase of the new premises, he has been attempting to establish the business. When purchased, the business was a (omitted) shop which he has converted to a (omitted business). It is the Father’s evidence that despite working extremely hard over the last 7 months, the (omitted business) will need more time to build success and generate a profit.
On 9 September 2016 the Child Support Agency issued a Notice of Assessment for the period of 1 January 2016 to 30 September 2017 that the Father pay child support for [X], [Z] and [Y] in the amount of $1,613.25 per month. The basis upon which the assessment was made is set out in the Notice of Assessment as follows:
| Father | Mother | ||
| 2016 taxable income | $200,000* | adjusted taxable income | $101,900* |
| $23,752 | less self-support amount | $23,752 | |
| $176,248 | child support income | $78,148 | |
| $254,396 | combined child support income | $254,396 | |
| 62.28% | income percentage | 30.72% | |
| *This value has been determined according to a Change of Assessment decision | |||
The Father made application to the Child Support Agency for a review of this assessment on the basis it was unfair because of his income, property and financial resources.
On 16 March 2017 a Notice of Decision was issued under Part 6A of the Assessment Act. Under the heading “The Decision in Summary” it states:
“Are the reasons in the application established?
In the application by Mr Ferris, Reason 8A is established.”
(Interestingly, on page 7 of the full explanation of the decision it states Reason 8A is not established.)
“No change to be made.
I have considered Mr Ferris’ application carefully and at this time it must be refused because the issues are too complex…”
On page 6 of “The Decision in Detail” in the Notice of Decision it states:
“Overall, given that there are some disparities in the evidence available with respect to the business income and in my view, determination of the income and financial resources available to Mr Ferris over the past period he seeks a change of assessment for would require an analysis of additional financial information and findings of credit, I find it is too complex for this process and should be dealt with by the Court in conjunction with the upcoming hearing.
I have discussed this with both parents and both are agreed that a Court finding would be the best option to appropriately determine the matter given the allegations involved and is most likely the best option to finalise the dispute.”
The Father has not paid child support since September 2016. His arrears of child support as at 7 July 2017 were $38,401.13.
The Law
Section 111C of the Act sets out the Court’s powers in relation to a stay application as follows:
“111C. 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.
…
(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.
In Jones v Child Support Registrar [2007] FCA 1732, cited with approval by then Federal Magistrate Monahan in Onder & Child Support Agency & Spencer [2010] FMCAfam 693 and Judge Scarlett in Abani & Abani & Anor (SSAT Appeal [2014] FCCA 2058, Justice Emmett held at paragraph 10:
“It appears to me that, before a stay could be granted, I would have to be satisfied that there is a serious question to be tried on the appeal or, putting it another way, that there is at least some arguable basis for suggesting that the appeal might succeed. Secondly, it would be necessary for the Court to have refard to the balance of convenience. Section 111C(3) of the Act requires the Court to take into account the interests of the persons who may be affected by the outcome of the proceeding. That, I suspect, does not go much beyond the balance of convenience.”
The Evidence
The Father relies on his affidavits sworn 11 May 2017 and 19 July 2017 as well as paragraph 12 of his affidavit sworn 29 July 2016 and paragraphs 11 to 25 of his affidavit sworn 25 November 2016.
The Mother relies on her affidavit sworn 20 July 2017.
Neither party gave vive voce evidence at the hearing of this application as the matter proceeded by way of oral submission only from the parties’ legal representatives.
The Father
It is submitted on behalf of the Father that there is a serious question to be determined at the hearing of his departure application. Further, it is submitted that there is an arguable basis to suggest that his application will succeed in circumstances where the basis for the determination of the amount of child support payable by the Father is that he had an income for child support purposes of $200,000 per annum, and the Mother an income for child support purposes of $101,000.
It is submitted on behalf of the Father that the period of the assessment, and most particularly from September 2016, the Father had sold his business, was earning no income and was establishing a new business. The Mother was not working at all. It is submitted this is clearly indicative of the assessment being erroneous.
It is further submitted on behalf of the Father that if there is not a stay ordered by the Court then the factually and erroneously based assessment would continue and allow the Child Support Agency to enforce debt that may not exist at the end of the hearing.
In paragraph 19 of the Father’s affidavit sworn 19 July 2017 he deposes to the Child Support Agency’s legal team being ready to take enforcement action against him unless the stay application is granted. It is submitted on behalf of the Father that if the stay is not granted and the Child Support Agency enforces the arrears of child support, this will impact on him being able to establish his new business. This would have the long term effect of preventing the Father from being in a position to properly support [X], [Z] and [Y] in the future.
Whilst conceding that it is not ideal that the Father is not in a position to pay regular periodic child support for [X], [Z] and [Y] at this time, it is his evidence he will, subject to having the financial capacity to do so, continue to meet the following average monthly expenses for the benefit of the children in addition to day-to-day expenses when they are in his care:
a)(omitted)’s school fees (half) ($334)
b)school uniforms ($292)
c)school shoes ($103)
d)Flexirent (children’s laptops) ($250)
e)Foxtel (at the Mother’s home) ($156)
Total: $1,135
It is therefore submitted on behalf of the Father that when the Court takes into account the interests of all the persons who may be affected by a stay order, the prejudice to him if that order is not made greatly outweighs any prejudice to the Mother and to [X], [Z] and [Y].
The Mother
It is submitted on behalf of the Mother that the Court can place little store in the Father’s evidence that the totality of the proceeds of sale of his Business C business was utilised in its entirety in the payment of debt.
Annexure VD-2 of the Mother’s affidavit sworn 20 July 2017 is a copy of the Business A cheque account statement for the period 1 July 2016 to 27 September 2017 from the (omitted) Bank into which the proceeds of sale of the Father’s (omitted) business were deposited. The statement has handwritten notes from the Father in which he explains the various payments from that account. The Mother highlights how the Father prioritised repaying Ms T and his close friend Mr S rather than meeting his child support obligations. The Mother also notes that the statement shows the Father paid $17,000 into the account of his current business as “working capital”. She submits this payment is not debt.
The Mother further deposes in paragraph 11 of her affidavit sworn
20 July 2017 that the statement provided by the Father shows a balance in the account of $242,449 as at 27 September 2016. She deposes that whilst she has been provided with a bank statement for the period 27 September 2016 to 28 December 2016 which shows the dissipation of all of that amount by 13 December 2016, unlike the Father’s previous bank statement where he identified how those funds were expended, the further statement provided is not annotated.
It is submitted on behalf of the Mother that what is apparent from the information provided by the Father as to how he utilised the proceeds of sale of his business, is that he did not prioritise his responsibility to pay child support for [X], [Z] and [Y] ahead of his other liabilities. In September 2016 the Father’s arrears of child support were in excess of $10,000 and he only chose to make a payment of $2,750.
It is further submitted on behalf of the Mother that the Court can have little confidence in the Father’s claim that his new business has as yet failed to generate a profit. It is the Mother’s evidence that despite repeated requests to the Father’s solicitors, the Father has failed to provide to the Mother and her solicitors any financial statements or information in relation to the conduct of this business.
In relation to the Father’s evidence that he continues to provide financial assistance to [X], [Z] and [Y] by way of payment of school fees, school uniforms and Foxtel, it is submitted on behalf of the Mother that the Father is currently in arrears of school fees and further, that the parenting orders require both parents to ensure that they have a complete school uniform for each of the children in their homes.
Further, it is submitted on behalf of the Mother that she would much rather have periodic child support paid than Foxtel being provided in her home.
It is submitted on behalf of the Mother that in all the circumstances in this case a stay should not be granted.
It is submitted however that if the Court is persuaded a stay should be granted, it should, in accordance with section 111C(5)(a) of the Act, be subject to such terms and conditions as are specified in the order. Given the Father’s responsibility to properly support his three children, it is submitted the Father should make a reasonable payment towards their support. Accordingly, the Court should order that the stay be on the basis that the Father pays the sum of $100 per week per child, an amount of $1,300 per month.
It is submitted that, as is required under section 111C(3), the Court must take into account the interests of the persons who will be affected by the outcome of the proceedings. In this matter the persons most affected if a stay order is made are [X], [Z] and [Y] and hence any stay should be on the basis of orders that require their ongoing support being provided by the Father.
Conclusion
I am in agreement with the submissions made on behalf of the Father that he has an arguable case in the context of his departure application in the circumstances. There is clearly a period when he was not earning any income after the sale of his business and where the figure utilised by the Child Support Agency as the child support income for the Mother is one that cannot be seen to be accurate given she was not working in this period and where she herself takes issue with that figure being used.
Whilst there are considerable questions about the manner in which the Father dealt with the proceeds of sale of the business and the current earnings and profitability of his new business, they are matters that will be fully explored when this matter proceeds to final hearing in April 2018.
It is the Father’s evidence that he is currently not generating an income and has no resources from which he could make the currently assessed child support payments to the Mother.
The Father has not paid the periodic child support since September 2016 and his liability to the Child Support Agency is growing exponentially with every passing month. The Child Support Agency are currently threatening enforcement proceedings in relation to those arrears.
It is the Father’s evidence that if the Child Support Agency pursues enforcement proceedings at this time, it will negatively impact on his efforts to re-establish his new business which could result in his being unable to pay child support for [X], [Z] and [Y] in the future.
Given the Father has an arguable case, the Father’s evidence that he currently has no means to pay the current assessment and the possibility that a failure to grant a stay will have a long term impact on the Father’s capacity to pay child support, I have formed the view that it is appropriate that an order be made in the terms sought by the Father. An order will therefore be made pursuant to section 111C of the Act that there be a stay of the collection of any of the Father’s current and future child support liability pending the hearing of his departure application.
I certify that the preceding forty eight (48) paragraphs are a true copy of the reasons for judgment of Judge Bender
Date: 30 August 2017
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