Jeffries and Jeffries

[2016] FCCA 454

FEDERAL CIRCUIT COURT OF AUSTRALIA

JEFFRIES & JEFFRIES [2016] FCCA 454

Catchwords:
FAMILY LAW – Property – application for leave to proceed out of time – significant delay – prejudice to the respondent – application refused.

Legislation:

Family Law Act 1975, ss.44(3), 117

Jacenko & Jacenko (1986) FLC 91-776
McDonald & McDonald (1977) FLC 90-317
Whitford & Whitford (1979) FLC 90-612
Sharp & Sharp [2011] FamCAFC 150
Mackrell & Mackrell (2015) FCCA 1996
Richardson & Richardson (2000) FLC 93-012

Applicant: MR JEFFRIES

Respondent: MS JEFFRIES

File Number: MLC 11356 of 2015

Judgment of: Judge Harland

Hearing date: 24 February 2016

Date of Last Submission: 24 February 2016

Delivered at: Melbourne

Delivered on: 25 February 2016

REPRESENTATION

Counsel for the Applicant: Mr Mellas

Solicitors for the Applicant: Alpass & Associates

Counsel for the Respondent: Mr Whitchurch

Solicitors for the Respondent: Barry Kenna & Co

ORDERS

1. The husband’s application for leave to proceed out of time is dismissed.

2. The husband is to pay the wife’s costs in the sum of $3,211 within 30 days.

3. The husband is to do all acts and things within 7 days to remove caveat number (omitted) lodged over the property volume (omitted), folio (omitted) being the property at Property I, Victoria (omitted).

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 11356 of 2015

MR JEFFRIES

Applicant

And

MS JEFFRIES

Respondent

REASONS FOR JUDGMENT

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

2. This is an application by the husband for leave to commence property proceedings out of time.  The respondent wife opposes that application.

3. To provide a brief background, the husband filed his application on 3 December 2015.  The final order sought is simply that the assets of the parties be divided between the parties in such proportions as this honourable Court deems just and necessary. I made comments at the hearing of this matter yesterday that the order sought is completely inadequate as it does not inform either the Court or the respondent the terms of the husband’s case in any way.

4. What it does indicate is that the husband is seeking to revisit the entirety of the property issues and is not simply seeking a superannuation split.  He does seek, as an interim order, a flagging order, which is in effect an injunction to prevent the wife from accessing her superannuation entitlements. 

5. The background facts are as follows.  The husband and wife are both aged 65 years. They were married on (omitted) 1973 and separated on 22 August 2004. They were divorced on 20 November 2005 and thus the time limit for filing an application would have been 12 months after the divorce became final. This means that the husband is almost 10 years out of time which is a significant period.  The parties have two children who are now aged 35 and 33.  The husband’s affidavit is brief and his evidence is sparse.  The husband says that when they married he was working as a (occupation omitted) and the wife was working as a (occupation omitted).  They bought their first home in 1975.  The husband says that in 1979 he bought a half share in a (business omitted) and worked in that (business omitted) until 1986. 

6. He claims that the wife was earning a good income as a (occupation omitted) and that they decided between them that he would work from home largely on the weekends, and otherwise primarily look after the children.  He says once the children started school, he continued to do (business omitted) whilst the wife continued working as a (occupation omitted).  The husband says that in early 2004 he suffered elbow problems and was told he needed an operation.  He says that he stopped working at that time. 

7. He deposes that the wife received a $70,000 inheritance from her late father about 15 years ago. He also claims that she gambled that money away and also gambled another $300,000 over the past eight years before they separated.  He says he had bank statements at the time.  He is silent as to whether he still has those bank statements.  He says, at paragraph 26 of his affidavit, that when the parties had an informal property settlement which involved him transferring his interest in the former matrimonial home to the wife in exchange for a payment of $150,000, the wife said to him that she would pay him half of her superannuation when she retired.

8. He says he used his funds to purchase a home. He remarried in 2007 and remains married today. He says that he and his current wife subdivided the home that they were in and sold one and live in the other.  They have a small mortgage.  He says that he has been receiving Centrelink benefits since 2004 and that his current wife receives carer benefits for looking after him.  He says his health is poor.  The husband says that in early November his son Mr D told him that the wife subject to these proceedings has terminal cancer.

9. He said his son told him a few days later that the wife was going to apply for a withdrawal of her superannuation and he says that this is what prompted him to commence proceedings, as he was concerned that the wife was not going to pay him his share of her superannuation.

10. The wife has filed a response and affidavit seeking that both interim and final orders sought by the husband be dismissed.  She says that she believes the husband started the proceedings after hearing from her sons that she was very ill and that is consistent with the husband’s evidence.

11. She says that the issue of her superannuation had never been raised before.  She says that she thought that the property settlement that the parties entered into informally was a fair and complete settlement and disputes saying anything about the husband receiving her superannuation.  She says apart from the transfer of the house and monetary payment, that they each kept assets in their possession, which for the husband’s part included a boat and car and his business and tools of trade.  She says that the house was worth about $300,000 at the time of their informal property settlement.

12. The wife says that while she enjoyed playing the pokies, she worked hard and she was the main provider for the family. She denies spending anything like the money that the husband claims that she did.  The wife filed a blank financial statement which was in error because of the portal but did not intend to file a financial statement as her case is that the husband is not entitled to any adjustment.  Counsel informed me yesterday that her superannuation entitlements were worth about $280,000 as at June last year and counsel for the husband indicated he thought it was currently at $340,000. 

13. The principles that apply to an application for leave out of time are well known. Section 44(3) of the Family Law Act 1975 (Cth) provides that:

    Property and maintenance applications must be brought within 12 months of a final divorce order. 

14. The divorce order itself refers to this time limit.  The Court has a discretion to grant leave to a party to proceed with an application out of time pursuant to section 44, subsection (4) if the Court is satisfied that hardship would be caused to the party or a child if leave were not granted.  It is clear from the case authorities that there are several factors that the Court must consider when determining whether or not to grant leave for an applicant to proceed out of time.  The husband’s counsel referred to the case of Jacenko & Jacenko (1986) FLC 91-776, which is a Full Court decision and the primary decision of Justice Nygh which considered this issue.

15. I should note that the application proceeded on the affidavits and submissions only without cross-examination which is the usual course in applications of this type. Neither counsel agitated for any different course to be adopted.  Nygh J refers to the general principle on the issue of the establishment of a prima facie case is that the Court proceeds on the basis that the evidence of the applicant, unless it is “inherently unbelievable or contradictory”, should be accepted.  That is a fairly low bar, but there is a bar to establishing that there is a prima facie case. 

16. The cases of McDonald & McDonald (1977) FLC 90-317 and Whitford & Whitford (1979) 90-612 refer to reasonable prima facie case.  The consideration does not end at whether or not there is a prima facie case but I will deal with that application first.  As indicated previously, the husband’s evidence is scant.  The husband does not say what he thought the house was worth at the time of separation.  He does not give a context to the settlement at the time.  He does not give particulars as to the conversation he alleges about her superannuation. 

17. As I noted yesterday, the superannuation splitting scheme came into effect in December 2002 so there was a mechanism available at the time to deal with parties’ superannuation interests.  This is not a case of the situation in cases prior to that scheme where it was necessary to wait until the superannuation vested.  It also seems that some of what he says or what he does not say seems inconsistent.  He comments on the wife wasting significant funds, yet she was able to access funds to make this payment to him.

18. The husband is also silent on whether or not he ever had any conversation with the wife about his superannuation in the years since the parties separated.  That seems to be an odd omission if he was concerned about his superannuation.  As counsel for the wife pointed out, there was no enquiry when she turned 60 or any enquiry since.  In my view, the husband’s case on his own material is pretty weak.  Even if I was to find that he had made out a prime facie case, that is not the end of the matter and it is necessary to consider the other elements that he has to establish.

19. The second element is hardship. As the Court made clear in Sharp & Sharp (2011) FamCAFC 150, the inability to pursue a claim is not in itself hardship. It is necessary to consider the merits of the application if leave was to be granted because if there is no real prospect of success, then it cannot be found that the applicant would suffer hardship. The Court also stated that the hardship is not necessarily tied to a monetary value. The husband does not elaborate on any hardship other than not being able to pursue his claim.

20. The next issue is an adequate explanation for the delay.  On the husband’s case, he says that he had no need to bring any proceedings until he found out about the wife’s health and her decision to withdraw her superannuation because she had not yet retired.  One of the gaps of the husband’s evidence is any attempts to raise this issue before commencing proceedings.  If one was to accept his evidence on face value, then that could be seen as an adequate explanation for the delay.

21. The next issue is the prejudice to the respondent.  The husband says that the wife is not prejudiced by the proceedings.  He did not expand on that.  Nygh J referred to prejudice in Jacenko & Jacenko as being beyond nuisance and annoyance and there is no doubt that an application of this type, to the wife in particular, is a nuisance to her and an annoyance. One of the real issues of prejudice to the wife, and particularly given that the husband’s application is for a just and equitable property settlement of all the parties’ assets, and given the nature of the allegations that he makes about waste, in order for the wife to meet that claim, she would need to be able to obtain evidence to refute it.

22. That means going back to 2004 and earlier for bank account statements.  The husband, whilst he referred to bank statements, does not say he has those bank statements.  There would be a real prejudice to the wife in being able to meet that claim when it may well be the case that bank records going back to that time have been destroyed.  It is possible to get bank statements from the past seven years, but beyond that it may well be the case that those records do not exist.  It may well be the case that there are other financial records that also do not exist.

23. The other prejudice to the respondent in this case is her health.  The wife says that these proceedings have had an impact on her health and, given that there was no dispute that the wife is terminally ill, there is some significance to the fact that if the proceedings were to move beyond this point it may well be the case that the last months of her life are taken up with being embroiled in a family law case, which on anyone’s view, is a stressful process.

24. I want to refer to in more detail the Full Court authorities on the point of this type of application because one thing that is very clear is that in this type of case, as in any other case, essentially, it is about doing justice as between the parties.  I considered the issues in the case of Mackrell & Mackrell (2015) FCCA 1996 in which the Full Court decisions of Whitford & Whitford and Sharp & Sharp were considered.

25. In Whitford the Full Court said at [78,146]:

    “The determination how this discretion should be exercised, must depend on the facts of the particular case. Due weight must be given to the expressed legislation intendment that ordinarily, proceedings should be commenced within a year from a date of the decree nisi, and the general policy of the Act which appears from s.44(3) and s.81 that financial relationships between the spouses should, wherever possible be brought to finality within a reasonable time after the dissolution of the marriage. Hence, such matters as the length of the delay, the reasons for the delay and prejudice occasioned to the respondent by reason of the delay, and the strength on the merits of the applicant's case, and the degree of the hardship which would be suffered unless leave were granted, are matters affecting the exercise of the discretion. These matters are not necessarily the only ones. 

    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 decree nisi.” 

26. The Full Court in Sharp & Sharp made the following statement with respect to the law at [12] – [14]:

    It is important to bear in mind the purpose of s 44 in the context of the Act, which is that time limits are to be observed as the wording of that section makes clear. The principles concerning applications for leave to commence an action out of time are well known. In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551 McHugh J said:

    The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. For nearly 400 years, the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates". [Footnotes omitted]

    At 553 his Honour continued:

    A limitation period should not be seen therefore as an arbitrary cut-off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated ...

    A limitation provision is the general rule; an extension provision is the exception to it ...

    There is nothing to suggest that this expression of the law in general is not entirely applicable to a consideration of s 44 of the Act. Indeed so much is seen from the opening words of the s 44(4), "[t]he court shall not grant leave under subs (3) unless ... ".

27. In terms of prejudice to the respondent, the Full Court in Richardson & Richardson (2000) FLC 93-012 considered this issue, that the prejudice to the respondent is looking at the respondent’s ability to meet the claim. I have already referred to documentary evidence. There may also be a lack of availability of witnesses. The authorities also go beyond that when considering prejudice to the respondent, and one of the relevant factors is and what was considered in Richardson & Richardson was that the respondent in that case had organised his finances and his life on the basis that the parties had implemented their financial settlement and, in that case, the respondent had re-married and carried out improvements on the former matrimonial home.

28. In this case, I do not have evidence about what the respondent has done with her finances post-separation.  In other words, the applicant has provided evidence about what he has done post-separation, which includes remarrying and buying a property. Whilst the husband’s financial statement and affidavit show a modest lifestyle, I am not satisfied when considering all of these issues that the husband has made out in his case.

29. Even if I was to err on the side of generosity and accept the husband had made out a reasonable prima facie case, I am not satisfied that the hardship he would face outweighs the prejudice that the wife would face if the proceedings were to commence, and, for these reasons, I dismiss the application of the husband for leave to proceed out of time.

30. The respondent seeks her costs. The amount of costs that she seeks is in accordance with the Federal Circuit Court cost scales and totals $6,211. That is not the total of the costs that she has incurred. The usual rule under s.117 of the Family Law Act is that each party pay their own costs. That, of course, by its nature, applies to matters where a party has been unsuccessful. Section 117(2A) sets out a series of factors that the Court has to take into account when considering departing from the usual rule.

31. The applicant has been wholly unsuccessful in his application.  There is no suggestion before me that there were any offers of settlement in either direction so that is not a relevant factor to consider in this case.  There is also no suggestion that either party was in receipt of legal aid and I would not expect that they would be in a matter such as this.  One of the most important factors in the circumstances of this case is the respective financial positions of the parties.

32. The husband has filed a financial statement which indicates that his average weekly income is $326, which is a Centrelink benefit.  He says that his expenses exceed that and says his expenses are $355 a week.  He discloses that his current wife has an income of about $350 a week.  He says he has a half share in the property that he owns with his wife.  He says his share is $250,000 and that is subject to a mortgage of which his share is $27,000.  He says he has $20 in the bank and does not have any superannuation.  He does not have any credit cards or other debts, but I assume he will have incurred costs for his legal fees.

33. As mentioned earlier, the wife has not filed a financial statement so I do not have a complete picture of her financial circumstances.  She is currently on long service leave so I could certainly infer from that that she is currently receiving an income that would be significantly higher than the husband’s.  She also has a mortgage that is higher than the husband’s on her property however; I do not know what her property is worth or what other assets she might have. There is also the superannuation that she has that she would be entitled to access, given her circumstances. It is certainly clear that the wife is in a stronger financial position than the husband. It comes down to considering that factor as against the fact that the husband has been entirely unsuccessful in his application.

1. It is certainly true that the husband has equity in his property so that there is some source of funds to fund a costs order, but I am mindful of the stronger financial position of the wife.  I am, however, of the view, after considering the factors, that the husband should pay some costs but because his financial circumstances are weaker than the wife’s, I am going to order that he pay costs of $3,211, which is a little more than half the amount sought by the wife and that such payment be made within 30 days.

2. I will also order that the husband do all acts and things within 7 days to remove caveat number (omitted) lodged over the property volume (omitted), folio (omitted) being the property at Property I, Victoria (omitted).

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Harland

Date:  3 March 2016