PRESTON & MAINE

[2013] FamCA 393

FAMILY COURT OF AUSTRALIA

PRESTON & MAINE [2013] FamCA 393

FAMILY LAW – PRACTICE AND PROCEDURE – Section 44(6) application for leave - Applicant cannot show hardship because there is no prospect of obtaining the relief sought as the major property is the life tenancy interest of the respondent and little else – Application dismissed.

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Gallo v Dawson (1998) CA 30; (1990) 93 ALR 479
Perkins and Perkins (1979) FLC 90-600
Stanford v Stanford [2012] HCA 52
Whitford (1979) FLC 90-612; 4 Fam LR 754

APPLICANT: Mr Preston

RESPONDENT: Ms Maine

FILE NUMBER: MLC 9572 of 2012

DATE DELIVERED: 23 April 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 3 April 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Combes

SOLICITOR FOR THE APPLICANT: Resolve Conflict Lawyers

COUNSEL FOR THE RESPONDENT: Ms Wheeler

SOLICITOR FOR THE RESPONDENT: Macgregor Barristers & Solicitors

Orders

1. That the application filed on 20 December 2012 is dismissed.

2. Save as to issues of costs, the response to the initiating application filed by the respondent on 20 December 2012 is dismissed.

3. That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 26 April 2013 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 10 May 2013 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Preston & Maine 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 MELBOURNE

FILE NUMBER: MLC9572 OF 2012

Mr Preston

Applicant

And

Ms Maine

Respondent

REASONS FOR JUDGMENT

1. On 3 April 2013, I dismissed an application by Mr Preston (“the applicant”) seeking orders for the division of property arising out of a relationship that he had with Ms Maine (“the respondent”).

2. The case had been listed before me some weeks earlier and because there was not sufficient time to deal with it, I listed it specifically for this hearing.  Then, both parties were represented by counsel.

3. On 2 April 2013, counsel for the applicant applied for an adjournment on the basis that the applicant had a certificate to indicate that he was suffering from shingles and unable to attend court.  It was said that he would be unwell for at least six weeks.  For reasons which I have separately given, I refused that application for the adjournment.  For the record, the respondent disputed the state of the evidence about the applicant’s health.  Counsel for the respondent pointed to the fact that the medical practitioner had a business association with the applicant but also provided an affidavit by a private investigator who had watched the movements of the applicant.  The inference I was presumably to draw was that there was little that prevented the applicant from going about his daily activities. 

4. More importantly, the application for the adjournment was rejected because the hearing could have been disposed of on submissions.  That had certainly been the proposed course of action when the case was set down.

5. I gave counsel for the applicant 24 hours to prepare and he did an admirable job with the documents that had been filed.

6. The applicant and the respondent had lived in a de facto relationship for a number of years. Whether or not the application of the applicant needed leave to proceed out of time is a matter that I deal with below. Needless to say, I find that he did need that leave and therefore the provisions of s 44(6) of the Family Law Act 1975 (Cth) (“the Act”) apply.

7. For the reasons that I set out below, I expressed concern about the obvious lack of detail in the material of the applicant bearing in mind that he had been put on notice by the respondent that his claim would be disputed.

8. The claim in this case depended entirely upon accepting that the respondent had no legal interest in the major real property which was the focus of the applicant’s attention.  The respondent is a life tenant in the estate which owns that real property and which holds it on trust for the remainderman.  The applicant was clearly aware of that problem and did not address it.  Whilst a life interest can be valued, when I turn to the issue of hardship, it will be apparent that there is no other property in the hands of the respondent from which any adjustment could be made.  I turn then to the finer detail.

The background

1. The applicant filed an initiating application seeking undefined orders relating to an equitable division of the asset pool between the parties.  The applicant sought to be excused from further particularising his claim until disclosure had been completed.  In my view, that approach was not justified.

2. The applicant described himself in the application as a company executive who is now 59 years of age.  In an affidavit he subsequently filed, he described himself as being 55 years of age.

3. To give rise to the jurisdiction, the initiating application asserted that the de facto relationship with the respondent broke down after 1 March 2009 and that the total periods of that relationship exceeded two years. 

4. On 7 December 2012, the respondent filed a response to the applicant’s initiating application.  She simply sought that the application be dismissed for want of jurisdiction because it was filed out of time. 

The relevance of time?

1. Section 44(5) of the Act permits a party to a de facto relationship to apply for financial orders only if the application is made within two years after the end of the de facto relationship. That is subject to s 44(6) to which I shall turn in a moment.

2. In his initiating application, the applicant said that the “date of final separation” was 20 October 2010. The description in the form is apt to mislead having regard to the wording of s 44(5).

3. In her statement of truth of the contents of the response, the respondent said that the facts in the response were supported by the evidence and she averred that the de facto relationship “concluded” on or before or by 12 August 2010.

4. Thus, on the applicant’s version, he had issued within time but on the respondent’s version, he was slightly out of time.

5. This case had been listed before a registrar in December 2012 where it was noted by the registrar that the date of separation was in dispute. On that occasion, both parties appeared by counsel. The matter was transferred to me for a hearing on 25 January 2013. It was clear from the order that I made on that day that the discrete issue was the application for an order under s 44(6) of the Act but out of an abundance of caution, I added to the order:

   …on the assumption that the application is out of time and requires such leave.

6. The applicant relied upon an affidavit filed 20 December 2012.  He said that the separation took place on 21 October 2010 when the respondent made application for an intervention order against him.  He disagreed with her assertion that the separation was 12 August 2010.  He then said:

   I consider that our relationship terminated on a final basis upon my being physically removed from the former matrimonial home as a result of the Intervention Order being made against me.  This is the date of separation.

7. He did go on however to say that “in or about mid-August 2010”, their interaction as a couple began to change and that it was likely that their relationship began breaking down at that point.

8. My first observation is to note that there was a clear reference to separation and to its termination as well as to it having begun to break down. The relevant provision in the Act refers to the “end” of the de facto relationship. In my view, the objective test must examine not only what was occurring physically within the relationship but also the subjective intent of the parties.

9. The affidavit of the respondent resolved that dilemma.  She filed an affidavit on 17 January 2013.  She also made reference to “final separation”.  Importantly, the respondent referred to an email written by the applicant to his solicitor.  She had been provided a copy by him.  She described her reaction as one of relief upon reading the email because it confirmed her feelings that the relationship “was over”.  The ending of a relationship may be determined to be at an end when one party considers it is “over”.  There must however be some evidence, tested objectively, that the subjective intent is manifested by conduct.

10. The respondent then described what happened beyond 8 August 2010 which included her moving into a guest room, living separate lives, not socialising together, not eating together, her cancellation of the cleaner as well as the cancellation of a joint health insurance. 

11. In the email from the applicant to his solicitor dated 12 August 2010, the only inference open to me is that he indicated that the de facto relationship had come to an end and that he wanted a collaborative approach to the resolution of property matters.   There would be little point in dividing property if the relationship had not ended.

12. On 21 October 2010, the respondent applied for an intervention order and in her description as to why she needed it, said that she and the applicant had been separated and living under the one roof for the previous three months and that she had asked him to move out of her house on 8 August but he had declined.

13. An interim intervention order was made on 21 October 2010 without the applicant having been served.  He was then excluded by the order from the premises at which the parties had both lived.

14. The intervention order proceedings returned to the Magistrates’ Court on 31 January 2011 when the respondent gave an undertaking without admitting the content of the application, not to engage in conduct prohibited by the undertaking. That undertaking was extensive. He also undertook to issue proceedings under the Act for property orders within 30 days.

15. Although the evidence was not tested and as I indicated above, had never intended to be tested by the parties, having regard to my view about when the de facto relationship can be viewed to have ended, I find that the de facto relationship between the applicant and the respondent did end in August 2010 and therefore, the applicant needed leave to bring the application for division of property out of time.

Why the delay?

1. The undertaking in the Magistrates’ Court mentioned above, required the applicant to bring property proceedings within 30 days.  He failed to do so.  In his explanation, the applicant said that he was under stress at the time and forgot all about what the undertaking required.  He described his health as beginning to suffer and that he was suffering from a diagnosed condition of clinical depression.  He annexed to his affidavit a doctor’s report dated 13 December 2012 which described “obvious anxiety and depression”.  The doctor said that it was evident that the applicant was not coping.  He said the treatment for the anxiety and depression was continuing with recurring episodes of exacerbation of the depression.

2. In addition to the medical problems at the time of the intervention order and subsequent thereto, the applicant also referred to the fact that he was in the midst of dealing with criminal firearms offences that arose out of the intervention order and that they took a toll on his mental health.  He then said that he had to have treatment for a total right knee replacement operation in September 2011 and had to undergo nearly four months of recuperative therapy.  He said he was unable to attend work until December 2011 and then was in considerable pain and taking medication.  He said he was having difficulty with his hip and was currently being treated by a surgeon and receiving physiotherapy.

3. In her reply, the respondent indicated she had no direct knowledge of the applicant’s health but in her view, after the breakdown of the relationship, he got back into the “swing of life”.  She complained that the doctor upon whom he had relied for the medical evidence had a business association with the applicant.  She said that whilst his health may have declined, the applicant failed to mention that he had since remarried. 

4. This evidence could not be tested but having regard to the matters set out below, it matters little.

The evidence

1. The applicant set out the businesses in which he was involved during the relationship which were now worthless.  He talked about the financial dilemma associated with his connection to those businesses.  In his view, there was no value in those interests.  He said in 2008, he had purchased a boat for $120,000 and that he thought that it was worth something between $110,000 and $120,000 now.  He lives on that boat.

2. The applicant pointed to the crux of the evidence in this case.  He said that the only real and tangible asset that he had at separation was his entitlement to the “former matrimonial home” at Suburb B.  He said that the property was worth $1.25 million.  He then said that this valuation was in no small part due to his financial input and personal endeavour for major works, repair and maintenance.

3. The applicant deposed to the fact that from the date of occupancy, he provided improvements to the property and he set out a long list of things that he had done between 1996 and 2004.  He estimated that he had spent something in the vicinity of $180,000.  Thereafter, there was ongoing maintenance that he provided.

4. What the applicant failed to point out was that regardless of how the Suburb B property came to be his residence, it was owned by a commercial trustee company.  Its purchase may have initially been as a result of money provided by the respondent by way of a deposit but that was refunded by the commercial trustee company.  Importantly, the purchase came about as a result of a will under which the respondent is the life tenant.

5. I found it hard to accept that information as significant as this was left out of the applicant’s affidavit filed 20 December 2012.  That is also important because in October 2012, the applicant also filed a financial statement in which he set out that the registered owner of the property was “Equity Trustees” but that he had a half interest worth $600,000.  None of that was mentioned in his affidavit prepared and sworn in December 2012.

6. The evidence setting out the details of the trust and life interest were comprehensively covered by the affidavit of the respondent.  The applicant had possession of that document from 17 January 2013 but remained remarkably silent about the life interest for the ensuing two months.  There can be little doubt that his legal practitioner knew about it.

7. When the respondent filed her response in December 2012, she also filed a financial statement.  In that document, she clearly indicated that she had no interest in any real property. 

8. The applicant’s case as eloquently articulated by his counsel was that the life tenancy was property and could be valued.  It is not necessary for me to traverse the authorities in relation to that issue.  Suffice to say that in his candid discussion, counsel for the applicant conceded that on the best view of all of the documents filed by both parties before the Court, the property of either of them amounted to the following:

   (a)the life interest just referred to;

   (b)the boat in the possession of the applicant; and

   (c)some chattels in the possession of the applicant which the respondent asserted exceeded $300,000 in value.

9. There are two other assets that might be added to that list.  The first is that the respondent deposed in her financial statement to the fact that she had just over $33,000 in savings.  In addition, she said she had $10,000 worth of chattels.

10. That evidence enables the Court to focus on the question of whether it would be just and equitable to make an order in the long run having regard to the requirement for the applicant to show hardship presupposing his delay in bringing the proceedings is accepted.

11. When pressed, counsel for the applicant conceded that if the picture as to the financial position of the parties was as portrayed, even if the life interest could be valued, there was no prospect that any sum could be achieved if it was treated as property because there was nowhere else from which the funds could be drawn by the respondent.  That was obviously presupposing that none of the remaindermen would be prepared to offer to pay the applicant some money for what he had done to the real property.

12. If the respondent’s interest is excluded on the basis that no relief could be sought arising out of it, then it would seem that the applicant already has the greater portion of the assets as they are known.

13. It also appears that the respondent had an interest in a superannuation fund but had recently retired and converted that entitlement into a pension.  That too compounded the problem for the applicant because there was no suggestion of any splitting order nor any spousal maintenance claim.  Having regard to the fact that the applicant has recently remarried, one can understand why.

14. To the extent that the applicant was purporting to make a claim based on some equitable principle such as a constructive trust, it is noticeable that when his practitioners filed the application, no reference was made to any specific relief of that nature.  It would seem that they were aware that the property was not owned by the respondent because they also drafted the financial statement that made reference to the legal interest being with Equity Trustees.

15. The applicant filed an amended initiating application on 20 December 2012 but no alteration was made to the final orders sought. That application sought interim orders including a declaration pursuant to s 90RD and, in the alternative, that leave be granted pursuant to s 44(6) to issue the application out of time.

16. Thus, it is difficult to know exactly what the applicant was pursuing because of his silence in the formal application document. 

Hardship?

1. In his affidavit, the applicant said that he believed that he had a “bona fide claim” to property division under the Act. He said that he had minimal property in his possession. He referred to a trust established in 1995 but he knew little about it.

2. He said that if he was not granted leave to bring his application (to the extent that he needed it) he would suffer significant hardship. 

3. The applicant said that the “former matrimonial home” was purchased in 1996.  He then set out the details but as I indicated earlier, excluded the relevant details about the full extent of the ownership of that property.  He said that the removal from “my home” had already created financial hardship and would increase if he was not able to litigate.  That meant that he would have essentially lost what represented his life savings and his “non-financial contributions as a homemaker and carer”. 

4. He pointed to the absence of any hardship on the part of the respondent.

5. It is important in applications of this nature that litigants do not resort to rhetoric, but set out facts that are relevant for the purposes of ss 55 and 56 of the Evidence Act 1995 (Cth). Importantly, the facts must be comprehensive.

6. It concerns me in this case that apart from the fact that the applicant knew there was a problem with the legal ownership of the home in Suburb B, that this case had been through a registrar’s hearing and a preliminary hearing before me without that life interest issue being carefully considered.  To a very large degree, the Court’s time has been wasted.

1. If what the applicant says is true and I note that much of the work that he described as having been done by him and the money spent by him, was disputed, a claim in equity could not be made against the respondent but rather against the owner of the legal title.  No other cause of action was advanced and, in the absence of the applicant setting out with any precision, the orders he was seeking on a final basis, the Court’s hands are tied.

2. For the reasons which follow, I find there can be no hardship proved by the applicant in this case because he has no prospect of obtaining a just and equitable order for a division of any property from the respondent having regard to the property that he already has and the inability of the respondent (on the applicant’s own evidence) to fund any payment that could arise out of the valuation of the life tenancy.

The legal aspects

1. I have already set out the provisions of s 44 of the Act. If an application is filed out of time as I find here, the Court may grant leave if satisfied that hardship would be caused to the party if that leave were not granted.

2. Nothing in s 44 would suggest that this Court should approach a case involving a de facto relationship from the way in which it has traditionally approached the same problem for parties who have been married.

3. I approach the matter on that basis.

4. Hardship is not defined in the Act but its common usage means such concepts as hardness, severity, privation and that which is hard to bear or a substantial detriment (see Shorter Oxford Dictionary). It must mean something of significance to the person claiming it or other words that there is real detriment.

5. Hardship has a broad meaning (see Whitford (1979) FLC 90-612; 4 Fam LR 754).

6. Hardship is more than the loss of a right to commence proceedings.  It is the consequence that goes with the loss of the right to commence the proceedings that constitutes the hardship (see Whitford (supra)).

7. A person cannot claim hardship if their ultimate claim cannot succeed.  That leads to the question of whether there is a reasonable probability of the claim being successful in some measure (see Perkins and Perkins (1979) FLC 90-600). Thus, fundamental to this hearing is the determination of the quality or character of the potential claim of the applicant. He must be able to point to some real possibility of success because otherwise, he cannot show that a substantive result would alleviate the hardship to which he has referred.

8. It is only when the applicant can demonstrate hardship that he needs to persuade the Court that its discretion should be exercised in his favour.

9. In Gallo v Dawson (1998) CA 30; (1990) 93 ALR 479, McHugh J on the question of an extension of time for proceedings said there was a need to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences of the party of the order relating to the grant or refusal of the extension of time. That is obviously in addition to the question of an explanation for the delay.

10. For the reasons I have outlined, the approach by the applicant to these proceedings has been questionable.  The nature of the litigation is clear that he has to show it is just and equitable to initially alter the legal and equitable interests of the parties to the relationship (see Stanford v Stanford [2012] HCA 52). In this case, for the reasons outlined, I cannot see any reasonable probability let alone possibility of the applicant obtaining the relief that I think he is seeking (bearing in mind the way the application has been framed) against the respondent (as distinct from the trustee or some other person). Whilst I appreciate the consequences for him of not being able to litigate, even on his own counsel’s concession, of the assets in which the two parties have legal or equitable interests, the applicant has the bulk already.

11. Thus, I could not find that there is any severity or privation let alone substantial detriment to the applicant vis a vis the respondent.  There is therefore no reasonable probability of the claim being successful against the respondent in any measure. 

12. Based on all of those matters, the application must fail. 

13. The respondent indicated that she would seek costs but I said I would provide for written submissions in relation to that issue having regard to the need for the applicant to see these reasons.  I will make orders accordingly.

I certify that the preceding Sixty Eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 23 April 2013.

Associate: 

Date:  23 April 2013