CAGAN & SABONE
[2019] FCCA 3163
•12 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CAGAN & SABONE | [2019] FCCA 3163 |
| Catchwords: FAMILY LAW – Interlocutory application for leave to apply out of time – delay – Family Law Act section 44(3). |
| Legislation: Family Law Act 1975 (Cth), s.44(3) |
| Cases cited: Holden & Holden [2015] FCCA 788 |
| Applicant: | MR CAGAN |
| Respondent: | MS SABONE |
| File Number: | PAC 2113 of 2017 |
| Judgment of: | Judge Harman |
| Hearing date: | 12 February 2019 |
| Date of Last Submission: | 12 February 2019 |
| Delivered at: | Parramatta |
| Delivered on: | 12 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Shaw |
| Counsel for the Respondent: | Mr Cunningham |
| Solicitors for the Respondent: | Cunningham Solicitors |
ORDERS
Pursuant to section 44(3) of the Family Law Act 1975 grant leave to the husband Mr Cagan to commence or maintain proceedings for property adjustment under part VIII of the Family Law Act 1975.
Pursuant to Rules 14.06 and 24.04 of the Federal Circuit Court Rules 2001 and within 21 days the parties and each of them are to ensure that copies of the following documents are provided to all other parties, namely:
(a)Copies of income tax returns, assessment notices and BASs for the last 3 completed financial years for that party personally and for any entity in which that party has an interest (such as a private company, trust or partnership);
(b)An up to date statement with respect to any superannuation interest of that party together with a valuation of the fund if not an accumulation interest;
(c)Copies of bank statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest such as a private company, trust or partnership;
(d)Copies of credit card statements for the period from the date of separation to date for any account in that party’s name (whether singularly or jointly with any other person or in trust) and in the name of any entity in which that party has an interest;
(e)Market appraisals with respect to any parcel of real estate in which any party has an interest;
(f)Any document within the possession, custody or control of that party proving, disproving or tending to prove or disprove any allegation of fact contained in either party’s Financial Statement or Affidavit or which will be raised as an allegation of fact at hearing;
(g)Copies of market appraisals or computer site print outs as to value of any motor vehicle the value of which is not agreed.
Any document which is, at the date of this Order, in the possession, custody or control of a party and which is not disclosed and a copy provided to the other party in accordance with the above Order will not be admitted into evidence.
The Applicant shall within 28 days of today’s date serve upon the Respondent a draft balance sheet to include all assets, liabilities, superannuation interests, financial resources and property suggested to be relevant and to include values as alleged by each party and:
(a)The Respondent shall then within 14 days of receipt of the draft balance sheet make any additions to the balance sheet as required to reflect contra allegations by the Respondent and any values that are agreed (if applicable);
(b)Wheresoever controversy exists as to the inclusion of an item or the value of an item a footnote shall be appended to explain the controversy;
(c)Upon completion of any Single expert valuation the balance sheet shall be amended to reflect determined/agreed values; and
(d)The balance sheet reflecting current agreements and controversies shall be provided to the Mediator not less than 7 days prior to the Mediation and a final, settled version shall be filed prior to trial with the Case Outline filed by each person.
Any party seeking to retain any asset and/or to pay monies to another person shall ensure that they have made all relevant enquiries as to their borrowing capacity and so that they are able to negotiate and make a real and genuine attempt to resolve the matter at the Mediation.
Not less than 7 days prior to the Mediation each lawyer for a party shall provide to their client a written statement of fees incurred to that time, expected to be incurred for the Mediation and likely to be incurred in preparation for and conduct of a trial if the matter is not resolved.
All documents in these proceedings shall be electronically filed.
The proceedings are adjourned for further mention and directions to 12 April 2019 at 9.30am and with respect to same:
(a)The parties and their legal representatives are to attend on that date;
(b)The parties and their legal representatives shall be in a position to advise the Court as to the following:
(i)The factual issues for trial;
(ii)Proposed witnesses and estimated length of trial;
(iii)Any procedural directions to be sought to aid the limiting of issues or time required for trial;
(iv)Each party shall be expected to certify that all necessary disclosure has occurred, all valuations and enquiries completed before any consideration will be given to listing the matter for trial.
Reserve the costs of both parties with respect to the determination of the application for leave.
IT IS NOTED that publication of this judgment under the pseudonym Cagan & Sabone is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2113 of 2017
| MR CAGAN |
Applicant
And
| MS SABONE |
Respondent
REASONS FOR JUDGMENT
These proceedings relate to an interlocutory application for leave to apply out of time pursuant to section 44(3) of the Family Law Act 1975.
The parties to the proceedings are a divorced husband and wife. Mr Cagan is the applicant and husband to the marriage between the parties, since dissolved. Ms Sabone is the wife and respondent.
This Application for leave (and, if granted, property adjustment orders), is the second such Application.
This tranche of proceedings was commenced by an Application Initiating Proceedings filed on 13 August 2018. The earlier application seeking property adjustment and leave was filed on 3 May 2017.
It is convenient to consider the first application, not that it has significant bearing upon the factual determination of these proceedings. The earlier application does have some impact upon the matters which must be considered in this application.
The first Application was filed by the husband. At that point in time, the husband retained legal representatives. The Application came before the court on 24 July 2017 for what might be described as a Case Assessment Conference before a Registrar. The husband did not appear at that conference, although his legal representative did. The wife and her legal representative were in attendance.
The Registrar’s bench sheet notes that the wife objected to the proceedings being dealt with out of time, the parties having been divorced 6 May 2015. A Divorce Order had been pronounced between the parties (that order and the Divorce Application comprising Exhibit A), which took effect from 7 June 2016. Accordingly, the period in which the application should have been filed without leave being required, concluded on 8 June 2016. The application was, thus, some 13 months out of time.
The Application for Divorce was a joint application of the parties. The application asserts separation on 1 January 2014. It says the parties are living separately and apart under the one roof from 1 January 2014 to the date of filing of the application. The husband provided, at that time, an affidavit saying that the parties continued to live separately and apart under the one roof “because of our children. We each have our own life. We have no marriage like relationship since 1 January 2014. Our separation is known to others”.
The Registrar’s bench sheet otherwise notes that “wife alleges that current property held in her name was purchased during separation and that the husband has no claim to property. Wife alleges that husband wasted (gambled and removed money to overseas) assets throughout the marriage and that he was not entitled to a distribution of assets held in her name. Husband is currently overseas and his solicitor unable to obtain current instructions.”
To the extent that the husband asserts that he was overseas at the time of the Registrar’s conference there is some corroboration.
A number of orders and directions were made by the Registrar, including an expeditious listing of the interlocutory application to be heard and determined by a Judge of the Family Court. That listing was 13 November 2017. On or by that date, it would appear, the husband had returned to the jurisdiction. However, he had, on his own evidence, advised his legal representatives to not appear. They did not appear.
The wife did appear with her then legal representative. As a consequence of the husband’s non-attendance the application was struck out and dismissed. An order was made that the husband pay the wife’s costs “as agreed or assessed”.
To the extent that the first application has been determined, I am conscious that it was determined on the basis that the application was dismissed for want of prosecution. I am not concerned that the striking out of the application, is as it is expressed, determined the matter on its merits such as would preclude the case being determined by me on this occasion.
The present proceedings have also progressed expeditiously. The matter first came before the court on 19 September 2018. The matter was listed for trial 28 November 2018. However, due to changes in diary arrangements, that date was ultimately vacated and the matter listed instead to be heard and determined on 11 January, 2019. On that date the matter was marked not reached and adjourned to today.
It is regrettable that the matter has had a number of false starts. However, it is a simple reality of the court’s predicament, with far more matters to be heard than can possibly be heard and determined on any given day.
Evidence relied upon
In the husband’s case I have read and considered his Application Initiating Proceedings, Financial Statement and Affidavit all filed 13 August 2018.
In the wife’s case I read and considered her Response, Financial Statement and Affidavit all filed 12 September 2018 together with an affidavit by one of the adult children of the parties, Ms Z Cagan, filed 9 January 2019 as well as a further affidavit of the wife filed this morning.
There are, in addition, a number of exhibits:
a)Exhibit R1, comprising paragraph 63 of an Affidavit of the husband filed 24 December 2018. Although the Affidavit is not read in the husband’s case that paragraph is tendered by the wife;
b)Exhibit A already referred to, the divorce file and divorce order.
Consideration of Evidence
By the time this application is determined, the husband is some two and a half years out of time.
It is important to consider some of the evidence of the parties. All evidence will be considered on the interlocutory standard, accepting the evidence as on its face more probably correct than not.
The parties were married on … 1991.
The parties’ date of separation is more complex. I am conscious that both parties swore on oath, when executing the application for divorce, that their separation was 1 January 2014 and that, at the date of filing of that application, namely, 23 March 2015, that they continued to live separately and apart under the one roof.
The wife asserts by her material filed in these proceedings that separation occurred on 1 July 2011 (see paragraph 42). It might also be inferred as being early 2012 (see paragraph 40).
The husband adheres to his initial oath that separation occurred on 1 January 2014, although the husband, by his material filed in these proceedings, also asserts that the parties had reconciled their relationship as opposed to living separately and apart under the one roof such that the final separation of the parties, in fact, occurred on 1 August 2017. If that later date were accepted there might be even more complex issues relating to the date of separation. For reasons that I will seek to explain, I do not propose to accept that later date.
Whilst there might be a suggestion that the husband is precluded from leading evidence contrary to his earlier oath based on what is often referred to as the “Elias principle”, I do not accept that such a principle is good law, being contrary to High Court authority. However, there is some force to the evidential principle that a party cannot swear something on oath without reference to the earlier, inconsistent evidence or disavow the earlier evidence as incorrect seeking to be accepted as correct on the second oath and incorrect on the first, without it impacting their credit.
Whilst the date of separation of the parties may require some further investigation and testing of evidence, at this point I am satisfied that I should proceed on the basis of the parties’ separation as they each deposed and as the court made findings of fact with respect to, invited jointly and consensually by the parties to do so, ie, separation January 2014. However, lest I am wrong in that regard, there remains the controversy as to whether the parties finally separated on 1 July 2011, in August 2017 or at any other date such is the moveable nature of the parties’ evidence.
To the extent that there is inconsistency and inconclusiveness as regards the evidence of the parties, it applies to the parties jointly. It is not be an issue that merely impugns the credit of the husband. It would apply to each. I am satisfied that I need not pursue the issue further, although it is suggested in the wife’s case to be fundamental to determination of this issue.
The wife opposes leave being granted on the basis that the substantial asset in which the parties or either of them hold a present legal or equitable interest, which might be subject to the court’s jurisdiction under Part VIII, is a property at Suburb A which was purchased, the parties agree, in February 2013.
The parties do not agree about a great deal else in relation to the purchase of the property. They do not agree upon the purchase price. The wife asserts that the property was purchased for $515,215. The husband asserts a much higher purchase price, although less than $600,000. The affidavit that is filed this morning by the wife corroborates her allegation of a purchase price of $515,250. I am not concerned with the husband’s relative inaccuracy as to the purchase price. It is fatal to his credit to the extent that it would cause me to reject all of his evidence as incapable of acceptance. It is, however, an area of variance in the evidence of the parties.
More importantly, the parties are at odds as to how that property came to be acquired. The parties are not at odds as to the registered proprietorship of the property. The property clearly is and has always been held solely by the wife.
The husband, at paragraph 18 of his affidavit, asserts that the property was purchased in or about 2012. The wife asserts that the property was bought in February 2013. Again, by reference to the contract for sale, the first page of which is attached to the wife’s most recent affidavit, it would seem that the wife’s evidence might be more accurate, although a date of exchange or the date of contract itself is not immediately discernible from the contract. Nothing turns upon the issue.
The husband asserts that the parties (and he refers to the purchase as being a joint enterprise, which is not, of itself inconsistent with the registered proprietorship of the property) funded the purchase by obtaining a mortgage of $410,000. The wife asserts the mortgage was $400,000. That is certainly which was drawn down at the time of purchase and as corroborated by correspondence from Suncorp Bank, the mortgagor. In fact, the funds drawn down by the parties which were applied towards purchase of the property and other expenses were $399,392.
The difference between the parties is not of such moment as to create any real issue as to credit at this point. The parties’ major issue is where the balance of funds came from. Other than the mortgage, the husband asserts that the balance of funds came from a compensation claim received by him of $60,000.
The parties are very much at odds as to the quantum of the compensation claim, let alone the use of the funds that were derived there from. The wife concedes that the husband had a workers’ compensation claim (paragraph 41 of her affidavit). She asserts, however, that the total received by the husband was $18,225. There is no independent corroborative evidence that would assist whatsoever in determining that issue. It is not a matter that need be determined.
The husband asserts that $40,000 arose from “the sale of my Suburb F business”. There is no dispute that the Suburb F business, which was a business known and trading as “Suburb FCompany H ” had been purchased in the sole name of the wife. The parties were, without any controversy at all, married and involved in a joint endeavour at the time. It is submitted on behalf of the wife that the reason that the purchase proceeded in her sole name was because the husband was, at that point, an undischarged bankrupt, a fact neither has sought to address in their material. Certainly, that circumstance, if it is correct, would explain why the purchase would have occurred in that fashion. It may be the husband’s intention, or perhaps even egotism on his part, to assert that it is “his business”. The parties were married at the time, and the evidence would appear to suggest that the husband’s version, that he predominantly worked in the business, might be preferred. I need make no finding.
Finally, the husband suggests that a sum of $30,000 was borrowed from “a friend of my daughter, Ms Z Cagan”.
The wife’s version with respect to the purchase is, not surprisingly, somewhat different. The parties would appear to agree on very little when it comes to the facts of transactions that have occurred in their relationship.
At paragraph 48 of the wife’s material, she refers to:
In February 2013, I bought in my own name my current home at Suburb A.
The wife asserts further:
I used $137,053 of my own funds as deposit. This consisted of a. $57,053 savings from my earnings, b. $40,000, the balance of proceeds of sale of the business at Suburb F [The parties agree on the amount introduced from the sale of the business, it is merely how they describe it that is different] and c. a loan of $30,000 from my daughter Ms Z Cagan.
Thus, the parties agree that $30,000 was introduced via Ms Z Cagan, whether it was her money or negotiated as a loan with a third party.
Finally, the wife deposes:
I obtained a mortgage from Suncorp-Metway Bank for $400,000 in my own name.
There is some slight discrepancy, potentially, with respect to the wife’s evidence, unless, of course, one were to treat items (a), (b) and (c) above, which, of course, could not fall within the descriptor “my own funds”, as representing an accumulation of the amount which ultimately was contributed other than by way of mortgage. Again, nothing substantial turns upon the issue.
What is potentially a significant issue is the assertion that the parties were, at that point in time, very much separated from each other. What is not in dispute between the parties is that the business from which $40,000 was derived and proceeds applied towards purchase of the property, was a joint endeavour of the parties. However, that proposition is disavowed to some extent by the wife, who, in reference to the sale of the business, suggests that the proceeds of sale of that business had been divided between the parties on a somewhat informal basis. The wife asserts (paragraph 37) that the business was sold in January 2011, some months before the date the wife now asserts separation occurred, for $85,000, and that $45,000 was given to the husband as a consequence of his overbearing demands and threats, and $40,000 retained by the wife. Thus, the wife asserts ownership of those funds in contradistinction to a joint endeavour.
The evidence of the parties certainly suggests, as is referred to in submissions on behalf of the husband, that their marriage has been plagued by certain financial difficulties and the failing of businesses. The financial affairs of the parties, whilst there are some differences between them, are largely agreed.
The husband asserts that they had purchased a (omitted) business, or established one, in 1994. The husband later refers to the business owning and operating premises at Suburb G. He does not give any detail as to their purchase. The wife does. She suggests, (paragraph 15 of her affidavit), that the premises were purchased in 1998 with a cross-collateralisation of the loan against both the Suburb G premises and a property that the parties agree they had purchased in 1996 as their former matrimonial home, being a property at Suburb H.
The husband refers to the business coming upon hard times, if it might be so described, thus causing him to sell the company and its assets including, one would assume, the premises at Suburb G. The husband suggests that upon sale, $110,000 was received. The wife refers to a sale of those premises at Suburb G by a mortgagee in possession, (paragraph 23). While she indicates that the property was sold by the bank in September 2008, she makes no reference to whether there was a profit or loss. It may be that the husband’s evidence is reconcilable with the wife’s.
The parties’ home at Suburb H had been sold in June 2001, (paragraph 16). The husband is silent as to when it occurred. The wife refers to the parties then purchasing two units with the net proceeds remaining, although those units are suggested to have been sold after a year or so with minimal profit, but certainly no loss.
The parties also operated a number of retail food outlets. The husband makes reference to them in the context of him working within them and the wife working very little within them. Beyond that, he does not identify what the businesses were, other than the general descriptor “(omitted) shop”. The wife’s evidence is more detailed. She describes, (paragraph 17), that in 1999, the parties purchased a (omitted) shop at Suburb D as well as a share in a (omitted) shop at Location J. The wife suggests, (paragraph 19), that the businesses did quite well, and certainly, during a three-week period of the Sydney Olympics, generated profit of $150,000, which, after payment of wages to an employee, causal or otherwise, netted them money in hand of $75,000, or $25,000 a week for the period of operation.
The wife complains that this money, or the majority of it, was wasted by the husband in gambling.
The husband’s reference to gambling is contained in one statement wherein he acknowledges that he gambled during the marriage, “…but deny that I have done so to the detriment of my family”, whatever that might mean. He makes specific reference to one win that he had with a jackpot of $58,800 from playing a poker machine.
The parties then, after their profit from the Olympics and with funds from some other source, although neither party specifies the funds, (indeed, the husband does not even refer to the transaction), purchased a property at Suburb B. That occurred, (paragraph 20 of the wife’s affidavit), in or about June 2002. The wife refers to the property eventually being sold by a mortgagee in possession in August 2008 and with a loss incurred of approximately $60,000 (paragraph 24 of the wife’s affidavit). This is at the same time as sale of the business.
At paragraph 23 of the wife’s affidavit, she refers to the closure of the Location J business in 2007 as a consequence of being locked out by the landlord with various debts extant. She refers to sale of the Suburb G business premises, (although whether for a profit or loss), and refers to the Suburb D business being abandoned by the husband in 2009. To the extent that the wife suggests that her work within the business was five days per week, it is curious that she would choose to describe the husband abandoning the business, as it would seem, on her evidence, each was intimately involved in its conduct. Irrespective, the business ceased on the wife’s allegation, the husband is silent.
There is no suggestion that the losses that were incurred from the closure of those businesses resulted in any payments by the husband or the parties jointly, although it may well be it so. Although there is no specific evidence of it, there is merely the suggestion from the bar table that it contributed to the husband’s bankruptcy.
Then there is the purchase of the Suburb F business, (paragraph 34 of the wife’s affidavit), in 2009. The business was purchased for $20,000 and a further $20,000 expended in fit out. The wife is clear that the business was purchased in her sole name through a company Cagan Proprietary Limited, of which she was the sole director. The wife asserts that this came about due to the husband being an undischarged bankrupt, at least as is submitted from the bar table, or because of the difficulty with debts and the husband’s credit worthiness at that time. The husband does not dispute that this was so.
The parties are otherwise agreed that at some point in time following purchase of the Suburb A home, at which point in time the parties still physically lived together (the wife does not suggest, for example, notwithstanding her assertion of separation 1 July 2011, that the parties ceased to occupy the same accommodation at any time until May 2015) that the property was converted, whether through the parties own exertions or payment of others, to accommodate a business. The Court is advised from the bar table that the business has now ceased. Irrespective, the parties agree that this was so.
It would seem agreed, even on the wife’s evidence, that the parties, from July 2011 until August 2016, and with one or possibly two brief periods of physical separation, lived under the same roof. Paragraph 52 of the wife’s affidavit makes that clear the wife’s suggestion that the husband return to the home after a seven-month physical separation commencing May 2015, (although described as a seven-month separation in May 2015), as a consequence of being pressured by the children to allow him to do so, and the children indicating that if he was not permitted to return to the home, they would leave and live with him instead. Certainly, there is no dispute that the parties have not lived under the one roof, however their relationship may have been described, since August 2016.
It is within this factual background that I now turn to the determination of the application for leave.
Determination
I am satisfied that the determination of the application can proceed on the basis of the general interlocutory standard, accepting the evidence of the husband as more probably correct than not until demonstrated to the contrary.
I am conscious that the law relating to such determinations is set out at paragraphs 161 to 163 of my earlier decision in Holden[1], which I incorporate herein:
[1] Holden & Holden [2015] FCCA 788.
161. As these are discretionary proceedings I am conscious of the various matters summarised by Justice O’Ryan in his decision of Tamaniego & Tamaniego [2010] FamCAFC 254[2] to which I have been referred and particularly those set out in paragraphs 140 - 144 thereof which I incorporate herein:
[2] Tamaniego & Tamaniego [2010] FamCAFC 254.
140. The question whether an order is interlocutory or final has been discussed in many cases including in the High Court: see Re Luck [2003] HCA 70; (2003) 203 ALR 1; Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 and 230, and Carr v Finance Corporation of Australia Limited (No.1) [1981] HCA 20; (1981) 147 CLR 246 at 248 and 256. The usual test is whether the order finally determines the rights of the parties in the principal cause pending between them.
141. In Thallon and Thallon (1992) FLC 92-322 the Full Court (per Fogarty, Baker and Maxwell JJ) concluded that orders under s 44(3) of the Act whether granting or refusing leave were final, that is, they finally determined that particular proceeding. If leave is granted and property or maintenance proceedings are instituted then that is a separate proceeding: see also Neocleous and Neocleous [1993] FamCA 44; (1993) FLC 92-377 (per Fogarty and Nygh JJ with Lindenmayer J dissenting).
142. In Emamy and Marino (1994) FLC 92-487 the majority of the Full Court (per Ellis and Baker JJ) concluded at 81,075 that an order dismissing an application pursuant to s 44(3) of the Act was final but was interlocutory if leave was granted because property proceedings would then be instituted and the “substantive property rights of the parties under s 79 remain to be determined”. The majority found that Thallon and Thallon was wrongly decided insofar as it was authority for the proposition that an order granting leave was a final order.
143. The issue was briefly considered by the Full Court (per Finn, Warnick and Boland JJ) in Richardson & Richardson [2008] FamCAFC 107 (16 July 2008). In that case the appellant husband filed an application for leave to appeal (and if leave was granted) an appeal against orders dismissing an application for a review of orders made by a Judicial Registrar. The primary judge had, in effect, confirmed the orders of the Judicial Registrar which had granted the wife leave under s 44(3) of the Act to institute proceedings against the husband for property settlement, notwithstanding a delay of 13.5 years. The Full Court said at [6] that it was well established by authorities that an order granting leave pursuant to s 44(3) to institute proceedings is an interlocutory order and that therefore leave is needed to appeal such an order and referred to Emamy and Marino. It was also accepted that in order to obtain leave to appeal, the appellant husband had to establish that there had been an error of principle in the making of the order or that the order worked a substantial injustice towards him.
144. I have some doubt about the correctness of the view of the majority in Emamy and Marino. However, it is not necessary for me to resolve that issue because in the written submissions of the Wife, referring to Emamy and Marino, it was acknowledged that there is Full Court authority indicating that applications pursuant to s 44(3) of the Act are interlocutory proceedings. It was submitted that, in addition, the proceeding was conducted as an interlocutory proceeding and there was no evidence given or cross-examination of witnesses during the hearing before the Federal Magistrate (Transcript, 11 September 2009, p 8). The Wife acknowledged that in those circumstances she required leave to appeal and that such leave can only be granted if her Honour made errors of principle and/or not to grant leave to appeal would cause a substantial injustice to the Wife: see Rutherford and Rutherford (1991) FLC 92-255. Accordingly, it was submitted that the errors made by her Honour in the hearing of the Wife’s application either individually or cumulatively lead to that result such that leave ought be granted.
162. As the application for leave to apply out of time is clearly an interlocutory application I am satisfied that I can safely proceed to determine the matter without either party having been cross examined and particularly in light of the concessions made by Counsel for each of the parties that the matter can proceed on that basis.
163. In dealing with the substantive issue of leave I am greatly assisted by the decisions referred to above and which have been highlighted by Counsel in their closing submissions. To that end I incorporate paragraphs 145 – 163 (inclusive) of the decision in Tamaniego [2010] FamCAFC 254 as well as paragraphs 25 – (27) inclusive) of Riordan [2012] FMCAfam 1297 together with paragraphs 6 – 14 of Morgan & Flanagan [2014] FamCA 348 all of which are set out below and all of which, I am satisfied, provide a clear and concise identification of the matters which I must address in determining these proceedings.
That portion of the judgment set out above refers to the myriad authorities that the parties have referred to. This includes the principle authority of the Full Court in Whitford[3], as well as its discussion and interpretation of consequent decisions, Tamaniego[4], Riordan [5], Morgan & Flanagan[6] to name but a few, but as set out more fully above.
[3] In the Marriage of Whitford (1979) 4 Fam LR 754.
[4] Tamaniego & Tamaniego [2010] FamCAFC 254.
[5] Riordan & Riordan [2012] FMCAfam 1297.
[6] Morgan & Flanagan [2014] FamCA 348.
The parties would appear at one as to the relevant issues which must be determined in addressing the issue of hardship.
As the Full Court was clear in Whitford[7] and as quoted:
An application for leave has two broad questions. The first of those is whether the Court is satisfied that hardship would be caused to the applicant or a child of the marriage if leave were not granted, and if not so satisfied, the application must fail. If the Court is satisfied that hardship would arise, the second question is whether leave should be granted.
[7] In the Marriage of Whitford (1979) 4 Fam LR 754.
Each of the authorities discussed above have made it clear that the Court should consider, at the very least:
(1)The explanation for delay, although it is not dispositive of the issue. It is noteworthy, particularly as pointed to by counsel for the applicant by reference to the Full Court’s decision in Slocomb & Hedgewood[8], that leave is sometimes granted after an inordinate delay and with very little plausible explanation for that delay. In fact, in Slocomb[9] itself, leave was granted after a period of 18 years. In this case, the husband’s delay, albeit his second attempt at obtaining leave, is some two and a half years after the date had passed in which he could have brought the application without leave.
(2)I must have regard to the reasonableness of the claim, whether there is any reasonable prospect that the husband could prosecute his application, or any application, successfully.
(3)I must have regard to the principle and fundamental issue of the hardship that would be occasioned to the husband.
(4)Lastly, I must balance that against the hardship that would be experienced by the wife and/or any children of the relationship, accepting for one moment, as discussed, for example, by Kay J,[10] that a child of the marriage does not cease to be a child of the marriage purely as a consequence of them no longer being a child within the description of the Act, (ie, having attained the age of 18 years). The parties might continue with a moral, if not legal, obligation to maintain their children. The wife certainly alludes to meeting various expenses for adult children undertaking tertiary study, although her financial statement makes clear that the two adult children are now both in full-time employment.
[8] Slocomb & Hedgewood [2015] FamCAFC 219.
[9] Ibid.
[10] For example, Anthony Norman Bienke (Husband) and Helen Greta Bienke-Robson (Wife) [1997] FamCA 54
I will deal with each of the above four issues separately.
Explanation for delay
The husband’s explanation is certainly “thin”, if it might be so described. It must be seen, however, in the context of his evidence, accepting it on its face as more probably correct than not.
To the extent that the divorce order became operative on 7 June 2015, an application could have been filed without leave at any time prior to 8 June 2016.
It is, of course, the joint evidence of these parties that they remained living under the one roof whether separately and apart, reconciled or a combination of the two, until August 2016, (i.e., after the passage of that period). That, of itself, might provide some explanation for why the husband did not file within time. But for the application that came before the Family Court that was disposed of by striking it out for want of prosecution, that would be the end of the issue. That is a more than reasonable explanation.
There must be some consideration of the explanation the husband gives for his abandonment of the earlier application. The husband’s evidence in that regard, taking it on its face as more probably correct than not, is at least plausible, albeit not necessarily persuasive if it were the dispositive issue in the proceedings. The husband suggests that having commenced the proceedings, that he thought, (paragraph 42), “I would need to be involved in a long, expensive and hard-fought case against Ms Sabone,” [the wife]. Clearly it was known, at the time that the application was filed, and pursuant to the advice the husband received, (as his application sought such leave), that it was necessary for the Court to determine the preliminary question of leave, as there was no consent from the wife, (that much being apparent following the case assessment conference in June).
The husband suggests, (paragraph 44), that before the matter came before Foster J that he was involved in discussions with members of his family, possibly also the community. Both parties refer to the involvement of the “Country K community” in their past business affairs, with a view to seeking to settle the matter out of court by arrangement between the parties and with the children of the parties, or at least the adults, one would hope, acting as facilitators or go-betweens.
The husband concludes (paragraph 45), “I believe that this was a sincere attempt to avoid contested court proceedings and I contacted [his then solicitor] and told him I no longer needed his assistance as an agreement would be reached out of court between myself and the wife over the issue of property.”
The wife goes further, suggesting that she or her attorneys had received email communications from the husband’s former attorneys reciting the content of text communications between the husband and those attorneys. Those communications are not before the court, thankfully so, as it might well demonstrate a significant interference with the husband’s right of legal professional privilege. The husband does give a cogent explanation for why he did not attend the case assessment conference. He was in Country K attending a funeral.
In relation to the November Court event, the husband indicates, (paragraph 48), “As a result of my believing that the matter would be settled and having terminated my engagement with [his former attorneys] the matter came before the court without my realising I needed to be there on that date.” He acknowledges the application was struck out.
The wife suggests that there was no such discussion or agreement.
The husband gives evidence that he was provided by an adult child of the relationship, Ms Z Cagan, with a notice of discontinuance, which he signed. There is also some controversy. Ms Z Cagan has, as would be apparent from the above enumeration of material considered, filed an affidavit in these proceedings. Ms Z Cagan indicates that she gave to her father a notice of discontinuance, thus they are at one. Ms Z Cagan indicates that she stated to her father that if he wished to discontinue the proceedings, he would have to sign the document and file it with the court and that he did not sign the document in her presence. He took the form from her without further conversation and Ms Z Cagan was unaware what he did with the form.
The husband indicates that he received the form and his evidence is not in any way inconsistent with Ms Z Cagan’s. He makes clear that he signed it, he retained it, but he does not suggest he returned it to Ms Z Cagan or signed it in her presence. Certainly, there is some force to the submission put that the husband must have known that by retaining the document he would not have communicated to anyone that the application was discontinued. But, in the end, very little turns upon the issue. Whether the husband had filed the notice of discontinuance or whether he simply did not appear and his application was dismissed for want of prosecution, the same consequence follows.
The wife had filed a response, thus she was entitled to appear and seek her costs. That is exactly what occurred. Ultimately, taking the husband’s evidence on its face as more probably correct than not, I accept that which the husband leads in his evidence. It is not compelling but nor does any authority suggest that the reason for delay must be compelling.
The husband’s explanation or his reason for delay in relation to the first proceedings is, as already observed, not compelling but it would be sufficient. But for those proceedings being abandoned his evidence would have been sufficient to overcome any impediment to leave being granted subject to hardship being established.
I am not satisfied that the earlier set of proceedings and that which transpired with respect to it could or would preclude acceptance of the husband’s reasonable explanation for the initial delay. His explanation in relation to an attempt to negotiate matters directly through family and/or community is not disproved as completely fanciful. Accordingly, I am satisfied there is an explanation which, in all of the circumstances, is reasonable.
Does the husband have a reasonable claim which could be prosecuted?
I am satisfied that he does.
Much turns in the wife’s case upon her suggestion that the parties were well and truly separated, albeit continuing to live under the one roof for some years after that event, at the time that the Suburb A property was purchased.
The parties are somewhat at odds as to where portions of funding for the purchase price came from but far less in dispute than would appear apparent on the face of the material. The parties agree that $30,000 came via Ms Z Cagan, whether her funds or borrowed through her from another person. They agree that $40,000 came from the sale of the business irrespective of whether there was or was not a division of the proceeds of sale informally between the parties.
The parties agree that some further amount of money, ironically almost the same amount of money alleged by each, came from an account which was held in the wife’s sole name. The wife suggests slightly less than $58,000. The husband suggests $60,000 derived from his compensation claim.
The parties agree there was a compensation claim. They simply disagree as to its amount.
Neither party has produced any document which would corroborate either of those allegations. The husband has not produced any document that corroborates the receipt by him of $60,000 in compensation funds. The wife has not produced any document that demonstrates she held $57,000 or slightly more in an account in her sole name. Even if she had, there is the difficulty that these parties, according to their own evidence on oath placed before a Registrar of the court, who made findings of fact in accordance with that evidence, were still very much in a marriage with each other at the date of purchase of the home.
Again, even if they were not, even if that issue is ultimately ventilated on the evidence if the Court is called upon to determine it, the source of portions of the funds could not be and is not in dispute. There is no impediment to either of the parties having produced corroborative material although, of course, they are not prosecuting the substantive proceedings, merely the issue of leave, and the husband is entitled to have his evidence accepted on its face as more probably correct than not.
The wife certainly has been in a position to demonstrate that the husband’s evidence is not correct by producing documentation, either through subpoena or otherwise, in relation to her savings or the husband’s compensation claim. That does not suggest that she cannot later seek to produce that material. No doubt, she will. However, at this point in time there would appear to be an intermingling of funds by these parties.
There is, of course, then also the wife’s own evidence of the transactions that occurred after the financial disasters of 2007/08 and as a consequence of which the parties jointly endeavoured to acquire the business at Suburb F in the wife’s sole name to protect it from creditors, past, present or prospective, of the husband, it being suggested today that the husband was an undischarged bankrupt at the time.
That may well suggest why the parties may have chosen to not purchase the property in joint names even if they were still in a marriage relationship as an alternate proposition to the wife’s assertion that it was purchased in her sole name merely because the parties were separated and it was her money.
On a consideration of the financial statements of the parties, certainly there is something of a disparity between the parties at this time. That does not assist a great deal. The High Court has been clear, (see, for example, Stanford[11]), that it is not the role of the court to equalise arrangements between parties. One must demonstrate the justice and equity of any order for property adjustment. It is not assumed that it is just and equitable to make an order merely because one has been sought. However, in this case, the wife has the benefit of in excess of $450,000 of equity in the Suburb A property which the husband, if one accepts his evidence as maintainable, is in contradistinction to his financial position, whereby he has a few hundred dollars in a bank account and a motor vehicle with a value of $1,500, and otherwise lives on a pension.
[11] Stanford v Stanford (2012) 247 CLR 108.
The wife raises certain concerns as to the husband’s credit, asserting that he also receives a Country K pension, has a right, by way of inheritance, to parcels of land in Country K, and that the husband is generally lacking in credit worthiness. That general lack of credit worthiness is suggested to stem from the fact that he has, in past businesses, left myriad debts causing third parties, including members of the Country K community, to be left out of pocket and that he has failed to pay previous solicitors. That is a matter between he and those attorneys. Whether that ultimately supports the assertion that the wife makes that the husband has no respect for legal process is a difficult conclusion to draw.
Certainly, he has had myriad debts. On the wife’s own evidence, the parties jointly and/or severally have had significant debts as a consequence of their failed businesses in 2007/08.
The wife suggests that the husband has been untruthful in his statement of financial circumstances, referring to annexures in the Country K language. They are not admissible. They simply have no standing before the court.
The wife suggests that the husband is lacking in credit and has shown his disregard for the community and the legal system as a consequence of committing driving offences. I simply do not accept that the conclusion could be supported by that suggested to support it.
Ultimately, I am satisfied that the husband has an arguable case. What he seeks by way of property adjustment would see him receiving approximately 30 per cent of the equity in the property.
I pause to make clear that this is not to suggest that the husband will be successful. But the test is not that he must run his case and prove it on the balance of probabilities before he is granted leave. He must demonstrate that he has an arguable case potentially capable of successful prosecution.
If his evidence is accepted, where there is controversy between the parties, if he can produce corroboration that proves what he alleges or disproves what is alleged by the wife, then he may succeed. It is not guaranteed. It will be a matter for the tribunal of fact that hears the application. However, his application could not be described as incapable of successful prosecution.
The mere fact that the property was purchased in the wife’s name does not exclude it from consideration. That much is clear from the High Court’s decision in Stanford[12]. The court must first identify and value the legal and equitable interests of the parties in property. The wife has a legal interest in the Suburb A property with a net value in excess of $450,000. That does not guarantee that the husband will receive a single cent from that equity. But does he have an argument? Based on the facts that he alleges and balanced against the possibility that the wife’s facts might be accepted in preference, yes, he does.
[12] Stanford v Stanford (2012) 247 CLR 108.
Is there hardship to the husband?
There is much discussion in the precedents quoted above as to what “hardship” might mean. There is real force to the submission put on behalf of the wife and supported by the above authorities, that the court should not be glib in granting leave to apply out of time.
There is a purpose for statutory time limits imposed in claims of this nature or any claim. Limitation periods, however, as discussed in the above authorities, should not be applied arbitrarily so as to deny access to justice to a party who has a judiciable controversy in which they have a reasonable prospect of obtaining a judgment.
That much and the general principle fundamentally supporting and underlying the propositions discussed in the above Full Court and High Court authorities is addressed by Atkin J in Ras Behari Lal v Emperor[13], affirmed and adopted by the High Court in Smith v Western Australia[14] as recently as 2014. “Finality is good. Justice is better”.
[13] Ras Behari Lal v King-Emperor (1933) 50 TLR 1.
[14] Smith v Western Australia [2014] HCA 3.
The husband has an arguable claim. Whilst certainly I must consider the hardship that will flow to the wife and the infant child of the relationship, (or potentially so), it is, at this point, the hardship to the husband that I must consider. Hardship is not demonstrated purely by having an arguable claim. It is a matter of considering all of the facts and circumstances of any particular case and the hardship that would be caused to the husband if his arguable claim were denied its prosecution through a refusal to grant leave.
As already observed, and whilst it is the subject of some controversy, as to which the wife will have abundant opportunity to be heard and lead evidence, the husband is in receipt of a disability support pension. The lack of trust and level of dispute between the parties is such that the wife has felt compelled to go to the point of looking up, and, thus, asserting the rate at which the disability pension is paid, and, thus, asserting, as an issue impugning the husband’s credit, that he has understated the benefit that he receives, albeit by some tens of dollars. However, there is no dispute that this is so.
The wife asserts that the husband works and receives cash in hand, and that, accordingly, his financial circumstances are vastly better than he asserts himself. It is suggested the husband makes that concession. He does not. At paragraph 22, the husband asserts:
I receive a disability pension from Centrelink and have no other income.
At paragraph 30, the husband asserts:
The mortgage instalments in relation to Suburb A were partly paid from my earnings and my Centrelink allowance, as I was on unemployment benefits at the time, although working two to three days per week on a causal basis for cash.
It may well be that the husband faces some difficulty with referral in relation to that evidence that he has led, assuming for one moment that the cash that he received was either not disclosed or exceeded the amount he was entitled to earn whilst still receiving a benefit. They are matters for trial.
The husband’s assertion, though, is fixed in a time period prior to leaving the home in August 2016. Accordingly, his assertion at August 2018 that he has no other income is not by and of itself impugned by the latter statement. Indeed, the husband’s credit on the basis of suggested inconsistencies between his evidence and that of the wife could not be impeached. The evidence is not tested. Each of the parties leads their evidence, and it is taken on its face as more probably correct than not. The observation that must be made, although it clearly escapes the parties or each of them, is that their evidence is far more consistent than inconsistent.
I am satisfied that if the husband were refused leave, having provided some explanation, portions more reasonable than others, for his delay, and having demonstrated that he has a reasonable claim to prosecute, (treating his evidence, taken on its face, as more probably correct than not), with some reasonable prospect of successful prosecution, whether for the claim that he seeks to plead or anything less, that he would suffer hardship.
He is a man in receipt of a disability support pension. He has no assets to his name, and, accordingly, the quantum of the claim itself must have some bearing upon hardship. Thus, I am satisfied that the husband would suffer hardship if that aspect of the case is made out.
Balance of Hardship
Lastly, I must consider and balance against any hardship suffered by the applicant, the hardship that will be suffered by the wife and the child.
Certainly, there is some force to the wife’s assertion that the husband has not satisfied the order for costs made by Foster J. However, the only evidence in that regard is that a claim has been made of the husband and that he has not paid the claim, as made. Thus, the parties have not agreed on costs. Regrettably, under the Family Law Rules, that means that unless they are able to mediate or compromise some resolution, that there will need to be invocation of the assessment of costs process at great expense and inconvenience to the parties.
Certainly, it must be observed that the claim that is suggested to be made in relation to those costs, $13,000 or thereabouts, is unlikely to be successfully prosecuted in any assessment of costs. All that occurred was an attendance for the purpose of striking out an application that was not prosecuted. One would think, by reference, for example, to the Federal Circuit Court Rules, that would be, at most, a half-day attendance and brief preparation, costs of two to three thousand dollars, rather than that which is sought. They are matters, however, for another fora.
The hardship to the wife is that she will be put to the expense of now resisting the claim that is brought by the husband. That is common with all litigation and would have occurred had the husband brought the claim in time. It is a cost which the wife could not complain of, or to the extent that it was complained of, particularly if the husband is unsuccessful, could be remedied by costs. There is, of course, the issue that the husband – the very gravamen of the determination of hardship – is, as it were, a “man of straw” such that there is no compensation offerable to the wife by way of costs or security for costs in the event that the husband is unsuccessful, or, perhaps, again, abandons proceedings, (although if they were abandoned again, it might be worthwhile to urge the Tribunal of fact before whom the matter is listed to determine the matter on its merits and on an undefended basis, rather than merely striking it out).
The hardship to the child is inferred as a consequence of hardship to the wife. However, that hardship arises through addressing a judiciable controversy which clearly requires determination. I am not satisfied that the hardship to the wife or the child outweighs or overrides the hardship which the husband would suffer, being a hardship determined by reference to the interests of justice and the perception of the judicial processes being available to determine legitimate disputes between members of the community.
That said, however, this case falls squarely within that category of cases that have no “public interest” and are thus readily arbitrable. It is not a matter that concerns any significant principle of law or otherwise. It is a case where the parties, should they desire to determine the proceedings quickly and with a minimisation of cost and, thus, hardship, will submit to arbitration. If they do not, the hearing is at least two years away.
Beyond that, however, I am satisfied that hardship is made out. Reasonable explanation is offered, albeit it that it is, in some aspects, flimsy or tenuous, but not implausible. I am satisfied that the husband has an arguable case capable of successful prosecution upon the facts that he alleges Finally, I am satisfied that the wife will, as a consequence of leave being granted, experience some hardship, but that she will be able to then more abundantly prosecute her position, participate in the proceedings, adduce and test evidence, and if she is successful in her resistance, will do so with a minimum of disruption to her life or that of the minor child of the parties. To the extent it is a hardship, it is, however, outweighed by the interests of justice.
Accordingly, orders are made as follows.
I certify that the preceding one hundred and sixteen (116) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 14 January 2020
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