Card and Mathis
[2012] FMCAfam 1007
•3 August 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARD & MATHIS | [2012] FMCAfam 1007 |
| FAMILY LAW – Property – Application by the wife for leave to file proceedings for a property settlement out of time – where the parties separated 17 years ago and were divorced 9 years ago. |
| Family Law Act 1975, ss.44(3) & (4) |
| Brisbane South Regional Health Authority & Taylor (1996) 186 CLR 541 Tamaniego & Tamaniego (2010) FamCAFC 254 |
| Applicant: | MS CARD |
| Respondent: | MR MATHIS |
| File Number: | NCC 150 of 2012 |
| Judgment of: | Terry FM |
| Hearing date: | 1 August 2012 |
| Date of Last Submission: | 1 August 2012 |
| Delivered at: | Armidale |
| Delivered on: | 3 August 2012 |
REPRESENTATION
| The Applicant: | In Person |
| Counsel for the Respondent: | Mr Tregilgas |
| Solicitors for the Respondent: | R J O'Halloran & Co |
ORDERS
The wife’s application for leave to proceed out of time is dismissed.
The wife’s Initiating Application filed on 24 January 2012 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Card & Mathis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ARMIDALE |
NCC 150 of 2012
| MS CARD |
Applicant
And
| MR MATHIS |
Respondent
REASONS FOR JUDGMENT
These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.
This is an application by the wife for leave to bring proceedings for a property settlement out of time.
The husband and wife separated in November 1994 and their divorce became final on 12 January 2002. The wife gave a different, and later, date in her affidavit for when the decree nisi became absolute but the decree nisi is on the court file and there can be no doubt that the decree became absolute on 12 January 2002.
The wife had 12 months from that date to file an application for a property settlement. She did not do so, and her application for leave to commence proceedings was filed on 24 January 2012, a little over nine years after the time limit for the filing of a property application had expired.
The husband is opposed to the wife being granted an extension of time in which to file her application.
The Evidence
The wife relied on her initiating application, affidavit and financial statement filed on 24 January 2012 and her further affidavit filed on 29 June 2012.
The husband relied on his response, affidavit and financial statement filed on 13 March 2012 and the affidavit of his solicitor Patrick O’Halloran filed on 30 May 2012.
Mr O’Halloran’s affidavit simply annexed documents of public record concerning mortgages and titles and he was not required for cross-examination. The husband’s counsel sought leave to cross-examine the wife and I granted that leave. The wife in turn cross-examined the husband.
Background
The parties commenced living together in February 1989 and married on [date omitted] 1989. There are two children of the marriage, [X], born [in] 1992 and [Y], born [in] 1994. [X] is now an independent adult and [Y] will be 18 very shortly.
The parties separated in November 1994 and the period of cohabitation/marriage was thus about five years and nine months.
The wife left the former matrimonial home with the children at separation and the husband remained living in the home.
In either 1994 or 1995 the wife initiated parenting proceedings and she was awarded what she described as sole custody of the children. In her second affidavit the wife said that she spoke to the solicitors who represented her in the parenting proceedings about pursuing a property settlement but, in her words, “stopped the settlement proceedings” because she was running low on money and because the husband threatened that he would burn the house down before she received anything.
The husband denied making the threat but for the purposes of these proceedings I need to take the wife’s case at its highest unless the wife’s evidence is inherently improbable or contradictory.
The wife subsequently approached another firm of solicitors who assisted her to obtain a divorce. She said that she saw these solicitors in 2002, but it must have been in 2001 because the divorce application was heard in December 2001.
The wife said that she asked these solicitors to contact the husband about a property settlement but that they failed to do so and as a result she had a dispute with them about their bill.
The decree nisi became absolute on 12 January 2002. The wife conceded during cross-examination that she was aware that property proceedings had to be commenced within 12 months of the decree becoming absolute.
The wife claimed that she tried on three occasions to initiate property proceedings by sending documents to the Family Court in Newcastle only to have the documents rejected. She said that she abandoned the matter after three attempts because she had no money to continue trying to file the documents.
In her first affidavit the wife said that these attempts occurred in 2002, but in her second affidavit she said that they occurred in 2004.
The wife said that in 2007 she approached a firm of solicitors in Tamworth about property matters but legal aid was refused. She said that she did not have the finances to fund the proceedings herself and did not try to take the matter any further through those solicitors at that time.
The wife said that on 5 March 2008 she sent a letter to the husband requesting a property settlement. She asked for $50,000.00 for herself, $20,000.00 for each of the girls and $10,000.00 to buy a car for [X]. The wife did not indicate that she ever received a response to the letter and gave no evidence that she followed up on it after sending it.
The wife said that in about 2010 the husband approached her at [X]’s high school graduation and asked her to sign off on the mortgage so that he could give the former matrimonial home to [X]. The husband denied that this conversation had occurred.
The wife said that in late 2011 she discovered that the husband had listed the former matrimonial home for sale and she immediately went to see a solicitor who prepared the application which is before me.
The Applicable Law
S.44 (3) of the Family Law Act provides as follows:
(3) 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.
S.44(4) provides that:
(4) The court shall not grant leave under subsection (3) ….. 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) (not applicable)
The decided cases make it clear that when an application is made for leave to file an application for a property settlement out of time the court is required to make two separate decisions. It must first decide whether it is satisfied that the applicant or a child of the marriage will suffer hardship if leave is not granted and if it is satisfied of that it must consider whether in the exercise of its discretion it should permit the applicant to proceed with the application.
The onus is on the applicant to both establish hardship and to persuade the court that it should exercise its discretion in the applicant’s favour.
Whether the wife will suffer hardship if leave is not granted
For the purposes of s.44(4)(a) the relevant issue in this case is whether the wife will suffer hardship if she is not given leave to proceed with her application.
In Sharp & Sharp the Full Court said as follows:
It is well accepted that hardship for these purposes is more than the loss of a right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship. That is a matter to be determined by the circumstances of the particular case. [1]
[1] Sharp & Sharp [2011] FamCAFC 150
I need to determine whether the wife has a prima facie claim worth pursuing or a real probability of success if allowed to proceed with her property claim.
The major assets in the property pool today are two blocks of land in Property C registered in the husband’s name, one of which has a house built on it.
In February 1989 when the parties commenced cohabitation the husband already owned these blocks of land. Documents from the Land Titles Office attached to Mr O’Halloran’s affidavit show that the husband acquired Lot 3 in February 1983 for $8,500.00 and Lot 4 in August 1987 for $13,000.00.
The wife said that Lot 4 was acquired a few months before cohabitation commenced but the documents from the Land Titles Office indicate otherwise.
The husband borrowed part of the money to purchase Lot 4 and a copy of the mortgage in that regard was also attached to Mr O’Halloran’s affidavit. The mortgage document does not show the amount the husband borrowed but the husband’s evidence was that it was $4,000.00 and that he repaid it within 12 months. He was not challenged about this evidence.
It was the husband’s evidence, again unchallenged, that when cohabitation commenced both properties were unencumbered. He alleged that he also had savings of $11,000 at this time.
There was no documentary proof that both blocks were unencumbered in 1989 or of the husband’s claim that he had savings but the claim that the blocks were unencumbered seems credible given the amount borrowed and the fact that the husband was working.
The wife said that she and the husband became engaged prior to the commencement of cohabitation and that she did some work on the blocks with the husband, including stick picking and fencing, and she said that this needed to be taken into account. However it is beyond question that the wife did not financially contribute to the acquisition of the properties.
The husband said that the wife had no real estate or savings herself at the commencement of cohabitation and the wife did not give any evidence to the contrary.
The husband and wife commenced living together in February 1989 and they married later that year. In 1992 they jointly borrowed $35,000.00 from the State Bank of New South Wales and they used this money, plus a $15,000.00 inheritance received by the husband on the husband’s evidence, or a $20,000.00 inheritance received by the husband on the wife’s evidence, to assist them to build a house on Lot 3.
The wife said that in addition to the money from the husband’s inheritance and the money obtained from the bank, she and the husband used savings of $20,000.00 toward the construction of the house and put in about $10,000.00 to $20,000.00 which they earned during the period of construction, and that the house cost $87,000.00 in total.
The husband neither confirmed nor denied this claim by the wife. It was not backed up by any documentary proof but the wife’s evidence is not inherently improbable and for the purposes of this application where I need to take the wife’s case at its highest, I will accept it.
The husband said that he took six weeks annual leave from work to help with the construction of the house. The wife said that she also carried out a variety of physical tasks in aid of constructing the house.
As for other contributions during the marriage, the husband worked for [omitted] throughout and it is fair to presume contributed his wages to family purposes. The wife said that she also worked during the marriage although she did not give any details about this save to say that she worked one, two and even three jobs on occasions. It is fair to presume that any money the wife earned was also used for family purposes.
Neither party provided any information about parenting and homemaker contributions but it is reasonable to infer, as the husband was working fulltime and the wife was in what would appear to have been casual employment that is likely that the wife made the majority of the parenting and homemaker contributions.
According to the evidence currently available the assets which existed at separation in 1994 were Lot 3 with the house built on it, Lot 4 which remained vacant land, savings which were fairly minimal and perhaps of about $1000, furniture, a Toyota Hilux which was sold in 1999 by the wife for $2,800.00, a Mazda one-tonne ute, a Massey Ferguson tractor and tools.
The wife said that the husband also had superannuation. Some of the period of cohabitation was after the superannuation guarantee levy commenced and the husband was working for [omitted] in any event, so it does seem more likely than not that he had superannuation at the end of the marriage.
No evidence was given about the value of Lots 3 and 4 in 1994, but doing the best I can to get some rough idea of the situation, if I add the purchase price of the Lot 3 to the construction costs alleged by the wife it comes to $95,500.00. The wife’s evidence was that there was about $27,000.00 owing on the mortgage at separation, not inherently improbable given that $35,000.00 was originally borrowed, and that gives a rough net value for Lot 3 of $68,500.00.
In addition, Lot 4, which had been purchased for $13,000.00 seven years earlier, still existed.
The husband retained Lots 3 and 4 and using the best figures I have at the moment to give me a rough yardstick they may have been worth about $88,500.00 net. He also retained the Mazda, tractor, tools, some of the furniture and it is reasonable to suppose some superannuation.
The wife retained savings of perhaps $1000.00, perhaps less, the Hilux which was sold five years later for $2,800.00 and some furniture.
After separation the husband continued to work for [omitted]. The wife on her evidence was only able to obtain casual work after separation and she claimed that she had been unemployed for about seven of the post-separation years although the evidence she gave about her work situation was somewhat contradictory. She put herself down in her financial statement as being in receipt only of a sole parents benefit, but in her first affidavit referred to having obtained fulltime work.
The wife had the care of the two children, who were aged two and three months respectively at separation, for some considerable period after separation. They lived primarily with her until 2004, according to the husband or 2007 according to the wife, after which the children went to live with the husband.
The husband was assessed to pay, and did pay, child support while the children lived with the wife.
The husband said that he spent time with the children each alternate weekend while they lived with the wife. The wife said the time was less frequent.
Almost 18 years has passed since the parties separated and in those 18 years the husband has paid off the mortgage on Lot 3 and has paid the rates and upkeep for the property. He has also attended to fencing and maintenance on Lot 4 on his evidence. He did not give any evidence however of having made any major improvements to either property and it is fair to say that their increase in value since separation must largely have been due to market forces.
The husband has had the benefit of living in the home on Lot 3 to the exclusion of the wife since separation.
The assets which now exist are Lot 3, which the husband said in his financial statement was worth $350,000.00 and Lot 4 which he said was worth $55,000.00. Neither party provided any evidence of value but the wife produced an undated printout from Domain.com indicating that Lot 3 had recently been placed on the market for $450,000.00.
In his financial statement, the husband said that he had $2,094.00 in a bank account and $125,400.00 in a term deposit. I infer that this latter amount is the remainder of the husband’s superannuation which he cashed in following being diagnosed with cancer in 2002.
The husband also owns a Honda motor vehicle estimated by him to be worth $20,000.00 and household contents estimated by him to be worth $10,000.00.
The wife according to her financial statement has $580.00 in the bank, a Toyota Hiace worth $10,000.00, furniture worth $10,000.00 and superannuation of $6,274.00
The information in the liabilities part of the wife’s financial statement is contradictory. She claimed credit card debts of $35,240.00 but put a lesser amount in the total box at the end of the liabilities section. For present purposes I will proceed on the basis that the wife has credit card debt of $35,240.00.
The wife is 46. She alleged that she had been unemployed for seven of the post separation years but gave conflicting information about whether she was currently employed. She said that she had seen counsellors for many years for depression, grief, anxiety and lack of sleep.
The wife has a child aged six from a post-separation relationship.
The husband is 57. He was diagnosed with renal cancer in 2002 and had a kidney removed. In November 2008 he was diagnosed with secondary cancer and in August 2009 was forced to resign from his employment due to ill health. The husband said that he had no capacity to work in the future.
In Hall & Hall,[2] an old Full Court decision which is referred to in the more recent decision of Tamaniego & Tamaniego[3] the Full Court said that a proceeding of the nature before me at present is not a proceeding to determine whether and to what extent the proposed application for a property settlement will ultimately be successful. It is a proceeding to determine whether the applicant will suffer hardship if leave is not granted and whether it is otherwise appropriate to grant leave.
[2] Hall & Hall (1979) FLC 90-679
[3] Tamaniego & Tamaniego (2010) FamCAFC 254
To determine if the wife will suffer hardship if she is refused leave to file her property application however I must attempt some assessment of her prospects of success if allowed to proceed. This is not an easy thing to do because there is no documentary evidence available at present about values, no documentary evidence to back up claims about various financial contributions, and no documentary evidence to back up claims about health problems. The best I can do is to attempt a very general assessment of whether the wife has an arguable case for a property settlement in some amount.
In her application the wife sought 50 per cent of the value of Lot 3. In my view this is a wildly optimistic claim, but it is not beyond the bounds of possibility that if the wife was allowed to proceed with her application she might receive something.
The parties’ cohabitation/marriage was relatively short. The husband brought in the two blocks of land which have always been registered in his name and he contributed an inheritance received upon the death of his mother to the building of the house on Lot 3. He has paid off the mortgage on that property and maintained both properties throughout the lengthy post-separation period.
However taking the wife’s case at its highest, as I must do at this time, she contributed income and carried out homemaker and parenting duties during the period of cohabitation, made some physical and financial contribution to the construction of the home, and had the primary care of the children for the majority of the post-separation period.
The husband is in poor health and after having seen him at court it is easy to accept that he is ill and incapable of further employment. The wife is 46. She made claims about her health which were unsubstantiated and about her income-earning capacity which were also unsubstantiated, but I must allow for the possibility that they might be substantiated at a hearing.
The wife has the care of a six year old, although he is not the husband’s child and there was no evidence on the face of it that the care of a six year old in itself would prevent the wife from working.
The husband’s circumstances are more difficult than those of the wife on the current information available, given his age and his state of health, but whether his circumstances would result in the wife’s entitlement on the basis of contributions, whatever it might be, being completely wiped must be open to question.
It is impossible for me to assess the extent to which the wife might ultimately be successful if she is allowed to bring a claim for a property settlement, but I cannot dismiss the possibility that she has some prospects of obtaining a small payment from the husband if she is permitted to proceed.
It is true that the parties were together only for a little over five years and that 18 years have passed since separation, but the wife did make contributions during that five year nine month period. If the amount to which she was entitled today was even as little as five per cent of the current value of Lot 3 it would entitle the wife to somewhere between, on the current figures, $17,500.00 and $27,500.00. This is not a large amount of money but given the wife’s financial circumstances it is a sum of money which it would cause her hardship to lose.
I am therefore satisfied that the wife will suffer hardship if she is not allowed to pursue her claim.
I stress that I have made that decision taking the wife’s evidence at its highest, and should it turn out that some of the information the wife has given is untrue or inaccurate then my assessment of the amount she might receive could turn out to be quite wrong. It did cross my mind to wonder whether the wife had failed to pursue her claim earlier because she was aware of the weakness of her position, but I have come to the conclusion that this is mere speculation on my part.
In the recent decision of Sharp & Sharp[4] the Full Court said that in assessing hardship the costs of the proceedings should be taken into account, and when a prospective claim is small the costs of the proceedings are something which needs to be very carefully considered. However the wife is self-represented and there was no evidence that she was likely to incur legal fees in pursuing her claim and therefore in the context of this particular case that is not something which I consider particularly relevant.
[4] Sharp & Sharp (supra)
Whether the discretion should be exercised in the wife’s favour
The fact that I am satisfied that the wife will suffer hardship if not permitted to proceed with her claim is not the end of the matter. I must then consider whether in the exercise of my discretion I should permit the wife to proceed out of time. As the Full Court said in Whitford & Whitford:
If a court is satisfied that hardship would be caused if leave is not granted, the court may exercise the discretion which is conferred upon it by section 44(3) to grant leave or it may refuse such leave. Section 44(4) inhibits the granting of leave unless the requisite case is made out, but it does not provide that leave must be granted if the court is satisfied that hardship would be caused.[5]
[5] Whitford & Whitford (1979) FLC 90-612
The wife’s application is not a few days out of time or even a few years out of time. It is more than nine years out of time. The wife admitted during cross-examination that she was well aware from the date she obtained her divorce that she had 12 months in which to file property proceedings and in my view she has provided no adequate explanation for her failure to commence proceedings within time or her failure to pursue the matter at a much earlier time than today.
The wife blamed the solicitor she had in 2002 for not following her instructions and she blamed the court in 2004 for rejecting her applications.
She provided no explanation for why she then did nothing between 2004 and 2007, when she next consulted a solicitor.
The wife said that she wrote to the husband in 2008 asking for a property settlement. I provisionally accept that as true, taking the wife’s case at its highest, but even on the wife’s case she did not follow up on that letter. She provided no satisfactory explanation for why she did not follow up on it and for why she did nothing further between 2008 and 2012 to pursue her application.
The wife claimed that initially the husband threatened her, but even if this is true it occurred around the time of separation. There was no evidence that this continued to weigh on the wife’s mind over the ensuing 18 years.
The wife claimed that in 2004 she spoke to someone at the Commonwealth Bank and was told that the husband would not be able to obtain the title deeds for Lot 3 without her first agreeing to discharge the mortgage registered over it to secure the joint loan the parties had taken out to build the house. She said that she therefore felt that she was protected and could use her refusal to sign the discharge authority as a bargaining chip to extract a settlement from the husband.
However the wife’s application for a property settlement was already out of time at this stage and she was well aware of the one-year time limit for the filing of an application for a property settlement.
I do not accept that the information the wife allegedly obtained from the bank adequately explains her failure to file an application for a property settlement within time or at the very least at a much earlier time than the present.
The fact that the wife well knew that she would have to file an application if she wanted to obtain a property settlement is illustrated by the fact that, on her own case, she tried on three occasions in 2004 to file such an application and she approached a solicitor in 2007 about filing such an application before finally approaching the same solicitor for the same reason four years later.
It is abundantly clear that the wife was well aware that she could not simply depend on the information given to her by the Commonwealth Bank, if it was indeed given, to ultimately deliver a property settlement to her.
The wife made reference in her material to having suffered over the years from anxiety and depression, but had she been seriously relying on this as an explanation for her inaction over a period of nine years I would have expected to see some medical evidence. The wife commented at the hearing that she could get further evidence if the court wanted it, but it is not up to the court to run the wife’s case.
In any event the wife in her most recent affidavit stated that she had been well for the last two years, and she did not take any steps in the two years preceding 2012 to file an application.
Whatever may have been in the wife’s own head the husband has never said or done anything which might have led her to believe that he would settle with her in the absence of her commencing court proceedings.
The husband had every right to assume until January 2012 that the wife did not intend to pursue a claim for a property settlement, and there would be prejudice to the husband if the wife was allowed to proceed with her application now.
In order to determine the application the court would be required to closely examine events which occurred between 18 and 23 years ago. There is a serious risk that documents in relation to that period would not be available and those potential witnesses and the parties themselves might now have a very imperfect and unreliable recollection of what occurred during that period.
The husband moreover is now very ill and that is an additional reason why it would be quite prejudicial to the husband to allow the wife to proceed with her property application nine years out of time.
In Sharp & Sharp (supra) at the very beginning of their judgment the Full Court referred to some observations by McHugh J in the High Court case of Brisbane South Regional Health Authority & Taylor.[6] He said as follows:
The discretion to extend time must be exercised in the context of the rationale for the existence of limitation periods. For nearly 400 years the policy of the law has been to fix definite time limits, usually six but often three years, for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that where there is a delay the whole quality of justice deteriorates. A limitation period should not be seen, therefore, as an arbitrary cut-off point unrelated to the demands of justice or the general welfare of society. It represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period. Notwithstanding that, the enactment of that period may often result in a good cause of action being defeated. A limitation provision is the general rule; an extension provision is the exception to it.
[6] Brisbane South Regional Health Authority & Taylor (1996) 186 CLR 541
The Full Court in Sharp & Sharp went on to say:
There is nothing to suggest that this expression of the law in general is not entirely applicable to a consideration of section 44 of the Act.
I am satisfied that the wife will suffer hardship if not allowed to pursue her claim, but on my assessment, on the best evidence that I have at the moment the amount which the wife could hope to receive from the proceedings is relatively small, and what mitigates against her being allowed to proceed with her claim is her very lengthy delay in filing her application.
The husband has never said or done anything which might have led the wife to believe that he would settle with her outside of the court system. If the wife is allowed to pursue her claim now the parties will have to cast their minds back between 18 and 23 years, look for documents relevant to that period, try to give evidence about that period which may be inherently unreliable, and the husband will be forced to deal with the claim in circumstances where he is now very ill.
I am satisfied as a result of all of these factors that I should in the exercise of my discretion refuse the wife leave to proceed out of time and I intend to dismiss the wife’s application.
I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of Terry FM
Date: 20 September 2012
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