REASONS FOR JUDGMENT

Application

This is an Application by the payer of child support to reduce the amount calculated as owing by an amount of $12,985.43. The Application is opposed by the First Respondent, the payee, and the Second Respondent, the Child Support Registrar. The child support relates to the daughter of the Applicant and the First Respondent, who was born [in] 1997 and is now 15 years of age.

On 7^th December 2010 orders in respect of arrears of child support and late payment penalties were stayed to the extent of $19,560.34.

Background

On 27^th April 2010 the Child Support Registrar filed a summons against the Applicant, claiming that he was indebted to the Commonwealth under s.30 of the Child Support (Registration and Collection) Act 1988 for an amount of $25,845.59 by way of arrears of child support payments and an amount of $8,129.02 by way of late payment penalties under s.67 of the Act.

On 7^th June 2010 the Applicant and the Child Support Registrar entered into consent orders:

declaring that the Applicant (who is the Respondent in the summons brought by the Child Support Registrar) owed the sum of $35,571.34 consisting of arrears of $26,956.43 and late payment penalties of $8,614.91;

the Applicant was to make a payment of $5,000.00 to the Child Support Registrar within 21 days;

the Applicant was restrained from selling or disposing of certain assets.

The Court noted that the Child Support Registrar agreed to adjourn the proceedings pending the determination of an application filed by the Applicant with the Child Support Agency.

Further orders were made by consent on 5^th July 2010.

On 1^st November 2010 the Applicant filed the current Application. The stay order referred to above was made on 7^th December 2010.

The Application was heard on 13^th March and 5^th June 2012.

Orders Sought

The Applicant seeks this order:

That the Child Support Registrar reduce the amount of child support calculated as being due and payable by Mr Hewett by the sum of $12,985.43 together with interest calculated on that sum at the rate provided for in the Child Support (Assessment) Act and Regulations and/or the Child Support (Registration and Collection) Act and Regulations as and from 2 December 2004.

The Child Support Registrar filed a Response on 21^st January 2011 seeking that:

the Application be dismissed; and

Order 1 made on 7^th December 2010 be dismissed.

The Second Respondent filed a Response on 3^rd March 2011 seeking the same orders.

Evidence

The Applicant relied on his affidavit sworn 18^th October 2010.

The First Respondent relied on her affidavit sworn or affirmed on 3^rd March 2011.

The Child Support Registrar relied on the following:

the affidavit of Mr M sworn on 21^st January 2011;

the affidavit of Ms C affirmed on 21^st January 2011; and

the affidavit of Ms C affirmed on 8^th March 2011.

The Applicant’s evidence was that he was advised by the Child Support Agency that after a reassessment of his child support liability he had overpaid the First Respondent the sum of $15,985.43. He annexed to his affidavit a copy of a letter from the Child Agency dated 17^th August 2004 saying:

You have paid Ms Johnson $15,985.43 too much child support.

He also annexed to his affidavit a copy of a letter from the Child Support Agency dated 5^th February 2010 to his solicitors, referring to gifting of an overpayment. The letter said:

It is possible for the paying parent to offset the overpayment by gifting to the receiving parent. By gifting an amount the paying parent is advising the Child Support Agency that they wish the overpaid amount to be treated as a voluntary payment to the receiving parent (section 74(1)(b) and 75(b) of the Registration and Collection Act). Voluntary payments, including gifts of overpaid amounts are accepted by the Registrar as having been paid to the receiving parent in addition to their entitlement under the registered maintenance liability.

The letter attached copies of the Child Support Agency’s records of telephone conversations with the Applicant.

The Applicant deposed that:

I do recall in one conversation with an officer from the Child Support Agency in 2004 saying words to the effect of “I don’t want to get it back from her, just credit it against future payments”. This is reflected in the conversation recorded between myself and an officer of the agency on 3 September 2004 which is contained in Annexure “B” hereto.

The Applicant also deposed:

It was my intention that the overpayment should be credited against future child support liabilities as they arose. I note that this is what the Agency did for the period 17 August 2004 to 2 December 2004.

The Applicant was cross-examined by Mr Kaplan of counsel, for the Child Support Registrar. He denied telling either Ms C or Mr M from the Child Support Agency that he intended making an outright to the First Respondent, and maintained his position that he had always intended that, rather than the overpaid funds be repaid to him, they should be retained by the First Respondent and that the amount should be credited against his child support liability.

He denied ever having seen a Notice of Decision dated 29^th March 2005 from the Child Support Agency, which had been tendered in evidence on behalf of the Child Support Registrar.

The First Respondent deposed in her affidavit of 3^rd March 2011 that in her view the Applicant definitely gifted the overpayment to her and there was never any discussion regarding the disputed amount of $12,985.43 being credited against future child support payments. She annexed to her affidavit a printout of an email dated 2^nd September 2004 from the Applicant to her.

The First Respondent was cross-examined by M Kaplan. She said that she would use the disputed amount of child support for such purposes as to cover rent, food, school requirements for her daughter, school fees, clothing, holidays for the child, music lessons and dental expenses for the child. She said that she had received a copy of the Notice of Decision of 29^th March 2005.

Mr M is an officer of the Child Support Agency. He is currently working in Brisbane and had travelled from Brisbane for the purpose of giving evidence on 13^th March 2012. For this reason, the parties agreed that his evidence could be taken out of turn, so that he would not need to return on the adjourned date.

In his affidavit sworn 21^st January 2011 he deposed that at the request of another officer, Ms C, he telephoned the Applicant on or about 2^nd December 2004 and spoke to him about the overpaid money. The Applicant said that he was in Paris and Mr M deposed that the conversation continued:

Me:I appreciate that, but we need to know what you would like to do with this overpayment. There are a number of options. You can gift the money to Ms Johnson, recover the money from her, or you can –

Mr Hewett:I will gift the money. Gift the money to Ms Johnson.

Me: OK. So you want to gift the overpayment to Ms Johnson.

Mr Hewett:All of it. But I want you to make it very clear on your records that I am gifting the money to Ms Johnson in good faith.

Me:Yes, I will make sure a note of that is recorded on your case. I am required to tell you that a decision to gift the overpayment is final and you cannot change your mind later on. Once you elect to gift the money a person cannot be forced to repay that money to you.

Mr Hewett:That’s fine.

Me:OK. I will pass this on to Ms C and she will give effect to your election to gift the credit balance. She will contact you.

Mr M was cross-examined by the Applicant’s solicitor, Mr Benetatos. He maintained his evidence in chief that Ms C wanted him to contact the Applicant for the purpose of confirming that he was making a gift of the overpayment. She had put to Mr M that making a gift of the money “was one of the options available to him and the most likely he was contemplating”.

The Child Support Registrar also relied on the affidavits of Ms C, affirmed on 21^st January and 8^th March 2011. Ms C was not required for cross-examination.

Her account of the conversation with the Applicant on 3^rd September 2004 is set out in paragraph 11 of her affidavit of 21^st January 2011:

…I am calling about the overpayment to Ms Johnson as a result of you recently lodging your tax returns. I would like to discuss with you what you would like to do about the overpayment. You probably will have received the letter from the CSA dated 17 August 2004 notifying you about the overpayment.

Mr Hewett:Yes.

Me:You can gift the money to her, in which case Ms Johnson would not be expected to pay back this money to you in future, or we can offset any future child support amounts against the credit until it is absorbed, or you can ask CSA to collect this amount from Ms Johnson.

Mr Hewett:I don’t want Ms Johnson to pay the money back. She can keep it, but I don’t want to be reassessed to pay this money back again to CSA at a later date. I will speak to Ms Johnson about future child support payments.

Me:OK. I won’t gift the overpayment to Ms Johnson until you speak to her. I’ll call you next week to confirm your decision.

Ms C deposed that she spoke to the Applicant again on or about 21 October 2004. He said to her:

I am very busy and haven’t had time to sort out child support issues with Ms Johnson.

Me:In relation to the overpayment to Ms Johnson, do you want to gift the overpayment to her?

Mr Hewett:I don’t want to gift the overpayment to her just yet. I want to speak to her first. Call me next Friday to discuss my decision.

Again, Ms C deposed that she spoke to the Applicant on 8^th November 2004 and asked him about his intention in relation to the overpayment to the First Respondent. He replied:

“I won’t be making a decision about this until I speak to Ms Johnson again.”

Ms C called the Applicant on two more occasions without getting a decision from him. On 15^th November 2004 she called him again and said:

Mr Hewett, you must make a decision. Do you want to gift the payment to Ms Johnson, let the ongoing liability absorb the overpayment, or have CSA collect the overpayment from Ms Johnson?

The Applicant said that he would call her back on 18^th November but did not do so. After a further unsuccessful attempt to speak to the Applicant, Ms C asked Mr M to speak to the Applicant, which he did on 2^nd December 2004.

Ms C deposed:

On 2 December 2004, I processed the overpayment to Ms Johnson as a gift which resulted in a debit being posted to Mr Hewett’s account in the amount of $12,985.43, being the balance of the overpayment to Ms Johnson for child support. On 3 December 2004 an amount of $1,070.71 in late payment penalties was remitted by the CSA.

Ms C was not required for cross-examination.

Submissions

In a written submission, the Applicant’s solicitor, Mr Benetatos, submitted that the Applicant’s telephone conversations with officers of the Child Support Agency on 3^rd September and 2^nd December 2004 are the most important, as they show that the Applicant was not seeking to make the Respondent refund any of the overpaid money but did not want to be reassessed to repay the money. He submitted that this can only be interpreted to mean that he wanted the overpayment credited against future obligations.

Further, it was submitted:

Given the decision to gift the payment to the payee is against the interests of the payer one can understand why the agency indicate why they want any such decision to be in writing. Notwithstanding this the Agency proceeded to implement this decision not only when it did not have instructions in writing to do this but when the first verbal instructions were clear in the initial phone conversation.

It was also submitted that the Court should have some doubts about the reliability of the evidence of Mr M, given the length of time that had elapsed since the conservations had taken place, some seven years:

Mr M was adamant about his recollections of his conversations with Mr Hewett…

He was not willing to make any concessions as to the possibility that his memory may have been faulty or that conversations may not have been in the exact words he had recalled. Or that he may not have recalled parts of the conversations. The lack of self-doubt in itself should be cause for doubts about his evidence given the lack of corroborating material available to him and the time that had elapsed since the conversation referred to.

In his oral submission to the Court, Mr Benetatos submitted that the evidence was not sufficient to allow the Court to exercise discretion in favour of the First Respondent.

Counsel for the Child Support Registrar submitted that the evidence supported the contention that the Applicant intended to make a gift of the money to the Respondent. He relied on the affidavit evidence of Ms C, who was not cross-examined. In none of the conversations with Ms C did the Applicant ever say that his intention on 3^rd September 2004 was to have the amount of the overpayment credited rather than be regarded as a gift.

Mr Kaplan further submitted that Mr M had given evidence of a conversation with the Applicant as to his intention that the money should be regarded as a gift. Also, the affidavit of the First Respondent was that at no time was there a conversation that the payment would be credited against child support and not gifted.

As to inconsistency, Mr Kaplan referred the Court to the unreported decision of Hodgson JA, with whom Meagher JA agreed, in Klewer v Walton at [21]-[22].

It was submitted that the Court should prefer the evidence of Ms C, Mr M and the First Respondent over that of the Applicant.

The secondary submission of the child Support Registrar was that the Applicant was in effect seeking a declaration that the amount of $12,985.43 should be taken off his child support debt. It was submitted that the Applicant’s conduct disqualified him for discretionary relief because, amongst other things, of the excessive delay in bringing his Application. These proceedings were only commenced seven months after enforcement proceedings were started by the Child Support Registrar, six years after the event. He referred the Court to the text “On Equity”, by Young JA, Croft and Smith, Lawbook Co 2009 (Sydney), where the learned authors said at page 1082:

The situations where the court will be inclined to refuse a declaratory remedy are (a) where to do so would be of no practical utility; or (b) where there is something about the plaintiff’s conduct which is seen to disqualify the plaintiff from relief.

Mr Kaplan referred the Court to the decision of the New South Wales Court of Appeal in John Fairfax & Sons Ltd v Police Tribunal of New South Wales at 471 on the question of declaratory relief.

The First Respondent agreed with the submission of counsel for the Child Support Registrar.

Conclusions

True it is that excessive and unwarranted delay in seeking relief (see The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd at 400).

However, it is not necessarily the case that the Applicant’s delay in seeking relief can be characterised as a delay of over six years and seven months. The situation only became of any importance to the Applicant once the enforcement proceedings were commenced by the Child Support Registrar on 27^th April 2010. The Court file shows that the Applicant raised the issue in an affidavit in those proceedings sworn on 4^th June 2010 and his Application for the Orders he now seeks was filed on 1^st November 2010.

In all the circumstances, the delay on the part of the Applicant in seeking relief is not such as to disqualify the Applicant from the relief which he seeks.

There is merit in the Applicant’s submissions that his conversations with Ms C on 3^rd September 2004 and Mr M on 2^nd December 2004 are important and do not necessarily set out that his intention was to make a gift of the overpaid money to the First Respondent rather than have the overpayment held as a credit against his child support liability.

Ms C was not required for cross-examination on her affidavits and her evidence therefore stands unchallenged. The Applicant said to her on or about 3^rd September 2004:

I don’t want Ms Johnson to pay the money back. She can keep it, but I don’t want to be reassessed to pay this money back again to CSA at a later date. I will speak to Ms Johnson about future child support payments.

In my view, Ms C’s account of this conversation, which is unchallenged, should be preferred to the Applicant’s account of the conversation at paragraph 8 of his affidavit of 18^th October 2010:

“I don’t want to get it back from her, just credit it against future payments”.

Ms C’s notes of the conversation on 3^rd September 2004 are annexed to the Applicant’s affidavit and say (relevantly):

*Spoke to pyr about gifting overpayment of $15,247 to pye (Ms Johnson). Pyr said he does not want pye to pay this money back and wants her to keep it, however he doesn’t want to be reassessed to pay this money back again to CSA at a later date.

*Pyr said he spends half the year working overseas. Pyr also said he is going to speak to the pye in relation to future child support payments.

*Told pyr that I would not gift overpay to pye until he had spoken to pye and will call him next week for confirmation.

The above account comes from Ms C’s contemporaneous notes of the conversation and should be given a great deal of weight. In my view, the Applicant’s statements that he did not want the First Respondent to pay the money back indicates that he did not seek a refund of the overpayment. The most likely interpretation of his statement that he did not want to be reassessed to pay the money back again to the Child Support Agency at a later date is that he wanted the amount to be credited against his child support liability. The statement does not support an interpretation that the Applicant meant that he wanted to give the money to the First Respondent in a transaction totally separate from his child support liability.

The affidavit of Mr M of 21^st January 2011 contains this account of his conversation with the Applicant on 2 December 2004:

There are a number of options. You can gift the money to Ms Johnson, recover the money from her, or you can –

Mr Hewett:I will gift the money. Gift the money to Ms Johnson.

Me:OK. So you want to gift the overpayment amount to Ms Johnson.

Mr Hewett:All of it. But I want you to make it very clear on your records that I am gifting the money to Ms Johnson in good faith.

Mr M’s notes of this conversation are also annexed to the Applicant’s affidavit:

I explained to Pyr Mr Hewett that if he elects to gift this money the decision is final and will not have to be collected from the pye.

Mr Hewett was concerned that he wanted it documented that he is gifting this money out of good faith.

It is noteworthy that the Applicant seems to have spoken over Mr M when he was explaining the options available and did not let him finish explaining what they all were. The Applicant’s concern that he wanted it documented that he was gifting the money “out of good faith” is ambiguous, but the more likely interpretation supports the proposition that he was seeking to have the money credited against his child support liability. No other explanation of “good faith” has been suggested.

It is instructive to consider the context in which the Applicant made the statements that he did to the officers of the Child Support Agency. It is clear from his email to the First Respondent of 2^nd September 2004 that he and she were not on the best of terms. He makes such statements as:

I read your email with a great deal of misgiving, that being your inability to terms with the reality of life…

I think you need to seriously consider what it is that you are going to do in terms of obtaining a respectable income…

By the way, I have four children that I am responsible for and I place all of them at the top of my priority. So stop acting as if you are the only one that knows about the cost of bringing up children and what the responsibility entails as I find that counter productive and will do nothing for [name omitted]’s future.

Ms C’s notes of her telephone conversation with the Applicant on 21^st October 2004 contains similar comments from the Applicant about the first Respondent:

* Pyr said pye should get a job and not rely on handouts from him, he has another family to support now and his chd with Ms Johnson is not his only child.

In this context, the proposition that the Applicant would want to make an outright gift to the First Respondent is highly improbable.

The more likely interpretation is that which the Applicant gives, that he did not seek a refund of the overpaid amount but that he intended the funds to be set off against his ongoing child support liability. His statements to the First Respondent in his email of 2^nd September 2004 support this view:

I have no intention of asking you for the money they claim that I have overpaid, so do not worry about that…

If necessary, I will speak with CSA and have them not claim any funds off you.

The Applicant appeared to be at cross purposes with the officers from the Child Support Agency when they were attempting to discuss the matter with them. However, it appears clear that it was the intention of the Applicant that the overpaid funds should not be recovered from the First Respondent but should be set off against a future liability for child support.

The Application will be granted and an Order will be made in terms of Order 1 of the Application.

The Court will hear submissions as to costs.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment ofScarlett FM

Date: 4 October 2012