MCCOY & CHANCELLOR
[2014] FamCAFC 62
•11 April 2014
FAMILY COURT OF AUSTRALIA
| MCCOY & CHANCELLOR | [2014] FamCAFC 62 |
FAMILY LAW – APPLICATION FOR LEAVE TO APPEAL – Where the application for leave to appeal was not challenged by the respondent – Where the proposed appeal considers applications for extensions of time following the High Court decision of Stanford v Stanford (2012) 247 CLR 108 – Leave to appeal granted.
FAMILY LAW – APPEAL – PROPERTY – Application for leave to appeal against orders allowing the respondent to commence de facto property proceedings out of time – Where the delay did not prejudice the appellant – Where the parties had entered into a mediated agreement which included a clause requiring the parties to consent to an extension of time for the commencement of property proceedings if the agreement was not effected – Where the submissions were confined to the trial judge’s finding that hardship would be caused if leave to bring proceedings out of time was not granted – Where hardship amounted to the denial of a chance to pursue a reasonable claim – Where the use of common property had come to an end through the voluntary conclusion of the de facto relationship – Appeal dismissed.
| Family Law Act 1975 (Cth) |
Frost & Nicholson (1981) FLC 91-05
| Sharp & Sharp [2011] FamCAFC 150 |
| APPELLANT: | Ms McCoy |
| RESPONDENT: | Ms Chancellor |
| FILE NUMBER: | BRC | 1650 | of | 2013 |
| APPEAL NUMBER: | NA | 40 | of | 2013 |
| DATE DELIVERED: | 11 April 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May, Strickland & Kent JJ |
| HEARING DATE: | 29 November 2013 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 15 July 2013 |
| LOWER COURT MNC: | [2013] FCCA 740 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Page QC |
| SOLICITOR FOR THE APPELLANT: | Feeney Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Jordan |
| SOLICITOR FOR THE RESPONDENT: | Phillips Family Law |
Orders made on 29 November 2013
The appellant be granted leave to appeal.
The appeal NA 40 of 2013 be dismissed.
The appellant pay the respondent’s costs of the application for leave to appeal and the appeal, and failing agreement such costs to be assessed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym McCoy & Chancellor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 40 of 2013
File Number: BRC 1650 of 2013
| Ms McCoy |
Appellant
And
| Ms Chancellor |
Respondent
REASONS FOR JUDGMENT
In an amended notice of appeal filed 8 August 2013, Ms McCoy, the appellant sought leave to appeal from orders made by Judge Turner on 15 July 2013. Those orders allowed an application by Ms Chancellor, the respondent in this appeal, to proceed with de facto property proceedings filed outside the time provided in the Family Law Act 1975 (Cth) (“the Act”). Subject to leave being granted, on appeal the appellant sought that those orders be set aside and that the application be dismissed.
At the hearing of the appeal on 29 November 2013 we granted leave to appeal but dismissed the substantive appeal. These are our reasons.
It was not controversial that the appellant required leave to appeal from the orders, being interlocutory in nature. Counsel for the appellant submitted that leave should be given because the proposed appeal raised a significant issue of law, namely, the applicable principles for determining applications for extensions of time following the High Court’s decision in Stanford v Stanford (2012) 247 CLR 108.The application for leave to appeal was not opposed by the respondent and it was granted.
The parties separated under the one roof on 4 December 2010. They attended a mediation on 19 November 2012 with a view to resolving their differences in relation to their property. At that mediation the parties reached an agreement in relation to a final division of property and they signed Heads of Agreement. Subsequent attempts to reflect that agreement in proposed orders to be made by consent ended when the appellant resiled from that agreement on 4 February 2013.
Ms McCoy filed an application for property settlement on 8 March 2013 – more than two years after the relationship ceased. The dates are significant. Section 44(5) and (6) of the Act provide the following:
(5)Subject to subsection (6), a party to a de facto relationship may apply for:
(a) an order under section 90SE, 90SG or 90SM; or
(b) a declaration under section 90SL;
only if the application is made within the period of 2 years after the end of the de facto relationship (the standard application period).
(6)The court may grant the party leave to apply after the end of the standard application period if the court is satisfied that:
(a)hardship would be caused to the party or a child if leave were not granted; or
(b)in the case of an application for an order for the maintenance of the party—the party’s circumstances were, at the end of the standard application period, such that he or she would have been unable to support himself or herself without an income tested pension, allowance or benefit.
The standard application period expired on 5 December 2012.
Counsel for the appellant made it clear that the three month delay in bringing the initiating application was not a basis for resisting the leave application. A delay of some three months is of little consequence on the facts of this case, particularly when the delay appears to have resulted from an attempt by the parties to resolve their property interests by way of private mediation and the making of orders by consent.
In the hearing before her Honour and the appeal before us, the submissions were confined to whether Ms McCoy had appropriately demonstrated hardship within the meaning of s 44(6)(a) of the Act, and was as a result able to proceed with her application.
Background
It is convenient to refer to the background and essential uncontroversial facts:
·The parties began living together in early 1983. They first separated under the one roof on 4 December 2010. Ms Chancellor physically left the home in December 2011.
·Ms Chancellor is aged 53 and Ms McCoy is aged nearly 57. Ms Chancellor works in the education industry and Ms McCoy has previously worked in education administration.
·The property pool consists of two houses: an unencumbered house property at A in the name of Ms McCoy (formally the parties’ home) and an encumbered house property at B in the name of Ms Chancellor.
·There are separate share portfolios in each party’s name.
·Each of them had a motor vehicle and they separately owned:
a bobcat, trailer and horse float in Ms McCoy's name;
a camper trailer in Ms McCoy’s name;
household contents including tools; and
a boat partly owned by Ms McCoy.
·Each had bank accounts and credit cards in their own name and through their employment had superannuation in their own names.
The judge accepted that the combined property pool was worth around $2,000,000. The value of their joint assets is approximately $45,000, that held by Ms McCoy $1,715,194, and Ms Chancellor $400,000, not including the inheritance referred to below.
Apart from the initial question as to whether there should be any property orders altering the interest of the parties there is a dispute in respect to monies said to be owing to Ms McCoy's parents in the sum of $167,000.
An additional difficulty seems to be that in early 2011 Ms Chancellor received an inheritance from a family member consisting of real property, motor vehicles, cash and a golf buggy, the total worth according to her estimates of around $400,000. Ms McCoy is of the view that the estate is worth in excess of $560,000.
As we have already mentioned, the parties attended a private mediation on 19 November 2012. Both parties signed a mediation agreement prior to the mediation occurring. Ms McCoy was not legally represented at the mediation. An agreement was reached at the mediation but attempts to convert the agreement into consent orders failed.
Letters were exchanged until early February 2013 when Ms McCoy said that she would not consent to the proposed orders.
As referred to above on 8 March 2013, Ms Chancellor filed an application seeking final orders for a de facto property division and on an interim basis that leave be granted to proceed out of time and for costs, on an indemnity basis including costs related to the mediation.
On 12 April 2013, Ms McCoy filed her response seeking that the application be dismissed and asking for costs on an indemnity basis.
Although Judge Turner was persuaded to exclude evidence in relation to the mediation, we regard the circumstances related to the mediation including the terms of the mediated agreement of some significance in this case.
In an affidavit filed on 8 March 2013 Ms Chancellor deposed that an agreement in relation to a final division of property was reached at the mediation on 19 November 2012. A Heads of Agreement was executed by the parties. That Heads of Agreement included a clause requiring the parties to consent to an extension of time for the purpose of making consent orders or filing an Initiating Application for Property Proceedings if consent was withdrawn to the mediated agreement (at [22]).
Ms Chancellor deposed to receiving correspondence on 8 January 2013 (after the standard application period had expired) where Ms McCoy’s solicitors informed her that she was taking legal advice but that she had not “resiled from the aforementioned agreement” (at [35] of the affidavit).
We note that the affidavit of Ms McCoy filed on 12 April 2013 takes no issue with the evidence of Ms Chancellor that it was agreed should consent orders not result the parties would consent to an extension of time for the purpose of the filing of an initiating application. In our view, this evidence was not validly objected to below and ought not have been excluded by the judge. It is relevant and goes to the issue of hardship itself. In particular, as part of a consideration of the history of the proceedings and the conduct of the parties in determining whether to grant leave, the purpose being to do justice between the parties.
Grounds of Appeal
The grounds of appeal as identified in the amended notice of appeal filed 8 August 2013 are as follows:
1. That the trial judge erred in that in determining that hardship would be occasioned to the respondent in the event that leave was not granted the trial judge had no or no proper regard to the terms of section 79(2) of the Family Law Act.
2. That in determining that hardship would be occasioned to the respondent if leave was not granted the trial judge erred in that she based her decision upon a predetermination that there would be a division of property between the parties.
3. That in determining that hardship would be occasioned to the respondent if leave was not granted the trial judge erred in that she determined that there needed to be a division of property in order to benefit each of the parties emotionally.
We note that although the grounds of appeal were drafted with reference to s 79(2) of the Act, it is clear that the appellant intended to refer to s 90SM(3) of the Act, being the equivalent provision applicable to de facto relationships.
The Reasons of the Judge
The hearing before Judge Turner was necessarily limited to the discrete issue of leave. Each party relied on affidavits and there was no oral evidence. The judge commented in this respect:
7.The material filed by the respondent is scant, and her affidavit filed 12 April 2013 provides the Court with no information as to the financial and non-financial arrangements between the parties during the lengthy relationship.
Her Honour discussed the law applicable to applications for extensions of time and after referring to the Full Court decision of Sharp & Sharp [2011] FamCAFC 150 her Honour said:
43. In summary the Court must take into account the following:
a) There are reasons as to why time limitations exist and careful consideration must be given to an application for leave to proceed out of time.
b) The Court must be satisfied that hardship would be caused to the applicant if leave to proceed out of time is not granted.
c) Once hardship has been established, the Court must be persuaded that discretion should be exercised to grant the leave to proceed.
d) The Court in considering whether to exercise the discretion must be satisfied that the respondent will not be prejudiced.
e) Where the Court is satisfied that hardship to the applicant will be caused if the leave is not granted, and that granting of leave will not prejudice the respondent, consideration must be had to the circumstances of the matter before leave is granted.
It could not be said that her Honour made any error in this respect. Her Honour also conducted a detailed review of the relevant authorities that have considered time limitations and the definition of “hardship” in reported cases of the High Court of Australia and the Family Court of Australia.
The judge noted at [60] the submission on behalf of Ms McCoy that, once the contributions during the relationship had been determined, and the debt to her parents taken into account, and Ms Chancellor’s inheritance considered:
…[T]he applicant would not, in effect, do any better in Court proceedings for a property division, and therefore is unable to establish a “loss” or “substantial hardship” as required to be successful in an application for leave to proceed out of time.
At [61] the judge concluded that the applicant had established hardship, before continuing:
62. I base my findings on the following:-
a)The applicant has a “prima facie” right as provided in Part VIIIAB Family Law Act 1975 to bring proceedings for a de facto property division. (McDonald& McDonald and Sharp & Sharp)
b)The pool is substantial and therefore the claim cannot be seen as “trifling”. (Whitford & Whitford)
c)It is little consequence that the applicant may not be in “necessitous circumstances”. (Whitford & Whitford)
d)As the de facto relationship was for 27 years, there is a “reasonable claim to be heard”. (Althaus & Althaus)
e)As a reasonable claim has been established, the ultimate outcome of the property division, as suggested by the respondent, is not a factor that need be considered in this matter. It is “not a decision about whether the claim will succeed” (Hedley & Hedley) or that “the applicant would receive no more or even less, than he or she owns in law or in equity”. (Whitford & Whitford)
f)It is not just about the “financial considerations” but the ability for the applicant to “have the financial and property relations of the parties adjusted and resolved.” (Sharp & Sharp)
g)I accept that the “applicant would suffer a substantial detriment as a consequence of the loss of the right to institute the proceedings” if leave was refused. (Sharp & Sharp)
63.This has been a long relationship where the parties intermingled their personal and financial lives over the years and where separation has been problematic.
64.The applicant is entitled to finalise the financial dealings by way of a property division.
65.Further it is evident from the limited information before the Court that emotionally it would also be of benefit to both party that their ties are severed on all levels and Court orders for a property division would assist in that regard.
(Emphasis added)
The family law cases referred to in the reasons of the judge are in relation to s 44(4), the applicable section in the case of married persons, a section identical in effect to s 44(6).
Her Honour having decided the discretion to grant leave should be exercised in favour of the applicant moved to a consideration of the possible prejudice the respondent would face if the application was granted. Her Honour had regard to the evidence of Ms McCoy of her changed circumstances since separation and her assertion that Ms Chancellor had not made full and proper disclosure as to the extent of her inheritance.
The personal difficulties faced by Ms McCoy since separation were considered by the judge, who noted that although she had experienced hardship since separation, “this is not uncommon when relationships, especially long relationships, come to an end” (at [71]). Her Honour concluded that these circumstances may be relevant to a final determination of the property interests of the parties, but not a factor which would impact on the judge’s discretion to grant the application.
The judge also found that this was not a case where Ms McCoy would be prejudiced by the granting of the extension of time, as it was not a case where Ms McCoy is “faced with an action which he or she had no reason to expect or had been led to believe [that an action] would not be brought” (at [77] of the reasons, quoting from Frost & Nicholson (1981) FLC 91-051 at p 5).
Her Honour concluded that it was appropriate to exercise the discretion and grant the application for leave to proceed, finding at [82] that the property application must proceed to do justice between the parties.
Discussion
Ground 1 – In determining that hardship would be occasioned the judge had no or proper regard to the terms of [s 90SM(3)] of the Act.
Counsel for the appellant submitted that before considering hardship to the respondent the judge was required to make findings that altering the property interests under s 90SM of the Act was necessary to do justice and equity between the parties. In addition, that a mere intermingling of property and financial resources was insufficient to demonstrate hardship.
It is clear that at [62(e)] of the reasons her Honour made findings that Ms Chancellor had established “a reasonable claim”, her Honour declining to determine the ultimate outcome of that claim:
…
It is “not a decision about whether the claim will succeed” (Hedley & Hedley) or that “the applicant would receive no more or even less, than he or she owns in law or in equity”. (Whitford & Whitford)…
Her Honour was correct in this approach. To interpret “hardship” as requiring a detailed assessment of the merit or potential value of a proposed initiating application for financial orders goes beyond what is required. The denial of a chance to pursue a reasonable claim must of itself cause an applicant hardship.
We refer to the well-known passage at [42] of Stanford:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
(Emphasis added).
On the evidence before the judge it was not in issue that after the long period of their de facto relationship and as a result of a choice made by the parties they were no longer living in a de facto relationship. Their common use of their then home ended when Ms Chancellor left that home in December 2011. In these circumstances the voluntary severance of the de facto relationship rendered the just and equitable requirement “readily satisfied” in the language of the High Court. As is made clear by the last sentence of the quoted passage from Stanford it is not necessary to find that an order adjusting property interests will be made, for the just and equitable requirement to be satisfied. Indeed the final sentence allows for cases where the just and equitable requirement is fulfilled, but application of s 79(4) may result in no order being made adjusting the parties’ existing property interests.
The judge had before her the unchallenged evidence of Ms Chancellor as to her financial and non-financial contributions to property and her homemaker contributions throughout the long relationship. There was no evidence before the judge, as the appellant asserts in her outline of argument filed 18 October 2013, that “there was an agreement… [to] keep their financial affairs separate and that agreement was adhered to” (at [5]).
This was a matter where all the considerations described in Stanford relevant to the just and equitable requirement were present such that to deny the application for an extension of time would inevitably cause hardship to the applicant. This ground is not established.
Ground 2 – In determining that hardship would be occasioned the trial judge erred by basing her decision upon a predetermination that there would be a division of property between the parties.
This ground of appeal is directed to [64] of the reasons:
The applicant is entitled to finalise the financial dealings by way of a property division.
The appellant complains that this passage demonstrates that the judge exercised her discretion in an inappropriate way, namely, that her Honour exercised the discretion by first determining an entitlement in the division of the de facto property, then finding hardship if that result was not allowed to occur. We note of course that this ground appears to conflict with the submissions on ground 1.
It is clear from our reading of the judgment that her Honour found that the hardship arose from the denial of an opportunity to pursue a reasonable claim. Whether that claim is likely to succeed or otherwise is a matter about which the judge declined to speculate (see [62] of the reasons), and further, could not be determined on the limited evidence before her. When read in context with the rest of her Honour’s reasons, the entitlement to which the judge refers at [64] can be understood as an entitlement to have the application for property orders heard.
Regardless, the conclusion at [64] could not be said to have vitiated the judge’s proper exercise of discretion.
Ground 3 – In determining hardship would be occasioned the trial judge erred in that she determined that there needed to be a division of property in order to benefit the parties emotionally.
This ground of appeal arises from [65] of the reasons:
Further, it is evident from the limited information before the Court that emotionally it would also be of benefit to both parties that their ties are severed on all levels and Court orders for a property division would assist in that regard.
The judge’s comment at [65] cannot be seen as a determination underpinning the decision to allow the application for an extension of time. It merely notes the practical benefits to the parties of the application being allowed, her Honour having previously found hardship at [61].
Thus this ground of appeal also has no merit.
conclusion
Having found no merit in any ground of appeal the appeal must be dismissed.
Costs
At the conclusion of the hearing of the appeal we indicated that leave would be granted but the appeal dismissed. Counsel for the appellant submitted that the appeal was not without merit and leave had been granted, but conceded that should an application for costs be made by the respondent it would be difficult to resist. An application for costs was made.
Whilst appreciating the Act provides that each party pay their own costs, subject to circumstances justifying an order for costs, in this case the appellant has been wholly unsuccessful (s 117(2A)(e)), and there should be an order for costs.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 11 April 2014
Associate:
Date: 11 April 2014
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