Leigh and Watson (No.2)
[2011] FMCAfam 1207
•15 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LEIGH & WATSON (No.2) | [2011] FMCAfam 1207 |
| CHILD SUPPORT – Application to set aside earlier order -departure order – special circumstances – just and equitable – otherwise proper – late payment penalties. |
| Child Support (Assessment) Act 1989 (Cth), ss.110, 111, 116, 117, 118 Child Support (Registration and Collection) Act 1988 (Cth), s.68 Federal Magistrates Court Rules 2001 (Cth), r.13.10 |
| Bryant and Bryant (1996) FLC 92-690 Child Support Registrar & Leigh [2008] FMCAfam 1424 Gilmour and Gilmour (1995) FLC 92-591 Gyselman and Gyselman (1992) FLC 92-279 Leigh & Watson [2011] FMCAfam 238 Leigh & Watson [2011] FamCAFC 117 Liesert v Nutsch (1996) FLC 92-665 Savery and Savery (1990) FLC 92-131 Taylor & Taylor (1979) 143 CLR 1 Wilkes & Wilkes (1981) FLC 91-060 |
| Applicant: | MR LEIGH |
| Respondent: | MS WATSON |
| File Number: | HBC 431 of 2007 |
| Judgment of: | Roberts FM |
| Hearing date: | 29 July 2011 |
| Date of Last Submission: | 29 July 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 15 November 2011 |
REPRESENTATION
| Counsel for the Applicant: | Appeared unrepresented |
| Solicitors for the Applicant: | Not applicable |
| Counsel for the Respondent: | Not applicable |
| Solicitors for the Respondent: | Not applicable |
ORDERS
That Order No. 1 of the Orders of this Court made 10 February 2011 and bearing number HBC431/2007 is set aside.
That pursuant to section 117 of the Child Support (Assessment) Act 1989 there be a departure from administrative assessment of child support payable by MR LEIGH (“the father”) for the children [X] born [in] 1998 and [Y] born [in] 2001 as follows:
(a)For the period from 24 July 2003 to 30 June 2004 the father’s child support income amount be set at $41,868; and
(b)For the period from 1 July 2004 to 30 June 2005 the father’s child support income amount be set at $30,572
That the father provide a copy of the Orders made today to the State Manager of the Child Support Agency in Hobart.
That all extant applications are otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Leigh & Watson (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
HBC 431 of 2007
| MR LEIGH |
Applicant
And
| MS WATSON |
Respondent
REASONS FOR JUDGMENT
Brief background to these proceedings
On 10 February 2011 I made an order dismissing an application by
MR LEIGH (“the father”). At that time I noted the following:
·that when this matter was called on 10 February 2011, neither the applicant father nor the respondent MS WATSON (“the mother”) appeared;
·
that I was satisfied that both parties were given notice on
29 November 2010 of the listing of the matter for hearing on
10 February 2011; and
·that, in any event, I was satisfied pursuant to Rule 13.10 of the Federal Magistrates Court Rules 2001 that the father had no reasonable prospect of successfully prosecuting his claim.
That decision of mine (“my earlier decision”) is reported in anonymous form as Leigh & Watson,[1] so I do not need to re-state in any significant detail what I said at that time.
[1] [2011] FMCAfam 238
However, the father appealed against my earlier decision. His appeal was heard by Strickland J in May 2011 and his Honour dismissed the appeal on the basis that I was not functus officio and it was open to the father to make an application to me to set aside my order.[2] His Honour referred to the Full Court decision of Wilkes & Wilkes [3] and the High Court decision of Taylor & Taylor.[4]
[2] See Leigh & Watson [2011] FamCAFC 117
[3] (1981) FLC 91-060
[4] (1979) 143 CLR 1
On 25 May 2011 the father filed a further application and shortly thereafter I set the matter down for hearing on 29 July 2011. I also made a number of procedural directions.
By his application of 25 May 2011, the father seeks orders as follows:
1. The Court make an order pursuant to section 116 to vary the applicant’s assessment for period of an order varying the annual rate of child support payable by a parent in tax years ending 30 June 2001 through to 30 June2005; and
2. The Court make an order pursuant to section 118 to vary the applicant’s child support income for tax years ending 30 June 2001, 30 June 2002, 30 June 2003, 30 June 2004 and 30 June 2005;
And/Or
3. The Court grant leave under section 111 of the Child Support (Assessment) Act 1989 for the Registrar to make a determination under section 98S or the court make an order under section 118 to amend the applicant's administration assessment by varying the applicant's assessment for years ending 30 June 2004 and June 2005; and
4. The Court make an order varying the annual rate of child support for the period 30 June to 30 June 2005 under order pursuant to section 116.
5 The Court discharge the late payment penalties payable by the applicant pursuant to the amended assessment.
Those orders are essentially the same as the orders he had sought in the application that I had dismissed.
When the matter came on for hearing, the mother did not appear. However, I was satisfied that she had been given adequate notice of the hearing.
Application to set aside order of 10 February 2011
On 29 July 2011, I pointed out that the father had not made an application to set aside my order of 10 February 2011, as envisaged by Strickland J. However, I permitted the father to make such an application orally.
I accept the father’s oral evidence on 29 July 2011 that his failure to appear on 10 February 2011 was not intentional. He had placed notice of the court date on the side of his refrigerator to remind himself of the hearing, but unfortunately his refrigerator “died” and the notice was not placed on his replacement refrigerator. He pointed out that he had appeared in court on a number of other occasions, so I accept that his failure to attend court on 10 February 2011 was both out of character and unintentional. It is also of some significance that the father appears to have wasted no time in lodging his appeal against my earlier decision.
Consequently, I accept that the father did not willingly absent himself from court on 10 February 2011, and therefore find that it is appropriate to give consideration to setting aside my order of 10 February 2011 dismissing his application (provided that it is otherwise appropriate to do so).
Jurisdiction and the law to be applied
Section 116 of the Child Support (Assessment) Act 1989 (“the Act”) provides the conditions that must be satisfied before a parent assessed to pay child support (“the liable parent”) may apply to a court for an order departing from the assessed child support (“a departure order”).
This matter has had a very long history and I accept that the father has satisfied the necessary conditions to enable him to proceed with a court application. Indeed, this appears to have been recognised by the Child Support Agency (“the CSA”) when they wrote to the father on
17 November 2009. In that letter the CSA said:As explained, to potentially have the amended tax returns taken into account you have the option of seeking leave of the court under section 111 of the Child Support (Assessment) Act 1989. A court may grant leave for CSA to change the assessment for up to 7 years prior to the date you make the application for leave. Alternatively if they consider it’s in the best interest of the parties they may treat your application as being made under section 116 of the same Act and make orders departing from the administrative assessments.[5]
[5] See Exhibit “F3”
In essence, the father has been seeking relief under sections 111 and/or 116 ever since he filed his original application on 23 July 2010.
Although there is no challenge to the court’s jurisdiction to hear the father’s application, I should say that I am satisfied that the court has jurisdiction to hear and determine it.
However, sub-section 111(1) of the act states the following:
A liable parent, or a carer entitled to child support, (the applicant) may apply to a court having jurisdiction under this Act for leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118;
in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.
The clear implication from that sub-section is that determinations under section 98S or orders under section 118 may not be made in relation to any part of a child support period that occurred 7 years or more before the application being filed. Indeed, that contention is supported by what is said in the simplified outline set out in section 110. In part, that simplified outline says:
A court must not grant leave for such a determination or order to be made in respect of a day in a child support period that is more than 7 years earlier.
It follows from what I have said above that I consider my jurisdiction to make any departure order to be limited to the period 7 years prior to the filing of the father’s application. In my earlier decision I said: “I am therefore of the view that the 7 year period referred to in section 111 of the Act prevents me from dealing with child support payable before 24 July 2003 under that section.” I am still of that view.
The provisions of section 117 of the Act empower Courts to make orders for departure from administrative assessment in special circumstances.
The approach that the court must adopt in relation to periodic child support has been well settled by decisions of the Full Court of the Family Court of Australia[6]. It is clear that I must apply the three-stage process that is required under Section 117 of the Act and I must be satisfied:
a)that in the special circumstances of the case, one or more of the grounds for departure in sub-section 117(2) is established;
b)that it is “just and equitable” within the meaning of sub-section 117(4) to make a particular order; and
c)that it is “otherwise proper” within the meaning of sub-section 117(5) to make a particular order.
[6] See Gilmour and Gilmour (1995) FLC 92-591, Liesert v Nutsch (1996) FLC 92-665 and Bryant and Bryant (1996) FLC 92-690.
In Savery and Savery,[7] Kay J said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases” and in Gyselman and Gyselman,[8] the Full Court of the Family Court said the following in relation to the phrase “special circumstances”:
Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary. That is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.[9]
[7] (1990) FLC 92-131
[8] (1992) FLC 92-279
[9] At page 79,065
Exercising his sense of humour, Kay J said this of section 117 of the Act:
To the extent that the statute is a difficult statute enshrouded in fog and that it may not have been seen to be as clear as possible, the Full Court in Gilmour and Gilmour (1995) FLC 92-591 endeavoured to bring in a very large fan and blew away the mist that hides some of the meaning of the section. Some may say in doing so they replaced fog with dust, others say the horizon is now clear.[10]
[10] Liesert v Nutsch (1996) FLC 92-665 at page 82,877
In my experience in relation to the statute generally, the horizon is far from clear to many lawyers and much less clear to the numerous unrepresented litigants who appear regularly in courts and tribunals in relation to child support matters. Certainly, ever continuing changes to the system of assessing levels of child support have made matters both foggy and dusty to many.
Further relevant background
This matter has a much longer history than is set out at the beginning of these Reasons. Indeed, in November 2008 I made orders in proceedings between the Child Support Registrar and father (“the enforcement proceedings”)[11] which would have resulted in real estate belonging to the father being sold if he did not pay the sum of $47,476.08 within 28 days. That sum comprised a child support debt, late payment penalties and legal costs. It appeared from the father’s evidence on 29 July 2011 that that sum (or some part of it) remained unpaid and the particular real estate was still on the market with a view to settling the debt from the proceeds of sale.
[11] Reported as Child Support Registrar & Leigh [2008] FMCAfam 1424
In giving my decision in the enforcement proceedings, I said the following:
12. A further variation in relation to the amount has come about as a result of the respondent lodging tax returns for six or seven years. They were only lodged in September, and on 17 September 2008 a number of adjustments were made. Most were adjustments upwards, although two of them gave him some credit. As I have said, the result is that he now owes more than $31,000 in child support and nearly $7,000 in penalties, making the total of $38,045.08.
13. (The father) has said that he needs to get his tax returns re-done because of some mistakes. That was one of the reasons why he sought an adjournment this morning, which I did not allow. In my view if he does get those tax returns re-done, and there is an adjustment in his favour, to put it bluntly, it will all come out in the wash because his liability for child support for these two children will continue for some time yet. At this stage he has not had that done, and it remains to be seen whether that will occur.
Saying that “it will all come out in the wash” was my blunt way of saying that I expected that any overpayment of child support would be credited against the father’s future child support assessments.
The father subsequently submitted amended tax returns to the Australian Taxation Office, which resulted in amended income tax assessments being issued. However, when he attempted to have his child support assessments varied in accordance with his tax assessments, that was refused. In their letter to him of 17 November 2009 the CSA stated:
Once CSA has made a child support assessment it will disregard any subsequent changes to your taxable income except where the Australian Taxation Office amends your tax assessment because of fraud or tax evasion or under a prescribed provision of the Income Tax Assessment Act (s56 (2) and regulation 7). In other words, it’s only when the amendment results in an increase to your taxable income that we will use the amended figure.
The emphasis in the paragraph quoted above is mine, because it shows that the CSA did not accept that it would “all come out in the wash because his liability for child support for these two children will continue for some time yet”, as stated by me during the enforcement proceedings. In essence, the emphasised sentence clearly suggested that the CSA would only vary the assessments if it resulted in an increase in the father’s child support liability. It is not hard to understand why the father may feel aggrieved by that.
Discussion
As stated at paragraph 14 of my earlier decision, material filed by the father shows that his annual taxable income between 24 July 2003 and 30 June 2004 was $41,868, and his annual taxable income between 1 July 2004 and 30 June 2005 was $30,572.[12]
[12] Annexures “F” and “G” to the father’s affidavit filed 23 July 2010.
It is important to note that the details of the father’s child support income amounts referred to by me in paragraph 15 of my earlier decision were clearly incorrect. Because the father did not appear at court on 10 February 2011, the information available to me at that time was not up-to-date. The relevant up-to-date child support income amounts in the father’s later re-assessments were:[13]
[13] Exhibit “F1”
2 July 2003 to 30 November 2003 $46,499 1 December 2003 to 28 February 2005 $38,078 1 March 2005 to 31 May 2006 $62,668
Although the periods set out in the two paragraphs immediately above do not readily correlate, it is clear that the father’s actual taxable income for the periods 24 July 2003 to 30 June 2004 and 1 July 2004 to 30 June 2005 was quite significantly less than that upon which his child support was assessed. It is also clear that any over-assessment has not “all come out in the wash” as I was expecting back in November 2008.
Are there special circumstances?
In my view, the fact that the father’s real estate is the subject of an order for sale makes this case sufficiently different or out of the ordinary to qualify as having special circumstances. I consider that, in such circumstances the amount that the father should have to pay for the relevant period should be properly assessed in accordance with what he earned.
Is there a ground for departure?
In my view, the fact that the father has fallen on hard times, primarily as a result of injury arising from a work-place accident and subsequent hospitalisation, means that the ground under section 117(2)(c)(ib) is made out.
Is a departure order just and equitable?
Naturally, the answer to this question depends very much upon the order that is intended to be made. As I understand his application, the father would like me to make orders varying his Child Support Income Amounts for the “tax years ending 30 June 2001 through to 30 June 2005” to coincide with his taxable income for those financial years. However, I have set out above why I cannot do that for any period before 23 July 2003.
With that in mind, however, I consider that it would be appropriate to make orders to make the father’s Child Support Income Amounts coincide with his taxable income for those periods between 23 July 2003 and 30 June 2005. Such would be just and equitable because:
·his child support payable would more accurately reflect his actual income; and
·his real estate is being compulsorily sold and what he owes should be as accurately calculated as possible.
Is a departure order otherwise proper?
Sub-section 117(5) states:
In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
In my view, the orders that I propose to make will result in the father paying what he should pay for the period 23 July 2003 and 30 June 2005. While I doubt that it will have any effect upon the mother’s entitlement to an income tested pension, allowance or benefit, I have no specific evidence about that, because the mother played no part in the proceedings.
Late payment penalties
I said in my earlier decision that I do not believe that I have the power to discharge late payment penalties, and I have not changed my mind about that. Section 68 of the Child Support (Registration and Collection) Act 1988 gives the Child Support Registrar the discretion to remit late payment penalties if the circumstances are appropriate.
Orders
The orders that I will make are:
a)An order setting aside my order dismissing the father’s application;
b)A departure order so that the father’s Child Support Income Amounts coincide with his taxable incomes for the periods between 23 July 2003 and 30 June 2005;
c)An order requiring the father to provide a copy of today’s orders to the Child Support Agency.
Procedure
I heard this matter in Launceston but I will be in Melbourne at the time that the decision is to be given, so I will have my Associate arrange for the parties to attend by telephone if they wish to do so.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Roberts FM
Date: 15/11/11
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