Delgado & Soto
[2021] FamCA 65
•19 February 2021
FAMILY COURT OF AUSTRALIA
Delgado & Soto [2021] FamCA 65
File number(s): MLC 14659 of 2019 Judgment of: MACMILLAN J Date of judgment: 19 February 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Registrar – Review of decision – where the wife seeks an extension of the time to file an application to review the decision of a Registrar making final property orders by consent – where this is opposed by the husband – where the final orders have been implemented save for one final payment – however the husband does not press for the final payment to be made – where the business the wife retained pursuant to the final orders has less value due to the impact of the COVID-19 pandemic – where the question arises as to whether the application would have been filed in the first place if the pandemic had not occurred – where the wife has also filed an application seeking that the final orders be set aside pursuant to s 79A of the Family Law Act 1975 (Cth) – where the wife’s case conflates the issues – where any potential outcome in favour of the wife would be likely negated by the costs of the proceedings – where the wife has other remedies and would not suffer an injustice if the time for filing her application is not extended – where the wife’s application to extend the time for filing an application to review the decision of the Registrar is dismissed Legislation: Family Law Act 1975 (Cth) s 37(1)(g), 37A, 79A, 79
Family Law Rules 2004 (Cth) r 1.14, 22.03
Cases cited: Gallo v Dawson (1990) 93 ALR 479 Number of paragraphs: 24 Date of hearing: 15 February 2021 Place: Melbourne Counsel for the Applicant: Ms Wheeler Solicitor for the Applicant: KCL Law Counsel for the Respondent: Mr Sweeney Solicitor for the Respondent: Hamilton Thomas Lawyers ORDERS
MLC 14659 of 2019 BETWEEN: MS DELGADO
Applicant
AND: MR SOTO
Respondent
ORDER MADE BY:
MACMILLAN J
DATE OF ORDER:
19 FEBRUARY 2021
THE COURT ORDERS THAT:
1.The Wife’s Application in a Case filed 28 October 2020 be dismissed.
Costs
2.I DIRECT that all questions of costs be reserved for determination in Chambers.
3.By 4.00pm on 12 March 2021 the parties file and serve any written submissions in support of an application for costs arising out of or incidental to the Application in a Case filed 28 October 2020.
4.By 4.00pm on 26 March 2021 the parties file and serve any written submissions in reply to the application for costs.
5.Any submissions as to costs should be limited to 10 pages.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Delgado & Soto has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MACMILLAN J
This matter was listed before me in the Judicial Duty List on 15 February 2021. The wife in her Application in a Case filed 28 October 2020 although drafted in different terms in effect seeks an extension of the time for filing her an application for the review of the final property orders made by consent by a Registrar of this Court on 21 January 2020 (“final property orders”). That application was opposed by the husband.
BACKGROUND
The parties commenced cohabitation in or about May 2015 and were married in 2016. They separated in September 2019. There is one child of their relationship X who is almost 4 years of age. The child currently lives with the wife and spends regular time with the husband each Tuesday, Wednesday and Thursday night, the child attends day-care during the day on these days.
The wife runs her own business B Pty Ltd ('the business") which she established prior to the commencement of the relationship and according to her Financial Statement filed 26 October 2020 earns $1731 per week including JobKeeper payments. There is no dispute that since the final orders the business has diminished in value due to the effects of the COVID-19 pandemic.
The husband is a Consultant and deposes in his Financial Statement filed 18 December 2020 that he is currently earning $2,800 gross per week, pays tax of approximately $741 per week and contributes $248 per week to superannuation.
On 21 December 2019 the parties filed an Application for Consent Orders and on 21 January 2020 the Registrar made final orders by consent inter alia as follows:
1.That the real property situate at and known as C Street, Suburb D, Victoria, being the whole of the land more particularly described in Certificate of Title Volume … Folio … (the real property be the sole property of the Respondent.
2.That the Respondent shall indemnify the Applicant against all payments and liabilities pursuant to the mortgage encumbering the real property and all rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.
3.That the Respondent shall retain for his sole use and benefit the motor vehicle 1 registration number …
4.That the Applicant shall retain for her sole use and benefit the motor vehicle 2 registration number …
5.That in accordance with the Share Sale Agreement signed by the parties on 13 December 2019 the Applicant pay to the Respondent the sum of $95,000 ("the share purchase price") being the purchase price for the Respondent's shares in B Pty Ltd, ACN … ("the company") in the following instalments:
(a) $30,000 on or before 18 December 2019;
(b) $65,000 on or before 1 February 2020.
6.That in order to finally determine their financial relationship the Applicant pay to the Respondent the further sum of $155,000 (" the further sum") in the following. instalments:
(a) $75,000 on or before 1 February 2020;
(b) $80,000 on or before 1 September 2020 ("the final date")
7.That the Applicant can only register the share transfer with ASIC after the share purchase price and the sum of $75,000 as per Order 6 (a) ("the total sum") has been received by the Respondent and that both parties do all necessary acts and things and sign all necessary documents to enable the Applicant to register the share transfer with ASIC once the Respondent receives the total sum.
8.That upon the Respondent receiving the total sum, the Respondent shall no longer have any claim or right to claim any rights, title or interest in or income from the company, and the businesses operated by the company being E Company and D Company ("the businesses") including but not limited to all inventory, vehicles, equipment, fittings and fixtures, all intellectual property and all associated websites.
9.That upon the Respondent receiving the total sum, he shall be indemnified absolutely for all liabilities of the company and the businesses of whatsoever nature and kind including any liability for any loans or taxes or duties arising from the activities of the company or the businesses.
10.That in the event the Applicant does not pay to the Respondent the monies due as specified in Orders 5 and 6 by the final date all the shares in the company shall vest with the Respondent in accordance with the General Security Agreement signed by the parties on 13 December 2019.
11.That unless otherwise specified in these Orders, and except for the purposes of enforcing any payments due under these Orders:
12.Each party shall be solely entitled to the exclusion of the other party to all property (including choses-in-action) in the possession of such party as at the date of these Orders;
13.Each party forego any claims that they may have to any superannuation benefits belonging to or earned by the other;
14.All insurance policies shall become the sole property of the policy owner named therein;
15.Each party shall be solely liable for and indemnify the other against any liability encumbering any items of property to which that party is entitled pursuant to these Orders;
16.Each party shall be solely entitled to the credit of any monies in any bank account in their name.
17.That in the event that either of the parties refuses or neglects to execute a deed and/or instrument in compliance with the provisions of these Orders, the Registrar or Deputy Registrar of the Family Court of Australia at Melbourne is hereby appointed pursuant to s106A of the Family Law Act 1975 to execute all deeds and / or instruments in the name of the defaulting party and do all acts and things to give validity and operation to the deeds and/or instruments.
NOTATION
A. That pursuant to Section 81 of the Family Law Act 1975, the parties intend that these Orders shall as far as practicable determine the financial relationship between them and avoid further proceedings between them.
The final orders have been largely implemented and the wife has made the payments she was required to make pursuant to paragraphs 5 and 6 of the final orders other than the sum of $80,000 which she was due to pay the husband by 1 September 2020. The husband through his Counsel has indicated that he will not be seeking to enforce that payment of the $80,000.
On 26 October 2020 the wife filed an Application for Final Orders seeking inter alia an order pursuant to s 79A of the Family Law Act 1975 (Cth) (“The Act”) setting aside the orders made by consent on 21 January 2020, orders for property settlement pursuant to s 79 of the Act and that she be excused from further particularising the orders she was seeking pursuant to s 79 until such time as the husband has made full and frank disclosure.
On 28 October 2020 the wife filed her Application in a case seeking leave out of time to review the decision of the Registrar and it was this Application that was listed before me in the Judicial Duty List.
The matter was conducted on the papers and counsel’s submissions. The wife relied upon her Affidavit and her Financial Statement filed 26 October 2020 and her Affidavit filed 19 January 2021. The husband relied upon his Affidavit filed 28 January 2021, his Financial Statement filed 18 December 2020 and the Affidavit of his father filed 18 December 2020.
LEGAL PRINCPLES
Pursuant to s 37A(1)(g) of the Act powers may be delegated to a Registrar to make orders, the terms of which have been agreed upon by the parties. It was that power exercised by the Registrar in this case. In accordance with s 37A(9) of the Act a party to the proceedings in which a Registrar has exercised a delegated power may apply for a review of that decision within the time specified in or allowed by the applicable Rules of Court. In accordance with r 18.08(1) of the Family Law Rules 2004 (Cth) (“the Rules”) the time for filing an application for a review of the order in this case is 28 days. The time for lodging the application for review expired on 18 February 2020. That time has clearly lapsed. Pursuant to r 1.14 of the Rules a party may apply to the Court to extend that time. It is that application the Court is required to determine in this case.
The Rules do not prescribe the matters the Court must consider or nor provide any guidance. However the principles the Court must apply in determining this matter are well settled. In Gallo v Dawson (1990) 93 ALR 479 (“Gallo”) McHugh said at 480-481 as follows:
…The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v. National Trustees Executors and Agency Co. of Australasia Ltd. (1978) VR 257, at p 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v. No.2 Public Service Appeal Board (1973) 2 NZLR 86, at p 92; Jess v. Scott (1986) 12 FCR 187, at pp 194-195. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v. Grigg (1967) VR 871, at p 872; Hughes, at pp 263-264; Mitchelson v. Mitchelson (1979) 24 ALR 522, at p 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has "a vested right to retain the judgment" unless the application is granted: Vilenius v. Heinegar (1962) 36 ALJR 200, at p 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v. Cumarasamy (1965) 1 WLR 8, at p 12; (1964) 3 All ER 933, at p 935:
"The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.”
Although McHugh J refers in Gallo to the need to consider the prospect of success when leave is sought to extend the time in which to file an appeal, an Application for Review is a hearing de novo and on that basis it is not a question of whether or not the application is likely to succeed. Rather the court must be satisfied that to refuse the extension of time would cause an injustice to the party seeking that extension and that extending the time would be necessary in order to do justice between them.
DISCUSSION
Shortly after the breakdown of the marriage the husband and the wife attended mediation. The wife says she attended an intake session and thereafter she and the husband attended four joint sessions reaching agreement regarding both parenting arrangements and financial matters. The wife now says that she felt pressured to attend and that with hindsight she was not ready to do so. Although the wife deposes that the mediator told them she was legally trained and they were referred to a commercial lawyer who drew up the sale and shareholder agreements to give effect to the agreement they had reached as embodied in the final orders it is the wife’s case that she did not receive advice from a family lawyer before signing those orders. Whilst it may be advisable and even preferable there is no requirement that parties should obtain legal advice before orders are made nor does it follow that the orders that are made are not just and equitable. If they do not do so. That depends on the circumstances of each case.
The wife also submits that she was subjected to significant family violence by the husband during the relationship and that she signed the orders under duress. The wife deposes in some detail to abuse and denigration by the husband during the marriage and the husband being extremely manipulative following separation. The husband denies the wife’s allegations. Even if the Court could make findings it is not in a position to do so and in my view the evidence as it currently stands would be unlikely to support the Court concluding that the wife signed the application for final orders under duress. In any event it is open to the wife to press her application pursuant to s 79A of the Act on that basis if she chooses to do so.
It is also the wife’s case that the husband had not provided full and frank discourse before the final orders were made in particular that the husband failed to disclose in the Application for Consent Orders that he had $450,000 in an account in his name and that he had $118,654 not $73,193 in superannuation entitlements. Whilst it is correct that the application the parties each signed prior to the orders being made by consent did not refer that the husband had $450,000 in an account in his name, it is the husband’s evidence confirmed by the wife’s own evidence that the husband was holding funds on his father’s behalf and that the wife was aware that he was doing so. It is the wife’s case that the husband has still not provided the wife with full and frank disclosure. The husband’s denies that he did not provide the wife with the necessary disclosure with respect to his financial circumstances and his evidence is that he produced evidence of his superannuation entitlements to the mediator.
It is not unusual for all kinds of reasons for parties to reach an agreement and consent to orders notwithstanding that there has not been full and frank disclosure as prescribed by the Rules and in fact parties may reach agreement and consent to orders for the very reason that they do not want to either embark on a formal process or incur the costs associated with doing so. One obvious reason for adopting this course is because the parties’ financial affairs are not complicated and each party knows the other’s position.
Counsel for the wife further submitted that the percentages agreed upon by the parties as referred to in the Application for Consent Orders were skewed because they did not take into account the amount the wife owed to the husband. However whether or not the percentages are correctly calculated the basis of the agreement and the reasons for it are in my view clear from the Application for Consent Orders.
Finally counsel for the wife submitted that the leave should be granted because the orders are so unjust that they should not be allowed to stand. The crux of this submission appears to be that the husband is left with assets whereas the wife has to pay the husband for a business that has little or no value and is certainly not worth as much as she agreed to pay the husband for it. In so far as the wife alleges that the husband has not accounted for the proceeds of sale of the investment property he owned prior to the relationship and has the $170,000 she has paid him, it is his evidence that he no longer has any of the proceeds of sale, a significant part of which he contributed to the business or used to pay out a previous shareholder and capital gains tax on the sale and deposes in some detail with respect to the application of the funds he was paid by the wife.
Although there may be a dispute as to whether the husband failed to disclose his true financial position prior to the orders being made in circumstances where the Court has made final property orders there is until those orders are set aside arguably no obligation for the husband to provide full and frank disclosure with respect to his current financial affairs or account to the wife with respect to how he has managed his finances since those orders.
The wife’s own evidence is that she issued proceedings because she was scared of what the husband would do if she did not pay him the final payment of $80,000 pursuant to the final orders. The wife’s evidence is that the business is no longer operational because of COVID-19 and that this has affected her to capacity to make the payments. It is reasonable in my view based upon the wife’s evidence to infer that had there been no pandemic and the business the wife retained pursuant to the final orders had continued to be profitable, which she clearly anticipated when she chose to retain it, she would have paid the husband the $80,000 pursuant to the final orders and not issued proceedings to set aside the orders or this application. As previously referred to the husband says that he will not seek to enforce that final payment.
In my view there is some force in the husband’s submission that the wife’s case conflates the issues. Whether it is because the wife says there has been a miscarriage of justice at the time the orders were made or circumstances have arisen since the orders were made that means that the wife having caring responsibility to the child of the marriage will suffer hardship, these are matters that can be addressed in the s 79A proceedings. It does not in my view mean that the wife will suffer an in justice if time is not extended for her to file her application for a review of the Registrars orders. Although in circumstances where the husband has indicated that he will not enforce the final payment there would appear to be no basis for an application to set aside the orders pursuant to s 79A(1)(b) of the Act.
There is also some force in counsel for the husband’s submissions as to likely outcome of the proceedings if leave were to be granted having regard to the costs the parties would incur. The parties between them have already incurred costs of approximately $100,000 some of which remain unpaid. The wife in her Affidavit filed 26 October 2020 deposes to what she believes to be the current asset pool. Although she says that there are net assets of approximately $324,232 this includes the sum of $320,000 she says the husband previously had in his account and the $170,000 she has paid him pursuant to the orders. The husband deposes in detail to the application of these funds. Although I cannot make findings with respect to these matters even if some of these funds are still available there is in any event still a very small pool. In so far as the wife submits that the asset pool cannot be identified in the absence of the husband providing full and frank disclosure she does not in her evidence depose to any matters that would suggest that there is other property not included in this table in her Affidavit. Whilst the values she has attributed may not be totally accurate it is difficult to see how the cost of further litigation including valuations is justified and in these circumstances why not granting the wife leave out of time would cause her an injustice.
Whilst the injustice may not be limited to monetary matters I am also mindful that there are two parties to this litigation and to extend the time for the wife to apply to review the Registrars decision would set both of these parties on the path of litigation. The husband and wife have consented to orders the intent of those orders being to end their financial relationship. I am not satisfied particularly in circumstances where the wife has other remedies available to her that she would be caused an injustice if the time for filing her application for a review of the Registrars decision is not extended. I also accept the husband’s submission that given the way in which the wife puts her case justice might be better served by dealing with both the wife’s application for the extension of time and her s 79A application at the same time. On that basis there would be little utility in the wife’s application for an extension of time.
In all of the circumstances, not being satisfied that the time should be extended, I propose to dismiss the wife’s Application in a Case filed 28 October 2020.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Macmillan. Associate:
Dated: 19 February 2021
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Appeal
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Procedural Fairness
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Costs
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Remedies
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Judicial Review
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