Drummond and Drummond
[2016] FCCA 3324
•20 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DRUMMOND & DRUMMOND | [2016] FCCA 3324 |
| Catchwords: FAMILY LAW – Property proceeding brought out of time – extension sought pursuant to s.44 Family Law Act 1975. |
| Legislation: Family Law Act 1975, ss.44, 75, 79 Family Law Amendment Act 1983, sub-s. 44(3) |
| Cases cited: Stanford v Stanford (2013) 247 CLR 108 |
| Applicant: | MR DRUMMOND |
| Respondent: | MS DRUMMOND |
| File Number: | ADC 2076 of 2011 |
| Judgment of: | Judge Young |
| Hearing dates: | 17 & 18 August 2016 |
| Date of Last Submission: | 29 September 2016 |
| Delivered at: | Adelaide |
| Delivered on: | 20 December 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bowler |
| Solicitors for the Applicant: | Marciano Lawyers |
| Counsel for the Respondent: | Mr Childs |
| Solicitors for the Respondent: | Old Port Chambers |
ORDERS
The application for an extension of time is dismissed.
All outstanding applications are otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Drummond & Drummond is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 2076 of 2011
| MR DRUMMOND |
Applicant
And
| MS DRUMMOND |
Respondent
REASONS FOR JUDGMENT
The applicant seeks leave pursuant to section 44 of the Family Law Act1975 to bring property proceedings against his former wife. Leave is necessary because the parties’ divorce order took effect on 7 October 2011 and the applicant did not apply to the court until 17 July 2015. The proceedings were thus commenced outside the 12 months period allowed by subsection 44(3) of the Act from the time the divorce order took effect.
I shall refer to the applicant as “the husband” and the respondent as “the wife”.
Credibility
Each of the parties was shown to be unreliable in some aspects of their evidence, particularly evidence about events many years ago. Generally, I thought the wife was endeavouring to be truthful although she was not always a reliable historian. The husband was guarded in his evidence and often attempted to cast his evidence in a way that was favourable to him. I found parts of his evidence implausible. I feel unable, therefore, to accept unreservedly the evidence of either party. I have attempted to determine, on the balance of probabilities, the most likely course of events rather than simply accept one version or the other.
Background
The husband is 52 years old. The wife is 54 years old. They married and began to cohabit in 1984.
The parties’ first child was born in 1988. He is now 28 years old. He lives at home with the mother. At the time of trial he was unemployed and receives a Newstart allowance. The parties’ second child was born in 1995. She is now 21 and is a university student. She receives a Centrelink student allowance but remains dependent, at least to a degree, on her mother.
The parties separated in September 2006. Their divorce, as mentioned, took effect on 7 October 2011.
The asset pool and superannuation at trial
Asset
Husband
Wife
Property N property
$430,000
Nissan (omitted)
NK
Furniture and effects
NK
Money in the bank
$4,900
Household contents
$5,000
Liabilities
Mortgage over Property N property
$85,085
Loan to wife’s mother
c. $10,000
Visa card
$200
Mastercard
$1,479
Net assets
$9,900
$333,236
Superannuation
(omitted) superannuation
$29,782.94
(omitted) superannuation
NK
The value of the Property N property was agreed.
The husband asserted that the Nissan (omitted) should be given a value according to the “Red Book” of $20,000. I do not consider that to be admissible evidence and in the absence of an admission by the wife I do not ascribe any value to it.
The husband listed membership of a superannuation fund in his financial statement but gave his interest a value of “nil”. He did not further explain the entry.
Contributions
The parties did not own any assets of significant value at the beginning of the relationship. The wife was employed at the time of the marriage as a (occupation omitted). In 1984, apparently shortly after the marriage, she suffered a repetitive strain injury to her wrist. She did not work again until 1990 when she obtained part-time work as a (occupation omitted). She ceased work again in 1992 and did not work again until after the parties’ separation in 2006. From 2007 she worked part-time at a (employer omitted) and worked full-time from 2013.
The wife says that she received an award of compensation of $20,000 in 1984. The evidence is unclear about when the award was received but I consider it to be unlikely that an award of worker’s compensation would be received so soon after the injury. I expect it is more likely that an award would be received a considerable time later. Consistently with that the wife says that the compensation was used as a deposit on the purchase of the home in 1987 at Property N. She says that the balance of the purchase price of $64,000 was borrowed from a financial institution[1]. The husband says the deposit was $2,500 and this was borrowed from his parents. His parents, although available, did not give any evidence to support that claim. I consider that it is unlikely that the parties could obtain a home loan secured only by mortgage on a home purchased for $64,000 with a deposit of $2,500. I accept that the deposit, or at least the bulk of it, was paid by the wife from her compensation award.
[1] The dealings listed on the certificate of title of the property do not include the name of the institution but the mortgage was discharged in 1999 and a new mortgage granted to the (omitted) Bank.
The husband was originally a (occupation omitted). In addition he said he did some casual work as a (occupation omitted) between 1988 and 1993 on weekends and evenings. In his affidavit the husband said he injured his back in 1993 “due to the hard labour involved in (occupation omitted) work”. He said he was unable to work after that. Thereafter, he said he received a welfare payment of some kind, said to be a Disability Support Pension.
The husband was cross-examined about his back injury. Asked if he had sought treatment for the injury he said “yes and no”. He said the back injury was “not serious” and the injury “comes and goes”. He also said that he had suffered “depression and anxiety” and it was this that had stopped him working. There was no medical evidence. The evidence about the husband’s capacity for employment was unsatisfactory. I was asked to find that the husband is incapacitated for gainful employment but given my reservations about the husband’s credibility on this and other issues and the inconsistent nature of the evidence I am unable to make a make a finding about the husband’s capacity for employment.
The husband says that he, assisted by members of his family, made a contribution to the Property N home by carrying out extensive renovations and improvements on the home including a family room extension, construction of a garage, building a stone fence and redesigning the façade of the home to match the fence and landscaping and maintenance. He said the value of this “…would have cost more than $100,000”, apparently assuming the work was carried out by paid contractors. This claim was not supported by evidence and remained a bald assertion.
The wife also said that renovations had been carried out and admitted the husband and his family had done some work. She said she assisted and also made a contribution of $15,000 to materials. She said this had been a gift from her mother. It was put to the husband that the wife’s mother gave her this sum. Initially he said “I don’t know”. It was then put to the husband that the wife had contributed this cash to the cost of the renovations. He denied that and said “No, I paid the cash”. He was asked where he had obtained the cash and replied “That’s my business. She got $15,000 but it didn’t go to the house.” This exchange, with its belated admission that the wife had received $15,000, was indicative of the husband’s manner of giving evidence. He lacked frankness and was reluctant to give any evidence that he perceived may assist the wife.
I accept that the husband and his family did some renovation work but I am unable to make any finding on its value or extent. I find that the wife contributed $15,000 towards the cost of those renovations.
According to the wife, the husband used illicit drugs throughout the marriage. The husband’s counsel, in a surprising tactic at first glance, put to the wife that the husband used illicit drugs, including cocaine and methamphetamine, on a daily basis during the marriage and was “always dazed, didn’t talk much and slept a lot”. The wife largely agreed with this description. The objective was evidently to establish that he lacked capacity or understanding when he transferred his interest in the home to the wife. However, in my view the evidence fell well short of establishing this and I am satisfied that the husband’s decision was both considered and rational.
Nevertheless, I accept that the husband was a user of illicit drugs throughout the marriage. The evidence of the husband’s drug use was supported by a record of the husband’s criminal history. In 1997 he was found guilty of possessing cannabis and hindering police. In 2005 he was convicted of possessing a prescription drug (methadone) and possessing a prohibited weapon (two flick knives and a knuckleduster). The offences occurred in 2003. In 2006 he was convicted of possessing a prescription drug. The offence occurred in 2005. In 2007 he was convicted of possessing a prohibited weapon.
In 2012 the husband was convicted and sentenced to a total period of imprisonment of 4 years and 10 months in the County Court of Victoria for drug offences committed in 2011. These were traffic drug of dependence (commercial quantity), possess a drug of dependence and possess a prohibited weapon. A charge of possess methylamphetamine had been struck out in the Melbourne Magistrates Court earlier in 2011. The background is referred to in documents produced on subpoena. The police arrested the husband and his present partner, Ms C, and another person at a clandestine drugs laboratory in Victoria. The report noted that there were outstanding interstate warrants for each person.
The husband served his sentence in Victoria and was then removed to South Australia to face outstanding charges there.
In 2015 the husband was convicted and sentenced to a period of imprisonment of 3 years and 8 months in the District Court of South Australia for drug offences committed in 2006 and 2007. These were possess a controlled drug (not cannabis), taking part in the production of a controlled substance and possessing a controlled substance for supply. The sentence was backdated to 22 October 2014 with a non-parole period of 14 months.
The wife asserted that the husband transferred his interest in the home to her as part of their separation (the separation occurred in September 2006 and the transfer in October 2006) and that initially it was proposed that the husband’s interest be transferred to the children. The husband asserted that the transfer was made because he expected to be charged with drug offences and expected to go to gaol. He was concerned about proceeds of crime forfeiture proceedings and wished to put the property beyond the reach of such proceedings. In my view neither of these assertions is inconsistent with the other and they are likely no more than differing perspectives on the same situation.
The wife borrowed $12,000 from her mother to pay out the mortgage on the property. About $10,000 remains owing to her.
It is unclear when the husband left South Australia for Victoria but it appears that he fled to escape criminal proceedings.
The wife asserted that the husband’s drug use affected their financial position because it was expensive and his financial contributions were small. Although such a claim is not amenable to quantification I accept her evidence.
Further, in my view, the husband’s drug use and, probably, drug dependency during the marriage indicates that the wife’s contribution, particularly as a homemaker and mother, was made more onerous. She gave evidence that she tried to have the husband attend drug rehabilitation to overcome his addictions but this was not successful. She also claimed that the husband carried on an extra marital relationship throughout the marriage with his present partner, Ms C, and the husband’s drug use and the attendant conduct was a cause of significant stress. She said that the husband led a “double life” which was substantially centred on Ms C and drug use. I am unable to make any finding about Ms C but it is of note that she was also apprehended in 2011 with the husband in Victoria in the course of drug production. I have little doubt that the husband’s drug use and other behaviour was a source of significant stress and difficulty for the wife.
The husband claims that between separation in September 2006 and August 2008 his pension continued to be paid into the joint account of the parties and that the wife used this money. He asserts that this was a financial contribution by him. He does not say what amount was used by the wife and what amount was used by him. It was put to the wife in cross-examination that she alone had access to the account during this period. She denied that and said both parties had a card for the account. She appeared to accept that she may have used part of the money but she did not recall how much of it she used.
It appears to me that if the wife was able to use this money, which was intended as income support for the husband based on his asserted incapacity, to any significant degree that this could only have been possible if the husband had some other source of income and did not need his pension himself. If he had some other source of income it seems probable that this was from drug production and supply, offences he committed around that time. The fact that he continued to receive a pension would suggest that he had not informed the authorities of his other income. If so, the pension money, to the extent it was used by the wife, would really be a contribution by the Australian government.
I am not satisfied that the wife used the husband’s pension to any significant degree and, if she did, I am not satisfied that it should be seen as a contribution by the husband.
At the time the parties separated their eldest child had just turned 18. He obtained an apprenticeship at that time. He still lives at home. He is presently unemployed and in receipt of Newstart Allowance. The wife says she still needs to provide financial assistance to him from time to time.
The youngest child was 10 years old at the time of separation. The wife claimed that the husband paid no child support after separation and she was entirely responsible for the child’s financial support. The husband claimed in his trial affidavit to have attempted unsuccessfully to contact the Child Support Agency to confirm his child support payments for the youngest child. He claimed to “recall paying child support for a short period after separation and believe that it was deducted from my pension”. I am satisfied that if the husband did pay any child support it was a negligible amount.
The wife also said that she had made a significant contribution of $5,500 towards orthodontic and medical expenses for oral and maxillofacial surgery for the youngest child between 2007 and 2009. She said she made a further contribution of $8,000 in 2010. She said she has received about $2,000 in Medicare rebates. The wife provided copies of the accounts for treatment and I accept the wife’s evidence.
In his trial affidavit the husband claimed to “support the children financially on a frequent basis”, to give the wife “money for the children’s extracurricular activities, medical expenses, educational expenses and special occasions” and to “provide all my children with money on a frequent basis when I can afford to”. No further particulars were provided.
In cross-examination it was put to the husband that he had not provided any financial assistance for the children after separation. He rejected that and said that he had provided $6,000 in cash towards the youngest child’s medical expenses. In an earlier affidavit he claimed the sum was $8,000. The discrepancy was not explained.
While I am unable to find that the husband made no financial contributions whatsoever towards the support of the children I am satisfied that his financial support has been relatively insignificant and the financial burden of caring for the parties’ youngest child and the eldest child (to the extent that his support is relevant) has overwhelmingly been provided by the wife.
Another issue that arose was an investment property at Property F purchased by the parties with the husband’s brother and his wife. The wife’s evidence about this was vague but she said the property was purchased during the marriage and sold a couple of years later in the year or two prior to separation. She said she did not receive any money from the sale but was liable for capital gains tax in the financial year ending 30 June 2006. The wife said the capital gains tax was $10,363. However, this is clearly an error as the notice of assessment annexed to her trial affidavit shows the capital gain was $10,363 and her tax for the year was $1,318. Nevertheless, this confirms her evidence of an investment property and its sale and realization of a capital gain in the year ending 30 June 2006. Annexed to the husband’s trial affidavit was a record of the parties’ transactions in their joint account from 1 January 2005 to 8 September 2008 when the account was closed. On 23 June 2006 a sum of $53,977.90 was deposited into the account by cheque. This took the balance of the account to $53,995.84. On 28 June 2006 $25,000 was withdrawn by cheque. On 30 June 2006 $14,000 was withdrawn in cash. On 18 September 2006 $4,000 was withdrawn by bank cheque. The balance was withdrawn in smaller amounts over the next month or so. Neither party referred to these transactions in their trial affidavit.
The husband was cross-examined about the Property F property. He was asked if he, the wife and other members of his family had previously had an interest in a property at Property F. He answered “I don’t recall”. The husband repeatedly denied having had any interest in a property at Property F or anywhere else during the marriage other than the former matrimonial home. He was then cross-examined about his Centrelink income statement for 9 August 2006 saying that he had received “real estate/business income” of $1,689.32 for the preceding year. Initially the husband denied any knowledge of the source of this income and repeated his denial. Eventually he conceded that his two brothers purchased a property and “put our names on it”. He continued to deny any “interest” in the property although he conceded that he and the wife’s names were on the title and that he was therefore a part owner.
The husband was not cross-examined about the transactions I have referred to above. I must therefore be cautious about reaching any conclusions about them but it is clear that the husband and wife were part owners of an investment property at Property F. The wife incurred a capital gains tax liability in respect of the property for the year ended 30 June 2006. I do not accept that the husband is so financially naive as to accept a capital gains tax liability without having had the benefit of the capital gain - although I am not persuaded this is true of the wife. It was a family arrangement and one would expect fair arrangements between the family members, at least between the husband and his brothers. The husband denied, through repeated questioning, any knowledge of this property. Eventually this culminated in an assertion that while “our names were on it” he had no interest in the property. I do not accept that denial is genuine.
The wife was not cross-examined about these transactions. I accept her evidence that she did not receive any of the money from the sale.
I consider the most likely explanation for the transactions is that the sum of $53,977.90 was the husband’s and wife’s proceeds of sale of the Property F property. I consider that the most likely explanation for the withdrawals described above, which amount to $43,000, is that the husband withdrew the money and used it for his own purposes. This was shortly before the parties’ separation and at a time when the husband was involved with illicit drugs. The sum was a joint asset and ought to have been shared equally between the parties. The husband has therefore had the benefit of at least $21,500 belonging to the wife and for which he has not accounted to her.
I consider that the wife made the major contribution to the acquisition of the former matrimonial home. She provided a deposit of almost one third of the purchase price and was a joint borrower with the husband for the balance. She provided, therefore, approximately 2/3 of the purchase price. There is no evidence about the financial contributions to the repayment of the mortgage but the wife claimed that the husband’s illicit drug use always meant that money was tight. I accept that evidence. I find that the other financial contributions were, at least, made equally by the wife. The wife also paid out the remaining $12,000 or so on the mortgage at the time the property was transferred to her in October 2006. The wife obtained a retrospective valuation for that time. The valuation was $310,000[2]. This would suggest that the wife’s financial contribution to the acquisition of the former matrimonial home was at least 70% to the time of separation.
[2] I am not using this valuation for any other purpose than to assist in identifying contributions to the time of separation. The relevant time to value assets for the purpose of valuing the pool is of course at the time of trial.
The wife’s non-financial contribution, particularly to the welfare of the family as a homemaker and parent, was of a similar magnitude.
Taking into account these matters and the husband’s conversion to his own use of at least $21,500 of the wife’s share of the sale proceeds of the Property F property I find that the wife’s overall contribution was 80% and the husband’s 20% to the time of separation.
Post-separation contributions
After separation the wife was left to support two children with minimal assistance from the husband. He did not pay any significant child support and I am satisfied that any other financial assistance he provided was intermittent and minimal. The eldest child was 18 years old at the time of separation. It is not suggested that the father had any legal duty to support his son notwithstanding that, as an apprentice, his income must have been low for much of that time. The youngest child was 10 years old and the father was legally obliged to contribute to her support until she reached 18 years old. She then became a university student and remains a student. At some point she received a government allowance and there may not have been any legal obligation for the father to contribute to her support after that time. Nevertheless, I am satisfied that the mother continued to support both children for many years and still provides support by providing the home in which they live.
Of course this is not a case where there was an assessment of child support which was not paid by a parent. Here the husband did not work and because of this and his illicit drug use, criminality and imprisonment was never likely to be assessed for child support. It is not possible to quantify what amount he might have paid had he been a responsible parent and citizen. Nevertheless, I am satisfied that the wife has expended many tens of thousands of dollars in supporting the children without real assistance from the husband since separation.
If, from a logical point of view, the husband has contributed something and his contribution cannot, therefore, be zero I would find that the wife’s contribution for the purpose of section 79(4) of the Family Law Act 1975 is at least 95% and the husband’s is no more than 5%.
Nevertheless, the wife’s post separation contributions have been major, to say the least, and in my view those contributions simply overwhelm in equitable terms any vestigial contribution by the husband.
Section 75(2) factors
The husband submitted that there should be an adjustment in his favour for section 75(2) factors on the basis that he is unfit for future employment and can expect to receive only a Centrelink benefits for the remainder of his life. Given the husband’s unsatisfactory evidence about the nature of his incapacity for work I am unable to accept this submission in the absence of medical evidence to support it. Further, it was submitted that there should be a “modest adjustment” in favour of the husband because of the disparity of income between the parties. Given that I am unable to find that the husband is incapacitated for work, either wholly or partially, and thus unable to speculate about whether he might be employed in future I reject that submission.
The wife did not make a submission about section 75(2) factors.
Conclusion - contributions
In discussing the High Court decision in Stanford v Stanford[3] the Full Court of the Family Court in Bevan & Bevan[4] made clear that the matters referred to in section 79(4) should not be ignored in deciding whether an order is “just and equitable” for the purposes of section 79(2). On the other hand, the Full Court recently commented in Chancellor & McCoy[5] that to conclude that an order was “just and equitable” only by reference to the matters in section 79(4) would conflate these sections and ignore the principles in the Act. I have attempted to steer between Scylla and Charybdis. I have concluded that it would not be “just and equitable” to make an order because of the overwhelming disparity of contributions between the parties and that, notwithstanding that the husband’s contribution cannot be said to be zero, it would not be “just and equitable” to make an order on the basis of little more than an arithmetic abstraction.
[3] (2012) 247 CLR 108
[4] (2013) FLC 93-545 at [84]
[5] [2016] FamCAFC 256 at [40]
Extension of time
Subsection 44(3) of the Family Law Act 1975 relevantly says:
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) … 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;…
Subsection 44(4) relevantly says:
The court shall not grant leave under subsection (3) or (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 …
Proof of hardship is a preliminary hurdle for the granting of leave. In Whitford and Whitford[6] the Full Court of the Family Court said:
[O]n 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 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 at p 78,144
In establishing hardship the applicant must show more than the loss of a right to commence proceedings. There must be a prima facie case or a “real” possibility of success[7]. I have concluded that because of the great inequality of contributions made by the parties in this case it would not be just and equitable to make an order in favour of the husband. That being the case no hardship arises if I refuse to grant leave and that is the end of the matter.
[7] Sharp & Sharp [2011] FamCAFC150 at [18].
If I am wrong in that conclusion I would consider the following matters to be relevant to the second question, that is, the exercise of the discretion to extend time. The Full Court in Whitford & Whitford[8] expressed the matter this way:
Section 44(4) inhibits the granting of leave unless the requisite case is made out, but does not provide that leave must be granted if the court is satisfied that hardship would be caused… Due weight must be given to the expressed legislation intendment that ordinarily, proceeding should be commenced within a year from the date of the decree nisi, and the general policy of the Act which appears from section 44(3) in section 81 that financial relationships between the spouses should, wherever possible be brought to finality within a reasonable time after the dissolution of the marriage. Hence, such matters as the length of the delay, the reasons for the delay and prejudice occasioned to the respondent by reason of the delay, and the strength on the merits of the applicant’s case, and the degree of the hardship which would be suffered unless leave were granted, are matters affecting the exercise of the discretion. These matters are not necessarily the only ones.
[8] (1979) FLC 90-612 at pp 78,145 – 78,146.
The Full Court of the Family Court surveyed the discretionary considerations in Sharp & Sharp[9]. The majority judgement approved a passage from the judgment of O’Ryan J in Tamaniego & Tamaniego[10]:
In Gallo v Dawson[11] McHugh J referred to the need to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences to the parties of the grant or refusal of the extension of time… In summary, in considering the second question the court may have regard to a number of factors that include whether the applicant has an adequate explanation for the delay in bringing the proceedings and whether to grant leave would prejudice or impose hardship on the respondent to the application for leave or other persons.
[9] [2011]FamCAFC 150 at [75]
[10] [2010] FamCAFC 254 at [162]
[11] (1990) 93 ALR 479
The judgment also approved a passage from the judgement of Evatt CJ in the Full Court decision in Althaus & Althaus[12]:
The requirement that the applicant under section 44(3) give an explanation of the delay in bringing proceedings in my view requires a consideration of the whole period from the date of the decree nisi to the lodging of the application. It requires the Court to consider whether the wife took all reasonable steps to pursue her claim or whether, on the other hand, she acted at any time as if she had no intention of proceeding or pursuing any claim at all against the husband. It requires the Court to consider whether it can reach conclusions as to why the proceedings were started beyond the time lodged and whether those proceedings are attributable to default on the part of the applicant. (emphasis added in Sharp & Sharp).
[12] (1982) FLC 91-233 at 77,267 to 77,268
In this case the period from the decree nisi on 7 October 2011 to the institution of proceedings on 17 July 2015 was three years and 10 months. In his trial affidavit the husband says that he was remanded in custody in Victoria from about 5 January 2011 to 22 October 2014 and was then extradited to South Australia and served a further 13 months in custody. This would suggest that the husband was released in about November 2015. The husband said that it was extremely difficult to obtain legal advice in custody but notwithstanding this he became aware from his present solicitors of the time limitations while in custody in South Australia and issued proceedings while still in custody.
The divorce application was served on the husband while he was imprisoned in Victoria. A letter from Mr McDonald, a solicitor employed by Victoria Legal Aid, dated 30 August 2011 to the wife, ignoring formal and irrelevant parts, said:
I am assisting Mr Drummond with his divorce matter.
I note that he received your Divorce Application. He has signed the Acknowledgement of Service and sent it to my office. I now forward it to you.
The husband was asked whether he engaged Mr McDonald as his solicitor. He answered “I don’t recall. I spoke to a solicitor but didn’t engage one. He was probably a duty solicitor in the gaol”. He was then asked whether he knew Mr McDonald. The husband answered “No. I spoke to him once. I know of him”. He went on to deny that he signed and returned the acknowledgement of service to Mr McDonald but said that he returned it directly to the wife.
The husband was then asked if he recalled receiving a copy of the divorce order while he was in custody in Victoria. Initially he denied receiving a copy of the divorce order but said he received “divorce papers”. On being questioned further he acknowledged that he did receive the divorce order in 2011. He was then asked whether he read the two-page divorce order after he received it. The husband said “No”. He was then asked why he had not read it. He answered “It was just a quick glance”.
I am satisfied that the husband had at least the possibility of obtaining legal advice after he received the divorce application. If he read the two-page divorce order, which was in evidence, he would have seen that note 1 on the second page read as follows:
If a party to the marriage proposes to make an application to a court exercising jurisdiction under the Family Law Act 1975 as to property or as to the maintenance of that party, such application must be made within 12 months from the date upon which this divorce order takes effect. After that time such an application cannot be made without first obtaining the leave of the court to do so.
I cannot find positively that the husband received legal advice about the 12 month time limit from Mr McDonald or that he read the second page of the divorce order setting out the note above. However, given the generally unsatisfactory evidence given by the husband about this and other issues I am not satisfied that the husband was unaware of the time limit.
The husband was also cross-examined about a telephone conversation between him and the wife in 2014. The evidence was not entirely clear but it appears that the wife had been asked by the husband’s brother to provide a surety for the husband’s bail secured by the Property N house. There was no evidence about any bail application but it may be that on the husband’s extradition to South Australia in October 2014 he intended to seek bail. It appears that the brother may have been insistent in his request. The husband said the wife was very upset during this telephone call and was worried about the house. The husband said that he said to the wife “It’s in your name, don’t worry about it”.
The husband was asked why he had instituted his application while still in custody. He answered “When I came back I needed money for lawyers. I said ‘lend me money’ and she refused. I asked her to borrow on the home and she refused”.
I find that the husband deliberately transferred his interest in the former matrimonial home in 2006 in contemplation of the risk of proceeds of crime forfeiture proceedings. I should add that there is no evidence that the former matrimonial home was purchased with the proceeds of crime. I also find that the husband was probably concerned to make some provision for the wife and their children in view of the fact that he was separating from her and was involved in criminal activity. The future was uncertain for him and there was no indication that he would be in a position to provide any support for the wife and their children.
His conversation with the wife in 2014 suggests that he considered the transfer of his interest to be permanent and that he had no further interest in the home. I find that the husband had no interest in pursuing property proceedings against the wife until she refused to lend him money for lawyers in 2015.
I find that the husband had no interest in property proceedings because he considered the transfer to be permanent and to properly reflect the claims and needs of his children and former partner. The husband’s decision to commence proceedings was the result of him changing his mind in 2015. Whether or not he was aware of the time limit is largely irrelevant because his failure to bring proceedings was deliberate and conscious. In this sense, the husband’s explanation for his delay is not adequate.
Counsel for the wife submitted that this was analogous to the situation described by Young J in Sharp & Sharp[13]:
… as a result of the husband’s avoidance of his creditors, and evasion of the claims of his second wife, he did not prosecute his claim with diligence. The husband should not now be allowed to seek the Court’s assistance to reinstitute substantive property proceedings in which he seeks to rectify his interest in property that he previously sought to divest any interest in, because at the time it was convenient for him to do so.
[13] [2011] FamCA 150 at [166]
While there are clear similarities with the factual scenario in Sharp & Sharp the husband in that case appeared to be primarily avoiding creditors. In this case I am satisfied that, in addition to avoiding potential proceeds of crime forfeiture proceedings, one of the primary factors motivating the husband was a wish to make a permanent transfer of his interest to the wife in recognition of her claims. Otherwise I agree the remarks of Young J appear apposite to this case.
I also find that the wife would be subject to prejudice if an extension of time were granted. The wife entered into substantial further indebtedness, secured by mortgage over the home, in the years after separation. The borrowings were for the purpose of buying a car or cars for the children and other unspecified reasons. I am satisfied she did so in the belief that she was the sole legal and equitable owner of the property. Had she foreseen a claim by the husband she may have prudently avoided further indebtedness.
Counsel for the wife also made submissions about applicable equitable principles, particularly equitable estoppel. I do not consider it necessary to reach any final conclusion about whether the facts of this case would give rise to an equitable estoppel and, if so, whether that was any more than one of the discretionary factors under the statutory scheme.
I dismiss the application for extension of time. The wife may seek to re-list the matter within 28 days if she wants to make submissions in relation to costs.
I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of Judge Young
Date: 20 December 2016
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Appeal
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Costs
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Procedural Fairness
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