Yathopoulos & Komine & Anor
[2013] FCCA 267
•20 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| YATHOPOULOS & KOMINE & ANOR | [2013] FCCA 267 |
| Catchwords: CHILD SUPPORT – Application for departure order – application for stay of departure prohibition order - stay refused. |
| Legislation: Child Support (Assessment) Act 1989, ss.117(2), 117(4), 117(5) Child Support (Registration and Collection) Act 1988, ss.72D(1), 72G, 72I(1), 72J, 72K, 72L, 72O, 72Q, 72T, 111C, 116(2) Taxation Administration Act1953 |
| Cases cited: Onder & Child Support Agency and Sari [2010] FMCAfam 693 |
| Applicant: | MR YATHOPOULOS |
| First Respondent: | MS KOMINE |
| Second Respondent: | THE CHILD SUPPORT REGISTRAR |
| File Number: | MLC 13656 of 2007 |
| Judgment of: | Judge Whelan |
| Hearing date: | 3 May 2013 |
| Date of Last Submission: | 3 May 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 20 May 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Tatti |
| Solicitors for the Applicant: | WMB Lawyers |
| Counsel for the First Respondent: | No appearance |
| Counsel for the Second Respondent: | Mr Maat |
| Solicitors for the Second Respondent: | Australian Government Solicitor |
ORDERS
That the application for a stay of the Departure Prohibition Order made by the Child Support Agency on 20 December 2012, filed 21 December 2012, and made under s.111C of the Child Support (Registration and Collection) Act 1988 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Yathopoulos & Komine & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 13656 of 2007
| MR YATHOPOULOS |
Applicant
And
| MS KOMINE |
First Respondent
| THE CHILD SUPPORT REGISTRAR |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for a stay of a Departure Prohibition Order (“DPO”) issued by the Child Support Agency (“CSA”) on 20 December 2012. The application forms part of proceedings in which the Applicant, MR YATHOPOULOS (“the Applicant”) seeks that Orders for child support made on 2 November 2009 be varied to reduce the amount payable and the amount of child support currently owed by the Applicant be discharged or varied. The Applicant also seeks an Order that he be able to apply for an Australian passport for one of the children of the marriage without the need for the Respondent’s consent.
The application also sought that the DPO issued on 20 December 2012 be set aside. During the proceedings it became clear that the Applicant only sought that Order if the amount of child support currently owing by him was wholly discharged. In such a case the REGISTRAR OF THE CSA (“the Second Respondent”) would be obliged by s.72I(1) of the Child Support (Registration and Collection) Act 1988 (“the Act”) to revoke the Order.
Background
The initial application in this matter was lodged on 21 December 2012. The Applicant stated in support of an order varying the Consent Orders made on 2 November 2009:
Since the time the consent orders were made the financial assistance available to me has significantly changed.
Companies which are also under the control of my current wife, who has assisted me financially, are experiencing difficulties and some have gone into liquidation.[1]
[1] Affidavit of Mr Yathopoulos sworn 20 December 2012 at paragraphs 3 – 4.
In support of the application to stay the DPO, the Applicant stated:
I intend to travel to China in January for Chinese New Year with my current wife and two children… I intend to be there for no longer than one month. Myself, my wife, and our two children already have visas.[2]
[2] Affidavit of Mr Yathopoulos sworn 20 December 2012 at paragraph 7.
In a second Affidavit, filed on 1 May 2013, the Applicant deposed that:
·The company ‘[T] Pty Ltd,’ which was his main trading company was placed into liquidation on 29 November 2012;
·The company ‘[M] Pty Ltd’ was in difficult financial circumstances;
·He was seeking to end the lease on a store in Sydney, but that the company owed significant rental arrears, in excess of $200,000.00;
·The company had been locked out of a store in [address omitted] in Melbourne;
·The Applicant had been issued with two Director’s Penalty Notices by the Deputy Commissioner of Taxation totalling in excess of $60,000.00;
·He may need to place ‘[M] Pty Ltd’ into administration or liquidation; and
·Given the financial difficulties his Wife had put all of her three properties on the market for sale.
The Applicant deposed that he needed to travel overseas to “repair relationships” with his suppliers[3] and that “these discussions are best had face to face.”[4]
[3] Affidavit of Mr Yathopoulos sworn 1 May 2013 at paragraph 20.
[4] Affidavit of Mr Yathopoulos sworn 1 May 2013 at paragraph 21.
The Applicant sought a Departure Authorisation Certificate from the CSA, which was denied on 29 April 2013.
From the material before the Court, the Applicant currently has a child support debt of $10,575.00 and owes an amount (including penalties) of $10,937.46 (certificate under s.116(2) of the Act). He has a history of being in arrears with his child support payments.[5] Two previous DPO’s have been made against the Applicant, both of which were discharged when the Applicant was able to make lump sum payments.
[5] Exhibit R2-1.
The Applicant deposes to being currently unemployed and according to his financial statement (of 21 December 2012) he has no income. He deposed to owning no property and to owing $200,000.00.
The submissions
The Applicant submits the Court has the power to issue a stay order under s.111C of the Act. In particular he relies on s.111C(3) of the Act:
Pending the hearing and final determination of the proceeding, the court may make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of the persons who may be affected by the outcome of the proceeding.[6]
[6] Section 111C(3) Child Support (Registration and Collection) Act 1988.
The Applicant referred the Court to the decision of Emmett J in Jones v Child Support Registrar.[7] And in particular paragraph [10] of that judgment with respect to the test to be applied to applications under s.111C of the Act:
It appears to me that before a stay could be granted, I would have to be satisfied that there is a serious question to be tried on the appeal or, putting it another way, that there is at least some arguable basis for suggesting that the appeal might succeed. Secondly, it would be necessary for the Court to have regard to the balance of convenience.[8]
[7] Jones v Child Support Registrar[2007] FCA 1732.
[8] Jones v Child Support Registrar[2007] FCA 1732 at [10].
This test has been adopted by the Federal Magistrates Court (now the Federal Circuit Court of Australia) in proceedings under s.111C of the Act.
The Applicant submits that there is a serious question to be tried in relation to the application for a departure order and the variation or discharge of the child support debt. The question is whether the Applicant has an arguable case.
There is a three-stage process in the Court determining whether or not a Departure Order ought to be made under the Child Support (Assessment) Act 1989 (“the Assessment Act”). This was identified by the Full Court of the Family Court in Gyselman and Gyselman[9] at paragraph [34]:
[9] Gyselman & Gyselman [1991] FamCA 93.
The structure of that section is that 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (2) to (9). Section 117(1)(b) identifies a clear three step process:
1. Whether one or more grounds of departure in s 117(2) is established.
If so:
2. Whether it is "just and equitable" within the meaning of s 117(4) to make a particular order.
3. Whether it is "otherwise proper" within the meaning of s 117(5) to make a particular order.[10]
[10] Gyselman & Gyselman [1991] FamCA 93 at [34].
The Applicant in this case relies on s.117(2)(c)(ia) and (ib) of the Assessment Act and submits that on the evidence there is an arguable case.
Sections 117(2)(c)(ia) and (ib) of the Assessment Act provide:
Grounds for departure order
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
…
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of the child; or
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or …
The Applicant deposes that his income is not what it was at the time of making the Order and he is in unhealthy financial circumstances.
In relation to step two, many of the factors in relation to the Applicant, in particular s.117(4)(d), (e), (f) and (g) of the Assessment Act can be established and there is no evidence of the Respondent’s position.
With respect to step three, the criteria set out in s.117(5) of the Assessment Act the material submitted by the Applicant discloses that there is an argument on which the Applicant could succeed.
With respect to the balance of convenience the Applicant submits:
·The Applicant’s capacity to derive income is affected by his ability to travel;
·There is no risk the Applicant will abscond;
·The Applicant is in difficult financial circumstances;
·The debt is relatively small;
·If the Applicant cannot travel overseas to mend relationships with his suppliers his financial circumstances are unlikely to improve and his ability to pay child support is impeded.
The Applicant referred to the decision of Monahan FM (as he was then) in Onder v Child Support Registrar and Sari (No.2)[11] at paragraph [91].
[11] Onder v Child Support Registrar and Sari (No.2) [2011] FMCAfam 430.
The Second Respondent submits that the onus is on the Applicant to establish that it is desirable to stay the DPO. A stay is usually granted in order to preserve the status quo pending the outcome of proceedings. In this case it is the Applicant who wishes to change the status quo.
The DPO was issued pursuant to s.72D(1) of the Act. It provides:
Registrar may make departure prohibition orders
(1) The Registrar may make an order (a departure prohibition order ) prohibiting a person from departing from Australia for a foreign country if:
(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:
(i) child support debts arising from a registrable maintenance liability under section 17; or
(ii) a child support debt arising from a registrable maintenance liability under section 17A; or
(iii) one or more child support debts arising from a registrable overseas maintenance liability under subsection 18A(1), paragraph 18A(3)(a) or subsection 18A(4) (insofar as subsection 18A(4) relates to subsection 18A(1) or paragraph 18A(3)(a)); 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:
(i) wholly discharging the child support liability; or
(ii) making arrangements satisfactory to the Registrar for the child support liability to be wholly discharged.[12]
[12] Section 72D(1) Child Support (Registration and Collection) Act 1988.
Section 72K of the Act provides for a person who is subject to a DPO to apply for a Departure Authorisation Certificate. In this case the Applicant did so and his application was rejected. Under s.72Q of the Act, the Court has jurisdiction to hear an appeal against the issuing of a DPO and under s.72T of the Act, the Administrative Appeals Tribunal has the jurisdiction to conduct a merits review of the decision of the CSA under s.72L of the Act to not issue a Departure Authorisation Certificate.
The nature of a decision under s.72D of the Act to issue a DPO was considered by Lindgren J in Whittaker v Child Support Registrar:[13]
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.[14]
[13] Whittaker v Child Support Registrar [2010] FCA 43.
[14] Whittaker v Child Support Registrar [2010] FCA 43 at [291].
The Second Respondent agrees that the test to be applied under s.111C of the Act was as set by Emmett J in Jones v Child Support Registrar (“Jones”).[15]
[15] Jones v Child Support Registrar[2007] FCA 1732.
In respect to the second test Emmett J considered the inconvenience to the applicant to be restrained from departing Australia but considered that this needed to be balanced against the interest of the person to whom the child support liability is ultimately owed. Jones has been followed by this Court on a number of occasions. In relation to the second test in Onder & Child Support Agency and Sari,[16] Monahan FM accepted that “the interests of the children must be factored in at the very least.”[17]
[16] Onder & Child Support Agency and Sari [2010] FMCAfam 693.
[17] Onder & Child Support Agency and Sari [2010] FMCAfam 693 at [27].
By reference to the legislative scheme the Second Respondent submitted that the issue of a DPO acts as a form of security for payment of a debt to prevent recovery being avoided. In a practical sense to stay the DPO amounts to it being set aside.
In this case there is a challenge to the liability. If the challenge is successful then the Second Respondent must set aside the DPO. If the challenge is unsuccessful the Applicant accepts that there is no basis for the DPO being set aside.
The Second Respondent submits that on the basis of the test in Jones, the Applicant has not advanced sufficient material to persuade the Court that there is an arguable basis for suggesting that the application to vary the Child Support Order might succeed.
With respect to the second test, the Second Respondent submits that the Applicant’s reason for travel was put on a different basis when the application was originally made to what is now before the Court.
It is apparent from his second Affidavit that the Applicant has substantial debts in Australia and that his wife is selling their real property interests in Australia. The Applicant’s wife’s family reside in China. There is a substantial risk that the Applicant intends not to return to Australia.
The Applicant travelled frequently to China and Singapore between 2010 and 2012,[18] yet his business continued to fail. The Applicant has not adduced any evidence to show that:
·‘[M] Pty Ltd’ has Chinese suppliers;
·Any relationships with these suppliers need mending; or
·Given any details of planned meetings or intended dates for travel.
[18] Affidavit of Mr Yathopoulos sworn 1 May 2013 at annexure AY-07.
The Applicant has chosen to spend his money on travel rather than on his maintenance obligations.
The Second Respondent submits that to stay the operation of the DPO may result in permanent loss of the security it provides for payment of the child support liability he owes.
The legislative scheme provides for the issuing of a Departure Authorisation Certificate which has the effect of ‘staying’ a DPO to allow a person to temporarily leave Australia. Part VA of the Act is modelled on Part IVA of the Taxation Administration Act1953, which does not confer power on a Court to order a stay in respect of a DPO. Further, ss.72G, 72J and 72O of the Act set out the notification requirements that form part of the legislative scheme and which arise respectively on the making or revocation of a DPO or a decision to issue a Departure Authorisation Certificate. The purpose of these provisions is to alert the appropriate authorities to the existence or revocation of a DPO or the issue a Departure Authorisation Certificate. No such provisions apply to s.111C of the Act.
Having regard to the legislative scheme, an Order under s.111C(3) of the Act should only be made with respect to a DPO in the rarest of cases.
Conclusions
In Jones,[19] Emmett J expressed the test for the application of s.111C(3) of the Act as follows:
It appears to me that, before a stay can be granted, I would have to be satisfied that there is a serious question to be tried on the appeal or, putting it another way, that there is at least some arguable basis for suggesting the appeal might succeed. Secondly, it would be necessary for the Court to have regard to the balance of convenience.[20]
[19] Jones v Child Support Registrar[2007] FCA 1732.
[20] Jones v Child Support Registrar[2007] FCA 1732 at [10].
In 2006, the High Court in Australian Broadcasting Corporation v O’Neill[21] addressed the issue of the tests to be applied to the granting of interlocutory injunctions. At paragraph [65], Gummow and Hayne JJ in a joint judgement expressed the test as follows:
The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
"The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted."
By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:
"How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”[22]
[21] Australian Broadcasting Corporation v O’Neill [2006] HCA 46.
[22] Australian Broadcasting Corporation v O’Neill [2006] HCA 46 at [65].
It seems to me that the test envisaged by s.111C of the Act requires a little more than a chance of success, particularly in circumstances, such as these, where the Court is being asked to stay an order which is specifically designed to provide some security that the existing Orders of the Court will be complied with. In my view, the onus is on the Applicant to show, on the basis of the material before the Court ‘a sufficient likelihood of success’ to justify the Orders sought by him.
There was no evidence before the Court of the corporate relationships between ‘[T] Pty Ltd’ (formerly ‘[G]’), ‘[G] Pty Ltd’ and ‘[M] Pty Ltd’. It would appear, however, that ‘[T] Pty Ltd’ is now in liquidation and the Applicant now trades through the company ‘[M] Pty Ltd’ of which he is the sole Director and shareholder. The balance sheet for that company as at September 2012 showed a total equity of -$684,297.03.
There was no evidence of the number or location of stores being operated by this company although one store in Sydney appears to have rental arrears in excess of $200,000.00 and one in Melbourne appears to have been repossessed by the landlord.
The Applicant also produced evidence of Directors Penalty Notices issued against him and deposed to the possibility of ‘[M] Pty Ltd’ also being placed in administration or liquidation.
The Applicant deposes to having no income and no assets.
On the basis of that evidence the Applicant may have an arguable case for consideration of a departure order on the basis of s.117(2)(c)(ia) and (ib) of the Assessment Act. There is, however, insufficient information before the Court, at this stage to know how the factors in s.117(4) of the Assessment Act might apply or those in s.117(5) of the Assessment Act.
As the consideration of a departure order is a three-step process it is difficult to assess, on the current material, how likely it is that the Applicant would be successful.
Even if, however, I was satisfied that there was a serious question to be tried, in my view the balance of convenience is not in the Applicant’s favour.
The very financial difficulties which the Applicant says would justify a departure order also, in my view, raise the possibility that the Applicant is a flight risk.
The mere fact that the Applicant says he is not a flight risk does not satisfy the onus. He says his Wife and three children live here as does his mother. He does not say that his wife is Chinese and has relatives in China, although this was not denied when it was put by the Second Respondent. He does say that his wife is liquidating her real estate assets in this country.
The Applicant says that his business is here – the very business which he says he is now contemplating putting into administration or liquidation.
The Applicant’s reasons for travel have changed between December 2012 and May 2013. In December 2012, he wanted to take his wife and children to China to celebrate Chinese New Year – no mention in that Affidavit of the dire financial position of his business, the need to ‘mend relationships with suppliers’ or how without any money (according to his financial statement) he was going to afford the trip. Yet, substantially the financial material relied upon by the Applicant in his May 2013 Affidavit, was all known to him in December 2012.
The purpose of travel – to mend relationships with suppliers – is vague to say the least. There is nothing to suggest how a trip to China would alleviate the business debts he is facing, merely the assertion that if he does not go he is unlikely to be able to meet his child support obligations.
On the other hand, both the First and Second Respondent have an interest in ensuring that the Applicant meets those obligations. While the amount owing is not significant in the context of a situation where he has, in the past, owed more than twice that amount, it is an outstanding debt in circumstances where no payments have been made since August 2012 and the Applicant has a history of being tardy in his payments.
Further, I accept that the effect of staying for an indefinite period, but presumably until the departure order application has been determined, the operation of the DPO would have the same effect as revoking the Order, in that it would no longer provide the security it currently does to both the First and Second Respondents to prevent recovery being frustrated. There is also a public interest in recovery not being frustrated.
I am not satisfied that staying the operation of the DPO pending the determination of the departure order application is desirable. The onus is on the Applicant to convince the Court that such an Order meets both the ‘serious question to be tried’ and ‘balance of convenience test.’ The reasons given by the Applicant for his need to travel are not convincing and the risk that he may not return is sufficient in my view to make it undesirable to grant such an order.
The application made under s.111C of the Act is, therefore, dismissed.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Judge Whelan
Date: 20 May 2013
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