P and P
[2002] FMCAfam 341
•16 September 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| P & P | [2002] FMCAfam 341 |
| FAMILY LAW – Property – Application for leave under s.44(3) to institute proceedings for property orders – s.44(3), (4) Family Law Act 1975 – Costs – s.117 Family Law Act. |
| Applicant: | GMP |
| Respondent: | RJP |
| File No: | SYM 227 of 2002 |
| Delivered on: | 16 September 2002 |
| Delivered at: | Parramatta |
| Hearing Dates: | 29 July & 12 September 2002 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Solicitors for the Applicant: | Lyon Jarrett & Associates |
| Counsel for the Respondent: | Ms Jane Knox |
| Solicitors for the Respondent: | Morton & Harris |
ORDERS
Pursuant to s.44(3) of the Family Law Act 1975 leave is granted to the applicant to institute proceedings for property settlement.
That the applicant shall file and serve any s.79 application that she wishes to make within eight (8) weeks from the date of these orders.
That the respondent file and serve a response and financial statement within a further four (4) weeks.
That the parties have leave to rely upon affidavits prepared for the purposes of the s.44(3) hearing in the s.79 hearing.
That the applicant pay the respondent’s costs in the sum of $875.00 within four (4) months of the date of these Orders.
That the matter be listed for callover in Wollongong at 9.00am on
22 January 2003.That the matter be listed for hearing during the Wollongong circuit commencing on 3 February 2003.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
SYM227 of 2002
| GMP |
Applicant
And
| RJP |
Respondent
REASONS FOR JUDGMENT
These reasons were delivered orally.
The application
This is an application by GMP (“the applicant”) pursuant to s.44(3) of the Family Law Act for leave to institute proceedings under s.79 of the Act. Leave is necessary because more than twelve months has elapsed since the making of a decree nisi dissolution of the parties’ marriage.
Chronology
The applicant and RJP (“the respondent”) married on 27 January 1984 at Century Point. There is no evidence that suggests either party had any assets or liabilities of significance when they married. Three years prior to their marriage the Respondent joined the Royal Australian Navy. At the same time he joined the Defence Force Retirement Benefit Scheme (DFRB).
There are four children of the marriage; RMP born 30 January 1985; JJP born 12 March 1987; SJP born 8 January 1990 and GAP born
24 November 1991.
The parties separated not long after G’s birthday, in about February 1992. On the respondent’s application a Decree Nisi dissolution of marriage was ordered on 12 April 1994. The decree became absolute on 13 April 1994.
Since separation the children have always lived with the applicant.
At separation the parties had no assets of significant value. They were living in rented Defence Force accommodation and did not own any real estate. Such assets as they did have comprised household furniture, a 1986 Mitsubishi Star wagon and some items of personalty. Because the children were living with the applicant she received a greater share of the household furniture, as well as the car. A number of joint matrimonial personal loans were consolidated with the car loan, which loan then became the applicant’s responsibility. She subsequently repaid it. The total debt was about $12,000 repayable to the St George Bank. The respondent retained responsibility for credit card debts in the approximate sum of $5,000 and otherwise only received a few small items of personalty and tools.
Thus at separation both parties were in a difficult financial position. The applicant had the care of the parties’ four infant children and was reliant upon Department of Social Security supporting parents benefits and modest child support payments to live on. The respondent had his salary from the Royal Australian Navy. It produced only a modest income and after paying his rent, child support and credit card debt he had little extra income available.
At separation the applicant made inquiries about any claim she could make against the respondent’s superannuation. She was correctly advised that, “I could receive no part of my husband’s superannuation until such time as my husband retired, resigned or left the navy”. There is no suggestion that she was advised that there are time limits in the Family Law Act relating to spousal maintenance and property applications. Nor that an application could have been made and then adjourned pursuant to s.79(5) pending the superannuation vesting. Thus the applicant took no steps during the intervening years to pursue or protect her s.79 entitlements.
The respondent commenced cohabitation with his present wife, SLP in August 1993. They married on 11 February 1995. The marriage subsists. Together they have borne two children, CS who was born on 23 September 1997 and OR who was born on 13 September 2000. In December 1999 the respondent and his wife bought a home at Nowra. Its purchase price was $135,000. They had joint savings of about $10,000, which were used as the deposit, and towards legal fees and stamp duty. About $130,000 was borrowed to complete the purchase. Approximately twelve months later they borrowed a further $25,000 to purchase a car, hot water service and furniture. In about November 2001 they borrowed another $16,500 to carry out further household improvements. These monies were raised by drawing down on the mortgage. At the time of the draw down the house was valued by the mortgagee at about $175,000.
The respondent then resigned from the Royal Australia Navy. Annexure A to his affidavit sworn 29 July 2002 reveals that on
21 March 2002 his superannuation was paid as firstly, a gross lump sum, $99,626.03 less tax of $17,146. The net amount payable was $82,480.03. In addition he received a productivity benefit of $26,391.44. The productivity benefit is preserved and has been rolled over into his current superannuation fund. He is entitled to receive a lifetime annual pension of $17,167.57 per annum, which equates to $658.48 cents per fortnight. Upward movements in the CPI on the first pay day in July each year adjust the pension. It is a valuable resource.
In his primary affidavit[1], the respondent revealed:
“When I received my lump sum superannuation pay-out from the Defence Force upon my retirement I applied this as follows:
a)approximately $45,000 to reduce the mortgage; and
b)about $5,000 on a holiday with S; and
c)in the vicinity of $32,000 which when combined with additional savings, was used to pay out the November 2001 and December 2000 loan.
As a result of these payments we were able to reduce our level of debt to approximately $75,000 being the current balance of the mortgage”.
[1] Paragraph 25
Since their separation the respondent has had regular, if not extensive contact, with the parties’ four children. It seems likely that one of the children advised the applicant that the respondent was leaving the Navy. Thus on about 20 February 2002 she telephoned him and said, “I hear that you are getting out of the Navy. How much am I going to get and what am I entitled to?” About four weeks later on 27 March 2002 she filed her s.44(3) leave application in the Family Court at Wollongong. Thus the respondent made the disposition of the superannuation benefits aware that his former wife asserted entitlement to a portion of them.
Relevant Law
In Whitford v. Whitford (1979) FLC 90-612, the Full Court of the Family Court said:
“On an application for leave under s44(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”.
Hardship to the applicant or a child of the parties is thus an essential pre-condition of the exercise of discretion. The nature of hardship is also discussed in Whitford (supra). It is a comparative concept that is concerned with the consequences of the loss of the right to litigate the claim. An applicant must demonstrate that they have a reasonable claim to be heard. See Jacenko (1986) FLC 91–776. Otherwise the applicant carries the onus of additionally explaining the delay in bringing the application. The absence of an adequate explanation, despite what was said by the Full Court in Kercher (1981) 7 FLR 216, is no more than a factor to be considered in the circumstances of the case. See Althaus (1982) FLC 91–233. It alone is not determinative of the application.
Finally, if all the above elements point to leave being given the court must balance the hardship to the respondent with the applicant’s hardship. Hardship to the respondent can result in the respondent’s inability to prepare and present their case; also because the respondent has ordered his or her financial affairs assuming that no s.79 claim was to be commenced. This list is not exhaustive.
Conclusion
In her financial statement filed on 7 August 2002 the applicant reveals that she has an income of $160 a week from part-time employment. Additionally she receives a supporting parents benefit of $240, family allowance of $257 and child support payments of $105. Her total income is $762 per week. From this she has weekly expenses of $133 identified as $43 tax and a loan repayment at $90. Otherwise her monies are spent on day to day living costs for her and the children. In essence she spends everything she receives meeting her day to day expenses. She has no assets of significance. Her cash resources comprise $1,300 deposited with the Commonwealth Bank. Otherwise she has a 1992 Ford Falcon car that is worth $7,000 and household furnishings that she estimates are worth $5,000. She owes $1800 on her Visa card and the Commonwealth Bank loan stands at $3,800. Her financial circumstances are limited indeed.
Since separation the applicant has been unable to acquire any assets of value. When she started these proceedings she identified that she sought leave to make an application pursuant to s.79(5) adjourning any s.79 application pending the commencement of the superannuation splitting legislation on 29 December 2002. However, as it became clear that the superannuation had vested, during his opening, her solicitor identified that she sought the payment of $21,000 by way of property adjustment and abandoned the s.79(5) application. This apparently modest sum caused the respondent’s counsel to submit that the loss of the opportunity to pursue a claim in that amount could not equate to hardship. However, hardship may be caused by the loss of comparatively small value. See Whitford (supra). Because the size of the claim is quite small the respondent’s counsel submitted that the legal costs that the applicant will incur would consume her entire claim. This is a surprising submission not supported by the evidence. Even if the matter goes to trial it is difficult to see how it could take more than about half a day or one day at worst. Schedule 1 of the Federal Magistrates Rules will result in costs of about $5,000 derived from a stage 1, stage 5 and daily hearing fee. In the circumstances of this applicant’s financial position even taking into account costs in about that amount this is a comparatively large sum of money. Of course, in considering the submission the Court is entitled to consider that litigants will consider carefully the advice that they are given and if a matter is properly one that should be compromised, the Court should not assume that the legal costs will be those that will take the matter to trial. It may be in a matter such as this that properly advised the parties might compromise the issue thereby incurring very limited costs. It would be an unacceptable outcome for a respondent to be able to successfully resist a s.44(3) claim on the basis that no matter how reasonable the orders sought if leave is given, the respondent will take the matter to trial thereby absorbing the applicant’s entitlement in legal fees. An unreasonable respondent may find themselves in a position whereby an application that the respondent pay the applicant’s costs of the defended hearing would entitle the applicant on the proper application of s.117 to an order for costs, whether in whole or in part.
An applicant must show that they have a reasonable claim. The applicant made a significant contribution as a home-maker and parent prior to the parties’ separation. Both parties maintained the joint venture of providing for their retirement through the respondent’s DFRB superannuation. Subsequently and over many years the applicant has made a significant post-separation contribution to the welfare of the family. That is, in her care of the parties’ four children.
The applicant seeks an outcome that would give her less than one third of the respondent’s received superannuation. She has proper grounds for the claim that she makes and I am satisfied that she has reasonable prospects of achieving that amount or some sum thereabouts.
Her explanation of the delay in bringing the application is quite simple. The applicant did not know she could protect her s.79 interests in the respondent’s superannuation before it vested nor that there were statutory time limits. She received poor legal advice, which advice was plausible to a layperson. She made the same mistake that many people make. It is not a situation whereby the advice received was so improbable that the court would reasonably have expected the applicant to seek a second opinion. Knowledge of the proposed superannuation splitting laws and the respondent’s resignation from the Royal Australian Navy galvanised the applicant into action. I accept that because she was unaware of her rights after she had taken reasonable steps to ascertain them, that she has explained her delay to the court’s satisfaction.
The final component of the exercise is balancing hardship. The respondent has lived the seven years since the decree of dissolution of marriage became absolute in the belief that no s.79 claim was to be made by the applicant. He and his wife have incurred significant debt to acquire and improve their home and have only a small sum of money remaining. However, when they spent the money the respondent was aware that the applicant sought a share of his DFRB payout. His prior knowledge moderates his claim of prejudice.
The applicant’s silence over the seven years is the most troubling aspect of the matter. It contributes to the respondent’s hardship in a sense because he incurred debt that he has subsequently needed to service.
I have already made findings about the applicant’s financial position and now consider the respondent’s. The respondent is employed as an aircraft technical assessor. His wife, S, has taken maternity leave following the birth of their youngest daughter. They own a motor vehicle which has a value of $20,000, a second family car worth $1600, their home valued at $175,000, shares valued at $5,000, the contents of the home which they valued at $71,000. I assume that is a typographical error intended to be $7,100. Otherwise they have debts of $75,000 which is the mortgage attached to the home. Both the respondent and his wife have superannuation entitlements. The respondent’s at $26,000 and his wife’s at approximately $8,000.
The administrative assessment of child support, which issued on
23 April 2002, requires the respondent to pay child support in the sum of $438.17 per month to the applicant for the parties’ four children.
In Whitford (supra) the Full Court said:
“Having regard to the nature of the jurisdiction which this Court exercises this power 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 decree nisi.” (At p78,146)
The hardship to the applicant as compared to the hardship to the respondent is substantial. Indeed, on one view it is severe. There was great emphasis given during submissions by the husband’s counsel that the applicant had taken a trip to Europe and she had had other holidays. This submission was made to emphasise that the hardship to the applicant in refusing the claim would not be as severe as her current financial position might suggest. I do not accept the submission. It was never necessary for the applicant to show that she lived in abject poverty at every moment since separation. She has largely lived in parlous circumstances and she has had overwhelming responsibility for the care of four children in very limited financial circumstances. That she was able to undertake some additional part-time work and give herself some relief from the relentless responsibility of caring for the four children does not undermine the veracity of her claim that leave should be given and I am satisfied that the s.79 application should proceed.
Costs
The final issue that requires adjudication is that of costs. The respondent made an application that the applicant pay his costs in resisting the s.44(3) application. Hi counsel submitted in essence that the court would almost certainly order costs in favour of a respondent in s.44(3) proceedings. I do not accept that there is a rule of general application to this effect. Ordinarily in family law proceedings each party will pay their own costs. When considering an application for costs the Court must consider the matters contained in s.117(2A) and
I consider each of these sequentially.
(a)I have already made findings about the financial circumstances of the parties and I do not repeat them. The respondent’s financial circumstances are superior to the applicant’s and the sub-paragraph favours the applicant.
(b)Neither party is in receipt of a grant of legal aid.
(c)
The applicant did not arrive at the hearing on time and thus whilst this matter was listed to commence at 10.00am on
29 July 2002 it did not do so. Ultimately the matter was heard at the end of that day. Had the applicant been present at 10.00am it would have been finalised of before the morning tea adjournment. The presentation of the applicant’s case was also somewhat confused in that her application initially sought a s.79(5) order, proceeding on the basis that the superannuation had not yet vested. Also the applicant did not give evidence about her current financial position. Thus when it came to considering the competing hardship to the parties the court determined that the evidence was incomplete and declined to deliver judgment until the applicant had provided a financial statement. This necessitated a further appearance on behalf of both parties. The costs associated with that appearance must be moderate, though, as the Court indicated that it would take submissions by telephone. For his own reasons the respondent instructed counsel to appear on his behalf in person.
(d)The only other sub-section that is relevant is that these proceedings have been necessitated by the failure of the applicant to bring proceedings in time. When I stand back and consider the evidence in its entirety, I am satisfied that the applicant had an apparently strong case from the moment she commenced it. The respondent has been legally represented and benefited from competent legal advice. His decision to resist the application may well have been made giving little regard to the advice.
There should be a limited order for costs. It will be limited to those parts that are truly disciplinary in nature and arise as a consequence of the failure of the applicant to attend Court on time and to present her case so that it could be heard and completed on the one day. Otherwise the parties will bear their own costs.
The costs will be ordered in accordance with Schedule 1 of the Federal Magistrates Court Rules. There is nothing about this case that suggests that it has the features that would justify an indemnity costs order. The order for costs will provide for a half-day hearing fee as well as the mention at the resumed hearing. The Respondent sought that the Court certify for an advocacy loading. Nothing in the submissions made by counsel for the Respondent persuaded me that this was a matter that had complex factual issues or complex issues of law such that it required that counsel appear on behalf of either party. I am not satisfied that it was reasonable to employ an advocate such that the advocacy loading should be certified pursuant to Rule 21.16.
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate:
Date: 2 October 2002
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