Handley and Tenneson & Ors
[2014] FamCA 441
•25 June 2014
FAMILY COURT OF AUSTRALIA
| HANDLEY & TENNESON AND ORS | [2014] FamCA 441 |
| FAMILY LAW – PROPERTY SETTLEMENT – Institution of proceedings – Application by the wife for leave pursuant to s 44(3) of the Family Law Act 1975 (Cth) to institute property settlement proceedings against the husband “out of time” – Whether the wife has demonstrated “hardship” – Factors to be considered in respect of whether the Court should grant leave – Hardship proven – Leave granted FAMILY LAW – PRACTICE AND PROCEDURE – SUMMARY DISMISSAL – Where the second, third and fourth respondents sought to have the wife’s application dismissed pursuant to rule 10.12 of the Family Law Rules 2004 (Cth) – Where the application was refused |
| Family Law Act 1975 (Cth) ss 44(3), 44(4), 75, 79(4) Family Law Rules 2004 (Cth) r 10.12 |
| Althaus & Althaus (1982) FLC 91-233; | ||
| APPLICANT: | Ms Handley | |
RESPONDENT: | Mr P Tenneson | |||
SECOND RESPONDENT: | Ms C Tenneson | |||
| THIRD RESPONDENT: | Ms H Tenneson | |||
FOURTH RESPONDENT: FILE NUMBER: | Mr A Tenneson SYC 4278 of 2013 | |||
| DATE DELIVERED: | 25 June 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 16 June 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: SOLICITOR FOR THE APPLICANT: | Mr Blackah Caroline Chung & Associates |
| COUNSEL FOR THE RESPONDENT: SOLICITOR FOR THE RESPONDENT: | Ms Lawson Marks Griffiths & Bova |
| COUNSEL FOR THE SECOND, THIRD AND FOURT RESPONDENTS: SOLICITOR FOR THE SECOND, THIRD AND FOURTH RESPONDENTS: | Mr Millar Robyn Sexton & Associates |
Orders
The wife’s application for leave pursuant to s 44(3) of the Family Law Act 1975 (Cth) (“the Act”) to institute proceedings under s 79 of the Act is granted and her Initiating Application filed 30 July 2013 is deemed to have been filed pursuant to that leave.
The application for summary dismissal of the wife’s Initiating Application contained in the Application in a Case filed by the second, third and fourth respondents on 28 February 2014 is dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Handley & Tenneson and Ors 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 4278 of 2013
| Ms Handley |
Applicant
And
| Mr P Tenneson |
Respondent
And
| Ms C Tenneson |
Second Respondent
And
| Ms H Tenneson |
Third Respondent
And
| Mr A Tenneson |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
Ms Handley and Mr P Tenneson were married in 1997 and divorced in 2011. The wife seeks leave to bring proceedings for property settlement out of time. The husband opposes the granting of leave. If leave is granted, the orders sought by the wife could affect the interests of Ms C Tenneson, Ms H Tenneson and Mr A Tenneson, the husband’s sister, mother and father. In the event that leave is granted, they seek that the wife’s claims against them be summarily dismissed.
Although the primary parties are divorced, for convenience I will refer to them as the wife and husband.
Applications
In accordance with her Initiating Application filed 30 July 2013, the wife sought orders to the following effect:
1.That within 28 days the husband pay to the wife the sum of $700,000.
2.In default that the respondents sell the property at [B Street], [Suburb D] and pay from the net proceeds $700,000 to the wife and the balance to the husband.
3.That otherwise the husband and wife retain the property in their respective possession or control.
4.That the wife have leave pursuant to section 44 (3) to initiate the proceedings.
In accordance with his Response filed 13 September 2013, the husband sought that the wife’s applications be dismissed.
By an Application in a Case filed 28 February 2014, amended orally to the refer to a provision of the rules of this Court, rather than those of the Federal Circuit Court, the second, third and fourth respondents sought that the wife’s application in relation to them be dismissed pursuant to r 10.12 of the Family Law Rules 2004 (Cth) (“the Rules”).
Documents read
The wife relied on the following documents:
· Affidavit of the wife filed 21 March 2014; and
· Financial Statement of wife filed 30 July 2013.
The husband relied on the following documents:
· Affidavit of the husband sworn 14 April 2014.
The second, third and fourth respondents did not rely on any sworn evidence.
Short History
The wife was born in 1962 and is currently 51 years of age. The husband was born in 1964 and is currently 50 years of age. They commenced cohabitation in 1992. They were married in March 1997 and separated in November 2005. They continued to live under one roof until January 2012 but were divorced with effect in November 2011.
The Hearing
The parties were all represented. Affidavits were sworn by the wife and husband and the wife relied on her Financial Statement. There was no request for cross-examination. The hearing was conducted on the papers and judgment was reserved.
Children
There are two children of the marriage namely; E who was born in 1999 and is 14 years of age and S who was born in 2002 and is 12 years of age.
The Background Facts
As will be discussed later, in relation to the proposed s 79 proceedings, the focus is very much on the case the wife seeks to make. It is perhaps understandable that no sworn evidence was relied on by the third parties and that the husband’s affidavit is largely silent on the history of the acquisition of the Suburb D property or financial arrangements in respect of the property. Albeit more in the style of a pleading rather than evidence, by bare denials, the husband flags in some paragraphs of his affidavit that he rejects some of the wife’s evidence.
The effect of the wife’s evidence is as follows:
The husband and wife started living together in 1992 in shared accommodation at Suburb F in Sydney.
They decided to buy a property together and inspected a number of properties including the property at B Street, Suburb D (“the Suburb D property”). The property was bought in about 1993 for $226,000. The husband and wife and later their children lived in the property together from 1993 until the wife moved out in January 2012.
The husband and wife were married in March 1997 and separated under one roof in November 2005.
The wife says that she discovered for the first time, from information contained in a divorce application served on her in 2011, that the Suburb D property was owned as to one half by the husband’s sister, as to 49/100 ths by the husband’s parents and as to 1/100th by the husband. It subsequently transpired that the husband only acquired his legal interest in the property in 2006.
Presumably in anticipation of moving out, in November 2011, the wife said to the husband “you have to give me some money, I can’t just leave, I’ve got nothing”. The husband proposed that they sell some shares. The wife agrees that in the period since November 2011 she received about $96,000 from the sale of shares. It is the wife’s evidence that she applied those funds to the purchase of a new car, to her rent, to purchase furniture and contents and for general living expenses. She has also travelled to the Gold Coast to assist her mother with the care of her father.
The wife currently lives in unsatisfactory rented accommodation. The children move freely between the households of their parents but there are no parenting orders in force.
The applications for leave and summary dismissal
It is convenient to first address the wife’s application for leave. If that application fails then there is no need to consider the third parties’ application for summary dismissal.
It is common ground that the wife requires leave to commence proceedings for property settlement. The divorce had effect in November 2011 and the wife did not file an application for property settlement within 12 months of that date. I note that her application for leave was filed on 30 July 2013. The wife was about eight months out of time.
The principles relevant to a section 44(3) application
In the context of these proceedings, s 44(3) & (4) of the Act relevantly provides:
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; or
(b) in the case of proceedings in relation to the maintenance of a party to a marriage--that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit.
Therefore the effect of s 44 of the Act, as it is relevant to these proceedings, is that:
·the wife requires the leave of the Court to bring property settlement proceedings because more than 12 months elapsed after the parties’ divorce became effective; and
·leave to commence property settlement proceedings can only be granted if the wife satisfies the Court that hardship would be caused to her (or the husband) if leave is not granted.
The Full Court in In the Marriage of Whitford (1979) FLC 90-612said:
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 case law reveals that “hardship” in the context of s 44 relates to the inability to pursue a claim. The quality or value of the claim required can depend on the circumstances of the case. If hardship is established then matters such as there being an adequate explanation for delay and the competing prejudices to the parties of granting or refusing leave, can be taken into account in deciding whether to grant leave.
From the decision in Whitford, which includes a review of authorities, the following propositions are made:
Hardship
·The loss of the right to institute proceedings of itself, is not the hardship to which the subsection refers. It is the consequences of the loss of that right, with which the subsection is concerned.
·If there is no real probability of success if the substantive application were heard on the merits, then the Court cannot be satisfied that hardship would be caused if leave were not granted.
·The meaning of ‘‘hardship’’ in s 44(4) is akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment. Cf. the meanings assigned to ‘‘hardship’’ in the Shorter Oxford Dictionary and in Webster’s New International Dictionary. See also In the Marriage of Mackenzie (1978) FLC 90-496.
·In ordinary parlance, “hardship” means something more burdensome than ‘‘any appreciable detriment’’. 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 the applicant is likely to be awarded on a property claim, ordinarily hardship would not result if leave to institute proceedings were not granted. The sections do not otherwise require 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 $1,000.00 or even less, whilst in other cases something of that value may be considered trifling.
·Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances.
Discretion
·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.
·On the other hand, ss 44(3) and 44(4) point to the conclusion that the legislature intended to confer power on the Court to grant leave to institute proceedings in order to avoid hardship. Having regard to the nature of the jurisdiction which this Court exercises, this power should be exercised liberally in order to avoid hardship, but nevertheless in a manner, which would not render nugatory the requirement that proceedings should be instituted within a year from the divorce.
As to the question of prejudice – the real issue is whether the granting of leave would be unfair to the husband. Having been satisfied that hardship would be caused to the wife if leave is not granted, the Court should look to the impact on the husband of granting leave.
In Hall and Hall (1979) FLC 90-679 at 78,629 the Full Court considered the discretionary matters going to the granting of leave and said:
However, that does not end the matter. His Honour also concluded in effect that he would exercise his discretion against the applicant both on the ground of delay and upon a consideration of prejudice which the respondent would suffer.
As to the question of prejudice the respondent had changed his employment, going from fairly well paid employment to his own business as a lawn contractor, in about September 1977. That was before the 12 months period had expired and at a time when negotiations were still on foot at least in the sense that there was outstanding correspondence which had not been completed between the respective solicitors. It is difficult to see that that step, significant though it was in the financial context of this case, could have been taken in reliance by the husband upon the expiry of the wife’s claim which could still then have been instituted. Similarly the financial changes which were involved in his remarriage would fall into much the same category since that occurred in December 1976 and in any event may not ordinarily be a matter of particular prejudice. The husband in his material did say that after the expiration of the 12 months period he in effect ordered his financial affairs in reliance upon that circumstance but there was in our view no new initiative or change in his financial action or activities after October 1977 and before July 1978 which could give rise to prejudice to him should the court allow the wife’s claim to be ventilated now. He simply went on in much the same way as he had before the 12 months had expired. He sold his lawn-mowing business but then established another and otherwise his financial circumstances, somewhat difficult though they are, were much the same.
In our view his Honour was not entitled to refuse to exercise his discretion on this basis.
To allow proceedings in (sic) under sec. 44(3) is always to prejudice the respondent in some way. The Court must therefore look for some factor which in some way links prejudice to the delay.
Given that the matters to be taken into account in exercising the discretion enlivened by a finding of hardship are not limited or exclusively defined by the legislation, if the Full Court intended by the last quoted assertion that the only relevant prejudice is one linked to delay, then I doubt that the statement is correct. For example it is argued before me that the husband would suffer hardship if leave is given because, given the wife’s financial circumstances she may not have the wherewithal to meet a costs order if she is unsuccessful in the resultant proceedings. If that issue is relevant at all, it seems to me that the potential prejudice applied irrespective of the timing of the s 79 application. Hypothetically, the husband may have suffered a burglary the day after the divorce during which all his records were destroyed. For that reason there could be prejudice to him in granting leave to the wife, even though there was no temporal link between the loss of records and the wife’s delay.
In Althaus & Althaus (1982) FLC 91-233 it was held that the extent of the hardship may outweigh an inadequate explanation for delay.
The Nature Of The Enquiry Under Section 44(3)
In Whitford the Full Court said:
The parties and the judge hearing the matter will no doubt bear in mind that the only question to be determined is, whether leave should be granted enabling the applicant to institute proceedings, and the extent of the proceedings and any investigation should be regulated accordingly.
In Althaus, Evatt CJ with whom Marshall SJ and Strauss J agreed said (at 77,267):
In my opinion, sec. 44(3) and (4) are not intended to require a detailed hearing on the merits to determine whether the applicant’s claim will succeed. The exercise is to determine whether there is a reasonable claim to be heard. That is the essence of the inquiry into whether hardship will be suffered by denying the applicant the right to litigate that claim.
It is not required that the applicant make the proposed s 79 case when seeking leave. In Neocleous & Neocleous (1993) FLC 92-377, it was the wife’s evidence that despite knowing of the statutory time limit, she acted on undertakings from the husband about future support, including a promise that he would buy a house for them. Despite the husband’s denial of that evidence, in granting the wife leave, the trial judge accepted her testimony on a prima facie basis, finding that it was not inherently improbable or unbelievable.
Discussion
Therefore the wife must establish that if she is granted leave, she has prospects of success for a case that is worth arguing.
In considering whether the wife has identified a case worth arguing, without identifying a dollar value, on the basis of the guidance from Whitford above, in my view the wife needs to demonstrate that she has a property settlement case for a settlement that would justify the potential costs of the proposed proceedings.
In my view it falls to the wife to give some indication of the monetary value, of the financial significance or of a basis on which a monetary value or financial significance could be attributed to the case she seeks leave to make.
The property settlement claim expressed in the wife’s Initiating Application is for $700,000. I understood from the wife’s counsel that the figure of $700,000 was based on the wife’s opinion that the Suburb D property was worth $1,400,000. The wife expressed that opinion in her March 2014 affidavit. The husband obtained an appraisal of the value of the property in 2013 putting it in the range of $900,000 - $950,000. I understood that for the purposes of the hearing before me, a figure of the order of $950,000 was accepted as the value of the property.
I was not provided with a revised figure for the wife’s claim. The basis for her claim, representing one half of her estimated value of the Suburb D property, was identified in the wife’s case. In the course of submissions the wife’s counsel said that the wife’s claim would be of the order of 50 per cent of the value of the Suburb D property based on contributions favouring the husband and an adjustment in favour of the wife for the other s 79(4) factors. Given that there are other assets, it is not clear why the claim is expressed only in terms of the Suburb D property, but there it is.
I turn to the wife’s proposed claim. Section 79 empowers the Court to alter the interests of the parties to the marriage in property. The approach to those proceedings may be undertaken in the following sequence[1]:
i)Identity the items and value of the property, liabilities and financial resources of the parties at the date of the hearing;
ii)Identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties;
iii)Identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties; and
iv)Consider the effect of those findings and determinations and determine what order (if any) is just and equitable in all the circumstances of the case.
[1] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) FLC 93-143; (2003) 30 Fam LR 355 at 370.
There is no agreed balance sheet. The husband referred to a balance sheet that he prepared in September 2011. That balance sheet is attached to his affidavit but it omits the wife’s superannuation and any reference to the husband’s interest in the Suburb D property. On the basis of their most recent evidence it appears that, aside from any equitable claims in respect of the Suburb D property, the assets and liabilities of the husband and wife are:
Assets and Liabilities
Value
Wife’s CBA account $3,000 Wife’s NAB account $100 Wife’s Audi motor vehicle $12,000 Wife’s household contents $5,000 Wife’s personal belongings and jewellery $2,000 Wife’s superannuation REST $6,000 Wife’s Visa Card -$7,000 Wife’s American Express card -$7,000 A 1 per cent interest in the Suburb D property (H)
$9,500
Shares (H) $48,950 A motor vehicle (possibly a Mazda) of unidentified value (H) $0 Husband’s superannuation State Super as at 30 June 2013 $127,832 Husband’s margin loan – CBA -$10,581 Total Net Assets
$189,801.00
It would be unusual if the husband had no money in a bank and no personalty in the form of household contents but there is no evidence to the contrary. It is relevant to note that the present situation leaves the distribution of the identified net assets as to 93 per cent with the husband and 7 per cent with the wife. However, it is an agreed fact that the wife received some property after separation. In 2011 the husband paid the wife money representing the proceeds of sale of shares. The wife says that she received about $96,000. The husband contends that he paid the wife $110,000.
This was not a matter developed in the wife’s case but I should acknowledge that it is likely that, if leave is given, the 2011 payment would be taken into account in the resultant proceedings. There is no compulsory approach to a preliminary distribution such as occurred in 2011. It could be added-back to the balance sheet as a notional asset in the hands of the wife (Townsend and Townsend (1995) FLC 92-569 and Omacini v Omacini (2005) FLC 93-218) it could be taken into account under s 75(2)(o) or it could be discounted.
Based on those propositions alone, in my view leave should not be granted. The facts leave open that at about the time the husband and wife separated there was of the order of $200,000 in assets and the wife received about $100,000. She does not point to any different outcome being appropriate. There is no case that would warrant further expenditure on legal fees.
Of course the matter does not end there. The critical issue and the focus of the wife’s case, is the possible equitable interest or rights that could be established for the husband (beyond his legal entitlement) and / or for the wife, in the Suburb D property.
Because of the equitable claims, at least in the alternative, in her case, the wife has lodged a Statement of Claim. In an Amended Statement of Claim filed 6 February 2014 the wife sets out the points of claim, the facts relied on and the relief sought.
In summary the wife pleads:
a)In 1993 the husband and wife agreed to buy a house together, with the financial assistance of the husband’s father;
b)The husband and wife found the Suburb D property and agreed to buy it for $226,000, with the assistance of the husband’s father;
c)At about the time of purchase the husband and his father told the wife that the husband’s sister contributed financially to the purchase;
d)The wife does not know what was contributed to the purchase price or who made those contributions;
e)The wife knows that the respondents borrowed from the NAB to assist with the purchase but does not know how much was borrowed;
f)Unknown to the wife at the time, the property was bought as to 50 per cent in the name of the husband’s parents and 50 per cent in the name of the husband’s sister;
g)Either the respondents caused the wife to believe that she and the husband owned the property or they knew she believed that and did nothing to disabuse her;
h)The husband and wife and later, their children lived in the home;
i)Some payments were made by the wife and or the husband by way of contribution towards the mortgage;
j)It was the common intention of the parties at the time of purchase that it would belong to the husband and wife. That can be inferred from the above facts and:
i.the fact that the husband and wife lived at the Suburb D property from 1993 to 2012;
ii.the fact that they jointly applied for the first home buyers grant;
iii.the fact that no rent was paid by them;
iv.the fact that no demand was made by the husband’s parents or sister for the return of their initial advances;
v.statements made by the husband’s father from time to time, presumably on behalf of the other owners, to the effect that the house belonged to the husband and wife;
vi.the wife’s father relied on those statements in contributing directly and financially towards the construction of a new garage and purchase of an air conditioning unit;
vii.none of the respondents ever told the wife’s father that the wife had no interest in the home;
viii.the husband continues to live in the home and pays no rent;
ix.the wife and husband paid mortgage instalments, rates, insurance and other outgoings in respect of the home;
x.the husband and wife spent money maintaining and improving the home; and
xi.the husband has not sought reimbursement for his expenditure on renovating and improving the property and on outgoings.
k)in about 1994 or possibly 1998 the husband inherited an unknown sum from his paternal grandmother and applied an unknown sum from those funds to discharge the original mortgage;
l)the husband and wife undertook renovations and improvements to the kitchen in 1999 using their labour and at their expense;
m)the husband and wife undertook renovations and improvements to the bathroom in 2004 using their labour and at their expense;
n)on 7 December 2004 the husband’s parents transferred a 1 per cent interest in the property to the husband for consideration of $6,000;
o)the husband and wife undertook extensions including a master bedroom and bathroom in 2006 funded the husband borrowing about $100,000 from the Commonwealth Bank, secured by a mortgage over the home. The husband made all the payments on that loan; and
p)In those circumstances, it is asserted that it would be unconscionable for the respondents to retain ownership of the property without recognition of the equitable interests of the wife and husband in the property.
The wife’s evidence could be summarised as follows:
a)At some time in or after 1993 there were a number of conversations between the husband and the wife and in the course of those conversations the husband said to the wife words to the effect “we should buy a property and get into the market. Dad can help sort it out.”
b)The husband and wife inspected a number of properties including the property at B Street, Suburb D. They both liked the house and the husband proposed that they make an offer. An offer made by someone was apparently accepted. The husband said to the wife “we’ve got the house. Dad will help us organise the legals and putting it together”.
c)The wife recalls that the purchase price was $226,000. The husband and his father said to the wife on different occasions that the husband’s sister was putting some money into the deposit for the house. The wife recalls that $20,000 may have been mentioned but cannot be certain. The wife recalls that she and the husband contributed to the purchase but she does not know how much. The wife is aware that a mortgage was raised but she does not know how much was borrowed or by whom. She is not sure how the purchase was funded.
d)The wife and the husband contributed money from their wages into their joint bank account. From a date of time that is not identified, money from that account was paid to the husband’s father. It could have been $500 per week. Those payments continued until the husband paid out the loan. The wife deposed that withdrawals from the joint account of $2,200 on 6 October 1995 and of $460 on 20 October 1995 probably resulted in payments to the husband’s father. She said that the latter payment “looks to me like a payment to [the husband’s father] towards the mortgage”.
e)Shortly after the property was purchased, the husband and his father carried out work to relocate a laundry and install a toilet in the garage of the property. The husband and the wife paid for the cost of materials for that work.
f)The wife recalls that she and the husband contributed their wages into a joint account with the National Australia Bank and that money was withdrawn from that account and paid to the husband’s father. It is the wife’s recollection that $500 per week was paid to the husband’s father in that way and that those payments continued until the husband paid out “the loan”. The wife thinks that withdrawals from the joint account of $2200 on 6 October 1995 and of $460 on 20 October 1995 probably resulted in payments to the husband’s father towards “the mortgage”.
g)The husband’s grandmother died in about 1998 and the wife understands from comments made to her by the husband’s father that the husband inherited part of the estate. The husband’s father said to the wife on more than one occasion “[The husband’s] inheritance from Nanna has paid off the house”. The wife took that to mean the housing loan on the Suburb D property.
h)The husband and wife thereafter undertook a number of renovations and improvements to the house. The husband contracted with a kitchen company and a copy of the contract dated 13 April 1999 for work at a price of $8,275 is annexed to the wife’s affidavit. The kitchen renovations were paid for by the savings of the husband and wife. The wife bought tiles for the new kitchen in June 1999 at a cost of $52.70. The wife chose the new kitchen furnishings and fittings and oversaw the work. In 2002 work was done to improve access to the garage. The wife’s father paid for the supply and installation and an air-conditioning unit.
i)On many occasions (meaning more than 20 occasions) the husband and his father have said to the wife sometimes in the presence of the wife’s father “it’s your home” and similar comments. On either 21 or 22 May 2013 the husband’s father said to the wife “you have had this house for 20 years now, hasn’t the time gone quickly”.
j)The wife and husband physically demolished the old bathroom over four days and carried the debris out to a skip. In 2006 further building work was carried out to construct an extension to the front of the house including a master bedroom bathroom and walk-in robe. The husband borrowed about $100,000 from the Commonwealth Bank to pay for that work. The husband made the repayments on that loan and it was discharged on 14 September 2012 the husband also paid the house insurance premiums for the property. The husband and wife paid the Council rates on the property. During their cohabitation the wife paid for the household furniture and furnishings and the husband paid for white goods and a lounge.
The husband has addressed the wife’s evidence in his affidavit. In relation to several paragraphs the husband denies the wife’s version of events. For example in relation to paragraphs 19, 31, 32 and 33 of the wife’s affidavit the husband deposes: “… I deny the accuracy of the statements contained therein.” In relation to other paragraphs he says that and then goes on to give his evidence about the topic in the disputed paragraph. However, in relation to some paragraphs, such as the wife’s evidence summarised in sub-paragraph 47(d) above, the husband’s affidavit is silent.
Despite the hybrid pleading/affidavit nature of the document, at paragraph 5 the husband says: “If I have not responded specifically to a paragraph of [the wife’s] affidavit it should not be taken that I agree with the accuracy of any statements contained therein.” In that spirit, I will not assume that the husband otherwise agrees with the wife’s affidavit, nor for that matter, that he disagrees.
Does the wife identify a case with some prospects of success that she or the husband have an equitable interest in or a right to equitable relief in relation to the Suburb D property?
There is no issue that this Court can, in the context of property settlement proceedings, determine whether a party to the marriage has an equitable interest in property or holds property subject to such an interest.
As to the claim for a finding of a constructive trust, Deane J in Muschinski v Dodds (1985) 160 CLR 583 said:
Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.
And later
Like most of the traditional doctrines of equity, it operates upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct (cf. Story, Commentaries on Equity Jurisprudence, l2th ed. (1877: Perry), vol. 2, par.1316; Legione v. Hateley, at p 444). The circumstances giving rise to the operation of the principle were broadly identified by Lord Cairns L.C., speaking for the Court of Appeal in Chancery, in Atwood v. Maude, at p 375: where “the case is one in which, using the words of Lord Cottenham in Hirst v. Tolson ((1850)) 2 Mac. and G. 134 [1850] EngR 313; (42 ER 52), a payment has been made by anticipation of something afterwards to be enjoyed (and) where ... circumstances arise so that future enjoyment is denied”. Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do (cf. Atwood v. Maude, at pp 374-375 and per Jessel M.R., Lyon v. Tweddell (1881) 17 ChD 529, at p 531).
In Giumelli v. Giumelli (1999)196 CLR 101 the High Court dealt with a decision of the Full Court of the Supreme Court of Western Australia and rejected that Court’s finding of a constructive trust at least in part because there were circumstances in respect of the respondents that had not been adequately taken into account. The High Court discussed the individual judgments in The Commonwealth v Verwayen (1990) 170 CLR 394 and said:
47.McHugh J concluded that what will be required to satisfy the equity which arises against the party estopped depends on the circumstances and that, whilst often the only way to prevent the promisee suffering detriment will be to enforce the promise, in the present case there was no equitable estoppel established because there had been no representation by the Commonwealth as to present or past facts.
48.The upshot is that the respondent is correct in his submissions that the reasoning in the judgments in Verwayen does not foreclose, as a matter of doctrine, the making in the present case of an order of the nature made by the Full Court.
The circumstances of the case
49.However, the appellants correctly challenge the Full Court order on other grounds. Before making an order designed to bring about a conveyance of the Promised Lot to the respondent, the Full Court was obliged to consider all the circumstances of the case. These circumstances included the still pending partnership action, the improvements to the Promised Lot by family members other than Robert, both before and after his residency there, the breakdown in family relationships and the continued residence on the Promised Lot of Steven and his family. It will be recalled that Steven is a party to the partnership action but not to the present action.
50.When these matters are taken into account, it is apparent that the order made by the Full Court reflected what in Verwayen was described as the prima facie entitlement of Robert. However, qualification was necessary both to avoid injustice to others, particularly Steven and his family, and to avoid relief which went beyond what was required for conscientious conduct by Mr and Mrs Giumelli. The result points inexorably to relief expressed not in terms of acquisition of title to land but in a money sum. This would reflect, with respect to the third promise, the approach taken by R D Nicholson J when giving relief in respect of the second promise.
Conclusion
51.Whilst the holding of the Full Court with respect to the third promise should be upheld, the Full Court erred in the measure of relief which it granted in respect of the Promised Lot. This is a case for the fixing of a money sum to represent the value of the equitable claim of the respondent to the Promised Lot. It will be necessary for the matter to be remitted to a judge of the Supreme Court to take that step. The amount so ascertained, with interest, should be charged upon the whole of the Dwellingup property. There will be no requirement of a subdivision of the Promised Lot as part of the remedy.
52.Fixing of the amount will require the making of valuations and allowances for a range of matters, some of which have been indicated above. It is neither possible nor appropriate now to fix any closed list of matters properly to be taken into account when the matter is remitted. Further submissions and, if that court so chooses, additional evidence will be needed.
Emphasis added
The wife points to a case whereby she and the husband and others on their behalf, expended funds and made other contributions to a property that, it transpires, was exclusively and after 2006, as to 99 per cent, owned by the third parties. There is no precise value placed on all of the alleged financial contributions but the wife gives evidence of substantial sums. In my view the wife is not obliged in the evidence in support of an application for leave, to fully substantiate her claim. The case identified by the wife has her, her father and possibly the husband, doing work and making payments in reliance on or knowing of statements made by the third parties or apparently on their behalf to the effect that the husband and wife had a beneficial interest in the Suburb D property. They did that work and made those payments apparently without any attempt by the third parties to interfere. The wife seeks to argue that it would be unconscionable for the third parties to assert or retain the benefit of the Suburb D property without regard to that work and those payments. It seems to me that she has a case to make.
As to the considerations found to exist in Giumelli, there is little doubt that “all of the circumstances” are not before the Court. Not only is there no evidence from the third parties, the husband has not put all his evidence in respect of the Suburb D property before the Court. That is not said by way of criticism but to explain that I cannot assume that there will be evidence, such as that found in Giumelli which would make it inappropriate to find a constructive trust.
The wife’s alternate claim in relation to an equitable charge satisfies the requirement, that in considering whether a trust has been established, a court must determine that an equitable remedy, short of such a finding is not available and appropriate. A remedy such as an equitable charge.
In Giumelli in finding that such a remedy should have been considered by the Full Court, the High Court referred to cases including the decision of the Privy Council in Plimmer v Mayor, Councillors and Citizens of the City of Wellington (1884) 9 App Cas 699 at 714.
Having found that the wife has identified an arguable case in relation to a constructive trust it follows that she has also identified a case to argue in respect of an equitable charge.
The case must be more than a trifling one, one that warrants the cost of s 79 proceedings. That turns on the magnitude of the potential equitable relief. Much of the wife’s evidence is vague and it is very difficult to discern the likely magnitude of an achievable claim. However, she alleges that substantial payments were made. It is her evidence that during cohabitation several renovation projects were undertaken. By description they involved extensive work – extensions to the existing house and adding or renovating rooms such as a kitchen and bathrooms. About $9,000 was paid to a kitchen company. Albeit after separation, the evidence is that the husband applied about $100,000 to renovations. For what may have been a substantial period the husband and wife paid $500 per week to the husband’s father. The husband and wife paid the rates and insurances for the property. Those sums dwarf the estimated value of the husband’s legal interest in the property. Depending on the amount borrowed on the original mortgage and when the payment was made, the amount the wife says, was paid by the husband from his inheritance to discharge the mortgage could have been substantial.
There may be another explanation justifying that expenditure by the wife and husband on the property of the third parties. For example such payments could have represented consideration for a right to continue to occupy the property – in the nature of rent. That is not asserted by any party. Although the husband deposes that he is paying money by way of rent now, there is no evidence from him or anyone else that he or the wife paid rent, for example, during cohabitation. I cannot assume such an explanation.
The value of the equitable claim would then be added to the balance sheet for the purposes of the s 79 claim. It follows from what I have said that there can be no calculation of the likely quantum of the equitable claim, save to say that in the context of a property worth $950,000, on the above facts, it could be significant.
Contributions
The second step in the proceedings the wife seeks leave to bring, would be for the contributions to be assessed.
The indication given in the wife’s case is that the balance of contributions favours the husband. I accept that the argument made on her behalf could change depending on the way in which the pool of matrimonial assets is made up.
The wife has identified some contributions in her affidavit but expressly, not all of them[2].
[2] Paragraph 35 of the wife’s affidavit
In her affidavit the wife gives evidence that she and the husband were in paid employment during the marriage but that she had very little paid work. The wife was probably the main parent and homemaker.
Importantly, there are the contributions referred to above in relation to the Suburb D property.
Conclusion on Contribution
It would be necessary to weigh the parties’ contributions.[3] Perhaps because of the limited nature of the enquiry before the Court in the leave application, the wife has not fully addressed her contributions by way of evidence and it may be that she has not fully addressed those of the husband. As I have recorded, I was told that the wife would argue that the husband’s contributions exceeded those of the wife. The fact of renovations, said to have been funded by the husband after separation would in itself support that argument.
[3] In the Marriage of Pierce (1999) FLC 92-844; (1998) 24 Fam LR 377
In my opinion the wife identifies a case to argue that could result in a finding that although the contributions made by the husband were greater, she made valuable contributions in the relevant sense.
The other matters in Section 79(4)
Once contributions have been assessed, the other factors in s 79(4) would need to be considered. Again I accept that if leave is granted the husband and wife are likely to put further evidence to the Court. Briefly, the evidence given includes:
(a)at 51 years of age the wife is slightly older than the husband;
(b)the wife lives in a one bedroom apartment where, when the children are with her, one child sleeps on a lounge and the other in the wife’s bed. The husband continues to live in the Suburb D property;
(c)the wife’s income is intermittent both because she works in the entertainment industry and due to her need to be available to the children, including at times when the husband is not available because of his shift work. With an average income of $725 per week and outgoings of $589, the wife has a modest weekly surplus but I note her evidence that she pays only $200 per week in rent and that her accommodation floods and is otherwise unsatisfactory. The husband works in a healthcare field. In 2013 his income was $87,438. He says he pays $400 per week in rent. The husband pays the school fees for the children. He has paid $9,255 and $4,572 for the children for 2014 as well as related school expenses and medical expenses. The husband estimates that for the two years from January 2012 he paid $21,121 for the children’s expenses.
Thus, the wife is not in robust financial circumstances. The husband appears to have a track record of secure, paid employment. The parties share responsibility for the children although the husband pays much of the children’s expenses.
Those matters beg a number of questions but again, in my view the wife identifies an arguable case for an adjustment in her favour for the matters raised in the remaining paragraphs of s 79(4), to the distribution warranted by contribution alone.
Just and Equitable
Taken together, in my view the wife identifies an arguable case that it would be just and equitable for a settlement in her favour which would justify the costs of proceedings.
Hardship
It follows that the wife can establish that she has a valuable property settlement case to make. Therefore she can demonstrate that she would suffer hardship if leave is not granted to bring those proceedings out of time.
As to whether the discretion enlivened by the finding of hardship should be exercised:
The application for leave was made only eight months after the expiration of the period within which a s 79 application could have been made without the need for leave. As to explanation for delay, the wife says that she did not want to cause conflict between herself and the husband that would impact on the children and that she did not feel safe in bringing an application. It is the wife’s evidence that on many occasions the husband insulted her and swore at her in front of the children. There is some detail given in relation to that evidence. The husband denies the allegations. There was no cross-examination of either party. It was submitted on behalf of the husband that the wife’s evidence is improbable because there is in place an arrangement whereby the children pass between the two households. I reject that submission.
Further, in relation to an explanation for her delay, I note that although the wife left the Suburb D property in January 2012, it is the unchallenged evidence of the husband that the wife returned to live in the property from November 2012 until May 2013.
I am satisfied that the delay is adequately explained.
The prejudice to the wife in refusing leave is reflected in the finding of hardship. On the other hand the only prejudice to the husband identified on his behalf if leave is granted, is based on the likely reality that if the wife is unsuccessful or for some other reason is ordered to pay the husband’s costs, she would not be able to meet a costs order. As was submitted on behalf of the wife, the starting point in relation to costs is that the parties bear their own. There is no reason to presume that, if leave is given, the wife would be required to pay the husband’s costs of the resultant proceedings.
I will grant the wife leave to institute property settlement proceedings.
The Claim for Summary Dismissal
The application for summary dismissal by the third parties can be quickly addressed.
The authorities[4] have it in relation to applications for summary dismissal that:
a)The power for summary dismissal is a discretionary one.
b)Relief “is rarely and sparingly provided”.
c)The parties seeking summary dismissal must show that the application is “doomed to fail” or as has been otherwise described “that the opponent lacked a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”.
d)A weak case or one that is unlikely to succeed is not “sufficient to warrant termination”.
e)“If there is a serious legal question to be determined, it should ordinarily be determined at a trial”.
f)The application is considered on the basis only of the applicant’s material.
g)In determining an application of this nature … the rule … is that if a version of the facts put forward by the respondent is not inherently incredible, then in the absence of any opportunity for cross-examination it is incumbent upon the Court to proceed on the basis that the respondent’s version will ultimately be accepted at the trial of the action.
[4] Including Bigg v Suzi (1998) FLC 92-799 at 84,973-84,974; Pelerman v Pelerman (2000) FLC 93-037 at 87,582; Webster v Lampard (1993) 177 CLR 598 at 608); Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at 544-5.
It follows from the findings made in relation to the wife’s application for leave to bring the property settlement proceedings that the application for summary dismissal cannot succeed.
I certify that the preceding eighty two (82) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 25 June 2014.
Associate:
Date: 25 June 2014
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Limitation Periods
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Summary Judgment
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Procedural Fairness
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