Lundon & Lundon
[2021] FedCFamC1F 330
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lundon & Lundon [2021] FedCFamC1F 330
File number(s): SYC 6228 of 2021 Judgment of: CHRISTIE J Date of judgment: 21 December 2021 Catchwords: FAMILY LAW – INTERIM ORDERS – Where the husband seeks leave to apply for property adjustment orders out of time – where an informal agreement exists and has been partially implemented Legislation: Family Law Act 1975 (Cth) ss 44(3), 44(4), 79 Cases cited: Althaus and Althaus (1982) FLC 91, Edmunds & Edmunds (2018) FLC 93, Gadzen & Simkin (2018) FLC 93, Kowaliw and Kowaliw (1981) 7 Fam LR 13; [1981] FLC 91, Welland & Hawthorn [2021] FedCFamC1A 43. Division: Division 1 First Instance Number of paragraphs: 69 Date of hearing: 6 December 2021 Place: Sydney Counsel for the Applicant: Mr Ford Solicitor for the Applicant: Eleanor Murphy & Company Solicitors Solicitor for the Respondent: Mr Price, Price & Company Solicitors & Attorneys ORDERS
SYC 6228 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR LUNDON
Applicant
AND: MS LUNDON
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
21 DECEMBER 2021
THE COURT ORDERS THAT:
1.That leave be granted to the applicant pursuant to section 44(3) of the Family Law Act 1975 (Cth) to bring an application pursuant to section 79 out of time.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lundon & Lundon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
The applicant husband, Mr Lundon (“the husband”) filed an Initiating Application on 26 August 2021. In that application he seeks an order that the court grant leave pursuant to s 44(3) of the Family Law Act 1975 (“the Act”), permitting him to commence proceedings out of time.
The respondent wife, Ms Lundon (“the wife”) filed a Response to the Initiating Application on 2 November 2021 in which she seeks that the husband’s application for leave to commence proceedings be dismissed.
Both of the parties were represented at the hearing and elected to proceed with the matter without cross-examination.
I had the benefit of well-developed written and oral submissions on behalf of both parties.
BACKGROUND
The parties were married in 1990 and separated on 30 January 2016.
At the time of separation, the parties’ youngest daughter, X, was in high school. She was 13 years of age.
The parties lived under the one roof from separation until December 2017. When the husband left the matrimonial home X was 15 and a half.
On 11 July 2017, a divorce order was pronounced. That decree became absolute on 12 August 2017.
On 26 August 2021, the husband made an application for final property settlement.
As emerges from the evidence in both cases, the time for the husband to make an application for property settlement without the leave of the court expired on 12 August of 2018.
Following separation the parties sold their home at B Street, Suburb D.
The wife says the parties agreed to and implemented an informal agreement about property settlement in about March 2018. The husband says not all the terms were agreed and indeed not all the terms were implemented.
THE LAW
Applications for leave to commence proceedings out of time are governed by the relevant subsections within s 44 of the Act, as follows:
(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 causein 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.
…
(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; or
b) in the case of proceedings in relation to the maintenance of a party to a marriage--that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit .
The question of whether or not to grant leave is a discretionary one. That exercise of discretion is guided by the terms of the section itself.
A party who seeks the court’s leave to commence proceedings is expected to explain any delay in bringing proceedings. A failure to provide an adequate explanation for delay may lead to an application for leave being dismissed: Welland & Hawthorn [2021] FedCFamC1A 43. But explanation for delay is only one of the matters for consideration: Althaus and Althaus (1982) FLC 91-233 (“Althaus”).
The applicant is expected in their evidence to address the question of hardship. An applicant is expected to demonstrate that a failure to grant leave will result in hardship. The mere fact that a party has been denied the opportunity to bring an application in and of itself does not constitute hardship.
In approaching the question of hardship it is necessary to take into account, in broad terms, the nature of the claim which will be brought by the applicant if he is successful and take into consideration the costs of pursuing the claim to properly understand whether the claim of hardship is made out: Gadzen & Simkin (2018) FLC 93-871 (“Gadzen”).
Assessment of the claim does not require a full hearing on the merits but a finding that the claim is reasonable or arguable: Gadzen at [33] – [37], Edmunds & Edmunds (2018) FLC 93-847; Althaus at 77, 267.
It is also necessary in addressing the question of whether or not leave should be granted to consider any prejudice to the respondent created by the grant of leave.
Ultimately, the court will be guided by the question of whether or not a grant of leave is necessary to do justice as between the parties.
CONSIDERATION AND DETERMINATION
Explanation for delay
The husband says he did not receive a copy of the Divorce Decree (“the Decree”). The wife does not dispute this. This is significant because the Decree contains a note advising a divorced party:
“[i]f a party to the marriage proposes to make an application to a court exercising jurisdiction under the Act as to property or as to maintenance of that party, such application must be made within 12 months from the date upon which this divorce order takes effect. After that time, such an application cannot be made without first obtaining the leave of the court to do so.”
The address shown on the Decree as that of Mr Lundon is C Street, Suburb E. That is because the application for divorce, which was filed 27 April 2017 and became exhibit 6 in the proceedings, was expressed to be a joint application. The joint application was prepared by Mr F of F Lawyers, whose address is C Street, Suburb E. Mr F was the wife’s employer. The husband’s signature does not appear on that application however, a document, which became exhibit 5 in the proceedings, was an affidavit by Mr Lundon said to have been sworn on 29 June 2017 and again, giving the address for service as F Lawyers. That affidavit was filed presumably in circumstances where the parties had lived separately under the one roof and the court required evidence that they were indeed separated. There is no evidence before the court about the circumstances in which that document was prepared.
There is no evidence to suggest Mr F gave the husband advice about any time period which would apply.
The husband says in his affidavit material that until he attended upon a solicitor, Mr G, in mid-2019 he was unaware of the existence of a time limit to bring property proceedings before the court. He says that he may have been given advice about the existence of a time limit when he attended that solicitor in mid-2019. The husband says he left that meeting without a sense that there was any urgency. He says that solicitor was closing his practice and their association was not ongoing.
It is necessary to understand the explanation he advances for delay in commencing proceedings. His explanation for the initial delay is explained by a lack of knowledge.
The husband also says he was conscious of his youngest daughter’s need for stability while she completed high school.
The period between the time when he says he may have been advised and the commencement of proceedings is about two years.
It would appear that the parties were engaged in correspondence about their property at that time. In an email dated 20 July 2019 the parties were involved in an email discussion using the subject line “Money”.
At 12.49 pm on 20 July 2019, the husband wrote to the wife as follows:
“Hi
I raised the settlement figures with you previously, so thought tomorrow would be an opportunity to discuss. I’ve attached a version that shows a 50 per cent settlement and also takes into account things that weren’t included previously like the car etc.
See you around 11.00 am?
Mr Lundon”
That annexure does not include the document which was purportedly attached.
At 1.17 pm on 20 July 2019, the wife responded:
“I’ll get advice from Mr F before I talk to you about that.
He did previously mention that there is no way there would be a 50/50 split in any court. Plus super would also be taken into account. Yours is much higher than mine.
Child support is also done on an income basis. Given your promotion and I assume a pay rise and my low income I could suggest we adjust that.
Second hand furniture is worth much less than your estimate. Next to nothing really.”
It would appear from context that the reference to getting advice from Mr F would be a reference to obtaining advice from her employer Mr F.
It is not plain what, if any, further negotiation took place after that email exchange but the wife indicated in her email of 20 July 2019 that she was not intending to speak to the husband at the time he proposed until she had had the opportunity to obtain advice.
It is not plain from the affidavit material whether the husband sought advice from Mr G before or after that email exchange.
The husband deposes that after he saw Mr G he said to the wife:
“I was told that the division should be more like 50-50 not 60-40”.
To which she responded:
“I don’t want to talk about that stuff, I don’t want to go there.”
Neither party sought to cross-examine on the application so I am entitled to accept the husband’s evidence which is not on its face improbable. It is not plain whether the wife knew that there was a time limit on the bringing of an application but it is plain that she did not raise any issue of a time limit with the husband. It is not necessary for me to reach a conclusion about the wife’s knowledge – the focus is on whether the facts support a finding that the husband has adequately explained his delay. I find that the husband had no knowledge of there being any time limit in play until at least mid-2019 at which time his daughter was still at high school. I find his focus thereafter on her stability above his own need for access to funds, adequately explains the delay.
Hardship
In this matter it is necessary to have regard to the situation which would prevail if leave were not granted. The wife, for her part, gives evidence that the parties entered into an informal agreement. An informal agreement is not binding on the court. However, in circumstances where the parties have entered into an agreement and have acted in accordance with that agreement, it may be that the court would be persuaded that it would be prejudicial to the respondent to grant the applicant leave to commence out of time.
In this matter, the parties had acquired assets according to the history set out in the evidence, which was largely agreed. At the commencement of cohabitation, the husband owned a property at H Street, Suburb J (“the H Street property”) in equal shares with his brother that was subject to a mortgage. The property had two dwellings and the husband and wife resided in one of the two dwellings. In June of 2001, the parties purchased the interest of the husband’s brother in the H Street property for $385,000 and converted the duplex into a single dwelling and built a swimming pool.
In June of 2010, the parties sold the H Street property for $2,275,000 and purchased B Street, Suburb D (“the B Street property”) for $2,130,000.
At the time of separation, the parties were residing in the B Street property. Following separation, the husband commenced to work for a company called O Company.
Both the husband and wife received inheritances during the relationship. In the case of the husband, $100,000 in 1995 and $376,644 in 1997. In the case of the wife, $125,000 in 1998 and $100,000 in 1999.
The husband had experienced financial challenges associated with self-employment and the parties had as a consequence accrued debts, including debts related to litigation.
Between separation and December 2017, the parties lived under the one roof and the husband says he contributed his income to the joint account from separation until May 2018 – an account from which the parties met the mortgage and expenses related to the wife’s car.
In December of 2017, the husband moved out of the B Street property and the property was sold. The sale price was $3,680,000. The wife retained the net proceeds of sale and applied those to purchase a property at K Street, Suburb D (“the K Street property”) for $1,722,000. As part of the informal agreement, the documentation suggested that the wife would set aside from the proceeds of sale of the K Street property, the sum of $75,000 for application to the school fees of the parties’ daughter X. During the period 2016 to May 2018, the husband in his affidavit material indicates that he contributed the entirety of his income to the joint account and that the wife also contributed to the joint account, but perhaps not to the extent of her whole income.
The wife says that the net proceeds of sale from the former matrimonial home in B Street were $1,690,463. The wife says that those monies were divided as between the parties such that she received $1,014,278 whilst she says that the husband was to receive $676,185. As it transpired, the wife made transfers of funds to the husband which she calculated totalled $276,185 retaining a sum of $400,000 which she indicated she would provide to the husband at the time at which the parties’ daughter X finished secondary school. The husband for his part says that he did not received $276,185 but rather received $60,457 (the remainder being applied to retire debt) and is yet to receive the $400,000 which he agreed at that point the wife could retain.
The husband relied on two documents to establish that the net proceeds of sale of the B Street property were $1,861,104.56 comprising the deposit of $319,593 and the balance of $1,541,511.56.
From those sums various amounts were paid to the benefit of the husband, the wife, the parties’ daughter X and in discharge of debts. Working from exhibit 2 the wife received:
(a)$1,481,052.64;
(b)$10,000;
(c)$55,000;
(d)$10,000;
(e)$7,525.47.
Working from exhibit 2 the husband received:
(a)$60,458.92;
(b)$1,000;
(c)$250;
(d)$20,000.
The following sums appear to have been paid to L Company:
(a)$9,000;
(b)$6,000;
(c)$10,000;
(d)$75,000;
(e)$16,776.50;
(f)$2,700.
The last three payments represent legal fees and the settlement sum necessary to resolve litigation in which L Company was involved.
The following amounts were said to be paid to the parties jointly:
(a)$1,500;
(b)$5,000 (to repay Mr M);
(c)$300.
The following amounts were designated as related to surgery of the wife:
(a)$5,000;
(b)$9,200;
(c)$2,500.
The following amounts were identified as school fees:
(a)$25,000;
(b)$4,078.
There were three payments identified as being for a car:
(a)$1,062;
(b)$10,000;
(c)$3,686.88.
The husband says in his affidavit that the car payments were in respect of the wife’s car.
There were two payments identified as being in respect of the “home loan” for the parties residence where the wife had been living between December 2017 and April 2018:
(a)$14,500;
(b)$5,800.
$5,000 was identified as a payment for insurance.
Further amounts were identified as paid to the wife’s conveyancing firm ($814.15) and in respect of moving costs ($2,310 and $790).
In annexure “A” to the wife’s affidavit she sets out payments made to the husband totalling $276,185.42. She attributes all the payments in respect of the settled (L Company) litigation to the husband (even though he did not retain those funds). She attributes an amount labelled Insurance to the husband although he also presumably paid those funds to a third party. The remainder of the amount is made up of payments to L Company and some other payments identified only by date.
The husband says he had various liabilities at the time including three credit cards and two tax debts – such that the settlement fell well below the wife’s calculation of a 60/40 split. There is acknowledgment by the wife of the existence of debt in the parties’ email correspondence. I am not in a position to make a finding about the precise division effected by the informal settlement but having regard to the figures drawn from exhibit 2 and the manner in which those funds were applied I find that (even taking into account the disparity in superannuation) the amount received by the husband fell well short of 40% of the net assets. I accept the submission that whatever funds the husband received at the time were “burdened with most of the liabilities aside from the mortgage”. I also take into consideration that the husband did not receive $400,000 which the wife accepts he was entitled to either at the time of the sale of the parties’ property or when the parties’ daughter X finished high school.
I find that leaving the position as it is or was under the informal agreement would create a hardship having regard to the husband’s contributions over a lengthy period as set out above. Even if the wife in due course establishes that the husband’s business challenges and resulting litigation and refinancing are properly regarded as “reckless negligent or wanton” (Kowaliw and Kowaliw (1981) 7 Fam LR 13). I am satisfied that his initial contribution, his inheritances and his other financial and non-financial contributions are likely to result in a property adjustment which it is reasonable and commercial for him to pursue. In so finding I have considered the wife’s corresponding contributions including the inheritances received by her and her financial and non-financial contributions including after separation.
There is a dispute between the parties as to the extent to which the parties agreed that the informal settlement should be binding upon them, agreed to all of its terms and agreed that it was just and equitable. There is a related dispute as between the parties about the extent to which they have complied with the agreement.
Even under the terms of the agreement the husband did not receive his $400,000 when the wife indicated it would be payable. The wife was able to rehouse herself using those funds while the husband has not been a participant in the housing market.
The wife gives evidence herself and via her finance broker about difficulty obtaining borrowings. Her inability to provide the funds to the husband at the time she indicated she would supports the conclusion that it is appropriate to grant leave.
It is not clear the extent to which it can be properly concluded that the $400,000 which the wife retained was an interest free loan from husband to wife. Whether it can be legally characterised as a loan only matters to the extent that a legally enforceable loan would provide the husband with an alternate cause of action if his application for leave were dismissed. It is unnecessary for me to determine that issue.
Prejudice to the wife
After separation the wife used the proceeds of sale from the parties’ home to purchase the K Street property in her own name.
The parties agreed to the appointment of a single expert to value the K Street property. Mr N provided the parties with a report dated 22 November 2021 which values the property at $2,550,000.
The wife says she has made improvements to that property between the time of purchase and the date of valuation. There is no specific evidence about the impact of those improvements on the value of the property. However, she says she has expended about $118,000.
I find that the prejudice to the wife in granting leave is addressed by her capacity in due course, to lead evidence of her post-separation contributions and (if she chooses) expert evidence about the impact of the renovations on the value of the property.
I find that the circumstances set out enliven my jurisdiction to grant leave and weighing the competing interests of the parties, I find that in order to do justice as between them it is necessary to grant leave.
I certify that the preceding sixty-eight (69) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 21 December 2021
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