QVRC and Child Support Registrar
[2015] AATA 271
•29 April 2015
[2015] AATA 271
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/5887
Re
QVRC
APPLICANT
And
Child Support Registrar
RESPONDENT
DECISION
Tribunal Dr Gordon Hughes, Member
Date 29 April 2015 Place Melbourne The Tribunal sets aside the decision under review but notes that this determination is rendered redundant by the fact that the period of proposed travel has now passed and that any future application for a Departure Authorisation Certificate would have to be re-appraised in light of the circumstances as they exist at that future time.
[sgd]........................................................................
Dr Gordon Hughes, Member
It is noted that publication of this decision is approved by the Administrative Appeals Tribunal pursuant to s 110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth).Departure Authorisation Certificate – whether security offered by a third party acceptable – whether the Registrar is obliged to follow the Child Support Guide – whether security must be readily convertible to cash
Legislation
Child Support (Registration and Collection) Act 1998 (Cth) s 72D,72I, 72L, 72M
Cases
Eid and Commissioner of Taxation [1998] AATA 73
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Wetzell and Child Support Registrar [2005] AATA 60 Whittaker v Child Support Registrar (2010) 264 ALR 473
Secondary Materials
Australian Government, Child Support Guide, Version 4.06 (9 February 2014)
REASONS FOR DECISION
Dr Gordon Hughes, Member
29 April 2015
The issue before the Tribunal was whether the respondent should refuse to issue a Departure Authorisation Certificate (DAC) to the applicant for the period between 12 November and 22 November 2014, on the grounds that the criteria in section 72L of the Child Support (Registration and Collection) Act 1998 (the Act) were not satisfied.
The parties agreed that the application centred upon the requirements of section 72L(3)(a) of the Act; namely, whether the applicant had provided security under section 72M for his return to Australia.
The applicant is 48 years old and is self-employed as a telecommunications consultant. He has travelled regularly for business over the past 20 years. He is the father of a child born in 2003.
On 30 November 2009 the applicant's estranged wife lodged a Change of Assessment Application, seeking an increase to the assessment of child support. On 10 January 2010 a Senior Case Officer set the applicant's adjusted taxable income at $100,000 between 30 November 2009 and 29 November 2011. An objection by the applicant to this Change of Assessment was disallowed.
The applicant sought review of this decision by the Social Security Appeals Tribunal (SSAT). On 9 February 2011 the SSAT set aside the Change of Assessment decision. The SSAT substituted a decision that the issues raised by the application were complex and that consequently, an application should be made to a court. On 14 June 2013 the Federal Circuit Court made an order setting the applicant's annual salary at $100,000 from 30 November 2009 to 30 June 2014.
The applicant subsequently advised the respondent of his intention to travel overseas in mid-September 2013. On 13 September 2013, however, the respondent issued a Departure Prohibition Order (DPO) due to arrears in child support payments following the creation of the backdated debt and the applicant's failure to make satisfactory arrangements for the liability to be wholly discharged. Specifically, the applicant was advised in a letter from the respondent dated 13 September 2013 that the DPO had been issued because there was an outstanding child support debt, satisfactory arrangements had not been made to pay the entire debt, the applicant had persistently and without reasonable grounds failed to pay his child support debts and that there were, in these circumstances, reasonable grounds to make an order to ensure that he did not leave Australia without paying the entire debt or making satisfactory arrangements to do so.
The applicant applied for a DAC) in November 2013 in order to undertake business travel in January 2014, offering $5,000.00 security. On 2 January 2014, the respondent made a decision to refuse to issue a DAC on the basis that the security was insufficient.
In October 2014, the applicant's solicitors advised the respondent that the applicant wished to travel overseas, from 12 November to 22 November 2014. A charge in favour of the respondent over real estate registered in the name of Combourne Pty Ltd was proffered. The amount of payments outstanding at the time was in the vicinity of $30,000.00. Rates notices showed the value of the property to be $730,000.00, and a bank statement revealed a mortgage of $540,000.00.
The applicant's request for a DAC was rejected on 10 November 2014. In rejecting the application, the respondent took account of the criteria contained in section 72L(2) of the Act. The respondent advised the applicant, in a letter dated 10 November 2014, that the application for a DAC had been refused on the grounds that it was unlikely the DPO issued against him would be revoked within an appropriate period; the applicant had not provided the required security for his return to Australia; humanitarian grounds had not been established; and there was no evidence that a refusal to issue a DAC would be detrimental to Australia's interests.
LEGISLATION
Section 72D of the Act provides as follows:
72D Registrar may make departure prohibition orders
(1)The Registrar may make an order (a departure prohibition order) prohibiting a person from departing from Australia for a foreign country if:
(a)the person has a child support liability; and
(b)the person has not made arrangements satisfactory to the Registrar for the child support liability to be wholly discharged; and
(c)the Registrar is satisfied that the person has persistently and without reasonable grounds failed to pay:
(i) child support debts arising from a registrable maintenance liability under section 17; or
(ii) a child support debt arising from a registrable maintenance liability under section 17A; or
(iii) one or more child support debts arising from a registrable overseas maintenance liability under subsection 18A(1), paragraph 18A(3)(a) or subsection 18A(4) (insofar as subsection 18A(4) relates to subsection 18A(1) or paragraph 18A(3)(a)); and
(d)the Registrar believes on reasonable grounds that it is desirable to make the order for the purpose of ensuring that the person does not depart from Australia for a foreign country without:
(i) wholly discharging the child support liability; or
(ii) making arrangements satisfactory to the Registrar for the child support liability to be wholly discharged.
(2)For the purposes of paragraph (1)(c), the Registrar must have regard to the following matters:
(a)the capacity of the person concerned to pay the debt or debts;
(b)the number of occasions on which action has been taken to recover the debt or debts, and the outcome of the recovery action;
(c)if subparagraph (1)(c)(i) applies—the number of occasions on which the debts mentioned in that subparagraph had not been paid on or before the day on which they became due and payable;
(d)if subparagraph (1)(c)(ii) applies—the length of time for which the debt mentioned in that subparagraph has remained unpaid after the day on which it became due and payable;
(da)if subparagraph (1)(c)(iii) applies:
(i) the length of time for which the debts mentioned in that subparagraph have remained unpaid after the day on which they became due and payable; and
(ii) the number of occasions on which the debts mentioned in that subparagraph had not been paid on or before the day on which they became due and payable;
(e)such other matters as the Registrar considers appropriate.
(3)A departure prohibition order must be in the approved form.
Note:For approved form see section 72X.
Section 72M(1) of the Act provides as follows:
72M Security for person’s return to Australia
(1)A person may give such security as the Registrar considers appropriate by bond, deposit or any other means, for the person's return to Australia by such day as is agreed by the person and the Registrar and is specified in the departure authorisation certificate.
Section 72L of the Act provides as follows:
72L When Registrar must issue departure authorisation certificate
(1)This section applies if a person makes an application under section 72K for a departure authorisation certificate.
(2)The Registrar must issue the departure authorisation certificate if the Registrar is satisfied:
(a)that, if the certificate is issued:
(i) it is likely that the person will depart from Australia and return to Australia within a period that the Registrar considers appropriate; and
(ii) it is likely that, within a period that the Registrar considers appropriate, the Registrar will be required by subsection 72I(1) to revoke the departure prohibition order in respect of the person; and
(b)that it is not necessary for the person to give security under section 72M for the person’s return to Australia.
(3)If the Registrar is not satisfied as mentioned in subsection (2), the Registrar must nevertheless issue the departure authorisation certificate if:
(a)the person has given security under section 72M for the person’s return to Australia; or
(b)if the person is unable to give such security, the Registrar is satisfied:
(i) that the certificate should be issued on humanitarian grounds; or
(ii) that refusing to issue the certificate will be detrimental to Australia’s interests.
Discussion
Essentially, the Tribunal's decision turns upon the wording of section 72M(1) of the Act, specifically the intention expressed by the words a person may give such security as the Registrar considers appropriate…for the person's return to Australia.
Is security offered by a third party acceptable?
The respondent asserted that the reference in section 72M(1) to a person, and the reference to the person's return, expressly contemplated an individual personally providing security for their own return to Australia.
It was not, in the respondent's contention, possible for a third party entity, in this case Company Pty Ltd, to give security for the applicant's return to Australia.
The respondent cited in support of this contention the Tribunal's decision of Eid and Commissioner of Taxation [1998] AATA 73 which considered a similar provision under the Taxation Administration Act 1953 (Cth). In that case, security had been offered over four houses owned by the applicant's friends and Deputy President McMahon concluded that the security was inadequate on the grounds that the applicant himself had not given security and that there was no evidence of any financial impairment which the applicant is prepared to undergo in order to secure the Commissioner's satisfaction that he will return.
In the context of section 72D, the respondent further cited a decision of the Federal Court of Australia, Whittaker v Child Support Registrar (2010) 264 ALR 473, in which Lindgren J said that
the terms of s 72D(1) show that a DPO is intended to ensure that a person does not depart from Australia without either wholly discharging his or her child support liability or else making arrangements satisfactory to the Registrar for its discharge.
His Honour added that a DPO is not security in a proprietary sense but does nevertheless represent a procedure designed to prevent recovery being frustrated. The respondent contended that, by analogy, the issue of a DPO in this instance should act as a form of security for the payment of a child support liability and this requirement was not satisfied where the security offered for the applicant's return was to be provided by someone else on his behalf.
The applicant contended that security offered by a third party should be regarded as adequate, particularly in this instance, where the applicant's sister was a director of the company offering the security. The applicant cited the Tribunal's decision in Wetzell and Child Support Registrar [2005] AATA 607, which dealt with a situation where the applicant had offered $7,000.00 in the form of money borrowed from his brother. The Tribunal accepted the security as being adequate, and Senior Member Constance stated (at paragraph 14):
On the facts before me, I am satisfied that the $7,000.00 offered as security, is a loan to Mr Wetzell from his brother. It has been argued on behalf of the Registrar that if Mr Wetzell is provide that $7,000.00 by way of security, he is not in fact giving the security as required by the Act. I do not accept this argument. It is my view that if Mr Wetzell borrows money from his brother and provides this money as security, he is in fact giving a security. It would be no different if Mr Wetzell was to borrow the money from a bank, use an overdraft facility, or in some way raise that money by way of loan.
The respondent countered by arguing that not only was the applicant himself not incurring any liability, but neither was his sister, who was a director of the company. Rather, only the company was incurring any liability. This presented a range of practical difficulties as there could be time and cost implications to the Registrar in converting security to cash.
The Tribunal has some difficulty with the respondent's contention that, in principle, security offered over a property owned by a third party is incapable of satisfying the requirements of section 72M(1). The primary question is whether security has been offered, and in this case it has been. The objective of the security is to ensure that, in the event of the applicant’s defaulting by failing to return to Australia, his existing debt will be paid. If the security is adequate in a financial sense, the fact that it is provided by a third party should not be to the point.
Is the Registrar obliged to follow the Child Support Guide?
The Tribunal is aware that any security must, under section 72M, be such that the Registrar considers appropriate.
On the question of what the Registrar might consider appropriate, reference needs to be made to the Child Support Guide (the Guide). The Guide states that the Registrar will only accept security that is, inter alia, offered by the debtor rather than third parties and which is in a form readily convertible to cash. This gives rise to a threshold issue, namely, whether the Registrar is obliged to follow the Guide. If so, then regardless of the Tribunal's views as expressed above, the security offered by the applicant will necessarily be inadequate because it is offered by a third party.
The respondent submitted that the Tribunal is obliged to apply the policy, citing Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. This interpretation was disputed by the applicant who argued that the Guide was not binding. According to the applicant, the Guide should give assistance with decision making, but should not provide the sole framework for doing so.
The applicant referred to the observations by Brennan J in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 in which his Honour stated, in the context of departmental policy:
Of course, a policy must be consistent with the statute. It must allow the Minister to take into account the relevant circumstances, it must not require him to take into account irrelevant circumstances, and it must not serve a purpose foreign to the purpose for which the discretionary power was created…[T]he Minister's policy [should not] preclude consideration of relevant arguments running counter to an adopted policy which might be reasonably advanced in particular cases…[T]he Minister must decide each of the cases…on its merits. His discretion cannot be so truncated by a policy as to preclude consideration of the merits of specified classes of cases.
The applicant also emphasised that the introduction to the Guide itself stipulates that it is not intended to be the only basis for a decision.
The Tribunal is of the opinion that the Guide cannot be regarded as binding on the Registrar. The Registrar has a statutory obligation to give personal consideration as to whether any security offered is appropriate. The Guide assists in identifying issues which should properly inform the Registrar in exercising this discretion, but it cannot constrain the ultimate exercise of that discretion.
Is the security readily convertible to cash?
Assuming, on this basis, that the Registrar is entitled to accept security offered by a third party, the next question becomes whether there are other factors which might render inappropriate the security offered by the applicant in this instance. In this respect, it is still relevant to consider whether the security is in a form readily convertible to cash.
It must be emphasised that the requirement that the security be readily convertible to cash reflects government policy rather than a specific legislative requirement, although it is a logical consideration in respect of whether the security is appropriate in all the circumstances. The applicant contended that the security he offered was, in effect, readily convertible to cash. It was not the same as cash in the bank but there was a right of enforcement through the courts.
The respondent contended that the security was not readily convertible to cash on the basis that the enforceable rights of a secured creditor could vary considerably according to a number of different legal factors and there were many situations under which a security could lose priority. The charge, once executed, would require the Registrar to take legal action in order to enforce payment, which could be time consuming, complicated and costly.
In the Tribunal's opinion, the mere fact that security is offered against real estate owned by a third party should not, of itself, render the security as being not readily convertible to cash. That there might be complications with secured creditors, or that it might be necessary to initiate proceedings to enforce the security, are potential issues confronting the realisation of any security. At face value, and in the absence of any evidence to suggest otherwise, the Commonwealth will have obtained security sufficient to secure its interest in the applicant’s meeting his outstanding child support debt. There is no evidence – as distinct from speculation − that the security is not readily convertible to cash.
Is the security appropriate in all circumstances?
It remains for the Registrar to exercise a discretion over whether a security, in whatever form it is offered, is appropriate in all the circumstances. This is so notwithstanding the Tribunal’s conclusion, at this point, that the Registrar is not obliged to follow the Guide, that security offered by a third party may be acceptable and that security over property owned by a third party can, in appropriate circumstances, be considered readily convertible to cash.
In this regard, the respondent pointed to the applicant's history of recalcitrance and lack of transparency; his unwillingness to make any payments in satisfaction of the liability currently outstanding; the fact that during the 17 months between 8 June 2013 and 10 November 2014 (when the delegate decided to refuse to issue a DAC), the applicant had only contributed $77.25 towards his liability; and, generally, the applicant's unwillingness to enter into, or even discuss, a satisfactory arrangement to address the outstanding amount.
The applicant's representative emphasised that the applicant was not a flight risk. He has significant ties to Australia. He does not own real estate in his own name, but there was no dispute that the applicant's intended journey overseas was a legitimate business trip, consistent with his previous practices.
Ultimately, the applicant's past behaviour, attitude and demeanour are not to the point, if one accepts that adequate and enforceable security has been offered in relation to his existing child support debt. A DAC must be issued. There will, in effect, be no outstanding liability.
It is important that the question of the applicant's prior conduct is not confused with the adequacy of the security. If the security is sufficient to ensure that the applicant's debt will be paid in the event that he defaults upon returning from overseas, then regardless of the applicant's prior conduct, the Registrar is obliged under section 72L(3)(a) to issue a DAC.
Relevance of this determination
There remains one final consideration in this matter. These proceedings relate to an appeal against a decision by the Registrar not to issue a DAC in respect of travel proposed by the applicant between 12 November and 22 November 2014. That period has now passed. In this respect, the Tribunal's determination that the applicant was entitled to be issued with a DAC in November 2014 is of no practical consequence. This decision has no direct bearing upon the adequacy of any security offered by the applicant in respect of a future application for a DAC. The same security may be offered but its adequacy, in a financial sense, would have to be re-appraised in light of the circumstances existing at the time of the proposed future travel. Apart from anything else, it would be necessary to consider, as at the date of the proposed travel, the value of the property, the amount of the mortgage and any evidence then affecting the ability of the respondent to convert the security to cash in the event of default by the applicant.
DECISION
38. The Tribunal sets aside the decision under review but notes that this decision is rendered redundant by the fact that the period of proposed travel has now passed; and that any future application for a Departure Authorisation Certificate would have to be re-appraised in light of the circumstances as they exist at that time.
I certify that the preceding 38 (thirty-eight) paragraphs are a true copy of the reasons for the decision herein of Dr Gordon Hughes, Member.
[sgd]........................................................................
Associate
Dated 29 April 2015
Date of hearing 16 February 2015 Date final submissions received 13 February 2015 Advocate for the Applicant
Solicitors for the Applicant
Mr J McClelland
Carew Gartlan McClelland
Advocate for the Respondent Mr N Anawati, Department of Social Services
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