Montano and Kinross

[2014] FCCA 843

FEDERAL CIRCUIT COURT OF AUSTRALIA

MONTANO & KINROSS [2014] FCCA 843

Catchwords:
FAMILY LAW – De-facto property proceedings – initiate within two years of end of relationship – extension of time – tests – whether must give an explanation for whole period of delay – leave to issue out of time denied.

Legislation:

Family Law Act 1975, s.44

Property Law Act 1958 (Vic)

Frost & Nicholson (1981) FLC 91-051
Harris & Harris (1997) DFC 95-192
Sharp & Sharp [2011] FamCAFC 150
Star & Star [2013] FamCA 91
Tamaniego & Tamaniego [2010] FamCAFC 254

Applicant: MS MONTANO

Respondent: MR KINROSS

File Number: MLC 8860 of 2013

Judgment of: Judge F. Turner

Hearing date: 26 March 2014

Date of Last Submission: 26 March 2014

Delivered at: Melbourne

Delivered on: 30 April 2014

REPRESENTATION

Counsel for the Applicant: Ms Wheeler

Solicitors for the Applicant: Jane M Curtis & Associates

Counsel for the Respondent: Mr Hannan

Solicitors for the Respondent: Westminster Lawyers Pty Ltd

ORDERS

1. The wife’s application seeking leave to issue proceedings out of time is dismissed.

2. The Initiating Application filed 14 October 2013 is dismissed.

3. All extant applications are dismissed and the matter is removed from the list of pending cases.

IT IS NOTED that publication of this judgment under the pseudonym Montano & Kinross is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 8860 of 2013

MS MONTANO

Applicant

And

MR KINROSS

Respondent

REASONS FOR JUDGMENT

1. This decision deals with an application by the de-facto wife to institute property proceedings out of time. (For convenience, the Court will refer to the de-facto wife as “wife” and the de-facto husband as “husband”). It is not disputed that the parties commenced cohabitation in 1992 and separated on a final basis on 23 November 2009, and that they were in a de-facto relationship for 17 years. There are no children of the relationship.

2. Section 44(5) of the Family Law Act 1975 (the “Act”) provides:

   (5)Subject to subsection (6), a party to a de facto relationship may apply for:

   (a)an order under section 90SE, 90SG or 90SM; or

   (b)a declaration under section 90SL;

   only if the application is made within the period of 2 years after the end of the de facto relationship (the standard application period ).

   (6)The court may grant the party leave to apply after the end of the standard application period if the court is satisfied that:

   (a)hardship would be caused to the party or a child if leave were not granted; or

   (b)in the case of an application for an order for the maintenance of the party--the party's circumstances were, at the end of the standard application period, such that he or she would have been unable to support himself or herself without an income tested pension, allowance or benefit.

3. To be made within the “standard application period”, the application had to be made on or before by 23 November 2011. The application was made on 14 October 2013 and is therefore nearly 23 months out of time.

4. At the hearing before the Court on 26 March 2013, Ms Wheeler of Counsel appeared for the wife and Mr Hannan of Counsel for the husband. The husband opposes leave being granted to issue out of time.

5. The tests for an extension of time are referred to in Sharp & Sharp [2011] FamCAFC 150.

6. The tests for being granted leave to apply out of time under s.44(3) of the Act were considered in Star & Star [2013] FamCA 91.

7. Sections 44(3) and (4) provide as follows:

   (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 cause in 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.

   The court may grant such leave at any time, even if the proceedings have already been instituted.

   (3AA)However, if such proceedings are instituted with the consent of both of the parties to the marriage, the court may dismiss the proceedings if it is satisfied that, because the consent was obtained by fraud, duress or unconscionable conduct, allowing the proceedings to continue would amount to a miscarriage of justice.

   (3A)Notwithstanding subsection (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 a decree of nullity of marriage has been made; and

   (b)the approval under section 87 of a maintenance agreement between the parties to the marriage has been revoked;

   proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in 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) may be instituted:

   (c)within the period of 12 months after:

   (i)the date on which the divorce order took effect or the date of the making of the decree of nullity, as the case may be; or

   (ii)the date on which the approval of the maintenance agreement was revoked;

   whichever is the later; or

   (d)with the leave of the court in which the proceedings are to be instituted;

   and not otherwise.

   (3B)Despite subsection (3), if, whether before or after the commencement of Schedule 2 to the Family Law Amendment Act 2000 :

   (a)a divorce order has taken effect or a decree of nullity of marriage has been made; and

   (b)a financial agreement between the parties to the marriage has been set aside under section 90K or found to be invalid under section 90KA;

   proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in 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) may be instituted:

   (c)within the period of 12 months after the later of:

   (i)the date on which the divorce order took effect or the date of the making of the decree of nullity, as the case may be; or

   (ii)the date on which the financial agreement was set aside, or found to be invalid, as the case may be; or

   (d)with the leave of the court in which the proceedings are to be instituted;

   and not otherwise.

   (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.

8. The application for an extension of time in the present case is made pursuant to s.44(5) of the Act. Sections 44(5) and (6) are set out (supra).

9. Because of the similarity of these provisions the tests applicable under ss.44(3) and (4) will be applied to ss.44(5) and (6).

10. In Star (supra), Cronin J decided:

    “38. Because of s 44(4)(a), it must be established that hardship would be caused to the husband if leave were not granted. If hardship is established, the husband still has to persuade the Court that its discretion should be exercised (see Whitford & Whitford (1979) FLC 90-612.)

    39. The husband must demonstrate hardship which involves considering whether he has an arguable case….

    40. It is important to note that hardship is more than the loss of a right to commence proceedings. It is the consequence arising from the loss of the right to commence proceedings (see Sharp (supra)).

    41. In Swallow & Swallow an unreported decision of Emery J in 1977, his Honour said:

    (t)he mere loss of the right is not in itself hardship. The right lost… must be a right which in all circumstances is substantial.

    ..to come within the provisions of this section an applicant must establish:-

    (a)     a prima facie case which is in the circumstances substantial;

    (b)     that to deny the right to litigate that claim would cause hardship in the sense referred to above to a party or to a child of the marriage;

    (c) that there is an adequate explanation as to why the claim was allowed to elapse.

    In McDonald & McDonald (1977) FLC 90-317, Evatt CJ referred to Swallow with approval and then added:

    I would add the following comment that the court may also think it appropriate to consider the question of prejudice to the respondent and that in this connection the period of delay in making the application to institute proceedings may itself be a relevant factor.

    42. A determination under s 44(3) therefore necessitates a clear distinction to be made between the proof of hardship and a consideration of the consequential exercise of the discretion (See in particular Whitford (supra) at 78,145; Cox & Cox (1981) FLC 91-068; Walker & Walker (1984) FLC 91-564. See also Hedley & Hedley [2009] FamCAFC 179; (2009) FLC 93-413).

    43. To succeed, the husband must have an arguable claim worth pursuing or a “real” probability of success. (see Sharp (supra))

    44. 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.

    45. In Whitford, the Court said that if there was no real probability of success, a court could not be satisfied that hardship would be caused if leave were not granted. Thus, the Full Court pointed out the following:

    (a). 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;

    (b) 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

    (c) otherwise nothing in either s 44(3) or 44(4) says that the right or entitlement lost must be a substantial one.

    46. If the applicant demonstrates hardship, it is appropriate to decide whether or not to exercise the discretion. As was said in Whitford (at 78,146) 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 of 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. Importantly, so as not to fetter the discretion, the Full Court said these examples were not necessarily the only ones.”

Would denial of leave to institute proceedings cause hardships to the

de-facto wife?

1. “Hardship” must be something more than the loss of the right to bring the action itself. A party’s “inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship”: Frost & Nicholson (1981) FLC 91-051 at p.76,424.

2. Here, there has been no adjustment of the financial and property relations of the parties since they separated on 23 November 2009. The Court considers that the consequence of not being able to have those matters adjusted will be a hardship to the wife. However, that is not the only test.

3. The wife deposes in her Affidavit affirmed on 30 September 2013 that she is unable to complete the building of the home at [address omitted] (the “home”) as she and the husband are jointly registered on the title and she cannot refinance.

4. To not be able to initiate proceedings to obtain a property settlement and finish building the house will cause hardship to the wife. She lives in her office when in [Y] (Ibid [10]). Since separation she has struggled financially (Ibid).

The question of hardship involves the question of “whether or not the wife has an arguable case for property settlement”?

1. On the evidence the land on which the home sits was purchased during 2006/2007 (Ibid [7]). In September 2009 the partly built home was destroyed in violent wind storms in [omitted]. The parties decided to rebuild, but the husband left Australia and on 23 November 2009 advised the wife that their relationship was over (Ibid).

2. The wife then became solely responsible to repay the mortgage, and rebuild the home (Ibid [8]).The land at [omitted] was subject to a line of credit of $125,000.00 (Ibid p.2). That line of credit was used for rebuilding of the home (Affidavit of the wife affirmed 28 February 2014 [8]) but was also used in part to finance and establish the parties move to [country omitted] in 2007 (Wife’s Affidavit affirmed 30 September 2013 at [4]). The wife repaid the line of credit (Wife’s Affidavit affirmed 28 February 2014 at [11]).

3. The parties contributed little at the beginning of their relationship. During the relationship the wife contributed much of her income, as did the husband at times.

4. The Court finds that the wife has an arguable case for a property settlement. The consequence of not being able to initiate proceedings will cause her hardship.

Is there an adequate explanation for the delay in seeking to institute proceedings?

1. Ms Wheeler presented the following analysis:

   ·The wife had a mental break down shortly after the separation (Annexure ‘A’ to the wife’s Affidavit sworn 17 March 2014).

   ·The wife made attempts to reconcile (Affidavit of the wife affirmed 28 February 2014 at [9] and [10]).

   ·The wife had a major car accident a few months after separation (Ibid [12])

   ·The wife broke her leg in March 2010 (Ibid [14])

   ·Up until April 2010 the husband had been sending funds to the wife (Ibid [10]). The wife was still hoping to reconcile.

   ·Generally the wife was not in a fit mental state to bring the proceedings. Her symptoms made it extremely difficult for her to function effectively in her usual occupation (Annexure ‘A’).

   ·On 20 October 2011 the wife went to see Mr Yong (a solicitor) in [Y] to get a transfer of the property to her, and was not told of any time limits (Affidavit of the wife affirmed 28 February 2014 at [18]).

2. The letter from the husband’s solicitor to the wife’s solicitor (Affidavit of the husband sworn 17 November 2013, Annexure ‘RNK-3’) made it clear that “a property division is yet to take place” and that they wanted to “avoid contested legal proceedings”; they were in the process of drafting a Binding Financial Agreement for the wife’s consideration.

3. The Court finds that the husband’s solicitor said that they were negotiating, but the matter was already out of time.

4. On 1 May 2012 the wife’s solicitor advised the husband’s they were no longer acting for the wife (Ibid Annexure “RNK-3’). The wife went to see a new lawyer in June/July 2012 and became aware of the time limit (Affidavit of the wife affirmed 28 February 2014 at [22]). However, at that time there were still ongoing settlement negotiations.

5. On 19 September 2012 the husband’s lawyers wrote to the wife’s lawyers sending a proposed Binding Financial Agreement that had been sent to the wife’s previous solicitors. That showed that negotiations were continuing [Affidavit of the husband sworn

   
   

   17 November 2013, Annexure ‘RNK-3’(supra)].

6. The letter in response on 12 March 2013 showed that negotiations were continuing [‘RNK-3’ (supra)]. Negotiations broke down after 12 March 2013. Ms Wheeler notes that the wife signed her Initiating Application on 30 September 2013, and that it was presented to the Registry on

   
   

   14 October 2013.

7. Ms Wheeler referred to the decision in Harris & Harris (1997) DFC 95-192, Supreme Court of Victoria relating to delay in bringing proceedings under the Property Law Act 1958 (Vic) between a de-facto wife and de-facto husband. There, she sought to institute property proceedings after the two years specified in that Act had expired.

8. The Court considered “delay”, amongst matters relevant to the discretion to make an order. Justice Gillard commented (at p.77,675):

   “I think the time has arrived for court to consign this outdated requirement to adequately explain a delay to the judicial dustbin. It takes up an inordinate time of lawyers in preparing applications for extension of time to try and come up with a suitable explanation and too much time is spent at the hearing on the topic. The failure to adequately explain delay, in my opinion, could never be a basis for refusing leave where there were factors which justified the leave.

   I think a court is entitled to know why the delay occurred but the explanation should be short and to the point. In my opinion there are no grounds for exercising the discretion adversely to the plaintiff.”

9. Ms Wheeler asks the Court to apply that reasoning to this matter, and find that on the facts of the case, the unexplained delay from March to October 2013 should not to be the determining factor.

10. The Court notes that Gillard J found that “the Court is entitled to know why the delay occurred”. Here there is no explanation for the 7 month delay from 12 March 2013 until 14 October 2013. The Court refers to the decision in Frost (supra) at p.76,424 as follows:

    “I agree with what was said by Lindenmayer J. in Perkins and Perkins , at p. 78,055; (1979) 4 Fam.L.R. 634, at p. 639 that there must be an explanation of the entire delay; that is to say, the delay until the commencement of proceedings on 13 November 1979.”

Would leave to institute the proceedings cause a prejudice to the husband?

1. In his Affidavit sworn 17 November 2013, the husband states at [48] to [51]:

   “48. I will be prejudice if leave is granted to [Ms Montano] to pursue her property application.

   49. It has been approximately four years since our separation and in this time I have moved on with my life.

   50. I will suffer prejudice because if [Ms Montano] is granted leave then I will suffer a financial detriment. One example of this is that my superannuation policy has increased in value since separation 4 years ago, and since the 2 year time limit expired, until today. From 30 June 2010 to 14 November 2013 my superannuation has increased $13,348.

   51. In addition, my post separation savings have increased since separation. Whilst these savings should be excluded from the asset pool, if leave were given to [Ms Montano] then my post separation savings could prejudice me in any future assessment under section 75(2) of the Act.”

2. The Court does not find that those allegations of prejudice are sufficient by themselves to justify dismissing the wife’s application. The matters raised by the husband can be addressed in property proceedings before the Court.

3. “Prejudice is intended to refer to the problems caused to memory and loss of documents which arise where there has been a delay”: Star (supra) at [50].

4. The Court finds that Courts in Australia with Family Law jurisdiction have not “consigned the outdated requirement to adequately explain a delay to their judicial dustbin”: Harris (supra). Gillard J stated that Court is entitled to know why the delay occurred. The requirement to adequately explain delay is stated in 2013 by Justice Cronin in Star (supra). It is a current requirement that has not been met by the wife.

1. Ms Wheeler referred to the decision in Tamaniego & Tamaniego [2010] FamCAFC 254 at [162] as follows:

   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 the refusal of the extension of time. The authorities and principles were discussed in Tormsen and Tormsen (1993) FLC 92-392: see also McMahon and McMahon (1976) FLC 90-038; Van der Kreek and Van der Kreek (1978) FLC 90-421 and Coombs and More (1990) FLC 92-175. 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.

2. The Court notes that the decision states the requirement for an “adequate explanation for the delay”. Here there is no explanation whatsoever for the 7 month delay between 7 March 2013 and

   
   

   14 October 2013. That period by itself is a significant delay. The wife’s application for leave to issue proceedings out of time is dismissed for that reason.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge F. Turner

Associate: 

Date:  30 April 2014