Jordon and Jordon

[2008] FamCA 589

FAMILY COURT OF AUSTRALIA

JORDON & JORDON [2008] FamCA 589

FAMILY LAW - PROPERTY SETTLEMENT – Leave to file application out of time – questions of hardship – explanation of delay and prejudice – leave granted

Family Law Act 1975 (Cth)
Child Support Assessment Act 1989 (Cth)

Andrews & Andrews [2007] FamCA 562
Frost & Nicholson (1981) FLC 91-051
McDonald & McDonald (1977) FLC 90-317
Whitford & Whitford (1979) FLC 90-612
Woodcock and Woodcock (1997) FLC ¶92-739
.

APPLICANT: Ms Jordon

RESPONDENT: Mr Jordon

FILE NUMBER: LNC 282 of 2008

DATE DELIVERED: 31 July 2008

PLACE DELIVERED: Hobart

PLACE HEARD: Launceston

JUDGMENT OF: Benjamin J

HEARING DATE: 26 June 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Ms A Trezise
SOLICITOR FOR THE APPLICANT:	Andrea Trezise
COUNSEL FOR THE RESPONDENT:	Mr D Gassner
SOLICITOR FOR THE RESPONDENT:	Rae & Partners

Orders

1. Ms Jordon is granted leave pursuant to s44(3) of the Family Law Act 1975 to continue the property proceedings filed by her on 28 May 2008 by way application for alteration of property interests under s 79 of the Family Law Act 1975 (“the property proceedings”). 

2. Ms Jordon is granted leave pursuant to s 116(1)(b) of the Child Support (Assessment) Act 1989 to apply to this Court (concurrently with the property proceedings) for an order under Division 4 of Part 7 of the Child Support (Assessment) Act 1989 in relation to the children of the parties (M born […] September 1993 and L born […] March 1996) in the special circumstances of the case.

3. The applications be listed for mention before a Registrar at 10am on 26 August 2008 at the Launceston Registry.

4. Costs of both parties to this application are reserved.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

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

FAMILY COURT OF AUSTRALIA AT HOBART

FILE NUMBER: LNC 282 OF 2008

Ms Jordon

Applicant

And

Mr Jordon

Respondent

REASONS FOR JUDGMENT

1. These are proceedings between Ms Jordon (‘the wife”) and Mr Jordon (“the husband’) in circumstances where the wife seeks leave pursuant to s44(3) of the Family Law Act 1975 (‘the Act’) to commence proceedings for property settlement out of time.

2. In addition the wife seeks a determination pursuant to s116(1)(b) of the Child Support (Assessment) Act 1989 that it would be in the interest of the parties for a court to consider whether an order should be made under Division 4 of Part 7 of the Child Support (Assessment) Act 1989 in relation to the children of the marriage.

3. It was agreed by counsel for both of the parties that if the wife succeeded in her application for leave to commence property proceedings out of time, the leave under the Child Support (Assessment) Act should be otherwise granted.  It was also agreed that if the wife failed in her application for leave to commence property proceedings then the court had no jurisdiction to make a determination under the Child Support (Assessment) Act and as such her application in that regard should likewise fail.

4. These proceeding were dealt with as an interim hearing on the basis of affidavit material and some untested oral evidence by the wife and by a solicitor.  Neither party sought to cross-examine other witnesses or the other party.  I have reserved costs of both parties as the basis upon which any costs order can be determined will depend upon the fact findings and determinations at a final hearing

EVIDENCE

1. The wife relied upon her application in a case filed the 28 May 2008, her application for final orders which had a s86 Deed attached to it (this deed apparently signed in about April 2005) (‘the agreement’), the affidavit of the wife sworn on the 28 May 2008 (‘the wife’s affidavit’) and oral evidence given by the wife. With the leave of the court and the consent of counsel for the husband the wife gave evidence that at settlement in April 2000 she retained the property at G which had been purchased in May 1998 (a month after the parties separated) for $115,000.00.

2. That property was subject to a mortgage for about the same amount.  The effect of the settlement was that the loan over that property would be refinanced and the husband would pay to the wife (and did indeed pay to the wife) the sum of $20,000.00. 

3. The husband retained a property at B.  The wife’s evidence was that the B property had a value of between $125,000.00 and $130,000.00 and was subject to a mortgage of $80,000.00 meaning that the B property had equity of $45,000.00 to $50,000.00.  The wife retained some furniture and motor car which she said had a nil value.  The husband retained a seven year old Magna and a value in his business (which the husband now asserts has a gross value of $100,000.00).

4. Mr Targett, a solicitor was called to give evidence.  He acted for the wife in 1998.  He said that he had a short interview with the wife (he thought it was face to face but said it could have been by telephone).  His file note[1] said the time was thirty five minutes but Mr Targett indicated the time with the client was much less.

   [1] Exhibit H1

5. In that file note Mr Targett observed firstly the s87 agreement and then the s86 agreement but said the wife was ok with valuations and that the parties had been negotiating and needed to finalise the agreement.

6. Mr Targett had no clear recollection of the meeting with the wife except to say that the agreement was concluded by the time the wife saw him.  The file note noted that the wife was advised in relation to the assets, liabilities and child support and that she agreed with the husband’s proposal for a property division.

7. The wife’s principal complaints from that time seemed to relate to child support for the children.

8. The wife is currently a senior executive with a multinational corporation and earns about $75,000.00 per year.  She has the primary care of the two children of the marriage namely M aged 14 and L aged 12.

9. The husband filed a financial statement and it seems from that statement that he retains his interest in the R business and earns about $939.00 per week.

10. The wife deposes that she has the following substantive assets:-

House at [G]	$410,000.00
Westpac shares	$800.00
Household contents	$20,000.00
Total	$430,805.00

1. The wife also has superannuation totalling about $161,000.00. 

2. The wife has liabilities of about $327,000.00.

3. The husband deposes that he has assets of about $320,000.00, superannuation of about $165,000.00 and liabilities of $201,666.00.

4. The husband’s counsel disputed the valuation asserted by the wife in relation to the property retained by the husband at B.

5. The husband was born in 1954 and is aged about 53 years.  The wife was born in 1956 and is aged about 52 years.  Both the husband and wife are employed and receive income as they allege earlier.

6. The parties began cohabitation in 1988 and married in February 1989.  The parties separated in 1998 and entered into the agreement in about April 2000.  The parties marriage was dissolved on 15 September 2005 and as such the wife’s application for property orders is about seventeen or eighteen months out of time.

7. The property arrangement entered into between the parties has been put into place.  At the time the wife entered into the agreement she had the benefit of the legal advice.  If that advice was inadequate (and in that regard I make no finding) then the wife has rights against her former solicitor (albeit that she may now be out of time). 

8. The wife asserts in her evidence that at the time she commenced cohabitation with the husband she was buying a home in Tasmania and that the husband had few assets.

9. The wife asserts that she used the monies from the sale of her house from a previous relationship to purchase a share in the husband’s business.  The wife deposes upon significant contributions by herself over the period of the marriage.  The wife said she was not aware of the real impact of the agreement.  The agreement also contained a provision relating to child support which was in the terms of child maintenance and unless registered as a child support agreement, was clearly ultra vires in that regard.

10. The wife’s affidavit also details the difficulty she has had with finances arising from the care of the children since separation including private school fees.

11. The husband contends that even if the wife is successful it is unlikely that she would achieve any more in property than is the current situation.  This has to be seen in the context that the real property has not been valued nor has the husband’s business been valued.  There is no evidence as to the superannuation entitlements of both parties as at April 2000.  The husband asserts that he has relied upon the agreement and says it would be prejudicial to him if the court were to give leave after such a longer period of time since the agreement was entered into (viz 8 years).

12. The husband deposes that he has re-partnered, he is engaged to be married to his new partner who has two children aged 11 and 14 and seeks an order that the wife’s applications for leave under s44(3) of the Act be dismissed.

THE RELEVANT LEGAL PRINCIPLES TO BE APPLIED

1. The Court is dealing with an application under s 44(3) of the Act. That section provides:-

   44(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.

1. The effect of that provision is that a party is not entitled to commence or continue such proceedings unless leave is granted by the Court.

   Section 44(4) provides:-

   (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.

1. The Full Court in McDonald & McDonald (1977) FLC 90-317 at page 76,688 and in general, with some exceptions, adopted the quote of Emery J in Swallow & Swallow (unreported) when he said:-

   In my judgment in order to come within the provisions of this section, an applicant must establish:

   (a)a prima facie case which is in the circumstances substantial;

   (b)that to deny the right to litigate that claim would cause hardship in the sense referred to above to a party or to a child of the marriage;

   (c)that there is an adequate explanation as to why the claim was allowed to lapse.

1. The Full Court went on to add:-

   [T]he Court may also think it is appropriate to consider the question of prejudice to the respondent and that, in this connection, the period in delay in making the application to institute proceedings may itself be a relevant factor.

2. In terms of hardship the Full Court in Whitford & Whitford (1979) FLC 90-612 (at pages 78, 144 said of s 44(4):-

   The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted.  The loss of the right to institute proceedings is not the hardship, to which the sub-section refers.  It is with the consequences of the loss that right, with which the subsection is concerned.  The requirement, that the Court must be satisfied that the 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 possibility of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted.  Further, the matter with which the court is concerned is not whether the applicant or child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted.

3. As to prejudice to the husband, Nigh J in Frost & Nicholson (1981) FLC 91-015 at page 76, 425 said:-

   Prejudice here means that a party is faced with an action which he or she had no reason to expect or had been led to believe would not be brought.

4. In relation to s 44(4) the Full Court in Andrews & Andrews [2007] FamCA 562 observed at paragraph 50:-

   50.      His Honour then referred, correctly in our view, to the law and the relevant authorities (notably Whitford & Whitford (1979) FLC 90-612), including the need for the exercise of discretion once hardship to the applicant has been established.

DISCUSSION

1. In this case the party’s marriage was dissolved on 14 November 2005 and the final order for divorce took effect on 15 December 2005. This means that pursuant to s 44(3) of the Act the wife had until 15 December 2006 to commence property proceedings. She commenced these proceedings on 28 May 2008, a little over one year and five months out of time.

2. This application is heard on the affidavit material and I am not in a position to make findings.  The usual take in property proceedings is to:

   a.The identify property of the parties and determine its value;

   b.Evaluate the parties’ contributions having regards to
   ss 79(4)(a)(b) & (c) of the Act;

   c.Consider any adjustment to that assessment having regard to the relevant matters in ss. 79(d),(e),(f) & (g) (“the other factors”) including the matters referred to in s.75(2); and

   d.Review of the outcome against a just and equitable requirement as to the pool of assets at the time of the deed or at present.

3. As such I should look at the case on the basis of looking at the wife’s material at its highest. If that evidence does not come up to proof then that will be a factor a court can take into account in determining any costs order in favour of the husband. In particular in this regard I note the amendment of the Act in 2007 with the addition of s117AB. I do not make findings as to contribution or other factors.

4. If the wife’s evidence as to the net value of the home at B and the husband’s business is valued at the time of separation at a significant value then the agreement would have been unlikely to have survived an adjustment of property under s79 bearing in mind the wife’s assertions as to contribution and future needs.

5. The wife says that she did not seek independent valuation of the business nor did she know of the husband’s superannuation entitlements. The wife believed that she was bound by the agreement both in terms of property and child support (the deed provided that the husband pay ‘child maintenance’ in the sum of $25.00 per week per child and that such maintenance would only be subject of a Child Support Assessment in the event of default by the husband).  The agreement itself does not provide any analysis of the finances of the parties nor does it outline the value of any superannuation entitlements.

6. On the prima facie case of the wife there would be significant hardship caused to her and the children (bearing in mind her allegations in respect of child support) if leave were not granted.  On the basis of her prima facie case she would probably succeed should her substantive application be heard on its merits.

7. As to the explanation for the delay commencing proceedings the wife is only to explain from December 2006 to date, because up to that date she had a right to commence property proceedings without leave. Her explanation was that she believed that her rights had come to an end as a consequence of the deed.  At the time she entered into the deed her prima facie case was that[2] 

   I did engage a lawyer, not to advise me on what my entitlements may be, but simply for the purpose of working with [the husband’s] lawyer to facilitate the offer from [the husband]. My lawyer did at one stage suggest to me in a phone call that I ask for more than $25.00 per week that was proposed, but for the reasons above I foolishly dismissed this advice.

   [2] Paragraph 24 of the wife’s affidavit.

8. She went on to say that she believed the agreement was legally binding.

9. Having regard to the relatively short period of delay from December 2006 to May 2008 I am satisfied on all of the wife’s evidence that the delay has been satisfactorily explained.

10. What then of the prejudice to the husband? He paid $20,000.00 in 2000 in accordance with the agreement and has over the last eight years progressed with his life. He has re-partnered and has no doubt believed for that long period of time that issues of property between him and the wife were finalised.   There is a prejudice to the husband if leave is granted. I do not intend to outline the evidence of the husband but I take all such evidence into account.

11. The husband submitted that I ought to take into account the possibility of a claim by the wife against her former lawyer. Bearing in mind the evidence of the wife and that lawyer I have had regard to that possibility.

12. What is the effect of the agreement, being an agreement under s86 of the Act which was registered in the court? This was discussed in detail by the Full Court in Woodcock and Woodcock (1997) FLC 92-739. This case was heard by Murray, Baker and Kay JJ and was a matter which had come before the Full Court by way of a case stated by Frederico J. The Full Court took some time to set out the case law in respect of how the Court’s jurisdiction could be ousted.[3]

    [3]See Woodcock (supra) – pages 83,960 to 83,968.

13. The Full Court concluded at page 83,968;

    Conclusion

    In our view the cases referred to above clearly indicate that the Court's jurisdiction to grant relief under s 74 or 79 can only be ousted by court order or by an agreement approved pursuant to the provisions of s 87. It may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ ``the worst of both worlds'' as it will be impossible to predict from case to case, exactly what weight ought to be given to the agreement (Schokker v Edwards: agreement followed; c/f Klesnik: agreement given little weight). However it is the dominant and unwavering thread of all of the cases that the parties cannot by their conduct or agreement oust the jurisdiction of the Court. 

    The Court's reluctance to preclude a party from seeking property or maintenance orders simply because an agreement intended to regulate financial matters between that party and his or her spouse has previously been entered has not been swayed by the circumstance that the agreement is in writing; has been drafted with the intent that it be registered under s 86 (or, in some cases, has been registered); is intended to be approved under s 87; is wholly executory; is partly executed; or has been wholly carried out. Given the ability to commence or continue proceedings in the face of a formal document, it is difficult to perceive why more significant consequences should flow from agreements made without the intention of any such formal imprimatur. Indeed, it is untenable that an agreement, whether oral or in writing executory or executed, should have a more binding effect than a written agreement which is registered or remains unapproved pursuant to the provisions of the Family Law Act.

1. I have considered all of the evidence and I have determined that the wife and the parties' children may suffer hardship if leave is not granted.  I am satisfied of a reasonable explanation by the wife in terms of the delay in commencing proceedings.  There is prejudice to the husband and I have considered that prejudice in terms of the exercise of my discretion.  Having done so I determine that leave ought to be granted to the wife. 

I certify that the preceding 47 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin

Legal Associate     :          …

Date  :          31 July 2008.