Li and Kong

[2016] FCCA 1484

FEDERAL CIRCUIT COURT OF AUSTRALIA

LI & KONG [2016] FCCA 1484

Catchwords:
FAMILY LAW – Application for an extension of time in which to bring property proceedings – inordinate delay – no evidence of hardship if application not granted – questionable merit in proposed application – extension of time refused.

Legislation:

Family Law Act 1975, s.44(6)

Cases cited:
Star & Star [2013] FamCA 91
Whitford & Whitford (1979) FLC 90-612

Applicant: MS LI

Respondent: MR KONG

File Number: MLC 9005 of 2015

Judgment of: Judge Burchardt

Hearing date: 9 February 2016

Date of Last Submission: 9 February 2016

Delivered at: Melbourne

Delivered on: 9 February 2016

REPRESENTATION

Counsel for the Applicant: Mr Kuan

Solicitors for the Applicant: Brygel Lawyers

Counsel for the Respondent: Ms Elleray

Solicitors for the Respondent: Slater & Gordon Lawyers

ORDERS

1. The Application for an extension of time pursuant to s.44(6) of the Family Law Act 1975 is dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 9005 of 2015

MS LI

Applicant

And

MR KONG

Respondent

REASONS FOR JUDGMENT

1. I will commence my observations by trying to set out the law as I would appreciate it applying to these matters. Pursuant to s.44(5) of the Family Law Act (“the Act”), a party to a de facto relationship may subject to subsection (6), only apply for an order relevant for these purposes if the application is made within two years after the end of the relationship. 

2. That is defined as the standard application period. Pursuant to section 44(6), the Court may grant leave to apply after the end of the standard application period of the Court is satisfied that (a) hardship would be caused to the party or a child if leave were not granted, (b) is about maintenance which is not relevant.

3. It should be noted that that is a slightly different time period to orders where a marriage has come to an end under s.44(3) but the authorities touching on s.44(3), to which I have been referred seem to me to be relevantly indistinguishable. It is safe to note that the power under s.44(6) is if anything more closely guarded so to speak more closely confined than that under s.44(3).

4. I have been referred to the judgment of Cronin J in Star & Star [2013] FamCA 91. This copy does not have the media neutral citation. At [36] and following his Honour had this to say:

   “Relevantly, s 44(3) of the Act provides that where a divorce order has taken effect, property proceedings should not be instituted after 12 months from that date except by leave of the court. The approach to dealing with a leave application or a time limit has not been met is well-known (see Brisbane South Regional Health Authority v Taylor [1996] HCA 25, (1996) 186 CLR 541, as followed by the Full Court in Sharp & Sharp [2011] FamCAFC 150).  It is not just a formality.” 

5. I just pause the quotation there and point out that the Brisbane South Regional Health Authority case was a Limitation Act point but in broad terms, the High Court’s point that the time limit is prima facie to be observed is well made out. Continuing on from Cronin J's judgment:

   “Section 44(4) is clear in providing the court shall not grant leave under subsection (3) unless certain criteria are satisfied.  Those principles have been canvassed a number of times by various courts but I shall refer to them again because they act as a guide for this determination. 

   Because of s44(4)(a), it must be established that hardship would be caused to the husband if leave were not granted.  If hardship is established, the husband still has to persuade the Court that its discretion should be exercised (see Whitford & Whitford (1979) FLC 90-612). 

   The husband must demonstrate hardship which involves considering whether he has an arguable case.  Despite the limited nature of the evidence normally presented on an interlocutory application, both parties dealt with their respective financial histories comprehensively and both had the opportunity (albeit in a limited way) to cross-examine the other. All parties were represented by a solicitor and counsel. I therefore have a reasonable picture from the tested evidence. 

   It is important to note that hardship is more than the loss of a right to commence proceedings.  It is the consequence arising from the loss of the right to commence proceedings (see Sharp (supra)). 

   In Swallow & Swallow an unreported decision of Emery J in 1977, his Honour said:

   (t)he mere loss of the right is not in itself hardship.  The right lost…must be a right, which, in all the circumstances, is substantial. 

   …to come within the provisions of this section, an applicant must establish:-

   (a) a prima facie case which is, in the circumstances substantial;

   (b) that to deny the right to litigate the claim would cause hardship in the sense referred to above to a party or to a child of the marriage;

   (c)  that there is an adequate explanation as to why the claim was allowed to elapse. 

   In McDonald & McDonald (1977) FLC 90-317, Evatt CJ referred to Swallow with approval and then added:

   I would add the following comment that the court may also think is appropriate to consider the question of prejudice to the respondent and that in this connection the period of delay in making the application to institute proceedings may itself be a relevant factor. 

   A determination under s 44(3) therefore necessitates a clear distinction to be made between the proof of hardship and a consideration of the consequential exercise of discretion (See in particular Whitford (supra) at 78,145; Cox & Cox 91981) FLC 91-068; Walker & Walker (1984) FC91-564. See also Hedley & Hedley [2009] FamCAFC 179; (2009) FLC 93-413).

   To succeed, the husband must have an arguable claim worth pursuing or a “real” probability of success. (see Sharp (supra)).”

6. In the case of Whitford & Whitford (1979) FLC 90-612, the Full Court of the Family Court held – and I quote from the headnote but it is essentially an extract from the judgment-

   “[O]n an application for leave under s44(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... 

   The hardship referred to in s 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted…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.”

7. I note that in the joint judgment of the Court at page 78, 144 the Court clarified an aspect of that headnote as follows:

   “The hardship referred to in s 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.” 

8. Here this leads obviously to a consideration of the affidavit material filed and most particularly that of the applicant because unless what she says is manifestly absurd, I have to assume for these purposes that she may advance her evidence and be believed.  So turning to her affidavit what she actually says is this. 

9. First, she is from Hong Kong.  I interpolate and point out that for at least some of her life the applicant would have been subject to the common law as Hong Kong was then a British possession.  She might be presumed to have some possible familiarity with the sort of legal traditions that inform our own legal system.  She has also, of course, lived in Australia for some years as well. 

10. In any event, she came to Australia in 1999 when she was 23 and according to her met the respondent in early 2000 at a party.  They started dating.  And in late 2000 she moved in with him to his family home in (omitted).  She asserts that she paid a weekly rent of $200 to his parents but I point out that that was more, in my view looking at the figure simply a contribution to her living and other costs. 

11. She goes on to depose that she had $100,000 which she had earned in Hong Kong and transferred that into a joint savings account.  The respondent put that in issue but I accept that she must be taken to potentially able to make that possibility out.  She further deposes that in late 2000 the parties bought a property in Property A for $300,000, of which $30,000 was paid as a deposit from the joint savings account. 

12. Nonetheless, although the wife as I shall refer to her, has deposed that the husband had little, if any earning capacity at the time having only recently qualified, she deposes he was the person who took out the mortgage.  That is counter-intuitive because the mortgage in his name alone was not guaranteed by the wife according to her affidavit.

13. Nonetheless, it is deposed that the Property A property has effectively paid for itself thereafter.  As long ago as 2001, according to the affidavit the parties decided also to invest in Melbourne and bought a property in Property S which is now of some significance.  Once again, the purchase price was around $300,000.  The deposit was asserted to have come from the joint savings account.

14. Once again, however, it was the respondent who applied for the mortgage and presumably obtained it.  The property was bought in joint names but in 2003, during refinancing was transferred to the name of the respondent.  Once again the applicant asserts that rental income covered the relevant costs.  All I know is that the respondent puts that in issue. 

15. Thereafter the wife was a student for some period of time.  The Property A property was sold for $380,000 in 2002 and a further property was bought in Property G for $315,000.  According to paragraph 21 of the affidavit, the respondent’s parents contributed $50,000, the applicant’s sister loaned $50,000, and the proceeds from the sale in Property A and the remainder of the joint savings account were applied such that the property in Property G was bought without any mortgage. 

16. Thereafter, the parties decided to move to China in 2007.  The property in Property G was sold for $350,000 and approximately $150,000 was contributed to starting a (omitted) business in China in which the applicant and respondent held between them a 60 per cent share. 

17. Ultimately, the respondent left for Australia in September 2010 and was reimbursed for his 30 per cent share of the business for $50,000.  Thereafter, according to the wife, the business did not do well.  She deposes that there is still cash available from the sale of Property G in addition to the Property S property.

18. Since separation, the wife deposes that she returned to Australia once every year and that – and I quote :

    “Every time that I came back, I met with the respondent to discuss property settlement.  I normally followed up with phone calls after getting back to Hong Kong.  The respondent would always tell me that the property market is not doing well and we should wait for a few years to sell Property S at the best possible price.” (paragraphs 32 & 33, wife’s affidavit).

19. She goes on to depose that, in effect, she took that at face value.  It would appear from the affidavit that the last time that the applicant identifies there was any discussion about the property was in April 2012, when they met in Sydney and she was dissuaded from selling the property by further assurances from the respondent. 

20. The respondent, however, did as he himself deposes transfer either $25,000 on the applicant’s version or $30,000 on his version to the applicant’s niece.  Why he would have done that is not clear from the materials and I do not know that I can take that matter much further.  In the ultimate in August 2014, the respondent sought to recoup the $25,000 that the wife asserts he had advanced to the niece.  This led to discussions between the parties one would infer in August 2014, about property settlement and an express denial by the respondent to the applicant that she had any interest in the Property S property.

21. At this point – and counsel conceded that this is what the affidavit must be taken to mean – the applicant finally realised that the respondent had no intention of having a property settlement.  She did not, however, lodge any proceedings in the Court, although she lodged a caveat on the Property S property in what one would assume from her affidavit was late 2014. 

22. The respondent’s affidavit says that the caveat was filed in November 2014, and I think that seems therefore uncontroversial.  Nonetheless, the matter did not proceed to Court here until over a year later when the initiating application seeking an extension of time was filed on 24 September 2015.  The explanation, to the extent that there is one, is – and I quote:

    “I was reluctant to take this matter to Court because that would require me to come back to Melbourne and create more animosity between the Respondent and me but at this matter is unresolved, I seek leave to file proceedings in the Federal Circuit Court.” (paragraph 41, wife’s affidavit).

23. Now, it must be said that the respondent’s affidavit does not by any means entirely dovetail with that of the applicant, but as I indicate, save to the extent that one can form significant views based on what one might describe as simple inferences, I am required to assume that she may make good those propositions. 

24. Now, the first thing I should say is, of course, that the applicant has not filed any material responding to the respondent’s affidavit which was filed as long ago as November.  I do not draw any specifically adverse inference but I note she has not taken the opportunity that would be available to her to put on more material had she so wished. 

25. The next matter to be understood is that of course there is no evidence in the wife’s affidavit of hardship.  There is no itemisation of what it is that would befall her if the application were not permitted to proceed.  And I repeat, we know from the Full Court’s decision in Whitford that it is not the loss of the opportunity that constitutes the hardship.

26. There are further matters that bear upon the case.  The claims for Property S are somewhat tenuous.  Putting the matter at its highest on the applicant’s materials, the 10 per cent deposit in 2001 was constituted from funds from a joint account to which she had previously contributed a substantial amount of money.  It rises no higher than that. 

27. All the other properties seem to have been liquidated from time to time and although the wife surmises that there might be money left over in Australia, the materials suggest a keen awareness of financial matters.  It suggests that the husband’s assertion that all the funds were transferred to China is correct.

28. I appreciate I am not making any final finding to this effect.  It is a matter of evaluating the materials to come to that sort of prima facie assessment of possible merit.  But insofar as there is any identified real property that might be fairly the subject of a claim by the wife, it really comes down to her contribution to the 10 per cent deposit all those years ago. 

29. There is another matter which as was pointed out by Cronin J is of some significance.  And that is the question of delay.  Even if separation was as the wife says in 2010 – and not has he says in 2009 – this application was made five years late.  More importantly again, even on the wife’s case it was made over a year after she well knew that her only possibility of obtaining any kind of result would be to lodge an application. 

30. She was sufficiently aware of legal matters to lodge a caveat in November 2014 or late 2014 and this application thereafter took months and months.  That, in my view, in the particular circumstances of this case is an extremely significant matter.  The applicant is fluent in English.  She has lived in Australia for seven years.

31. She is sufficiently aware of her position in law to lodge a caveat.  She grew up in a country which was at least, for part of that time, a common law country.  All these factors are part of the mix, although those latter ones perhaps less so.  Furthermore, prejudice to the respondent is not irrelevant. 

32. The events which might be the subject of dispute go back now some 16 or 15 years.  Memory is affected.  Even if one were to fast-forward to 2010, it is still now six years ago.  There is an obvious prejudice to the respondent in seeking to respond to a claim put in these terms, especially where, on any view of the matter, the claim is not one of overwhelming strength. 

33. The authorities to which I have referred talk about the claim probably succeeding.  One would not say that the force of this case would be of that character.  Taking all these matters together and laying perhaps particular emphasis upon the delay in the institution of proceedings, I decline to exercise my discretion to extend time. 

34. There is no evidence of hardship. On one view, I do not even arrive at the point of considering the discretion but whether taken separately or cumulatively which would probably be the wrong methodological way to proceed it is clear that the discretion ought not be exercised in the applicant’s favour. So the application for an extension of time pursuant to s.44(6) of the Family Law Act is dismissed. 

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.

Date: 9 February 2016