Stedman and Stedman (No 2)

[2015] FamCA 392

FAMILY COURT OF AUSTRALIA

STEDMAN & STEDMAN (NO 2) [2015] FamCA 392

FAMILY LAW – PRACTICE AND PROCEDURE – Institution of proceedings out of time – leave sought under section 44(3) of the Family Law Act 1975 (Cth)

Family Law Act 1975 (Cth) ss 44(3), 81

Farmer & Bramley [2000] FLC 93-060; [2000] FamCA 165
Hall & Hall (1979) FLC 90-679
Whitford & Whitford (1979) FLC 90-612

APPLICANT: Mr Stedman

RESPONDENT: Ms Stedman

FILE NUMBER: SYC 1497 of 2013

DATE DELIVERED: 26 May 2015

PLACE DELIVERED: Parramatta

PLACE HEARD: Sydney

JUDGMENT OF: Hannam J

HEARING DATE: 27 March 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bell

SOLICITOR FOR THE APPLICANT: Champion Legal

COUNSEL FOR THE RESPONDENT: Mr Johnston

SOLICITOR FOR THE RESPONDENT: H A Miedzinski Lawyers

Orders

1. Pursuant to s 44(3) of the Family Law Act 1975 (Cth) leave is granted to the husband to institute proceedings out of time for property settlement.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Stedman & Stedman (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1497 of 2013

Mr Stedman

Applicant

And

Ms Stedman

Respondent

REASONS FOR JUDGMENT

Introduction

1. Mr and Ms Stedman were married for 24 years before they divorced on 8 June 2013. They had two children who are now in their 20s and accumulated and disposed of property throughout the marriage. When they separated, the husband and wife each held property in their own names and the parties jointly held property.

2. After the divorce the parties commenced negotiations in relation to their property.

3. On 19 August 2014, six weeks out of time, the applicant husband filed an Initiating Application for property settlement orders. He seeks leave to commence these property proceedings out of time and the wife opposes leave being granted.

4. The question for me to determine is whether leave under s 44(3) of the Family Law Act 1975 (Cth) (‘the Act’) should be granted to enable the applicant to commence property settlement proceedings out of time.

Background

1. The husband, who was born in 1943, is aged 71. He was previously married and has two children from that marriage in their 40s. After the death of his first wife in 1988, Mr Stedman married the wife in these proceedings in September 1989.

2. The wife had also previously been married and was the mother of a seven year old child, Mr B at the date of the parties’ marriage. The wife is currently 60 years of age. The husband and the wife have two children, Ms C and Mr D who are in their 20s.

3. Throughout much of the marriage the family lived in a home registered in joint names. The parties separated in late 2011 and initially both remained living in the former family home. The husband vacated the home in March 2013 and the wife remained living there.

4. The parties were divorced on 7 May 2013 with the decree becoming absolute on 8 June 2013.

5. The husband instructed solicitors to commence negotiations with his former wife in relation to their property in September 2013 and those negotiations were ongoing until mid-May 2014. On 15 May 2014 the wife’s solicitor sent a letter to the husband’s solicitor, which included the following: “if agreement on the asset position is not possible or no response to this correspondence is received within seven days, she will proceed to promptly file her Initiating Application”. The husband instructed his solicitors to accept service of the Initiating Application. The husband’s solicitors informed the wife’s solicitors in a letter that includes the following “I refer to our telephone discussion and note that you are to commence proceedings prior to 7 June 2014 and I advise that I have my client’s instructions to accept service of your clients Application”.

6. Neither party commenced proceedings prior to 7 June 2014, but they continued to discuss settling their property dispute through their solicitors.

7. The husband filed an Initiating Application on 15 August 2014. The wife offered a proposal for settlement of the property proceedings through her legal representative later that month and did not object to the filing of the application out of time in this correspondence. She subsequently made that objection.

The parties’ contentions as to the property dispute

1. In general, it is the husband’s application that if the matrimonial property were left in the hands of the owners as at the date of separation or hearing of the application, this would not be a just result having regard to the contributions made by the parties and other relevant factors.

2. The husband sets out in his affidavit (filed for the purposes of the leave application and stated to be not for the purposes of the application for property adjustment) that he brought considerable assets to the marriage, including two unencumbered properties, cash deposits, a contract from which he earned an income, a motor vehicle and an heirloom violin. He also sets out his financial affairs and business transactions throughout the marriage, which included the purchase of a retail business franchise and two retail stores.

3. The wife takes issue with the value of the parties’ contributions at the commencement of the marriage. She also takes issue with the husband’s contributions related to his businesses, his expenditure and loans associated with some items of property.

4. It is the husband’s case that during the marriage he and the wife purchased a number of home units as investments to fund their retirement, but those units are now registered in the name of the wife alone.

5. It does not appear to be in dispute that the wife had control of all of the financial arrangements for the parties, including the financial arrangements for the husband’s business, their individual personal finances and the rental properties. The husband says that he did not attend any appointments with solicitors or accountants throughout the marriage, that the wife presented documents to him for his signature and that he signed them as requested and that the wife exclusively attended to their financial affairs. The wife, as I understand it, disputes this evidence in relation to the presentation of documents to the husband.

6. It is the husband’s case that three one bedroom units which are now registered in the wife’s name alone are matrimonial assets. In each case, the husband says that he had understood that the properties were purchased either in his name or in joint names. He cannot explain how the properties came to be registered in the wife’s name alone and says that he wishes to investigate the circumstances relating to the purchasing and mortgaging of these properties in the property proceedings. The wife provides an explanation in her affidavit in relation to the purchase and registration of these properties.

7. The husband contends that the assets of the parties include the former family home in joint names, one property at E Town in his name, various motor vehicles and bank accounts, three properties in the wife’s name, properties registered to their children Ms F and Mr D, shares and superannuation. He had also originally contended that a home unit registered in the name of his stepson Mr B may also be a matrimonial asset, but as a result of concessions under cross-examination, he may no longer take this position. The total value of the matrimonial pool of assets contended by the parties is unknown.

8. The wife contends that the matrimonial assets at the time of separation included items in addition to those listed by the husband, including the antique musical instrument, a European motor vehicle, and cash in a bank account in the husband’s name.

9. The husband’s table of matrimonial assets and liabilities set out in his affidavit also includes properties in the name of his stepson Mr B and the parties’ two children. It is the wife’s case that these properties were purchased by her mother and registered in her name, but upon turning 18 each of the children became the sole registered proprietors of them. She denies that they are matrimonial assets.

10. The husband says he requires the former family home (which is in joint names) to be sold so that his share of the proceeds can be used by him to fund his retirement which he says will commence when the property matters are settled. He says that if he is not granted leave to commence these proceedings he will commence proceedings in the Supreme Court of New South Wales.

11. The husband is also the registered proprietor of a property in E Town, which is mortgaged. He contends that the balance outstanding on that mortgage has increased since a loan was obtained to purchase the property and wishes to investigate the circumstances of this loan increase. The wife gives an explanation in her affidavit in relation to the mortgage and debt associated with the E Town property which, if accepted, would mean that this is the husband’s sole liability.

12. Each of the parties was cross-examined in the leave proceedings and the husband, in particular, made some concessions. In relation to his inclusion of the properties in the adult children’s names in the matrimonial pool of assets, he said that he would not maintain this position if he could see where the money to purchase the units came from. He agreed that each of the children had given an explanation in their respective affidavits as to how they came to purchase their units and said that he “accepted” those explanations. He maintained his position in relation to the purchase of the units in the wife’s name, the mortgage over the E Town property and the wife’s control over all financial matters and his lack of knowledge concerning them. The husband also took issue with other aspects of the wife’s case that he had not addressed in his affidavit including, for example, her estimate of his expenditure related to motor racing.

13. In summary, there remains a significant dispute concerning financial contributions at the commencement of and throughout the marriage and in relation to assets and liabilities which should be treated as being available for distribution. There is also some jointly owned property, including the family home.

The Law & Discussion

1. The law requires that leave to institute proceedings out of time should not be granted unless the Court is satisfied that hardship would be caused to a party if leave were not granted.

2. In Whitford & Whitford[1] the Full Court held that

   … on an application for leave under s 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…

   The Full Court went on to make it clear that the loss of the right to institute proceedings is not a “hardship” to which this section refers, but the Court must be satisfied of the consequences of that loss.

   [1] (1979) FLC 90-612 at 78144.

3. In Hall & Hall[2] the Full Court considered the meaning that had been given in a number of cases including Whitford (supra) to the word “hardship” in an application such as this and concluded that ““substantial detriment” seems to be the generally accepted interpretation of that word.” In Hall the Full Court said a number of factors should be considered by the Court in this regard, including:

   ·Whether on the applicant’s evidence he has a “reasonable claim to be heard”;

   ·The financial and other circumstances of both of the parties;

   ·Any other facts of the case relevant to the issue of hardship

   [2] (1979) FLC 90-679 at 78627.

4. It is contended on behalf of the applicant that in circumstances where both parties conducted themselves in a way that suggests there was a bona fide issue to be resolved and where the husband has a reasonable chance of success, then the husband would suffer financial hardship if he is not able to agitate his claim in the proper way.

5. So far as the strength of his case is concerned, it is submitted that the wife’s position appears to be based on an interpretation of disputed issues in the wife’s favour and does not address the possibility that the husband’s contentions may succeed at a hearing. It was stressed on behalf of the husband that the leave application is not the same as the hearing of the property application and that there will be further material put before the Court in the event leave is granted. It is contended by the husband that he has been unable to complete the inquiries required to make contentions about the matrimonial asset pool and needs to issue subpoenas for this to occur. It is also submitted by the husband that at the very least, the issue of jointly owned property must be resolved by court proceedings.

6. It is submitted on behalf of the wife that the husband will not suffer hardship if the proceedings are not instituted. Submissions made on behalf of the wife rely heavily upon concessions made under cross-examination by the husband, which it is said significantly weaken the strength of his case.

7. In his Initiating Application the husband seeks to sell the family home and divide the proceeds equally and retain the E Town property and have transferred to him each of the units currently in the wife’s name. It is submitted by the wife that this must mean that it is the husband’s case that the wife will “retain” the ownership of three home units registered in the name of the three adult children. It is argued that, as the husband conceded under cross-examination that he accepts the explanations given by the children as to their ownership of the three properties, he must not now be seeking to include these properties in the matrimonial asset pool.

8. In this regard, it is submitted that the husband does not have a reasonable case for the property adjustment orders he seeks. In my view, the concessions made by the husband under cross-examination do not necessarily mean that he will not contend in any property proceedings that some or all of the properties held in the names of the children should be considered as matrimonial assets. The circumstances in which these properties were purchased may very well still remain as a matter of dispute between the parties notwithstanding his concession in the leave application. In any event there are many other matters of dispute between the parties including the purchase of the family home, contributions throughout the marriage and inclusion of other items in the pool for distribution in respect of which the main ground for contending that the husband does not have an arguable case is that the facts will be resolved in favour of the wife. On the limited testing of the evidence in this application I cannot conclude that the factual disputes will all be resolved in the wife’s favour.

9. It is also submitted on behalf of the wife that the husband has failed to disclose his financial circumstances, which is described as a “significant failing”. This is also not a matter which I have been able to determine in the circumstances of a limited hearing concerning the granting of leave.

10. Alternatively, it is submitted on behalf of the wife that a “just and equitable” result will be achieved if proceedings are not instituted and on this basis, the applicant will not suffer hardship if that occurs. The submissions as to a just and equitable result are to the effect that if leave is refused, the ownership of the property of the parties will remain as it is, which it is contended would result in “an even distribution of the assets of the parties”. The argument is that the retention of property by each of the parties of approximate equal value in the circumstances of this marriage would be a just and equitable result. However, the value of the assets is unknown and the contention that each of the parties currently owns property of approximately equal value depends upon the resolution of other factual matters entirely as contended by the wife. As I have previously noted, it is not possible on the limited cross-examination concerning leave to determine that all of these matters will be resolved in favour of the wife.

11. There is no dispute between the parties that a valuable item of matrimonial property is the jointly owned former matrimonial home. There is also no dispute that other valuable property should be included in the matrimonial pool. Three other pieces of real estate which are currently registered in the wife’s sole name the parties appear to agree should form part of the matrimonial pool of assets. There are disputes concerning the inclusion or exclusion of liabilities, the inclusion of other significant items and contributions throughout the marriage.

12. In Farmer & Bramley[3] the following was said by Kay J:

    …the Court's task is to evaluate all of the contributions from the time of the commencement of the parties' relationship until the time of the hearing and give such weight to such contributions as the Court thinks is appropriate in the circumstances.  Further, there is nothing in the legislation that requires s 79(4) (a) (b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which they are presently possessed.

    [3] [2000] FLC 93-060 at 87,949; [2000] FamCA 165 at [68].

13. The parties in this case had a relationship of 22 years and had two children together. The husband earned a reasonable income and the wife made significant non-financial contribution and managed the financial affairs of the parties. They purchase a home together which they still own jointly and the wife purchased a number of properties, ownership of which changed over time in circumstances which are not entirely clear.

14. The husband contends that as a result of his contributions and  s 75(2) factors it would not be just and equitable for there to be no adjustment of the parties’ current property interests. He says that he has an arguable case for property adjustment orders and he would suffer substantial detriment if leave were not granted. In my view he has a “reasonable claim to be heard”. Having regard to this assessment of his case and the financial circumstances of the parties I am satisfied that he has established that he will suffer substantial detriment if this claim cannot be heard. While the husband did make some concessions under cross-examination that may detrimentally affect his case he has indicated that he intends to adduce more detailed and precise evidence at trial taking into account further investigations.

Should leave be granted?

1. The next issue to be considered in an application such as this is whether the discretion to grant leave should be exercised.

2. Relevant considerations in the exercise of the discretion include the length of delay in bringing proceedings and whether there has been a reasonable explanation for the delay. The delay in this matter is not significant, being two months and it is conceded by the wife that there is a reasonable explanation for the delay. I am of the view that in circumstances where the parties were still clearly negotiating a property settlement and it had been said by the wife’s legal representative that if the matters were not resolved within twelve months from the date of divorce she would institute proceedings, the delay has been explained.

3. Prejudice that may be caused to the respondent if leave is granted is a relevant factor and is relied upon in this case. The wife submitted that prejudice in this case is “extremely significant” and that the prejudice that will be suffered by her will arise from the “inevitable” significant period of time it will take to resolve the matter. It is said that the wife will suffer from anxiety due to the delay and will also have to bear the cost of having the matter prepared for trial including having all the real estate valued. In my view there is no evidence that the respondent in this case will suffer any particular anxiety different to any other person participating in the court process and delays in the hearing of the matter and the costs of preparation does not amount to a prejudice for this particular respondent. In circumstances where the wife’s case is that no property adjustment order is needed to be made to achieve a just and equitable result and she will be able to argue this case in the proceedings, I am not satisfied that any particular prejudice will be caused to the respondent in this matter.

1. In exercising this discretion, the Court must be mindful of the duty under s 81 of the Act to end the financial relationships of the parties to a marriage as far as practicable and avoid further proceedings between them. Further, the discretion should not be exercised in such a way as to render nugatory the requirement that proceedings be instituted in accordance with the Act. However, the Court does have power to grant leave to allow a party to institute out of time in appropriate circumstances. The husband has, in my view, satisfied the requirement that he will suffer hardship if he is unable to have the property dispute with his wife resolved in court proceedings. The delay of two months in bringing the proceedings has been satisfactorily explained as the parties were engaged in negotiations which appeared to be bona fide up until and after he filed his Initiating Application. The wife in my view will not be prejudiced by permitting the husband to commence proceedings. In these circumstances, leave is granted for the husband to initiate his property proceedings out of time and orders are made accordingly.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 26 May 2015.

Associate: 

Date:  25 May 2015