Waldmann & Paddack
[2024] FedCFamC1A 100
•24 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Waldmann & Paddack [2024] FedCFamC1A 100
Appeal from: Paddack & Waldmann (No 2) [2023] FedCFamC2F 1629 Appeal number: NAA 8 of 2024 File number: MLC 3714 of 2023 Judgment of: MCCLELLAND DCJ Date of judgment: 24 June 2024 Catchwords: FAMILY LAW – LEAVE TO APPEAL – Where leave to appeal is required because orders pursuant to s 44(6) of the Family Law Act 1975 (Cth) are interlocutory – Application of Medlow & Medlow (2016) FLC 93-692 – Where a substantial injustice would be suffered by the de facto husband if he were denied the opportunity to prosecute a meritorious appeal – Leave to appeal granted.
FAMILY LAW – APPEAL – Where the primary judge erred in failing to provide adequate reasons for the basis of the finding that the de facto wife had a prima facie case of establishing hardship – Where the de facto wife has proved she will suffer hardship if she were not allowed to commence proceedings out of time – Where the Court has to weigh hardship against other discretionary factors – Where the de facto wife has not provided a sufficient reason as to the delay in commencing proceedings – Where neglectful legal advice or lack of knowledge of a limitation period is not an adequate reason for delay in commencing proceedings – Where the length of delay in commencing proceedings causes prejudice to the de facto husband who has administered his affairs on the basis that there will be no further property settlement – Appeal allowed – Re-exercise of discretion – Orders of the primary judge set aside – De facto wife’s application for leave to commence proceedings out of time dismissed – De facto wife’s Application for Review dismissed –Where the de facto wife was wholly unsuccessful – Costs certificate granted to the de facto husband.
Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 44, 90SF, 90SM, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 5
Federal Proceedings (Costs) Act 1981 (Cth) s 9
Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) r 13.13
Cases cited: Althaus and Althaus (1982) FLC 91-233; [1979] FamCA 47
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25
Carlon and Carlon (1982) FLC 91-272; [1982] FamCA 60
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
Edmunds & Edmunds (2018) FLC 93-847; [2018] FamCAFC 121
Hall and Hall (1979) FLC 90-679; [1979] FamCA 50
Hardwick & Hardwick (No 2) (2022) FLC 94-126; [2022] FedCFamC1A 216
Hedley & Hedley (2009) FLC 93-413; [2009] FamCAFC 179
Jacenko and Jacenko (1986) FLC 91-776; [1986] FamCA 25
Krueger & Krueger [2023] FedCFamC1A 203
Lambertson v Lambertson (2021) 63 Fam LR 185; [2021] FamCAFC 48
McIver v Australian Capital Territory; Williams v Australian Capital Territory [2024] ACTSC 112
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Moy & Pao (2022) FLC 94-073; [2022] FedCFamC1A
Neocleous and Neocleous (1993) FLC 92-377; [1993] FamCA 42
Paddack & Waldmann [2023] FedCFamC2F 1336
R v Watson; Ex parte Armstrong (1976) 136 CLR 248; [1976] HCA 39
Robb and Robb (1995) FLC 92-555; [1994] FamCA 136
Sharp & Sharp (2011) 50 Fam LR 567; [2011] FamCAFC 150
Skelton v Lindop (2022) 64 Fam LR 617; [2022] FedCFamC1A 47
Studder v Boettcher [2000] NSWCA 263
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
V and S [2006] FCWA 2
Welland v Hawthorn (2021) 64 Fam LR 520; [2021] FedCFamC1A 43
Whitford and Whitford (1979) FLC 90-612; [1979] FamCA 3
Number of paragraphs: 127 Date of last submissions: 1 May 2024 Date of hearing: 10 April 2024 Place: Melbourne (Via videolink) Counsel for the Appellant: Mr Howard Solicitor for the Appellant: Farrell Lusher Solicitors Counsel for the Respondent: Mr Hogg Solicitor for the Respondent: Orman Solicitors ORDERS
NAA 8 of 2024
MLC 3714 of 2023FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR WALDMANN
Appellant
AND: MS PADDACK
Respondent
ORDER MADE BY:
MCCLELLAND DCJ
DATE OF ORDER:
24 JUNE 2024
THE COURT ORDERS THAT:
1.Leave to appeal the orders of a judge of the Federal Circuit and Family Court of Australia (Division 2) made on 15 December 2023 is granted.
2.Appeal NAA 8 of 2024 is allowed.
3.Orders of the Federal Circuit and Family Court of Australia (Division 2) made on 15 December 2023 are set aside.
4.Pursuant to Pt VIII of the Family Law Act 1975 (Cth), the de facto wife’s Application for Review filed on 21 September 2023 is dismissed.
5.The de facto wife’s application for leave to commence proceedings out of time pursuant to s 44(6) of the Family Law Act 1975 (Cth) is dismissed.
6.The de facto husband 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 this Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the de facto husband in respect of the costs incurred by him in Appeal NAA 8 of 2024.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Waldmann & Paddack has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ:
By a Notice of Appeal filed on 10 January 2024, subject to the grant of leave to do so, the de facto husband appeals interlocutory orders made by a judge of the Federal Circuit and Family Court of Australia (Division 2) (“the primary judge”) on 15 December 2023. The orders made by the primary judge allowed the de facto wife’s application to commence property proceedings out of time pursuant to s 44(6) of the Family Law Act 1975 (Cth) (“the Act”).
I have granted leave to appeal and have upheld the appeal. At the request of both parties, I have re-exercised discretion and, in doing so, I have dismissed the de facto wife’s application for leave to commence proceedings out of time pursuant to s 44(6) of the Act.
The appeal has been upheld because the primary judge failed to provide adequate reasons that properly engage with the legislative criteria concerning applications for the adjustment of property in respect to de facto relationships (s 90SM of the Act).
I have dismissed the de facto wife’s application as she has failed to satisfy me that she has a bona fide reason for the delay in commencing proceedings. This delay has prejudiced the de facto husband. After having regard to likely costs associated with the proceedings and the lack of adequate reasons for this delay, I have concluded that there would be marginal utility in the proceedings being commenced.
BACKGROUND
For the purpose of this appeal, I provide the following brief outline of background facts and contentions insofar as they are relevant to the issues that require determination in this appeal.
The appellant, Mr Waldmann, was born in 1962 and is currently 62 years of age. The respondent, Ms Paddack, was born in 1971 and is currently 52 years of age. In circumstances where this decision considers various applications, and an appeal, it is convenient to refer to the parties as the de facto husband and the de facto wife.
The de facto husband has two children from a previous relationship and the de facto wife also has two children from a previous relationship.
The parties commenced a relationship in 1999 and separated in November or December 2018. Both parties agreed that, during the period of cohabitation, their finances and property were intermingled. The parties agree on the initial contributions to the relationship but dispute the value of those contributions. The parties also agree that the de facto husband brought in a larger initial contribution. However, the extent of that contribution is disputed. The acquisition and disposal of property and business interests in the relationship are set out below:
(a)In 2000, the de facto wife moved with her children into the home of the de facto husband situated at Property B, which was owned by the de facto husband on an unencumbered basis. At the time of cohabitation, the de facto husband owned a vehicle and some plant and equipment that was subject to some finance. The value and contents of this equipment is disputed.
(b)In 2002, the de facto husband purchased a header for $450,000.
(c)In 2006, the parties spent significant time at Property C to farm the property owned by the de facto wife’s mother.
(d)In 2006, the parties commenced a partnership with the de facto wife’s mother, trading as D Company. The parties continued to operate the farming partnership even after separation until 2019.
(e)Although there has been some dispute between the parties throughout the proceedings as to the dates of the events set out below, in written submissions filed on 1 May 2024, it is agreed that in 2007 the following events occurred:
(i)The de facto husband sold the Property B for $75,000.
(ii)Property E was acquired. The nature of the purchase of the property is disputed, with the de facto wife contending that Property E was purchased by her mother and the de facto husband contending that the parties purchased Property E and that the de facto wife’s mother acted as guarantor. Both parties agree that Property E was in the de facto wife’s mother’s sole name. The parties agree that they jointly farmed the property.
(iii)The de facto husband inherited Property F from his parents as a gift. The property was unencumbered. The de facto husband asserts at the time of the transfer, the property had a value of approximately $352,000, although the Court has no retrospective valuations to this effect.
(iv)It is agreed that the parties jointly farmed Property E, Property F, Property G and Property C properties.
(f)In 2010, the parties purchased farm equipment from finance and savings valued at $700,000.
(g)In 2018, the parties purchased farm equipment for $312,000 from a deposit and finance.
After separation, the de facto wife’s mother sold Property E and Property C. Property E sold for over $2 million, with the net proceeds of the sale amounting to the value of either $493,000, according to the de facto husband or $497,000 according to the de facto wife. The de facto wife’s mother gifted the de facto wife a sum of $530,703 in August 2022, which the de facto wife purports is made up of the net sale proceeds from Property E and the capital gains tax refund (written submissions of the de facto wife filed 1 May 2024, paragraph 33).
The parties are in dispute about the extent of communication that occurred between them post-separation (at [36]). The parties agree that there were discussions regarding a property settlement initiated by the de facto wife but that these discussions did not progress past preliminary stages with the last communication regarding possible settlement being by way of correspondence from the de facto wife’s solicitor which was sent in May 2020.
The de facto wife commenced proceedings more than two years out of time, on 11 April 2023. In circumstances where the limitation period expired in November or December 2020 (s 44(5)(a)(i) of the Act), the de facto wife required leave to commence proceedings (s 44(6) of the Act). The de facto husband filed his Response to the Initiating Application on 11 July 2023, seeking a dismissal of the de facto wife’s substantive application.
The matter was first listed before a senior judicial registrar, who, by orders made on 8 September 2023, dismissed the de facto wife’s application to commence proceedings out of time: Paddack& Waldmann [2023] FedCFamC2F 1336.
On 21 September 2023, the de facto wife filed an Application for Review of the senior judicial registrar’s decision. The application was heard by the primary judge on 9 November 2023. On 15 December 2023, judgment was delivered and orders were made granting leave for the de facto wife to commence proceedings out of time pursuant to s 44(6) of the Act.
The de facto husband filed his Notice of Appeal on 10 January 2024 challenging the decision to grant such leave. The de facto wife opposes the de facto husband’s application for leave to appeal and seeks orders for the appeal to be dismissed with costs.
GROUNDS OF APPEAL
The grounds of appeal are set out, as follows:
1.That the trial judge erred in finding that the [de facto wife] had a prima facie case or a real probability of success.
2.That the trial judge erred in finding that the [de facto wife] would suffer hardship if leave were not granted.
3.That the trial judge erred in not making her own assessment of the likely range of possible outcomes in relation to a consideration of whether the [de facto wife] had a prima facie case and in relation to hardship to the [de facto wife].
4.That the trial judge gave no, or inadequate, reasons in relation to the following:-
a. the basis for the finding that the [de facto wife] has a prima facie case; &
b. the basis for the finding that the [de facto wife] would suffer hardship if leave were not granted.
5.The trial judge erred in finding that the prejudice to the [de facto husband] “would be ameliorated in circumstances where property is valued at the time of separation” in circumstances where this is not the usual way that assets would be valued.
6.That the [de facto husband] was denied procedural fairness in relation to the finding referred to in paragraph 5 above.
7.That the trial judge erred in finding that the explanation for the delay by the [de facto wife] was “sufficiently persuasive to justify the delay in filing the substantive application”.
For reasons which follow, it has only been necessary for me to consider Ground 4.
THE DECISION OF THE PRIMARY JUDGE
The primary judge noted (at [31]) that the relevant time limit within which the de facto wife should have commenced proceedings pursuant to s 44(5) of the Act, expired in November or December 2020, resulting in the Initiating Application being filed approximately two and a half years out of time. In considering the de facto wife’s explanation for that delay, the primary judge detailed the nature of the communication between the parties concerning their property, as follows (at [33]):
(a)On “several occasions” between December 2018 and February 2019, the de facto husband was unwilling to communicate or provide details about the location or value of machinery purchased jointly by the parties.
(b)In mid-January 2019, the parties agreed to obtain valuations for machinery and equipment and put Property E on the market for sale.
(c)In February 2019, the parties had a conversation regarding the valuation of machinery and equipment, which had not yet occurred.
(d)In March 2019, the parties engaged in a conversation regarding property settlement, wherein the de facto husband reported having held valuations, although the de facto wife did not see them.
(e)In April 2019, the de facto wife made attempts to arrange a valuer to attend Property E, but the de facto husband refused.
(f)Between April and June 2019, the de facto wife contacted the de facto husband once per fortnight regarding their ongoing joint partnership.
(g)In June 2019, the de facto wife spoke to the de facto husband saying words to the effect of “We need to sort things out”.
(h)In February 2020, the de facto wife attended Property E with the intention of speaking to the de facto husband about a property settlement.
Significantly, the primary judge noted there was silence in respect to any further discussions from approximately May 2020 until the filing of the Initiating Application on 11 April 2023 (at [36]). The primary judge nevertheless held that the almost three year delay in bringing the Initiating Application is explained by the de facto wife’s “reasonable belief that the parties could resolve the matter out of court, particularly where they had an ongoing business relationship” (at [38]).
The primary judge then considered the de facto wife’s claim that she has a prima facie case for property adjustment orders due to “the significant contributions made by both parties throughout their long relationship” (at [42]), which the de facto wife contended justified an adjustment of the parties’ property such that she would receive 50 per cent of the total asset pool. This was in circumstances where the primary judge accepted that, as at the date of filing the Initiating Application, the de facto wife had approximately 32 per cent of the parties’ combined net property (at [43]).
In that respect, reference was made to the de facto wife’s Amended Financial Statement filed 25 August 2023 which declared that she has property valued at a total of $638,000, $12,290 in superannuation, and $5,000 in liabilities (at [43]). The primary judge noted that the de facto wife calculated the total net asset pool of the parties as being in the order of $1,955,774. Accordingly, the primary judge found that the de facto wife had approximately 32 per cent of the parties’ net property.
The primary judge accepted the de facto wife’s argument that she would suffer hardship if leave to file the Initiating Application out of time were not granted, as she contended that she would be approximately $350,000 worse off than she would be if she succeeded in obtaining an adjustment of 50 per cent of the total property pool.
The primary judge determined (at [50]), that it was “plain that the [de facto wife] has a prima facie case and that there is a real probability that, even if the asset pool were not ultimately split 50-50 as between the parties, that she may be better off than at present”. However, the primary judge made no real assessment or gave substantive reasons as to why she reached this conclusion. In essence, the primary judge held that the de facto wife demonstrated that hardship would be caused if leave were refused, and that there is a real possibility that a property adjustment would alleviate such hardship. Furthermore, it was held that the de facto wife would be caused hardship if she was not granted leave to institute proceedings as she would be denied the benefit of disclosure obligations being enforceable on the de facto husband, “preventing a true end to the parties’ financial relationship” through the process of mutual disclosure (at [54]).
In considering the potential outcome of the proceedings, by factoring in the likely costs that would be incurred by the parties, the primary judge noted that it was not disputed that, as a result of dealings involving the de facto wife’s mother, it was likely that she would be a necessary party to the proceedings (at [48]). The primary judge also noted the de facto husband’s argument that the complexity and expense of the proceedings if leave were granted would outweigh any amount that the de facto wife could potentially receive at final hearing (at [50]).
Having found the existence of hardship and in moving to consider the exercise of discretion, the primary judge determined that the degree of hardship that would be suffered by the de facto wife if leave to bring the Initiating Application out of time were declined, outweighed the potential prejudice to the de facto husband who had acted upon a reasonable expectation that no proceedings would be commenced. This was so, it was determined, even having regard to the length of the delay in filing the substantive proceeding and the “somewhat inadequate explanation for that delay” (at [57]).
LEAVE TO APPEAL
In combination, s 44(5) and s 44(6) of the Act empowers the Court to grant leave to a party to commence or to continue proceedings in circumstances where they have failed to seek orders for property adjustment pursuant to s 90SM of the Act, within two years of the end of their de facto relationship. The de facto husband appropriately acknowledged that the application for leave to commence proceedings out of time was interlocutory in nature and leave to appeal is required in respect of the order made by the primary judge granting such leave to the de facto wife: Welland v Hawthorn (2021) 64 Fam LR 520 at [13].
For leave to appeal to be granted, the Court must be satisfied that the primary judge’s decision is attended by sufficient doubt and, additionally, whether a substantial injustice would occur if leave were refused: Medlow & Medlow (2016) FLC 93-692 at [57] (“Medlow”), as applied in Moy & Pao (2022) FLC 94-073 at [11].
In this case, the parties were content for me to consider the issue of leave to appeal simultaneously with determining the appeal in the event of such leave being given. That course is appropriate and permitted pursuant to r 13.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Is the primary judge’s decision attended by sufficient doubt?
The de facto husband has satisfied me that the decision of the primary judge was attended by sufficient doubt because the primary judge did not, in her reasons for judgment, indicate that she had undertaken her own assessment of the possible outcomes in the case. In that respect, in Hardwick & Hardwick (No 2) (2022) FLC 94-126 (“Hardwick”) at [51], the Full Court explained:
The primary judge was unable to make an order granting leave, pursuant to s 44(3) [in this case s 44(6)] of the Act, unless she was first satisfied of the conditions set out in s 44(4) of the Act, namely, that rejection of the wife’s application would cause hardship to her. This necessarily required the primary judge to engage with the evidentiary material with a view to making an assessment of the wife’s prospects of succeeding in her substantive application for property adjustment orders, pursuant to s 79 [in this case s 90SM] of the Act, to determine if she had sufficient likelihood of success in establishing hardship if her application for leave to continue the proceedings was declined (V and S). More was required than a mere statement of satisfaction that a prima facie case existed.
(Emphasis and italics per the original)
Relevantly, the primary judge noted at [44] of her reasons:
At the Review Hearing, Counsel for the [de facto wife] contended that the [de facto wife] would be seeking a 50-50 split of the total asset pool, noting that if her Substantive Application was accepted on this basis, she would in effect be approximately $350,000 short at present. Even in the event that the split as proposed by the [de facto wife] is not accepted, or the asset pool is calculated to a different value, allowing for adjustments between 1-5%, Counsel submitted that the differential amount for the [de facto wife] is still significant.
(Footnotes omitted)
Under the subheading of her judgment dealing with the issue of hardship, the primary judge stated at [52]–[54]:
As discussed at [44] above, the [de facto wife] submits that she is approximately $350,000 worse off than she would be if the Substantive Application was allowed and if it was accepted that she is entitled to 50% of the total property pool. The [de facto wife] does not consider the total value of assets held by her to be representative of her entitlements, given her significant and ongoing financial and non-financial contributions made during the course of the parties’ long relationship. The conduct of the [de facto husband], in delaying the resolution of the parties’ distribution of the property pool, was also pointed to by the [de facto wife] as being to the [de facto wife’s] detriment in circumstances where she ultimately exceeded the statutory timeframe to bring the Substantive Application. Therefore, the [de facto wife] submits that substantial detriment would befall her if leave were not granted to bring the Substantive Application.
The [de facto husband] submits that not only has the [de facto wife] not established that she would suffer substantial detriment if leave were not granted, she in fact ‘may have received more than what she’s entitled to already’. Such a sentiment was expressed by the Senior Judicial Registrar in the Registrar’s Reasons for Judgment at [47], and the following, at [49]
49. I am also not satisfied that the [de facto wife] has demonstrated any hardship. She does not demonstrate on any basis, why a refusal to commencing proceedings would cause her hardship in her current circumstances. The [de facto wife] does not demonstrate any need for a further property adjustment, or the basis on which she claims a further adjustment of property. It is not clear in fact what it is she wants the [de facto husband] to do. […]
I consider that the [de facto wife] has in fact demonstrated that hardship would be caused if leave were refused, and that there is a real possibility that a property adjustment would alleviate such hardship. Further, I am satisfied that denying the [de facto wife] the benefit of disclosure obligations upon the [de facto husband] that come with the granting of leave and instituting of proceedings would cause hardship to her in preventing a true end to the parties’ financial relationship.
(Footnotes omitted)
It is apparent that the primary judge determined the issue of hardship on the basis of the submissions of counsel for the de facto wife, that she was seeking an adjustment of 50 per cent of the parties’ combined net property pool.
The primary judge did not, however, by reference to the evidence, indicate whether she considered that the de facto wife had “sufficient likelihood of success” of obtaining that outcome: Skelton v Lindop (2022) 64 Fam LR 617 at [16]–[21] (“Skelton v Lindop”). To do so, it was necessary to at least broadly engage with the statutory criteria set out in s 90SM of the Act: R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 258. In the context of the relevant statutory criteria, the primary judge was required to explain, at least in broad terms, what she considered would be the likely range of any adjustment and by reference to the evidence and why. Having determined that range it was then “necessary to have regard to the costs of pursuing the claim to assess whether the costs were likely to be proportional to the likely claim and accordingly whether the grant of leave would address any hardship which may be identified”: Krueger & Krueger [2023] FedCFamC1A 203 at [22] and [79]; Sharp & Sharp (2011) 50 Fam LR 567 at [36].
Accordingly, I am satisfied that the failure of the primary judge to provide adequate reasons addressing those matters would, if leave is given, be found to constitute appellable error. Therefore, the first arm of the test for granting leave as set out in Medlow is satisfied.
Would the de facto husband suffer substantial injustice if leave to appeal is declined?
It is then necessary to consider the second arm of the test adumbrated in Medlow. That is, whether the de facto husband would suffer substantial injustice if leave to appeal is declined.
The de facto husband contends:
5.It was conceded by the [de facto wife] that, if leave were granted out of time, the subsequent proceedings would be “complicated and expensive” and would likely involve a joinder of the [de facto wife’s] mother to the proceedings.
6.If leave to appeal the decision is not granted, then the [de facto husband] will incur substantial costs in responding to the application for orders for property division.
7.In addition, if leave to appeal is refused, then the cost of the proceedings for property division may exceed legal costs to be incurred by the parties.
(Notice of Appeal filed 10 January 2024, page 3)
In Lambertson v Lambertson (2021) 63 Fam LR 185 at [48], the Full court noted that:
… It is well accepted that to allow the commencement of an action beyond a statutory time limit is prima facie prejudicial to the respondent (Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 544; 139 ALR 1 at 2 (“Brisbane South”)). A respondent is entitled to believe that the cause of action has expired and to arrange their affairs accordingly …
That prima facie assumption is a relevant consideration but does not, in itself, indicate that the de facto husband would suffer a substantial injustice if leave to appeal is refused.
It has also been determined that the costs incurred during litigation, in the event of leave to commence proceedings being granted, does not, in itself, result in the establishment of hardship justifying the granting of leave to appeal. This is because such costs would be incurred by the de facto husband regardless, had the de facto wife filed the application for property adjustment within the appropriate timeframe: Hardwick at [83], discussing Skelton and Lindop.
However, for reasons which I explain, based on the particular facts of this case, I am satisfied that the de facto husband will suffer a substantial injustice if he is compelled to participate in proceedings where the likely costs that will be incurred by the parties are disproportionate to the amount in dispute.
In his written submissions filed on 1 May 2024, the de facto husband contended that the costs incurred by the parties would be disproportionate to the likely outcome.
Counsel for the de facto wife summarised the quantum of her claim in the proceedings at first instance as follows:
[COUNSEL FOR THE DE FACTO WIFE:] … my client asserts that she has circa $645,290 worth of financial resources currently under – it was actually – currently under her control or thereabouts. She also asserts, and I will take to you this, in her affidavit at paragraph 85 and 86 actually is where it’s summarised that she believes that the net asset pool if the matter was to proceed would be circa 1.955 million.
The reason I raise that is that if you accept on face value that she has sworn a truthful financial statement in relation to the assets she has, if you accept that the best evidence available to the court is her rough estimate as to what the pool is worth at, let’s call it $2 million, and if you then accept that her claim on a final basis would be fifty-fifty she would, in effect, be $350,000 short on what she would ultimately be seeking.
(Transcript 9 November 2023, p.4 lines 36–47)
The de facto husband notes that the Costs Notices filed by the parties in the proceedings before the primary judge estimated that the combined costs of the parties as being in the order of $152,000.[1] That estimate of costs was provided prior to the concession that the proceedings would involve additional complexity as a result of the likely joinder of the de facto wife’s mother who had been involved in the partnership interests of the parties (at [48]). In those circumstances, the likely costs incurred by the parties would be considerably higher than the estimate that has been provided.[2]
[1] Written submissions of the de facto husband filed 1 May 2024, paragraph 28.
[2] Written submissions of the de facto husband filed 1 May 2024, paragraph 29.
Irrespective of any potential costs order in the proceedings, the property of the parties would necessarily be reduced by an amount equivalent to the parties’ expenditure on legal costs.
If leave to appeal is refused, the de facto husband will be deprived of the opportunity of presenting his case which, if successful, would be dispositive of the proceedings and relieve him of the cost and stress of litigation. In that respect, in Studder v Boettcher [2000] NSWCA 263 Fitzgerald JA stated at [63]:
… Litigation is highly stressful for most people and notoriously expensive. An obligation on a litigant to pay the costs of another party in addition to his or her own costs can be financially ruinous. Further, time spent by parties and witnesses in connection with litigation cannot be devoted to other, productive activities …
The de facto husband contends that the inevitable financial and emotional stress of the litigation should be considered in the context of the likely potential benefit the de facto wife would receive if the matter were to proceed to finality.
Specifically, the de facto husband contends that the potential benefit of a litigated outcome for the de facto wife is much less than the $350,000 advanced by her as a best case scenario in the proceedings at first instance.
There is substance in that contention. In the circumstances that I have outlined, it would, in my view, visit a substantial injustice upon the de facto husband to deprive him of the opportunity to present his case as to why the de facto wife should not be granted an extension of time on the basis of both the issue of hardship and also the inadequacy of her explanation for delay in commencing proceedings.
LEAVE TO APPEAL GRANTED AND APPEAL UPHELD
Being satisfied that the decision of the primary judge is vitiated by appellable error and that the de facto husband would suffer substantial injustice if leave to appeal is not granted, I grant such leave.
I have found appellable error in terms of at least Ground 4 of the appeal. In the interests of judicial economy, and consistent with the objects of the Federal Circuit and Family Court of Australia Act 2021 (Cth), calling for the efficient delivery of justice, the remaining grounds set out in the Notice of Appeal filed 10 January 2024 need not be addressed: Boensch v Pascoe (2019) 268 CLR 593 at [7]–[8].
Having found apellable error, I therefore uphold the appeal.
RE-EXERCISE OF DISCRETION
Both parties contended that, in the event that I allowed the appeal, I should re-exercise discretion based on the evidence presented before the primary judge. That is an entirely appropriate course, it being recognised that remitter for re-hearing should be the remedial order of last resort (CDJ v VAJ (1998) 197 CLR 182 at [103]).
As these proceedings are interlocutory in nature, I am in as good a position as a judge at first instance to redetermine the matter. I have read and considered the material contained in the Appeal Book including the parties’ affidavits, Financial Statements and their respective Case Outlines, together with the transcript of the parties’ submissions at first instance. I have also been assisted by supplementary written submissions of the parties filed on 1 May 2024.
Consideration
As noted by counsel for the de facto wife, the Full Court has said that the hearing of applications for leave pursuant to s 44(6) of the Act should be “summary in character”,[3]and not a final hearing of the matter: Edmunds & Edmunds (2018) FLC 93-847 at [16], citing Whitford and Whitford (1979) FLC 90-612 at 78,143 and Hedley & Hedley (2009) FLC 93-413 at [32].
[3] Neocleous and Neocleous (1993) FLC 92-377 at 79,914, citing Hall and Hall (1979) FLC 90-679 at 78,628 and Jacenko and Jacenko (1986) FLC 91-776 at 75,643–75,644 (“Jacenko”).
The de facto wife’s written submissions filed 1 May 2024, in substance, contend that the evidence of the parties’ property before the primary judge was, if anything, undervalued.[4] While that approach is understandable where the issue of proportionality is a substantial issue in the proceedings, in actual fact that approach, with respect, tended to cloud rather than clarify the de facto wife’s case. That is in circumstances where the de facto wife carries the persuasive onus of satisfying the Court of a reasonably likely outcome of the proceedings. In considering that question, I have found more utility in referring to the sworn evidence presented by the de facto wife in the proceedings at first instance.
[4] Written submissions of the de facto wife filed 1 May 2024, paragraph 35.
The de facto wife contends that the assets of the parties are as set out at paragraphs 85 and 86 of her affidavit filed 25 August 2023 which are as follows:
Outlined below in Table 1.1 is my preliminary understanding of the likely balance sheet associated with the matter if leave is granted to commence proceedings.
Table 1.1 – Balance Sheet
Ownership
Description
Wife’s Value
Assets
W
Net proceeds of sale of [Property E]
$498,000
W
Account ending …04
$55,000
W
Account ending …28
$15,000
W
Motor Vehicle 1
$65,000
W
Motor Vehicle 2
$5,000
J
D Company
$NIL
H
[Property F]
$1,000,000
H
Plant and Equipment:
$700,000
H
Stock
$60,000
H
Grain
$180,000
H
Account ending …52
$1,700
H
Motor Vehicle 3
$20,000
H
Proceeds of sale from stock
$50,000
TOTAL ASSETS
$2,649,700
Liabilities
Ownership
Description
Wife’s Value
W
Motor Vehicle 1 Finance
$5,000
H
Personal Loan
$38,285
H
Suppliers
$255,641
H
Equipment Finance:
$485,000
TOTAL LIABILITIES
$783,926
Superannuation
Member
Name of Fund and Type of Interest
Wife’s Value
H
Super Fund 1
$78,000
W
Super Fund 2
$12,000
TOTAL SUPERANNUATION
$90,000
As at the date of swearing, I calculate the total net asset pool inclusive of superannuation to be $1,955,774.
Contributions
As earlier noted, the parties are essentially in agreement as to the assets that each party brought into the relationship. However, there is a significant level of dispute as to the value and form of the parties’ contributions.
Consistent with authority, in circumstances where the de facto wife’s evidence is not “inherently unbelievable or contradictory” I have presumed her evidence to be correct: Jacenko at 75,643.
Summary of the de facto wife’s evidence
At paragraphs 11–15 of the de facto wife’s affidavit filed on 25 August 2023, she set out her understanding of the parties’ initial contributions. By way of summary, those contributions are set out below.
The parties commenced cohabitation in mid-2000, at which time the de facto wife and her daughters moved into the de facto husband’s three bedroom home at Property B.
At the time of cohabitation, the de facto wife was employed casually at in hospitality, earning around $10,000 per annum.
The de facto wife recalls that she owned household furniture valued at $15,000, a motor vehicle with an estimated valued of $25,000 and personal savings of approximately $10,000.
The de facto wife acknowledges that the de facto husband owned an older motor vehicle, a truck and farm equipment. She also says that the de facto husband jointly owned farm equipment with his father. At the time of cohabitation, the de facto wife did not know the value of those items or if they were encumbered by debt.
While the de facto wife acknowledges that the de facto husband also owned other miscellaneous items of plant and equipment, she disagrees with the de facto husband’s estimate of contributing approximately $500,000 of farming plant and equipment at the beginning of the relationship. The de facto wife contends that a more accurate estimate is in the vicinity of, but no more than, $200,000.
Contributions during the course of the parties’ relationship
At paragraphs 16–48 of her affidavit filed 25 August 2023, the de facto wife attests to making contributions during the course of the parties intact relationship as set out below.
Throughout the relationship, the de facto wife contends that she was the primary caregiver for her children and would also look after the de facto husband’s children when they visited their father each alternate weekend. The de facto wife also stated that she undertook the majority of the domestic duties including laundry, washing and cleaning. She said the de facto husband would cook from time to time and take his own children to extracurricular activities.
In 2001, the de facto wife established a small business, earning an average of $1,000 per week. She continued to operate the small business between 2001 and 2007, balancing their family and farming responsibilities and the small business.
In 1999, she met the de facto husband, who worked as a contract labourer and had a share farming arrangement with two local men. The de facto wife attests to assisting the de facto husband in this business by attending to administration. The de facto wife states the de facto husband was earning approximately $1,500 per week during this period.
In 2002, the parties entered into a business with an assigned Australian Business Number (“ABN”), which was used for all contracting, labouring, and farming work.
In 2006, the de facto husband and the de facto wife purchased two items of farm machinery. These were valued at approximately $44,000 for one item and approximately $28,000 for the other, which was purchased second hand.
On 13 July 2006, the de facto wife’s father unfortunately passed away, and the parties relocated to the de facto wife’s mother’s farm known as “[Property C]”. That property was 2650 acres of farming. The agreement was that the de facto husband and the de facto wife would run Property C for 12 months.
In late 2006, the de facto husband, the de facto wife, and the de facto wife’s mother commenced a partnership trading as D Company (“the partnership”). All expenditure and income associated with running Property E was run through the partnership.
In 2007, the de facto husband, the de facto wife, and her mother agreed that the mother would purchase the property next door, known as “[Property E]” and operate it in the same way as they were operating Property C.
The transfer of Property E to the de facto wife’s mother was completed in January 2007. On the de facto wife’s case, the de facto husband and the de facto wife did not financially contribute to the purchase of Property E. This is directly contradictory to the de facto husband’s case. I am unable to resolve that controversy in these proceedings, nor is it necessary for me to do so because, in taking the de facto wife’s case at its highest, I have assumed it will be determined in her favour.
In about May 2007, the de facto husband’s parents transferred the title of their farming property, known as “[Property F]” into the de facto husband’s sole name. The de facto wife attests that the agreement was that the parties would share the costs of Property F equally with his parents and assist in maintaining the farm. The de facto wife contends that the de facto husband is listed on the title “due to their [sic] being no cost for an intergenerational transfer this way”.[5] No explanation has been provided as to the significance in the characterisation of the transfer of the property in that way and why it should be inferred the contribution was of less significance than the value of the property.
[5] Affidavit of the de facto wife filed on 25 August 2023, paragraph 32.
In 2007, the parties sold Property B for approximately $75,000, which was deposited into their joint account and applied towards the overdraft at the time.
In 2007, the parties decided to close the de facto wife’s small business as she was unable to meet the demands of the small business and care for the family, while also attending farming operations on Property E.
In 2010, the parties purchased a new piece of farm machinery for approximately $700,000, funded by finance of $433,000 and savings. In 2012, they purchased a piece of farm machinery as they were having difficulties with the previous one. In 2015, the parties travelled to Town H for two years to do contracting work with the farm machinery.
Throughout the years, the parties would frequently travel to obtain work, attending harvests for the de facto husband’s cousin, and for Property F. In about 2017, in addition to assisting with farming duties, the de facto wife also worked two shifts per week as a labourer for the mines in Town J. The de facto wife earned approximately $1,000 per week working at the mines.
In about mid-2018, the parties purchased a new piece of farm machinery for approximately $312,000 met by a $50,000 deposit and finance. They had been using the de facto wife’s farm machinery from 2007 until 2012. The parties did not pay the mother for the use of that tractor.
The parties also assisted with the de facto wife’s mother’s farm contracting business. This involved labouring to feed the stock using the de facto wife’s mother’s machinery. The de facto wife says that the parties would sometimes also use her mother’s machinery for their own use.
Throughout the relationship, the parties attended to all expenses using a joint account.
At paragraphs 54 and 55 of her affidavit filed 25 August 2023, the de facto wife sets out specific contributions that she made to Property E from 2007 until separation which included a range of farming work and administration. She also did administration for the farms the parties worked on.
At paragraphs 56–62, the de facto wife sets out contributions that she made to Property F from 2007 until separation. That work also included a range of farming work as well as, between 2006 and 2010, undertaking a farming program with the de facto husband, which she contends earned approximately $50,00 per year.
The de facto wife attests that, from 1999 to 2018, the parties attended to the harvest on the Property F. The de facto wife attests to making the following improvements and estimated the costs for same:
(a)Building new stock yards, various labouring, costing approximately $15,000.
(b)Building and concreting a new shed, costing between $60,000 to $80,000.
(c)Purchasing water tanks for the shed, costing approximately $20,000.
The de facto wife attests to the parties spending hours stick picking, cleaning up and burning trees and picking sticks after each fire, as well as rock picking to clear new ground. The de facto wife says that she was always driving machinery for farming, filling trucks, carting water, and moving machinery from one paddock to another.
In respect to Property G and Property C, the de facto wife declares that, in 2010, her mother allowed the parties to farm Property G, which was a 1400 acre farming property. From 2010, the de facto wife’s mother allowed the parties to farm the land and retain the income. The parties were not transferred the title, and their mother remained the beneficial owner of the property.
The de facto wife estimates that the parties earned an income of approximately $150,000 per annum from their activities on Property G. They relocated to Property C in 2006 to assist their mother after the passing of the de facto wife’s father. They remained living there until returning to Property E in 2007.
The parties and the de facto wife’s daughters assisted with stock work Property C without seeking financial reward.
In 2019, the de facto wife’s mother sold Property C for approximately $2,700,000. In 2020, the de facto wife’s mother sold Property G for approximately $1,000,000.
Post separation contributions
The parties separated in November 2018 when the de facto wife moved to Town J to live with her daughter.
The parties continued to use a joint account until July 2019, when the de facto wife obtained her own ABN and no longer put monies into the parties’ joint account.
The de facto wife attests to having difficulty contacting the de facto husband in the period post separation but said that in December 2021, she paid a tax bill from the parties’ joint account at the request of the de facto husband in the sum of $13,000.
Future needs
There is little evidence before the Court that enables a comprehensive assessment to be made of the parties’ future needs in terms of s 90SF(3) of the Act.
Doing the best I can on the available evidence, I note that the de facto wife attests that in the period post separation she has spent approximately $20,000 from a personal account to furnish the property in which she lives.
She currently has two motor vehicles and otherwise retains assets and has liabilities as set out in her Amended Financial Statement filed 25 August 2023.
There is no evidence to suggest that the de facto wife is not in good health.
The de facto wife is currently self-employed as a contractor and, according to her affidavit evidence, earns approximately $2,500 per week. She also has a tax liability of $14,000.
Consideration of evidence relied upon by the husband
The husband attests that in the period post separation, the de facto wife withdrew an amount of $28,691 from the parties’ joint account.[6] There is, however, no evidence before me as to how those funds were applied, aside from the de facto wife’s assertion in her August 2023 affidavit that they were deposited into her personal account and applied towards legal fees and expenses. The evidence is not such that in enables me to determine the extent to which it is likely that legal fees paid by the de facto wife from those funds would be added back into the property pool in accordance with the principles adumbrated in Trevi & Trevi (2018) FLC 93-858 at [28]–[30].
[6] Written submissions of the de facto husband filed 1 May 2024, paragraph 9.
In terms of initial contributions, the de facto wife concedes that the value of plant and equipment owned by the husband was approximately $200,000. The de facto wife also acknowledges that the de facto husband owned Property B unencumbered. There is no indication of the value of that property as at the date of commencement of cohabitation. However, the de facto husband asserts that Property B was sold in 2007 for approximately $75,000 and the funds were applied to the benefit of the parties.
There is no real contest between the parties regarding the contributions they respectively made to the income of the family and to undertaking their respective roles, as best they could, to support the running of the household in caring for the de facto wife’s daughters and, for a time on alternate weekends, the de facto husband’s children. The greater contribution made by the father in assisting in the care of the de facto wife’s daughters would be a consideration pursuant to s 90SF(3) of the Act.
The major factual controversy between the parties is in respect to whether the de facto husband has an equitable interest in Property E or, more accurately, the proceeds of sale of that property. The de facto husband contends that the property was purchased by the parties, with the de facto wife’s mother who was the guarantor for the purchase. The de facto husband acknowledges that the property was ultimately placed into the sole name of the de facto wife’s mother. The de facto husband, nonetheless, contests that the parties solely met those mortgage instalments on the property with no contribution from the de facto wife’s mother. The de facto husband acknowledges, however, that the parties farmed the property and retained the profits arising from farming activities on the property.
The de facto wife did not challenge the de facto husband’s assertion that, in 2007, his parents transferred to him Property F. It was not challenged that at the time of the transfer, the property was unencumbered. The de facto husband contends that at the time of the transfer, the property had a value of approximately $352,000 and is currently worth approximately $1,000,000. Even on the de facto wife’s balance sheet, it clearly forms a significant part of the parties’ property pool.
The de facto husband contends that in respect to farming activities undertaken on Property G and Property C, there was effectively a quid pro quo arrangement whereby the parties assisted the de facto wife’s mother in farming Property C while they retained the benefit of farming activities on Property G. This appears to be broadly consistent with the de facto wife’s evidence.
Broad assessment of the parties’ contributions
It is clear that both parties worked extremely hard during the course of their intact relationship. There is insufficient information before the Court to enable me to determine the nature and extent of the parties’ contributions in the period post-separation. It appears to be acknowledged, however, that, at least from July 2019, the parties operated separate bank accounts and, insofar as the de facto wife contends she has little communication with the husband and that she seeks to dissolve the partnership between the parties and the de facto wife’s mother, it appears that the partnership no longer plays any substantial part in the parties’ respective earnings.
At final hearing, the de facto husband would, in my opinion, be entitled to an additional adjustment in respect to his initial contributions which the de facto wife concedes, in respect of plant and equipment, was in the vicinity of $200,000. While not valued at the time the parties commenced their relationship, the Court would also acknowledge that the husband owned real estate with an undetermined value, but which was probably less than $75,000.
The Court would also have regard to the transfer of Property F to the de facto husband. While the de facto wife contends that the transfer was “intergenerational”, no explanation is provided as to why it was not a significant contribution to the parties’ property pool made on behalf of the de facto husband. As noted, even on the de facto wife’s balance sheet, that property represents approximately 50 per cent of the parties’ net property pool.
Leaving aside issues regarding any equitable interest that the de facto husband may have in respect to Property E or, more specifically, the net proceeds of sale of Property E, I am satisfied that it is likely that there would be an adjustment in the de facto husband’s favour in respect to superior initial contributions and the contribution made through his parents in the form of Property F.
Even allowing for the lengthy period of the parties’ relationship of 19 years and the substantial gift from the mother of the de facto wife to her in August 2022 in the sum of $530,703, I am satisfied that it is likely that the de facto husband would receive an adjustment of property in his favour of between 5 to 10 per cent for the superior initial contributions he made and Property F.
I am not satisfied that there would be any additional adjustment as a result of the factors set out in s 90SF(3) of the Act. While the de facto husband has a superior income to that of the de facto wife earning approximately $305,000 as against the de facto wife’s income which is approximately $130,000 per annum, the husband is 62 years of age and his ability to undertake farming work would necessarily be finite.
Moreover, in accordance with the principles adumbrated in Robb and Robb (1995) FLC 92-555, the de facto husband’s superior earnings would, in my view, be largely offset by the greater financial and other support he provided to the de facto wife’s daughters when they resided with the parties which was over and above that provided by the wife to the husband’s children who spent less time with the parties.
Accordingly, I am satisfied that, in the event of the de facto wife being granted leave to commence proceedings, that it is likely she would receive an adjustment which is in the order of 8 to 13 per cent higher than the property that is currently in her possession. In assessing the potential benefit to the de facto wife of a litigated outcome, it is necessary to deduct from the potential property pool – which is in the order of approximately $1,955,774 – the declared anticipated legal costs of the parties in the sum of $142,200. That brings the potential property pool down to $1,813,574. Taking the de facto wife’s case at what I have determined to be the likely highest adjustment amount of 45 per cent, the de facto wife would receive the allocated property to the value of approximately $816,108. As noted earlier, she currently has property in her possession of $645,000. This would mean, on what I have determined to be a best case outcome for the de facto wife, she would be likely to receive, an additional amount in the order of approximately $171,000 should she proceed to a litigated outcome.
Self-evidently, that sum would be less if the adjustment in favour of the de facto wife was less than that which I have determined to be a best case outcome. It would also be further reduced by likely additional legal costs that the parties would incur if the de facto wife’s mother were to be joined to the proceedings.
Nonetheless, even having regard to those considerations, I am satisfied that depriving the de facto wife of the opportunity to obtain a litigated outcome in which a favourable outcome would be her receiving an additional amount in the order of $171,000 would cause “hardship” in terms of s 44(6) of the Act.
As acknowledged by both parties that is, however, not the end of the matter. It is then necessary for me to move on to the discretionary considerations.
Discretionary considerations
The matters that a court might take into consideration in determining whether discretion should be exercised in favour of the party seeking leave to commence proceedings pursuant to s 44(6) of the Act are not limited. However, it is generally accepted that the Court will have regard to the following matters:
(1)The prospects of success: V and S [2006] FCWA 2 at [6];
(2)The extent of the delay and the reasons (or absence of reasons) for the delay: Althaus and Althaus (1982) FLC 91-233 (“Althaus”);
(3)The extent of the hardship the applicant would experience if leave were not granted: Carlon and Carlon (1982) FLC 91-272 at 77,531(“Carlon”); and
(4)The extent of the prejudice that would be caused to the respondent if leave were granted: Althaus at 77,268.
While it is relevant to balance the prejudice that would respectively be suffered by each party in the event of leave to commence proceedings being given or not given, the most significant factor impacting my decision to decline leave to commence proceedings, are the length of delay and the reasons for that delay.
Both of these factors must be given the appropriate weight in the exercise of the discretion: Carlon at 77,533.
There was no explanation provided by the de facto wife as to why she failed to commence proceedings in the period subsequent to May 2020 which, was acknowledged to be the last date that she communicated with the de facto husband regarding the possibility of resolution of the proceedings.
The highest that the de facto wife’s explanation rises to is stated at paragraph 103 of her affidavit filed 25 August 2023, which deposes that when she approached a solicitor for advice in or around April 2020, she was “not advised about the time limits for commencing proceedings”.
This explanation is inadequate because ignorance of the law, including ignorance as a result of inadequate information being provided by a party’s legal advisor, is not a valid reason to extend time.[7] Were it otherwise, any self-represented litigant or poorly advised litigant would be able to circumvent the relevant statutory limitation period. This would be contrary to the public policy goal of the inclusion of limitation periods which were described by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551–553 where his Honour relevantly stated:
The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods. … The enactment of time limitations has been driven by the general perception that “[w]here there is delay the whole quality of justice deteriorates”. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo, “what has been forgotten can rarely be shown”. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now “knowing” that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.
…
The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even “cruel”, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period. As the New South Wales Law Reform Commission has pointed out:
“The potential defendant is thus able to make the most productive use of his or her resources and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided. To that extent the public interest is also served.”
(Footnotes omitted)
[7] McIver v Australian Capital Territory; Williams v Australian Capital Territory [2024] ACTSC 112 at [455].
If a litigant were able to avoid time limits by asserting ignorance of the law, including as a result of negligent or neglectful legal advice, those important public policy considerations would be circumvented.
For these reasons, the de facto wife has failed to satisfy me that she has an adequate reason for failing to commence proceedings prior to, or at least, within a reasonable time after the expiration of the limitation period set out in s 44(5) of the Act.
As against that inadequate explanation for the delay, there was no contradiction of the de facto husband’s evidence that he has arranged his personal and his business affairs in the period subsequent to the expiration of the relevant time limitation on the assumption that the de facto wife does not intend to commence legal proceedings. In the exercise of discretion, I have also had regard to the fact that even accepting the de facto wife’s evidence for the purpose of these proceedings, it is likely that she would receive funds over and above those which are currently in her possession of approximately $171,000 in the best case scenario. It being noted that sum is just slightly more than the anticipated legal fees of the parties even before consideration is given to additional costs associated with the likely joinder of the wife’s mother if leave was given for the de facto wife to commence proceedings. In those circumstances, I am satisfied that granting leave for the proceedings to be commenced would result in the parties incurring disproportionate costs in the context of the amount reasonably in dispute.
Accordingly, while I accept that declining the de facto wife’s application for leave to commence proceedings pursuant to section s 44(6) of the Act would cause hardship to her, the de facto wife has failed to satisfy me in the circumstances of this case, that it is appropriate for the Court to exercise its discretion to grant such leave because she has failed to provide an adequate explanation and the extent of hardship that she would suffer is significantly reduced by the disproportionate costs that the parties would inevitably incur in the event of leave to commence proceedings being granted.
ORDERS AND COSTS
Accordingly, the orders I make are for the de facto husband to be given leave to appeal, the appeal is upheld and the de facto wife’s Application for Review of the decision of the judicial registrar filed on 21 September 2023 is dismissed.
In circumstances where I have upheld the appeal on an error of law, it is appropriate to grant the de facto husband’s application for a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth).
No similar application has been made by the de facto wife and, in circumstances where she has been wholly unsuccessful in the appeal and the redetermination of her application for leave to commence proceedings, I decline her application for costs pursuant to s 117 of the Act.[8]
[8] Summary of Argument of the de facto wife filed 2 April 2024, paragraph 4(c).
I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McClelland. Associate:
Dated: 24 June 2024
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