KENCH & KENCH
[2020] FCCA 962
•28 April 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KENCH & KENCH | [2020] FCCA 962 |
| Catchwords: FAMILY LAW – Property – Applicant Wife’s application for leave to issue property and spousal maintenance proceedings out of time pursuant to section 44(3) of the Family Law Act 1975 – Application filed 14 months out of time – whether the Wife will suffer hardship if leave to proceed out of time is refused – hardship established – exercise of Court’s discretion to grant leave for the Application to proceed out of time. |
| Legislation: Family Law Act 1975 (Cth), ss.44(3), 44(4) |
| Cases cited: Emerald & Emerald [2018] FamCAFC 217 |
| Applicant: | MS KENCH |
| Respondent: | MR KENCH |
| File Number: | MLC 9832 of 2019 |
| Judgment of: | Judge Blake |
| Hearing date: | 31 January 2020 |
| Date of Last Submission: | 31 January 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 28 April 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Carne |
| Solicitors for the Applicant: | RKL Lawyers and Consultants |
| Advocate for the Respondent: | Ms Mojidi |
| Solicitors for the Respondent: | Genuine Legal |
ORDERS
Pursuant to section 44(3) of the Family Law Act 1975, the Applicant be granted leave to proceed out of time.
The matter be listed for Mention on 19 May 2020 at 10am.
IT IS NOTED that publication of this judgment under the pseudonym Kench & Kench is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9832 of 2019
| MS KENCH |
Applicant
And
| MR KENCH |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by the Applicant Wife to pursue proceedings for a property settlement and proceedings for spousal maintenance out of time. The application is opposed by the Respondent Husband.
For the reasons that follow, I have decided to grant the Applicant leave to proceed out of time with her application for property settlement and spousal maintenance.
Background facts
The Applicant is currently aged 56 years. She is unemployed, receives the Newstart Allowance, and lives in public housing.
The Respondent is currently aged 57. He is in employment as a labourer earning around $20,000 per year. He lives in the former matrimonial home in Suburb A (‘Property’). There is no mortgage over the Property. The Respondent is the sole registered proprietor over the Property. The Property was acquired in 2001.
The parties were married in 1998. There are conflicting accounts in relation to whether the parties endured periods of separation during the marriage. For example, the Applicant says there was a period of separation between 2001 and 2005 and also that final separation occurred under the one roof in 2013. The Respondent, for his part, asserts that final separation, albeit under the one roof, occurred in 2009.
The parties were granted a divorce on 24 May 2017. The divorce order took effect on 25 June 2017.
Proceedings in this Court were commenced on 30 August 2019.
The Law
This proceeding concerns subsections 44(3) and 44(4) of the Family Law Act 1975 (‘Act’). The Applicant must obtain leave to pursue her claims for a property settlement, and maintenance, out of time.
In respect of her claim for a property settlement, the Applicant must satisfy the Court that hardship would be caused to her if leave were not granted. In respect of the claim for maintenance, the Applicant must satisfy the Court, relevantly, that her circumstances are such that she is unable to support herself without an income tested pension, allowance or benefit.
The matter of Whitford & Whitford (1979) 24 ALR 424 (‘Whitford’) is the leading case which has been cited with approval in many section 44 leave applications. The Full Court held at 430:
‘…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.’
The approach to applications such as this has also been more recently considered in two separate decisions of the Full Court of the Family Court of Australia: Gadzen v Simkin [2018] FamCAFC 218 (‘Gadzen’) and Emerald v Emerald [2018] FamCAFC 217 (‘Emerald’).
In Gadzen, the Full Court reviewed a number of authorities relating to hardship. At paragraphs [31] to [37] the Full Court stated as follows:
‘[31] In discussing hardship the Full Court in Whitford said:17
17 At 78,144.
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 subsection refers. It is with the consequences of the loss of that right, with which the subsection is concerned. 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. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship 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.
[32] The Full Court then proceeded to discuss the meaning of “hardship”. In the course of that discussion the Full Court said:18
18 At 78,144 – 78,145.
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…
…
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 its most stringent, connotations. It is impossible to lay down in advance what particular facts may or may not amount to hardship in the relevant sense. As a general proposition it might be said that, the inability of an applicant to pursue a claim which in the circumstances of the applicant or a child of the marriage is trifling, generally will not cause hardship. Similarly, where the costs which the applicant will have to bear himself or herself are about as much or more than 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 that the right or entitlement lost must be a substantial one.
(As per original)
[33] In Althaus and Althaus19 Evatt CJ (with whom Marshall SJ and Strauss J agreed) observed of earlier cases:
19 (1982) FLC 91-233, 77,266 – 77,267
…Now to some extent there may be an exercise of semantics involved here. The case of McDonald referred to a reasonable prima facie case as the test. Other cases such as McKenzie and Whitford suggest that the applicant needs to show that she would probably succeed. In the case of Perkins and Perkins (1979) FLC 90-600, Lindenmayer J. suggested that the test was that there was a reasonable probability of the claim being successful…
In my opinion, sec. 44(3) and (4) are not intended to require a detailed hearing on the merits to determine whether the applicant’s claim will succeed. The exercise is to determine whether there is a reasonable claim to be heard. That is the essence of the inquiry into whether hardship will be suffered by denying the applicant the right to litigate that claim.
[34] In Hall and Hall20 the Full Court said:
Fundamental to that [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…
[35] In Sharp the plurality of the Full Court observed:
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.
20 (1979) FLC 90-679, 78,627; see also McCoy and Chancellor [2014] FamCAFC 62; Sharp v Sharp (2011) 50 Fam LR 567 (“Sharp”) and Edmunds & Edmunds (2018) FLC 93-847 (“Edmunds”).
[36] In Edmunds the Full Court recently cited with approval the judgment in Sharp and said:
47. As the Full Court pointed out in Sharp at [18], “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”.
48. That involves a consideration, but not a final determination, of the nature of the applicant’s claim. In doing so, the Court must weigh the applicant’s case against that of the respondent’s and form a view as to whether there is in fact a prima facie case, or a real probability of success, that would, if leave were granted, alleviate hardship.
[37] It follows from these authorities that the starting point in determining an application for leave is to consider the question of hardship which requires for its existence a conclusion that an applicant has a prima facie or arguable case of substance having regard to all of the circumstances of the case. That must take into account the costs or likely costs to be incurred in pursuing the claim.’
The question of hardship that the Court is required to consider is distinct from the question of whether the Court should exercise its discretion to permit an application that is out of time. In Emerald, at paragraphs [127] to [130], Murphy J discussed the distinction and also identified factors to be considered in the exercise of the discretion:
‘[127] The Full Court in Sharp held that “the appropriate approach to a determination under [s 44(4)] necessitates a clear distinction to be made between the proof of hardship and a consideration of the consequential exercise of the discretion” (at [27]). That is, the discretion required for relief arises if, but only if, “hardship” is established (s 44(4)(a); see also, Whitford at 78,145 (cited by the primary judge); Hedley & Hedley (2009) FLC 93-413; Montano & Kinross (2014) FLC 93-623).
[128] Authority establishes that an explanation for delay is an extremely important consideration in the exercise of discretion. However, unlike hardship, a failure to adequately explain delay is not, at least as a matter of principle, fatal to obtaining leave. The same is true of prejudice to the opposing party if leave is granted. It, too, is a highly important discretionary consideration. However, it too is not, at least as a matter of principle, a bar to the grant of leave. Conversely, establishing a lack of prejudice is not a necessary precondition to the grant of leave (Whitford at 78,142; Hall and Hall (1979) FLC 90-679; see also, Frost and Nicholson (1981) FLC 91-051 and Leibinger and Leibinger (1986) FLC 91-727).
[129] For an appellate court, a consequence of the application of those principles is that an appeal which asserts error in a conclusion as to hardship (or lack of hardship) is not an appeal from the exercise of a discretion, but an appeal asserting error in a factual finding (or a finding as to a mixed question of fact and law). In this case, where no oral evidence was given before his Honour, this Court “is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge” having of course given proper “respect and weight to the conclusion of the trial judge” (Warren v Coombes (1979) 142 CLR 531 at 551).
[130] A challenge to the second component for the grant of leave involves a challenge to the exercise of discretion to which different principles apply. A conclusion by an appellate court different to that of the primary judge does not attract appellate intervention; error within recognised categories must be established (see, eg, House v The King (1936) 55 CLR 499 at 505; Gronow at 519 – 520).’
I turn now to applying the principles set out above to the facts of this matter.
Hardship
The Respondent submitted that the Applicant would not suffer hardship if leave was refused. In summary, the Respondent submitted that the Applicant had capacity for work and that that there was no evidence indicating that she was medically unfit for work. The Respondent also submitted that the Applicant had received payments from the Respondent, including payments made under agreements reached between them privately to resolve property matters between them. On the Respondent’s case, the amount of the assets or payments given to the Applicant amounted to around $170,000. Finally, the Respondent also submitted that any contributions, financial and non-financial, made by the Applicant, were minimal during the course of the marriage.
It is apparent from the material before me that the Applicant worked for a period in the marriage between 2004 in 2009. Her work included working as a labourer. It would appear, however, from the submissions of both parties that, apart from this period, the Applicant was not engaged in employment.
There does not appear to be any dispute that the Applicant’s English language skills are poor. She was assisted by an interpreter during the hearing.
The Applicant placed into evidence a report from her treating psychologist, Dr B. That report is not comprehensive. It indicates, however, that:
a)the Applicant has been a patient for more than six years;
b)she has had periods where her psychological state has greatly affected her ability to cope and make decisions; and
c)she also suffers from physical ailments.
The medical evidence supports evidence given by the Applicant about the state of her health.
There is not before me any evidence that indicates that the Applicant is completely incapacitated from any work. The Applicant asserts that she is exempt from the job seeking requirements of the Newstart allowance as she has been certified as unfit to work. She submits that her condition is not so severe that she qualifies for a disability support pension.
It is apparent, from what I have set out above, and I am satisfied that, the Applicant is likely to face significant difficulties in securing regular, ongoing, full-time employment. The suggestion by the Respondent that she could once again work by undertaking manual work such as labouring at her age, and given the medical evidence before the Court, is somewhat fanciful.
The next issue is the payments that the Respondent says he has made to the Applicant in order to resolve property matters. Evidence of the agreements under which the payments were said to be made was placed before the Court. The Respondent says that he has given to the Applicant, whether pursuant to the agreements or otherwise, cash and assets totalling around $170,000. The Applicant disputes this. She says that in addition to the Motor Vehicle 1, she has only received $30,000 from the Respondent. The Respondent claims that $100,000 was given to the Applicant in a combination of bank withdrawals and cash. There are a number of bank statements annexed to the Respondent’s affidavit affirmed on 18 October 2019 (annexure E). A review of these bank statements shows various amounts withdrawn as cash. There is no documentary evidence before the Court however, that confirms whether the payments the Respondent claims to have paid to the Applicant were in fact made.
It is not possible in an interim hearing, without supporting documentary evidence, to ascertain whether or not the payments have been made to the Applicant. That issue can only be resolved at trial following testing all of the evidence.
In written submissions, the Respondent submits that vastly different assertions in relation to the part property settlement payments made by the Respondent is demonstrative of the fact that the Applicant has not established that she has a probability of success in the substantive claim. That submission must be rejected. A dispute about what was paid may equally point toward a probability that the substantive claim may succeed. The only way in which payments said to be made pursuant to prior agreements might be regarded as demonstrating that the Applicant does not have a probability of success in the substantive claim is if there is proof that such payments were made. There is not such proof presently before the Court.
To the above, I would also add the following. Another way to look at the question of whether the alleged payments to the Applicant leads to the result that the Applicant does not have a probability of success is to consider, at face value, the amounts the Respondent says he has paid to the Applicant. On the material before me, the Respondent asserts that he has paid to the Applicant cash and other assets to the value of $170,000. Even if that position is to be accepted, however, what it discloses, as acknowledged by the Respondent’s counsel, is that the Applicant has received an amount of around 20% to 25% of the estimated pool of assets. In what was a lengthy marriage, that split would appear to heavily favour the Respondent. It therefore, in my view, cannot be said that the Applicant does not have a probability of success on the basis contended.
The matters above also, in my view, are an answer to the Respondent’s argument that the Applicant acknowledged in writing (while unwell it might be observed) that she had received her share of the property settlement.
There is then the Respondent’s submission that the Applicant did not make any financial contributions during the marriage. In a situation where there were no children of the marriage, the Respondent submits that the Applicant had the benefit of living rent-free in the Respondent’s home.
In a hearing such as the present one, all of the evidence about the respective contributions of each party, which would ordinarily be available at trial, is not before me. What is apparent, however, is that the Applicant did make contributions to the marriage. The Applicant appears to have made financial contributions to the marriage by, at the very least, working in the period from 2004 to 2009. The Applicant also says she made significant non-financial contributions during the relationship.
Exactly what weight ought to be given to the respective contributions of each party will have to wait for trial. For present purposes however, I am unable to accept a submission that the Applicant did not make any contributions during the marriage and that this should be a reason, or part of the reason, for concluding that the Applicant does not have a probability of success.
During the hearing, the Respondent pointed to the Application filed in the proceeding. The Application fails to specify, with any particularity, the final relief sought by the Applicant. The Respondent submitted that, on the current form of the Application, the Applicant cannot succeed.
I do not accept that the failure to particularise the claim at this stage leads to the conclusion that the Applicant has no prospect of success. As the Full Court said in In theMarriage of Hall (1979) 5 Fam LR 417:
‘…the … 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. It is not necessary to further categorize the nature or quality of that claim. … As Lindenmayer J. said [in Perkins and Perkins (1979) FLC 90-600], an application under sec. 44 is not intended to be a detailed hearing of the merits of the proposed claim itself…’
There are then the financial statements filed in the proceeding. The Financial Statement of the Respondent discloses available assets of approximately $615,000. This includes the Property of which he is the sole owner, without mortgage. The property was acquired during the marriage in 2001. The Respondent’s financial statement also discloses that his superannuation balance is $76,571. He has a personal loan of around $55,000 against these assets.
The Respondent’s Financial Statement also discloses a weekly income in the amount of $402, and weekly expenses totalling $579. He presently works in labouring jobs.
The Applicant’s Financial Statement discloses minimal assets. She presently lives in public housing. Her major assets appear to be a vehicle valued at $15,000 and superannuation of $8,000. She also has a personal loan of $18,000. She discloses a weekly income of $286 comprised of the receipt of Newstart allowance with weekly expenses totalling $584.
Finally, it is necessary for me to consider the costs of the proceeding. This is a matter in which the main assets of the parties are the Property and the Respondent’s superannuation. I expect that any trial will last around 1 – 2 days, with two days being a generous estimate. In circumstances where the Applicant could stand to recover amounts in excess of $100,000, I am of the view that the costs of the proceeding would not result in any hardship not being alleviated.
When all of the matters above are considered, I am satisfied that the Applicant will suffer hardship.
Should the Court exercise discretion to permit the application to proceed out of time?
In Whitford at 432-433, the Full Court said the following regarding the Court’s discretion:
‘The determination of 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 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.’
I turn to consider the reasons for delay. The delay is not extensive. The Applicant has produced medical evidence from two practitioners that she was unwell and that this contributed to the delay. I do not accept the evidence of Dr C. It is vague and there is no indication on the evidence that the Applicant was affected by any form of ill-health in the period following separation.
There is, however, the evidence of a psychologist, Dr B. He has deposed that the Applicant was greatly affected in the period after separation, including in the period around the divorce taking effect that led to the alleged financial agreement. I accept this evidence.
I observe that the Applicant has not sat on her hands. The attempts to resolve property matters, which are recorded in the agreements that are presently before the Court, are evidence of this.
For the above reasons, I accept the Applicant has an explanation for the delay.
There is then the question of the merits of the Applicant’s substantive case. I have dealt with that earlier in these submissions and rely on my earlier comments and findings. I am satisfied that the application has merit and that the Applicant has prospects of success by reason of the length of the marriage, the contributions during the marriage, her personal and financial circumstances, and the fact that even if the Respondent’s position that he has paid significant sums to the Applicant to settle property matters is accepted, the Applicant has not received anywhere near what might be in the range the Court may accept.
Finally, there is the question of any prejudice that the Respondent may suffer if the Applicant is permitted to proceed. In Frost & Nicholson (1981) FLC 91-051 at [18], Nygh J stated:
‘… 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. To give an extreme example, if after ten years a wife sought leave under sec. 44(3) without ever having given any indication beforehand that she wished to seek a property settlement, leave might well be refused.’
In Montano v Kinross [2014] FamCAFC 231 at [14], the Full Court stated:
‘Like many applications for indulgence, an application for leave to apply after the end of the standard application period requires the Court to exercise its discretion in a manner that, ultimately, is consistent with justice being done to both parties. The potential for injustice to the applicant being unable to pursue the remedy precluded by the refusal to grant leave must be compared to the prejudice to the respondent in the granting of leave. So, too, good or legitimate reasons for failing to do that which the Act requires must be compared with wilful blindness or recalcitrance. Equally, a desire to pursue a remedy out of time must be compared to the necessity for parties to proceed with their post-separation lives free of the spectre of prospective litigation, (see, for example, Gallo v Dawson (1990) 93 ALR 479, and the statutory requirements in section 81 of the Act).’
The Respondent submits he will be prejudiced because a property settlement has already taken place. I do not accept that submission for the reasons articulated earlier, that is, there is a real dispute as to whether all of the amounts claimed by the Respondent to have been paid to the Applicant were in fact paid.
The Respondent also submits that he is on a low income, close to retirement and wishes to retire, and this position will be prejudiced if the claim is permitted to proceed. I accept what the Respondent says in this respect. The difficulty for the Respondent however, is that whatever his position and intentions toward retirement are, he would appear on the material before me to be in a much stronger position financially than the Applicant. While I accept he might suffer some prejudice to his financial position if the claim is permitted to proceed, the evidence suggests that the Applicant’s needs are just as great, if not greater.
The Application for Spousal Maintenance
The evidence is that the Applicant is in receipt of an income tested benefit in the form of the Newstart allowance. The Financial Statement of the Applicant indicates that her expenses exceed her Newstart payments. It is evident that the Applicant cannot support herself without government benefits.
I refer to and rely on my reasons articulated earlier regarding the Applicant’s medical condition and her inability to work.
For all of the above reasons, I grant the Applicant leave to pursue her application for a property settlement and her application for maintenance out of time.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Blake
Date: 28 April 2020
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