Mendez & Navarro
[2022] FedCFamC2F 1149
Federal Circuit and Family Court of Australia
(DIVISION 2)
Mendez & Navarro [2022] FedCFamC2F 1149
File number(s): MLC 2394 of 2022 Judgment of: JUDGE O'SHANNESSY Date of judgment: 4 August 2022 Catchwords: FAMILY LAW – defended threshold hearing – leave to issue property proceedings after time limit – dispute as to length of the relationship – de facto partnership – ex tempore judgment. Legislation: Family Law Act1975 (Cth) ss 44, 90SF, 90SM, 117 Cases cited: Arcand & Boen (2021) FLC 94-046
Gadzen & Simkin [2018] FamCAFC 218
Hall and Hall (1979) FLC 90-679
In the Marriage of Jacenko (1986) 11 Fam LR 314
Sharp & Sharp [2011] FamCAFC 150
Tamaniego & Tamaniego [2010] FamCAFC 254
Whitford& Whitford (1979) FLC 90-612
Division: Division 2 Family Law Number of paragraphs: 67 Date of hearing: 4 August 2022 Place: Melbourne Counsel for the Applicant: Mr G. Combes Solicitor for the Applicant: Hicks Oakley Chessell Williams Counsel for the Respondent: Mr D. James ORDERS
MLC 2394 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR MENDEZ
Applicant
AND: MS NAVARRO
Respondent
order made by:
JUDGE O'SHANNESSY
DATE OF ORDER:
4 AUGUST 2022
THE COURT ORDERS THAT:
1.Pursuant to section 44(6) of the Family Law Act 1975 (Cth) leave be and is granted to the Applicant De Facto Husband to bring proceedings out of time.
2.The Applicant’s Initiating Application filed 9 March 2022 stand as his Initiating Application seeking property settlement orders.
3.The Respondent’s Response filed 6 April 2022 stand as her Response to the Applicant’s Initiating Application.
Conciliation Conference:
4.The parties and any lawyers on the record shall personally attend a Conciliation Conference on 30 November 2023 and 9:00am.
5.The parties and any lawyers on the record shall follow any directions from the Registrar convening the conference in relation to attendance in person, by Microsoft Teams or by telephone.
6.At least 14 days prior to the conference date, each party must:
(a)ensure that all documents required to be exchanged between parties pursuant to Chapter 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) have been exchanged;
(b)ensure that any private expert report that is relevant to the proceedings has been filed;
(c)provide to the Court by email to the relevant case manager at …@fcfcoa.gov.au and to the other party a single collated bundle of documents comprising:
(i)a Confidential Outline of Case (Dispute Resolution)
(ii)a detailed minute of Orders Sought;
(iii)details of any previous or current family violence orders;
(iv)a copy of any document exchanged between the parties which is directly relevant to an issue remaining in dispute (with relevant passages highlighted);
(v)particulars of any financial resource;
(vi)a valuation or market appraisal of any real estate or other asset the value of which is in dispute;
(vii)statements for, and where applicable, valuations of any superannuation interest;
(viii)written confirmation that the trustee of any fund that may be the subject of a splitting order has been afforded procedural fairness.
Adjournment:
7.The matter be adjourned to Tuesday 24 January 2023 at 10:00am for Mention Hearing at the Federal Circuit and Family Court of Australia.
AND THE COURT NOTES THAT:
A.The mention date at order 7 can be vacated at the Conciliation Conference if settlement is reached.
B.Prior to the Conciliation Conference, the lawyer for each represented party must provide to his or her client, and to each other party, a notice indicating whether the party is in receipt of legal aid funding and, if not, providing particulars of:
(a)the total costs and disbursements incurred by the party in the proceeding to date;
(b)an estimate of the anticipated costs expected to be incurred in each remaining stage of the proceeding; and
(c)an estimate of the likely duration of the final hearing and the total anticipated costs and disbursements expected to be incurred for the remainder of the proceeding.
C.The Confidential Outline of Case (Dispute Resolution) is a confidential without prejudice document prepared for the purpose of the Conciliation Conference only. It is not to be filed or kept with the Court file after the conclusion of the conference.
D.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.
E.Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme (“the Scheme”) for representation but any such application must be made at least 12 weeks prior to the final hearing.
F.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.
G.If s102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.
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 a pseudonym Mendez & Navarro has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
JUDGE O’SHANNESSY
Introduction
These are the settled reasons of a judgment delivered ex tempore. The hearing was on the papers.
The question I must determine in this matter is whether the applicant, Mr Mendez (‘the applicant’), who is 60 years old, should have leave pursuant to sections 44(5) and (6) of the Family Law Act 1975 (‘the Act’), to institute property settlement proceedings pursuant to sections 90SM and 90SF of the Act. The respondent to these proceedings is Ms Navarro (‘the respondent’), who is 64 years old and is currently not in paid employment due to medical circumstances from a deterioration in her health in or about 2019.
The parties are in a dispute as to when cohabitation commenced. It appears to be common ground that their relationship, but not necessarily cohabitation, commenced in or about 1986. Separation occurred, on the applicant's account in or about April of 2014 following the application for an intervention order, or on the respondent’s account in 2012 under the one roof. The respondent's account is that the parties did not commence cohabitation until 1989, when they moved into the premises that I will describe as the former relationship home, a single dwelling of three bedrooms where the respondent currently resides alone.
The property that the parties moved into in or about May of 1989 is at B Street, Suburb C, and I will refer to it hereafter as the B Street, Suburb C property. The parties then lived continuously in the B Street, Suburb C property until separation.
The parties had two children, Mr D who is now almost 32 and who was born in 1990 and Mr E who is now almost 31 and who was born in 1991. The respondent has a child from a previous relationship, Mr F, who is some number of years older than the children of the relationship. Mr F did not live with the parties during the relationship, but had frequent and regular time with his mother and siblings.
The circumstances in 2012 appear to be common ground. At that time, the respondent ceased to share a bedroom with the applicant; the applicant says because of his snoring and the respondent says because their de facto marriage had ended. I do not have any evidence before me about any statement of the end of that relationship.
It is then common ground that the parties resided at the B Street, Suburb C property until 2014, when there was a confrontation between the parties and an assault by the applicant upon the respondent which led to an application for an intervention order. As I understand it, the applicant left the B Street, Suburb C property at the time or soon after that assault. Later, the applicant pleaded guilty to assault and asserts he was not convicted but placed on a reconnaissance. Those proceedings were finalised in November of 2014. The respondent has continued to live in the B Street, Suburb C property.
I must also refer to two other allegations of the respondent, being two other incidents of significant family violence by the applicant that she says she suffered, that occurred in 2001 and 2006.
Legal principles
The principles that I must apply in determining this matter relate to sections 44(5) and (6) of the Act:
44 Institution of proceedings…
Proceedings in relation to de facto relationships
(5)Subject to subsection (6), a party to a de facto relationship may apply for an order under section 90SE, 90SG or 90SM, or a declaration under section 90SL, only if:
(a)the application is made within the period (the standard application period) of:
(i)2 years after the end of the de facto relationship; or
(ii)12 months after a financial agreement between the parties to the de facto relationship was set aside, or found to be invalid, as the case may be; or
(b) both parties to the de facto relationship consent to the application.
…
(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 defended threshold hearing
In the hearing before me both parties were represented by counsel. The applicant's counsel, Mr Combes, was retained by solicitors. The respondent's counsel, Mr James, acted pro bono without a solicitor.
The applicant relied upon the following documents:
·The applicant’s initiating application filed 9 March 2022
·The applicant’s financial statement filed 13 July 2022
·The applicant’s trial affidavit filed 13 July 2022
The respondent relied upon the following documents:
· The respondent’s response to initiating application filed 6 April 2022
· The respondent’s affidavit filed 21 July 2022
· The respondent’s financial statement filed 21 July 2022
Exhibits tendered were:
·R1 – the respondent’s outline of arguments
·A1 – a list of authorities relied upon by the applicant
De facto partnerships
The parties address me on the basis that the principles of applications for leave to proceed in property or maintenance proceedings if the parties were married are the same as applicable to the de facto relationship provisions. If the parties were married or where parties are married, the provisions of sections 44(3) and (4) apply.
The parties sensibly addressed me on the basis that they regarded the principles in the authorities, going back as far at Whitford& Whitford (1979) FLC 90-612 (‘Whitford’), apply to this de facto relationship. Fortunately, with the assistance of my associate I was able to find not only is there agreement about those principles, but it is clear that the Full Court has adopted that principle in the matter of Arcand & Boen [2021] FLC 94-046, a section 44(6) case. The Full Court applied, and apparently unhesitatingly, the principles applicable to 44(3) cases to that 44(6) case. I make that comment because there is an actual difference in the wording between section 44(3) and section 44(6). I do not need to determine in these proceedings why that is or the consequence of that small difference, but I must reference the actual legislation I am to apply rather than only the authorities addressing it. Hence, I am cognisant of the differences between sections 44(3) and (4) as opposed to sections 44(5) and (6). However, in this case, and on the approach of the parties' counsel, nothing turns on any difference between those provisions.
The asset pool
Assets in 2014
At 2014, the time of separation asserted by the applicant, the assets and liabilities of the parties included:
·the B Street, Suburb C property, subject to an apparent remaining mortgage from its purchase of about $30,000;
·motor cars or, at least a motor car;
·modest savings;
·the applicant's superannuation of about $75,000;
·the timeshare and the timeshare obligation.
The parties' two children were also living with them in the home at that time, albeit that they were no longer children.
The timeshare
In or around 2000 the parties borrowed a sum of money for the purchase of a timeshare agreement. Following separation, whether it was 2012 or 2014, the respondent had practical control of that timeshare. There were two financial obligations that came with that timeshare; a monthly fee of some $103 to be paid for the use of the timeshare, and monthly repayments in the order of $331 per month on the borrowings to purchase the timeshare. It appears common ground that the monthly fee was paid by the respondent, whereas the applicant paid the monthly repayments.
It is common ground that there was at least one conversation between the applicant and the respondent where the substance of what was communicated was that the respondent did not want to continue with the timeshare or the financial obligations relating to it, and said that the applicant could have it. The applicant had not used the timeshare up to that point, and it is said that the conversation was around a fairly wide timeframe of 2018 or 2019.
What is significant is that the applicant continued to meet that monthly payment until it was paid out fully in around, again, a wide timeframe of 2020 or 2021.
The B Street, Suburb C home
I infer the B Street, Suburb C property had been purchased in 1989, shortly before the settlement. From the certificate of title we know that the respondent was registered as the sole proprietor on 30 May 2019. The applicant asserts that he and the respondent applied for the loan, but that he was knocked back because he had an outstanding car loan at the time, and the applicant received the loan in her sole name. The respondent recites in her affidavit her position that the applicant had no part to play in the choice of that property to be their home. However, it is common ground that after settlement of the property both parties moved in to it and lived in it together.
Contributions
It is clear enough that the common-ground position is that the parties lived together as a family thereafter. The applicant worked full time and the respondent worked in paid employment, full time or part time, until the birth of the first child. The respondent was then a full-time homemaker and caregiver until the second child went into kindergarten, and thereafter she worked in part-time employment as well as undertaking the bulk of the homemaking and parenting duties.
It is also common ground that the applicant played a role in regard to the cooking, laundry and caring of the children when not at work. The applicant asserts that this was about 30% of the work, and the respondent asserts that it was only 25%. However, it is common ground that the applicant undertook significant domestic duties and that the respondent undertook the bulk of those very significant domestic duties of being the primary caregiver to the children and homemaker over those many years.
Following the intervention order in 2014, the respondent continued in part-time employment. The respondent was employed as a cleaner part time from 2012 (when she had moved to sleep in the spare room or the modified carport) to 2014, (about the time of the intervention order and/or separation). The respondent asserts that she continued to work as a cleaner from 2014 to 2016 but with minimal hours, some 10 hours per week, and she was a carer, although it is not clear for whom she was caring. Over the years leading up to 2019, her medical condition deteriorated, and from about 2019 she has been dependent on Centrelink benefits. The applicant has continuously worked in paid employment, save for a period in 2017 when he suffered a significant injury and was off work for some three or so months.
Evidence in a defended threshold hearing
This hearing is not a full hearing of the merits of the claim and that has been stressed in the various authorities, as recited in the Australian Family Law LexisNexis commentary. Further and significantly for the hearing today, it is recited and I accept that it follows, that the evidence relevant to the application for leave will be limited. As stated in In the Marriage of Jacenko (1986) 11 Fam LR 314, the Full Court has said that the general principle is that the Court proceeds on the evidence of the applicant, which should be accepted unless it is inherently implausible or contradictory.
In this case, the applicant's evidence about the general financial circumstances, the date of separation and the date of cohabitation are not inherently unbelievable or contradictory. I will return to that concept of unbelievable or contradictory when I get a little bit further.
Hence, for the purpose of this application as a matter of law, I must proceed on the basis that the relationship was over the very significant length of time as asserted by the applicant, that is, from about 1986 until 2014, hence a cohabitation of about 28 years. However, I acknowledge that this is not common ground or factually established.
Post-separation
The other aspect that must be noted is that the asset pool as it is now is fundamentally the same asset pool as it was in 2014. The significant asset is the B Street, Suburb C property in which the parties lived and made direct and indirect contributions to, including the payment of the mortgage, painting, renovations, homemaking and parenting, over those many years. One significant difference is that the home is now unencumbered, in that the mortgage balance as at separation, whether 2012 or 2014, of about $30,000 has been paid out by the efforts of the respondent.
The modest savings that the applicant had at 2014 of about $2,000 have, from the circumstances of his continuous full-time employment, been able to increase to the current $125,000 (roughly). I might add it is not clear to me whether the amount of roughly $27,000 or $33,000 that he has paid on legal fees has come from savings and whether that would or would not be ultimately included in an asset pool.
The other aspect is that the liability that related to the timeshare of whatever it was has been paid off by the post-separation efforts of the applicant.
The caveat
Another significant development in the matter is the caveat on the B Street, Suburb C home that was lodged by the applicant soon after separation. According to the applicant's affidavit at annexure -2, the caveat was lodged for registration on 26 March 2014. That was shortly after, I understand, the time when the applicant left following the confrontation between the parties. Whether I say he left or was excluded, nothing turns on that for this point.
The terms of the caveat are not in evidence, only the computer search thereof. I am unable to make a finding upon what the basis of the caveat was, but I am aware that the practice following a relationship of lawyers and caveators in Victoria is to lodge a caveat relying on the grounds of an implied resulting or constructive trust. It is clear that he must have received legal advice at that time.
It is significant that the respondent says she was not aware of the caveat until 2019. The applicant disputes this and says that she met with him in 2018 and asked him to withdraw the caveat, to which he refused.
Other assets
I must add that the superannuation balance of the applicant of $75,000 at 2014 has now risen to about $155,000. This is no doubt by dint of his continuing in full-time employment and successful investment by the trustees of his superannuation fund. It is significant to me that in full-time employment over his working life until now, at age 60, the applicant has been able to amass about $155,000 of superannuation. In addition to this, post-separation he has been able to amass, whilst living at his parents' home, about something in the order of $125,000 in savings after payment of legal fees.
On the other hand, the respondent is totally dependent on social security, unable to obtain employment, closer to retirement age and has no superannuation whatsoever.
In broad parameters that is the factual circumstance of the case.
The applicable law
I recite and apply the following passages from Whitford:
28.Thus, on an application for leave under sec. 44(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.
…
39.If the Court is satisfied that hardship would be caused if leave were not granted, the Court may exercise the discretion which is conferred upon it by sec. 44(3) to grant leave or it may refuse such leave. Section 44(4) inhibits the granting of leave unless the requisite case is made out, but it does not provide that leave must be granted if the Court is satisfied that hardship would be caused.
40.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 sec. 44(3) and sec. 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.
41.On the other hand, sec. 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.
I also recite and apply the following passage in Hall and Hall (1979) FLC 90-679 (‘Hall’) as to hardship, quoted in Gadzen & Simkin [2018] FamCAFC 218 (‘Gadzen’) at 39, that the failure to consider the quality of the contributions and hardship is an error:
Fundamental to that is the determination of the quality or character of the potential claim.
Significantly and realistically, this case is marked by the very efficient conduct of it by the respondent's counsel this day. Whether or not facing inevitability, but nonetheless, he made a concession that in this case hardship would occur. That sensible concession that for the purposes of the tests of 44(5) and (6) there would be hardship to the applicant or that he has established hardship, does not mean I am absolved from the obligation to look at the extent of it. In terms of Gadzen referring to Hall, I must look at the issue of quality or extent of the potential claim. Hence, hardship is established.
The asset pool
In broad parameters the asset pool ends up being roughly $1,160,000, depending on the value of the home or the timeshare. The parties agree that the B Street, Suburb C property is likely to be worth somewhere between $800,000 and $900,000, and for the purpose of these proceedings they have both adopted a figure of $850,000. The other assets are the motor cars, savings of roughly $123,000 or $125,000 of the applicant, the superannuation and the timeshare, without putting a value on the timeshare, which the respondent would retain.
As things stand, the respondent has about $304,000 of assets, including his motor car of about $25,000, his savings and his superannuation. It might be a tad more than that if legal fees are to be taken into account.
The authorities also require me to take into account the issue of the extent of costs necessary to obtain the fruits of the litigation, so to speak. The costs estimate filed by the applicant puts his costs in the order of about $90,000, start-to-finish. Of that amount, $33,000 has already been expended, and that there may well be another $55,000 to $60,000 of expenses if the matter proceeds to a final hearing. Those costs may be able to be ameliorated if the matter was resolved at a conciliation conference or by the operation of section 117 in terms of offers in writing. Nonetheless, there is to be a significant expenditure of costs by the applicant and, maybe, by the respondent if she is able to organise the same.
The point is this: the applicant currently holds roughly 25% of the assets of the parties on those figures.
Extent of hardship considerations
The applicant’s case is that after 28 years of cohabitation, in the circumstances of his age and likely retirement within a few years, he would be entitled to roughly 50 per cent of all of the assets, including the post-separation savings. I explored with counsel whether that was realistic or unrealistic, and I am able to say that it is not an unrealistic starting point.
Considering section 90SF matters, as things stand the respondent earns roughly $1,370 per week before tax, being just over $1000 per week net of tax. Hence, his financial position and earning capacity is far superior to the respondent, who is depending on social security.
In discussion with counsel I posed the issue of the range of outcome on that asset pool. If there was to be a property case, painting with the broadest brush for the purpose of a very preliminary assessment and not an actual hearing of the property case, the range of distribution would be somewhere between 40 and 50 per cent. That is, taking into account there may or may not be a Kennon claim. On that asset pool it would be that the applicant would receive an additional, roughly, $160,000 (40%) to $275,000 (50%). Whether or not that is said to be a significant amount depends very much on whether you are the person who misses out on the $160,000 to $275,000 or the person who has to come up with it. Looking as objectively as I can at the significance of that, at 60 years of age, after being in paid employment working full time for his adult working life, the applicant by diligent, almost continuous employment has been able to put together superannuation of about $155,000. Hence, what he may miss out on is, on any case, greater than what he has been able to acquire in superannuation over that great working life.
The other matter that bears with me is that it is not as simple as looking at only the period of cohabitation. These parties did not stop contributing in the sense of section 90SM(4) of the Act to these assets as at the date of separation. The respondent continued to work in part-time employment, care for the home and pay out the mortgage. The applicant continued to work in full-time employment, save for a period when he was injured, and not only pay-off the timeshare unit, but acquire significant savings.
The circumstance that changed was that in 2019 the respondent was unable to continue working, even part time. However, she was at that time approaching retirement age in any event. Hence, the period of contribution for the parties did not stop in 2014, and whether it turns out to be 23 or 28 years of cohabitation on a full hearing or by agreement, there is a further eight years or so of contribution of each of the parties to the assets acquired during that long relationship.
I turn for convenience to the helpful and elegantly written submissions modestly described as a skeleton outline of argument, which is exhibit R1. The real gravamen, or point upon which this case turns, is the discretionary aspect or the second stage in the circumstances where hardship is conceded.
The outline refers to the decision of Tamaniego & Tamaniego [2010] FamCAFC 254, which is also taken up in the case of Sharp & Sharp [2011] FamCAFC 150 (‘Sharp’). In the circumstances where Mr James has referred to and relied upon Sharp, and that being an authoritative statement of the Full Court, although not the most recent one, I will recite observations of the Full Court on the issue of discretionary considerations:
Discretionary considerations
75.In Tamaniego & Tamaniego [2010] FamCAFC 254 O’Ryan J said at paragraph 162:
As to the second part of the exercise, the fundamental issue in any application for extension of time is whether this will enable the court to do justice between the parties: see Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479. In Gallo v Dawson McHugh J referred to the need to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences to the parties of the grant or refusal of the extension of time ... In summary, in considering the second question the court may have regard to a number of factors that include whether the applicant has an adequate explanation for the delay in bringing the proceedings and whether to grant leave would prejudice or impose hardship on the respondent to the application for leave or other persons.
76.In Althaus & Althaus (1982) FLC 91-233 at 77,267 to 77,268, Evatt CJ stated, and the Full Court held that:
The requirement that the applicant under sec. 44(3) give an explanation of the delay in bringing proceedings in my view requires a consideration of the whole period from the date of the decree nisi to the lodging of the application. It requires the Court to consider whether the wife took all reasonable steps to pursue her claim or whether, on the other hand, she acted at any time as if she had no intention of proceeding or pursuing any claim at all against the husband. It requires the Court to consider whether it can reach conclusions as to why the proceedings were started beyond the time lodged and whether those proceedings are attributable to default on the part of the applicant. (our emphasis)
77. Of interest in this case Evatt CJ added at 77,268:
“Where hardship to the applicant is established and there is no question of prejudice to the respondent, the Court should not seek to raise artificial barriers if the applicant has behaved in a reasonably diligent manner in prosecuting her claim.” (our emphasis)
…
88.As was found by the Federal Magistrate, the delay in instituting proceedings occurred first because the husband did not want to receive money from any property division while he was bankrupt as the money might then be claimed by his creditors and secondly at a time when his second wife might make a claim on some of the money.
89.That the husband took a deliberate course of avoiding finalising any financial settlement with the wife to avoid his creditors and his second wife are significant matters that weigh against the exercise of discretion.
90.Further, as we have indicated, despite the letter written to the trustee in bankruptcy by the husband’s solicitor in which he disavowed ever having an interest in the two blocks of land on T, the husband now asserts a claim to an interest in that land in this Court. To permit the husband to pursue such a claim would be to allow this Court to assist the husband in effecting his avoidance of the claims of his creditors. This is a significant consideration.
[Emphasis added]
In a separate judgment, Young J also dealt with the matter of discretion.
In this case the delay is considerable. This application was brought eight years or six years after the end of the time period, depending on the reality of the end of the relationship. The written and oral submissions of the parties point to the delay of six or eight years being either three or four times the two-year standard period. That is a significant matter to take into account and I do. The application could have been brought at any time after separation or the end of the relationship.
The written submissions of the respondent refer to the case of Sharp for the point that a deliberate decision not to take proceedings was fatal to an application. In Sharp, there was a 19-year marriage and a divorce triggered a 12-month period to make a property application. The applicant husband was fairly busy during that time, and there was a lot of water under the bridge by the time he finally came to issue proceedings, four years after that expiry.
In that case, on the findings of the trial judge and the Full Court it is clear that the applicant was aware of the time limit but chose not to issue proceedings. Between the decree nisi and the date of issue he had been bankrupt and discharged, and also married and separated again. He had refrained from issuing proceedings, despite knowing of the time limit and knowing of his right to issue proceedings, because he did not want his second wife or his creditors getting a crack at the proceeds of the litigation. That is very different to the circumstances here.
The explanation for the delay of the applicant comes down to, as set out in the respondent's outline, really four propositions. Firstly, he did not want to disrupt the children's living arrangements. Secondly, he did not have savings in order to pay for legal advice and the institution of proceedings. Thirdly, he had a mistaken belief that the issue of the caveat protected his interests. Fourthly, he believed they would come to an agreement.
There is really one further matter and that is that the applicant has not taken any step to demonstrate to the respondent that she should regard the matter as finalised and ended. The caveat contends to the opposite. The difficulty is that the respondent claims she did not get notice of the caveat.
Nonetheless, in terms of dealing with the delay, I do not accept the four or five propositions posed, despite being, the applicant says, completely adequate explanations. I do not accept that, through the whole of the period from 2014 until 2022, the applicant could not afford to fund lawyers. That aspect of his case is, as pointed out to me by Mr James, inherently contradicted or implausible in the circumstances where he has, at this point in time, been able to pay some $27,000 in legal fees and have saved $120,000 over that journey. Taking his evidence where it is not inherently implausible or contradictory, as at 2014 and likely for some time thereafter, he was unable to proceed unable to afford legal fees, but not for the whole time to 2022. The other explanations are not implausible or contradictory.
Hence, in this case there is an explanation for the delay that is only partially sufficient or satisfactory; it is not entirely sufficient or satisfactory. The authority that deals with this aspect is Hall, referred to me by Mr Combes, that deals with the explanation of delay being a significant matter but not fatal to the application. To the extent that it is sometimes expressed that the explanation for the delay is merely one of the matters to be taken into account, I do not accept that. In the circumstances of this case the explanation for delay is significant.
Prejudice considerations
The next matter that was agitated is the issue of prejudice. The prejudice that the respondent points to is that, as it turns out, the proceedings are not issued until after she is no longer able to engage in employment and it is asserted in her affidavit filed 21 July 2022:
56.In 2014, it is likely that I would have been in a better position to facilitate a property settlement during separation. My circumstances have substantially changed since the time of separation. As it now stands, my financial stability relies heavily upon being able to live in my current home.
57.I currently live off a welfare payment of $346.00 per week and am struggling with my living expenses, and now, on top of that, legal fees.
Had the applicant issued proceedings in 2014 or shortly thereafter, circumstances would have been very different. In argument it was not disputed that neither of them would have been able to (what we call) buy out the other one. The reality was the home would have needed to be sold. Mr James, with some skill, puts that there may have been options open for the respondent to perhaps increase her hours, borrow money or downsize, as she was still working at that time. There is substance in that submission that whilst working there would have been more options available to the respondent. However, to the extent that if the $1,100,000 of assets are divided now, it does not follow that the respondent will not be able to rehouse herself at all on the evidence.
The respondent may not be able to rehouse herself in a three-bedroom home within Greater Melbourne with the advantages of proximity to so many things that B Street, Suburb C has. However, it does not follow on the evidence, even on the applicant’s case of a 50% division of those assets, that she would not be able to rehouse herself. Nonetheless, I take into account that there is prejudice to the respondent and there is inherent prejudice in any application being brought outside the time period.
I also acknowledge Mr James' submissions that point me to that passage in Whitford that immediately follows the often-quoted paragraph that mentions the criterion of such matters stating that those considerations are not to render the time limit nugatory. However, I have to balance all the criterion.
Conclusion
One matter that weighs very significantly with me is that in terms of material assets, the endeavours of the applicant and the respondent have put together an unencumbered home in B Street, Suburb C, and some modest superannuation and modest savings.
The extent of the time of the contributions that that took to get to that point is significant. The applicant is a number of times outside the standard period of two years. However, he has not proceeded in a manner that would give the respondent the impression that the fruits of those many years of contribution were to be hers alone. The caveat contends to the opposite. Nonetheless, the caveat is not an application, and this application would not be necessary at all had he acted within time.
There is also no evidence of the respondent relying upon the fact that he had not issued proceedings and continuing to live her life on the basis that he would not. The caveat contends to the opposite, and for the purpose of these proceedings I must proceed on the applicant's evidence that in about 2018 (but on the respondent’s submissions it may have been in 2019) the caveat was known to the respondent. It was open to the respondent herself to issue proceedings at that time. I place very little weight on that circumstance because the burden is squarely and solely on the applicant to not only demonstrate hardship, but also that the exercise of discretion should be exercised in his favour.
In terms of the discretionary matters, conveniently described in Whitford and applied over and over by the authorities, the issue of the strength of the merits of the applicant's case not only goes to the hardship question, but goes to the exercise of discretion. The strength of the merits of the applicant's case is that, by hard work, these parties have made very significant contributions over many years. That is the matter that weighs most heavily with me, notwithstanding the not entirely satisfactory explanation for delay and the fact that there will be prejudice to the respondent.
I have examined the extent of the hardship or the strength of the merits of the applicant's case in the context of the many years of contribution and section 79SF(4) being the driving force behind the property alternation provisions for de facto parties. Balancing all of those matters leads me to conclude that I will grant leave to the applicant to proceed with his claim.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy. Associate:
Dated: 29 August 2022
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