Britt and Britt

[2020] FamCAFC 51

FAMILY COURT OF AUSTRALIA

BRITT & BRITT [2020] FamCAFC 51

FAMILY LAW – APPEAL – PROPERTY – APPLICATION IN AN APPEAL – Extension of time to file a Notice of Appeal – Reasonable explanation for delay – Where the proposed appeal has very limited prospects of success – Where the applicant declined to accede to a condition which would have provided a just outcome in which the application for an extension of time could be granted – Application dismissed – Applicant to pay the respondent’s costs in a fixed sum.

Family Law Act 1975 (Cth) s 75(2)

Family Law Rules 2004 (Cth) r 22.03

De Winter and De Winter (1979) FLC 90-605
Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12

APPLICANT: Mr Britt

RESPONDENT: Ms Britt

FILE NUMBER: SYC 3351 of 2012

APPEAL NUMBER: EAA 9 of 2020

DATE DELIVERED: 12 March 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 13 February 2020

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 19 December 2019

LOWER COURT MNC: [2019] FamCA 982

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kelly

SOLICITOR FOR THE APPLICANT: Birtles Legal

COUNSEL FOR THE RESPONDENT: Mr Hodgson

SOLICITOR FOR THE RESPONDENT: Sorensen & Brown

Orders

1. The Application in an Appeal filed 15 January 2020 is dismissed.

2. The applicant pay the respondent’s costs of the application fixed in the sum of $5,500.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Britt & Britt has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT
SYDNEY

Appeal Number: EAA 9 of 2020
File Number: SYC 3351 of 2012

Mr Britt

Applicant

And

Ms Britt

Respondent

REASONS FOR JUDGMENT

1. Mr Britt (“the applicant”) seeks an extension of time in which to file a Notice of Appeal against final property settlement orders made by a judge of the Family Court of Australia on 19 December 2019. The orders required the applicant to pay Ms Britt (“the respondent”) the sum of $421,013 within 60 days of the date of the orders (Order 5 made on 19 December 2019).

2. Any appeal from these orders should have been filed on or before 16 January 2020 but none was (r 22.03 of the Family Law Rules 2004 (Cth) (“the Rules”)). Instead, on 15 January 2020, the applicant’s solicitor filed an Application in an Appeal seeking orders for an extension of the time in which a Notice of Appeal could be filed. It is this application which is before the Court. A draft Notice of Appeal was provided to the respondent’s solicitors on 24 January 2020, although as will become clear shortly, that document does not contain all of the challenges that the applicant seeks to make against the primary judge’s orders.

3. The principles to be applied in an application for an extension of time in which to file an appeal are set out in Gallo v Dawson (1990) 93 ALR 479 (“Gallo”) at 480-481, where McHugh J said:

   … The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-5; 70 ALR 185. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has “a vested right to retain the judgment” unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12; [1964] 3 All ER 933 at 935:

   “The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.”

4. The hearing of such an application therefore involves the exercise of discretion so as to enable the Court to do justice between the parties. In doing so, the Court will consider the history and conduct of the proceedings, their nature, the consequences for the parties of the grant or refusal of leave and the merits of the appeal. The Court will only exercise its discretion in favour of the applicant if it can be satisfied that strict compliance with the Rules will work an injustice.

Explanation for the delay

1. The applicant’s evidence was that it took him some time to understand the primary judge’s reasons for judgment due to a difficulty that he has with reading. The applicant approached a solicitor when the firm’s office reopened on 6 January 2020 after the holiday period. That solicitor, who was not experienced in family law, had considerable difficulty in finding counsel who was in a position to look at the question of an appeal promptly.

2. This is a reasonable explanation for not filing the Notice of Appeal in time.

The merits of the proposed appeal

1. In order to understand the merits of the proposed appeal, it is necessary to set out some of the relevant history of the matter.

2. The primary judge found that the property available for division between the parties comprised of assets valued just in excess of $3,000,000. This significant amount was mostly made up of two farming properties owned by the applicant which were valued at $1,205,000 and $805,000 and a property owned by the respondent which was valued at $470,000. The only significant liability was the applicant’s mortgage over his farming properties, which had a balance of $277,732.39 owing.

3. A significant complicating factor in the matter before her Honour was that it was the second time that property settlement proceedings between the parties had come before the Court on a final basis. Earlier final property settlement orders had been made by another judge of the Federal Circuit Court of Australia on 30 March 2015. The orders made on 30 March 2015 required the applicant to pay to the respondent the sum of $597,875.74 within 60 days of the date of the orders. On 27 February 2017, an appeal by the respondent from the orders made on 30 March 2015 was allowed and those orders were set aside. Notwithstanding that appeal and its success, the applicant had borrowed $600,000 and paid the sum of $597,875.74 to the respondent.

4. At the second hearing of the property settlement proceedings, which was before the primary judge, issues arose as to how that payment and the applicant’s borrowing in order to make that payment, should be treated. The primary judge dealt with the issue by “adding back” the sum paid to the respondent to the list of property to be divided between the parties, as a notional asset held by the respondent (at [206]). There, her Honour noted that the figure was included “by consent”. It was not controversial that the payment received by the respondent from the applicant had dissipated because the respondent had spent it substantially on legal fees and living expenses. The primary judge also included the balance owing on the applicant’s mortgage as a liability.

5. A further complicating factor was an inheritance received by the applicant from his late mother’s estate in the period between late 2018 to early 2019 in the total sum of $989,118.14. After $121,654.40 was repaid to the estate, the applicant paid $280,099.69 in reduction of the mortgage to which I have just referred. Some of the balance of the inheritance was used for the applicant’s legal fees. The primary judge found that as at 14 May 2019, the applicant had $347,678.66 in savings, which represented the balance of his inheritance (at [162]). As there was no suggestion that the respondent had made any contribution to the applicant’s inheritance, her Honour did not include any part of the inheritance in the property to be divided between the parties.

6. The draft Notice of Appeal raises some seven grounds of appeal. Ground 1 to 6 challenge, in various ways, the primary judge’s inclusion of the sum of $597,875.74 paid to the respondent as a notional asset, and the balance of the mortgage in the sum of $277,732.39 at the time of the hearing.

7. In short, the applicant submitted that by doing so “the [primary] judge erroneously inflated the asset pool by approximately $300,000” (Applicant’s Summary of Argument dated 12 February 2020, paragraph 43). It was submitted that because the mortgage was reduced by the applicant using part of his inheritance, there was an increase in the property available for division, despite the clear intention of the primary judge to exclude the inheritance entirely. Thus, the applicant submitted that either the full sum of the mortgage had to be included in calculating the assets to be divided between the parties, namely, $600,000, or both the payment to the respondent by the applicant and the applicant’s mortgage had to be excluded.

8. There is some force in the applicant’s submission but it faces an unsurpassable hurdle because that was not the applicant’s approach at the hearing before the primary judge. At [162] the primary judge recorded what she described as “[t]he parties’ assets at date of trial”, which were “set out in the joint balance sheet”. A footnote to this references Exhibit 3. There follows, a table of the parties’ assets and liabilities with the values ascribed to them by each of the parties. The table is then followed by her Honour’s discussion where she resolves any differences between the positions of the parties.

9. Importantly, for present purposes, at line 18, both parties included $597,875.74 as “moneys paid to [the respondent] by [the applicant] by way of property settlement pursuant to orders made by [a judge of the Federal Circuit Court of Australia]. From this amount the respondent has paid legal costs of some $350,000” (at [162]). Similarly, at line 21, the parties agreed on a figure of $277,732.39, for the “mortgage outstanding on [the applicant’s properties] obtained to pay [the respondent’s] settlement” (at [162]).

10. If this was not clear enough, the primary judge said:

    204.In 2015 as a result of an order of the judge of the [Federal Circuit Court of Australia] the [applicant] borrowed from the bank to pay to the [respondent], the sum of $597,876.

    205.The [respondent] accounted in her written and oral evidence for those funds being expended. The sum of $320,000 was paid out in costs of trial and appeal. The rest for expenses.

    206.By consent that sum has been added back into the pool of assets as a nominal asset held by the [respondent]. Accordingly, the position of the parties reverts to what it was after separation with one reservation. The [applicant] has paid down the debt incurred to meet the payment by $300,000. He has paid interest. He used $280,000 from his inheritance to reduce the debt.

11. Thus, the applicant ran the proceedings before the primary judge on the basis that both the payment to respondent in the sum of $597,875.74 and the current balance of the mortgage in the sum of $277,732.39, would appear in the calculation of the property available for division between the parties. The applicant cannot now assert that this was an error or propound that the trial ought to have been run on another basis (Metwally v University of Wollongong (1985) 60 ALR 68; Water Board v Moustakas (1988) 180 CLR 491).

12. Faced with this difficulty, the applicant submitted that if he was bound by his conduct at the hearing before the primary judge, nonetheless, it remained that the applicant had reduced the mortgage by the use of his inheritance which was a significant contribution made by him and which ought to have been taken into account by the primary judge. Thus, her Honour had erred by not doing so.

13. However, the primary judge did take the reduction of the mortgage into account as a contribution by the applicant. Paragraph [206] of her Honour’s reasons, which I have quoted above, appears under the heading “[c]ontributions post separation”. Under that heading, her Honour identified the applicant’s precise point now sought to be made, accepted it and took it into account.

14. In addition to these proposed grounds of appeal which emerge from the draft Notice of Appeal, the applicant advanced further challenges at the hearing of the application which do not appear in the draft. If an extension of time was granted, it would require an amendment to that draft.

15. The first challenge focuses on her Honours reasons at [236] and following:

    236.The [applicant] was the beneficiary of the estate of his late mother who died in 2017, six years after the parties separated. He inherited a total of $867,464. The [applicant] used $280,000 from his inheritance to reduce debt incurred by borrowing to meet Court orders in 2015.

    237.Accordingly he has a cash resource of $587,464.

    238.The remainder of the inheritance is equivalent to 30 percent of the net asset pool so in relative terms delivers a significant benefit to the [applicant].

16. The applicant correctly submitted that at that time he did not have cash resources in the sum of $587,464 as recorded by the primary judge, but rather, as found earlier by her Honour, he had savings in the sum of $347,678.66. The calculation of 30 per cent at [238] is also wrong, if intended to refer to either of those sums. However, it seems to be an obvious mathematical or typographical error. If at [238], it is read as 10 per cent instead of 30 per cent, it roughly fits with the figure of $347,678.66. Alternatively, the whole of the inheritance (as opposed to the remainder) was approximately 30 per cent of the assets to be divided.

17. The question also arises as to whether the figure of $587,464 mentioned at [237] is also a simple misstatement.

18. Assuming the above are errors, the question then is; what is their materiality? The primary judge’s discussion at [236]–[238] appears under the heading “[r]elevant factors under section 75(2)”. There, her Honour dealt with this aspect of the matter in meticulous detail at [210]–[293]. A reading of those paragraphs clearly demonstrates that her Honour had in mind more significant matters which she considered carried substantive weight. Having regard to those matters and bearing in mind the reluctance of appellate courts to find error on issues of weight (Gronow v Gronow (1979) 144 CLR 513), it is very difficult to see how an error of approximately $200,000 as to the amount of cash held by the applicant would have any effect on the outcome. It was not a matter to which the primary judge ascribed any definitive weight, unlike other matters which clearly carried much greater weight. On either figure, the husband derived a “significant benefit” from the remainder of the inheritance.

19. The applicant submitted that the magnitude of the error is compounded by the following, which appears under the heading “conclusion”:

    299.The [applicant] is unlikely to sell [his property]. He could borrow in order to pay the sum of $421,013 to the [respondent], or could use his inherited funds.

20. Again, the applicant submitted that the primary judge must have had in mind the erroneous figure of $587,464 as the available inherited funds. This is not necessarily so. Reading everything together as a whole, that paragraph is no more than the primary judge saying that the applicant could afford the payment to the respondent by using his inherited funds and by borrowing funds. This does not assist the applicant’s case much at all.

21. Finally, after having determined what her Honour considered to be the appropriate adjustment for the respondent, her Honour turned to the question of whether such an order was just and equitable. In undertaking that assessment, the primary judge decided to test the division of property which her Honour had already derived, against a position where the balance of the applicant’s inheritance was included as property to be divided between the parties. In doing so, her Honour included the inheritance in the sum of $587,464 and not the lower figure of $347,678.66. On that basis, the primary judge determined that a division which saw the respondent receive 42 per cent would have been appropriate. That was not what occurred of course, and the orders ultimately made by the primary judge did not include any part of the applicant’s inheritance. The exercise was a type of cross-check and not at all relevant to the orders that were made.

22. The applicant submitted that if the sum of $347,678.66 had been used, the outcome of the cross-check would have been a 45/55 per cent split in the applicant’s favour. That assumes that all other things remain the same, but they do not, as the contributions might be weighed differently.

23. This all has nothing to do with the orders that were made by the primary judge and the reasons that support them. Any error in the cross-check is entirely immaterial to the outcome (De Winter and De Winter (1979) FLC 90-605).

24. In summary, the applicant is left with one dubious potential ground of appeal which goes to a limited aspect of the matter, which is the adjustment made under 75(2) of the Family Law Act 1975 (Cth). This is likely to lack any significant materiality having regard to the wide ranging nature and severity of the factors considered by her Honour under that heading in the reasons for judgment (at [210]–[293]).

25. The proposed appeal has very limited prospects of success indeed.

26. It is implicit in the applicant’s appeal that he accepts that there should be a payment to the respondent regardless of the outcome of the appeal. The draft Notice of Appeal seeks an order that if the appeal was allowed and the existing orders set aside, there be an order that the applicant pay the respondent the sum of $260,942 within 60 days of the date of the determination of the appeal.

27. In other words, there is an acceptance by the applicant that the respondent should receive that sum but he wishes to delay that entitlement until after judgment in any appeal is given. Such a result would work a significant injustice on the respondent as there is a present order requiring her to be paid a much greater sum.

28. Recognising this, counsel for the respondent sought that it be conditional to any extension of time to file a Notice of Appeal that the sum of $260,942 be paid to the respondent forthwith.

1. The applicant declined to accede to such a condition, asserting that he did not want to bear the costs of refinancing twice. That was an extraordinary submission from a person who seeks an indulgence from the Court and it leads to the inference that not only does the applicant disregard what he accepts to be the respondent’s present entitlement but also that he wishes to uses the appeal as a means of delaying that payment.

2. If an extension of time to file a Notice of Appeal were to be granted, the only way a just outcome could be achieved, would be to require the payment of the undisputed amount to the respondent before any extension of time took effect.

3. There is marked disparity between the parties in terms of their assets. I do not know the income of the applicant as he has not filed a Financial Statement. I am, however, prepared to accept that the costs of an appeal would be a heavy burden on both parties. It would be most unfair to require that burden to be borne by the respondent without having the benefit of the part of the property settlement to which the applicant accepts she is entitled.

4. Of course, in any event, the correct legal position is that the respondent presently has a vested right to immediate payment of the entire sum ordered by the primary judge.

Conclusion and Costs

1. Taking all these matters into account, one of which supports the application with the other matters weighing against it, I am firmly of the view that the interests of justice weigh most heavily in favour of refusing the application for an extension of time to file a Notice of Appeal. The application will be dismissed.

2. In that event, as accepted by the applicant, it is appropriate that he pay the respondent’s costs of the application fixed in the sum of $5,500.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 12 March 2020.

Associate:

Date:  12 March 2020