Merwar & Merwar
[2023] FedCFamC2F 970
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Merwar & Merwar [2023] FedCFamC2F 970
File number(s): MLC 12365 of 2022 Judgment of: JUDGE STEWART Date of judgment: 3 August 2023 Catchwords: FAMILY LAW – property – limited claim – leave to proceed out of time – hardship – leave granted Legislation: Family Law Act 1975 (Cth) ss 44(3), 44(4), 75(2) Cases cited: Chang & Su (2002) FLC 93-117
Hall v Hall [1979] FamCA 50
Hardwick & Hardwick (No 2) [2022] FedCFamC1A 216
Skelton and Lindop (2022) FedCFamC1A 47
Stanford v Stanford [2012] HCA 52
Weir & Weir (1993) FLC 92-338
Division: Division 2 Family Law Number of paragraphs: 24 Date of hearing: 2 August 2023 Place: Melbourne Counsel for the Applicant: Mr Kaufman Solicitor for the Applicant: Sayer Jones Solicitor for the Respondent: Mr Ambas of Swiftly Legal ORDERS
MLC 12365 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS MERWAR
Applicant
AND: MR MERWAR
Respondent
order made by:
JUDGE STEWART
DATE OF ORDER:
3 AUGUST 2023
THE COURT ORDERS THAT:
1.Pursuant to Section 44(3) of the Family Law Act 1975 (Cth), leave is granted to the Applicant to proceed with her application for property settlement.
2.The proceedings are adjourned to 13 September 2023 at 10:00am for First Return Financial before a Judicial Registrar.
3.Each party’s costs of 2 August 2023 be reserved.
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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE STEWART
The issue in this case is whether leave to proceed out of time should be granted pursuant to section 44(3) of the Family Law Act 1975 (Cth) ("the Act"). The Applicant Wife seeks leave and the Respondent Husband resists the Application.
A divorce order was made on 1 June 2021 and became final on 2 July 2021. The Wife issued these proceedings on 4 November 2022, around four months out of time. In the substantive proceedings, the Wife seeks a property adjustment of 30% of an asset pool said to be somewhere between $720,000 and $860,000 in round terms. The reason for the difference is because the Husband says that approximately $140,000 held by him in bank accounts in his name is actually held by him on trust for his sister, Ms B (the "sister"). In the substantive proceedings, the Husband seeks dismissal of the Wife's Application. In other words, he says that each of the parties should retain property in their respective possession. As an alternative, but not primary, he seeks position he seeks a declaration that the monies held by him in a particular bank account are held on trust for his sister.
The asset pool, at least insofar as there is property in Australia is as follows:-
Asset
Value
Notes
Property in Suburb C
$560,000
In the sole name of the Husband
Husband’s company (as trustee for a unit trust)
$153,340
Husband sole director and shareholder
Wife’s bank accounts
$6,532
Husband’s bank accounts
$142,127
Insertion in dispute if $137,402 in dispute
Total assets
$861,999.00
Liabilities
Wife’s MasterCard debt
$2,095
Husband’s MasterCard debt
$473
Total liabilities
$2,568
Superannuation
Wife’s superannuation entitlements
$3,111
Total asset pool including superannuation
$862,542
There are assertions by each of the parties respectively that the other has property or resources in Country D. For the purpose of this consideration, I take note of that but cannot take those matters any further as there is insufficient evidence surrounding those issues. If there is property and financial resources in Country D in the Husband's hands, it is clear that the Wife has made negligible direct or indirect financial or non-financial contributions to the same. If there is property and financial resources in Country D in the Wife's hands, it is clear that the Husband has made negligible direct or indirect financial or non-financial contributions to the same but ultimately it may have an impact on the assessment of factors pursuant to section 75(2) of the Act.
The hearing proceeded by way of submission notwithstanding the parties were given an opportunity to cross-examine the other party's witnesses if they chose to. The Wife relied on her own affidavits and an affidavit by a psychiatrist, Dr E. The Husband relied on his own affidavits and an affidavit by his sister.
The Wife is 39 years old and the Husband is 44 years old. They married in Country D in 2015. Following marriage, they spent some months apart, with the Husband in Australia and the Wife remaining in Country D until 2015 when she migrated to Australia, initially on a Partner Visa. The Wife is now a permanent resident of Australia and it is her intention to remain here permanently. The date of separation is in dispute. The Wife's position is that there was a short period of separation from July 2019 until November 2019 when the parties reconciled and the parties separated on a final basis in January 2020. The Husband's position is that the parties separated under the one roof from January 2019. He agrees the Wife did not leave the home permanently until January 2020. Therefore, on the Wife's case the marriage was almost five years and on the Husband's case it was almost four years. There are no children of the marriage.
There are various matters in dispute regarding the nature and extent of the Wife's contributions during the marriage and what, if any impact an assessment of the section 75(2) factors might have on substantive outcome. Although leave to proceed out of time is granted pursuant to section 44(3) of the Act, section 44(4) of the Act requires me to be satisfied that that hardship would be caused to the Wife if leave were not granted.
The Husband took no issue with delay, which was sensible as in the circumstances of this case. A four month delay with the explanations provided by the Wife was understandable. The primary ground upon which the Husband resists the Wife's application is his position that the Wife has failed to establish hardship pursuant to section 44(4) of the Act. Although I do not need to undertake a detailed assessment of the merits of the Wife's case, it is necessary to consider whether the Wife has a "sufficient likelihood of success" in her overall claim for property division as opposed to her likely expenditure on legal fees (see Skelton and Lindop (2022) FedCFamC1A 47, Hardwick & Hardwick (No 2) [2022] FedCFamC1A 216). In assessing the Wife's claim and issues of hardship, I also take into account the Wife's estimated costs of $70,000 to pursue her claim.
I stress I am not determining the Wife's purported claim to property adjustment but it is necessary to make a preliminary assessment of the possible range of results. That issue has particular resonance in this case as the marriage was time limited, produced no children and it is clear that the Wife's direct financial contributions were limited and the initial financial contributions and financial contributions overwhelmingly favour the Husband. In making this preliminary assessment, I shall put the Wife's case in her most favourable light (see Hall v Hall [1979] FamCA 50).
At the commencement of the marriage and cohabitation, the Wife had $5,000 worth of gold and little else of significance. The Husband had around $500,000 which he applied to the acquisition of the property in Suburb C and building a house on that land referred to in the assets above. During the marriage, the Wife transferred two amounts of $4,000 to the Husband. The Wife had limited employment during the marriage working as a part-time retail assistant and for a brief period being employed by F Company applying her income to household expenses. It is not possible to quantify with precision the direct financial contributions made by the Wife to the family but on any view they were limited. It was the Husband who had the primary responsibility for financial support and he did so from his income.
The Wife made non-financial contributions. The Husband and Wife had a traditional marriage where it was the Wife's responsibility to keep the home and undertake homemaking duties. The Wife assisted in the design of the home built on the Suburb C land, attending meetings and selecting products and materials. She identified construction faults on the property at the conclusion of the build and unpacked the parties' belongings and made the house a home when they moved in. The Wife also assisted in the Husband's business, providing not only encouragement and support to the Husband but performing unpaid tasks such as book-keeping, cleaning and business development.
Acknowledging that the Wife's contributions were time limited, her personal circumstances are relevant in considering what, if any, adjustment might be made in her favour pursuant to section 75(2) of the Act.
The parties are of a similar age and are earning relatively similar amounts when considering their deposed income. The Husband is essentially self-employed and it is likely he derives some additional benefits from that self-employment. On balance, the Husband's earning capacity appears superior to the Wife's. The Wife has moved from Country D to Australia to live with the Husband and now finds herself away from her country of origin and with no family supports in Australia. She is currently working in two jobs to support herself in Australia and living in shared rental accommodation. She has expressed her desire to undertake study to improve her circumstances which she would like to undertake over the next two to five years. The Husband's health is good whereas the Wife has a schizoaffective disorder which at present does not affect her capacity for employment and is managed by medication. There is some prospect that the additional stress of further study coupled with employment might diminish the Wife's capacity for ongoing employment however additional study will likely increase her earning capacity in the longer term. The Wife has left the marriage with essentially nothing to re-establish her life whereas, in comparison, the Husband holds significant wealth. There is no evidence that the Husband has voluntarily provided the Wife with financial support post separation.
On a preliminary assessment, I am satisfied that the Wife has a prima facie case for property adjustment and it is unlikely that a Court hearing the substantive claim would either summarily dismiss the Wife's application or decide that it is not just and equitable to adjust property between the parties (see Stanford v Stanford [2012] HCA 52).
Therefore, the question arises as to whether the Wife's claim is of sufficient merit to produce an outcome which will exceed her expenditure on legal fees. The Wife cannot establish hardship if the fruits of her claim will be spent before she achieves it.
The Husband suggests that the Wife's claim should be limited to around 10% of the pool. If that is the case, the Wife would receive around $72,000 (on the Husband's construction of the asset pool) to around $86,000 (on the Wife's construction of the asset pool). The Wife suggests her claim is 30% meaning she would receive between approximately $216,000 to $258,000.
In a preliminary assessment of factors, I am not convinced the Wife will receive an adjustment of 30%. I can, however, see how the Wife might construct a claim of 20% or even 25% and it is not difficult to conceive an outcome of between 15% and 20%. At 15%, the Wife would receive between $108,000 and $129,000 and at 20% between $144,000 and $172,000. Whilst the margins are low, even taking legal feels into account, the Wife's receipt of even $40,000 would provide her with valuable support and a buffer to embark on her new life as a single person in Australia who seeks to improve her employment prospects through study. The assessment of hardship is relative to a person's circumstances and while that amount of money may seem insignificant to some, it is not insignificant to the Wife.
It was suggested by the legal practitioner for the Husband that anything beyond a 10% adjustment was not within the range of appropriate outcomes and was beyond the reasonable limits of judicial discretion for adjustment. I disagree. Although an assessment of direct financial contributions would suggest there is merit in that submission, it fails to address the myriad of contributions made during this industrious, albeit time limited, union. Even if the contribution based entitlement of the Wife is limited to 10%, it is not difficult to imagine a further 10% or even 15% adjustment in favour of the Wife in a consideration of section 75(2) factors.
The Husband raised a further issue regarding a lack of full financial disclosure by the Wife in not disclosing bank statements for an overseas and ANZ account. He suggested that following the principles set out in Weir & Weir (1993) FLC 92-338 and Chang & Su (2002) FLC 93-117 that I should adopt a more robust approach on this leave application. I am not persuaded that the line of authority set out in those cases is applicable in an application such as this. Those cases and principles apply to substantive applications for property adjustment whereas this is merely an application for leave to proceed. Even if I am incorrect about that, beyond the assertion that the Wife has property or financial resources in Country D, there is no suggestion that she has hidden wealth of any significance and it is common ground that her initial financial contributions were limited as were her earnings during the marriage.
In all of the circumstances, I am satisfied that the Wife has established hardship if she is not granted leave to proceed out of time.
Turning to the exercise of my discretion as to whether to grant leave:-
(a)There is no issue with delay;
(b)The only prejudice to the Husband in granting leave I can identify is the prospect of paying the Wife her just and equitable entitlement to property adjustment as may be determined in due course;
(c)There is some prospect of prejudice to the Husband's sister if she seeks to be joined to the proceedings however I make the preliminary observation that it seems likely the Husband does hold those monies on trust for his sister having regard to the affidavit sworn/affirmed by her;
(d)I have dealt with the merits of the Wife's case as I perceive them; and
(e)I have dealt with hardship issues, the circumstances of the Wife and how her circumstances might be improved with even a modest cash uplift.
Having regard to all factors, I am satisfied that leave should be granted to the Wife to proceed out of time.
The proceedings will therefore be referred to a judicial registrar for case management and progression through the case management pathway. While in no way seeking to fetter the discretion of the judicial registrar as to how the case should be managed, I express my view that the case and the nature of the issues would seem more suited to the allocation of a conciliation conference rather than a costly mediation.
I propose to reserve each party's costs for consideration when the substantive determination is made.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Stewart. Associate:
Dated: 3 August 2023
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