Roughan and Child Support Registrar (Child support)

[2018] AATA 352

Roughan and Child Support Registrar (Child support) [2018] AATA 352 (26 February 2018)

Division:GENERAL DIVISION

File Number(s):      2017/0810

Re:Michael Gerard Roughan

APPLICANT

AndChild Support Registrar

RESPONDENT

DECISION

Tribunal:Senior Member A Poljak

Date:26 February 2018

Place:Sydney

The decision under review is set aside and in substitution find that the applicant satisfies section 72I(1)(b) of the Child Support (Registration and Collection) Act 1988 (Cth) and the Departure Prohibition Order of 2 September 2016 be revoked.

.......................[sgd].............................................

Senior Member A Poljak

CATCHWORDS

CHILD SUPPORT – Departure Prohibition Order (“DPO”) – child support debt –satisfactory arrangement in place for debt to be wholly discharged – debt not irrecoverable – discretion to revoke or vary – basis for revocation of DPO – decision under review set aside

LEGISLATION

Child Support (Assessment) Act 1989 (Cth) s 106A(6)

Child Support (Registration and Collection) Act 1988 (Cth) ss 3, 72A, 72D, 72E, 72I and 116(2)

CASES

Naboush v Child Support Registrar [2014] AATA 930

Whittaker v Child Support Registrar (2010) 264 ALR 473

SECONDARY MATERIALS

The Child Support Guide

REASONS FOR DECISION

Senior Member A Poljak

26 February 2018

1. On 7 November 2000, an application for a child support assessment was made in respect of a child of the applicant, Mr Roughan (“the child”). The child support assessment application was subsequently refused as it was not established that the applicant was the parent of the child.

2. On 7 May 2015, the Magistrates Court of Western Australia found that the applicant was the father of the child. In accordance with section 106A(6)(a) of the Child Support (Assessment) Act 1989 (Cth) (“the AssessmentAct”), the Child Support Registrar (“the Registrar”) was then taken to have accepted the application for child support assessment lodged on 7 November 2000.

3. On 20 August 2015, the Registrar issued assessments in respect of the child from 7 November 2000, and a child support liability of $148,814.56 was raised against the applicant. The applicant lodged an objection to the decision that he was required to pay child support from 7 November 2000, however his application was unsuccessful.

4. As a consequence of the applicant’s child support liability, the Registrar issued a Departure Prohibition Order (“DPO”) on 2 September 2016 pursuant to section 72D of the Child Support (Registration and Collection) Act 1988 (Cth) (“the Act”).

5. The applicant applied for a revocation of the DPO.

6. On 1 November 2016, the Registrar refused to revoke the DPO on the basis that the applicant did not satisfy section 72I of the Act. The applicant seeks review of this decision.

7. The issues to be determined in these proceedings are:

   (a)whether the applicant has a child support liability within the meaning of section 72E of the Act; and

   (b)if so:

   (i)whether satisfactory arrangements have been made for the liability to be wholly discharged; or

   (ii)the liability is completely irrecoverable.

   (c)whether it is otherwise desirable to revoke or vary the DPO.

   RELEVANT LEGISLATIVE PROVISIONS

8. Section 3(1) of the Act provides that the principal objects of the Act are to ensure:

   (a)  that children receive from their parents the financial support that the parents are liable to provide; and

   (b)  that periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis; and

   (c)   that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.

9. Pursuant to subsection 3(2) of the Act, it is the intention of the Parliament that the Act shall be construed and administered, to the greatest extent consistent with the attainment of its objects.

10. Section 72D of the Act authorises the Registrar to issue a DPO provided four conditions are met, namely: (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; 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 wholly discharging the child support liability; or making arrangements satisfactory to the Registrar for the child support liability to be wholly discharged.

11. In Whittaker v Child Support Registrar (2010) 264 ALR 473, the nature and purpose of a DPO was discussed by Lindgren J at [291] and [292]:

    [291] …Generally speaking, 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 making arrangements satisfactory to the Registrar for its discharge. While a DPO is not security in a proprietary sense, it is security in a broader sense of a procedure designed to prevent recovery being frustrated.

    [292] It may be that the present submission is intended to distinguish between a purpose of preventing a particular imminent departure from Australia and a more general prevention of any departure from Australia. In my view even the latter is within para (b) of s 72D(1). That is to say, that paragraph is satisfied if the Registrar believes on reasonable grounds that it is “desirable” to make the DPO for the purpose of “ensuring” (a strong word: see Troughton v Deputy Commissioner of Taxation (2008) 166 FCR 9 at [20]) that the person does not depart at any time in the future from Australia for any foreign country without first discharging the child support liability or making arrangements satisfactory to the Registrar for its discharge. (Emphasis added)

12. Section 72I(1) of the Act prescribes the circumstances where the Registrar must revoke a DPO and provides:

    (1)  The Registrar must revoke a departure prohibition order in respect of a person if:

    (a)  the person no longer has a child support liability; or

    (b)  the person has a child support liability, but arrangements satisfactory to the Registrar have been made for the liability to be wholly discharged; or

    (c)  the person has a child support liability, but the Registrar is satisfied that the liability is completely irrecoverable.

13. However, s 72I(3) provides that the Registrar may, at the Registrar’s discretion, revoke or vary a DPO in respect of a person if the Registrar considers it desirable to do so.

    CONSIDERATION

    Child support liability

14. The applicant currently has a child support liability as defined in section 72E of the Act. That section provides that a person has a child support liability if the person has a registrable maintenance liability in an amount payable under the Act. A registrable maintenance liability is a “child-support debt” where the liability remains unpaid in whole or in part.

15. There is no dispute on the material before me that the applicant continues to have a child support liability within the meaning of s 72E of the Act. A Certificate under subsection 116(2) of the Act, confirms the applicant owes a debt payable to the Commonwealth in relation to a registrable maintenance liability. The debt encompasses maintenance liabilities in the amount of $88,441.12 in child-support debt and $14,973.54 in penalties. The debt remains unpaid as at 21 April 2017. Accordingly, s 72I(1)(a) of the Act is not satisfied.

    Whether a satisfactory arrangement has been made for the liability to be wholly discharged

16. Section 72I(1)(b) of the Act provides that the Registrar must revoke a DPO in respect of a person if arrangements satisfactory to the Registrar have been made for the liability to be wholly discharged.

17. The Child Support Guide (“the Guide”) requires a “common sense approach” to determine whether arrangements are satisfactory for the debt to be wholly discharged. In determining whether or not a payment arrangement is satisfactory, it is necessary to have regard to a number of factors, such as the size of the liability, the applicant’s circumstances, the proposed period of any payment arrangement, and their capacity to discharge the liability.

18. The circumstances of this case are unique. Despite the child support assessment being issued in November 2000, the assessment was not accepted at the time, and a child support liability was not raised until July 2015. The assessment is approximately 14 years after the original application and amounts to a significant debt. The applicant submits that despite this, they have attempted to pay off the debt in the form of a lump sum payment and by entering into acceptable payment arrangements.

19. The Child Support Payer Transaction Statement for the period 07/11/2000 to 21/04/2017 shows that since 3 November 2015, the applicant has been making various payments on a monthly basis (excluding September 2016).

20. On 12 July 2016, the applicant entered into one payment arrangement and agreed to make a one-off $500 payment while DHS Child Support investigated the applicant’s finances. The applicant made the payment by the agreed date of 29 July 2016.

21. On 30 August 2016, a section 72A garnishee notice was issued in regards to a real estate property settlement to which the applicant was a party. On 4 October 2016, a lump sum payment of $71,680.28 was made by the applicant towards the child-support debt. This payment went a considerable way towards satisfying the debt.

22. A file note from the Child Support CUBA system dated 3 November 2016, records a conversation with the applicant’s wife regarding a payment arrangement. It notes:

    “… [The applicant’s wife] confirmed that she would like to get this finalised today and she confirmed that her payment proposal is for $112 per week, and she confirmed that this is in addition to the monthly liability, which is currently $114.42. This payment arrangement would commence on 7 November 2016…

    All parties agreed that all matters have been sufficiently discussed and resolved today…

    It is my recommendation that this arrangement be accepted as this payment arrangement exceeds [the applicant’s] individual capacity to repay the debt based on his $0.00 estimate. Using the capacity calculator, the acceptable range [the applicant] would be determined to pay would be $23 per week…”

23. This payment arrangement was approved by a APS6 delegate as can be seen from an additional file note from the Child Support CUBA system dated 3 November 2016, which records:

    “Approval of payment arrangement is at the APS6 delegation. I am satisfied this is a suitable arrangement given the current capacity of the paying parent. The arrangement will be reviewed when/if the circumstances of the paying parent change.”

24. Since 7 November 2016, payments of $112 have been made towards the arrears every week in addition to the $114.42 monthly ongoing child-support payment. Since assessment in February 2017, monthly ongoing child-support payments of $34.50 have been made every month plus weekly payments of $112. A printout of the Account Details for 21 July 2017-18 August 2017, shows that the regular payments of $112 a week and $34.50 a month continued during this period.

25. The current payment arrangement is based on the applicant’s capacity to discharge the liability and was no doubt also based on recent tax returns of the applicant and his wife.

26. For the financial year 2014/2015, the applicant declared an annual income of $233.755. The applicant’s taxable income for the 2015/2016 financial year was $91,102. In the 2016/2017 financial year the applicant’s estimated income was $0. However the applicant’s completed 2016/2017 tax return recorded a taxable income of $18,256. The tax return for the applicant’s wife shows that in the 2016/2017 financial year she received $58,037 in gross payments. 

27. While the applicant’s drop in income may seem extreme, it accords with the applicant’s submission that he is currently out of work and facing genuine financial hardship. The applicant contends that he has no assets or savings. His only asset was a portion of proceedings from the sale of a property and this was paid towards the liability in October 2016. The applicant further submits that he is dependent on financial support from his wife and only works sporadically. He is approaching 65 years of age and is coming to the end of his working life.

28. The applicant has provided numerous emails between his wife (and representative) and the mother of the child. The first email from the applicant’s wife to the child’s mother, dated 11 August 2017, states:

    “I have unexpectedly inherited $60,000 which I plan to pay towards [the applicant’s] child support debt. Also I recently made the final payment of a personal loan (which I borrowed for living expenses while [the applicant] was out of work). As a result my bank is now willing to lend me $20,000.

    Rather than continue to make small payments to gradually reduce the debt over a long period of time and paying the minimal amount of child support to you on a monthly basis until [the child] turns 18, I am willing to pay you the $80,000 in full and final satisfaction of the remaining debt owing…”

29. In response, the child’s mother emailed the applicant’s wife on 14 August 2017, advising:

    “Thank you very much for your offer - and even more importantly [], your efforts to try and help resolve this situation. I truly appreciate it!

    I will obviously need to discuss the implications of your offer with Centrelink and Child Support, to see whether that would be acceptable with them and if there are any problems etc that may arise for me in accepting your offer.”

30. On 26 August 2017, the child’s mother sent another email to the applicant’s wife detailing, inter alia, her dealings with Centrelink in regards to accepting the lump sum offer from the applicant. In short, it is plain from the email that the child’s mother was having difficulty in understanding the implications to her if she accepted the offer. It appears that she could potentially incur a debt herself for the repayment of entitlements she received from Centrelink since November 2000. She states:

    “…Secondly - Nobody at C/Link can seem to tell me how much a lump sum will affect my future, and/or past payments, or even if I may end up with a debt! Nor can they tell me how to work it out. Arrghh!

    What I was told by both CSA & C/Link - & it is still the same when [the applicant] made the 1^st offer - if I accept anything less than the full Assessed amount, I am then considered to have received the full amount - due to previous C/Link payments I have received. Which therefore means, I may incur a debt.

    Thirdly - since I received the last lump sum from the sale of the Leederville Property - as much as this has been wonderfully helpful in some ways, I have not been able to use the money as I would have perhaps liked due to the fact that my benefits from C/Link were drastically reduced or cut completely & I have to use it for our weekly household bills/rent etc that were previously covered…

    I am sorry I am not able to accept your offer as of yet due to the unknown implications…”

31. In response, the applicant’s wife emailed the child’s mother on 28 August 2017 and proposed the following:

    “…I still think there is a financial solution in amongst all this somewhere! One that works for you and us. I’ve come up with another idea which might suit your circumstances better than a lump sum offer.

    My main concern is getting [the applicant] out of the CSA system. It is stressful on both of us (Iike Centrelink for you) and I’m more committed to building all our relationships with each other than I am fighting with them.

    What I propose is that I pay you weekly what your FTB was, plus the $34.50 monthly assessed rate up until [the child’s] 18^th birthday. On or around [the child’s] 18^th birthday I will pay the remainder of the debt as a lump sum. This gives you just over a year to sort things out with Centrelink and it provides security that you can cover your bills in the meantime.

    We can manage this via a Binding Financial Agreement (BFA) in which we agree on the payment schedule (and amount) and you release [the applicant] from CSA by explaining we are entering a private agreement…

    You would need to let me know how much you need per week, and those payments would come off the back pay balance. The monthly $34.50 would be paid extra for child support. The lump sum in 12 months’ time will be the balance of the debt (as it stands on the day we sign) less the weekly payments paid from now until then. Does this plan suit you better for managing your finances?

    As per my previous offer I will pay for whatever legal paperwork needs to be drawn up. If you have any questions please ask so we can discuss…”

32. On 4 September 2017, the applicant’s wife again contacted the child’s mother by email requesting confirmation of which offer was most suitable for her. She states:

    “…One of our contentions is the CSR is pushing [the applicant] to pay off the debt as a lump sum. Having written to you to work this out together, I can now see how a lump sum affects you paying back Centrelink, and why offer number two might suit you better…”

33. On 5 September 2017, the child’s mother responded:

    “Thank you for all your emails, I truly appreciate all your links, suggestions and especially all your efforts.

    …

    Let me start by saying - certainly in principle at least, I am very open to accepting a reciprocally beneficial solution for all of us - in terms of building positive relationships now and moving forward in the future, satisfying/resolving the financial obligations, in particular, to reduce everybody’s stress levels!...”

34. In an email to the applicant’s wife dated 7 September 2017, the child’s mother states:

    “…Unfortunately [], until I have some ‘concrete’ information, I am unable to accept any offer, not until I fully understand all the implications. I know this is extremely stressful for you and [the applicant], as it is for me as well, and I am doing my very best to expedite the process, for all of us.

    I will be in touch very soon…”

35. In an email to the applicant’s wife dated 10 September 2017, the child’s mother states:

    “I wish to clarify a couple of things in regard to your offers.

    Firstly, I have explored all the options and suggestions you have made in regards to accepting your offer/s, with the intention of trying to find a mutually beneficial outcome for all of us.

    This is against the advice of both CSA and C/Link, with both Departments advising me strongly from accepting any offer! The reason has nothing to do with the lump sum, or any repayments/debt from me, but as you want this payment to finalise [the applicant’s] financial obligations as of now, will create major problems.

    [The applicant’s] income from this year and next year will still be assessed to see how much child support he should have paid me over that time. As [the child] turns 18 in October 2018, there are still three tax periods to be assessed - 16/17, 17/18 & 18/19.

    Secondly, I cannot enter into any Binding Financial Agreement as I receive payments from C/Link.

    I really have tried to find a way to accept one of your offers [], but my hands are tied. There seems nothing more that I can do but let the process run its course…”

36. On 10 September 2017, the applicant’s wife responds via email and says:

    “Thank you so much for clarifying where things are at for you.

    Rest assured I do believe you have explored every opportunity to resolve this, as I have…”

37. It is plain from the email correspondence between the applicant’s wife and the child’s mother that active negotiations have taken place in an attempt to discharge the liability. It is also plain from the emails that the applicant, through his wife, has been working with the mother of the child to find a solution which is beneficial for both parties. In particular, it appears that one of the most complex issues holding up settlement is the child’s mother’s potential liability to Centerlink should she receive a lump sum payout from the applicant. Similarly, she may face her benefits being cut off or reduced.

1. The respondent submits that under the current payment plan, it would take more than 12 years to wholly discharge the liability. This might very well be the case, however based on the evidence I have before me, I am satisfied that the current arrangement is satisfactory having regard to the potential capacity of the applicant to discharge the debt. Despite the obvious drop in the applicant’s income, he has regularly paid the required amounts of child support plus $112 in weekly payments. This is in addition to a substantial amount of the debt being paid off in a lump sum in October 2016. This payment may not have been made willingly and was in fact a result of a garnishee notice, but it did in any event, go a substantial way towards discharging the applicant’s child-support liability. As already outlined above, because of the correspondence between the applicant’s representative (his wife) and the child’s mother, I am satisfied that the applicant is committed to discharging his child support liability as soon as practicable.

2. Accordingly, for all of the above reasons, section 72I(1)(b) of the Act is satisfied.

   Is the liability completely irrecoverable?

3. In accordance with the Guide, a debt will be regarded as completely irrecoverable when there is no prospect that the debtor will be able to make any payment towards it. Deputy President Tamberlin stated in Naboush v Child Support Registrar [2014] AATA 930 at [15]:

   The word ‘irrecoverable’ is a word of wide import, and this width is expanded by the use of the word ‘completely’. Whilst ever there is some reasonable prospect of recovering money from the applicant, the DPO should not be revoked.

4. As I have already highlighted above, the applicant is making payments towards his child support liability and this is evidence that the debt is recoverable. Accordingly section 72I(1)(c) of the Act is not satisfied.

   DECISION

5. For all of the above reasons, I am satisfied that the applicant has a child support liability and that the liability is not completely irrecoverable.

6. For the detailed reasons set out above, I am however satisfied that there is a satisfactory arrangement in place to wholly discharge the child support liability having regard to, but not limited to, the size of the debt, the proposed period of the arrangement, and the extent to which the applicant has capacity to repay the debt in full. He has entered into a payment arrangement and has undertaken steps to work with the child’s mother to discharge this liability.

7. The decision under review is set aside and in substitution find that the applicant satisfies section 72I(1)(b) of the Child Support (Registration and Collection) Act 1988 (Cth) and the Departure Prohibition Order of 2 September 2016 be revoked.

I certify that the preceding 44 (forty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak

..............................[sgd]......................................

Associate

Dated: 26 February 2018

Date(s) of hearing:	13 September 2017
Advocate for the Applicant:	Ms E Roughan
Solicitors for the Respondent:	Dr S Thompson, Department of Human Services