Jacenko & Jacenko

[1986] FamCA 25

In the marriage of JACENKO, N. and JACENKO, S.I.

(1986) FLC ¶91-776

Other publishers' citations: (1986) 11 FamLR 341

Full Court of the Family Court of Australia at Sydney.

Judgment delivered 11 November 1986.

Before: Fogarty, Walsh and Nygh JJ.

Nygh J.: This is an appeal from Bell J., when he was sitting in the Sydney Registry, from a decision in which he granted leave to the wife to institute proceedings under sec. 79 of the Act — in pursuance of sec. 44(3).

The facts of this case, in so far as they are relevant, can be briefly stated. The parties in this case were married on 24 April 1971. Two children were born of the marriage: S was born on 17 April 1974, and T who was born on 11 February 1976. It has not been disputed in this case that those children, although S has attended boarding school for some time, have, throughout the relevant period, been in the defacto care and control of the wife.

The parties acquired their matrimonial home, which was situated at Annandale, in 1972. They separated in August 1976 and a decree nisi was pronounced on 11 July 1978, and I presume became automatically absolute within the prescribed one-month period.

Following separation, the wife and the children remained in the former matrimonial home. However, in August 1978 the wife moved out of that house and acquired, in the next year, title to a property at Fairlight; it not being disputed that some $14,000 was contributed by the husband towards the purchase of that property.

The wife, subsequently in 1982, sold the Fairlight property. She bought another property at North Narrabeen which in turn was sold by her in January 1985 and she has now acquired a property at Warriewood, like the two previous properties situated in the northern beaches district of the Sydney metropolitan area.

It is common ground as between the parties, that apart from the $14,000 which was paid by the husband towards the acquisition of the Fairlight property, the wife also retained a motor car which was then in her possession and which had been acquired in 1974, and the furniture which was then in the former matrimonial home.

It would seem that between 1980 and the end of 1984 the husband, in substitution for his maintenance obligation, agreed to pay the mortgage instalments outstanding on the various properties which the wife had occupied. However, according to the wife's allegations, in December 1984, when she was about to acquire the property where she currently resides, the husband demanded, in view of the fact that he had been paying the mortgage payments, to be registered on the title as a joint owner of that property.

Upon the wife refusing to accede to that demand, the husband ceased his payments. The wife then alleges that at that moment she sought and obtained legal advice, and acting on that advice she commenced proceedings on 26 July 1985 in respect of maintenance, and on 3 September 1985 she instituted proceedings by way of property settlement intimating that she would seek an order that the husband pay to her, by way of property settlement, the sum of $250,000.

His Honour, in granting leave, found that the wife had established a prima facie case to relief which was likely to exceed themoney that she actually did receive and any costs of the proceedings. He also found that she would suffer hardship if leave were refused. He also found that she had given an adequate explanation of the delay in instituting proceedings by reference to the fact that there had been continuing support by the husband until December 1984. And he finally found on the balance of hardship that that of the wife by far outweighed that of the husband. Accordingly, he granted leave. The husband has appealed from that decision.

I should state at the outset my concern at the manner in which the husband's case was conducted before his Honour. It was listed before his Honour originally, it would appear, as a so-called short cause which was expected to be finished within one day. As a result of circumstances, outside anybody's control, it was not reached until late in the evening and accordingly had to stand over to continue on another day.

However, the matter was conducted not merely on one day but spread out over five separate hearing dates. That was largely due because of the attitude taken by counsel for the husband who took the view that he was entitled not merely to argue whether or not the wife, on the basis of the affidavit evidence, had presented a prima facie case but to probe that prima facie case and seek to destroy it by cross-examination of the wife, and by introduction of contrary evidence.

As a result, that approach pressed upon his Honour, by counsel for the husband, was misconceived. As I stated in my decision of Frost and Nicholson (1981) FLC ¶91-051, a prima facie case should be judged on the evidence put forward by the applicant in her affidavit evidence available at the time of the hearing of the application for leave.

The respondent may demur that the evidence which the applicant seeks to rely upon is not sufficient to justify the costs involved. In so holding, I followed the views expressed by Lindenmayer J. in Perkins and Perkins (1979) FLC ¶90-600; (1979) 4 Fam. L.R. 634. And I wholeheartedly accept the qualification that he introduced there; that there may be situations where, because of lack of clarity in the evidence of the applicant, oral evidence may have to be called and cross-examination may have to be allowed.

But the general principle is that on the issue of the establishment of a prima facie case the Court proceeds on the basis that the evidence of the applicant, unless it is inherently unbelievable or contradictory, should be accepted, and the Court should therefore decide whether or not on that basis a prima facie case has been made out. If leave is granted, then it is for the Court conducting the ultimate hearing to determine whether that prima facie case can be established.

That, as I understand, is certainly the practice in other Registries of this Court, and as I indicated in argument, it may be due to the peculiarities of the Sydney bar that it has not always been accepted in this Registry as the correct procedure.

I have to make this point at the outset, because it permeates the entire case of the husband. Basically, it is the case of the husband that his Honour should have made certain findings on the evidence of the husband; should have rejected the evidence of the wife, and so forth. In my view, all that was totally unnecessary and went far beyond what was required.

The issues then before his Honour were those which have been established in this Court as long ago as 1977 in McDonald and McDonald (1977) FLC ¶90-317; (1977) 3 Fam. L.R. 426. The applicant must establish three principal matters: first, a reasonable prima facie case for relief, had she instituted proceedings in time; secondly, that denial of the wife's claim would cause her hardship; and thirdly, an adequate explanation as to her delay.

That third requirement must now be read, subject to the decisions of the Full Court in Althaus and Althaus (1982) FLC ¶91-233; (1979) 8 Fam. L.R. 169, and Howard and Howard (1982) FLC ¶91-234; (1979) 8 Fam. L.R. 178 which indicate that in appropriate cases the degree of hardship to be suffered by the applicant may well outweigh an inadequate explanation of delay.

If those three elements are satisfied, the Court should further, in determining whether to exercise its discretion to grant relief, consider the question of prejudice which the respondent would suffer by reason of the delay in bringing the application.

Dealing with those three items in turn, the evidence of the wife was that she received the sum of $14,000 out of the sale of the former matrimonial home. It was her case that that home, which was jointly owned by the parties, was subsequently sold for a sum of either $64,000 or $69,000, and that after discharge of the relevant costs of mortgage, etc., she received only 25% of the net proceeds of sale.

It was also her case that the husband had other business interests which were not taken into account in determining the sum of $14,000. There was a dispute as between the parties as to whether or not the $14,000 had been paid as a result of an agreement between the parties, or whether it was nothing more than a unilateral concession on the part of the husband about which the wife was never asked, nor did she agree; except, of course, to the extent that she needed the money to invest in the Fairlight property.

That was an issue between the parties, and it was not, in my view, appropriate at the hearing of the application under sec. 44(3), in line with the principles that I have earlier outlined, for his Honour to have to determine that issue.

If the wife's evidence is to be accepted, prima facie, and there is no suggestion that it was inherently contradictory, or unbelievable, then it is obvious that the wife did not receive the relief that she would have obtained had she instituted the proceedings in time. She received something that was considerably less than her prima facie entitlement had the matter been fully litigated at the time, and had proper account been taken of the totality of the assets of the parties, and the means and resources available to each of the parties, including the responsibility of the wife for the two young children of the marriage.

Indeed, as his Honour found, on the evidence of exhibit 7, in which the husband had set out or had caused to be set out a statement of assets and liabilities as at 19 November 1979, that the net assets held by himself at that time amounted to $387,222. Now it may be that upon hearing of the evidence his Honour might have come to the conclusion that those assets were far less than as asserted by the husband at that time.

But the point is this: that had the wife instituted the proceedings in time, she would have instituted those proceedings somewhere between 1978 or the middle of 1979, which was the appropriate time for institution of proceedings having regard to the state of the Act at that time.

The Court, had it entertained those proceedings, and had they come up in the normal course of hearing — which in the likely state of the list at that time would not have been until late 1979 or more likely 1980 — would, in line with the principle outlined by the Full Court in Carter and Carter (1981) FLC ¶91-061; (1981) 7 Fam. L.R. 41, have looked not only at the contribution of the parties but also their means and needs as at the date of the hearing.

There was evidence before his Honour to which he referred, which indicated that the means of the husband by far outweighed anything that was available to the wife, and which by far outweighed any benefits that the wife had received from her husband.

I must point out that whether or not there was an agreement between the parties in 1978, it was not an agreement which was approved under sec. 87 of the Family Law Act. If there was an agreement, it was at best an informal agreement and it has been held in Candlish and Pratt (1980) FLC ¶90-819; (1980) 6 Fam. L.R. 75, that such agreements cannot and do not stand in the way of a sec. 79 application.

Therefore, had she brought her application in time nothing would have prevented her, in my view, on the evidence before his Honour, from obtaining substantially more than the amount that she did in fact obtain from the husband. Any agreement, even if it existed, could not have been pleaded as a bar to her application.

That approach does, in my view, make it unnecessary to consider much of the grounds of appeal of the husband. The husband's argument was that there had been an agreement between the parties in 1978; that it was based upon the then current value of the property, and that what the wife received was an equal division of that property.

In my view, even if the allegations by the husband were to be accepted — as I say his Honour was not, in my view, properly concerned with the correctness or otherwise of the husband's allegations — it still follows, for the reasons I have just given, that this would not have stood in the way of an application by the wife, and of her prima facie success, in obtaining a considerably larger amount than the $14,000 actually received.

To a certain extent, in my view, the husband's case was again based upon a misconception and it may be from some of the remarks his Honour made, that he was led into that misconception. There was a considerable stress upon what the parties had in 1976 and what their assets were and how they should be distributed on the basis of contribution. That is, of course, not the test. Contribution is only part of the test. The other — and in this case, much more important part — is the question of the relative means and resources of the parties.

And that had to be determined not as at 1976, nor even as at 1978, but at the likely date of hearing which, as I have indicated earlier, in the circumstances, and having regard to the state of the law at that time, would have been a much later date. It is not necessary to consider what the husband's assets were at an earlier time or whether or not inferences could be drawn from the evidence as to assets of the husband in 1979 whether or not he had those assets in 1976 or 1978.

For the same reason, I think that any grounds of appeal put forward by the husband based upon the alleged lack of creditworthiness on the part of the wife, were also misconceived. As I said in Frost and Nicholson, I did not permit the respondent to test the applicant on the veracity of her evidence as to the merits of the case and I stopped any cross-examination on that issue. It was therefore not a question before his Honour whether or not the wife in her evidence was to be believed or disbelieved. It was an issue of whether or not, on the material that she put before the Court, she had made out a prima facie case.

In the circumstances, his Honour did make a finding as to the credit of the parties, and he did find that despite the wife's failure to be at all times honest in relation to her social security obligations, she nevertheless gave him the impression of a woman who was telling the truth. It need not be repeated that his Honour had the benefit of hearing both parties inthe witness box; that his Honour has therefore an advantage which we, in this Court, do not possess. We do not know the intonation with which words were spoken. We do not know what pauses or otherwise there were in answers.

His Honour had that advantage and it is not for us to interfere with that conclusion if it were at all necessary or relevant in these proceedings. The next issue which his Honour had to determine, was whether denial of the wife's claim would cause her hardship. That was an issue which relates to the situation of the wife as at the date of the hearing. His Honour made certain findings as to the current position of the wife. He found that she has a home upon which there is a mortgage of something like $40,000; that demands have been made upon her by the mortgagee for payment of the instalments, she being somewhat in arrears. She borrowed sums of money from other people, in an endeavour to keep herself and the children fed. She has no assets other than those set out in her Form 17, but she does have considerable liabilities as set out therein and indeed if one turns to the Form 17 it does disclose a considerable amount of existing debts and creditors, and it indicates that she has a mortgage balance of $40,000. She has, in addition thereto, another $9,000 in various indebtednesses.

She is now in employment and discloses an income of $259 per week. It is, and it is indicated by the various liabilities and expenditures, clearly a fairly modest income compared to what the husband admitted as to his financial situation, and in my view, his Honour, in those circumstances, was quite entitled to find that she would suffer hardship if she did not obtain leave. It is in my view not relevant to point out that his Honour did perhaps exaggerate somewhat slightly by referring to an endeavour to keep herself and the children fed, since the loans to which he refers clearly do not so much refer to feeding, but rather to housing. The point simply is that she is short of funds and in need of funds, and that unless she obtains further funds, she will be in serious financial difficulty, even if she is able to find the wherewithal to feed herself with.

Similarly, I do not think that it is relevant in considering whether the wife as at the present stage, would suffer hardship, to consider whether or not she has in the period of 1980-1984 been in full-time or part-time employment. So far as the question of inadequate explanation as to her delay is concerned, again, his Honour was satisfied and in my view rightly satisfied, that the wife had an adequate explanation for her delay. Basically, the explanation was that until December 1984 in line with the promise which the husband had given, as alleged by the wife when she protested that she had not received enough from the sale of the former matrimonial home, that he would look after her financially, and that, through the payment of the mortgage instalments on the various properties since then, he had in fact done so.

Her willingness to upset that arrangement was only activated in December 1984. Then she took legal advice and regrettably perhaps with the inevitable delays that the investigation of claims and matters take, action did not eventuate until the latter part of 1985.

In my view, his Honour was entitled to accept that explanation as an adequate explanation of the delay.

So far as the question of prejudice is concerned, it is clear that the wife would suffer a considerable amount of prejudice if she was denied her application. His Honour said that prejudice on the part of the husband, as was conceded in the earlier stages by senior counsel for the respondent, was not being pressed. That was a reference to a concession which was made in the course of the hearing that the husband did have the financial ability — although, of course, in no way was he going to concede that he ought to pay — the amount claimed by the wife.

It has been conceded, should leave be granted, that Mr Jacenko has sufficient moneys to pay a reasonable and just award. Undoubtedly there was some prejudice to Mr Jacenko in having litigation so many years after the parties had separated and the decree had been pronounced. But whatever the prejudice in terms of nuisance and annoyance to him was, the wife's much more tangible financial disadvantage weighed much more heavily against that.

In those circumstances, I am of the view that his Honour, on the case that was presented to him by the wife, was entitled to come to the conclusion that he did and grant the wife leave to institute the proceedings.

There are two other points to which I want to make brief reference. One is the issue that was raised that his Honour should have disqualified himself on the ground of his bias.

Our attention was drawn to several passages in the transcript in which it was alleged that his Honour had shown irritability, impatience with the husband's case, unwillingness to allow the husband to present the case in the way that the husband's counsel saw fit, and that he had indicated to the parties that the matter ought to be settled; no doubt a settlement by the payment of some moneys to the wife.

The question of the circumstances in which a Judge of this Court should disqualify himself/herself for reasons of bias have been considered by the Full Court on a number of occasions. Most prominently in recent years in Sealey and Sealey (1986) FLC ¶91-736 which was endorsed by the Full Court in Giunti and Giunti (1986) FLC ¶91-759. I need not repeat here the points which were made by the Full Court in Sealey and Sealey at pp. 75,359-75,360.

But basically it is quite clear that if a Judge indicates or is seen to indicate that he or she has prejudged an issue that is a live issue as between the parties, or has come to a conclusion beforehand as to the credit of a witness, that Judge should disqualify himself or herself whatever might have been the subjective intention of that Judge.

In the present situation the complaints which were made against his Honour can be divided into three situations. There is, first of all, the statement made by his Honour quite early in the proceedings that this should be a short matter; that cross-examination of the wife on her case is unnecessary. It is a view in which, with respect, I would agree with his Honour for the reasons which I have earlier given.

In the event, of course, his Honour did permit the cross-examination of the wife by the husband and it is therefore very hard to see what the husband has to complain about it, except I suppose, that his Honour did not do it with as good a grace as the husband might have liked.

The next point which arises is the somewhat cryptic statement by his Honour that like Martin Luther King, he had a dream. It would be fair to read that as an indication of his view that this was a matter which the parties ought to settle, and indeed that is a theme which is repeated by several remarks by his Honour, not merely during the course of the proceedings, but up to and including the termination of the proceedings. In my view, there is nothing wrong with a Judge urging the parties to settle a particular dispute and such an urging does not necessarily indicate in my view that the Judge has come to a conclusion as to the success or otherwise of the applicant's case.

A settlement may be by way of compromise: it may be based upon the wife accepting an amount which was considerably less than she might be hoping for, discounting what she might think would have been her entitlement had she obtained leave, that is to say, by reference to the chances as assessed by her legal advisers, of the probability that she would be granted leave in this case.

His Honour did not in any way indicate how the matter was to be settled, or at what figure it should be settled, and it cannot therefore be inferred, since his remarks in my view at all times were cautiously made to the point of cryptic, that his Honour appeared in any way to have prejudged the issues.

The next ground was his Honour's reminders from time to time to the fact that the clock was ticking throughout the proceedings. Again, in my view, it is the duty of a Judge to try and keep the proceedings within limits, to try and save the parties costs and expense; and it is quite legitimate, where a Judge is of the view that one of the parties is spending time unnecessarily on issues which are not relevant or only marginally relevant, to remind that party that he or she is engaging in that course at the risk of costs.

And having regard to the history of this matter and the manner in which it was conducted, again for the reasons I have earlier expressed, in this case his Honour, in my view, was fully entitled to issue those reminders to those who represented the husband.

That brings me to the final issue which was raised in this case and is relevant in these proceedings and more or less answers that one as well, and that is the question of the order which his Honour made as to costs. His Honour made an order that the husband pay the wife's costs which he assessed at $5,000. No point was taken before us in repect of the quantum, and therefore I do not concern myself with that issue.

The point was taken that since the wife was approaching the Court for an indulgence, it was a situation in which, prima facie, the husband should not be ordered to pay costs. I would agree with that proposition as generally stated. However, in determining whether or not an order for costs should be made. sec. 117(2A) lays down a number of considerations.

One of these directs the Court to consider the manner in which the proceedings were conducted. For reasons which in effect form a thread in my reasoning, it is my view that the proceedings were conducted by the husband in an extravagant and wasteful way. His Honour did not stop the husband from engaging in that conduct but rightly warned the husband's representatives that they left their client open to an order for costs at the end of the proceedings.

For those reasons, in my view, his Honour was fully entitled to make an order for costs against the husband in the circumstances of this case. For the reasons I have given, I would dismiss the appeal.

Fogarty J.: I agree that the appeal should be dismissed, and I agree with the reasoning of my brother Nygh J. I would just add one reference, if I may, to the last matter to which his Honour has referred, namely, the question of costs.

This case reminded me of the comments made by the New South Wales Court of Appeal in Hermann v. Charny (1976) 1 N.S.W.L.R. 261 at p. 268:

``Orders for costs are one of the ways, possibly one of the most effective ways, of a court controlling the standards of the profession and the efficiency of litigation.''

No doubt, in this particular case, the emphasis is upon the words ``efficiency of litigation'' and those remarks by the New South Wales Court were specifically adopted by the Full Court of this Court in J and P (No. 2) (1986) FLC ¶91-707 at p. 75,127. As I have already indicated, in my view the appeal should be dismissed.

Walsh J.: I agree with the reasons of my brother Nygh J. I have nothing to add, and I would dismiss the appeal.

Fogarty J.: The order of the Court is that the appeal is dismissed.