Puckett and Child Support Registrar (Child support)

[2019] AATA 5026

Puckett and Child Support Registrar (Child support) [2019] AATA 5026 (5 September 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC016413

APPLICANT:  Mr Puckett

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:Member J Longo

DECISION DATE:  05 September 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – late payment penalty - whether there were grounds to remit – whether the liable parent took reasonable action – not fair and reasonable to remit - decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Puckett was the parent liable to pay child support in four separate child support assessments. Two of the four assessments are still ongoing. The issue to be decided by the tribunal in this case is whether or not the late payment penalties should be remitted in part or in full.

2. According to Department of Human Services – Child Support (the Department) records, late payment penalties have been imposed on Mr Puckett since mid-1990. While some late payment penalties were partly paid by the interception of Mr Puckett’s refund from his income tax assessments, Mr Puckett had $52,389.73 in outstanding late payment penalties on 2 October 2018 when the Department issued a notice to recover outstanding child support arrears and late payment penalties. On 12 October 2018, the Department collected the outstanding arrears of child support and late payment penalties, totalling $102,546.64. 

3. Mr Puckett requested full remission of the late payment penalties accrued on his account, on the basis that he felt the amount imposed was unfair. On 29 October 2018, the Department refused Mr Puckett’s application for remission of late payment penalties of $52,389.73. Mr Puckett lodged an objection on 28 November 2018 and on 27 March 2019 an objections officer disallowed the objection.

4. Mr Puckett lodged an application for review with the Administrative Appeals Tribunal (the tribunal) on 26 April 2019. The matter was heard on 5 September 2019 and Mr Puckett gave sworn evidence in person. The tribunal also took into account the documents provided by the Department (384 pages) which were also provided to Mr Puckett prior to the hearing.

CONSIDERATION

1. The law relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Registration Act).

2. Mr Puckett told the tribunal that he acknowledged that he did not pay his child support for much of the period because he had difficulty with access to seeing his children. He admitted that this was the wrong thing to do and led to the arrears of child support in each of his four child support liabilities. Mr Puckett also stated that his financial circumstances were not properly taken into account which led to the arrears and subsequent late payment penalties being imposed. Mr Puckett stated that he was late in his payments but that many times he was late due to problems with being paid.

3. Mr Puckett stated that he lodged his income tax returns late because of laziness and withdrawal from society. As he was not seeing his children, he became depressed and was receiving treatment on and off throughout the period. Mr Puckett stated that when his depression was particularly bad he would see a psychologist.

4. The tribunal notes that there were numerous attempts throughout the period by the Department to collect child support arrears from Mr Puckett. Mr Puckett also made arrangements to pay his arrears of child support throughout the period, with the last arrangement ending in 2012, with substantial arrears still outstanding.

5. The tribunal further notes that the arrears and late payment penalties were recovered by the Department from his solicitor. Mr Puckett stated that he had taken action in relation to his mother’s will, which he contested because his sister had received her entire estate. The matter was resolved by a settlement agreement but the Department contacted his lawyer and recovered the outstanding amounts before he was paid the settlement.

10.Mr Puckett stated that he was intending to repay his arrears of child support once he had received the money from this inheritance as he wanted to clear the air and was sick of hiding his head in the sand in regard to his responsibilities for paying child support. Mr Puckett stated that he made an application to Court regarding the notice to recover this money but later withdrew the application because he was told by a staff member of the Department that the late payment penalties would be remitted. He was later told that the late payment penalties would not be remitted but this was after he had withdrawn the application.

11.Child support payments are registered and collected under the Registration Act. Penalties for late payment of child support are levied against the payer of child support by the Child Support Registrar under section 67 of the Registration Act if “the child support debt remains unpaid after the time when it became due and payable”.

12.Section 68 of the Registration Act provides that the Registrar (or tribunal standing in the shoes of the Registrar) may remit the late payment penalties or part thereof if particular conditions are met. By Mr Puckett’s own admission, he has directly contributed to the delay in payments of child support. As the circumstances which led to the delay in payment were caused directly by an act or omission of Mr Puckett, paragraph 68(1)(a) of the Registration Act does not apply.

13.Relevantly, paragraph 68(1)(b) of the Registration Act provides that in cases where the delay in payment was caused directly by an act or omission of Mr Puckett, late payment penalties can only be remitted if a person has taken reasonable action to mitigate the circumstances that led to the late payment, or the effect of those circumstances. Furthermore, as the three requirements under paragraph 68(1)(b) of the Registration Act are not mutually exclusive, the tribunal must also be satisfied that in regard to the nature of those circumstances, it is fair and reasonable to remit all or part of the late payment penalties (paragraph 68(1)(b) of the Registration Act).

14.In this case, the tribunal accepts that there were occasions when Mr Puckett did initiate collection through arrangements to repay the arrears and ongoing liability. However, it is also clear that Mr Puckett did not maintain these payments and also failed to advise the Department of changes in his circumstances or lodge his tax returns in a timely manner prior to 2018.

15.The tribunal acknowledges the impact of income irregularities throughout the period under review however the tribunal cannot be satisfied that Mr Puckett has taken reasonable action to mitigate the effects of the difficulties in finding secure employment as he failed to keep the Department updated in respect of his circumstances. Therefore, the tribunal finds that the requirement under subparagraph 68(1)(b)(ii) of the Registration Act has not been satisfied. Consequently, all three requirements of paragraph 68(1)(b) cannot be met and the tribunal finds that the late payment penalties cannot be remitted under this section.

16.The tribunal then turned to paragraph 68(1)(c) of the Registration Act which provides a discretion to the decision maker to remit the late payment penalties, or part thereof, if satisfied that “special circumstances” exist which make it “fair and reasonable” to do so. The Child Support Guide (the Guide), the Department’s online policy and legislation resource states that such discretion is to be used in a way that will further the objectives of the child support scheme. According to the Guide, the purpose of a late payment penalty is to encourage parents to comply voluntarily with their obligation to pay child support and discourage late payment.

17.The meaning of “special circumstances’’ is not defined in the Registration Act or the Act. However, the tribunal was guided by the courts, who have concluded that the expression relates to the facts peculiar to each case such that those facts are “out of the ordinary” and set the case apart from the usual case (Gyselman & Gyselman (1992) FLC 92-279 and Phillippe and Phillippe (1978) FLC 90-433). Although not limited to, the Guide gives examples of special circumstances such as a serious accident, being unaware of the registration of the liability, an unexpected and unavoidable expense, serious health problems or the payer acting on incorrect advice.

18.In response to the tribunal’s questions, Mr Puckett stated that there were no special circumstances in his matter other than the unfairness in having accrued the amount of late payment penalties. The tribunal notes that the arrears and late payment penalties were recovered due to Department action rather than due to any action on the part of Mr Puckett. As to whether it is “fair and reasonable” to remit any part of the late payment penalties, the tribunal carefully considered Mr Puckett’s current circumstances. The tribunal has, on balance, found that no special circumstances exist to remit the late payment penalties in this matter.

DECISION

The decision under review is affirmed.