RICH & SHORLAND
[2019] FamCAFC 50
•27 March 2019
FAMILY COURT OF AUSTRALIA
| RICH & SHORLAND | [2019] FamCAFC 50 |
| FAMILY LAW – APPEAL – LEAVE TO APPEAL – Where the appellant seeks leave to appeal – No prejudice to the respondent in allowing the appeal to proceed – Where the decision appealed from is attended with sufficient doubt such that it would result in an injustice if leave were not granted – Application for leave to appeal granted. FAMILY LAW – APPEAL – DE FACTO – PROPERTY – Leave given to commence property proceedings out of time on the basis of hardship – Weight given by the primary judge to relevant principles – Where the primary judge failed to give appropriate consideration to the relevant principles – Where the primary judge was required to determine whether there is a real probability of success that will alleviate the hardship – Where the primary judge erred by failing to make the required assessment – Failure of the primary judge to draw a nexus between the probability of success and the alleviation of hardship – Inadequate reasons – Where his Honour failed to take into account the interlocutory nature of the proceedings – Where his Honour failed to engage with the principles around time limits and applications for extension of time to file an application – Appeal allowed – Matter remitted for rehearing. FAMILY LAW – APPEAL – COSTS – Orders made to allow the parties to file submissions on the question of costs. |
| Family Law Act 1975 (Cth) ss 445, 79(2), 79(4) |
| Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25 Edmunds & Edmunds (2018) FLC 93-847; [2018] FamCAFC 121 Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34 Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 Sharp & Sharp (2011) 50 FamLR 567; [2011] FamCAFC 150 Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52 |
| APPELLANT: | Ms Rich |
| RESPONDENT: | Mr Shorland |
| FILE NUMBER: | SYC | 4800 | of | 2016 |
| APPEAL NUMBER: | EA | 120 | of | 2018 |
| DATE DELIVERED: | 27 March 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace J |
| HEARING DATE: | 19 February 2019 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 8 August 2018 |
| LOWER COURT MNC: | [2018] FCCA 1928 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Coleman SC |
| SOLICITOR FOR THE APPELLANT: | Mr Cohen Solicitor |
| COUNSEL FOR THE RESPONDENT: | Mr O'Ryan QC |
| SOLICITOR FOR THE RESPONDENT: | Michael Conley Lawyers |
Orders
The appellant be granted leave to appeal the orders of Judge Monahan made on
8 August 2018.
The appeal against the orders of Judge Monahan made on 8 August 2018 is upheld and those orders are set aside.
The hearing of the application is remitted to the Federal Circuit Court to be heard by a judge other than Judge Monahan.
Any submissions as to either costs certificates or otherwise be filed and served within 14 days of these orders.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rich & Shortland has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 120 of 2018
File Number: SYC 4800 of 2016
| Ms Rich |
Appellant
and
| Mr Shorland |
Respondent
REASONS FOR JUDGMENT
Ms Rich (“the appellant”) appeals against orders made by
Judge Monahan of the Federal Circuit Court on 8 August 2018 granting Mr Shorland (“the respondent”) leave to commence proceedings for property settlement notwithstanding that the time for commencing those proceedings had expired. The parties were relevantly in a de facto relationship which commenced in about early November 2005 and concluded early November 2013. Section 44(5) of the Family Law Act 1975 (Cth) (“the Act”) provides that an application for adjustment of property must be brought within two years after the end of the relationship. The respondent’s application was filed 1 August 2016 some nine months after the expiration of the limitation period.
The determination of whether leave to commence proceedings is granted is governed by s 44(6) of the Act, where, relevantly for these proceedings, the Court may grant leave where it is satisfied that hardship would be caused to a party or a child if leave were not granted.
The application for leave came before the primary judge who found hardship proved and who then granted the respondent leave to commence the proceedings.
The appellant contends that his Honour erred in coming to that conclusion, in that his Honour erred in the application of the well-known principles.
It is well accepted that hardship of the relevant kind is not a measurement of the loss of the right to commence proceedings but the consequences of that loss. In considering whether an applicant for leave has established the necessary hardship, a court must determine whether the applicant has a “prima facie claim worth pursuing” or, put another way, “a real probability of success” in the contemplated proceedings.[1]
[1]Sharp v Sharp (2011) 50 Fam LR 567, [18] (“Sharp”).
However, that is not the end of the necessary consideration because leave will not be granted if to do so would not, in the ultimate result, alleviate the identified hardship.[2]
[2] Sharp, [18]; Hedley v Hedley (2009) FLC 93-413, [131] and Whitford & Whitford (1979) FLC 90-612, 78, 144.
While it is accepted that the consideration of whether a grant of leave should be made involves a summary process, it nonetheless requires an assessment of the applicant’s putative claim while conscious that the applicant is not required to establish his or her final case on the leave application.[3]
[3]Hedley v Hedley (2009) FLC 93-413, [32].
In Edmunds & Edmunds (2018) FLC 93-847, the Full Court after quoting from Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 said:
20. … Thus the Court, when considering the issue of leave and the strength of the proposed case, will look to see whether, in the event that the evidence remains the same at a final hearing, there is a probability that the applicant would succeed in obtaining a property settlement adjustment in her favour. The Court does not undertake a preliminary trial but looks to see whether there is some or a fair or reasonable probability that relief will be granted.
Their Honours continued and said:
47. As the Full Court pointed out in Sharp at [18], “the well-established test is that the applicant must have a prima facie claim worth pursuing or a ‘real’ probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship”.
48. That involves a consideration, but not a final determination, of the nature of the applicant’s claim. In doing so, the Court must weigh the applicant’s case against that of the respondent’s and form a view as to whether there is in fact a prima facie case, or a real probability of success, that would, if leave were granted, alleviate hardship.
Having determined hardship of the kind to which these authorities speak, the Court must then consider whether, notwithstanding the identified hardship, it should, in the exercise of its discretion grant leave to commence proceedings. The resolution of that question requires consideration of matters such as the length of and explanation for the delay in commencing proceedings and the prejudice to the respondent if leave is granted.
The appeal
Leave to appeal
It is well accepted that the appellant requires leave to bring the appeal.
The test for leave is two-fold.[4] First, it must be found that the decision in question is attended with sufficient doubt as to warrant the grant of leave. The second requirement is that a substantial injustice will result if leave to appeal is refused
[4]Medlow & Medlow (2016) FLC 93-692 at [57]).
For the reasons that follow, leave to appeal will be granted.
The appellant couches the challenges to the primary judge’s application of the relevant principles in two ways; first, it was contended that in failing to give proper consideration to the legal principles guiding the determination, his Honour constructively failed to exercise the jurisdiction conferred under the Act. Secondly, it was argued that in failing to give proper consideration to the application of those relevant principles, his Honour erred.
As to the argument that there was here a constructive failure to exercise the jurisdiction, acceptance of this argument is not without its difficulties. I am conscious of the note of warning sounded by Basten JA in Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [9] about importing the language of a supervisory jurisdiction into an appeal of a different type.
In any event, in my view, the disposition of this appeal can sit easily in the second contention advanced by the appellant that is that his Honour failed to give proper consideration to the relevant principles.
In particular it was argued that his Honour failed to give “genuine and realistic” consideration to:
a)The issue of hardship;
b)The apparent merits of the claim sought to be commenced;
c)The duration of the delay and the explanation for it; and
d)Prejudice to the party opposing leave.
It was further contended that the primary judge failed to expose his reasoning process leading to the findings he made.
I then turn to the primary judge’s reasons. His Honour after some preamble to which I will return, set out the submissions of each party, and said:
49. Overall, I am satisfied and find that the applicant has established hardship.
50. Firstly, I am satisfied that the applicant has established a prima facie case for property adjustment. The parties were in an eight year de facto relationship from November 2005 to November 2013. While the applicant concedes that he did not contribute directly to the payment of the mortgage whilst he was living with the respondent in the relevant properties she owned, there is evidence that he shared expenses and household costs with the respondent. The applicant’s income was also taken by the Bank in approving finance to the respondent to purchase a new home in Property A in 2013. There is also some evidence that the applicant made indirect contributions to the household during the relationship and assisted the respondent with her business.
51.Secondly, in relation to ‘hardship’, it appears that the applicant has fallen on harder times since separation and has been somewhat itinerant having moved from home to home reliant upon the goodwill of friends. As a consequence of his financial circumstances, the applicant has incurred further debt and gives evidence that he had to sell shares in order to meet his living expenses. Nevertheless, I note that well after filing these proceedings, and shortly before the leave hearing, the applicant received an inheritance of $204,091.00 from his late brother’s estate. That said, the applicant, who at 66 years of age is 10 years older than the respondent, suffers depression and anxiety and is only able to secure employment on a casual basis.
Prima facie case
The appellant argued that his Honour’s reasons at [50] do not reveal a consideration or evaluation of the competing contentions between the parties. Rather it was said, his Honour set out the apparent factual bases for his conclusion but his reasons contain no analysis of those matters nor reveal how they lead to the conclusion that a prima facie case had been established.
Further, while the primary judge permitted cross-examination of the parties, a process which, it was said, exposed controversies as to the evidence, those controversies are nowhere resolved. Nor does his Honour mention the respondent’s late received inheritance or discuss how it might impact on the parties’ competing positions.
It was further argued that his Honour was obliged to give consideration to the adjuration in Stanford that before any order for property settlement is made, a court must be satisfied that it would be just and equitable to do so.[5] The respondent contended that Stanford has no work to do in the consideration of whether an applicant for leave has established a real probability of success.
[5]Stanford v Stanford (2012) 247 CLR 108 (“Stanford”).
I am inclined to acceptance of the appellant’s argument. The High Court’s consideration of the work of both s 79(2) and s 79(4) of the Act in Stanford forms the matrix against which s 79 issues must be considered.[6] However the issue was not fully ventilated during the appeal and I will not express a concluded view.
[6] In Stanford at [37] the High Court said “[f]irst, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order”.
The thrust of the appellant’s argument is that it is insufficient for the primary judge merely to find that a prima facie case had been established without attempting to formulate or assess what that real probability of success would look like and, how thus a grant of leave would alleviate the identified hardship.
The respondent argued that, given that applications of this type are summary in nature, an applicant for leave is not required, nor should the court demand, a detailed hearing on the merits of the application. It was thus argued that his Honour’s assessment of the “prima facie” case for property adjustment was what was required in this context and to do otherwise would be to trespass onto the merits of the respondent’s case and would of itself be an error.
I do not agree. His Honour was obliged to make some assessment of the applicant’s case against that of the respondent based on the evidence then before him and assuming that it would remain the same at the final hearing, and while accepting that the full merits of the case are not argued, determine whether that real probability of success will alleviate the identified hardship.
Nowhere does his Honour either advert to the nexus between the “real probability of success” and the alleviation of the hardship nor does he attempt the necessary assessment which is whether the “real probability” of success in the proceedings sought to be commenced would alleviate the identified hardship.
To this extent his Honour erred.
Hardship
It was argued that his Honour’s conclusion that hardship existed was unsupported by reasons. For example, his Honour while mentioning the respondent’s late received inheritance makes no reference to how or if receipt of that sum was taken into account in coming to the conclusion that the respondent would suffer hardship if he were not given leave to commence proceedings.
In relation to both the finding as to prima facie case and to the conclusion of hardship, the respondent argued that the nature of the proceedings being an interlocutory enquiry should be taken into account in considering whether the reasons given by the primary judge were adequate to the purpose.
Whilst it is undoubtedly correct that the requirement to give reasons is not immutable and the content of such reasons as are given may vary depending on the ambit of the enquiry,[7] however his Honour’s reasons were inadequate to this context amounting to little more than a recitation of a series of facts followed by a conclusion.
[7]Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33, [48].
This challenge is made out.
Turning then to the exercise of his Honour’s discretion and the considerations of the issues of delay in commencing proceedings and prejudice to the appellant, his Honour said:
52. Thirdly, in relation to the issue of delay, I accept the applicant’s submission that a delay of approximately 9 months is relatively insignificant when compared to an eight year relationship. In addition, the Court accepts that the applicant’s relatively poorer circumstances and mental health post separation made it difficult for him to focus on the legal issues arising from the end of the relationship with the respondent. I accept the applicant’s submission that there is no real prejudice to the respondent by reason of the delay apart from the nuisance factor of having to respond to a property claim following the end of an eight year de facto relationship.
Although his Honour’s recitation of the relevant legal principles refers to the need to take account of the reasons “why time limitations exist” at [35], his Honour’s consideration was restricted to a comparison between the length of the relationship and the length of delay and the respondent’s mental health since separation.
Delay and its explanation does not exist in isolation. It is inextricably linked to the prejudice to the party opposing leave.[8]
[8]Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, 551 (“Brisbane South”).
Nor should it be assumed that even though, as here, no actual prejudice was raised by the appellant, none exists. The law presumes prejudice to flow to a person sought to be joined in the litigation after the effluxion of the relevant time limits.[9]
[9]Brisbane South; Sharp, [97] (May & Ainslie-Wallace JJ).
His Honour’s reference to the issue of delay in the granting of leave amounting to no more than a “nuisance factor” to the appellant fails to engage with the fundamental principles concerning time limits and applications for extension.
Thus the challenges to the primary judge’s order are established and the appeal will be allowed.
Disposition of the Appeal
It was agreed that if the appeal succeeded on the basis of want of reasons, there was no choice but to remit the application to the Federal Circuit Court to be determined by another judge.
Costs
This appeal having succeeded on a question of law, were they sought, an order for costs certificates would be appropriate for both parties. However, not having taken submissions on costs at the conclusion of the appeal hearing, I will make an order that in the event that the parties wish to make applications in respect of costs, they do so in writing within 14 days of the delivery of these orders.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 27 March 2019.
Associate:
Date: 27 March 2019
0
7
1