LAGIOIA & RAPINO
[2020] FamCA 11
•17 January 2020
FAMILY COURT OF AUSTRALIA
| LAGIOIA & RAPINO | [2020] FamCA 11 |
| FAMILY LAW – PROPERTY – Where an application is made under s 44(3) – where the Wife sought leave to institute property proceedings out of time – where hardship is not established – application dismissed. FAMILY LAW – COSTS – Application for costs – where the Husband made an application to restrain the Wife’s solicitor from acting in the proceedings – where the Husband abandoned the application – where the Husband is required to pay the disbursement for counsel and two thirds of the solicitor’s fees. |
| Family Law Act 1975 (Cth) ss 44(3), 44(4), 79(4), 75(2) |
| Althaus and Althaus (1982) FLC 91-233 Bevan v Bevan (2013) 49 FamLR 387 Emerald and Emerald [2018] FamCAFC 217 Hall and Hall (1979) FLC 90-679 In the Marriage of N and S I Jacenko (1986) 11 Fam LR 341 Norton v Locke (2013) 50 Fam LR 517 Sharp v Sharp (2011) 50 Fam LR 567 Stanford v Stanford (2012) 247 CLR 108 Whitford and Whitford (1979) FLC 90-612 |
| APPLICANT: | Ms Lagioia |
| RESPONDENT: | Mr Rapino |
| FILE NUMBER: | CAC | 1615 | of | 2008 |
| DATE DELIVERED: | 17 January 2020 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Gill J |
| HEARING DATE: | 18 December 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Howard |
| SOLICITOR FOR THE APPLICANT: | Phelps Reid |
| COUNSEL FOR THE RESPONDENT: | Mr Haddock |
| SOLICITOR FOR THE RESPONDENT: | Dobinson Davey Clifford Simpson |
Orders
The Wife’s application to commence property proceedings out of time is refused.
The Wife’s initiating application filed 16 May 2017 is dismissed.
The Husband is, within 28 days, to pay to the Wife on account of her legal costs in relation to his application to restrain her solicitors from acting for her the sum of $4,825.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lagioia & Rapino has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAC 1615 of 2008
| MS LAGIOIA |
Applicant
And
| MR RAPINO |
Respondent
REASONS FOR JUDGMENT
Introduction
The current proceedings involve an application by the Wife for leave to commence property proceedings out of time. This application followed a long history of litigation that commenced some years after the parties’ separation in October 2008.
The parties’ divorce order became final in January 2012.
The Husband commenced property proceedings in the Federal Circuit Court in February 2012.
The Husband withdrew his application in the Federal Circuit Court on 14 May 2013 without orders being made.
The Applicant Wife filed an Initiating Application on 16 May 2017 seeking leave under s 44(3) Family Law Act 1975 (Cth) to commence proceedings under s 79 out of time. In the Respondent Husband’s Response to Initiating Application filed 3 May 2018, he opposed leave being granted under s 44(3).
On 3 November 2017, the Husband filed a Response to Initiating Application, seeking that the Wife’s application be dismissed and that Phelps Reid Lawyers be restrained from representing the Wife. This application was listed for an Interim Hearing on 26 April 2018. The Husband did not press this application on this day, due to concerns about a lack of standing.
On 8 October 2018, the Wife’s application under s 44(3) was listed for a defended hearing on 18 December 2018.
On 18 December 2018, the Wife brought a late application for an adjournment, requesting further financial disclosure by the Husband. This adjournment was refused, and the application for leave under s 44(3) was heard.
In relation to the s 44(3) application, both parties filed an Outline of Case document in which they provided timelines, arguments and authorities. Further documents were tendered in the course of the proceedings. The Wife relied on her affidavit and financial statement filed on 16 May 2017, and the affidavit of Doctor D filed 26 September 2017. The Wife also tendered four documents (exhibited as W1-W4) related to the Husband’s finances and various properties, and two documents containing correspondence between the parties in relation to property and/or disclosure (Exhibits W5 and W6). The Wife also provided the Court with an aide memoir listing the assets and liabilities of the parties at separation. The Husband relied on his affidavits filed 3 November 2017 and 26 November 2018, and his unfiled financial statement sworn 6 February 2018 (exhibit W1).
Section 44 (3) – Provisions and Principles
Subsection 44(3) provides:
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.
Subsection 44(4) then provides:
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.
Although in dissent in Emerald and Emerald,[1] Murphy J’s explanation of the operation of the provision appears to be uncontroversial:
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).
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).
[1] [2018] FamCAFC 217 (“Emerald”).
That is, a determination of hardship is what enlivens the discretion to grant leave. The discretion can only be exercised after a determination of hardship is made.
In this case the Husband disputed that the Wife has established that she has a prima facie reasonable case, that she has demonstrated hardship should leave be refused, and that she has not presented a reasonable explanation for delay.
Hardship
The central focus of the consideration of hardship is the loss of claim for an applicant should leave be refused.
The majority in Emerald approved the formulation of the trial judge as to the content of hardship, supplementing the trial judge’s formulation by reference to further authority:
As to the first issue (establishing hardship), what his Honour actually said was that “[t]here must be a claim worth pursuing” (at [21]), and that is entirely consistent with the authorities. For example, in Althaus and Althaus (1982) FLC 91-233 (“Althaus”) the Full Court said (at 77,267):
…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.
Further, in Sharp the Full Court referred to “the well established test … that the applicant must have a prima facie claim worth pursuing” (at [18]).
Further still, in Whitford the Full Court said this (at 78,144):
…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. ... 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.
Additionally, it has been noted that a case of hardship may be supported by an applicant being in difficult financial circumstances. This is not a matter that may stand alone from an assessment of whether there is a claim worth pursuing, as if there is no claim worth pursuing, the inability to pursue the claim cannot cause a hardship, even in circumstances of financial difficulty. It may, however, supplement and reinforce an argument of hardship where there is such a material claim. It may also go to the exercise of the discretion.
In Hall and Hall,[2] the Full Court observed that fundamental to the statutory concept of “hardship” in s 44 “is a determination of the quality or character of the potential claim.” The Full Court then set out the array of formulations previously used by the court in such a characterisation, concluding that:
(t)hese varying phrases may tend to suggest different shades of meaning whereas in reality they are directed to the same fundamental enquiry 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.
[2] (1979) FLC 90-679 (“Hall”).
The Full Court accepted what had also been said by Lindenmayer J that “an application under s 44 is not intended to be a detailed hearing of the merits of the proposed claim itself.” Rather, the procedure is directed to “determine whether the applicant would suffer hardship if leave were not granted.”
Frequently this has been described in terms of the assessment of a prima facie case. A prima facie case typically takes the evidence of the claimant at its highest, drawing all favourable inferences for the claimant. However, the comments by Lindenmayer J in Perkins and Perkins[3] as approved by the Full Court in Hall reveal that the use of “prima facie” in this area has a qualified meaning:
I would add only this qualification, that if the applicant’s evidence as to merits of his or her proposed claim is in itself inherently improbable or self-contradictory in important respects, or if it is clearly shown by other unimpeachable evidence (such as undisputed documentary evidence or the testimony of independent witnesses) to be false, then the applicant may be held to have failed to establish a prima facie case notwithstanding that if his or her evidence were accepted there would be a reasonable probability of success.
[3] (1979) FLC 90 -600.
This qualified use of prima facie corresponds to the purpose of the enquiry being whether an applicant will suffer hardship by a refusal of leave. While the traditional approach to prima facie provides a useful starting point to assessing that question, the qualification described by Lindenmayer J focuses the approach back upon the substance of the enquiry, as not every prima facie case brings with it a reasonable probability of success.
In understanding whether, under those circumstances, such a case meets the “reasonable claim” description, the case must be assessed through the framework identified in Stanford v Stanford.[4] It is firstly necessary to consider whether it is just and equitable to make an order adjusting the parties’ property interests. This requires “identification, according to ordinary common law and equitable principles, of the existing legal and equitable interests of the parties in the property.” If the first hurdle is met, Bevan v Bevan[5] sets out that following the identification of the property, there is to be an identification of the contributions made, the s 79(4)(d)-(g) (including s 75(2)) factors, followed by a further consideration of justice and equity.
[4] (2012) 247 CLR 108 (“Stanford”).
[5] (2013) 49 FamLR 387.
Emphasis is placed in Stanford on the existing property of the parties as central to the consideration of whether any adjustment should be made, as an adjustment can only be made from property that is in existence.
The circumstances of this case
As noted earlier, the Husband disputes that the Wife has established a prima facie reasonable case.
In her outline of case document, the Wife urges the Court to accept her evidence about the parties’ assets and liabilities at the date of their separation. Her position as set out in the aide memoire was that the parties’ net position at separation was approximately $2.7 million of which she retained $1.2 million. For the purposes of the prima facie assessment of the Wife’s claim, this may be accepted.
On the Wife’s financial statement, her current net asset position is debt of $220,000. The Wife, in this context, attests to still holding property, in the form of superannuation ($200,000), and a motor vehicle the subject of finance. She, however, conceded that she may have $266,000 of proceeds from the sale of properties to her father that is still owed to her.
The Wife makes no assertion as to the property currently held by the Husband, and presents no evidence as to property held by the Husband, other than by the tender of exhibits W2 and W3, being title searches.
The Husband alleges that he currently owes $3.4m [H47]. On his financial statement (Exhibit W1) his net asset position is debt of approximately $700,000. This includes property at Suburb B, with his share at $1m, but encumbered at slightly over the value of his share. He attests to holding another property as trustee. He also attests to another mortgage and other debts.
At T42 the Wife concedes that she is not in a position to confirm or to deny that the Husband’s financial position is as he says.
Taking the Wife’s case at its highest, there is an absence of evidence to support the notion that either party holds net positive assets, or unencumbered assets, or that there is a pool available for distribution. This is the more favourable view of the Wife’s case. The alternate view is that, of whatever is left, the Wife holds the bulk of the assets, comprised of her superannuation and money that may be owed to her by her father.
At its best for the Wife, the evidence sustains that there was a net pool at the time of separation, from which each party received benefit. On the Wife’s case the Husband has had the benefit of approximately 55 per cent of the separation pool. That, however, does not answer the current pool position.
The Wife alleges that the Husband has not made full and frank disclosure. If that allegation is accepted it still does not establish, even on a prima facie basis, that there are existing assets regarding which an adjustment could be justified. Absent an identification of a pool of existing assets being available for distribution the Wife does not meet the first hurdle set out in Stanford.
Establishing hardship requires that the Wife demonstrate that she would be denied a claim that is worth pursuing. The Wife has not established that she has a reasonable claim to be heard. Absent establishing this aspect, she has not established, despite her evidence as to dire current financial circumstances, that she would suffer hardship should leave not be granted.
This conclusion means that it is not permissible to make an order under s 44.
This conclusion renders the other considerations otiose.
Despite that, it may be observed that, for a period after the cessation of the property proceedings there was significant explanation for not pursuing, in court, a property settlement, given the state of uncertainty as to the parties’ relationship, and their discussions regarding their property. However, with the passage of time this became a less cogent explanation.
The parties, it seems, on the whole, dealt with what each took from the relationship without regard to the other. For example, the Wife disposed of assets jointly held with her father without reference to the Husband. The husband conducted his affairs as he saw fit. The exception is a trust distribution where a trust in which the Husband, Wife and their children were beneficiaries was wound up by the Husband on 27 March 2017. The Wife received $156,596, the Husband received $9,415, and their children together $33,020.
The conduct by the parties in relation to what each took from the relationship is also a matter that would have told against the exercise of the discretion had an occasion for its exercise arisen.
The consequence of the failure of the Wife to demonstrate that she has a claim worth pursuing is that her application will be dismissed.
Costs
The Wife sought costs against the Husband in relation to an application made by the Husband to restrain her solicitor from acting in the proceedings. The Husband abandoned the application shortly prior to the matter being listed for hearing. The Wife established that the costs incurred were $2,695 for her solicitor and $3,025 for counsel. These costs were effectively thrown away.
Although the starting point is that each party should bear his or her own costs (pursuant to s 117), of the s 117(2A) factors, the Husband’s conduct in continuing the matter until shortly before the hearing, then abandoning it, meaning that he has been wholly unsuccessful, mean that a costs order should be made. That conclusion is not altered by the difficult financial circumstances that he faces.
An order will be made fixing a sum such that the Husband pay the disbursement for counsel and two thirds of the solicitor’s fees. This totals $4,825.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 17 January 2020.
Associate:
Date: 17 January 2020
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