Paglia & Wayson (No 2)
[2024] FedCFamC2F 1514
•18 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Paglia & Wayson (No 2) [2024] FedCFamC2F 1514
File number(s): MLC 7880 of 2023 Judgment of: JUDGE O'SHANNESSY Date of judgment: 18 October 2024 Catchwords: FAMILY LAW – Child Support – Child Support Registrar unable to retrospectively consider assessment past 18 months ago – whether leave should be given to the Registrar to consider further than 18 months- balance of prejudice – explanation for delay – prima facie case – leave granted Legislation: Child Support (Assessment) Act 1989 (Cth) ss 98S, 111 and 112 Cases cited: Child Support Registrar & Holub [2017] FCCA 2400
Peck & Peck [2019] FCCA 558
Division: Division 2 Family Law Number of paragraphs: 31 Date of hearing: 18 October 2024 Place: Melbourne Counsel for the Applicant: Mr Mutton Solicitor for the Applicant: Victoria Legal Aid Counsel for the Respondent: Mr Cash Solicitor for the Respondent: Bramham Lawyers ORDERS
MLC 7880 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PAGLIA
Applicant
AND: MS WAYSON
Respondent
ORDER MADE BY:
JUDGE O'SHANNESSY
DATE OF ORDER:
18 OCTOBER 2024
THE COURT ORDERS THAT:
1.Pursuant to section 112 of the Child Support (Assessment) Act 1989 (Cth) (‘the Act’) leave be and is granted for the Child Support Registrar to make a determination under section 98S of the Act for the child support assessment in relation to the child, X born in 2008, for the period of 1 September 2020 to 10 October 2021 provided that Mr Paglia makes such application to the Registrar within 14 days of this day.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
These are the settled reasons of a judgment delivered ex tempore. These reasons were delivered orally. These settled reasons have been corrected from the transcript where appropriate to correct grammatical errors, to add citations, passages of authorities and evidence, findings omitted by pressure of time, and to attempt to make the orally delivered reasons easier to read. The substance is unchanged.
Background
In the matter of Paglia & Wayson, the matter comes before me in regard to an application made by the applicant father, Mr Paglia (‘the Father’), who has been assessed to pay child support in regard to the child X, who is now almost 16 (‘X’).
The Father and the respondent mother, Ms Wayson (‘the Mother’), are now aged 59 and 60 years respectively, and they have two children together – the youngest now almost 16, and the oldest now 23. The older child lives independently of the parties, and the younger child lives with the Mother predominantly but spends alternate weekends and another night in the other week, and half school holidays with the Father.
Father’s income
The Father is unemployed and has suffered an injury in the past, such that he received income support payments connected, in a way that is not material, to a superannuation fund. The Father’s income prior to the injury was in the order of $60,000 per year. As a result of agitation by him in regard to the insurance company making the payments, effectively by way of income protection insurance via a superannuation policy that he received in lump sums that ended his income entitlement. By the ordinary operation of income tax law and the Child Support (Assessment) Act 1989 (Cth), the Father was assessed as having an income of $252,548 for the financial year ending 2020. He also had roughly $17,000 of income from government benefits in that same year. The payer, or insurance company, regarded those funds as covering a number of years of the past, that being the period from 2014 to 2018.
Some further sums were received by way of income protection in the following financial year, being financial year ending 2021, and his taxable income for that year was in the order of $71,403.
Father’s initial applications
The Father lodged a tax return for his income for the financial year ending 2020 on or about 10 July 2021. The lodging of that tax return ultimately triggered an assessment of child support on 23 November 2021 that triggered, automatically, arrears of almost $30,000. The dispute over those arrears has troubled the Father and the Mother since. Pretty soon after that assessment, I am satisfied that the Father started to agitate what he saw as the unfairness of being assessed for child support in regard to funds received that were notionally in regard to income over a number of years to be assessed in one year. The Father made a number of applications thereafter that he saw as dealing with the matter. The primary matter that he immediately pursued was seeking credit for what he regarded as non-agency payments that related to his understanding that the Mother owed him money for a share of rent in regard to a property that the parties had owned.
Various applications commenced in at least the middle of 2022, if not sooner. I am satisfied that, the Father agitated his unhappiness about that assessment from soon after it was made, notwithstanding that he is unable to find any written record about that. That is consistent with his personality and means of operating. He makes complaints promptly. His various applications for non-agency payments, which included applications on 11 November 2022, were all ultimately unsuccessful.
On at least 11 November 2022, the Father sought a non-agency payment. When that was unsuccessful, he lodged an objection on 18 November 2022. Soon after, on 29 December 2022, that objection was disallowed. On 23 January 2023, he applied to the Administrative Appeals Tribunal for review of the objection decision. That application was later dismissed on 4 May 2023. The number of applications and the time that the Father had put into agitating his child support assessment meant that he had established a regular line of communication with the child support agency. The Father understands that it was the view of the child support agency that his various applications were without merit but that he may well have the same merit in regard to what is known as ground 8 (not ground 5, that he had previously been acting on).
2023 application
Whether or not, in fact, that was what the agency actually did or whether that is what the Father understood that is what the agency was suggesting, on 10 April 2023, he applied to Services Australia (also known as the Child Support Registrar) for a change of assessment in the special circumstances of the case, being that he received income in one financial year that was notionally meant to be spread over a number of years. That application was dealt with on 13 July 2023. The effect of that application was both good and bad for the Father.
In regard to some of the assessments being dealt with, it was regarded that it was unfair to take into account the income assessment of $252,000. In regard to other years, it was found to be unfair to the Mother to take into account a zero income position, and the reviewing officer assessed a notional income to the Father of $50,400 per annum to continue until X was 18. That was assessed on the basis of the Father’s expenditure rather than actual income. At the time of that assessment, the Father had an undrawn finance facility, or what is known as a home loan redraw facility, of about $136,000.
To the extent the “lumpy” income of the FYE 2020 has been applied to the Father’s expenditure over the following years, it is arguable, that has already been applied to the expenditure of the Father and has resulted in the notional income assessment and child support of the following years.
Parties’ property
As at today, that redraw facility is down to $8000. Some of that difference has been applied to funding the Father’s various investments. The Father and the Mother hold or have held a fair-sized chunk of the real estate of B Street, Suburb C, that being a significant traffic thoroughfare through Melbourne. The parties made consent orders in regard to a property division in 2019. The end result of that was that the payer, the Mother, ended up with the property known as 1 B Street unencumbered. The Mother still lives in that property with X, and it is still unencumbered.
The Father ended up with the former matrimonial home which is of greater value at 2 B Street but subject to a significant mortgage. That debt had previously been secured on both properties but became secured upon the Father’s B Street property. At about the same time as that settlement was taking place, the Father entered into investments in other properties in B Street. He invested via a company with the next-door neighbour to 1 B Street and a company known by an appropriate name in 3 B Street. That last mentioned investment may ultimately turn out to be moderately successful.
The Father has a 50 per cent shareholding in the company that is the registered proprietor of that property. However, he is not a director of that company anymore and has fallen out with the only director and the other shareholders. It is likely that there is some disparity in contributions to funding that investment recorded in the loan accounts of the company. However, it is satisfactorily clear that whilst the Father has some value in that shareholding, that is not available to him (in sums of money) in the immediate future.
Apart from 3 B Street, the Father invested in multiple properties which are, in fact, one property, being a vacant piece of land at 4 B Street. Being vacant land, as I understand it, there was little or no income on that property. Ultimately, that property was sold. The Father’s interest was 50 per cent of the entity that held 50 per cent of that property. The end result was that the property was sold for only very little more than what it was purchased for, when substantial funds have been borrowed and, the carrying costs of the asset over a number of years were substantial. Ultimately, the Father has lost capital in that investment. On the other hand, the investment at 3 B Street may turn out to be profitable and the Father, in his financial statement, estimates that he will end up with about $250,000 from that property one day.
He may end up with a little bit more or a little bit less or, as he fears, substantially less after legal proceedings that he fears will be necessary to obtain his equity in that property. In the meantime, he estimates that he has about one and a half million dollars in equity in the home in which he lives, being the former matrimonial home. The Mother continues to hold number 1 B Street, and it remains unencumbered, and she estimates based on rate notices that it is worth about $900,000, though, for the purpose of the property proceedings, it was valued at significantly more. I am satisfied that the property would be worth at least $900,000.
The Mother works full time as an allied health worker and, after tax, earns a total of about $850 per week. The Father is not employed at all and, as he understands it, he is not entitled to any government assistance because of his various investments notwithstanding that they do not actually produce him any income.
2023 Decision
The effect of the decision of the child support agency was to vary existing assessments but by operation of law, the registrar cannot change an assessment more than 18 months in the past. The relevant legislation of the Child Support (Assessment) Act 1989 is as follows.
Section 98S Determinations that may be made under Part
(1) The determinations the Registrar may make under this Part are as follows:
(a)a determination varying the annual rate of child support payable by a parent;
(b)a determination varying a parent's or non - parent carer's cost percentage for a child;
(c) a determination varying a parent's child support income;
(d) a determination varying the parents' combined child support income;
(e) a determination that:
(i)the column in the Costs of the Children Table that covers a parent's child support income or combined child support income that is, or is determined to be, greater than 2.5 times the annualised MTAWE figure for the relevant June quarter, is the column headed "2 to 2.5"; and
(ii)the column is to apply as if the second dollar amount in the heading to that column did not apply;
(f) a determination varying a parent's child support percentage;
(g) a determination varying a parent's adjusted taxable income;
(h)a determination varying a parent's relevant dependent child amount or multi - case allowance;
(i) a determination varying a parent's self - support amount;
(j) a determination varying the costs of the children.
Note: There are limitations on the Registrar making a determination that varies an annual rate of child support payable in respect of a child support case below the minimum annual rate (see section 98SA).
(2)In proceedings under Division 2, the determinations under subsection (1) that the Registrar may make are not limited by the terms of the application.
(3)A determination under this Division may make different provision in relation to different child support periods and in relation to different parts of a child support period.
(3B)The Registrar may only make a determination under this Part in respect of a day in a child support period, being a day that is more than 18 months earlier than:
(a)the day on which the application for the determination is made under section 98B; or
(b)the day on which the Registrar notifies the relevant parties under subsection 98M(1);
if a court has granted leave under section 112 for the determination to be made.
(3C)If a court has granted leave under section 112, the Registrar may only make a determination under this Part in respect of a day in a child support period if the day is within the period specified by the court, under subsection 112(6), in the order granting the leave.
(4)The Registrar must give, in writing, the reasons for making the determination (including the reasons for which the Registrar is satisfied as required by paragraph 117(1)(b)).
(5)A contravention of subsection (4) in relation to a determination does not affect the validity of the determination.
…
Section 111Application for amendment of administrative assessment that is more than 18 months old
Parent or carer applications
(1)A liable parent, or a carer entitled to child support, (the applicant ) may apply to a court having jurisdiction under this Act for leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118;
in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.
(2)Subject to section 145 (Registrar may intervene in proceedings), the parties to the proceeding under subsection (1) are:
(a) the applicant; and
(b) either:
(i) the liable parent; or
(ii) the carer entitled to child support.
Registrar application
(3)The Registrar (the applicant) may apply to a court having jurisdiction under this Act for leave for the Registrar to make a determination under section 98S in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.
(4)The parties to the proceeding under subsection (3) are:
(a) the applicant; and
(b) the liable parent; and
(c) the carer entitled to child support.
Section 112 Court may grant leave to amend administrative assessment that is more than 18 months old
(1)If an application is made to a court under section 111, the court may grant leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118.
(2)The court may grant leave for an order to be made under section 118 if the court is satisfied that it would be in the interest of the parties to the proceeding for the court to consider, at the same time as it hears the application under section 111, whether an order should be made under section 118. If the court does so, the applicant is taken to have made an application to the court under section 116 for such an order.
(3)Otherwise, the court may grant leave for the Registrar to make a determination under section 98S.
(3A)To avoid doubt, the court may grant leave for the Registrar to make a determination under section 98S, or for the court to make an order under section 118, irrespective of what the applicant applied for under section 111.
Matters to be considered
(4)In considering whether to grant leave under subsection (1), the court must have regard to:
(a) any responsibility, and reason, for the delay in:
(i) making an application under section 98B or 116; or
(ii) making a determination under section 98S;
as the case requires; and
(b)the hardship to the applicant (other than the Registrar) if leave is not granted; and
(c)the hardship to the other party or parties (other than the Registrar) if leave is granted.
(5)The court may have regard to any other relevant matter.
Orders granting leave to specify period
(6)An order granting leave under this section must specify the period in respect of which the Registrar may make a determination or the court may make an order.
(7)The period specified under subsection (6):
(a)must not include a day in a child support period if the day is more than 7 years earlier than the day on which the application under section 111 was made; and
(b) is not limited by the terms of that application.
No requirement to make determination or order
(8)The granting of leave under subsection (1) does not imply that:
(a)the Registrar is required to make a determination under section 98S; or
(b) the court is required to make an order under section 118.
This Court is empowered where it is appropriate to grant leave for the registrar to go back past 18 months but, under no circumstances, to go back any further than seven years. The decision that the registrar made on 13 July 2023 was carefully considered and found that the assessments, to the extent they were amenable to change by the registrar, should have been changed, and they were. The registrar was prohibited from considering matters further back in the past. Whether or not the registrar will ultimately determine that the Father’s argument is entirely appropriate or makes some other calculation, I am not determining.
The delay
However, I am satisfied that the Father’s case, prima facie, is of some substance and is not hopeless. That does not mean that I am deciding it in advance. That will be a matter for the registrar. However, the Father made this application the day after the registrar dealt with it on 13 July 2023. By reason of the volume of cases awaiting hearing in this Court, the fact that both parties sought to cross-examine the other and the consequences and, perhaps, the unintended consequences of section 102NA has all contributed to the matter only being able to be heard this day. However, I am satisfied that the Father has, since 14 July 2023, been very diligent and attentive to filing documents and attempting to prosecute this matter. The Mother has likewise been very attentive and has not, in any way, contributed to any delay.
The delay that I have to deal with really comes down to a period of 17 months from 23 November 2021, when the impugned assessment was made, to 10 April 2023, when the Father challenged the fact that the registrar was only going back 18 months.
When leave can be granted
I refer to and repeat relevant paragraphs within the matter of Peck & Peck [2019] FCCA 558 of Judge Terry:
45.The solicitor for the Registrar submitted that leave pursuant to s.112 should only be granted in exceptional circumstances. He referred to the following passage from the judgment of FM Brown as he then was in Bauer & Becker which was handed down not long after s. 112 was introduced into the Act:
The legislative provisions, which relate to the amendment of any administrative assessment of child support that is more than eighteen months old were inaugurated following the recommendations of the Ministerial Taskforce on Child Support, chaired by Professor Parkinson. The Taskforce was concerned to limit retrospective applications in respect of child support and the government accepted its recommendations in this regard.
The Taskforce reported as follows:
“An application for change of assessment may currently be made for a virtually unlimited time. This is highly undesirable, as it may open periods to re-examination which have long past, to the detriment of the other parent who finds past child support obligations being retrospectively reviewed. Particularly where a parent wishes to avoid complying with large outstanding child support debts, a belated application to reduce the assessment may be available, undermining the CSA’s ability to enforce debt. In practice, most decisions are not retrospective. However, the currently open discretion to make an application to vary past periods should generally be limited to the immediately preceding child support period.
However, there may be some exceptional circumstances where a parent has a legitimate reason for delaying their application for a change to a past assessment. One such reason is because information has only recently come to light about a payer’s hidden income. In such cases, a process should exist to enable this general limit on retrospective applications to be eased. A court is in the best position to consider the past ‘rights’ of the parties, and determine whether making an exception is appropriate. For this reason the Taskforce proposes that an application should be made to a court (in practice this would be the Federal Magistrates Court), to grant leave to apply out of time. This would be similar to the existing process under s.44 of the Family Law Act 1975 in relation to property and spousal maintenance applications.
Where such application has been made to a court, and the court is inclined to grant it, the court may have before it much of the necessary information and evidence from the parents to consider making a departure order. It may be inefficient to require the parents to return to the CSA to seek administrative determination of the application. In such cases, the court should have a discretion on application by a parent to proceed to determine the substantive departure application itself.”
46.However while the passage from the report by the Ministerial Taskforce on Child Support makes the purpose of the 2006 amendments clear and does contain the word “exceptional” it would be putting an impermissible gloss on s. 112 to hold that leave should only be granted in exceptional circumstances.
47.The word “exceptional” is used in s. 136 of the CSAA which relates to an application to set aside binding child support agreements, so the legislature uses this phrase when it chooses to do so and it has not done so in s.112. Further and by way of analogy it was made clear early in the life of the Family Law Act that the interpretation of s. 117(2) of that Act which provides that the court may make an order as to costs if there are circumstances justifying it doing so should not be fettered by a suggestion that “special circumstances” needed to be established before an order as to costs was made.
…
57.Pursuant to s. 112(5) I must also consider any other relevant matter and I concur with Judge Brown who said in Yewen & Child Support Registrar & Anor that it was appropriate to ask:
Is the court satisfied that the applicant concerned has made out a prima facie case to have the relevant child support assessment changed?
(footnotes omitted)
I also refer to and repeat the relevant paragraphs in the matter of Child Support Registrar & Holub [2017] FCCA 2400 of Judge Henderson as she then was:
19.Brown FM, as he then was, in Bauer & Becker , a decision oft quoted in these matters where the principles surrounding the granting of leave under section 111 and 112 of the Child Support (Assessment) Act 1989 is discussed by his Honour. In that matter His Honour Judge Brown referred to the undesirability of parents being able to review assessments retrospectively saying at paragraph 74 and 75:
The object of section 111 of the Assessment Act is to prevent the re-examination of past assessments of child support for unlimited periods of time. If there was such a facility, it would undermine the integrity of the overall system.
20. In 75:
In these circumstances, it is my view there must be something exceptional to justify the court revisiting of decisions which were made some time ago and the fact that some have been challenged to pay arrears is not an exceptional circumstance.
21.In the decision of Child Support Registrar & Rawlings , a decision of Judge Scarlett:
It should be by now be clear to people with an obligation to pay child support under an administrative assessment that it is essential that they lodge their income tax returns within the time required. That is an obligation that applies to taxpayers generally. In cases of hardship, a taxpayer may be granted an extension within which to lodge a return. However, repeated and continuing failure to lodge income tax returns will lead to adverse consequences for which parties can expect to receive little sympathy from the Court.
22. Judge Roberts in Hacherl & Berrios :
In this particular matter, the father does not come to Court with clean hands in relation to the lodgement of his tax returns. He should not be, therefore, allowed to rely on his dilatory behaviour to obtain relief in relation to a period when the Child Support Agency was hampered by his failure to lodge income tax returns.
23.Judge Halligan, in McColl & McColl set out the matters the Court must have regard to in determining leave applications.
24.The first is to ensure that parties do not unnecessarily seek to review assessments of child support going back over many years, given there are simple and easily accessible administrative processes for those matters to be determined within the Child Support Agency processes.
25. Secondly, as Judge Halligan said:
The Court must be satisfied the applicant has a prima facie case to have the assessments changed.
Secondly in determining whether the applicant has a prima facie case, his evidence on the issue is accepted without cross-examination unless inherently unbelievable or contradictory;
Thirdly the Court must consider whether there has been any delay by the applicant in bringing the application to change the relevant assessments and if so, who has responsibility for the delay;
Fourthly the Court must consider any hardship to be caused to all parties by granting or not granting the leave,
Finally any other relevant fact or circumstances.
(footnotes omitted)
In determining whether to grant leave or not, I must have regard to section 112 of the Child Support (Assessment) Act which sets out the matters to be considered, as recited above). The responsibility for that 17-month delay is entirely that of the Father. The reason for the delay is primarily because the point that may ultimately have some merit had not occurred to him, and he spent time and effort pursuing other rabbits down other burrows that came up with nothing.
Nonetheless, that delay in substance is 17 months. In the scheme of matters, including that the income received in the financial year ending 2022 was, to the mind of the insurance company paying it, to have regard to be spread over, notionally, at least 5 years, that 17 months delay is not of enormous proportion. Although there is some disadvantage and prejudice to both parties by that delay and I do take this into account.
By reason of the effluxion of time, some matters are not crisply within the memory or record accessibility of either of the parties. There is no responsibility for that delay that can be attributed to the Mother. There is no delay whatsoever on the Father’s part in applying for leave once he learned of the decision of 13 July 2023. He promptly applied and applied for leave the next day. I must consider the hardship to the Father if leave is not granted. The Father’s financial circumstances are very modest. He has no income. He has substantial equity in the home in which he lives. However, I am prepared to draw the inference that that is not palatial and, despite its valuable position, is of ultimately modest circumstances.
Some insight into his financial circumstances can be gained by the fact that he owns a motor car, but it is an old model in need of some repair, unregistered and uninsured. He asserts, and I accept, that he has not paid his gas bill for some time and has arrears in the order of $7000. The same applies in regard to his electricity bill; he has arrears in the order of some $7000. He has not paid his rates for some time and has arrears, he says, in the order of $7000. The Mother says that he has administration of substantial funds that belong to his mother. He may have. I do not have any evidence that would mean I could satisfactorily treat his mother’s money as his, whether or not he has control of it or administers it on her behalf.
Apart from the troubled investment in 3 B Street, the Father has a valuable but nonetheless modest home. He needs a home for himself and X when X is with him. I am satisfied that there would be hardship to the Father were leave not given to enable the registrar to consider his application. I am satisfied that there is no hardship, save for the inconvenience of having to put up with, and listen to, the Father go on about his modest circumstances, to the Mother. That is because I am not actually making the decision of whether the arrears will be scrapped or not.
I accept that there is substantial irritation to the Mother and some prejudice of the delay, but I am not satisfied that there is hardship to her of that matter being considered in all of the circumstances. It is clear that she will oppose the application that the Father will make. The Mother is of modest circumstances and works long and hard in full-time employment and, by careful budgeting and sensible expenditure, is able to survive in modest circumstances and provide for herself and X. However, I am satisfied that the Mother lives far from the lap of luxury and that the child support that the Father pays is a necessary and important and proper part of her household expenditure. I am satisfied that it costs her far more to support X than the modest amount the Father pays.
Decision
Nonetheless, balancing all the matters under section 112, I am satisfied that the registrar should be permitted on the Father’s application to consider the child support assessment on the grounds the Father presses for the period from 1 September 2020 to 10 October 2021 as the Father, by his counsel, has pressed before me this day. I am satisfied that the Father has informally kept the Child Support Registrar informed of this application, but I am not satisfied that he has formally served the registrar in the form as required under the rules and, to the extent necessary, I waive and vary those rules because I am satisfied that the Father’s regular communications with the Child Support Registrar has, in substance, kept the Child Support Registrar informed.
I also take into account the grief and unhappiness for both parents of their financial circumstances going on and on (and on and on and on). However, balancing all those matters, I am satisfied that it is proper and just and equitable that the registrar be permitted in the circumstances of this case to go back beyond the 18 months as specified under the Child Support (Assessment) Act 1989.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 31 October 2024
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