Lawrence v McLeish
[2010] VCC 1316
•10 September 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
FAMILY PROPERTY DIVISION
Case No. CI-10-000134
| FRANK CHRISTOPHER LAWRENCE | Plaintiff |
| v | |
| FAYE MARGARET McLEISH | Defendant |
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| JUDGE: | HIS HONOUR JUDGE LACAVA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 20 August 2010 |
| DATE OF RULING: | 10 September 2010 |
| CASE MAY BE CITED AS: | Lawrence v McLeish |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 1316 |
RULING
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Catchwords: Application on Summons for leave to commence proceeding out of time for adjustment of property interest under Relationships Act 2008 – S.43(2) of Act – hardship – Reasons for Delay (5 years) in bringing proceeding.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Corbett | Kenna Teasdale Lawyers |
| For the Defendant | Mr D Brown SC | Caroline Counsel Family Lawyers |
| HIS HONOUR: |
1 This proceeding commenced by Writ issued by the plaintiff on 15 January 2010.
2 The Statement of Claim seeks relief in the nature of a declaration that a partnership previously conducted between the plaintiff and the defendant known as “FC Lawrence and MF McLeish” trading as “Point Addis Flower Farm” (“the partnership”) was dissolved as from 13 February 2009, and other consequential relief. This includes dissolution of the partnership and the winding up of its affairs and distribution of its assets.
3 A Defence and Counterclaim has been filed. In that pleading the defendant does not admit the plaintiff’s allegations supporting the claim for dissolution of the partnership and she counterclaims. In summary form the Counterclaim pleads the parties resided together in a “domestic relationship” within the meaning of that term as defined in the Relationships Act 2008 (Vic) (“the Act”). By counterclaim the defendant applies to the Court “for the adjustment of interests with respect to the property” of the plaintiff pursuant to section 41(1)(a) of the Act.
4 The plaintiff and the defendant lived together in a domestic relationship for a period of about twenty years between 1984 and July 2003. The plaintiff contends that in fact the relationship between the two had deteriorated from about 1995 and, whilst thereafter until July 2003 the parties lived together under the same roof, the domestic relationship between them had in fact come to an end from about 1995. The defendant strongly disputes this. It is not necessary I decide this issue at this time. For the purposes of this ruling, I proceed on the basis the domestic relationship came to an end in about July 2003.
5 Section 43(1) of the Act places a time limit on the making of an application under section 41 of the Act. The defendant must have made her application within two (2) years after the relationship ended. In this case, on or before July 2005. It is common ground the defendant is out of time in seeking the relief she does by counterclaim.
6 Section 43(2) of the Act provides a power to the Court to grant leave to a party to apply for an order under section 41 after the two-year time limit “if the Court is satisfied that the greater hardship would be caused to the partner applying if that leave were not granted than would be caused to the other partner if that leave were granted”. As Ashley JA said in Giller v Procopets [2008] VSCA 236 at [58] when discussing what was formerly section 282(2) of the Property Law Act 1958, a provision in like terms to section 43(2) of the Act, the section “requires a comparison of hardships”.
7 By Summons issued by the defendant dated 27 May 2010, she seeks leave pursuant to section 43(2) of the Act to apply to the Court “for the adjustment of interests with respect to the property” of the plaintiff within section 41(1)(a) of the Act out of time. That Summons came on for hearing before me on 20 August 2010. My ruling is thus confined to the relatively narrow point of whether or not the defendant should be granted leave to seek the relief she seeks in the counterclaim. I do not have to decide the many factual differences asserted by the parties about their domestic relationship and I do not do so for it is not necessary for the purpose of deciding the narrow issue raised by the summons.
8 One issue that arises in cases where a party seeks leave to proceed out of time is whether or not there is a requirement for the party bringing the application for leave to explain the delay in making application. The Act itself does not require an explanation be given. Here the delay is around five years. A number of decisions dealing with this question have been decided in the Supreme Court and they are summarised in Giller v Procopets (supra) in the judgment of Neave JA at paragraphs 308 and 309. Her Honour cited with approval a judgment of Chief Justice Warren in McGibbon v Marriott [1999] VSC 381 where her Honour said that an applicant should provide a reasonable explanation for the delay, but that:
“The standard is not a rigorous or high standard of satisfaction, but rather a standard of reasonableness; that is, a reasonable explanation, allowing, in particular, for the emotional and human factors involved in domestic arrangements and the complex factors involved in such arrangements.”
9 In this case the parties ended their domestic relationship in July 2003. After that time the plaintiff lived in rental accommodation nearby. The defendant continued to live in and work from a property where together they had conducted business in partnership. Notwithstanding the domestic relationship had ceased at least by July 2003, the parties nevertheless seem to have continued to get along well. The partnership between them continued. In 2008, the property from which they conducted their partnership business which had previously been registered in their joint names was transferred to each of them as tenants in common in equal shares.
10 After the domestic relationship ended in 2005, the parties, as between themselves from time to time, discussed a division of their assets. On 12 February 2009, the plaintiff, through solicitors, gave notice in writing terminating the partnership[1] and advertised the dissolution in the Victorian Government Gazette.[2]
[1] Exhibit “FCL-6” to the affidavit of the plaintiff sworn 1 July 2010
[2] Exhibit “FCL-7” to the affidavit of the plaintiff sworn 1 July 2010
11 On 28 May 2009, the plaintiff, through solicitors, wrote to the defendant making an offer to effectively dissolve the partnership, wind it up and divide its assets.[3] There were then further discussions confirmed in a handwritten letter from the plaintiff to the defendant dated 26 June 2009.[4] The defendant did not respond to that letter. A further six months then passed before the plaintiff issued the proceeding by writ on 15 January 2010.
[3] Exhibit “FCL-8” to the affidavit of the plaintiff sworn 1 July 2010
[4] Exhibit “FCL-9” to the affidavit of the plaintiff sworn 1 July 2010
12 The defendant says that up until the time of the issue of the writ she had been negotiating with the plaintiff on good terms and she was shocked when she was served with the writ.[5] In short, she argues she did not commence a proceeding seeking relief within time because as far as she was concerned negotiations were still ongoing and neither party had shown any interest in going to court. I accept that to have been the case. Indeed, it is consistent with the way the plaintiff himself seems to have approached the matter. He delayed seeking relief from the Court until January this year when the writ was issued. He thus waited about six and a half years to go to the Court after July 2003. The Counterclaim was filed on 10 March 2010.
[5] Affidavit of the defendant sworn 17 August 2010 [23]
13 I am satisfied that the defendant has provided a reasonable and sufficient explanation for her delay in seeking leave pursuant to section 43(2) of the Act in all of the circumstances of this case. Up until shortly prior to issue of the writ, the parties were negotiating between themselves. The defendant asserted her claim under the Act soon after the writ issued and soon after all discussion had ceased.
14 In support of her application by summons, the defendant has sworn and filed two affidavits. The first is sworn 27 May 2010 and the second 17 August 2010. The defendant’s second affidavit is a response to a lengthy affidavit filed by the plaintiff sworn 1 July 2010 to which there are eleven exhibits. In giving consideration to this application I have had full regard to the contents of each affidavit and the exhibits. In addition, each party gave sworn evidence verifying their respective affidavits and was cross-examined. A transcript was prepared of that evidence. As I said earlier, I do not have to decide at this time the many factual differences asserted by the parties about their domestic relationship and I do not do so.
15 During the domestic relationship between the parties they jointly purchased farming land of nearly 70 acres in size at Point Addis Road, Point Addis from which they carried on the business of the partnership known as the “Point Addis Flower Farm”. There is a dispute between the parties as to the amount of financial and non-financial contributions they each respectively made to the acquisition, development and improvement of this property. That property is recorded in the books of the partnership as an asset of the partnership. It is now registered in the names of the plaintiff and defendant as tenants in common in equal shares.
16 The plaintiff contends that the financial records of the partnership show that he is entitled to seventy per cent of the value of the partnership assets and the defendant, thirty per cent. Notwithstanding the entitlements shown in the financial records of the partnership, the plaintiff by his Statement of Claim seeks to have the partnership dissolved and the value of the net assets divided equally between the parties.
17 In summary, the plaintiff contends that were the relief to be granted that he seeks in the Writ and Statement of Claim, the defendant would be better off financially because the records show she is entitled to only thirty per cent of the net value of the partnership assets.
18 However, the plaintiff’s Statement of Claim addresses itself only to the partnership between the parties and a division of partnership assets. It does not deal with the assets of either party which do not comprise the assets of the partnership.
19 At paragraph 13 of his affidavit, the plaintiff in general terms sets out his assets at the commencement of the domestic relationship with the defendant. They included a terrace house at Paddington in New South Wales, a half share of a property at 332 Beach Road, Black Rock and an interest in an hotel at Lakes Entrance. In addition, he had a half interest in a business known as “Geelong Flower Farm”, some shares and cash, furniture and personal effects, including works of art and sculptures.
20 After the domestic relationship commenced, the plaintiff continued to work in his business at Geelong Flower Farm and he still does, although the location of that business and the make up of the ownership of it has since changed.
21 At the commencement of the domestic relationship, the defendant had four children from a previous marriage. A former matrimonial home which she shared with her former husband was at some point sold and she received some $180,000 from this which she says she used in part in contributing to the purchase of the property that became the “Point Addis Flower Farm”. She also received a small inheritance and she had a small share portfolio.
22 The Point Addis property was renovated and developed. There were gardens developed around the house and a Bed and Breakfast business established. Other garden beds were developed to grow flowers for commercial sale. There are disputes between the parties as to who contributed to the improvement and development of the Point Addis Flower farm, both financially and in terms of manual and other contributions.
23 At the beginning of the domestic relationship the defendant operated her own catering and flower arranging business which she continued during the course of the domestic relationship.
24 Each party appears to have worked hard during the course of the domestic relationship.
25 Exhibit FCL-11 is the plaintiff’s list of his present assets at value. It will be remembered that the Statement of Claim addresses the partnership only. According to the plaintiff’s list of assets, the Point Addis Property and Business is valued at $6,000,000. His assets, apart from partnership assets, are valued according to the list in a total sum of $1,299,400.00. Because those assets are not “partnership” assets, as the pleadings presently stand, unless leave is granted to the defendant to seek an adjustment of the plaintiff’s assets in her favour she will not be able to claim any portion of the plaintiff’s other assets outside of the partnership. The defendant does not admit Exhibit FCL-11 lists all of the plaintiff’s assets or the values of them.
26 Section 41(1) of the Act empowers the Court to adjust the interests with respect to the property of one or both of the domestic partners.
27 Section 44 requires the Court, so far as practicable, to finally determine the financial relationships between the domestic partners for the avoidance of further proceedings.
28 Section 45 is important. Relevantly it is in the following terms:
“45 Order for adjustment
(1)
On an application by a domestic partner under section 41 for an order to adjust interests with respect to the property of one or both of the domestic partners, a court may make an order adjusting the interests of the domestic partners in the property of one or both of them that seems just and equitable to it having regard to-
(a) the financial and non-financial contributions made directly or indirectly by or on behalf of the domestic partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners; and (b) the contributions, including any contributions made in the capacity of or parent, made by either of the domestic partners to the welfare of the other domestic partner or to the welfare of the family constituted by the partners and one or more of the following- (i) a child of the partners;
(ii) a child accepted by the partners as one of the family, whether or not the child is a child of one or both of the partners; and
(c)
the nature and duration of the domestic relationship; and
(d) any relevant matter referred to in section 51.”
(emphasis added)
29 It can be seen that if the defendant was granted leave pursuant to section 43 of the Act in dealing with any adjustments of the plaintiff’s assets in her favour, applying section 45 the Court would be required to examine the nature of the domestic relationship between the parties (sub(c)) and adjust their respective interests having regard to financial and non-financial contributions and direct and indirect contributions of the parties in a fair and equitable way. Importantly, section 45(1)(d) permits the Court to take into account on such an application, any relevant matters contained in section 51 of the Act. That section deals with a number of matters relevant to maintenance.
30 Should leave not be granted on the other hand, then the proceeding would fall for determination applying the provisions of the Partnership Act 1958 and principles of partnership law. In bland terms, the Court would be confined to looking at the financial contributions of the respective parties to the partnership only. The Court could not examine the domestic relationship and nor could it guarantee that in deciding the partnership proceeding only it would bring to finality litigation that may arise out of the domestic relationship. In short, absent leave being granted the proceeding being confined to matters of the partnership between the parties would ignore that they lived together as a family for twenty years or so.
31 The defendant’s case on this application is that she was in a domestic relationship with the plaintiff for about twenty years, during which time they engaged in the partnership business and acquired assets in the partnership. But she argues she also cared for the plaintiff attending to most of the household chores and she earned income which she contributed to the partnership account. This she argues enabled the plaintiff to continue to run his other business interests which were profitable. She contends that whilst she may not have made a direct financial contribution to other assets acquired by the plaintiff her contribution was nonetheless indirect and permitted him to attend to his other business interests unfettered by either the partnership business or by the demands of running the household where he lived. The defendant argues that when the nature of the domestic relationship and her present and future needs are examined by a court it is only just and equitable that she receive an adjustment of the plaintiff’s property interests in her favour to compensate her fully for her direct and indirect contributions to the acquisition of all of the plaintiff’s assets not just the partnership assets. She argues section 51 matters are relevant in that determination.
32 If leave is not granted the defendant will be shut out from claiming any interest in the plaintiff’s assets outside of those assets in the partnership. That is the hardship suffered by the defendant were leave not to be granted. If leave is granted to the defendant the plaintiff will suffer the hardship of having to account for all of his assets in the court and will have to call evidence of the direct financial contributions towards acquisition of his assets and defend any claim that the defendant might make to entitlement on the basis of either direct financial contribution or contribution as home maker or having regard to any relevant matter in section 51.
33 On balance, I am of the view that were leave not to be granted the hardship suffered by the defendant in not being able to pursue a statutory claim for assets of the plaintiff over and above partnership assets outweighs any hardship the plaintiff may suffer in having to defend or deal with such a claim.
34 Accordingly, the orders of the Court are as follows:
1 That the defendant have leave pursuant to section 43(2) of the Relationships Act 2008 to apply to the Court for an order adjusting the plaintiff’s interest in property pursuant to Part 3.3 of the said Act. 2 That the counterclaim delivered by the defendant in the proceeding dated 10 March 2010 stand as the defendant’s application referred to in order 1 hereof. 35 I will hear the parties on costs and any consequential orders.
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