Rivera and Child Support Registrar (Child support)

[2023] AATA 2931

Rivera and Child Support Registrar (Child support) [2023] AATA 2931 (3 July 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC025520

APPLICANT:  Mr Rivera

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:Senior Member M Kennedy

DECISION DATE:  3 July 2023

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 removed 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

1. On 23 March 2022, Mr Rivera wrote to the Child Support Registrar (“Child Support”) requesting the remission of a late payment penalty accrued on his account.  On 11 August 2022 Child Support wrote to Mr Rivera advising of its decision to refuse to remit the late payment penalty of $40,622.66.

2. Mr Rivera objected to that decision on 16 August 2022.  On 19 November 2022 the objection was disallowed.

3. Mr Rivera applied to the Tribunal for review on 22 December 2022.

4. Mr Rivera participated in a telephone hearing on 30 May 2023, but I abandoned the hearing when it became apparent that Mr Rivera did not have the Tribunal papers and I could not establish from the Tribunal’s records that Child Support had sent the papers to him.  On that occasion I revisited an earlier decision I had made to refuse Mr Rivera permission to be represented in the proceedings by his partner, [Ms A].  Mr Rivera gave evidence that his participation in the review process was affected by a medical condition. I granted permission for Mr Rivera to be represented by [Ms A] and issued a non-disclosure order to her.

5. Mr Rivera and [Ms A] participated in the resumed hearing on 3 July 2023.

Legislative framework

1. The child support law contains provisions for administrative penalties to be applied to a child support account where a parent fails to pay their child support liability by the due date.  By the time of Mr Rivera’s request to remit late payment penalties, Mr Rivera had accrued $40,622.66 as a late payment penalty.

2. Section 68 of the Child Support (Registration and Collection) Act 1988 (the Act) provides for a discretion to remit the whole or part of a late payment penalty subject to certain criteria as follows:

   If a… late payment penalty is payable by a person and

   (a)  the Registrar is satisfied that:

   (i)  the circumstances that contributed to the delay in payment of the debt were not due to, or caused directly or indirectly by, an act or omission of the person; and
   (ii)  the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; or

   (b)  the Registrar is satisfied that:

   (i)  the circumstances that contributed to the delay in payment of the debt were due to, or caused directly or indirectly by, an act or omission of the person; and
   (ii)  the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; and
   (iii)  having regard to the nature of those circumstances, it would be fair and reasonable to remit the late payment penalty or part of the late payment penalty; or

(c)  the Registrar is satisfied that there are special circumstances by reason of which it would be fair and reasonable to remit the late payment penalty or part of the late payment penalty;

the Registrar may remit the late payment penalty or part of the late payment penalty.

1. I must therefore decide whether any of the identified criteria are satisfied, and if so whether the late payment penalty or part of the late payment penalty should be remitted. 

The circumstances in which the penalty accrued

1. A detailed submission was prepared within child support setting out the circumstances in which the penalty accrued and providing reasons why a decision maker might decide not to remit the penalty.

2. Relying on that document, at the hearing I took Mr Rivera through the events and circumstances identified by Child Support noting as follows:

• Mr Rivera has two child support cases: one with Ms B commenced on 14 August 2000 and ended on 25 May 2021, and the other with Ms S commencing on 14 October 2005 and ending on 17 April 2021.

• Mr Rivera has been in arrears of his child support liability since 8 January 2010.

• Mr Rivera’s liability has been set from time to time by a change of assessment process:

  ·1 December 2009 to 30 November 2011;

  ·1 January 2012 to 7 February 2013;

  ·8 February 2013 to 27 January 2014;

  ·28 January 2014 to 31 December 2016; and

  ·1 January 2017 to 15 January 2022.

• While disagreeing with the outcome of those decisions, Mr Rivera did not seek review of those decisions at the time.

• In August 2017, Mr Rivera was referred for consideration for a departure prohibition order and debt enforcement.

• A departure prohibition order was placed on Mr Rivera on 19 February 2018 and a letter of demand issued on 26 April 2018.

• During negotiations Mr Rivera sought review of his assessments but was unsuccessful. 

• Child Support became aware that Mr Rivera was a beneficiary of his mother’s estate and garnisheed the outstanding amount.  A second garnishee order was issued to his late brother’s estate.

• Mr Rivera commenced litigation against Child Support in relation to the garnishee notices, but Child Support received $171,906.31 in December 2019.  Mr Rivera commenced further litigation, but his litigation was not successful. 

• Payments in respect of Mr Rivera’s child support liabilities totalling $268,074.21 have been received via taxation refund intercepts, employer deductions, small payments by EFT and the garnishee process. The majority of funds paid towards the liability have been paid through enforcement action.

Mr Rivera’s case for the remission of the penalty

1. In responding to that chronology, Mr Rivera submitted that the reason he had not kept up with his payments was that the amount of money Child Support thought he had was unheard of.  He said that no matter what he did to have it assessed correctly he was just ignored.  Mr Rivera said that his accountant was told that he should not bother trying to contest it.

2. In response to my questions, Mr Rivera confirmed that he had not sought review of the assessments in the AAT.  He said that he never had a real grasp of the whole process, he tried to do what he could but would just be ignored.  Mr Rivera said he eventually made multiple objections but Child Support refused because they were late.

3. Mr Rivera referred to a conversation documented in the papers at T30 between Child Support and his accountant.  Mr Rivera pointed out that his accountant was told on that occasion (in the context of a discussion about extension of time decisions) that the opportunity to lodge with the AAT was null, but Mr Rivera should investigate this further and speak directly to the AAT.

4. I asked Mr Rivera to explain why he did not seek review of the decisions he was aggrieved with at the AAT.  Mr Rivera said he didn’t know how it worked, and he thought he was doing all the right things.  I observed that Mr Rivera had had been able to bring the current proceedings to the AAT, and had also commenced litigation against the Commonwealth in relation to the garnishee action, and the availability of AAT review is also explained in every decision letter that is issued.  I explained I was having difficulty understanding why he had not pursued his review rights.  Mr Rivera explained that he needed to consult a lawyer when Child Support were trying to take everything his mother had left him, and the lawyer steered the matter for him.

5. I noted a reference in the Tribunal papers to the effect that Mr Rivera had not even paid the amount of child support that he thought he should pay if the change of assessment decisions had not been made.  Mr Rivera explained that he had paid in the beginning but when they started throwing ridiculous numbers and tried the garnishee action he knew they were getting paid something.

6. Mr Rivera asked that I take into account a number of circumstances during the period within which the arrears accrued.  These circumstances are set out in written submissions (particularly those of 16 August 2022) which I have taken into account and formed the framework of my discussions with Mr Rivera.

7. Mr Rivera described suffering a back injury in 2013.  He said he hasn’t returned to work, in the sense of being back on the tools, since that injury.  Mr Rivera said that he had to put on staff to run his business.  In response to my question as to why he couldn’t pay child support from the income he received as the owner of the business, Mr Rivera said he wasn’t earning an income as such and just spent what he needed to in order to live.

8. Mr Rivera also referred to his business being subject to a winding up order initiated by the Australian Taxation Office.  He explained that this was largely due to errors made by a previous accountant, but the process to correct it and come to an arrangement with the ATO was very stressful.  I asked Mr Rivera to elaborate on why his dealings with the ATO were relevant to his request to have the late payment penalty remitted.  Mr Rivera said he didn’t know what might be relevant.

9. Mr Rivera also addressed the circumstances of his late mother and brother’s passing, explaining that these events were very stressful, elaborating on the details which are unnecessary to reproduce in these Reasons.

10. Reflecting on the matters Mr Rivera had raised, and the focus in the legislation on steps taken to mitigate the effects of circumstances resulting in the late payment of a child support liability, I asked Mr Rivera to identify examples of any measures he had taken to mitigate the effects of the late payment.  Mr Rivera reiterated that every time he called Child Support he was ignored and told the decision could not be changed.

11. Mr Rivera also identified the more recent circumstances of a fire at his workshop, and also took me to an extract of the Tribunal papers (T41) which describes his circumstances as ‘asset rich and cash poor’.  Mr Rivera considered this statement demonstrated the underlying error in all the child support assessments, adding that his assets are all mortgaged to the hilt and were acquired in unusual circumstances that were highly favourable to him.

CONSIDERATION

1. As to whether I can identify circumstances that contributed to the delay in payment of the debt that were not due to, or caused directly or indirectly by, an act or omission of Mr Rivera, I note that Mr Rivera has pointed to generally feeling helpless and ignored in his dealings with Child Support, and never having a full understanding of the steps he could take to seek review of decisions.  Mr Rivera has also referred to the passing of his mother in 2015 and the associated emotional trauma compounded by the actions of his siblings.

2. I am not satisfied that these matters amount to circumstances contributing to the delay in payment of the debt not caused directly or indirectly to an act or omission of Mr Rivera.

3. In relation to Mr Rivera’s failure to seek review of the underlying assessment decisions, I do not accept that the failure to take up those opportunities is due to any circumstances other than Mr Rivera’s decision at the time not to pursue them.  I do not accept that the review process for child support decisions is inaccessible or obscured.  The availability of objection rights and review rights to the AAT are overtly communicated in notifications of decisions. 

4. Furthermore, and in any event, these matters are not directly connected with the delay in the payment of the debt.  It is possible to be dissatisfied with an assessment and still make payments in respect of it. 

5. While acknowledging the difficult circumstances encountered by Mr Rivera in relation to his injury, dealing with the ATO and the passing of his mother and brother and the stressors surrounding those events, I am not satisfied that these events, as difficult as they were, contributed to the delay in payment of the child support liability.

6. I am not satisfied that any of the circumstances the subject of Mr Rivera’s evidence and submissions can be described as circumstances that contributed to the delay in payment of the debt that were not due to, or caused directly or indirectly by, an act or omission of Mr Rivera. 

7. As such, the criterion provided for by paragraph 68(1)(a) cannot be established.

8. The second alternative criterion, at paragraph 68(1)(b) of the Act, provides for circumstances that contributed to the delay in payment of the debt being within Mr Rivera’s control.  Like paragraph 68(1)(a) above, however, the criterion requires that I be satisfied that Mr Rivera has taken reasonable action to mitigate, or mitigate the effects of circumstances that were within his control that contributed to the delay in payment of the debt.

9. I have reviewed all of the circumstances in which the debt accrued, and Mr Rivera’s evidence, with an eye attuned for the identification of steps Mr Rivera may have taken to mitigate the effect of the delay in payment of the child support debt, but can identify no such action.

10. I accept the narrative provided by Child Support to the effect that the majority of funds paid towards the debt have been paid as a result of enforcement action.  I also note Mr Rivera’s response to my question as to why he did not even pay the amount of child support he thought he should pay.  These circumstances contradict any suggestion that Mr Rivera had acted to mitigate the effect of the delay in payment.

11. Furthermore, while Mr Rivera had every right to challenge the lawfulness of Child Support’s enforcement action in the Courts (and I have limited information about the basis of that challenge other than it was ultimately unsuccessful), that challenge to the garnishee action further delayed the distribution of the proceeds to the parents entitled to child support. This further demonstrates the absence of any step taken to mitigate the effect of the late payment.

12. As such, the criterion provided for by paragraph 68(1)(b) of the Act cannot be established.

13. Finally, I have considered the whole of Mr Rivera’s case as articulated to me against the alternative criterion at paragraph 68(1)(c) of the Act.  In that regard I must be satisfied both that there are special circumstances and that it would be fair and reasonable by reason of those circumstances to remit the whole or part of the late payment penalty.

14. While I acknowledge the difficult life stressors faced by Mr Rivera over time as he has described, these matters have limited connection with his obligation to pay child support.  Mr Rivera’s conduct in failing to seek administrative review of the decisions he disagrees with, failing to make voluntary payments over an extended period of time, and delaying the distribution of funds garnisheed by taking unsuccessful legal action tends to detract from the proposition that it would be fair and reasonable to remit the late payment penalty in light of any special circumstances.  While I understand that Mr Rivera considers the change of assessment processes have over assessed his capacity to pay child support, I cannot consider his circumstances on an assumption that this is so.

15. Ultimately, after considering all the circumstances of this matter and the matters Mr Rivera has asked that I take into account, I am not satisfied that there are any special circumstances arising in this case by reason of which it would be fair and reasonable to remit the whole or part of the late payment penalty. 

DECISION

The decision under review is affirmed.