Carter & Shahid
[2022] FedCFamC1F 867
Federal Circuit and Family Court of Australia
(DIVISION 1)
Carter & Shahid [2022] FedCFamC1F 867
File number(s): WOC 705 of 2019 Judgment of: CHRISTIE J Date of judgment: 8 November 2022 Catchwords: FAMILY LAW – APPLICATION TO COMMENCE PROPERTY PROCEEDINGS OUT OF TIME – Where the applicant seeks to commence property proceedings under s 90SM of the Family Law Act 1975 (Cth) out of time – Where the parties agree they were in a de facto relationship – Where property proceedings may need to include a third party – Where the asset pool is modest – Where the costs of litigation impacts on the assessment of hardship Legislation: Family Law Act 1975 (Cth) ss 44, 90SF Cases cited: Althaus & Althaus (1982) FLC 91-233; [1979] FamCA 47
Edmunds & Edmunds (2018) FLC 93-847; [2018] FamCAFC 121
Gadzen & Simkin (2018) FLC 93-871; [2018] FamCAFC 218
Whitford v Whitford (1979) FLC 90-612; [1979] FamCA 3
Division: Division 1 First Instance Number of paragraphs: 51 Date of hearing: 1 November 2022 Place: Sydney Counsel for the Applicant: Mr Rossic Solicitor for the Applicant: Manning Lawyers Counsel for the Respondent: Mr Moutasallem Solicitor for the Respondent: Kells the Lawyers ORDERS
WOC 705 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CARTER
Applicant
AND: MR SHAHID
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
8 November 2022
THE COURT ORDERS THAT:
1.The application filed 29 August 2022 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Carter & Shahid has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application for leave to commence financial proceedings out of time.
The parties separated in May 2019 and the applicant commenced proceedings for parenting orders in July 2019. On 24 May 2022 the applicant amended her application to seek financial orders as well.
The respondent opposes leave being granted.
The parties are the parents of X born 2018.
Background
The respondent married Ms B in 2006 and the couple had two children.
In 2013 the respondent and Ms B purchased land at C Street, Suburb D NSW (“the Suburb D property”) as joint tenants and in 2014 they commenced building a home on that property.
The parties to these proceedings met in 2015 when they were both at the E Agency.
The respondent and Ms B separated in April 2017 and in mid-2017 the parties commenced co-habitation.
In 2018 the parties had a child, X.
In early 2019 the respondent and Ms B were divorced.
On 21 May 2019 the applicant and respondent separated.
On 5 July 2019 the applicant commenced parenting proceedings in the Federal Circuit Court of Australia (as it then was).
The respondent reconciled with his former wife and in 2020 a third child was born to that relationship.
On 21 May 2021 the limitation period for commencing proceedings without leave expired.
On 24 May 2022 the applicant filed an application for leave to commence financial proceedings out of time.
In 2022 a fourth child was born to the respondent and Ms B.
The evidence replied upon by the applicant was set out in her Outline of Case document. Similarly, the evidence relied upon by the Respondent was listed in the Outline of Case document filed in his case.
The law
The applicant for leave is required to demonstrate that the requirements of s 44(6) of the Family Law Act 1975 (Cth) (“the Act”) have been satisfied in order for the Court to grant such leave. The applicant bears the onus.
Sections 44(5) and 44(6) of the Act provide:
(5) Subject to subsection (6), a party to a de facto relationship may apply for an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL, only if:
(a) the application is made within the period (the standard application period) of:
(i) 2 years after the end of the de facto relationship; or
(ii) 12 months after a financial agreement between the parties to the de facto relationship was set aside, or found to be invalid, as the case may be; or
(b) both parties to the de facto relationship consent to the application.
…
(6) The court may grant the party leave to apply after the end of the standard application period if the court is satisfied that:
(a) hardship would be caused to the party or a child if leave were not granted; or
(b) in the case of an application for an order for the maintenance of the party—the party’s circumstances were, at the end of the standard application period, such that he or she would have been unable to support himself or herself without an income tested pension, allowance or benefit.
In that regard, the applicant is required to demonstrate that if leave is not granted then she is deprived of her reasonable chance of success in the prospective proceedings and that will occasion hardship: Gadzen & Simkin (2018) FLC 93-871.
It is necessary to make a summary assessment of the prospective claim of the applicant in order to determine whether or not the onus has been discharged: Edmunds & Edmunds (2018) FLC 93-847 at [16]-[17]; Althaus & Althaus (1982) FLC 91-233.
Consideration
This is a difficult case. I accept that the assets of the applicant and respondent are modest and the respondent’s assets are held jointly with his current partner, to whom he was previously married.
Both parties accept that the relationship between them would be regarded as a de facto relationship at law notwithstanding the fact that it was of a brief duration.
The applicant is required to demonstrate hardship in order to enliven the discretion to grant leave which is created by the terms of s 44(6) of the Act.
It is accepted that the hardship in question is the hardship occasioned by the refusal to grant leave and the consequent loss of the right to bring a proceeding which has some merit.
In order to assess whether or not the claim of hardship is established on the evidence it is necessary to understand the nature of the claim in a general or summary sense that is:
(a)What assets are available for distribution?
(b)What is the likely contribution based entitlement of the applicant at final hearing?
(c)What adjustment (if any) would be appropriate to take into account any relevant matters under s 90SF of the Act?
The asset position of the parties is set out in their financial statements. The most significant assets are the home of the respondent and his partner (subject to mortgage) and the parties’ respective superannuation entitlements.
In broad terms the evidence in each parties’ financial statement suggests that the assets are:
PROPERTY OWNERSHIP VALUE ASSETS C Street, Suburb D 50% H $500,000 Bank accounts H $1,082 Shares H $3,941 Motor Vehicle 1 H $9,000 Household contents H $5,000 Bank accounts W $100 Motor Vehicle 2 W $20,000 Household contents W $5,000 Total: $544,123 SUPERANNUATION Superannuation Fund 1 H $117,283 Superannuation Fund 2 W $42,000 Total: $159,283 Total Assets & Superannuation: $703,406 LIABILITIES Mortgage 50% H $392,996 Credit cards H $83,151 Personal loans H $83,780 Total: $559,927 NET ASSETS AND SUPERANNUATION: $143,479
There is some controversy surrounding the value of the Suburb D property. I cannot resolve that controversy. The applicant for leave also contends that the credit card and personal loan debt of the respondent should be excluded for the purpose of ascertaining the net pool available for adjustment.
The respondent is a joint tenant with Ms B of the Suburb D property. They purchased the land together (exhibit 2). They continue to own it as joint tenants (exhibit 3). Counsel for the respondent alluded to the fact that, if leave were granted, Ms B may need to be joined (or may seek leave to be joined) to the proceedings as a necessary and independently represented party. The inclusion of a necessary party is likely to increase the length of any proceeding.
The effect of the joint tenancy is that, while the respondent is the owner of the property with an entitlement to it as a whole, he shares that entitlement with another person and each of the parties to this application concede that a short hand way of representing that is to attribute half of the value of the property and half of the value of the mortgage to the respondent.
Counsel for the respondent faintly hinted that the claims of Ms B (for whom he does not act) may be greater than a 50 per cent share would acknowledge. That may be the case but I can make no finding in that regard.
The respondent said he had significant credit card debt at separation. The applicant has not demonstrated otherwise. However, through his counsel, he agreed to set the credit card (and other unsecured debt) aside in order to make submissions about the likely outcome of the applicant’s claim.
Adopting the asset pool set out above and excluding the unsecured debts of the husband ($166,931) the net assets and superannuation of the parties total: $310,410.
I accept that this figure would increase if the property were to be valued at more than a million dollars but similarly it would decrease if the credit card and personal loan debt were to be included.
The onus in this application is on the applicant to establish through admissible evidence that a failure to grant leave would occasion hardship.
The applicant submitted that her contribution based entitlements, taking into account the short period of the cohabitation and the parenting contributions undertaken since separation, are likely to be assessed at 10 to15 per cent. It was contended that a further adjustment to take into account s 90SF matters, in particular s 90SF(3)(c) of the Act, of between 10 to16 per cent, may be appropriate. The conclusion, the applicant contends, is that her entitlements may be between 20 to25 per cent of the pool. I cannot make findings about the merits of the applicant’s case for property adjustment in the manner that would be possible at the conclusion of a final hearing. However, one matter which the applicant’s submissions do not squarely address is that the respondent himself has very significant s 90SF(3) considerations including: financial responsibility for four children with Ms B, financial responsibility for the parties’ child and potential loss of current employment. The exercise undertaken by the Court in applying the provisions of s 90SF(3) is not a fault based exercise but an acknowledgment of the reality of the financial position that each of the parties is in at the time of hearing and prospectively.
The respondent adopted the applicant’s contentions about overall division in order to argue that, even if the applicant were to be entitled to the percentage division for which she contends, she could not logically only apply that to the respondent’s assets – it would have to be applied to the assets of both parties and take into account the applicant’s superannuation and other property. That approach, the respondent submitted, required a recognition that the applicant had in her possession 20 per cent of the assets of the parties without any further adjustment. Recognising, again, for abundant caution the respondent had excluded his unsecured liabilities in making this calculation.
20 per cent of $310,410 is $62,082. 25 per cent of $310,410 is $77,602.50. In her financial statement the applicant says she has property and superannuation which total $67,100.
If the Court accepted this approach the applicant may have no claim or, at best, a modest claim. The respondent went further and acknowledged that the value of the real property owned by the respondent and Ms B is not the subject of valuation evidence. If that property is valued at more than $1,000,000, being the figure the respondent has in his financial statement (and the figure the applicant had in her financial questionnaire as being the value at cohabitation), then the net asset position would improve. But it would still need to be considered in light of the costs of litigation and the possibility that unsecured debts would be taken into account.
The applicant bears the onus of establishing hardship. The respondent objected to the evidence the applicant sought to rely on concerning a higher value for the Suburb D property. That evidence was excluded as hearsay. Consequently, she has not filed any admissible evidence to support a conclusion that the Suburb D property is valued at a figure different from that in the respondent’s financial statement.
The respondent submitted that the modest nature of the applicant’s claim needs to be considered in the context of the additional legal fees which would be expended to achieve the result.
The applicant, appropriately, conceded that it was necessary to place the claim in that context.
The costs of litigation
As is required by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), the applicant filed a costs notice (exhibit 4). That costs notice contained an estimate of future legal fees. The notice did not draw a distinction between legal fees for the parenting proceedings and legal fees in respect of the property proceedings and it was not clear from that document how many days it was asserted would be required for a trial. However, it did contain the following relevant estimates:
1.Preparation for and attendance at Interim Hearing (Leave out of time Property) – 1 November 2022 $3,500 plus $350 GST = $3,850 to $5,500 plus $550 GST = $6,050
2.Preparation for and attendance at Mediation (if required) $4,000 plus $400 GST = $4,400 to $6,000 plus $600 GST = $6,600
3.Preparation and finalising settlement documents (if matter settles at mediation – if required) $1,200 plus $120 GST = $1,320 to $2,500 plus $250 GST = $2,750
4.Attendance at further Direction Hearings/Case Management Readiness Hearing $2,000 plus $200 GST = $2,200 to $3,000 plus $300 GST = $3,300
5.Further work up to and including Final Hearing including drafting Court documents, Trial Affidavit, conference with you, conferences with Counsel, updating disclosure, appointing valuer (if required), correspondence with other party’s solicitor, preparation for and attendance at the Final Hearing, briefing Counsel, other ancillary matters $25,000 plus $2,500 GST = $27,500 to $35,000 plus $3,500 GST = $38,500
6.Disbursement – Mediator’s fees (50%) (if necessary) $2,000 plus $200 GST = $2,200 to $4,000 plus $400 GST = $4,400 Estimated only – fees to be advised by mediator separately
7.Disbursement - Valuer's fees (50%) (if necessary) $500 plus $50 GST = $550 to $1,000 plus $100 GST = $1,100 Estimated only - fees to be advised by valuer separately
8.Disbursement - Counsel fees (preparation for and attendance at Interim Hearing – 01.11.22) $6,000 plus $600 GST = $6,600
9.Disbursement – Counsel fees (prep for and attendance at mediation) (if necessary) $8,000 plus $800 GST = $8,800 to $9,000 plus $900 GST = $9,900
10.Disbursement – Counsel fees (prep for and attendance at Final Hearing) $10,000 plus $1,000 GST = $11,000 to $16,000 plus $1,600 GST = $17,600
As per the original
The costs notice does not explicitly state the number of days the solicitor has estimated would be required for the final hearing. It seems likely, given the figures for counsel’s attendance at the interim hearing and the final hearing, that the estimate for the final hearing is two days. I accept that if the issue of financial adjustment were to be litigated that may add a further one to two days to the hearing time. The parties would be required to participate in alternate dispute resolution the costs of which are set out above.
I cannot find with precision what the additional legal fees would be but they would include preparation of financial documents, mediation, valuation and further days of hearing.
The applicant’s counsel emphasised the authorities which have consistently reiterated that applications for leave should be approached in a manner which acknowledges the need to alleviate hardship. Accordingly, the Court should take a liberal approach to the grant of leave.
As against that, counsel for the respondent argued that if too liberal an approach is taken to the grant of leave the time limit itself is rendered nugatory.
I accept that both counsel have accurately summarised the legal principles that apply. My role is to determine how the facts of this case fit within that jurisprudential framework.
Having considered the claim of the applicant as articulated by her lawyers and the potential costs of pursuing the claim I conclude that the loss of claim if leave is not granted (in the context of the legal fees) could not be characterised as “a substantial detriment”: Whitford v Whitford (1979) FLC 90-612.
Given that I cannot find that there would be hardship, it is unnecessary for me to make a finding as to whether the explanation for delay is adequate in the circumstances.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 8 November 2022
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