CHAUCER & LAKE

[2013] FCCA 953

FEDERAL CIRCUIT COURT OF AUSTRALIA

CHAUCER & LAKE [2013] FCCA 953

Catchwords:
FAMILY LAW – Property – application for leave to commence property proceedings out of time – where application for property proceedings commenced sixteen months after Divorce Order – whether applicant would suffer hardship if leave were not granted – discretionary factors considered – whether satisfactory explanation for delay – whether applicant would have a prima facie claim worth pursuing – where the asset pool is relatively modest – whether application has no real probability of success of leave were to be granted – leave granted.

FAMILY LAW – Costs – whether applicant should pay the respondent’s costs.

Legislation:
Family Law Act 1975 (Cth), ss.44, 79, 117

Cases cited:
Lindon v Commonwealth of Australia (No.2) [1996] HCA 14; (1996) 136 ALR 251; 70 ALJR 541
Sharp & Sharp [2011] FamCAFC 150
Whitford & Whitford (1979) FLC 90-612

Applicant: MR CHAUCER

Respondent: MS LAKE

File Number: SYC 1863 of 2011

Judgment of: Judge Scarlett

Hearing date: 5 July 2013

Date of Last Submission: 5 July 2013

Delivered at: Sydney

Delivered on: 5 July 2013

REPRESENTATION

Solicitor for the Applicant: Mr Jiang

Solicitors for the Applicant: Churchill Lawyers

Solicitor for the Respondent: Mr Oliveri

Solicitors for the Respondent: Phoenix Attorneys

ORDERS

1. The Applicant is granted leave to institute proceedings under s.79 of the Family Law Act 1975 for the settlement of property arising out of the marital relationship.

2. The Respondent is to file and serve a Response to the Property Application, an affidavit stating the facts upon which she relies and a Financial Statement by 31 July 2013. 

3. The Application is adjourned to 5 August 2013 for further mention at 10:00am.

IT IS NOTED that publication of this judgment under the pseudonym Chaucer & Lake is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYC 1863 of 2011

MR CHAUCER

Applicant

And

MS LAKE

Respondent

REASONS FOR JUDGMENT

1. The application before the Court is an Application in a Case by the Husband seeking leave under subsection 44(3) of the Family Law Act 1975 to commence proceedings for settlement of property under section 79 of the Act, out of time. The Applicant relies on his original affidavit in support of his substantive application for property settlement and a later affidavit confirmed on 23^rd November 2012. 

2. The Respondent opposes the application by her response filed on 6^th November 2012. She seeks simply that the Applicant Husband’s application be dismissed as it was filed out of time pursuant to section 44 of the Family Law Act1975. 

3. Indeed, the application was filed out of time. 

4. The parties were married on (omitted) 1997.  They separated in March 2010. There were divorce proceedings in this Court where a divorce order was made on 21^st April, 2011 and the divorce became effective one month after the expiration of one month, namely 22^nd May 2011. 

5. The Applicant did not commence his proceedings until he filed his initiating application on 4^th September 2012. Clearly, the application is out of time. Subsection 3 of section 44 says relevantly:

   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  and 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. 

   And that, indeed, is the case here. The applicant did not file his application in a case seeking leave until 23^rd November 2012 which was after the matter became an issue by the respondent filing her response opposing the institution of the proceedings on 6^th November 2012. 

6. The substance of the Applicant’s case is contained in his affidavit of 22^nd November 2012.  There are a lot of matters referred to in that affidavit that are simply not relevant.  However, the Applicant deposes that after the divorce, he approached a particular legal firm in August 2011 requesting them to act for him to initiate property proceedings in this Court. However, the solicitors concerned, not surprisingly, required an upfront payment of some $4000 which the Applicant did not have.

7. The Applicant then sought other legal representation and he again was told that he would need to put the solicitors in fund to commence the proceedings.  Fortunately for him, his current solicitor agreed to act for him after the Applicant had initially approached him and the Applicant had gone off and worked as much as he could and presumably put away some money, but the arrangement with his current solicitor is that costs will be paid out of the Applicant’s anticipated share of the property proceedings. 

8. The Applicant also claimed, apart from the financial reasons, that his former wife had harassed him and even threatened him in respect of certain matters in his background and he annexes to his affidavit a letter dated 9^th September 2012 which he says came from the former wife, saying:

   I am writing this letter to inform you that I will give you seven days time to think about it.  If I do not receive any response from you at 5 pm, 16 September, I am going to hand in this document to the police station on the morning of 17 December [sic].  I will also give the court one copy when I attend the court for the first hearing on 20 October. 

9. I should make it clear that neither party has given oral evidence and it is not, therefore, the case that this evidence has been tested.  It is, however, on its face, a threat to the Applicant not to proceed otherwise documents will be given to the police and it appears clear, from the Respondent’s affidavit evidence, that she will be arguing that the Applicant entered into a form of marriage in (country omitted) in circumstances which, under the law of this country, would amount to bigamy. 

10. I commented to the parties’ solicitors this morning that, if it were to be established that the acts involved in entering into a form of marriage took place in the (country omitted) rather than in Australia. It would appear at first glance that the courts of that country would have the jurisdiction as the entering into a form of marriage took place after the Applicant was legally married to the Respondent in this country.

11. The Applicant submits that he has, therefore, a reasonable explanation for the delay.  He also submits that he has a case which, if he were not allowed to prosecute that case, would cause him hardship. He estimates in his affidavit that, on a final hearing, he would be seeking approximately 30% of the asset pool although he expressed the view that he thought he might be entitled to somewhat more than that. 

12. On my reading of the affidavit material and the financial statements, without going into the details, it would seem to me that the likelihood of the Applicant receiving more than 30% of the asset pool, based on contributions and what appear to be agreed in subsection 75(2) matters, is remote to say the least and, indeed, it could not be guaranteed that the Applicant could safely receive 30%of the asset pool, based on the material before the Court. 

13. Mr Oliveri, who appears for the Respondent, submits that leave should not be granted.  To some extent, he casts some doubt on the reasons for the delay – and the delay is conceded not to be a lengthy delay – but the thrust of the Respondent’s case is that the Applicant does not have a prima facie case.  In other words, if the Applicant does not have a case in which he could reasonably expect success, there is no hardship for him in not being given leave to commence an entirely unmeritorious case. 

14. Mr Oliveri submits that the contributions greatly favour the Wife and has provided a list of significant financial contributions over the term of the marriage from May 2000 through to October 2009, including a substantial contribution by way of compensation monies received from a worker’s compensation claim amounting to some $206,000.00.  By comparison, he submits that the Applicant’s contributions not only pale into insignificance but would appear to be negative contributions. 

15. He points in the affidavit evidence to mysterious losses of money amounting to a loss of $110,000.00 for which no adequate explanation has been given, and also points out that the Applicant appears not to have made a full and frank financial disclosure in that he has not disclosed money held in bank accounts in (country omitted).  He also submits that the evidence would suggest that the Applicant has been channelling money out of Australia into (country omitted) particularly on the Respondent’s evidence that the Applicant had acquired a wife and a child in (country omitted) and was spending a considerable amount of time out of Australia up to indeed 142 days where without descending too much into hyperbole it appears that the Applicant or it will be submitted that the Applicant was leading a double life, a separate family. 

16. The submission is, in fact, that the Applicant’s contributions between 2000 and 2006 were negative contributions which on Mr Oliveri’s calculations amount to some $285,000.00 over the years.  It is also a matter of some relevance that leaving aside monies added back if such there are to be and leaving aside such factors as monies in bank accounts in (country omitted), if such there are, the asset pool in Australia is relatively modest. The principal asset leaving aside a small superannuation policy, a motor car and a few other items like that would be the former matrimonial home at Property B, which is in the sole name of the Wife and the value of that property is subject to some conjecture. 

17. The Husband in his affidavit estimates up to $650,000.00.  The Wife takes a more pessimistic view of $500,000.00 or probably less and in each case the parties are ad idem that there is a mortgage of $190,000.00.

18. On the Wife’s figures, therefore, the equity in the property would amount to $310,000.00. On the Husband’s figures it would be significantly more.  Nevertheless, it remains a relatively modest asset pool. Mr Oliveri raises the point that the Husband’s substantive application if he were given leave to bring it would be of little value to him in that the costs that he estimates that the Husband would incur may well exceed the amount, if any, that he could expect to receive out of the property settlement. 

19. By comparison the Wife would be in a position of suffering some hardship in that she would have to incur costs to defend the claim which would include such steps as endeavouring to find out assets held outside Australia and endeavouring to trace the amounts which she alleges that the Husband has lost or wasted over the term of the marriage.  Of course, it could be that if the Husband were given leave to commence this substantive case the amounts of negative contributions referred to by the Wife of amounts lost could well be seen as money taken from joint assets, put by the Husband to his own use which could be subject to amounts being added back, and as I said, the property or the amounts said to have been appropriated by the Husband in this way amount to some $285,000.00. 

20. If those amounts were added back it would increase the asset pool but would not have a particularly beneficial effect on any amount the Husband could receive. It could be as I suggested to the party’s lawyers to be rather akin to scoring an “own goal” in football.  I have had a variety of authorities referred to me by the party’s legal advisers.  The most recent authority is the decision known as Sharp & Sharp[1] which is an appeal from a decision of a Federal Magistrate.  In that decision the Full Court constituted by May, Ainslie-Wallace and Young JJ conduct an extensive survey of relevant cases going back indeed to Whitford & Whitford[2].  I would comment that Sharp & Sharp being an appeal decision from this court or at least this Court as it then was is binding on this Court in its present incarnation. 

    [1] [2011] FamCAFC 150

    [2] (1979) FLC 90-612

21. Their Honours considered the decision in Whitford looking at the meaning of hardship and they did so at paragraphs [19] to [21].  Their Honours said:

    In considering the meaning of hardship in Whitford at 78, 144 the court said:

    …The requirement that the court must be satisfied that hardship would be caused if leave were not granted implies that it must be made to appear to the court that the applicant would probably succeed if the substantive application were heard on the merits.  If there is no real probability of success, then the court cannot be satisfied that hardship would be caused if leave were not granted.  If the probable result of the hearing on the merits is that hardship is not likely to be alleviated then the court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted. 

    Further, at page 78, 145 the Court said:

    …As a general proposition it might be said that the inability of an applicant to pursue a claim which in the circumstances of the applicant or a child of the marriage is trifling generally will not cause hardship.  Similarly, where the costs which the applicant will have to bear himself or herself are about as much or more than what the applicant is likely to be awarded on a property claim, ordinarily hardship would not result if leave to institute proceedings were not granted.  But otherwise we find no warrant in either subsection 44(3) or 44(4) for saying that the right or entitlement lost must be a substantial one. (emphasis in original). 

    At the same page they continued:

    In an appropriate case and depending on the circumstances of the applicant or the children, hardship may be caused by the loss of deprivation of something which is of comparatively small money value… 

22. And at [22] their Honours went on to say:

    If an applicant demonstrates hardship of the type discussed then the applicant must then persuade the court that in the exercise of its discretion leave should be granted. 

23. Their Honours went on to say at paragraph [27] of the decision:

    We observe that subsequent Full Court decisions have indicated that the appropriate approach to a determination under this section necessitates a clear distinction to be made between the proof of hardship and a consideration of the consequential exercise of the discretion. 

24. Their Honours referred in particular to Whitford and also to the decisions of Cox & Cox, Walker & Walker and Hedley & Hedley. So that then is the exercise upon which the court must embark. I have referred to the requirement of subsection (3) of section 44. Their Honours in Sharp & Sharp, of course, considered the requirement in subsection (4) of section 44 which says:

    The Court shall now grant leave under subsection (3) and (3A) unless it is satisfied:

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

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

25. That is not what is being claimed here as this is an application for leave to commence property proceedings. The first thing that must be considered, therefore, in following the authorities is whether hardship would be exercised by the Applicant if he were not given leave to present his claim.  The circumstances are that the principal asset is the former matrimonial home where there appears to be an equity of about $310,000.00.  The parties were together for about 13 or 14 years.  The parties are in violent disagreement about the contributions of the Husband. 

26. The Husband is saying that they are positive contributions, the Wife saying that they are quite the reverse.  There are two children of the marriage under the age of 18 years.  They both live with the Wife.  It would certainly seem that the children living with the Wife and, if the Wife’s evidence is correct they were receiving little if anything by way of child support payments would be a factor that the Court would take into account under subsection (2) of section 75.  Can it be said that the Applicant has no real probability of success if leave were to be granted?  The Applicant is of the belief that his claim is worth about 30%.  In my view, that is optimistic at best.  It may well be less.  But if the Applicant is not given leave to proceed, he cannot even bring this claim. 

27. If the claim is a claim entirely within merit, he would receive nothing and he should not be given leave, but if it were the case that the Applicant were not to receive the 30%of the asset pool which he claims, but to receive a smaller amount, perhaps, such as 20% or less, could his case be said to be unsuccessful?  The answer must clearly be no, unless the costs which were to be expended were greater, or at least as much as, the amount that he could expect to receive. 

28. For instance, if he were only to receive 50 or 60 thousand dollars, would he need to expend 50 or 60 thousand dollars in order to obtain such an order?  With the greatest of respect to the party’s legal advisor, that would clearly be money not well spent.  That need not necessarily be the case.  Many property applications are decided much earlier than at a final hearing by either private mediation or at a conciliation conference before a registrar.  That would not, in my view, involve the expenditure of 50 or 60 thousand dollars. 

29. I am not satisfied that the Applicant’s chances of success, in a substantive property application, are so little that he could be said to have no real probability of success.  Thus, if he were not granted leave, he would suffer hardship.  But that, of course, is only a part of it, as the Full Court has very clearly set out.  The Court must consider the consequential exercise of the Court’s discretion once hardship has been proven.  How is this to be done?  The first matter that should be looked at is the extent of the delay and whether there is a reasonable explanation for the delay. 

30. It is instructive to look at the delay that was the subject of the appeal before their Honours in Sharp & Sharp. 

    In that case, the parties were divorced on 14 February 2004.  The husband remarried in October of that year, divorced his second wife in June 2008, was declared bankrupt in April 2005, discharged from that bankruptcy in April 2008 some three years later.  He then, on 15 June 2009, filed an application seeking the Court’s leave to bring section 79 property proceedings, notwithstanding the time for bringing those proceedings that expired on 15 February 2005…

    and, I might comment, notwithstanding the fact that,

    in the intervening period, he had remarried, got divorced, got into bankruptcy and then come out of bankruptcy. 

31. I must say, with the very greatest of respect, that I am not surprised that their Honours in the Full Court had the decision in the matter of Sharp & Sharp before them.  This is not such a case.  This is a case of a delay of some four months, more or less.  The application is out of time but it is only out of time by about four months or so.  The Applicant has given a reason – or he has given an explanation – and I am not particularly concerned or swayed by his allegations of threats by his former wife.  He has indicated, however, that he was impecunious when he sought to give instructions to a solicitor, in August 2011, when he was within time. 

1. The solicitors required $4000.00 up front, which he did not have.  He sought other legal advice and, eventually, his current solicitor, in an act that can only be described as an act of kindness and generosity, agreed to take on his case.  By that time, however, the substantive application was out of time.  This is not an unusual or an unbelievable explanation.  The delay is not an unduly excessive delay and I am of the belief that the explanation is, at the very least, plausible.  I am of the view that the Applicant’s delay in commencing his substantive application in time has been reasonably explained. 

2. I have given consideration to the merits of the Applicant’s claim.  It is not one where he can expect to receive the major part of the asset pool.  It is not one, however, where he could expect to receive nothing or next to nothing, taking into account necessary legal costs.  It is not a hopeless case, nor is it a near a hopeless case.  It is, in fairness, to my mind, a weak case but, as Kirby J said, in Lindon v Commonwealth of Australia (No.2)[3] even a weak case deserves its time in Court. 

   [3] [1996] HCA 14; (1996) 136 ALR 251; 70 ALJR 541

3. It is for these reasons that I propose to grant leave, under subsection (3) of section 44 of the Family Law Act 1975, for the Applicant to commence proceedings out of time.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Scarlett

Date:  30 July 2013