TAGGART & TAGGART

[2020] FCCA 194

FEDERAL CIRCUIT COURT OF AUSTRALIA

TAGGART & TAGGART [2020] FCCA 194

Catchwords:
FAMILY LAW – Application to grant leave to bring property proceedings out of time pursuant to s.44(3) – hardship – reasons for delay

Legislation:

Family Law Act 1975 (Cth), s.44

Cases cited:

Whitford & Whitford (1979) FLC 90-612

G & G [1999] FamCA 240

Althous & Althous (1982) FLC 91-233

Montano & Kinross [2014] FamCAFC 231

Applicant: MS TAGGART

Respondent: MR TAGGART

File Number: LNC 761 of 2019

Judgment of: Judge McGuire

Hearing date: 30 January 2020

Date of Last Submission: 30 January 2020

Delivered at: Launceston

Delivered on: 5 February 2020

REPRESENTATION

Counsel for the Applicant: Mr P Sullivan

Solicitors for the Applicant: Paul Sullivan, Lawyer

Counsel for the Respondent: Mr L Edwards

Solicitors for the Respondent: Friend & Edwards

ORDERS

1. That leave be granted to the applicant pursuant to s.44(3) of the Family Law Act 1975 to bring an Application for property settlement out of time.

2. That an amended Application be filed and served within 14 days of the date of these Orders particularising the applicant’s claim.

3. That the respondent make, file and serve a Response, responsive Affidavit and sworn Financial Statement within 21 days of service of the applicant’s Applications.

4. That the parties must attend for property mediation with an accredited Family Dispute Resolution Practitioner (“FDRP”) as nominated by Relationships Australia (Victoria) (noting an appointment in Town A on Friday 3 April 2020 at 1.30 p.m.).

5. That the within fourteen days each legal representative or self-represented litigant is to contact Relationships Australia (Victoria) ([email protected] or 1800 679 491) to confirm arrangements for mediation.

6. That within fourteen days of being notified of the nominated FDRP, each party must send to the FDRP documents outlining the dispute including the following :

   (a)a copy of the parties’ respective applications, affidavits and Financial Statements;

   (b)a full list of assets ( including any superannuation ) and liabilities including values;

   (c)details of alleged financial contributions;

   (d)relevant future needs factors pursuant to section 75(2) or 90SF(3) of the Family Law Act 1975;

   (e)the proposal for property settlement; and

   (f)copies of any current intervention or restraining orders.

7. That unless otherwise exempted from payment, the parties must each pay an amount equivalent to half of the Conciliation Conference fee in respect of the above mediation in accordance with the Family Law (Fees) Regulation 2012 prior to the property mediation.

8. That unless agreed in writing within 7 days of the date of these Orders, for the purposes of the Mediation only, then the parties jointly obtain valuations of any asset the value of which is in dispute such to be filed on Affidavit not later and 2 clear working days prior to the Mediation and that the parties to be equally responsible for the costs of the preparation and provision of the valuation.

9. That leave is granted to the parties to file with my Associate executed Consent Orders/Terms of Settlement prior to the adjourned date and if appropriate orders may be made in Chambers and the above adjourned date may be administratively vacated.

10. That the matter is listed for directions in the Federal Circuit Court at Town B on Monday 20 April 2020 at 11.30 a.m.  

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BURNIE

LNC 761 of 2019

MS TAGGART

Applicant

And

MR TAGGART

Respondent

REASONS FOR JUDGMENT

Applications

1. This is an application by Ms Taggart for leave pursuant to section 44(3) of the Family Law Act 1975 (‘the Act’) to file an application for final orders as to property settlement out of time.  The application is opposed. 

Background

1. The applicant is 50 years of age.  The respondent is 54 years.

2. The parties commenced cohabitation in about June 2000.  They married on … 2000.  Separation occurred on 6 June 2013.  The parties were divorced on 26 June 2015. 

3. There are three children of the relationship being Ms A Taggart (aged 18 years), X (aged 15 years) and Y (aged the seven years).  The children live with the wife.  Consent parenting orders were made between the parties on 26 November 2014.

4. Both parties have re-partnered.  The husband has remarried and there is a daughter of that union.

5. The wife is in employment as a customer service professional with Employer C.  She discloses a gross weekly income of $1,068.

6. The husband is employed as a tradesman.  He became bankrupt on his Debtors Petition on … 2016 and was discharged from that bankruptcy on … 2019.

Relevant Law

1. Section 44(3) of the Act provides that proceedings for financial orders, including for property settlement pursuant to section 79 of the Act, 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 from the date on which the divorce order took effect. Consequently, in the matter now before me the parties agree that the application is sought to be filed some 3 ½ years out of time.

2. S.44(4) provides that:

   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.

3. The leading Full Court authority of Whitford & Whitford[1] established guiding principles in respect of the consideration to granting leave out of time pursuant to s.44(3). At [78,144] the Court stated:

   Thus, on 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 proceeding.

   [1] (1979) FLC 90-612

4. In G & G[2] Ellis J commented:

   … Proof of hardship is a necessary precondition 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.

   [2] [1999] FamCA 240 @ [22]

5. Notably, however, and as observed by the Court in Whitford (supra) at [78 – 145]:

   Whatever the financial situation of an applicant may be, his or her loss of a prospective entitlement to property including money, or his or her inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship.

6. The consideration of potential hardship on any applicant does not require the Court to enter into a detailed hearing on examination on the merits of the of the applicant’s substantive applications.  Rather, an applicant must only present a prima facie reasonable claim with some chances of success.  The Full Court in Althous & Althous[3] noted:

   In my opinion, sec 44(3) and (4) are not intended to require a detailed hearing on the merits to determine whether the applicant’s claim will succeed. The exercise is to determine whether there is a reasonable claim to be heard.  That is the essence of the enquiry into whether hardship will be suffered by denying the applicant the right to litigate that claim.

   [3] (1982) FLC 91-233 @ 77,267

The Applicant's Case – Hardship

1. This relationship was one of reasonable duration of some 13 years.  It brought into the world three children.

2. The value of the property pool is arguably negligible in that, in a tangible sense, it comprises only of debt and noting again the husband's recent discharge from bankruptcy.  The wife asserts that she retains debts of the marriage of some $12,127 (the husband does not challenge the fact of the debt but does question the quantum).  I can only assume that the parties’ debt situation was otherwise captured by the husband's bankruptcy? The husband does, however, retain superannuation entitlements of $58,594.61.  Relevantly within this context the wife deposes that at separation she was receiving a Centrelink benefit and had full-time care of the children whereas the husband continued to operate a business.  She deposes that the husband retained a motor vehicle ($8,500) and withdrew $10,000 from the business account for private purposes.

3. The wife deposes that she herself has a superannuation entitlement of $33,837 but accumulated in its totality since separation from the husband.

4. The wife deposes that the children have habitually lived primarily in her care and that the husband ‘has never paid more than $80 per month for child support’.

5. Counsel for the respondent in this application argued that the applicant could not cross the evidentiary threshold of proving 'hardship' in that it best she could hope to receive is a splitting order from the husband's superannuation entitlement but that in her disclosed circumstances, and given her age she would not be able to crystallise those benefits and hence could not satisfy the debts that she says that she has retained. I reject this argument. Firstly, it confuses the notion of 'hardship' for the purposes of the superannuation regulations with the definition of hardship pursuant to s.44(3) of the Family Law Act as discussed in Whitford. Put bluntly, if successful in her application and she was to obtain a split from the husband's superannuation entitlement, there would be no compulsion on the applicant to satisfy her debts. It is well-established that the Courts normally take an holistic approach to property settlements pursuant to s.79 of the Act.

6. Whilst this is a matter that does not contemplate a consideration of positive tangible assets but rather simply some debts and superannuation entitlements of relatively minimal value and quantum, such matters are relative to the particular circumstances of these parties. Arguably, in the context of these parties’ historical financial circumstances, the husband’s current superannuation entitlement which was presumably accrued substantially during the course of the relationship, comprises significant value for these parties. Prima Facie it is clear that the wife claims contribution to this 'property'. She will also clearly claim an adjustment because of factors under this s.75(2) of the Act and notably her historical primary care of the children. In this sense I return to the decision in Whitford (supra) at 78 – 145 and am mindful of the their Honour’s comments thus:

   In ordinary parlance, hardship mean something more burdensome than, any appreciable detriment.  We consider that in subsec 44(4) the words should have its usual, though not necessarily its most stringent, connotation.  It is impossible to lay down in advance what particular facts may or may not amount to hardship and the relevant case.  As a general proposition, it might be said that the inability of an applicant to pursue a claim which in the circumstances of the applicant or a child of the marriage is trifling, generally will not cause hardship.  Similarly, where the costs which the applicant will have to bare himself or herself are about as much or more than what the applicant is likely to be awarded in a property claim, ordinary hardship would not result if leave to institute proceedings were not granted.  But otherwise we find no warrant in either subsec 44 (3) or (4) for saying that the right or entitlement lost must be a substantial one.

   On the other hand, sec 44(3) and (4) point to the conclusion that the legislature intended to confer power on the Court to grant leave to institute proceedings in order to avoid hardship.  Having regard to the nature of the jurisdiction which this Court exercises, this power should be exercised liberally in order to avoid hardship, but nevertheless in a manner which would not render nugatory the requirement the proceedings should be instituted within a year from the decree nisi.

7. In the matter now before me, and whilst the applicant's potential claim could not in any sense be substantial in its dollar terms, such claim must be seen within the context of this marriage and its circumstances. Put simply, it is arguable that the wife retains that the only substantial debts of the relationship. She does not disclose retaining any assets of substantial value. She argues potentially that the husband retains a superannuation entitlement which is of some value relative to the debts retained by the wife. The circumstances of the wife also give her argument for adjustment under s.75(2) of the Act. In all of those circumstances I am comfortably satisfied that the applicant wife would suffer hardship if not granted leave to bring the application out of time.

Discretion

1. The respondent husband argues that, should the Court find hardship for the applicant in not being granted leave, then in its discretion the Court should not, in any event, grant that leave.

2. A comment from the Full Court in Montano & Kinross[4] is notable as follows:

   Like many applications for indulgence, an application for leave to apply after the end of the standard application period requires the court to exercise its discretion in a manner that, ultimately, is consistent with justice being done to both parties. The potential for injustice to the applicant being unable to pursue the remedy precluded by the refusal to grant leave must be compared to the prejudice to the respondent in the granting of leave. So, too, good or legitimate reasons for failing to do that which the Act requires must be compared with a wilful blindness or recalcitrance. Equally, a desire to pursue a remedy out of time must be compared to the necessity of the parties to proceed with their post-separation lives free of the spectre of prospective litigation.

   [4] [2014] FamCAFC 231 @ [14]

3. There are some merits to the respondent's submissions that the discretion should not be exercised in favour of the applicant. It is now some 3 ½ years since time expired for the applicant to bring her application. It is commonly understood that the decree of divorce gives notice to parties of the time limits for bringing applications under s.79 of the Act. Further, it is clear that the wife has been represented since separation including for parenting orders and, on material tendered to the Court, in respect of negotiations as to property settlement. It is easily assumed that the time limits for the wife to bring such an application would or should have therefore been reinforced.

4. Since the granting of the divorce the husband has endured a period of bankruptcy albeit on his own Debtor’s Petition.  In this sense he has moved on from the financial implications of his marriage to the applicant.  He has remarried.  He and his wife have a young child.  They have an understandable expectation of proceeding emotionally and financially from the circumstances of the husband's previous marriage. 

5. The husband is 54 years of age.  He is not a young man.  He would have an expectation of securing his financial future prior to his retirement.

6. To the contrary, however, the property pool is neither substantial nor complex in its elements.  It is not a matter where the husband's 'defence' of any application is likely to be hindered through the loss of documents or absence of witnesses by the flux of time.  In this this context, therefore, the delay of 3 ½ years is neither a long one nor one which would preclude or provide prejudice in respect of the conduct of litigating the issues.

7. The applicant's reasons for allowing the delay and becoming out of time are problematic.  At [27] of her affidavit she deposes as follows:

   The reason I did not pursue a property settlement earlier was that, as a result of the final separation, I was left with the full-time care of the children and our middle child X has special needs as he suffers ADHD.  He was diagnosed in 2009.  I was emotionally exhausted and gave up (my emphasis) at the time because Mr Taggart would not negotiate in good faith. 

8. In the preceding paragraph [26] the applicant deposes:

   Earlier this year I sought legal advice in relation to this matter after Mr Taggart refused to enter into an arrangement with me to pay liabilities arising out of the failed cafe business at Suburb D.  In particular, these are an Aurora account for $4,127 which remains in my name and a demand for payment of employee superannuation contributions from the ATO of approximately $8,000.  I have been advised that I am joint and severally responsible for the debt.

9. The evidence makes it clear that there were cursory negotiations towards a property settlement in or about 2014.  A letter from the applicant’s then solicitors to the respondent's current solicitors dated 13 January 2014 puts forward proposals for property settlement including as to a split of the husband's superannuation entitlements.  A reply to that letter from the respondent's solicitors dated 5 February 2014 offers the following:

   I refer to my letter of the 17 January 2014 regarding both property and children and note that I have received no response from you stop. 

   Given that the parties are essentially in debt a property settlement seems pointless.  Therefore, it only remains to settle children's matters and I note my client’s proposal in that regard is quite straightforward.

   I look forward to hearing from you.

10. On the evidence before me, this appears to be the extent of negotiations towards property settlement.

11. Quite obviously the wife was aware of her entitlement to pursue a property settlement by reason of her solicitor’s letter to the respondent's solicitor.  As mentioned above, I can comfortably assume that she was aware of the time limits by reason of the divorce document and from being represented.  Her own affidavit deposes that she 'gave up'.  Superficially, it might then be argued that the wife is simply 'revisiting' her claims and might not be permitted the indulgence of an application out of time under the Court's discretion.  However, on reflection, I think it proper to consider the wife's inaction within the total context and circumstances of these parties.  In her affidavit she deposes as to a rationale for 'giving up' being the circumstances of her children and being left with the full-time care of those children together with, quite obviously from the correspondence, being left to bear some real responsibility for the debt position of the parties without there being any obvious positive assets to set off against those debts.  It was only later that she became aware of the quantum of the husband's superannuation entitlement. She was most likely aware of his bankruptcy. Consequently, and whilst the consideration of the discretion of the Court is very much finely balanced in this particular matter, given these factors, I am satisfied that circumstantially and contextually this wife has offered a reasonable and plausible explanation for her delay in instituting proceedings. As mentioned above, the circumstances of the property pool and the length of delay are not such that the 'defence' of such an application would be prejudiced on the delay.

12. Consequently, I intend to exercise my discretion in favour of the applicant and grant leave for her to bring her application for financial orders out of time. 

I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Associate: 

Date: 5 February 2020