Insights and Inspiration
A Bad Debt Follows You
26 September 2017
RECOVERY OF CHILD SUPPORT ARREARS BY THE PAYEE
As from 1 January 2017, payees may take action to recover arrears of periodic payments of child support. Such arrears are a debt due to the Commonwealth and, in the past, recovery action could only be taken by the Commonwealth by the Child Support Registrar.
As the Registrar pursues recovery action against the payer at no cost to the payee, the circumstances in which the payee may wish to pursue direct recovery action are limited.
Such an application may be considered in circumstances where the Registrar has exhausted the available avenues of enforcement and proceedings are to be commenced or are pending between the payer and the payee in which a property adjustment order is likely to be made in favour of the payer.
In those circumstances, an order may be sought by the payee to recover the arrears from the proceeds of the property adjustment order made in favour of the payer. If there is a significant history of non-payment of child support, consideration could also be given to applying for an order under s123A of the Child Support (Assessment) Act 1989 for the payment of future child support in the form of a lump sum.
The outcome of the child support applications may affect the weight given by the Court in the property adjustment proceedings to the matters taken into account under s75(2)(na) or s90SF(3)(q) of the Family Law Act 1975 (Cth) in respect of the child support that a party "has provided, is to provide or might be liable to provide in the future".
Although the Registrar could be notified of the potential to recover the arrears from the proceeds of the property adjustment order in the circumstances set out above, if the Registrar did not apply to intervene in the property proceedings to seek the appropriate orders, the prospects of successfully recovering the arrears would be limited to the Registrar's ability to trace the proceeds of the property order to the payer after the event.
As with any enforcement action, the estimated costs of the action should be carefully considered and weighed against the likely benefit at an early stage. A cost effective outcome may only be achieved when the arrears are relatively substantial.
Section 113 of the Child Support (Registration and Collection) Act 1988 provides that a payee may sue for and recover a debt due under a registered maintenance liability in accordance with the provisions of section 113A of that Act. All subsequent references in this article are to the Registration Act, unless otherwise stated.
What is a "registered maintenance liability"? That is not a simple question to answer. A "registered maintenance liability" is defined under s 4 of the Registration Act to mean a "registrable maintenance liability" that is registered under that Act. A "registrable maintenance liability" is defined in section 4 to mean a liability under sections 17, 17A, 18 or 18A of the Registration Act. In summary, a registrable maintenance liability includes:
- a liability under a child support assessment;
- a liability of a parent or step-parent to pay periodic amounts of child support under a court order or court registered agreement or if it is a collection agency maintenance liability as defined;
- a liability to pay periodic amounts of maintenance for a party to a marriage or a de facto relationship under a court order or court registered agreement or if it is a collection agency maintenance liability as defined;
- a registrable overseas maintenance liability as defined.
Certain liabilities may be excluded as set out in s19 of the Registration Act and the Child Support (Registration and Collection) Regulations 1988.
Prior notice to Child Support Registrar and s116 certificate
There is a prerequisite to commencing proceedings for recovery. The payee must give the Child Support Registrar at least 14 days' notice in writing of his or her intention to institute proceedings to recover the debt: s113A(1)(a). There is no particular form of notice. According to the Child Support Guide, the notice in writing may be given by email or facsimile. In exceptional circumstances, the Court may shorten the period of notice: s113A(1)(b).
The Child Support Registrar should also be requested to provide a certificate to be relied on under s116 of the Registration Act which stipulates that a certificate in writing signed by the Registrar is prima facie evidence of the matters stated in the certificate, that is, the amount of the debt owing under the registrable maintenance liability at the date of the certificate.
Proceedings may be commenced in a civil court or any court having jurisdiction under the Registration Act which includes the Family Court and the Federal Circuit Court: s113(1)(c) and s104. The Family Law Act, the Family Law Rules (FLR) and the related Federal Circuit Court Rules (FCCR) apply to such proceedings as if they were proceedings under the Family Law Act: s105.
The "Protocol for the division of work between the Family Court of Australia and the Federal Circuit Court" may assist to determine in which Court proceedings should be commenced as between the Family Court and the Federal Circuit Court. If the proceedings relate only to the recovery of the child support debt, the Federal Circuit Court would be the preferred option.
It is not necessary to comply with the pre-action procedures (financial) prior to commencing proceedings under family law jurisdiction: r1.05(2)(g)FLR.
The relevant provisions relating to enforcement in the Family Court or Federal Circuit Court are set out at:
- Part XIII of the Family Law Act (and Part XIII if seeking sanctions for contravention of an order which is beyond the scope of this article);
- Parts 20 and 21 of the FLR; and
- Parts 25A and 25B of the FCCR.
In addition to the powers of the Court under those provisions, the Court has the general powers set out at s111B of the Registration Act in payee enforcement proceedings. The Registration Act also provides that the Court may exercise the Registrar's powers to obtain information and evidence: s120.
Not surprisingly, perhaps, to those who have grappled with the differences in practice and procedure between the two Courts, there are some discrepancies as to the procedure to be followed to commence payee enforcement proceedings in the Family Court and the Federal Circuit Court.
In the Family Court, it is not clear which particular provisions, if any, of Division 4.2.5 of the Family Law Rules in relation to child support applications generally apply to proceedings to enforce a child support liability in the Family Court. Until such time as that issue is clarified, it may be prudent to comply with all relevant provisions and this article references the requirements of those provisions, in particular rules 4.17, 4.18 and 4.23 of the Family Law Rules, in the guide to the respective procedures set out below.
In any event, the Court may make such orders as it considers necessary in cases of difficulty with practice and procedure: r1.09 FLR; or otherwise may dispense with compliance with the Rules: r1.12 FLR.
In the Family Court, applications for final orders in relation to child support are commenced by Initiating Application: r4.17 FLR. Enforcement proceedings are commenced by filing an Application in a Case with an Affidavit in Support: r2.01 and r2.02 FLR.
In the Federal Circuit Court, proceedings under the Registration Act are commenced by filing the approved form. As there is no particular approved form, proceedings may be commenced by filing an Initiating Application.
An Affidavit in Support is required in both Courts. The Affidavit in Support should set out the facts relied upon to support the Application and attach the documents set out at r4.18 FLR (Family Court) or r25A.03FCCR (Federal Circuit Court).
The Affidavit must also address the usual matters required in relation to proceedings where enforcement orders are sought set out in r20.06 FLR or r25B.12 FCCR.
Order for Payment
In both the Family Court and the Federal Circuit Court, before an enforcement order is made the payee must first obtain an order for payment of the amount of child support owing by filing an Application in a Case and Affidavit setting out the facts relied on in support of the application, a certificate under s116 of the Registration Act and a copy of the s113A notice given to the Child Support Registrar: r20.03 FLR and r25B FCCR.
The notes to the rules provide that, after the Court has made an order for payment of the amount owed, it may immediately make an enforcement order so it would appear that one Application in a Case and Affidavit may be filed addressing all of the matters set out above.
In the Federal Circuit Court, a sworn Financial Statement is also required: r25A.03(1)(b) FCCR. It is not clear why a Financial Statement would be necessary to payee enforcement proceedings and it may be that applications under s113 of the Registration Act should be exempted from that requirement as are certain appeals and other applications under the Assessment Act in accordance with r25A.03(2) FCCR.
Intervention and service
The Registrar may intervene in the proceedings: s111E.
In the Federal Circuit Court, it is necessary to serve each respondent, parent and the Child Support Registrar: r25A.07 FCCR. The brochure "Child Support Applications" must be served on each respondent.
The Child Support Registrar must be served with the Application at least 28 days prior to the hearing and with any documents to be relied on at least 21 days before the hearing.
As set out above, it would be prudent to comply with the like provisions for service set out in r4.23 FLR in relation to payee enforcement proceedings in the Family Court. There is no requirement to serve the brochure in Family Court proceedings.
The Commonwealth is not liable to meet the payee's costs of any enforcement proceedings: s111G. If the Child Support Registrar becomes a party to the proceedings, the Court may make an order for costs against the Registrar or any other party.
Payment to Registrar
If the Court makes an order for the payment of the amount owed by the payer, the payment must be made to the Child Support Registrar (not the payee): s111F. The Registrar must pay the amount received to the payee as soon as practicable after receiving the payment.
Notice of order to Registrar
Within 14 days of any orders being made, the payee must give notice to the Child Support Registrar of the orders made: s113A(2). It is an offence of strict liability under the Act to fail to provide such notice, although the Act provides a defence if the person charged proves that notice was given as soon as reasonably practical after becoming aware of the relevant order: ss113A(3) to (5). According to the Child Support Guide, notice may be provided personally or via telephone (in which case a receipt number. should be obtained) or in writing including via email or facsimile.
The Child Support Guide and a recent case
The Child Support Guide at Part 5.4.7 provides a useful summary of payee recovery action: http://guides.dss.gov.au/child-support-guide/5/4/7 .
For a recent example of an application by the Child Support Registrar to enforce payment of a child support debt under ss104 and 113 of the Registration Act, see Child Support Registrar & Ayton  FCCA 780 (20 April 2017).
Whilst the circumstances in which the payee may wish to take direct action to recover a child support debt are limited, it may be worth considering as an option in some cases, particularly where the arrears are substantial and other proceedings are to be commenced or are on foot. In that event, the above outline may assist to simplify the procedural requirements which, when dealing with child support matters, can often be quite complex.
This article was originally published in the Australian Family Lawyer.
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