Re Lynne Margaret Field v Kenneth Howard Collins, Deputy Child Support Registrar [1992] FCA 57; (1992) 106 ALR 68 (1992) 34 FCR 280 (1992) 26 ALD 430 (Extracts) (21 February 1992)

FEDERAL COURT OF AUSTRALIA

Re: LYNNE MARGARET FIELD
And: KENNETH HOWARD COLLINS, DEPUTY CHILD SUPPORT REGISTRAR
No. V G160 of 1991
FED No. 67
Administrative Law
[1992] FCA 57; (1992) 106 ALR 68
(1992) 34 FCR 280
(1992) 26 ALD 430 (extracts)

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Administrative Law - judicial review - decision of Child Support Registrar - court order for payment of arrears of child maintenance by weekly instalments - whether total amount of arrears "a debt due to the Commonwealth" - s.72(b) Child Support (Registratration and Collection) Act 1988 - discretion of Child Support Registrar to apply income tax refund against amount of the debt.

Child Support (Registration and Collection) Act 1988 : s.72

HEARING

MELBOURNE
21:2:1992

Counsel for the applicant: Mr G.W. Robertson

Solicitors for the applicant: Mason Sier Turnbull

Counsel for the respondent: Mr R. Huttner

Solicitor for the respondent: Australian Government Solicitor

ORDER

Declare that the amount of arrears of maintenance fixed at $3,326.49 by order of the Magistrates' Court at Box Hill on 25 February 1991 was a debt due to the Commonwealth by Desmond James Field within the meaning of s.72(b) of the Child Support (Registration and Collection) Act 1988 notwithstanding that such amount was ordered to be paid by instalments.

Declare that the respondent has a discretion immediately exercisable under s.72 of the said Act to apply any taxation refund otherwise payable to the said Desmond James Field towards payment of the said debt, giving credit for any instalments subsequently paid.

The decision of the respondent that he has no jurisdiction to apply the said taxation refunds towards payment of the said debt be set aside and quashed.
NOTE: Settlement and entry of orders is dealt with in Orders 36 of the Federal Court Rules.

DECISION

When marriages break down, the children often suffer a dramatic decline in their living standards. An income barely sufficient for one household is called upon to support two. Court orders for the maintenance of children are, more often than not, ignored or evaded. Enforcement of those orders is left to the custodial parent, usually the mother, who will rarely have the practical resources of money, skill and information to pursue the defaulting parent. As a result, the obligation for support of the children falls on the taxpaying community through the Social Security system.

2. In 1988 the Commonwealth Parliament took a radical step to tackle these problems. By the Child Support (Registration and Collection) Act 1988 ("the Act") it provided for collection of child maintenance payments through the income tax system.

3. Some of the provisions of the Act will need to be examined in a little more detail, but for the moment it is sufficient to say that the Act makes liabilities for periodic child maintenance payments debts due to the Commonwealth (s.30) which are to be collected by deduction from salary or wages (Part IV) in substantially the same way as PAYE income tax instalments and then paid to the person entitled (Part VI). The Act is administered by the Australian Tax Office (Part II), the principal officer responsible being the Child Support Registrar, who is also the Commissioner of Taxation (s.10).

4. Since collection of child maintenance payments was to be integrated with the income tax system in this way, one circumstance likely to be encountered was that of a maintenance payer who became entitled to an income tax refund. The Act made provision for this in s.72:
"72. Where:

(a) the Registrar finds in any case that an amount is owing to a
person by the Commonwealth under an Act of which the Registrar
has the general administration (whether as Commissioner or
Registrar); and
(b) a debt is due to the Commonwealth by the person under this
Act; then, in spite of anything contained in that Act or any other
law of the Commonwealth, the Registrar may apply the amount owing

to

the person against the amount of the debt."

In the present case a court order for the payment of arrears of maintenance fixed a lump sum of $3,326.49 and provided for payment of that amount at the rate of $15 per week. The maintenance payer having become subsequently entitled to an income tax refund of $2,218.84, the question arises whether the amount of the lump sum ordered by the court (less the weekly instalments paid in the meantime) is "a debt due to the Commonwealth by the person under this Act" within the meaning of s.72(b).
The Box Hill Magistrates' Court Order

5. The applicant Lynne Margaret Field was married to Desmond James Field in 1971. They had one child who was born in 1981. The marriage was dissolved in 1986. On 30th November 1984 the Family Court of Australia at Melbourne granted custody of the child to the applicant and ordered Mr Field to pay $40 per week maintenance for the child. On 16th February 1990 the Magistrates' Court at Melbourne made an order increasing that amount to $80 per week. On 24th April 1990 that order was registered under Part III of the Act. The maintenance thus became collectable under the Act in the way already described.

6. On 4th December 1990 Mr Field filed an application at the Box Hill Magistrates' Court seeking a reduction of the amount of maintenance and an order that he pay by instalments the arrears of maintenance which had accrued.

7. On 25th February 1991 the applicant and Mr Field appeared at the Box Hill court. Both were represented by counsel. After negotiations between the parties, a consent order was made discharging the order of 16th February 1990 and ordering that Mr Field pay to the applicant for the maintenance of the child the sum of $35 per week, the first payment due from 25th February 1991, the payments to be indexed in accordance with the Consumer Price Index each year ending 3lst December. As has been already mentioned, the arrears of maintenance were fixed at $3,326.49 and Mr Field was ordered to pay that amount at $15 per week. The order also provided for payment by Mr Field of certain education expenses.
The Income Tax Refund

8. On 5th April 1991 a taxation refund of $2,218.84 became due to Mr Field. An affidavit filed on behalf of the respondent states that the respondent "intercepted a taxation refund cheque" for that amount, but I was informed by counsel in argument that a cheque did not actually come into existence but rather the Taxation Office computer raised a credit in Mr Field's favour. There had been some delay in entering on the register details of the orders made on 25th February 1991 because of the respondent's practice in waiting until sealed copies of Court orders are received. On 19th April the appropriate variation was made to the particulars entered on the register.

9. In the meantime the applicant had become aware of the taxation refund. In the proceedings in the Box Hill Court Mr Field had not disclosed the potential receipt of such a refund. On 10th April 1991 the applicant's solicitors wrote to the Child Support Agency asking that the taxation refund be applied towards the arrears of maintenance owed by Mr Field. At this stage Mr Field had not been in default in complying with his obligation under the order of 25th February 1991 to pay $15 per week off the arrears. The respondent took the view that s.72 did not permit him to apply the taxation refund in the manner sought by the applicant as there was no "debt due to the Commonwealth" from Mr Field.
Family Court Proceedings

10. On 2nd May 1991 the applicant filed an application in the Family Court of Australia at Melbourne seeking an order that any taxation refund due to Mr Field be applied to reduce the arrears of maintenance and that he be restrained from disposing of any taxation refund he might receive from the Australian Taxation Office. It was also sought to restrain the Child Support Agency from releasing the taxation refund to Mr Field. This application was heard by Kay J on 3rd May 1991 and is reported at (1991) FLC 78,562. His Honour said (at 78,565):

"The existence of s.72 of the Act, is of no assistance to me in
determining the issue raised here. There is no relief that I can
grant to the husband or the wife in the proceedings presently
before me, if the Registrar does or does not seek to apply the tax
moneys towards the moneys due to the wife. He has a discretion,
and there does not appear to me to be any procedure that involves
the Family Court in supervising the manner in which that
discretion is carried out. Subject to the usual review provisions
of the administrative appeals legislation, there is no specific
power to grant the Family Court power to intervene in the exercise
of that discretion."

His Honour went on to hold that he had power to vary the order for maintenance notwithstanding that the liability was registered under the Act but concluded that he should not do so because on the view of the evidence he took the circumstances of the husband had deteriorated. He thus dismissed the application. However his Honour did make an order continuing the restraining order in relation to the taxation refund. That restraint was subsequently renewed from time to time and is still in place. In the meantime on 27th June 1991 the applicant commenced these proceedings under the Administrative Decisions (Judicial Review) Act 1977 ("the AD(JR) Act") seeking an order of review of the Registrar's decision not to consider whether Mr Field's taxation refund should be applied in reduction of the arrears.
The Scheme of the Act

11. Part III of the Act provides for the registration of "maintenance liabilities". That term includes a liability of a parent of a child to pay a periodic amount for the maintenance of the child arising under a Court order (s.16). It was common ground before me that the order of the Box Hill Court on 25th February 1991 relating to arrears created such a liability. The respondent, correctly in my view, accepted that the amount fixed for arrears by that order was "periodic". The amount was simply the total of a number of liabilities each of which had accrued by reference to a period of time.

12. The Act requires the payee to notify the Registrar of a registrable maintenance liability (s.23) which the Registrar which must then register on the Child Support Register (s.24). Particulars to be entered on the Register include the amount or the aggregate of the periodic amounts payable (s.26)(1)(f) and the period at which amounts are payable (s.26)(1)(h). Upon registration of the liability it becomes subject to s.30 which provides:

"30. Where a registrable maintenance liability is registered under
this Act:
(a) amounts payable under the liability in relation to the child
support enforcement period are debts due by the payer to the
Commonwealth in accordance with the particulars of the
liability entered in the Register; and
(b) the payee is not entitled to, and may not enforce payment of,
those amounts."

A debt due to the Commonwealth under s.30 is a "child support debt" (s.40 (1)) and s.66 provides:

"66. An amount that becomes a child support debt in any month is
due and payable on the seventh day of the following month."

Is there a debt due?

13. The question whether a debt is "due" even if it is not immediately payable has arisen in many different contexts. The authorities are comprehensively reviewed by Ormiston J in Re Elgar Heights Pty Ltd (1985) VR 657. The classic statement is that of Sir George Mellish L.J. in Ex Parte Kemp; in re Fastnedge (1874) LR 9 Ch App 383, 387-8. As Ormiston J notes, ((1985) VR, 664), this passage has been cited with approval in a number of High Court authorities. Sir George Mellish said:

"Now, the words `debts due to him' are certainly words which are
capable of a wide or a narrow construction. I think that prima
facie, and if there be nothing in the context to give them a
different construction, they would include all sums certain which
any person is legally liable to pay, whether such sums had become
actually payable or not. On the other hand, there can be no doubt
that the word `due' is constantly used in the sense of `payable',
and if it is used in that sense, then no debts which had not
actually become payable when the act of bankruptcy was committed
would be included. Lastly, the expression `debts due' is
sometimes used in bankruptcy proceedings to include all demands
which can be proved against a bankrupt's estate, although some of
them may not be strictly debts at all."

In Bank of Australasia v Hall [1907] HCA 78; (1907) 4 CLR 1514, 1535 O'Connor J cited the statement of Mellish L.J. just referred to and proceeded to make a comment which is apposite to the present case:

"This is also an example of the well known rule of interpretation
that, where an ambiguity arises as to whether the legislature has
used a general expression in its narrow or in its wider sense, the
Court will place that meaning upon the expression which will most
effectually carry out the object of the section. In such cases it
becomes necessary to examine the context, the subject matter, and
the object and purpose of the enactment as disclosed by its
provisions."

In my view, the applicant's construction, is not only the prima facie construction of the expression "debt due" but is also more consistent with the purpose of the Act than the alternative. Nor does this prima facie construction appear to be at all inconvenient or unjust; cf Cooper Brookes (Wollongong) Pty Ltd v FCT [1981] HCA 26; (1981) 147 CLR 297, 305.

14. The amount of arrears fixed by the Box Hill Court's order was the total of liabilities which earlier Court orders had obliged Mr Field to pay for the support of his child. He had allowed these arrears to accumulate. Prior to his application on 4th December 1990 he had not sought any mitigation or variation of these obligations on the grounds of changed circumstances. It may be that as at the date of the Box Hill Court's order he was not realistically able to meet these arrears, hence the consent order for the payment by instalments. But the liability remained and if he has now come to be in a position to satisfy that liability by the very means which s.72 contemplates, it seems to me perfectly in accordance with the purpose of the Act that he should do so.

15. There are linguistic grounds also for accepting the applicant's construction. Where the draftsman is concerned with a debt which is immediately payable, the expression "due and payable" is used: see s.66.

16. Counsel for the respondent argued that the applicant's construction would mean that the Registrar would have to inquire into the merits of the periodical payments of arrears ordered by the court and ascertain what is an appropriate deduction. It was said the Act confers no power on the Registrar to do this and it does not contain any powers to receive evidence, summons witnesses etc. It was also said that to embark upon such a course would involve the Registrar usurping the role of the courts.

17. In my opinion, the true effect of the Act is just the opposite. Section 72 is concerned with a debt that is due. The existence of that debt will have been fixed by a court. The Registrar is not given any power to increase, decrease or extinguish the amount of that debt. He has a discretion as to whether to apply the amount of the tax refund against the amount of the debt, but that seems to be quite a different exercise from a variation of the debt itself.
Enforcement of payments

18. It was also argued that s.30 had been breached here because this application amounted to an attempt by the applicant to enforce payment of the arrears. While the motive of the applicant in bringing the present application is obvious enough, I do not think that what she has done amounts to attempting to enforce payment of the arrears. She has merely exercised the right given to her by the AD(JR) Act to seek an order to review what is admittedly a decision made under an enactment. No point was taken that she was not a person aggrieved within the meaning of s.5(1) of the AD(JR) Act. Looked at another way, the applicant's success in these proceedings will not result in an order that the amount of Mr Field's taxation refund be paid to her. As I will shortly explain in relation to another issue, all the Court can do in this proceeding is to direct that the respondent exercise his discretion under s.72 according to law.
Discretion

19. The amended application of the applicant sought declarations in substance that the amount of the arrears was a "debt due to the Commonwealth" within the meaning of s.72, notwithstanding that the debt was payable by instalments, and a declaration that the respondent has a discretion immediately exercisable under s.72 to apply Mr Field's taxation refund towards payment of the debt.

20. At the hearing, however, counsel for the applicant also sought an order that the amount of the taxation refund be immediately so applied. I do not think I can or should make such an order. I think that s.72 clearly confers a discretion on the Registrar which remains to be exercised in accordance with law.
Orders

21. I shall vary slightly the form of declarations sought to take account of the fact that the debt actually due will be something less than that amount which existed at the time of the Box Hill Court's order. It would seem that the relevant date of the decision for the purposes of the AD(JR) Act was 19th April 1991. As at that date Mr Field's payments were up to date, although I was told that subsequently there was default. The declarations I make should of course be concerned with the correctness of the decision complained of as at the time it was made. But this principle having been established, no doubt as a matter of practical convenience any subsequent defaults will be taken into account.

22. I make the following orders:

1. Declare that the amount of arrears of maintenance fixed at
$3,326.49 by order of the Magistrates' Court at Box Hill on 25th
February 1991 was a debt due to the Commonwealth by Desmond James
Field within the meaning of s.72(b) of the Child Support
(Registration and Collection) Act 1988 notwithstanding that such
amount was ordered to be paid by instalments.
2. Declare that the respondent has a discretion immediately
exercisable under s.72 of the said Act to apply any taxation
refund otherwise payable to the said Desmond James Field towards
payment of the said debt, giving credit for any instalments
subsequently paid.
3. Order that the decision of the respondent that he has no
jurisdiction to apply the said taxation refund towards payment of
the said debt be set aside and quashed.

23. Counsel informed me that certain arrangements have been made which will obviate the need for any order as to costs.