Warnock and Armfield
[2010] FMCAfam 498
•11 May 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WARNOCK & ARMFIELD | [2010] FMCAfam 498 |
| CHILD SUPPORT |
| Child Support Assessment Act 1989, ss.111, 112 (1), 112(4), 117(1), 117(2), 117(2A) |
| Bauer and Becker (2009) FLC 98 042 Whitford and Whitford (1979) FLC 90-612 Bagala & Bagala (2009) FMCA Fam 953 |
| Applicant: | MS WARNOCK |
| Respondent: | MR ARMFIELD |
| File Number: | HBC 674 of 2009 |
| Judgment of: | Baker FM |
| Hearing dates: | 24 & 26 February 2010 |
| Date of Last Submission: | 26 February 2010 |
| Delivered at: | Hobart |
| Delivered on: | 11 May 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Smith |
| Counsel for the Respondent: | In Person |
ORDERS
The mother be granted leave to proceed, within 21 days, with an application for an amendment of administrative assessment for the period 19 September 2006 until 27 June 2007 and the determination be conducted by the Registrar pursuant to Part 6A of the Child Support (Assessment) Act 1989.
The mother’s application for costs made on 24 February 2010 be dismissed.
The mother’s application for costs made on 11 May 2010 be adjourned to the duty list on 21 June 2010 at 10.00am.
IT IS NOTED that publication of this judgment under the pseudonym Warnock & Armfield is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT HOBART |
HBC 674 of 2009
| MS WARNOCK |
Applicant
And
| MR ARMFIELD |
Respondent
REASONS FOR JUDGMENT
Ex-tempore
This is a child support and parenting dispute between the parties, who are parents of the child, [X], born [in] 1997. Most of the parenting issues settled. I heard evidence about those issues which did not settle and I delivered my reasons, ex-tempore, on 24 February 2010.
The mother relied on her Amended Application, filed 29 October 2009, and her affidavits filed 13 July 2009, 4 September 2009, 29 October 2009, 22 February 2010 and her Financial Statement filed 24 October 2009. She also relied on her affidavit filed 22 February 2010 and the affidavit of Ms W, filed 17 February 2010, in respect of a costs application.
The father relied on his Initiating Application, filed 30 July 2009, his affidavits filed 13 July 2009, 4 September 2009, 16 September 2009, 15 February 2010, 23 February 2010, his Financial Statement filed 29 September 2009 and his Response filed 3 November 2009 and Amended Response filed 23 February 2010.
Background
There has been a long history of disputes between the parties, both in respect of [X]’s living arrangements and in respect of child support. [X] lived with the mother until September 2006. Since then she has lived with the father. There have been objections, reviews and a court hearing. There have been two determinations by the Social Security Appeals Tribunal (“the SSAT”).
The mother’s Application was filed in the local court in [Y], New South Wales on 13 July 2009. The father sought a transfer of the matter to the Federal Magistrates Court, because he filed a parenting application in the Hobart Registry on 30 July 2009. The local court in [Y] transferred the matter to the Canberra registry of the Federal Magistrates Court. The matter was then transferred to Hobart and the first return date was 4 September 2009.
The mother’s Application is made pursuant to section 111 of the Child Support (Assessment) Act 1989 (“the Act”). She is seeking leave that the Registrar be entitled to make a determination under section 98S of the Act for the child support assessment period, 19 September 2006 until 27 June 2007.
The father, in his Response filed 3 November 2009, seeks that the mother’s application be dismissed, or in the alternative, that if the court grants leave, the period of review be from 19 September 2006 to 15 June 2009. In his Amended Response filed in Court on 23 February 2010, the father seeks that the period of review be from 19 September 2006 to 30 June 2008, rather than to 15 June 2009.
The Application has been made because in June 2009, the father lodged his income tax returns with the Australian Tax Office for the financial years, 2005-2006, 2006-2007 and 2007-2008 and new assessments issued. The father deposes that his income for these years was $37,462.00, $87,076.00 and $98,128.00. His income for the 2008-2009 year was $78,119.00 and I refer to paragraph 9 of the father’s affidavit filed on 15 February 2010.
After the filing of the father’s income tax returns in June 2009, the mother accrued a child support debt for the period 19 September 2006 to 30 June 2007 of around $2,850.00. This occurred once the father lodged his tax returns, his income being $37,462.00 for the 2005-2006 financial year, upon which a child support assessment was made for the next child support period of 2006-2007. Because the father’s income was substantially greater than $37,462.00 for 2006-2007, the mother seeks a review of that period.
The mother seeks that the determination of the review be conducted by the Registrar, in accordance with section 98S of the Act. The mother requires leave of the Court, because the assessment period is more than 18 months old. The father seeks leave for the period of review of 19 September 2006 to 30 June 2008.
History of relevant reviews
On 21 September 2007, the father applied for a departure from the administrative assessment of child support on the grounds of income, property, financial resources and earning capacity of the mother. This application was made after the father’s objection to an estimate of the mother’s income was disallowed on 12 September 2007. On 6 February 2008, a senior case officer, acting as a delegate of the Registrar of the Child Support Agency (“the Agency”) considered the father’s departure applications. Based on the mother’s earning capacity, she set the mother’s child support income at $69,946.00 for the period 27 June 2007 to 30 November 2009.
The mother lodged an objection to this decision. An objections officer of the Agency reconsidered the departure application and decided to partly allow the objection. The previous change of assessment was revoked and the new child support income amounts were set for the mother for the periods 27 June 2007 to 30 June 2008, and 1 July 2008 to 17 May 2010 at $79,449.32. The child support income amounts for the father were set for the periods 19 September 2006 to 30 June 2008 and 1 July to 17 May 2010 at $101,378.00. The father, at that time, had not lodged any tax returns since 2005.
The mother lodged an appeal to the SSAT. On 26 November 2008 the SSAT found that there were no grounds for departing from the provisions of the Act. The assessments were therefore calculated in accordance with the administrative provisions of the Act. The Tribunal reviewed all findings of the original decision maker and the objections officer. Examination of the reasons for the decision of the SSAT indicates that the Tribunal considered the mother’s earning capacity for the 2007-2008 financial year. The Tribunal found that the mother’s resignation from [omitted] and her move to [Y] with her husband in 2007 was not a major purpose of her decision to affect the administrative assessment of child support in relation to [X]. The Tribunal did not change the assessment to take into account the mother’s earning capacity, rather than her income. The Tribunal refused to make a determination. New assessments for child support for the periods 19 September 2006 to 26 June 2007, 27 June 2007 to 18 December 2007, 19 December 2007 to 20 May 2008, 21 May 2008 to 5 June 2008 and 6 June 2008 to 30 June 2008 were issued on 12 January 2009.
On 14 August 2009 the father applied for a departure order and on 5 October 2009 the senior case officer stated that the SSAT had already reviewed the period 27 June 2007 until 17 May 2010, and refused to conduct a wholesale review of the previous findings. The senior case officer said:
My role is limited to evaluating new evidence that was not provided at the earlier hearings.
She changed the child support assessment for the period 16 June 2009 to 30 December 2009.
The law
Both parties are applying for amendments to administrative assessments more than 18 months old. Section 111 of the Act deals with the process in respect of child support periods which have been in place for more than 18 months.
Section 111 (1) provides:
Parent or carer applications
(1) A liable parent, or a carer entitled to child support, (the applicant) may apply to a court having jurisdiction under this Act for leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118;
in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.
Pursuant to s.112 (1) of the Act the Court has a discretion in respect of applications made to it pursuant to s.111.
Pursuant to sub-section (4) the matters to be considered by the court when deciding whether to grant leave under sub-section (1) are as follows:
(a) any responsibility, and reason, for the delay in:
(i) making an application under section 98B or 116; or
(ii) making a determination under section 98S;
as the case requires; and
(b) the hardship to the applicant (other than the Registrar) if leave is not granted; and
(c) the hardship to the other party or parties (other than the Registrar) if leave is granted”
Sub-section (5) of section 112 enables the court to have regard to any other relevant matter.
The mother requires the leave of the Court for her application to be determined by a Registrar for the Court to make an order; the father also requires leave of the Court.
The Court must have regard to the responsibility and reasons for the delays of each party, any hardship which may be caused to each party and any other matters which the court considers relevant.
Federal Magistrate Brown in Bauer and Becker[1] set out a history of the legislative provisions which relate to the amendment of any administrative assessment of child support that is more than 18 months old. His Honour referred to the recommendations of the Ministerial Taskforce on Child Support chaired by Professor Parkinson. The Taskforce was concerned to limit retrospective applications in respect of child support, and the government accepted its recommendations in this regard. His Honour continued:
“The taskforce reported as follows: an application for a change of assessment may currently be made for a virtually unlimited time. This is highly undesirable as it may open periods to re-examination which have long passed, to the detriment of the other parent, who finds past child support obligations being retrospectively reviewed, particularly where a parent wishes to avoid complying with large outstanding child support debt. A belated application to reduce the assessment may be available undermining the agency's ability to enforce debt.
In practice, most decisions are not retrospective. However the currently open discretion to make an application for any past period should generally be limited to the immediately preceding child support period. However, there may be some exceptional circumstances where a parent has a legitimate reason for delaying their application for a change to a past assessment.
One such reason is because information has only recently come to light about a parent's hidden income. In such cases a process should exist to enable this general limit on retrospective applications to be eased. A court is in the best position to consider the past “rights” of the parties and to determine whether making an exception is appropriate.
For this reason the Taskforce proposes that an application should be made to a court (in practice, this would be to the Federal Magistrates Court) to grant leave to apply out of time. This would be similar to the existing process under section 44 of the FamilyLaw Act 1975 in relation to property and spousal maintenance applications. Where such application has been made to a court, and the court is inclined to grant it, the court may have before it much of the necessary information and evidence from the parents to consider making a departure order.
It may be inefficient to require the parents to return to the agency to seek administrative determination of the applications. In such cases the court should have a discretion, on application by a parent, to proceed to determine the substantive departure application itself.”[2]
[1] (2009) FLC 98 042
[2] ibid at page 195
The purpose of the legislation is to limit the payers of child support having an open-ended ability to review past assessments of child support. They should only be entitled to do so if there are exceptional circumstances.
One of the objects of the Act is “that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children, readily determined without the need to resort to court proceedings.”[3]
[3] Section 4(2)(a) of the Act
The mother’s application
On 23 June 2009 the Agency wrote to the mother advising her that it had updated information to reflect the father's income for the period 2005-2006, at $37,462.00. The mother filed her application in the [Y] Magistrates Court on 13 July 2009. She filed her application as soon as she was aware that the father had filed his tax returns. There was, therefore, no delay on her behalf.
The mother asserts there is a hardship to her because she is now in arrears in the sum of around $2,847.00. She is unemployed. She has savings of $1,044.00; liabilities of two personal loans amounting to $14,919.00; credit card liabilities of $4,950.00 and legal fees of approximately $5,000.00. The mother's husband earns around $30,000.00 per annum. The mother has superannuation worth $113,500.00.
The father opposes leave be given to the mother because the period has already been reviewed twice by the Agency and the SSAT. However, the mother is seeking a review because of the re-assessment for the 2006-2007 period as a result of the father lodging his income tax return. The reassessment has created a child support debt for the mother for the period 19 September 2006 to 26 June 2007 of $2,847.00.
The mother submits there is hardship to her because she has a debt and will lose the opportunity to apply for a review if leave is not granted due to the action of the father not filing his tax return until June 2009.
The father's current financial position is as follows: he is currently employed earning $55,000.00 per annum, and has a capacity to earn 3 per cent of gross profit. His wife earns approximately $13,000.00 per annum. He is the joint registered proprietor of a property at [L], his share being worth $165,000.00. He has savings of around $2,000.00; a motor vehicle worth $16,000.00; household contents worth $7,500.00 and superannuation of around $32,000.00. He has liabilities of a mortgage, his share being $148,725.00; a loan from GE Money of $15,250.00; credit cards of around $11,000.00 and a hire-purchase lease with BMW Finance of $25,200.00. He maintains them and does not receive child support from the mother at the present time.
Section 112(4) of the Act requires the respective hardships of the parties to be weighed up. In my view it is appropriate to follow the Full Court's interpretation in Whitford and Whitford[4] to equate hardship to:
[4] (1979) FLC 90-612 78 145
Any appreciable detriment, financial, personal or otherwise.
On weighing up the respective hardships and balancing the hardships, I find there would be greater hardship for the mother if leave is not granted than to the father if it is granted.
The father's application
The father in his Response seeks that the mother's child support application be dismissed and in the alternative should the Court allow the review, the period be from September 2006 to 15 June 2007.
In her affidavit filed 17 February 2010, the mother deposed:
The father seeks to reopen matters dealt with by the SSAT, but he has not provided an error of law by which he will base his application. The father has not been able to put a case that there is an error of law…
The father filed his Amended Response on the day of the hearing seeking that if the Court grants leave for the mother's application to proceed, the review period be from 19 September 2006 to 30 June 2008. The father is therefore seeking a review of the extra period, 27 June 2007 to 30 June 2008, and he no longer seeks that the period to 15 June 2009 be reviewed.
The father is seeking leave for a review of the child support assessment from 27 June 2007 to 30 June 2008, although it appears he only needs leave for the period 27 June 2007 to 3 May 2008, having filed his response on 3 November 2009.
Both parties made submissions on the basis that the father needed leave for the full period. He asserts that the mother had a higher earning capacity in this period than indicated by her taxable income. At paragraph (8) of his affidavit filed 15 February 2010, he deposes:
Ms Warnock voluntarily took leave without pay from her employer, [omitted], and should be assessed on her earning capacity as found by the CSA change of assessment objection decision dated 3 June 2008. Ms Warnock also worked privately for her husband's company.
This was the very issue determined by the SSAT in its decision of December 2008. It found that Ms Warnock earned income from her husband's business in the 2007-2008 financial year. It said:
The tribunal is satisfied that her actions were not motivated by any intention on her part to reduce her child support obligations. The tribunal accepts that she is prepared and attempted to obtain employment in the [Y] area on balance, and not without some reservations. The tribunal is satisfied that Ms Warnock has demonstrated that her decision to move to [Y] and cease employment with [omitted] was not substantially motivated, as Mr Armfield claims, to minimise her liability for child support.
The father did not appeal the decision of the SSAT. The father delayed in making an application until 3 November 2009. His explanation for his delay in applying for a review of this period is that he filed a Response after the mother filed her application at the [Y] Local Court. He submits that it is unfair to review one period and not the other period.
The father did not take any action from 12 January 2009 when the SSAT’s decision of December 2008 was processed by the Agency and new assessments issued. The assessment which issued in January 2009 for the period 9 September 2006 to 26 June 2007, set the father’s child support income amount at $83,151.00, and set the mother’s child support income at $69,849.00. For the period 27 June 2007 to 18 December 2007, the father’s child support income amount was set at $83,151.00, and for the periods between 19 December 2007 to 30 June 2008, it was set at $88,306.00. The father’s income for 2007-2008 was $98,128.00 according to the father’s affidavit filed on 15 February 2010. The father has not satisfied me that he will suffer any hardship if the period is not reviewed. He seeks a review because he wants a consideration of the mother’s earning capacity for the 2007-2008 financial year. In my view he has sought the review only in response to the mother’s application. The father has not satisfied me that it is not fair to have one period reviewed and not the other. The hardship which will occur to the mother will be to produce documentation and give evidence in respect of the same matters heard by the SSAT in 2008.
Having regard to all the factors referred to in section 112(4) and (5), I am of the view that leave should not be granted to the father to review the period 27 June 2007 to 30 June 2008. For the period 3 May 2008 to 30 June 2008 for which the father does not require leave, I am not satisfied that it is in the interests of either party to consider whether or not it should be made in relation to [X]. I refer to what Riethmuller FM said in Bagala & Bagala[5] at paragraphs 20 and 21:
Section (4)(2)(c) of the Act seeks to have child support matters settled without recourse to the courts, thus avoiding needless expense for the parties and using court resources that might otherwise be utilised. There have been tow (sic) significant amendments to the scheme, each further advancing the object of providing an inexpensive administrative system for review of child support assessments. The first was the introduction of the departure process under Part 6A of the Act, allowing for administrative departures from child support assessments; the second change was providing for objection rights following Part 6A decisions; and the third significant change provided for review by the SSAT.
All of these changes were driven by considerations of access to justice and the reality that the cost of legal proceedings are almost invariably greater than the amount of money in dispute in child support cases, placing great hardship on applicants and undue pressure on respondents to settle to avoid the disproportionate costs of litigation. Thus, a well developed informal administrative system has been developed. The objects and purpose of the Child Support Scheme are to provide an informal and inexpensive and timely avenue of review for disputing parties.
[5] (2009) FMCA Fam 953
Both parties proceeded on the basis that the father required leave. No submissions were made about the departure application for this period.
The mother seeks that the review be carried out by the Registrar of the Agency because this will reduce the cost to the parties, reduce time in reaching determination and the Registrar has the ability to collect and collate information directly from the Australian Tax Office, ASIC and financial institutions.
In accordance with the objects of the Act, it is my view that the matter should be determined by the Registrar, rather than the parties using valuable court resources and incurring unnecessary expense. The amount of child support in dispute is disproportionate to the costs of litigation.
Costs application
The mother seeks her costs of a conciliation conference, which did not proceed. A conference had been listed for 4 January 2010 at 2.15 pm. The mother was unable to attend and the father consented to a change of the date of the conference to 15 January 2010 at 2.30 pm. The mother was flying to Hobart with [X] on 15 January 2010. The mother’s plane was delayed, so she did not arrive until around 2.10 pm at Hobart.
Section 117(1), (2) and (2A)
Section 117(1) of the Family Law Act 1975 provides that:
Subject to certain other provisions, including section 117(2), each party to proceedings under the Act shall bear his or her own costs.
Section 117(2) provides the court with a general discretion to make an order for costs if it is of the opinion there are circumstances that justify it in so doing. Section 117(2A) comprises the factors the court must consider in determining what costs order, if any, should be made. Paragraph (g) of subsection (2A) provides:
The court shall have regard to such other matters as the court considers relevant.
This paragraph makes it clear that the earlier paragraphs are not exhaustive of the factors to be taken into account by the Court, and confers a broad discretion upon the court in determining whether a costs order should be made. Not only is the question of costs discretionary, but so is the quantum.
There was no cross-examination of either party in respect of this costs application.
The financial circumstances of the parties have been referred to already in these reasons.
Subparagraphs (b), (c), (d), (e) and (f) of section 117(2A) of the Act are not relevant.
On the day of the conciliation conference the mother was returning [X] to the father at the end of her school holiday time with [X]. On 13 January 2010 the mother responded to the father’s proposal to collect [X] from the airport and indicated that [X] would be available for collection at either the information centre at the central town mall, or outside the father’s home in [L], or he could arrange for a responsible adult to collect her from the Federal Magistrates Court in Hobart at around 1.30 pm.
On 14 January 2010 the father emailed the mother and said he was working all of the following day and would not be available at 1.30 pm, and asked what time [X]’s plane landed. The mother responded and reminded the father that he had to attend court at 2.30 pm, and he had to send a responsible adult to collect [X] from the court at 1.30 pm. The father responded by email on 15 January 2010 that he was already taking time off to attend the conference at 2.30 pm and no other responsible adult was available at 1.30 pm to collect [X], and he could not understand why he could not collect her from the airport.
On 15 January at around 12.41 pm the father was informed by the mother’s solicitor that the mother was still on the plane. The father found a telephone message on his mobile telephone from the mother. She informed him that the flight had been delayed and would not be there before 1.00 pm. She suggested that he arrange for a home key for [X] and they would meet at the Court, then [X] could taxi to the father’s home. A second message indicated that the flight had been further delayed.
The father ascertained from the internet that the flight was arriving at 2.15 pm. He collected [X] at the airport and left at around 2.30 pm after waiting for [X]’s bag and took her home. When he telephoned the court at 2.50 pm he was informed that the conference was cancelled.
This incident between the parties highlights the lack of co-operation between them and their inability to make arrangements or reach agreement. In my view, neither party is blameless for the cancellation of the conference. The mother refused to agree to the collection of [X] from the airport and the father insisted upon her collection from there. The plane delay and the parties’ dispute about the collection of [X] resulted in her collection running into the conference time, which meant it was cancelled. I am of the view that these circumstances do not justify an order for costs.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Baker FM
Associate:
Date: 21 May 2010
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