Skelton & Lindop
[2022] FedCFamC1A 47
•4 April 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Skelton & Lindop [2022] FedCFamC1A 47
Appeal from: Skelton & Lindop [2021] FedCFamC2F 196 Appeal number(s): NAA 61 of 2021 File number(s): SYC 7487 of 2018 Judgment of: AUSTIN J Date of judgment: 4 April 2022 Catchwords: FAMILY LAW – APPEAL – Leave to appeal – Where the primary judge dismissed the appellant’s application pursuant to s 44(6) of the Family Law Act 1975 (Cth) (“the Act”) to bring an application for de facto property settlement out of time – Where the decision of the primary judge was incongruent – Where the decision is attended by sufficient doubt to warrant appellate scrutiny and a substantial injustice would result if leave were refused – Where it was not open to find the appellant failed to demonstrate she would suffer hardship if deprived of the chance to bring her property settlement claim – Where it was found the delay was not substantial – Where it was found the respondent could not point to any real prejudice he would suffer in having to meet the claim out of time – Leave to appeal granted – Appeal allowed – Orders of the primary judge set aside – Discretion re-exercised – Order made granting the appellant leave pursuant to s 44(6) of the Act to prosecute her claim for property settlement relief under Pt VIIIAB of the Act – Parties granted costs certificates in relation to the appeal. Legislation: Family Law Act 1975 (Cth) Pt VIIIAB ss 44(6), 90SF, 90SM, 117
Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited: Althaus & Althaus (1982) FLC 91-233; [1979] FamCA 47
Arcand & Boen (2021) FLC 94-046; [2021] FamCAFC 155
Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57; [2006] HCA 46
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1
Carlon & Carlon (1982) FLC 91-272; [1982] FamCA 60
Edmunds & Edmunds (2018) FLC 93-847; [2018] FamCAFC 121
Emerald & Emerald (2018) FLC 93-870; [2018] FamCAFC 217
Gadzen & Simkin (2018) FLC 93-871; [2018] FamCAFC 218
Hall & Hall (1979) FLC 90-679; [1979] FamCA 50
Whitford & Whitford (1979) FLC 90-612; [1979] FamCA 3
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30
Sharp & Sharp (2011) 50 Fam LR 567; [2011] FamCAFC 150
Warren v Coombes (1978) 142 CLR 531
Welland & Hawthorn [2021] FedCFamC1A 43
Number of paragraphs: 41 Date of last submission: 31 March 2022 Date of hearing: 22 March 2022 Place: Newcastle (via video link) Counsel for the Appellant: Mr Moutasallem Solicitor for the Appellant: Platinum Lawyers Solicitor for the Respondent: Mr Longworth Solicitor for the Respondent: Pearson Emerson ORDERS
NAA 61 of 2021
SYC 7487 of 2018FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS SKELTON
Appellant
AND: MR LINDOP
Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
4 APRIL 2022
THE COURT ORDERS THAT:
1.Leave to appeal is granted.
2.The appeal is allowed.
3.The orders made by the Federal Circuit and Family Court of Australia (Division 2) on 15 October 2021 are set aside.
4.Leave is granted to the appellant, pursuant to s 44(6) of the Family Law Act 1975 (Cth), to prosecute the application for property settlement relief under Pt VIIIAB, filed on 22 November 2018.
5.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in the appeal.
6.The respondent is granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in the appeal.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Skelton & Lindop has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN J:
By Notice of Appeal filed on 9 November 2021, the appellant seeks leave to appeal and to then appeal from orders made on 15 October 2021 by a judge of the Federal Circuit and Family Court of Australia (Division 2) dismissing her application under s 44(6) of the Family Law Act 1975 (Cth) (“the Act”) to belatedly bring an application for de facto property settlement against the respondent under Pt VIIIAB of the Act.
For the following reasons, leave to appeal should be granted and the appeal succeeds.
The primary decision
The parties began a de facto relationship in late 2009 or early 2010. It was common ground they had been in a de facto relationship, but they disputed how long it lasted and when it ended.
The appellant brought her application for substantive property settlement in November 2018. The proceedings were undoubtedly brought late and the appellant sought an interlocutory order under s 44(6) of the Act enabling the application to be prosecuted out of time. Regrettably, her application for leave to proceed out of time was not entertained until June 2021.
The respondent asserted he and the appellant separated in February 2014, whereas the appellant contended their separation did not occur until March 2016 (at [18]). The primary judge correctly recognised that, for the purpose of determining the interlocutory dispute under s 44(6) of the Act, the untested evidence of the appellant should be accepted at its highest (at [41], [45] and [54]–[55]). The primary judge therefore accepted separation occurred in March 2016 and so the appellant’s application was about eight months late (at [20]).
The appellant joined the respondent and the respondent’s sister (“Ms C”) as parties to the proceedings below. By way of substantive relief, the appellant sought that a parcel of real property (“the Suburb M property”), owned jointly by the respondent and Ms C, be sold and the net sale proceeds then divided between the parties in these shares: the appellant (20 per cent); the respondent (30 per cent); Ms C (50 per cent).
The primary judge correctly referred to the established legal principles by which the interlocutory decision must be made, including that the appellant must first demonstrate hardship if deprived of the chance to bring her claim, that such alleged hardship depends upon the prima facie strength of her claim, and that the decision to extend time still requires an exercise of discretion in the appellant’s favour even if she first establishes hardship. It was not contended the primary judge wrongly recited the applicable law.
His Honour then turned to the question of hardship, accepting the parties’ de facto relationship lasted nearly nine years (at [55]) and the net value of their property at the time of separation in March 2016 fell in the range between $1.079 million and $2.436 million, of which amount the Suburb M property comprised between $850,000 and $900,000 (at [17] and [56]).
The primary judge concluded the appellant’s financial and non-financial contributions, on the strength of her own evidence, were “minimal” and so she was unable to establish on the balance of probabilities that the deprivation of the opportunity to bring a substantive property settlement claim out of time would cause her hardship (at [82] and [87]).
The parties adduced evidence about the likely costs of the substantive proceedings. The appellant said the litigation would cost her $100,000 and the respondent said it would cost him $151,000 (at [83]–[84]). The primary judge accepted that the appellant’s costs would exceed the financial return she could likely expect from the proceedings (at [85]). His Honour also accepted that the joinder of Ms C to the proceedings would increase the appellant’s exposure to an adverse costs order, which she would be unable to pay (at [86]).
The primary judge noted that the failure to demonstrate hardship was fatal to the application (at [91]), but nonetheless went ahead and considered other discretionary factors. His Honour concluded that, although the delay of eight months was “not substantial” (at [94]), the appellant gave no explanation for her delay between separation in March 2016 and her letter of demand to the respondent just before the limitation period expired (at [96]), which weighed against the exercise of discretion in her favour (at [98]). Otherwise, the primary judge accepted the respondent “has the potential to suffer a prejudice”, which carried some weight (at [105]).
Leave to appeal
The appellant correctly acknowledged that leave to appeal from the dismissal order is necessary as it is an interlocutory judgment (Welland & Hawthorn [2021] FedCFamC1A 43 at [13]).
The grant of leave usually requires the applicant to show the decision at first instance is attended by sufficient doubt to warrant appellate scrutiny and, additionally, substantial injustice would result if leave were refused, supposing the decision to be wrong (Medlow & Medlow (2016) FLC 93-692 at [44]–[57]). For the reasons which follow, the appellant is able to demonstrate both those elements and so leave to appeal is granted.
Hardship
The primary judge determined the appellant failed to demonstrate she will suffer hardship if precluded from bringing her substantive claim, which conclusion was expressed this way:
82.The Court accepts that, on the [appellant’s] own evidence, her contribution, both financially and non-financially, would be regarded as so minimal that it would be, therefore, difficult, on the balance of probabilities, to establish any hardship.
…
85.The [respondent] maintained that the costs of the [appellant] in pursuing her application compared to the contributions made by her in the relationship, would exceed that which she is likely to receive on any property adjustment. The Court accepts that submission.
…
87.… Accordingly, noting the [appellant’s] costs of pursuing any such an entitlement would likely outweigh any award, in consideration of the assistance provided by the [respondent] in terms of the repairs and improvements to the Town A property and the provision of the motor vehicle, as referred to in paragraph 100, below, the Court is of the view that the [appellant’s] prima facie claim does not have a real probability of success.
Two grounds of appeal (Grounds 1 and 2) attack those conclusions, contending they were not reasonably open. The submissions made in support of those grounds should be accepted.
To begin with, it is as well to say something about the test applied by the primary judge, which was obviously an earnest attempt to synthesise authoritative principles developed over many years. The distinction between, on the one hand, a “prima facie claim” and, on the other, a claim which has a “real probability of success” is not novel because it has been discussed before – both long ago (Althaus & Althaus (1982) FLC 91-233 at 77,266–77,267) and more recently (Gadzen & Simkin (2018) FLC 93-871 at [30]–[37]). The distinction has been described as semantic (Hall & Hall (1979) FLC 90-679 at 78,627; Althaus & Althaus at 77,266), but it can be troubling to see how a “prima facie claim” and a claim which has a “real probability of success” are one and the same thing when a prima facie claim is not one which need be conclusively proven on the balance of probabilities.
In this jurisdiction, one strand of authority speaks of the need for the applicant to demonstrate his or her claim has a real probability of success, as the pre-requisite to the demonstration of hardship (Marriage of Whitford (1979) FLC 90-612 at 78,144). Another strand of authority speaks of the need for the applicant to only demonstrate his or her prospective claim is reasonable or arguable (Arcand & Boen (2021) FLC 94-046 at [12]-[13]; Gadzen & Simkin at [37]; Althaus & Althaus at 77,266-77,267). Still other cases attempt to homogenise the two concepts (Edmunds & Edmunds (2018) FLC 93-847 at [17]-[24] and [47]-[48]; Sharp & Sharp (2011) 50 Fam LR 567 at [18]).
In Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622–623, the High Court of Australia said that, for the purposes of an interlocutory application in which it is necessary for an applicant to demonstrate a prima facie case:
The first [inquiry] is whether the [applicant] has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the [applicant] will be held entitled to relief.
How strong the probability needs to be depends, no doubt, upon the nature of the rights the [applicant] asserts and the practical consequences likely to flow from the order the [applicant] seeks.
(Emphasis added)
The Full Court has previously affirmed that principle binds the determination of interlocutory applications under s 44 of the Act (Edmunds & Edmunds at [19]–[20]).
In Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57 (at [65] and [69]), the High Court of Australia said this to explicate the test established in Beecham:
65.… By using the phrase "prima facie case", their Honours did not mean that the [applicant] must show that it is more probable than not that at trial the [applicant] will succeed; it is sufficient that the [applicant] show a sufficient likelihood of success to justify [the interlocutory relief].
…
69.…it [is] not necessary for the [applicant] to show that is [is] more probable than not that the [applicant] [will] succeed at trial.
(Emphasis added)
It may be in this case the primary judge was saying no more than that the appellant did not demonstrate her case had “sufficient likelihood of success” to prove hardship, which would be the correct test, but his Honour’s reference in the reasons for judgment to not being satisfied “on the balance of probabilities” (at [82]), nor that the appellant’s claim has “a real probability of success” (at [87]), has the flavour of demanding more from the appellant than she needed to give. She certainly did not have to prove it was more probable than not that her claim for property settlement relief would succeed if allowed to proceed.
The respondent contended the test applied by the primary judge was not the subject of any ground of appeal. Even so, as the respondent was bound to accept, that does not obviate the need to correct any frank error which is identified in an appeal conducted by way of re-hearing (Warren v Coombes (1978) 142 CLR 531 at 553; Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 at [30]–[32]).
It is unnecessary to find error in the test applied by the primary judge because, even it be assumed the correct test was applied, the result was incongruent. The reasonable prospects enjoyed by the appellant’s claim for property settlement relief, taking into account the factors prescribed by both ss 90SM(4) and 90SF(3) of the Act, were manifest from the evidence, as the following short summary should reveal.
The parties lived in a de facto relationship for eight years, during which time the appellant made many noteworthy financial and non-financial contributions. The respondent did not deny she had, but rather contended her contributions paled by comparison with his.
The appellant was 60 years of age and unemployed. Her physical disability, verified by medical evidence, hindered her capacity to obtain or perform any gainful employment. She was effectively destitute. She had no assets and was reliant upon welfare payments to survive.
By comparison, the respondent was 58 years old, self-employed and owned assets which he admitted were worth more than $1 million. The appellant contended his assets were worth much more, but that was an adversarial issue for any subsequent trial.
Despite a multitude of prospective factual disputes between the parties, the appellant had a reasonably arguable case on the evidence before the primary judge for a proportional share of the respondent’s property, given her contributions over eight years and her comparatively superior future needs.
It will be remembered the specific relief sought by the appellant was entitlement to a 20 per cent share of the Suburb M property (at [1]), which property the respondent admitted was unencumbered and worth at least $850,000. Therefore, the appellant quantified her claim for relief at $170,000, which sum was a quite modest proportion of the overall value of the respondent’s assets – about 16 per cent thereof on his estimate of value at $1.079 million, but an even lesser percentage if the respondent’s overall assets were worth more than he admitted (as the appellant alleged). On any objective view, the claim was not disproportionately audacious. Given her relative penury, the appellant’s deprivation of any claim at all was likely to occasion her hardship, let alone her deprivation of a claim worth that amount.
The primary judge accepted the respondent’s submission that the value of any relief obtained by the appellant would likely be subsumed by the legal fees she would expend to acquire it, but that finding was not reasonably open. It was possible her legal fees would exceed the value of any relief she obtained, but it could not be reasonably said to be probable. The relief sought, readily quantifiable on the evidence at $170,000 (but perhaps a little more if the appellant was vindicated about the greater value of the Suburb M property), well exceeded the costs of $100,000 which the appellant expected to incur conducting the litigation.
Assuming no costs orders between the parties at the end of any substantive proceedings, then of course the costs incurred by the appellant would off-set the value of the remedy she stood to receive. But, on the other hand, if the appellant succeeded with her claim and was then able to demonstrate the respondent’s unreasonable defence of it by, for example, rejecting her reasonable offers of compromise, she might even be able to improve her position with a costs order against him. Though that is speculative, it illustrates why it was an error to assume it was probable the appellant’s claim for relief would be overwhelmed by her own costs.
The respondent can have no complaint about such speculation as he sought to defend the primary judge’s speculation about the appellant’s prospective liability to Ms C for costs, which factor counted against the appellant being granted leave to proceed (at [86]). However, since the appellant did not seek any relief which would impinge upon Ms C’s retention of her one-half interest in the Suburb M property, it is difficult to see how Ms C could ever seek a costs order against the appellant, even if her claim ultimately failed. The assumption of a costs order likely being made against the appellant in favour of Ms C was unduly conjectural, so the attack upon the primary judge’s reliance upon that consideration as an influential factor (Ground 3) was also substantiated.
Discretion
Having found the appellant did not prove hardship, it was unnecessary for the primary judge to go further, but his Honour’s additional disinclination to exercise discretion in the appellant’s favour was founded on these features: the appellant’s failure to update her financial position; the paucity of evidence about her ability to support herself without an income-tested pension, allowance or benefit; and an absence of explanation for her delay.
Those conclusions were relevantly expressed this way
89.The [appellant’s] Financial Statement indicated that she received in November 2018, the sum of $300.00 per week by way of Centrelink Newstart payment. Part B of her Financial Statement summarised her personal expenditure at $160.00 per week. However, the personal expenditure pages were blank. She referred to a $7,000.00 debt on a Commonwealth Bank visa credit card and while referring to superannuation with Fund Y with a nil balance. Noting the deficiencies in the wife’s Financial Statement, on its face, she has an excess of income over expenditures of $140.00 per week. The wife made no application for a spousal maintenance claim. Any failure to update her financial position must weigh against her application.
…
96.The [respondent] maintained that on the [appellant’s] version of separation, being 10 March 2016, she subsequently had in August 2018 a neck fusion which was some 2 years after separation. The [appellant] sought in terms of the letter from her solicitors to the [respondent] dated 8 March 2018 (Exhibit “H” to her affidavit) disclosure when she was nearly out of time. She provided no explanation as to what she did during the period March 2016 to the date of that letter.
…
98.In the absence of any explanation by the [appellant], the Court is of the view that this weighs in favour of the [respondent].
…
107.There is a paucity of evidence as to whether the [appellant] is able to support herself without an income tested pension, allowance or benefit. The Court would have expected the [appellant] to have provided some update of her financial circumstances and this weighs against her.
Three grounds of appeal (Grounds 4, 5 and 6) attack those conclusions, contending they were not reasonably open. The submissions made in support of those grounds should be accepted.
The primary judge’s observation about the lack of evidence led by the appellant concerning her financial circumstances was so unbalanced as to be mistaken. It is true the appellant did not update her financial statement after commencing the proceedings in November 2018, but neither party suggested her situation had changed to warrant the evidence being updated. It was not her fault her application was not entertained for nearly three years.
As the primary judge correctly acknowledged, the appellant’s untested evidence had to be accepted at its highest. It was an error to assume such evidence no longer correctly represented the appellant’s situation. The appellant deposed to her unemployment, her sole source of income being a weekly welfare payment of $300, within which limits she confined her frugal living expenses, her lack of any property or superannuation, and her existing credit card debt. The unchallenged evidence inexorably proved she was entirely reliant upon welfare payments to support herself and was living a hand-to-mouth existence. The exercise of discretion must have miscarried when it was undoubtedly influenced by false considerations about the paucity of evidence concerning the appellant’s ability to support herself and her failure to adduce more recent evidence about her financial circumstances.
It is true the appellant did not lead evidence to explain why she omitted to bring her claim with the two-year limitation period, which is of course usually an influential factor, but it is not of itself necessarily fatal (Emerald & Emerald (2018) FLC 93-870 at [128]; Carlon & Carlon (1982) FLC 91-272 at 77,533). Significantly, the appellant sent a letter to the respondent in March 2018 (just before the limitation period expired) foreshadowing her intention to bring a claim, so he was on notice. The primary judge was satisfied the further eight months which then elapsed before the claim was actually filed in November 2018 was “not substantial” (at [94]). Moreover, the primary judge found the only prejudice the respondent would suffer if the appellant’s claim was allowed to proceed out of time would be the legal costs he would bear in defending her claim – but he would have been put to that expense anyway if the appellant’s claim was brought within time.
Disposition
The appeal succeeds. In that event, the appellant sought the re-exercise of discretion without the need to adduce further evidence, with which course the respondent agreed.
For the reasons already canvassed, the appellant has demonstrated she will suffer hardship if deprived of the chance to bring her reasonably arguable substantive property settlement claim against the respondent. In the exercise of discretion, she should be permitted to do so. That discretionary decision is motivated by these considerations: the appellant’s claim appears reasonably arguable; the respondent was on notice of the appellant’s intention to pursue a claim against him before the limitation period expired; the claim was brought eight months later, which delay was not substantial; and the respondent could not point to any prejudice he would suffer in having to meet the claim out of time which he would not have otherwise suffered if the claim was brought within time.
The orders made by the primary judge will be set aside. In their place, an order is made granting the appellant leave pursuant to s 44(6) of the Act to prosecute her claim for property settlement relief under Pt VIIIAB of the Act.
The appellant sought an order compelling the respondent’s payment of her costs in the sum of $14,300, but only on the basis of her poor financial circumstances and the success of the appeal. The ordinary rule established by s 117(1) of the Act should prevail. The appeal succeeded for legal error and both parties should have costs certificates for the appeal under the Federal Proceedings (Costs) Act 1981 (Cth).
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 4 April 2022
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