Braid and Singh

[2007] FamCA 753

FAMILY COURT OF AUSTRALIA

BRAID & SINGH [2007] FamCA 753

FAMILY LAW - PROPERTY SETTLEMENT – Leave to file property and spousal maintenance applications out of time – Questions of hardship – Explanation of delay and prejudice – Leave granted.

APPLICANT: Ms Braid

RESPONDENT: Mr Singh

FILE NUMBER: LNM 1615 Of 2003

DATE DELIVERED: 31 July 2007

PLACE DELIVERED: Hobart

PLACE HEARD: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 20 July 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mrs Di Giovanni

SOLICITOR FOR THE APPLICANT: Wallace Wilkinson & Webster

COUNSEL FOR THE RESPONDENT: Mr Crisp

SOLICITOR FOR THE RESPONDENT: Page Seager

Orders

1. The wife is granted leave to apply out of time on or before 30 August 2007 for alteration of property interests under s 79 of the Family Law Act.

2. The wife is granted leave to apply out of time on or before 30 August 2007 for spousal maintenance under s 72 of the Family Law Act.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Benjamin delivered this day will for all publication and reporting purposes be referred to as Braid and Singh

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER:

Ms Braid

Applicant

And

Mr Singh

Respondent

REASONS FOR JUDGMENT

1. These are proceedings between Ms Braid (“the wife”) and Mr Singh (“the husband”).  The wife makes an application for leave to commence property and spousal maintenance proceedings out of time.

2. The parties married in 1981 and separated in September 2002.  They were divorced on 1 December 2003.  There are five children of the marriage, all of whom resided with the wife following separation. Of the five children of the parties, two continue to reside with the wife.

3. The respondent is a health professional operating a business called “Q”.

4. The wife asserts that in 1995 she was diagnosed with a serious, chronic, incurable disease myalgic-enchephalomyelitis and that in 2005 she suffered a relapse of that condition.  The wife says that she is unable to obtain employment and will not be able to participate in paid employment in the foreseeable future.  The husband does not agree with that assertion.

5. Proceedings were commenced by the wife in this court by application filed

   
   

   17 June 2003.  The proceedings included an application that there be property adjustment orders and that the husband pay to the wife spousal maintenance.

6. On 18 November 2004 the wife filed a notice of discontinuance in respect of the property and spousal maintenance proceedings.  The husband agrees that the wife had that filing set aside[1].  The property and maintenance proceedings then continued in this court until February 2005 when both the husband and wife filed notices of discontinuance with regard to the property and spousal maintenance proceedings.

   [1] Affidavit of husband sworn 13 July 2007 (“husband’s affidavit”) paragraph 2.

7. About 10 months later, on 13 December 2005, the wife filed an application in a case seeking leave, pursuant to s 44(3), to recommence proceedings seeking orders  that “pursuant to s 44(3) of the Family Law Act 1975 (Cth) (‘the Act’) the Applicant … be granted leave to proceed with an application for property settlement”. 

8. This application in a case was served on the husband and he filed an address for service in early February 2006. On 5 April 2006, by consent, a Registrar removed the application in a case from the pending cases list with liberty to restore. On 5 May 2006 a Registrar again removed the application from the list with liberty to apply. The Court file noted “parties wish to remove from list for purpose of negotiations between themselves”.

9. This application in a case remained on foot whilst the parties negotiated through 2006 and 2007. The current application, as an amended application in a case, was filed on 28 June 2007 and came before me in a Judicial Duty List on 16 July 2007. In the amended application the wife sought leave in respect of both spousal maintenance and property proceedings.  She had not sought leave in respect of maintenance in the earlier application.

10. There was a preliminary argument as to whether the husband ought to be able to cross-examine the wife and whether the wife needed to file the substantive application at the same time she filed the application in a case.  Those preliminary issues were dealt with by me on 16 July 2007.  I did not give leave for the husband to cross-examine the wife and I determined that it was open for a court to give the wife leave to file the proceedings after the determination of the application under s 44(3) of the Act.  The wife had annexed to an affidavit filed 28 June 2007 (“the wife’s affidavit”) a draft form of the application she proposed to file if her leave application was successful.[2]

    [2] Annexure “O” to the wife’s affidavit.

11. The wife says that since separation she had assisted the husband in establishing a new business.  The husband said that the wife had not been in paid employment since 1982. 

12. The parties have entered into a number of agreements which are not binding under the provisions of the Family Law Act1975.  The first of these post separation agreements asserted by the wife, was allegedly made in November 2003.  The wife says that the husband did not adhere to the terms of that agreement.  The husband says that he does not recall the substance or effect of that agreement except that it may have been when the parties agreed that the applicant would receive the proceeds from the sales of properties at L Street and H Road, Adelaide. 

13. The wife says that she and the husband then entered into an agreement in January or February 2005 which led to each party filing a notice of discontinuance in this court in that same month.  The wife annexes an agreement marked “final agreement between [the parties]” and dated March 2005.[3]

    [3] Annexure “B” to the wife’s affidavit files 28 June 2007 (“the wife’s affidavit’).

14. As to that assertion the husband says:[4]

    As to paragraph 18, I am presently unable to locate a copy of the so-called offer of settlement sent to the applicant’s solicitors on 19 January 2005.  I agree, as asserted in paragraph 19, that at this time the applicant and I were still negotiating, she agreed that it was more likely than not we could reach agreement and that we could do so without solicitors, saving us each considerable expense.  The applicant insisted I give up my then solicitor if there was to be any hope of her reaching agreement with me.  I agreed to stop the proceedings and as I have said previously, to the best of my knowledge and belief our notices of discontinuance were filed on or about 25 February 2005.  Our discussions culminated the [sic] applicant sending to me the document “marked B”... I do not recall agreeing to pay spouse maintenance, let alone the sum asserted at paragraph 6 under “essential conditions of $500.00 per week”.

    [4] Paragraph 6(x)

15. The wife says that from March 2005 to December 2005 she attempted to finalise the agreement with the husband.  That assertion of fact appears not to be in issue.  The husband says in his affidavit:

    We reached a stale mate of sorts during this period.

16. The wife says that she filed her application in a case in December 2005 as the husband was the defendant in criminal proceedings commenced by ASIC.  The husband was subsequently acquitted in respect of those criminal proceedings.  The husband says that this ASIC prosecution was not a new matter to the wife in late 2005, as ASIC investigations had commenced in 2002, and that he was engaged in a committal hearing during the earlier part of 2005. 

17. Both parties agree that the negotiations relating to family law issues between them continued through 2006.  It is clear that this related to property and it appears from clause 8 of the document signed by the parties 5 October 2006, spousal maintenance was also an issue up to that time.

18. The wife says that her father passed away in July 2006 and that as a consequence her health deteriorated.  The wife annexed a letter from Dr E to her affidavit dated 11 June 2007 in which Dr E said:-

    I have been caring for the health of the above named person for the last two years, over this time [the wife] has been suffering from relapsing severe depression and anxiety brought on by separation from her husband and subsequent legal process involved in the divorce.  From August 2005 she was almost bed down by her illness and was subsequently admitted to hospital for severe depression in December 2005.  [The wife] was recovering from this when her father became very unwell in June 2006 and died within four weeks.  This was followed by the unexpected death of a close cousin in August 2006.  [The wife] was severely effected by prolonged grief arising from both tragedies.  This led to a further relapse in her depression and anxiety state. At this stage [the wife] was close to being re-admitted to hospital but was able to be cared for at home as she needed to be at home for her children …

19. The husband makes no comment on the report of Dr E, nor were submissions made in relation to its accuracy.  The wife says that the husband badgered her into settlement in August, September and October 2006.  The husband denies badgering the wife as alleged or at all.

20. On about 5 October 2006 the parties entered into a further agreement.[5]  There are issues between the parties as to who typed the agreement, and I make no finding in that regard.  During the course of argument I asked whether the companies or trustees of the various entities of the parties were parties to the agreement.  I was informed on behalf of the husband, that they were not.  It was submitted to me by the husband’s counsel that the agreement was enforceable at common law or equity but the husband accepted it was not a binding agreement under the Family Law Act.

    [5] Annexure “F” to the wife’s affidavit

21. Late in October 2006 there was an addendum added to the 5 October 2006 ‘agreement’.  This addendum dealt with child support issues including private school fees.[6]

    [6] Annexure “H” to the wife’s affidavit

22. On 21 December 2006 the lawyers acting for the husband sent a letter to the lawyers acting for the wife.[7]  In that letter the husband’s lawyers said:-

    Please find enclosed a sealed “agreement” I have received from my client in relation to their matrimonial property settlement.

    I have advised my client that this “agreement” is not or will not be binding and it needs to be drawn up by either a binding financial agreement or consent orders to be filed in the Family Court.

    I have been instructed by my client to draft consent orders to be filed in the Family Court which reflects the “agreement” reached between our clients.

    This will be conditional upon the utility of the proceedings that have previously been on foot in the Family Court, which I understand have been removed from the active pending list with liberty to restore.  If we can make use of these proceedings I have advised my client that this can be the framework upon which we can proceed to file consent orders.

    Please obtain instructions from you client as to her preference in the way in which to proceed…

    [7] Annexure “K” to the wife’s affidavit

23. The wife says that in early 2007 she instructed her solicitors that she had not been well during the period when the October 2006 agreement was reached and she did not feel bound by it.  During the first half of 2007 the parties had some negotiations which led to an informal conference in June 2007 and no agreement was reached at that time.

24. The wife says that she was paid spousal maintenance by the husband until July 2006 when those payments ceased.  The husband’s position in this respect is not clear as he did not respond to that part of the wife’s affidavit.

25. The wife sets out in paragraph 57 of her affidavit the hardship she will suffer in the event that leave is not granted.  These are:-

    (a)I am seriously ill and am unable to return to my original profession (nursing);

    (b)The respondent ceased paying me spousal maintenance on 26 July 2006. Since January 2007, I have received income from the rental of [G property], Centrelink payments and [R] dividends and rent.  The total amount of income I have received for the period 1 January 2007 to 5 June 2007 is $18,337.78.  For the same period I have paid insurances in the sum of $1,192.16, rates in the sum of $905.00, school fees in the sum of $8,000.00 and school excursion expenses of $1,777.00.

    (c)I have been using my small inheritance from my father’s estate to supplement my income and to pay for the children’s and my expenses.

    (d)On 22 August 2005, the respondent told me that he did not plan to pay the children’s school fees or support the children at university next year.  He sent an email to the two eldest children confirming this.  In October 2006, he indicated that he would pay the children’s school fees and then he did not do so.  The respondent’s history of agreeing to one thing and then not complying with it is such that he cannot be relied upon to ensure the children’s future education.  If I do not have sufficient assets and income, I will be unable to support all of the children’s education over the next five years.  The children all have special needs in that they are all highly gifted children, having IQ scores of 155-168.  Such scores place them in the “genius” category.  Their education is very challenging and difficult as the school system struggles enormously to cater for such unusual children.

    (e)During the marriage, the respondent and I were directors and shareholders of [K] Pty Ltd.  This company held matrimonial assets, predominantly shares in the [R] Centres in South Australia.  The company also has borrowings from the National Australia Bank.  We have to date been unable to facilitate the division of these assets, the transfer of the assets to me and the refinancing of debts.  Annexed hereto and marked “L” is a copy of correspondence received from [P Company] dated 12 June 2007 confirming that the transfer for the [U] Trust has not been effected.  Annexed hereto and marked “M” is a copy of an email received from [Mr T], the accountant for [RU] Pty Ltd, confirming that the shares in this company have not been transferred to me.  In the event that these assets are transferred to me without a court order, I am informed and verily believe by the accountants for the [R] Centres that stamp duty will be payable on the transfer and I will be liable for the payment of the stamp duty fees.  I do not know how much the stamp duty will be however.  I believe that the cost of same will be substantial.

    (f)Despite reaching agreements on a number of occasions, the respondent has steadfastly refused to finalise property matters between us.  As a result of this, assets which are held in my name and were to remain my property under the agreements reached with the respondent are now at risk as the National Australia Bank are taking action to recover monies owed.  As I am a guarantor of some of those debts, my assets remain at risk until there is some finalisation of all of the affairs between the respondent and I.  The respondent informed my solicitor and I [sic] on 5 June 2007 that there were still debts owing to the National Australia Bank of around $1 million dollars, however I have not seen any documents verifying this.

    (g)The property at [TA] remains in our joint names.  Annexed hereto and marked “N” is a copy of a title search undertaken by my solicitor on 6 June 2007 indicating that the property is still registered in our joint names.

26. The husband opposes the orders sought by the applicant asserting[8]:

    1.All aspects of our agreement 5 October 2006 have been given effect to – as I have mentioned previously the transfer of [TA] has been executed by the applicant and it is with [X Company] for registration.  The applicant has resigned from the Trustee company [K] Pty Ltd, she has signed all relevant share transfer for shares that are to pass to me.  For my part I have tendered all relevant resignations and signed all required transfer of shares to her, I have rearranged my finances so the applicant is no longer bound by any personal covenants contained in a mortgage.  In short there is nothing further required to divide the pool of assets between us.

    2.The applicant has received substantial benefits from her having received the sale proceeds mentioned above.

    3.By reason of the steps which I have taken to give effect to the agreement I have incurred cost, or will incur cost, associated with stamp duty assessments arising from the transfer of assets to me, to the extent stamp duty will arise in relation to the transfer of assets to the applicant, that will be an expense for her.

    4.The only purpose to be served by an order pursuant to the Family Law Act, would be to gain an exemption from that stamp duty, and that alone should not be reason to allow the applicant’s application.

    5.The application by the applicant is out of time notwithstanding that she has always been in receipt of legal service, and to the extent she may have acted contrary to the legal advice (by filing two Notices of Discontinuance), I say the applicant should [not] be afforded what amounts to a “third chance” for proceedings in this Honourable Court.  To allow her would be an abuse of the Court’s process.

    6.Having done all that is required of me in the terms of the agreement 5 October 2006, I will be prejudiced by further costs, delay and uncertainly, which cost and delay far outweigh any prejudice which the applicant may suffer as a result of this application being unsuccessful.

    7.I seek that the applicant’s application be dismissed in any event.

    [8] The husband’s affidavit filed 13 July 2007, paragraph 6(xxix).

27. The issues to determine are hardship, whether there is a prima facie case, explanation of delay and the prejudice to the parties.

28. In fairness to the husband, during submissions his counsel did not strongly argue that there was unacceptable delay.  The parties have been endeavouring to reach agreement since the proceedings commenced in 2003.  There is a gap of 10 months between discontinuance and the application in a case filed by the wife.  The delay, on the surface, seems long, vis either 2 December 2003 or 2 January 2004 to December 2005 or June 2007.  Yet proceedings have been on foot from 2003 to February 2005 and this application (at least with regard to property) from December 2005 to date. 

29. The husband’s submissions were primarily;

    ·    that there was no hardship to the wife bearing in mind the settlement she received;

    ·    that there was prejudice to the husband if the proceedings were allowed to be revived; and

    ·    that the wife had established no prima facie case or, if she had, such case was so minor that allowing re-agitation of the issues was out of proportion to the costs involved in litigating such proceedings.

30. The husband’s counsel submitted that the agreement was binding in a civil sense.  I have some concerns as to the strength of that argument bearing in mind the letter from the husband’s lawyer of 21 December 2006 referred to above, which on its face seems to repudiate the 5 October 2006 agreement and the wife’s later actions appear to accept that repudiation.  That letter also invites the parties to enter into a process to put in place a binding agreement.

The Law

1. The Court is dealing with an application under s 44(3) of the Act.  That section provides:-

   Where, whether before or after the commencement of section 21 of the Family Law Amendment Act 1983:

   (a)     a divorce order has taken effect; or

   (b)     a decree of nullity of marriage has been made;

   proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in subsection 4(1) (not being proceedings under section 78 or 79A or proceedings seeking the discharge, suspension, revival or variation of an order previously made in proceedings with respect to the maintenance of a party) shall not be instituted, except by leave of the court in which the proceedings are to be instituted or with the consent of both of the parties to the marriage, after the expiration of 12 months after:

   (c)in a case referred to in paragraph (a)--the date on which the divorce order took effect; or

   (d)     in a case referred to in paragraph (b)--the date of the making of the decree.

   The court may grant such leave at any time, even if the proceedings have already been instituted.

1. The effect of that provision is that a party is not entitled to commence or continue such proceedings unless leave is granted by the Court.

2. Section 44(4) provides:-

   (4)    The court shall not grant leave under subsection (3) or (3A) unless it is satisfied:

   (a)       that hardship would be caused to a party to the relevant marriage or a child if leave were not granted; or

   (b)       in the case of proceedings in relation to the maintenance of a party to a marriage--that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit.

3. The applicant in this case does not assert that she would be unable to support herself without an income tested pension, allowance or benefit.  Her case is based upon an assertion that hardship would be caused to her if leave was not granted.

4. The Full Court in McDonald & McDonald (1977) FLC 90-317 at page 76,688 and in general, with some exceptions, adopted the quote of Emery J in Swallow & Swallow when he said:-

   In my judgment in order to come within the provisions of this section, an applicant must establish:

   (a)a prima facie case which is in the circumstances substantial;

   (b)that to deny the right to litigate that claim would cause hardship in the sense referred to above to a party or to a child of the marriage;

   (c)that there is an adequate explanation as to why the claim was allowed to lapse.

1. The Full Court went on to add:-

   [T]he Court may also think it is appropriate to consider the question of prejudice to the respondent and that, in this connection, the period in delay in making the application to institute proceedings may itself be a relevant factor.

2. In terms of hardship the Full Court in Whitford & Whitford (1979) FLC 90-612 at pages 78, 144 said of s 44(4):-

   The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted.  The loss of the right to institute proceedings is not the hardship, to which the sub-section refers.  It is with the consequences of the loss that right, with which the subsection is concerned.  The requirement, that the Court must be satisfied that the hardship would be caused if leave were not granted, implies that it must be made to appear to the court that the applicant would probably succeed, if the substantive application were heard on the merits.  If there is no real possibility of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted.  Further, the matter with which the court is concerned is not whether the applicant or child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted.

3. As to prejudice to the husband, Nigh J in Frost & Nicholson (1981) FLC 91-015 at page 76, 425 said:-

   Prejudice here means that a party is faced with an action which he or she had no reason to expect or had been led to believe would not be brought.

4. In relation to s 44(4) the Full Court in Andrews & Andrews [2007] FamCA 262 (8 June 2007) observed at paragraph 50:-

   50.His Honour then referred, correctly in our view, to the law and the relevant authorities (notably Whitford & Whitford (1979) FLC 90-612), including the need for the exercise of discretion once hardship to the applicant has been established.

5. In terms of a prima facie case the wife deposes in paragraph 14 of the wife’s affidavit details of real estate, cash and investments, business interests, goods and chattels and liabilities.  The thrust of the wife’s argument is that there are substantial assets, the full details of which she is not aware and to which she may have been excluded by virtue of her view that there had not been full discovery by the husband, and that the husband intimidated her into reaching an agreement.  The wife further asserts that she was paid spousal maintenance until the middle of 2006 and that such spousal maintenance has ceased.  This, she asserts, occurred in circumstances of a long marriage where there are five children and where there is evidence of the husband that the wife has not been in paid employment since about 1982.

6. The husband’s counsel took me through the assets and liabilities in great detail and asked me to assume the value of certain property and assume that the wife had agreed to the value of this property.  One of the submissions made by counsel for the husband was that the wife had, on the husband’s calculations, received fifty six per cent of the asset pool.  It is possible, counsel for the father argued, that the wife had received a greater percentage than the 56% on his calculations.  What is not clear is the value of the property and the extent of the property.  This will involve examination of businesses and trusts.  Whilst I am unable to determine the extent of any such property claim, I am satisfied that the wife has established, on the material before me, that she has a prima facie case in terms of property. The various accommodations or agreements reached by the parties are indicative of the complexity of the property structures between the parties. On the evidence, the wife has established a prima facie case in regard to property.  If, in the long term, her expectations are not met and the amount allocated to her under Part VIII of the Act is less than the sum offered by the husband in the various arrangements they have endeavoured to enter into up to date, that can no doubt be remedied, if appropriate, by cost orders. 

7. In so far as her maintenance application is concerned, in the wife’s statement of financial circumstances filed 13 December 2005 the wife deposed of a weekly income of about $2,148.00.  This included $500.00 per week paid to her by way of spousal maintenance by the husband and, as I have discussed, these payments have now ceased.  Her expenses at that time amounted to some $2,281.00. 

8. In paragraph 57(b) of the wife’s affidavit she deposes that she does not have sufficient income to meet her outgoings.  Given the fact that the wife is still financially responsible for two children of the marriage, does not have sufficient income to meet her expenses and the substantial evidence in relation to her health and limited capacity for employment, I am satisfied that the wife has a prima facie case with regard to spousal maintenance.

9. The parties have endeavoured to resolve the issues between themselves, without the assistance of legal practitioners from 2003 onwards. The hardship asserted by the wife is that she is seriously ill and unable to return to her original profession. If leave is granted the wife will have the opportunity to assess the full value of the property owned by the parties which has the capacity to ensure that she is better provided for than she is in her current circumstances. The husband asserts that the wife will not do better or if she does it will only be marginal. It is not possible on the material provided and without a full final hearing for that to be finally determined. What is clear is that the wife will suffer hardship if there is property available to her by virtue of an exercise of discretion under s 79 of the Act and/or the payment of spousal maintenance under Part VII of the Act and she is not entitled to pursue these proceedings.

10. The wife’s case is that part of the hardship is that the parties entered into non-binding agreements (under the Act) and that they are not completed.  The husband claims that not only have the agreements been put in place but they have substantially been implemented with the exception of stamp duty.  The wife asserts that there will be stamp duty payable upon the transactions which may well be substantial.  This is an outstanding issue which will no doubt be determined on final hearing.

11. The husband says that he will suffer prejudice if leave is granted as set out earlier in these reasons.  Primarily he says he has undertaken the transfers pursuant to the alleged agreement of 5 October 2006.  Furthermore, he says the applicant has received substantial benefits from the assets of the parties and that he will incur costs associated with stamp duty by virtue of him taking these steps.  He claims that the only benefit to the wife is by virtue of a stamp duty exception.  I might add that the stamp duty issue is part, but not all, of the wife’s claim of hardship.  The husband says he will be delayed, there will be uncertainty, he will be prejudiced by further costs and that the wife’s application ought to be dismissed.

12. In terms of the delay the husband and wife discontinued proceedings in February 2005.  Almost continuously between that time and June 2007 the parties have been engaged in one form of negotiation or another.  They have reached accommodation and then reached further accommodation. I am satisfied there has not been any unreasonable delay by the wife commencing these proceedings. 

13. In reflecting on the material I have considered the extent and degree of hardship of the wife compared to that of the husband.  Whilst the wife has significant assets she asserts (although it is not established) that she does not know the full extent of the parties’ full financial circumstances.

14. The prejudice to the wife, on balance, seems greater than that of the husband. 

15. After considering all of the evidence and all of the submissions I am satisfied as follows:-

    1.That the wife has established a prima facie case with regard to a case under s 79 for orders for property interests and for a claim for spousal maintenance;

    2.That the wife has established hardship to her, within the meaning set out in the authorities;

    3.That the wife has explained the delay in recommencing these proceedings between December 2005 and June 2007; and

    4. That the prejudice to the husband of allowing the wife’s application is outweighed by the hardship the wife would suffer were she unable to pursue her application.

Conclusions

1. I conclude that the wife’s leave application should be allowed as the delay is explained and she has satisfied me that there would be hardship to her if the leave was not granted.

2. There is likely to be an injustice to the wife if the leave application is not allowed.  As such I will allow the application for leave.

I certify that the preceding 52 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin

Associate: 

Date: 31 July 2007