SALAZAR & SALAZAR

[2020] FCCA 330

FEDERAL CIRCUIT COURT OF AUSTRALIA

SALAZAR & SALAZAR [2020] FCCA 330

Catchwords:
FAMILY LAW – PROPERTY – Leave to commence property settlement proceedings eight months out of time – summary dismissal – initiating application and response dismissed.

Legislation:

Family Law Act 1975 (Cth), ss.44(3), 44(4)(a), 79(2), 75(2)

Cases cited:

Whitford and Whitford (1979) FLC 90-612
Gadzen & Simkin [2018] FamCAFC 218
Stanford & Stanford [2011] FamCAFC 208
Calvin & McTier [2017] FamCAFC 125
Holland & Holland [2017] FamCAFC 166

Applicant: MS SALAZAR

Respondent: MR SALAZAR

File Number: ADC 3802 of 2017

Judgment of: Judge Kari

Hearing date: 10 February 2020

Date of Last Submission: 10 February 2020

Delivered at: Adelaide

Delivered on: 19 February 2020

REPRESENTATION

Counsel for the Applicant: Mr Dillon

Solicitors for the Applicant: Andrew Hill & Co

Counsel for the Respondent: Ms Dickson

Solicitors for the Respondent: AM Legal

ORDERS

1. That the Initiating Application filed 12 August 2019 and the Response filed 4 October 2019 be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Salazar & Salazar is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADC 3802 of 2017

MS SALAZAR

Applicant

And

MR SALAZAR

Respondent

REASONS FOR JUDGMENT

Introduction

1. These proceedings relate to an application made by the wife for leave to commence a property settlement claim some 8 months out of time.

2. The application for leave is opposed by the husband. In the alternative and in the event that leave is granted to proceed out of time, the husband asks that the court summarily dismiss the application for property settlement. A significant thread of the husband’s position is his assertion that the wife’s property settlement claim is without merit.

Background

1. The relevant relationship history is as follows:

   a)The wife was born on … 1953 and she is 66 years of age.

   b)The husband was born on … 1948 and he is 71 years of age.

   c)The parties began living together in a de facto relationship in or about September 2004.

   d)The parties married on … 2005.

   e)The parties separated according to the wife in December 2010 and according to the husband some time in 2008 when they began living separately and apart under the same roof.

   f)The parties were divorced on 28 November 2017 with the divorce becoming final on 29 December 2017.

   g)The time limit for the wife to bring proceedings for settlement of property expired on 30 December 2018.

   h)The Initiating Application of the wife for leave to commence the proceedings out of time was filed on 12 August 2019 (some nine years post separation on the wife’s case, and some 11 years post separation on the husband’s case).

2. While the parties do not agree the length of the relationship (on the wife’s case it is six years and on the husband’s case it is four years), there is much that they do agree, significantly as follows:

   a)There are no children of the relationship.

   b)Both parties are now in receipt of a pension, with the wife being in receipt of a disability pension throughout the parties’ relationship due to a “bad hip”. 

   c)At the commencement of the relationship the husband owned a freehold property at Suburb A, whereas the wife owned a motor vehicle with nominal value and she otherwise had nominal savings and furniture and effects.

   d)The husband was a tradesman prior to and during the relationship and had been building a house on the Suburb A property prior to the relationship and it was “largely built”[1] at the time of cohabitation.

   e)In the post separation period the wife received an inheritance in the amount of $53,000 of which the sum of $20,000 remains.

   [1] Affidavit of the wife filed 12 August 2019, [3].

3. While the wife does not expressly acknowledge it in her affidavit material, the husband asserts and no submissions were put on behalf of the wife to the contrary,:

   a)That in or about August 2007 the husband took out a mortgage over the former matrimonial home in the amount of $100,000 which was applied to purchase new furniture and motor vehicle B for $22,000.

   b)At the time of separation, the wife retained the motor vehicle B.

   c)The husband has entirely serviced the loan since it was taken out (including over the post separation period). 

   d)The loan balance at the time of separation was $88,493, and it now has a balance of $52,830; a reduction in the post separation period in an amount of $35,663.

4. The parties are in dispute as to the extent to which the wife made non-financial contributions to the completion of works to the Suburb A property and the establishment of the garden. 

   a)The wife asserts that she undertook painting and finishing works to the interior of the property, and that in addition she laid out and planted the garden and she assisted the husband in improvements undertaken to add a new kitchen and bathroom and otherwise upgrading the interior of a granny flat on the property.

   b)The husband asserts that the property was largely completed at the time of cohabitation and that significantly the wife’s hip injury (for which she was in receipt of a disability pension) restricted and limited her ability to assist in any of the works that the wife now asserts she assisted with.

5. There are three further areas of dispute between the parties:

   a)Firstly, the wife asserts that her father gave her the sum of $5,000 in or about 2007 which was applied to purchase and install floating floor boards to the hallway kitchen and dining rooms.  The husband does not agree this contribution.

   b)Secondly, the wife asserts that she performed the majority of household chores and gardening over the course of the relationship, whereas the husband asserts that the house cleaning duties were shared and that the wife was restricted in gardening duties and that she would tell the husband her plan for the garden and he otherwise carried out the gardening works.

   c)Finally, while the parties agree that the granny flat was rented out to the wife’s father from approximately 2009 until 2011 and that he paid $250 per week to the wife; the husband asserts that the wife retained those funds for her sole use whereas the wife asserts those funds were put back into the relationship expenses.

6. As can be seen from the summary I have just set out, and as otherwise acknowledged by the wife’s counsel during the hearing the wife’s case rests on a direct financial contribution of $5,000 (being the gift from her father), and otherwise non-financial contributions made to the Suburb A property and generally.

7. The current assets of significance that are available for division appear at best to be as follows:

   a)The Suburb A property owned by the husband, with a value of $450,000 on the wife’s case and $330,000 on the husband’s case, which has a mortgage with a present balance owing of $53,378;

   b)The wife’s savings, being the balance of her inheritance in the amount of $20,000;

   c)The parties respective motor vehicles which have limited value; and

   d)Furniture and effects in the parties’ respective possession.

The Legal Principles

1. Section 44(3) of the Family Law Act 1975 (Cth) prescribes for present purposes that an application for property settlement following the breakdown of a marriage must be made within 12 months from the date upon which a divorce order becomes final, and if outside this timeframe leave of the court is required.

2. The court can grant leave to a party to commence proceedings out of time if the court is satisfied pursuant to section 44(4)(a) that “hardship would be caused to a party to the relevant marriage or a child if leave were not granted.”

3. The principles applicable to a grant of leave are well-settled and were identified in the Full Court decision of Whitford and Whitford (1979) FLC 90-612, where it was said:

   Thus, on an application for leave under sec. 44(3), two broad questions may arise for determination.  The first of these is whether the Court is satisfied that hardship would be caused to the applicant or a child of the marriage if leave were not granted.  If the Court is not so satisfied, that is the end of the matter.  If the Court is so satisfied, the second question arises.  That is whether in the exercise of its discretion the Court should grant or refuse leave to institute proceedings.

4. The Full Court in Gadzen & Simkin [2018] FamCAFC 218 has recently comprehensively considered earlier authorities as to the question of the granting of leave and the hardship test, confirming at paragraph 33:

   Self-evidently, the Full Court there and subsequent Full Courts (as will be discussed) have emphasised that hardship within the meaning of the section must first be established for the discretion to grant leave to arise.

5. And at paragraph 37:

   It follows from these authorities that the starting point in determining an application for leave is to consider the question of hardship which requires for its existence a conclusion that an applicant has a prima facie or arguable case of substance having regard to all of the circumstances of the case.  That must take into account the costs or likely costs to be incurred in pursuing the claim.

6. In addition the Full Court identified and confirmed from earlier authorities at paragraphs 31 to 36 that:

   a)Hardship is more than the loss of a right to commence proceedings it is the consequences of the loss of that right;

   b)Hardship is not whether the applicant is presently suffering hardship, but rather that hardship would be suffered if leave were not granted;

   c)The applicant must have a “real” probability of success;

   d)Where the costs of pursuing the claim are about as much as the property claim itself, this would not ordinarily result in a conclusion of hardship.

Discussion

1. Much time was spent during oral submissions focusing on the question of the wife’s delay in bringing proceedings. While the wife is on oath that she was aware of the time limitation before its expiration and that she sought legal advice prior to the expiration of the time limit,[2] the reality is that a consideration of the reasons for delay only becomes necessary if the court is satisfied that the threshold question of hardship is met and the court has moved to a consideration of the exercise of discretion to grant leave.

   [2] Affidavit of the wife filed 25 November 2019, [26].

2. Turning to the question of hardship, much was made by the wife’s counsel during the hearing of two factors:

   a)Firstly, the wife’s current circumstances and limited means were pointed to as evidence of her hardship; and

   b)Secondly, the wife’s inability to bring a claim if leave were not granted.

3. As discussed in Gadzen & Simkin, neither of these factors would result in a finding of hardship.

4. Rather, the emphasis should be on the consequences to the wife of the loss of the ability to bring a claim.

5. During the hearing the court did not benefit from any submissions by the parties as to their respective costs if leave were to be granted to the wife.  At the conclusion of the hearing the court invited the parties to inform the court as to the anticipated costs of the proceedings for property settlement if leave were to be granted to the wife.

   a)The wife’s estimated costs were said to be between $15,000 and $20,000.

   b)The husband’s estimated costs were said to be between $40,000 and $50,000.

6. The wife’s claim is that there be a 60/40 division in favour of the husband.

7. The husband asserts that the wife is unlikely to achieve any outcome   remotely close to that which she has sought.  He asserts  that the wife is unlikely to receive any further adjustment as and by way of property settlement even if her case was taken at its highest, taking into account the limited contributions she made to the acquisition conservation or improvement towards the property, and in addition taking into account what has occurred in the post separation period and in particular that:

   a)The wife retained the Motor vehicle B motor vehicle at the time of separation, whereas the husband was left to service the loan taken out in part to purchase that vehicle;

   b)The wife has had the benefit of utilising a portion of her inheritance and still has the sum of $20,000 available to her; and

   c)The husband has solely reduced the mortgage liability by $35,663 in the post separation period.

8. In short it is the husband’s case that there should be no orders for property settlement as it would not be just and equitable in all of the circumstances for the court to interfere and alter the parties respective legal interests in the property that they each own, with reference to section 79(2) of the Act as discussed by the Full Court in Stanford & Stanford [2011] FamCAFC 208.

9. Frankly, these are submissions which have some significant force and are ones which I accept taking into account those contributions that are agreed and taking the wife’s case at its highest on all issues, together with the submissions made by counsel for the husband as summarised herein.

10. If however I am wrong about the wife’s claim failing at the section 79(2) stage of analysis, it is my view that again in light of all of the matters that I have set out in these reasons, the wife’s claim is unlikely to come anywhere near the 40% division she has sought, and nor will it exceed the costs that she is to incur in pursuing the claim. In coming to that conclusion, I have had particular regard to the following factors:

    a)The length of the relationship is at best according to the wife a period of 6 years;

    b)On both parties cases they have been separated for much longer than they were together;

    c)The sole asset of any substance available for division is the Suburb A property, which the husband brought into the relationship freehold and which he had largely built prior to the parties cohabitation;

    d)The sole financial contribution made by the wife during the relationship on her case is a sum of $5,000, and otherwise in the post separation period, her inheritance of $53,000 to which she solely has benefited from;

    e)While there is a dispute as to the extent of the parties respective non-financial contributions, it is not the wife’s case that the husband made no meaningful non-financial contributions, and accordingly in my view the parties respective non-financial contributions on a preliminary assessment are likely to be treated as equal;

    f)The wife retained the Motor vehicle B motor vehicle which had been purchased for $22,000, three years prior to separation (taking the separation date to be that asserted by the wife);

    g)The husband has solely met all of the mortgage payments and significantly so over the post separation period resulting in a reduction of that liability, noting that part of the loan was taken out in part to fund the Motor vehicle B retained by the wife;

    h)While the husband has had the benefit of retaining the Suburb A property, the reality is this property was brought into the relationship by him and a preliminary weighing up of all of the contributions of all forms during the relationship and in the post separation period weigh overwhelmingly in the husband’s favour,

    i)To the extent that section 75(2) factors are relevant, other than the fact that the husband has retained the Suburb A property there do not appear to be any distinguishing nor disparate section 75(2) factors.

11. During the hearing, I heard submissions from the husband’s counsel as to the correct composition of the pool of property and that the same must include the inheritance received by the wife, with reference to the Full Court decisions in Calvin & McTier [2017] FamCAFC 125, Holland & Holland [2017] FamCAFC 166. The wife’s counsel did not rally against this approach.

12. Accordingly, the value of the total property available for division is somewhere between $416,622 on the wife’s case, and $296,622 on the husband’s case. The wife’s has $20,000 being the balance of her inheritance.

13. In my preliminary assessment and if I am wrong about the wife’s claim failing at the section 79(2) hurdle, it is my view that at best the wife’s claim is no more than 5-10%. While there is a dispute about the value of the home, taking into account the wife’s anticipated legal fees to pursue any claim, it is clear that the wife’s current hardship would not be alleviated by a grant of leave.

14. For all of these reasons, I do not consider that the wife would suffer any hardship if she were not given leave to proceed out of time. I accordingly refuse the application for leave.

15. Given I have refused the grant of leave, it is not necessary for me to consider the summary dismissal application of the husband.  Although it must be said that in light of my consideration of the merits of the wife’s claim in these reasons, the summary dismissal application would have had some impetus.

16. For all of these reasons I now make those orders that appear at the commencement of these reasons.

I certify that the preceding thirty one (31) paragraphs are a true copy of the reasons for judgment of Judge Kari

Associate: 

Date:  19 February 2020