Edmunds & Edmunds - [2018] FamCAFC 121

FAMILY COURT OF AUSTRALIA

EDMUNDS & EDMUNDS

[2018] FamCAFC 121

FAMILY LAW – APPEAL – PROPERTY – Leave to institute proceedings out of time – Where the wife sought leave to institute property proceedings six years out of time – Whether the primary judge made a final determination instead of assessing whether the wife had a prima facie case – Whether the primary judge failed to assess the wife’s case at its highest – Whether the primary judge erred in finding that the wife had a weak prima facie case – Where the primary judge erred by not considering whether the wife had a real probability of obtaining an order for property settlement which fell short of the outcome sought by her but which was more favourable than her present legal entitlements to the property – Whether the primary judge made a material error in respect of a finding about the husband’s post-separation contributions to superannuation – Whether the primary judge took an irrelevant consideration into account, namely the costs of the proceedings, in assessing the wife’s prima facie case – Whether the primary judge erred in failing to find that the wife’s reliance on an agreement in relation to the parties’ property was a reasonable explanation for her delay in instituting property proceedings – Whether the primary judge erred in her findings as to the prejudice caused to the husband if leave is granted – Appeal allowed.

FAMILY LAW – APPEAL – LEAVE TO APPEAL – Where leave is required to appeal an order made pursuant to s 44(3) of the Family Law Act 1975 (Cth) – Where the primary judge’s decision is attended by sufficient doubt to warrant it being reconsidered and where substantial injustice would result if leave were refused – Leave to appeal granted.

Family Law Act 1975 (Cth) ss 44(3), 44(4), 79
Federal Proceedings (Costs) Act 1981 (Cth)

Althaus and Althaus (1982) FLC 91-233
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618;
[1968] HCA 1
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541;
[1996] HCA 25
Hedley & Hedley (2009) FLC 93-413; [2009] FamCAFC 179
House v The King (1936) 55 CLR 499; [1936] HCA 40
Jacenko and Jacenko (1986) FLC 91-776; [1986] FamCA 25
McDonald and McDonald (1977) FLC 90-317; [1977] FamCA 93
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Neocleous & Neocleous (1993) FLC 92-377; [1993] FamCA 42
Reddington & Pontow [2018] FamCAFC 33
Sharp v Sharp (2011) 50 Fam LR 567; [2011] FamCAFC 150
Taffa & Taffa [2014] FamCAFC 106
Walker and Walker (1984) FLC 91-564; [1984] FamCA 55
Whitford and Whitford (1979) FLC 90-612; [1979] FamCA 3
Wood v Glaxo Australia Pty Ltd [1994] 2 Qd R 431

APPELLANT:

Ms Edmunds

RESPONDENT:

Mr Edmunds

FILE NUMBER:

PAC

4882

2016

APPEAL NUMBER:

117

2017

DATE DELIVERED:

6 July 2018

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ryan, Aldridge & Watts JJ

HEARING DATE:

2 May 2018

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

19 October 2017

LOWER COURT MNC:

[2017] FCCA 2493

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Vassili solicitor

SOLICITOR FOR THE APPELLANT:

Michael Vassili Barristers and Solicitors

COUNSEL FOR THE RESPONDENT:

Mr Kearney SC

SOLICITOR FOR THE RESPONDENT:

Newnhams Solicitors

Orders

Leave is granted to the appellant to make an oral application for leave to appeal.
Leave to appeal is granted.
The appeal be allowed and the orders made on 19 October 2017 be set aside.
The appellant is granted leave pursuant to s 44(3) to commence proceedings under s 79 of the Family Law Act1975 (Cth).
There be no order as to costs.
The Court grants to the appellant wife a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant wife in respect of the costs incurred by her in relation to the appeal.
The Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by him in relation to the appeal.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Edmunds & Edmunds has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

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 r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 117 of 2017
File Number: PAC 4882 of 2016

Ms Edmunds

Appellant

And

Mr Edmunds

Respondent

REASONS FOR JUDGMENT

Introduction

On 19 October 2017 Judge Obradovic refused Ms Edmunds (“the wife”) leave pursuant to s 44(3) of the Family Law Act 1975 (Cth) (“the Act”) to commence property settlement proceedings against Mr Edmunds (“the husband”).
Section 44(3) provides:
44 Institution of proceedings
…
(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
(b)a decree of nullity of marriage has been made;
proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in subsection 4(1) (not being proceedings under section 78 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) shall not be instituted, except by leave of the court in which the proceedings are to be instituted or with the consent of both of the parties to the marriage, after the expiration of 12 months after:
(c)in a case referred to in paragraph (a)—the date on which the divorce order took effect; or
(d)in a case referred to in paragraph (b)—the date of the making of the decree.
The court may grant such leave at any time, even if the proceedings have already been instituted.
Leave is not to be granted unless the court is satisfied that hardship would be caused to a party to the marriage or a child if leave was not granted: s 44(4) of the Act.
The parties were divorced on 16 January 2009 and therefore any property settlement proceedings had to be commenced on or before 16 January 2010. The wife filed the application for leave on 17 October 2016.
The primary judge described the task before her in the following way:
16.The authorities on the issue of an application pursuant to s44(3) are numerous. The Court must consider whether the applicant has established:
a)A reasonable prima facie case for relief had proceedings been instituted in time;
b)That denial of the claim would cause the applicant hardship; and
c)An adequate explanation as to the delay.
17.In appropriate cases the degree of hardship to be suffered by the applicant may well outweigh an inadequate explanation of delay.
18.Once the three elements are satisfied, in determining whether to exercise its discretion to grant relief, the question of prejudice which the respondent would suffer by reason of the delay in bringing the application ought be considered.
(Footnotes omitted)
Such an approach is consistent with the authorities: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553 per McHugh J; McDonald and McDonald (1977) FLC 90-317 at 76,688; Jacenko and Jacenko (1986) FLC 91-776 (“Jacenko”) at 75,644; Sharp v Sharp (2011) 50 Fam LR 567 (“Sharp”).
The wife did not challenge this approach by the primary judge. Rather, the grounds of appeal focused on her Honour’s findings as to the nature of the wife’s prima facie case, whether she had established hardship and whether she had an adequate explanation for her delay in commencing the proceedings.

Background

The parties commenced cohabitation in 1992 and married in 1993. They separated in late 2006 or early 2007. They were divorced on 16 January 2009.
The parties had three children who were born in 1994, 1997 and 2000. The youngest child was almost 17 years old at the time of the orders of the primary judge.

The appeal

Leave to appeal

The wife did not apply for leave to appeal, notwithstanding that it is now well established that leave is required: see Taffa & Taffa [2014] FamCAFC 106 at [10] and the authorities cited therein; Reddington & Pontow [2018] FamCAFC 33 at [2].
Belatedly, at the close of the hearing of the appeal, the wife sought leave to make an oral application for leave to appeal, which the Court permitted. The husband opposed the grant of leave.
We shall return to the issue of leave after considering the merits of the appeal.

Ground 1

Ground 1 asserts:
1.Her Honour did not assess whether the Appellant had a prima facie case to make at trial when put at its highest, and thus failed to exercise the discretion at section 44(3) of the Family Law Act 1975: instead Her Honour:
a.Decided or prejudged the case under section 79(4) instead of assessing whether the Appellant had a prima facie case worth pursuing,
…
c.wrongly made a series of findings in support of Her Honour’s own assessment mainly based on the Respondent’s contentions but which failed to consider the material matters which were the basis of the Appellant’s prima facie case;
d.misstated the facts upon which the Appellant relied at their highest, and
e.disregarded the Appellant’s own proposed assessment under section 79(4).
Ground 1(b) was not pressed.

Did the primary judge prejudge the wife’s case instead of assessing whether she had a prima facie case worth pursuing?

The wife submitted that the primary judge went further than considering whether, taking the wife’s case at its highest, she had a prima facie case worth pursuing but instead came to a final conclusion as to the ultimate merit of the wife’s case.
The hearing of applications for leave pursuant to s 44(3) should be “summary in character” (Neocleous & Neocleous (1993) FLC 92-377 at 79,914) and not a final hearing of the matter (Whitford and Whitford (1979) FLC 90-612 at 78,143; Hedley & Hedley (2009) FLC 93-413 at [32] per Finn J and at [111] per Boland J). A detailed hearing of the case on its merits is not required (Althaus and Althaus (1982) FLC 91-233 at 77,267).
In Wood v Glaxo Australia Pty Ltd [1994] 2 Qd R 431 at 434 Macrossan CJ of the Queensland Court of Appeal, in the course of discussing s 31(2) of the Limitation of Actions Act 1974 (Qld), relevantly observed that:
… applicants for extension of limitation periods are not intended by the legislation to be placed in the position where they must establish an entitlement to recover on two occasions, first on the hearing of the application and once more at the trial of the action. Although the requirements of the legislation must be complied with if an extension is to be granted, the extent to which an applicant must show a case on the hearing of the application to extend time will frequently depend on the impression on the judge’s mind of the material which the applicant presents or the existence of which he demonstrates or points to. It is nevertheless recognised as wrong to place potential plaintiffs in anything like a situation where they must on the probabilities show that it is likely they will succeed in their actions. A judge may harbour a feeling that there is a strong chance that particular applicants will fail at trial but, in my opinion, he should not act on the basis of this impression both because that is a question reserved for another occasion and because he cannot know and should not insist on being able to see in all of its ramifications the full strength of the case which will eventually be presented at trial. There are some resemblances in this to the situation of a defendant who resists a summary judgment application. The Court should be cautious in shutting out a party from the opportunity to make his case at the appropriate time. In any situation where proof of a case is difficult and very far from straightforward, it would be very expensive to require a party applying to extend time to demonstrate his case with any high degree of elaboration.
The point to be drawn from this passage is that an applicant for leave is not required to establish their final case on the leave application. Similarly, the Court is not to approach the application on that basis.
In the context of an interlocutory injunction in a patent case but in terms that apply to all interlocutory injunctions, in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 (“Beecham”) at 622 the High Court described the inquiry the Court is to undertake in the following way:
The Court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v. Luck; Challender v. Royle. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks.
(Footnotes omitted)
We consider that as an application for leave is also an interlocutory application, these principles appropriately apply in this case. Thus the Court, when considering the issue of leave and the strength of the proposed case, will look to see whether, in the event that the evidence remains the same at a final hearing, there is a probability that the applicant would succeed in obtaining a property settlement adjustment in her favour. The Court does not undertake a preliminary trial but looks to see whether there is some or a fair or reasonable probability that relief will be granted.
In Sharp at [18] the Court, consistently with Beecham in our opinion, considered that there must be a “‘real’ probability of success”.
The primary judge set out her understanding of the facts as asserted by the parties at [27] – [70]. Her Honour then concluded:
72.The respondent contends that the applicant is unable to establish any prima facie case as to an entitlement to an order pursuant to section 79. The Court accepts the submission made on behalf of the respondent that it is difficult to conceive of a different result to the parties legal interests having been arrived at the time of the parties separation in 2006 and now, in circumstances where whilst the respondent retained a greater share of the then available property, and the applicant retained the benefit on a cost free basis of sole occupation of the property in which the respondent otherwise has a legal entitlement of 50%, the realisation of which he has postponed for some 11 years. However, it is not impossible to do so.
73.The fact is that the respondent received the very significant termination payment within the 12 month post-divorce period, and that he appears to have retained shortly after separation the majority of the net proceeds of [Property E]. This could be as much as $330,000 in total.
74.The Court is mindful of the greater non-financial contributions made by the applicant throughout the relationship as well as post separation. The applicant will continue to have the bulk of the care and financial responsibility of the parties’ children (although only one is still a minor but already 16 years old). The moral obligation is likely to continue. The Court is also mindful of the applicant’s financial contributions throughout the relationship as well as post separation.
75.However, given:
a)the significant and overall much greater financial contributions, particularly those in 2004 but also throughout the relationship, by the respondent;
b)the increase in the respondent’s superannuation of some $480,000 over the 10 years post separation as a result of his continued employment and contributions;
c)the post separation contribution by the respondent to the upkeep and maintenance of [Property B];
d)the applicant’s continued use of [Property B] for over 10 years post separation, albeit she has been responsible for its upkeep and maintenance, and has conducted some renovations to it;
e)that both parties contributed to the welfare of the children by virtue of the fact that the children remained living in [Property B, which is a] jointly owned property;
f)the assets of the parties at the date of separation;
g)the likely costs to be borne by the parties in pursuing a s79 application;
h)that the post separation period of over 10 years is not insubstantial when compared to the period during which the parties lived together of approximately 14 years; and
i)the myriad of other matters arising for consideration pursuant to s79(4) from which no relevant distinction between the parties emerges,
it is not apparent that the applicant would receive any money or property by way of property settlement once all of these factors are considered.
76.The applicant seeks an order which would see her retaining the vast majority of the parties’ current non-superannuation assets. If the Court acceded to her application, the applicant would walk away with approximately $750,000 - 800,000 in readily realisable assets, while the respondent would receive $617,000 worth of superannuation and some $20,000 worth of other assets. The applicant has not established prima facie case in respect of her application as presently couched.
77.However, a prima facie or arguable case for property adjustment orders at large is established, albeit it is a weak case. It must however be kept in mind that prima facie even an applicant with a weak case has a right to be heard.
As can be seen, the primary judge’s findings are couched in terms as to whether or not there was a “prima facie” or “arguable” case. The primary judge did not express herself in terms that would be applicable for a final determination of property proceedings and we would not readily infer that that is what her Honour did. There was no finding that it would not be just and equitable to make a property settlement or that the appropriate property division between the parties would be to leave each party with the assets presently held by them.
What her Honour did find was that the wife had not established a prima facie case for the orders proposed by her but had established a prima facie case for some relief, albeit a weak case (see the last sentence of [76] and the first sentence of [77]).
Although her Honour made findings at [75] and [80] that “it is not apparent that the applicant would receive any money or property by way of property settlement” and that “taking the applicant’s evidence at its highest and the current asset pool, it may be that ultimately there would only be a very small adjustment in the applicant’s favour”, neither of those statements bespeak a final determination of the property proceedings.
This aspect of the ground does not succeed.

Did the primary judge wrongly make a series of findings based on the husband’s contentions but ignoring the material matters relied upon by the wife?

The wife submitted that the primary judge made a series of findings which demonstrated that her Honour decided the outcome based almost entirely on the claims of the husband rather than assessing the actual prima facie case made out by the wife. In particular, the wife submitted that her Honour:
·Failed to acknowledge or consider all of the non-financial contributions made by the parties during their cohabitation and after separation and how these might be weighed against the greater financial contributions made by the husband;
·Made no reference to the wife’s contributions;
·Disregarded the fact that the children were housed and cared for by the wife;
·Failed to acknowledge the wife’s claim that she made far greater non-financial contributions for ten years after separation;
·Disregarded the husband’s receipt of a redundancy payment; and
·Failed to acknowledge that the wife claimed to have made at least equal if not greater contributions of different kinds for ten years out of a total of 25 years from the date of cohabitation to trial.

Clearly, the primary judge did take these matters into account.
In relation to the non-financial contributions made by the wife, her Honour said:
50.The applicant asserts that she was the primary homemaker and carer for the children. She asserts that the respondent contributed by putting the children to bed at night until the age of 7 or 8 and to mowing the lawns once per month. She says that she prepared the meals and attended to the housekeeping. The parties agree that the applicant’s aunt provided assistance to the parties in looking after their children while the applicant was at work.
51.As such, on the applicant’s case at its highest the applicant’s non-financial contributions, including contributions as homemaker and parent, throughout the parties’ relationship were greater than those of the respondent.
As to post-separation contributions, at [58] – [59] her Honour recorded that since the date of separation the wife remained living in Property B, while the husband provided only some financial support for the children and paid council rates and insurance. The wife paid the three children’s private school fees.
At [64] the primary judge noted the wife’s renovations to Property B, which were undertaken after separation.
These considerations led her Honour to conclude:
74.The Court is mindful of the greater non-financial contributions made by the applicant throughout the relationship as well as post-separation. The applicant will continue to have the bulk of the care and financial responsibility of the parties’ children (although only one is still a minor but already 16 years old). The moral obligation is likely to continue. The court is also mindful of the applicant’s financial contributions throughout the relationship as well as post separation.
The primary judge clearly took the wife’s post-separation contributions into account. While the weight her Honour attributed to these factors was not the same as that sought by the wife, that is a different complaint and not one that was made in the wife’s Amended Notice of Appeal.
Similarly, her Honour noted the husband’s redundancy payment which was received on 15 February 2010 and said (at [62]):
… The respondent worked for this same employer throughout the parties’ relationship, and as such the vast majority of the entitlements paid to the respondent upon termination were accrued during the relationship.
Thus again this matter was taken into account by the primary judge.
There is no merit in this aspect of the ground.

Did the primary judge misstate the facts upon which the wife relied?

Under this ground the wife submitted that in addition to misstating the evidence the primary judge “decided the outcome under s 79(4) based almost entirely on the claims of the respondent”, accepted the husband’s case “down to the adoption of the very phraseology (‘a myriad…’) at paragraph 19 of Senior Counsel’s submissions” and the primary judge’s assessment “was faulty and weighted heavily towards the respondent’s arguments”.
As we have already pointed out, the court considers the evidence as it is before it without making a final determination of disputed evidence or of the outcome (often phrased as taking the applicant’s case at its highest). The court may also take into account evidence of the respondent when it is not in dispute and, of course, the respondent’s submissions, in determining whether there is a real or fair probability of success. In short, many of the complaints under this ground are no more than a complaint that the husband’s submissions were preferred.
The submissions repeat the complaints that the primary judge did not take into account all the asserted contributions of the wife including the care of the children and the redundancy payment received by the husband. We have already dealt with those submissions.
The only particular fact which the wife pointed to in asserting that the primary judge mistook the evidence was her finding at [75(a)] that a factor to be taken into account was the “significant and overall much greater financial contributions, particularly those in 2004 but also throughout the relationship” that had been made by the husband. The wife asserted that the primary judge erred in making this finding by taking into account the wife’s evidence that the husband received an inheritance of $180,000 in 2004 rather than husband’s evidence that the inheritance was $97,000.
A footnote attached to “2004” states the following:
On the applicant’s case, the respondent made a financial contribution of $180,000 in 2004, and an assessed significant initial contribution comprising of property which was utilised by the parties as explained earlier in these reasons. On the respondent’s case, he made a financial contribution of almost $450,000 in 2004.
The respondent’s case was that the purchase of Property B for $450,000 was entirely funded by him from his savings and from the sale of another property (“Property A”). The footnotes to that finding indicate that the primary judge considered that it was likely that the purchase of Property B was funded by the inheritance and the sale of Property A. This is an acceptance of the wife’s contention, noted at [35], that the inheritance was used to purchase this property. The husband’s evidence was that the inheritance was spent on family expenses and fitout and furniture for Property B.
This is an acceptance of the wife’s case at its highest. She did not suggest that she contributed to the purchase of Property B. Thus the exact amount of the inheritance is not critically important – it is the contribution of the purchase price of the property by the husband that was the significant consideration that led to the finding at [75(a)].
We see no error on the part of the primary judge.
This aspect of the ground has not been established.

Did the primary judge disregard the wife’s own proposed assessment under s 79(4)?

The essence of the complaint under this heading is that the primary judge preferred the husband’s submissions as to the nature of the wife’s case as opposed to the wife’s. Thus it was submitted that the primary judge erred by not giving the weight to the various contributions that were asserted by the wife.
As the Full Court pointed out in Sharp at [18], “the well-established test is that the applicant must have a prima facie claim worth pursuing or a ‘real’ probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship”.
That involves a consideration, but not a final determination, of the nature of the applicant’s claim. In doing so, the Court must weigh the applicant’s case against that of the respondent’s and form a view as to whether there is in fact a prima facie case, or a real probability of success, that would, if leave were granted, alleviate hardship.
As we have pointed out, the primary judge did take account of the wife’s submissions and contentions as to the nature of the case but ultimately did not accept them. That, of itself, cannot be an error.
Ground 1 does not succeed.

Ground 2

By Ground 2 the appellant contends:
Her Honour’s conclusion that “it is not apparent the Appellant would receive any money or property by way of property settlement” if leave were granted was not a conclusion available to Her Honour either on the evidence or on any proper assessment of the Appellant’s prima facie case.
In order to understand the wife’s submissions that on any proper assessment of the wife’s prima facie case it was clear that there was a real prospect of success, it is necessary to set out the nature of her claim.
The primary judge found that the wife’s initial financial contributions consisted of a motor vehicle and approximately $5,000 in savings. The husband’s initial financial contributions were found to be a motor vehicle and some savings, each with an unknown value, and Property A, the value of which at the time of the commencement the relationship was not known (at [45] – [46], [48]).
The wife asserted that the husband also held a half interest in a property at Town F, but due to the uncertain state of the evidence, the primary judge concluded that any such contribution would be regarded as being of minimal weight (at [47]).
It is clear that both parties contributed their earned wages throughout the relationship. The husband also received the inheritance in 2004, asserted by the wife to be $180,000 and the husband to be $97,000 ([35]).
During the relationship the parties bought and sold a number of properties, the details of which are not necessary to record.
The primary judge found at [49] that the financial contributions by the husband “both at the commencement of the parties’ relationship and throughout the parties’ relationship were significantly greater than those of the applicant”. No challenge was made to that finding.
Similarly, there was no challenge to the finding at [51] that the wife’s non-financial contributions throughout the parties’ relationship were greater than those of the husband.
What occurred after separation is of significance, particularly given the lengthy period that had passed between the relationship ceasing and the hearing before the primary judge. At the time of separation, the children were aged 12, 9 and 6. They lived with the wife who provided the majority of financial support for them, including paying their private school fees. The husband provided “some financial support” and also paid the majority of council rates and insurance on Property B (at [59]). Property B was owned jointly.
The parties also jointly owned another property, Property E. From the date of separation the husband maintained the mortgage payments on this property. It was sold in December 2007 and the net proceeds of $115,000 were paid into the parties’ joint account. The primary judge found that part of these funds were used by the wife but there was no evidence as to where the balance went. The wife asserted that it was retained by the husband (at [61]).
The husband’s employment in government was terminated on or about 14 September 2009. He received a termination payment consisting of annual leave, time in lieu, long service leave, sick leave and a redundancy payment totalling $231,337 which was paid to him on 15 February 2010.
The primary judge found at [62] that the vast majority of the entitlements making up the termination payment were accrued by the husband during the relationship. The primary judge did not make an express finding that the wife’s contributions during the relationship were also an indirect contribution to the termination payment although such a finding was obviously open on the evidence.
The husband used the funds received in February 2010 to establish a business and to purchase equipment. He also used part of the funds for living expenses and to pay out a credit card debt.
At the time of the hearing the husband’s superannuation had a value of $617,124.
Accordingly, her Honour found the assets at the time of the hearing to be:
69.The applicant’s assets at the time of hearing comprise at least of the following:
a)Half interest in [Property B] estimated by the parties to be between $380,000-$450,000;
b)Motor vehicles net value estimated at $23,500;
c)[The wife’s business] estimated at $6,250; and
d)Money in bank account of $50,200.
70.The respondent’s assets at the time of hearing comprise at least of the following:
a)Half interest in [Property B] estimated by the parties to be between $380,000-$450,000;
b)Superannuation of $617,124;
c)[The husband’s business] estimated to be worth $0;
d)Motor vehicle net value estimated at $5,000; and
e)Money in bank account of $10,486.
Her Honour therefore found that there were assets available for distribution of between $1,472,560 and $1,612,560. The wife’s assets, depending upon the value attributed to Property B, amounted to 31.2 per cent to 32.9 per cent of that property.
We note in passing that the value ascribed to the husband’s business came from his own estimate as to its value, as opposed to being derived from the opinion of an independent valuer.
It is convenient to repeat [76] of the primary judge’s findings:
76.The applicant seeks an order which would see her retaining the vast majority of the parties’ current non-superannuation assets. If the Court acceded to her application, the applicant would walk away with approximately $750,000 - 800,000 in readily realisable assets, while the respondent would receive $617,000 worth of superannuation and some $20,000 worth of other assets. The applicant has not established prima facie case in respect of her application as presently couched.
The reference to the wife’s application is a reference to the ultimate claim foreshadowed by her, which was that an appropriate order would see her retain Property B – that is, between 57 per cent to 61 per cent of the property available for distribution.
What the primary judge did not consider was whether there was a real probability or a prima facie case that the wife would receive a property division that was somewhere between the 31.2 per cent to 32.9 per cent that she presently held and the 57 per cent to 61 per cent outcome for which she was contending.
Section 79 of the Act empowers the Court to make such orders as it considers appropriate, providing that they are just and equitable. The Court is not limited to considering whether or not to make the particular orders contended for by each of the parties and no other. Commonly the orders that are ultimately made fall between the proposals of the parties but that is not always the case. Subject to requirements of procedural fairness the Court can formulate orders for itself which may be outside the bounds of the parties’ proposed orders.
In our opinion, the primary judge erred by not considering whether the wife had a prima facie case for, or a real probability of, obtaining a property settlement order that may well have fallen short of the outcome sought by her but nonetheless would see her obtain a greater share of the property available for division than the 31.2 to 32.9 per cent currently held by her.
Further, in making her finding that “it is not apparent that the applicant would receive any money or property by way of a property settlement once all of these factors are considered” her Honour expressly took into account “the increase in the respondent’s superannuation of some $480,000 over the 10 years post separation as a result of his continued employment and contributions” (at [75(b)]).
On the evidence, this finding was not available.
The parties separated in late 2006 or early 2007. The husband’s employment was terminated in September 2009, less than three years after that separation. Thereafter the husband has been self-employed. He currently earns, he says, about $30,000 per year. He did not proffer any evidence as to his earnings from previous years. As can be seen, his business was estimated by him to have no value. It would be surprising if earning an income of $30,000 per year (assuming his current income to be typical) permitted the husband to make any significant contributions to his superannuation from his business. His evidence did not suggest that he had.
The statement from the husband’s superannuation fund in relation to his deferred benefits scheme indicated that as at 1 July 2016 he had been liable to pay a contributions tax of $5.46. This does not suggest any significant contributions by him at that stage.
In the absence, therefore, of any further evidence on this subject – and there was none – the only inference that is readily available is that the significant increase in the value of the husband’s superannuation arose not from his contributions after separation but from growth in the fund. Given that the effect of her Honour’s finding at [75(2)(b)] is that the husband alone had contributed $480,000 to an asset pool in the range of $1,472,000 – $1,612,000, this error is material. At least at a prima facie level on the evidence that was before the Court, there was a basis for finding that because most of the contributions to the superannuation fund occurred prior to separation, the wife should be taken to have made non-financial contributions to it.
In response, the husband submitted that the present entitlements of the wife constituted a proper outcome of any property settlement claim by her because the husband’s superannuation entitlements should not be included in the property available for division. On the basis of the parties’ retention of the present assets, the wife would retain some 53 per cent of the assets available for division (namely the assets other than the husband’s superannuation). However, as we have said, the evidence that was before the primary judge did not support such an approach.
On the contrary, the evidence as it stood justified the inclusion of the husband’s superannuation as property available for distribution (whether as part of the one group of assets or in a separate group of its own).
This ground has been established.

Ground 3

Ground 3 is as follows:
Her Honour wrongly had regard to an irrelevant consideration to the question of whether the Appellant had a prima facie case, namely the future costs of proceedings, and since this was telling in the dismissal of the application the exercise of discretion miscarried.
The wife asserts that when assessing the wife’s prima facie case, the primary judge took account as an irrelevant matter the likely legal costs of the wife.
There are two of difficulties with this submission.
The first is that the primary judge did not take costs into account in determining whether or not there was a prima facie case.
At [75] – [77] her Honour concluded that the wife had a weak prima facie or arguable case for property adjustment orders. The likely legal costs of the parties was one of the factors that was taken into account in the finding at the end of [75] that it was not apparent that the wife would receive any money or property.
Her Honour then continued:
78.The applicant’s prospects of success are not to be considered in isolation. In determining if there is a reasonable claim to be heard, the likely costs of the hearing should be taken into account to give a proper analysis of the probable outcome.
79.It is likely that the costs of the hearing of the application for property adjustment orders would be considerable, requiring valuations of each of the parties’ businesses and a valuation of [Property B]. It is the court’s view that the assets would also need to be valued at particular points in time; for an example at the date of separation, the date of hearing and at the date of the expiration of the limitation period. It is also likely that the parties were [sic] incur costs of a number of directions hearings, a conciliation conference and possibly a mediation, and if the matter did not resolve it is the court’s assessment that a final hearing would take at least two, if not three days. In the court’s experience such costs could be anywhere between $30,000 and $130,000 for each of the parties. To add to this is the cost of the present application.
80.Indeed, taking the applicant’s evidence at its highest and the current asset pool, it may be that ultimately there would only be a very small adjustment in the applicant’s favour, should a s79 application be permitted to be brought out of time. Any benefit to the applicant will likely be closely balanced by the costs which she will need to incur and has incurred to date.
Thus the likely costs was a factor to be taken into account along with the strength of the proposed proceedings. Costs were also taken into account in determining the likely benefit of the proceedings to the wife. They were not, when the reasons are viewed as a whole, considered as a factor in determining the strength of the proposed case.

The second difficulty is that the likely costs of any proposed proceeding is a relevant matter to take into account in determining whether or not hardship would be alleviated: Whitford and Whitford (1979) FLC 90-612 at 78,145; Walker and Walker (1984) FLC 91-564 at 79,555.
This ground has not been established.

Ground 4

Ground 4 asserts:
Her Honour’s finding as to the Appellant’s likely costs of a contested hearing in a range $30,000 - $130,000 was not available to Her Honour on the evidence, and since such erroneous finding was telling in the dismissal of the application the exercise of discretion miscarried.
In part of her assessment of the effect of the likely costs on hardship to which we have just referred, the primary judge said at [79], “[i]n the court’s experience such costs could be anywhere between $30,000 and $130,000 for each of the parties”.
The wife’s submissions are twofold. First, she submits that it was not open for the primary judge to make any assessment of the likely costs of the proceedings because there was no evidence to that effect. Secondly, she submits that the Court could not, on the evidence before it, safely conclude that the costs of the proceedings would outweigh the outcome. Given our findings in relation to Ground 2, there is little point pursuing the latter submission as we have found that the finding that it was not apparent that the wife would receive any money or assets as a result of the proposed proceedings was not soundly based.
As to the first, one would ordinarily expect that on an application for leave the applicant, at the least, would adduce some evidence as to the likely costs of the proceedings so as to demonstrate that there was likely to be a benefit in bringing the proceedings. It is obvious that if the proceedings do not result in a net benefit they are not going to alleviate any hardship.
There was no such evidence in this case and the question, therefore, is whether the primary judge could rely on her own knowledge and experience to formulate an estimate of the likely costs of the proceedings.
The primary judge did not attempt a realistic quantification of the likely costs of the proceedings and we do not know how her Honour arrived at the range of $30,000 to $130,000. However, the likely costs of the proceedings was a relevant factor to take into account, whether or not a figure was put on them. Of course, the absence of a figure must reduce the weight that could be given to this consideration.
Central to her Honour’s consideration was her view that the wife would only receive a small adjustment in her favour, if at all. Indeed at [80] the primary judge said “taking the applicant’s evidence at its highest and the current asset pool, it may be that ultimately there would only be a very small adjustment in the applicant’s favour”. It follows that even costs at the lower end of the range posited by her Honour would be likely to negate the benefit of any adjustment. Her Honour’s estimate of the lower end of the range is an unsurprising figure.
Once it is understood that the primary judge considered that costs of any significance would undermine the benefit of any success in the proposed proceedings, it can be seen that the actual parameters of the range and especially the upper end posited by her Honour do not have any significant impact. Given that, we are inclined to the view that her Honour did not err by estimating the range of the likely costs. Had the wife sought a more focused finding as to costs it was incumbent on her to adduce the evidence.
This ground does not succeed.

Grounds 5 and 6

It is convenient to deal with these two grounds together. This is because under Ground 5 the wife submitted that hardship arose from the husband’s failure to comply with an agreement the parties had reached as to how their property was to be divided. That agreement was the basis of the wife’s explanation for not commencing proceedings within the prescribed time. It was not suggested that the asserted agreement was enforceable in proceedings under the Act so no hardship could arise from non-compliance with it. The primary judge found that the agreement was not relevant to the consideration of hardship. This ground is therefore misconceived.
The agreement was however relied upon by the wife to justify her conduct as being entirely reasonable in the circumstances.
Ground 6 challenges the failure of the primary judge to accept that explanation.
There was no dispute between the parties that shortly after separation they reached an oral agreement as to the disposition and use of their property. The parties did, however, disagree about the terms of that agreement.
The wife’s version of the agreement was that she was to retain Property B and her car and the husband would retain his superannuation, Property E and anything else he held.
The husband’s version was that the property would be divided as asserted by the wife other than Property B. According to the husband, the wife and the children were to be permitted to live in Property B until the youngest child turned 16, whereupon the property would be sold and the proceeds divided equally.
Of these versions, the primary judge said:
57.In any event, it is not necessary to make any findings about the assertions by each of the parties in respect of any agreement reached between them after separation. It is ultimately a relevant matter going to the explanation of the delay in commencing proceedings by the applicant, but otherwise would not be relevant to the consideration of hardship, except in so far as it could go to the issue of credit. Because of its assessment of the applicant’s case at its highest, issues of credit were not considered relevant for the purposes of determining the present application.
Her Honour later said:
90.It is the applicant’s evidence that:
a)The respondent had already changed his mind about their agreement by about late 2008/early 2009, in that he ceased paying child support two years after the parties separation;
b)She knew as at January 2009 that there was a time limit in respect of seeking relief for property adjustment and she elected not to seek such relief;
c)She knew at all times that the respondent had a legal interest in [Property B]; and
d)The respondent was paying the rates and the contents insurance in relation to [Property B] post separation.
91.As such, the Court finds that the explanation for the lengthy delay is not adequate.
It can be immediately observed that [90(b)] and [90(c)] are not reasons for inferring that there was not an agreement in place as asserted by the wife. Whilst it is true that these points would have justified the wife seeking consent property orders to give effect to the agreement, they are also consistent with the wife believing that she had such an agreement and that she needed to take no further steps to ensure compliance with it. It is relevant too that the husband also believed that there was an agreement in place, albeit a different agreement.
As to the finding in [90(a)] that the husband had changed his mind about the agreement, the wife said she had a conversation with the husband about making child support payments in 2008 in which he refused to continue to make them. She then said:
I didn’t ask [the husband] for any money for the children after this time as I did not want to jeopardise the agreement we had entered into with respect to the assets from the relationship.
(Wife’s affidavit filed 9 February 2017, paragraph 66)
It may be that the primary judge did not accept this explanation but, if so, she did not say why. If accepted, it explains why again the wife was content to rely on the agreement.
As to [90(d)], this is not inconsistent with either of the agreements asserted by the parties.
The wife asserted that she first became aware that the husband was not continuing to adhere to the agreement in September 2016 when he made a claim for half of Property B. He did so by means of a text message. It was made quite clear in a message sent by the husband on 2 September 2016 that he was seeking 50 per cent of Property B and was pressing for either an urgent sale of the property or that the wife promptly buy out his share. On 4 September 2016 the husband forwarded his solicitor’s details to the wife.
The wife’s responses to these text messages are instructive. On 2 September she said:
Actually we didn’t agree on anything. Other that you wrote down that I could have this house and I wouldnt touch your super. Which I didn’t
(Wife’s affidavit filed 9 February 2017, annexure B)
On 4 September 2016 she responded to the husband’s replies, saying:
Unfortunately you haven’t really given me much notice, given that I was at work Friday and have only had the weekend since. I was hoping we could settle this, as you mentioned previously, in a civil manner. But you seem intent on doing things otherwise.
I would like an opportunity for mediation and as yet I haven’t had a chance to speak to a solicitor. Due to work commitments I need more time to do this.
…
This may well be an old subject, but you have sprung it on me very very suddenly. Of course I’m going into protection mode, I have to think about where we are going to live. Which may not be a problem when you only have yourself to think about, but there’s 4 of us. I can’t understand how you’d think I wouldn’t be upset.
(Wife’s affidavit filed 9 February 2017, annexure B)
The only inference that can be drawn from these responses is that the husband’s insistence on a sale of Property B now that the youngest child was about to turn 16 years old came as a surprise to the wife. Her first response was to assert that there was an agreement that she retain the house permanently. Her second response was to say that it had all been sprung on her very suddenly. If this evidence was accepted, it would give a convincing explanation as to why the wife did not commence proceedings within the time limit.
These text messages were not referred to by the primary judge. If her Honour did take them into account, no reasons were given as to why they were not given weight. The point is not whether, in fact, there was an agreement as asserted by the wife, but rather whether she believed that she had the benefit of such an agreement.
The reasons given for not accepting the wife’s explanation were not soundly based. When coupled with the failure to refer to the text messages as support for the wife’s explanation, we are satisfied that Ground 6 has been established.

Grounds 7 and 8

Grounds 7 and 8 are:
7. Her Honour was plainly wrong on the evidence before her that the ability of the respondent to meet the contentions of the Appellant was impaired due to the time which had passed since the limitation period expired, and by placing weight on this finding her Honour’s exercise of the discretion miscarried.
8. Her Honour’s findings that there was prejudice to the respondent if the Appellant was given leave was based on findings which were not available on the evidence, and the consideration of irrelevant matters.
It is convenient to deal with these grounds together.
The wife submits that the primary judge wrongly took into account or gave excessive weight to the prejudice that would flow to the husband if the wife’s application for leave were granted. The primary judge said:
83.The Full Court in Sharp & Sharp said that
“Merely because the respondent to an application for leave does not point to particular prejudice that might arise if leave were granted, does not dispose of the question”.
84.However, the respondent herein points to particular prejudice. The Court accepts that having regard to the amount of time which has lapsed since the parties’ separation the ability of the respondent to meet the contentions of the applicant is impaired. This is so not only by the passage of time and the effect of the same upon the availability of documents and witnesses, but also because of the ability to recall matters some of which will go back as far as 25 years.
85.Furthermore, the law presumes prejudice to flow to a person sought to be joined in litigation after the effluxion of the relevant time limits.
86.In considering the question of prejudice, the Court does not merely look at the time which has elapsed since the expiration of the limitation period, which in this case is significant. The limitation period for property adjustment proceedings is much shorter than some other limitation periods, such as for example for breaches of contract. The legislature must have had a reason for such a short limitation period. The length of the limitation period when compared to the delay is a significant matter – that is, the limitation period had expired 6 times over before the applicant sought to commence proceedings.
(Footnotes omitted)
The primary judge was undoubtedly right to find that there was a presumed prejudice to the husband if the application was granted.
In Sharp the Court said:
97.Merely because the respondent to an application for leave does not point to particular prejudice that might arise if leave were granted, does not dispose of the question. The law presumes prejudice to flow to a person sought to be joined in litigation after the effluxion of the relevant time limits. Even if the court came to the view that there was no significant prejudice to the respondent, the court may consider whether in all of the circumstances of the case, it is just and reasonable to grant the extension sought. The New South Wales Court of Appeal in McLean v Sydney Water Corporation[2001] NSWCA 122 , per Giles JA (Hodgson and Stein JA agreeing) said at [22] that:
[22]Prejudice engendered by delay and unlikelihood of a fair trial will be highly material, and if there is prejudice and unlikelihood of a fair trial that will tell strongly, often conclusively, against the grant of an extension of time. It does not follow that in the absence of prejudice (other than general prejudice) and unlikelihood of a fair trial it will be just and reasonable to grant an extension of time.
The husband did not point to any particular prejudice other than pointing to the unfortunate effect of time on witnesses’ recollections. That, however, is a feature of many family law cases, particularly property cases in long relationships. It is a prejudice which is not to be ignored and was in fact taken into account by the primary judge. The husband pointed to no particular prejudice beyond that. He did not assert, for example, that particular witnesses or evidence were no longer available due to the effluxion of time. These were, however, matters taken into account by the primary judge and we do not see any error in her Honour’s approach.

Ground 9

Ground 9 asserts:
Her Honour’s finding that the Appellant had not behaved in a diligent manner in prosecuting her claim was not available to Her Honour on the evidence nor grounded in Her Honour’s own findings.
Her Honour said:
94.Lastly, it has been held that where hardship to the applicant is established and there is no question of prejudice to the respondent, the court should not seek to raise artificial barriers if the applicant has behaved in a reasonably diligent manner in prosecuting her claim.
95.However, in the present circumstances, not only has hardship not been established and there is prejudice to the respondent but the Court also finds that the applicant has not behaved in a diligent manner in prosecuting her claim.
(Emphasis added)
These paragraphs follow [90] to which we have already referred, an express rejection of the wife’s explanation of the delay at [91] and a finding that the wife’s actions post separation “are unlikely to have raised in the respondent a reasonable expectation that she would later bring an application” at [93].
There was no other basis for making a finding of a lack of diligence as the wife promptly filed the application on 17 October 2016, having become aware of the husband’s claims in early September.
The findings at [94] and [95] are based therefore on the delay from separation to the filing of the application and the rejection of the wife’s explanation for that delay. We have already dealt with those aspects of the appeal and there is no point in taking this ground further.

Ground 10

This ground asserts that the primary judge was plainly wrong on the basis that the outcome was “unreasonable or plainly unjust”: House v The King (1936) 55 CLR 499 at 505. Given that the appeal will be allowed on other grounds it is not necessary to deal with this ground, particularly as the wife’s application must be reconsidered.

Leave to appeal

We return now to the question of leave to appeal.
It is apparent that we consider that the primary judge’s decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court. A substantial injustice would result if leave were refused as the wife would be denied the opportunity to bring her property proceedings (Medlow & Medlow (2016) FLC 93-692 at [57]).
There will be a grant of leave.

Conclusion

It follows that the appeal has been successful and the orders must be set aside.

Re-exercise of the discretion

The parties invited us, in the event that the appeal was to be allowed, to re-exercise the discretion and to determine for ourselves whether or not leave should be granted. Neither party sought to adduce any further evidence. Both were content to rely upon their submissions to the primary judge.

Does the wife have a prima facie claim or a claim with a “real” probability of success?

The wife’s present entitlement to the property of the parties, as set out earlier, is between 31.2 per cent and 32.9 per cent. As the primary judge found, the husband made a considerably greater financial contribution during the course of the relationship by means of the contribution of the property he owned at the time of cohabitation and the inheritance he received during the relationship. Her Honour also found that the wife made a greater non-financial contribution to that property and to the welfare of the family.
Since separation the wife has had the care and support of the three children of the marriage including paying their school fees. She has done so without the benefit of child support from the husband since 2008. The husband has paid the rates and insurance on Property B.
It is true that the wife had the benefit of residing in Property B with the three children cost-free, but against that it must be said that she was responsible for the care and support of the children with limited financial assistance from the husband. It appears on the evidence that the husband has had the benefit of at least a significant part of the proceeds of sale of the parties’ jointly owned Property A.
It is also relevant to consider the husband’s redundancy payment and superannuation. It is clear that as the husband was employed by the same employer throughout the relationship and until the termination of his employment in 2009, the wife made considerable indirect contributions to both his entitlements on termination and to the contributions to his superannuation fund.
The wife also has the care of a 17 year old child.
Taking these matters into account, we are of the view that there is a prima facie case or a real probability that the wife will obtain a property settlement order that will give her a significantly greater benefit than the 31.2 per cent to 32.9 per cent to which she is currently entitled.

Is there hardship?

We consider that if leave to commence proceedings is granted it is likely that there will be a relatively short and straightforward property settlement hearing. The costs of such a hearing, as best as can be done in the absence of evidence, are not likely to outweigh any benefit the wife will receive from the proceedings.

The wife does not earn a significant amount of money and owes debts to her parents and to a family friend for funds that she has borrowed to pay the children’s school fees. Her ability to rehouse herself will improve if she does not have to only rely upon her present legal entitlements
We are satisfied that the wife would suffer hardship if leave was not granted.

Is there an explanation for delay?

It is apparent from what we have already discussed that we consider that the wife has given an adequate explanation for the delay. The point is not whether or not there was an agreement in place between the parties or the terms of that agreement but, rather, whether the wife reasonably believed that she had such an agreement with the husband so that it was not necessary for her to approach the Court for an order for property settlement.
Such an agreement provides a ready explanation as to why the wife did not either commence property proceedings or otherwise take steps to protect her position – it is clear she thought it was sufficiently protected by the agreement. When she became aware that her understanding as to the agreement was challenged, she promptly sought leave.

Should there be a grant of leave?

Taking these matters into account, but also taking into account the undoubted prejudice that will be suffered by the husband, we are satisfied that leave should be given for the wife to commence proceedings.

Costs

The wife sought an order that the husband pay her costs of the appeal on the basis that there were clearly apparent errors and the appeal should have been conceded. We would not be inclined to go so far, but there is force in the submission that the appeal has been wholly successful.
However, we consider that there is also equal force in the husband’s submission that the wife’s conduct of the appeal has not been entirely satisfactory in that no formal application was made for leave to appeal.
We are of the view that the appropriate order is therefore that there be no order as to costs of the appeal. However, as the appeal has been allowed on the basis of an error of law on the part of the primary judge, it is appropriate that the parties be granted certificates under the Federal Proceedings (Costs) Act 1981 (Cth).

I certify that the preceding one hundred and forty-eight (148) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Watts JJ) delivered on 6 July 2018.

Legal associate:

Date: 6 July 2018