Adame and Adame
[2011] FMCAfam 184
•11 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ADAME & ADAME | [2011] FMCAfam 184 |
| FAMILY LAW – Property proceedings – application for leave to commence proceedings out of time. |
| Family Law Act 1975, ss.44, 75, 79 |
| Oxenham [2009] FamCAFC 167 Althaus and Althaus (1979) 8 Fam LR 169 Jacenko (1986) 11 Fam LR 341 Hall and Hall (1979) 5 Fam LR 411 |
| Applicant: | MS ADAME |
| Respondent: | MR ADAME |
| File Number: | BRC 3910 of 2008 |
| Judgment of: | Lapthorn FM |
| Hearing date: | 1 February 2011 |
| Date of Last Submission: | 1 February 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 11 March 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr O'Neill |
| Solicitors for the Applicant: | Blanch Towers Lawyers |
| Counsel for the Respondent: | N/A |
| Solicitors for the Respondent: | Hall Payne Lawyers |
ORDERS
That pursuant to s.44(3) the Applicant be granted leave to commence property proceedings out of time.
IT IS NOTED that publication of this judgment under the pseudonym Adame & Adame is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 3910 of 2008
| MS ADAME |
Applicant
And
| MR ADAME |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms and Mr Adame were in a relationship from about 1990 until they separated on 6 June 2006. They were married [in] 1997 and a Divorce Order came into effect on 25 July 2008.
Ms Adame has brought an application seeking leave of the court to commence property proceedings pursuant to s.79 of the Family Law Act 1975. It was necessary for her to seek such leave because when she filed her application on 2 November 2010 more than 12 months had elapsed since the Divorce Order took effect.[1] This application is opposed by Mr Adame. However in his Response filed 24 January 2011 he also sought parenting orders in relation to the two children of the marriage: [X] born [in] 1997 and [Y] born [in] 2003.
[1] s.44(3)
When the matter came before me on 1 February 2011 I made final parenting orders by consent which provided for the children to live primarily with the wife and to spend time with the husband during school holidays.
Evidence
In support of her case the wife relied on her:
(1)Initiating Application filed 2 November 2010;
(2)An amended affidavit by her filed 20 January 2011; and
(3)A financial statement filed 2 November 2010.
In support of his case the husband relied on:
(1)His Response filed 24 January 2011;
(2)His affidavit filed 24 January 2011; and
(3)His financial statement filed 24 November 2010.
The hearing proceeded on the papers without any testing of the evidence and therefore the court is not in a position to determine any disputed question of fact of which there were many.
The wife gave evidence of both parties working throughout their relationship. She said that she initially worked part-time for a [omitted] company in Townsville for about 8 or 9 months after they were married and then went to work full-time in her husband’s [omitted] business doing secretarial work. She said that she held shares in the company and was the company secretary. According to her the business closed down in 2000 and the parties then travelled around Australia for about 3 years until the child [Y] was born. During that time they worked in various jobs.
The husband’s brother and his wife held interests in the business. The wife asserted that at one stage she was asked to transfer her share in the business to the husband so that he and his brother would be the sole shareholders. She said she received no legal advice prior to the transfer of her interest nor did she receive any payment for the transfer.
In 2004 the wife purchased a block of land at [K] in the Gulf of Carpentaria with funds provided from her parents. Her evidence was that her parents had given her $50,000 as an inter vivos gift. She said the purchase of the land was at the instigation of the husband but the land was registered in her sole name at the insistence of her father. After separation the land was sold for $75,000 and she retained all of the proceeds but she did not give evidence of how the proceeds were utilised.
The husband and two of his brothers purchased the Property Q near [C] in May 2005. According to the wife the cost of the [property] was $98,000 and she believed the three men purchased it in equal shares. A business that the husband and his brothers’ held was sold for $168,000 and used to finance the purchase of the [property] with the balance left over being split three ways between them. The wife said she did not receive any of the husband’s share of these funds. The wife’s block of land was used as collateral to guarantee the business overdraft on the [property] for a period of 18 months. She said that 9 months into the life of this guarantee the parties separated but she continued to provide the land as collateral for a further 9 months. She alleged she received no consideration for the risk she took on guaranteeing the land in that way.
The wife also alleged that following the purchase of the [property] she worked in it up to 18 hours a day doing [omitted], as well as raising the two children of the marriage. She said she never received any consideration for her labour. The wife also alleged that when the [property] was purchased in 2005 it was in a rundown condition and efforts were made to renovate it substantially within the first 12 months. She said that as a result of that the [property prospered].
Although she did not know the value of the [property] at the time of separation in 2006 she believed that it was valued at $1.5 million in 2009. She did not provide evidence as to how she came to that conclusion or belief. She also said she was of the view that this significant increase in value occurred during the initial years of the businesses operation.
The wife gave evidence of not receiving any financial support for the children from the husband for the first twelve months after separation. From 2007 to 2010 she received $100 per week and from
10 September 2010 for about 3 months she received $150 per week. She alleged that after 14 December 2010 the husband stopped payment altogether and she was of the view that he was now only prepared to pay $30 per month per child.
According to the wife from around September 2007 she had been in regular telephone discussions with the husband in respect of both property settlement and parenting issues. There was also a period of formal mediation leading to a parenting plan. She claimed to have no knowledge that there was any time limit upon when she was required to bring an application for property settlement. She said she had never been given any advice of such by the lawyers who acted for her in her divorce application. She expressed concerned that the husband had continued to have discussions with her until the expiry time had elapsed. She alleged he misled her as to the bona fides of those discussions.
The wife commenced a relationship with Mr C after she separated from the husband and they commenced to live together in July 2006 and were married [in] 2008. She said that they separated in September 2009 but reconciled in April 2010. Mr C is a [occupation omitted] who the wife alleges is financially self sufficient. She says she lives on a benefit set out in her financial statement the amount of which has been reduced because of her current husband’s income.
The husband’s evidence differs from the wife’s in a number of significant details. He denied the wife ever worked full time for his business and said she worked as a [omitted] in her own business that had been funded by his business. He also said his business did not close down but went bankrupt. He said when the company went into liquidation no-one benefited and no share holder received any benefit from the company.
He agreed with the wife that when the parties left Darwin in 2003 he entered into partnership with his two brothers in a [omitted] business called [P] and that the wife worked fulltime as a [omitted] but he said the wife received an income from her work with the company.
In relation to the $50,000.00 that the wife referred to he said that she borrowed the money from her father to purchase the block of land at [K].
The husband said that the Property Q was purchased in September 2005 through a partnership between him and his two brothers known as [Adame] Family Ventures. He has a one third share of Property Q but conceded he has been the most significant contributor to Property Q being its manager and living there as well as contributing significant labour to the renovations.
He disputed the allegation the wife made that she put in many hours working for Property Q. He said that she would put in a couple of hours a day doing office work and the occasional [omitted] work.
He accepted that Property Q was purchased in a rundown state and that during the first year they focused on significant cleaning up rather than renovations. He said that most of the renovations to the property have been done after the parties separated and have all been funded by him by way of income from the [property] and an $85,000 overdraft rather than funds that was available to him at the time of separation. He accepted that the land at [K] was used to guarantee the overdraft but that guarantee was not required long term.
The husband alleged that when the parties separated they entered into an informal property settlement in which the wife received around 74% of the matrimonial pool. He was of the view that they had finalised their property settlement. He said that he would have been reluctant to renovate Property Q if he felt the wife would come back and demand some interest in it.
The husband said a valuation of the [property] and other related assets was carried out on June 30 2010 valuing the property at $276,509.00 not including the overdraft and therefore rejected the wife’s assertions it could be valued at around 1.5 million dollars.
The husband alleged that for the first 5 to 6 months of the separation he was the primary carer of the children and the mother did not make any effort to come and see the children during that time. He said that once the wife settled in [G] they reached an agreement for the children to live with her.
He denied receiving any correspondence from the wife’s former solicitors in relation to property settlement or that he had been aware that the wife had been seeking a property settlement. He denied ever discussing property matters with the wife in their telephone conversations or that he had ever promised a property settlement believing that they had already done that upon separation. He said this application has come as a complete surprise to him.
The law
The court is not permitted to grant the leave that the wife seeks unless it is satisfied that hardship would be caused to a party to the marriage or a child if that leave was not granted.[2] In determining the issue the court is not required to conduct “a detailed hearing of the merits of the claim”.[3]
[2] s.44(4)
[3] Althaus and Althaus (1979) 8 Fam LR 169 at 172
In Oxenham [2009] FamCAFC 167 O’Ryan J. said:
[97] Although s 44 of the Act does not state what principles should guide the exercise of the discretion to grant or refuse leave to extend time the discretion is not wholly unfettered. As the Full Court (Asche and Pawley S.JJ and Strauss J) said in Whitford and Whitford (1979) FLC 90-612 at 78,144 “two broad questions may arise”. First the discretion is subject to the requirement in s 44(4) that the court must not grant leave unless it is satisfied that hardship would be caused to a party to the relevant marriage or a child if leave were not granted. Thus if such hardship is not established then the application for leave must be dismissed. Second, if the court is satisfied that hardship would be caused, it should proceed to consider whether leave should be granted: see also Hall and Hall (1979) FLC 90-679 and Cox and Cox (1981) FLC 91-068. The applicant for leave bears the onus on the balance of probabilities.
His Honour then went on to consider the considerable authority on what constitutes hardship. He concluded:
[102] In summary, in order to establish hardship in the relevant sense the applicant for leave must have a prima facie case to be heard by the court on the merits. This does not require a detailed hearing of the merits of the substantive application, but a consideration of whether there exists a prima facie case on the strength of the applicant’s material.
I have noted that the parties dispute many important facts. For the purposes of determining if hardship will be suffered by the applicant wife however I must look to see if on her evidence she has established a prima facie case. In Jacenko[4] Nygh J writing the judgment of the Full Court addressed the issue of determining this issue as a preliminary one without the benefit of testing the evidence. His Honour said:
…[T]he general principle is that on the issue of the establishment of a prima facie case the court proceeds on the basis that the evidence of the applicant, unless it is inherently unbelievable or contradictory, should be accepted, and the court should therefore decide whether or not on that basis a prima facie case has been made out. If leave is granted, then it is for the court conducting the ultimate hearing to determine whether that prima facie case can be established.
[4] (1986) 11 Fam LR 341 at 343
If I am not persuaded that the prima facie case has been established then that is the end of the matter and her application must fail. If on the other hand I am persuaded that she will suffer hardship I must turn my mind to the exercise of my discretion as to whether the leave should be granted. The Full Court[5] in Hall and Hall[6] said:
If hardship of the required type is established then the court may grant the leave but it has a discretion to refuse to do so and in considering the exercise of that discretion it would take into account any other relevant matters, but basically the question whether there is a reasonable explanation of the delay and the question of prejudice which may have occurred to the respondent as a consequence. Other facts may be relevant in an individual case, such as, for example, any prior order or provision made, and the discretion has to be exercised on the basis of the facts of that particular case.
[5] Evatt CJ, Fogarty and Yuill JJ
[6] (1979) 5 Fam LR 411 at 417
Discussion
Counsel for the wife argued that the wife had an arguable case that she was entitled to a substantial payment arising out of her contributions to a lengthy relationship and that there would be an adjustment in her favour for s.75(2) factors particularly given she had the care of two young children. In making that submission Mr O’Neill argued that the property pool was likely to be in the vicinity of $500,000. He arrived at that figure on the basis of the wife’s assertion that the Property Q was valued at 1.5 million dollars and the husband had a one third share in the business. He argued that taking these factors into account the wife had the potential to receive a 60% distribution of the property and to deprive her of such would constitute her being “significantly worse off”. Counsel did not refer to the wife’s use of the proceeds of sale of the block of land in [K].
The difficulty with the submissions on behalf of the wife is that there is no reliable evidence of the value of the Property Q. The reference to it in the wife’s affidavit is a mere assertion on her part without any corroboration or source of her information. The husband’s evidence may also fall short at least in its current form but that is understandable given the application before me was of a preliminary nature. He annexed to his affidavit a one page appraisal and part of a partnership tax return and asserted the value was $276,509 less the business overdraft rather than the significant value asserted by the wife. The question arises, given the onus falls on the applicant to establish a prima facie case, as to what weight I should give to her assertion of the value of Property Q. Taking up what Nygh J had to say in the quote from Jacenko above I propose to proceed on the basis that the court should accept the evidence of the applicant unless it is inherently unbelievable or contradictory. I am not satisfied it is either.
On the face of it there is merit in the wife’s argument given their lengthy relationship; she has the primary care of two young children and there has been no formal property settlement although I accept the husband would argue there has nonetheless been an informal one. For those reasons I am satisfied that the wife would suffer hardship if leave is not granted for her to argue her case.
Consequently I must turn my mind to consider exercising my discretion and in doing so look at the reason for the delay and the prejudice if any likely to be suffered by the respondent.
The wife filed her application some 15 months late. Her evidence was that she did not know there was any time limit to the bringing of such an application. I find this evidence hard to accept. She was legally represented in her Divorce Application and all divorce orders carry a notation as to the need to make any application in relation to property and maintenance within 12 months of the divorce order taking effect.
The wife said that she discussed property matters on at least
12 occasions between 15 January 2008 and 23 August 2010.[7] She alleged that in the last of these conversations the husband told her: “I have been advised that you are out of time and you won’t get a cent.” The husband denied the wife’s evidence as to these discussions and gave evidence of the parties having reached an agreement as to property matters soon after separation and that he was taken by surprise when served with this application.
[7] See paragraphs 32 and 30 of the amened affidavit of the wife filed 20 January 2011
I am unable at this point, to determine that factual dispute but accept that if the wife’s evidence is ultimately accepted there may be some reason for her not bringing her application before 25 July 2009. When I take that into account with the fact that she filed her application some 10 weeks after the alleged conversation on 23 August 2010 and the delay is not one spanning many years I find that there has been a reasonable explanation for the delay.
The issue of potential prejudice to the respondent is an important consideration when deciding if it is appropriate to exercise discretion to grant the leave sought. The husband argued that he has got on with his life in the belief that the parties had reached a property settlement and would not have embarked on the work of improving the [property] if there was some risk the wife would make any claim on it later. He conceded that no binding financial agreement was entered into or property orders made. I am not satisfied that the husband would be prejudiced as any post separation contributions are taken into account when determining property adjustment proceedings. He also may have a remedy in a costs order if the wife is found to have grossly exaggerated the value of the [property] or her case is not ultimately successful.
When I weigh this up with the not too significant a delay and the potential for the wife to suffer hardship if she is not permitted to present her case I am satisfied it is appropriate to exercise my discretion and give her leave to commence her application out of time and for these reasons I will make the order set out in the beginning of this judgment.
I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of Lapthorn FM
Associate:
Date: 11 March 2011
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