Millanta v Commissioner of Inland Revenue [2018] NZHC 2900 (8 November 2018)

Last Updated: 26 November 2018

NOTE: PURSUANT TO S 124 OF THE CHILD SUPPORT ACT 1991, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B, 11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE https://www.justice.govt.nz/family/about/restriction-on-publishing- judgments/

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2018-470-000060 [2018] NZHC 2900

UNDER	The Child Support Act 1991
BETWEEN	KARL DAVID MILLANTA Appellant
AND	COMMISSIONER OF INLAND REVENUE Respondent

Hearing:	25 October 2018
Appearances:	C Tuck and R Butler for the Appellant B Smith for the Respondent
Judgment:	8 November 2018

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Thursday, 8 November 2018 at 3.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors: Pollett Legal Limited (Office of the Crown Solicitor), Tauranga Counsel: C Tuck, Tauranga

MILLANTA v COMMISSIONER OF INLAND REVENUE [2018] NZHC 2900 [8 November 2018]

[1] On 5 April 2018, Judge C L Cook ordered that Mr Millanta undertake 280 hours community work and pay $80,153.77 to the Commissioner of Inland Revenue for child support arrears. He now appeals against the decision. He says the Judge was wrong to impose community work and should have allowed him to pay off the arrears at $50 per week, with another review of his financial situation and ability to make a lump sum payment after six months.

[2] Mr Millanta has filed an affidavit in support of his appeal dated 18 October 2018. It contains fresh evidence. Mr Millanta’s counsel made an oral application to admit the affidavit as fresh evidence. The respondent did not oppose its admission and so I have taken it into account.

District Court decision

[3] Judge Cook’s imposition of community work and order to pay $80,153.77 was the culmination of a lengthy process under the Child Support Act 1991 (the Act). Mr Millanta accepts that he owes a core debt without late payment penalties of
$80,153.77 to the respondent for child support arrears.

[4] The respondent initiated the statutory process under the Act in November 2014 for Mr Millanta to be examined orally by the Family Court as to his means and the reason for his default in paying child support. A hearing was held in the Family Court on 12 May 2017 and adjourned to 2 November 2017. Further evidence was heard on that date.

[5] In a decision on 2 November 2017, the Judge noted Mr Millanta’s position that he simply did not accept that he had any obligation to pay child support. The Judge also recorded that despite assurances that Mr Millanta would make payment in recent times, there have been no payments whatsoever. An agreement was, however, reached between the parties, which the Judge recorded as follows:¹

Following some discussions which apparently had taken place just prior to and during the course of the examination hearing, the position was that by agreement Mr Millanta would make a total payment of $80,153.77 at a rate of

$50 per week and the agreement was that that would commence within 14

¹ Commissioner of Inland Revenue v Millanta [2017] NZFC 9032 at [6].

days of today; that the Commissioner seeks that the matter be reviewed in March 2018 in front of myself with a view to both monitor Mr Millanta’s payments to date and also seek a lump sum payment depending on Mr Millanta’s current financial position.

[6] The Judge, however, took a stricter approach than the respondent. She expected a lump sum payment on or before the next review in March 2018. She noted that the issue in dispute at the conclusion of the evidence was the respondent’s application for an order of community work to be imposed on Mr Millanta. After discussing his financial means and attitude towards paying the core debt, the Judge said:²

In my view, whilst I have considerable sympathy with the Commissioner in respect of their approach I am narrowly not of a view where an imposition of community work hours should be imposed at this stage. My view is that Mr Millanta has, albeit at the last minute, made an offer to start making payments in regard to what is a very considerable obligation to Commissioner of Inland Revenue and the government but I am of the view that Mr Millanta needs to be very clearly warned that if he does not make good on his agreement today and in March 2018 be in a position where he is not willing to make a payment in regard to a lump sum payment, that I will be monitoring the matter and in March 2018, should he fail to make those payments my view would be that given the cases, given the section, that he has clearly refused to make arrangements to pay the amount outstanding.

I should note that I am satisfied at this juncture beyond reasonable doubt that he has and has had sufficient means to make payments to the Inland Revenue and for his own personal reasons has not done so.

The position is, therefore, that in March 2018, if Mr Millanta has not made those payments, is not in a position where there is a realistic resolution of the outstanding arrears by way of a lump sum, that he will face a sentence of community work and in my view 100 hours would be too lenient in terms of the Court’s approach to the hours imposed and he needs to be clearly warned of that fact today.

[7] On 5 April 2018, the matter came back before the Judge. At the outset, the Judge noted that at the earlier hearing on 2 November 2017, she had determined that Mr Millanta had assets and access to funds which would enable him to make a lump sum payment to the respondent. Although Mr Millanta had made 20 weekly payments of $50 from 14 November 2017 to 27 March 2018, he had not made any lump sum payment. The Judge recorded advice from his counsel that Mr Millanta had no ability to make a lump sum payment, and if the Court imposed a sentence of community work

² At [20]–[22].

on him he would not be able to continue work and would be forced to go on a benefit and therefore not be able to make any payments whatsoever.

[8] The Judge then summarised the evidence she had heard about Mr Millanta’s financial means as follows:³

The position is that I have heard extensive evidence during the course of the examination. The evidence that I heard made it clear that Mr Millanta was and did have access to funds and I refer specifically to para 11 of my decision, that from a period July 2016 to 28 April 2017, there were deposits in Mr Millanta’s bank account, $75,724.95. There was a boat sold in the region of $75,000. There were items sold on TradeMe in the amount of $8642 and there were purchases made.

There was also evidence that whilst Mr Millanta lives in a home which may be owned by a family trust, he asserted that he had a vehicle owned by the family trust but there was no evidence to support that, no financial accounts were provided to the Court and also there was no evidence that the chattels in the family home, which he again asserted was in the family trust, there was no evidence to support that.

There was also evidence that Mr Millanta had refinanced his home in June 2017 and was on a 12 month mortgage break and had accounts indicating he had access to funds in the region of $41,420 as at June 2017. All of that evidence supported, as did the extensive evidence in cross-examination, which showed ongoing payments from the sale of garlic on an ongoing basis by Mr Millanta for the duration of the bank accounts which were produced to the Court, that Mr Millanta clearly did have income.

[9] The Judge then said:⁴

I am therefore well satisfied, given the history, the failure to pay by Mr Millanta on a lengthy and ongoing basis and the opportunity that the Court has given Mr Millanta to make arrangements for lump sum payments to be made, that Mr Millanta has failed to make the lump sum payments and was clearly on notice today that if he did not make lump sum payments, then the Court would sentence him to a period of community work and that also would mean that the debt remains outstanding.

[10] The Judge then proceeded to impose 280 hours community work on Mr Millanta and ordered that he also make a lump sum payment of $80,153.77 to the respondent.

³ Commissioner of Inland Revenue v Millanta [2018] NZFC 2461 at [7]–[9].

⁴ At [11].

Grounds of appeal

[11] The grounds of appeal are simply expressed. Mr Millanta says that the Judge wrongly determined that he had the opportunity and/or access to funds to make lump sum payments to the respondent.

Fresh evidence

[12] Mr Millanta earlier gave evidence by way of affidavit dated 8 May 2017, which he says sets out his financial position at the time of the hearing on 2 November 2017. His affidavit dated 18 October 2018 is said to update his financial situation, which he says has not improved since the hearing on 2 November 2017. However, Mr Millanta’s new affidavit does not clarify his financial situation.

[13] In his earlier affidavit, Mr Millanta stated that the assets of his family trust, half-owned by Jason Eade, included ownership of 12 Fairfax Crescent, Pyes Pa (the property), valued at $650,000, a Toyota Hilux motor vehicle valued at $20,000, and household assets valued at $4000. The trust was making mortgage payments on the property of approximately $970 a fortnight. These payments were being made by Mr Millanta personally as he has included them in the list of his monthly living expenses. The total of the outstanding home loan was approximately $320,000 as at 31 March 2017.

[14] In his new affidavit, Mr Millanta states that “The Family trust is in the process of being closed” without disclosing any detail of what has happened to the property, motor vehicle or household assets. It is evident from the documentation attached to his new affidavit that the trust is no longer making mortgage payments on the property. Instead, Mr Millanta personally is making rent payments of $1,210 a fortnight to Eade Residential Ltd.

[15] If the property has been sold to Eade Residential Ltd, then there is no explanation of what has happened to the half-share of the property owned by the family trust. Mr Millanta valued the property at $650,000. It had a mortgage of
$320,000. After repayment of the mortgage a half-share of the remaining equity in the property would be $165,000. If there was equity in the property at the time of its sale,
there is no information about what has happened to it or who has had the benefit of it. An explanation was required if Mr Millanta wanted to persuade this Court that the Judge was wrong to determine that he had the opportunity and/or access to funds to make lump sum payments to the respondent.

Discussion

[16] The Judge’s order imposing community work has the same effect as if Mr Millanta had been sentenced to community work following a conviction.⁵ On appeal, this Court can only allow the appeal against the order of community work if it is satisfied that there was an error in the order imposing community work and some other means of disposal should have been ordered.⁶

[17] The Judge’s order that Mr Millanta pay the lump sum of $80,153.77 to the respondent is appealable under s 120 of the Act. On appeal, this Court may make any decision it thinks should have been made.⁷

[18] The Court’s power to impose community work arises under s 196(1) of the Act, which provides:

196 Contempt procedures

(1) Where, upon completion of an examination under section 190, the District Court or Family Court is satisfied beyond reasonable doubt that the liable person has or has had sufficient means to pay any money payable under this Act but has refused or failed to do so and that other methods of enforcing payment under this Part have been considered or tried and it appears to the court that they are inappropriate or have been unsuccessful, the court may order the liable person to do community work for a number of hours, not exceeding 400 hours, as the court thinks fit.

...

[19] Mr Millanta continues to maintain he does not have sufficient means to make any lump sum payments to the respondent. The Judge, however, made a specific finding in her decision on 2 November 2017 that she was:⁸

⁵ Child Support Act 1991, ss 191(8) and (9).

⁶ Criminal Procedure Act 2011, s 250.

⁷ District Court Act 2016, s 128.

⁸ Commissioner of Inland Revenue v Millanta [2017] NZFC 9032 at [21].

... satisfied ... beyond reasonable doubt that [Mr Millanta] has and has had sufficient means to make payments to the Inland Revenue and for his own personal reasons has not done so.

[20] The Judge was also required to be satisfied that other methods of enforcing payment had been considered or tried and that they were inappropriate or had been unsuccessful. Mr Millanta says that an alternative to a lump sum payment was the continuation of weekly payments of $50. The Judge, however, considered this to be inadequate. As the respondent’s counsel points out, the core debt of $80,153.77 would not be paid off for more than 30 years – when Mr Millanta’s children to whom the liability related would be aged between 43 and 49 years.

[21] In her decision of 2 November 2017, the Judge stated:⁹

The Commissioner of Inland Revenue in my view has been patient in respect of the attempts which have been made to obtain payments from Mr Millanta and Mr Millanta has as at today in my view been obstructive in the manner in which he has simply neglected, despite receiving income, the amounts set out earlier in my decision to make arrangements to pay his legal obligations.

[22] The Judge was clearly satisfied that other methods of enforcing payment were inappropriate and/or unsuccessful.

[23] The fresh evidence does not assist Mr Millanta’s submission that the Judge fell into error and some other means of disposal should have been ordered. I also cannot see that any other decision should have been made given the clear factual finding by the Judge about Mr Millanta’s ability make a lump sum payment for child support arrears.

[24] The appeal, therefore, has to be dismissed. However, I note two further statutory provisions that may be of assistance to Mr Millanta. First, s 198 of the Act provides that if Mr Millanta pays the amount due then he will be discharged from undertaking the community work. Second, s 68 of the Sentencing Act 2002 enables Mr Millanta to apply for variation or cancellation of the sentence of community work on the grounds that there has been a change of circumstances since the sentence was imposed that would justify its variation or cancellation, or having regard to any change

⁹ Commissioner of Inland Revenue v Millanta [2017] NZFC 9032 at [17].

in circumstances and to the manner in which he has responded to the sentence, its continuation is no longer necessary in the interests of the community or the offender. Better financial information would, however, be required to support such an application.

[25] The appeal is dismissed.











Woolford J