Phelan and Phelan
[2008] FMCAfam 986
•25 September 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PHELAN & PHELAN | [2008] FMCAfam 986 |
| FAMILY LAW – Application to set aside consent property orders – application to extend time for application for spousal maintenance – application for summary dismissal of both applications – consideration of s.79A and s.44 of the Family Law Act 1975. |
| Family Law Act 1975, ss.44(4), 79A, 87A Federal Magistrates Court Rules 2001, rr.13.10, 13.10(a) |
| Roach v Electoral Commissioner (2007) 81 ALJR 1830 |
| Applicant: | MR PHELAN |
| Respondent: | MS PHELAN |
| File Number: | MLC 4531 of 2008 |
| Judgment of: | Burchardt FM |
| Hearing date: | 27 August 2008 |
| Date of Last Submission: | 27 August 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 25 September 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms S. Dosanjh |
| Solicitors for the Applicant: | Hartleys Lawyers |
| Counsel for the Respondent: | Mr D.S. Lampe |
| Solicitors for the Respondent: | Lampe Family Lawyers |
IT IS NOTED that publication of this judgment under the pseudonym Phelan & Phelan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 4531 of 2008
| MR PHELAN |
Applicant
And
| MS PHELAN |
Respondent
REASONS FOR JUDGMENT
The Applicant husband has applied to set aside final orders made by consent in the Family Court on 10 June 2005 pursuant to s.79A of the Family Law Act 1975 (“the Act”) and that he have leave to issue an application for spousal maintenance out of time.
The Respondent wife has sought to dismiss the application summarily on the basis that it has no prospects of success.
For the reasons that follow I am not persuaded that the application should be summarily dismissed. I am also of the view that Mr Phelan should be granted leave to bring his application for spousal maintenance out of time.
The application as finally pressed in oral argument before the Court on behalf of Mr Phelan was an all-encompassing potpourri of the various matters set out in s.79A of the Act. It was put that taken cumulatively, these matters gave rise to a miscarriage of justice such that the Court should exercise its powers to allow Mr Phelan's application to proceed.
While I have come to the clear view that the application ought not be summarily dismissed, it must be said that a number of the propositions advanced in support of Mr Phelan's position are lacking in substance.
The Facts
The parties married in 1986 and were divorced on 13 November 2006 when their decree became absolute.
There are two children of the relationship, [X], born in 1987, and [Y], born in 1990.
Mr Phelan was in gaol from November 2004 for armed robbery. He pleaded guilty to two charges and was sentenced to about nine years in gaol. His affidavit material suggests that he appealed that decision and the sentence was quashed and he is now out on parole, having been released on 24 March 2008. Mr Phelan has not indicated whether or not he faces a retrial or re-sentencing.
Mr Phelan has deposed that while he was in gaol, Ms Phelan attended the gaol and asked him to sign papers in relation to property matters. This was before the divorce.
There were four properties owned by the parties and the net result of the documents signed was that three of the properties, which were encumbered to a greater or lesser extent, were made over into Ms Phelan's name and one which was unencumbered was transferred to him.
Mr Phelan has sworn that he was severely depressed while he was in gaol and was not thinking straight at the time that he signed the relevant documents. He deposes:
“All I was thinking about was the children and their welfare, so I then signed whatever papers needed to be signed.”
Ms Phelan was represented by lawyers who prepared the consent orders that were eventually put to the Court. From Mr Phelan’s affidavit, it appears that he has been unable to work since 1997 when a 100‑kilogram roll of paper fell onto his lower back. He says, and I see no reason to doubt, that he has been on medication for the pain of that injury ever since.
He is presently solely reliant on Centrelink benefits.
Mr Phelan has not deposed as to why he did not apply for spousal maintenance earlier, but of course it is a fact that he was in gaol throughout the year that followed his decree absolute.
In the application that was made to the Family Court that led to the consent orders in 2005 (prepared by Ms Phelan's then solicitors and executed on oath by all concerned) the following figures were asserted as to the value of the properties of the parties:
“Property H, total value $230,000.00;
Property F, total value $150,000.00;
Property E, total value $135,000.00;
Property M, total value $170,000.00.”
Those values were attested by Ms Phelan on 3 June 2005 and by
Mr Phelan on 5 June 2005.
Both parties were represented by lawyers who attested that they had given the appropriate legal advice about the settlement and the percentage split was correctly assessed at 34 per cent to the husband and 66 per cent to the wife, as they then were.
A number of other valuations of these properties have been disclosed almost all of which are roughly contemporaneous with the application sworn before the Family Court in respect of each of these properties. They are as follows:
Property E:
$165,000.00 (from rates certificate, 10 June 2005).
$165,000.00 (home loan application, 1 July 2005).
$250,000.00 (valuation request, desktop valuation, 8 March 2005).
Property F:
$180,000.00 (rates notice, 10 June 2005).
Property M:
$230,000.00 (rates notice, 10 June 2005).
$230,000.00 (home loan application, 1 July 2005).
$250,000.00 (application for desktop valuation, 8 March 2005).
Property H:
$244,000.00 (rates notice, 5 August 2008).
$250,000.00 (home loan application, 1 July 2005).
Counsel for Mr Phelan also pointed to some alleged undervaluations of other matters such as car and bank accounts but in the ultimate I am not persuaded that they are of sufficient moment to be of any significance.
What these figures do show, however, is that the total set out in the application to the Family Court of the alleged value of the real estate owned by the parties was said to be $685,000.00.
The totals revealed by a combination of the contemporaneous rates notices and loan applications at its highest would be $930,000.00.
It is true, as counsel for Ms Phelan submits, the resultant percentages of outcome would alter relatively little on either version of the figures because Mr Phelan received his property unencumbered and Ms Phelan was responsible for the debts in relation to the other three properties. What is readily apparent, however, is that the size of the pool would have been dramatically different.
Legal Representation
Mr Phelan submitted here that the alleged incompetence/misconduct of his legal representative at the time of the execution of the original orders was another issue going to whether or not there had been a miscarriage of justice.
It was submitted that the material suggested that Mr Revill, the solicitor who had acted, was not in fact, as the affidavit he swore suggested, a practitioner on the High Court roll and thus entitled to appear in the Family Court.
It was also put that Mr Revill, who is a specialist criminal lawyer, would not have given Mr Phelan proper advice.
I do not propose to get bogged down in the competing submissions made by the parties as to whether or not legal representation is or is not a relevant consideration under s.79A of the Act.
Mr Revill signed a statement that he had given Mr Phelan independent legal advice.
Even if I were to accept what is not necessarily established, namely that Mr Revill was not as he asserted in that statement entitled to practise in this Court, that does not lead to a prima facie inference that Mr Revill had misconducted himself or otherwise knowingly or negligently misrepresented the position as to the advice he had given.
This is not the trial of the proceeding. It is only an interlocutory application. I will presuppose for the moment that Mr Phelan may establish at trial both that Mr Revill was not at the relevant time entitled to appear in this Court and that he did not give Mr Phelan the advice he says he received.
Given the serious nature of the allegations made, I think it is better to leave consideration of this matter until trial, if there be one.
Duress
It was submitted that the conduct of the mother in repeatedly attending the gaol at a time when Mr Phelan was depressed was a factor going to the exercise of the Court's powers under s.79A.
The difficulty with this submission is that while I am prepared to accept that Mr Phelan may prove that he was depressed at the time, his own affidavit material already filed makes it clear that the depression had not overborne his capacity to make decisions. In the passage I have earlier quoted, he makes it clear that he had the capacity to consider his children's interests at the time in what, prima facie, was a perfectly lucid way.
Furthermore, and even accepting, as counsel for Ms Phelan conceded, that the Court may approach this issue on the basis of equitable duress - in other words, the transaction may have been caused by pressure short of common law duress - I simply do not believe that the facts go that far.
The Relevant Test
The submissions made to me proceeded on the footing that it must be assumed that Mr Phelan will make out the factual assertions he advances at trial and that it should be shown that his case is doomed to fail. I was referred to a number of authorities of the Full Court of the Family Court to this effect. I have also been provided by Mr Lampe with hard copies of authority in that Court, the High Court and the Federal Magistrates Court.
While, if I may respectfully say so, those decisions are obviously helpful in a general way, it is important to remember that this case falls to be determined pursuant to r.13.10 of the Federal Magistrates Court Rules 2001 (“the Rules”) which is not the same as the relevant family law rule with which the Full Court, in particular, was concerned.
For these purposes, the rule can be relevantly stated as follows:
“The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim.”
I do not understand counsel for Ms Phelan to submit that the proceeding is frivolous or vexatious or an abuse of the process of the Court which are the other matters contained in that rule. That is because Mr Lampe expressly referred to the "doomed to fail" test which is plainly analogous to r.13.10(a) of the Rules that I have set out above.
I do not think that it can be said that Mr Phelan's application has no reasonable prospects of success.
Although counsel for Ms Phelan submitted that only the material sworn before the Family Court involved any, as it were, real valuation, it cannot be assumed that the higher figures disclosed by the almost exactly contemporaneous rate values may not be made out and indeed, nor can it be assumed that the higher values in the home loan application are untrue.
This will be a matter for evidence. It cannot be decided in advance of the hearing and testing of that evidence.
If the pool turns out to be in effect almost 35 per cent larger than it was then represented to be, that is plainly a matter that might produce a miscarriage of justice.
It should be noted that it is quite clear that the materials presented to Mr Phelan to sign when he was in gaol were prepared wholly by the wife. It seems at least possible that it will be made out that Mr Phelan had no idea of the values of the properties at that time. He had been in gaol for some considerable period of time, after all, when the papers were brought to him.
A division of the 66/34 per cent in a property pool with two effectively adult children in circumstances where the husband had a very severe limitation to his working capacity, together with ongoing pain caused from his work accident, might be said on one view to be within the range, whether the pool was of the order of $685,000.00 or whether it was of the order of $930,000.00.
Nonetheless, if one is looking at a substantially larger pool it cannot be said, if it is in fact proved that these figures were in effect deliberately and wilfully understated by Ms Phelan, that Mr Phelan will not in fact establish that the judgment entered by consent was indeed such that there has been a miscarriage of justice. If fraud and/or suppression of evidence is made out, which they may be in the event that the much higher figures turn out to be the true ones without adequate explanation from Ms Phelan, then it is not the case in my view that Mr Phelan cannot be said to have any reasonable prospects of success.
Spousal Maintenance
Here one turns to consider s.44(4) of the Act. Relevantly, that provides that:
“(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 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.”
Counsel for Ms Phelan submitted that Mr Phelan could not come within that subsection because he was in gaol on the anniversary of his decree absolute. It was put that he was not unable to support himself without an income-tested pension allowance or benefit because all his immediate needs were in fact met by the prison authorities as to food, shelter and the like.
While on one view a literal reading of the section might produce that result, I do not believe that it is appropriate to interpret s.44 in such a fashion that it operates to prevent spousal maintenance applications by people who happen to be in gaol one year after their decree absolute.
It should be noted once again that this is not the final hearing of this matter. I am merely asked to summarily dismiss the proceeding on the footing that it has no reasonable prospects of success.
I think it is at least open to argument that the proper interpretation of s.44 is that persons who happen to be incarcerated one year after their decree absolute are not prevented from making an application.
Neither counsel was able on this interim hearing to refer me to any authority about this aspect of the case.
In Roach v Electoral Commissioner (2007) 81 ALJR 1830, which concerned an application by an imprisoned person to exercise their electoral franchise, Gleeson CJ said at [19]:
“It is consistent with our constitutional concept of choice by the people for Parliament to treat those who have been imprisoned for serious criminal offences as having suffered a temporary suspension of their connection with the community, reflected at the physical level of incarceration, and reflected also in temporary deprivation of the right to participate by voting in the political life of the community.”
That case turned on very different circumstances and is self‑evidently not directly applicable here.
Nonetheless, it seems to me that there is at least room for argument that the sort of suspension from the community to which the Chief Justice referred should not be held to be implicit in the terms of s.44.
These are by no means easy matters of interpretation. There is a substantial amount of authority on the issue of the approach that should be taken to the interpretation of legislation in a purposive way especially where, as might be arguably said to be the case here, one is concerned with what is sometimes referred to as remedial legislation or legislation for a social purpose.
In my view, it would not be appropriate to summarily dismiss the application for spousal maintenance in the absence of a full hearing and considered argument from both sides on these issues.
Conclusion
For all these reasons, I am going to dismiss the application by
Ms Phelan for the summary dismissal of Mr Phelan's claims, both in relation to s.87A and in respect of the spousal maintenance application.
That is not, however, the end of the matter. Mr Phelan will have many things to overcome before he finally achieves judgment.
If it emerges that his application has at all times been misconceived, then it is probable that Ms Phelan will have been put to substantial cost.
I am prepared to allow the application to continue only on the footing that Mr Phelan be ordered not to sell or encumber in any way his interest in the property which he now owns outright. That will ensure that in the event that his application were to be found to be as futile as Ms Phelan asserts, there will at least be real property against which any costs application might be distrained in the event that the Court were afterwards minded to make such an order.
I will require the parties to draw up orders to give effect to these conclusions.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Brooke Evans
Date: 25 September 2008
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