MATTHEWS & DODD

[2014] FCCA 766

FEDERAL CIRCUIT COURT OF AUSTRALIA

MATTHEWS & DODD [2014] FCCA 766

Catchwords:
CHILD SUPPORT – Applicant for a stay – where the father’s wages are being garnisheed to recover both ongoing child support and arrears – where the father has appealed to the SSAT in respect of the finding about his taxable income which is the basis for the amount he is required to pay as ongoing child support – where the father is willing however to continue paying the ongoing child support voluntarily – where the father disputes the amount of the arrears – where there are no proceedings on foot challenging any component of the arrears – application for a stay dismissed.

Legislation:

Child Support (Registration & Collection) Act 1988,  ss.43, 44, 80, 84, 111C

Kness & Kness (2000) FLC 98-103

Applicant: MS MATTHEWS

First Respondent: MS DODD

File Number: NCC 1386 of 2008

Judgment of: Judge Terry

Hearing date: 21 March 2014

Date of Last Submission: 21 March 2014

Delivered at: Newcastle

Delivered on: 17 April 2014

REPRESENTATION

The Applicant: In person

The Respondent: In person

ORDERS

1. The Initiating Application filed by the father on 13 December 2013 is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Matthews & Dodd is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 1386 of 2008

MS MATTHEWS

Applicant

And

MS DODD

First Respondent

REASONS FOR JUDGMENT

Introduction

1. Pursuant to a change of assessment decision made on 24 June 2013 Mr Matthews (“the father”) is required to pay child support for his daughter [X] in the amount of $1,234.33 per month.

2. The father also owes arrears of child support unconnected with the change of assessment decision.

3. On 27 November 2013 the Child Support Agency (CSA) sent a letter to the father’s employer requiring it to deduct $2,050.33 per month from his wages. This was made up of $1,234.33 ongoing child support and $816.00 to reduce the arrears.

4. When the father found out that his wages were to be garnisheed he was incensed. He immediately filed an application in this court seeking what he described as a stay of the operation of the garnishee.

5. The father has an appeal on foot to the SSAT against the dismissal of his objection to the change of assessment decision and he submitted that this gave the court the power to grant the stay. However the outcome of this appeal will only affect whether he has to pay $1,234.33 per month and confusingly the father said that if a stay was granted he would pay $1,234.33 per month voluntarily.

6. The father has issues with the amount of the arrears and is angry about the CSA’s decision to collect the arrears at the rate of $816.00 per month; he was previously paying $15.57 per month voluntarily. However there are no proceedings on foot before a Registrar, the SSAT or a court which might affect any component of the arrears and an issue is whether in that case the court has the power pursuant to s.111C to make an order affecting the collection of the arrears by the method and at the rate determined by the CSA.

7. Ms Dodd (“the mother”) opposes the stay being granted.

The parties to the proceedings

1. The father has grievances about the property settlement he and the mother agreed to a decade ago and has a fixed idea that the mother is the beneficiary of a wealthy family trust, but he regards the CSA as the mother’s agent and the source of most of his problems and he named the CSA (not the Child Support Registrar) as the First Respondent in his application filed on 13 December 2013. The mother was named as the Second Respondent.

2. Ms J appeared on behalf of the Department of Human Services at the first two mentions of the matter. She did not take issue with the way the First Respondent was described and said that she was willing to appear to assist the court if required. Ms J said that the Child Support Registrar did not wish to be heard about whether the stay should be granted.

3. On 20 February 2014 I made an order removing the CSA as a party. This was done to assist the father, who wished the court to see a particular document but did not wish Ms J to see it, but the father subsequently became unhappy about this decision.

4. I am satisfied that in circumstances where Ms J had already indicated that the Child Support Registrar did not have a position on whether the stay should be granted it was appropriate for the hearing of the stay application to proceed on 21 March 2014 with the father and the mother as parties.

Documents relied on

1. The father relied on his Application filed on 13 December 2013, his affidavits filed on 13 December 2013 and 18 March 2014 and his Financial Statement filed on 13 February 2014.[1]

   [1]  The father was ordered to file the affidavit which he eventually filed on 18 March 2014 by 13 March 2014. On 18 March 2014 he filed an amended application in a case seeking an extension of time to file this affidavit. He was permitted to rely on the late filed affidavit during the hearing of his application.

2. The mother relied on her response filed on 6 February 2014, her affidavits filed on 6 February 2014 and 11 March 2014 and her financial statement filed on 11 March 2014.

3. The hearing on 21 March 2014 proceeded by way of submissions.

Background

1. The mother and father separated many years ago. They have three children, [Z], born [in] 1991, [Y], born [in] 1993 and [X], born [in] 1996 and consent orders were made in the Family Court at Newcastle on 29 August 2005 which provided for the children to live week about with the parents.

2. In or about 2008 the children one by one ceased living week about with the father and began living with the mother and since early 2009 all of the children have been estranged from the father. Each party blames the other for this.   

3. [Z] and [Y] are now adults and are at university. They do not live at home although the mother continues to assist them financially. [X], who will turn 18 on [date omitted] 2014, is in her final year of high school. She still lives with the mother.

4. The mother’s evidence, which the father did not seek to contradict, suggests that the father was assessed to pay child support for the children from 2009.  

5. The mother gave a history of child support payments since 2009. She said that from August 2009 to May 2010 she received regular payments from the father which commenced when the father’s wages were garnisheed. She said that from June 2010 to December 2010 payments were made at irregular intervals and the amounts were small.

6. From January 2011 and June 2011 the father was assessed to pay nil child support because he estimated his income at nil.

7. The mother went on to say that:

   “….from 12/8/11 to 31/12/11 Mr Matthews was to pay $7,595.85 however only made payments of $4,599.09. From 1/1/12 to 31/3/12 Mr Matthews was to pay $2,983.26, however only made payments of $1,740.00. From 1/4/12 to 31/3/13 Mr Matthews was to pay $13,194.96, however only made payments of $8,405.00. Since 1/4/13 Mr Matthews is to pay $1,234.33 per month which to date would equate to $13,577.63, however has only made payments to the total of $11,650.66. Since January 2012 Mr Matthews has missed monthly payments on 8 occasions.”[2]

   [2] Mother’s affidavit filed 11 March 2014 at paragraph 3.

8. The father did not seek to contradict this evidence save that he provided receipts for the payments he had made since December 2012. The receipts showed that he paid $1,250.00 (the assessed amount plus the voluntary $15.67) in August, September and November 2013. Between 14 May and 2 August 2013 however (3 months) he paid a total of $2,600.00.[3]

   [3] Exhibit B

The 24 June 2013 change of assessment decision  

1. A change of assessment decision setting the father’s taxable income at $100,000.00 was in place for the period 12 August 2011 to 31 March 2013. When it was about to expire the mother filed a fresh application for a change of assessment alleging that the father was earning far more than the $44,758.00 which the CSA proposed to use as his taxable income for the period from March 2013.  

2. The father opposed the application and a hearing was conducted by a Senior Case Officer (SCO).

3. The father had not filed tax returns since either 2006 or 2007 and in order to determine the father’s income the SCO served a notice on his employer requiring it to provide information about his income. The father’s employer advised that the father had been a full time employee since 19 March 2012 and was on a salary package including superannuation of $195,000.00 per annum and that his gross salary was $178,789.00 per annum.

4. The father attempted to persuade the SCO that the mother was the beneficiary of a trust fund which could provide her with significant sums of money and that he had high costs associated among other things with medical and dental issues, the need to pay a debt for legal fees and the need to support his parents and he argued that these things should be taken into account in setting an appropriate level of child support.

5. The mother denied the allegation about the trust fund and the SCO commented in her decision that the father had either failed to provide any evidence at all of the alleged debts or had provided documents which were partially illegible or altered. In a decision dated 24 June 2013 the SCO set the father’s adjusted taxable income at $178,789.00 from 1 April 2013 until a terminating event for [X].

6. As a result of this decision the father was assessed to pay child support of $1,234.33 per month.

7. The father lodged an objection but on 25 October 2013 his objection was disallowed and the change of assessment decision affirmed.

8. The father filed an appeal to the SSAT against the objection decision. He did not provide a copy of the appeal to me and I am unaware of the grounds of the appeal.

9. The SSAT appeal was listed for directions in February 2014. The direction hearing did not take place because the father advised the SSAT that he was ill. It was rescheduled for March 2014 and the parties understand that the hearing will take place in May 2014.  

The decision to amend the assessment for the period 1 January 2011 to 30 June 2011

1. On 26 November 2013 the CSA informed the parties that it had reassessed the father’s child support liability for the period 1 January 2011 to 30 June 2011, the period for which the father had declared a nil income and set his income for this period at $31,322.69. This meant that he owed an additional $5,701.62.

2. It would appear that the father was given the opportunity to comment on the CSA’s proposal that his income be set at $31,322.69 for this period before the assessment issued and that he did not respond within the required time frame.[4]

   [4] Father’s affidavit filed 18 March 2014  annexure  B2

3. The father had a right pursuant to s.80 of the Child Support (Registration and Collection) Act 1988 to lodge an objection to this decision within 28 days of it being made. During the hearing before me he insisted that he had done so and in support of this claim he pointed to his use of the word “objection” in letters he had written to the CSA.

4. I am satisfied however that the father has not lodged an objection in the form required by the legislation.   

5. S.84 of the Child Support (Registration and Collection) Act provides that:

   The objection must state or give fully and in detail the grounds relied on

6. I accept that the father has sent letters to the CSA complaining about the decision and has used the words “objection” or “I have objected” in the correspondence, but the father (who is no stranger to the objection process) has not filed an objection stating fully and in detail the grounds relied on.

7. The father’s letters to the CSA are similar to the letter described by Kay J in Kness & Kness. Kay J said as follows:

   I say that the letter appears to be as follows.  Firstly, it is a complaint that the amount the mother is to receive is inadequate from her perspective having regard to her needs for the children.  Secondly, it is a general complaint about her dealings with the Agency.  Thirdly, it is a more specific complaint about the father's alleged extravagance in respect of the acquisition of a motor bike.  And finally, it concludes with a complaint of pressure being exerted upon her by the father and the Agency itself and her desire to obtain other relief.

   As much as it would be convenient for me to deal with the substance of this matter today as the parties are both here and the issues are likely to be fairly narrow, I find it impossible to say upon reading the letter that it states fully and in detail the grounds of objection relied on.[5]

   [5] Kness & Kness (2000) FLC 98-013

8. The father said that he should be excused his failure to file a formal objection within time because he needed information from the CSA, which he had sought via a Freedom of Information request, before he could specify his grounds of objection.

9. The father can argue this if he ever seeks leave to file an objection out of time, but I am not persuaded on the material currently available to me that this provides an acceptable excuse for the father’s delay in filing an objection.

10. The father’s complaint is about the CSA setting his child support income for the period 1 January 2011 to 30 June 2011 at $31,322.69 rather than nil. The father has not filed tax returns for many years but he must know what he earned during this period and he must have some records either of what he earned or to support a finding that he lacked income during this period.

11. If his objection is on some other ground than the income earned such as the care percentage that also is something which must be within his knowledge.

12. However whether the father is ever given leave to file an objection out of time is irrelevant. The fact is that he has not lodged one to date and there is no challenge to this component of the arrears before a court, the Registrar or the SSAT.

13. The arrears do not consist only of the $5,701.62. The father had arrears of $3,936.50 in February 2012 and arrears of $7,674.85 at the time of hearing of the change of assessment application in 2013 and as at January 2014 his arrears stood at $18,097.25.

14. There are no proceedings on foot before the Registrar, this court or the SSAT concerning any other component of the arrears.

15. I further note that even without the addition of further penalties it will take the father 96 years to pay the arrears as they stood in January 2014 if he continues to pay $15.57 per month which is his preferred option.

The decision by the CSA to collect child support by employer deductions

1. On 27 November 2013 the CSA sent a letter to the father’s employer [A] Pty Ltd requiring it to deduct $2,050.33 per month from the father’s wages commencing on 15 December 2013. A letter bearing the same date was sent to the father. He maintained that he did not find out receive it until 13 December 2013 but nothing turns on whether this is correct.  

2. There is no right of objection to a decision to collect by way of employer deductions; indeed collection by way of employer deductions is the default method of collection by the CSA. S.43 of the Child Support (Registration and Collection) Act provides that:

   (1) Subject to subsection (2), where the payer of an enforceable maintenance liability is an employee, the Registrar shall, as far as practicable, collect amounts due to the Commonwealth under or in relation to the liability by deduction from the salary or wages of the payer under this Part.

   (2) Subsection (1) applies in relation to an enforceable maintenance liability whether or not the particulars in the entry in the Child Support Register in relation to the liability contain a statement that employer withholding applies in relation to the liability, but does not apply in relation to the liability if, by virtue of section 44, the particulars contain a statement that employer withholding does not apply in relation to the liability.

3. S.44 of the Act gives the father an avenue to seek a different collection method. S.44(1) and (3) provide as follows:

   (1) If:

   (a) the payer of an enforceable maintenance liability elects that employer withholding is not to apply in relation to the liability; and

   (b) the Registrar is satisfied that the payer is likely to make timely payments to the Registrar under the liability;

   the Registrar must, within 28 days after receiving the election, vary the particulars of the entry in the Child Support Register in relation to the liability so that they contain a statement that employer withholding does not apply in relation to the liability.

   3) An election under subsection (1) or (2) must be made to the Registrar in the manner specified by the Registrar.

4. There was nothing in the father’s material to suggest that he had tried to utilise this avenue but given his payment history which has led to arrears which stood at $18,097.25 as at 18 January 2014 his prospects of success if he attempted it might not be high.

5. The other aspect of the father’s complaint about the employer deductions was the amount the Registrar had chosen to collect each month but there is no right of objection to the amount the Registrar determines to collect to reduce arrears. The Registrar must have regard to the protected earnings rate in setting the amount to be collected but he has done so in this case.  

The court’s power to grant a stay

1. S.111C of the Child Support (Registration & Collection) Act 1988 provides as follows:

   Stay orders

   (1) This section applies if a proceeding has been instituted:

   (a) in a court having jurisdiction under this Act; or

   (b) before the Registrar under Part VII; or

   (c) before the SSAT under Part VIIA; or

   (d) under Part 6A or 7 of the Assessment Act.

   (2) A party to the proceeding may, subject to the Family Law Act 1975 :

   (a) in the case of a proceeding instituted in a court--apply to that court for an    order under this section; or

   (b) otherwise--apply to a court having jurisdiction under this Act for an order under this section.

   (3) Pending the hearing and final determination of the proceeding, the court may make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of the persons who may be affected by the outcome of the proceeding.

   (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 SSAT determining the proceeding becomes final.

2. The following can be gleaned from this section:

   i) the court’s power to grant a stay is dependent on proceedings of a kind described in s.111C(1) being on foot;

   ii)     the court has a discretion as to whether to grant a stay and it must take into account the interests of the persons who might be affected by the proceedings. The persons in this case are the father, the mother and the child; 

   iii)    a stay can be made subject to terms and conditions; and

   iv)    a stay operates until the decision of the Registrar, the court or SSAT or an earlier period set by the court.

The father’s case

1. The father’s case in essence was that:

   a)      he had lodged an appeal against the SSAT decision and therefore the court had the power to grant a stay of the garnishment of his wages, in other words a stay on the operation of the Child Support (Registration and Collection) Act 1988, pending the hearing of his appeal;

   b)      the courts discretion should be exercised in his favour because:

   i)he was willing to continue to pay the $1,234.33 per month voluntarily if the garnishee was stopped, so the mother and [X] would suffer no hardship;

   ii)the court could be confident that he would make the payments as promised because he had done so between September and November 2013 and he had provided evidence that he had this amount available in his bank account in December 2013 and January, February and March 2014.[6]

   iii)he would also continue to make the voluntary additional payment of $15.67 per month.[7]

   iv)the mother and [X] would suffer no hardship if the arrears were not paid at the rate determined by the CSA because:

   While the arrears may be construed to be entitlement to the mother, the money is in fact child support for a past period. I have seen no case presented anywhere (within CSA procedures or this matter) or on any other occasion that the mother has been financially impacted such to be able to demonstrate that she has incurred debt equalling the amount of the arrears.[8]

   v)Although he had declared in his financial statement filed on 13 February 2014 that he was earning $178,899.00 per annum (which was the figure used by the Registrar) his income had recently dropped to $158,000.00 per annum.

   vi)His financial statement and the information in his affidavit clearly demonstrated that when the garnishee amount was taken into account his expenses exceeded his income. He would suffer hardship if the stay was not granted.

   [6]    Exhibit A

   [7]    A reasonable conclusion from the fact that the father sought to demonstrate that he would pay $1,250.00 voluntarily not $1,234.33.

   [8]    Father’s affidavit filed 18 March 2014 paragraph 24.8

The mother’s case

1. The mother argued that the court should not in the exercise of its discretion grant the stay.

2. The mother is working 4 days a week as a [omitted] and earns $99,000.00 per annum. She was diagnosed with bowel cancer six years ago and underwent surgery and chemotherapy. She said that she was regularly monitored and had a growth which might require attention. The mother said that she needed to avoid stress and had reorganised her finances including selling her home in 2011 and buying a smaller home to reduce financial stress.

3. The mother said that she had considered further reducing her working hours but could not afford to do so as she not only supported [X] but her two older children who were university students.

4. The mother said that she did not accept that the father would keep paying the ongoing amount regularly and on time if the garnishee was removed and that she would suffer further stress over any issue of late payments. She also not unnaturally wishes to recover the arrears in a timely fashion as she has already paid this money out supporting the children, including during the period January 2011 to 30 June 2011 when the father paid no child support.

5. The mother did not accept that the father would suffer hardship if he was required to pay at the current amount. She pointed out that his expenses included mortgage payments of $3,508.00 per month for a property he owned with his current wife who was paying off another property and allegedly could not contribute to the home mortgage and car lease payments of $2,080.00 per month. She also pointed out that while the father may have high medical costs and the obligation to support elderly parents, so did she.

Conclusion

1. There are a number of difficulties with the father’s application.

2. The first is that there are no proceedings on foot anywhere concerning any component of the arrears, and I therefore do not have the power pursuant to s.111C to stay the collection of $816.00 per month from the father.

3. I have the power to grant a stay of the collection of the ongoing amount of $1,234.33 because the father has appealed to the SSAT against the objection decision which led to him being assessed to pay this amount, but the father does not in fact want to cease paying this amount, he simply wants be permitted to pay it voluntarily.

4. I am not persuaded that I should use s.111C to interfere with the method of collection chosen by the Registrar. To do so would be a misuse of s.111C and allow the father to evade the provisions of ss.43 and 44 by a backdoor method and it could result in hardship for the mother and [X].

5. The mother asserted that there had been problems with payment in past years and the fact that there are old arrears together with the fact that the father did not pay the full amount between April and August 2013 suggests that her fears that the payments may become irregular or that payments might not be made in full is reasonably based.

6. The mother is not on Centrelink benefits, she is earning $99,000.00 per annum, and neither the mother nor [X] would starve if the father did not pay child support or pay it regularly, but [X] is entitled to share in the benefit of the income of both her parents and the mother is entitled to the father subsidising the cost of the mother providing care for [X] at a level the father can afford to pay as determined by the child support formula. It would constitute hardship for the mother and [X] if the father failed to pay the amount he is lawfully required to pay.

7. I am not persuaded that the father will suffer hardship simply because money is recovered from him by employer deduction, or because he has to pay $2050.00 per month. He has no other dependents but [X], his wife is employed and is a position to share payment of some expenses with him and he cannot choose to commit himself to very high mortgage payments and car lease payments and then claim that he would suffer hardship if he had to pay his assessed child support.

8. I do not have the father’s Notice of Appeal to the SSAT but the father’s prospects of success with the appeal do not appear to be high. The change of assessment decision was based on information from the father’s employer about his income and in his Financial Statement filed nearly twelve months later the father confirmed that this information was correct. In his affidavit filed on 18 March 2014 he claimed that his salary had now reduced to $158,496.00 per annum but provided no documentary evidence to support this claim.

9. If I am wrong and the father does succeed on the appeal and the monthly child support payments are reduced, any overpayment which results from the father having made payment of $1,234.33 up to the date of the decision can easily be recovered either by a reduction in the arrears or a repayment by the mother who earns a reasonable salary.

10. For all of the above reasons I intend to dismiss the father’s application.

I certify that the preceding sixty nine (69) paragraphs are a true copy of the reasons for judgment of Judge Terry

Associate:     

Date:            17 April 2014