GAMMA & SERRITELLA

[2015] FamCA 283

FAMILY COURT OF AUSTRALIA

GAMMA & SERRITELLA [2015] FamCA 283

FAMILY LAW – PROPERTY SETTLEMENT – INTERIM PROCEEDINGS – APPLICATION FOR LEAVE PURSUANT TO S44(3) OF THE FAMILY LAW ACT 1975 – Where the parties cohabited for approximately ten years – Where there are three children of the marriage – Where two children are in the care of the wife and one child in the care of the husband – Where the wife says she will suffer hardship because she is financially impecunious and has no assets of significance – Where the husband made an offer of settlement and completed an Application for Consent Orders shortly after separation – Where the wife asserts that the reason for the delay was because the husband threatened to kill her if she signed the Application and told her that she would get more if she waited longer – Where the husband says his liabilities exceed his assets – Where the husband did not provide evidence to substantiate his assertions – Where the prejudice to the husband does not outweigh the hardship to the wife if she cannot pursue her claim – Leave granted to the wife to institute proceedings out of time.

Family Law Act 1975 (Cth) s 44

Whitford & Whitford (1979) FLC 90-612
Montano & Kinross (2014) FLC 93-623

APPLICANT: Ms Gamma

RESPONDENT: Mr Serritella

FILE NUMBER: SYC 2674 of 2010

DATE DELIVERED: 22 April 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 14 April 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT: KP Lawyers & Barristers

COUNSEL FOR THE RESPONDENT: Mr Schonell

SOLICITOR FOR THE RESPONDENT: Dettman Longworth Lawyers

Orders

IT IS ORDERED

1. That leave be granted to the wife to institute proceedings for property settlement out of time.

2. That, pending further order, the husband be restrained from selling, transferring or encumbering the property at B Street, Suburb C; his interest in any company and his interest as a beneficiary of the Serritella Family Trust.

3. That the husband have liberty to apply on the giving of 21 days’ notice in relation to Order 2.

4. That the matter be referred to the Registrar to be listed for directions.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2674  of 2010

Ms Gamma

Applicant

And

Mr Serritella

Respondent

REASONS FOR JUDGMENT

1.Ms Gamma (“the wife”) commenced co-habitation with Mr Serritella (“the husband”) in 1997/1998 and they married in 2004. The wife had no significant assets at the commencement of the relationship. The husband asserts that he had net assets of $250,000.

2.There are three children aged 15 years, 14 years and 12 years.

3.The husband and the wife separated in approximately June 2008, the children remaining in the care of the wife until June 2014 when the eldest child moved to live with the husband.

4.A decree nisi was pronounced on 3 June 2010. The Divorce Order took effect on 4 July 2010. Thus any application for property settlement was required to have been filed before 4 July 2011.

5.No such application was filed and the wife now asks the Court to make an order permitting her to file an application out of time.

THE LAW

6.The wife’s application proceeds pursuant to the provisions of s44(3) and (4) of the Family Law Act1975 (Cth) (“the Act”), the relevant portions of which are set out below:

FAMILY LAW ACT 1975 - SECT 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.

(4) 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

7.The law in relation to applications of this nature is well settled. In Whitford & Whitford (1979) FLC 90-612 (“Whitford”), the Full Court held at [78144]:

Thus, on an application for leave under sec. 44(3), two broad questions may arise for determination. The first of these is whether the Court is satisfied that hardship would be caused to the applicant or a child of the marriage if leave were not granted. If the Court is not so satisfied, that is the end of the matter. If the Court is so satisfied, the second question arises. That is whether in the exercise of its discretion the Court should grant or refuse leave to institute proceedings.

The provisions in subsec. 44(3) and 44(4) have been considered in various unreported decisions and in McDonald's case (supra), In the Marriage of Mosaj (1978) FLC ¶ 90-431 and in McCarron and Unsworth (1978) FLC ¶ 90-444 . In view of what appears to us to be a divergence of opinions, we deem it appropriate to state what our appreciation of these provisions is. 

The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted. The loss of the right to institute proceedings is not the hardship, to which the subsection refers. It is with the consequences of the loss of that right, with which the subsection is concerned. The requirement, that the Court must be satisfied that hardship would be caused if leave were not granted, implies that it must be made to appear to the Court that the applicant would probably succeed, if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted. If the probable result of the hearing on the merits is that the hardship is not likely to be alleviated, then the Court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted. 

8.As to the interpretation of “hardship” in this context, their Honours Asche, Pawley S.JJ and Strauss JJ said at [78145]:

In ordinary parlance, hardship means something more burdensome than ''any appreciable detriment'' . We consider that in subsec. 44(4) the word should have its usual, though not necessarily its most stringent, connotations. It is impossible to lay down in advance what particular facts may or may not amount to hardship in the relevant sense. As a general proposition it might be said that, the inability of an applicant to pursue a claim which in the circumstances of the applicant or a child of the marriage  is trifling, generally will not cause hardship. Similarly, where the costs which the applicant will have to bear himself or herself are about as much or more than what the applicant is likely to be awarded on a property claim, ordinarily hardship would not result if leave to institute proceedings were not granted. But otherwise we find no warrant in either subsec. 44(3) or 44(4) for saying that the right or entitlement lost must be a substantial one. 

In an appropriate case, and depending on the circumstances of the applicant or the children, hardship may be caused by the loss or deprivation of something which is of comparatively small money value. In some cases, it may be a great hardship to an applicant if he or she is unable to gain something worth $1,000 or even less, whilst in other cases something of that value may be considered trifling.

9.Most recently, in Montano & Kinross (2014) FLC 93-623 the Full Court, per Murphy J, said at [12]:

In Whitford & Whitford (1979) FLC 90-612, this court set out a number of matters which may be relevant to the exercise of the relevant discretion in a particular case once hardship is established. Those criteria are frequently referred to. It must be understood, however, that, as might be expected where factors relevant to a broad discretion are enumerated, they are but illustrative of the sorts of issues that might inform the broad discretion in the circumstances of a particular case.

10.And at [14] and following:

Like many applications for indulgence, an application for leave to apply after the end of the standard application period requires the Court to exercise its discretion in a manner that, ultimately, is consistent with justice being done to both parties. The potential for injustice to the applicant being unable to pursue the remedy precluded by the refusal to grant leave must be compared to the prejudice to the respondent in the granting of leave. So, too, good or legitimate reasons for failing to do that which the Act requires must be compared with wilful blindness or recalcitrance. Equally, a desire to pursue a remedy out of time must be compared to the necessity for parties to proceed with their post-separation lives free of the spectre of prospective litigation, (see, for example, Gallo v Dawson (1990) 93 ALR 479, and the statutory requirements in section 81 of the Act).

This Full Court spoke in Whitford of “such matters as” the “length of delay, the reasons for the delay and prejudice occasioned the respondent by reason of the delay and the strength of the applicant’s case and the degree of hardship which would be suffered unless leave were granted”.  All of those matters were said by the Court to be “matters which affect the exercise of the discretion”.  Yet, this Court was at pains there to point out that those considerations were not exclusive of the matters to be considered in the exercise of the broad discretion; an overall requirement to do justice between the parties is the ultimate criterion.  The strength or weakness of, or the relative weight to be attached to, those various matters in the exercise of the discretion must necessarily depend on the facts of the particular case.  This court said explicitly in Whitford that “these matters are not necessarily the only ones”. 

11.In Whitford, the Full Court said at [78145] – [78146]:

Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship. In some cases, where a resolution of the property or financial relationships of the parties is desired, it might be, that the applicant would receive no more or even less, than he or she already owns at law or in equity. Nevertheless, hardship might be caused to the applicant if leave were not granted so as to facilitate such resolution. Examples where this kind of situation may arise are, where the matrimonial home has been left in joint ownership to enable the wife to continue to live there with the children for the time being or where a joint business venture has been continued to provide for the family. Where then circumstances arise which make it just, that the financial or property inter-dependence of the parties be terminated, hardship may be caused to an applicant if leave to institute proceedings were not granted. 

Similarly a party in relatively affluent circumstances may demonstrate an entitlement to maintenance because such party cannot support herself or himself adequately.  The word ''adequately''  in sec. 72 means much the same as fittingly or suitably, and what is adequate depends on all the circumstances of both parties. (See In the Marriage of Wales,  as yet unreported delivered on 1st May 1978, In the Marriage of Ferguson (1978) FLC ¶ 90-500 .) 

If the Court is satisfied that hardship would be caused if leave were not granted, the Court may exercise the discretion which is conferred upon it by sec. 44(3) to grant leave or it may refuse such leave. Section 44(4) inhibits the granting of leave unless the requisite case is made out, but it does not provide that leave must be granted if the Court is satisfied that hardship would be caused.

The determination how this discretion should be exercised, must depend on the facts of the particular case. Due weight must be given to the expressed legislation intendment that ordinarily, proceedings should be commenced within a year from a date of the decree nisi, and the general policy of the Act which appears from sec. 44(3) and sec. 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.

WOULD THE APPLICANT SUFFER HARDSHIP IF LEAVE WERE NOT GRANTED?

12.At the commencement of the hearing, Counsel for the husband was given the opportunity to cross-examine the wife but declined to do so. Therefore the wife’s evidence, unless inherently improbable, is accepted as unchallenged.

13.The wife bears the onus of satisfying the Court that she would suffer hardship if leave were not granted.

14.It is her evidence that she made contributions to the improvement of assets, in that she assisted with the renovations of the property owned by the husband at B Street, Suburb C (“Suburb C”). Suburb C was purchased in the sole name of the husband after the parties commenced co-habitation. The wife does not assert that she made any contribution to the purchase money. Suburb C was substantially renovated. The wife is not aware of the source of the funds used for the renovations.

15.The wife also made a contribution as home maker and parent to the three children during the period of the parties’ relationship and she continued to make contributions as the children’s primary carer after separation.

16.It is the wife’s case that she does not know what the husband’s assets and liabilities are. She deposes that, during the marriage, the husband “kept all financial matters to himself”. Annexed to her affidavit are searches showing the husband to be the owner of Suburb C, subject to a mortgage to the Bendigo and Adelaide Bank Limited and that a person with the same name as the husband is an owner as joint tenant of two other properties in Suburb D and Suburb E.

17.Searches disclose that in June 2014, the husband was a director and secretary of two companies, F Pty Ltd and Serritella Pty Limited. The husband held two ordinary shares in each company.

18.The husband is a beneficiary of the Serritella Family Trust. In his affidavit filed in the proceedings, the husband deposes that the Serritella Family Trust owns a factory at G Street, Suburb H. That property was purchased during the marriage. The husband deposes that he and his brother are the beneficiaries of the trust. The husband does not put into evidence the financial statements of the Serritella Family Trust.

19.It is the husband’s case that his liabilities exceed his assets. He provides no documents to support that assertion.

20.The wife, in support of her assertion that she will suffer hardship if she is not permitted to proceed with her application, relies substantially on two matters.

21.Firstly, she is financially impecunious and relies on a Newstart Allowance as her main source of income. She has no assets of significance.

22.Secondly, the wife relies on an offer of settlement made to her by the husband. In November 2009, a letter was written to the wife by the solicitors for the husband. The text of the letter, in so far as it related to financial matters, is set out below:

We have received instructions in relation to both property matters and matters concerning the three children of the marriage. We have been instructed to put to you an offer in relation to both issues for your consideration, based on all factors to be considered pursuant to the Family Law Act.

Our client offers to:

1.Continue to pay the sum of $450.00 per week towards your rent until the purchase of a property or unit for you and the children, at which time this will cease;

2.The purchase of a property will occur within two (2) years from the date of the Financial Agreement or Consent Orders.

3.Fund up to a maximum of $500,000.00 towards the purchase of the property/unit. The purchase of such property is to be with direct consultation and agreement with the Husband;

4.The Property is to be purchased in your name and the children’s names jointly.

The Wife is to:

1.   Transfer all shares in [Serritella] Pty Limited and resign as Director and Secretary;

2.   Relinquish all right, title and interest in Units 1 and 2, [B Street, Suburb C]; and

3.   Relinquish all right, title and interest in the property held in the [Serritella] Family Trust

23.The letter concluded:

Could you please consider our clients proposal and indicate whether you are agreeable within 28 days. It is our view that in the interests of the parties, particularly the children, these matters are resolved swiftly and amicably given the costs, both financial and emotional, involved in litigating matters of this nature.

24.It is the wife’s case that the husband, by making this offer, conceded that she had a claim to adjustment of property worth a significant amount and that to forgo the opportunity to seek an adjustment in her favour would constitute hardship.

25.The making of the offer by the husband is sufficient evidence that the wife had a significant claim and I accept that she would suffer hardship if she were not allowed to pursue her claim.

SHOULD LEAVE BE GRANTED?

26.On 29 March 2010 a letter was written by the solicitor for the husband to the solicitors for the wife stating:

We refer to prior correspondence and note that your client has indicated to our client that no financial statement is required and that the original proposal put forward by us to her dated 6 November 2009, is acceptable to her.

27.On 6 April 2010 a letter was written by the wife’s solicitors to the husband’s solicitors seeking “complete disclosure” by the husband.

28.On 31 May 2010 a further letter was sent to the husband’s solicitors.

29.On 3 June 2010 a decree nisi was pronounced.

30.On 4 June 2010 the husband’s solicitors wrote to the wife’s solicitors indicating that an Application for Consent Orders was being prepared.

31.On 4 July 2010 the Divorce Order took effect.

32.On 7 July 2010 a draft Application for Consent Orders was forwarded to the wife’s solicitors. The letter stated, inter alia:

We have taken it upon ourselves to commence completing the Application for consent orders whereby our client has disclosed the property and liabilities in accordance with the required disclosure.

33.The draft Application, in Part I, set out the husband’s property as follows:

Real estate  $1,225,000

Furniture and personal effects  $10,000

Funds in bank etc  $12,500

Interest in any business  $180,000

Other property  $46,800

Total  $1,474,300

The liabilities were listed as:

Home mortgage  $980,000

Other mortgage  $350,000

Other liabilities  $7,000

Total  $1,337,000

34.In the wife’s column, the husband’s solicitor, under the heading “Value of the property the respondent will receive” wrote “$500,000”.

35.The husband disclosed a gross weekly income of $1,916.50 and gave his occupation as “[tradesman]/Director”

36.Under the heading “Financial Resources” the husband listed his interest in the Serritella Family Trust at $350,000.

37.No orders were attached to the draft Application.

38.On 11 August 2010 the husband’s solicitors wrote to the wife’s solicitors asking for a response to their earlier letter. The wife attended on her solicitor to complete the Application. She deposes:

Whilst I was there to discuss and complete the Consent Orders, I received a telephone call from [the husband] in [the solicitor’s] presence who said to me words to the effect of:

[Husband]:     “I will slit your throat. I’ll fuckin kill you if you do that to me. You will have to wait. The longer you wait the more I will give you.”

[Wife]:          “Relax. What are you talking about? I’m on my own now. I need somewhere to live.”

[Husband]:     “I will never do that to my kids. I will never leave them without a house. The longer you wait the more you will get.”

39.The wife deposes:

As [the husband] was a heavy cocaine user and mixed with criminals, I became fearful of continuing with the Orders and believed that he would be making the payment to me of five hundred thousand dollars ($500,000.00) agreed upon or more if I waited.

40.The wife deposes that from August 2010 she asked the husband on numerous occasions when she would get her money and on each occasion he told her that, the longer she waited, the more she would get. The husband denies that any such conversations took place. However I note that, despite the letters and documents in evidence, the husband also denies that he offered the wife $500,000.

41.In about June 2014 the wife had a conversation with a friend who told her:

[The husband’s girlfriend] said to me [the husband] is not going to give you a cent. You should get some advice because after 12 months from the divorce you can’t get anything.

42.It was the wife’s uncontested evidence that until this conversation took place she was not aware of the requirement to commence property settlement proceedings within twelve months from the date of the divorce. She deposes “I came to the realisation that I would never see the money promised unless I commence proceedings”.

43.The wife’s Initiating Application, Financial Statement and Affidavit were filed on 16 September 2014.

44.I am satisfied that the wife has provided an adequate explanation for the delay in filing the Application.

45.Against the hardship caused to the wife if leave were not granted, must be balanced the prejudice to the husband if leave is granted.

46.The husband deposes that he would be prejudiced if leave were granted because:

a)I have been in a relationship with [named] for over two years and she has made contributions to the children and me and [she] paid for a lot of the expenses of the children and myself such as clothing, food and entertainment.

b)I am no longer employed or engaged in any work and I am suffering from depression. I presently living (sic) with my mother at [Suburb I] and she is supporting me.

c)I have taken on debt and I owe (former partner) $336,000, (husband’s mother) $496,000, [Mr J] $80,000 and [Mr K] $50,000.

47.The husband also submits that the documents which will be needed to substantiate his financial contributions may not be available and that his mother and brother may no longer recall relevant events.

48.The relationship with the husband’s former partner ended in February 2015. Until that date, they lived together in a house which the husband says is owned by his brother and in which he deposes to having no interest. The husband did not provide any document to substantiate the alleged loan from her. Tendered in the wife’s case was a copy of a caveat lodged 27 October 2014 and referring to a loan agreement dated 22 July 2014. The husband’s solicitors were advised of the wife’s intention to file the present application by letter dated 14 July 2014. The loan agreement dated 22 July 2014 is not in evidence.

49.The husband gives no evidence of the circumstances of the loan. In July 2014 the husband had been unemployed, on his evidence, for a year and had no security to offer.

50.Similarly, in relation to the alleged loans from the husband’s mother and the two third parties, no loan agreements are in evidence and there is no evidence to explain why an unemployed man with almost no net assets is able to borrow such amounts or what was done with the money.

51.On the husband’s case, he has a property worth $1,400,500 with a mortgage of $905,000 and has been able to borrow a further amount of $962,000.

52.In addition the husband deposes to credit card debts of $45,000.

53.The husband deposes that his interest in the Serritella Family Trust now has no value.

54.The wife does not accept that the husband’s financial position is as he represents and he provides no relevant documents to prove his assertions.

55.The husband deposes to an assessment of tax for the last financial year and assessments for F Pty Ltd of tax and GST for the year ended 30 June 2014. Clearly, financial documents are available at least up to and including that time.

56.I do not accept that the documents relevant to the parties’ financial transactions as recently as 2008 are not available or, in the absence of any evidence, that the husband’s mother or brother may not recall relevant events.

57.The husband submits that it is unreasonable that he be put to the expense of conducting the proceedings. There is some force in that submission. However, the prejudice to the husband does not outweigh the hardship to the wife if she is not able to pursue her claim.

THE WIFE’S APPLICATION FOR INJUNCTIVE RELIEF

58.No submissions were made by either party in relation to this application.

59.The husband entered into a purported loan agreement after the wife commenced these proceedings and has allowed, without objection, a caveat to be lodged over Suburb C.

60.It is appropriate that the assets be preserved until such time as the matter is finally determined.

61.The husband is not prejudiced by the making of the order sought by the wife because it will be made pending further order and he will have the opportunity to bring the matter back before the Court if necessary in relation to that order.

THE APPLICATION FOR INTERIM PROPERTY SETTLEMENT

62.No submissions were addressed to this application and it is not appropriate to deal with it at this time.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 22 April 2015.

Associate:

Date:  22 April 2015