Morgan and Flanagan

[2014] FamCA 348

FAMILY COURT OF AUSTRALIA

MORGAN & FLANAGAN [2014] FamCA 348

FAMILY LAW – PROPERTY – Application for leave to commence property settlement proceedings out of time pursuant to section 44(3) of the Family Law Act 1975 (Cth) – Whether the wife has demonstrated “hardship” – Factors to be considered in respect of whether the Court should grant leave – Hardship proven – Whether the Court’s discretion in granting leave should be exercised - Application granted

Family Law Act 1975 (Cth) ss 44(3) & (4), 81

Carlon & Carlon (1982) FLC 91-272
Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060
Hall & Hall (1979) FLC 90-679
Neocleous (1993) FLC 92-377
Whitford& Whitford (1979) FLC 90-612

APPLICANT: Ms Morgan

RESPONDENT: Mr Flanagan

FILE NUMBER: PAC 5345 of 2010

DATE DELIVERED: 30 May 2014

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 23 May 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Shaw

SOLICITOR FOR THE RESPONDENT: Adams & Partners Lawyers

Orders

1. That leave be granted to the Applicant wife to institute property proceedings, notwithstanding that the proceedings were not commenced within twelve (12) months of the date of the Divorce Order dissolving the parties’ marriage took effect, pursuant to section 44(3) of the Family Law Act 1975 (Cth).

2. That the Respondent husband file and serve a response as to property and a financial statement within fourteen (14) days.

3. That the matter be listed before the docket Registrar for appropriate directions on Friday 25 July 2014 at 10.30 am to facilitate the matter proceeding to a conciliation conference.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Morgan & Flanagan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 5345  of 2010

Ms Morgan

Applicant

And

Mr Flanagan

Respondent

REASONS FOR JUDGMENT

1. The Applicant wife seeks leave to commence property proceedings out of time.

2. The parties lived together from about late 1996 / early 1997, married in May 2002, separated in April/May 2010 and were divorced on … December 2011.

3. The wife was required to commence proceedings within 12 months of the Divorce Order, that is by … December 2012. She did not do. She commenced the present application for leave on the 21 January 2014 when she was only a little over a year out of time.

4. The husband opposes the wife being granted leave to commence proceedings.

5. The question for determination is whether circumstances are such that the wife should be granted leave to commence these proceedings out of time.

6. Sections 44(3) and (4) of the Family Law Act 1975 (Cth), in summary, provide that such proceedings cannot be commenced without leave of the Court after the expiration of 12 months after a divorce order takes effect.

7. The Court may grant leave at any time, even if the proceedings have already been instituted, however, such leave shall not be granted unless the court is satisfied that hardship would be caused to a party to the relevant marriage or a child if leave were not granted.

8. In Whitford& Whitford (1979) FLC 90-612 the Full Court held:

   [O]n 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…

9. Hardship in the context of the wife’s application means substantial detriment (Hall & Hall (1979) FLC 90-679) and the Court will consider a number of factors:

   a)whether on the Applicant’s evidence she has a reasonable case to be heard;

   b)the financial and other circumstances of both of the parties; and

   c)any other facts of the case relevant to the issue of hardship.

10. After considering the question of hardship, the question to be determined is whether the Court should, in the exercise of its discretion, grant or refuse leave to bring proceedings out of time. Pertinent considerations are:

    a)the length of the delay in bringing proceedings;

    b)whether there has been a reasonable explanation for the delay;

    c)the prejudice that may be caused to a respondent to the application if permission is granted; and

    d)any other facts of the case relevant to the exercise of the Court’s discretion.

11. The absence of any reasonable or other explanation for delay in commencing proceedings is no more than one of the relevant considerations. The absence of an explanation does not mean that leave will not be granted (Neocleous (1993) FLC 92-377; Carlon & Carlon (1982) FLC 91-272).

12. As the Full Court  said in Whitford (supra), having regard to the nature of the jurisdiction which the Court exercises, the power to extend time 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 divorce decree.

13. Pursuant to s 81 of the Act the Court has a duty to end the financial relationship of parties to a marriage as far as practicable, and to therefore make such orders to finally determine the financial relationship between parties to a marriage and avoid further proceedings between them where possible. But this is to be balanced against the Court’s power to grant leave to institute proceedings out of time if it is satisfied that not to do so would cause a party to a marriage financial hardship, as referred to above.

14. The questions for determination are:

    a)Whether the wife has demonstrated hardship as contemplated by the statutory provision?

    b)If hardship is demonstrated then should leave be granted for the wife to commence proceedings for property and/or spousal maintenance out of time?

Hardship?

1. The wife, if granted leave, seeks an order for lump sum settlement related to asserted termination payments paid to the husband and superannuation splitting orders.

2. The wife is aged 54. The wife is presently in receipt of Centrelink benefits by way of a disability pension and the husband, she says, is a consultant.

3. There is one child of the relationship, S, now aged 15 and S is in the primary care of the wife. It is agreed that the husband pays minimal child support for the child.

4. The husband in 2006 was earning about $107,900 per annum plus bonuses. The husband has accumulated superannuation of about $92,000, as best can be determined by the wife, as at about mid-2009. The inference is that his entitlements to superannuation have continued to accrue in the ensuing years.

5. At cohabitation the wife owned the Town K property that had an estimated value of about $229,000 and was unencumbered and a car with an estimated value of $15,000. The husband had a 4WD vehicle under finance.

6. At the commencement of cohabitation the parties lived in the wife’s unit at Town H, NSW and about 12 months later they moved to the wife’s home at N Street, Town K.

7. The wife asserts that during cohabitation she has made various advances of money to the husband for his own purposes. Otherwise, she asserts that she has borrowed significant funds during the period of cohabitation for the benefit of the husband, with those borrowing secured against her home in Town K.

8. As to her delay in commencing proceedings the wife asserts that subsequent to separation she had been in a state of “emotional turmoil”. There were contested parenting proceedings in relation to the parties’ child with those proceedings ultimately being resolved by consent Orders on 20 September 2011. She says that, notwithstanding the consent Orders, there continued to be difficulties in the relationship between the father and the child that were distressing to her.

9. She concedes that, notwithstanding her being somewhat disorganised and under extreme financial pressure, she realised that it was necessary to do something about making an application for settlement of property.

10. As a consequence of her borrowings against her home, that home had to be sold and the wife has lived in somewhat impecunious circumstances since. From what was available to the wife from the proceeds of sale of her Town K property she was able to acquire a one half interest in a small rural property at Town A, NSW, with that interest having an estimated value of about $12,000 (for her half). The wife has no superannuation and is indebted for outstanding school fees for the child of the marriage and her previous legal fees.

11. The wife sought the assistance of a psychologist to deal with problems in her life.

12. In his Response to the wife’s application the husband seeks an order that her application for leave be dismissed and that she pay his costs on an indemnity basis. The husband asserts in his Response that he is unemployed but he has failed to file a financial statement to provide to the Court an overview of his present financial circumstances.

13. The husband received a letter from the wife’s then solicitors in August 2010 addressing issues as to parenting, child support, property and spousal maintenance. The husband, through his solicitors, responded in late August 2010. In that correspondence the husband confirmed that his then child-support assessment was about $1,200 per month, offset by his then current payments for the child’s school fees of about $900 per month. The husband acknowledged that, at that time, there was a mortgage of approximately $355,000 secured over the wife’s property at N Street, Town K.

14. The husband asserts that the wife sold the property at Town K in September 2010 for $485,000 and that, at the time of sale, the property was encumbered by way of mortgage and a line of credit with a total debt of $369,240. It was his belief that on sale the wife received about $100,000. Other than the purchase of an interest in the rural property, referred to above, the husband has no knowledge as to how the wife disposed of the balance of proceeds of sale of Town K.

15. The husband makes no assertion, nor is any submission made on his behalf, that he would suffer any prejudice by the wife being granted leave to commence proceedings out of time. Indeed, he has elected, as he may do, not to disclose details of his present financial circumstances.

16. In Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060, Kay J stated two things clearly:

    The Court's task is to evaluate all of the contributions from the time of the commencement of the parties' relationship until the time of the hearing and give such weight to such contributions as the Court thinks is appropriate in the circumstances.  Further, there is nothing in the legislation that requires s 79(4) (a) (b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which they are presently possessed.

17. The parties had a relationship of about 13/14 years with one child. The husband was in paid employment during the relationship. Even in the event of a modest asset pool existing now, the wife by reason of her assertions as to funds borrowed for the husband’s benefit and her primary care of the parties’ child would have an arguable case for significant contribution by her.

18. A consideration of the various s 75(2) factors, particularly it seems health, superannuation, income capacity and care of the parties’ child, would see any adjustment to a contribution-based finding favouring the wife further.

19. The ambit of the assessment of contributions and s 75(2) factors that may lead to a final property order awaits more precise evidence at trial, but it is clear that the wife has a reasonable case to be heard. The husband has superannuation that may be the subject of the splitting order sought by the wife.

20. Having regard to the matters set out above, the wife would suffer hardship if leave were not granted.

Should the Court exercise the discretion and grant leave as to property?

1. The wife has explained her reason for delay of just over a year in bringing her application, as referred to above. The husband does not contend any prejudice to him. There is therefore a case to be determined.

2. In all the circumstances, leave will be granted for the wife to pursue property proceedings. Orders will be made accordingly.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 30 May 2014.

Legal Associate:      

Date:    30 May 2014