JACOBSON & WYNNE
[2017] FCCA 2801
•20 November 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JACOBSON & WYNNE | [2017] FCCA 2801 |
| Catchwords: HELD – the Husband will not suffer hardship if leave is refused – leave to apply out of time not granted – application dismissed. |
| Legislation: Family Law Act 1975 (Cth), ss.44(3), 44(4) |
| Cases cited: Whitford & Whitford (1979) FLC 90-612 Sharp & Sharp [2011] FamCAFC 150 |
| Applicant: | MR JACOBSON |
| Respondent: | MS WYNNE |
| File Number: | MLC 4803 of 2017 |
| Judgment of: | Judge Bender |
| Hearing date: | 21 September 2017 |
| Date of Last Submission: | 21 September 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 20 November 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Mort |
| Solicitors for the Applicant: | Harwood Andrews |
| Counsel for the Respondent: | Dr Parker |
| Solicitors for the Respondent: | Grace Law |
ORDERS
The Initiating Application filed by the Husband on 18 May 2017 be dismissed.
The matter be removed from the pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Jacobson & Wynne is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 4803 of 2017
| MR JACOBSON |
Applicant
And
| MS WYNNE |
Respondent
REASONS FOR JUDGMENT
Introduction
This is the Husband’s application for leave pursuant to section 44(3) of the Family Law Act 1975 (Cth) (“the Act”) to issue proceedings out of time for a division of the parties’ property interests pursuant to section 79 of the Act.
At the commencement of the hearing of this matter it was jointly proposed by Counsel for both parties that the application proceed on the basis of oral submissions only and that the parties not be called to give vive voce evidence. The Court was amenable to that proposal and the matter proceeded on that basis.
The Husband relies on his affidavits sworn 12 May 2017 and 7 September 2017. The Husband also relies on his Financial Statement sworn 12 May 2017.
The Wife relies on her affidavits sworn 7 July 2017, 28 August 2017 and 20 September 2017. The Wife also relies on her Financial Statement sworn 7 July 2017.
Counsel for both parties made oral submissions on behalf of their clients at the hearing of this matter.
Background
The parties commenced cohabitation in 1990. They married on (omitted) 1991 and were divorced on 15 October 2006. There are no children of the marriage.
It is the Husband’s evidence that following their divorce, the parties remained living “under the one roof”[1], albeit he regularly travelled between his mother’s home in Victoria and the Wife’s home in Queensland due to the ailing health of his mother as well as his own health complications resulting from a workplace injury in 2002 which required ongoing surgery and treatment in Melbourne. It is the Husband’s evidence that final physical separation occurred in May 2010 when he “vacated the property”[2].
[1] Affidavit sworn by the Husband 12 May 2017, paragraph 3.
[2] Ibid.
It is the Wife’s evidence that at the time of their divorce in October 2006, the parties had been separated and living apart for some three years: she initially in Victoria and then Queensland and the Husband with his mother in Victoria. It is the Wife’s evidence that whilst the Husband stayed with her in Queensland on an irregular basis, this did not reflect a continuation of their relationship, but rather was a “lodging” type arrangement given the dire financial circumstances the Husband was in at the time. It is her evidence that when the Husband was staying with her in Queensland, there was no interaction between the parties whatsoever. It is her further evidence that the parties did not cohabit in Queensland at any time.
At the commencement of their relationship the Husband owned a Holden Commodore motor vehicle, a small amount of cash savings and a small amount of superannuation. The Wife also had a small amount of superannuation and cash savings, as well as a unit in Property C which was encumbered and in which she held approximately $25,000 equity.
The Husband, now aged 66, was employed as a (occupation omitted) until 1991, after which time he undertook labour work for a brief period. From 1993 he worked on a (occupation omitted) for (employer omitted) until his retrenchment in 1997. It is his evidence he would often work 12 hours per day for seven days a week during this time. From 1998 the Husband worked for (employer omitted) in (omitted). In 2002 he suffered a devastating workplace injury to his back. This injury left him debilitated and he has been unable to undertake paid employment since. It is the Husband’s evidence that prior to his injury, he also worked long hours for (employer omitted).
The Husband is in receipt of an aged pension. He deposes to a current income of approximately $20,000 per annum.
The Wife, now 63 years old, has worked for the (employer omitted) in various positions since well prior to the commencement of the relationship. The Wife’s current position is as an (occupation omitted) with the (employer omitted) in (omitted) earning $63,000 per annum.
During their relationship the parties purchased and sold a number of properties in Victoria. The Wife has also had various property dealings in Queensland following her relocation to (omitted) in 2004.
The parties’ evidence as to their financial history and the various property dealings made by them is not set out in their material in any clear way. As best as can be ascertained from their affidavits filed in these proceedings, the history of their property transactions is as follows:
| Date | |
| 1990 | Parties commenced cohabitation |
| 1991 | The Wife sold her unit at Property C The parties jointly purchased property at Property B and build a house on the property |
| (omitted) 1991 | Parties marry |
| 1993 | The parties sell Property B |
| 1993-1997 | Parties live in rental accommodation |
| Early 1997 | The parties jointly purchase property at Property D (“Property D property”), upon which they build a house |
| 1998 | The Wife receives $80,000 redundancy payment from the (employer omitted) |
| c. 1997-2002 | The parties purchase an investment property at Property N and sell 12 months later The parties purchase an investment property at Property G and sell approximately 18 months later The parties purchase a townhouse at Property H and sell shortly thereafter Sale proceeds from the Property G and Property H properties utilised to reduce the mortgage on Property D property |
| 2003 | The parties sell Property D property, realising a net profit of either $260,000 (Wife) or $300,000 (Husband) The proceeds of sale from Property D property are utilised by the Wife to purchase a house and land package in Property I in her name |
| October 2003 | The Wife moved into rental accommodation and the Husband moved in with his mother. It is the Wife’s evidence that separation occurred at this time |
| April 2004 | The Wife moved to live in the property in Property I. The Husband remained living with his mother The Wife utilises further proceeds from the sale of Property D property for her relocation expenses |
| Nov 2004 | The Wife moved from the parties’ Property I property to rental accommodation in (omitted) The Wife sold the Property I property for $220,000 |
| April 2005 | The Wife purchased a property at Property A and applied the proceeds of sale from the Property I property to the purchase of the Property A property |
| c. 2004/2005 | The Husband purchased a Toyota (omitted). The Wife drew down $25,000(E) of her mortgage on the Property A property and gave it to the Husband to assist in the purchase of the vehicle. |
| May 2006 | The Wife purchased a property at Property L and built a house on the property for a total expenditure of $380,000 |
| October 2006 | The Wife sold Property A for $385,000(E) |
| 15/10/2006 | The parties are divorced |
| (omitted) 2007 | The Husband’s mother dies |
| c. 2007-2009 | The Wife purchased land at Property M for $180,000 and sold it for a $36,000 loss |
| April 2008 | The Husband received an inheritance of $96,370 from his late mother’s estate. It is the Husband’s evidence he loaned all of his inheritance to the Wife. It is the Wife’s evidence the amount loaned to her by the Husband was $70,000. Transaction records indicate that $70,000 was transferred by the Husband to the Wife. The Wife repaid the $70,000 loan. |
| May 2009 | The Wife purchased a property at Property J (“Property J”) for $380-390,000 |
| June 2009 | The Wife sold the Property L property |
| 2009 | The Wife purchased a property at Property F (“Property F”)for $380,000 and built a house upon the land The Husband received $90,000 by way of compensation payment related to his 2002 workplace injury |
| 2010 | The Husband purchased a property at Property E for $174,000 and moved into the property |
| c.2011-2012 | The Wife purchased a unit at Property K (“the Property K unit”) for $285,000 and moved into the unit |
| 2012-2017 | The Wife lives in the Property K unit |
| 6/10/2012 | The Wife sold Property J and receives a net sum of $300,000(E) |
| April 2017 | The Wife moved out of the Property K unit |
Currently the Wife owns Property F and the Property K unit which are both tenanted. It is her evidence, supported by sworn valuations, that the properties have a total value of $500,000 and are encumbered by mortgages of $480,000. The Wife also has a line of credit of $41,000.
It is the Husband’s evidence that the parties made an oral agreement in or around 2008 that the Wife would pay to him by way of informal property settlement an amount of $160,000. It is the Husband’s further evidence that the payment of $160,000 was to be in addition to the repayment of the $96,370 owed to him by the loan he made to the Wife from his inheritance, meaning that he would receive a total payout from the Wife of $256,370.
The Wife refutes there was any agreement between she and the Husband that she would pay the Husband $160,000 or any amount at all save for the communication referred to at paragraph [28] herein.
The two year period in which property proceedings could be commenced by the parties lapsed on 15 October 2008.
As set out in paragraphs [7]-[8] of this judgment, it is the evidence of both parties that the Husband spent some time staying with the Wife in Queensland in the years following their divorce. However, the nature of their living arrangement is disputed. The Wife asserts it was purely a lodging style arrangement and that besides sharing some meals together, the parties did not associate with one another at all. It is the Wife’s evidence she allowed the Husband to stay with her as he had nowhere else to stay. It is the Husband’s evidence that he was living with the Wife in Queensland and that they were in effect separated “under the one roof”.[3]
[3] Affidavit sworn by the Husband 12 May 2017, paragraph 3.
It is the Husband’s evidence that the parties’ final physical separation occurred in May 2010.
At paragraph [24] of his affidavit sworn 7 September 2017 the Husband deposes that the parties spoke “very regularly” on the telephone following their final physical separation. It is his evidence these telephone conversations initially took place weekly, then fortnightly and eventually monthly.
It is the Husband’s evidence that between 2012 and 2016 the parties had numerous telephone discussions about the prospective property settlement between them. It is his evidence that it was always understood between the parties during this time that the Wife would pay him when she was in a financial position to do so.
The Wife denies the parties regularly spoke to each other on the phone between 2012 and 2016. It is the Wife’s evidence she had not heard from the Husband “in years” when he rang her unexpectedly in 2016.
At the hearing of this matter the Husband was not able to provide any independent evidence that the conversations he alleges occurred between 2012 and 2016 between he and the Wife regarding their oral agreement, took place. It is the Husband’s evidence that he does not communicate via text message or email and that he uses a pre-paid mobile phone only.
It is the Husband’s evidence it was not until early 2016 when he began to more firmly pursue the monies “owed” to him by the Wife, that he started to doubt she would pay him the amount she had allegedly agreed to. It is his evidence when he and the Wife could not reach agreement, it was arranged between he and the Wife that he would fly to Queensland to stay with her, so they could discuss the matter of settlement. He deposes at paragraph [27] of his affidavit sworn
7 September 2017 that the Wife had agreed to pick him up from the airport in Queensland upon his arrival.
Tendered into evidence by Counsel for the Husband at the hearing of this matter were airline tickets for the Husband to fly to (omitted) on (omitted) 2016, returning to Melbourne on (omitted) 2016.
The Husband did not fly to (omitted) in (omitted) 2016. It is his evidence this was because the Wife notified him approximately three to four weeks prior to his scheduled travel that he would not be able to stay with her because she had met someone. The Husband deposes at paragraph [28] of his affidavit sworn 7 September 2017 that the Wife then told him she would sell her rental property and that he would be entitled to the balance of the proceeds of sale after the payment of her liabilities.
It is the Wife’s evidence she does not recall any conversations with the Husband whereby she promised him $160,000 by way of property settlement and a refund of $96,370, totalling $253,370. It is her evidence that after Property J sold in 2012, she offered the Husband a portion of the proceeds of sale from that property, but that the Husband, in effect, stated he did not want any of the proceeds.[4] It is the Wife’s evidence there have been no discussions about an informal property settlement since that time.
[4] Affidavit sworn by the Wife 28 August 2017, paragraph 58.
The Wife agrees that the Husband asked to stay with her in 2016. At paragraph [60] of her affidavit sworn 28 August 2017 she deposes as follows:
“I hadn’t heard from Mr Jacobson (sic) in years until 2016, when Mr Jacobson asked if he could come and stay with me again. I informed Mr Jacobson that the answer was “no” as I had met someone and I didn’t want my new partner … to have to contend with Mr Jacobson. It was after I told Mr Jacobson that I had met someone else that I received a letter from Mr Jacobson’s solicitor.”
The Husband’s solicitors wrote to the Wife on 9 August 2016 advising they acted for the Husband and that he was seeking a property settlement. It is the Wife’s evidence the letter from the Husband’s solicitor was the first indication she received from the Husband that he was seeking a property settlement.
The Husband filed an Initiating Application with the Federal Circuit Court on 18 May 2017 seeking leave pursuant to section 44(3) of the Act to institute property proceedings out of time, and if successful, that orders be made pursuant to section 79 of the Act such that the Wife make payment to him “such sum as is deemed appropriate by this Honourable Court”.
The Wife filed a Response on 7 July 2017 seeking that the Husband’s Initiating Application filed 18 May 2017 be dismissed.
The Law
Subsections 44(3) and 44(4) of the Act provide:
“(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.”
The law as to whether leave should be granted to initiate proceedings outside the standard application period is well settled.
The leading case which has been cited with approval in most section 44 leave applications since it was decided, is the matter of Whitford & Whitford (1979) FLC 90-612. The Full Court held at 78,144:
“…on an application for leave under s 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.”
Thus, when determining an application for leave out of time two questions arise:
a)firstly, is the Court satisfied hardship would be caused if leave were not granted?
If the answer to this question is yes;
b)should the Court in the exercise of its discretion grant or refuse leave to institute the proceedings?
Hardship
When discussing what constitutes hardship for the purposes of section 44 of the Act, Justices May and Ainslie-Wallace in the matter of Sharp & Sharp [2011] FamCAFC 150 held at paragraphs [17]-[21] as follows:
“17. It is well accepted that hardship for these purposes is more than the loss of a right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship. That is a matter to be determined by the circumstances of the particular case.
18. In assessing hardship in this context the well established test is that the applicant must have a prima facie claim worth pursuing or a “real” probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship. However, whether or not hardship exists is not to be assessed only by reason of the monetary value of the probable order to be made if leave were granted.
19. In considering the meaning of hardship, in Whitford at 78,144 the Court said:
“... The requirement, that the Court must be satisfied that hardship would be caused if leave were not granted, implies that it must be made to appear to the Court that the applicant would probably succeed, if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted … If the probable result of the hearing on the merits is that the hardship is not likely to be alleviated, then the Court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted.”
20. Further at page 78,145 the Court said:
“… As a general proposition it might be said that, the inability of an applicant to pursue a claim which in the circumstances of the applicant or a child of the marriage is trifling, generally will not cause hardship. Similarly, where the costs which the applicant will have to bear himself or herself are about as much or more than what the applicant is likely to be awarded on a property claim, ordinarily hardship would not result if leave to institute proceedings were not granted. But otherwise we find no warrant in either subsec. 44(3) or 44(4) for saying that the right or entitlement lost must be a substantial one.”
21. At the same page the Court continued:
“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 Sharp (supra) at paragraphs [128]-[135] Young J considered the meaning of hardship in section 44 of the Act. His Honour held:
“128. In Whitford (supra) the Full Court at 78,144 to 78,145, in addition to the passages cited in the reasons of May and Ainslie-Wallace JJ above, specifically considered the meaning of hardship as stated in s 44(4)(a). The Full Court observed that:
“In our view the meaning of “hardship” in subsec. 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”. We consider that in subsec. 44(4) the word should have its usual, though not necessarily it’s 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.”
129. Similarly, in Hall (supra) at 78,627 the Full Court stated that the authorities:
“…have considered what is meant by the term “hardship” in this context, and the term “substantial detriment” seems to be the generally accepted interpretation of that word.”
130. It follows from the discussion in Whitford (supra) at 78,144, and Hall (supra) at 78, 627, that in the context of s 44(4)(a) hardship has a broad meaning and, as identified by the majority, although the mere loss of a prospective entitlement to pursue a substantive claim may not of itself constitute hardship it is the consequences attending the loss of the right “with which the subsection is concerned”. However, in Whitford (supra) it is important to note that the Court observed at 78, 145 that:
“Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship. In some cases, where a resolution of the property or financial relationships of the parties is desired, it might be, that the applicant would receive no more or even less, than he or she already owns at law or in equity. Nevertheless, hardship might be caused to the applicant if leave were not granted so as to facilitate such resolution…”
131. From the observations in Whitford (supra) and Hall (supra), and in view of the recent authorities of the Full Court on the subject of hardship, it is apparent that an assessment of hardship requires the Court to consider whether the applicant would suffer a substantial detriment as a consequence of the loss of the right to institute the proceedings, although that detriment, in the circumstances of a particular matter, may not be entirely related to financial considerations. In my opinion, it is not possible nor desirable to define exhaustively what will, in all the circumstances of a particular application, constitute hardship for the purposes of s 44(4)(a). However, in undertaking the exercise the Court should have regard to the nature of the jurisdiction exercised by the Family Court and the 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 decree nisi” per Whitford (supra) at 78,146.
132. In undertaking an assessment of hardship the Court is required to consider whether the applicant has established a prima facie claim and in Hall (supra), at 78,627, the Full Court stated that:
“Fundamental to [a finding of hardship] is a determination of the quality or character of the potential claim. In relation to that different cases have used somewhat different phrases to describe it so that it has become something of a matter of semantics to describe in different ways what is really the same basic concept. For example in Swallow’s case (unreported Emery J, 16 September 1977; referred to in McDonald’s case) it was said to be “a prima facie case which is in the circumstances substantial”; the Full Court in McDonald’s case differed from that by stating that it ought to be “a reasonable prima facie case”. In Mackenzie’s case it was described as being “a probability of success”, and in Whitford’s case the distinction was said to be that the applicant would need to show that she would “probably succeed” to be contrasted with a situation where she had “no real probability of success”. In Perkins’ case (1979) FLC 90-600 Lindenmayer J described it as “a reasonable probability of the claim being successful in some measure”.
These varying phrases may tend to suggest different shades of meaning whereas in reality they are directed to the same fundamental inquiry which basically is in the context whether on the applicant’s material he or she has a reasonable claim to be heard by the court…”
133. In Althaus (supra) at 77,267 the Full Court similarly observed that “[t]he 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.”
134. More recently in Hedley (supra) at paragraph 215, Cronin J cited the Full Court decision of Richardson (supra) at paragraph 14, in which Finn, Warnick and Boland JJ stated and affirmed the principles set out by the primary judge who observed that “it is not a decision about whether the claim will succeed but whether there is a reasonable claim to be heard”.
135. In my opinion, in undertaking a determination of whether the requisite hardship will be occasioned to the applicant under s 44(4)(a) what is required by the Court is an assessment of the asserted hardship, and in view of that hardship, a determination of whether the applicant has demonstrated that there is a reasonable claim to be heard. If the applicant has established that there is a reasonable claim to be heard and has demonstrated that she or he would suffer hardship in the form of a substantial detriment as a consequence of the loss of the right to institute the proceedings, then the statutory precondition in s 44(4)(a) will be satisfied and the Court may then consider whether in all the circumstances leave should be granted to allow the application under s 44(3) of the Act.”
The Husband
It is submitted on behalf of the Husband that he will suffer hardship if he is not granted leave pursuant to section 44(3), as he will lose his right and entitlement to pursue a property claim.
The Husband submits that the loss of this right amounts to a substantial detriment given that his 2002 workplace injury rendered him unable to work and to earn an income into the future. The Husband is now 66 and in receipt of an aged pension. It was submitted on behalf of the Husband that without the receipt of compensation for his injury, together with the inheritance from his late mother’s estate, he would not have been able to purchase his home at Property E. Whilst it is not submitted the Husband is in necessitous circumstances, it is argued that a property settlement would greatly enhance the Husband’s circumstances.
It is further submitted on behalf of the Husband that his application for an order that a payment be made to him by the Wife is reasonable, given that in her various property dealings in Queensland the Wife has had the sole benefit of the monies which originated from the proceeds of sale of Property D property in 2002/2003. It is the Husband’s submission that the sale of Property D property marked a fork in the road in their relationship, as it was after this time that the Wife moved to Queensland and he, having recently suffered his serious workplace injury, moved back into his mother’s home.
It is the Husband’s evidence that despite receiving ongoing assurances from the Wife that she would pay him $160,000 by way of informal property settlement, this payment has never eventuated and that this has now necessitated his application to the Court.
Both in his affidavit material and in oral submissions made by Counsel on his behalf, the Husband takes considerable issue with the lack of disclosure provided by the Wife in relation to her financial circumstances post-separation. The Husband has issued 5 subpoenas to financial institutions in an effort to shed light on the Wife’s financial position.
Produced pursuant to subpoenas issued by the Husband were two loan applications which were signed by the Wife in 2010 and 2011 respectively. The Husband takes particular issue with the disparity between the figures deposed to in those applications and the figures deposed to in the Wife’s Financial Statement sworn 7 July 2017.
In her 2010 loan application the Wife claimed a net worth of $1,255,000. In her 2011 loan application the Wife claimed a net worth of $1,448,353.80. In her Financial Statement sworn 7 July 2017 the Wife deposes to a total net worth of $226,700 inclusive of superannuation and in her affidavit sworn the same date she deposes to a figure of $193,851. With respect to superannuation, in her 2010 loan application the Wife claimed an entitlement of $228,000. In her 2011 loan application the Wife claimed an entitlement of $428,703. At paragraph [15] of her affidavit sworn 28 August 2017 the Wife deposes that her current superannuation entitlement is $242,803.
At the hearing of this matter, Counsel for the Husband indicated that the Husband’s solicitors had forwarded to the Wife’s solicitors on 8 August 2017 a request for answers to specific questions that the Wife has not complied with.
It was submitted on behalf of the Husband that the Wife’s failure to properly and adequately disclose the dramatic fluctuation in her financial circumstances during the period post-separation means that neither the Husband nor the Court can have any confidence in her asserted current assets and liabilities. Further, it was posited by Counsel for the Husband that the dramatic fluctuations reflected in her superannuation funds may be indicative of the Wife attempting to furtively conceal funds that she had otherwise promised to the Husband, such that she would be able to continue to avoid payment.
It is submitted on behalf of the Husband that the inconsistent figures between the Wife’s loan application and her Financial Statement have not been adequately explained by the Wife in her affidavit material.
It is further submitted on behalf of the Husband that the Wife’s lack of disclosure increases the detriment that he would suffer should he not be permitted to pursue property proceedings, as the Wife’s surreptitious transfers between accounts and/or her superannuation funds have clouded the ability of the Court to determine what her financial circumstances are and more particularly, where the monies arising from the sale of Property D property in 2003 have flowed.
It is therefore submitted on behalf of the Husband that hardship will be occasioned should he not be permitted to institute proceedings for a property settlement and that, given his age and physical state and the Wife’s failure to properly disclose her financial circumstances, such hardship will constitute a substantial detriment.
The Wife
It is submitted on behalf of the Wife in accordance with the decision of Whitford (supra), that the meaning of hardship is akin to concepts such as hardness, severity, privation and substantial detriment, and that the Court should not find that the Husband has satisfied those concepts in this case.
Counsel appearing on behalf of the Wife pointed to the Husband’s unencumbered home, his motor vehicle, his cash savings and $30,000 superannuation which he has not yet accessed, as well as his lack of debt, as factors supporting the Wife’s submission that hardship would not be suffered by the Husband if he is not given leave to issue property proceedings.
Further, Counsel for the Wife drew the Court’s attention to the receipt by the Husband of the compensation payment for his workplace injury, as well as the inheritance from his late mother’s estate.
In his affidavit material the Husband alleged he lent the Wife the entirety of his inheritance and sought its repayment. It is the Wife’s evidence the Husband lent her $70,000 of his inheritance which she repaid in full. At the hearing the Husband conceded that the $70,000 has been fully repaid to him by the Wife. It is therefore submitted on behalf of the Wife that the Husband has had the benefit of all of his inheritance and compensation payment.
With respect to the compensation payment for the Husband’s workplace injury, it is submitted on behalf of the Wife that as the injury occurred in 2002 during the parties’ relationship, the $90,000 payment received by him would have formed part of the asset pool had proceedings been instituted within the standard application period.
It is submitted on behalf of the Wife that the Husband’s application for a property settlement pursuant to section 79 has no merit and that there is a real risk that his costs of pursuing the application will exceed any amount which he would be awarded.
Counsel appearing on behalf of the Wife indicated that if the Husband were successful in his application for leave to proceed out of time, it would be her client’s position that orders adjusting the parties’ current property interests would not be just and equitable and that she would oppose any orders for an alteration of their respective property interests in accordance with the High Court decision of Stanford & Stanford [2012] HCA 52.
To support her submission that the Husband is unlikely to be successful in his claim, Counsel appearing on behalf of the Wife highlighted the Wife’s current modest financial position.
At paragraph [15] of her affidavit sworn 28 August 2017 the Wife sets out her current assets and liabilities. The Wife deposes to non-superannuation assets of $503,000 being the Property K unit, Property F, a 12 year old motor vehicle and furniture. Both of the Wife’s properties have been recently valued. The Wife deposes to liabilities of $536,952 being mortgages on each of the properties, a line of credit for $41,000 and a further credit card debt of $11,952. The Wife also deposes to superannuation of $242,803. The Wife therefore deposes to a net worth of $208,851 inclusive of superannuation.
It is the Wife’s evidence that the Property K unit was badly damaged by Cyclone Yasi in 2012 and that repairs to that property were not fully covered by the insurance. She had to use her line of credit to pay for the repairs.
It is the Wife’s further evidence that following damage to Property F caused by tenants in 2016, costly repairs were required during which time this property could not be tenanted. It is the Wife’s evidence that she had to utilise her line of credit to pay for the repairs and meet the mortgage payments while Property F was vacant.
It is therefore the Wife’s evidence that excluding superannuation her liabilities exceed her assets.
In her Financial Statement sworn 7 July 2017 the Wife deposes to having an average weekly income of $1,702 and total personal expenditure of $2,080 per week.
In her most recent affidavit sworn 20 September 2017, the Wife responds to the Husband’s complaints with regard to the disparity in figures contained in the 2011 loan application and her Financial Statement sworn 7 July 2017. The Wife deposes that she has never had a net worth of $1,448,353.80 as is claimed in the loan application. At subparagraphs [1](b)(ii)-(iii) of her affidavit the Wife deposes that her actual net worth at the time she completed the loan application, not inclusive of superannuation, was $273,795.
The Wife deposes at subparagraph [1](c) of her affidavit sworn 20 September 2017 that she has never held superannuation in the amount of $428,703 as is claimed in the 2011 loan application. To her affidavit the Wife annexes statements from each of her two superannuation funds which show the Wife’s entitlements as:
a)(omitted) Superannuation at 30 August 2011 - $98,995.63; and
b)(omitted) Superannuation at 1 July 2012 - $28,352.92.
Counsel appearing on behalf of the Wife confirmed the Wife’s instructions that the 2010 and 2011 loan applications were completed by a broker engaged on behalf of the Wife and not by her. It is for this reason that the figures contained within them are erroneous.
Counsel appearing for the Wife confirmed the Wife’s instructions that the increase in the Wife’s superannuation between 2011 and now is attributable to the fact that as a (employer omitted) employee she receives superannuation of 15.9% of her salary per year. It is the Wife’s evidence that the vast majority of her superannuation entitlement has been accrued post-separation.
The Wife denies the Husband’s allegation that she has surreptitiously transferred monies from her superannuation funds in an effort to evade any responsibility that she had to pay the Husband an amount of $160,000.
It is submitted on behalf of the Wife that it has been she alone who has serviced the rates, mortgages and outgoings on all of her properties in Queensland, including during the time the Husband stayed with her for intermittent periods prior to and during 2010.
It is the Wife’s submission that given the parties’ current financial circumstances, the Husband has no real prospect of achieving a successful outcome in this matter in the form of a payment to him by the Wife. Further, the Husband is not in necessitous circumstances. It is therefore the Wife’s submission that the Husband would not suffer hardship if leave to make application out of time is refused.
Conclusion - Hardship
In this matter the period in which the Husband could make application for property proceedings lapsed on 15 October 2008. In order to be granted leave to proceed out of time, the Husband needs to first persuade the Court that he would suffer hardship in the event leave is not granted.
The Court accepts the Wife’s submission that the concept of “hardship” in section 44 of the Act is akin to notions such as hardness and severity.
It is clear from the Full Court’s decision in Whitford (supra) that where an Applicant is not in necessitous circumstances, hardship may nevertheless be brought about by the loss of the opportunity to pursue property proceedings. The Full Court stated:
“Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship. In some cases, where a resolution of the property or financial relationships of the parties is desired, it might be, that the applicant would receive no more or even less, than he or she already owns at law or in equity. Nevertheless, hardship might be caused to the applicant if leave were not granted so as to facilitate such resolution…”
The Husband is not in dire financial circumstances. He is living in an unencumbered home in Property E and has a relatively new motor vehicle. He has superannuation that he is able to access immediately given he has retired. He is also in receipt of an aged pension.
However, the Husband’s financial circumstances are not determinative of the question of hardship. Rather, the Court must consider the consequences attending the loss of the opportunity to institute property proceedings should leave be refused.[5]
[5] Sharp & Sharp [2011] FamCAFC 150 at 17, 130.
In order to consider the likely detriment to the Husband should leave be refused, the Court must consider the merits of the Husband’s claim. If the Husband’s claim is considered to be without merit the Court can hardly be satisfied that he would suffer hardship in the form of a substantial detriment should he be denied the opportunity to pursue his claim.
The Husband seeks orders in his Initiating Application that the Wife pay the Husband “such sum as is deemed appropriate by this Honourable Court”. It is therefore not possible to determine the exact nature of the payment sought by him. However, it is the Husband’s evidence that it has always been understood between the parties that he would be paid the sum of $160,000 by the Wife. The Husband also sought orders the Wife repay him the sum of $96,370, being the inheritance from his mother which he alleged he had loaned to the Wife. It was conceded during the hearing of this matter that there was evidence the Husband had lent the Wife $70,000 and she had repaid this amount in full.
Irrespective of the existence of a precise figure being sought, in order for the hardship requirement to be satisfied, the Court does not have to be persuaded that the Husband would obtain precisely the orders he is seeking in his Initiating Application. However, as was stated by Young J in Sharp (supra), the Court should be satisfied that the Husband has “a reasonable claim to be heard”.
It is the Wife’s submission that any alteration of the parties’ property interests would not be just and equitable. It is further submitted on behalf of the Wife that if the Court is persuaded the Husband should be granted leave out of time, and that he overcomes the threshold question of whether a property division is just and equitable, there is a serious likelihood that the Husband’s legal costs would exceed that which he would be entitled to under any orders for a payment to him by the Wife. It is therefore the Wife’s submission that the Court should not be satisfied the Husband has a reasonable claim to be heard.
It is submitted on behalf of the Husband that his entitlement to a payment from the Wife arises because of the Wife’s sole use of the proceeds of sale from the parties’ jointly owned Property D property in 2003/2004.
The Wife does not deny that she used the proceeds of sale of Property D property for her sole benefit, save for the contribution she made towards the Husband’s purchase of a motor vehicle in 2004/5. It is apparent that a substantial portion of the proceeds of sale of Property D property was used to purchase a house and land package in Property I. Whether this purchase was made by the Wife with the Husband’s knowledge and acquiescence remains unclear. It is the Wife’s evidence she also used a portion of the proceeds of sale of Property D property to meet the costs of her relocation and living costs in Queensland until she obtained employment.
After her move to Queensland, the Wife purchased and sold several properties in Queensland. It would appear that she used the proceeds of sale from the preceding property and borrowed funds to contribute to the purchase of the next property.
Whilst it is not possible to ascertain precisely how each purchase and sale by the Wife after her move to Queensland unfolded, the Court does not accept the Husband’s submission that the Wife has deliberately failed to adequately disclose the nature of her financial circumstances.
The Wife has sworn a Financial Statement dated 7 July 2017 which sets out her assets and liabilities. The Wife has also filed three affidavits in these proceedings. In her affidavits sworn 7 July 2017 and 28 August 2017 the Wife outlines her current assets and liabilities in significant detail. Both of the Wife’s current properties have been very recently valued and the Husband does not take issue with those valuations. The Wife also deposes to the financial circumstances of the parties both during and after their relationship and explains how she finds herself in her current financial difficulties.
The Wife agrees with the Husband’s evidence of the parties’ relationship. She appropriately challenges the Husband’s evidence of their post-separation relationship, particularly with respect to the nature of the Husband’s stays with her in Queensland between 2006 and 2010 and the nature and regularity of telephone conversations between them between 2010 and 2016.
When the Wife was challenged by the Husband as to the figures contained in her subpoenaed 2011 loan application, she filed an affidavit sworn 20 September 2017 that explained the disparity in those figures and annexed supporting documents to demonstrate the true nature of her financial circumstances at that time.
Whilst the Husband complains about the Wife’s failure to answer specific questions sent to her by his solicitors on 8 August 2017, she was and remains under no obligation to provide answers, as leave has not been granted to the Husband to seek answers to specific questions pursuant to rule 14.01 of the Federal Circuit Court Rules 2001 (Cth).
The Court is therefore not convinced there is anything evident in the Wife’s material filed to date that indicates she has been dishonest or surreptitious in the disclosure of her financial circumstances.
The Court accepts that the Wife’s current financial circumstances are as set out in her Financial Statement and affidavits filed in these proceedings.
It is the Wife’s evidence that excluding superannuation, her liabilities exceed her assets. It is her further evidence that her average weekly expenditure currently exceeds her income and that she does not have the capacity to pay the Husband any sum of money, let alone the amount sought by him.
Aside from the Wife’s two properties, the values of which are exceeded by their mortgages and an overdraft by a figure of approximately $34,000, the Wife’s major asset is her superannuation. The Wife intends to retire within the next couple of years.[6] At paragraph [16] of her affidavit sworn 28 August 2017 the Wife states that:
“I commenced superannuation contributions … on 3 July 2000. The Respondent and I divorced six years later. I have since accumulated a further eleven (11) years of superannuation since my divorce. I hope to pay the balance owing on my unit with these funds once I retire.”
[6] Affidavit sworn by the Wife 28 August 2017, paragraph 64.
After moving to Queensland, the Wife utilised the proceeds of sale of the parties’ jointly owned property to invest in a series of property purchases, no doubt with the intention of making a profit and improving her financial position. Unfortunately this is not what has occurred and she is now in a position where her liabilities exceed the value of the real estate owned by her.
If the Husband’s evidence is accepted that he spent considerable time with the Wife in Queensland from 2004 to 2010 and was then in regular telephone communication with her between 2010 and 2016, he must have been aware of the Wife’s various property dealings in Queensland.
It is not the Husband’s evidence that he at any time sought to prevent or dissuade the Wife from buying and selling her various Queensland properties. More importantly he made no application for property settlement either within the period afforded under the Act or for a further eight and a half years.
Whilst the Wife was investing in property in Queensland, the Husband received the sum of $96,370 by way of an inheritance following the passing of his mother as well as $90,000 by way of compensation for a workplace injury suffered during the marriage.
The Court is satisfied that the Husband loaned the Wife $70,000 of the inheritance and that this sum was repaid to the Husband by the Wife prior to 2010. The Husband utilised his inheritance and compensation payment towards the purchase of his property in Property E.
There is no evidence to support the Husband’s contention that the remaining $26,370 of his inheritance was also loaned by him to the Wife and that she retained the benefit of those monies.
Had property proceedings been instituted within the standard application period, the Husband’s compensation payment and the inheritance received from his late mother’s estate would have been part of the pool for division between the parties.
If the Husband is granted leave to institute proceedings out of time, the Court is required to ascertain the parties’ current property interests before determining whether it would be just and equitable to adjust their property interests. The Husband has an unencumbered property in Property E with a value of $185,000, a motor vehicle valued at $12,000 and superannuation of $30,000: a net asset position of $237,000. The Wife has superannuation of $242,803 and has realisable assets worth $503,000 and liabilities of $536,952, leaving her net asset position as $208,851.
Whilst the Husband does not specify in his Initiating Application the amount he seeks by way of property settlement from the Wife, his material clearly indicates he anticipates a payment of an amount of $160,000.
Given the parties’ current assets and liabilities, the Wife’s age and imminent retirement and that any superannuation received by her will be, on her evidence, used to discharge debt, both parties are in remarkably similar circumstances.
It is therefore apparent that there is no prospect that the Husband would be successful in achieving an outcome that would come anywhere near his expectations.
Further, if leave were granted, there is a very real likelihood that the costs of the proceedings to the Husband would exceed any possible order for payment by the Wife to him. If the Wife was successful in her “Stanford argument”, the Husband could face a costs order that could financially ruin him.
It is therefore apparent that the Husband’s application cannot be considered to have any reasonable prospect of success. Further, he faces the real risk that the costs of his application will outweigh any payment which he might receive.
Accordingly, it cannot be seen that the Husband would suffer hardship if leave is not granted to him to institute proceedings out of time.
Conclusion
As outlined in paragraphs [35]-[36] of this judgment, an application seeking leave pursuant to section 44(3) of the Act requires the Court to engage in a two-step process.
In Whitford (supra) the Full Court provided:
“…on an application for leave under s 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.” (my emphasis).
The Court has found that the Husband would not suffer hardship should leave to institute property proceedings out of time be refused. The Husband’s Initiating Application filed 18 May 2017 is therefore dismissed.
I certify that the preceding one hundred and eight (108) paragraphs are a true copy of the reasons for judgment of Judge Bender
Date: 20 November 2017
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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Procedural Fairness
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