Hamblin and Wheaton

[2019] FCCA 1761

FEDERAL CIRCUIT COURT OF AUSTRALIA

HAMBLIN & WHEATON [2019] FCCA 1761

Catchwords:
FAMILY LAW – Application for extension of time – where the applicant would face hardship if extension was not granted – where alteration of property interests and superannuation splitting or flagging order appropriate – extension granted – order for costs.

Legislation:

Family Law Act 1975 (Cth), s.44(6)

Federal Circuit Court Rules 2001 (Cth)
Family Law Rules 2004 (Cth)

Cases cited:

In the Marriage of Whitford (1979) 24 ALR 424

Sharp & Sharp (2011) 50 Fam LR 567

Applicant: MS HAMBLIN

Respondent: MR WHEATON

File Number: ADC 2089 of 2017

Judgment of: Judge Young

Hearing date: 21 May 2019

Date of Last Submission: 21 May 2019

Delivered at: Adelaide

Delivered on: 21 May 2019

REPRESENTATION

Counsel for the Applicant: Mr Dillon

Solicitors for the Applicant: Tindall Gask Bently

Counsel for the Respondent: Ms Burckhardt

Solicitors for the Respondent: Adelaide Lawyers

ORDERS

1. That pursuant to section 44(6) of the Family Law Act 1975 ("the Act") time is extended for the filing of the applicant de facto wife's Initiating Application to 18 March 2019.

2. The respondent de facto husband do pay the applicant de facto wife's costs of this application.

3. The solicitors for the applicant provide to the solicitors for the respondent a schedule of their costs pursuant to the Federal Circuit Court Rules 2001 within 28 days and if costs cannot be agreed the issue of costs will be determined on the adjourned date be listed before the Court for determination.

4. Pursuant to Regulation 10.05 of the Federal Circuit Court Rules 2001, the parties and their legal representatives do attend a Conciliation Conference with a Registrar of the Federal Circuit Court on 11 July 2019 at 11.00am.

5. That within twenty eight (28) days of the date of this Order, the parties do provide mutual informal discovery of all documents relevant to the issue of property settlement that are or have been in their respective possession, custody or control.

6. That within twenty eight (28) days of the date of this Order the parties do jointly appoint a single expert witness pursuant to Rule 15.44 of the Family Law Rules 2004 to carry out a valuation of any asset the value of which remains in dispute with the cost of any necessary valuation report(s) to be met in equal shares by the parties.

7. The matter be otherwise adjourned to 21 August 2019 at 9.30am for mention.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 2089 of 2017

MS HAMBLIN

Applicant

And

MR WHEATON

Respondent

REASONS FOR JUDGMENT

Ex-Tempore

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

2. This is an application for an extension of time pursuant to section 44 of the Family Law Act 1975 in relation to a de facto relationship. The parties agreed that the question addressing extension of time should be dealt with as an interlocutory matter on the papers and I proceeded to deal with it in that way. 

3. The chronology as far as I can tell is as follows. The parties appear to agree that in 2007 they commenced living together.  They disagree about when they separated. The de facto wife says that separation occurred after a period of disharmony in January 2017.  The de facto husband says that the parties separated in July of 2016 but they continued to live together under the one roof for another six months.

4. Having regard to the state of the evidence, I do not believe I can make a finding about which of those claims is true and certainly not on the basis of a hearing on the papers in an interlocutory hearing. In my view, it is not necessary to make a finding because the de facto wife’s application is made more than two years after separation on any view.

5. On the separation date in January 2017 claimed by the wife the application, which was commenced on 18 March 2019, was approximately two months out of time, being two years and two months after separation. On the de facto husband’s timeline, this is brought two years and eight months after separation.  In any event or on any view of the evidence, an extension of time is necessary if the de facto wife is to pursue her claim.

6. I will say something else about the chronology. The de facto wife commenced proceedings by seeking parenting orders on 26 May 2017 but did not seek property orders. Orders were made on 13 August.  Although the order does not record that it was made by consent, I suspect it was made by consent (though that finding is not necessary to my ultimate conclusion today), which was to the effect that the proceeds of sale of the former matrimonial home were to be placed in a trust account requiring the signature or agreement of both parties or a court order before they could be disbursed. That was in reality a property order that was made by the court.  I suspect it was made by consent because, simply, the fact that property proceedings had been commenced at that time and it is unlikely that a court would have made what amounted to a property order in those circumstances other than by consent. As I say, it is a finding that is not necessary to my ultimate conclusion.

7. On that date, the de facto husband was also ordered to file an initiating application in relation to property and the de facto wife was ordered to file a response within a time limit. There was an order for a conciliation conference to be held on 10 October 2018 and trial dates were set in November 2018 for parenting and property matters. It is apparent from the nature of the orders made on that date that there had been no point taken by the de facto husband at that stage that any property application would be out of time. Whether the parties turned their mind to the question, I do not know. In any event, it makes no difference for the reason I have already mentioned that an extension of time is necessary if the de facto wife is to proceed.

8. On 5 December 2018, the parties resolved their parenting issues with a consent order which concerned the three children of the parties who are aged seven, five and three at present.  The consent orders provided for the children to spend Friday and Saturday nights with their father or Friday and Saturday and Saturday night with their father on alternate weekends and for the children to spend each Wednesday, including Wednesday night, with their father. As at least one child was of school age, it would appear that what was intended by those orders was that on each Wednesday and Wednesday night the father would care for the two younger children. In any event, those orders provided for the children to spend four nights a fortnight with the father. The consent orders also provided that from 2021 the time the children spent with the father would increase with the addition of Sunday night on the alternate weekend, so from 2021 the time will increase to five nights a fortnight with the father.

9. There are also orders that not before October 2021 and no later than April 2022 the parties are to enter into a mediation regarding the further care arrangements for the children. It is apparent from those orders and from the other uncontested material before me that since separation, whenever it occurred, the children have spent most time living with the mother and that she has been primarily responsible for their care and will continue to be primarily responsible for their care until at least October 2021. A period of approximately the past two and a half to three years which will continue for another two and a half years to three years. In any event, there is no guarantee that arrangements will change at that point.

10. The de facto wife works as a health care worker and if she were to work fulltime it appears at least apparent that she would be capable of earning an income of well in excess of a hundred thousand dollars a year. She cares for the children and is working four days a fortnight or two days a week.  The de facto husband, who is a professional, has ceased working full-time for some time to care for the children and he appears to work seven and a half days a fortnight.

11. The parties agreed on the relevant law. They both referred to the Full Court of the Family Court decision in Sharp & Sharp (2011) 50 Fam LR 567 and in particular at paragraphs 17 through to 21, where the Court referred to an earlier Full Court decision of In the Marriage of Whitford (1979) 24 ALR 424.

12. To summarise the position as I understand it, it is necessary for an applicant for an extension of time to demonstrate that there is a prima-facie case for alteration of property interests and that the gain to the applicant, should the proceedings go ahead and the applicant be successful, must be more than trifling. I am happy to concede in reference to a submission from Ms Burckhardt, who used the word “substantial”, that they are probably the same thing in the circumstances, that is, there be some substantial benefit to be gained. An example is given in the decision of Re Whitford, where the costs to be incurred by the party pursuing the claim were equal to, at least, the amount to be recovered. That would not constitute hardship. 

13. Nevertheless, as the Court makes clear at paragraph 21, depending on the circumstances of the case, the hardship caused to an applicant may involve a comparatively small money value. The other issue which is to be applied in the calculus required in this sort of application is whether or not there is hardship likely to be caused to the respondent should the application succeed. So there is a balancing act.

14. The assets of the parties at the moment consist of some $250,000 held in a trust account consisting of the proceeds of sale of the former matrimonial home which was sold in August last year pursuant to consent orders, as I believe in all probability. That money is held pending further order of a court or agreement of the parties to disburse the money.  There is also, presumably, some household effects and other chattels of relatively insignificant value.

15. The other significant interest of the parties or interests of the parties concern their superannuation. The de facto husband’s superannuation consists of about $161,000 in an accrual fund as I understand it and similarly the de facto wife’s superannuation amounts to about $96,000 in an accrual fund. It appears that the bulk to the superannuation of both parties was built up during the period of the relationship. The de facto husband says, and the de facto wife seems to accept this, that apart from about $18,000 which the de facto husband had in his superannuation at the beginning of the relationship, the rest of the superannuation has been built up during the period of the relationship.

16. In my view, it is open to the court to conclude that superannuation was really either a savings vehicle of the parties or that the parties should be seen as having contributed almost equally to the accrual of the total superannuation, particularly bearing in mind that it would appear that during the period of the relationship the de facto husband was primarily responsible for working and bringing in the money and the de facto wife worked less because of her commitment to care for the children. In those circumstances it is almost unavoidable that there would be an approach by the court that saw something approaching an equalisation of superannuation interests.

17. The other matter is the money in the trust account in cash. The de facto husband says that there is not likely to be any order for anything other than a 50-50 split of that money. In other words, he asserts that prima-facie there will be no alteration of the interests beyond what would be the position in equity, where in a joint fund derived from, in this case a jointly owned home, that adopting the position of equity as equality, that there would be anything other than a 50-50 split. I am not satisfied that is the case.

18. I think in circumstances where the de facto wife is primarily responsible for looking after children, quite young children, one of whom at least is not yet of school age, and will continue in all probability to be responsible for the primary care of those children until at least October 2021, in my view, an adjustment or an alteration of the prima-facie equal division of that sum is likely. 

19. Mr Dillon also submitted that there is an additional element of hardship with regard to the de facto wife. He submits that if she is not given an extension of time not only is she going to be deprived of what is a not trifling or substantial monetary advantage over the 50-50 split, notional 50-50 split of the $250,000, but she will also be unable to obtain a superannuation splitting, or flagging order, in relation to the de facto husband’s superannuation, where the parties at present are the joint owners of a fund where she cannot access the money. She has sworn an affidavit saying that she wants to access money in order to purchase a property for herself and the children to live in until there is agreement by the de facto husband on whatever terms he seeks to impose that she cannot access that money and that constitutes hardship.

20. I accept that argument. I accept that being kept out of some minimum entitlement of approximately $125,000, on the de facto husband’s own case, for what is not a substantial period, since August of 2018, constitutes hardship because she cannot either buy a property or make other appropriate arrangements. I am satisfied that there is likely to be an alteration of property interests between the parties or a superannuation splitting or flagging order and that the benefit to the de facto wife, should she be permitted to bring proceedings, is not trifling and is substantial.

21. I am not told what the legal costs might be but I am not satisfied that her legal costs are likely to be equal to or outweigh any benefit she obtains.  So propose to make an order extending time for the de facto wife to comment proceedings to 18 March 2019, which was the date that proceedings were commenced.

22. There is a costs application. Unfortunately the successful de facto wife does not have a schedule that she is able to provide me which sets out the costs claimed under the Rules. Mr Dillon asked that if I were to make a costs order, that the costs be taxed or agreed. I am reluctant to do that because, as I say, in this court the costs schedule is pretty clear and I would have thought it was a very straightforward matter to give me a schedule of the costs that the de facto wife was seeking according to the Schedule 1 in the Circuit Court Rules. That has not happened. I consider that an order for taxation is likely to lead to unnecessary expense.

23. However, I do propose to make an order for costs and I will reserve the amount of the costs to another day when the parties, particularly the de facto wife, are in a position to give me appropriate submissions and information. In my view, this case merits a departure from the general rule in section 117 that parties bear their own costs. It is apparent to me from the orders that were made on 13 August, including a property order referring to the property jurisdiction of the court by consent in circumstances where they were both represented, that it was contemplated that after the filing of appropriate proceedings the court would determine property matters.

24. The de facto husband has had a change of heart. Why that is I don’t know but at the point, 13 August 2018, on the de facto husband’s version of reality the de facto wife’s application was merely one month out of time. On the de facto wife’s version of reality it was within time and that objection was not taken by the de facto husband when the de facto wife’s application was still within time on her version but not his.

25. I am unable to make a finding that the de facto husband has stood by and let the de facto wife act to her detriment by not commencing proceedings within time but it is, certainly, a suspicion that occurs to me. If that were the case, it would be entirely tactical conduct unrelated to the merit of the proceedings. In my view, the position taken by the de facto husband lacks merit.  It was technically open to him but it lacks merit and it is associated with the suspicion that I have just mentioned.

26. In my view, those circumstances merit a costs order and I will make an order that the de facto husband pay the de facto wife’s costs of this application and I am going to direct that the de facto wife is to serve a schedule of the costs claimed pursuant to the Circuit Court Rules on the respondent de facto husband within 28 days and, if there is no agreement, the matter is to be relisted before me for determination of the de facto wife’s costs.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Young

Date:  25 June 2019