Yewen & Child Support Registrar & Anor
[2014] FCCA 2399
•24 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| YEWEN & CHILD SUPPORT REGISTRAR & ANOR | [2014] FCCA 2399 |
| Catchwords: CHILD SUPPORT – Application for leave to amend child support assessments for periods more than eighteen months prior to date of application – principles applicable – liable parent has failed to file tax returns for child support years between 2006 and 2012 until recently – child support assessed on basis of Registrar’s determination – Registrar has commencement enforcement proceedings in respect of arrears – judgement entered against applicant – tax returns filed following entry of judgement against applicant – current proceedings commencement following filing of tax returns – applicant contends that if departure application allowed child support arrears will be reduced –whether prima facie case exists to change assessments – hardship – reasons for delay – other relevant considerations – late filing of tax returns. |
| Legislation: Family Law Act 1975, ss.44, 44(3) Child Support (Registration & Collection) Act 1988, ss.30(1); 67; 68; 80, 88, 110B; Child Support (Assessment) Act 1989, ss.4(2), 43(1); 58A; 58A(2)(c); 66(1); 98C; 98C(2); 98E; 98R; 98S; 111; 111(1); 112, 112(1); 112(4); 112(5); 116, 117(1), 117(2), 118, 122, 123, 123A; 123(2);124; 141 |
| In the Marriage of Gyselman (1992) 15 FamLR 219 Savery & Savery (1990) FLC 92-131 Bauer & Becker [2009] FMCAfam 480 Hacherl & Barrios [2010] FMCAfam 668 Jacenko & Jacenko, (1986) 11 Fam LR 341 Whitford & Whitford (1979) FLC 90-612 Canrell & Jennings [2009] FMCAfam 229 McColl & McColl [2013] FCCA 736 Child Support Registrar & Rawlings & Anor [2013] FCCA 370 The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389 Re Commonwealth of Australia; Ex parte Marks (2000) 177 ALR 491 |
| Applicant: | MR YEWEN |
| First Respondent: | CHILD SUPPORT REGISTRAR |
| Second Respondent: | MS HALLEY |
| File Number: | ADC 1982 of 2013 |
| Judgment of: | Judge Brown |
| Hearing date: | 1 October 2014 |
| Date of Last Submission: | 1 October 2014 |
| Delivered at: | Adelaide |
| Delivered on: | 24 October 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Howe |
| Solicitors for the Applicant: | Howe Jenkin |
| Counsel for the First Respondent: | Ms Shepherd |
| Solicitors for the First Respondent: | Australian Government Solicitor |
| Counsel for the Second Respondent: | In Person |
ORDERS
Leave is granted under section 112 of the Child Support (Assessment) Act 1989 (the Act) for the first respondent to make a determination under section 98S of the Act for the period 1 July 2008 to 15 July 2012 inclusive, subject to the applicant satisfying the condition specified in order (2) hereof.
Within fourteen (14) days of the date of these orders the applicant pay the first respondent the sum of five thousand dollars ($5,000.00) in respect of the arrears of child support as currently assessed.
The applicant has leave to lodge a change of assessment application to the first respondent for the period 1 July 2008 to 15 July 2012 inclusive.
The applicant will lodge any such change of assessment application referred to in order 2 within fourteen (14) days of the date of these orders.
If the applicant complies with order 3 above, the first respondent undertakes not to enforce the orders made by the court on 5 August 2013 in the matter of CSR & Yewen ADC837/2014 until a decision is made on such a change of assessment application referred to in orders 2 and 3, or if that decision is appealed, until the outcome of such appeal but only if any such appeal is lodged on time.
The amended application lodged on 11 June 2014 by the applicant is otherwise dismissed.
The parties have liberty to apply.
Each party will bear their own costs.
IT IS NOTED that publication of this judgment under the pseudonym Yewen & Child Support Registrar & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 1982 of 2013
| MR YEWEN |
Applicant
And
| CHILD SUPPORT REGISTRAR |
First Respondent
| MS HALLEY |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Mr Yewen and Ms Halley are the parents of [X], born [in] 2002. [X] lives predominantly with Ms Halley. Accordingly, Mr Yewen is liable to pay child support, to Ms Halley, for [X].
Mr Yewen’s liability for child support began on 6 January 2003. As Ms Halley was entitled to do, she registered the assessment arising with the Registrar of Child Support “the Registrar” for collection pursuant to the provisions of the Child Support (Registration & Collection) Act 1988 (Cth) “the Registration Act”.
As a consequence of this registration, child support owed by Mr Yewen becomes a debt to the Commonwealth of Australia pursuant to section 30(1) of the Registration Act and, as such, the Registrar was authorised to sue Mr Yewen, in a court of appropriate jurisdiction, to recover amounts of child support owed by him, for [X], to Ms Halley.
As at 3 June 2013, Mr Yewen owed child support of $17,490.88 to the Commonwealth. Pursuant to section 67 of the Registration Act, penalties attached to late payment of child support, which the Registrar is also authorised to collect. In conjunction with his arrears of child support, Mr Yewen owed late payment penalties of $5,466.63.
As a consequence of this liability, on 5 June 2013, the Registrar commenced proceedings, in this court, against Mr Yewen, seeking payment of arrears of child support and late payment penalties, which in total amounted to $22,957.51. In support of this application, an affidavit of Mr R was filed.[1]
[1] See affidavit of Mr R filed 5 June 2013
Mr R is a Commonwealth public servant, who is employed as a litigation officer in the Child Support Section of the Department of Human Services, which is the Commonwealth department responsible for the administration of the child support system within Australia.
Annexed to Mr R’s affidavit is a document dated 3 June 2013, which is entitled Child Support Payer Transition Statement. This document tabulates the child support calculated to be owed by Mr Yewen in the period from 24 January 2003 to 2 June 2013.
In addition, it sets off amounts received by the Child Support Agency from Mr Yewen. The record shows that child support, in modest amounts, has been calculated since early 2003 but very few payments have been made by Mr Yewen.
The last payment, which was made, was $349.34 paid on 4 March 2006. This followed the interception of a tax refund of $1,146.52, due to Mr Yewen, which was re-directed to child support on 30 June 2006. Thereafter, from March of 2006, the amount of child support owed by Mr Yewen and the penalties arising thereon, have inexorably accumulated, without any reduction.
In his affidavit, Mr R deposed that each month a copy of the Payer Transaction Statement was sent to Mr Yewen. Axiomatically,
Mr Yewen did not respond to this correspondence but neither did the Registrar. It was only on 14 February 2013 that a letter of demand was sent by solicitors acting on behalf of the Registrar to Mr Yewen seeking payment from him of the sum of $21,261.68 by 28 February 2013.
Perhaps unsurprisingly, Mr Yewen did not pay the sum sought by the due date. As a consequence, the Registrar commenced enforcement proceedings. In conjunction with these proceedings, Mr R searched the records of the South Australian Land Titles Registrar. Mr R’s searches revealed that Mr Yewen owns a property located at Property B (herein after referred to as “the Property B property”).
As a consequence of other inquires undertaken by him, Mr R discovered that the relevant rating notice, issued in respect of the Property B property, indicated that it had a capital value of $360,000.00 and was subject to a mortgage, in favour of the Commonwealth Bank, in a sum of $117,460.92.
The Registrar’s enforcement application was allocated a first return date of 6 August 2013. The day prior, I was advised by solicitors acting for the Child Support Registrar, that an agreement regarding payment of the outstanding child support had been reached between
Mr Yewen and the Registrar. As a consequence of this agreement, the following orders were made:
“The Respondent owes the Commonwealth of Australia an amount in respect of arrears of child support and late payment penalties (the child support debt) as at the date to be specified in the orders made and as evidenced by a certificate issued under s 116(2) of the Child Support (Registration and Collection) Act1988.
UPON NOTING THAT As at 23 July 2013, the Respondent owes the Applicant the sum of $23,503.10 ('child support debt') consisting of $17,752.15 in arrears of child support and $5,750.95 in late payment penalties.
THE COURT ORDERS THAT:
1. The Respondent pay to the Applicant the child support debt of $23,503.10.
2. The Respondent pay to the Applicant the sum of $2,272.50 toward the Applicant's legal costs.
3. The Respondent pay to the Applicant the sum of $25,775.60 ('total debt') comprising the child support debt as declared above and the Applicant's legal costs within 75 days from the date of these orders.
Security
4. Until further order of the Court or payment in full of the total debt:
4.1 The Respondent is hereby restrained from assigning, transferring, further encumbering or dealing in any way with his interest in the real property at Property B in the State of South Australia more particularly described in Certificate of Title Volume [omitted] (real property) without the prior written consent of the Applicant.
4.2 The Respondent’s interest in the real property be charged in favour of the Applicant for the total debt (and the Applicant be at liberty to lodge a caveat over the real property to secure the interest created by this charge).
The Respondent’s interest in his personal property be charged in favour of the Applicant for the total debt (and the Applicant be at liberty to lodge an encumbrance over such personal property to secure the interest created by this charge).
Enforcement orders
5. If the Respondent defaults in making any of the payments under these orders or deals with any of the personal property or real property in breach of these orders the following orders shall take effect:
5.1 An Official Receiver of the Commonwealth of Australia, a Sheriff of the Federal Circuit Court, and their servants and agents shall be appointed as Enforcement Officers.
5.2 Pursuant to rule 25B.11(a) of the Rules an Enforcement Officer shall seize and sell under an Enforcement Warrant such of the Respondent’s real property and personal property, not being prescribed personal property, as the Enforcement Officer may consider sufficient to meet the reasonable costs of the Enforcement Officer and to discharge in full all amounts owed by the Respondent under the orders of this Court.
AND THE COURT NOTES THAT:
A. Any monies payable by the Respondent pursuant to these orders are in addition to his ongoing liability to pay child support as assessed or varied from time to time.
B. The Respondent intends to apply for remission, in whole or part, of the late payment penalties as declared above. The determination of the application may impact on the amount of the debt payable.”
The enforcement proceedings, envisaged in the orders, pursuant to which the Property B property would be seized and sold by an enforcement officer appointed by the court have not, as yet, eventuated. The Registrar however has filed a caveat, on the title in question, to safeguard its interests.
Mr Yewen was not legally represented, when he consented to the orders of 5 August 2013. It is his position that, at the time, he felt overwhelmed and powerless by the magnitude of the debt confronting him and, as a consequence, felt that he had no alternative other than to agree to the orders in question, which ultimately envisaged the sale of the Property B property, which is his home, if the child support debt and penalties were not paid.
The current applications
On 3 April 2014, Mr Yewen applied to the court to set aside the orders of 5 August 2013 and for the removal of the caveat lodged on the Property B property. In addition, he sought a departure from the child support assessment, pertaining to him, for the child support years ending 30 June 2006 onwards to the year ending 30 June 2013.
In support of this application, Mr Yewen filed an affidavit.[2] Mr Yewen deposed that, prior to the Registrar commencing proceedings against him, he had not filed a tax return for the tax years ending 30 June 2006 to 30 June 2013 inclusive. As a consequence, the Registrar had estimated the level of his taxable income for these years and calculated child support by reference to these estimates.
[2] See affidavit of Mr Yewen filed 3 April 2014
It is Mr Yewen’s position that the Registrar has inaccurately assessed his level of income, in these periods, as he did not have regular employment between 2006 and 2013. In addition, he asserts that he has suffered from depression and dyslexia, which led to him to put his head in the sand so far as his liabilities to the Child Support Agency are concerned.
However, it is Mr Yewen’s evidence that, in September of 2013, he sought assistance from his family and has now been able to file his tax returns for the relevant years in question, which were lodged in October 2013. It is Mr Yewen’s position that his actual income, for these periods, is significantly lower than the estimated income used by the Child Support Registrar to calculate the amount of child support owed by him.
Clearly, the Registrar was not the only person, who would be affected by Mr Yewen’s application. Ms Halley, as [X]’s major provider of care and the person entitled to receive financial support for him, would also be affected by any reduction in the amount of child support to be paid by Mr Yewen.
In these circumstances, on 4 June 2014, the proceedings were adjourned in order to allow Mr Yewen to amend his application to name Ms Halley as a second respondent to it. In addition, Mr Yewen has amended his application[3] and now seeks the following orders:
[3] See Amended Application in a Case filed on 11 June 2014
“That paragraphs 1-5 of the Order of this Honourable Court dated 5 August 2013 be discharged, varied or set aside.
That pursuant to section 123 of the Child Support (Assessment) Act 1989, this Honourable Court make an Order pursuant to section 124 of the Child Support (Assessment) Act 1989 that the applicant pay to the second respondent the sum of $8,000 in full and final satisfaction of all outstanding child support payments to 31 December 2014 including all arrears referred to in the Order of 5 August 2013, subject to paragraph 8 below.
That in the alternative to paragraph 2 above, pursuant to section 123 of the Child Support (Assessment) Act 1989, this Honourable Court make an Order pursuant to section 124 of the Child Support (Assessment) Act 1989 that the applicant pay to the second respondent such amount as this Honourable Court considers fair, subject to paragraph 8 below.
That in the alternative to paragraphs 2 and 3 above, pursuant to sections 111 and 112 of the Child Support (Assessment) Act 1989, leave be granted for an order pursuant to section 118 to amend the assessments for the period 3 April 2007 – 3 October 2012.
That in the event the Court is minded to make an Order pursuant to paragraph 4 above this Honourable Court depart from the assessment and determine the applicant’s assessment based on his actual taxable income for the period 3 April 2007 to 31 December 2014 inclusive.
That in the alternative to paragraph 5, this Honourable Court depart from the assessment and assess the applicant’s annual assessment for the period 3 April 2007- 31 December 2014 at the annual rate of $1,500 per year
That the payments made by the applicant since 28 July 2013 be deducted from the debt assessed to be paid pursuant to paragraphs 5 and 6 above.
That the caveat held by the Commonwealth of Australia against the applicant’s property at Property B be removed within 7 days to enable the applicant to borrow funds to pay debts.
That pending the final determination of this matter the Order of this Honourable Court made on 5 August 2013 be stayed.”
Ms Halley responded to this application on 25 September 2014. She seeks the dismissal of Mr Yewen’s application. As a consequence of this, she would want the Registrar to complete its enforcement of the child support debt, memorialised in the court’s order of 5 August 2013, whether or not it means the sale of the Property B property.
In particular, Ms Halley does not accept that Mr Yewen’s estimated taxable income, as utilised by the Child Support Agency for the years 2006 to 2013, is significantly higher than his overall level of income. She categorises Mr Yewen as a [occupation omitted].
As such, she does not necessarily accept that his taxable income properly reflects his actual income, earning capacity and financial resources. In this context, Ms Halley deposes as follows:
“Mr Yewen ‘actual’ income does not accurately reflect his capacity to pay child support. Mr Yewen is a [occupation omitted]. This enables more offsets and expenses from income sources that do not apply to standard wage earners …”[4]
[4] See affidavit of Ms Halley at paragraph 13
The issues in the case
In certain prescribed circumstances, both the payer and the payee of child support and indeed the child support Registrar itself may apply to depart from an administrative assessment of child support pertaining to any relevant child. Time limitations apply and the procedures to be followed are set out in the Child Support (Assessment) Act 1989 (Cth) “the Assessment Act”.
The Assessment Act provides two ways to seek a departure from an administrative assessment of child support. An administrative method or a judicial approach.
Firstly, the Registrar can make a departure determination under Part 6A of the Assessment Act. Secondly, on the application of either the payer or the payee, certain courts can make a departure order, pursuant to division 4 of Part 7 of the same Act.
Separate provisions relate to the provision of child support in a lump sum. These are contained in different part of the Assessment Act namely division 5 of Part 7. Different principles are to be applied to such lump sum payments, which are often referred to as substitution payments because they are made in substitution for the provision of periodic payments of child support, which is the usual manner in which child support is provided, as it is a payment intended to provide for the immediate financial needs of a child, as they arise from time to time.
Mr Yewen, in his current application, ostensibly at least, seeks a court ordered departure. In particular, he seeks that the court makes an order, which would effect a lump sum payment of child support, for the years in question, from 30 June 2006 onwards.
The Child Support Registrar remains a party to these proceedings. It neither opposes nor consents to the court granting leave for the matter to return to the Agency, pursuant to section 98S of the Assessment Act, and thereafter for there to be a departure determination for the years in question. Essentially, this would be a departure process by administrative means rather than judicial order.
For her part, Ms Halley opposes that there be either an administrative departure or a court ordered departure in respect of the child support assessments, owed by Mr Yewen to her, for [X], from 30 June 2006 onwards.
As indicated earlier, she wishes the debt to remain as it was found to be on 5 August 2013 and for the necessary steps to be taken to enforce the debt. Essentially, it is her position that it would be oppressive and unfair to her to let Mr Yewen escape the consequence of his abrogation of responsibility to pay her child support over so many years.
Both avenues for departure engage the provisions of section 111(1) of the Assessment Act, which provides that departures may only occur in respect of child support periods more than eighteen months and less than seven years earlier than the date on which application is made with the leave of the court. The section reads as follows:
“(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.”
Accordingly, Mr Yewen requires the leave of the court to proceed with the bulk of his departure application, whether it occurs administratively or by judicial process. Ms Halley opposes the granting of such leave. The registrar neither opposes nor consents to such a course. The matters to be considered turn on the construction of section 112 of the Assessment Act, which confers upon the court a discretion to grant such leave.
The current proceedings turn on whether such leave should be granted and whether, if leave is granted, the applications in question should be returned to the Registrar pursuant to section 98S of the Assessment Act or remain before the court.
In order to determine this issue, it will be necessary to set out, in more detail, the applicable legal provisions, which are not without their complexity. However, in essence, whether or not the discretion should be exercised in Mr Yewen’s favour depends on a balancing of hardship considerations between him and Ms Halley and whether there is an adequate explanation as to why there has been a delay in the institution of departure procedures.
The legal principles to be applied
At the outset, it is important to note that the involvement of courts, such as this one, in the assessment of child support is closely circumscribed. Fundamentally, the calculation of child support is an administrative matter and has been since 1 October 1989, when the child support regime inaugurated by the Assessment Act and the Registration Act came into being.
These complex pieces of legislation are supported by other legislation, relating to social welfare payments, taxation matters, and the like. In broad terms, the child support regime provides a mechanism for the financial support, to be provided by parents for their children, to be calculated administratively, through the application of legislatively prescribed formulae.
The relevant formulae are based on a number of elements, primarily related to the respective incomes of the parents themselves and the extent of care, which each provides to any child concerned. As I understand matters, there is no controversy that [X] lives for twelve days each fortnight with Ms Halley and for the remainder with
Mr Yewen. In any event, this is not a case which turns on issues to do with the level of care provided for [X], by each of his parents. There is no controversy about this issue.
The principle object of the Assessment Act is to ensure that children receive a proper level of financial support from their parents.[5] This object is supported by the following particular objects set out in section 4(2) as follows:
a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
b)that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of the children; and
c)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; and
d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
e)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.
[5] See Assessment Act at s.4(1)
The objective that the level of child support, payable by parents for their children, should be readily determined is, at least in part, achieved by the application of the child support formula to the circumstances of the parents concerned.
The formula itself is informed by regular statistical research, undertaken by agencies of the Australian Government, relating to the actual costs of provided for children, within the context of wages paid to average salary earners within Australia.
The intention of the legislature is that the formula should be transparent and provide fairly for the financial support of children, based on an objective assessment of their needs. The formula is also intended to be responsive to the care provided, by separated parents, for their children.
Pursuant to section 25 of the Assessment Act, separated parents, of a child living in Australia, may apply to the Registrar of the Child Support Agency for an administrative assessment to be made in respect of the child concerned.
Ms Halley has made such application. She did so in early January of 2003. She requested that the Child Support Agency collect the amounts of child support assessed to be paid by Mr Yewen, for [X], on her behalf. From her perspective, the system can only be characterised as being singularly ineffective.
The basis which is used to calculate how much child support a parent should pay is a concept known as child support income, which is essentially based on that person’s adjustable taxable income, which is defined by section 43(1) of the Assessment Act. In basic terms, it is the parent’s taxable income for the last relevant year of income in relation to the child support period.
Generally, a parent’s taxable income is the amount of taxable income as assessed under the Income Tax Assessment Act (1936). Accordingly, the provision of tax returns, by a payer parent, is fundamental to the integrity of the application of the relevant formula to the circumstances of the parents concerned.
However, it is a fairly common circumstance that, for a variety of reasons, it may not be possible to ascertain a paying parent’s income by reference to income tax returns, mostly usually because they have not been filed, either because of the dilatoriness of the taxpayer or as a consequence of the nature of his/her employment.
In such situations, the Registrar is authorised, pursuant to section 58 of the Assessment Act, to determine a person’s taxable income by reference to the previous year’s return or other information available to it from the Australian Taxation Office and in certain circumstances, when there have been multiple failures to provide tax returns, by reference to a statistical regime known as Male Total Average Weekly Earnings “MTAWE”.
It is pursuant to this provision that the Registrar has assessed
Mr Yewen’s income, for child support purposes, from 2006 onwards, which has resulted in the current level of arrears. However, it should also be noted that, pursuant to section 58A of the Assessment Act, the Registrar is obliged to amend any administrative assessment in the light of subsequent information coming to light regarding a parent’s taxable income, but only if the income is higher or certain prescribed circumstances apply.
Section 58A is not an easy section to read. However, as I understand it, the Registrar must immediately amend an administrative assessment of child support retrospectively only when it transpires that the adjusted taxable income concerned is higher than the deemed taxable income, as previously assessed under section 58.
The assessment can be retrospectively amended if the taxable income is lower, only if the liable parent concerned had filed his necessary income tax returns within the date required under Part IV of the Income Tax Assessment Act 1936 (Cth) or certain prescribed circumstances are applicable. The rationale of the difference of approach being, I take it, to avoid unfair situations of over-payment occurring and to avoid any passive endorsement of delay in filing tax returns.
Otherwise any potential hardship arising from this provision is ameliorated by section 58A(2)(c), which enable the legislature to prescribe situations in which the Registrar should amend any relevant assessments, in question, on the grounds of hardship.
Regulation 7B of the Child Support (Assessment) Regulations1989 provides the hardship circumstances in which the Registrar is authorised to replace a lower income retrospectively. They include the following:
·the parent was unaware an application for child support had been made;
·the parent was seriously ill;
·the parent was in prison;
·the parent lived remotely or was subject to a natural disaster;
·some other exceptional circumstance existed.
I have not been provided with any evidence, regarding the existing of any of these circumstances in the present case. In addition, although I understand the Registrar now has amended income figures for
Mr Yewen, I am unaware of the specific manner in which the Registrar has conducted its duties arising under section 58A.
In spite of the good intentions of the Australian Government, the application of the child support formula remains controversial, particularly amongst separated parents. In addition, the potential for human circumstances to throw up situations not readily anticipated by the various child support formulae, created by the legislation, remains infinite.
As previously indicated, there are two main avenues, through which any person aggrieved by a child support assessment, may apply to change or depart from such an assessment – firstly, an administrative approach and secondly, one based on application to an appropriate court. Again, as previously indicated, time limits apply to both such avenues.
The grounds for an administrative departure are set out in Part 6A of the Assessment Act, primarily in section 98C. This section provides three basic criteria, which must be satisfied, before the Registrar may decide to depart from an administrative assessment of child support.
In the first instance, the Registrar must be satisfied that one, of a number of stipulated grounds for departure, is satisfied. Amongst other things, these grounds include, relevantly in this case, the income, property, financial resources or earning capacity of a parent, which is not properly reflected in any child support assessment arising.
Secondly, the Registrar must be satisfied that it is both just and equitable, as regards the child, the carer of the child and the parent liable to pay child support, to depart from the applicable administrative assessment and thirdly and finally, it is otherwise proper to do so.
In addition, there is a further right of review. Pursuant to provisions contained in the Registration Act, a person may lodge an objection, with the Registrar of the Child Support Agency, to any decision arising from the departure process, which is created by Part 6A of the Assessment Act.
Lawyers categorise this objection process as being an independent but internal method of administrative review. The objections process is mandated by section 80 of the Registration Act.
Thereafter, any person who remains aggrieved, following this objection process, may further appeal to the SSAT pursuant to the provisions of section 110B of the Registration Act. The process of appeal to the SSAT provides a de novo hearing process. That is the SSAT is authorised to gather evidence and make findings of fact.
Pursuant to section 88 of the Registration Act, the SSAT is directed to provide a mechanism of review, of child support decisions, which is fair, just, economical, informal and quick. Lawyers categorise the SSAT process as being an independent and external source of administrative review.
It is only in limited circumstances that an appeal can be successfully lodged, with the court, from a child support decision of the SSAT. Pursuant to section 110B of the Registration Act, the only appeal to the court, from a decision of the SSAT, arises in respect of a question of law.
The regime, as outlined above, is informed by the legislature’s desire that issues relating to the financial support, to be provided by parents, for their children, should be readily determined, without the need for those parents to have resort to court proceedings, which have the potential to be expensive, both in financial and emotional terms. In this regard, reference is again made to the objects of the child support regime as outlined in section 4(2) of the Assessment Act.
The court’s jurisdiction to make a departure from an administrative assessment of child support arises pursuant to section 116 of the Assessment Act arises. The relevant section reads as follows:
(1)A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:
(a) all of the following apply:
(i) the Registrar has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment;
(ii) an objection to the refusal has been lodged;
(iii) the Registrar has disallowed the objection; or
(aa) all of the following apply:
(i)a decision has been made in respect of the administrative assessment;
(ii) an objection to the decision has been lodged;
(iii) in making a decision on the objection, the Registrar has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment; or
(ab)the SSAT has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment; or
(b)both of the following apply:
(i)the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;
(ii)the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; or
(c)in the case of a liable parent--the administrative assessment of child support payable by the liable parent for the child is made under subsection 66(1).
In this context, it should be noted that both the Registrar and the SSAT may decline to make a departure order due to the complexity of the matter concerned. In these circumstances, the court based mechanisms are engaged by default.
Otherwise the court has jurisdiction, to deal with child support departure matters, in circumstances in which there are other proceedings before the court, concerning the same parties and it is in the interests of all concerned for the court to deal with all the various issues outstanding, including child support, in one package.
Pursuant to section 117(1) of the Assessment Act an applicant for departure from an administrative assessment of child support must satisfy three pre-conditions before such a departure order is made. They are as follows:
·An applicant must establish one or more of the grounds for departure as specified in section 117(2);
·Thereafter the court must be satisfied that it is just and equitable to make a departure order;
·The court must then be satisfied that it is otherwise proper to make a departure order.
If the three conditions as set out in section 117(1) are satisfied then the court may make the departure order sought. However, there is a further significant proviso to any departure application, namely special circumstances must be demonstrated to exist.
In theMarriage of Gyselman[6] the Full Court of the Family Court said as follows, in respect of the phrase special circumstances:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary, that is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.”
[6] In the Marriage of Gyselman (1992) 15 FamLR 219 at 225
In Savery & Savery[7] Kay J held that:
“Special circumstances” [were] facts peculiar to the particular case which set it apart from other cases.”
[7] Savery & Savery (1990) FLC 92-131
Amongst the grounds for departure, specified in section 117(2) of the Assessment Act is the following:
·The applicable administrative assessment does not reflect the income, earning capacity, property and financial resources of one or other of the parents concerned.
Accordingly, departure applications to the court are closely constrained by the provisions contained in section 116. In this case, there is, as yet, no other proceedings pending between the parties in this court. As far as I know the Registrar has not declined to make a Part 6A departure order. However, he is not as yet authorised to make any such determination due to the years to which the assessments in question relate.
The rationale for the exclusion of the court, from the process of review, is readily explicable in light of the objects as outlined in section 4 of the Assessment Act. Court proceedings, regarding child support assessments, should be the exception rather than the rule. This is particularly so, since the inauguration of the external level of appeal, in child support matters, provided by the SSAT.
The instigation of appeals to SSAT, in child support matters, was part of a wide ranging reform of the child support system inaugurated by the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 (the “Reform Act”). The SSAT is intended to be a specialist tribunal, dealing with child support matters, in preference to a court such as this one.
The relevant portion of the Explanatory Memorandum, published in support of the Reform Act, indicates that it:
…introduces review by an internal external body, the Social Security Appeals Tribunal, of child support decisions which have been reviewed under the Child Support Agency’s internal review procedure. The purpose of introducing this is to provide external review mechanism which is faster, less formal and less expensive than court action, while still providing just and fair outcomes. …It is an inquisitorial, rather than an adversarial process, which may assist in reducing tensions between separated parents when resolving child support issues.
…
Parents…may appeal a decision of the SSAT to a court on a question of law. Parents can still appeal to the courts, in a number of situations. These are applications about the making of assessments requiring parentage declarations, applications to terminate an agreement, applications for child support in non-periodic form. Applications for urgent child support pending the making of an assessment, and applications for a departure in some limited circumstances, such as where the decision is too complex to be finalised administratively, or the applicant seeks to vary a child support assessment from more than 18 months ago.[8]
[8] See Explanatory Memorandum at page 89
The important matter to note, in my view, is that departure applications are to be heard by the court in what are categorised as being limited circumstances, given the desirability of such issues being determined in a manner characterised as being less adversarial, whilst, at the same time, remaining fair.
In addition reference is made to the expense, for parents, of utilising court procedures and for the potential of court cases to add a further level of irritation, in what are often already inflamed parental relationship.
It is in this context that section 116 of the Assessment Act must be considered. This section also has had its most recent genesis in the reforms initiated the Reform Act of 2006. Again, in my view, it is instructive to have regard to the relevant Explanatory Memorandum.
The relevant portion reads as follows:
Because the SSAT will be established in order to review many matters…direct applications to the court will be limited…the person must first go through the internal review process…[however]
… if there are other matters before the court that involve one or the other of the parents, for example family law or bankruptcy matters, then the parent can ask the court also to consider the child support matter, without first going through internal review. The court may consider whether to hear the child support matter together with the other matter. If the court chooses not to hear the child support matter, the parent must go through the internal review processes.[9]
[9] Ibid at pages 140-141
The only mechanism by which a parent liable to pay child support can be ordered to pay child support, other in a recurrent periodic manner, is provided by the provisions contained in Division 5 of Part 7 of the Assessment Act, particularly section 122. The section permits an application to be made for the provision of “child support… otherwise than in the form of periodic amounts paid to the carer…”
In this case, Mr Yewen has mooted the possibility of him paying his arrears of child support, from 2006 onwards, by means of a lump sum. It is a necessary implication of Mr Yewen’s application that any prospective commutation occurs at a discount to the level of arrears as currently calculated pursuant to the orders of 5 August 2013. The Registrar is not authorised to commute arrears in this manner.
Section 123(2) provides that an application for such a lump sum, in substitution of periodic payments, may only be made if an administrative assessment is in force and may only be made by the carer entitled to child support.However, pursuant to section 123A the court may make an order for a liable parent to provide a lump sum payment to be credited against a child support liability.
The rationale of the child support regime is that financial support, for children, is to be provided periodically in response to their situation and the situations of their parents and be amenable to change, as those situations change, from time to time.
In this context, it is important to note the limitations pertaining to lump sum or substitution orders. They are not a mechanism to be utilised by a payer parent to subvert administrative assessments of child support or to commute arrears.
The court has been conferred with wide powers, in child support matters, as a consequence of section 141 of the Assessment Act. The court may make an order for a lump sum of child support, either in one sum or in instalments; order that child support be paid in weekly, monthly, yearly or other periodic amounts; or order that it be achieved by a transfer of property.
Accordingly, it is open to the court to make a lump sum or substitution order, on Mr Yewen’s application, but only in the context of a departure application brought pursuant to section 116 and only after satisfaction of the three criteria provided by section 117.
Such an order is available, only on Ms Halley’s application, pursuant to the provisions of section 123. In my view, neither of these approaches authorises the court to discount an existing administrative assessment for pragmatic reasons.
Consideration relating to leave – section 112 of the Assessment Act
In all the circumstances of the case, it seems to me that the court currently has three options available to it:
·Embark upon a departure application itself, on Mr Yewen’s application pursuant to section 116 and if it is determined that there should be a departure consider whether any payment should be in a lump sum pursuant to the general powers contained in section 141;
·Remit the matter back to the Registrar for decision under section 98S;
·Dismiss Mr Yewen’s application and allow the Registrar to complete the execution process envisaged by the orders of 5 August 2013, in respect of the arrears of child support as currently calculated.
The first two options require the leave of the court pursuant to the provisions of section 112(1) of the Assessment Act which confers upon the court a discretion to grant leave. This discretion is subject to the considerations set out in section 112(4) which reads as follows:
“(4) In considering whether to grant leave under subsection (1), the court must have regard to:
(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.”
Pursuant to section 112(5) of the Assessment Act, the court may have regard to any relevant matter in its determination whether or not to grant the necessary leave. However, pursuant to section 112(8), the granting of leave, of itself, does not imply that the Registrar of the Agency is required to make a determination under section 98S or that the court is required to make a departure order under section 118.
In summary, pursuant to section 112 of the Assessment Act, the court has a discretion to grant such leave and then proceed with any dependant application pursuant to section 118. The matters which are to inform this discretion are set out in subsections (4) & (5) of section 112. The court must have regard to the responsibility and reasons for the delay; any hardship which may be occasioned to the applicant and any other party; and any other matters, which the court considers relevant.
The legislative provisions, which relate to the amendment of any administrative assessment of child support, that is more than eighteen months old, were inaugurated following 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.
The Taskforce reported as follows:
“An application for 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 past, 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 debts, a belated application to reduce the assessment may be available, undermining the CSA’s ability to enforce debt. In practice, most decisions are not retrospective. However, the currently open discretion to make an application to vary past periods 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 payer’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 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 the Federal Magistrates Court), to grant leave to apply out of time. This would be similar to the existing process under s.44 of the Family Law 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 CSA to seek administrative determination of the application. In such cases, the court should have a discretion on application by a parent to proceed to determine the substantive departure application itself.”[10]
[10] ibid at page 195
From this passage, it is clear that the Taskforce envisaged the court being a gatekeeper to prevent liable parents being able to re-examine long concluded periods of child support, particularly to avoid enforcement proceedings. This was regarded as being highly undesirable and detrimental to the interests of the caring parent.
However, the Taskforce also recognised that there might be situations where there were exceptional circumstances justifying such belated applications, which were brought for legitimate reasons. The explanatory memorandum, published in respect of section 112 does not provide any assistance in determining how the section is to be applied.
In Bauer & Becker, a case concerned with the discretion arising under section 112(4), I said as follows:
“I agree with the view of the child support taskforce, outlined above, that it is “highly undesirable” for a parent to be able to retrospectively review obligations arising out of past child support determinations solely because he or she wishes to avoid the payment of substantial amounts of child support arrears.
The object of section 111 of the Assessment Act is to prevent the re-examination of past assessments of child support for unlimited periods of time. If there was such a facility, it would undermine the integrity of the overall system.
…
The reason for the delay in this matter is solely attributable to Mr Bauer and the manner in which he has chosen to respond to his obligation to provide financial support for A and B. To use an old saw of equity, it cannot be said that he comes to court, to seek the exercise of a discretion in his favour, with “clean hands”.[11]
[11] Bauer & Becker [2009] FMCAfam 480 at [73]-[74] & [76]
Hacherl & Barrios was also a case concerned with section 112, in which an applicant had failed to file his income tax assessments for a period of seven years. Roberts FM (as his Honour then was) said as follows:
“In relation to hardship, it is clear that the father will be disadvantaged if he is not allowed to argue for a departure order. However, it is equally clear that the grandmother will be similarly disadvantaged if he is allowed to mount such an argument in relation to the period prior to lodging his tax returns. The delay in relation to lodging those returns must lie solely at the feet of the father.
…
In this particular matter, the father does not come to court with clean hands in relation to the lodgement of his tax returns. He should not therefore be allowed to rely upon his own dilatory behaviour to obtain relief in relation to a period when the Child support agency was hampered by his failure to lodge tax returns for a number of years.”[12]
[12] Hacherl & Barrios [2010] FMCAfam 668 at [37] & [41]
As noted above, the Taskforce indicated a view that the discretion arising under section 112 was broadly analogous to the discretion to extend time to institute property proceedings created pursuant to section 44 of the Family Law Act. In such cases, the court is required to make an assessment of whether the applicant concerned has a reasonable prima facie case, if leave is granted.
In conducting this exercise, the “the court proceeds on the basis that the evidence of the applicant, unless it is inherently unbelievable or contradictory, should be accepted, and the court should therefore decide whether or not on that basis a prima facie case has been made out”.[13]
[13] See Jacenko & Jacenko, (1986) 11 Fam LR 341 at 343
In Whitford & Whitford[14] a case concerned with hardship, within the context of an application to extend time brought under section 44(3), the Full Court considered that, where a court was legislatively required to consider potential hardship, being occasioned to one party, by it not making a particular order and the hardship to be occasioned to the other party, if the order in question was made, the exercise involved the balance of “any appreciable detriment financial, personal or otherwise” between the parties concerned. In my view, similar considerations apply to section 112(1).[15]
[14] Whitford & Whitford (1979) FLC 90-612 at 78,145
[15] See Canrell & Jennings [2009] FMCAfam 229
In summary, in the exercise of the discretion to grant or refuse leave under section 112(1), the court should have regard to the following factors:
·Is the court satisfied that the applicant concerned has made a prima facie case to have the relevant child support assessments changed. This is a relevant consideration arising under section 112(5);
·In determining whether the applicant has a prima facie case, the applicant’s evidence on that issue is to be accepted, without cross-examination, unless it is inherently unbelievable or contradictory;
·The court must consider the delay in bringing the application concerned and who is responsible for that delay and why;
·The court must consider the hardship which would be occasioned to each of the parties concerned and balance that hardship;
·The court must consider any other relevant fact or circumstance; and
·In the exercise of its discretion to grant or refuse leave, the court may grant leave despite an inadequate explanation of delay, if other considerations warrant leave being granted nonetheless.[16]
Conclusions
[16] See McColl & McColl [2013] FCCA 736 at [21] per Judge Halligan.
a)Is there a prima facie case to have assessments changed?
Mr Howe, counsel for Mr Yewen has provided the court with a Child Support Payer Transaction Statement, for his client, dated 19 December 2013. This shows that child support was adjusted in October of 2013 as a consequence of the lodgement of tax returns by Mr Yewen.
Accordingly, it seems that the Registrar has done what is required according to the provisions of section 58A of the Assessment Act. As previously indicated, it is only in limited circumstances that the Registrar is authorised to amend an assessment retrospectively so that a lower income is utilised.
The Registrar must amend an administrative assessment of child support, based on the Registrar’s determination of child support income, when further information arises concerning the taxable income for the liable parent in question but only if the taxable income is higher than that previously adopted by the Registrar pursuant to the procedures provided by section 58 or designated circumstances of hardship have arisen.
The rationale of the provision is, it would seem, firstly to encourage liable parents to lodge their tax returns on time and secondly not to allow a situation to arise in which a caring parent becomes subject to overpayment because of the tardiness of the other parent concerned. However, the legislature also recognised that the regime “may operate harshly where parents are genuinely unable to provide the Registrar with timely information. This may be because of ill-health, natural disaster or remote location.” [17]
[17] See Explanatory Memorandum to Families, Community Services and Indigenous Affairs Legislation Amendment (Child Support Reform Consolidation and Other Measures) Bill 2007 at page 18
The Transaction Statement in question indicates that credits to a total of $7,192.00 were made in Mr Yewen’s favour on 30 October 2013. On the same date, other sums totalling $9,754.41 were added in child support due. Why this was so I am unable to ascertain.[18] I presume that the hardship provisions did not apply to Mr Yewen and in some years his income was higher than previously assessed by the Registrar.
[18] See affidavit of Mr Yewen filed 3 April 2014 at paragraph 16
Pursuant to section 68 of the Registration Act, only the Registrar is authorised to remit penalties imposed on a liable parent for the late payment of child support. Accordingly the issue of penalties cannot be the direct subject of a departure application. In his affidavit in support of his application, Mr Yewen confirms that penalties were reduced by 50% on 12 December 2013. This remission also appears in the Transaction Statement.
Accordingly, the issue for the court, at this stage, is what is the basis of Mr Yewen’s application for departure and whether he has demonstrated, on the evidence currently available, that he has a prima facie case in support of his application.
In his affidavit, Mr Yewen deposes as follows, in respect of the grounds for his departure application:
“I seek…to depart from the previous assessments for the period 30 June 2006 to 30 June 2013 inclusive…and I seek a redetermination of my assessment on my actual income as determined by my recently lodged tax returns.
In the alternative, I seek [to] depart form the assessed child support payments and order that annual payments be averaged at $1,500 per year, to be more consistent with my income across that period, noting that in some of those years even $1,500 would have been a struggle.
I seek that this court order payment of a lump sum it considers fair.”[19]
[19] Ibid at paragraphs 32-35
Presumably the ground for departure, on which Mr Yewen seeks to rely, is that the various historical assessments in question do not properly reflect his income, earning capacity, property or financial circumstances [Assessment Act section 117(2)(c) (court ordered departure) or section 98C(2) (administrative departure)].
There now seems to be no uncertainty, given the lodgement of his tax returns, about what was Mr Yewen’s child support income for the periods in question. The Registrar has acted on the changed income available, as he was required to do within the parameters stipulated by section 58A. This, it would seem, has proven to be something of a mixed blessing for him, as he is only marginally better placed.
In these circumstances, I am persuaded that Mr Yewen has established that he has a prima facie case for departure. It does seem to be evident that, for at least some of the years in question, his child support income, as assessed by the ATO, was less than his deemed income for child support purposes and this is potentially inequitable to him.
However, I am troubled that his application for a lump sum or substitution payment is misconceived, given the structure of the applicable legislation. As previously indicated, only a payee can seek a lump sum payment, pursuant to the provision contained in section 123 of the Assessment Act.
At this preliminary stage, I find it difficult to consider that it would be just and equitable or in keeping with the ethos of the legislation for the court to make a lump sum payment, in the manner envisaged by
Mr Yewen, as a de facto comminution of the arrears in question, pursuant to the general powers of the court.
b) Responsibility and reasons for delay
The delay in the institution of these proceedings is solely attributable to Mr Yewen. He concedes that he put his head in the sand so far as his child support affairs were concerned. Mr Yewen has lived at the same address for many years. As such the Child Support Agency sent him regular statements in respect of his inexorably growing arrears, which he ignored from 2006 onwards.
Mr Yewen claims that he suffers from dyslexia and so “had a lot of trouble following all of the Child Support Agency documentation.” [20] However, Mr Yewen has not provided any independent and objective assessment of his difficulties in this regard. It beggars my belief that he was not aware, to some extent, that Ms Halley was entitled to child support from him, for [X], and the regular letters he received from the CSA related to this issue.
[20] Ibid at paragraph 11
The fact remains, however, that for close to eight years, his strategy of ignoring the CSA was successful. Nothing happened to him, apart from the fact that the letters from the Agency, with their ever increasing totals of arrears, kept landing in his mail box. In this context, I accept his evidence that, as the arrears increased with the number of outstanding tax returns, it became more and more daunting for him to confront the prospect of putting his financial and taxation affairs in orders.
I accept that Mr Yewen is not a sophisticated avoider of child support. There is no evidence to indicate that he has arranged his affairs to avoid child support. I also accept that he is not a wealthy person or one who is enjoying a standard of living, which is not obviously reflective of his declared financial situation.
J Paul Getty, the late American oil millionaire, is reported to have said “if you owe the bank a $100.00 that’s your problem. If you owe the bank one hundred million, that’s the bank’s problem.” It is a neat way of pointing out the obvious – that the question of debt is a relative matter. It is apparent that the Agency itself did little to engage with
Mr Yewen, whilst the debt built up and up. In saying this, I appreciate that it is not the Agency’s statutory function to assist child support debtors and it has limited resources.
In terms of Mr Yewen’s difficulties with reading as a consequence of dyslexia and what he asserts were feelings of hopelessness for much of the time in question and a period of diagnosed depression in 2012, he has provided no independent expert evidence to verify these claims.
As I say, the fact remains that for close to eight years, Mr Yewen was totally negligent in respect of both his taxation and child support responsibilities. It is a significant period of time and cannot be excused as a being a temporary aberration on his part, due to a specific incident or trauma which befell him.
It might be considered part of the Child Support Agency’s remit, when it becomes apparent to it that an individual is in trouble, with his or her child support responsibilities, as a consequence of no child support being paid, that the Agency should consider starting enforcement proceedings sooner rather than later with a remedial intent.
It is obviously easier, to put an individual back on track, so far as arrears are concerned, if those arrears are manageable rather than overwhelming, for the individual concerned. However, in statutory terms, no such obligation resides in the Agency. Rather the obligation is on the liable parent concerned to maintain his or her tax records appropriately.
c) Hardship
The father’s claim to hardship is, if he not able to proceed with some form of departure application, he will be assessed to pay an amount of child support which is not properly reflective of his income, income earning capacity and his financial resources generally. This will be unfair to him and is likely to result in the loss of his home. I accept that this represents a significant level of hardship to him.
It is Mr Yewen’s case that, of late, he has been responsible in the discharge of his financial obligations to support [X]. In this sense, as the child’s current financial needs are being met, it is somewhat theoretical to consider issues to do with his past financial support. He submits, in these circumstances, there is no great hardship to either
Ms Halley or [X] to defer the issue of reimbursement of past amounts of child support to Ms Halley a little longer.
The potential hardship to the mother is that she will be further delayed in receiving sums of child support, for [X], to which she has long been entitled. This will cause her further financial hardship and prevent her utilising these monies, in the manner which she thinks will best benefit [X], for some further undefined period of time.
However, it seems unlikely that there will be any issue of possible over-payment of previous amounts of child support arising as a consequence of a successful challenge to previous long-standing assessments. The reality is that Mr Yewen paid no child support between 2006 and 2013, so there can be no over-payment, no matter what is the outcome of any departure process. On this basis, if the departure process occurs, it could be said there is no prejudice to
Ms Halley, as nothing will have changed for her.
However, if the matter is remitted back to the Agency or departure proceedings proceed in this court, Ms Halley will potentially be involved in time consuming and burdensome litigation with Mr Yewen, which is due to no fault or omission on her part. As previously indicated, she fears becoming embroiled in a complex dispute which centres on issues to do with Mr Yewen’s income earning history as a [occupation omitted].
Mr Yewen contends that some of the hardship necessarily to be occasioned to Ms Halley can be ameliorated by him providing her with the immediate sum of $5,000.00, whilst the departure process is engaged. This will give her some financial respite and should be viewed in the context that he has, of late, shouldered his child support obligations for [X] and honoured the on-going assessments for him.
Ms Halley conjectures that Mr Yewen’s financial situation, as a self-employed [omitted], is likely to be complicated. Certainly, his situation is not readily comparable to a PAYG taxpayer, whose taxable income is easily ascertainable.
In these circumstances, she contends that it will constitute a considerable hardship to her if she is compelled to engage in litigation, in this court, in respect of departure proceedings relating to child support periods long concluded.
This litigation will be potentially stressful for her and time consuming. If she retains legal advisors, the proceedings will be expensive. In these circumstances, she contends that considerations of hardship overwhelmingly favour her.
In my view, issues of hardship favour Mr Yewen, particularly the possibility that the Registrar will execute against the Property B property on the basis of assessments of child support that are based on assessments of child support which may bear no true reflection of
Mr Yewen’s actual income situation in the years in question. I also agree that a payment of $5,000.00 immediately to Ms Halley would ameliorate any potential prejudice to her.
d) Any other relevant fact or circumstances
This imbroglio of competing considerations arises because Mr Yewen has been totally remiss in filing his tax returns on time, as he had a legal obligation to do pursuant to Part IV of the Income Tax Assessment Act 1936. Is this a factor to be taken into account in the exercise of the discretion arising under section 112. If so, how?
In Child Support Registrar & Rawlings[21] Judge Scarlett said as follows:
“Unwarrantable delay justifies the withholding of relief. The exercise of the Courts’ discretion to deny relief for delay has been considered in a number of decisions of the High Court, including The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd[22], and Re Commonwealth of Australia; Ex parte Marks.[23]
The predicament in which the First Respondent finds himself is entirely of his own making. Whilst the Court can accept that the sudden death of his father in 2008 and the serious illness leading to surgery of his de facto partner in 2009 placed a considerable strain on the First Respondent, these unfortunate events and their aftermath are far from a complete explanation for the First Respondent’s delay in lodging his income tax returns for a period of four years from 2008 to 2012.
It should by now be clear to people with an obligation to pay child support under an administrative assessment that it is essential that they lodge their income tax returns within the time required. That is an obligation that applies to taxpayers generally. In cases of hardship, a taxpayer may be granted an extension within which to lodge a return. However, repeated and continuing failure to lodge income tax returns will lead to adverse consequences, for which parties can expect to receive little sympathy from the Court.”
[21] Child Support Registrar & Rawlings & Anor [2013] FCCA 370 at [70] – [75]
[22]The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd (1949) 78 CLR 389
[23] Re Commonwealth of Australia; Ex parte Marks (2000) 177 ALR 491
As previously indicated Roberts FM took a similar approach in Hacherl & Berrios, where the liable parent, seeking leave under section 112, had belatedly filed his income tax returns. Leave was not granted on the basis that the delay in filing the returns lay solely at the feet of the applicant.
In McColl & McColl[24] Judge Halligan said as follows:
“Had the father lodged his tax returns when he was obliged to, the assessments he seeks to challenge would have issued proximate to the child support periods to which they relate, and he could have then pursued his remedies to challenge them, as he now seeks to do, unburdened by the limitation period for retrospective changes of assessments that now restricts his ability to challenge the assessments. It might also be observed that had he lodged his tax returns when he was obliged to, the objects of the Assessment Act set out in s.4 would have been better served, in that a proper level of support payable for the children by the father could then have been determined and the children's material needs better met at the time those needs had to be met.”
[24] McColl & McColl [2013] FCCA 736 at [53]
The proper and fair working of the child support regime, which is designed to ensure that children are fairly and properly supported, not just by one but by both of their parents, both regularly and reliably, depends on parents promptly and accurately disclosing their taxable income to the Registrar through the filing of the tax returns applicable to them.
It would, in my view, undermine the regime if liable parents could easily escape potential adverse consequences to them, arising from the late lodgement of tax returns, by bringing proceedings such as the current ones many years later. I cannot easily overlook the fact that
Mr Yewen’s current predicament is entirely of his own making.
On the other hand, in my view, it also potentially undermines the fair operation of the system if administrative assessments of child support are based on inaccurate assessments of income. Parents are required to provide a proper level of financial support for their children, not a level which is disproportionate to their income. The principle definition of proper is “accurate, correct.”[25]
[25] See Australian Oxford Dictionary
These public policy considerations must be balanced against one another in the exercise of the court’s discretion, which is unfettered, subject to it giving appropriate weight to all matters required to be considered. No one factor is necessarily decisive.
Mr Yewen’s explanation for failing to file his tax returns on time was that he felt overwhelmed by them and had difficulty reading and understanding his financial obligations due to his dyslexia. Ms Halley accepts that Mr Yewen suffers this condition but is uncertain of its application to the mismanagement of his taxation affairs.
I accept that there was some serious level of dysfunction in
Mr Yewen’s financial affairs over the period in question and he was not motivated by malice, greed or dishonesty in his failure to lodge his assessments. He is not a sophisticated person and there is no evidence to indicate that he is anything other than an ordinary working person, who was paralysed in respect of his financial affairs, rather than disingenuous.
In these circumstances the prospect of losing his home is a very serious hardship to Mr Yewen. I also accept that the hardship to Ms Halley can be ameliorated by the payment of a significant sum off the arrears.
For these reasons, I have come to the conclusion that I should exercise the discretion available to me in favour of Mr Yewen, subject to the condition that he pays the immediate sum of $5,000.00 in respect of the currently assessed arrears of child support.
It also seems to be the most pragmatic way to engage the departure process, for the years in question, is if the matter is remitted back to the Registrar for a decision to be made pursuant to section 98S of the Assessment Act.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and forty-nine (149) paragraphs are a true copy of the reasons for judgment of Judge Brown
Associate:
Date: 24 October 2014
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