Krueger & Krueger

Case [2023] FedCFamC1A 203

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Krueger & Krueger [2023] FedCFamC1A 203

Appeal from: Krueger & Krueger [2023] FedCFamC2F 1009
Appeal number: NAA 191 of 2023
File number: PAC 1280 of 2019
Judgment of: CHRISTIE J
Date of judgment: 21 November 2023 
Catchwords: FAMILY LAW – APPEAL – Application for leave to appeal – Appeal against orders dismissing an application for leave to commence proceedings out of time – Where the appellant had given evidence on behalf of his brother in his brother’s litigation against the respondent in the New South Wales Supreme Court – Where the appellant’s brother’s claim was partially successful such that the respondent was ordered to pay monies to the appellant’s brother – Where the primary judge found that the appellant had improperly acted to diminish the pool of assets available for distribution between the parties – Where the finding was not open to the primary judge – Leave to appeal granted – Appeal allowed – Re-exercise of discretion – Where the evidence does not allow the Court to be satisfied that the appellant would face hardship from refusal to grant leave to commence property proceedings out of time – Costs certificates issued.
Legislation:

Family Law Act 1975 (Cth) ss 44, 75, 79

Federal Proceedings (Costs) Act 1981 (Cth)

Confiscation of Proceeds of Crime Act 1989 (NSW)
Cases cited:

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33

Dimmick & Harrison (No 3) [2023] FedCFamC1A 81

Hardwick & Hardwick (No 2) [2022] FedCFamC1A 216

Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

Nelson & Nelson (1995) 184 CLR 538; [1995] HCA 25

Valder & Saklani (2021) FLC 94-042; [2021] FamCAFC 142

Welland & Hawthorn (2021) 64 Fam LR 520; [2021] FedCFamC1A 43

Number of paragraphs: 91
Date of hearing: 7 November 2023
Place: Sydney
Counsel for the Appellant: Mr Lethbridge SC
Solicitor for the Appellant: Branston Neville Lawyers
Counsel for the Respondent: Ms Treherne
Solicitor for the Respondent: Memcorp Lawyers Pty Ltd

ORDERS

NAA 191 of 2023
PAC 1280 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION
BETWEEN:

MR KRUEGER

Appellant
AND:

MS KRUEGER

Respondent

ORDER MADE BY:

CHRISTIE J

DATE OF ORDER:

21 NOVEMBER 2023

THE COURT ORDERS THAT:

1.Leave to appeal the order of a judge of the Federal Circuit and Family Court of Australia (Division 2) made 5 July 2023 is granted.

2.The appeal is allowed.

3.Order 2 of the orders of the Federal Circuit and Family Court of Australia (Division 1) made 5 July 2023 is set aside.

4.The application for leave to commence proceedings out of time is dismissed.

5.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment…

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AGLC
Krueger & Krueger [2023] FedCFamC1A 203
Case
[2023] FedCFamC1A 203
Decision Date

CaseChat Overview and Summary

The case of Mr Krueger v Ms Krueger involved an appeal against the dismissal of an application to commence property proceedings out of time. The appellant, Mr Krueger, sought leave to appeal against the orders of the Federal Circuit and Family Court of Australia that dismissed his application. The court was required to decide whether the appellant's evidence was sufficient to demonstrate that he would face hardship if his application was dismissed. The court also had to consider the implications of the appellant's actions in the previous litigation between his brother and the respondent. The primary judge found that the appellant had acted improperly to diminish the pool of assets available for distribution between the parties, a finding that was challenged on appeal.

The court concluded that the finding of improper conduct was not open to the primary judge. The court also determined that the evidence did not allow it to be satisfied that the appellant would face hardship from refusal to grant leave to commence property proceedings out of time. The court allowed the appeal and set aside the orders dismissing the appellant's application. The court granted leave to appeal and dismissed the application for leave to commence proceedings out of time. The court also issued costs certificates to both parties pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). The costs certificates stated that it would be appropriate for the Attorney-General to authorise a payment to the appellant and the respondent in respect of the costs incurred by them in the appeal.

This decision highlights the importance of the discretion under section 44(3) of the Family Law Act 1975 (Cth) in granting leave to commence proceedings out of time. The court emphasised that the finding of hardship is a preliminary or gateway step in the exercise of this discretion. The court also noted that the evidence did not support a conclusion that the appellant would face hardship if his application was dismissed. The decision also underscores the importance of the proper exercise of discretion in family law proceedings. The court's decision to set aside the orders dismissing the appellant's application and to issue costs certificates to both parties demonstrates the court's commitment to ensuring that the exercise of discretion is fair and just.

Orders

Orders of the court

NAA 191 of 2023

PAC 1280 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR KRUEGER

Appellant

AND:

MS KRUEGER

Respondent

ORDER MADE BY:

CHRISTIE J

DATE OF ORDER:

21 NOVEMBER 2023

THE COURT ORDERS THAT:

1. Leave to appeal the order of a judge of the Federal Circuit and Family Court of Australia (Division 2) made 5 July 2023 is granted.

2. The appeal is allowed.

3. Order 2 of the orders of the Federal Circuit and Family Court of Australia (Division 1) made 5 July 2023 is set aside.

4. The application for leave to commence proceedings out of time is dismissed.

5. The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in the appeal.

6. The Respondent is granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in the appeal.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

It is necessary to set out some of the uncontroversial background matters to appreciate the submissions of both the appellant and the respondent. I will do so by setting out the content of a “Joint Statement of Agreed Facts and Issues for the Purposes of Hearing on 16 June 2023” which was before the primary judge:Agreed Facts1.The Applicant, [Mr Krueger], and Respondent, [Ms Krueger], were married [i]n […] 2008.2.In about December 2008, the Respondent purchased the matrimonial home at [B Street, Suburb F] (Property). The purchase price was $455,000. The sale completed in January 2009. The Respondent became (and remained until its eventual sale) the sole registered proprietor of the Property.3.The relationship produced two children: [X] born […] 2011 (now 12) and [Y] born […] 2012 (now 10).4.On or around 1 February 2018, the Applicant and the Respondent separated on a final basis.5.On 17 December 2018, the Applicant commenced proceedings seeking parenting orders. The Applicant was legally represented throughout the proceedings.6.[I]n July 2019, a divorce order (caused by the Applicant’s application for same) took effect. The Applicant was legally represented throughout the divorce proceedings.7.On 11 February 2020, final parenting orders were made by consent as between the parties.Applicant’s bankruptcy8.From […] 2013 until […] 2022, the Applicant was bankrupt.Supreme Court proceedings9.On 13 December 2018, the Applicant’s brother, [Mr E Krueger] ([Mr E Krueger]), commenced proceedings in the Supreme Court of New South Wales seeking repayment of alleged contributions made by him to the Property. [Mr E Krueger]’s [sic] sought relief based on a Deed entered into between the Respondent and [Mr E Krueger] on or around December 2013. The Applicant was a witness [in Mr E Krueger]’s case.10.[I]n May 2021, the Supreme Court of New South Wales handed down its decision in [Krueger] v [Krueger] […]. The Court explained its decision in [Krueger] (No 2) […]:The position that the Court ultimately reached in the primary judgment was that, in principle, the deed should be set aside, but that such an order should only be made if [Ms Krueger] paid a reasonable amount of compensation to [Mr E Krueger].11.The hearing then proceeded to a further trial on the quantum of the compensation which should be paid to [Mr E Krueger].12.[I]n October 2022, the Supreme Court handed down its third decision, [Krueger] v [Krueger] (No 3) […]. The Court determined that [Ms Krueger] should pay to [Mr E Krueger] the sum of $400,000 but that she need not pay that amount until the cost issues in the proceedings were determined: [Krueger] (No 3) [...].13.[I]n February 2023, the Supreme Court made a costs order in the Respondents favour in the gross sum of $215,000. As a result, the Respondent paid [Mr E Krueger] $185,000 upon the sale of the Property in February 2023: [Krueger] and [Krueger] (No 4) […].Proceedings filed out of time; sale of former matrimonial home14.On 5 December 2022, the Initiating Application seeking property settlement orders was filed by the Applicant. Pursuant to section 44(3) of the Act, the application was made more than 12 months after the divorce order took effect.15.On 7 December 2022, the matter was listed for urgent interim hearing for determination of the Applicant’s application for urgent injunctive relief to restrain the Respondent from using the proceeds from the sale of the Property.16.On 1 February 2023, the Court made interim orders to preserve a portion of the net proceeds of sale of the Property pending the resolution of these proceedings.17.On 2 February 2023, the property was sold. The net proceeds were $1,380,834.13.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

To those issue I would also add:(c)The husband explicitly indicates that contributions made by him were made “[criminal activity]”. It is difficult to conceive how the husband might demonstrate those contributions. This evidence also raises a real issue about whether any funds to which the appellant may otherwise be entitled would be vulnerable to a claim under the Confiscation of Proceeds of Crime Act 1989 (NSW). I cannot make a definitive finding but will return to this later when I consider the residual discretion; and(d)The husband explicitly indicates that his brother diverted wages, which would otherwise have been payable to the husband, to the mortgage over B Street, Suburb F throughout the period of the husband’s bankruptcy. This evidence would appear to indicate on its face that whatever information was provided to the trustee in bankruptcy concerning income may not have been a true representation of the husband’s income; and(e)Similar issues arise in respect of the representations of the husband discussed at [70].Conclusions The husband may, on the basis of the above evidence, have an arguable case for recognition of financial and non-financial contributions made by him but its strength is not plain given the identified evidentiary difficulties. Further, the size of the pool, the childcare arrangements, the child support history and arrears and the wife’s income all speak to the wife having an entitlement to recognition of matters pursuant to s 75(2) of the Act. Finally, the costs of the litigation are such that the Court could not be satisfied that hardship would be caused to the husband by failure to pursue the claim with its attendant costs. Because I have not determined that the appellant would experience hardship from refusal to grant leave, other matters which may be relevant to the exercise of discretion do not arise since the finding of hardship functions as a preliminary or gateway step in the process. As indicated, I have found that hardship would not be caused to a party to the relevant marriage or a child if leave were not granted. However, even if I had been persuaded that the evidence supported a conclusion that hardship would be caused to the appellant if leave were not granted, I would nonetheless have exercised the discretion created by s 44(3) of the Act because of the matters set out at [84]-[85]. COSTS The respondent sought her costs of appeal in the event that the appeal was dismissed. The respondent filed an itemised schedule of costs as was directed. That schedule did not comply with the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth). I have allowed the appeal. In the circumstances discussed above I consider it is appropriate that each party have a benefit of a certificate under the Federal Proceedings (Costs) Act 1981 (Cth).

Ratio Decidendi

Legal Principle Established

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