FEDERAL CIRCUIT COURT OF AUSTRALIA
DALTON & MUNRO & ANOR	[2015] FCCA 2945 	

Catchwords: 
CHILD SUPPORT – Child support assessment – application for amendment of administrative assessment – where Applicant did not lodge income tax returns for the 2011, 2012 and 2013 financial years until 2014 – where deemed income used for purposes of child support assessment. 	

Legislation:
Child Support (Assessment) Act 1989 (Cth), ss.58, 58A, 111, 112, 116, 118
Family Law Act 1975 (Cth), s.117
Income Tax Assessment Act 1936 (Cth), Part IV
Children and Young Persons (Care and Protection) Act 1998 (NSW), s.49  	

Cases cited:
Bagala & Bagala (2009) FLC 98-043; [2009] FMCAfam 953
Bauer & Becker (2009) FLC 98-042; [2009] FMCAfam 480
Cantrell & Jennings [2009] FMCAfam 229
Child Support Registrar & Rawlings [2013] FCCA 370
Gilmour & Gilmour (1994) 18 Fam LR 646; (1995) FLC 92-591
Hacherl & Berrios [2010] FMCAfam 668
Whitford & Whitford (1979) 4 Fam LR 754; FLC 90-612	

Applicant:	MR DALTON	

First Respondent:	MS MUNRO	

Second Respondent:	Child Support Registrar	

File Number:	SYC 3682 of 2013	

Judgment of:	Judge Scarlett	

Hearing date:	11 November 2014	

Date of Last Submission:	11 November 2014	

Delivered at:	Sydney	

Delivered on:	24 June 2015	
REPRESENTATION
Counsel for the Applicant:	Ms Gibbons	

Solicitors for the Applicant:	Hunter Family Law Centre Pty Ltd	

Counsel for the First Respondent:	Ms Barnett	

Solicitors for the First Respondent:	Powe & White Family Lawyers	

Solicitor for the Second Respondent:	Ms Taah	

Solicitors for the Second Respondent:	Australian Government Solicitor	

ORDERS
(1)	The Further Amended Application filed on 20 October 2014 is dismissed.
(2)	Written submissions in support of any application for costs and any affidavits setting out the way in which the costs sought are quantified are to be filed and served within 28 days of the date of these Orders.
(3)	Any written submissions in opposition to any application for costs are to be filed and served within a further period of 14 days.  

IT IS NOTED that publication of this judgment under the pseudonym Dalton & Munro & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

(1)	
FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT Sydney	
SYC 3682 of 2013
MR DALTON	
Applicant

And

MR MUNRO	
First Respondent

Child Support Registrar	
Second Respondent

REASONS FOR JUDGMENT
Application
1.	This is an Application for departure from administrative assessment of child support, including an application to amend the administrative assessment of child support.
2.	The Application is opposed by the First Respondent, the payee, and the Second Respondent, the Child Support Registrar.  
Orders Sought 
3.	The Applicant originally filed an Application on 14 April 2014. The First Respondent filed her Response on 5 August 2014, seeking dismissal of the Application for both Interim and Final Orders.
4.	The Applicant then filed an Amended Application on 13 August 2014. The First Respondent maintained her earlier Response.
5.	The Applicant filed a Further Amended Initiating Application on 20 October 2014. It is this Application, somewhat amended, which proceeded to a hearing on 11 November 2014.
6.	The Applicant seeks the following orders:
	1.	That the annual rate of child support fixed by the Child Support Agency, in terms of its decision made on 23 May 2013 for the Assessment period from 10 October 2012 issued on 23 May 2013 for the Assessment period from 10 October 2012 to 19 March 2013; issued on 23 May 2013 for the Assessment period from 20 March 2013 to 19 June 2014 pending the determination of the Departure Order under the provision of Part 6A of the Child Support (Assessment) Act 1989 be varied pursuant to the provisions of s.116 of the Child Support (Assessment) Act 1989.
	2. (Not pressed)
	3.	That the annual rate of child support payable by the Husband to the Wife for the support of the child of the parties, namely X born (omitted) 1997 (‘the child’) is hereby set at $383.00 per annum for the period commencing from 10 October 2012 to 19 March 2013.
	4.	That the annual rate of child support payable by the Husband to the Wife for the support of the child of the parties, namely X born (omitted) 1997 (‘the child’) is hereby set at $391.00 per annum for the period commencing from 20 March 2013 to 19 June 2014.
	5.	(Not pressed)
Background
7.	The background to this matter has been succinctly set out by the solicitor for the Child Support Registrar, Ms Taah, in her Written Submissions of 11 November 2014.
8.	The Applicant’s child support liability for the parties’ child X commenced on (omitted) 1997, the date of his birth. Child support payments were collected privately for a few months until the liability was registered for collection with the Child Support Registrar on 5 May 1997. The Registrar has continued to collect the child support since then, except for a brief period between 20 September and 24 October 2010, when it was again collected privately. 
9.	The Applicant did not lodge an income tax return for the financial years ending in 2011, 2012 and 2013. His child support liability was calculated on a deemed or default taxable income. He lodged his income tax returns for those years in 2014. Those income tax returns showed taxable incomes that were lower than the deemed or default taxable incomes used to calculate the Applicant’s child support liability for the 2011, 2012 and 2013 financial years.
Procedural History
10.	The proceedings were commenced by an Application filed by the Child Support Registrar on 2 July 2013, seeking to enforce payment of a child support debt of $27,394.53 and late payment penalties of $3,581.60. 
11.	On 10 April 2014 the Applicant filed a Response, seeking a stay on the collection by the Registrar of arrears or amounts due in relation to administrative assessments issued on 23 May 2013 for various Assessment periods from 11 September 2011 to 19 June 2014 pending the determination of an application for a Departure Order for those periods.
12.	On 14 April 2014 the Applicant filed an Application seeking the same stay and Departure Orders.
13.	The Applicant then filed, on 13 August 2014, an Amended Application and, on 20 October 2014, a Further Amended Application.   
Evidence
14.	The Applicant relied on the following:
a)	his affidavit of 30 October 2014;
b)	the affidavit of Mr G sworn 22 October 2014; and
c)	his Financial Statement filed on 14 April 2014.
15.	The First Respondent relied on: 
a)	her affidavit of 29 July 2014; and
b)	her Financial Statement filed on 5 August 2014.
16.	The Child Support Registrar relied on the affidavits of:
a)	Ms S, sworn 28 June 2013; and
b)	Ms M, sworn 31 January 2014.
17.	The Applicant gave oral evidence and was cross-examined by Ms Barnett of Counsel for the First Respondent.
18.	No other deponents were required for cross-examination.
19.	The Applicant deposed in his affidavit that the child lived with his mother, the First Respondent, from birth on (omitted) 1997 until about (omitted) 2008. On that date, the child was placed in the Applicant’s care by the Department of Community Services under the provisions of s.49 of the Children and Young Persons (Care and Protection) Act 1998 (NSW).
20.	About the beginning of October 2010 the child returned to live with the mother, without either his consent or that of the Department.
21.	The Applicant went on to depose that he had attempted to obtain an administrative assessment of child support in early 2008, but without success. He stated that he had last received any communication from the Child Support Agency in about June or July 2008 and he denied that he had ever received any notification that the mother was claiming child support for the child from September 2010.
22.	The child has left school. He worked as a (occupation omitted) for a while and, at the date of the Applicant’s affidavit, was working for the Applicant on a casual basis. 
23.	The Applicant deposed that from the time that the child returned to live with his mother he had given the child money from time to time.
24.	The Applicant denied that his assets had the values ascribed to them by the Child Support Registrar. He confirmed that he owned the motor vehicles set out in paragraph [23] of the affidavit of Ms S except for a Prime Mover (White) registration (omitted), which he claimed to hold as trustee for his brother in law, Mr G. He deposed:
	Mr G is my wife’s brother and he became bankrupt on at least two occasions and he was therefore unable to obtain any finance because of his past history of bankruptcy. Mr G is involved in the (omitted) business as an owner operator.
25.	As to his income tax returns, the Applicant deposed:
	47.	In relation to my personal income I say that I have not lodged any Income Tax Returns since 30 June 2010 at the time when these proceedings had commenced.
	48.	I had not been able to lodge my Income Tax Returns as the book keeper that had been employed by me, Ms G, left my employment to assist her partner in a (omitted) business.
	49.	After my book keeper left I had difficulty in finding a suitable replacement to assist me with the preparation of Financial Statements and Income Tax Returns.
	50.	I did eventually employ a book keeper to complete all the book keeping entries for the tax years after 2010.
	51.	I have now submitted my tax return for the outstanding tax years 2011, 2012 and 2013 and I attach hereto marked annexure “D” a true copy of these returns.
	52.	I have now received my income tax assessments for the outstanding tax years 2011, 2012 and 2013 and I attach hereto marked annexure “E” a true copy of these assessments.
26.	In his affidavit of 22 October 2014, Mr G confirmed that:
a)	He had been bankrupt;
b)	He had difficulty obtaining finance once he had come out of bankruptcy;
c)	He asked the Applicant to purchase a truck in his name on his behalf;
d)	He has made all the repayments on the truck; and
e)	He had arranged to sell the truck by auction because it is no longer suitable for long haul transport.
Submissions
27.	Ms Gibbons for the Applicant submitted that the Applicant’s position as of 2011 was that he owed $60,000.00 to the Australian Taxation Office. He filed his income tax returns some months prior to the hearing and his income was assessed as being lower than the default assessments made by the Child Support Registrar. The Applicant was in significant debt at the time and the debt seems to be increasing rather than decreasing.
28.	It was submitted that the Applicant’s house is valued at less than $300,000.00; he has a tax debt of $63,000.00 and a debt of $25,000.00 owing to his landlord. Thus, he is not in a position to meet the debt due to the Child Support Registrar on behalf of the child. Not to depart from the assessment would not be fair or equitable. It is a special circumstance, it was submitted.
29.	The child concerned has been financially independent for a number of years and is now self-supporting. He has no special needs.
30.	Ms Gibbons submitted that the Applicant’s financial circumstances have been on a downward spiral where his property is all burdened by debt.
31.	Counsel for the First Respondent submitted that at the time of the commencement of proceedings the Applicant owed $27,394.53 in arrears of child support. As he had not lodged his income tax returns for 2011, 2012 and 2013 a provisional figure was determined by the Child Support Agency under s.58 of the Child Support (Assessment) Act 1989 (Cth). Section 58A of the Act does not provide for the adjustment of taxable incomes retrospectively applied where the reportable taxable income is lower than the taxable income as assessed and the Applicant has not filed his income tax returns in compliance with Part IV of the Income Tax Assessment Act 1936 (Cth).
32.	Ms Barnett submitted that, as the Court found in the matter of Child Support Registrar & Rawlings at [71], unwarranted delay justifies the withholding of relief. She further submitted that the Applicant chose not to seek a review of the child support owed through the normal course (Bagala & Bagala).  Again, the balance of hardship favours the mother as she is in a financially weaker position (Cantrell & Jennings).
33.	Ms Barnett went on to submit that the Court should not order a departure from the assessed amount, referring to s.116 of the Child Support (Assessment) Act 1989. The Applicant had real opportunities, prior to the Child Support Registrar filing the Application for enforcement, to seek a review of his child support liability. He chose not to do so and has not provided any evidence of a reasonable excuse for not doing so (see Bagala & Bagala). Moreover, the Respondent mother has limited financial resources and relies upon Centrelink benefits, and has done so whilst the child was in her care.
34.	Ms Barnett referred the Court to the decision of the Full Court of the Family Court in Gilmour & Gilmour where it was held by Ellis, Finn and Maxwell JJ that the Court must satisfy itself:
	1.	Whether one or more grounds for departure in s. 117(2) is established.
	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.    
35.	It is for the Applicant to make out one of the grounds under s.117(2) and, she submitted, he has not done so. The Court should not be satisfied that the Applicant has shown that there are special circumstances or that the administrative assessment results in an unjust or inequitable determination. 
36.	It is the responsibility of the Applicant to prove that the administrative assessment of child support is inequitable and, it is submitted, he has not done so. 
37.	Ms Barnett submitted on behalf of her client that the Court should not find that it is just and equitable or proper to make a departure order.
38.	The solicitor for the Child Support Registrar, Ms Taah, submitted that the Applicant had shown a delay in seeking relief. She referred to the decision of Brown FM in Bauer & Becker at [73]-[75] where his Honour referred to the undesirability of parents being able to review assessments retrospectively, saying:
	74.	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.
	75.	…In these circumstances, it is my view that there must be something exceptional to justify the court’s revisiting of decisions which were made some time ago. The fact that Mr Bauer is currently being challenged to pay the arrears outstanding is not such an exceptional circumstance. 
39.	Ms Taah submitted that it was open to the Applicant to lodge an application for change of assessment for the child support periods that were assessed by the Child Support Registrar using deemed taxable incomes. She cast doubt on the Applicant’s assertion that he was “totally unaware” of his child support obligations until he was served with court documents in these proceedings.
40.	It was further submitted that the Applicant’s explanation that he was unable to lodge his tax returns because his previous book keeper had left his employment is not a reasonable explanation for his delay in lodging his income tax returns.
41.	Ms Taah submitted that the Court is required to consider the balance of hardship to the Applicant and the First Respondent, noting that in Bauer & Beckerat [84] Brown FM accepted that the exercise involves the balance of any appreciable detriment financial, personal or otherwise (following the decision of Whitford & Whitford). It was submitted that, noting the Applicant’s assets, it would be open to the Court to find that he would not suffer any hardship if his application were to be refused. On the other hand, the Respondent mother has been on a disability support pension and would suffer hardship if the application were to be granted.
42.	Ms Taah also referred the Court to the decision of Riethmuller FM in Bagala & Bagalawhere His Honour held that a court should not exercise its discretion to permit a party to apply for a review of the party’s child support liability through the Court, rather than following the procedure for administrative departure provided by Part 6A of the Act, after enforcement proceedings have already been commenced. As his Honour said at [22]:
	The Applicant had real opportunities, prior to the Child Support Registrar filing the enforcement summons, to seek a review of his child support liability. He chose not to do so and has not provided any evidence of a reasonable excuse for not doing so.
43.	Finally, it was submitted that the Applicant’s contention that he had 100% care of the child from (omitted) 2008 until about October 2010 and had made repeated attempts to obtain an assessment of child support from the mother is not relevant to the matter before the Court, as this period predates the period for which the Applicant seeks departure.
Conclusions
44.	The Applicant has not discharged his onus of establishing that the administrative assessments made on 23 May 2013 for the periods 10 October 2012 to 19 March 2013 and 20 March 2013 to 19 June 2014 result in an unjust or inequitable determination or that there are special circumstances that would justify a departure from administrative assessment.
45.	The Applicant’s explanation for his failure to file income tax returns for three years running is inadequate. The Court has consistently held that taxpayers who fail to lodge their income tax returns in a timely manner should not expect to be able to use this delay as a reason for making an application for a retrospective variation to a child support assessment. As I held in Child Support Registrar & Rawlings at [73]:
	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. 
46.	In an earlier decision, Hacherl & Berrios, Roberts FM held at [41]:
	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 on 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.
47.	The other issues that arises in this case is that the Applicant did not make his Application to depart from the administrative assessments of child support until after the Child Support Registrar had commenced enforcement proceedings. As Brown FM held in Bauer & Becker at [73]:
	…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.
48.	There is a clear line of authority in this Court to this effect which should be followed, in the decisions of Cantrell & Jennings, Bauer & Becker, Bagala & Bagala, Hacherl & Berrios and Child Support Registrar & Rawlings. 
49.	The Application will be dismissed.
Costs
50.	Costs in child support proceedings do not necessarily follow the event. The Court is required to follow the provisions of s.117 of the Family Law Act 1975 (Cth). Where the Court is of the opinion that there are circumstances that justify it in doing so, the Court may make an order for costs, subject to the considerations in s.117(2A).
51.	I propose to allow a period of 28 days in which any party who seeks an order for costs should file and serve a written submission and an affidavit setting out the way in which the costs sought are quantified. I will allow a further period of 14 days to file and serve any written submission in opposition to an application for costs.  
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Associate:  

Date: 2 November 2015