McKay v Commissioner of Inland Revenue
[2017] NZHC 1608
•12 July 2017
NOTE: IN ACCORDANCE WITH PARA [36] OF THIS JUDGMENT ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE align="center">ABOUT-US/ABOUT-THE-FAMILYCOURT/ LEGISLATION/RESTRICTION- ON-PUBLISHING-JUDGMENTS.
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2017-485-82 [2017] NZHC 1608
IN THE MATTER of the Judicature Amendment Act 1972 BETWEEN
ANDREW RODERICK MCKAY Plaintiff
AND
THE COMMISSIONER OF INLAND REVENUE
Defendant
Hearing: 5 July 2017 Counsel:
A C Beck for Plaintiff
J K Gorman and M Szymanik for DefendantJudgment:
12 July 2017
JUDGMENT OF ELLIS J
[1] Mr McKay seeks judicial review of a 2015 decision made by the Commissioner of Inland Revenue (the Commissioner) assessing him as liable to pay child support for a child (B) under the Child Support Act 1991 (the CSA). That assessment is necessarily based on the Commissioner being satisfied that he is B’s
father, in accordance with the provisions of that Act.
MCKAY v THE COMMISSIONER OF INLAND REVENUE [2017] NZHC 1608 [12 July 2017]
[2] Mr McKay did not exercise his statutory appeal rights against the Commissioner’s decision and is now out of time to do so. He has, sporadically, been paying child support to B’s mother (A) since the date of the decision but is now in arrears.
[3] Mr McKay does not seek to contend in this proceeding that he is not B’s biological father, as a matter of fact. Rather he says that in reaching the conclusion that he was, the Commissioner impermissibly relied on information that was privileged and/or confidential. That information was, in effect, an acknowledgement of paternity made in a signed agreement made between A and Mr McKay following their engagement in a family dispute resolution process under the Family Dispute Resolution Act 2013 (the FDRA).
[4] The Commissioner accepts that if Mr McKay is correct on the privilege/confidentiality point (which she denies) then the basis for her assessment would fall away. That is because her finding of Mr McKay’s “parenthood” was based on s 7(1)(e) of the CSA, which provides that a person is a parent of a child if:
the person has, at any time in any proceeding before any court in New Zealand, or before any court or public authority in an overseas jurisdiction, or in writing signed by the person, acknowledged that he or she is a parent of the child and a court has not made a finding of paternity of the child that is to the contrary of that acknowledgment
(emphasis added.)
[5] There presently exists no other basis upon which Mr McKay’s paternity
could be established under s 7.
[6] Following that general overview it is necessary now to say a little more about A’s application under the CSA, the Commissioner’s determination of it and about the operation of the FDRA.
A’s application under the CSA
[7] Children who are New Zealand citizens or who are ordinarily resident in New Zealand qualify for child support in New Zealand.1 Any parent or carer can apply to the Commissioner to assess child support payable for a child who qualifies for support under the CSA.
[8] On 20 August 2015, the Commissioner received an IR10l Child Support application from A. The application named Mr McKay as the other parent of B. B’s New Zealand birth certificate does not, however, name his father.
[9] Attached to the application was a DNA Diagnostics report on parentage testing. The report records that the DNA results very strongly suggest that Mr McKay is B’s biological father. Indeed, it states that he is 37 million times more likely to be the child’s father than any man not related to him.
[10] Also attached to the application was a copy of a mediated agreement which, as I have said, was the product of a process engaged in by Mr McKay and A under the FDRA and it contains an acknowledgement by Mr McKay that he is B’s father. The mediated agreement was signed by both A and Mr McKay. It does not, on its
face, state that it is a privileged or a confidential document.2
[11] Based on the agreement, the Commissioner found that Mr McKay was B’s parent in terms of s 7(1)(e) of the CSA. And on 25 August 2015 she accepted the child support application as a formula assessment under s 10 of the CSA.
[12] The Commissioner then received a Notice of Objection from Mr McKay on
7 September 2015. The grounds for the objection were that the assessment was not in accordance with the CSA because:
1 Children must be less than 18 years old, or 18 years old and still attending school; not be living with another person in marriage, civil union or a de facto relationship; and not be financially independent: Child Support Act 1991, s 5.
2 Due to Mr McKay’s insistence that the document was privileged, it was not in evidence before me. Necessarily, however, its key features were the subject of agreement between the parties and I proceed on that agreed basis.
(a) Mr McKay was not named as the father on B’s birth certificate;
(b) B was not a New Zealand citizen;
(c) as at the date of the application B was not ordinarily resident in
New Zealand; and
(d)the mediated agreement was privileged and confidential and its contents should be disregarded.
[13] The claim for privilege was based on s 14 of the FDRA, which relevantly provides:
14 Privilege
(1) This section applies to a statement that a party to a family dispute makes to an FDR provider for the purpose of enabling the FDR provider to deal with the dispute.
(2) No evidence of the statement is admissible in any court or before any person acting judicially, unless the statement is recorded in a family dispute resolution form.
[14] The Commissioner accepted the objection under s 90(1)(a) of the CSA, but subsequently disallowed it. In letters dated 29 September 2015 and 12 November
2015, she advised Mr McKay that the reasons for the disallowance were that:
(a) B is a qualifying child as his father is a New Zealand citizen meaning that the child is also a New Zealand citizen by birth as he was born in New Zealand;3 and
(b)decision-makers under s 7 of the CSA are not acting judicially but are completing an administrative task such that s 14(2) of the FDRA does
not apply.
3 Mr McKay now accepts that B meets the requirements to qualify for child support in s 5(1)(a) to (d) of the CSA. In particular, he does not now object to the Commissioner's decision that the child qualifies support under the CSA on the basis of the child’s residency/citizenship status. If Mr McKay is the child's father, then the child is a New Zealand citizen by birth: s 6(1)(b)(i) Citizenship Act 1977.
[15] Mr McKay was advised in the 29 September letter that if he disagreed with the decision he could lodge an appeal with the Family Court within two months from the date of the letter but he did not do so.
[16] On 16 February 2017 the Commissioner was served with the statement of claim in this proceeding.
The FDRA process – both generally and in Mr McKay’s case
[17] The FDRA and the processes established under it formed part of the 2013 family justice reforms. The purpose of the Act are stated in s 3 to be:
(a) to require the use of family dispute resolution in specified family disputes:
(b) to provide for operational measures required for the use of family dispute resolution.
[18] The s 4 definition of “family dispute resolution” is:
family dispute resolution provided by a family dispute resolution provider for the purposes of—
(a) assisting parties to a family dispute to resolve the dispute without having to pursue court proceedings; and
(b) ensuring that the parties’ first and paramount consideration in reaching a resolution is the welfare and best interests of the children[.]
[19] And a “family dispute” is defined in s 4 to mean a dispute that will require an application described in section 46F(1) of the Care of Children Act 2004 if a party to the dispute wants a court to resolve it. In other words, the Act is concerned with resolving parenting and guardianship disputes.4
[20] Section 12 deals with the various ways in which a family dispute resolution process can be brought to an end and the consequences which flow from each. Subsections (7) and (8) provide that when an FDR provider and the parties agree that
resolution has been reached on all matters in dispute:
4 Section 46F makes it clear that it relates to applications for a direction under s 46R (relating to guardianship matters) and s 48 (which relates to parenting orders).
The FDR provider must give each of the parties to the family dispute a form that states—
(a) all of the matters on which resolution has been reached; and
(b) the agreement reached in respect of those matters.
[21] It seems that there is a standard form used for that purpose. The form that was in evidence before me relevantly stated under the heading “The matters parties reached agreement on”:
All parenting and guardianship matters in dispute were agreed and are listed below. The agreement details are described in the attached document (if required).
…
Contact agreed and also a transition period agreed whereby contact can be increased and guardianship to be reviewed in 6 months time.
[22] It seems that in Mr McKay’s case, the agreement itself was not physically
attached to this form, although it could have been.
[23] Section 13 sets out the circumstances in which such a form must be provided to the Family Court by the FDR provider. That section is not directly relevant here as there are no Family Court proceedings between Mr McKay and A. It seems clear, however, from the Ministry of Justice Operating Guidelines for Family Dispute Resolution Suppliers that if Mr McKay and A wished to formalise their agreement by way of Court order they may also provide it to the Family Court for that purpose.
[24] I have already set out s 14 of the FDRA at [13] above so do not repeat it here.
[25] Before leaving the FDRA and the processes under it seems relevant to note that the agreement to mediate signed by Mr McKay and A relevantly provided:
8.The mediator and the parties will treat as confidential all written and oral communications as well as documents presented at or before mediation.
…
10.Any information, whether written or spoken, about what occurred in the mediation is privileged. It shall not be used by any party in any Court unless all parties agree.
…
15.When agreement is reached about the care arrangements for the children, a mediated agreement will be prepared and signed by the parties. No settlement is binding unless and until it is in writing and has been signed by all of the parties.
Discussion
[26] It is my clear view that Mr McKay’s application must fail. I consider that the
agreement is neither privileged nor confidential, for the reasons that follow.
Privilege
[27] First, I agree with Ms Gorman that s 14(2) of the FDRA is effectively a statutory version of the “without prejudice” privilege at common law, and which is now reflected in s 57 of the Evidence Act 2006 (the EA). Section 57 provides in part:
57 Privilege for settlement negotiations, mediation, or plea discussions
(1) A person who is a party to, or a mediator in, a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of any communication between that person and any other person who is a party to the dispute if the communication—
(a) was intended to be confidential; and
(b) was made in connection with an attempt to settle or mediate the dispute between the persons.
(2) A person who is a party to a dispute of a kind for which relief may be given in a civil proceeding has a privilege in respect of a confidential document that the person has prepared, or caused to be prepared, in connection with an attempt to mediate the dispute or to negotiate a settlement of the dispute.
…
(3) This section does not apply to—
(a) the terms of an agreement settling the dispute; or
(b) evidence necessary to prove the existence of such an agreement in a proceeding in which the conclusion of such an agreement is in issue[.]
[28] The underlying purpose of the privilege is to encourage parties engaged in settlement negotiations (as Mr McKay and A were) to speak freely. To that end, admissions and statements made in the course of those negotiations are protected and cannot be used against the maker, should the negotiations fail to achieve settlement. The overall objective is to facilitate out of court resolution, and reduce the necessity for litigation.
[29] In my view the terms of s 14 make the link to “without prejudice” privilege plain. The section is expressly concerned with statements made “to an FDR provider for the purpose of enabling the FDR provider to deal with the dispute”. And on any analysis the word “statement” does not include the agreement that results when settlement negotiations are successful. As well as being at odds with the words of the section, it would defy common sense because it would mean that the agreement could not subsequently be enforced in any Court or, in the case of an agreement under the FDRA, provided to the Family Court for conversion to formal orders. As is evident from the contents of the family dispute resolution form that was completed in the present case, such a form may well not be adequate for that purpose. The point is further underscored by the distinction drawn in s 57(3) of the EA.
[30] Strictly speaking, it is unnecessary to consider the alternative ground advanced by the Commissioner, namely that the s 14(2) prohibition does not apply because she is not, when considering information supplied in support of a child support applications, either admitting evidence or performing that function as “a Court or person acting judicially”. I therefore merely record my agreement that that submission runs contrary to this Court’s decision in Commissioner of Inland Revenue v B, and to an analysis based on the ten tests formulated by Lord Diplock in
Trapp v Mackie as was undertaken by Wild J in that case.5
5 Commissioner of Inland Revenue v B [2001] 2 NZLR 566 (HC), applying Trapp v Mackie
[1979] 1 All ER 489 (HL).
Confidentiality
[31] I acknowledge that some settlement agreements are stated to be confidential to the parties. When that is so, confidentiality effectively forms part of the agreement; it becomes an obligation that falls on the parties to maintain. MacGregor v Craig is a signal and recent case involving such an agreement.6 But the settlement agreement here contained no such provisions.
[32] I also acknowledge that the earlier agreement to mediate did contain confidentiality provisions. I have set it out above. But like the “without prejudice” privilege already discussed, confidentiality is expressly confined to “all written and oral communications” and documents “presented at or before mediation”. Any resulting settlement agreement is not included, no doubt precisely for all the reasons already discussed.
[33] In terms of any wider or separate contention that there is something about Mr McKay’s acknowledgment of paternity which was contained in the agreement that is confidential, the stark reality is that the very fact that Mr McKay was able to participate in the family dispute resolution process at all implies that he is B’s father. It has not been suggested that there is any other way he would have standing to make an application under ss 46R or 48 of the COCA, which is a prerequisite to participating in the process. Absent some special circumstances (and none have been advanced here) there is nothing inherently private or confidential about the fact of paternity. In my view the confidentiality emperor has no clothes either.
Conclusion
[34] For the reasons I have given the mediated family dispute resolution agreement is neither privileged nor confidential. The Commissioner was entitled to take its contents into account in determining that Mr McKay was B’s father for the
purposes of a child support assessment under the CSA.
6 MacGregor v Craig [2016] NZHRRT 6 at [6].
[35] The application for judicial review is dismissed accordingly. The
Commissioner is entitled to her 2B costs.
[36] Although s 124 of the CSA does not directly apply in an application for review of a child support assessment I consider that the reporting of this proceeding should, by analogy, comply with ss 11B to 11D of the Family Courts Act 1980 and the name of Mr McKay's son (and therefore the name of his mother) should not be
published. For that reason I have anonymised their names in this judgment.
Rebecca Ellis J
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