NEWBROOK & GARLAND
[2019] FCCA 3732
•20 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NEWBROOK & GARLAND | [2019] FCCA 3732 |
| Catchwords: FAMILY LAW – Property – de facto relationship – leave to proceed out of time. |
| Legislation: Family Law Act 1975 (Cth), ss.44, 90SM |
| Cases cited: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Sharp & Sharp [2011] FamCAFC 150, (2011) 50 FamLR 567 Edmunds & Edmunds [2018] FamCAFC 121 Althaus & Althaus (1979) 8 Fam LR 169, (1982) FLC 91-233 Neocleous & Neocleous (1993) FLC 92-377 Whitford & Whitford (1979) FLC 90-612 Hall and Hall (1979) 5 FamLR 411, (1979) FLC 90-679 |
| Applicant: | MR NEWBROOK |
| Respondent: | MS GARLAND |
| File Number: | BRC 2683 of 2019 |
| Judgment of: | Judge Lapthorn |
| Hearing date: | 2 August 2019 |
| Date of Last Submission: | 2 August 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 20 December 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Jeffery |
| Solicitors for the Applicant: | Keller Nall & Brown |
| Solicitor for the Respondent: | Mr Rosen |
| Solicitors for the Respondent: | Rosen Lawyers |
ORDERS
That pursuant to s.44(6) leave be granted for the applicant to apply for an order under s.90SM notwithstanding the expiration of the standard application period.
IT IS NOTED that publication of this judgment under the pseudonym Newbrook & Garland is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 2683 of 2019
| MR NEWBROOK |
Applicant
And
| MS GARLAND |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant, Mr Newbrook, would like to receive an order for property adjustment following the breakdown of his de-facto relationship with the Respondent, Ms Garland. In order for him to do so he will need leave of the court to apply as he did not bring his application within the time limit provided for in the Family Law Act 1975 (“the Act”). The respondent opposes the granting of that leave. This judgment relates solely to the issue of whether that leave should be granted. Throughout these reasons I will refer to Mr Newbrook as the applicant and Ms Garland as the respondent. I mean no disrespect in doing so.
By way of brief background, the parties commenced a de-facto relationship in 2006 and separated in March 2009. The applicant did not file his application until 7 March 2019 some ten years after the breakdown of the relationship and eight years after the relevant expiry period.
Documents relied on
In support of his application the applicant relied on the following documents:
a)The Initiating Application filed 7 March 2019;
b)His Affidavits filed 7 March 2019 and 30 July 2019;
c)His Financial Statement filed 7 march 2019; and
d)A Case Outline filed 30 July 2019.
The respondent did not file a Response to the Initiating Application nor any evidence by way of affidavit. Only an Amended Case Outline filed 31 July 2019 was relied upon by her. When pressed at the hearing, the solicitor for the respondent made an oral application seeking an order that the Initiating Application be dismissed.
A number of documents were tendered into evidence.[1]
[1] Exhibit R1: ANZ Loan – Account Details
Legal Approach
Part VIIIAB of the Act makes provision for financial matters relating to de-facto relationships. Subject to certain conditions the court has power to alter property interests pursuant to s90SM(1). Section 44(5) provides that a party seeking orders for property adjustment must do so within “the standard application period” which is defined as being within 2 years after the end of the de-facto relationship or 12 months after a financial agreement between the parties to the de-facto relationship has been set aside, or found to be invalid, as the case may be. Both parties can however consent to the application if it is outside the standard application period. In this case the applicant does not meet any of these criteria. However the Court has power, pursuant to s44(6)(a), to grant leave to a party to proceed outside the standard application period if it is satisfied that hardship would be caused to the party or a child if leave were not granted.
In determining whether that leave should be granted the court needs to consider the following matters:[2]
a)Whether the applicant has established a prima facie case for the orders sought if the application had been brought in time;
b)Whether the applicant would suffer hardship if the application is not granted; and
c)Whether the applicant has adequately explained the delay in bringing the application.
[2] Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; Jacenko & Jacenko (1986) FLC 91-776; Oxenham & Oxenham [2009] FamCAFC 167; Sharp & Sharp (2011) 50 Fam LR 567; and Edmunds & Edmunds [2018] FamCAFC 121
If satisfied in relation to the matters referred to in the above paragraph, I then need to look at the degree of prejudice the respondent would suffer if the leave is granted. This task has been made difficult in this instance as the respondent has not filed any evidence.
In determining the preliminary issue, the court is not required to conduct “a detailed hearing of the merits of the claim”[3] and would ordinarily hear the application “on the papers” without cross-examination. Counsel for the applicant sought to proceed on this basis. In Neocleous & Neocleous[4] the majority[5] opined:
…the judge must always bear in mind that the only question to be determined is whether leave should be granted to enable proceedings to be instituted and this should govern the procedure before him or her. For that reason it will often be undesirable to allow cross-examination on any issue which will or can be fully litigated at the principal hearing or on any issue which is not immediately relevant to the question of granting leave.
[3] Althaus & Althaus (1979) 8 Fam LR 169 at 172, (1982) FLC 91-233; See also Hedley & Hedley (2009) FamLR 147, (2009) FLC 93-413; Tamaniego & Tamaniego [2010] FamCAFC 254 and Sharp & Sharp [2011] FamCAFC 150, (2011) 50 FamLR 567
[4] (1993) FLC 92-377
[5] Fogarty and Nygh JJ
In Jacenko,[6] Nygh J writing for the Full Court[7] said:
… [T]he general principle is that on the issue of the establishment of a prima facie case the court proceeds on the basis that the evidence of the applicant, unless it is inherently unbelievable or contradictory, should be accepted, and the court should therefore decide whether or not on that basis a prima facie case has been made out. If leave is granted, then it is for the court conducting the ultimate hearing to determine whether that prima facie case can be established.
[6] (1986) 11 FamLR 341
[7] Fogarty, Nygh and Walsh JJ
The solicitor for the respondent argued that the state of the applicant’s evidence lacked clarity, was contradictory and omitted important factual matters. One example of which was an historic application for a debtor’s petition in bankruptcy in relation to the applicant that had been tendered at a previous mention but did not form part of any of the applicant’s evidence. The applicant’s counsel conceded the court did have discretion to allow cross-examination but argued that it should be limited to matters relevant to the granting of leave only. I was persuaded to allow cross-examination of the applicant on that limited basis.
Many authorities have addressed what is meant by ‘hardship’ in the context of a leave application. In Sharp & Sharp[8] May and Ainslie-Wallace JJ held:
[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.
[8] [2011] FamCAFC 150
An 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 his or her circumstances.[9] In Hall & Hall[10] the Full Court[11] 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.
[9] See Whitford & Whitford (1979) FLC 90-612
[10] (1979) 5 FamLR 411, (1979) FLC 90-679
[11] Evatt CJ, Fogarty and Yuill JJ
The decision to grant the leave is a discretionary one. In Hall the Full Court said:
If hardship of the required type is established then the court may grant the leave but it has a discretion to refuse to do so and in considering the exercise of that discretion it would take into account any other relevant matters, but basically the question whether there is a reasonable explanation of the delay and the question of prejudice which may have occurred to the respondent as a consequence. Other facts may be relevant in an individual case, such as, for example, any prior order or provision made, and the discretion has to be exercised on the basis of the facts of that particular case.
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[12] Murphy J writing for the Full Court[13] 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. So, too, good or legitimate reasons for failing to do that which the Act requires must be compared with wilful blindness or recalcitrance. Equally, a desire to pursue a remedy out of time must be compared to the necessity for parties to proceed with their post-separation lives free of the spectre of prospective litigation, (see, for example, Gallo v Dawson (1990) 93 ALR 479, and the statutory requirements in section 81 of the Act).
[15] This Full Court spoke in Whitford of “such matters as” the “length of delay, the reasons for the delay and prejudice occasioned the respondent by reason of the delay and the strength of the applicant’s case and the degree of hardship which would be suffered unless leave were granted”. All of those matters were said by the Court to be “matters which affect the exercise of the discretion”. Yet, this Court was at pains there to point out that those considerations were not exclusive of the matters to be considered in the exercise of the broad discretion; an overall requirement to do justice between the parties is the ultimate criterion. The strength or weakness of, or the relative weight to be attached to, those various matters in the exercise of the discretion must necessarily depend on the facts of the particular case. This court said explicitly in Whitford that “these matters are not necessarily the only ones”.
[12] [2014] FamCAFC 231
[13] Ainslee-Wallace, Murphy and Tree JJ
The applicant’s evidence
The applicant in 68 years of age having been born in 1951. The respondent was born in and is 55. The parties commenced their de facto relationship in early 2006 and separated in March 2009.
In 1999 The B Trust (“the Trust”) was created with Mr C appointed trustee and the applicant and Ms D, his former wife, named as the primary beneficiaries. Although the applicant gave that evidence in his affidavit, he had difficulty remembering these details during cross-examination. He initially told the court his former wife and son were the beneficiaries. When directed to the cover page of the trust which was annexed to his affidavit he conceded his oral evidence was not correct.
Shortly after the Trust was establish the real property situated at A Street, Suburb E in Queensland (“the property”) was purchased by the trustee. The purchase price for the property was $140,000. The applicant said he paid the deposit for the property and the ANZ Bank provided finance although it is unclear whose name was on this mortgage. After purchasing the property the applicant resided at the property.
The parties to these proceedings commenced their de-facto relationship in 2006. In his evidence the applicant said he and the respondent entered into an oral agreement in 2007 for the property to be transferred into her name conditional on her transferring the property to him at any time in the future upon his request. On 19 September 2007 the trustee transferred the property to the respondent and the mortgage was refinanced into her sole name. According to the transfer document registered with the Queensland Land Registry the consideration was $445,000 although the applicant’s evidence in his affidavit was that no money changed hands and that that sum was used purely for stamp duty purposes. When cross-examined however a different position emerged. The applicant recalled the initial mortgage on the property was paid out and his former wife was paid $250,000 as “part of her settlement”. He maintained that he never received any funds from the sale. He was then shown a document that became exhibit R3 which was a purported agreement between the trustee and the respondent in relation to the sale of the property. It was dated 10 September 2007. Paragraphs 4.3 and 4.4 of that document provide:
4.3 The purchase price is agreed at $445,000.
4.4 The purchase price shall be made up of the following:
a. A lump sum cash payment in the sum of $356,000 payable on the settlement date to the seller.
b. $89,000 in consideration already paid directly and indirectly to the seller by means of:
i. Direct financial contributions by means of payments made to offset the mortgage owing on the property between January 2005 and the settlement date;
ii. Financial contributions made by the buyer to the insurance municipal rate and upkeep and general maintenance of the property between January 2005 and the settlement date;
iii. Indirect financial contributions towards Mr Newbrook, a primary beneficiary under the Trust in terms of domestic chores and general health care and convalescent care and financial assistance when Mr Newbrook has been too ill to property care for and maintain himself.
Following the presentation of this document and after repeated questioning the applicant conceded the respondent had purchased the property as per the agreement. However, he maintained that no money was paid to him. The respondent elected not to file an affidavit setting out her evidence, so I am left without any knowledge as to how much was borrowed by her under the mortgage in order to make the cash payment.
The circumstances surrounding the sale and purchase of this property are important. The applicant brought a debtor’s petition for bankruptcy in January 2009. A fact he omitted from his affidavit evidence. During the first return of these proceedings the respondent’s solicitor tendered a Statement of Affairs signed by the applicant and dated 19 January 2009. This document had been prepared for him to support his bankruptcy application. When he filed a new affidavit on 30 July 2019 to address errors in his primary affidavit filed 7 March 2019 he did not address this bankruptcy even though he was aware the document had been tendered. The document became Exhibit R2 in the hearing before me. In this document were a series of questions which the applicant was taken to during his cross-examination, these include:
28. Do you own, or are you buying, any land or buildings in Australia or overseas (This includes an interest in vacant land, house, unit, commercial property) ?
34. Do you own any assets which are not currently in your possession?
35. Have you contributed or otherwise assisted in the purchase or improvement of any asset valued over $1000 which is held by someone else?
44. Have you been a unit holder in or beneficiary of a trust in the last 5 years?
The Declaration section of the Statement of Affairs bears the applicant’s signature dated 19 January 2009 underneath a notation which read:
S267(2) of the Bankruptcy Act provides that a person must not sign a declaration that the person knows to be false. Penalty: Imprisonment for 12 months.
The applicant had answered all of the above questions with “no” in the document. During his cross-examination each of these answers was put to him. His explanations ranged from “I don’t remember” to “I may not have understood it properly”. He could however recall that the property was transferred to the respondent as a result of his bankruptcy. He also recalled that his application for a debtor’s petition was to avoid a creditor’s petition being filed against him by his former wife. The applicant’s bankruptcy lasted from 20 January 2009 to 22 January 2012.
The omission of this important evidence raises significant questions as to the credibility of the applicant’s evidence. This however will be a matter more properly considered at a final hearing.
The applicant’s evidence is that although the mortgage was in the respondent’s name, he made the mortgage payments from his personal income. He was not aware if the respondent made any other loan payments on the mortgage. When they separated in 2009 the applicant remained living in the property and continued to make mortgage payments until June 2018.
The applicant married his current wife in 2011. They continue to live at the property. He said that over the years he has maintained and made improvements to the property including the building of a three-car garage and a shed in which he and his wife live. He has rented out the main home on the property. Initially the rental payments were applied to the mortgage but since he ceased paying the mortgage he has retained the rental income.
In June 2018 the property was valued at between $450,000 and $500,000. The mortgagee has filed proceedings in the District Court of Queensland to recover the outstanding loan payments which the applicant understands to be approximately $390,000.
His evidence was that he did not discuss with the respondent the agreement to transfer the property back to him until 2015 because he saw no need as they had been enjoying an amicable relationship post separation until sometime in 2014. In April 2015 however he contacted the respondent and requested her to transfer the property to him. According to his evidence she agreed to do so and asked him to deliver the transfer document to her place of employment so she could sign it. However, when he attended, she would not meet with him but sent a work colleague to tell him she was busy.
In his evidence he said that in 2016 he was diagnosed with bowel cancer and wanted to organise his affairs in the event of his death. This was said to be the reason he wanted the property transferred to him. However, elsewhere in his evidence he said he made the initial request for the transfer a year prior to the diagnosis. He did not provide any corroborative evidence as to his diagnosis, however I accept for the purposes of this application, that I should accept his evidence at its highest.
The applicant’s evidence is silent to the events that occurred in the three years following his initial request for the property to be transferred. It was not until May 2018 that he next communicated with the respondent, this time by email, requesting the property be transferred to him so he could sell it. He did not receive a response. He sent another email the following month again requesting the transfer into his own name but the respondent did not answer his request. It was at this point in time that he stopped making the mortgage payments.
Discussion
Given the parties separated in March 2009, to avoid the need for leave to proceed, the applicant would have had to have filed his application for property adjustment by March 2011. He filed his Initiating Application on 7 March 2019 some eight years late.
It was submitted on behalf of the applicant that the court would find that he would suffer hardship if his application was not granted. The hardship was said to be his right to bring the application considered in the context of him: having had a beneficial and/or equitable interest in this property since 1999; having made the mortgage payments since the property was transferred to the respondent; and having made improvements to it. Although his evidence was at times unsatisfactory, I am satisfied that he has established a prima facie case for a property adjustment order given the contributions he said he has made to the property and he would suffer hardship if he is not granted leave to proceed.
The issue as to whether he has sufficiently explained the reason for delay is finely balanced. The delay is a lengthy one. It was submitted that I should accept his evidence that initially he saw no need to seek a transfer of the property given the respondent was content for him to continue to live there. Even after their relationship became less amicable in 2014, she did not seek to remove him from it. She was content for him to continue to pay the mortgage. They had developed what counsel described as a status quo. Notwithstanding my reservations as to the applicant’s credibility discussed earlier in this judgment, given the respondent did not file any evidence to the contrary and the applicant was not challenged in relation to the status quo, for the purposes of the preliminary issue, I will accept his evidence.
Although he did not provide any corroborative evidence, I accept, for the purposes of the application for leave, that he had cancer in 2016. He was not challenged on this evidence and therefore I should accept it at its highest. It is not surprising that in the context of a small pool the applicant did not readily resort to legal action after his health improved. He again tried by way of request to obtain the transfer in 2018 without a response from the respondent. She did not file any evidence explaining her failure to do so. Despite the lengthy delay, I am satisfied he has sufficiently explained the delay.
One troubling aspect of this case has been the respondent’s failure to file any evidence that would enable me to assess what prejudice she would suffer if I allowed the application to proceed. Although it is correct to say she would have to incur legal costs by responding to the application it is impossible for me to assess the impact of such costs on her financial circumstances without any evidence.
On the material that was before me I am satisfied that for justice to be done to both parties the leave to proceed out of time should be granted. I will order accordingly.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Lapthorn
Date: 20 December 2019
Exhibit A1: Letter dated 17 October 2018 from the Registrar of Titles
Exhibit R2: Statement of Affairs
Exhibit R3: Agreement
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