Lappin and Alwood - [2009] FamCA 874

FAMILY COURT OF AUSTRALIA

LAPPIN & ALWOOD

[2009] FamCA 874

FAMILY LAW – PRACTICE AND PROCEDURE – Application to institute property proceedings out of time – Short marriage – Separation nine years ago – Limited financial assets disclosed – Matrimonial cause – Hardship – Delay – What the justice of the case requires – Reasonable claim – Prejudice to parties – Proceedings instituted in Supreme Court of Victoria for financial orders between the parties arising out of a default on mortgage payments – Appropriate venue for hearing – Jurisdiction of Family Court – Whether the facts show a matrimonial cause and dispute arising out of the matrimonial relationship – Terms and conditions imposed upon an order granting leave to institute proceedings – Future assessment of wife’s costs for Supreme Court proceedings – To be paid by husband as a condition to being granted leave to institute proceedings

Family Law Act 1975 (Cth) ss 4(1), 8(1), 39(1), 39(5), 40, 44(3), 44(4), 75(2), 79(4), 90AD(1)
Family Law Rules 2004 (Cth) Rules 1.04, 1.06, 1.07, 1.10(2)(a)

Bak v Bak (1980) FLC 90-877
Coluzzi v Coluzzi (2001) NSWSC 94
DMW v CGW (1982) 151 CLR 491
Farr v Farr (1976) FLC 90-133
Frost v Nicholson (1981) FLC 91-051
Hall and Hall (1979) FLC 90-697
In the Marriage of Neocleous (1993) FLC 92-377
Kowalski v Kowalski (1993) FLC 92-342
McMahon and McMahon (1976) FLC 90-038
McNeill v McNeill's Transport Pty Ltd (1985) 81 FLR 26
Mills v Mills (1976) FLC 90-079
Perkins and Perkins (1979) FLC 90-600
Re Dovey; Ex parte Ross (1979) FLC 90-616
Tormsen and Tormsen (1993) FLC 92-392
Whitford and Whitford (1979) FLC 90-612

APPLICANT:

MR LAPPIN

RESPONDENT:

MS ALWOOD

FILE NUMBER:

MLC

6971

2009

DATE DELIVERED:

10 SEPTEMBER 2009

PLACE DELIVERED:

MELBOURNE

PLACE HEARD:

MELBOURNE

JUDGMENT OF:

YOUNG J

HEARING DATE:

4 SEPTEMBER 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR STAINDL, with him MR STRUM

SOLICITOR FOR THE APPLICANT:

CLANCY & TRIADO

COUNSEL FOR THE RESPONDENT:

DR INGLEBY

SOLICITOR FOR THE RESPONDENT:

ROCHELLE BELCHER

Orders

THAT subject to order 2 hereof leave be granted to the husband, pursuant to s 44(3) of the Family Law Act 1975 (Cth) to institute proceedings out of time for an alteration of the interests of the parties to this marriage in property.
THAT as a term or condition of order 1 hereof the husband pay to the wife, prior to instituting such Family Court s 79 proceedings, her reasonable legal costs and disbursements incurred by her or on her behalf in Supreme Court proceedings No. ... in the sum agreed or assessed for the period 1 May 2008 until the date of this order.
THAT otherwise paragraph 1 of both the final orders and the interim orders sought in the initiating application of the husband filed 7 August 2009 be dismissed.
THAT all extant interim and final orders as sought by the husband in that initiating application, and the response of the wife thereto, be adjourned to and be listed in the Judicial Duty List on 22 September 2009 at 10.00 a.m.
THAT the costs of and incidental to the hearing of this interim application be reserved to Young J and the matter fixed for oral submissions on costs issues at a date to be fixed.

IT IS CERTIFIED

THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for each of the husband and wife.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 6971 of 2009

MR LAPPIN

Applicant

And

MS ALWOOD

Respondent

REASONS FOR JUDGMENT

By his initiating application filed 7 August 2009 the husband sought, as a matter of urgency, orders for:
(a)leave to institute property proceedings out of time pursuant to s44(3) of the Family Law Act 1975 (Cth) (“the Act”); and
(b)an anti-suit injunction restraining the wife from executing or taking steps to execute any final judgment made or to be made in proceedings in the Supreme Court of Victoria, No. … of 2007.
By a further application in a case filed 14 August 2009 the husband sought an urgent hearing of the interim issues and for that purpose it was listed in the Judicial Duty List and came before me on 4 September 2009.
By her response filed 4 September 2009, pursuant to leave which I granted, the wife sought that the initiating application of the husband be dismissed and that he pay her costs of and associated with the proceedings.
The husband relied upon:
(a)his affidavit filed 26 August 2009 and its various annexures;
(b)the affidavit of his solicitor filed 14 August 2009;
(c)his financial statement filed 7 August 2009.
In his Outline of Argument filed on his behalf by Mr Staindl of Counsel appearing together with Mr Strum of Counsel the husband sought leave to amend his initiating application for the purposes of a further interim order whereby the wife would be restrained, pending final determination of all proceedings in this Court, from taking any other step in the proceedings in the Supreme Court of Victoria other than adjourning or discontinuing those proceedings or transferring them to this Court and consolidating all proceedings under the Family Law Act1975 (Cth).
Given that the hearing of this matter came before me, without any prior notice, in a busy Judicial Duty List time permitted only the hearing of the leave to institute proceedings, pursuant to s.44(3) of the Act. That limitation of the issues before the Court was agreed to by Counsel prior to the commencement of proceedings and over the balance of the court day remaining I heard submissions from Counsel, read all material relied upon and then the matter concluded at about the end of the Court day, with this judgment reserved.
Dr Ingleby of Counsel appeared for the wife and relied upon her affidavit filed 4 September 2009, and annexures thereto, and her financial statement filed that same day.
I have read and evaluated all of the evidence contained in the various affidavits and annexures which I was asked to read and additionally I was assisted by the written Outline of Argument presented on behalf of the husband and the oral submissions made on behalf of the wife.

STATUTORY REQUIREMENTS

Section 44(3) of the Act provides that:
(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.

Section 44(4) of the Act provides that:
(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;

FACTS

The husband and wife commenced cohabitation in August 1999 and married two months thereafter, in October 1999.
The husband is now aged 59 years and he was not present in Court for the hearing as he chose to remain at his Queensland residence with his new wife.
The wife, who was present in Court, is 49 years of age.
The parties had finally separated on 2 September 2000 and a Decree Nisi of Dissolution of Marriage was pronounced, on the application of the husband, on 22 March 2002.
There are no children of the marriage.
The husband is a director of a company involved with a manufacturing enterprise and his disclosed income was said to be approximately $2,885 per week, though his stated expenses modestly exceed that income.
The wife had, after divorce, lived in a de facto relationship with Mr D, though they have now separated. The Court was not informed if these parties had in fact concluded any financial or separation agreement. The wife is involved in the hospitality industry and her financial statement disclosed an income of $973 per week, including certain Government benefits which were said to be soon to terminate, leaving her therefore with employment income of $754 per week. Her personal expenditure was calculated at $585 per week.
As to the disclosed assets of the parties the husband’s financial statement, as addressed by Mr Strum who presented argument on his behalf, totalled less than $300,000 plus his superannuation entitlements of $60,000. In contrast the wife’s current assets are modest, approximately $30,000 plus superannuation entitlements of a further $30,000, as disclosed in her financial statement. These financial circumstances of both parties are ultimately a matter of high importance in the exercise of discretion of granting leave to now institute property proceedings in this Court.
As the Court was hearing an interlocutory application the hearing proceeded on the papers and detailed submissions but with no cross examination of the parties and that approach to the hearing was the subject of agreement.
In October 1999, shortly after marriage the husband purchased in his sole name the property situate at W for a sum of $527,000 (“W property”). The husband paid a deposit equal to 10% of the purchase price and a mortgage loan for the balance was obtained from the National Australia Bank. The husband paid all stamp duty, transfer fees and legal costs on the property which settled in or about December 1999 and thereafter the husband and wife, and her three children by a prior relationship resided in that home.
Almost immediately significant difficulties arose within the marriage and the parties decided to separate by early July 2000. Prior to that date the W property was listed for sale at an indicative sale price of $650,000. The husband (and the wife) anticipated a surplus, after all sale costs and discharge of mortgage of approximately $100,000 and he proposed that sum be paid to the wife for her to re-establish herself and her then family.
In June 2000, prior to the auction of the W property, the husband and wife purchased, in the sole name of the wife, the property at M for $225,000 (“M property”). The wife contributed approximately $22,000 and the husband $10,000 towards its purchase and the balance of the funds were obtained by a joint National Australia Bank mortgage, in the names of both parties, and secured over M property. It was a requirement of the bank that the husband be a party to the mortgage document as the wife did not qualify for any borrowings on her income alone. A sum of $180,000 was borrowed pursuant to that mortgage of which approximately $168,000, after costs, fees and charges, were applied towards the purchase price of the M property.
On 30 June 2000 the purchase of M property was settled, the parties then first physically separated and the wife and her children vacated W property to live at M property.
On 15 July 2000 W property was auctioned and the ultimate sale price was said to be a very disappointing $530,000, much less than had been anticipated, and thus there were no surplus funds available to reduce the mortgage on M property.
In August 2000 the parties attempted reconciliation and the husband moved to the M property which then became the matrimonial home and during this time he took over responsibility for the mortgage repayments. That reconciliation failed and again the husband moved from that home in early December 2000 and from that date until early January 2002 the wife took on responsibility for payment of that National Australia Bank mortgage.
Arising out of a meeting and financial discussion between the parties the husband agreed from early 2002 that he would assume responsibility to pay two-thirds of the mortgage instalments with the wife then to pay the remaining one-third balance.
The parties were divorced in late March 2002 and shortly thereafter their previous amicable relationship substantially deteriorated. Various allegations were made, by and against the other, and the husband obtained an Intervention Order on 23 May 2002, which is exhibited to his affidavit. Thereafter the wife applied for an Intervention Order against the husband but when her complaint was listed, on a second occasion in late June 2002, she failed to appear at the Magistrates Court hearing and her application was dismissed with costs of $1,500 awarded in favour of the husband. Those costs have not been paid by the wife but they are not an issue in these interim proceedings. For the purposes of the determination that I am now required to make I have not had regard to these various intervention orders or the alleged conduct of either party in that regard.
The wife thereafter ceased the payment of her one-third mortgage contribution and the husband then responded by ceasing to pay his balance of mortgage payment. The result was that in or about February 2003 the National Australia Bank commenced proceedings in the Supreme Court of Victoria against the wife, as the sole registered proprietor of M property, seeking possession of that property.
There was a term in the loan facility agreement with the bank which had been part of the original documentation and wherein it was stipulated “that upon the settlement and sale of [W property], the loan facility was to be cleared in full and the title returned to the wife”.
An amended Writ was subsequently issued by the Plaintiff bank and on this occasion the husband was joined as a party. It is said to be a matter of significance by the husband in his legal submissions to this Court that the wife then did not seek any contribution or indemnity from him in those amended proceedings. I conclude that there is merit in that submission and it was a course of action that was open to and should have been adopted on behalf of the wife. It, more than likely, would then have required the participation of the husband in those Supreme Court proceedings rather than his absence from the trial, which then eventuated.
The trial was listed for March 2006 before a judge of the Supreme Court of Victoria. The husband did not attend and presented no argument to the Court. That was not in any way the fault of the wife as the husband well knew he was a party to those proceedings, as amended. It was his choice, and at his risk not to then appear or present submissions to the Court. A judgment was later delivered by the Court against the wife for possession of the M property and against the husband for payment of a sum of $220,777.92 and further as against each of the husband and wife for the National Australia Bank’s costs of the proceedings.
Subsequently, and to prevent the National Australia Bank from taking lawful possession of M property pursuant to its judgment, the wife settled the bank’s claim against her for possession of the property, interest and costs by paying to them a sum of $270,000. The wife obtained those monies by transferring ownership of M property to her then de facto husband’s name and he borrowed that sum of money against title from Members Equity Bank. The resulting situation was then that the de facto, Mr D, owned the property encumbered by a substantial mortgage in his name and he and the wife continued to live therein. I have been informed that they later separated and the wife now resides in alternate rented accommodation elsewhere and Mr D remains living in M property. I have no knowledge of the financial circumstances or settlement arising from that separation.
National Australia Bank then pursued the husband for the balance of their costs claim and ultimately he settled that claim by paying to the bank a negotiated sum of $35,000.
In November 2007 the wife commenced proceedings against the husband in the Supreme Court of Victoria and those proceedings remain ongoing. The wife is seeking the husband repay to her the monies she paid to National Australia Bank to settle her claim and all associated legal costs of the first Supreme Court proceedings, that is a total sum of $306,640, plus interest and costs on that amount.
The wife’s claim is founded upon her argument that there was an agreement between she and the husband that he would assume sole responsibility for that mortgage loan post separation and further that it was found or implied within the judgment of the Supreme Court that the husband had or should have assumed responsibility for the loan to purchase M property. A copy of that Writ was annexed to the husband’s affidavit which I have read. I do observe that in paragraph 7 of that Statement of Claim it is asserted that, in former proceedings, the Court had found that the defendant husband had assumed sole responsibility for the repayment of that bank loan. Insofar as that was detailed in paragraph 28 of the Judgment of the Supreme Court I have not read and do not have that document in evidence before me.
By a further reading of paragraphs 12 and 13 of that Statement of Claim the basis of the wife’s claim of the quantum of $306,640 is identified, though they are matters upon which the defendant husband has responded.
In March 2008 the wife applied for summary judgment on her claim and the husband sought by way of cross application a summary dismissal of the proceedings and these issues are clearly explained in paragraph 32 of the husband’s affidavit.
The Supreme Court delivered judgment in May 2008 and dismissed both application and cross application and made procedural orders to further prepare the matter for trial. All of those interlocutory matters were complied with and the trial was listed for hearing in the Supreme Court commencing March 2009. It was only at that time that the husband applied to amend his defence and to re-plead certain matters including a cross claim seeking orders for property settlement pursuant to the Family Law Act 1975.
On that day the Supreme Court permitted the husband leave to amend his defence but denied the claim for him to seek property settlement orders pursuant to the Family Law Act. The Judge directed that the parties attend mediation, which is scheduled for September 2009 within the Supreme Court and otherwise the trial of the matter in that Court is to commence in October 2009.
That amended defence of the husband is annexed to his affidavit and the amended paragraphs to which my attention was directed are as follows:
“25.By reason of the matters pleaded herein and in particular in paragraphs 5A to 5E, 7(b) and 16(b) hereof these proceedings are a matrimonial cause within the meaning given to that expression by paragraphs (ca) and/or (e) of the definition of that expression in Section 4(1) of the Family Law Act 1975 (Commonwealth) and are proceedings in contravention of Section 8(1) of that Act”.
Arising out of the leave for the husband to amend his defence it was ordered that he pay the wife’s costs of and incidental to that indulgence. Accordingly I was handed during submissions an itemised bill of costs prepared for the period 12 February – 18 April 2009, and for a sum of approximately $15,000. Those costs are as yet unpaid by the husband in favour of the wife and may be subject to further legal challenge as to quantum.
From the time when the Supreme Court dismissed the interim applications in May 2008 then before the Supreme Court the husband, seemingly, did not take any further step(s) to vary or amend his claim in that Court and did not seek to transfer proceedings to this Court pursuant to the jurisdiction of the Family Law Act nor did he file a s.44(3) application. Indeed for that period from May 2008 until in or about February 2009, a period of some nine months, the proceedings remained within the Supreme Court, unchallenged by the husband and with the wife incurring ongoing legal costs and disbursements.

It was, as a matter of significance, only on 7 August 2009 that his solicitors elected to file proceedings in this Court for leave pursuant to s.44(3) of the Act to initiate property proceedings out of time. For the whole of the period that the husband had participated in the Supreme Court proceedings he did so without any live application to have proceedings for alteration of property interests before this Court.
I am not provided with a copy of the reasons for judgment of the Supreme Court. Likewise I do not have a statement of all of the legal costs and disbursements incurred by the parties, and particularly by the wife in the Supreme Court proceedings. I have not been given a separate estimate of the wife’s costs for the period May 2008 until February 2009 when the husband was wholly compliant with the procedural requirements of the Supreme Court proceedings and then had sought no leave to institute proceedings in this Court.
I raised with Counsel for the husband the issue as to why the wife should, in any way whatsoever, be financially prejudiced as to costs incurred by her in those Supreme Court proceedings between the period May 2008 and the hearing of the proceedings listed in March of this year. I asked Counsel to address me, in the alternative to the orders sought, why additionally I should not make a conditional order imposed upon the husband pursuant to Family Law Rule 1.10(2)(a) for him to pay the properly calculated reasonable costs and disbursements of the wife for that period. In so doing I relied upon the power of this Court to impose any term or condition, on its own initiative. There was a proper concession made by Counsel for the husband that, provided the Court acted judicially, it could impose conditions and make orders appropriately structured to have regard to matters and facts as found.
I conclude, on all of the evidence it would be unjust and prejudicial to the wife, upon an exercise of the discretion afforded the Court by s.44(3) of the Act to do so without an appropriate requirement for the husband to pay her reasonable costs and disbursements incurred in that period and in addition to what I understand to be the further costs for the period 12 February – 18 April 2009 (inclusive) in accordance with that interim bill of costs which I sighted in the proceedings.

THE LAW

MATRIMONIAL CAUSE

The term “matrimonial cause” is defined in s. 4(1) of the Act. Of particular relevance to these proceedings is subsection (ca)(i) which provides that a matrimonial cause means:
(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:
(i) arising out of the marital relationship

Sub-clause (ca) was inserted in the Act by the 1983 Amendments.

In Kowalski v Kowalski (1993) FLC 92-342, the Full Court (Nicholson CJ, Nygh and Purdy JJ) said at 79,630-1:
“…once a marriage has been celebrated between the parties, the entire relationship between the parties whether arising out of contributions before, during or after the formal tie of marriage was entered into or dissolved falls within the ambit of Part VIII of the Family Law Act 1975….These parties are before the Family Court because they were once married and hence the proceedings can be said to arise out of the marital relationship, even if the property…does not.
…. Once it is determined that the proceedings fall within paragraph (ca) of the definition of “Matrimonial Cause” … the whole of the relationship can be taken into consideration…”
I was otherwise referred by Counsel for the husband to a number of supporting authorities which I have read and evaluated including:
§     Bak v Bak (1980) FLC 90-877 (at p. 75,550);
§     Re Dovey; Ex parte Ross (1979) FLC 90-616 (p. 78,191);
§     Mills v Mills (1976) FLC 90-079(p. 75,381);
§     Farr v Farr (1976) FLC 90-133 (pp. 75,635 – 75,636).
In Bak v Bak (supra) the parties had entered into a partnership agreement for a commercial venture and the dissolution of that partnership was in issue when the wife commenced proceedings in a Supreme Court and the husband sought an application restraining that action and argued that the issues were of and concerning a matrimonial cause and should be before the Family Court.
In his Judgment Opas J concluded that:
“In the present case, the relief sought by the applicant husband is clearly in relation to the property of a party which is clearly of the nature indicated by s.114(1), by its very words. Not only that but the partnership of which there were no other members but the parties is ultimately connected to the fact that the parties are husband and wife. The evidence indicated that the parties were both involved in the business (to what degree I do not find it necessary to decide) and the business provided the funds necessary for their living together as husband and wife and finance the jointly owned home … there is a connection too between the fact of partnership in this case and the fact of marriage … it seems that the partnership was at least in part a result of the marriage”.
The proceedings now before me fall within the definition of a matrimonial cause as the purchase and occupation of the property, which is the subject of Supreme Court proceedings, arose out of the marital relationship. Of further significance is the fact that one, and thereafter both parties, lived in that M property and the mortgage was in their joint names at purchase date. The proceedings properly brought by the National Australia Bank were in the nature of commercial proceedings properly instituted in the Supreme Court but that does not empower the subsequent and separate proceedings, as between husband and wife, to remain within that Supreme Court jurisdiction. If on the facts it is established that there is a matrimonial cause, between parties to a marriage and involving a property that was a matrimonial home and the financial adjustments of and related to that home and the marriage are in dispute then the proceedings should properly be instituted and heard in the Family Court.

SECTIONS 8(1), 39(1), 39(5) AND40 OF THE ACT

The relevant sections of the Family Law Act which provide for the jurisdiction or commencement of proceedings in matrimonial causes are sections 8(1), 39(1), 39(5) and 40, which are set out hereunder.
Section 8(1) of the Act provides for the supersession of existing laws:
(1)After the commencement of this Act:
(a)proceedings by way of a matrimonial cause shall not be instituted except under this Act …
Section 39(1) of the Act provides as to jurisdiction in matrimonial causes:
(1) Subject to this Part, a matrimonial cause may be instituted under this Act:
(a) in the Family Court; or
(b)in the Supreme Court of a State or a Territory.
Section 39(5) provides as to Supreme Court jurisdiction:
(5) Subject to this Part and to section 111AA, the Supreme Court of each State is invested with federal jurisdiction, and jurisdiction is conferred on the Family Court and on the Supreme Court of each Territory, with respect to matters arising under this Act in respect of which:
(a) matrimonial causes are instituted under this Act;
Section 40 provides as to the jurisdiction of the Family Court:
(1)The jurisdiction of the Family Court under this Act shall not be exercised except in accordance with proclamations under this Section.
Counsel for the husband submitted that the wife, in accordance with s 8(1), should have instituted proceedings pursuant to the Act rather than instituting proceedings with the Supreme Court of Victoria, as the circumstances arise out of the marital relationship.
This claim was belatedly raised by the husband during the Supreme Court proceedings in March 2008 on the wife’s application for summary judgment and the husband’s cross-application for summary dismissal. Both applications were dismissed, though I was told that Her Honour did not give any detailed reasons (there were no reasons before this Court) in reference to the operation and effect of s 8(1).
Counsel did not refer me to any authority on the interpretation or effect of s 8(1) and nor am I advised that such authority was provided to Her Honour on the summary judgment application in the Supreme Court. There is however considerable learned authority on this section.
The High Court of Australia in DMW v CGW (1982) 151 CLR 491 had before it for determination the issue of whether the Supreme Court of New South Wales had jurisdiction to entertain certain proceedings brought in that Court, and to make declarations and orders and give directions on paternity issues.
In considering the jurisdictional issues and the respective powers of that Supreme Court and of the Family Court and upon a consideration of s.8(1) Chief Justice Gibbs said:
“The combined effect of ss. 8(1)(a), 39(1) and 40(3) of the Family Law Act, and of a proclamation made under the last mentioned subsection on 27 May 1976, is that since 1 June 1976 proceedings of a kind referred to in pars. (a), (b), (c), (d), (e) and (f) of the definition of "matrimonial cause" in s. 4(1) of the Family Law Act may not, with immaterial exceptions, be instituted in the Supreme Court of New South Wales. Such proceedings may be instituted only in the Family Court”.
and thereafter further said:
“The Supreme Court is in a somewhat similar position. Although its jurisdiction was originally virtually unlimited, there are some areas in which exclusive jurisdiction has been given to other courts, and in those areas the Supreme Court no longer has jurisdiction. One such area, as I have already said, is that occupied by "proceedings by way of a matrimonial cause" within the meaning of the Family Law Act. However, ss. 8, 39 and 40 of that Act do not (and constitutionally could not) give exclusive jurisdiction to the Family Court in proceedings which the Family Court considers, wrongly, to be by way of a matrimonial cause. It is only if the proceeding is in truth a matrimonial cause that the Supreme Court is deprived of jurisdiction”.
Dawson J, in a judgment supportive of the outcome of the majority held that:
“Whether proceedings answer the description of proceedings by way of a matrimonial cause so as to fall within the jurisdiction of the Family Court and outside the jurisdiction of the other courts specified in the proclamation (see Family Law Act, ss. 8 and 40(1) and (4)) cannot be dependent upon the ultimate outcome of those proceedings. The nature of the proceedings must be characterized by the matters which fall for determination in the proceedings”.
and thereafter considered the nature of the inquiry which the Family Court might make as to proceedings and in that regard held that:
“Notwithstanding that the issues to be determined go to jurisdiction, the Family Court does not lack power to embark upon an investigation of those issues (see Federated Engine Drivers v. Broken Hill Pty. Co. Ltd. [1911] HCA 31; (1911) 12 CLR 398 and R. v. Blakeley) even if it ultimately holds that jurisdiction is lacking. The proceedings in which it determines those issues may nonetheless constitute a matrimonial cause. This would, I think, be the proper conclusion without recourse to the definition of "proceedings" in s. 4 of the Family Law Act, but that definition, which includes within the term "proceedings" an "incidental proceeding in the course of or in connexion with a proceeding" makes it clear in my view that an inquiry by the Family Court into the facts necessary to found its own jurisdiction itself falls within the definition of a matrimonial cause. (at p511)”.
In Coluzzi v Coluzzi (2001) NSWSC 94 the Supreme Court of New South Wales had before it a case where the applicant wife sought a declaration that the husband (the first defendant) held his interest in the former matrimonial home on trust for her or, in the alternative, that he held his interest subject to her equitable interest. The husband and wife were married and were not separated and continued to live together in that home. The second defendant to those proceedings was a person who had suffered personal injuries as a result of the alleged assault by the first defendant and he sought leave to intervene in those proceedings and was joined as the second defendant. He was the only true contradictor.
In his Judgment Young J (as he then was) said:
[25] The problem arises because of para(ca) of the definition of "matrimonial cause" in s4 of the Family Law Act 1975. That definition reads:
"Matrimonial cause means - (ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings -
(i) arising out of a marital relationship ...".
[26] S39 of the Family Law Act permits a matrimonial cause to be instituted in this Court. However, s40(3) provides that the Governor General may by proclamation fix a date as the date on and after which matrimonial causes may not be instituted in or transferred to the Supreme Court of a State. A proclamation made by the Governor General on 27 May 1976 excluded jurisdiction in matrimonial causes within para(a), para(b), para(c), para(d), para(e) or para(f) of the definition of "matrimonial cause" from State Supreme Courts other than as specified. This proclamation does not affect the present proceedings. However, by a further proclamation of 23 November 1983, no matrimonial cause within s39(5)(a) of the Family Law Act may be instituted in the Supreme Court of NSW.
[27] No argument has been addressed on the validity of this second proclamation. It is, of course, clearly arguable that it is just not open to the Governor General to completely deprive a Supreme Court of jurisdiction which has been invested by an Act of Parliament and that s40(3) must be read down accordingly. I will, however, assume that the proclamation is valid.
[28] The question then arises as to whether these proceedings are in fact a matrimonial cause within para(ca) and if they are, what is the effect of the plaintiff instituting such proceedings in breach of the Family Law Act.
[29] The proceedings are obviously proceedings with respect to the property of the parties to the marriage because the plaintiff and the first defendant are marriage partners. The vital question is whether the proceedings are proceedings "arising out of the marital relationship".
[30] In Re Aldred (1984) 9 Fam LR 539, 542, Nygh J said of this phrase:
"That is one of those magnificent terms which the draftsman has invented and which has plagued us ever since. It is not a term in respect of which a ready definition occurs."
[31] In Re Farr (1976) 2 Fam LR 11,300, Murray J said that she agreed that events which raise issues of criminal law, industrial law or fiscal law cannot be brought within the marital relationship simply because the circumstances involve a husband and wife and their children. But she then said:
"But as I read the Family Law Act, its linchpin is marital breakdown or marital difficulties. The Act is designed to provide remedies as between husband and wife in relation to any disputes that arise as a result of marital difficulties, and this in many cases regardless of whether or not proceedings for dissolution can be or, for that matter, should be commenced. It appears to me that the moment that the marital difficulty or breakdown occurs, events thereafter involving disputes between husband and wife arising because of that difficulty or breakdown must be circumstances which arise out of the marital relationship whether or not fiscal, property, criminal or some other area of law is involved; but the spouses must be able to find their remedies within the boundaries of the Family Law Act, eg on these criteria a road negligence claim as between an estranged husband and wife could not be dealt with under the Family Law Act."
[32] In Re Aldred Nygh J took the reasoning in that decision to mean that there was a dichotomy between claims which could only arise out of the Family Law Act because of a marital relationship, as opposed to where a claim may arise between parties who have been husband and wife, but the claim arose out of the general law.
[33] Mr Atkin put to me that it was irrelevant that the parties had not separated and that it was quite in order for the Family Court to make orders with respect to the parties' property before separation. He cited Jennings v Jennings (1977) 22 Fam LR 510 and Landerer v Abeles (Moore J, 8 December 2000). In the former case jurisdiction appears to have been conceded. In the latter case, all the learned Judge said was "I think there is jurisdiction to hear proceedings between parties to a marriage with respect to their property though they have not separated. It derives not from their separation, but from their marriage". I do not consider that either of these cases affects the result of the present one.
[34] One might think that in the instant case the marital relationship was irrelevant to the claim being made by the plaintiff because what she is saying is that this case must be treated in the same way as a case between strangers, where the contributions are in fact made in unequal proportions. The claim thus did not arise out of the marital relationship in the light of the above tests.
[35] However, there are some dicta which tend in the other direction. Thus, in Re Savage and Hodgson (1982) 46 ALR 198, 205, the Full Family Court seemed to think that where there were proceedings which related to the jointly owned former matrimonial home of parties, acquired by them during the course of the marriage and which one of the parties to that former marriage continues to occupy, then the relevant proceeding arises out of the relationship and not simply out of the circumstance that the parties are co-owners of the real estate.
[36] In McNeill v McNeill's Transport Pty Ltd (1985) 81 FLR 26, I said at p27:
"If the proceedings relate to the matrimonial home then one may infer that they arise out of the marital relationship, but if the property being dealt with is some other species of property, such as property which is being used in trade or commerce, then I do not believe that one can infer merely from the facts of marriage or from the fact that one party says but for the marriage he would not have entered into a commercial relationship with the other party is sufficient to establish the fact that the property dispute arises out of the matrimonial relationship."
I then went on to say that it is for the person who wishes to allege that the Supreme Court has no jurisdiction to establish that fact by evidence (at p28).
[37] I should note that in R v Dovey; Ex parte Ross (1979) 141 CLR 526, 532-533, the High Court declined to give a comprehensive statement as to the meaning of the words "circumstances arising out of the marital relationship", but noted that they were wide words and approved what Demack J said in Re Mills (1976) 25 FLR 433, 435 that the mere fact that something happens between a husband and wife is insufficient.
[38] The words I used in McNeill's case should not be read as meaning that the inference must be made that something arises out of a marital relationship if the dispute is over the matrimonial home. The thrust of the passage is that where the dispute is not over the matrimonial home the inference is harder to draw. Circumstances may mean that the inference should not even be drawn in the case of a matrimonial home. I do not read the passage in the Full Family Court's judgment in Re Savage and Hodgson (supra) as saying anything else.
[39]One must always look at the circumstances of each particular case. In the instant case there is absolutely nothing with respect to the breakdown of the matrimonial relationship (indeed it has not broken down), or the material upon which the plaintiff relies, to say that there is a trust. Her claim would be exactly the same if the other co-owner of the property was a complete stranger. Accordingly, in my view the proceedings do not arise out of the marital relationship and are not a matrimonial cause.

In particular I have regard to paragraphs 36, 38 and 39 of the above Judgment and contrast the factual situation to that now before me. Here the parties are separated and divorced and the marriage relationship has wholly broken down. The subject property was a former matrimonial home purchased with a joint mortgage. On that basis a strong inference can be drawn that the proceedings relate to the marital relationship. I have carefully assessed all of the facts of the present case and it can be markedly distinguished from Coluzzi (supra) and McNeill (supra).
I find the facts and proceedings of and related to this current case do arise out of the matrimonial relationship and are a matrimonial cause. I conclude therefore that the proper outcome is for this case and the orders sought therein should be heard and determined within the Family Court pursuant to the requirments of the Act. It is not merely the consequences of any financial default in the payment of the mortgage to National Australia Bank but it is all of the circumstances of and related to the marriage and in particular contribution issues pursuant to s 79(4) and other factors pursuant to s 75(2) of the Act that must be considered to conclude a just and equitable outcome.

SECTION 4(1) – PROPERTY

The term “property” in relation to parties to a marriage is defined in s. 4(1) of the Act as “property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
The definition of matrimonial cause and property is extended in s. 90AD(1) of the Act which provides that:
For the purposes of this Part, a debt owed by a party to a marriage is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.
The mortgage which was owed and paid by the wife to the National Australia Bank in the total sum of $270,000 (inclusive of costs and interest) is thus to be treated as property for the purposes of s. 4(1)(ca). The M property is, by any definition, property within the meaning of the sub-section and that which should be within the exclusive jurisdiction of the Family Court in proceedings as between the parties to this marriage.

SECTION 44(3)

Counsel for both parties referred me to several authorities on the operation of s. 44(3) and s. 44(4) which I have carefully considered and evaluated upon the facts of this case.
In McMahon and McMahon (1976) FLC 90-038 Evatt CJ summarised the general principles governing applications for leave to extend time and said at 75,144:
``In summary, the applicant must show that there are adequate reasons which explain the delay; that there is a substantial issue to be raised on appeal; and that no hardship or injustice is caused to the Respondent which cannot be compensated by orders as to costs or otherwise.''
In Whitford and Whitford (1979) FLC 90-612 the Full Court (Ashe and Pawley SJJ and Strauss J) said at 78,144:
“…on an application for leave under sec 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”
Their Honours noted at 78,143:
§The hearing of a s. 44(3) application “is not intended to be a final hearing of a matter”;
§The applicant should file adequate affidavit evidence;
§The respondent should “have an opportunity to file an affidavit to answer the applicant’s allegations and to adduce material showing why leave to institute the proceedings should not be granted”;
§In “appropriate cases, the applicant should have an opportunity to file an affidavit in reply”;
§If necessary, the Court “may allow an applicant to conduct some investigation into the financial position of the respondent”; and
§The “only question to be determined is, whether leave should be granted enabling the applicant to institute proceedings, and the extent of the proceedings and any investigation should be regulated accordingly”.
Their Honours went on to discuss what constitutes hardship and said, 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.”
Of particular relevance to these proceedings is the following statement from their Honours at 78,145:
“Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship.”
The written submissions for the husband submitted that the hardship caused to him “arises from the actions of the wife in instituting the Supreme Court proceedings against him, especially in circumstances where she failed to seek any contribution or indemnity from him in the NAB proceedings”. Further it was submitted orally in Court that if the wife were wholly successful in her Supreme Court application she would, having regard to the husband’s financial statement filed 7 August 2009, be taking all, if not more, than the husband’s entire assets.
The submissions on behalf of the wife challenged any alleged hardship and supported the continuation of proceedings instituted by the wife in the Supreme Court and relied upon the past inaction of the husband in claiming any Family Court jurisdiction and in his acquiescing or consenting to the jurisdiction of the Supreme Court.
I conclude on all of the evidence that there most likely would be a significant hardship occasioned to the husband if leave were not granted to institute proceedings out of time in this Court. The reality of the financial circumstances in evidence before the Court is that the wife seeks a judgment sum, costs and interest greater than the whole of the disclosed current assets of the husband. The consequences of that loss of right of instituting proceedings in this Court could ultimately mean that the wife, who came into this extremely short marriage with very modest assets and financial circumstances, could finish up with all of the present disclosed assets and financial resources of the parties notwithstanding they have been separated for most of this decade.
I conclude that there is a probability that a just and equitable alteration of property interests pursuant to s.79 of the Act would likely provide a division of some property in favour of the husband as there would be required to be a proper and balanced consideration of the requirements of s.79(4) and s.75(2) of the Act. I conclude therefore that there is a probability of success (within the discussion of the Full Court in Whitford (supra)) and thus I can be further satisfied that hardship would be caused if leave were not granted to the husband on this application pursuant to s.44(3) of the Act.
I further find that it was properly open to the wife to have sought a contribution or indemnity from the husband in the Supreme Court proceedings, though that finding is of far lesser significance and I would have found hardship to have existed without that fact.
In Hall and Hall (1979) FLC 90-697 the Full Court (Evatt CJ, Fogarty and Yuill JJ) said at 78,627:
“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, subject, however, to the qualification referred to by Lindenmayer J. in Perkins' case at p. 78,054 when he said:
“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 selfcontradictory in important respects, or if it is clearly shown by other impeachable 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.''
As Lindenmayer J. said, an application under sec. 44 is not intended to be a detailed hearing of the merits of the proposed claim itself…”
I conclude that the husband does have a reasonable claim to be heard by this Court. The evidence that I have read in the husband’s affidavit, and submissions of his Counsel do support the conclusion that a final hearing of a s.79 proceeding, on full and proper evidence, would likely establish a prima facie case for orders to be made for a division of property. I thus find support from Hall’s case (supra) for the outcome which I have concluded is just and appropriate in all of the circumstances of the case.
In Tormsen and Tormsen (1993) FLC 92-392 the Full Court (Fogarty, Nygh and Burton JJ) said at 80,017:
“The fundamental issue in application for extension of periods of time prescribed by rules of court is whether this will enable the court to do justice between the parties...In that connection the Court must weigh the right which the respondent to the application prima facie has to attain the benefit of the judgment … and the desirability that there be finality of litigation…. A failure to explain the delay adequately can certainly lead to a conclusion that justice demands that the application be dismissed … But in appropriate cases the interests of justice may outweigh the absence of an adequate explanation…” (citations omitted)
In the Marriage of Neocleous (1993) FLC 92-377 Fogarty and Nygh JJ said at 79,915:
“it is clear … that the absence of an explanation for delay is not more than a factor to be considered in the circumstances of the case”
In Perkins and Perkins (1979) FLC 90-600 Lindenmayer J said at 78,055:
“…the applicant must give an adequate explanation of the entire delay which has occurred prior to the institution of the proceedings, including any which has occurred since the right lapsed.”
In the written submissions for the husband, it was submitted that “the husband’s delay is explicable…it arises directly from the institution by the wife of the Supreme Court proceedings in November 2007”.
Counsel for the husband conceded that the husband had delayed bringing a s 44(3) application for a ten month period between May 2008 (when judgment was delivered in the Supreme Court) and March 2009.
There was delay on behalf of the husband and I am troubled as to the adequate explanation given for the entirety of that delay, though I more limit my concerns to the period post November 2007 and the institution of proceedings in the Supreme Court by the wife. The husband then should have sought the necessary leave to institute proceedings in the Family Court and I have before me no balanced and satisfactory explanation of any legal reasons he was then given for his contrary course of action. It is curious and unsatisfactory. Nevertheless I must balance that absence of proper explanation for delay against the hardship that would be caused to him and the overall obligation of the Court to do justice between the husband and wife. I proceed on the basis that the absence of explanation for delay is a factor to be considered (which I have carefully evaluated), but it is not the sole or crucial factor in my overall consideration of the issues now before me.
Ultimately the purchase and occupation of the matrimonial property, the prior financial contributions of the husband and wife, the short duration of the marriage, and other relevant facts do support the outcome that there is an entitlement of the husband to obtain a determination in this Court of the property issues, as yet unresolved, as between he and his wife. Insofar therefore as there is a lack of adequate explanation of delay the appropriate interests of justice outweigh that factor and support leave to institute s.79 proceedings out of time.
I must now further balance the hardship that would be occasioned to the husband if leave were not granted to institute proceedings in this Court as against the prejudice that could be caused to, or suffered by the wife, upon the granting of such leave.
In Frost v Nicholson (1981) FLC 91-051 Nygh J at 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.”
Counsel for the wife submitted that it would be prejudicial to her to grant leave in circumstances where the parties were divorced in March 2002 and where the husband should have filed a property application by March 2003, more than six years ago. The husband was legally represented in the Supreme Court proceedings and should have been aware of the 12 month rule. This is particularly the situation as he was the applicant for divorce and has at all times retained the services of a firm of solicitors who have a level of special qualification in Family Law matters. Counsel for the wife further submitted that she would be forced to incur further legal costs if leave were granted after having already spent a considerable sum (approximately $37,000) on the Supreme Court proceedings.
On the other hand, Counsel for the husband submitted that it would be prejudicial to the husband to not grant leave to institute proceedings as the wife was effectively intending to obtain a much larger property settlement in her favour than she could have received pursuant to the Family Law Act 1975 (Cth).
I conclude that there would be a level of prejudice to the wife and that she would be financially disadvantaged if the only order I were to pronounce was to grant leave to the husband to now institute proceedings in this Court. The wife has had legal costs and disbursements associated with her unchallenged Supreme Court proceedings (as to jurisdiction) and I conclude that the justice of this case requires a proper term or condition to be attached to the order to financially reimburse her for reasonable costs and disbursements incurred in her Supreme Court proceedings as and from May 2008.
I raised this potential outcome with Counsel for the husband in argument who had acknowledged and conceded the husband’s delay and neglect in bringing this interlocutory application before this Court.
As can be seen from the Family Law Rules and the powers extended to the Court an order may be made subject to specific terms and conditions. The main purpose of the Rules is to ensure each case is resolved in a just and timely manner at a reasonable cost to the parties and Court in all of the circumstances.
The main purpose of the Family Law Rules 2004 (Cth) is set out in Rule 1.04:
The main purpose of these Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.
To promote this main purpose, Rule 1.06 provides for an active and involved scheme of management by the Court and then to achieve this main purpose Rule 1.07 provides:
To achieve the main purpose, the court applies these Rules in a way that:
(b)deals with each case fairly, justly and in a timely manner;
(c)encourages parties to negotiate a settlement, if appropriate;
(d)is proportionate to the issues in a case and their complexity, and the likely costs of the case;
(e)promotes the saving of costs;
(f)gives an appropriate share of the court’s resources to a case, taking into account the needs of other cases; and
(g)promotes family relationships after resolution of the dispute, where possible.
Pursuant to Rule 1.10(2)(a) the Court may make an order imposing terms and conditions.
I conclude that, aside from the costs already ordered by the Supreme Court of and incidental to the proceedings in March 2009, there should be an order for costs and disbursements of and incurred by the wife to be paid by the husband from May 2008. As a condition precedent to the husband having leave to institute proceedings pursuant to s 79 in this Court there must forthwith be an assessment of or agreement as to the quantum of the wife’s costs and disbursements incurred in the Supreme Court proceedings from 1 May 2008 to the date of this Judgment and those costs are then to be forthwith paid by the husband. I have already identified that an itemised bill of costs for proceedings in March 2009 has been prepared and is subject to dispute. The assessment and payment of those agreed or assessed costs are clearly part of what I intend to be paid to the wife and solicitors must manage that process or otherwise have that matter there determined. It would be proper if the husband’s costs of the Magistrates Court Intervention Order, in the sum of $1,500, were offset in favour of him against this costs requirement. The parties should agree on these costs or otherwise they will need to submit an itemised bill of costs for taxation to the appropriate Court appointed officer or Registrar. That is a procedural matter which the solicitors for the parties should be capable of immediately addressing.
It was mentioned in Court by the wife’s Counsel that she has spent approximately $37,000 in the conduct of her Supreme Court proceedings. I do not determine that to be the accurate quantum of her costs but the discussion and agreement between parties, or any Court process, to ascertain those costs must be undertaken as a matter of urgency. The term or condition I impose upon the husband being granted leave to institute proceedings in this Court pursuant to s.44(3) of the Act is that the wife’s costs in her Supreme Court proceedings as identified in the preceding paragraph are to be paid by him in full prior to his being permitted to file, and the Registry of the Family Court at Melbourne accepting, an application instituting proceedings pursuant to s 79 of the Act.
In all of the circumstances which I have considered in some detail in these urgently prepared reasons for judgment I conclude that the husband have leave to institute proceedings in the Family Court pursuant to s 44(3) of the Act, for an alternation of property interests pursuant to s 79 of the Act but subject to an immediate agreement or assessment of the wife’s reasonable costs and disbursements incurred in the Supreme Court proceedings as and from 1 May 2008 to this date.
As to the applications before the Court I will otherwise dismiss paragraph 1 of both the final orders sought and interim orders sought within the initiating application filed 7 August 2009.
As to the remaining final application for settlement of property and the interim orders sought in paragraph 2 of the interim relief, that is an anti-suit injunction restraining the wife from executing or taking steps to execute any final Judgment made or to be made in the concurrent Supreme Court proceedings, I will adjourn each of those applications to the first available Judicial Duty List hearing day, 22 September 2009 at 9.45 a.m. I record that it is most unlikely that the further interim matters can or would be heard and determined that day. I have however selected that adjournment date as I am conscious of the forthcoming Supreme Court mediation and thereafter hearing date which currently is listed for trial commencing in October 2009.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

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Associate: