Marmindie Holdings Pty Limited and Darvall
[2000] FamCA 1614
•12 December 2000
[2000] FamCA 1614
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No NA 64 of 1999
AT BRISBANE File No BR 6177 of 1994
BETWEEN:
MARMINDIE HOLDINGS PTY LIMITED
Appellant
- and -
JENNIFER JOAN DARVALL
Respondent Wife
REASONS FOR JUDGMENT OF THE FULL COURT
CORAM: FINN, KAY & GUEST JJ
DATE OF HEARING: 10 August 2000 and by way of written submissions
DATE OF JUDGMENT: 12 December 2000
APPEARANCES:
Mr North, Senior Counsel, instructed by Uther Webster & Evans, Solicitors, 11th Floor, 1 Chifley Sq, Sydney, NSW 2000, appeared on behalf of the Appellant.
Mr Hamwood of Counsel, instructed by Anderssen & Company, Solicitors, PO Box 163, Fortitude Valley, QLD 4006, appeared on behalf of the Respondent Husband/Wife.
MARMINDIE HOLDINGS PTY LTD and DARVALL
NA 64 of 1999
Coram: Finn, Kay & Guest JJ
Date of hearing: 10 August 2000 and by way of written submissions
Date of judgment: 12 December 2000
JURISDICTION-CHILD SUPPORT- ENFORCEMENT - proceedings by payee to collect third party debts - whether proceedings at the suit of the payee prohibited by s 30 Child Support (Registration and Collection) Act [only the Commonwealth may enforce a "registrable maintenance liability"] - order creating arrears discharged by a Registrar of the Court - order resurrected upon review proceedings - Child Support Register amended after order discharged - whether "registrable maintenance liability" existed when order to collect third party debts made
In November 1989, orders were made providing inter alia that H pay weekly child support of $140 for his two children. H failed to pay the child support. By September 1998 the debt had grown to exceed $115,000.
In September 1998, Registrar McGrath found that H was unable to pay the arrears either periodically or in a lump sum. He therefore ordered that H pay the education expenses of the children and otherwise discharged the maintenance liability.
W sought to review the Registrar's decision and also filed an application seeking orders relating to a trust which had been established under her late father-in-law’s will. The father-in-law had left one quarter of his estate to H as trustee for the children. In the course of the proceedings, issues arose as to the relationship between H and Marmindie Holdings Pty Limited (“Marmindie”) as trustee of the Family Trust. Marmindie employed H as a financial adviser and the company’s directors were friends of H. W sought additional orders affecting the business of Marmindie.
Barry J dismissed W’s application to replace H as trustee under the will and discharged the Registrar’s orders. His Honour then indicated that there were in place various injunctive orders in relation to Marmindie and other companies and persons, and that he would make orders in relation to those once he had given Marmindie an opportunity to be heard. After hearing submissions in November 1999, his Honour found that the company was the alter ego of H and ordered inter alia that Marmindie pay W monies owing from H in child support payments.
Shortly after Registrar McGrath discharged all of the existing orders, including arrears, the Child Support Registrar amended the Child Support Register to give effect to that order, so that at the time the proceedings came on before Barry J there was no amount due to the Commonwealth. The effect of Barry J's order setting aside Registrar McGrath's order was to cause the Child Support Registrar to amend the Register so as to reinstate the debt due to the Commonwealth as though the order of Registrar McGrath had never been made.
On appeal, Marmindie contended that it had been denied natural justice in not being given the opportunity to be heard. It also raised general grounds relating to jurisdictional issues discussed in Ascot Investments v Harper (1981) 148 CLR 337.
At the commencement of the appeal the Court sought submissions as to whether by reason of s 30 of the Child Support (Registration and Collection) Act 1988, the trial Judge had jurisdiction to grant an order for enforcement of a registrable child maintenance liability at the suit of W.
Held, in allowing the appeal
(per Finn J)
Whilst agreeing with the reasons given by Kay and Guest JJ in relation to child support issues, in the circumstances, it was not necessary to express an opinion on the natural justice and jurisdiction issues originally raised by Marmindie.
(per Kay and Guest JJ)
Given that the legislation clearly differentiated between the variation of an entry in the Register and of the deletion of an entry from the Register, and also recognised that the Registrar can record a non-enforceable liability which subsequently revives, there was at all times in these proceedings a registrable maintenance liability registered under the provisions of the Act albeit that for a while the registered liability was for a nil amount.
Until that registered maintenance liability became no longer enforceable by reason of a s 38 variation or until it was deleted under the provision of ss 40 or 41of the Child Support (Collection and Registration) Act 1988, it could only be enforced at the suit of the Commonwealth.
There was no jurisdiction to make orders which were clearly orders for the enforcement of the maintenance liability.
The trial Judge gave the appellant a reasonable opportunity to be heard before granting the injunctions and making the orders that affected it.
It was unnecessary to deal with the Ascot Investment grounds
APPEAL ALLOWED
COSTS CERTIFICATES GRANTED
REPORTABLE
FINN J
In this appeal by Marmindie Holdings Pty Ltd against certain orders for the enforcement of a maintenance liability, which were made by Barry J. on 22 November 1999, I agree for the reasons given by Kay and Guest JJ. (which relate essentially to the operation of s.30 and of other provisions of the Child Support (Registration and Collection) Act 1988), that there was no jurisdiction in the Court to make the orders.
Accordingly the appeal must be allowed and the orders in question set aside. I also agree that the parties should be granted certificates under s.9 and s.6 of the Federal Proceedings (Costs) Act 1981.
In the circumstances I do not consider it necessary to express an opinion on the other matters raised before us on behalf of the appellant, being whether the appellant was given a proper opportunity to be heard, and whether there was jurisdiction to make the orders against the appellant, being as it was, in the position of a third party.
KAY AND GUEST JJ
This is an appeal by a company, Marmindie Holdings Pty Ltd ("Marmindie Holdings") against certain orders made by Barry J. on 22 November 1999. Those orders will be most usefully explained after some description of the background to the proceedings in which they were made.
Background
Jennifer Darvall, the wife, and John Darvall, the husband, married in 1980 and separated in February 1989. There are two children born of the marriage, Amy who was born in July 1982 and Anthony who was born in December 1983.
An order was made by the Family Court at Sydney on 3 November 1989 providing inter alia for the payment by the husband to the wife of $70 per week maintenance for each of the children. By 13 October 1993, over $12,000 had accrued in unpaid maintenance. By 28 October 1996 the arrears had grown to $62,629, when an order was made at the Local Court at Sydney declaring that that sum was owed as child maintenance to the Commonwealth. On 3 February 1997 the Local Court ordered the husband to pay the Deputy Registrar Child Support the sum of $73,746.01 by way of arrears. By September 1998 the debt had grown to exceed $115,000.
On 9 September 1998 Registrar McGrath delivered judgment in an application brought by the husband seeking to vary the existing orders and seeking a discharge of all arrears. The husband was by then an undischarged bankrupt. The Registrar found:
"...that the Husband is not in a current position to pay significant maintenance by way of periodic sums having regard to his financial situation, and also having regard to his track record in paying maintenance over the last nine years."
He ordered:
"1.That the maintenance orders with respect to the children of the marriage, Amy Jennifer Darvall born 19 July 1982 and Anthony John Darvall born 10 December 1983, being clauses 10 and 12 of the order of the Family Court of Australia at Sydney made 3 November 1989, clause 3 of the order of the Magistrates Court at Southport made 13 October 1993 and clause 6 of the order of the Honourable Justice Bell made in the Family Court at Brisbane on 25 March 1996 be discharged.
2. That the payment of all arrears and penalties owing pursuant to the above orders be waived.
3.That the Applicant, John Roger Darvall do pay all tuition fees and school related expenses including text books and stationery expenses and school uniform expenses relating to the said children’s attendance at St Hilda’s College at Southport and Toowoomba Grammar School respectively as and when such fees and expenses fall due; and
4.That all other applications contained in both the application as amended filed by the Applicant and the response filed by the Respondent be dismissed.”
The wife sought to review the Registrar's decision. In addition to the review application, the wife also filed an application seeking orders relating to a trust which had been established under the last will and testament of the husband's father Anthony Roger Darvall, who had died in November 1998 leaving one quarter of his estate to the husband as trustee for the children. The applications came on for hearing before Barry J on 14 July 1999.
In the course of those proceedings, issues arose as to the relationship between the husband and Marmindie Holdings as trustee of the John Darvall Family Trust. The wife was granted leave to seek orders which directly affected Marmindie Holdings in the following terms:
" ADDITIONAL ORDERS SOUGHT BY THE WIFE
DARVALL - BR 6177 of 1994
1.That the fifty-nine thousand dollars ($59,000.00) owed to Marmindie Holdings Pty Ltd by Ullimba Pty Limited, Mr Philip John Longworth and/or Motuere Pty Ltd be paid to the trust account of Messrs Anderssen & Company, the solicitors for the Wife.
2.That Marmindie Holdings Pty Ltd under its common seal and the Directors of Marmindie Holdings Pty Ltd sign all such documents and do all such things necessary to direct that Ullimba Pty Limited, Mr Philip John Longworth and/or Motuere Pty Ltd pay the fifty nine thousand dollars ($59,000.00) owed to it to the trust account of Messrs Anderssen & Company, the solicitors of the Wife.
3.That Landlush Pty Limited pay to the trust account of Anderssen & Company, Solicitors for the Wife the sixteen thousand dollars ($16,000.00) owed to Marmindie Holdings Pty Limited plus any interest or accretion thereupon.
4.That Marmindie Holdings Pty Ltd under common seal and the Directors of Marmindie Holdings Pty Ltd sign all such documents and do all such acts necessary to direct Landlush Pty Limited to pay to the trust account of Anderssen & Company, the Solicitors for the Wife the sixteen [sic] ($16,000.00) owed to Marmindie Holdings Pty Limited by Landlush Pty Limited plus any interest due or accretions thereupon.
5.That the Wife be entitled to sue in the name of Marmindie Holdings Pty Ltd to recover monies owed to Marmindie Holdings Pty Ltd by any of the persons or entities referred to in the above orders.
6.That the Wife be entitled to apply such funds as may [be] recovered under the above orders for the maintenance and advancement of the children of the marriage."
The proceedings before Barry J culminated in orders being made on 2 August 1999 as follows:
"1.That the Wife's application to replace the Husband as Trustee under the last Will and Testament of ANTHONY ROGER DARVALL be dismissed.
2.That the order of Registrar McGrath of 9th September 1998 be discharged.
3.That Paragraph 2 of the order of Jordan J of 18th March 199[sic] restraining Catriona Middleton in her role as Executrix of the Will of ANTHONY ROGER DARVALL from making any payments to the Husband be discharged.
4.The husband is ordered:
(a)to notify the solicitors for the wife in writing immediately upon receiving in whole or in part any bequest he is to manage as trustee of the last will and testament of Anthony Roger Darvall dated 4th June 1997, including details of the assets so received;
(b)invest at call with the Commonwealth Bank of Australia or such other bank as may be agreed between the husband's solicitors and the wife's solicitors any cash bequest received by him from the estate of the late Anthony Roger Darvall deceased pursuant to his last will and testament dated 4th June 1997 but otherwise not deal with any bequest so received pending further order of this Court;
(c)provide to the wife satisfactory evidence of any investment so made;
(d)not make any distributions whatsoever from the proceeds received from any such investment pending further order of this Court.
I direct the Registrar of the Family Court of Townsville to refer the reasons for Judgment of the 2nd August 1999 to the Attorney General for the Commonwealth for consideration of the issues arising from the evidence of the Husband, including:
(a)breach of bankruptcy laws;
(b)breach of social security laws;
(c)possible breaches of income tax by way of false declarations in the past five years.
(d)issues of money laundering."
Towards the end of his reasons for judgment his Honour indicated that there were in place various injunctive orders in relation to Marmindie Holdings and other companies and persons, in respect of which he would not make final orders until he had given a legal representative for Marmindie Holdings an opportunity to be heard.
The matter returned for hearing before his Honour on 22 November 1999. Mr Page SC announced his appearance for Marmindie Holdings and for the husband as trustee in the will of his father. After hearing submissions, his Honour made the following orders:
"1. That the Order of the 16th July 1999 be discharged.
2.That the $59,000.00 owed to Marmindie Holdings Pty Ltd by Ullimba Pty Limited and/or, Mr Philip John Longworth and/or Motuere Pty Ltd be paid to the trust account of Messrs Anderssen & Company, the solicitors for the wife.
3.That Marmindie Holdings Pty Ltd under its common seal and the Directors of Marmindie Holdings Pty Ltd sign all such documents and do all such things necessary to direct that Ullimba Pty Limited, Mr Philip John Longworth and/or Motuere Pty Ltd pay the $59,000.00 to the trust account of Messrs Anderssen & Company, the solicitors for the wife.
4.That Landlush No. 1 Pty Limited pay to the trust account of Anderssen & Company, solicitors for the wife the $16,000.00 owed to Marmindie Holdings Pty Ltd plus any interest or accretions thereupon.
5.That Marmindie Holdings Pty Ltd under common seal and the Directors of Marmindie Pty Ltd sign all such documents and do all such acts necessary to direct Landlush No.1 Pty Ltd to pay to the trust account of Anderssen & Company, the solicitors for the wife the $16,000.00 owed to Marmindie Pty Ltd by Landlush No. 1 Pty Limited plus any interest due or accretions thereupon.
6.That the wife be entitled to sue in the name of Marmindie Holdings Pty Ltd to recover monies owed to Marmindie [Holdings] Pty Ltd by any of the persons or entities referred to in the above orders.
7.That the wife be entitled to apply such funds as may be recovered under the above orders for maintenance and advancement of the children of the marriage.
8.That the husband pay to the wife costs of the hearing on 14th, 15th & 16th July 1999 together with all cost of and incidental thereto to include
(a)costs of the hearing before Registrar McGrath
(b)costs of the hearings by telephone on 20th, 21st and 23rd July 1999.
(c)any reserved costs."
Grounds of Appeal
Marmindie Holdings now appeals all orders which affect it.
After we granted leave to the appellant to amend the Grounds of Appeal to include a ground that the appellant was not given proper opportunity to participate in or be heard in the proceedings, the Notice of Appeal and the outline of argument by the appellant effectively sought to raise two issues.
That Marmindie Holdings Pty Limited had not been given an opportunity to properly argue as to whether the orders should or could be made, and
That the orders requiring the payment of moneys due to the appellant to be paid to the wife in satisfaction of the husband's maintenance obligation, when the appellant was neither a party to the marriage nor a party to proceedings, were beyond the jurisdiction of the Court [Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337].
At the commencement of the hearing of this appeal the Court raised a preliminary matter with the parties, namely whether by reason of s 30 of the Child Support (Registration and Collection) Act 1988, Barry J had jurisdiction to grant an order for enforcement of a child maintenance liability at the suit of the wife.
It was common ground that at least until the time Registrar McGrath dealt with the matter in September 1998, any liability to pay maintenance to the wife under the court orders had been registered for collection under the Child Support (Registration and Collection) Act 1988 and was, at least at the time that Registrar McGrath dealt with the matter, a debt due to the Commonwealth.
We have sought and received some additional submissions from counsel for the appellant and counsel for the wife. It appears to be common ground that on 30 October 1998, shortly after Registrar McGrath discharged all of the existing orders, including arrears, the Child Support Registrar amended the Child Support Register to give effect to that order, so that when the proceedings came on before Barry J there was no amount due to the Commonwealth. It further appears that the effect of Barry J's order setting aside Registrar McGrath's order was to cause the Child Support Registrar upon being notified of Barry J's order, to amend the Register on 10 December 1999 so as to reinstate the debt due to the Commonwealth as though the order of Registrar McGrath had never been made.
Counsel for the wife in the proceedings before us queried whether, at the time Barry J made the orders requiring the debts due to Marmindie Holdings to be paid to the wife, there was in fact a registrable maintenance liability registered under the Child Support (Registration and Collection) Act 1988 relating to the husband's obligation to pay child maintenance to the wife. In his subsequent written submissions he asserted the amendment to the Register as a result of Registrar McGrath's orders extinguished the registered maintenance liability so that s 30 of that Act had no application when Barry J made the orders the subject matter of this appeal.
The relevant legislation
CHILD SUPPORT (REGISTRATION AND COLLECTION) ACT 1988
SECT 30 Effect of registration
(1) If a registrable maintenance liability is registered under this Act, amounts payable under the child support assessment, court order or maintenance agreement under which the liability arises are debts due to the Commonwealth by the payer in accordance with the particulars of the liability entered in the Child Support Register.
…
(3) If a registrable maintenance liability is registered under this Act, the payee is not entitled to, and may not enforce payment of, amounts payable under the liability.
The key issue in determining whether s 30 presented an absolute bar to Barry J making orders at the behest of the wife is whether or not a registrable maintenance liability was registered under the Act when the orders were made. In order to answer that question it is necessary to examine several further provisions of the legislation
SECT 4 Interpretation
(1) In this Act, unless the contrary intention appears:
"affecting event", in relation to an enforceable maintenance liability, …does not include:
(a)the making by…a court of an order;
"child support debt" means an amount that is a debt due to the Commonwealth under section 30.
"child support enforcement period", in relation to a registered maintenance liability, means:
(a) the period commencing on the day on which the liability first becomes enforceable under this Act and ending on the day on which the liability first ceases to be so enforceable; and
(b) if the liability ceases to be enforceable under this Act and again becomes so enforceable (whether on one occasion or more than one occasion) - each period commencing on a day on which the liability again becomes so enforceable and ending on the day on which the liability next ceases to be so enforceable;
"court order" means an order:
(a) that was made …under…the Family Law Act 1975,…and
(b) that has not been set aside or discharged and has not expired or otherwise ceased to be in force.
"enforceable maintenance liability" means a registered maintenance liability that is enforceable under this Act.
"modifications" includes additions, omissions and substitutions.
"payee", in relation to a registrable maintenance liability, means the person who is entitled, or would but for the registration of the liability under this Act be entitled, to receive payments under the liability.
"payer", in relation to a registrable maintenance liability, means the person who is liable to make payments under the liability.
"registered maintenance liability" means a registrable maintenance liability that is registered under this Act.
"registrable maintenance liability" means a liability that is, under section 17…a registrable maintenance liability.
"terminating event", in relation to an enforceable maintenance liability
…
does not include:
(f) the making by, or registration in, a court of an order;."vary", in relation to the particulars entered in the Child Support Register in relation to a registered maintenance liability, includes the addition of a particular, and the omission of a particular and the substitution of another particular.
SECT 13 Child Support Register
(1) The Registrar shall keep a register, to be known as the Child Support Register.
(2) The Child Support Register shall be kept in such form (whether or not in a documentary form) as the Registrar considers appropriate.
SECT 17 Liabilities in relation to children that are registrable
maintenance liabilities(1) … a liability is a registrable maintenance liability if…it is a liability of…a parent of a child to pay a periodic amount for the maintenance of the child;… and …it arises under a court order …
SECT 23 Payer and payee to notify Registrar when registrable maintenance liability arises etc.
(1) This section applies where…under the…Family Law Act 1975…an order is made by…a court…and…a registrable maintenance liability arises under the order…;
(2) The payee of the registrable maintenance liability shall, within 14 days after the day (in subsection (5) called the relevant day) on which the order is made by…the court…give notice to the Registrar in relation to the order…
(3) The payee is not required to give the Registrar notice under subsection if the payee, within that period of 14 days, elects, by giving the Registrar a notice, not to have the registrable maintenance liability enforced under this Act.
(5) Subject to subsection (6), the payer of the registrable maintenance liability shall, within 14 days after the relevant day, give notice to the Registrar in relation to the order or agreement.
(6) The payer is not required to give the notice to the Registrar if the payee elects under subsection (3) not to have the registrable maintenance liability enforced under this Act.
…
SECT 24 Registrar to register liability in Child Support Register on
receipt of notification etc.(1) Where the Registrar receives under subsection 23(2) a notice from the payee of a registrable maintenance liability, the Registrar shall, within 28 days after receipt of the notice, register the liability under this Act by entering particulars of the liability in the Child Support Register.
…
SECT 26 Particulars of liability to be entered in Child Support Register
Particulars of the child support assessment, court order or maintenance agreement
(1) The entry in the Child Support Register in relation to a registered maintenance liability must include particulars from the … court order …under which the liability arose. Those particulars are as follows:
(a) the name of the payer;
(b) the name of the payee;
(c) particulars of the …court order…under which the liability arose and each …court order…varying or otherwise affecting the first-mentioned …order…being particulars that are, in the opinion of the Registrar, sufficient to adequately identify the basis of the liability;
(d) the name and date of birth of each child to whose maintenance the entry relates;
(e) the name of any other person to whose maintenance the entry relates;
(f) the periodic amount, or the aggregate of the periodic amounts that are:
(i)stipulated in the …court order…under which the liability arose; and
(ii)payable by the payer in relation to the entry;
(g) if the entry relates to the maintenance of 2 or more persons-the periodic amount attributable to each of them;
(h) the period specified in the …court order…as the period at which amounts are payable under the liability;
(i) particulars of any terms and conditions of the court order…that the Registrar considers necessary or desirable to include in the entry to ensure that all the terms and conditions of the order…relating to the liability are fully given effect to under this Act.
Particulars as to the payment period and payment rate
(2) The entry in the Register must also include particulars relating to the payment rate and payment period in respect of the liability. Those particulars are as follows:(a) the initial period (determined under section 26C) (if any) at which an amount is payable in respect of the liability;
(b) the payment period (determined under section 26A, 26B or 42A or Part IV), after the initial period (if any), at which amounts are payable in respect of the liability, and the start day of the period;
(c) if employer withholding is to apply in relation to a liability-a weekly rate of payment in relation to the periodic amount, or the aggregate of the periodic amounts;
(d) the rate of payment (weekly, fortnightly, 4 weekly or monthly) in relation to the periodic amount, or the aggregate of the periodic amounts, payable by the payer in relation to the entry and the amount of the rate of payment.
…
Particulars relating to enforceability of the liability
(3) The entry in the Register must also include particulars relating to the enforceability of the liability. Those particulars are as follows:(a) the day on which the liability first becomes enforceable under this Act;
(b) if the liability ceases to be enforceable under this Act (whether on one occasion or more than one occasion)-each day on which the liability ceases to be so enforceable;
(c) if the liability ceases to be enforceable under this Act and again becomes so enforceable (whether on one occasion or more than one occasion)-each day on which the liability again becomes enforceable under this Act;
(d) particulars of any suspension of the liability.
Other particulars that the Register may include
(4) The entry in the Register may also include the following particulars in relation to the liability:
(a) the daily rate of payment in relation to the periodic amount, or the aggregate of the periodic amounts, payable by the payer in relation to the entry;
(b) a statement of whether or not employer withholding applies in relation to the liability;
(c) such other matters as the Registrar considers necessary or desirable to be included in the Child Support Register.
SECT 28 Day on which liability first becomes enforceable under Act
A registered maintenance liability first becomes enforceable under this Act on whichever of the following days is applicable in relation to the liability:…
(b)if the liability is registered under subsection 24(1) - the day on which the liability arose under, or was varied or otherwise affected by, the court order … by virtue of which the liability is registered under that subsection;
…
SECT 33 Payee to notify Registrar of court order varying registered maintenance liability etc.
(1) Where:
(a) under the …the Family Law Act 1975…an order is made by...a court; and
(b) the order …varies or otherwise affects a registered maintenance liability (other than a registered maintenance liability that is not enforceable under this Act because of an election made under section 38A or a decision of the Registrar under section 38B);
the payee of the registered maintenance liability shall, within 14 days after the day on which the order is made by, or registered in, the court…give notice to the Registrar, in the manner specified by the Registrar, in relation to the order or agreement.
…SECT 35 Payer may apply to Registrar for variation of Child Support Register
(1) The payer of a registered maintenance liability may apply to the Registrar, in the manner specified by the Registrar, for the variation of particulars entered in the Child Support Register in relation to the liability to enable a court order …that varies or otherwise affects the liability to be given effect to under this Act.
SECT 36 Registrar to vary Child Support Register on receipt of notification or application
When the Registrar receives under subsection 33(1)…34(1) or 35(1)…an application or notice (as the case may be) from the payee or payer of a registrable maintenance liability, the Registrar must, within 28 days after receipt of the application or notice, make such variations (if any) to the particulars entered in the Child Support Register in relation to the liability as the Registrar considers necessary or desirable to…enable the relevant order …to be given effect to under this Act;
SECT 37 Registrar may vary Child Support Register to give effect to court order etc.
Where the Registrar is of the opinion (otherwise than because of the receipt of an application or notice (as the case may be) under subsection 33(1),…or 35(1)…):
(a) that, under …the Family Law Act 1975 an order has been made by…a court …and the order…varies or otherwise affects a registered maintenance liability
the Registrar shall make such variations (if any) to the particulars entered in the Child Support Register in relation to the liability as the Registrar considers necessary or desirable to enable the order…to be given effect to under this Act …
SECT 37B Registered maintenance liability not to be enforced if payer is a low-income recipient of a social security pension or a social security benefit
Object
(1) The object of this section is to provide for the non-enforcement of certain registered maintenance liabilities during the subsistence of a low-income non-enforcement period.
Payer may apply to have liability no longer enforced under Act
(2) If the payer of an enforceable maintenance liability covered by subsection 17(1):
(a)is in receipt of a social security pension or a social security benefit; or
(b)has made a claim for a social security pension or a social security benefit;
the payer may apply to the Registrar, in the manner specified by the Registrar, to have the liability no longer enforced under this Act.
…
Non-enforcement of liability-variation of Child Support Register
(6) If a low-income non-enforcement period in relation to a registered maintenance liability begins, the Registrar must, as soon as practicable, vary the particulars entered in the Child Support Register in relation to the liability by specifying the beginning of the low-income non-enforcement period as the time at which the liability ceases to be enforceable under this Act. However, this rule does not apply if, immediately before the low-income non-enforcement period, the liability had already ceased to be enforceable under this Act because of section 38A, 38B or 39B.
Resumption of enforcement of liability-variation of Child Support Register
(7) If a low-income non-enforcement period in relation to a registered maintenance liability ends, the Registrar:
(a)must, as soon as practicable, vary the particulars entered in the Child Support Register in relation to the liability by specifying the end of the low-income non-enforcement period as the time at which the liability again becomes enforceable under this Act; and
(b)may make such variations (if any) to those particulars as the Registrar considers necessary or desirable:
(i)to enable a court order … that varies or otherwise affects the liability to be given effect to under this Act; or
(ii)to take account of the happening of an affecting event in relation to the liability.
However, these rules do not apply if, immediately before the low-income non-enforcement period, the liability had ceased to be enforceable under this Act because of section 38A, 38B or 39B.
SECT 38 Variation of Register to have enforceable maintenance liability no longer enforced under Act
The Registrar must vary the particulars in the Child Support Register in relation to an enforceable maintenance liability so that the liability is no longer enforced under this Act if:
(a)the payee of the liability makes an election under section 38A; or
(b)the payee and payer of the liability jointly make an election under section 38A; or
(c)the Registrar makes a decision under section 38B.
SECT 38A Election by payee or by payee and payer jointly
(1) The payee of an enforceable maintenance liability, or the payee and payer jointly, may make an election to have the liability no longer enforced under this Act.
(2) An election under this section must be made in the manner specified by the Registrar.(3) Within 28 days after receiving the election, the Registrar must:
(a)vary the particulars relating to the liability in the Child Support Register by specifying a day (not later than 60 days after the day on which the Registrar received the election) as the day on which the liability ceases to be enforceable under this Act (the terminating day); and
(b)if the payee, or the payee and payer jointly, have elected to have amounts payable under the liability in relation to the child support enforcement period that are unpaid on the terminating day also no longer enforced under this Act-vary the particulars so as to ensure that, in spite of section 30, those amounts cease to be debts due by the payer to the Commonwealth.
(4) The Registrar must not make a variation under paragraph (3)(a) by specifying a day that is included in a period that is a low-income non-enforcement period under section 37B in relation to the liability. If that day is included in that period, the Registrar must not take action under paragraph (3)(b) in relation to that day.
SECT 38B Decision by Registrar based on payment record and other
factors(1) The Registrar may decide that an enforceable maintenance liability should no longer be enforced under this Act if all the following conditions are met:
(a)the payer is taken, under the regulations, to have a satisfactory payment record in relation to the previous 6 months;
(b)the Registrar is satisfied that the payer is likely to continue to have a satisfactory payment record;
(c) the Registrar is satisfied that a decision under this section is appropriate in relation to the liability.
(2) If the Registrar makes a decision under subsection (1), the Registrar must vary the particulars relating to the liability in the Child Support Register by specifying a day (not earlier than 28 days after the day on which the Registrar makes the decision) as the day on which the liability ceases to be enforceable under this Act.
….
SECT 39 Application for variation to enable liability to again become enforceable under Act
(1) If a registered maintenance liability is not enforceable under this Act because of an election made under section 38A or a decision by the Registrar under section 38B, the payee may apply to the Registrar for the liability to again become enforceable under this Act.
(2) The application must be made in the manner specified by the Registrar.
(3) An application cannot be made in relation to a liability during a period that is a low-income non-enforcement period under section 37B in relation to the liability.
….
(6) If the Registrar grants the application, the Registrar must:(a)vary the particulars relating to the liability in the Child Support Register by specifying a day (not later than 60 days after the day on which the Registrar received the application) as the day on which the liability again becomes enforceable under this Act; and
(b)may make any variations to those particulars that the Registrar considers necessary or desirable:
(i)to enable a court order…that varies or otherwise affects the liability to be given effect under this Act…
SECT 39B Amounts not enforceable under this Act during periods when the payee is not the main provider of ongoing daily care for a child
...
Registrar to vary Register
(8) If an election is made under this section, the Registrar must, as soon as practicable, make such variations to the particulars entered in the Child Support Register in relation to the liability as the Registrar considers necessary or desirable to give effect to subsection (4) or (7), as the case requires.
SECT 40 Entry wrongly existing in Child Support Register
Where the Registrar is satisfied that an entry wrongly exists in the Child Support Register, the Registrar shall delete the entry from the Child Support Register.
SECT 41 Obsolete entries in Child Support Register
Where the Registrar is satisfied (whether because of the happening of a terminating event in relation to an enforceable maintenance liability or the length of time that has elapsed since a registered maintenance liability was an enforceable maintenance liability) that the entry in the Child Support Register in relation to the liability is obsolete, the Registrar may delete the entry from the Child Support Register.
SECT 42 Correction of clerical errors and other mistakes in Child Support Register
Where the Registrar is satisfied that a clerical error or other mistake exists in particulars entered in the Child Support Register in relation to a registered maintenance liability, the Registrar may vary the particulars for the purpose of correcting the error or mistake.
Effect of the legislation
The written submissions on behalf of Marmindie Holdings succinctly and accurately set out what we consider to be the effect of the legislation. Those submissions (subject to some slight omissions) were as follows:
"1.The maintenance liabilities discharged by Registrar McGrath's Order of 9 September 1998 were liabilities which had been registered under the Child Support (Registration and Collection) Act ("the Act").
2.The Order by Registrar McGrath was one which was made by a Court and which had the consequence of varying or otherwise affecting the registered maintenance liability. Consequently, there was an obligation on the payee to notify the Registrar of the Order and its terms (see s33(1) of the Act).
3.Having been so notified the Registrar was required by s36 of the Act to make such variations (if any) to the particulars entered in the Child Support Register in relation to the liability as the Registrar considered necessary or desirable to enable the relevant Order "to be given effect to under this Act". (Emphasis added)
4.… the power conferred on the Registrar is to vary the particulars entered on the Register not to cease the registration of the liability. That this is so is confirmed by the power conferred by s41 of the Act to delete obsolete entries in the Child Support Register… Obsolescence arises by reason of the happening of a terminating event or as a result of an elapse of time since a 'registered maintenance liability' was an 'enforceable maintenance liability'. Given the definition of terminating event provided by s4 of the Act the power conferred on the Registrar to delete an entry by s41 is not applicable here. There appears to be no other express power to delete an entry from the Register.
5.The terms of s26 of the Act further confirm that the power conferred by s36 to vary an entry to give effect to an order does not include a power to terminate the registration or delete the registration of the liability. Reference is made in particular to ss26(3) which provides for particulars of entry in relation to when a liability first becomes enforceable, when it may cease to become enforceable, when a liability that has ceased to become enforceable again becomes enforceable and particulars of any suspension of liability.
6.Further one sees under s38 provision to enable a Registrar to vary the particulars on the Child Support Register in relation to an enforceable maintenance liability so that the liability is no longer enforced under the Act. Again, whilst it is clear that none of the circumstances in which that may be done are directly applicable here, variation in the particulars does not alter the fact of registration of the liability and application can be subsequently made in particular circumstances to enable the liability to again become enforceable (see for instance, s39). In such circumstances, the reversal of the election can give rise to an opportunity for the collection of arrears (see s39A).
7.It may be seen that the variation necessary or desirable to give effect to the Order of Registrar McGrath was not one of deleting or terminating the registration of the liability and indeed, that there was no such termination of registration here. Rather a variation in the particulars reducing the periodic sum payable under the liability to nil and reducing the amount recoverable with respect to arrears to nil was all that was necessary and all that took place. Insofar as there was an entry in the Register noting that maintenance was not enforceable by the agency from 9 September 1998 such an entry did not and could not have the affect of altering the circumstance that there was a registered maintenance liability which had been reduced by the Order of Registrar McGrath to nil.
8.Consequently, upon the order having been made by Barry J on 2 August 1999 it too was an order varying or affecting a registered maintenance liability and s36 of the Act required the Registrar to make further variations to the particulars entered in the Register so that the order could be given effect to 'under this Act'.
9.The Appellant places reliance upon the words appearing in subparagraph (a) of s36 whereby the Registrar is empowered to make variations that enable the order 'to be given effect to under this Act'. One does not give effect to an order under the Act by cancellation of registration. After all, it is only by the registration of a liability arising under an order that effect can be given to it under the Act (see s17(1) and s24(1)) and it is only by the maintenance of the registration of that liability that effect can continue to be given to the Order under the Act.
10.Once a registrable maintenance liability becomes registered it remains so until the registration is deleted under s41 of the Act. This is so whether or not the registered maintenance liability continues to be an 'enforceable maintenance liability' throughout the term of its registration. Sections 41, 28, 26(3), 38 through to 39B demonstrate the clear distinction in the Act between the concepts of 'registered maintenance liability' and 'enforceable maintenance liability' and it is clear that it is registration and not enforceability that enlivens the operation of ss30(1) and (3) of the Act.
11.Further, it may be noted that the debt due to the Commonwealth under ss30(1) is not determined simply by reference to the amount payable under the Order but rather the debt is the amount payable under an 'Order ... in accordance with the particulars of the liability entered in the Child Support Register'.
12.It is tolerably clear that the statutory scheme is such that when a maintenance liability becomes registered and the particulars entered on the Register those particulars may thereafter be varied as the circumstances require whether by reason of a Court Order as contemplated by s33 or by reason of the happening of an affecting event under s34 and further, that in the event that a registered maintenance liability ceases to be enforceable or having ceased to be enforceable becomes enforceable again or is suspended such a particular is to be entered [i]n the Register. The liability does not cease to be registered its particulars are varied.
13.It may be seen therefore that at all times prior to the Registrar again altering the particulars of the liability entered in the Child Support Register after having been given notice of Barry J's Order of 2 August, there remained a registrable maintenance liability registered under the Act. Consequently, the Respondent was at all times precluded from bringing enforcement proceedings by s30(3) of the Act. Rather the Respondent had an obligation under s33 of the Act to notify the Registrar of Barry J's Order so that the Registrar could make appropriate variations to the particulars on the Register and so that the enforcement of the liability varied as a consequence of that Order could proceed in accordance with the provisions of the Act.
14.In the circumstances, at all times, the Respondent had no entitlement to enforce payment of the amounts payable under the Order and in any event, given the current state of the Register, has no present entitlement."
Given that the legislation clearly differentiates between the variation of an entry in the Register and of the deletion of an entry from the Register, and seeing further that the legislation clearly recognises in provisions such as s26(3)(c) that from time to time the Registrar can record a non-enforceable liability which subsequently revives, there was at all times in these proceedings a registrable maintenance liability registered under the provisions of the Act albeit that for a while the registered liability was for a nil amount. Until that registered maintenance liability became no longer enforceable by reason of a s 38 variation or until it was deleted under the provision of ss 40 or 41, it could only be enforced at the suit of the Commonwealth.
Accordingly Barry J had no jurisdiction to make orders which were clearly orders for the enforcement of the maintenance liability. For that reason the appeal must succeed.
The natural justice issue
It is, strictly speaking, unnecessary for the Full Court to rule in respect of the other grounds of appeal relied upon by Marmindie Holdings. It is, however, appropriate, seeing the matter was fully argued, that we deal at least with the natural justice point raised on behalf of Marmindie Holdings.
In our view that submission is without substance. It is clear from the transcript of the proceedings that Marmindie Holdings were on notice as to the orders that were sought against it and as to the provisional findings that Barry J had made in the earlier proceedings concerning the husband's relationship with Marmindie Holdings and the John Darvall Family Trust. His Honour had said in his judgment on 2 August 1999:
"...There is a compelling body of evidence to indicate the company is the alter ego of the husband, but I refrain from making a final determination on this aspect till the company can be fully heard."
His Honour then set out precisely why that conclusion was open:
"Reasons advanced why the company is the alter ego of the husband include:
(a)Michelle Rutherford signs many of the cheques for the company but I am satisfied she does so at the direction of the husband. Mr Pilcher’s evidence was that in 1994 he was requested to be a director by the husband 'to protect the interests of the children'. The husband wanted Mr Pilcher, an accountant, to look after his affairs. Mr Pilcher’s role with the company is limited to reviewing cheques drawn on the company accounts. He said in evidence, 'The major role I play is to make sure the company is run properly.' In view of the fact the company has not lodged tax returns for five years, no financial statements have been prepared in proper form for the same period, and all the books are missing, I can only conclude Mr Pilcher has not performed his major role in an efficient or effective manner.
(b)After the conclusion of the evidence in this matter on Friday 16 July, an application was received on behalf of the wife in relation to payments said to have been made to an account of the company held at the St George Bank, Bligh Street, Sydney. A sum of $18,000.00 was deposited to this account in May this year. This account was used to pay numerous credit card debts of the husband, as well as pay the children’s school fees and medical and dental expenses. Amounts paid from this St George account to the Diners Club credit card of the husband between May this year and July include the following amounts: $1,996.00, $1,536.00, $1,232.00, $1,300.00 and $2,000.00. The advice from Ms Evans, who has perused a schedule of such drawings, would indicate that eight cheques in all were payable to Diners Club from the amount paid into the St George account of the company. I accept that the husband is employed by the company as a consultant and is to be paid a set consultancy fee, but the evidence would indicate the company is operating wholly and solely for the husband’s benefit.
(c)In the course of her evidence, Michelle Rutherford indicated she held her directorship by title only. She had nothing to do with the day to day running of the company. She said the husband had approached her to be a director and she agreed to so act 'in the best interests of the children' - meaning Mr Darvall’s children. When the husband received $100,000.00 from his father by way of a gift inter vivos, this amount was placed by the husband in the bank account of the company.
(d)The company exists as the trustee of the husband’s family trust. It would seem the sole purpose of the company is to employ the husband in his business as a financial advisor and to act as trustee of the Family Trust. There is a preponderance of evidence the company operates at the husband’s direction, or for his benefit, notwithstanding he is not shown as a director or shareholder of the company."
On 2 August 1999 his Honour directed Mr Page to make written submissions in relation to any application by Marmindie Holdings. On 22 November 1999 Mr Page sought a further adjournment of the matter and in respect of which his Honour said:
"I've not seen any material. Marmindie was invited by me, on a number of occasions, to intervene, to file material, and that was months ago, and it hasn't done so. Bad luck."
Discussion proceeded further between the trial Judge and Mr Page.
"HIS HONOUR: All right. Well, in view of the fact that there is no cross-examination to proceed, what is your position Mr Page?
MR PAGE: Well, I'm just a little embarrassed myself, and I apologise just for the reason that I have stated.
HIS HONOUR: You're probably jet lagged.
MR PAGE: No. I may be later, but I'm not yet. But I'm not in a position that I could make submissions now, but I could do so later.
HIS HONOUR: Submissions on what?
MR PAGE: In relation to this application that is against Marmindie Holdings.
HIS HONOUR: That application was made months and months ago. The proceedings were deferred as a matter of procedural fairness to give Marmindie Holdings the opportunity to file material. I've said, Marmindie Holdings is like a ghost ship, out there on the high seas with no one on board. It is just: come to court. No, no appearance. There was then foreshadowed - there is correspondence from Anderson and Company saying to my associate to tell the judge, 'We want to cross-examine the directors of Marmindi, and Mr Darvall.' The foreshadowed application has gone up in smoke right now. It doesn't exist.
...
MR PAGE: I'm here to meet an application. I'm simply not ready to do so right at the moment.
HIS HONOUR: Well, I'm saying there is nothing to meet."
After significant further discussion between his Honour and counsel for each of the parties, Mr Page drew his Honour's attention to an affidavit of Michael Pilcher sworn 30 July 1999 saying:
"...that is the evidence upon which the company relies in relation to the orders sought against it.
...
...that is, the injunctions relating to the payments to it and in particular in relation to the question as to whether Marmindi is, in fact, some sham or alter ego of the husband which seemed to be the basis upon which the, as your Honour determined, the garnishee orders be made."
Then, his Honour said:
"I read Mr Pilcher's material. I delivered my reasons for judgment on 2 August. On 2 August I gave my decision that in effect Marmindi is the alter ego of the husband, but, as you say at page 23, as a precautionary measure, if Marmindi was going to file any other material other than Mr Pilcher's affidavit, then they were to make application in relation to the orders already made on 16 July. They haven't done so. You're here today. I'm only too willing to hear from you, Mr Page. Say what you will."
Mr Page then, after some discussion as to whether the earlier orders were interim or tentative said:
"...I've made my submissions in relation to whether the orders should be made or not, but it's the terms of the orders which certainly concern my client..."
There then ensured discussion as to the form of the orders to be made.
The written submissions contained in the outline of argument by Marmindie Holdings assert:
"1.The company, Marmindie Holdings Pty Ltd was at no time given the appropriate opportunity to be heard in argument against the orders sought against it, whether they be the substantive orders or orders for costs.
2.The company, Marmindie Holdings Pty Ltd, as a respondent to an application, was not heard in argument in relation to the orders sought against it, whether they be the substantive orders or those for costs.
...
16.Whilst the Court was aware of the orders sought directly against Marmindie Holdings Pty Ltd as trustee, and whilst it entertained some preliminary arguments against its ability to make orders against that company, it at no time provided that company the opportunity to be properly heard in relation to those applications."
In our view, the transcript clearly demonstrates there is no substance in any of those arguments.
Costs
This is a case in which it is appropriate that each party be granted a costs certificate pursuant to the provisions of the Federal Proceedings (Costs) Act 1981.
Orders
The formal order of the Court will be:
1. That the appeal be allowed.
2. That orders 2, 3, 4, 5, 6 and 7 of the orders made by the Honourable Justice Barry on 22 November 1999 be set aside.
3. That the Court grants to the appellant a costs certificate pursuant to the provisions of s.9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
4. That the Court grants to the respondent/wife a costs certificate pursuant to the provisions of s.6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent/wife in respect of the costs incurred by the respondent/wife in relation to the appeal.
I certify that the 33 preceding
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.
Associate
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