Sheppard & Reeves
[2022] FedCFamC2F 317
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Sheppard & Reeves [2022] FedCFamC2F 317
File number(s): DGC 1391 of 2021 Judgment of: JUDGE BURCHARDT Date of judgment: 24 March 2022 Catchwords: FAMILY LAW – de facto husband applying for leave pursuant to s 44(6) Family Law Act to apply for property orders out of time – parties in 15-year relationship and all four children living with father – husband’s explanations for delay in application plausible – husband’s chances of successful outcome high – consideration of twofold test in Whitford & Whitford (1979) FLC 90-612 – extension of time granted – wife’s initial contribution to matrimonial home – overall contributions assess 60/40 in husband’s favour – further 15 per cent adjustment to refer husband’s care of younger children – 75/25 outcome just and equitable. Legislation: Family Law Act 1975 (Cth) Cases cited: Gadzen v Simkin (2018) FLC 93-871
Stanford & Stanford [2012] HCA 52
Whitford & Whitford [1979] FLC 90-612
Division: Division 2 Family Law Number of paragraphs: 36 Date of hearing: 7 March 2022 Place: Dandenong The Applicant: The Applicant is self-represented The Respondent: The Respondent did not appear ORDERS
DGC 1391 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR SHEPPARD
Applicant
AND: MS REEVES
Respondent
ORDER MADE BY:
JUDGE BURCHARDT
DATE OF ORDER:
24 MARCH 2022
THE COURT ORDERS THAT:
1.Within 60 days, the parties do all such acts and sign all such documents as may be required to put the property situate at and known as B Street, Town C in the State of Victoria being the whole of the property described in Certificate of Title Volume … Folio … (“the B Street, Town C property”) on the market for sale (“the sale”), on the following terms:
(a)The B Street, Town C property shall be listed for private sale with a real estate agent chosen by the applicant Mr Sheppard;
(b)The listing price for the B Street, Town C property shall be as determined by the real estate agent; and
(c)Mr Sheppard engage a conveyancer or solicitor, who must have a trust account, to undertake the conveyancing with respect to the sale.
2.Upon completion of the sale, the proceeds shall be as applied as follows:
(a)Firstly, to pay all costs, commissions and expenses of the sale, including conveyancing costs;
(b)Secondly, to discharge the mortgage and any other encumbrance affecting the B Street, Town C property, including the removal of caveat in order 4 below;
(c)Thirdly, the net balance to be divided between the parties 75 per cent to Mr Sheppard and 25 per cent to Ms Reeves, with Ms Reeves’ share to be held on trust for her by the conveyancer or solicitor until collected.
3.In the event there is not an exchanged sale still on foot of the B Street, Town C property by private treaty pursuant to the above order within 120 days of these Orders, then the parties shall forthwith do all things necessary to cause the B Street, Town C property to be sold by public auction at the earliest possible date on the following terms:
(a)at a reserved price nominated by the real estate agent; and
(b)on completion of sale the proceeds of sale shall be disbursed as provided for in order 2 herein, save that the parties shall, prior to distribution of proceeds to them personally, equally pay and bear as and when they fall due all costs associated with the auction process.
Withdrawal of caveat
4.Contemporaneously with the sale, the conveyancer or solicitor to do all acts and things and sign all such documents as may be required to withdraw, any PEXA fees and Caveats with respect to the B Street, Town C property.
Arrangements pending sale
5.Pending the sale, Mr Sheppard:
(a)Have the sole right to occupy the B Street, Town C property;
(b)During such occupation, pay all instalments pursuant to the mortgage secured by the B Street, Town C property, rates, all utilities, taxes and like apportionable outgoings of or with respect to the B Street, Town C property as and when they fall due;
(c)Keep the B Street, Town C property in good order and repair;
(d)Co-operate in all reasonable ways with requests by real estate agents and/or prospective purchasers including but not limited to:
(i)Providing keys to obtain access;
(ii)Doing all things necessary to facilitate access to the B Street, Town C property at all reasonable times and facilitating access for inspection without interference;
(e)Maintain the B Street, Town C property in a presentable condition so as to facilitate the sale including but not limited to presenting the B Street, Town C property in a neat and tidy condition at all times when the B Street, Town C property is subject to inspection; and
(f)Do all things necessary to facilitate a sale at the earliest possible time and shall refrain from doing or saying anything which has the effect of hindering or preventing an inspection or a sale of the B Street, Town C property being effected.
6.Pending the sale:
(a)The parties each hold their respective interest in the B Street, Town C property on trust; and
(b)Neither party shall sell, mortgage, assign, alienate or further encumber the B Street, Town C property without agreement between the parties in writing.
Section 106A Order
7.In the event that Ms Reeves should fail, neglect or refuse to sign or execute any deed, document or instrument required by or to give effect to these Orders, then pursuant to s 106A of the Family Law Act1975 (Cth), Mr Sheppard shall be and is hereby authorised, empowered and directed to sign and execute such deed, document or instrument in the place and instead of Ms Reeves, and to thereafter do all things and acts as are necessary to give validity and operation to same and any expenses incurred by Mr Sheppard in executing the 106A Order be reimbursed to him out of Ms Reeves’ share of the proceeds of sale of the B Street, Town C property.
8.Should Ms Reeves fail to comply with or otherwise fail to do all things required to give effect to these Orders, any additional expense/s incurred by Mr Sheppard in executing the Orders on Ms Reeves’ behalf be reimbursed to Mr Sheppard from Ms Reeves’ share of the proceeds of sale of the B Street, Town C property.
9.The parties have liberty to apply in respect to the enforcement of these Orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Sheppard & Reeves has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BURCHARDT
INTRODUCTORY
The applicant, Mr Sheppard, seeks property orders against his former de facto partner Ms Reeves arising out their relationship between 2001 and 2015. Separation having occurred in September 2015, it is immediately apparent that the application is well outside the two-year limitation period provided by section 45(5) of the Family Law Act 1975 (Cth). What the husband - as I shall refer to him - seeks is that the former matrimonial home be sold and the net proceeds divided as the court sees fit but, as he would put it, approximately somewhere between 70 to 80 per cent in his favour with the remainder to the wife.
For the reasons that follow, I am going to order that the home be sold and the net proceeds divided 75 per cent to the husband and 25 per cent to the wife. It follows axiomatically that I have determined that it is appropriate for the court to extend time for the application to be brought pursuant to section 44(6) of the Act.
THE HISTORY OF THE PROCEEDING
In order that the application can be considered in its proper context, it is necessary to set out the procedural history of the matter in some detail.
The husband filed his initiating application, financial statement and affidavit on 7 April 2021. He has been self-represented at all times. At the first return on 22 June 2021, he appeared in person and the respondent did not appear. I adjourned the matter for mention on 9 July 2021 by telephone and directed the applicant to serve a sealed copy of the orders upon the respondent. The court directed the respondent to attend court by telephone on the return date and noted a warrant might issue if she failed to attend.
On 9 July 2021, both parties appeared, representing themselves. The matter was adjourned to court on 12 August 2021 and an order was made for the respondent to file her responding materials on or before 30 July 2021. When the matter returned to court on 12 August 2021, the wife did not appear, and she had not complied with the orders for the filing of materials. The matter was adjourned till 2 September 2021 at 9 am with an estimated time of one day and leave was granted to the husband to proceed on an undefended basis if the wife had failed to attend court on the return date.
On 2 September 2021, the applicant appeared but the wife did not appear at 9 am. She contacted my associate shortly after 10 am indicating she was having trouble joining the meeting. My associate indicated by way of reply that the matter had already been dealt with and the order I made was that the husband was to obtain and file and serve an affidavit of valuation of the property, and the matter was adjourned to trial on 5 October 2021 at 9.30 am. Those matters were communicated to the wife by my associate by email at 10.19 am on 2 September 2021.
The husband filed an affidavit on 29 September 2021 annexing a valuation of the former matrimonial home at B Street, Town C, of $280,000. The valuation is plainly admissible as a business record.
On 5 October 2021, the husband and the wife both appeared in person and I adjourned the matter to final hearing on 7 March 2022 at 10 am and again directed the respondent to file responding materials on or before 6 December 2021. The wife has not filed any material pursuant to that order or otherwise. She did not appear when the matter was called on 7 March 2022 and, accordingly, I proceeded in her absence. The only sensible inference available to the court is that, for whatever reason, she has either been unwilling or unable to participate in the proceeding.
THE HUSBAND'S MATERIALS
Because of his self-representation, much of what is relevant is not so much in the husband's affidavit as in his initiating application and financial statement. In his initiating application, the husband sought that he refinance and that the respondent transfer the property to him. It was also sought "applicant to carry all debt/liabilities from the relationship to the sum of $80,000". As interim orders, he sought, relevantly, leave to apply out of time and a number of ancillary matters.
From the application, it is apparent that the husband was born in 1985 and the wife was born in 1987. The relationship commenced in 2001 and lasted until 25 September 2015. During this time, the parties had four children: Ms D, born in 2002; Mr E, born in 2003; X, born in 2007; and Y, born in 2011.
From orders made by Judge Riethmuller appended to the husband's initiating application, it is apparent that the children live with the father and there are orders for the two younger children to spend alternate weekends and other time with the mother.
From the husband's financial statement, it is apparent that he has a total income of $1321 per week, of which family tax benefit is $235. Ms F, who is described as his "wife", earns an estimate of $600 per week. The husband has no superannuation and debts in the sum of a total of $159,500.
In his affidavit, the husband deposed to the relationship commencing in 2001 and ending in September 2015. The former matrimonial home was bought in August 2006 with a deposit of $35,659, which was provided from the sale of the wife’s mother's home in Town G. The purchase price of the property at B Street, Town C, was $184,717 and the Bank H mortgage was $149,645. This was refinanced with the Commonwealth Bank in June 2008 into a loan in joint names of $164,000. It is not put in terms in the affidavit, but it is apparent from texts annexed to it that the wife alone was registered as the owner, but that both parties were mortgagors, both to Bank H and to the Commonwealth Bank.
The husband deposed to having worked throughout, whereas the wife worked only for two years at the Employer J. He described the care of the children as being fifty-fifty throughout. By the time of the separation, there were $80,000 in debts and liabilities.
The husband deposed that, in late 2006, the wife had a Motor Vehicle 1 repossessed. It was under finance in his name but was left with her upon separation on the basis that she would continue to meet the repayments, which she failed to do. The net result was a debt of some $27,000 to the car finance company.
The affidavit went on to depose to overdue rates in substantial amounts and, more particularly, to the fact that the property was rented from March 2019 for $250 a week but the mortgage has not been paid by the wife since November 2019. The underpayments are in thousands of dollars. The husband went on to depose the wife facing criminal charges following a raid in her place of residence in August 2020, and he deposed to paying $300 per fortnight off the arrears (annexure 11 supports this proposition and shows indeed that Ms F has contributed from time to time). There are still over $3300 worth of rates owing.
THE INFORMATION PROVIDED AT THE TRIAL
As earlier indicated, Mr Sheppard represented himself but the wife did not appear. In these circumstances, a process of question and answer took place, with the court endeavouring to flesh out matters not addressed in the husband's affidavit. The husband's affect and demeanour was redolent both of a direct honesty in regards to the questions put and a weary, worn out sense of frustration at the march of events. It should be noted that I have not traversed, as perhaps I should have, annexures to the husband's affidavit showing the wife taunting the husband because he is not on title, and endeavours by the husband from time to time to settle the matter by taking over their debts for a given amount, taking over their debts and the property. Obviously, I should not have been shown these without prejudice discussions, but this is what happens when parties are self-represented.
The husband confirmed that separation was in September 2015 and the property was, effectively, the sole asset. He readily conceded that the deposit came, so to speak, from her side. The property is worth $280,000 (or possibly a little more, given price increases) and the mortgage is, near as makes no difference, $152,000. The tenants are still in the property. The $27,000 debt in respect of the car is still not repaid and the finance company is still after it. The husband frankly conceded that, although there were a number of other debts, they are now at least five years old and not likely to be pressed. The property is in her name. This was despite the refinancing. The husband has $13,000 worth of credit card debt, but all of this was pre-separation. The three children under 18 live with the father, as does the child over age who has an income but, as the father put it, still returns to the "bank of Dad" from time to time. None of the children spend any time with the mother.
When asked why he had not applied for property orders in a more timely way, the husband said that the wife used the kids. She told him if he sold the house they would have nowhere to live. She last lived in the property, nonetheless, in 2018 and the children had been with the father since 2017. She has not paid one cent towards the support of the children. He sought that the net proceeds of the property be divided in somewhere in the range of 70 to 80 per cent his way, to enable him to buy another house. He has ongoing expenses associated with the children and the youngest child is likely to need $3000 worth of dental work. The mother is not working and is not likely to cooperate, and he sought a section 106A order. The maternal grandmother supplied the deposit and is now in an aged care home. She is not likely to be able to obtain any rental because the mother's conduct had led to her being blacklisted. He was happy for $35,000-$40,000 to go back to the grandmother, but if any moneys were given to the wife she will waste it on drugs or otherwise. Her criminal charges are not yet resolved.
EXTENSION OF TIME
Section 44(6) of the Family Law Act reads:
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
(b) (not relevant).
Consideration of the approach that the court should take to such applications commences with the decision of the Full Court of the Family Court in Whitford & Whitford [1979] FLC 90-612. In that case, at page 78, 144, the Full Court relevantly observed:
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.
Further on in the same page the court continued:
The hardship referred to in sec. 44(4) is the hardship which would be caused to the applicant or a child of the marriage if leave were not granted. The loss of the right to institute proceedings is not the hardship to which the subsection refers. It is with the consequences of the loss of that right with which the subsection is concerned. The requirement that the court must be satisfied that hardship would be caused if leave were not granted implies that it must be made to appear to the court that the applicant would probably succeed, if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused if leave were not granted. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship if leave were not granted. If the probable result of the hearing on the merits is that the hardship is not likely to be alleviated, then the Court cannot be satisfied that the applicant or a child would suffer hardship if leave were not granted.
That test applies equally to de facto cases (see Gadzen v Simkin (2018) FLC 93-871 at [29]).
In this case, the two parts of the preliminary consideration set out in Whitford are readily answered. There is no question that Mr Sheppard has a prima facie claim worth pursuing or, as it is sometimes put, a real probability of success. He was in a de facto relationship for over 14 years which produced four children, all of whom (albeit that one is now adult) are in his full-time care. He has obviously contributed substantially more by way of income throughout the relationship, apart, obviously, from the initial deposit upon the matrimonial home. His evidence, which is the only evidence I have, is that, during the relationship, the care of the children was shared equally and he has had, it would seem something akin to sole care since 2017. Plainly, on any view of the matter, he must have very real prospects of success.
The second limb of this preliminary test, of course, is that, if the grant of leave will not alleviate hardship, it will not be made. In this case, a grant of leave is highly likely to alleviate the hardship to Mr Sheppard if leave is granted. If leave is granted, he is likely to obtain real money from his share of the sale proceeds of the former matrimonial home. He has informed me during the trial that trying to buy another place is made more difficult by his credit history, something he attributes to the misconduct of the wife. Plainly, the grant of leave has a very real prospect of alleviating hardship to him and to the children.
Having, therefore, met the first limb of the test, the question is whether the court should exercise its discretion to extend time. The matters already set out above would, of course, militate strongly in favour of the court exercising its discretion to extend time. The only countervailing matter that I can see is the delay between separation in 2015 and 2021, when the application was filed. The husband has deposed to being, in effect, fobbed off from time to time and it is clear from the annexures to his affidavit that he has sought, at least, to alleviate this matter by discussion and agreement from time to time and, although the text messages most recently passing between the parties are not, as far as I can see, dated, from the tenor of the affidavit material as a whole it is clear that this is sometime in 2020 or 2021. It is plain that it is only the ongoing threats from third parties in relation to default in the mortgage and the payment of rates that the husband has become fully aware of the wife's conduct. Given the chaotic nature of the wife's life as disclosed by what the husband has told me and by the tenor of her messages to him from time to time, in my opinion the delay on the husband's part is both reasonably explained by his lack of legal representation, his ongoing endeavours to negotiate with the wife and, no doubt, the ongoing pressures of trying to bring up four and then three young children on his own.
Even if this characterisation of the delay is overly generous to the husband, his case, in my view, is so strong and his needs for remedy so obviously arguable that they militate decisively in favour of an extension of time in any event. Accordingly, I will extend time pursuant to section 44(6) of the Act.
STANFORD & STANFORD
Once one comes to consider the question of property settlement, the court must, pursuant to the High Court's observations in Stanford & Stanford [2012] HCA 52, determine the legal and equitable interests of the parties and decide whether it is just and equitable that there be a property settlement.
The only property apparently owned by the parties is the former matrimonial home in the wife's name. The husband has a car which, while it doubtless has some value, is plainly not such as to be likely to realise any surplus if sold (because he will still need a car to transport himself). The husband has no or minimal superannuation and the wife's financial circumstances otherwise are simply not known because of her failure to participate in the proceedings. In circumstances where the property was bought for $184,000 and is now worth $280,000, and the mortgage has been reduced from $164,000 to $152,000 dollars, and this is predominantly through the husband's endeavours, it is plainly just and equitable that, notwithstanding the wife's legal ownership of the matrimonial home, that there be a property settlement.
THE POOL
As already indicated, the property pool appears to consist of
(a)the matrimonial home, $280,000;
(b)the mortgage, $152,000.
(c)The debt of the wife’s car of $27,000.
For the reasons already expressed, I would exclude the husband's car.
CONTRIBUTIONS
There is no question that the property was bought with a deposit paid for by funds derived from the sale of the maternal grandmother’s property. It is not necessary in the circumstances of this case to rehearse or repeat the authorities dealing with the question of gifts advanced to a couple and/or to a child. On any view of the matter, it must have been a contribution that should be put to the wife's credit, even if I accept (as seems likely) that the maternal grandmother will never be repaid those funds. There is, it should be said, nothing in the materials to suggest that it was advanced as a loan. Nonetheless, it was a major contribution, which redounds to the wife's credit.
Against this, on the evidence that is before me, I can only find that household duties were performed roughly equally. That conclusion is buttressed by the fact that the children have been in the care of the father since 2017.
The husband was employed at all times, and earned substantially more than the wife, who has been unemployed save for a two-year period as an office worker for Employer J. The wife has left the husband with a debt of $27,000 a not insubstantial one give the overall size of the pool.
The assessment of contributions is always a matter of an impressionistic assessment and a matter of degree. This is all the more so, given the evidentiary lacunae that arise from the wife's failure to participate in this proceeding. In the circumstances, noting that the initial contribution was many years ago, I would assess the contributions of the parties as 60 per cent to the husband and 40 per cent to the wife.
FUTURE NEEDS
I have not been told anything as to the state of health of either of the parents. I note that they are still relatively young and there is no reason to suppose that their health is anything other than unexceptionable. The husband has suggested that the wife is in serious difficulties with drug use and other difficulties, so it is possible that she may face difficulties of which the court is not aware, but this arises, essentially, because the wife has failed to participate in the proceeding and is not in any contact with the husband at all. What he has told me is plainly derived from local gossip.
What is beyond dispute, however, is that the husband continues to have the primary care for X, who is only 15, and Y, who is only 11. He will have these responsibilities for years to come. He may have some assistance from his wife, but how much is not clear. In the circumstances, and doing the best I can, I would assess the husband's future needs, noting his greater income at all times, as requiring a 15 per cent loading in his favour.
CONCLUSION
Is an order that the matrimonial home net proceeds be divided 75/25 in the husband's favour just and equitable? In the light of all the relevant considerations, which I hope are traversed sufficiently above, I think it is. Given the near certainty that the wife will not in any way cooperate with the process of sale, I have drawn orders to sell the property and for the net proceeds to be divided in this fashion. Plainly, a solicitor will have to be appointed to hold the wife's share of the proceeds until such time as she is in a position to collect them.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Burchardt. Associate:
Dated: 24 March 2022
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