YARWOOD & SHORE
[2013] FCCA 2219
•16 December 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| YARWOOD & SHORE | [2013] FCCA 2219 |
| Catchwords: CHILD SUPPORT – Application for administrative assessment – application to enforce payment of child support debt – no power to apply for administrative assessment through the court – payee may not enforce payment of child support debt without first notifying the Child Support Registrar. BANKRUPTCY – Where applicant became bankrupt after the commencement of the action – application stayed – where trustee did not elect to continue action – application deemed abandoned. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.58, 60 Child Support (Assessment) Act 1989 (Cth), ss.24, 116 Family Law Act 1975 (Cth), s.90SM |
| Cases cited: Yarwood & Shore [2012] FMCAfam 1440 Yarwood & Shore [2013] FCCA 2114 |
| Applicant: | MR YARWOOD |
| Respondent: | MS SHORE |
| File Number: | SYC 2033 of 2012 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 16 December 2013 |
| Date of Last Submission: | 16 December 2013 |
| Delivered at: | Sydney |
| Delivered on: | 16 December 2013 |
REPRESENTATION
| The Applicant: | In person |
| The Respondent: | In person |
ORDERS
The Application is discontinued.
The Response is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Yarwood & Shore is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 2033 of 2012
| MR YARWOOD |
Applicant
And
| MS SHORE |
Respondent
REASONS FOR JUDGMENT
Application
By an Amended Application filed on 18th March 2013, the Applicant seeks orders for property settlement arising out of the parties’ de facto relationship and a departure from administrative assessment of child support. The Respondent, by her Amended Response filed on 3rd June 2013, seeks orders for:
a)Administrative assessment of child support;
b)Property adjustment, including the repayment by the Applicant of a debt of owed to the Respondent’s parents; and
c)Costs.
Regrettably, neither of the parties’ claims will be successful.
Background
The parties entered into a de facto relationship in December 1999 and separated on 15th October 2011. There are three children of the relationship, now aged 10, 8 and 5 years.
The Applicant was an (omitted) by occupation.
The Applicant commenced proceedings on 10th April 2012 by filing an application for parenting Orders, child support departure and alteration of property interests under s.90SM of the Family Law Act 1975 (Cth).
On 19th December 2012, after an interim hearing on 19th November, orders were made until further order relating to parenting and property matters (Yarwood & Shore[1]) and the proceedings were set down for final hearing on 3rd April 2013.
[1] [2012] FMCAfam 1440
When the matter came before the Court, the Applicant’s then solicitor, Mr Ian Williams, advised the Court that his client had obtained a grant of legal aid relating to the parenting issues only. The Respondent was unrepresented. To his credit, Mr Williams negotiated a settlement of the parenting issues between the parties, and on that day final orders were made by consent, providing that:
a)the children would live with the Respondent;
b)the parties would have equal shared parental responsibility for the children; and
c)the children would spend substantial and significant time with the father.
The financial matters were adjourned and listed for hearing on 6th November 2013.
On 1st November 2013 the Applicant filed an affidavit in which he deposed that he had become bankrupt as a result of a creditor’s petition brought by the Australian Taxation Office, which claimed a debt of approximately $165,000.00. A Mr S was appointed his trustee in bankruptcy on 12th June 2013.
Neither party was legally represented when the matter came to court for hearing on 6th November. It was explained to the parties that, as a result of the Applicant having become bankrupt:
a)the Applicant’s property had vested forthwith in the trustee of the Applicant’s bankrupt estate by virtue of s.58(1) of the Bankruptcy Act 1966 (Cth); and
b)the Application was stayed by operation of s.60(2) of the Bankruptcy Act 1966 until the trustee made an election, in writing, to prosecute or discontinue the action.
It became apparent that the Applicant’s trustee had not been made aware of the proceedings in this Court. The parties were directed to advise the trustee in writing of the proceedings. The Applicant was ordered to seek an election from the trustee in writing to either prosecute or discontinue the Application (Yarwood & Shore[2]). The proceedings were adjourned to 16th December 2013 for mention.
[2] [2013] FCCA 2114
The parties attended Court on 16 December and said that they had each contacted the trustee, as directed. The Applicant told the Court that he had contacted the trustee in writing on two occasions, with no response. The Respondent said that she had been advised by the trustee to lodge a proof of debt.
The Bankruptcy Act
The effect of s.60 of the Bankruptcy Act 1966 upon an action commenced by a person who subsequently becomes a bankrupt is:
a)to stay the action until the trustee makes election, in writing, to either prosecute or discontinue the action (s.60(2)); and
b)if the trustee does not make an election within 28 days after service of notice of the action, the trustee shall be deemed to have abandoned the action (s.60(3)).
Conclusions
I am satisfied that the trustee received notice of the action shortly after 6th November 2013. The trustee has not made an election in writing either to prosecute or discontinue the action. As more than 28 days have passed since the trustee received notice, the trustee is deemed to have abandoned the action by virtue of s.60(3).
The Respondent sought orders in the nature of child support:
1. That Mr Yarwood (the father) pay child support to Ms Shore (the mother) as determined by administrative assessment through the Child Support Agency.
2.All outstanding child support from the father be paid to the mother immediately.
The orders sought cannot be made. There is no power in the Court to order a party to pay child support according to an administrative assessment. An application for administrative assessment of child support must be made directly to the Child Support Registrar (Child Support (Assessment) Act 1989 (Cth) s.24). In any event, there is an administrative assessment of child support already in force.
The application for an order that the Applicant pay all outstanding amounts of child support cannot be made, either. The Respondent has annexed to her affidavit sworn 26th March 2013 a copy of a certificate under subsection 116(2) of the Child Support (Registration and Collection) Act 1988 (Cth), showing that the applicant had a child support debt of $3,325.70 as at 15th March 2013.
Where a registrable maintenance liability is registered under the Child Support (Registration and Collection) Act 1988, amounts payable under the child support assessment are debts due to the Commonwealth (s.30(1)) and cannot be enforced by the payee. Subsection 30(3) of the Act provides:
(3)If a registrable maintenance liability is registered under this Act, the payee of the liability is not entitled to, and may not enforce payment of, amounts payable under the liability other than by instituting a proceeding under section 113A to recover a debt due in relation to the liability.
In order for a payee to take his or her own action to recover arrears of child support, the payee must notify the Registrar in accordance with subsection 113A(1), which provides:
A payee of a registered maintenance liability may sue for and recover a debt due in relation to the liability if the payee notifies the Registrar in writing of his or her intention to institute a proceeding to recover the debt:
(a) at least 14 days before instituting the proceeding; or
(b)in exceptional circumstances – within such shorter period as the court allows.
The Respondent has produced no evidence of compliance with s.113A(1). Accordingly, the Respondent’s application for enforcement of the child support debt must fail.
The Respondent seeks various property orders against the Applicant, including claims for sums of:
a)$50,000.00;
b)$5500.00; and
c)$30,000.00.
However, the Applicant’s assets have all vested in the trustee. The Applicant is not in a position to make any payments to the Respondent himself.
The Respondent also seeks orders relating to the Applicant’s superannuation, but there is no evidence of value.
The Respondent also sought an order that the Applicant should repay to her parents the sum of $80,000.00, being a loan from them to the Applicant. Leaving aside the question of whether the Respondent can bring a claim on behalf of her parents, which would appear to be doubtful, the fact is that the debt owed to the Respondent’s parents is a provable debt. Subsection 58(3) provides that after a debtor has become a bankrupt, it is not competent for a creditor to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt.
The Respondent told the Court that her parents had filed a proof of debt and had been told that they would be unlikely to receive more than two cents in the dollar. This is, in my view, a fair indication that there is little if anything to be had from the Applicant’s bankrupt estate.
The Application will be discontinued and the Response will be dismissed.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 18 December 2013
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