SUMMERS & GLASS

[2019] FCCA 2164

FEDERAL CIRCUIT COURT OF AUSTRALIA

SUMMERS & GLASS [2019] FCCA 2164

Catchwords:
FAMILY LAW – Property proceedings – leave to commence property proceedings out of time – leave ordered.

Legislation:

Family Law Act 1975 Cth, ss.44(5), 44(6)

Cases cited:

Edmunds & Edmunds [2018] FamCAFC 121

Applicant: MR SUMMERS

Respondent: MS GLASS

File Number: PAC 4369 of 2018

Judgment of: Judge Newbrun

Hearing date: 6 August 2019

Date of Last Submission: 6 August 2019

Delivered at: Parramatta

Delivered on: 14 August 2019

REPRESENTATION

Counsel for the Applicant: Mr Vassili

Solicitors for the Applicant: Ms Joshi

Counsel for the Respondent: Mr Bainbridge

Solicitors for the Respondent: Ms Li

Solicitors for the Independent Children's Lawyer: Ms Shedden

ORDERS

1. That leave be granted for the applicant husband to commence de facto property proceedings out of time pursuant to s44(5) and s44(6) of the Family Law Act 1975 (Cth).

2. That the parties provide financial disclosure to each other pursuant to this Court’s Rules within 21 days of these Orders.

3. That leave be granted to the applicant husband to amend his Initiating Application following the above financial disclosure.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

PAC 4369 of 2018

MR SUMMERS

Applicant

And

MS GLASS

Respondent

REASONS FOR JUDGMENT

1. This is the determination of a contested application by the husband for leave to commence de facto property proceedings out of time under s44(5) and s44(6) of the Family Law Act1975 (Cth).

Material relied upon

1. The mother relied upon the following documents:

   a)Response filed by Respondent Wife on 12 November 2018.

   b)Affidavit of Ms Glass sworn 12 November 2018

   c)Affidavit of Ms Glass sworn 22 March 2019.

   d)Affidavit of Ms A sworn 30 July 2019.

   e)Affidavit of Ms B sworn 30 July 2019.

   f)Affidavit of Ms Glass sworn 30 July 2019.

   g)Financial Statement of Ms Glass filed 12 November 2018

2. The father relied upon the following documents:

   a)Amended Application of Mr Summers filed 5 December 2018.

   b)Financial Statement of Mr Summers filed 13 September 2018.

   c)Affidavit of Mr Summers affirmed 31 August 2018 (initial).

   d)Affidavit of Mr Summers affirmed 4 December 2018 (issue of delay).

   e)Affidavit of Mr Summers affirmed 17 July 2019 (updating).

   f)Affidavit of Mr C affirmed 16 July 2019.

   g)Affidavit of Avanti Joshi sworn 30 July 2019.

   h)Written submissions on behalf of the Applicant.

   i)Table of inconsistencies.

3. The following exhibits were relied upon:

   a)Exhibit A - Letter from law firm Cockburn & Co.

   b)Exhibit B – Phone log documents (Sleeve 3 of subpoena material produced by the Department of Justice).

Legal principles

1. The Court refers to the decision of the Full Court of the FCA in Edmunds [2018] FamCAFC 121 as to relevant legal principle in relation to the husband’s current application; in particular the Court refers to paragraphs 6, 16-21, 38, 47-48, 87-88 in Edmunds.

Does the husband have a prima facie claim or a claim with a real probability of success? 

The husband’s case:

1. The Court does not propose to set out the entirety of the husband’s evidence.

2. The parties commenced cohabitation in about year 2000.

3. The eldest child was born in … 2004 (now aged 14 years).  The youngest child was born in … 2010 (now aged 9 years).

4. Between 2004 and 2006, the wife was the eldest child’s primary carer, with the husband assisting with the care of this child upon his return home from work during the week and on weekends.

5. Between about 2006 until 2013, the husband was the primary carer of the children, pursuant to an agreement between the parties.  The wife assisted with the care of the children when she was not at work as a health care worker.

6. When the parties commenced cohabitation, the husband was working as a tradesman and also had a business.  At cohabitation, the wife was studying.  She worked as a customer service officer on a part-time basis.

7. At cohabitation, the husband had his Business G, a car, minimal savings, and superannuation with Super Fund H.  His only debt was $12,000 owing on a previous car.

8. The husband later had employment as a customer service officer at Employer J.

9. Between about 1998 to … 2013 the husband earnt an average of $1,500 a week in his Business G.

10. From 2006 until 2013, the husband’s Business G was his only source of income.

11. Between 2000 and … 2013 the husband paid the wife between $400-$500 each week in cash monies to meet the household expenses.  He also provided the wife with additional cash when she required more money to meet expenses.  The husband purchased household items including a fridge, TV, dryer, other than stove.

12. The wife was responsible for ensuring that the household bills were paid including the rent and later the mortgage repayments and utilities and groceries.

13. In about 2008 the property at D Street, Suburb E was purchased in the name of the wife for $312,000.  The purchase price was totally borrowed by way of bank loan.  This property was sold in … 2017 for $1 million.  The husband received no payment from the sale of this property.  The property had not been solely purchased for possible capital gains tax benefits but rather an additional purpose was so that the husband could operate his Business G.

14. The husband paid to get electricity and water connected to a shed in the backyard.  He paid for installation of new colour bond fences at the property.  He paid for repairs to blocked pipes at the property.

15. From cohabitation until 2013 the parties equally shared the household chores.

16. In about … 2011, the wife pay the husband’s bail surety of $40,000.  The wife had borrowed $25,000 from friends and the balance she got through a bank loan.  The husband by late 2012 had repaid the $25,000 from the proceeds of his Business G.  When the husband was incarcerated (see below) the $40,000 bail surety was paid to the wife’s bank account.

17. On 30 January 2013 the wife swore an affidavit in the husband’s criminal proceedings.  Inter alia, she stated in that affidavit:

    a)the husband was heavily involved in the children’s upbringing;

    b)much of the parties’ family life is structured around the husband’s business G.  The husband is now a well-regarded businessman;

    c)the parties have attempted to be good role models for the children by working hard and providing a supportive and loving family environment;

    d)after the husband’s brother was convicted of sexual assault in 2008, it was common knowledge between the parties that they were only just managing to keep their heads above water financially;

    e)the parties tried to reduce the amount of their mortgage debt but had very little equity in their home; in about mid 2011 the loan balance was about $300,000.  In January 2013 the mortgage balance was about $292,000;

    f)the husband’s income has always fluctuated.  The Wife earns a reasonable salary as a health care worker. Whatever money came into the parties’ household would be almost immediately spent on bills and living expenses;

    g)the wife has always found the husband to be a loyal, honest, hard-working and loving family man;

    h)the husband developed and opened up his own business called Business F; the husband is only able to draw a very meagre wage from this business.  The husband continues to work within the Business G industry;

    i)the husband is the only person who can care for the children when the wife is on evening and night work; if the husband was not available to help the wife care for the children she would be forced to quit her job.  The maternal grandmother assists with the care of children;

    j)the wife is only just meeting the mortgage payments at present.  If the parties lose the income from the wife’s job, as well as the husband’s limited earnings from the shop and Business G, the parties will lose the wife’s car and their home;

    k)the husband has worked extremely hard throughout 2012 to build his Business F up.  The ramifications of having to close the husband’s Business G are quite large and extend much further than just the loss of income. The husband’s reputation with regards to the aspect of the Business G industry has led to their products being highly desirable.  Apart from the husband’s skills, these products are the most valuable part of the husband’s operation.

18. In about … 2013 the father was incarcerated for certain criminal convictions and was not released until about … 2017.  Following his incarceration and to date, the wife has been the children’s primary carer.

19. The wife paid $18,800 plus $16,500 to the husband’s lawyers in relation to his criminal proceedings.

20. Prior to being sentenced, the husband sold products for $1,500 each, and provided the sale proceeds to the wife.

21. The husband sold a product for about $7,000 in … 2012 which monies were deposited in the wife’s account.

22. In about … 2013 the wife transferred from the husband’s bank account about $2,430 which was used in part to pay rates on the property.

23. In about March or April 2013 the husband told the wife that he would prefer to obtain funding for his appeal from Legal Aid, however the wife disagreed stating that her friend recommended a good solicitor.  Thereafter, private solicitors were retained.  The husband lost his appeal.

24. In about mid 2013 the wife sold two of the husband’s business products and received a total of about $17,000.

25. The wife deposited $100 into the husband’s jail account each fortnight.  The wife purchased a television for the husband whilst he was in jail for $500.

26. The parties separated in about September 2015.

27. On the husband’s release from jail he discovered that all his business equipment had disappeared.  He formed the view that the wife had either sold or thrown out the equipment, which he estimates at about $10,000.

28. The husband’s September 2018 Financial Statement indicates his average weekly income is $800 and his weekly expenses are about $677.  His total owned property is about $3,100 and his gross superannuation value is about $27,000.

29. Since the husband’s release from jail, he has found it difficult to find employment as he is asked about his criminal record.  He has been successful in obtaining some work as a tradesman where he does not have to disclose his criminal record.  He is only paid for the days he works.  He is unable to run his former business because he does not have the funds to establish another business.  He is also currently residing in a rental apartment which does not allow him to keep his business equipment.  To re-establish the business the husband would need to purchase equipment totalling about $10,000; products worth between $2,000 and $5,000 each; and other equipment between $1,500 and $9,000 each if he was to earn a consistent income.

30. Had he brought his application for property adjustment in time, he would seek 30% of the real estate pool and an adjustment of 5% for future needs on the basis of his limited employment prospects.

The wife’s case:

1. The Court does not propose to set out the entirety of the wife’s evidence.

2. The parties commenced a relationship in about 2001 and in about 2002 started living together.

3. Since the children’s birth, the wife has been their primary caregiver.

4. The wife’s extended family members provided significant assistance to the wife with childcare, both before and after the children commenced their schooling.  The husband at no time was the children’s primary carer; he chose to spend time pursuing his own interests.

5. The wife spent about $100,000 on securing legal representation for the husband, including representation for his bail application.  The wife asserts that she paid monies for legal fees for the husband after he was incarcerated in … 2013. The wife denies that she insisted on obtaining private legal representation for the husband for as appeal.  She denies receiving $17,000 for the sale of the husband’s business.

6. Whilst the husband was in jail the wife paid him $100 per week.

7. The husband had a gambling problem.  The wife paid off certain of the husband’s gambling and other debts which is estimated as in excess of $100,000.

8. The wife was the primary income earner during the relationship.

9. The husband did not have a stable stream of income, and was reliant on the wife meeting household expenses, and the husband would frequently get himself into debt and required the wife to pay off his liabilities.

10. The wife performed the majority of household tasks.

11. The husband kept any income he received to himself and didn’t spend on the family.

12. The husband attempted to run other businesses during the relationship without success.

13. The wife spent monies for the husband’s Business G.

14. Following separation the husband did not provide the wife with any financial support for the care of the children.

15. Current interim parenting orders provide for the husband to have one telephone call with the children each week.

16. The wife asserts she has now moved on with her life.  She has acquired a house at Suburb E which is mortgaged.  She has re-partnered and had a young child with her current partner.  Her partner provides her with financial support.

17. The wife disputes the husband’s assessment of the contributions he made to their relationship.

18. The wife received $7,000 for the sale of one of the husband’s Business G.  However, the wife asserts that she met all the ongoing expenses relating to the husband’s Business G after his arrest.  She asserts that she would have spent at least $60,000 over the years until the Business G ended in 2017.

19. The maternal grandmother and the wife’s sister also refutes the husband’s assertion that he was the primary caregiver to the children prior to his incarceration.

Discussion

1. The parties’ relationship spanned the period, according to the husband, from about year 2000 until about September 2015.

2. The wife utilised a significant part of the net proceeds of sale of the parties’ former home at D Street, Suburb E (that property having been sold in about … 2017), a sum of about $710,000 (less a sum for various household expenses that the wife refers to in her Financial Statement), to purchase her current property at Suburb E (purchased post separation; it is not clear exactly when this property was purchased although it appears that that occurred prior to January 2018).  The husband received no financial sum from such net proceeds of sale.

3. The wife’s new property is valued at about $730,000. The mortgage balance on that property is about $265,000.  Therefore the equity in the property is about $465,000.

4. Taking the husband’s case in its highest, it is arguable that he made, inter alia:

   a)indirect financial contributions towards the maintenance (the court not overlooking that in about … 2013 when the husband was incarcerated there was little equity in the property) of the parties’ former property at D Street, Suburb E for a not insignificant period, facilitating the wife’s mortgage repayments.  It is arguable that but for the husband’s indirect financial contributions the parties could not have afforded to have maintained the mortgage repayments and the property would have been sold;

   b)direct financial contributions towards the maintenance of the property (for example, repairs and fencing);

   c)indirect financial contributions towards the increase in value of the wife’s superannuation entitlement prior to his incarceration in about … 2013. The wife has a superannuation entitlement of about $127,000.  It is arguable that a significant part of such entitlement accrued prior to the parties’ separation.

   d)a significant contribution as a homemaker and parent during the period from 2006 to about … 2013 when he asserts he was the children’s primary carer. 

5. The Court takes into account that the wife has at least been the sole carer of the children post … 2013 to date, including being the sole if not the predominant financial provider towards the children during that period.

6. Whilst the wife has had the benefit of occupation of the former property post … 2013 to date, she has been required to meet the mortgage repayments up until its sale with no financial support post … 2013 from the husband.

7. In terms of need under section 75(2), the wife has a need to house the children and herself; she is the primary carer of the children, and will probably remain so, and it is arguable that she will not receive significant financial support from the husband in the future.

8. On the other hand, the wife has a superior earning capacity to that of the husband, the husband has no assets of significance, he has a criminal record with difficulties obtaining employment by reason of that fact, and a capital sum may enable him to re-establish himself in the industry.

9. Taking these matters into account, the Court is of the view that there is a prima facie case or a real probability that the husband will obtain a property settlement order in his favour.

Is there hardship?

1. If the husband is granted leave to commence proceedings out of time there should be a fairly non-complex property adjustment hearing, whilst acknowledging, that presently, on the evidence before the Court, there are numerous factual disputes between the parties.

2. There is no evidence before the Court as to the legal costs of such a property adjustment hearing, nevertheless this Court is of the view, doing the best it can in the absence of evidence, that such costs are not likely to outweigh any benefit the husband will receive from such proceedings.

3. The husband earns a limited income, and is able to save little after payment of his usual week to week expenses.  He owns virtually no assets and his superannuation is modest, in the sum of about $27,000.

4. The husband has a significant criminal record and he asserts that he has difficulties obtaining employment by reason of that record; the Court would attach significant weight in particular to that assertion of the husband.

5. The husband’s ability to re-establish himself as a business owner may well improve if he receives a capital sum from these property proceedings.

6. This Court is satisfied that the husband would suffer hardship if leave was not granted.

Is there an explanation for delay?

1. The Court refers to the husband’s delay explanation in his Affidavit filed 5 December 2018.

2. Again, the parties separated in about September 2015, whilst the husband was still incarcerated.

3. The husband had two years to commence proceedings from separation under the Act; that is, by September 2017.  He commenced proceedings on 13 September 2018, so he is about one year out of time.

4. The Court does not propose to set out the entirety of the husband’s explanation in these Reasons.

5. The husband asserts, inter alia, that:

   a)he had difficulties obtaining legal advice during his incarceration (the Court has not overlooked the prison telephone records in exhibit B which it has considered);

   b)whilst incarcerated he did not have the funds to privately engage a solicitor to assist him;

   c)in about early 2017 he telephoned legal aid for assistance with these parenting proceedings, and in about mid 2017 a legal aid solicitor attended the prison to discuss his parenting matter, however he had difficulty in maintaining regular contact with this solicitor;

   d)when he was released from jail in … 2017, the husband was unaware of the time restraints associated with filing an application with the court. At this time another legal aid solicitor was allocated to him;

   e)in about late 2017, the legal aid solicitor informed the husband that he/she was unable to represent the husband;

   f)in about late 2017 the husband attended a firm of solicitors to obtain legal advice in relation to the property matter, however in about mid May 2018 the husband’s sole practitioner solicitor died and the husband was only informed by a friend of this happening;

   g)between late May to early June 2018, the husband did not have sufficient finances to engage a further private solicitor;

   h)and in about early June 2018 he attended his present solicitors to obtain legal advice.

1. The wife contended a letter from the firm of solicitors referred to above indicating that they did not have any documents to produce an answer to a subpoena issued by the wife.  The Court attaches no significant weight to this letter, there being insufficient material before the Court to explain why the solicitors had no relevant documents to produce.

2. There is no material from the husband as to what legal advice he received from the sole practitioner having first attended upon this practitioner in about late 2017. There is some force to the husband’s solicitor’s submission that the husband was and is not a sophisticated litigant. An inference can probably be drawn that the husband was reliant upon the sole practitioner for legal advice and that he was first informed of the limitation period when he consulted his present solicitors.

3. The Court is satisfied that the husband’s delay explanation is adequate.

Should there be a grant of leave?

1. The wife asserts that if the husband is allowed to proceed out of time and claim against the assets in her name she will most likely need to sell the house that she has purchased at Suburb E which will impact upon the children.  It is not clear that such asserted likelihood will come to pass, noting that the wife’s new partner provides not only assistance in caring for the children but also financial support.

2. The wife asserts that she has moved on with her life since separating from the husband, including purchasing a new property, a new relationship and a further child.  On the other hand the husband submits that there are already in existence parenting proceedings before the court. In any event, the Court accepts that there is a real chance of some prejudice to the wife if leave is given.

3. The Court is of the view that there is a significant prospect that the husband will suffer prejudice if leave is not given, taking into account his personal circumstances (he has no assets, saves little from his present employment, and has difficulties obtaining employment generally by reason of his criminal record).

4. The Court considers that on balance such prejudice to the husband outweighs the real chance of some prejudice to the wife.

5. Even if the Court is incorrect as to its above view that the husband has provided an adequate explanation for his delay, the Court is of the view that such prejudice to the husband should be seen to excuse any deficiencies in his delay explanation.

6. Taking the above matters into account, the court is satisfied that leave should be given for the husband to commence property proceedings.

I certify that the preceding eighty three (83) paragraphs are a true copy of the reasons for judgment of Judge Newbrun

Date: 14 August 2019