MACKRELL & MACKRELL

[2015] FCCA 1996

FEDERAL CIRCUIT COURT OF AUSTRALIA

MACKRELL & MACKRELL [2015] FCCA 1996

Catchwords:
FAMILY LAW – Property – whether or not leave should be granted to the wife to commence proceedings out of time – parties implemented informal settlement – parties were advised at the time to enter into consent orders and binding child support agreement but chose not to do so.

Legislation:

Family Law Act 1975, ss.44, 75

Whitford and Whitford (1979) FLC 90-612
Sharp v Sharp [2011] FamCAFC 150
Gallo and Dawson (1990) 93 ALR 479
Richardson and Richardson (2000) FLC 93-012

Applicant: MS MACKRELL

Respondent: MR MACKRELL

File Number: ADC 2808 of 2012

Judgment of: Judge Harland

Hearing date: 18 June 2015

Date of Last Submission: 18 June 2015

Delivered at: Melbourne

Delivered on: 29 July 2015

REPRESENTATION

Counsel for the Applicant: Mr McQuade

Solicitors for the Applicant: Diane Myers Pty Ltd

Counsel for the Respondent: Ms Dickson

Solicitors for the Respondent: Donlan Lawyers

ORDERS

1. That the application for an extension of time for the wife to bring an application for adjustment of property orders pursuant to s.44(3) of the Family Law Act 1975 (Cth) be dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 2808 of 2012

MS MACKRELL

Applicant

And

MR MACKRELL

Respondent

REASONS FOR JUDGMENT

1. The wife applies for leave to pursue property proceedings out of time. The respondent resists the application. In the event the applicant is successful on her leave application, the respondent seeks the opportunity to argue for security for costs. The applicant has an outstanding costs order against her in favour of the respondent with respect to District Court proceedings.

2. There are many facts which are agreed between the parties.

3. The parties entered into an informal property settlement in September 2011. The parties documented the settlement by email, a copy of which was tendered as exhibit A. The parties reached the agreement after attending a mediation. They agreed on an equal property division.  The parties compromised on the value of the husband’s business. The wife thought the business had a value of $109,000. The husband thought it had a value of $67,000. They adopted the mid-point of $88,000.

4. Both parties received legal advice during the course of negotiations.

5. It is also agreed that the wife received a $90,000 inheritance shortly after separation which was not brought into account in the informal property settlement.

6. The parties agreed to enter into consent orders and a binding child support agreement. The wife was to receive a $30,000 credit towards her future child support liabilities. The parties agreed to be responsible for half of the children’s school fees each. The email was sent by Kelly and Co to the parties. They conducted the mediation. They referred to entering into consent orders and the binding child support agreement.

7. The wife says the settlement represents a 45/55 split in the husband’s favour.

8. It is agreed between the parties that the wife has not paid periodic child support since the agreement was reached. The parties have implemented the property agreement.

9. Much of the wife’s evidence in her affidavit refers to child support issues. It is not clear what her child support liability would have been from September 2011 to date if she had paid child support pursuant to a child support assessment.  The email is silent as to whether the $30,000 was to only be credited against periodic child support and not school fees. There seems to be no reason why it should not also apply to the school fees but that may well be a matter for another forum.

10. The child support credit clearly benefited the husband as it meant he was able to keep the home. He could not raise sufficient funds to pay the wife the full extent of her property settlement without that agreement with respect to child support.

11. The parties’ divorce became final on 22 September 2012. The wife filed her application on 29 January 2015, some 16 months out of time.

12. Both counsel relied on a lengthy list of authorities addressing the issue of the court’s discretion to grant leave to a party to proceed with an application out of time.  I have read all of those cases however it is not necessary to discuss them all as many restate the same principles.

13. Section 44(3) of the Family Law Act 1975 provides that property and maintenance applications must be brought within 12 months of a final divorce order. The Court has a discretion to grant leave to a party to proceed with an application out of time pursuant to section 44(4) if the Court is satisfied that hardship would be caused to a party to the marriage or a child if leave were not granted.

14. Both counsel referred to the Full Court of the Family Court decision of Whitford and Whitford (1979) FLC 90-612 which is often referred to in these applications. The Full Court commented that there are two questions arising in these types of applications being:

    a)whether the Court is satisfied that the applicant or child of the marriage would be caused hardship if leave were not granted;

    b)if the Court is satisfied that hardship would be caused, then whether or not the court should exercise its discretion to grant or refuse leave to institute proceedings out of time.

15. The Full Court said at [78,146]:

    “The determination how this discretion should be exercised, must depend on the facts of the particular case. Due weight must be given to the expressed legislation intendment that ordinarily, proceedings should be commenced within a year from a date of the decree nisi, and the general policy of the Act which appears from s.44(3) and
    s.81 that financial relationships between the spouses should, wherever possible be brought to finality within a reasonable time after the dissolution of the marriage. Hence, such matters as the length of the delay, the reasons for the delay and prejudice occasioned to the respondent by reason of the delay, and the strength on the merits of the applicant's case, and the degree of the hardship which would be suffered unless leave were granted, are matters affecting the exercise of the discretion. These matters are not necessarily the only ones. 

    On the other hand, ss 44(3) and 44(4) point to the conclusion that the legislature intended to confer power on the Court to grant leave  to institute proceedings in order to avoid hardship. Having regard to the nature of the jurisdiction which this Court exercises, this power should be exercised liberally in order to avoid hardship, but nevertheless in a manner, which would not render nugatory the requirement that proceedings should be instituted within a year from the decree nisi.” 

16. The Full Court also stated that the inability to pursue a claim is not in itself hardship. It is necessary to consider the merits of the application for leave was granted. This is because if there is no real prospect of success then it cannot be found that the applicant would suffer hardship if the leave were not granted. Hardship is not necessarily tied to a monetary value: see Sharp v Sharp [2011] FamCAFC 150.

17. In Gallo and Dawson (1990) 93 ALR 479 McHugh J of the High Court held that the purpose of rules to allow an extension of time (in this case an application to extend the time within which to lodge an appeal) is solely to enable the Court to do justice between the parties. In order to determine whether or not there would be an injustice to the parties were it not granted, it is necessary to consider the history of the proceedings, the conduct of the parties, the nature of litigation and the consequences for the parties of the grant or refusal of the application to grant an extension of time. It is necessary to consider the applicant’s prospects of success in the substantive proceedings. It is necessary to be mindful of the purpose of such time limits.

18. The applicant’s explanation for the delay is inadequate. Her counsel says that the fact that the informal agreement was not formally implemented is in itself an explanation for the delay. I do not accept this submission. The wife had been represented at some point during the negotiations for property settlement. Both parties were aware at the time of implementing the informal settlement that in order to formalise the arrangement they needed to enter into consent orders made by the Family Court and enter into a binding child support agreement registered with the Child Support Agency. That much is made clear from the penultimate paragraph of Exhibit A. The parties’ divorce did not become final until 22 September 2012. Still, the applicant took no action. The lack of adequate explanation for delay is a relevant factor but the enquiry does not end there.

19. The Full Court in Sharp v Sharp made the following statement with respect to the law at [12] – [14]:

    It is important to bear in mind the purpose of s 44 in the context of the Act, which is that time limits are to be observed as the wording of that section makes clear. The principles concerning applications for leave to commence an action out of time are well known. In Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541  at 551 McHugh J said:

    The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. For nearly 400 years, the policy of the law has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. The enactment of time limitations has been driven by the general perception that "[w]here there is delay the whole quality of justice deteriorates". [footnotes omitted]

    At 553 his Honour continued:

    A limitation period should not be seen therefore as an arbitrary cut-off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated ...

    A limitation provision is the general rule; an extension provision is the exception to it ...

    There is nothing to suggest that this expression of the law in general is not entirely applicable to a consideration of s 44 of the Act. Indeed so much is seen from the opening words of the s 44(4), "[t]he court shall not grant leave under subs (3) unless ... ".

20. The wife says she will suffer hardship if leave is not granted because:

    a)The business was not valued;

    b)She would be entitled to a greater percentage of the property than what she received;

    c)The husband could seek a child support assessment.

21. The parties clearly compromised on the value of the business. The wife thought it was worth more. The husband thought it was worth less. They chose a mid-point rather than incurring the expense of a valuation. They did have a valuation of the former matrimonial home. This was a course open to them. It is not a ground to establish hardship. The wife makes no suggestion that she was misled in some way about the value of the business.

22. On the limited information available to the Court, it could not be said that the settlement was outside the range of just and equitable outcome particularly given the fact that the wife’s inheritance was excluded as a consideration. It would have been relevant as a s.75(2) resource the wife had if nothing else. The fact that the settlement was not approved and that she may have achieved a better outcome is not enough to establish hardship. Many people compromise their claim. In order to litigate a claim to a final hearing, the wife could have incurred considerable further expense and delay.

23. Much of the wife’s evidence focuses on the issue of child support. The husband has said in open Court that he is willing to enter into a binding child support agreement in the same terms as was agreed in 2011. The wife was well aware at the time of implementing the settlement that in order to properly formalise the settlement, consent orders should be made and a binding child support agreement should be signed and registered with the Child Support Agency.

24. It is open to the parties to enter into a binding child support agreement now. If they do not and the father seeks to have a child support assessment, then the wife can agitate that issue in another forum. The wife has failed to establish hardship.

25. It is not necessary to consider the second limb however, I will make a few observations. Counsel for the applicant submitted that prejudice to the respondent is only to be considered with respect to the respondent’s ability to meet the claim. The lack of availability of witnesses and documentary evidence was clearly relevant to the issue of prejudice to the respondent. That is not the case here but the authorities do not limit their interpretation of prejudice to the respondent’s ability to meet the case. They go further than that. For example, in Richardson and Richardson (2000) FLC 93-012, the Court considered the fact that the respondent has organised his finances and his life on the basis the parties had implemented their financial settlement. The respondent has remarried and has carried out improvements on the former matrimonial home. The authorities talk about doing justice between the parties. That does not support the narrow interpretation of prejudice to the respondent which the applicant’s counsel supports. The prejudice cannot be simply covered by a costs order.

26. For these reasons I dismiss the application.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Harland

Associate: 

Date:  29 July 2015