Quarto and Emmert (No.3)

[2018] FCCA 2058

FEDERAL CIRCUIT COURT OF AUSTRALIA

QUARTO & EMMERT (No.3) [2018] FCCA 2058

Catchwords:
FAMILY LAW – De facto property – application filed out of time –whether leave to commence proceedings should be granted – hardship established – discretion exercised – leave granted.

Legislation:

Family Law Act 1975 (Cth), ss.44, 90SM

Federal Circuit Court Rules 2001 (Cth) r.13.12

Cases cited:

Hall v Nominal Defendant (1966) 117 CLR 423

Hedley & Hedley (2009) FLC 93-413

Sheill & McMurr (No.2) (2014) FLC 93-451

Whitford & Whitford (1979) FLC 90-612

Applicant: MR QUARTO

Respondent: MS EMMERT

File Number: DGC 1025 of 2014

Judgment of: Judge Hartnett

Hearing date: 14 May 2018

Delivered at: Melbourne

Delivered on:  27 July 2018

REPRESENTATION

Counsel for the Applicant: Dr Smith

Solicitors for the Applicant: Peter Lynch

Counsel for the Respondent: Mr O'Connor

Solicitors for the Respondent: MW Law

ORDERS

1. The Applicant is granted leave to issue an application out of time pursuant to s.44(6) of the Family Law Act 1975 (Cth).

2. The matter be adjourned to 16 November 2018 at 10.00am for final hearing.

3. The parties file and serve any further affidavit material they intend to rely upon not less than fourteen days prior to the final hearing.

IT IS NOTED that publication of this judgment under the pseudonym Quarto & Emmert (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

DGC 1025 of 2014

MR QUARTO

Applicant

And

MS EMMERT

Respondent

REASONS FOR JUDGMENT

1. This is an application made pursuant to s.44(5) of the Family Law Act 1975 (Cth) (‘the Act’). The Applicant de facto husband (‘the husband’) is seeking leave, pursuant to s.44(6) of the Act, to apply for property orders under s.90SM of the Act.

2. The parties’ earlier and relevant litigation is set out in the paragraphs which follow, that being a necessary factual context for the consideration of the matters required to be considered by the Court in determining issues of hardship and the exercise of discretion.

Procedural Background

1. On 9 April 2014 the husband filed an application for property orders.  That application was first returnable on 27 May 2014.  On that day, and by consent, orders were made which included, relevantly, that the parties attend a conciliation conference on 4 August 2014.  Before that conciliation conference could occur, the parties were back in Court seeking further orders. On 15 July 2014, interim consent orders were made.  They were comprehensive and indicated the parties’ willingness to engage in a dialogue to deal with, broadly speaking, the payment of company and personal liabilities; the sale of the property situate at Property A in the State of Victoria (‘the former matrimonial home’) and application of the proceeds; those matters in relation to which discovery was required; the matters which related to the Respondent de facto wife (the wife’) remaining as a director of the company operating the husband’s business, and her exposure in relation thereto; and the husband’s establishment of another sole trader (identical) business together with the maintenance and/or accountability for assets of the company and those of the sole trader business. In particular, the following orders were made:-

   “…

   3. The property situate at and known as Property A be sold out of Court by way of auction (“the sale”) in the first instance and if it does not sell at auction, by private treaty.

   4. Within 21 days, the parties through their solicitors, or otherwise in writing agree upon a selling agent and a reserve price and in default of agreement in respect of the sale, the selling agent and terms shall be as determined by the President of the REIV (or his nominee) at the joint and equal expense of the parties.

   5. The net proceeds of the sale after all outgoings, encumbrances and selling costs and commissions shall be held in an interest bearing account in joint names of the parties to be reserved by the solicitor conducting the conveyance pending the written agreement of the parties or Order by the Court.

   …”

2. On 4 August 2014 the husband did not attend the conciliation conference.  His failure to attend resulted in the Court making a costs order against the husband in the sum of $880 made payable to the wife and by 2 September 2014. 

3. On 3 September 2014 further interim consent orders were made adjourning the proceedings to 28 October 2014 for mention.  The purpose of that further adjournment, and for a mention date only was that the parties had indicated to the Court the matter had resolved as between them.  The orders made on 3 September 2014 included the following notation:-

   “   AND THE COURT NOTES:

   The parties have reached agreement and the purpose of the adjournment is allow procedural fairness to be accorded to the trustees of the relevant superannuation fund.  In the event that the minutes are filed in reasonable time prior to the adjourned date, orders may be made in chambers and the adjourned date vacated.”

4. On 28 October 2014 instead of final property consent orders being entered into between the parties, further orders in preparation for trial were made. These orders were necessitated by the proceedings not being settled between the parties.  The orders made on 28 October 2014 included, relevantly, the listing of the matter for trial commencing 11 June 2015 and consent orders, which relevantly altered in part those orders as to the sale of the former matrimonial home set out in paragraph 3 herein, and provided for the proposed sale of the parties’ real property in (country omitted). Those orders were relevantly, as follows: - 

   “…

   4. That within 30 days the parties shall endeavour to agree upon a value for the real property situate at and known as (country omitted) (“The (country omitted) property”).

   5. That in the event the parties are unable to obtain agreement as to the value of the (country omitted) property within 30 days hereof they shall forthwith appoint a valuer to provide a sworn valuation of the said property at the shared equal cost of the parties.

   6. That the applicant shall be responsible for all outgoings in relation to the (country omitted) property including but not limited to rates and maintenance.

   7. That pending the final hearing the respondent shall be at liberty to sell the real property at Property A (“Property A property”) on the following terms and conditions:

   a) That Real Estate be appointed as selling agent and be listed forthwith;

   b) At a reserve price of $850,000.

   8. That in the event of a sale of the Property A property the proceeds be distributed as follows:

   a) Payment of costs and commission associated with the sale;

   b) Discharge of mortgage and any other encumbrance affecting same;

   c) Payment of the Visa Card Business credit card in the name of the company;

   d) Of the balance:

   i. 30% to the applicant;

   ii. 30% to the respondent;

   iii. 40% to be held in trust by the respondent’s solicitor invested in an interest bearing account in the joint names of the parties.”

5. On 9 April 2015 further procedural orders were entered into between the parties. The making of these orders was necessitated by the parties’ failure to comply with the earlier procedural orders. These were as follows:-

   “1. The final hearing listed on 11 & 12 June 2015 be vacated.

   2. Both parties and their solicitors shall file and serve affidavits deposing to complete compliance with the existing orders and directions and providing proof of same. Upon the filing of such affidavits the parties may write to the Court and request that the matter be listed for mention within 6 months.

   3. The proceedings shall be adjourned sine die until compliance of order (2).

   AND THE COURT NOTES:

   In the event the parties fail to comply, the Court will write to the parties after 6 months, putting the parties on notice that the Court will consider dismissing the proceedings pursuant to Rule 13.12 of the the Federal Circuit Court Rules 2001 (“the Rules”).”

6. On 1 December 2015, the Court sent a letter to the parties setting out the notation in the orders of 9 April 2015 and r.13.12 of the Federal Circuit Court Rules 2001 (Cth). The correspondence was further and relevantly, as follows:-

   “… these proceedings are now listed on Tuesday 9 February 2016 at the Federal Circuit Court of Australia at Melbourne commencing at 10.00 am to consider why the Court should not dismiss the proceedings pursuant to r.13.12 of the Rules...”

7. On 9 February 2016 the Court determined the matter on a final basis. Orders were made as a result of both parties’ failure to diligently prosecute their respective applications.  The orders made on that day were as follows:-

   “1. The application !Unexpected End of Formulafiled on 9 April 2014 be dismissed pursuant to Rule 13.12 of the Federal Circuit Court Rules 2001 (“the Rules”) and the proceedings be removed from the Pending Cases List.”

8. No order was made in respect of the wife’s orders sought, as set out in her Response filed 22 May 2014:-

   “1. That there be such property settlement between the parties as deemed appropriate by this Honourable Court.

   2. That the Respondent be excused from particularising her claim until such time as the Applicant has provided full and frank disclosure of all relevant financial documents to the Respondent and valuations obtained for any asset in dispute.”

9. On 10 August 2016, some six months after dismissal of the husband’s application, the husband filed a further initiating application and sought the leave of the Court to proceed out of time. On 31 August 2016 the wife filed a response to the husband’s initiating application seeking dismissal of his application.  It appears that both the husband and the wife thereafter proceeded on the basis that the remaining extant application for orders sought by the wife in the response filed 22 May 2014 had also been dismissed by the order made 9 February 2016. I note the Court’s finding that both parties’ conduct had led to the dismissal order.

10. In the Court’s subsequent judgment dated 24 February 2017, which went to the husband’s application for leave to proceed out of time, the Court said, in relation to its earlier orders the following:-

    “Whilst not common ground, the order made 9 February 2016 was interlocutory in the sense that the order made under the Rules did not finally dispose of the rights of the parties.[1] The applicant did not, either in the application filed 10 August 2016 or at the hearing on 31 January 2017 seek leave to set aside the order made 9 February 2016. Rather, it is common ground that as the applicant has filed this application out of time and in order to pursue property proceedings under section 90SM the applicant must first be granted leave to do so pursuant to subsection 44(6) of the Act. Given this was the agreed position of the parties, the matter has been approached on that basis.”

    [1] Hall v Nominal Defendant (1966) 117 CLR 423, Sheill & McMurr (No. 2) (2014) FLC 93-451.

11. The Full Court of the Family Court of Australia, in a subsequent judgment delivered on appeal, a matter to which I shall return, made only this reference to the matter:-

    “Following the separation the Applicant commenced proceedings seeking orders for property settlement in 2014. However, on 9 February 2016 those proceedings were dismissed pursuant to r.13.12 of the Federal Circuit Court Rules 2001, as a result of non-compliance with orders made in those proceedings.”

These proceedings

1. In the initiating application filed 10 August 2016, the husband sought the following orders:-

   “Final Orders Sought

   1. That the parties shall do all necessary acts and things to sell the property at (country omitted property), being the land more particularly described Certificate of Title (“the (country omitted) property”), by public auction within 6 weeks of the making of these final orders, and the proceeds of the sale shall be applied in the following manner:-

   (a) Firstly to the payment of all costs, commissions and expenses associated with the sale of the (country omitted) property;

   (b) Secondly, to repayments in respect of discharging any encumbrances attached to the property; and

   (c) Thirdly, to the balance of sale proceeds being divided equally between the parties.

   2. That the parties shall do all necessary acts and things in order to make application to the Australian Securities Investment Commission (ASIC) for the voluntary deregistration of Business A Pty Ltd, if it is determined that the company is eligible for same, within 28 days of the receipt of these final orders.

   3. If the Respondent has not, at the time of the making of these Final Orders, returned funds released to her from Mitcham Whitelaw Pty Ltd's controlled money account, then:

   (a) Those particular funds held by the Respondent shall form part of the asset pool of the parties and be divided equally, with an adjustment made in favour of the Applicant in respect of any amounts out of those funds which the Respondent has spent after they were released to her;

   (b) The Respondent shall be responsible for payment of all costs incidental to the de-registration or liquidation of Business A Pty Ltd; and

   (c) If the Respondent has spent the entire amount, then an adjustment of the division of any remaining assets of the parties shall be made in the Applicant’s favour, to reflect his equal share in the original amount held on trust pursuant to Order 8(d)(iii) of Annexure A to Orders made 28 October 2014 by Judge O'Sullivan.

   4. That subject to Procedural Fairness requirements being satisfied, the Court make an Order for an equal division of the parties’ combined superannuation entitlements as at the date of separation.

   5. That each party shall retain as their property absolutely and exclusively, as against each other, the previous interim distribution made pursuant to paragraph 8 (d) i & ii of the consent orders made on 28 October 2014.

   6. That the respondent pay to the applicant an amount equal to one half value of the respondent's motor vehicle and jewellery.

   7. That unless otherwise specified and save for the purposes of enforcing any payments due under these or any subsequent orders:

   (a) Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;

   (b) Each party forego any claims they may have to any superannuation;

   (c) Insurance policies remain the sole property of the owner;

   (d) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

   (e) Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

   8. Any such further and other orders this Honourable Court deems appropriate to make in the circumstances.

   Interim or procedural orders sought

   1. That the Applicant be granted leave to issue proceedings out of time.

   2. The Respondent be restrained from selling, disposing or encumbering the property at (country omitted property), being the land more particularly described Certificate of Title (“the (country omitted) property”), until such time as the parties reach agreement as to the terms and conditions of the sale and or distribution of the sale proceeds.

   3. That the parties shall co-operate and do all necessary acts and things and give all necessary information and authorisations in order to seek a proper determination from the relevant qualified person as to whether Business A Pty Ltd meets the requisite ASIC criteria for the voluntary de-registration of a company.

   4. That the Respondent immediately return the balance of the proceeds of sale of the Property A property recently released to her from Mitcham Whitelaw Pty Ltd (“MW Law”) and thereafter such funds to be held in trust by Bailey Timms Lawyers in a controlled money account on behalf of both parties pending final court orders.

   5. That the Respondent be restrained from disposing of any funds released to her from the controlled money account of MW Law until such further and other order of the Court.

   6. That the Respondent be restrained from dealing _in any way with any of her superannuation entitlements until such further and other order of the Court.

   7. Such further interim orders this Court deems appropriate.”

2. On 31 August 2016 the Court made, relevantly, the following orders:- 

   “…

   2. Until further order the respondent, her servants or agents be and hereby restrained from selling, encumbering or dealing in any way with:

   a) The real property situated and known as (country omitted property), more particularly described in Certificate of Title.

   b) Her interest in the real property described at sub-paragraph 52(h) of her affidavit filed this day.

   3. The respondent’s costs of this day be fixed at $4,778 and reserved.”

3. On 24 February 2017 the Court delivered its judgment on the husband’s initiating application and made orders as follows:-

   “1. The application by the applicant pursuant to s.44(6) of the Family Law Act 1975 (Cth) for leave to issue an application out of time for alteration of the parties property interests be dismissed.

   2. The respondent is to file and serve submissions as to costs within 7 days.

   3. The applicant is to file and serve submissions in reply 7 days thereafter.”

4. Both parties filed submissions as to costs and consented to the Court determining the issue on the papers. On 20 March 2017 the Court ordered the following:- 

   “1. Mr Quarto pay the costs of Ms Emmert fixed at $4,000 within 30 days.

   2. That Order 2 of the orders of 31 August 2016 be discharged.”

5. The husband thereafter filed an appeal against the orders made on 24 February 2017 and 20 March 2017.  The appeal was allowed and the proceedings were remitted back to the Court.  The orders made 7 February 2018 were relevantly as follows:- 

   “SOA 21 of 2017

   (1) Leave be granted to the applicant to appeal the order made on 24 February 2017.

   (2) The appeal be allowed.

   (3) The order made on 24 February 2017 be set aside.

   …

   SOA 22 of 2017

   (8) By consent the appeal be allowed and order (1) made on 20 March 2017 be set aside.”

6. No injunctive orders were sought or obtained by the parties or either of them on appeal. Upon remittal, both parties filed updated affidavit material and financial statements.

Evidence

1. The property proceedings between the parties, in respect of which the husband seeks leave to proceed out of time, are referrable to a relatively small asset pool at this point in time.  It is a pool that has been diminished by the wife’s actions since the making of the orders on 24 February 2017. The wife’s evidence in relation to her actions since the orders made on 24 February 2017 is as set out in her affidavit of evidence sworn 30 August 2016 and as follows:-

   “49. As the proceedings were dismissed, that decision was not appealed and I heard nothing further from the plaintiff or the plaintiff’s solicitor I finally moved on with my life on the basis of the final court orders dismissing the proceedings. I was greatly relieved.

   50. Having turned 65, I cashed in my superannuation benefit of $130,000 (the applicant had already done so with his smaller benefit).

   51. The 40% of the net proceeds of the Property A property was dispersed to me by my solicitor (after my solicitor sought advice from the law institute regarding whether those funds could be properly distributed and was advised that they could be).

   52. Most of those funds I received have been dispersed as follows:-

   a. $25,000- Legal costs to MW Law.

   b. $2,000- Legal costs to (country omitted) Law Firm.

   c. $2,000- Business accounting costs to date.

   d. $9,000- Holiday in 2016.

   e. $16,000- Repayment of loan to oldest son.

   f. $4,000- Credit Card.

   g. $30,000- Gift to 3 children = 10k each.

   h. $200,000- Part interest in an apartment (to move in with my son in retirement).

   i. $10,000- Future costs to winding up the business, including liquidation.”

2. The asset pool of the parties, prior to dismissal of the proceedings, was, generally, the proceeds of sale remaining in the joint names of the parties from the sale of Property A in the State of Victoria; a second real property being the investment property of the parties in (country omitted); the husband’s business and its assets and liabilities; the parties’ respective superannuation entitlements; and the parties’ motor vehicles and personal items. 

1. The situation for the parties now is that the husband, born on 1949, is aged 68 years.  He continues to be self-employed at Business B as a sole trader. His income as a self-employed (occupation omitted) in April 2014 was, on his evidence, $1,500 gross each week, a total of $78,000 gross per annum. His superannuation accumulated was in the sum of $19,415. In April 2018 his income, on his evidence, from the same source was $600 gross per week, a total of $31,200 gross per annum. He had nil superannuation funds. He had already cashed in $20,000 approximately in superannuation funds. On the husband’s evidence, he had $13,000 in bank savings, a car of modest value; a business with nil value, (the wife claims Business B is a valuable business), and $12,551.00 in outstanding taxation liabilities. He has $20,000 in credit card debt. He lives alone in a rental room above the factory in which he works. He is approaching retirement years.

2. The wife, born on 1951, is now aged 67 years.  She continues to be employed as a (occupation omitted) at the (employer omitted).  She has been continuously employed at that (employer omitted) for approximately 28 years.   The wife’s income as a (occupation omitted) in 2014 was, on her evidence, $733 gross per week, a total of $38,116 gross per annum.  Her superannuation accumulated was in the sum of $118,000. In April 2018, the wife’s income, on her evidence, was $792 gross per week, a total of $41,184 gross per annum. She had $44,000 in superannuation funds, contributing to superannuation accumulation by way of salary sacrifice in the sum of approximately $465 each week. She had already cashed in $130,000 of superannuation funds. The wife is residing with her son (whom is in receipt of income of approximately $900 gross per week) and personally pays a rental sum of $210 each week. On her evidence, the wife had $65,000 in a savings account and a motor vehicle with modest value. She had little credit card debt. She is approaching retirement years.

Background

1. The parties’ cohabitation commenced in 2002 and their separation occurred under the one roof in December 2011 on the wife’s evidence, and August 2012 on the husband’s evidence.  The cohabitation period was something in the vicinity of 9 or 10 years.  The parties had no children.  Each of them have adult children from prior relationships.

2. The parties agree that their physical separation occurred on 11 April 2014 when the wife changed the locks on the former matrimonial home and thereafter obtained an Intervention Order (by consent and without admission).

3. At the commencement of the parties’ relationship the husband was renting accommodation and had no interest in real estate; no superannuation; an old motor vehicle, and tax (and perhaps other) liabilities. The wife was the sole registered proprietor of an unencumbered property situate at Property B in the State of Victoria which she was occupying. She otherwise had superannuation benefits which had accumulated since 1990, a motor vehicle and personal chattels. She had no liabilities.  Both parties were working. The wife moved into the husband’s rental accommodation. Her son/s remained in her home. In 2004 the wife sold the property owned by her and received net sale proceeds in an amount of approximately $329,000. Prior to the sale of that property, the husband claims he contributed (materials omitted) of $2000 and otherwise manual labour in the preparation of the property for sale and in the maintenance of the property from the commencement of cohabitation.

4. In 2004 the parties purchased the former matrimonial home. The purchase price was $400,000.  The entirety of the sale proceeds of the wife’s home was applied toward the purchase of the former matrimonial home and otherwise a mortgage was taken out in the sum of $92,000 (on the wife’s evidence) and $100,000 (on the husband’s evidence).  The wife was the sole registered proprietor of the property. 

5. The parties, in particular the husband, carried out renovations to the former matrimonial home over the period in which they resided in the property but in particular in the earlier years. In paragraphs 12, 13 and 14 of the affidavit sworn by the husband on 8 April 2014, the husband set out his calculation of monies expended by him in renovations to the former matrimonial home. That expenditure totalled $124,379. He maintains that claim. That sum is disputed by the wife.

6. On 9 February 2005 the husband received a sum of $82,486.09 by way of inheritance.  Additionally, he received real property in the transfer to him of sole proprietorship of Property C in the State of Victoria. That property was sold by the parties in 2007, the net proceeds received were $291,000. 

7. In September 2005 the wife drew down a further $19,000 on the mortgage in her sole name and secured over the former matrimonial home to advance a loan to the husband’s business to enhance the continuation of its sole trader operations.  

8. In 2008 and with the husband’s inheritance monies the parties purchased, in the sole name of the wife, an investment property situate at (country omitted property) in (country omitted) for the sum of $166,000. The balance of the funds received by the husband from his inheritance had been and were, expended by the parties, on holidays, renovations to the former matrimonial home and general living expenses as claimed by the husband. The wife’s evidence is that some part of those monies were expended by the husband on gambling and additionally other unknown expenditure. 

9. On 6 March 2008 Business A Pty Ltd was registered. This was a movement of the husband’s business into a corporate structure.  The wife was the sole director and sole shareholder of the company. She remained so following separation. At the time of incorporation of the husband’s business, he had owing, taxation liabilities in respect of the sole trader business.

10. In November 2013 the husband registered a trading name of ‘Business B’.  This was an identical business to that of Business A Pty Ltd. The husband continued to work through the company entity until 30 March 2014, when he ceased to so work. The wife claims that:-

    “14. The applicant transferred all of the assets of Business A to Business B and left me with all the liabilities. The applicant had paid to himself personally or his new business Business B accounts outstanding to Business A.

    …

    63. Since the dismissal in February 2016, I have been left with the responsibility of winding up the company Business A and completing all financial obligations. The company still owes me $44,000 and the Applicant owes the company $26,000.”[2]

    The husband denies these claims of the wife. The Court makes no finding as to this, it being a matter for trial.

    [2] Affidavit of Ms Emmert affirmed 30 August 2016.

11. To advance the new sole trading business the husband drew down further on the mortgage loan secured over the former matrimonial home in the sum of approximately $149,000.  At the time of the sale of the former matrimonial home an amount of $133,804 was required to be repaid on the mortgage loan in respect of this debt before the remaining equity from the sale of the former matrimonial home could be, in part, distributed to the parties and, in part, held on trust in their joint names in accordance with the earlier orders of the Court. 

12. Following the parties’ physical separation, the former matrimonial home was agreed to be sold by them.  The monies obtained were in the sum of approximately $750,000.  Pursuant to the order made on 28 October 2014 the parties each received the sum of $190,000 with the remainder of the funds received placed in an interest bearing trust account in the joint names of the parties. On 13 April 2016 the monies in the trust account were transferred from the wife’s previous solicitors to the wife’s current solicitors and deposited in like manner. What happened thereafter is as set out in paragraphs 20 and 40(a) of these reasons.

13. The husband also claims that he purchased jewellery for the wife during the period of cohabitation and that the value of the jewellery is approximately $40,000 to $50,000. The wife obtained a valuation, that cannot in its present form, be relied on by her at trial, as to the jewellery’s value being in the sum of $13,115.

14. The wife now suffers from a number of medical issues which include hypertension and anxiety. The husband has no particular health issues beyond those associated with his age. Both parties’ state of health does not preclude them from ongoing employment.

Consideration

1. Section 44(5) and s.44(6) of the Act are relevantly as follows:-

   “(5)  Subject to subsection (6), a party to a de facto relationship may apply for:

   (a)  an order under section 90SE, 90SG or 90SM; or

   (b)  a declaration under section 90SL;

   only if the application is made within the period of 2 years after the end of the de facto relationship (the standard application period).

   (6)  The court may grant the party leave to apply after the end of the standard application period if the court is satisfied that:

   (a)  hardship would be caused to the party or a child if leave were not granted; or

...”

1. Pursuant to s.44(6)(a) of the Act, the Court is only required to consider the potential hardship to the husband that may be caused if leave is not granted.

2. The Court is satisfied that hardship would be caused to the husband if leave is not granted on the above facts for these reasons:-

   a)there was an amount of 40% of the net proceeds of sale of the former matrimonial home held in trust in the joint names of the parties. Without the knowledge or consent of the husband, that sum, together with interest, was distributed as to 100% to the wife being a sum of $294,840.37. The de fact husband had a clear claim in respect of those monies which remained outstanding despite the cessation of the Court proceedings. He sought to secure those funds post the dismissal of the proceedings. The wife acted to retain the distribution of those funds solely to her;

   b)the husband had an interest in the real property in (country omitted) by virtue of s.90SM(4) of the Act. There has been no accounting to the husband in respect of this interest which was land held in the wife’s name and sold by her in May 2017. The net proceeds of sale were $146,113.26. These monies have been retained by the wife and expended by her on legal costs; supporting her mother; gifts to her sons; furniture; and a holiday as claimed by her;

   c)both the husband and wife have cashed in their superannuation entitlements with the wife’s entitlements considerably exceeding that of the husband in an apportionment of $20,000 to the husband and approximately $130,000 to the wife;

   d)the husband is approaching retirement age and has little asset security. He made a contribution as described in these reasons and of the type set out in s.90SM(4) of the Act, being contributions the Court must take into account in property settlement proceedings. The monies received by the husband in the form of an inheritance during the course of the relationship were fairly similar to the monies that the wife brought into the relationship at the commencement of the parties’ cohabitation; and

   e)in the event the husband is unable to proceed with his application out of time he will have little of the joint assets of the parties to secure in some measure his financial future and will rely almost certainly and exclusively on government Centrelink benefits.

Should the Court in the exercise of its discretion grant or refuse leave to the husband to institute these proceedings

1. The discretion the Court exercises is a broad one with the Court being required overall to “not make an order… unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”[3]

   [3] Family Law Act 1975 (Cth) s.90SM(3).

2. The Court is satisfied in weighing and balancing the matters relevant to this consideration that the degree of hardship that will be caused to the husband if he is not granted leave will be so significant that it will outweigh the very real prejudice occasioned to the wife by the incurring of costs and again undergoing the stresses of litigation.[4] The Court gives little weight to the wife’s argument that she has moved on with her life. She has been able to do so by the actions taken by her (as described above) to secure most of the balance of the parties remaining assets. The husband has had no equal or reasonable opportunity to so get on with his life. This represents to him a significant hardship.

   [4] Whitford & Whitford (1979) FLC 90-612.

3. Whilst the wife may, on the evidence, have had no reason to expect, in the six month period between the end of litigation in February 2016 and the filing of the husband’s initiating application on 10 August 2016, (‘the six month period’) that there would be further litigation about property matters between the parties, she was nevertheless aware that there remained financial matters between the parties which placed them in a financial relationship which needed to be addressed and finalised, at the least, outside the Court process. In the six month period, the husband sought to secure his interest in the parties’ assets. On 27 April 2016 the husband’s then solicitors, wrote to the wife’s solicitors. On 5 July 2016, the husband’s then solicitors sent another letter to the solicitors for the wife, having not received a reply from the 27 April 2016 letter. The 5 July 2016 letter said, relevantly:-

   “… We have received notification from Land Information (country omitted) that your client has applied to have our client’s caveat removed, due to lapse of a claim notice. As previously outlined, our client has no objection to the sale of the (country omitted) property, provided the proceeds are held in trust pending resolution of the outstanding matters and our client be involved with the fixing of the reserve price and the appointment of the (country omitted) agent.

   If your client is not agreeable to the sale of the property, then we will instruct our client to reissue proceedings and notify Land Information of the new claim number.  We believe the sale of the (country omitted) property under the above terms may bring pressure on the parties to hopefully reconsider their positions and resolve their ongoing dispute.

   Finally, we note that on or about the 12^th of April 2016, Cantwell Lawyers your client’s previous lawyers, transferred the balance proceeds of sale of the former matrimonial home into Mitcham Whitelaw Pty Ltd trust account. Please confirm that the balance of proceeds of sale are currently in your trust account or invested on short term deposit.”

4. In the six month period, there were no negotiations in respect of a property settlement between the parties because the wife was not negotiating. She had control of the entirety of the remaining assets. It was not until July 2016, after notification from Land Information (country omitted), that the husband’s solicitor suggested to the wife’s solicitors in correspondence that the husband was considering reissuing proceedings. He was getting no response. It is reasonable that the husband did not expect the sale monies from the former matrimonial home to be distributed solely to the wife. Those monies were held in a trust account in the joint names of the parties and the husband received no notification from the solicitors for the wife of their intention to distribute the monies solely to their client. In the six month period, the wife dealt with the parties’ assets to the exclusion of the husband.

5. The wife claims in the substantive proceedings that the husband had a gambling habit which she urges the Court to find as a fact, and as a matter that would result in no further sums being awarded to the husband. The husband denies that he wasted matrimonial funds. The wife also alleges that she was subjected to domestic violence during the relationship on the part of the husband. These are matters which, at this stage, do not eradicate the obvious existence of a reasonable claim for property settlement to be pursued by the husband. Any prejudice to the wife can be dealt with by the trial judge.

6. As Cronin J said in Hedley & Hedley (2009) FLC 93-413:-

   “219. It is not appropriate for a Court in a limited s44(3) hearing to conduct the proceedings as if it was an application under s 79 of the Act. Each of the defined steps in s 79 carry subjective judgments. In a s44(3) application, the applicant need only establish that there is a case to be argued, bearing in mind those subjective judgments in s79.

   220.  As part of the discretionary process when examining the strengths and weaknesses of the applicant’s proposed claim, a Court is obliged to bear in mind that an applicant with a weak case has a right to be heard provided the matters set out above are established. 

   221. If a respondent claims to have been prejudiced by the applicant’s delay, in many cases, that can be ameliorated by the Court in the substantive property proceedings making assessments and giving weight to contributions and the various factors under s 75(2) of the Act. Any prejudice to the respondent can be factored into the ultimate deliberation.”

7. The husband’s application must succeed.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Date: 27 July 2018