MICHELSON & WALTAS
[2020] FCCA 2038
•28 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MICHELSON & WALTAS | [2020] FCCA 2038 |
| Catchwords: FAMILY LAW – Application for extension of time to file property proceedings under s.79 of the Family Law Act 1975 – leave to institute proceedings granted. |
| Legislation: Family Law Act 1975 (Cth), ss.44, 79 |
| Cases cited: Hall & Hall (1979) FLC 90-679 Whitford & Whitford (1979) FLC 90-612 Edmunds & Edmunds [2018] FamCAFC 121 Gadzen v Simkin [2018] FamCAFC 218 Emerald & Emerald [2018] FamCAFC 217 Sharp & Sharp [2011] FamCAFC 150 Jacenko & Jacenko [1986] FamCA 25 Montano & Kinross [2014] FamCAFC 231 Frost and Nicholson [1981] FamCA 45 |
| Applicant: | MS MICHELSON |
| Respondent: | MR WALTAS |
| File Number: | DGC 439 of 2020 |
| Judgment of: | Judge O'Sullivan |
| Hearing date: | 8 July 2020 |
| Date of Last Submission: | 8 July 2020 |
| Delivered at: | Dandenong |
| Delivered on: | 28 July 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ng |
| Solicitors for the Applicant: | Pentana Stanton Lawyers |
| Counsel for the Respondent: | Mr Stanley |
| Solicitors for the Respondent: | Wheeler Family Lawyer |
ORDERS
The applicant is granted leave pursuant to s.44(3) of the Family Law Act 1975 (Cth) to commence property proceedings against the respondent under s.79 of the Act.
IT IS NOTED that publication of this judgment under the pseudonym Michelson & Waltas is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DANDENONG |
DGC 439 of 2020
| MS MICHELSON |
Applicant
And
| MR WALTAS |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons concern an application by Ms Michelson (“the applicant”) for leave to bring property settlement proceedings out of time. The application is opposed by Mr Waltas (“the respondent”).
For the reasons that follow the applicant will be granted leave to proceed out of time with her application for property settlement.
Background facts
The applicant is 51 years old and lives in Town B. The respondent is 52 years old and also lives in Town B.
The parties commenced a relationship in the late 1980s, married in 1991, separated in November 2013 and there was a divorce order in June 2015. There were three children of the 22 year marriage who are now all over 18 years old.
When the parties separated the children remained living with the respondent in the former matrimonial home at C Street, Town B (“the former matrimonial home”).
The respondent, the sole registered proprietor of the former matrimonial home remains living there (as he has since separation) and continues to meet the mortgage repayments (as he has also done since separation).
The applicant, for who it was agreed the separation was traumatic, remarried in 2018, and prior to that had reconciled with at least one of the adult children who now lives with her.
Finally its uncontroversial that prior to the divorce order taking effect the applicant had legal advice and had notice, when it was made, of the time limit within which to bring proceedings under s.79 of the Family Law Act 1975 (Cth) (“the Act”).
The applicant began attending counselling in 2015, and did so until towards the end of 2017, to deal with her mental health.
In mid to late 2019 the applicant engaged solicitors, and after attempts to negotiate with the respondent filed her application on 10 February 2020.
There was a response filed on behalf of the respondent on 23 March 2020. On 8 May 2020 the dispute over whether the Court should extend time for the applicant to bring proceedings was set for a hearing via Microsoft Teams (due to COVID-19) on 8 July 2020.
The time limit as provided for in the Act for the applicant to bring proceedings would have expired in mid 2016. It is agreed as the application was filed 3 years and 6 months out of time the applicant must now obtain leave to pursue her claim for property settlement.
Legislation
Section 44(3) of the Act states:
“(3) Where, whether before or after the commencement of section 21 of the Family Law Amendment Act 1983 :
(a) a divorce order has taken effect; or
(b) a decree of nullity of marriage has been made;
proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial causein subsection 4(1) (not being proceedings under section 78 or 79A or 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 of the 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 divorce order took effect; or
(d) in a case referred to in paragraph (b)--the date of the making of the decree...”
Section 44(4) of the Act states:
(4) The court shall not grant leave under subsection (3) or (3A) unless it is satisfied:
(a) that hardship would be caused to a party to the relevant marriage or a child if leave were not granted; or
(b) in the case of proceedings in relation to the maintenance of a party to a marriage--that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit.”
Hearing – 8 July 2020
At the hearing Mr Ng, Solicitor, appeared on behalf of the applicant and Mr Stanley of Counsel appeared on behalf of the respondent. In preparation for the hearing the parties had filed an electronic court book (which was marked as an exhibit).
The applicant relied on:
a)her application, affidavit and financial statement filed on 10 February 2020;
b)the affidavit of her Counsellor, Ms Wall filed on 29 May 2020; and
c)her affidavit filed on 29 May 2020.
The respondent relied on:
a)his response filed on 23 March 2020;
b)his affidavit and financial statement also filed on 23 March 2020; and
c)applicant’s estimate of costs (exhibit R1).
As well as a number of objections to the applicant’s affidavits (which were agreed) the parties agreed on a number of “facts or opinions” and “matters in dispute” which were at paragraphs [2] to [5] inclusive of the electronic court book (which for the sake of brevity won’t be rehearsed but have been taken into account).
The law and matters to be considered in determining the application
The matters that ought to be considered by the Court when determining the application to bring proceedings out of time are established by a series of decisions going back to Hall & Hall (1979) FLC 90-679 and Whitford & Whitford (1979) FLC 90-612 (“Whitford”).
In Whitford the Full Court said at 430:
“…on an application for leave under s 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.”
The approach to applications such as this has also been considered in a number of separate (and more recent) decisions of the Full Court of the Family Court of Australia: Edmunds & Edmunds [2018] FamCAFC 121 (“Edmunds”); Gadzen v Simkin [2018] FamCAFC 218 (“Gadzen”) and Emerald & Emerald [2018] FamCAFC 217 (“Emerald”).
In Edmunds the Full Court stated:
[16] The hearing of applications for leave pursuant to s 44(3) should be “summary in character” (Neocleous & Neocleous (1993) FLC 92-377 at 79,914) and not a final hearing of the matter (Whitford and Whitford (1979) FLC 90-612 at 78,143; Hedley & Hedley (2009) FLC 93-413 at [32] per Finn J and at [111] per Boland J). A detailed hearing of the case on its merits is not required (Althaus and Althaus (1982) FLC 91-233 at 77,267).
[17] In Wood v Glaxo Australia Pty Ltd [1994] 2 Qd R 431 at 434 Macrossan CJ of the Queensland Court of Appeal, in the course of discussing s 31(2) of the Limitation of Actions Act 1974 (Qld), relevantly observed that:
… Applicants for extension of limitation periods are not intended by the legislation to be placed in the position where they must establish an entitlement to recover on two occasions, first on the hearing of the application and once more at the trial of the action. Although the requirements of the legislation must be complied with if an extension is to be granted, the extent to which an Applicant must show a case on the hearing of the application to extend time will frequently depend on the impression on the judge’s mind of the material which the Applicant presents or the existence of which he demonstrates or points to. It is nevertheless recognised as wrong to place potential plaintiffs in anything like a situation where they must on the probabilities show that it is likely they will succeed in their actions. A judge may harbour a feeling that there is a strong chance that particular Applicants will fail at trial but, in my opinion, he should not act on the basis of this impression both because that is a question reserved for another occasion and because he cannot know and should not insist on being able to see in all of its ramifications the full strength of the case which will eventually be presented at trial. There are some resemblances in this to the situation of a defendant who resists a summary judgment application. The Court should be cautious in shutting out a party from the opportunity to make his case at the appropriate time. In any situation where proof of a case is difficult and very far from straightforward, it would be very expensive to require a party applying to extend time to demonstrate his case with any high degree of elaboration.
[18] The point to be drawn from this passage is that an Applicant for leave is not required to establish their final case on the leave application. Similarly, the Court is not to approach the application on that basis.
[19] In the context of an interlocutory injunction in a patent case but in terms that apply to all interlocutory injunctions, in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 (“Beecham”) at 622 the High Court described the inquiry the Court is to undertake in the following way:
The Court addresses itself in all cases, patent as well as other, to two main inquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief: Preston v. Luck; Challender v Royle. How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks.
[20] We consider that as an application for leave is also an interlocutory application, these principles appropriately apply in this case. Thus the Court, when considering the issue of leave and the strength of the proposed case, will look to see whether, in the event that the evidence remains the same at a final hearing, there is a probability that the Applicant would succeed in obtaining a property settlement adjustment in her favour. The Court does not undertake a preliminary trial but looks to see whether there is some or a fair or reasonable probability that relief will be granted.
[21] In Sharp at [18] the Court, consistently with Beecham in our opinion, considered that there must be a “‘real’ probability of success”.[1]
[1] Edmunds & Edmunds [2018] FamCAFC 121, [16]-[21].
Their Honours continued at paragraph [47]:
“[47] As the Full Court pointed out in Sharp at [18], “the well-established test is that the Applicant must have a prima facie claim worth pursuing or a ‘real’ probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship.
[48] That involves a consideration, but not a final determination, of the nature of the Applicant’s claim. In doing so, the Court must weigh the Applicant’s case against that of the Respondent’s and form a view as to whether there is in fact a prima facie case, or a real probability of success, that would, if leave were granted, alleviate hardship.[2]”
[2] Edmunds & Edmunds [2018] FamCAFC 121, [47]-[48].
At paragraph [121], the Court held that:
[121] In Sharp the Court said:
[97] Merely because the Respondent to an application for leave does not point to particular prejudice that might arise if leave were granted, does not dispose of the question. The law presumes prejudice to flow to a person sought to be joined in litigation after the effluxion of the relevant time limits. Even if the court came to the view that there was no significant prejudice to the Respondent, the court may consider whether in all of the circumstances of the case, it is just and reasonable to grant the extension sought. The New South Wales Court of Appeal in McLean v Sydney Water Corporation [2001] NSWCA 122, per Giles JA (Hodgson and Stein JA agreeing) said at [22] that:
[22] Prejudice engendered by delay and unlikelihood of a fair trial will be highly material, and if there is prejudice and unlikelihood of a fair trial that will tell strongly, often conclusively, against the grant of an extension of time. It does not follow that in the absence of prejudice (other than general prejudice) and unlikelihood of a fair trial it will be just and reasonable to grant an extension of time.[3]
[3] Edmunds & Edmunds [2018] FamCAFC 121, [121].
In Gadzen, the Full Court reviewed a number of authorities relating to hardship. At paragraphs [31] to [37] the Full Court stated as follows:
‘[31] In discussing hardship the Full Court in Whitford said:17
17 At 78,144.
The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted. The loss of the right to institute proceedings is not the hardship, to which the subsection refers. It is with the consequences of the loss of that right, with which the subsection is concerned. The requirement, that the Court must be satisfied that hardship would be caused if leave were not granted, implies that it must be made to appear to the Court that the applicant would probably succeed, if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted. If the probable result of the hearing on the merits is that the hardship is not likely to be alleviated, then the Court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted.
[32] The Full Court then proceeded to discuss the meaning of “hardship”. In the course of that discussion the Full Court said:18
18 At 78,144 – 78,145.
In our view the meaning of “hardship” in subsec. 44(4) is akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment. Cf. the meanings assigned to “hardship” in the Shorter Oxford Dictionary and in Webster’s New International Dictionary…
…
In ordinary parlance, hardship means something more burdensome than “any appreciable detriment”. We consider that in subsec. 44(4) the word should have its usual, though not necessarily its most stringent, connotations. 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. Similarly, where the costs which the applicant will have to bear himself or herself are about as much or more than what the applicant is likely to be awarded on a property claim, ordinarily hardship would not result if leave to institute proceedings were not granted. But otherwise we find no warrant in either subsec. 44(3) or 44(4) for saying that that the right or entitlement lost must be a substantial one.
(As per original)
[33] In Althaus and Althaus19 Evatt CJ (with whom Marshall SJ and Strauss J agreed) observed of earlier cases:
19 (1982) FLC 91-233, 77,266 – 77,267.
…Now to some extent there may be an exercise of semantics involved here. The case of McDonald referred to a reasonable prima facie case as the test. Other cases such as McKenzie and Whitford suggest that the applicant needs to show that she would probably succeed. In the case of Perkins and Perkins (1979) FLC 90-600, Lindenmayer J. suggested that the test was that there was a reasonable probability of the claim being successful…
In my opinion, sec. 44(3) and (4) are not intended to require a detailed hearing on the merits to determine whether the applicant’s claim will succeed. The exercise is to determine whether there is a reasonable claim to be heard. That is the essence of the inquiry into whether hardship will be suffered by denying the applicant the right to litigate that claim.
[34] In Hall and Hall20 the Full Court said:
Fundamental to that [a finding of hardship] is a determination of the quality or character of the potential claim. In relation to that different cases have used somewhat different phrases to describe it so that it has become something of a matter of semantics to describe in different ways what is really the same basic concept…
[35] In Sharp the plurality of the Full Court observed:
17. It is well-accepted that hardship for these purposes is more than the loss of a right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship. That is a matter to be determined by the circumstances of the particular case.
18. In assessing hardship in this context the well-established test is that the applicant must have a prima facie claim worth pursuing or a “real” probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship. However, whether or not hardship exists is not to be assessed only by reason of the monetary value of the probable order to be made if leave were granted.
20 (1979) FLC 90-679, 78,627; see also McCoy and Chancellor [2014] FamCAFC 62; Sharp v Sharp (2011) 50 Fam LR 567 (“Sharp”) and Edmunds & Edmunds (2018) FLC 93-847 (“Edmunds”).
[36] In Edmunds the Full Court recently cited with approval the judgment in Sharp and said:
47. As the Full Court pointed out in Sharp at [18], “the well-established test is that the applicant must have a prima facie claim worth pursuing or a ‘real’ probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship”.
48. That involves a consideration, but not a final determination, of the nature of the applicant’s claim. In doing so, the Court must weigh the applicant’s case against that of the respondent’s and form a view as to whether there is in fact a prima facie case, or a real probability of success, that would, if leave were granted, alleviate hardship.
[37] It follows from these authorities that the starting point in determining an application for leave is to consider the question of hardship which requires for its existence a conclusion that an applicant has a prima facie or arguable case of substance having regard to all of the circumstances of the case. That must take into account the costs or likely costs to be incurred in pursuing the claim.’
The question of hardship that the Court is required to consider is distinct from the question of whether the Court should exercise its discretion to permit an application that is out of time. In Emerald, at paragraphs [127] to [130], Murphy J discussed the distinction and also identified factors to be considered in the exercise of the discretion:
‘[127] The Full Court in Sharp held that “the appropriate approach to a determination under [s 44(4)] necessitates a clear distinction to be made between the proof of hardship and a consideration of the consequential exercise of the discretion” (at [27]). That is, the discretion required for relief arises if, but only if, “hardship” is established (s 44(4)(a); see also, Whitford at 78,145 (cited by the primary judge); Hedley & Hedley (2009) FLC 93-413; Montano & Kinross (2014) FLC 93-623).
[128] Authority establishes that an explanation for delay is an extremely important consideration in the exercise of discretion. However, unlike hardship, a failure to adequately explain delay is not, at least as a matter of principle, fatal to obtaining leave. The same is true of prejudice to the opposing party if leave is granted. It, too, is a highly important discretionary consideration. However, it too is not, at least as a matter of principle, a bar to the grant of leave. Conversely, establishing a lack of prejudice is not a necessary precondition to the grant of leave (Whitford at 78,142; Hall and Hall (1979) FLC 90-679; see also, Frost and Nicholson (1981) FLC 91-051 and Leibinger and Leibinger (1986) FLC 91-727).
[129] For an appellate court, a consequence of the application of those principles is that an appeal which asserts error in a conclusion as to hardship (or lack of hardship) is not an appeal from the exercise of a discretion, but an appeal asserting error in a factual finding (or a finding as to a mixed question of fact and law). In this case, where no oral evidence was given before his Honour, this Court “is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge” having of course given proper “respect and weight to the conclusion of the trial judge” (Warren v Coombes (1979) 142 CLR 531 at 551).
[130] A challenge to the second component for the grant of leave involves a challenge to the exercise of discretion to which different principles apply. A conclusion by an appellate court different to that of the primary judge does not attract appellate intervention; error within recognised categories must be established (see, eg, House v The King (1936) 55 CLR 499 at 505; Gronow at 519 – 520).”
In Edmunds the Full Court set out what was said to be an uncontroversial summary in that case of the required approach as follows:[4]
[4] Edmunds & Edmunds [2018] FamCAFC 121.
“[5] The primary judge described the task before her in the following way:
[16]The authorities on the issue of an application pursuant to s44(3) are numerous. The Court must consider whether the Applicant has established:
a) A reasonable prima facie case for relief had proceedings been instituted in time;
b) That denial of the claim would cause the Applicant hardship;
and
c) An adequate explanation as to the delay.
[17] In appropriate cases the degree of hardship to be suffered by the Applicant may well outweigh an inadequate explanation of delay. Once the three elements are satisfied, in determining whether to exercise its discretion to grant relief, the question of prejudice which the Respondent would suffer by reason of the delay in bringing the application ought to be considered.
[6] Such an approach is consistent with the authorities: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553 per McHugh J; McDonald and McDonald (1977) FLC 90-317 at 76,688; Jacenko and Jacenko (1986) FLC 91-776 (“Jacenko”) at 75,644; Sharp v Sharp (2011) 50 Fam LR 567 (“Sharp”).[5]”
[5] Edmunds & Edmunds [2018] FamCAFC 121, [5]-[6].
In light of the principles set out above it is now convenient to turn to the facts of this matter.
Applicant’s evidence
The applicant relied on her affidavits filed 10 February 2020 and 29 May 2020. The applicant also relied on the evidence of her counsellor Ms Wall. Neither the applicant or the counsellor were required for cross examination.
The applicant’s evidence is the parties entered into the relationship with little assets of significance and they built their wealth together over the course of a 22 year marriage.
The applicant’s evidence is that after cohabitation began she worked casually earning $350.00 per week and was the primary carer of the children. The applicant’s evidence is that her income throughout the relationship was supplemented by Centrelink income benefits of $200.00 per week was applied to meet the parties needs but the respondent was the main financial contributor.
The applicant’s evidence is the parties rented until 2006 when a property in Suburb D was purchased from the paternal grandparents for $170,000.00 and sold around 4 years later for $430,000.00.
The applicant’s evidence is the purchase of the Suburb D property was funded by a house deposit and mortgage and when that was sold the remaining equity was used (along with a mortgage) to purchase the former matrimonial home.
The applicant’s evidence is throughout this period she continued to work casually, care for the children and did so until separation when the respondent threw her belongings out on the nature strip and he remained in the former matrimonial home with the children.
The applicant’s evidence is that whilst the respondent was thereafter responsible for the mortgage she was responsible for debts properly the responsibility of both parties (including school fees) of at least $25,000.00.
The applicant’s evidence acknowledges the respondent’s care of the children after 2013 but by that time only two of the children were under 18 years of age. The applicant’s evidence is the youngest child, who is now 18 years old began living with her in 2018.
The applicant’s evidence is that she is reliant on Centrelink income benefits and was diagnosed with cancer in early 2020.
On behalf of the applicant it was submitted she had a “bona fide claim to a property adjustment” and she was “likely to receive at least 40% of the net pool”.
Whilst it was acknowledged there would be costs associated with bringing the proceedings it was submitted given it would be a “relatively short and simple” hearing as the “pool is simple and most matters agreed”, the loss of the potential benefit of an award of around $100,000.000 would undoubtedly be a substantial detriment to the applicant given “her parlous financial circumstances”.
Respondent’s evidence
The respondent gave evidence and was briefly cross examined. The respondent adopted his affidavit and financial statement filed on 23 March 2020.
The respondent deposed to his problems, including his health problems, since separation and that his new business was unlikely to make a profit.
The respondent’s evidence was to the effect that he believed the applicant would not suffer the requisite hardship if leave were not granted. The respondent’s evidence was, given the modest asset pool, (and that he estimated the net non superannuation pool at separation had only been $100,000.000) it was likely the costs of the proceedings would outweigh any benefit to making the application.
The respondent acknowledged that the former matrimonial home was in his sole name, and that the applicant had made payments of debts after separation but said these were for periods prior to that date.
The respondent did not take issue with the applicant’s evidence regarding her financial and non financial contributions during the relationship. He emphasised what he had done since separation (including the trials and tribulations of dealing with the youngest child), the debts he still had and that he believed (though he did not say why) the applicant did not wish to pursue any claim against the home.
In response to questions in cross examination the respondent agreed he had the same assets now as he had at separation. The respondent agreed that this was also the case in relation to his current liabilities and the only difference from what they had been at separation was because his sister had helped pay out a car loan and credit card debt. The respondent’s evidence was these were paid out to avoid interest and not because of any delay by the applicant in bringing proceedings.
Consideration
At the beginning of the hearing there was, what turned out to be, an arid debate over whether, when assessing whether the applicant had a reasonable claim, the Court should take the parties assets and liabilities as at the hearing date or as at the date of separation. For the reasons referred to in the authorities it is as at the hearing date.
In any event at the hearing it was agreed for the purposes of that exercise that at the time of separation the former matrimonial home was worth approximately $575,000.00 with a mortgage of $400,000.00 whilst it was now worth $700,000.00 with a mortgage of $342,000.00.
The applicant earns $400.00 week and has $17,339.00 in superannuation. Aside from $167.00 in a bank account and a motor vehicle worth $1,500.00 the applicant owns no other assets.
The respondent earns $600.00 a week, has $80,000.00 in superannuation and gives the total value of property he owns at $711,000.00 but with liabilities of $448,740.00.
In looking at the nature and quality of the parties respective claims, it is important to recall that the applicant bears the onus of establishing a prima facie claim worth pursuing or a real probability of success.
In that context this was a twenty two year marriage and I note that in Whitford it was said at 78,145:
“In some cases, where a resolution of the property or financial relationships of the parties is desired, it might be, that the applicant would receive no more or even less, than he or she already owns at law or in equity. Nevertheless, hardship might be caused to the applicant if leave were not granted so as to facilitate such resolution.
…”
The applicant submitted that the contributions to the relationship would be assessed as near equal given the 22 year marriage, where both parties worked, applied their income jointly and she was the primary carer and homemaker. Whilst it was acknowledged the respondent’s post separation contributions would be greater (given his primary care of the children following separation) it was submitted this was a relatively small portion of time given cohabitation began in 1991. The applicant also submitted that s.75(2) factors if not in her favour certainly did not render her claim unreasonable.
The respondent’s position was the applicant could not satisfy the Court that she would suffer hardship. The respondent’s position emphasised that the statutory time limit must be “given meaning” and the applicant could not be allowed to “profit” from her delay.
In submissions before the Court, Counsel for the respondent emphasised in the context of the question of hardship that the potential costs of any claim[6] (in the context of what it was submitted the applicant could expect to achieve) meant the applicant could not satisfy the Court she would suffer hardship.
[6] See exhibit R1.
Counsel for the respondent submitted any hardship for the applicant was “limited” and “contained” and not substantiated when the costs of any claim were taken into account.
Many authorities have addressed what is meant by ‘hardship’ in the context of a leave application. In Sharp & Sharp [2011] FamCAFC 150 May and Ainslie-Wallace JJ held:
o [17] It is well accepted that hardship for these purposes is more than the loss of a right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship. That is a matter to be determined by the circumstances of the particular case.
The applicant does not have to show that any loss suffered by a refusal to grant leave would be substantial in monetary terms. The Court needs to consider the applicant’s prospects of success in the context of her circumstances (see Whitford).
In Hall & Hall [1979] FamCA 50 the Full Court held that a court considering the preliminary question did not need to find that the application will ultimately be successful and went on to say:
“…
Similarly it needs to be borne in mind that the prospect of success need not relate to the whole of the proposed claim. It is sufficient if it relates to some part or aspect of it which in the context of the facts of the individual case is of significance.
It is therefore an inquiry as to whether in the particular circumstances of the case in question the applicant would suffer hardship by the refusal to grant leave which s.44(4) permits the court to grant. As all of the authorities point out, the fact that the applicant demonstrates that he or she has a reasonable claim to present to the court is not necessarily the same thing, although that is an important aspect of the matter. That circumstance must then be considered in the light of all of the facts in determining whether at this particular stage the applicant would suffer hardship by the application being refused. That involves amongst other matters some consideration of the then financial and other circumstances of both parties.”
In submissions before the Court the respondent went as far as to suggest it may be possible to argue that there should be no alteration to the parties’ property interests. All of the evidence about what weight ought to be given to the respective contributions of each party will have to wait for trial.
However, given evidence of the parties referred to above about the nature and quality of their respective claims, in the event the evidence of the applicant is the same at the final hearing there is a probability that the applicant will attain a property settlement adjustment given her contributions over a 22 year marriage. In such circumstances there is a fair and reasonable probability that relief will be granted.[7]
[7] Edmunds at [20].
In relation to the costs of the proceedings this matter is not a complex property case and a two day hearing would be a generous estimate. In the circumstances where the applicant could stand to recover around $100,000.00 the costs of the proceedings would not result in any hardship not being alleviated.
Given the evidence as to the parties contributions throughout the entirety of their relationship, for the applicant to be unable to have her direct and indirect financial contributions acknowledged in some way in the finalisation of her financial relationship with the respondent would be unfair to her and constitute significant hardship.
Therefore, and notwithstanding the costs of the proceedings, if the applicant is not given leave to proceed out of time it is considered that she would suffer a significant degree of hardship.
Turning to the other issues relevant to whether leave should be granted, the applicant does not say she was unaware of the time limits in s.44 of the Act. The applicant confronts the issue head on and relying on the claims in her own affidavit (and that of her counsellor) deposes that her poor mental health caused her to be “disengaged with legal processes both emotionally and punctually”.
The applicant’s allegations about the respondent’s emotional and financial abuse throughout the long term marriage are contested. However, it was common cause the relationship was unhappy and the separation traumatic for the applicant.
The applicant deposes she could not cope with the stressors of court proceedings and thought initiating proceedings would have “sabotaged her hopes of connecting with her children”. Whilst the respondent said he believed the applicant was not pursuing proceedings, her evidence was she was not in a position psychologically or emotionally to do so in 2016. She at least is supported in satisfying me that was the case by the evidence of her counsellor (who whilst not qualified to offer a medical opinion) said that she was mentally unwell and not able to do so.
It was acknowledged in submissions before the Court on her behalf that the reason given by the applicant for the delay was not compelling. However, it was submitted given the applicant’s evidence (which was not challenged) that her “mental health greatly suffered” following separation and that she “could not cope with the stress” of attempting to resolve financial matters that this should not be “held strongly against” the applicant. In reliance on Jacenko at [18] it was submitted the hardship to the applicant ought in those circumstances outweigh any inadequate explanation.
I have taken into account the applicant’s evidence (and explanation) for the whole of the delay, including over 2019 when a firm of solicitors represented they would seek instructions from the respondent about her request to negotiate property out of Court before months later telling her they did not represent him.
Taking into account each element of the applicant’s explanation for the delay, whilst I accept it is not strong in and of itself it does not tell against the exercise of the discretion at this stage.
In submissions before the Court, Counsel for the applicant acknowledged there would be some prejudice to the respondent if leave were granted. However, it was submitted there needed to be a link between that prejudice and the requisite delay. It was submitted that on the respondent’s own evidence in cross examination he had not changed his financial circumstances in reliance on the applicant’s delay in commencing proceedings and the Court should find accordingly.
Counsel for the respondent in contrast described the prejudice to his client as “spectacular”. Counsel for the respondent focused on what was submitted to be the prejudice (though there was no independent evidence of this) that would flow as any claim would necessitate the sale of the former matrimonial home.
However, it was never explained how this was linked to the delay itself. Indeed if the respondent’s position on hardship is recalled this would have been the case in any event had the proceedings been brought earlier. Moreover, it was also never explained how the health issues the respondent said he faced, about which there was no independent evidence, (but which were also relied on to ground prejudice) were linked to the issue of delay.
Be all of that as it may, it is the case that the “law presumes prejudice to flow to a person sought to be joined in litigation after the effluxion of the relevant time limits”.[8]
[8] Sharp at [97].
Nonetheless, given his evidence before the Court that he had not changed his finances as a result of any delay by the applicant (in light of the matters referred to above) and noting that the respondent did not assert particular witnesses or evidence was no longer available, the prejudice to the respondent is not as “spectacular” as the use of the phrase by his Counsel would suggest.
In Frost and Nicholson [1981] FamCA 45 it was said prejudice 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. The respondent’s evidence, even on his own affidavit, did not rise to the level that he had been led to believe no action would be brought.
Given the respondent’s evidence that he has not undertaken any particular steps on the basis of assuming no claim would be made by the applicant, I nonetheless accept he might suffer some prejudice if the claim is permitted to proceed.
However, it is important to recall that the fundamental question in any application of this nature is whether granting an extension of time will do justice between the parties. In Montano & Kinross [2014] FamCAFC 231 Murphy J writing for the Full Court[ said:
“[14] Like many applications for indulgence, an application for leave to apply after the end of the standard application period requires the Court to exercise its discretion in a manner that, ultimately, is consistent with justice being done to both parties. The potential for injustice to the applicant being unable to pursue the remedy precluded by the refusal to grant leave must be compared to the prejudice to the respondent in the granting of leave…”
Conclusion
Having concluded the applicant would suffer hardship for the purposes of s.44 of the Act, and having considered the matters relevant to the exercise of discretion, the Court will grant leave pursuant to s.44(3) of the Act for the applicant to commence proceedings.
I certify that the preceding seventy eight (78) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan
Associate:
Date: 28 July 2020
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