O'Donnell and Child Support Registrar

[2006] AATA 878

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 878

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/223 

GENERAL ADMINISTRATIVE DIVISION		)
Re		MR STEPHEN O'DONNELL

Applicant

And CHILD SUPPORT REGISTRAR

Respondent

DECISION

Tribunal Ms N BELL

Date16 October 2006 

PlaceSydney

Decision The decision under review is varied so that the amount of late payment penalty is $206.95.  In all other respects the decision is affirmed.

...................[Sgd]...................

Ms N Bell  Senior Member 

CHILD SUPPORT – Child Support Agency – Failure to Pay Arrears – Late Payment Penalties – Earning Capacity – Actual Capacity – Bankruptcy -  No Special Circumstances – Failure to Lodge Application – Decision Under Review Varied for Late Payment – Decision is Affirmed with Regard to All Other Matters

Child Support (Assessment) Act 1989

Child Support (Registration and Collection) Act 1988

Re Beadle and Director-General of Social Security (1984) 6 ADL 1

REASONS FOR DECISION

16 October 2006 MS N BELL            

1. Mr O’Donnell is required to pay child support to his former wife for their two children born in 1993 and 1994. His liability to pay child support arises under the Child Support (Assessment) Act 1989 and he must make those payments through the Child Support Agency.

2.      In 2004 Mr O’Donnell’s child support payments fell into arrears.  Mr O’Donnell had become unemployed in February 2004 and, in May, the Agency increased his monthly child support payment to $1,000.  As at 31 May 2004, the balance of his child support “account” was nil and he was subject to ongoing payments of $1,000 per month.

3.      When he contacted the Agency to discuss his circumstances he was advised that he could lodge an objection to the decision to increase his payments.  The amount of child support to be paid by a person is assessed according to a statutory formula based on earning capacity rather than on actual earnings.  A person may apply, by lodging an objection, for the assessment to be changed.  Mr O’Donnell did not lodge an objection in 2004.

4. The agency received no payments from Mr O’Donnell between 31 May and 26 September 2004 and some irregular voluntary payments thereafter. However, the voluntary payments were not sufficient to discharge the substantial arrears that had accrued. Under section 67 of the Child Support (Registration and Collection) Act 1988 late payment penalties may be imposed when a person fails to pay child support by the due date. Penalties of $228.45 were imposed on Mr O’Donnell in respect of the period 13 July 2004 to 13 January 2005. Mr O’Donnell sought remission of the penalties. The Agency refused his request and it is that decision, affirmed after Mr O’Donnell lodged a formal objection, that I will review.

5.      Another relevant and undisputed fact in this matter is that Mr O’Donnell, on his own petition, entered into bankruptcy on 22 July 2004.  Ms Aleema, for the Child Support Registrar, advised that the Registrar had decided not to recover the proportion of the late payment penalties incurred prior to bankruptcy ($21.50) because the effect of the bankruptcy is that the amount is not recoverable.  I agree that, as a pre bankruptcy debt, it cannot be recovered. 

6.      It is also relevant to this matter that the bulk of the arrears of child support payments owed by Mr O’Donnell were recovered from the unrestricted non preserved funds in his AMP superannuation account.  The Agency received $10,678.48 from the fund on 21 October 2005 in partial satisfaction of his debt which, at that date, stood at $12,873, comprising $12,644.58 in child support arrears and $228.45 in late payment penalties.

issues

7. The issues in this matter are defined by section 68 of the Child Support (Registration and Collection) Act 1988 which provides for the conditions under which the Registrar may remit a late payment penalty. Those conditions are:

(a)Where the circumstances that contributed to the delay in payment were not due to an act or omission of the person; and the person has taken reasonable action to mitigate the effects of those circumstances; or

(b)Where the circumstances that contributed to the delay in payment were due to an act or omission of the person; and the person has taken reasonable action to mitigate the effects of those circumstances; and having regard to the nature of those circumstances, it would be fair and reasonable to remit the penalty; or

(c)There are special circumstances by reason of which it would be fair and reasonable to remit the penalty.

8.      The first condition is not available to Mr O’Donnell.  There is no evidence to suggest that the funds in his superannuation account which were ultimately used to discharge the bulk of his arrears, were not available when his liability for payments first arose.  It follows that the circumstances that contributed to the delay in payment were due to an act or omission of Mr O’Donnell. 

9.      Nor do I consider that Mr O’Donnell took reasonable action to mitigate the effects of those circumstances.   There is no dispute that Mr O’Donnell did not voluntarily apply his superannuation funds to his child support arrears. Rather, the Agency obtained the moneys direct from the superannuation fund. Nor did Mr O’Donnell take the step of lodging, at the time his arrears began to accrue, an objection to the assessment that had been made.    An objection lodged by him, if successful, may have had the effect of decreasing his child support liability.

10.     It remains, then, to consider whether there are special circumstances by reason of which it would be fair and reasonable to remit the penalties.

special circumstances

11.     Mr O’Donnell raised the following matters as special circumstances surrounding his delay in payment:

12.     Mr O’Donnell considers he is paying more child support than he should have to and maintains this has always been the case.  He was retrenched in February 2004 from Computer Sciences Corporation after working there for 11 years.  He received a retrenchment package of approximately $50,000 to $60,000.  He said his education and experience are in a very narrow field (maintenance of mechanical marine systems) and this affected his ability to find other work.  He remained unemployed until October 2004 when he obtained work for 20 hours per week at $18 per hour.  In March 2005 he found full time employment with another company at a salary of $32,000 per annum.

13.     Mr O’Donnell said that when he got his retrenchment package he had a lot of debts to pay – approximately $90,000. The debt was made up of approximately $45,000 legal costs in respect of family law litigation and the costs of defending apprehended violence orders.  He was successful in these actions but was unable to recover costs from his former wife.  He also has debts to American Express, Citibank, Mastercard and a personal loan and personal debts to individuals.  He claimed these latter debts arose from the Agency’s requirement that he pay child support at a level that did not reflect his actual earnings.

14.     Mr O’Donnell has had his son Christopher living with him since 19 June 2006 but the Agency has only recognised this since 12 July and has adjusted his rate of child support only since then.  Mr O’Donnell said his current job is now under threat because his son goes to school at Glenmore Park High School and that requires him to drive his son there and back every day.  This means he must arrive at work at 9.15 am and leave at 2.15 pm instead of keeping full time hours.  He must drive 120 km per day and this costs him between $60 and $70 per week in petrol.  He is considering a change of school but under the current Family Court Orders both parents must agree to this.  He said he has had to purchase clothes, a school uniform and other necessities for his son, amounting to approximately $600.

15.     Mr O’Donnell said he has a new baby (8 weeks old) with his second wife who is currently on maternity leave.  Mr O’Donnell has curvature of his cervical spine and requires regular chiropractic and massage treatment.  He has significant current debt of about $7,000 in relation to the costs of Family Court proceedings and also faces significant additional costs in relation to future proceedings.

16.     Mr O’Donnell maintains the Agency breached its own Guide in obtaining moneys from his superannuation fund to satisfy his child support debt.

17.     Mr O’Donnell said he made an application to the Family Court on 27 July 2005 to vary assessments made for all preceding periods but he was unable to pursue assessment by the Court because Judicial Registrar Halligan wanted a summary of Agency assessments over the years but the Agency refused to provide it.  He said he finally obtained the information in March this year but has not taken any further steps because of being busy with his son.

18.     Ms Aleema, for the Registrar, conceded that the Agency’s recovery from the superannuation fund was not in accordance with the Guide, in that it did not obtain an election or application by Mr O’Donnell to obtain the funds.  However, she submitted that the Guide, at that time, was based on an incorrect interpretation of the law and, some two months after it obtained the funds from Mr O’Donnell’s account, it amended the Guide to reflect the correct legal position.

19.     As to the difficulty Mr O’Donnell has had in relation to his application to the Family Court for variation of assessment, Ms Aleema submitted that the Agency is not a party to the assessment application but can seek to intervene.  It has not done so in this case and the only parties are Mr O’Donnell and his former wife.  In any event, she submitted, Mr O’Donnell had been provided with copies of all determinations that had been made and all notices of assessment.

20.     The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 is often quoted in relation to the interpretation of "special circumstances". In that decision, the Tribunal said at 6 ALD 3:

"An expression such as `special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

21.     The matters raised by Mr O’Donnell - the loss of his job, his bankruptcy, the financial burden of contested family law proceedings, his new family and his renewed custody of his son – are all matters which have undoubtedly complicated his life and made it harder to cope with the child support regime.  However, in the context of a marriage and family breakdown, they are, unfortunately, not unusual events.   There is nothing exceptional about them.  Mr O’Donnell’s period of unemployment was a matter that may have prompted an objection to the Agency’s assessment and this was the appropriate step to be taken to have those circumstances taken into account.  However, Mr O’Donnell did not take this step until his arrears had already substantially accrued.  It is not appropriate for me, now, to regard those circumstances as so uncommon as to be “special”.

22.     For these reasons, I do not consider that the range of his circumstances is so special as to make it fair and reasonable to remit the penalty.  By “penalty”, I refer to the amount that remains outstanding after taking into account the amount of late payment penalty incurred by Mr O’Donnell prior to his bankruptcy.  The decision under review is varied only to the extent necessary to reflect that adjustment.

decision

23.     The decision under review is varied so that the amount of late payment penalty is $206.95.  In all other respects the decision is affirmed.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member.

Signed:         ………………. [Sanjiv Shah] ………………
              Associate

Dates of Hearing  7 August 2006

Date of Decision  16 October 2006

Advocate for the Respondent  Child Support Agency