Lacy and Cloet

[2020] FCCA 791

FEDERAL CIRCUIT COURT OF AUSTRALIA

LACY & CLOET [2020] FCCA 791

Catchwords:
FAMILY LAW – Property – application by the applicant seeking leave to commence property proceedings out of time pursuant to s 44(6) of the Family Law Act 1975 (Cth) – Where it is found the applicant would not suffer hardship if leave not granted – applicant’s application dismissed.

Legislation:

Family Law Act 1975 (Cth), ss.44(3), 44(4), 44(5), 44(6).

Cases cited:

Gadzen & Simkin (2018) FLC 93 – 871.
Sharp v Sharp (2011) 50 Fam LR 567; [2011] FamCAFC 150.
Stanford v Stanford [2012] HCA 52.

Whitford and Whitford (1979) FLC 90-612; [1979] FamCA 3.

Applicant: MS LACY

Respondent: MR CLOET

File Number: SYC 2137 of 2019

Judgment of: Judge Boyle

Hearing date: 5 March 2020

Date of Last Submission: 5 March 2020

Delivered at: Sydney

Delivered on: 9 April 2020

REPRESENTATION

Counsel for the Applicant: Ms Treherne

Solicitors for the Applicant: Maksisi Lawyers

Counsel for the Respondent: Mr Carroll

Solicitors for the Respondent: Guardian Legal

ORDERS

1. The applicant’s Amended Initiating Application filed 9 July 2019 is dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 2137 of 2019

MS LACY

Applicant

And

MR CLOET

Respondent

REASONS FOR JUDGMENT

1. The applicant seeks leave pursuant to section 44(6) of the Family Law Act 1975 (Cth) (“The Act”), to commence property proceedings out of time. The respondent seeks that the application be dismissed.

Background

1. The parties met in late 2008/early 2009. They commenced cohabitation in rental accommodation with the applicant’s sister. The respondent was married at that time.

2. The respondent agrees that a de facto relationship existed. For the purposes of this application I accept the applicant’s position that the relationship commenced in December 2009, and continued for a period of almost 5 years.

3. The parties both work in hospitality, and met through employment at the Employer A. Both the applicant and the respondent have undertaken courses in Australia to further their qualifications in hospitality.

4. In September 2010 the respondent purchased motor vehicle B for $34,000. He traded in motor vehicle C for $9,000. The respondent made repayments of $550 per month on motor vehicle B. Both parties used motor vehicle B prior to the respondent purchasing motor vehicle D for around $2,000. The respondent then used that vehicle, and the applicant motor vehicle B.

5. There is a dispute between the parties about the purchase of the property at E Street, Suburb F. It was purchased in the respondent’s sole name on … 2012. The applicant argues that she contributed $24,000 towards the deposit, and thereafter paid $1,000 per month towards the mortgage.

6. The respondent’s evidence is he deposited money into the applicant’s account to assist him with saving. Through this he amassed $15,440. The applicant lent him additional funds for the deposit, bringing the total to $24,000, of which $8,560 was repaid to the applicant.

7. The respondent maintains that regular payments made electronically by the applicant following the purchase were her contribution to rent. The first such payment was made by electronic transfer between the parties’ accounts on 4 January 2013. There is no reference made with respect to the payment. The bank records on 11 February 2013, 11 March 2013, 8 April 2013 and 27 June 2014 note the transfer was for “rent”.

8. In September 2014 the parties separated, and the respondent remained in the property.

Documents relied on

1. Each party provided a case outline document setting out the material relied on.

2. The applicant relied on the following documents:

   a)Amended Initiation Application, filed 9 July 2019;

   b)Financial Statement of Ms Lacy, filed 11 April 2019; and

   c)Affidavit, filed 3 February 2020

3. The respondent relied on the following documents:

   a)Response, filed 4 March 2020;

   b)Financial Statement, filed 4 March 2020; and

   c)Affidavit, filed 10 December 2019.

The Law

1. The requirements for the grant of leave in section 44(3) and section 44(6) of the Act are essentially in identical terms,[1] and the principles applicable to leave under one section are equally applicable to the other.

   [1] Gadzen & Simkin (2018) FLC 93 – 871, 29.

2. Section 44(5) of the Act relevantly provides:

   Subject to subsection (6), a party to a de facto relationship may apply for an order under section 90SE, 90SG or 90SM; or a declaration under section 90SL, only if:

   (a) the application is made within the period (the standard application period) of:

   (i) 2 years after the end of the de facto relationship; or

   (ii) 12 months after a financial agreement between the parties to the de facto relationship was set aside, or found the be invalid, as the case may be; or

   (b) both parties to the de facto relationship consent to the application.

3. Section 44(6) of the Act relevantly provides:

   The court may grant the party leave to apply after the end of the standard application period if the court is satisfied that:

   (a)hardship would be caused to the party or a child if leave were not granted…

4. Hardship was discussed in Whitford and Whitford:[2]

   The hardship referred to in section 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…

   …In ordinary parlance, hardship means something more burdensome than “any appreciable detriment.” We consider that in subsection 44(4) the word should have its usual, though not necessarily it’s most stringent, connotations. … 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.

   [2] Whitford & Whitford (1979) FLC 90-612; [1979] FamCA 3.

5. The Court is not required to engage in a detailed hearing on the merits. The Full Court has observed in Sharp & Sharp,[3] in assessing hardship in this context the well-established test is that the applicant must have a prima facie claim worth pursuing. Leave will not be granted if to do so would not, in the substantive result, alleviate that hardship.

   [3] Sharp & Sharp (2011) 50 Fam LR 567; [2011] FamFACF 150.

6. If the Court is satisfied that hardship would be caused if leave were not granted there is a second step, where the Court is required to consider whether to exercise its discretion to grant leave or to refuse leave. Matters to be considered are the length of the delay beyond the standard application period, and the reasons for it, and any prejudice occasioned to the respondent by reason of delay.

7. It was conceded by the respondent that a prima facie case exists. The parties were in a de facto relationship for a period of four years, and the respondent proposed a Binding Financial Agreement to the applicant following separation.

Hardship

1. The applicant made contributions to the acquisition of the property on her case by way of $24,000 towards the deposit, and $1,000 per month from January 2013 to September 2014. There is no issue that post separation contributions favour the respondent.

2. The property was purchased in the amount of $399,000 with a mortgage of $364,930. Otherwise the assets comprised motor vehicle B subject to a debt, and motor vehicle D purchased for $2,000. At the time of separation there was a modest pool.

3. A valuation conducted on 14 December 2018 valued the property at $575,000. That is two years following the expiration of the standard application period. The respondent relies on an ANZ property profile report which values the property at $499,000 on 7 July 2019. The respondent has refinanced the property, and the mortgage presently stands at $376,000.

4. The applicant owns a unit in Suburb G which she estimates is worth $500,000. There is a mortgage over the property of $385,000.

5. Both parties live with their current partners, both of whom are employed on modest wages. Each have a young child.

6. The contribution of $1,000, whether to the mortgage or by way of rent did not commence until three months following the purchase. It equates to an amount of $230 per week, which is similar to the rent paid by the respondent on the property shared with the applicant’s sister. The electronic payments when they commenced were frequently marked “rent” by the applicant. I accept the submission by the respondent that it is unlikely these payments will ground a finding of any significant contribution, above payment for accommodation equivalent to rent.

7. If the applicant is entirely successful with respect to the argument of her contribution to the deposit of $24,000, it is difficult to see that supporting an order for a 50% division of the current net pool five years after separation from a four year relationship, with no children.

8. There was no evidence provided of estimated costs of the litigation. When asked during submissions, counsel for the applicant indicated her costs would be in the order of $75,000. Neither party addressed me with respect to the application of Stanford[4], although that would be required at any hearing.

   [4] Stanford & Stanford [2012] HCA 52.

9. I accept the submission made by counsel for the respondent that a 50% division of the net pool is putting the applicant’s case at its absolute limit. The respondent has made all post separation contributions over a period of six years. The net pool including superannuation is between $311,000 and $386,000.

10. Exhibit R1 was tendered by the respondent without objection, with respect to estimated net outcomes of orders for division. Although there was no objection, I regard this document as an aide memoir as it is necessarily only broadly indicative, depending on findings with respect to the pool. Given the estimate of costs by counsel for the applicant, there is a real issue of what benefit might flow to the applicant were leave granted.

Delay

1. Turning to the discretionary issues, there is no adequate explanation advanced by the applicant with respect to delay in filing proceedings. At the time of separation the respondent proposed a Binding Financial Agreement, and arrangements were made for her to receive legal advice at no cost. 

2. The applicant complains that the respondent did not produce documents, pursuant to a Notice to Produce, in the Supreme Court proceedings. The details of the solicitor who provided advice to the applicant were sought. The applicant gave no evidence pertaining to the advice provided. Her affidavit simply records that she met with the lawyer in private, told the lawyer she needed more time to think about the issue, and left.[5] She makes no complaint about the advice given by the lawyer.

   [5] Paragraphs 49 and 50 applicant's Affidavit, filed 3 February 2020.

3. The applicant dealt with the issue of delay in her affidavit:

   …The reason I have not brought proceedings sooner is because I did not know what I could do and have only recently had the benefit of legal advice. I did not have much money but as soon as I did, I instructed Mr Maksisi to lodge a caveat over the property. I did not take the next step to commence proceedings because I was worried about the cost and I thought the caveat would protect my interest in the meantime while I saved some money.[6]

   [6] Applicant's Affidavit, filed 3 February 2020, paragraphs 71 and 72.

4. The applicant first had legal advice from her current solicitors in March 2018. There is no explanation of why an application for leave was not filed at that time, nor any time prior to the filing of the current application. There may be other remedies available to the applicant.

5. The legislation imposes a two year period to commence litigation following separation, after which leave must be sought. In Whitford & Whitford,[7] the Full Court referring to section 44(3), noted:

   … [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.

   The same principle is applicable to section 44(6) of the Act.

   [7] Whitford & Whitford (1979) FLC 90-612; [1979] FamCA 3.

6. The applicant should have filed an application for property settlement by October 2016. Despite having spoken with a solicitor shortly after separation in September 2014, and receiving advice in March 2018 from her current solicitors, no application was filed until the current application on 4 April 2019.

7. The parties are currently in a similar financial situation in terms of assets and liabilities. Life has moved on for both of them, as one would expect, in the years following separation. The respondent has refinanced the property, as he was entitled to do.

8. There is a modest pool of assets. The parties have been separated for five years at the date of filing. The costs of the litigation would at best limit any amount received, and there is a real possibly could equal or exceed it.

9. I am not satisfied that any hardship the applicant may suffer would be alleviated were leave granted. I do not propose granting the applicant leave to commence property proceedings and therefore dismiss the application.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Boyle

Associate:

Date: 9 April 2020