D'ORAZIO & DENCH
[2010] FMCAfam 991
•14 September 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| D'ORAZIO & DENCH | [2010] FMCAfam 991 |
| FAMILY LAW – Property application – whether leave should be given under section 44(3) to bring application out of time – hardship – explanation for delay – prejudice to respondent – leave granted. |
| Family Law Act 1975 (Cth), ss.44(3), (3A), 44(4), 75(2), 79 |
| Keith v Soukis [2007] FamCA 1017 Hedley & Hedley (2009) FLC 93-413 Whitford & Whitford (1979) FLC 90-612 |
| Applicant: | MS D'ORAZIO |
| Respondent: | MR DENCH |
| File Number: | DGC 4422 of 2008 |
| Judgment of: | O'Sullivan FM |
| Hearing date: | 7 September 2010 |
| Date of Last Submission: | 7 September 2010 |
| Delivered at: | Dandenong |
| Delivered on: | 14 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Weerappah |
| Solicitors for the Applicant: | Bayside Solicitors |
| Counsel for the Respondent: | Ms Colla |
| Solicitors for the Respondent: | Richard Calley Family Lawyers |
ORDERS
The applicant have leave pursuant to s.44(3) of the Family Law Act 1975 to initiate proceedings by her application filed on 1 July 2010.
Costs be reserved.
IT IS NOTED that publication of this judgment under the pseudonym D’Orazio & Dench is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 4422 of 2008
| MS D'ORAZIO |
Applicant
And
| MR DENCH |
Respondent
REASONS FOR JUDGMENT
In this matter an application has been made by Ms D'Orazio born [in] 1971 (“the wife”) for leave pursuant to s.44(3) of the Family Law Act 1975 (Cth) (“the Act”) to enable her to pursue property proceedings against Mr Dench born [in] 1961 (“the husband”). The husband opposes leave being granted.
At the hearing on 7 September 2010 the parties agreed the matter should be dealt with on the basis of submissions and the affidavit material[1] that had been filed and I am content to proceed on that basis.[2]
[1] The wife relied on her application filed 1 July 2010, her form 13 and affidavit filed 1 July 2010, two affidavits filed 26 August 2010 and an affidavit filed 31 August 2010. The husband relied on his response file 25 August 2010, his form 13 and affidavit filed the same date and two further affidavits filed 2 September 2010 and 6 September 2010.
[2] See Finn J at para 21 in Hedley & Hedley (2009) FLC 93-413
Background
The wife is 39 and the husband is 49. The parties married [in] 2005 and a divorce order took effect [in] 2009.
There is one child of the marriage, [X] who was born [in] 2005 (“the child”). There were final parenting orders made for the child on 8 December 2009.
The husband has one child from a previous relationship living with him who is in year 12. The wife has 4 children in total living with her (including the child of the parties relationship).
The husband deposed in his affidavit material that he was a “[tradesman]” who is “supplementing” his income with Centrelink benefits and on Newstart. The wife described herself as a self funded retiree.
The wife filed this application on 1 July 2010. It was served on 17 July 2010 and came before the Court on 23 August 2010.
On that occasion whilst both parties were represented the husband had yet to file a response. Given this and the number of matters in the Court’s duty list that day, there were interim orders made and the matter was adjourned to 7 September 2010 to deal with the question of whether the wife ought be given leave to proceed with her application.
Since separation both parties have re-partnered. The husband sold the former matrimonial home earlier this year. As a result of orders made on 23 August 2010 the balance of the proceeds of that sale are held in trust by his solicitors.
It is common ground that there have been no orders made in respect of property settlement.
Submissions
The parties are agreed as to the relevant considerations for the Court in deciding an application of this type and that the 12 months time limit to commence property proceedings expired in March 2010.
Counsel for the wife referred to the relevant authorities, including that of Keith v Soukis [2007] FamCA 1017 where at paragraph 28 and following the relevant principles and authorities are discussed. Both parties also referred to the Full Court decision in Hedley & Hedley (2009) FLC 93-413.
The submissions advanced on behalf of the wife addressed the relevant considerations in an application such as this by reference to the material in the affidavits filed on her behalf. Those submissions maintained the wife had a reasonable claim for a just and equitable settlement of matrimonial property. Submissions were made pointing to the wife’s claims in her affidavit material about her financial, non financial contributions and future needs.[3]
[3] see paras 5, 13, 16, 21 and 22 of affidavit filed 1 July 2010
Counsel for the wife summarised his client’s position as where, in his submissions, his client had “indisputably” made financial and non financial contributions during the marriage and had a substantial prima facie case for property settlement.
Counsel for the wife maintained that in light of these matters and the other matters referred to in his client’s material[4] the wife would suffer hardship if leave were not granted.
[4] see paras 24-25 of affidavit filed 1 July 2010
Therefore, and given this, Counsel for the wife submitted that in exercising the discretion to grant the wife the leave she sought the question of delay in making the application assumed less significance. In any event, Counsel for the wife maintained his client had provided a reasonable explanation for the delay. By reference to the material in the wife’s affidavits, Counsel for the wife pointed out his client acknowledged that she was aware of the time limit. Further that she had seen the information in the divorce order certificate but, due to her physical and mental impairment, she did not appreciate the importance of making the application in time.
In submissions on behalf of the husband who opposed the wife being given leave, Counsel for the husband emphasised the Court needed first to be satisfied the wife would suffer hardship if leave were not granted. In the husband’s submissions the wife’s application should fail at this stage.
Counsel for the husband sought to impugn the wife’s claim to hardship if leave were not granted by reference to contradictions in her affidavit material in relation to the dates of cohabitation and separation. Whilst disclaiming any argument that the wife did not do enough during the relationship, Counsel for the husband, having tendered without objection exhibit H1 (which it was contended set out what each party would receive if they kept what they got) argued the wife would not suffer hardship.
Counsel for the husband submitted it was “disingenuous” for the wife to claim she was not aware of her rights given she had used the “legal process” in this and other courts.
Counsel for the husband characterised the claim the wife sought leave to bring as “ambit” and contended by reference to the claims her client made regarding his significant contributions that the wife was “still not going to be entitled to much more”.
Counsel for the husband contended there was no adequate explanation for the delay and in any event given the criticisms against her in the husband’s material[5] the Court should have doubts as to the veracity of her claims. Counsel for the husband claimed that her client would be prejudiced if leave were granted. Counsel for the husband submitted that her client believed property issues with the wife had been “done and dusted” and after the expiration of the 12 months period he had taken steps to move on with the rest of his life and would suffer prejudice if leave were granted.
[5] See for eg. Affidavits filed 25 August 2010, 2 September 2010 and 6 September 2010.
In the circumstances Counsel for the husband submitted that the Court should find the wife had not demonstrated hardship or that in the alternative leave should not be granted.
The law
Section 44(3) of the Act provides that proceedings between the parties to a marriage with respect to the property of the parties to the marriage shall not be instituted except by leave of the Court after the expiration of twelve months after the date on which the divorce order took effect.
Section 44(3A) of the Act provides:
“(3A) Notwithstanding subsection (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 a decree of nullity of marriage has been made; and
(b)the approval under section 87 of a maintenance agreement between the parties to the marriage has been revoked;
proceedings of a kind referred to in paragraph (c) or (ca) 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) may be instituted:
(c) within the period of 12 months after:
(i) the date on which the divorce order took effect or the date of the making of the decree of nullity, as the case may be; or
(ii) the date on which the approval of the maintenance agreement was revoked; whichever is the later; or
(d)with the leave of the court in which the proceedings are to be instituted;
and not otherwise.
…”
The requirements for leave are set out in s.44(4) which provides inter alia that the Court shall not grant leave unless it is satisfied that hardship would be caused to a party to the relevant marriage or child if leave were not granted.
The Full Court of the Family Court in Whitford & Whitford[6] said of the approach to this sort of application at p.78-144 that:
“On an application for leave under section 44(3), two broad questions may arise for determination. The first of these 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. If the Court is not so satisfied, that is the end of the matter. If the Court is so satisfied, the second question arises. That is whether in the exercise of its discretion the Court should grant or refuse leave to institute proceedings.”
[6] (1979) FLC 90-612
In Keith and Soukis [2007] FamCA 1017 the Full Court having referred to the provisions of the Act set out above and under the heading of "Applicable principles" said:
“30.In Whitford & Whitford (1979) FLC 90-612, the Full Court (Asche & Pawley SJJ and Strauss J) identified the “two broad questions” which arise for determination on an application for leave pursuant to subsection 44(3) (at 78,144):-
Thus, on an application for leave under sec. 44(3), two broad questions may arise for determination. The first of these 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. If the Court is not so satisfied, that is the end of the matter. If the Court is so satisfied, the second question arises. That is whether in the exercise of its discretion the Court should grant or refuse leave to institute proceedings.
31. The Court went on to state in Whitford (supra) that the hardship reference in subsection 44(4) of the Act is not a reference to the loss of a right to institute proceedings, but rather a loss of that opportunity where it is clear to the Court that:
...[T]he 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. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted. If the probable result of the hearing on the merits is that the 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.
32.Ellis J in G and G [1999] FamCA 240 interpreted the test in Whitford (supra) in the following terms (at paragraphs 22 and 23):
It can thus be seen that proof of hardship is a necessary pre-condition to the exercise by the Court of its discretion. The generally accepted interpretation of hardship, in the context of s.44(3), is “substantial detriment”. The loss of the right to institute the proceedings itself, however, is not hardship within the meaning of the section. Fundamental to the inquiry as to hardship is, as was said in Frost and Nicholson (1981) FLC 91-051, whether the applicant has a reasonable claim to be heard by the Court. That is not by itself necessarily the same thing as hardship but the stronger the applicant’s prima facie case, the greater the likelihood of hardship if leave were refused.
Nothing which has been put on behalf of the husband under the first of the three headings, in my view, demonstrates that the trial Judge erred as asserted. In my view, it was open to him to conclude that hardship would be caused to the wife if leave were not granted. In the ultimate, the trial Judge found that the claim of the wife was a small claim but that must be viewed, in my judgment, in the light of the circumstances, including the financial circumstances of each of the parties at the date of the hearing.
33.As to the explanation for delay, the Full Court stated in Carlon and Carlon (1982) FLC 91-272 (at 77,533):
[I]t is in our judgment a correct statement of the law that while Parliament in sec. 44(4) has placed a fetter on the discretion of the Court, the Court itself should not and probably cannot do the same by laying down any strict principles such as that a party must give an adequate explanation for delay. Once hardship has been established in the sense referred to in Whitford (supra) then the Court is in the exercise of its discretion at large and should take into account all relevant facts including, if that be the case, that no or no satisfactory explanation has been given for delay. Such a position namely no or no satisfactory explanation for delay is no more than another factor which must be given appropriate weight in the exercise of discretion.”
In Hedley & Hedley (2009) FLC 93-413 the members of the Full Court, Finn, Boland, and Cronin JJ each considered the procedure that should be followed for applications of this sort. At paragraph 21, Finn J said:
“The authorities reveal some differences of opinion as to the appropriate manner for the conduct of proceedings for leave under s 44(3) (contrast, for example, observations in Whitford & Whitford(1979) FLC 90-612 at 78,143 with observations in Neocleous & Neocleous (1993) 92-377 at 79,914 and 79,917-918). Nevertheless, it can be accepted that the authorities establish that such proceedings are not intended to be the final hearing of the property (or maintenance) matter.”
At paragraph 127, Boland J said:
“The procedure to be followed in an application under s 44(3) and the consideration of what is meant by “hardship” in s 44(4) are the subject of well-known authority. The authorities have consistently recognised, whilst an application under the section is not a matter of practice and procedure, it should be summary in character (see Neocleous & Neocleous[1993] FamCA 44; (1993) FLC 92-377 and the cases there cited at 79,914).
In Whitford & Whitford(1979) FLC 90-612 the Full Court (Asche and Pawley SJJ and Strauss J) referred to the appropriate way for proceedings to be conducted. Having said they did not consider it necessary or desirable to lay down any definitive procedural rules their Honours noted the following:
·an application for leave to institute proceedings under
s 44(3) is not intended to be the final hearing of the matter;·the applicant should file adequate affidavit evidence;
·the respondent should have an opportunity to file an affidavit in answer to adduce material showing why leave to institute proceedings should not be granted;
·in an appropriate case the applicant should have an opportunity to file an affidavit in reply;
·cross-examination of either party on his or her affidavit material should be permitted. On occasions oral evidence may be received;
·if necessary, the Court may allow an applicant to conduct some investigation into the financial position of the respondent; and
·the question to be borne in mind is whether leave should be granted, enabling the applicant to institute proceedings (and the extent of the proceedings and any investigation should be regulated accordingly).
Earlier authorities, including McDonald & McDonald(1977) FLC 90-317, referred to the establishment of a prima facie case which is substantial, that denial of the right to litigate that claim would cause hardship, and there is an adequate explanation as to delay. Additionally, Evatt CJ in McDonald said the Court may, in an appropriate case, take into account prejudice to a respondent.
In Althaus & Althaus (1982) FLC 91-233 Evatt CJ confirmed that ss 44(3) and (4) do not require “a detailed hearing on the merits to determine whether the applicant’s claim will succeed”. Her Honour said:
“…The exercise is to determine whether there is a reasonable claim to be heard. That is the essence of the inquiry into whether hardship will be suffered by denying the applicant the right to litigate that claim.”
In Whitford the Full Court conducted an expansive discussion of what will constitute hardship. Their Honours noted:
· the loss of the right to institute proceedings is not the hardship to which the subsection refers, but the consequences of the loss of that right;
· the hardship, if leave is not granted, implies that the applicant would probably succeed if the substantive application were heard on the merits;
· if there is no probability of success the Court cannot be satisfied that hardship will 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 would suffer hardship if leave were not granted; and
· the right or the entitlement to be lost if leave is not granted should not be trifling or likely to be outweighed by the costs of the proceedings. However, it is not necessary to establish the loss must be a substantial one.
The Full Court concluded that if a court is satisfied hardship would be caused if leave were not granted, the court should then, as a second step, consider whether to exercise its discretion to grant leave or to refuse such leave. It is relevant to note that the Full Court, at 78,146, saw the nature of the jurisdiction to be exercised by the Court required that:
“…this power should be exercised liberally in order to avoid hardship, but nevertheless in a manner, which would not render nugatory the requirement that proceedings should be instituted within a year from the decree nisi.”
In Neocleous the majority, Fogarty and Nygh JJ, discussed the Full Court decision in Whitford. The majority explained that the remarks in Whitford were clearly obiter. They went on to say:
“As we see it, the essence of the remarks in Whitford as further exemplified by decisions such as Jacenko, is that the judge must always bear in mind that the only question to be determined is whether leave should be granted to enable proceedings to be instituted and this should govern the procedure before him or her. For that reason it will often be undesirable to allow cross-examination on any issue which will or can be fully litigated at the principal hearing or on any issue which is not immediately relevant to the question of granting leave.”
Finally, at paragraph 216, Cronin J said:
“In property proceedings, s 44(3) requires only a limited inquiry in relation to whether
or not hardship would be caused to a party (or a child) if leave were not granted. That same limited inquiry in relation to maintenance is whether at the end of the period within which the proceedings could have been instituted without leave, the circumstances of the applicant were such that he or she would have been unable to support himself or herself without an income tested pension, allowance or benefit.
In relation to property matters therefore, the applicant must set out in affidavit form what the hardship would be if leave was not granted. The respondent must have a right of cross-examination on those facts put in issue but it must be limited bearing in mind the onus of proof lies with the applicant to establish hardship on the balance of probabilities. If the applicant is able to establish hardship, a court is obliged to then consider whether or not to exercise the discretion to grant the leave sought. An applicant must therefore also set out in affidavit form any material which would support the court exercising its discretion in the applicant’s favour. That material includes but is not limited to, the length of the delay, the adequacy of the explanation for the delay, the prejudice occasioned to the respondent by reason of the delay and the strengths of the applicant’s case.|
(See Whitford; Hall and Hall (1979) FLC 90-679; Cox and Cox (1981) FLC 91-068). These matters too may be subjected to limited cross-examination by the respondent bearing in mind that an affidavit will have been filed putting the respondent’s position in relation to how the delay has affected him or her. It is not appropriate for a court in a limited s 44(3) hearing to conduct the proceedings as if it was an application under s 79 of the Act. Each of the defined steps in s 79 carry subjective judgments. In a s 44(3) application, the applicant need only establish that there is a case to be argued bearing in mind those subjective judgments in s 79. As part of the discretionary process, when examining the strengths and weaknesses of the applicant’s proposed claim, a court is obliged to bear in mind that an applicant with a weak case has a right to be heard provided the matters set out above are established.”
In summary the Court must consider whether hardship would be caused to the wife if leave were refused. The onus is on the wife at all times to prove that leave should be granted. If the Court is not satisfied that hardship would result by refusal of leave then that is the end of the matter. If, however, the Court is satisfied that there would be hardship to the wife by a refusal to grant leave then the Court still has a discretion with two further considerations being:
a)whether there is a reasonable explanation for the delay in bringing the application; and
b)the question of prejudice to the husband should the application for leave be granted.
Consideration
In considering this matter, I have had regard to the documents referred to in the course of the proceedings, to the affidavit evidence filed on behalf of the wife and husband and to the submissions made on their behalf.
On the question of whether the wife would suffer hardship if leave weren’t granted in Whitford & Whitford[7], the Full Court said of the issue of hardship at page 78,144 that:
“The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted. The loss of the right to institute proceedings is not the hardship, to which the subsection refers. It is with the consequences of the loss of that right, with which the subsection is concerned.”
[7] (1979) FLC 90-612
Further, at page 78,145 the Court said:
“Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship.”
In Hedley (supra) Cronin J at paragraph 220 said that, subject to certain matters being established, even an applicant with a weak case has a right to be heard.
The wife’s material makes clear at the present time[8] she has primary care of the child of the parties’ relationship. The wife receives $5.00 per week in child support from the husband. The husband deposed that given what he believed the wife had retained after separation his support of the child was “more than adequate.” The wife also has the care of a number of other children from a previous relationship.
[8] This will change next year under parenting orders made in 2009.
The husband deposed that notwithstanding the length of the marriage the parties only lived together for approximately 12 months. However this was disputed. The husband deposed that he believed the wife retained assets in excess of what he believed she would be entitled pursuant to s.79 of the Act, that his contributions outweighed hers, he did not believe she did not get legal advice in respect of property proceedings, she had a very strong and forceful personality, she was a dishonest person and that he would suffer great prejudice and hardship if she were to succeed with her application. The wife denied this.
The parties couldn’t agree on when they commenced living together and when they separated. Whilst acknowledging the wife’s contributions Counsel for the husband submitted that during the relationship as well as the money he earned the parties lived on draw downs on the mortgage which was refinanced over the former matrimonial home and credit cards.
Denying the wife leave at this stage would prevent her from making a claim in relation to the matrimonial property. Whilst it may be a small claim she would lose the opportunity to have her interest in that determined, if appropriate adjusted and the matter resolved.[9]
[9] see Keith v Soukis [2007] FamCA 1017 at para 52
Notwithstanding what was said in submissions on behalf of the husband I can not be satisfied that there is no real probability of success of the wife’s application.[10]
[10] see Keith v Soukis [2007] FamCA 1017 at para 31
Whilst at face value the submissions made on behalf of the husband seem appealing that would still leave uncertainty as to the parties’ rights and entitlements.
As I understand it, it is not depriving a litigant (in this case, the applicant) of the fruits of s.79 adjustment that constitutes hardship but depriving her or him of the chance of obtaining those fruits. (emphasis added)
The wife on her case made a contribution to the welfare of the family and the assets of herself and her former husband. Those matters and the matters to be considered pursuant to s.75(2) of the Act are matters to which the wife refers in her evidence and do require judicial determination.
I consider it important for each of the parties that a determination is made with respect to their respective interests in matrimonial property.
Despite what was said in submissions by the husband I am satisfied that the wife does have, on the limited inquiry to date, a reasonable prima face case for property adjustment.
In so finding, I am also conscious of what the Full Court held in Hall [1979] FLC 90-679 when discussing the strength of prima facie cases in s.44(3) applications that:
“The varying phrases may tend to suggest different shades of meaning whereas in reality, they are directed to the same fundamental inquiry which basically is in the context whether on the Applicant’s material he or she has a reasonable claim to be heard by the Court.”
In those circumstances and notwithstanding the submissions made on the husband’s behalf, on the material before the Court, I am satisfied the wife gets over the first hurdle.
Turning then to the other issues, identified by the authorities, the Court should consider in the context of the present application.
In terms of delay the wife’s claim was not that she wasn’t aware of the time limit but that by virtue of a combination of circumstances her understanding of the import of that time limit was impaired.
The onus to provide an explanation for the delay in instituting proceedings lies upon the wife. Her material in this regard could have been more detailed but I take into account that:
a)the wife says she did the divorce order proceedings herself and was inter alia focused on parenting proceedings until recently.
b)the wife claims that she didn’t understand the importance of the 12 month time limit; and
c)the delay is a relatively short period of approximately 4 months.
The wife’s claims in her affidavit material as to the reasons for delay were the subject of criticism in submissions made on behalf of the husband.
Those claims were inter alia that she had not been thinking clearly and had been focused on other issues. Even acknowledging there was some basis for those criticisms of the wife’s claims, in the submissions made on behalf of the husband, at this stage, I am unable to find the wife’s claims are without foundation.
In any event I note that the authorities make clear that the lack of explanation for delay is merely a factor to be taken into account.
Whilst the matter is finely balanced I am prepared to accept there is an adequate explanation.
Finally, it is necessary for me to consider the prejudice that could be occasioned to the husband if the application for leave is granted. I have already set out above what the husband has said about this.
In terms of the claimed prejudice to the husband the matters he raises regarding changes he has made since the expiration of the 12 month time limit can be considered in the context of a s.79 application and can be a factor to be considered under s.75(2)(o).
I accept that the husband has taken steps to move on with the rest of his life but I am satisfied that appropriate adjustments can be made in the s.79 process to take account of this.
Conclusion
Submissions were made on behalf of the husband to the effect that granting leave to the wife in this case may send the “wrong message”. Whether that is the case or not, the law is as stated by the Full Court.[11]
[11] see Keith v Soukis [2007] FamCA 1017 at para 27 above and Hedley & Hedley (2009) FLC 93-413 at paras28 to 30 above
Having considered the matter and ultimately for the reasons set out above leave should be granted to the wife to proceed with the application filed 1 July 2010 out of time.
Accordingly, the orders of the Court will be that the wife be given leave pursuant to section 44(3) of the Act to initiate property proceedings by application filed 1 July 2010.
No submissions have been made by either party concerning costs.
I will reserve the matter of costs pending formal submissions if the matter is not otherwise agreed between the parties.
Otherwise I will hear the parties further on the directions that should now be made to progress the matter to a conciliation conference.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of O'Sullivan FM
Date: 14 September 2010
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