McGrath and McGrath - [2004] FMCAfam 640

FEDERAL MAGISTRATES COURT OF AUSTRALIA

McGRATH & McGRATH

[2004] FMCAfam 640

FAMILY LAW – Property – application for leave under s.44(3) – leave to commence proceedings out of time – interlocutory application – delay of 8 months – whether hardship would be caused if leave were to be refused.

Family Law Act1975 (Cth), s.44(3)

Emamy and Marino (1994) 18 Fam LR 44; FLC 92-487
Kinkead-Weekes (Mushin J) (unreported) Appeal SA62L of 2001
Carlon (1982) FLC 91-272
Slater (1985) 10 Fam LR 381; FLC 91-641
Althaus (1979) 8 Fam LR 169; (1982) FLC 91-233

Hall (1979) FLC 90-679

Frost and Nicholson (1981) FLC 91-051
Atwill (1981) FLC 91-107
Whitford (1979) FLC 90-612

Applicant:

SUSAN LESLEY McGRATH

Respondent:

DENNIS KEVIN McGRATH

File No:

PAM 1074 of 2004

Delivered on:

1 October 2004

Delivered at:

Parramatta

Hearing dates:

3 and 5 August 2004 and written submissions

Judgment of:

Scarlett FM

REPRESENTATION

Counsel for the Applicant:

Mr Maiden

Solicitors for the Applicant:

Willis & Bowring

Counsel for the Respondent:

Mr Johnston

Solicitors for the Respondent:

Gells

ORDERS

The Applicant is granted leave to institute proceedings for an order for settlement of property pursuant to s.44(3) of the Family Law Act.
The Respondent’s costs of this proceeding are reserved.
Transcript of reasons for decision required.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

PAM 1074 of 2004

SUSAN LESLEY McGRATH

Applicant

And

DENNIS KEVIN McGRATH

Respondent

REASONS FOR JUDGMENT

This is an application for leave to commence proceedings for property settlement out of time. A decree nisi dissolving the parties' marriage became absolute on the 23 June 2002.
The substantive application for property settlement was not filed until 27 February 2004 and the application for leave was filed at the same time.
Applications for financial orders are required to be made within 12 months of the date the decree of dissolution became absolute unless the relevant Court grants leave or the other party consents. The Respondent in these proceedings has not consented.

The relevant statutory provisions

Subsection 44 of sub-s.(3) of the Family Law Act 1975 imposes this limitation:
Time restrictions on maintenance and property proceedings
Where, whether before or after the commencement of section 21 of the Family Law Amendment Act (1983) -
(a)a decree nisi of dissolution of marriage has become absolute; or
(b)a decree of nullity of marriage has been made,
Proceedings of a kind referred to in paragraph (c) or (ca) of the definition of matrimonial cause in sub-section 4(1) (not being 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 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 decree nisi became absolute 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.
In this case, as I said, the Respondent does not consent to the proceedings being instituted out of time.
Section 44(4) sets out the circumstances in which a Court may grant leave to institute proceedings. In a case such as this, s.44(4)(a) applies. The court shall not grant leave under subsection (3) and (3A) unless it is satisfied that hardship would be caused to a party to the relevant marriage or a child if leave were not granted.
In this case the Applicant says that she will suffer hardship if she is not granted leave to institute these proceedings.
For the Respondent, it was argued that the Applicant does not meet the test of hardship as prescribed by subsection 44(4). The parties were divorced over two years ago and it is onerous on the husband that he should be called back to Court to receive this demand. It is the Respondent, it is submitted, who would suffer hardship if leave were to be granted.
For the Applicant, it is submitted that the Court should grant leave.

Principles to be followed

Applications for leave to institute proceedings under subsection 44(3) are interlocutory applications, see Emamy v Marino (1994) 18 Fam LR 44 which was followed by the Mushin J in Kinkead-Weekes which is an unreported appeal number SA62L of 2001. It follows therefore that leave is required to appeal against such a decision pursuant to

s.94AA (2) O of the Family Law Act.
The Full Court of the Family Court has made it clear that it is not necessary for a detailed hearing on the merits of the claim to be undertaken before the question of leave is to be decided. The Court does not have to decide whether the substantive claim will succeed. (See In the Marriage of Althaus the citation to which is (1979) 8 Fam LR 169; (1982) FLC 91-233. Where the Applicant establishes a claim proper to be heard, the Court should generally be reluctant to refuse to allow the claim to proceed where the delay has been explained and there is no real prejudice to the Respondent. See Hall v Hall (1979) FLC 90-679, and see also Frost v Nicholson (1981) FLC 91-051.
It is not necessary to show that the Applicant is in penurious circumstances before hardship is established. See Bevan v Bevan (1995) FLC 92-600.
The Full Court considered the meaning of hardship in sub-s.44 (4) in Whitford v Whitford (1979) FLC 90-612.
We consider that in sub s 44 (4) the word should have its usual though not necessarily its most stringent connotation. It is impossible to lay down in advance what particular facts may or may not amount to hardship in the relevant sense. As a general proposition it might be said that the inability of an Applicant to pursue a claim which, in the circumstances of the Applicant or a child of the marriage is trifling, generally will not cause hardship.
The question of hardship to the Respondent is also a matter for the Court to consider in exercising its discretion to grant leave. In Frost v Nicholson, the citation to which I have already given, Nygh J said at page 76, 424:
This leads me to the final question as to the exercise of my discretion. That is to say, whether in the circumstances the husband would suffer prejudice if leave to institute proceedings were granted to the wife. Prejudice here means that a party is faced with an action which he or she had no reason to expect or had been led to believe would not be brought. To give an extreme example; if after ten years a wife sought leave under s 44 (3) without ever having given any indication beforehand that she wished to seek a property settlement, leave might well be refused.
In this case I am satisfied that the Applicant has given an explanation for the delay in bringing the application. In submissions presented on her behalf by Mr Maiden of counsel, he points out that the delay in this matter is approximately eight months and the wife seeks leave to commence property proceedings that would involve the former matrimonial home, valued at between 600,000 and $650,000 with two mortgages remaining on it totalling approximately $60,000. Further, an inheritance received by the husband from his late father's estate of $50,000, that inheritance now having been dissipated, motor vehicles and chattel items, the husband's superannuation entitlement with Sydney Water Corporation and the husband's interest in family provision proceedings involving his late father's estate. The value of the net estate available for distribution, counsel submits, is somewhere between possibly $1.2 million up to $2 million.
The wife continues to reside in the matrimonial home and it is her evidence that she has continued to pay the outgoings of the property involving the mortgage payments.
The evidence is that the wife has given evidence to show that there had been some correspondence between her solicitors and the husband's solicitors relating to her intention to commence property proceedings. Indeed, some negotiations took place which eventually proved fruitless. She also gave an explanation that it took some time to find out details of the husband's superannuation entitlements which delayed proceedings. Finally, she has given evidence that her solicitors required payments of amounts of money before they would proceed to act further on her behalf. Early this year she received moneys from her parents in the sum of some $5000 which she paid to the solicitors on account of anticipated legal costs and the application was commenced approximately three weeks later.
The husband, through his counsel, Mr Johnston, submits that the application should not be granted as that the wife has not shown a reasonable explanation for the delay and that the husband would suffer hardship if leave were to be granted and finally, that the wife has an alternative remedy available to her. He points out that the wife is a joint registered proprietor of the home and it is open to her to seek to appoint trustees for sale to realise her interest. He submits it is also open to the wife to commence proceedings against her solicitors for breach of their duty of care. He submits that the wife was aware that the husband was making his claim under the Family Provision Act when the divorce was completed and that the husband would suffer some prejudice if the Court exercised its discretion in the wife's favour. Mr Johnston also acknowledges, properly in my view, that the wife would, on the face of her evidence, suffer some hardship if leave were not to be granted but for the existence of her remedy against her solicitors.
The submission is; the wife sought advice in relation to a property settlement from another solicitor, Moira Ryan, about 25 September 2001 and that solicitor wrote to the husband and said:
Our client desires that a property settlement be effected between you that is both fair and equitable.
The wife, in her cross-examination, said that that solicitor did not advise her of any time limitation following the divorce but conceded that advice about the divorce was given. The wife changed solicitors on 21 November 2001 and her present solicitors wrote to the husband's then solicitors on 30 November 2001 advising of their client's willingness to mediate a financial settlement. The husband agreed to mediation on 7 December 2001 and there was further correspondence relating to mediation and on 15 January 2002 the wife's solicitors advised that the wife would be filing for divorce in February of 2002.
The wife conceded, under cross-examination, that from at least that time she was aware of the 12 month limitation period as far as financial proceedings were concerned.
The husband's current solicitors advised, on 11 February 2002, that they had instructions to accept service of Family Court process and in May of that year there were discussions between the solicitors over parenting matters and the husband's solicitor gave notice of the proposed claim by the husband under the Family Provision Act. That same month the wife's solicitors gave notice as to an overseas trip planned for the parties' child and that there was a need for orders to be made in respect of that but no property proceedings were commenced.
The wife's solicitors advised her on 6 February 2003 that they required a down payment of over $5000 on account of the property settlement and this letter gave further notice to the wife of the 12 month period. At that stage the wife said she could not afford to re-engage her current solicitors and indeed on 13 February 2003, the wife borrowed $5000 from her parents and came to an agreement with her solicitors. It is submitted by Mr Johnston for the husband, that the wife's solicitor, Mr Lewis, had a duty of care to write to the wife after the 13 February 2003, which was when an arrangement was reached with the wife to confirm that contrary to his advice on 6 February, that the firm was satisfied with financial arrangements made with their client and that they would continue to act for her.
There is evidence that the wife was hospitalised in February 2003 with a gall-bladder attack. But of course the limitation period expired on 23 June. The wife had some discussions with Mr Lewis, her solicitor, on 1 August 2003, by which time the application was already out of time and there was some delay in the wife's view about obtaining information about superannuation. Mr Johnston of counsel for the husband submits that there could be no excuse for a delay as an ambit claim could have been made prior to 23 June 2003 and subsequently amended.
It is the wife's evidence that her grandmother died in December of 2003 and that was a distraction for her, even though the late grandmother was some 87 years of age and the actual death of the lady would have come as no real surprise.
The basis of the husband's case is that the wife knew that she had to file her property settlement application on or before 23 June 2003 at all material times. The wife's solicitor, Mr Lewis, had agreed on

13 February 2003, to receive and act on her instructions. He had instructions to institute proceedings. He had abandoned mediation and was well aware of the need to file an application within time.
In my view the wife has made out a reasonable explanation for her delay, which inclines me to exercise the Court's discretion in the wife's favour. I am not satisfied that the husband's claim that the wife has an alternative remedy against her solicitors, if leave is not given to proceed, should be given a great deal of weight. In my view, any claim against the current solicitor, Mr Lewis and his firm, would seem to me to have little prospect of success. There is evidence before the Court that the firm, through Mr Lewis, had given the wife advice about the 12 month time limit on commencing property proceedings on more than one occasion within plenty of time. Such an alternative remedy, to my mind, would be unlikely to yield the wife much satisfaction.
Appointing trustees for sale in respect of the real estate, in which the wife is a joint tenant, is to my mind an expensive and complicated procedure and would only offer partial satisfaction to the wife's claim at best.
The Applicant has not acted with the expedition that she should have but I am mindful of the words of the late Nygh J in Frost v Nicholson to which I have previously referred. His Honour, as I said, in referring to prejudice to the Respondent said:
Prejudice here means that a party is faced with an action which he or she had no reason to expect or had been led to believe would not be brought.
This is not the case here. The Respondent knew and was well aware that it was the wife's intention to commence property proceedings and there had been negotiations between his solicitors and the wife's current solicitors for a considerable period of time. The delay is not excessive. It is some eight months and it would be unwise of a Respondent to assume that a claim would not be brought for leave out of time with such a relatively short delay.
I am not satisfied that the Respondent has shown any evidence that he has acted to his detriment in reliance on a belief that the Applicant would not commence property proceedings.
It seems to me that where the parties had joint property, that it would cause a hardship to both parties for those matters not to be resolved in a just and equitable way, either by consent or by order of this Court.
In my view, the wife has made out her claim and I propose to grant leave to institute these proceedings.
It may well be that the husband has been put to some expense by way of legal costs in respect of these matters as he may say that this was a hearing brought about only because of the delay made by the wife.

I propose therefore to grant the husband the opportunity to make submissions about costs in due course and accordingly the Respondent's costs are reserved.
The matter will be adjourned to a list day when orders can be made about the parties attending a conciliation conference pursuant to s.26 of the Federal Magistrates Act.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Scarlett FM

Associate: V Lee

Date: 11 November 2004