Ettich & Ettich

[2007] FamCA 1656

FAMILY COURT OF AUSTRALIA

ETTICH & ETTICH [2007] FamCA 1656

FAMILY LAW – PRACTICE AND PROCEDURE – Transfer of Proceedings to the Federal Magistrates Court – Review of Consent Orders granted 

Family Law Act 1975 (Cth)

APPLICANT: Ms Ettich

RESPONDENT: Mr Ettich

FILE NUMBER: BRF 1475 of 2006

DATE DELIVERED: 5 June 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: Justice O’Reilly

HEARING DATE: 5 June 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Canning of Counsel

SOLICITOR FOR THE APPLICANT: K A Taylor, Solicitor

COUNSEL FOR THE RESPONDENT: Mr McGregor of Counsel

SOLICITOR FOR THE RESPONDENT: SBA Family Lawyers

IT IS ORDERED

1. The time for the husband to file an application for review of the consent orders made on 22 June 2006 is extended to seven days from today.

AND IT IS ORDERED BY CONSENT

1. Upon the filing of the application for review the matter be transferred to the Federal Magistrates Court at Brisbane.

AND IT IS FURTHER ORDERED

1. The parties’ costs of and relating to the husband’s application to extend time are reserved to the Federal Magistrates Court.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRF1475 of 2006

MS ETTICH  

Applicant

And

MR ETTICH  

Respondent

REASONS FOR JUDGMENT  

1. On 28 June 2006 the parties entered into a consent final property order under s 79 of the Family Law Act 1975 (Cth).

2. The husband, by application in a case filed on 4 April 2007, applies pursuant to Rule 1.14 of the Family Law Rules 2004 for an order that the time under Rule 18.08 to allow the husband to apply for a review of the consent order be extended. 

3. It is common ground having regard to item 4 of Table 18.6, which appears under Rule 18.08, that for an order made by a Registrar exercising a power delegated under Rule 18.06 an application for review is to be made within seven days.  It is item 4 which applies to the present case because the consent order was made by a Registrar exercising delegated power.

4. Rule 1.14 provides that a party may apply to the Court to extend a time that is fixed under the Rules and that such application may be made even though the time fixed by the rule has passed.

5. It seems to be common ground between Mr Canning of Counsel who appeared for the husband and Mr McGregor of Counsel who appeared for the wife that the principles relating to the exercise of the discretion to extend time, whilst not fixed so as to fetter the exercise of the discretion, nonetheless generally require a consideration of the following factors:  (1) the reasons for the delay and whether the delay is satisfactorily explained; (2) an appraisal of the prospects of success, that is, whether there may be a more favourable order if the extension of time is given, bearing in mind that a review of this nature is, if time is extended, as of right and de novo;  (3) the harm or injustice that might be worked upon the applicant if the time is not extended; and (4) the prejudice to the respondent if time is extended; but having regard also to such other factors that the particular circumstances of the case might throw up for consideration, for example, whether there may have been any vitiating factor in relation to the giving of consent by a party to a consent order.  The discretion can only be exercised upon proof that strict compliance with the Rules will work an injustice upon the applicant.  In order to determine whether the Rules will work an injustice it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of the application.  See Gallo v Dawson (1990) 93 ALR 479 at 480-1 per McHugh J; Prowse v Prowse (1995) FLC 92-557 at 81,568 to 81,573 but in particular 81,572-3; and Morrison v Morrison (1995) FLC 92‑573 at 81,674.

6. It is plain that none of the factors to which I have referred necessarily is more significant than another, but that having regard to their impact in a particular case, in the balancing exercise looking at all of the relevant factors together it is part of my function to give such weight to each of the factors as I consider appropriate and then ultimately to decide where, in the balancing exercise, the justice of the case lies.

7. I will therefore look briefly at each of what I consider to be the relevant factors which indeed are those advanced by Counsel as the relevant factors.

Reasons for the delay and whether the delay is satisfactorily explained

1. The consent order under s 79 was made on 28 June 2006 either during or after a case assessment conference. At that time and date the husband was suffering cancer and had undergone extensive chemotherapy treatment ceasing only three weeks before the case assessment conference. The husband said that two days before the Court date he caught the train from the Gold Coast to Brisbane to attend the conference, as he was not well enough to drive. He said when he attended Court he had lost all his hair; he was sweating profusely; and extremely nauseous. He said that his solicitor asked if he was “okay” and that he lied and said that he was well enough to proceed. He said however that he was still suffering from the residual after affects of his chemotherapy treatment and, significantly, I would point to his evidence at par 21 of his affidavit that these residual after affects of the chemotherapy continued for approximately six months after the chemotherapy ceased.

2. As to his consenting to the order, the husband says (par 23):

   … [The wife]’s solicitor made an Offer of me receiving 57% in my favour of the net asset pool and [the wife] receiving 43%.  When I was considering this Offer, my then solicitor, while observing my obvious ill health, asked me whether I was feeling alright.  I was feeling like I was about to vomit, pass out and my head was spinning.  I immediately agreed to the Offer to put an end to the Court Proceedings and leave the building.  I instructed my then solicitor to give me the Court Documents to sign which I did and I then immediately left.

3. The husband annexes to his affidavit and relies upon two brief reports by Dr S, his oncologist, the first dated 18 May 2006, annexure A, that date being the month before the consent orders were made, identifying the nature of the husband's cancer as non-Hodgkin's lymphoma which had relapsed in early 2006.

4. Dr S’ second report, annexure D, is dated 20 February 2007.  It refers to the husband being under his care for follow up of non-Hodgkin's lymphoma.  He said that the husband had an intensive chemotherapy program commencing in March 2006 with the final dose of treatment administered on 3 June 2006, and that as a consequence of the chemotherapy program and nature of the underlying disease process the husband was severely debilitated physically and emotionally through this time.  Importantly, he said that there is some suggestion of transient cognitive impairment as a consequence of chemotherapy programs of this nature, although he then qualified that.  The doctor's report concluded that certainly the situation at that time “through June 2006” was such that the husband would not have been acting in his full capacity at that stage.

5. The husband says (affidavit, par 26) that after the making of the consent order his former solicitor left her employment and he says that there was no advice given to him regarding a possible review application or a setting aside application.  He says also that he felt that with his former solicitors there was no consideration of his wish to reopen his application or to amend the consent order dated 28 June 2006. 

6. Mr McGregor of Counsel, for the wife, points out correctly that the husband does not offer any evidence as to when precisely he became dissatisfied with the consent order and when precisely he became aware of his right to seek a review, nor does he say when he consulted his new solicitors, nor when he received advice that he had a right, or had formerly had a right, to seek a review and an existing right to seek an extension of time for a de novo review of the order.

7. However the husband, it appears by reference to par 29 of his affidavit, was not just in ill health preceding and at or about the time of the consent order, but for the last six months has had a "constant cough".  That affidavit was sworn on 21 March 2007, which would take the matter back to about September 2006, there being roughly six months between September 2006 and March 2007.  It would appear thus that if the husband has not been in continuous ill health since the date of the consent order, he certainly had ill health at the date of the consent order and has suffered a bout of ill health again since, though ill-defined, between about September 2006 and the bringing of his application in March 2007.  In relation to the period of the last six months the husband said that his Gold Coast doctor referred him for an X-ray and CAT scan, seemingly because of his constant cough, and discovered cysts and lesions on his liver and kidneys, which the doctors are uncertain may or may not be cancerous.  He thus attended again with Dr S, his oncologist, who ordered ultrasound, which indicated that the lesions were too small to indicate whether they were cancerous and that he is to have another ultrasound in about four months time by way of follow up.

8. Whilst these matters certainly do not cure the deficiencies identified by Mr McGregor, in my view they satisfactorily explain the husband's delay irrespective of the precise date on which he became dissatisfied with the consent order and the precise date upon which he became aware of his former right to a review and his current right to seek an extension of time for a review. 

9. The period of the delay, since the expiry of time, is about 10 months until the husband filed his application in April 2007.  Plainly it is not the fault of the husband that it has taken the Court two further months to list the matter for hearing. 

10. It seems to me, overall, that the husband satisfactorily has explained the period of delay of 10 months by reference, generally, to his ill health and though it is desirable it is not always incumbent on an applicant for an extension of time to say the precise date on which he became dissatisfied with the order and the precise date on which he became aware of his rights.

An appraisal of the prospects of success if time is extended

1. The husband relies on the circumstances set out at pars 22, 26 and 38 of his affidavit. In his view, there were misapplied valuations in relation to the parties' furniture and chattels in that the furniture which the wife had in her possession, he says, had been insured for about $140,000; he claimed it had a value of $20,000; the wife said $5,000; and he agreed to allocate $5,000 to both the furniture in her possession and the furniture in his possession.  In retrospect he says that the furniture retained by the wife is valued at about $60,000 and that retained by him about $20,000.  He says that the wife's motor vehicle, for the purpose of the consent order, was valued at $6000 where it ought to have been $18,000; and that whilst her financial statement placed a valuation on her superannuation of about $32,000, he had not received financial documents to support this.  He says the wife owns and conducts a business which, she said, had no value, but which appeared to be financially viable and performing well.

2. In addition, the husband says that the mortgage on the parties' former matrimonial home had increased from about $90,000 at the date of separation to about $158,000 at the time of the case assessment conference, inferring a benefit to the wife not taken into account in the consent order or its making.  Further, he says, in about 1997 he received about $80,000 inheritance from his mother which was applied to build up property in the pool; in 2001 he received a superannuation payout of $475,000 of which $25,000 was applied to the overdraft on the house and the balance to QSuper which was later transferred to his Macquarie Bank savings account with a current balance of about $580,000; and that in 2001 he also received an MLC policy payment of about $35,000 applied to meeting household expenses; all of which he regards as special financial contributions which either were not taken into account or were taken into account inadequately.  He describes also inadequate disclosure by the wife, as claimed by him, as affecting the fairness of the consent order.

3. Mr McGregor, on this aspect of the matter, said that the history and facts of the matter, in particular in relation to a 32 year marriage in which each of the parties started with little, indicated that the Court properly would conclude in favour of a 50/50 split but for two factors, namely the husband's inheritance, to which I have referred, and the husband's cancer diagnosis which, he said, was a two‑edged sword but may have effect under s 75(2).  However, Mr McGregor said a deficiency in the husband's case is that he does not point to what s 75(2) adjustment, if any, he says should have been made.  Mr McGregor says also that the husband's superannuation and its use ought to be ignored as a special contribution because after all the parties had been together for some 32 years.

4. It seems to me, having regard to the matters raised by the husband, and taking into account also the submissions and observations of Mr McGregor, that it is more likely than not that there may have been some matters not taken into account, or adequately taken into account, at the case assessment conference which, if taken into account, or adequately taken into account, may have resulted in a more favourable split in favour of the husband.  Sitting here at this moment I cannot, of course, determine necessarily that there ought be a more favourable split for the husband, but I am satisfied that there are at least substantial issues to be raised for the determination of the Court which, on all of the evidence, it appears may not have been taken into account or adequately taken into account when the consent order was made, with the result that the husband may not have received a just and equitable property division.

Any vitiating factors relating to the husband's consent

1. I have referred already to Dr S' evidence and in particular his evidence in his report, annexure D, that at the time of the husband's chemotherapy treatment and "through June 2006", which of course was the time of the making of the consent order, the husband “would not have been acting in his full capacity at that stage".

2. Mr McGregor properly pointed to the circumstance that there is no evidence that the husband lacked legal capacity, and there is no evidence that, at the date of the consent order, the husband was not capable of resolving his dispute.  Mr McGregor urged that I should look at what Dr S did not say, rather than what he did say.  However, when dealing with capacity, I am not sure that it is a valid distinction.  It is sufficient, I think, for present purposes, to accept Dr S’ evidence that the husband would not have been acting in his “full” capacity for the purpose of considering the justice of the case and whether, by reason of that, an injustice may have occurred. I accept Mr McGregor’s submission that there is no evidence that the husband lacked legal capacity.  However, the husband does not base his case on lack of legal capacity, as such, but rather on his state of ill health (as described) which, he infers, affected the decision he made to consent to the order.  See, in particular, par 23 of his affidavit, referred to above.

3. Mr McGregor also relied on the circumstance, as admitted by the husband in par 21 of his affidavit, that he lied to his solicitor on the occasion of the making of the consent order and thus, by inference in the submission, has forfeited the right to say now that he was unwell or did not have capacity or sufficient capacity to bring his mind properly to the consent exercise.

4. I do not accept this submission.  The circumstance of the husband lying to his solicitor, in context, is explained in par 21 of his affidavit, to which I have referred. 

5. In summary, on this aspect of the matter, as the husband did not raise, or seek to prove, lack of legal capacity as a vitiating circumstance, it is not incumbent on me to make a finding as to whether he did or did not have legal capacity.  Rather, as I have explained, the husband’s state of ill health is the matter which he raised for my consideration as explaining his course of conduct, both at the time of agreeing to the consent order, and subsequently until he filed his present application.

Injustice to the husband

1. I have referred already to the circumstance that, by agreeing to the consent order, the husband may not have received a just and equitable property division.

2. I would add that it is axiomatic that before pronouncing any s 79 property order, including any proposed consent order, an officer of the Court, properly informed as to all relevant matters, must be satisfied that the proposed division is just and equitable. The particular matters as to potentially misapplied valuations; the non inclusion of the value of the wife’s business; the alleged benefit to the wife of moneys representing increase in the mortgage on the former matrimonial home; the matters of special financial contribution referred to and claimed by the husband; and his allegation of inadequate disclosure by the wife are all matters which, in all of the circumstances, the Registrar exercising delegated power who approved the consent order may not have had proper opportunity to consider, particularly as the consent order arose out of a case assessment conference and not a trial.

Prejudice to the wife

1. Against this, the wife relies on the circumstance that since the consent order was made, and in reliance on it, she has used the proceeds of sale of the former matrimonial home, which she obtained pursuant to the order, $214,864, towards the purchase of a new residence for herself in the sum of $370,000 in relation to which she borrowed $101,000 from the Commonwealth Bank of Australia and $50,000 from a friend.  Mr McGregor points to the circumstance that not only has the wife thus changed her position, but that pursuant to the order she is yet to receive about $120,000 from the husband, which the wife relies on in order to be able to discharge the debt to her friend and part of the debt to the bank.  He said that if the order is reviewed then the repayment of these amounts by the wife, at best, would be extended for a longer period by the requirement of the payment of further interest, but that in addition to that there would be prejudice by the fact of having to face a trial, the cost of this application and the cost of a trial. 

2. Mr Canning however relied on the circumstance that although the wife has made these changes in reliance on the consent order, the position of the wife is not irremediable or unalterable in the sense that if there is now to be a trial the obligation of the Court will be to look at the assets of the parties and each of them as at the date of the trial and to assess contribution accordingly. 

3. It is not at all an unusual circumstance that sometimes between the date of a separation and the date of trial assets have changed in nature, e.g. cash to real property; real property to cash; or real property to other real property. 

4. Mr Canning urged that the injustice to the husband, if the consent order is not a just and equitable property division, outweighs the prejudice the wife would suffer of having to face a trial which, plainly enough if the consent order had not been made, she would have faced anyway. 

1. Mr McGregor countered this by the submission that any consideration of the justice of the case must take into account that if the matter is now to be litigated, ore relitigated, it is unlikely that the husband would receive more than the 57% division of the pool which he achieved by way of the consent order, so that, upon proper consideration, the prejudice to the wife now in having to face a trial should result in the refusal of the husband’s application.

Analysis and balancing exercise

1. I have taken into account all of the written and oral submissions of the parties, whether or not specifically referred to, and all of the evidence, whether or not specifically referred to. I have endeavoured to identify above the more significant rather than the less significant matters affecting the exercise of my discretion. I have determined that the husband's delay is satisfactorily explained. I have determined also that he has satisfied me that there are substantial issues to be raised by him at a trial which previously may not have been taken into account, or adequately taken into account, with the result that he may not have received a just and equitable property division. Both of these factors would seem to favour the exercise of the discretion in the husband’s favour. I have taken into account that the husband did not raise, and I therefore need not determine, whether at the time of giving his consent he lacked legal capacity, as such, but that rather he has raised for my consideration his state of ill health as explaining his course of conduct in agreeing to the consent order; and that it is axiomatic that before pronouncing a s 79 order an officer of the Court, properly informed as to all relevant matters, must be satisfied that a proposed division is just and equitable. I have taken into account also the finely balanced arguments of injustice and prejudice as raised by each of the parties.

2. I take into account overall the statement of principle by McHugh J in Gallo v Dawson (above) that:

   The discretion [to extend time prescribed by the rules] can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time.

3. In my view, having carefully considered and weighed all of these matters, I conclude that if I were to refuse the husband's application for an extension of time, there would be an injustice worked against him. 

4. On balance therefore, having made this finding, it is proper in the exercise of my discretion that I extend the time for his filing of an application for review to seven days from today. 

ARGUMENT ENSUED 

HER HONOUR:  And then I'll simply order that, upon the filing of the application for review, the matter be transferred to the Federal Magistrates Court.

ARGUMENT ENSUED 

HER HONOUR:  Thank you.  The first order will be by me and the second order by me by consent.  Thank you very much for your assistance.

MR McGREGOR:  Your Honour, I do want to be heard in relation to the question of costs.

ARGUMENT ENSUED 

HER HONOUR:   Very well, I will add on as order 3, the parties' costs of and relating to the husband's application to extend time are reserved to the Federal Magistrate's Court.  

I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O'Reilly.

Associate

Date: 5 June 2007