Howarth and Howarth and Anor
[2016] FCCA 2869
•14 November 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOWARTH & HOWARTH & ANOR | [2016] FCCA 2869 |
| Catchwords: CHILD SUPPORT – Overseas maintenance order - Application by the husband pursuant to s.111C of the Child Support (Registration & Collection) Act for a stay of collection of money owing under the order pending determination of his application pursuant to Regulation 36 of the Family Law Regulations for discharge of the order – where the Child Support Registrar contends that the husband cannot rely on s. 111C – where the court is satisfied that the husband can rely on s.111C but in the exercise of its discretion declines to grant a stay SPOUSAL MAINTENANCE – Overseas maintenance order - Application by the husband pursuant to s.111C of the Child Support (Registration & Collection) Act for a stay of collection of money owing under the order pending determination of his application pursuant to Regulation 36 of the Family Law Regulations for discharge of the order – where the Child Support Registrar contends that the husband cannot rely on s.111C – where the court is satisfied that the husband can rely on s.111C but in the exercise of its discretion declines to grant a stay. |
| Legislation: Child Support (Registration and Collection) Act 1988, ss.18A, 30, 111C Family Law Regulations, Reg.36, 37, 38 |
| Cases cited: Appeal No. SOA14 of 2016 Lloyd & Tasker (2016) 304 FLR 286 Perron & Bird [2014] FCCA 1315 Vaters & Kantner & Anor [2011] FMCAfam 303 |
| Applicant: | MR HOWARTH |
| First Respondent: | MS HOWARTH |
| Second Respondent: | CHILD SUPPORT REGISTRAR |
| File Number: | NCC 3044 of 2015 |
| Judgment of: | Judge Terry |
| Hearing date: | 11 August 2016 |
| Date of Last Submission: | 11 August 2016 |
| Delivered at: | Newcastle |
| Delivered on: | 14 November 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bithrey |
| Solicitors for the Applicant: | Everingham Solomons Solicitors |
| The First Respondent: | In person |
| Solicitor Advocate for the Second Respondent: | Ms Rayment |
| Solicitors for the Second Respondent: | Mills Oakley Lawyers |
ORDERS
The application for interim Orders contained in the Amended Initiating Application filed on 19 July 2016 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Howarth & Howarth & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 3044 of 2015
| MR HOWARTH |
Applicant
And
| MS HOWARTH |
First Respondent
And
| CHILD SUPPORT REGISTRAR |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The Child Support Registrar has been asked by its counterpart in the United Kingdom to collect arrears of child support and spousal maintenance from Mr Howarth.
Mr Howarth owes the money pursuant to an order made in the Brighton County Court in the United Kingdom on 11 January 2006. He has made no payments since June 2009 and he currently owes something in the vicinity of half a million dollars.
Mr Howarth has applied to this court pursuant to reg.36 of the Family Law Regulations for an order discharging the Brighton County Court order and relying on s.111C of the Child Support (Registration & Collection) Act 1988 he seeks a stay of collection until the reg.36 application is determined.
Ms Howarth and the Child Support Registrar both oppose a stay being granted. Ms Howarth opposes it on the grounds of fairness to her but the Child Support Registrar contends that s.111C of the Collection Act cannot be relied on when the substantive application before the court is for an order pursuant to reg.36 of the Family Law Regulations.
I heard Mr Howarth’s reg.36 application on 4 October 2016 but judgment is reserved and I therefore still need to determine the stay application which was argued on 11 August 2016.
Background
Mr & Ms Howarth are both UK citizens. They separated in about 2002 and on 11 January 2006 orders were made by consent in the Brighton County Court which provided for Mr Howarth to pay Ms Howarth:
i)Child support of £1,100.01 per month for the benefit of their children X born on (omitted) 1987, Y born on (omitted) 1990 and Z born on (omitted) 1998 until they turned 18 or ceased fulltime education at the end of their first tertiary degree, reducing to 75% of this amount when the first child no longer required support and 60% of this amount when the next child no longer required support.[1]
ii)Spousal Maintenance in the sum of £2,200.00 per month during the party’s joint lives or until Ms Howarth remarried or until further order of the court.
[1] There are additional orders for payment of some specific amount for example school fees but it is not necessary to go into detail about those provisions for the purposes of this decision.
Mr Howarth ceased paying in June 2009 and in October 2009 he left the United Kingdom and commenced residing in the (country omitted). In (omitted) 2011 he left the (country omitted) and came to Australia and he has lived in Australia ever since. He has a visa allowing him to work in Australia and said that he intended to apply for permanent residency.
In late 2014 Ms Howarth found out that Mr Howarth was in Australia and notified the Child Maintenance authority in England. They in turn asked the Child Support Registrar in Australia to take action to recover money from Mr Howarth.
As is not uncommon in these matters the wheels turned slowly but on 5 October 2015 Child Support wrote to Mr Howarth informing him that they had been asked to collect child support and spousal maintenance from him and requesting him to pay a lump sum of $49,745.00 and $1,362.25 per month child support and $4,540.80 per month spousal maintenance.
Mr Howarth did not respond and on 11 November 2015 Child Support sent him another letter informing him that as they had not heard from him they intended to commence recovery proceedings on 20 November 2015.
On 24 November 2015 Mr Howarth filed an application in this court seeking an order pursuant to reg. 36 of the Family Law Regulations that the UK orders be discharged. He did not initially seek a stay of collection but on 12 May 2016 he filed an amended initiating application which included an application for an order pursuant to s. 111C of the Collection Act staying collection until his application to discharge the 2006 orders was heard and determined.
The applicable law
The Brighton County Court order is a registered overseas maintenance liability as defined in reg. 24 of the Family Law Regulations. Reg.36 makes provision for a party in Australia to apply to vary, discharge or suspend such an order and it provides as follows:
Party in Australia may apply to vary etc overseas maintenance order, agreement or liability
(1)This regulation applies to:
(a)an overseas maintenance order or agreement registered in a court before 1 July 2000; and
(b)an overseas maintenance entry liability or a registered maintenance liability.
(2)Application may be made to a court having jurisdiction under the Act for an order discharging, suspending, reviving or varying an order, agreement or liability to which this regulation applies.
(3)An application may be made by:
(a)the person for whose benefit the order or agreement was made, or for whose benefit the liability was created; or
(b)the person against whom the order was made or the person who is liable to make payments because of the agreement or the liability; or
(c)the Secretary, on behalf of a person mentioned in paragraph (a) or (b).
(4)The law to be applied to determination of an application is the law in force in Australia under the Act.
Reg. 38 provides that an order made under reg. 36 is provisional if the relevant reciprocating jurisdiction is one of a number of named jurisdictions, and the United Kingdom is one of those named jurisdictions. However this is not material for the purposes of the stay application.
Until such time as an order is made varying, discharging or suspending the overseas order or unless a stay order is made the Child Support Registrar is entitled to enforce the order. It is a registrable maintenance liability as defined in s.18A of the Child Support (Registration & Collection) Act (“the Collection Act”) and pursuant to s.30(1) of the Collection Act amounts payable pursuant to the order, including arrears, are debts due to the Commonwealth.
The Collection Act gives the Child Support Registrar various powers to collect debts owing to the Commonwealth and it has already taken some steps to recover money from Mr Howarth. $4,876.21 has been garnisheed from his bank account and it would seem, although this was not directly confirmed, that his wages are being garnisheed.
Mr Howarth would like collection to be stayed until his reg. 36 application is determined and it was his case that s.111C of the Collection Act gave the court the power to grant a stay.
S.111C provides as follows:
(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;
(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.
In this judgment I have referred to Mr Howarth’s application as being for a stay of collection and Mr Howarth’s counsel used the same wording in his submissions. It accurately describes the outcome Mr Howarth hopes to achieve because it is an outcome which would be achieved by staying either the operation or implementation of the Collection Act. It also ensures proper focus on the interests of the people who would be affected by the outcome. However if I do make a stay order I will need to ensure that it worded in terms of s. 111C (3).
Mr Howarth’s submissions
Mr Howarth’s counsel submitted that s.111C(1)(a) empowered the court to order a stay because Mr Howarth had instituted a proceeding (the reg. 36 application) in a court having jurisdiction under the Collection Act. He submitted that there were many decided cases in which the court had either made an order staying collection when the application on foot was a reg. 36 application or had accepted that if such a proceeding was instituted s.111C gave it power to grant a stay.[2]
[2] Perron & Bird [2014]FCCA315, Vaters & Kantner & Anor [2011] FMCAfam 303
Mr Howarth’s counsel submitted that a stay should be granted in this case because real hardship would be caused to Mr Howarth if the Child Support Registrar continued recovery action against him. His circumstances had changed dramatically since the UK orders were made. He was earning the equivalent of AUD$240,000.00 at that time but at present his income was $53,924.00 per annum. Mr Howarth’s counsel submitted that garnishment of Mr Howarth’s modest income would place him in a difficult position and he could face insolvency measures given that he had no means of paying the large capital sum now claimed to be outstanding.
In one of the affidavits Ms Howarth filed in the proceedings she informed the court that Mr Howarth stood to inherit a sum of money following the death of his mother in (omitted) 2015. When confronted with this information Mr Howarth admitted that he was entitled to a quarter share of his mother’s estate, had received a distribution of the equivalent of AUD$12,500.00 in (omitted) 2015 and would receive further money once his mother’s house in the UK was sold. However he professed to be unsure of how much he would receive from the sale of the home or when he would receive it.
Mr Howarth's Counsel submitted that it was a relevant consideration that the children of the marriage were now aged between 18 and 29 and by implication submitted that they were not in immediate need of support and would not suffer hardship if the stay was granted.
He also submitted that the children and Ms Howarth had been without support from Mr Howarth for 7 years, the implication being that if Ms Howarth had to go without support a little longer while the court determined whether to discharge the orders then that should be manageable for her.
Mr Howarth's Counsel submitted that Mr Howarth had brought his application for stay without undue delay after receiving notice of the intention by the Child Support Registrar to collect the money and submitted that it was a relevant matter that Ms Howarth took no enforcement action for over 6 years.
During submissions on 11 August 2016 Mr Howarth’s counsel reminded the court that the hearing of Mr Howarth’s substantive application was due to take place on 4 October 2016 and that Mr Howarth was therefore not seeking a stay for a lengthy period and given that his application could not be deemed meritless in light of the significant change in his circumstances the balance of convenience favoured granting the stay.
The application has since been heard and judgment has been reserved but if the judgment is delivered within the accepted timeframe it should be delivered by January 2017 so again the timeframe during which a stay would be in place would be quite limited.
Ms Howarth’s submissions
Ms Howarth’s case was that she was entitled to the benefits of the order and that no stay should be granted.
It was her case that Mr Howarth could have applied to the court in England at any time to vary the order if he thought that his circumstances justified it but instead he had stopped paying and disappeared. She went into considerable detail in one of her affidavits about the efforts she had made to find him between 2009 and 2014.
Ms Howarth said that she did not accept the information Mr Howarth gave about his income and asserted that her research indicated that his mother’s house was worth £187,000.00 and his quarter share was therefore worth £46,750.00. By implication she submitted that Mr Howarth was being disingenuous in claiming to be unsure how much he would receive.
Ms Howarth was concerned that if the stay was granted her opportunity to collect money on the sale of Mr Howarth’s mother’s home in England might be missed.
Ms Howarth said that she had struggled financially to support her daughters after Mr Howarth stopped paying in June 2009 and had been forced to sell her home and move to a much smaller home. She had been unable to work for many years as her youngest daughter suffered from anxiety and depression and needed support, and even though she had now returned to work she was still struggling financially. She had increased costs because she needed to visit and provide support for her eldest daughter X who was an inpatient at a mental health facility hours from her home.
The Child Support Registrar’s submissions
The solicitor for the Child Support Registrar relied on written submissions prepared by Mr R, Special Counsel for the solicitor for the Second Respondent.
The main thrust of those submissions was that s.111C did not give the court the power to grant a stay when money was being collected pursuant to an overseas maintenance order and that because there was no other stay power on which Mr Howarth could rely his application must be dismissed.
Although on its face s.111C(1)(a) seems clearly to apply Mr R submitted that it should be read down and that the power to grant a stay should be treated as only applying when an application had been made under the Collection Act or the Child Support (Assessment) Act.
His submissions in detail were as follows:
a)It is unlikely that Parliament would have intended to create a power to stay the operation or implementation of the Registration and Collection Act or the Assessment Act which fixed merely upon the happenstance of the Court in which the proceedings are being heard having a co-existent jurisdiction to decide cases under the Act;
b)The other paragraphs in subsection 111C(1) each relate to proceedings brought pursuant to or seeking relief under the Registration and Collection Act or the Assessment Act. This is consistent with an evident legislative intention that the proceedings referred to in s 111C(1)(a) must involve an exercise of jurisdiction under the Registration and Collection Act;
c)If s 111C(1)(a) were construed as applying to any proceeding in a Court having jurisdiction under the Registration and Collection Act irrespective of whether or not that was a proceeding instituted under the Registration and Collection Act, subsection 111C(1)(d) (proceedings under Part 6A and 7 of the Assessment Act) would be redundant. Jurisdiction under Parts 6A and 7 of the Assessment Act is, in s 99 of that Act, conferred in relevantly identical terms to the conferral of jurisdiction under the Registration and Collection Act in s 104. Thus, if a proceeding has been instituted under Part 6A of the Assessment Act, s 111C would already apply by virtue of subsection (1) (a) because the proceeding would necessarily be instituted in a court having jurisdiction under the Registration and Collection Act and subsection (1) (d) would be redundant. Such a construction is unlikely to reflect the intention of Parliament: see eg Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 382 [71]; and
d)Section 111A, headed “Simplified Outline of this Part”, provides that “A court exercising jurisdiction under this Act has broad powers. A court may make an order staying or otherwise affecting the operation of the Assessment Act or this Act.” This supports the construction set out above.
In support of his argument for restricting the application of s. 111C Mr R pointed out that that it did not refer to collection of child support pursuant to an overseas maintenance order.
Mr R asked me to have regard to the case of Lloyd & Tasker[3], a Federal Circuit Court decision in which the Judge accepted the argument by the Child Support Registrar that s. 111C(1)(a) should be read down.
[3]Lloyd & Tasker (2016) 304 FLR 286.
Mr R also referred me to the fact that the Child Support Registrar had an appeal on foot in the matter of Appeal No. SOA14 of 2016.[4] In that case a Federal Circuit Court Judge made an order staying collection in relation to an overseas maintenance order relying on s. 111C(1)(a).
[4] Appeal No. SOA14 of 2016
The Child Support Registrar was not a party to the proceedings in the Federal Circuit Court but sought and was granted leave to appeal against the decision as a party affected by the decision. There are a number of grounds of appeal but one is that s.111C does not give the Federal Circuit Court power to stay the operation or implementation of the Collection Act when the substantive application is one made under reg. 36 and 37 of the Family Law Regulations.
The appeal was heard by the Full Court on 6 July 2016 and judgment has been reserved and Mr R urged me to wait until that decision was delivered before determining this matter.
Mr R finally submitted that if the court did consider that it had the power to grant a stay it should not in the exercise of its discretion do so. He submitted that a significant relevant factor was that Mr Howarth had done nothing about the order for 7 years and had not explained his delay.
Does the court have power to grant a stay?
I do not accept that s. 111C (1) (a) should be read down as Mr R submitted. Simple logic suggests that it should apply in this case.
The Child Support Registrar is collecting money from Mr Howarth pursuant to the provisions of the Collection Act.
That Act contains a provision allowing for implementation of the Act to be stayed in certain circumstances.
One of those circumstances is that “an application has been made to a court having jurisdiction under the Act”. The precise wording is due to the fact that more than one court has jurisdiction under the Collection Act. More than one court also has jurisdiction under the Family Law Regulations and identical words are used in reg.36.
S.111C (1) (b) and (c) go on to provide for a stay to be granted if an application has been made to a Registrar or the AAT.
Then there is s.111C (1) (d) which does not refer to any particular person, court or tribunal and the Child Support Registrar submitted that s. 111C (1) (a) should be read down because otherwise s. 111C (1) (d) would have no work to do.
I am loath to treat this as significant. The Collection Act and the Child Support (Assessment) Act have been extensively amended over the years and it is often unclear if regard has been had to how an amendment of one section affects others. Did the Legislative Draftsman consider the effect of amending s. 12 of the Child Support (Assessment) Act on Binding Child Support Agreements for example or did they overlook it?
I cannot lightly assume that the reason s.111 (1) (d) seems out of place is because of some intention of Parliament to restrict the meaning of s.111C (1) (a), a restriction which if intended could easily have been precisely spelled out.
In summary s.111C (1) (a), (b) and (c) are clear enough – they grant a stay power if an application has been made to a court, the Registrar or the AAT for order which bears on the issue of whether the money which is being collected is indeed due and owing. S. 111(1) (d) is different; it refers to an application having been made under a particular part of an Act, but I do not accept that s.111C (1) (a) should be read down in an effort to make sense of s.111 (1) (d).
I do not accept that the mere fact that a person has applied (indeed must apply) under a different piece of legislation to have an order creating a liability discharged, varied or suspended means that a power in the Act pursuant to which the money is being collected should not be available to them.
It does not make sense that some sections of the Collection Act (those which facilitate collection of money) should apply in relation to an overseas maintenance order but another section (which allows for that collection to be stayed) should not.
Common sense suggests that s.111(1)(a) is applicable in a case where:
·The Child Support Registrar is collecting money pursuant to powers contained in the Child Support (Registration & Collection) Act.
·There is a power in that Act to stay collection by making an order staying the implementation of the Act.
·The clear wording of s. 111C (1) (a) confers that power on this court to grant a stay if there is an application before the court which bears on whether the money is properly due and owing.
There is no power in the Family Law Regulations to stay collection when an application is made pursuant to reg. 36 or reg. 37 and it is not difficult to envisage circumstances in which such a power might be clearly needed. There have been cases where enforcement has been sought of ex parte Orders made overseas years before and circumstances could arise where enforcement of such an Order resulted in a threat to sell a property, an outcome which could not be reversed if the reg. 36 application was successful.
I do not consider that there is any warrant for reading down the plain words in s. 111C (1) (a) and I consider that I have the power to grant a stay.
I am conscious of the decision in Lloyd & Tasker but it is not binding on me and in any event it involved a stay application made in the context of an appeal from an AAT first review decision, not a stay application made in the context of a reg. 36 application.
I accept that there is a Full Court appeal on foot in which one of the grounds of appeal is the construction of s. 111C(1)(a) but I cannot delay delivery of this decision indefinitely waiting for the determination of that appeal. If wiser heads than mine decide that my interpretation of s.111C is incorrect I will be sorry but at present I must determine this matter in the light of the evidence and submissions before me and in the absence of authority which binds me saying that I am wrong.
Should the court in the exercise of its discretion grant a stay?
Having said that I am not satisfied that in this particular case I should in the exercise of my discretion grant a stay.
I cannot determine all the factual disputes between the parties at this stage, and the factual disputes include the extent of Mr Howarth’s income, earning capacity, property and financial resources now and in the past, the value of his inheritance and whether Ms Howarth actively pursued collection of the money due under the order between 2009 and 2014.
I do consider it relevant however that Mr Howarth made no attempt while he was in the UK or at any time thereafter to apply to the Brighton County Court asking it to discharge or vary the order it had made. There is the appearance of him simply avoiding his responsibilities by moving first to the (country omitted) and then to Australia. By his actions he left Ms Howarth in limbo not knowing when and if he might be able or willing to resume paying in accordance with the order.
The only steps the Child Support Registrar has taken to date to recover money from Mr Howarth is to garnishee his bank account (in which he currently has little) and it would seem his wages. In his financial statement filed on 24 November 2015 he showed an excess of income over expenditure of $350.00 and the amount the Child Support Registrar can garnishee from his wages is governed by the Collection Act. There is no evidence that Mr Howarth will experience hardship if his wages are garnisheed.
Mr Howarth owes substantial arrears under the Brighton County Court order including arrears of child support during a lengthy period when one and probably two of his children required support. He may ultimately succeed in having his child support debt wiped in its entirety but it is by no means certain that this will be the case and if he is relieved of paying anything toward the debt now it will take even longer for Ms Howarth, who has done nothing wrong, to recover the money she is owed.
Pursuant to s. 111C (5) (a) a stay order can be made subject to conditions. Notwithstanding this and notwithstanding that he has an excess of income over expenditure, Mr Howarth did not offer to make any payments towards the arrears which could perhaps have been held in escrow pending determination of his reg. 36 application. His application for a stay might have been stronger if he had made such an offer.
There is of course the issue of Mr Howarth’s inheritance. If a large sum of money is seized from him and paid to Ms Howarth it might be difficult to restore the position if his application to discharge the order is successful either here or in the UK. However there is no certainty that if this money is seized it will be in Australia. Mr Howarth can apply again if that seems likely to be the case but the Child Maintenance authority in the UK may take steps to collect the money if it becomes visible in the UK and no order I make can prevent that happening.
For all of the above reason’s Mr Howarth’s application for a stay is dismissed.
I certify that the preceding sixty five (65) paragraphs are a true copy of the reasons for judgment of Judge Terry
Date:14 November 2016
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