Thurman and Child Support Registrar (Child support)

[2018] AATA 4987

Thurman and Child Support Registrar (Child support) [2018] AATA 4987 (27 November 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/HC015094

APPLICANT:  Mr Thurman

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:Member F Hewson

DECISION DATE:  27 November 2018

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – refusal to grant an extension of time to object - no satisfactory explanation for the delay - arguable merit but not compelling - extension of time correctly refused - 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

BACKGROUND

1. This application for review is about whether Mr Thurman should be given an extension of time to object to the decision made on 7 March 2003 to depart from the administrative assessment of child support (in respect of [Adult Children 1] and [2] now aged almost 30 and 31 respectively) so that the adjusted taxable income of Mr Thurman was varied to $37,987 for periods from 26 January 2003 to 13 August 2004.

2. On 23 July 2018, the Department of Human Services – Child Support (the Department) recorded that Mr Thurman lodged a written objection to the decision of 7 March 2003. As this was more than 28 days after he was given notice of the decision, Mr Thurman was also required to apply for an extension of time to lodge the objection.

3. On 31 August 2018, an officer of the Department refused the application for an extension of time to object (the refusal decision).

4. On 24 September 2018, Mr Thurman applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal) for review of the decision to refuse the application for an extension of time to object to the decision of 7 March 2003. The application was heard on 27 November 2018. Mr Thurman spoke to the tribunal by conference telephone. The tribunal also had regard to documents provided by the Department, a copy of which was also provided to Mr Thurman.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act) and the Child Support (Registration and Collection) Regulations 1988 (the Regulations).

2. Objections must generally be lodged within 28 days from the day on which notice of the decision was given, or within 90 days if the person is a resident of a reciprocating jurisdiction (section 81). An application outside that timeframe can only proceed if the objector also applies for an extension of time in which to object and that application is granted (section 83). 

3. The issues which arise in this case are:

   ·     Whether Mr Thurman  lodged an objection within the statutory timeframe; and, if not

   ·     Whether, in the particular circumstances of the case, it is appropriate to extend the time for lodging an objection.

CONSIDERATION

1. The original decision, which is the subject of the Department’s refusal of an extension of time, is the decision of 7 March 2003. A copy of the notice advising Mr Thurman of the decision is contained in the documents provided by the Department. The letter was dated 24 March 2003 and was sent to Mr Thurman at [Address 1], New Zealand.

2. At the hearing Mr Thurman said he doesn’t think he was living at [Address 1] in March 2003. He thinks he had relocated by then to [Country 1]. His mother lived at [Address 1] , but a lot of his mail was not passed on to him. He did not notify the Department that he had moved.

3. The tribunal was satisfied that Mr Thurman was given proper notice in March 2003 of the decision he is seeking to object to, because the notice was sent to his last known address (section 15 of the Regulations then in force).

4. The objection lodged by Mr Thurman on 23 July 2018 is, therefore, outside the statutory 90-day timeframe that applies in this case.

5. In considering whether to exercise the discretion to extend the time for making an application for internal review, the tribunal had regard to the guiding principles set out in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. In that case, the Federal Court said that an extension of time should not be granted unless it was proper to do so, noting that, in general, applications or proceedings commenced outside of a prescribed time limit will not be considered. The Court also said that there must be an acceptable explanation for the delay and that it must be fair and equitable in the circumstances to extend the time.

6. In Re Mulheron and Australian Telecommunications Corporation (1991) 14 AAR 42 O’Connor J outlined some principles to be applied in considering an application for an extension of time:

   The principles to be applied in considering an application for extension of time are:

   (i)   prima facie proceedings commenced outside the prescribed period will not be entertained. An extension of time will be granted, however, if it is proper to do so;

   (ii)     it is relevant whether the applicant rested on his [or her] rights or took action to make the decision maker aware that the decision was being contested;

   (iii)    any prejudice to the respondent that would be caused by granting the extension of time is relevant;

   (iv)    any wider prejudice to the general public in terms of disruption to established practice is relevant;

   (v)     the merits of the substantial application are relevant; and

   (vi)    fairness of granting an extension of time as between the applicant and other persons in like position is relevant.

7. In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, the High Court, in dealing with an extension of time and the general concept of time limitation periods, noted that while an extension of time is the exception to the general rule, there are legislative provisions which in the circumstances of the facts of a particular case may indicate that justice is served by the general rule being overturned.

Reason for the delay and whether Mr Thurman rested on his rights

1. As noted above, the decision which was the subject of the refusal of an extension of time to object was the decision of March 2003 and Mr Thurman’s objection lodged on 23 July 2018 is about 15 years out of time.

2. Mr Thurman said he was not aware of the decision at the time it was made, because he had relocated to [Country 1] and, also, there was a lot going on in his life. His [business]was failing; he went bankrupt in February 2004; and he was sentenced to seven years in gaol in July 2004. He was released from gaol in 2009.

3. Mr Thurman agreed that he was in contact with the Department in June 2004, after he became bankrupt, and then while he was in gaol. He said he was not aware at that time, however, that he could object to the March 2003 decision.

4. The documents provided by the Department show that in January 2005 Mr Thurman spoke to a departmental officer about his child support debt. His options, including an objection to the change of assessment decision, were canvassed at that time. As he had no evidence, however, Mr Thurman was advised that it was not a “viable option for him to pursue”.

5. The documents also show that in July 2010 Mr Thurman contacted the Department about his child support debt and was advised at that time that he could, despite the long delay, lodge an objection to the previous change of assessment decision along with an application for an extension of time. The records indicate Mr Thurman was assisted to download the necessary forms while he was on the telephone. The next record of contact with Mr Thurman was in July 2017, when he queried the amount of child support owed by him.  He made a further enquiry in April 2018, when his right to lodge an objection was again discussed and forms were sent to him. Following a similar discussion in June 2018, Mr Thurman lodged the objection on 23 July 2018.    

6. The delay in this case is very long.  The tribunal accepted that Mr Thurman was not aware of the decision when it was made, and he was beset by problems in the following year, due to the failure of his business, becoming bankrupt and his incarceration for an extended period. While there is an explanation for part of the delay in this case, the tribunal was not persuaded that there was a reasonable explanation for the delay from about 2010. By then Mr Thurman had been released from gaol and had been made aware of his objection rights.

Merit of the objection

1. The tribunal did not conduct a substantive review of the decision of 7 March 2003 to depart from the administrative assessment of child support so that the adjusted taxable income of Mr Thurman was varied to $37,987 for certain periods from 26 January 2003 to 13 August 2004.

2. Mr Thurman said he disagrees with the decision that was made to increase his income in the child support assessment for 2003 and 2004, to an amount of $37,987, because the amount used is higher than his taxable income which has since been assessed for those years. He noted that he became bankrupt in mid-2004. In his written objection he indicated that his New Zealand incomes for the period under review were $27,359 and $25,904, less tax and exchange rate.

3. The tribunal noted that the income that was used in his case, as a result of the change of assessment application, was based on a broader assessment of his income, property and financial resources, and was not just about taxable income. It took into account benefits he derived because he was self-employed and was able to legitimately claim tax deductions for expenses (e.g. vehicle) that a salaried employee would have to pay from their after tax income. Mr Thurman said his business was failing and he became bankrupt the following year. He said he was only a one third shareholder in the business and he did not have control over the business. His wife was also a shareholder. The business only claimed legitimate expenses. He believes the amount of $37,987 was significantly higher than he was earning. He thought the amounts hadn’t been adjusted properly from [one currency] to $AU. Mr Thurman said he does not have financial documents for the business going back to 2002/03.

4. The documents provided by the Department show that attempts were made to contact Mr Thurman in early 2003 about a change of assessment application lodged by Mrs  [A] in December 2002.  In the absence of information from Mr Thurman, the Department had regard to financial information provided by him in August 2002, in relation to an earlier change of assessment application lodged by him, which reduced the income used in the child support assessment from $56,000AU to $37,987AU.  In the earlier case it is recorded that Mr Thurman provided details of his financial position for the financial year ending 31 March 2001 (indicating an income of $46,600NZ after business expenses), but did not provide evidence requested in relation to his income for the following year. Mr Thurman also advised the Department that he earned the equivalent of $5,600 in [Country 2] in the year ending 31 March 2001, which was not included in his New Zealand income. That income was disregarded for the following year, apparently because it was for a finite period. The evidence in relation to Mr Thurman’s New Zealand income in the year ending 31 March 2001 was used in assessing his income for the purpose of the later change of assessment application because it was the best evidence available at that time. Using the appropriate exchange rate the amount of $46,600NZ was converted to $37,987AU and applied to the child support assessment.

5. The tribunal concluded that while there may be some merit to Mr Thurman’s objection, this would be very difficult to determine after more than 15 years. It seems very unlikely that the financial documents necessary to make a proper assessment of Mr Thurman’s financial situation in 2003 could be obtained. The tribunal was satisfied that while there is arguable merit in Mr Thurman’s objection, it is not compelling.

Prejudice to others

26.The tribunal also considered whether there would be prejudice to Mrs [A] should the extension of time be granted. It was satisfied there would be some prejudice to Mrs [A] because the outcome of the decision was presumed determined once the 90 days for lodging an objection had passed. A decision in Mr Thurman’s favour, however, would result in a reduction in the arrears owed by him, and is not likely to result in Mrs [A] incurring an overpayment of child support.

27.The tribunal also considered whether there would be prejudice to the general public and whether it is in the public interest for the issues raised by Mr Thurman’s objection to be determined. The tribunal concluded that there would be significant prejudice to the general public, due to the disruption to the established practice if the application was granted after such an extended delay.

Conclusion

28.The tribunal carefully weighed the various factors it had to consider. It concluded that there is an explanation for part of the very long delay in this case, but after about 2010 the explanation is not reasonable, taking into account advice given to Mr Thurman. The long delay and the prejudice to Mrs [A] and to the general public are not outweighed, in the tribunal’s view, by the objection’s arguable merit. The tribunal decided that it is not appropriate in the circumstances of this case to grant the extension application for Mr Thurman to object to the decision of 7 March 2003. This means that the child support arrears owed by Mr Thurman of about $6,000 will remain and are an enforceable maintenance liability, although it is open to the payee (Mrs [A]), or payee and payer jointly, to make an election to end collection of the arrears.

DECISION

The decision under review is affirmed.