Sherman and Statham
[2009] FamCA 776
•27 August 2009
FAMILY COURT OF AUSTRALIA
| SHERMAN & STATHAM | [2009] FamCA 776 |
| FAMILY LAW – PROPERTY - Wife seeks orders under s79A(1)(a) and (b) and s44(3) of the Family Law Act 1975, that leave be granted to commence spousal maintenance proceedings out of time – Wife seeks to have consent orders set aside FAMILY LAW – PRACTICE AND PROCEDURE – Husband’s section 118 application FAMILY LAW – COSTS |
| Family Law Act 1975 (Cth) |
| Keith & Soukis [2007] FamCA 1017 |
| APPLICANT: | Ms Sherman |
| RESPONDENT: | Mr Statham |
| FILE NUMBER: | NCF | 274 | of | 2004 |
| DATE DELIVERED: | 27 August 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Le Poer Trench |
| HEARING DATE: | 15 December 2008 and by written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Foster |
| SOLICITOR FOR THE APPLICANT: | Dimocks Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Brzostowski SC |
| SOLICITOR FOR THE RESPONDENT: | Dobinson Davey Clifford Simpson |
Orders
The wife’s application under section 79A is dismissed.
The wife is granted leave to commence proceedings for spouse maintenance against the husband provided she files an application within 28 days from the date hereof.
The husband’s application for an order under section 118 of the Family Law Act is dismissed.
Any costs application arising from the orders made herein is to be filed with supporting affidavit and written submissions within twenty-eight (28) days from the date hereof.
In the event of any cost application being served on either party such party is to file any written submission opposing such application within fourteen (14) days of service of the application.
The matter is to be listed before me in chambers at the conclusion of thirty (30) days from the date hereof to ascertain if any cost application has been filed.
IT IS NOTED that publication of this judgment under the pseudonym Sherman & Statham is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: NCF274/2004
| MS SHERMAN |
Applicant
And
| MR STATHAM |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter was listed for final hearing before me on 28 August 2006 in relation to parenting and property. Final orders were subsequently made by consent on 29 August 2006. The property orders made that day provided for the wife to transfer to the husband her interest in the property at M (“the M property”). The order required the husband to pay the wife $70,000 within 30 days. That sum was to be paid to the wife’s solicitor. The husband was required to indemnify the wife in relation to specific liabilities. The husband was to further pay the wife 22% of the net proceeds of sale of the husband’s shares in F Company Pty Ltd (hereinafter “F Company”). The husband was to deduct any GST, capital gains tax and any personal taxation payable on dividends or deemed dividends, in relation to the shares, from the sale proceeds prior to calculating the wife’s 22% interest. No time limit was specified for the sale of the shares.
On 19 October 2006 those orders were varied by consent and pursuant to section 79A. The varied orders provided for the sum of $70,000, due to the wife under the first property order, to be paid to meet her outstanding legal costs. The consent orders made that day were as follows:
THE COURT ORDERED BY CONSENT:
1.That Orders be made in terms of paragraphs 1, 2, 3, 4 and 5 of the document entitled “Short Minute of Order” dated 19 October 2006, filed herein as set out hereunder:
“1.Pursuant to s79A that Order 16A of the Orders of 29 August 2006 be discharged.
2. That the husband shall pay to the wife by way of property settlement the sum of $70,000 within 30 days to the wife’s solicitor Hannaway Lawyers Trust Account and then such proceeds shall be disbursed as follows:
a. outstanding amount to pay Impact Capital
b.65% of the then remaining balance to Slade Manwaring; and
c.35% of the then remaining balance to Hannaway Lawyers.
3.That the firm Slade Manwaring withdraw all garnishee orders issued to the husband, Farrar Gesini Dunn and Hannaway Lawyers, Solicitors and notify in writing when do so.
4.That the solicitors Alison Osmond and Ann Northcote of the firm Farrar Gesini Dunn be released from any undertaking and escrow orders given to the Family Court of Australia at Canberra on 28 September 2006.
5.For the purposes of Order 19 of the Orders of 29 August 2006 such payment shall be made by the husband to Hannaway Lawyers, Trust Account and then such proceeds shall be disbursed as follows:
a.in the event of any costs orders any costs outstanding to the husband
b.the amount outstanding to pay Slade Manwaring as communicated in writing by Slade Manwaring to the wife and her solicitors
c.the amount outstanding to pay Hannaway Lawyers as communicated in writing to the wife; and
d. the balance to the wife.”
AND THE COURT NOTED that Orders 1, 2 and 5 are Orders made pursuant to section 79A.
In these current proceedings the applicant wife filed a Further Amended Application for Final Orders on 15 April 2008 in which she seeks orders pursuant to s 79A of the Family Law Act 1975 (“the Act”), and specifically relies on ss 79A(1)(a) and (b). In addition, the wife seeks leave pursuant to sections 44(3) and (4) of the Act to bring proceedings for spousal maintenance, out of time.
In essence, the wife’s application seeks to have the consent orders made by me on 29 August 2006 set aside in respect of paragraphs 19 and 21 of the those orders. Those paragraphs are as follows:
19. That the husband pay to the wife 22% of the net proceeds of sale of the husband’s shares in [F Company] Pty Ltd received by him after the deduction of any amount payable by the husband for GST, capital gains tax with respect to the disposition of the shares, and any tax payable in respect of any dividends or deemed dividends with respect to those shares within 28 days of receipt of any taxation assessment for the capital gains tax, GST and income tax payable in respect of the dividends or deemed dividend.
…
21. The husband and the wife shall each pay his or her own costs of these proceedings.
The husband seeks orders in accordance with the document titled “Minute of Orders Sought by the Respondent Husband” dated 12 December 2008. The orders sought by the husband are for the dismissal of the wife’s application together with an order under s 118 restraining the wife from commencing any further applications in the court without first obtaining the leave of the court. He further seeks costs.
Background Facts
Where in this judgment I make statements of fact, unless it clearly states matters of controversy, those findings are findings of fact.
Much of the fact in the case was uncontroversial.
The husband was born in 1952 and is 56 years of age. He is employed in a profession.
The wife was born in 1968 and is 41 years of age. She is not currently in paid employment.
In or about December 1987 the parties commenced cohabitation.
In August 1990 the child, T, was born and is now almost 19 years of age.
In July 1994 the child, D, was born. She is now 15 years of age.
In December 1994 the parties married.
In February 1996 the child, E, was born. She is now 13 years of age.
In 1998 the husband incorporated a company, S Administration Pty Ltd (“S Administration”), which company was to act as a trustee of the Statham Family Trust. The company managed the day-to-day administration of the professional practice. The wife was the sole shareholder and Director of S Administration. The power to appoint the Trustee Company for the Statham Family Trust was held by the husband.
In January 2000 the husband’s father died. The husband and his four brothers were the five beneficiaries to the Estate.
On 1 September 2000 the husband received a one fifth share in the estate of his late father following probate being granted. The husband and his brothers, P Statham and R Statham were the three executors of the estate.
In September 2000 the child, K, was born and is currently 8 years of age.
Since 30 June 2002 and to the date of the orders in August 2006, the husband had not filed taxation returns. I accept that the husband was unable to do so because of the liquidation of companies which had operated during the course of the parties’ marriage.
Between 30 June 2002 and 12 December 2003, the wife was working in the professional practice of the husband for two days per week.
On 12 December 2003 that the parties separated.
Following the date of separation the wife moved with K out of the matrimonial home at M and commenced residing at her father’s house. The other three children remained with the husband. I note the husband contends that the wife at some time post separation (and still continuing) lived in a de facto relationship in Sydney.
The wife contends that the husband was at the time of separation operating his professional practice through Statham Admin Services Pty Ltd (hereinafter referred to as “Statham Admin Services”), as trustee of the Statham Family Trust, and Q Company Pty Ltd (hereinafter referred to as “Q Company”). The wife said Q Company was operating as a service company to the husband’s professional practice through Statham Professional Pty Ltd (hereinafter referred to as “Statham Professional”). In his affidavit filed 22 May 2008 the husband said that the wife and he were the two shareholders of Q Company, with the husband’s shareholding having the controlling interest. Statham Admin Services and Q Company were later liquidated.
On 5 March 2004 the wife commenced proceedings in the Local Court, in relation to parenting and property, whilst on 9 June 2004 the husband commenced proceedings in the Newcastle Registry of the Family Court of Australia.
On 20 July 2004 interim orders were made by Justice Cohen sitting at the Newcastle registry of the Family Court of Australia. The orders made by his Honour provided for K to reside with the wife and the three other children to reside with the husband. The proceedings were transferred to the Sydney Registry of the Family Court of Australia.
On 10 September 2004 the husband contends the wife commenced cohabitation with Mr V. In her affidavit filed 15 April 2008 at paragraph 59 the wife said she filed an Application in a Case on 25 October 2004, and it was at that time that she moved to Mr V’s Sydney residence. She continued to live with him until September 2006. At paragraph 67 the wife said her Financial Statement filed on 10 April 2007 incorrectly stated that Mr V was an occupant of her household. At that time she said she was living with her father in the north coast area. For the purpose of the application under consideration I am prepared to proceed on the basis that the wife accurately records the circumstances of her relationship with Mr V.
On 25 October 2004 the wife commenced her first spouse maintenance application.
On 3 December 2004 the wife’s maintenance application was withdrawn and dismissed. The orders in relation to that day are recorded on 7 January 2005.
On or about December 2004 the husband incorporated Statham Professional as the new service entity for his professional practice. He also incorporated Statham Admin Services as the new trustee for the Statham Family Trust.
On 25 May 2005 orders were made for the parties to cause the sum of $130,000, which was to be obtained by way of loan, to be applied to meet the costs of the proceedings, in particular the cost of experts.
On or about 16 June 2005 Mr Y was appointed to prepare a valuation report for the parties’ companies and the trust. The valuation was to include a valuation of the husband’s interests expected to be derived from the estate of his father.
In August 2005 the company S Administration was deregistered.
On 15 November 2005 the Decree Nisi was granted.
On 5 December 2005 the wife was removed as a director of Statham Admin Services and Q Company.
On 14 December 2005 administrators were appointed to Q Company and Statham Admin Services.
On 7 January 2006 a letter was sent from the husband’s brother to the husband, (Annexure “G” to the wife’s affidavit filed 15 April 2008), and related to continuing differences as to the conduct and valuation of F Company. The husband’s affidavit filed 22 May 2008, at paragraph 66, sets out the steps the husband took in an attempt to resolve the dispute with his brothers in relation to the Estate.
Further orders were made in early 2006 for the appointment of Mr G as the single expert in the stead of Mr Y who was no longer available. Once again the expert was to value the husband’s interests arising from his inheritance from his father. There was other valuation work to be carried out.
On 21 February 2006 the husband engaged solicitors to act for him in relation to the dispute with his brothers as co-executors of their late father’s Estate.
On 24 February 2006 the husband filed his affidavit setting out his evidence in chief. At that time the dispute between the husband and his brothers remained unresolved.
On 4 May 2006 the wife contends that the husband’s solicitors were informed by Mr G that he could not proceed with the valuation of the husband’s interests. A letter dated 4 May 2006 was sent to the parties by Mr G, and is Annexure “H” to the husband’s affidavit filed 22 May 2008. The letter sets out details of further information required by Mr G in order to commence the report. It also provides information relating to fees and timing for the report’s completion. In the letter Mr G noted he was not in a position to determine the remuneration issues between the husband and his brothers in relation to F Company, and suggested that a remuneration expert be engaged. In addition, Mr G advised that he would be unable to complete the valuation of the entities until the financial statements, which had not been completed for some years, and income tax returns had been completed.
Ultimately, as will be seen later, Mr G did not proceed with the valuation work.
On 22 May 2006 the matter was set down for trial in August 2006. The wife said this was done even though there were no valuations of the husband’s business interests. As will be seen later, the matter was listed on the wife’s request notwithstanding the lack of expert valuation evidence.
On 29 June 2006 the wife filed an Amended Application for Final Orders, in relation to parenting and property.
On 4 July 2006 a Notice of Address for Service was filed by Hannaway Lawyers on behalf of the wife.
On 8 July 2006 the wife said the husband received advice from his accountant that his shareholdings inherited from his father were valued at $1,053,680. A report by Mr C of C & Associates, Chartered Accountants, provides this valuation of the husband’s entitlement to shares in F Company, and is Annexure “B” to the wife’s affidavit filed 15 April 2008. This report was provided to the wife’s solicitors on 21 August 2006. There is no issue that the wife received a copy of the report. It was specifically referred to by her counsel in his address to the court on 29 August 2006.
On 28 August 2006 the first day of the hearing took place, and both parties were represented by Counsel.
On 29 August 2006 consent orders were entered into by the parties. Orders 1 to 15 inclusive and a notation numbered 22 related to children’s matters and Orders 20 and 21 related to costs. Orders 16 to 19 related to property matters, and are relevantly set out below:
Property orders
16.That simultaneously with the payment referred to in Order 16A, the
wife will sign all necessary documents and do all acts and things
necessary to transfer to the husband all her right, title and interest in the former matrimonial home at [M] in the State of New South Wales.
16A. That the husband shall pay to the wife by way of property settlement the sum of $70,000 within 30 days, to the wife’s solicitors.
17. The husband shall indemnify the wife in respect of the following:
(a) Against all taxation liabilities, claims, interest and penalties arising from the issue of any income tax assessment or amended income tax assessment to [Q Company] Pty Ltd, and [S Administration] Pty Ltd ATF the [Statham] Family Trust;
(b) Against any legal proceedings, claims, penalties and interest by the Australian Taxation Office in relation to the non lodgement of business activity statements and income tax returns and non payment of employees withholding tax deductions to the Australian Taxation Office from 1 July 2002 to date in relation to [Q Company] Pty Ltd and [S Administration] Pty Ltd ATF the [Statham] Family Trust;
(c) Against any legal proceedings, claims, penalties and interests by the Australian Securities and Investment Commission for the non lodgement of any returns and non payment of any fees relating to [Q Company] Pty Ltd and [S Administration ] Pty Ltd ATF the [Statham] Family Trust;
(d) All outgoings with respect to the former matrimonial home, including any mortgage for which the property is security;
(e) Any liability owing to [L] Pty Ltd; and
(f) Any liability with respect to the [E] Pty Ltd overdraft and/or loan.
17A. Within 30 days the husband shall cause the mortgages presently secured over the property at [M] to be discharged.
18. That the husband shall do all things necessary to obtain a release by the wife from any personal guarantees provided by her to the Commonwealth Bank of Australia in relation to overdrafts for debts of [Q Company] Pty Ltd and the [Statham] Family Trust and the husband shall indemnify the wife in relation to any liability pursuant to such guarantees.
19. That the husband pay to the wife 22% of the net proceeds of sale of the husband’s shares in [F] Pty Ltd received by him after the deduction of any amount payable by the husband for GST, capital gain tax with respect to the disposition of the shares, and any tax payable in respect of any dividends or deemed dividends with respect to those shares within 28 days of receipt of any taxation assessment for the capital gains tax, GST and other income tax payable in respect of the dividends or deemed dividend.
20. All orders for costs previously made are discharged.
21. The husband and the wife shall each pay his or her own costs of these proceedings.
On 19 September 2006 the wife began to receive Centrelink unemployment benefits.
On 19 October 2006 orders were made by which the Orders of 29 August 2006 were varied. Specifically, Order 16A was varied pursuant to section 79A to enable the wife to pay costs of $70,000 to her solicitors. In her affidavit filed 15 April 2008, at paragraph 14, the wife said that effectively she did not, therefore, personally receive any of that sum of $70,000. The Order provided that:
1.Pursuant to s79A that Order 16A of the Orders of 29 August 2006 be discharged.
2.That the husband shall pay to the wife by way of property settlement the sum of $70,000 within 30 days to the wife’s solicitor Hannaway Lawyers Trust Account and then such proceeds shall be disbursed as follows:
a. outstanding amount to pay Impact Capital
b. 65% of the then remaining balance to Slade Manwaring; and
c. 35% of the then remaining balance to Hannaway Lawyers.
3. That the firm Slade Manwaring withdraw all garnishee orders issued to the husband, Farrar Gesini Dunn and Hannaway Lawyers, Solicitors and notify in writing when do so.
4. That the solicitors Alison Osmond and Ann Northcote of the firm Farrar Gesini Dunn be released from any undertaking and escrow orders given to the Family Court of Australia at Canberra on 28 September 2006.
5. For the purposes of Order 19 of the Orders of 29 August 2006 such payment shall be made by the husband to Hannaway Lawyers, Trust Account and then such proceeds shall be disbursed as follows:
a. in the event of any costs orders any costs outstanding to the husband
b. the amount outstanding to pay Slade Manwaring as communicated in writing by Slade Manwaring to the wife and her solicitors.
c. the amount outstanding to pay Hannaway Lawyers as communicated in writing to the wife; and
d. the balance to the wife.
…
On 30 October 2006 the husband paid the sum of $70,000 by bank cheque.
On 16 December 2006 the wife ended her relationship with Mr V. For the purpose of this application only I accept that assertion by the wife.
On 12 March 2007 the wife filed an Application for Final Orders, which commenced these current proceedings. The wife later filed an Amended Application for Final Orders on 31 May 2007 and a Further Amended Application for Final Orders on 15 April 2008.
On 16 April 2007 the husband filed a Response to an Application for Final Orders.
On 12 May 2007 a meeting took place between the husband and his brothers.
On 17 August 2007 the husband’s brother, P, wrote to his brothers in relation to the ongoing dispute.
On 20 October 2007 the husband wrote to his brothers, seeking to sell his shares.
In February 2008 the wife commenced to receive a disability pension from Centrelink.
On 27 February 2008 Judicial Registrar Johnston ordered, by consent, that the husband give the necessary written authorisation to the wife and her legal representatives to obtain from the liquidator of Statham Admin, Q Company and the Statham Family Trust such information as is requested by them. The wife’s Application in a Case filed 14 January 2008 was otherwise adjourned to 16 April 2008.
On 21 August 2008 I ordered that the application filed by the wife for leave under s44(3) to commence spouse maintenance proceedings out of time, together with the application of the husband for summary dismissal of the wife’s application under section 79A, be listed for a one day hearing before me on 15 December 2008. Ultimately the matter proceeded as a determination of a threshold matter, namely, whether some of the property orders made on 29 August 2006 should be set aside and the wife permitted to seek further property matters. The matter proceeded on the affidavit evidence and tendered documents. No witness was cross-examined. Some documents were tendered. Written and oral submissions were received. To the extent that the husband sought the dismissal of the wife’s applications such application must be seen as a request for summary dismissal. This will be considered further in these reasons.
On 1 September 2008 the husband and his brothers obtained independent advice as to the tax implications flowing from the inheritance of shares by each of them in corporations previously controlled by their father. In particular advice was sought as to the tax implications of the husband selling his shares to his brother.
On 28 October 2008 the husband and his brothers reached a settlement and a deed was prepared by Sparke Helmore, solicitors. Under the deed each of the three brothers were to pay the husband $195,000 as consideration for transferring to each of them two of his shares, with the total sum therefore being $585,000.
On 31 October 2008 the husband paid to the wife $128,700, that being 22 per cent of the sum of $585,000 received by him from his brothers.
On 12 December 2008 the husband provided updated details regarding his financial position following the transactions with his bothers, as noted above.
On 15 December 2008 the Further Amended Application for Final Orders filed 15 April 2008 and a Case Application filed 13 October 2006 came before me for hearing.
The Approach of the Parties and the Court
At the hearing before me there was no submission made about “summary dismissal”. The matter was presented as a request to determine as a preliminary matter whether the orders made should be set aside under section 79A based upon the evidence each party had presented to the court. It seemed clear that each party was seeking to avoid the expense of preparing the case on the basis of a possible determination that the final property orders would be set aside and therefore, further property orders required. Such an exercise would involve the parties obtaining valuation evidence necessary for such an exercise in circumstances where each professed to be unable or unwilling to expend the necessary funds to achieve such a state of readiness. In the circumstances of this case that was an understandable and appropriate approach to be urged on the court.
As I prepared these reasons it became clear that I did not have a clear and unambiguous agreement between the parties and the court as to the manner in which the application under section 79A was to be determined. Accordingly, I had my Associate send the following request to each of the parties’ legal representatives on 20 August 2009:
Memo to solicitors.
I am in a position to deliver judgment in this case subject to clarification on two procedural matters.
On 21 August 2008 I ordered that the application filed by the wife for leave under s44(3) to commence spouse maintenance proceedings out of time together with the application of the husband for summary dismissal of the wife’s application under section 79A be listed for a one day hearing before me on 15 December 2008.
In the hearing conducted before me in this matter there was no reference to a summary dismissal application by the husband. The matter was presented to me as a determination of the preliminary matter under section 79A, namely should the orders of 29 August 2006 be set aside. If, as a result of that determination, the orders are to be set aside then further directions should be made for the rehearing of the section 79 applications.
The approach I have taken is to accept the evidence of fact of the parties and their witnesses unless there is some inherent incredulity about a particular fact. On that platform of facts I have determined whether the wife has made out her case to set aside the orders. This is the approach I understand each counsel for the parties understood was to take place. Does either party suggest that I have misunderstood the approach I am required by the parties to take to decide the case? In other words, is it clear I am not being asked to determine an application for summary dismissal of the wife's application?
The application for leave to make an application for spouse maintenance out of time falls for consideration on the same basis. Does either party suggest otherwise?
If you agree with the approach above outlined please let my associate know as soon as possible. I will be taking leave for a few weeks from 27 August and would like to hand down the judgment before that date. If you have an issue with the approach outlined than the matter will need to be re-listed for further submission.
On 20 August 2009 I received a reply from the solicitor for the wife. In that email the wife’s solicitor said “I am able to confirm that His Honour’s proposed approach is correct and the approach contemplated by the parties”.
On 21 August 2009 I received a letter from the husband’s solicitor. I was advised by that letter that the husband agreed with the approach set out by me in the email of 20 August 2009 in relation to the section 79A application of the wife. In relation to the section 44(3) application of the wife a transcript had been urgently ordered to check information before responding further. On 25 August 2009 I received a further email from the husband’s solicitor which stated, “We confirm that the approach to the Application pursuant to Section 79A and the Application pursuant to section 44(3) outlined in the memo to solicitors dated 20 August 2009 accords with the approach Mr Brzostowski understood was to take place.”
Application and Response
On 15 April 2008 the wife filed a Further Amended Application for Final Orders seeking the following orders:
1.THAT the orders for property settlement made on 29 August 2006 in terms of paragraphs 19 and 21 of the “Terms of Settlement” filed in Court on that date be set aside pursuant to Section 79A Family Law Act 1975 (“the Act”).
2.THAT within one month of the date of Order 1 above being made, the husband pay to the wife by way of property settlement the sum of $500,000.
3.THAT pursuant to Section 44(3) of the Act, the wife have leave to commence proceedings for spousal maintenance out of time.
4.THAT the husband pay the wife’s costs of and incidental to this Application.
The husband set out the orders he was seeking in a document titled “Minute of Orders Sought by the Respondent Husband” dated 12 December 2008:
1.That the further amended Application filed by the wife on 15 April 2008 be dismissed.
2.That the wife be restrained from making any further Applications without the leave of the Court.
3.That the wife pay the husband’s costs of and incidental to these proceedings on an indemnity basis.
The Issues
In the husband’s summary of argument, extensive argument is provided to support a dismissal of the wife’s applications.
Counsel for the wife, at page 9 of a Case Summary dated 15 December 2008, provides a succinct summary of the wife’s argument as to why leave should be given permitting the initiation of spousal maintenance proceedings out of time. These can be summarised as follows:
a)The wife is impecunious - having no assets and relying on a disability pension as her sole source of income, in addition to her father for financial support and accommodation;
b)The husband is a self-employed professional who the wife asserts has a high income and appears to have substantial assets. Counsel for the wife contends that it is difficult to see how granting the wife the leave that she seeks would incur hardship to the husband considering that any payment of spousal maintenance is based on a party’s capacity to pay;
c)Counsel for the wife contends that, if the substantive application is permitted then it would likely succeed, and that the wife would suffer hardship if her claim was not heard. It is the wife’s position that the test in s44(3)(a) is satisfied;
d)It is said by Counsel for the wife that at all relevant times the wife has satisfied the test provided under s44(4) of the Act;
e)That the Court must consider whether, in exercising its discretion, leave should be granted. Counsel for the wife submits that the Court should be reluctant to refuse to allow the claim to proceed where delay has been explained, and where there is no real prejudice to the respondent.
The Wife’s Evidence
The wife’s primary affidavit in these proceedings was filed on 15 April 2008.
Points raised in the background chronology will not be repeated, unless expansion on that particular point is required.
Neither party nor their witnesses were cross-examined. I therefore accept the evidence of the wife which is set out hereafter and is a clear statement of fact unless I specifically comment to the contrary.
The wife said the husband has failed to pay the moneys as provided for by Order 19 of the 2006 consent orders. At paragraph 19 of the wife’s affidavit filed 15 April 2008, it is argued that this Order is “impracticable”, and provides the following reasons:
a.There is no obligation placed on the Respondent to sell his shares in [F Company] Pty Ltd.
b.So far as I am aware, it was not until 17 October, 2006 that the Respondent notified his fellow shareholders in [F Company] Pty Ltd of the 2006 Orders.
c.It was the agreement at the time of making of the 2006 Orders, that I should receive 22% of the value of the Respondent’s interest in the family business that was owned by [F Company] Pty Ltd, and not 22% of the value of his shares in that Company per se. As referred to herein, that interest, at the time of the 2006 Orders, arose from the husband’s entitlement to a 1/5th share as a beneficiary in his later father’s Estate. The Estate included his late father’s shares in [F Company] Pty Ltd, together with his late father’s shareholding in [Statham] & Co Pty Limited, that Company being the ultimate holding company of [F Company] Pty Ltd. It was indicated to me that the Respondent’s interest in [F Company] Pty Ltd was valued at approximately $1.1 million. This value was derived from a detailed Report prepared by the Respondent’s Accountant on 8 July 2006. A copy of which is now annexed hereto, marked with the letter “B”. Therefore, in total, I was told to receive an estimated sum of $242,000.
d.So far as I am aware, it was not until 20 August, 2007 that the Respondent made any attempt to sell his shares in [F Company] Pty Ltd. Now annexed hereto and marked with the letter “C” is a copy of a letter dated 20 August, 2007 apparently sent by the Respondents to his brothers, in which he states, inter alia:
“…As a means to resolving this matter quickly without further cost, I propose the Company buy my shares at a value of $750,000.”
The husband’s father passed away in January 2000. The wife said to the best of her knowledge the husband’s father was the primary shareholder in F Company through his asserted ownership of Class “A” and Class “B” shares, and also had primary shareholding in Statham & Co Pty Ltd. In relation to the transfer of these shareholdings to the husband and his brothers by the husband’s father, the wife said, in her affidavit filed 15 April 2008:
25. Subsequent to his death, the late [husband’s father] personal shareholding in [F Company] Pty Ltd was transferred to the Executors of his Estate, being the Respondent, his brothers [P] and [R Statham]. Further, subsequent to the death of the late [husband’s father], his shareholding in the ultimate Company [F Company] Pty Ltd, the primary shareholder being [Statham] & Co Pty Ltd, was transferred to the Executors of his Estate being the Respondent and his bothers [P] and [R Statham].
26. To the best of my knowledge, information and belief, there are continuing differences between the Respondent and his brothers, [P] and [R] as Executors of their late father’s Estate and continuing conflict between the Respondent and his four brothers as beneficiaries or otherwise of the Respondent’s interest in [F Company] Pty Ltd.
…
29. It is my belief that in the absence of any application by the Respondent to force the proper and due administration of his late father’s estate so as to cause his entitlement as a shareholder in [F Company] Pty Ltd and [Statham] & Co Pty Ltd, to be vested in him and thereafter by the Respondent to have the Companies wound up, there is no prospect that I will ever receive any monies pursuant to Order 19 of the 2006 Orders, or for my prospective entitlement under Order 19 to be quantified.
30. I wish to get on with my life. I am entirely dependent upon the Order made in terms of paragraph 19 for funds that will reflect, and compensate me for, contributions during the course of 16 years of marriage, and beyond. However, paragraph 19 is non-time specific, as to when I am to receive my entitlements. It appears that I will receive my entitlements, within 28 days after the Respondent receives a certain taxation assessment. But the Respondent has not yet even lodged his personal Taxation Return in respect of the financial year ended 30 June, 2003…
The wife said that there has been a miscarriage of justice under s 79A(1)(a) of the Act. At paragraph 31 of her affidavit filed 15 April 2008, the wife sets out her reasons for this assertion as being:
a.fraud, and/or suppression of evidence on the part of the Respondent;
b. failure by the Respondent to disclose relevant information;
c. the giving of false evidence by the Respondent; and
d. other circumstances.
Commencing at paragraph 32, the wife provides her account of the circumstances of the making of the consent orders, in particular her meetings with her then solicitor and counsel. The wife said that on the day before the hearing counsel told her she should have obtained valuations. In her affidavit evidence the wife said that on the first day of the hearing, negotiations took place. The wife said she told her counsel she needed $100,000 in order to pay her legal fees, in addition to 25 per cent of F Company. However, the wife said she accepted the husband’s proposal of an up front payment of $70,000 and that after listening to her counsel’s advice she accepted the offer of 22% of F Company.
Between paragraphs 45-46 of her affidavit filed 15 April 2008 the wife details her assertions regarding the alleged history of the husband’s non-disclosure.
The wife alleges the husband has partaken in fraud or suppression of evidence at the time the 2006 orders were made and therefore there has been a miscarriage of justice. I summarise the basis for these allegations as follows:
a)The husband has not filed personal tax returns since the year ending 30 June 2002, which the wife argues was deliberate fraud, both against the wife and this Court;
b)At the time the 2006 orders were made, the wife contends that the most recent financial statement which had been filed by the husband was dated 10 August 2004. The wife said she became aware that the husband had filed an updated financial statement three days before the hearing was to commence however she only became aware of the existence of this document after the finalisation of the 2006 proceedings, when her solicitors received a copy of the documents under cover of letter dated 8 October 2007. Those documents are Annexure “H” and Annexure “I” to the wife’s affidavit.
(I note no submission was made as to any particular entry in that document nor what impact that document might have had on the wife’s determination to sign the consent orders had she been aware of its’ contents. There is also nothing in the letter from the husband annexed as “H” to the wife’s affidavit (letter to CJD Dimock, solicitor dated 8 October 2007) to establish that it enclosed a copy of the husband’s Financial Statement which had been signed on 25 August 2006. The Financial Statement of the husband dated 10 August 2004 was not before the court.)
c)That the husband had failed to disclose his legal costs up the date first day of the hearing being made and that she was unaware of the source of payment of those costs. The wife said she understands that the legal costs of the husband should have been in the schedule of assets and liabilities put before the court on 28 August 2006, when the 2006 orders were made.
(I note the hearing in relation to the property dispute never proceeded. The wife could have sought the husband provide her with his “costs disclosure letter” as part of the negotiations. Rule 19.3 required each of the parties’ lawyers to have present to provide to the Court particular cost information.)
d)That the husband failed to disclose to the Court at the making of the 2006 orders he had been living in a de facto relationship with a Ms H. It is the wife’s contention that therefore the Court was unable to take into account Ms H’s financial circumstances in a situation where the wife said since July 2005 Ms G and her son had been residing with the husband at the M property.
(Clearly this was information known to the wife at the time of the settlement being agreed to by her. Had she been disturbed by any aspect of the alleged cohabitation by the husband with Ms H she should have refused the settlement)
On 24 January 2006 I made orders by consent. Order 2 of those orders required the husband to provide to the wife’s solicitors within 21 days, a “[c]opy of the taxation return and financial statement of [Statham Professional] Pty Ltd for the year ended 30 June 2005” and “[c]opies of the Husband’s individual income tax returns for the years ended 30 June 2003, 30 June, 2004 and 30 June, 2005.” At paragraphs 47-50 of her affidavit the wife alleges the husband has failed to comply with those Orders.
On 4 April 2006 I made further orders, including an order that the husband provide to the wife a number of financial statements, income tax returns and assessments for F Company. The wife alleges the husband failed to comply with Orders 1 and 2, which required that:
1.The husband cause to be sent by prepaid post to the wife a copy of the Financial Statements, income tax returns and assessments for [F Company] Pty Ltd for the years ended 30th of June 2002, 2003 and 2004 by the close of business on Friday 7 April 2006.
2.In the event of Financial Statements, income tax returns and assessments for that company coming into possession of the husband for the year ended 30th of June 2005 then upon such documents coming into his possession he is to forthwith cause a copy of it to be sent by prepaid post to the wife.
Following the production of documents as required by way of a subpoena on the husband’s accountant, Mr C, it is the wife’s evidence that on 22 October 2007 she became aware that Mr C had prepared, if only in draft form, a tax return for the husband for the year ending 30 June 2006 and provided this to the husband. However, the wife said at no time prior to the making of the August 2006 orders had a copy of that document been provided to her or her legal representatives.
The wife subsequently filed an Application in a Case on 14 January 2008, and orders were made by consent before Judicial Registrar Johnston on 27 February 2008. In her affidavit filed 15 April 2008 the wife said on that occasion the husband informed the Court he was unable to prepare his personal tax returns until group certificates had been issued by the liquidator of Statham Admin Services and Q Company. In summary, it was ordered by consent that the husband would authorise the wife to obtain from the liquidator of Statham Admin Services, Q Company and the Statham Family Trust such information as is requested by her. The wife’s interim application was otherwise adjourned to 16 April 2008.
The two companies Statham Admin Services and Q Company have been liquidated. On 14 December 2005 the wife said the husband appointed Mr I to act as the Administrator for both companies. At paragraph 53(b) of her primary affidavit the wife contends the reason for this was to prevent her from discovering the true financial position of the professional practice. In his affidavit filed 22 May 2008, the husband said the wife consented to the liquidation of the subject companies and agreed to resign as a director of Q Company. At that time the wife was legally represented. The wife said that around this time the husband also set up a new company, Statham Professional Pty Ltd, which has been the company which operates the professional practice in which the husband works.
The wife said it is her understanding that two reports were completed by Mr I in relation to Statham Admin Services and Q Company. She says copies of the reports were provided to the wife’s legal representatives following a hearing on 27 February 2008. The reports are Annexure “K” to the wife’s affidavit filed 15 April 2008.
In view of these reports, the wife said that since 14 February 2007 there has been nothing to prevent an independent accountant from collecting the records from Mr I to facilitate the completion of the outstanding tax returns and financial statements for Statham Admin Services and Q Company and then for the completion of the husband’s personal taxation returns for the financial years ended 30 June 2003 to 30 June 2007. This issue is further examined later in these reasons. An affidavit was filed by Mr N, a Chartered Accountant, on 25 February 2008 on behalf of the wife. I do not see that affidavit as particularly helpful to the case the wife seeks to make out; namely, that the husband should be able to complete his tax returns for the years ended 30 June 2003 to date.
The wife annexes a balance sheet which she has prepared, setting out the value of the assets which she said were in existence at the time of the August 2006 orders were made. The wife said that since that time the husband has acquired a property at B through which he operates the professional practice and has also purchased a vehicle for $40,000.
Leave to apply for spouse maintenance out of time
At paragraphs 58 – 60 of the wife’s affidavit filed 15 April 2008, the wife sets out her argument regarding leave to apply for spousal maintenance out of time. The wife sets out her explanation for the delay in commencing proceedings - the final day to do so having been 15 December 2006.
The wife’s explanation for her delay in commencing proceedings
The wife explains her reasons for delay, including that she was impecunious and she was unrepresented at that time. She was unaware that there was a restriction on time for commencing proceedings. The wife further said at the time of the 2006 orders she was in a relationship with Mr V, and was unaware that she could still have applied for orders in relation to spouse maintenance. The wife said she was periodically spending overnight periods with Mr V.
In her affidavit at paragraph 59, the wife said she filed an Application in a Case on 25 October 2004 seeking spouse maintenance. At that time there were interim parenting orders in place providing that she spend time with the children for two weekends during the school holidays. The wife said she moved into Mr V’s residence in Sydney, in part to ease the demands of travel between the northern coast and Sydney. It was not until a later stage that their relationship became more serious. In her affidavit the wife said she was still receiving a single parent pension and child support from the husband during the time that she continued to live with Mr V. She said she lived with him until September 2006.
In or about late November 2004 the wife deposes to a conversation she had with her then solicitor, Mr Hannaway, in which the wife said she was advised that her application for spouse maintenance was not likely to be successful whilst she was residing with Mr V. The wife said that on her then solicitor’s advice she withdrew her application for spouse maintenance.
The wife’s arguments in relation to the merits of her application
Since 16 September 2006 the wife has resided with her father in the northern coast area. She said her sole source of income is from a Disability Pension. She is dependent on her father to meet any shortfall in her expenses.
At paragraph 67 the wife said her Financial Statement filed on 10 April 2007 incorrectly stated that Mr V was a member of her household. She said she was actually living with her father in the northern coast area at that time. The wife’s father, Mr Sherman, filed an affidavit in these proceedings on 17 April 2008. In relation to that affidavit Mr Sherman said the wife was unrepresented in April 2007 and she was living with him.
The wife’s health
Under the sub-heading “The Merits of my Application” the wife identifies a number of issues, particularly in relation to her employment history and health. The wife deposes to having not worked since separating from the husband on 12 December 2003. Until the date of separation the wife was working for 2 and a half days at the husband’s business. At paragraph 62 the wife sets out her work experience following cohabitation with the husband. That experience includes work in a technical field, in addition to reception duties at the husband’s professional practice between 1995 and the date of separation.
The wife deposes to suffering a congenital hip disorder for which she has undergone numerous operations, most recently a hip replacement and reconstruction in 2000. The wife said her hip condition has affected her employment, including that in 1992 she resigned from her position at a Newcastle organisation because of pain and restrictions caused by her condition.
At paragraph 64 the wife summarises the particulars of her medical condition. The details provided include, most recently, that since at least 2005 the wife has experienced significant pain in her hip when undertaking certain activities, including not being able to drive for longer than 50km without stopping and difficulties in sitting in the same position for a period of time.
In his affidavit filed 17 April 2008, the wife’s father outlines his observations in relation to restrictions on the activities the wife is able to undertake as a result of her hip disorder, including that she is unable to lift heavy articles, and is unable to walk or drive for long distances without frequent breaks. The wife’s father also said the wife suffers from frequent panic attacks, frequently cries and has sleepless nights.
In or about 1994 the wife said she was referred to a pain specialist at Prince of Wales Hospital, and has been taking medication to control the pain in addition to an anti-depressant. The wife said she was referred to a psychiatrist in 2005, and since at least 2004 has suffered depression and anxiety, including panic attacks.
Affidavit of Dr Z, Psychiatrist
The wife’s treating psychiatrist, Dr Z, filed an affidavit in these proceedings on 16 April 2008. Dr Z first assessed the wife on 21 October 2005 and has since filed two reports for the purposes of these proceedings. The reports were annexed to his affidavit. The first report is dated 1 June 2007 (“Dr Z’s first report) and the second report is dated 23 March 2008 (“Dr Z’s second report).
In his Report dated 1 June 2007, Dr Z said he first saw the wife on referral from Dr W, a pain management specialist at Prince of Wales Private Hospital. Dr Z said the wife has suffered from anxiety and depression since 2004, with continuing stresses in relation to the husband, these proceedings and the continuing costs thereof and what Dr Z describes as the loss of her younger son, K.
In Dr Z’s second report, dated 23 March 2008, the frequencies of his consultations with the wife are outlined. In summary, the wife saw Dr Z for ongoing treatment, which he describes as supportive psychotherapy, each month between October and December 2005 and approximately once each month between February and November 2006 and again on 19 March 2007.
The assessment of Dr Z is that the wife suffers from a major depressive disorder with melancholic features, which requires medication. The wife was prescribed an antidepressant together with adjuvant treatment consisting of an antipsychotic and antianxiolytic medication.
In his 2007 Report, Dr Z said the wife’s situation has remained unchanged and if anything, has worsened. He said the wife has reported to him that the husband has made communication with the children difficult, and that in turn the wife feels frustrated and powerless which perpetuates her depressive symptoms.
In considering the wife’s prognosis Dr Z said he sees no easy resolution of the wife’s present dilemma, and discusses the financial stresses of the wife and her father and the wife’s isolation from the children.
The wife’s financial circumstances
The wife said her only source of income is from a disability pension. She filed a Financial Statement on 15 April 2008 in which her personal expenditure is said, on a weekly basis, to exceed her average income. The wife said her total average weekly outgoings are $653 whilst her total average weekly income is $269. She is not employed and is without any financial resources or superannuation, due to having withdrawn the amount of $24,206 (her superannuation) on hardship provisions. On the wife’s evidence she has a prima facie requirement for maintenance.
Although the wife has received the funds paid by the husband to her of $128,700 no explanation of how that money has been spent has been provided. Each of the bank records tendered by the wife show no deposit of funds at the relevant time to suggest the funds have been paid into her account. I think probably most, if not all, of the moneys have gone to pay legal costs or to pay debt. She owed her father at least $42,000. I do not see the lack of explanation as determining the wife’s application to seek spouse maintenance.
In the affidavit of the wife’s father filed 17 April 2008 he said the wife lived with him between December 2003 and December 2004 and has been living with him since September 2006.
As discussed earlier in these reasons, the wife’s evidence is that she depends upon the financial support of her father to meet the shortfall in her expenses. In his affidavit filed 17 April 2008 the wife’s father said at paragraph 7 that he assists the wife, including paying $82 per week on the wife’s behalf to GE Finance in relation to a personal loan.
The wife’s father further said that between 2004 and the time of swearing his affidavit, on 15 April 2008, he had advanced to the wife the total sum of $42,000, pending the finalisation of the property proceedings.
In the wife’s affidavit filed 15 April 2008 she said that since 16 September 2006 she has been reliant on unemployment benefits, before becoming entitled to a disability pension. Annexure “M” to that affidavit is a Job Capacity Assessment Report, completed for Centrelink purposes. In the Assessment Summary contained in that Report, it was noted that:
“Clients ability to work is currently limited to 0-7 hours per week due to symptoms of depression and a hip injury. Due to the severity of ongoing chronic pain and the clients limited functional capacity and inability to perform some activities of daily living and domestic tasks as well as the clients symptoms of depression, it is unlikely the client would be able to maintain employment. TDR confirms that clients conditions are likely to last for longer than 24 months. The clients capacity to work is expected to remain limited to 0-7 hours per week within 24 months without intervention due to ongoing permanent symptoms. Clients capacity to work may improve to 8-14 hours per week within 24 months with intervention.”
Affidavit of Mr N
Mr N is a Chartered Accountant and director of N Accountants Pty Limited. He swore an affidavit on 25 February 2008. No objection based upon Rule 15.51 was made to the wife relying upon the evidence of Mr N.
Mr N received instructions from the wife’s lawyers in a letter dated 20 February 2008. That letter contained the following questions:
(1)Whether, on the face of the 3 enclosed documents, there appears to you to be any impediment to the preparation of [the husband’s] personal Taxation Returns, for financial years ended 30 June 2003 to 30 June 2007.
(2)Whether, by reference to those same documents, there appear to you to be any impediments to the preparation of Financial Statements and taxation returns for [Statham Professional] Pty Ltd, for financial years ended 30 June 2005 to 30 June 2007 inclusive.
(3)If, merely by reference to the documents enclosed, there would appear to you to be difficulties in the finalisation of those Taxation Returns and/or Financial Statements, please identify those issues and advice how you, as a Chartered Accountant, would address them, in order to expedite the preparation of those financial documents.
Attached to the letter sent to Mr N was an affidavit of the husband sworn 1 February 2008; an affidavit of Mr C, sworn 3 April 2006; an affidavit sworn by Mr I on 29 March 2006 and a Current Extract for Statham Professional Pty Ltd. None of those documents were placed in evidence by the wife.
Mr N provided a response by letter dated 21 February 2008. In summary, he said that on the face of the three documents provided to him there does not appear to be an impediment to the preparation of the husband’s personal taxation returns for the years ended 30 June 2003 to 30 June 2004, other than the provision of information by the liquidator to the husband’s accountant. Mr N goes on to say that the only impediment to the preparation of the husband’s taxation returns for the years ended 30 June 2005 to 30 June 2007 is the preparation of accounts for Statham Professional.
In relation to Q Company and the Statham Family Trust, Mr N said it would appear that these accounts were completed by February 2007 and that there does not, therefore, appear to be an impediment to the preparation of accounts and taxation returns for Statham Professional for the years ended 30 June 2005 to 30 June 2007 other than provision of information by the liquidator to the husband’s accountant. Mr N did say, however, that he was not in a position to contradict the statement made Mr C in paragraph 8 of his affidavit. I note the husband did not read the affidavit of Mr C. I do not know what was in paragraph 8 of that affidavit.
As a consequence of not being able to see the evidence of Mr C and thereby unaware of the impact of paragraph 8 I am left with the dilemma of assessing the weight to be attached to the evidence of Mr N. In the circumstances I am left with the conclusion that I cannot give any significant weight to the thrust of the evidence of Mr N that the husband should be able to file his tax returns for the financial years ended 30 June 2002 and following.
The Husband’s Evidence
The husband set out the orders he is seeking in a document titled “Minute of Orders” and dated 12 December 2008, as follows:
1.That the further amended Application filed by the wife on 15 April 2008 be dismissed.
2.That the wife be restrained from making any further Applications without the leave of the Court.
3.That the wife pay the husband’s costs of and incidental to these proceedings on an indemnity basis.
The husband’s affidavit filed 16 April 2007
The husband filed an affidavit on 22 May 2008, and notes that he has read the wife’s affidavit sworn 14 April 2008 and filed in support of her present application.
In his affidavit filed 22 May 2008 the husband sets out a history of the legal representation of the wife and said the wife has been variously represented throughout the history of the proceedings, in addition to periods of being self-represented. The husband said, at paragraph 11, that in order to have the wife sign the documents to give effect to Orders 16 to 17A inclusive of 29 August 2006 he filed an application under s106A. The application came before a Registrar on 28 September 2006 at which stage the documentation was then signed by the wife. The matter was further heard on 19 October 2006 and consent orders were subsequently made for the funds due to the wife under Orders 16A and 19 of the final consent orders to be paid to the wife’s legal representatives.
At paragraph 10 of his affidavit, the husband said that his counsel, Mr Millar, prepared a document entitled “The Husband’s Case Summary Document” for the hearing in August 2006. That document set out what the husband asserted was the parties’ financial position at that time and which in turn was filed with the Court and also served on the wife’s legal representatives prior to the hearing.
The husband’s Response to the wife’s claims under s79A(1)(a) of the Act
The husband’s affidavit filed 22 May 2008
The husband set out his evidence in relation to the wife’s argument under s 79A(1)(a) in his affidavit filed 22 May 2008.
The husband refutes the wife’s claims in paragraph 31 of her affidavit filed 15 April 2008, and as set out earlier in these reasons. The husband said the parties’ assets had either been valued or agreement had been reached as to value; however, the values of the companies and trust which managed the husband’s professional practice were in contention.
In his affidavit the husband said that during 2005 the company’s accountant, Mr C, recommended that Q Company and Statham Admin Services be placed into liquidation. Mr I was subsequently appointed as administrator and liquidator. In addition, the husband said at paragraph 46 that Mr C prepared a valuation of the husband’s interest in F Company, which he believes was sent to the wife’s solicitors on 21 August 2006. The husband said the wife therefore had this report at the hearing. He also points to the fact that both Mr C and Mr I were available for cross examination at the final hearing on 28 August 2006.
The husband further said that on 28 June 2005 he sought orders, which were opposed by the wife, that Mr C be authorised to complete all the financial returns for the companies Q Company, S Administration and Statham Admin Services and the Statham Family Trust.
On 30 November 2005 the husband said orders were made appointing Mr Y to value Statham Professional. Mr Y was later replaced by Mr G pursuant to orders of 24 January 2006. He said the Orders of 30 November 2005 provided for the completion of taxation returns for Statham Professional to be provided to the expert. However, the husband said he was advised by Mr C that the taxation returns were not able to be completed without the Liquidator’s Report. The husband refers to the affidavit of Mr C of 31 March 2006.
Subsequently, it is the evidence of the husband that the Liquidator advised he would appoint an independent accountant to prepare the company’s financial returns.
On 24 January 2006 orders were made appointing Mr G as the expert to prepare valuations for the Court. The husband was required to file and produce his outstanding personal taxation returns. It is the husband’s evidence that he provided the financial data for Statham Professional to his solicitor who in turn provided it to Mr G.
The husband said he was advised by Mr C that the liquidator’s report would be required in order for the husband’s personal taxation returns to be completed.
At paragraph 34 the husband commenced setting out his evidence in relation to difficulties in the completion of Mr G’s report. The husband said the wife swore an affidavit on 4 April 2006, in which she said, at paragraph 55, that she was unable to meet her portion of the single expert’s fees. This affidavit was served on the husband’s solicitors on 5 April 2006. The husband contends that at the hearing on 4 April 2006, the wife, who was self-represented, did not inform the Court of her position in relation to meeting her share of the payment of the single expert.
Annexure “F” to the husband’s affidavit is a copy of a letter dated 7 April 2006 to the husband from his solicitor informing the husband that the wife may not be able to meet her share of Mr G’s fees. Consequently, it was confirmed by G Practice that the wife’s share of the payment could be deferred until the finalisation of the matter. Annexure “G” to the husband’s affidavit is a copy of a letter from the wife to the husband’s solicitor rejecting that offer, and confirming she would pay her share of Mr G’s fees.
The husband said a Letter of Instruction was sent to G Practice on 13 April 2006. Annexure “H” to the husband’s affidavit is a letter from G Practice advising of a number of issues, including that they could not complete the report until the liquidator’s reports had been completed and that the report would not be able to be completed by the next hearing date on 22 May 2006.
The husband said that following the 22 May 2006 he was advised by his solicitor that the wife was not able to meet her share of the expert’s fees and asked the Court to set down the matter for hearing without that evidence. She asked that the Court value the entities. The husband annexes a copy of a letter, Annexure “K”, sent by G Practice to his solicitors providing their final account and advising they would return the material upon receipt of the funds.
The husband said the wife did not, either on 22 May 2006 or subsequently, demonstrate evidence of non-disclosure of financial information. However, the husband points to affidavits filed by the wife on 10 November 2005, 4 April 2006 and 29 June 2006 in which non disclosure of financial information on the part of the husband is alleged and which preceded the wife signing the consent orders.
At paragraphs 48 to 50 the husband sets out his evidence in relation to the settlement negotiations undertaken on 28 August 2006, the first day of the hearing, and which resulted in the signing of consent orders the following day.
On 17 February 2007 Mr I released his report and a proposed repayment program in relation to Q Company and Statham Admin Services.
At paragraph 51 of his affidavit the husband refers to his affidavit of 24 March 2006, in which it is said the combined debts of the companies and also the moneys received under his late father’s Estate were set out and relied upon for the final hearing.
At the time of swearing this affidavit the husband said the taxation returns for Statham Professional had not been completed as Mr C was awaiting further advice from the liquidator, who (it is said by the husband) was in turn waiting on details requested from the wife’s father and accountant on 19 April 2006.
The husband sets out at paragraph 53 sums which he said have been paid by him in satisfaction of debts of the marriage. These debts include the payment of the mortgage, sums towards the settlement of the liquidated companies and credit card debts which were said to have been jointly incurred.
In relation to the Estate of his late father, the husband sets out matters relating to F Company, which is wholly owned by Statham and Co Pty Ltd. He also details the dispute between himself and his brothers relating to the execution of his father’s Will as it relates to the companies. Three of the beneficiaries (his brothers) who hold positions as Directors in the company and who worked in the business believed they were entitled to a greater legacy under the will of their father to that which they received.
At paragraph 64 the husband refuted any allegations that he has deliberately refused to resolve the dispute in relation to the Estate, and said he needs to realise the value of his interests in order to fulfil his obligations under the consent orders. The husband said he was reluctant to commence legal proceedings against his brothers; however he engaged solicitors to act on his behalf to assist in the resolution of the dispute. In support the husband provided, as Annexure “M” copies of correspondence dating from 8 June 2000 to 14 May 2008, which he said demonstrate the steps undertaken by him to resolve the dispute in relation to his late father’s Estate.
The husband’s affidavit filed 15 December 2008
The husband filed an affidavit on 15 December 2008. Annexure “C” to that affidavit is a series of letters between the husband and his brothers which set out the history of negotiations in relation to the husband’s interest in F Company. The letters set out a series of offers and counter offers between the husband and his brothers between 20 May 2008 and 20 June 2008.
Annexure “A” to the husband’s affidavit is a copy of a Deed of Settlement and Release entered into between the husband and his brothers, P, R, A and W Statham and F Company and Statham & Co.
The husband said there were delays between June 2008 when his brothers and he reached agreement and October 2008, as the lawyer for the estate and the company accountant each were unavailable (on leave). Each of the husband and his brothers obtained independent advice as to the taxation implications of the sale of the shares, such advice being received by the husband in September 2008.
The settlement saw the husband receive $585,000. He forwarded a cheque for $128,700, being 22 per cent of the net proceeds of sale of his interest in F Company, to Douglas Hannaway of Hannaway Lawyers. The husband said he also sent a letter to the wife’s solicitors and notified Slade Manwaring Solicitors.
At paragraph 8 of his affidavit the husband details how he applied the balance of the funds received from F Company, such funds being paid out to the total of $307,625.87. The payments made included the satisfaction of outstanding legal fees and loans. The husband also said he made a final payment in the sum of $7,784.86 to an ANZ Visa account held by the husband and wife and a payment to L Pty Ltd of $30,000 in relation to a debt outstanding from the earlier proceedings which the husband said he assumed on behalf of the wife. He said there remain a number of outstanding debts, including debts in the joint names of the parties. The husband has an unknown liability to the Australian Taxation Office.
The husband provided as Annexure “D”, a copy of advice obtained from an accountant, Mr S, in relation to the taxation consequences from the inheritance and sale of the shares in Statham & Co.
The husband’s response to the wife’s application for leave to apply for spousal maintenance out of time
In the husband’s affidavit filed 22 May 2008, he sets out his evidence in relation to the wife’s application for leave to apply for spousal maintenance.
The husband asserted that the wife had failed to establish she was no longer in a de facto relationship. He said he had evidence which would support a conclusion that her relationship with Mr V was subsisting.
The husband quotes from an affidavit of the wife sworn 19 January 2005 as follows:
“I have now commenced a relationship with [Mr V]. [Mr V] lives [in Sydney]” And in paragraph (sic) she states “Since 11 December 2004 I have been living with [Mr V] at his address at [Sydney].”
The husband’s current financial circumstances
In the husband’s affidavit filed 22 May 2008, at paragraph 1043, he set out the expenses in relation to the children which he meets, as follows:
i. Daily living costs;
ii.School expenses and school fees totalling $18,020.29 (from Final Orders);
iii. Clothing for the children totalling $3,285.68 (from Final Orders);
iv.Sporting and entertainment expenses $6,463.29 (from Final Orders);
v. Medical and dental expenses $8,387.45 (from Final Orders).
The husband said he receives $12.76 per fortnight in child support from the wife and is also responsible for transportation costs for the children to Sydney, for the amount of $7,457.29.
The husband filed a Financial Statement on 15 December 2008 in which he lists his total average weekly income as $4,000, and his total personal expenditure as $3,162. The husband said the total gross value of his superannuation is $62,723. He has no financial resources.
In his affidavit filed 22 May 2008 the husband said he has been in a relationship with Ms H since in or about July 2005, and that they commenced residing together in February 2007; however, they maintain separate financial interests.
In relation to each fact asserted in the evidence of the husband and referred to above I have no reason to doubt the veracity of same.
Relevant Law
Counsel for each party provided case outline documents which summarised the arguments being advanced. Cases were referred to in those outline documents.
The matter was listed to determine as a preliminary matter the wife’s application to set aside the consent property orders under section 79A. As each party had spent large sums of money on litigation in the court I agreed to hear the matter on that basis. If I determine the property orders made 29 August 2006 should be set aside then I will make procedural orders for the matter to proceed further so that further orders under section 79 might be considered.
Section s79A of the Act
The purpose of s 79A of the Act is to allow for the setting aside of final property orders which altered the property interests of the parties. The applicant wife seeks to re-agitate property matters.
Section 79A provides an avenue for redress, in appropriate circumstances, while simultaneously maintaining the need to protect the finality of proceedings.
In the Case Outline filed by the wife, it is argued that the wife’s s 79A application comes within either s7 9A(1)(a) or s 79A(1)(b). It is useful to set out the provisions.
(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
…
The court may, in its discretion, vary the order or set aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.”
Section 79A Application
The written submissions provided by the wife in support of her application under s 79A specify that the wife relies upon s 79A(1)(a) and/or s 79A(1)(b). The wife’s case is that the orders complained of (Orders 19 and 21 of the Orders made 29 August 2006) presume “a reasonable prospect of the husband being able to realise by sale the value of his shareholdings in [F Company].” As against that, it is submitted “the husband knew there was a long running and protracted argument with his siblings as to the very asset the subject of the orders.”
It is further submitted that the order (Order 19) “was underpinned by the expectation that the husband was in a position to file appropriate returns (tax returns) to allow calculation of his taxation liabilities and hence the net figure payable to the wife.” It is submitted that contrary to that expectation the husband had not filed returns since the year ended June 2002 and “knew that by reason of the administration of various of his entities and the circumstances of that administration that the prospect of filing those returns was negligible.”
It is further submitted,
“the husband made available to the wife and the court a valuation, that was relied on by the wife, that in effect was meaningless by reason of the ongoing and protracted dispute between the husband and his siblings over not only the value of the husband’s underlying shareholding in [F Company] but the very administration of the estate pursuant to which the husband had an expectancy of being entitled to the shares in [F Company].”
Relevant evidence
In his affidavit sworn 12 December 2008 the husband annexes as Annexure A the Deed of Settlement and Release entered into between he, his brothers, F Company Pty Limited and Statham and Co. Pty Limited. The deed is dated 27 October 2008. The deed recites complaints made by the husband against executors of the will of his late father. The deed contains a release by the husband against all other relevant parties. The deed provides for the husband to receive $195,000 from each of his brothers P, R and W. In consideration of those payments, the husband transferred his shares in relevant companies to those persons.
The husband in his affidavit recites that he entered into the Deed of Settlement and Release with his brothers on 27 October 2008. On 31 October 2008 he forwarded a cheque for $128,700 (being 22% of the net proceeds of the sale of his interest in the family company F Company) to Douglas Hannaway of Hannaways Lawyers (that is the payment of the wife’s entitlement under orders 19 and 21 of 29 August 2006).
The husband said in his December 2008 affidavit that the resolution of his disputes with his brothers in relation to his father’s estate was brought about “after lengthy and intensive negotiations between my brothers and me.” Annexed to his affidavit and marked “C” is a series of letters between the husband and his brothers reflecting the negotiations. I have read those letters and there is nothing in that evidence to suggest that the deed entered into between the husband and his brothers as aforementioned was a sham. I accept the husband’s evidence that the resolution was a compromise. Clearly, had the husband and his brothers been unable to reach an agreement there would have been expensive and protracted litigation. He said that in September 2008 he and his brothers obtained independent advice from an accountant, Mr S, on the taxation consequences of inheriting and then selling shares in Statham and Co. Pty Limited. The husband attached a copy of that advice to his affidavit. The annexure shows that the husband will not have a liability for capital gains tax arising from the transactions or the inheritance.
In his affidavit filed 16 April 2007 the husband points out that the settlement which gave rise to the Orders of 29 August 2006 was based upon a minute of order filed in Court on his behalf as part of his case summary document. He annexes a copy of that document to his affidavit.
The husband deposes to the difficulty experienced by him and the cost incurred in seeking to comply with Order 16A of the final orders which required a payment by him of $70,000 to the wife.
In the husband’s affidavit sworn 15 May 2008, he sets out some relevant history in relation to the proceedings. In particular, I note the following.
On 16 June 2005, consent orders were made appointing Mr Y as the independent expert to value the various entities including the value of the husband’s interest in his late father’s estate. This was to be funded by a loan which the parties had consented to raising by Court Order dated 23 May 2005. $130,000 was to be borrowed for that purpose.
In January 2006 the parties agreed to appoint an independent expert, Mr G, in place of Mr Y who was no longer available to carry out the valuation work. On 24 January 2006 orders were made confirming Mr G’s appointment. The Orders further required the husband to file and produce outstanding personal taxation returns. The husband said he was unable to comply with that order because his accountant could not complete the returns until there was a report available from the liquidator of various entities which had been owned and managed by the parties in the course of cohabitation.
On 4 April 2006 the wife filed an affidavit in which she said, “I am no longer in a position to pay my share of the fees for the single expert valuer.”
The husband’s solicitors made arrangements for Mr G to defer the wife’s share of his costs until after the proceedings. That offer was made to the wife. The wife refused the offer.
On 22 May 2006 there was an attendance before the Court. On that occasion the wife confirmed she had no funds to pay for the independent expert’s fees. The wife sought that the matter be set down for trial and the Court do its best to value the various entities.
The matter having been allocated a hearing date for 28 August 2006, the husband said on 4 July 2006 Hannaways Lawyers filed a Notice of Address for Service on behalf of the wife.
At the husband’s request, his accountant, Mr C, prepared a valuation of the husband’s interest in F Company. This was sent to the wife’s solicitors on 21 August 2006.
One of the matters which the husband draws to the Court’s attention is the transcript of the proceedings on 29 August 2006. In his submissions supporting the orders being made, Mr Millar, on behalf of the husband, said:
“the accountant says “I think that 20% (of the) shareholding is worth about 1.1 million”. If he’s right about that he says there would be tax payable on that. Because we don’t know what the gain would be that would be the taxable gain, therefore we can’t estimate the tax payable but we know that there’s likely to be tax payable. So that’s as far as we can go in trying to get a handle now on what the net effect of that is. The husband is in dispute with his brothers who are the executors.”
Mr Millar spoke about the possibility of litigation and the cost associated with that litigation if settlement was not reached amicably between the husband and his brothers. He said,
“So it’s really quite speculative and I put what I do about figures just that is what the evidence indicates. We just don’t have better knowledge than that. I hear what my friend says about the speculation about “well, that should mean about $220,000 or whatever it is” (will be the wife’s benefit under the orders proposed). I just can’t provide better than that and it’s the case- one advantage of this settlement is that it’s to try and get finality in a case where there look to me anyway to be at least a possibility that the court could take the attitude of saying “well, how do I know what the property pool is, I won’t know until the litigation is resolved, if it is litigation. Therefore under s 79(5) stand it all over, which of course one can see the neat attraction of that as a legal exercise because the court’s task would be much more precisely done but the disadvantage is obvious as well to everybody about not having finality and so we’re all taking a chance in a sense on what that outcome’s going to be in our speculation about what the net effect of it will be in dollars. That’s the best I can do your Honour.”
In his submissions, on 29 August 2006, in supporting the orders being made, Mr Peatey, counsel for the wife, told me that the wife’s legal costs amounted to about $120,000. Thus, it was that she would not receive any of the $70,000 which the husband was to pay to her under the orders.
The wife’s affidavit sworn 14 April 2008 sets out her evidence in support of her application. In my view, that evidence does not support any order which would see the Court Orders made 29 August 2006 disturbed in any way.
Prior to the hearing on 29 August 2006 the wife had every opportunity to investigate the financial affairs of the husband and herself and, in particular, the husband’s interests arising under his father’s estate. Ultimately she did not do that because, it appears, she could not afford to contribute to the cost of the single expert carrying out the valuation work. Rather than pursuing the single expert, the wife sought to have the Court determine, as best it could, the value of the husband’s interest in the company which had been operated by his father and which was left to the husband.
In an attempt to be of assistance to the Court and further to discharge his obligation to disclose his financial position, the husband had his accountant prepare a valuation as best could be done, of the husband’s interest in the companies formerly owned by his father. That valuation was prepared by Mr C who had filed an affidavit and was available at the trial in August 2006 to be cross-examined by the wife if she so chose.
I do not accept that there has been any undue delay on the part of the husband in implementing the orders of the Court. The original order (Order 19) contained no time provision other than the requirement to make a payment to the wife with 28 days of the husband having received the proceeds of the sale of his shares and having been able to pay any GST or capital gains tax or other tax payable in relation to the receipt of the sale proceeds. The evidence before the Court at the time the orders were made clearly stated the position that the parties were unsure when the sale proceeds might be available. The record clearly shows the disclosure of a dispute between the husband and his brothers about the entitlements to their fathers’ estate. The fact that the order was devoid of a time provision in which the husband was to receive the sale proceeds of the shares or to cause his shares to be sold is ample acknowledgment of the uncertainty about when he might be in a position to sell his shares.
It is objectively evident that the wife entered into the consent orders represented by a solicitor and counsel. She must have understood the implication of providing no time provision in which the husband was to sell his shares. The only inferred provision can be that the husband will act diligently to secure the sale of the shares as soon as reasonably practicable. I am not satisfied the husband did not do that. The evidence establishes that once an agreement was reached with his brothers for the sale of his shares he acted promptly to ensure the wife received her entitlement to 22% of the net sale proceeds.
It seems on the evidence that the husband has paid the wife the dollar equivalent of 22% of the net sale proceeds of his shares in F Company Pty Limited without having deducted any amount payable for GST or capital gains tax. The wife, therefore, can have no complaint about that.
It should be noted that when the content of the Deed of Settlement and Release is closely studied it is evident that the husband did not receive anything from the sale of shares in F Company Pty Limited. The shares in that company were effectively transferred to Statham & Co Pty Limited and in exchange, Statham & Co Pty Limited issued shares to each of the brothers. The husband then sold those shares to his brothers for $585,000. Notwithstanding those circumstances the husband paid to the wife 22% of the funds received by him from the transaction as a whole. Clearly in the circumstances had the husband said to the wife, “I am sorry but I received nothing from the sale of [F Company] shares therefore you get 22% of nothing” then the wife’s application under s 79A would have a different circumstance to be considered and success would be expected to have enhanced prospects. The point is that the husband did none of that. He approached the matter reasonably, rationally and appropriately in making the payment to the wife.
The wife in her submissions relies on s 79A(1)(b). The wife submitted that the subject orders were impracticable. She said that no time limit was provided for the sale of the husband’s interest in F Company. She said the orders further provided no time limit in which the husband was to file his taxation returns. This was necessary for the purpose of the calculation envisaged in Order 19. Ultimately, the evidence establishes, it was unnecessary for the husband to lodge his personal tax returns in order to ascertain the amount the wife was to receive from the sale proceeds of the husband’s shares.
The wife said the valuation of the husband’s shares in F Company (as prepared by Mr C) suggested a value contemplated by sale on the open market. In relation to this last matter, in the circumstances it must have been evident that the most likely purchasers of the husband’s shares in the subject company would be the husband’s brothers who had been involved in the operation of the company prior to the demise of their father. The husband had disclosed that certain of his brothers had worked in the company with their father before his demise and as a consequence were claiming a greater interest in the company than their father’s will provided. Those circumstances warranted consideration of compromise and receipt by the husband of less than the commercial market value of the shares had the company been sold as a whole. Considerations of the time the company might take to sell, and the cost of inevitable litigation which was brewing between the beneficiaries to the subject will, are but two matters which should have been entertained by the husband as a prudent business person in that circumstance. There is nothing to suggest a sham transaction between the husband and his brothers. In my view, there is nothing in the wife’s case in relation to s 79A(1)(b) which would warrant the Court setting aside the orders complained of.
In her case outline the wife relied upon the “any other circumstance” provision of s 79A(1)(a). In order to establish that ground it is necessary to establish that there has been a “miscarriage of justice”. In this case the miscarriage suggested by the wife seems to be that she received $128,700 pursuant to Order 19 of the relevant orders rather than a maximum of $242,000. In the submissions made by the wife’s counsel at the time the subject orders were made, he told the Court the wife was anticipating about $200,000 as her “best estimate”. Her counsel told me the wife was expecting $270,000 as her 22% of the proceeds to be received by the husband less tax (see page 6 of the transcript of 29 August 2006). Clearly no allowance was made for any compromise of what appeared to be a genuine dispute about the amount which might be distributed to the husband from his father’s estate. I note that 22% of $1.1 million is in fact $242,000. I should also point out that the valuation by Mr C which is annexure “B” to the wife’s affidavit sworn 14 April 2008 values the husband’s interest in F Company at $1,053,680. It is difficult to see, therefore, how the figure of $270,000 was calculated by the wife. The wife referred to the dispute between the husband and his brothers in her own evidence. I reiterate what she said here:
26. To the best of my knowledge, information and belief, there are continuing differences between the Respondent and his brothers, [P] and [R] as Executors of their late father’s Estate and continuing conflict between the Respondent and his four brothers as beneficiaries or otherwise of the Respondent’s interest in [F Company] Pty Ltd.
…
29. It is my belief that in the absence of any application by the Respondent to force the proper and due administration of his late father’s estate so as to cause his entitlement as a shareholder in [F Company] Pty Ltd and [Statham & Co] Pty Ltd, to be vested in him and thereafter by the Respondent to have the Companies wound up, there is no prospect that I will ever receive any monies pursuant to Order 19 of the 2006 Orders, or for my prospective entitlement under Order 19 to be quantified.
Again, the wife’s own evidence raises questions as to the reality of a value of $1.053 million for the husband’s entitlement from the company F Company if the only method of realising that entitlement was to wind up the company. This must be therefore another matter which the husband was entitled to consider when agreeing upon a price for the payout of his interest in the company.
In her submissions on the current application the wife suggests there might be “mutual mistake” involved in the case. I cannot see that on the facts. The husband made it clear to the Court that he was not warranting the amount the wife might receive as her 22%. He made it as clear as it could be made that there was a considerable number of circumstances which needed to be taken into account and which were at the time unknown.
It appears to be submitted on behalf of the wife that as she did not receive about $200,000 as her share of the sale proceeds of the husband’s shares then there was a miscarriage of justice. In the context it appears to be suggested that in the circumstances which evolved the receipt by the wife of $128,700 would mean that the wife had not received a settlement of property which was “in the range” and thereby create an injustice. This fails to consider that if the wife was to receive about $200,000 then the husband would have anticipated retaining about $800,000 for himself. As it transpired he retained $456,300 after the payment to the wife.
Given all the facts of the case which were placed before the Court on 29 August 2006 and those which have since been placed before the court it seems to me that the ultimate payment to the wife of the $128,700 was well within the range of available results. Further, given what the wife said in her own evidence about the dispute between the husband and his brothers and her own view that in the absence of litigation instituted by the husband against the estate and/or the other executors there would be no resolution or conclusion, the husband’s compromise settlement seems on its face a very prudent conclusion to the dispute by all parties.
Having considered all of the evidence placed before the Court and all of the submissions I comfortably come to the conclusion that the wife has failed to make out her case to set aside the orders made on 29 August 2006. Accordingly I would dismiss the wife’s application under s 79A.
Application to Commence Maintenance Proceedings Out of Time
Leave to apply for spousal maintenance out of time
The other provisions of the Act relevant to these proceedings are s 44(3) and (4) of the Act, which I here set out:
(3) Where, whether before or after the commencement of section 21 of the Family Law Amendment Act 1983 :
(a) a divorce order has taken effect; or
(b) a decree of nullity of marriage has been made;
proceedings of a kind referred to in paragraph (c), (caa), (ca) or (cb) of the definition of matrimonial cause in subsection 4(1) (not being proceedings under section 78 or 79A or proceedings seeking the discharge, suspension, revival or variation of an order previously made in proceedings with respect to the maintenance of a party) shall not be instituted, except by leave of the court in which the proceedings are to be instituted or with the consent of both of the parties to the marriage, after the expiration of 12 months after:
(c) in a case referred to in paragraph (a)--the date on which the divorce order took effect; or
(d) in a case referred to in paragraph (b)--the date of the making of the decree.
The court may grant such leave at any time, even if the proceedings have already been instituted.
(4) The court shall not grant leave under subsection (3) or (3A) unless it is satisfied:
(a) that hardship would be caused to a party to the relevant marriage or a child if leave were not granted; or
(b) in the case of proceedings in relation to the maintenance of a party to a marriage--that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit.
The parties were divorced on 15 November 2005. The time for filing an application for spouse maintenance (without leave) expired therefore about 15 December 2006. As stated earlier, the wife commenced to receive a Centrelink unemployment benefit on 19 September 2006. I accept that she was still in receipt of that payment on 15 December 2006.
It is a requirement of s 44(4) that for leave to be granted under s 44(3) the Court must be satisfied “that hardship would be caused to a party to the relevant marriage or a child if leave were not granted” or alternatively, that the applicant was, at the time the 12 months concluded during which she could have made an application for spouse maintenance without leave, dependant upon an income tested pension, allowance or benefit (my paraphrase). The evidence supports a conclusion that the wife was at the relevant time in receipt of such an allowance or benefit.
Relevantly, s 72(1) also states that “[a] party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately” by reason of the three categories of factor set out, with regard to any relevant factor under s 75(2).
It is clearly the wife’s case that she is likely to be successful in satisfying the Court that she has a relevant need for maintenance and that the husband has the capacity to meet that need.
The wife relies upon the decision in Keith & Soukis [2007] FamCA 1017 (31 August 2007) as setting out the relevant principles for the Court in determining an application for leave:
“Applicable principles
28. Subsection 44(3) of the Act provides that:-
(3)Where, whether before or after the commencement of section 21 of the Family Law Amendment Act 1983:
(a) a divorce order has taken effect; or
(b) a decree of nullity of marriage has been made;
proceedings of a kind referred to in paragraph (c),(caa), (ca) or (cb) of the definition of matrimonial cause in subsection 4(1) (not being proceedings under section 78 or 79A or proceedings seeking the discharge, suspension, revival or variation of an order previously made in proceedings with respect to the maintenance of a party) shall not be instituted, except by leave of the court in which the proceedings are to be instituted or with the consent of both of the parties to the marriage, after the expiration of 12 months after:
(c)in a case referred to in paragraph (a) – the date on which the divorce order took effect; or
(d)in a case referred to in paragraph (b) – the date of the making of the decree.
The Court may grant such leave at any time, even if the proceedings have already been instituted.
29.Subsection 44(4) goes on to state that the Court shall not grant leave pursuant to subsection (3) unless it is satisfied:-
(a)that hardship would be caused to a party to the relevant marriage or a child if leave were not granted; or
(b) in the case of proceedings in relation to the maintenance of a party to a marriage – that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit.
30.In Whitford & Whitford (1979) FLC 90-612, the Full Court (Asche & Pawley SJJ and Strauss J) identified the “two broad questions” which arise for determination on an application for leave pursuant to subsection 44(3) (at 78,144):-
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.
31.The Court went on to state in Whitford (supra) that the hardship reference in subsection 44(4) of the Act is not a reference to the loss of a right to institute proceedings, but rather a loss of that opportunity where it is clear to the Court that:
…[T]he 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.
32.Ellis J in Gill and Gill [1999] FamCA 240 interpreted the test in Whitford (supra) in the following terms (at paragraphs 22 and 23):
It can thus be seen that proof of hardship is a necessary pre-condition to the exercise by the Court of its discretion. The generally accepted interpretation of hardship, in the context of s.44(3), is “substantial detriment”. The loss of the right to institute the proceedings itself, however, is not hardship within the meaning of the section. Fundamental to the inquiry as to hardship is, as was said in Frost and Nicholson (1981) FLC 91-051, whether the applicant has a reasonable claim to be heard by the Court. That is not by itself necessarily the same thing as hardship but the stronger the applicant’s prima facie case, the greater the likelihood of hardship if leave were refused.
Nothing which has been put on behalf of the husband under the first of the three headings, in my view, demonstrates that the trial Judge erred as asserted. In my view, it was open to him to conclude that hardship would be caused to the wife if leave were not granted. In the ultimate, the trial Judge found that the claim of the wife was a small claim but that must be viewed, in my judgment, in the light of the circumstances, including the financial circumstances of each of the parties at the date of the hearing.
33.As to the explanation for delay, the Full Court stated in Carlon and Carlon (1982) FLC 91-272 (at 77,533):-
[I]t is in our judgment a correct statement of the law that while Parliament in sec. 44(4) has placed a fetter on the discretion of the Court, the Court itself should not and probably cannot do the same by laying down any strict principles such as that a party must give an adequate explanation for delay. Once hardship has been established in the sense referred to in Whitford (supra) then the Court is in the exercise of its discretion at large and should take into account all relevant facts including, if that be the case, that no or no satisfactory explanation has been given for delay. Such a position namely no or no satisfactory explanation for delay is no more than another factor which must be given appropriate weight in the exercise of discretion.”
Each of the parties have provided detailed written submissions in support or otherwise of the wife’s application. Each has filed Financial Statements.
The wife said she is currently impecunious. She is dependent upon a disability pension. She is reliant upon her father for financial support and to accommodate her. She is not in a position to work. The evidence provided by the wife supports such submission. She is dependant for support upon her disability pension and the financial assistance of her father. The evidence in relation to her health supports a conclusion that she is unable to work.
The wife submits that, prima facie, she has a case of merit and she would suffer hardship if she were prevented from being able to bring her application for spouse maintenance. I agree with that submission.
The husband’s case is that if the wife is able to make another claim for spouse maintenance then she has been able to do so for a considerable number of years but has failed to make any application. He said the wife lives in a de facto relationship with Mr V. This is denied by the wife and the evidence of both parties would need to be tested.
The wife has set out her explanation for delay. That explanation is in effect that she did not know her time to make an application for spouse maintenance would expire. She had been legally represented at the time the orders were made on 29 August 2006 but not so thereafter until she sought legal advice which gave rise to the subject application. She still was “in a relationship” with Mr F although that relationship was such that she apparently remained eligible to receive her government allowance/pension. She was not challenged on her explanation for delay.
The husband submits the Court should decline the wife’s application, at least on the ground of exercising discretion, as the wife has delayed for more than two years in making her application for leave. The wife has previously filed a spouse maintenance application and withdrawn it. The husband submits the wife has provided no adequate explanation for delay in making the application. I do not agree with that submission.
The husband submits that if granted leave the wife is most unlikely to succeed given the husband’s circumstances and the fact that he supports all of the children of the marriage. In relation to this submission the husband may be correct; however, that is not obviously the case. It seems to me prima facie that there may be some capacity for the husband to be able to pay spouse maintenance.
The wife’s Financial Statement filed 15 April 2008 shows her only income as a disability support pension. That pension provides her with $269 per week. In that document she said she lives with her father who contributes some $380 per week to her support. She has very few assets and she has liabilities of $89,000. She has drawn on her superannuation which was some $24,000. In her affidavit evidence the wife points out that the time for her to file a spouse maintenance application without leave expired on 15 December 2006. She said that in 2006 she was in a relationship with Mr V and that concluded on 16 September 2006. She was not aware of the time limit expiring as she was self-represented at the time. The wife has not worked since she separated from the husband in December 2003. She has not worked full time since 1992.
The wife was in receipt of an income tested pension, allowance or benefit as at the relevant date (15 December 2006).
Since 16 September 2006 the wife has lived with her father in the northern coast region. She does not feel well enough to work.
Conclusion
I am satisfied that the wife has made out a case for leave to apply to the Court for a spouse maintenance order. Whilst I have reservations about whether an order will ultimately be made in favour of the wife because of the husband’s financial circumstances and responsibilities to support the children of the marriage, it is not a case where I am satisfied the wife could not succeed. I propose therefore, to grant the wife’s application.
The wife has a prima facie entitlement to leave under s 44(4) insofar as she was in receipt of an unemployment benefit on 15 December 2006. I accept that without that payment she would not have been able to support herself.
In granting the wife’s application I determine that she has made out a case of hardship should her application be denied. I am satisfied that the wife has given an explanation for delay which should, in the circumstances, be accepted. I further determine that this is a case where the Court should exercise discretion in favour of the wife and allow her to file an application for spouse maintenance. Whilst setting out some reservations I have about the possible success or otherwise of the wife in the determination of a maintenance claim against the husband I certainly am not confident that the wife could not obtain an order of significance.
The wife has presented prima facie evidence of inability to earn an income. This results from her current health. The fact that she receives a disability pension should be seen as significant evidence of her inability to earn an income through personal exertion.
Any application for spouse maintenance should be commenced within 28 days.
The Husband’s Application under Section 118
In the Husband’s Minute of Orders dated 12 December 2008, the husband seeks that the wife be restrained from commencing any further proceedings without first obtaining the leave of the court.
The husband’s application is made pursuant to s 118 of the Act.
No submission was made particularly addressing this application.
Section 118 of the Act is as follows:
FAMILY LAW ACT 1975 - SECT 118
Frivolous or vexatious proceedings
(1) The court may, at any stage of proceedings under this Act, if it is satisfied that the proceedings are frivolous or vexatious:
(a) dismiss the proceedings;
(b) make such order as to costs as the court considers just; and
(c) if the court considers appropriate, on the application of a party to the proceedings--order that the person who instituted the proceedings shall not, without leave of a court having jurisdiction under this Act, institute proceedings under this Act of the kind or kinds specified in the order;
and an order made by a court under paragraph (c) has effect notwithstanding any other provision of this Act.
(2) A court may discharge or vary an order made by that court under paragraph (1)(c).
The husband in his affidavits has outlined a history of action he has had to take in order to comply with Court orders where the wife is said to have been obstructive and unco-operative with his endeavours. I have assumed it is because of that complaint that the husband pursues this remedy.
Whilst I have some sympathy with the husband’s difficulties, as outlined in his evidence, the current applications by the wife do not in my view fulfil the definition as being “frivolous or vexatious”. Accordingly I would dismiss the husband’s application for an order under s 118.
Costs
The husband in his minute of order seeks that the wife pay the costs of and incidental to these proceedings on an indemnity bases. This application was not addressed in the husband’s written submissions.
Given the reasons herein, the husband may or may not wish to pursue his costs application. Likewise, the wife now may or may not wish to seek an order for costs.
I propose to make an order that any costs application arising from the orders made today be filed with a supporting affidavit and written submissions within 28 days.
Should a costs application be filed, the respondent party should have opportunity to file any written submission in reply within 14 days of service.
The matter will be listed before me in Chambers at the conclusion of 30 days to ascertain whether any costs application has been filed.
I certify that the preceding two hundred and twenty-six (226) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench.
Associate:
Date: 27 August 2009
Key Legal Topics
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Family Law
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Civil Procedure
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