Welland & Hawthorn
[2021] FCCA 1232
•7 June 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Welland & Hawthorn [2021] FCCA 1232
File number(s): SYC 7509 of 2019 Judgment of: JUDGE BOYLE Date of judgment: 7 June 2021 Catchwords: FAMILY LAW – Property – application by the applicant seeking leave to commence property proceedings out of time pursuant to s 44(6) of the Family Law Act 1975 (Cth) Legislation: Family Law Act 1975 (Cth) ss 44(3), 44(4), 44(5), 44(6). Cases cited: Jacenko & Jacenko [1986] FamCA 25
Gadzen & Simkin (2018) FLC 93 – 871
Sharp v Sharp (2011) 50 Fam LR 567; [2011] FamCAFC 150
Stanford v Stanford [2012] HCA 52Whitford and Whitford (1979) FLC 90-612; [1979] FamCA 3
Number of paragraphs: 62 Date of hearing: 21 September 2020 Place: Sydney Counsel for the Applicant: Mr Blackah Solicitor for the Applicant: WMD Law Counsel for the Respondent: Mr Harper Solicitor for the Respondent: F C Bryant Thomas & Co ORDERS
SYC 7509 of 2019 BETWEEN: MS WELLAND
Applicant
AND: MR HAWTHORN
Respondent
ORDER MADE BY:
JUDGE BOYLE
DATE OF ORDER:
7 JUNE 2021
THE COURT ORDERS THAT:
1.The application filed 7 November 2019 is dismissed.
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Welland & Hawthorn is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
The applicant seeks leave pursuant to section 44(6) of the Family Law Act 1975 (Cth) (“The Act”), to commence property proceedings out of time. The respondent seeks that the application be dismissed.
The parties agreed that the matter should proceed without cross-examination. Properly, the respondent submitted that the Court was entitled to take the applicants case at its highest.[1]
[1] Jacenko & Jacenko [1986] FLC 91–776, 75643.
The issues in the matter are the hardship to the applicant if leave were not granted, and the adequacy of the explanation for the delay.
BACKGROUND
The applicant is aged 40 years, and the respondent 63 years. The parties differ on the length of cohabitation. The applicant asserts they commenced living together in 2000, and separated in February 2016. The respondent asserts they were in a relationship from 2000, and started living together in late 2009. He says separation occurred in 2010.
The parties have two children: Ms B aged 18, and X aged 15. The children have lived with the respondent following his release from gaol in 2016.
At the commencement of the relationship the respondent had assets: an investment property at C Street, Suburb D, and he and a brother owned 50% shares in a property at E Street, Suburb F. The latter was subject to a mortgage of about $50,000. Otherwise he had some shares, savings a motor vehicle, and a business. The applicant owned a motor vehicle. She had some superannuation, and nominal savings.
In 2001 the respondent purchased G Street, Suburb H, in his sole name. The purchase price was $335,000, and the deposit was paid of $85,863.48 from the respondent’s savings. $249,281 was borrowed by way of mortgage.
On the evidence of the applicant, the parties resided in the property. It is agreed that the applicant commenced a business on the grounds of the G Street, Suburb H property.
In 2002 the applicant asserts her father and brother replaced the roof on the G Street, Suburb H property, and tiled some parts of the home at no cost to the parties.
The applicant ceased employment at the business around Ms B’s birth in 2003, re-starting the business later that year. She had the primary responsibility for care of Ms B.
On 24 September 2003 the respondent sold the C Street, Suburb D property for $450,000. The proceeds were used to purchase a block of land at Town J, a share in a restaurant, and a number of vending machines. He sold that property several months later receiving $20,000 in net proceeds, on the applicant’s recollection. The respondent asserts $50,000.
In 2005 the applicant started part-time work with Employer K as a contract driver two days each week. Ms B was at day care whilst she worked. At this time she ceased the business.
From late 2005, following X’s birth, the applicant ceased paid employment. She was responsible for both children, and attended to most household duties. The respondent asserts the applicant was living at her parent’s home over this period. He paid child support, and the applicant was in receipt of Centrelink benefits.
In 2006 the applicant returned to work for Employer K two days per week. Her work started at 4:30 AM, and she made arrangements for care of the children around her work.
In 2006 the applicant found out that the respondent was selling crystal methamphetamine (ICE). She asserts she became depressed around this time.
The applicant asserts that there was an agreement in the respondent’s family that his brother Mr L would buy his siblings out of their share in their mother’s home. The applicant understood from conversations with the respondent and Mr L, that this was in the sum of $250,000.
In 2001 the applicant underwent surgery for cancer. In 2010 she underwent further surgery.
In 2010 the applicant asserts that the parties decided to get married in later that year. She refers to preparations being made for the wedding, and costs paid.
In mid 2010 the respondent was charged with commercial supply of ICE, and was bail refused. In 2011 the respondent was sentenced to 9 years imprisonment, eligible for parole from mid 2016. The respondent remained incarcerated until mid 2016. The applicant was also charged with drug related offences, which ultimately did not proceed.
As a result of the criminal proceedings he paid legal fees, and owed the New South Wales Crime Commission $222,277.82. The respondent and his brother Mr L sold the E Street, Suburb F property in 2011, from which the respondent received $323,645.72. Those funds were used to pay the debt to the New South Wales Crime Commission. The remaining $101,367.90 were paid into the home loan to meet expenses, and maintain the mortgage payments during his incarceration.
Over the period that the respondent was in gaol up until 2015 the applicant regularly visited the respondent. She took the children and the respondent’s mother with her on many occasions.
In 2010 the respondent appointed the applicant as his attorney under a power of attorney. In 2011 the respondent made a Will and appointed the applicant as executor and trustee, and gave her a life tenancy in the G Street, Suburb H property. The applicant relies on this as evidence of their ongoing relationship. The respondent asserts it was so that she could maintain the household, and care for the children. He made a Will as he was suffering from hepatitis C, receiving care in the hospital wing of the gaol. He was worried that he may not live.
In 2012 the applicant received a redundancy payment from Employer K of $2,000, which she paid into the home loan. She commenced working at Employer M as a contract driver working part-time two days per week for 10 hours a day. In 2014 she received $10,000 from her mother’s estate, which money was used to pay credit card debt.
In 2015 the applicant first consulted solicitors for advice with respect to separation. She was advised at that time that any property application was required to be filed within 2 years of separation from a de facto relationship. She instructed solicitors to lodge a caveat on the G Street, Suburb H property.
In February 2016 the applicant asserts the parties separated. She vacated the G Street, Suburb H property, leaving the children there with their cousin. The applicant had a credit card debt in the order of $25,000. She asserts she had met the costs of land rates, electricity, water rates, health insurance and living expense for herself and the children. She does not refer to the expenditure of the $100,000 deposited by the respondent. Following his release from custody later that year the respondent lived with the children.
On 11 November 2016 the respondent, his three brothers, and his mother entered into a Deed of Family Arrangement. The Deed provided for the respondent’s mother to transfer her property to her son Mr L. Mr L was required to pay $200,000 to each to his brothers. A valuation was undertaken prior to the deed, which estimated value of the property to be $880,000. The applicant was unaware of the transfer of the property until 13 July 2020, following a title search. The respondent did not disclose the deposit of $198,000 into his account on 9 December 2016. The applicant became aware of the funds through a subpoena issued to the Commonwealth Bank, which was available for inspection on 28 August 2020.
The applicant maintains that on a number of occasions following his release from custody in 2017 and 2018, the respondent told the applicant she would receive a share of the house once sold, at some point in the future.
Following separation the applicant sought advice from a number of solicitors, as detailed below. She received advice about filing an application, and the time frame required.
DOCUMENTS RELIED ON
The applicant relied on her application filed 7 November 2019, affidavit filed 31 August 2020, and financial statement filed 7 November 2019.
The respondent relied on his response filed 11 February 2020, affidavit filed 17 September 2020 and financial statement filed 11 February 2020.
THE LAW
The purpose of section 44(6) of the Family Law Act is to impose time limits on the bringing of applications following a de facto relationship within 2 years of the end of the relationship. The law applicable to married parties in leave applications is also applicable in de facto property cases[2].
[2] Gadzen & Simkin (2018) FLC 93 – 871, 29.
The applicant bears the onus of establishing that she would suffer hardship were her application not granted[3]. The test is considered in McDonald[4]:
…The mere loss of the rights is not in itself hardship. The rights loss [sic] must be a right which in all circumstances is substantial… The applicant must establish:
(a) a prima facie case which is in the circumstances substantial;
(b) that to deny the right to litigate that claim would cause hardship in the sense referred to above to a party to a child of the marriage;
(c) that there is an adequate explanation as to why the claim was allowed to elapse.
[3] Family Law Act 1975, section 44(4).
[4] McDonald & McDonald (1977) FLC 90-317 at paragraph 8.
Even if the Court is satisfied with respect to the above matters, there is a discretion whether or not to grant leave, as was considered in Whitford.[5] The full court considered the meaning of hardship as being:
the consequences of the loss of that right, with which the subsection is concerned. The requirement, that the court must be satisfied that hardship would be caused if leave were not granted, implies that it must be made to appear to the court that the applicant would probably succeed if the substantive application were heard on the merits…
[5] Whitford & Whitford (1979) FLC 90-612 at 78145-78146.
The Court is not required to engage in a detailed hearing on the merits. The Full Court has observed in Sharp & Sharp,[6] in assessing hardship in this context the well-established test is that the applicant must have a prima facie claim worth pursuing. Leave will not be granted if to do so would not, in the substantive result, alleviate that hardship.
[6] Sharp & Sharp (2011) 50 Fam LR 567; [2011] FamFACF 150.
Establishing hardship does not mean leave must be granted. Due weight must be given to the legislative intent that ordinarily, proceedings should be commenced within a year from a date of the decree nisi, or two years from separation of de facto parties. Hence, such matters as the length of the delay, the reasons for the delay, prejudice occasioned by the delay, the merits of the applicant’s case, and the degree of the hardship which would be suffered unless leave were granted, are matters relevant to the exercise of the discretion.
HARDSHIP
The cases make clear that “hardship may be caused by loss or deprivation of something which is of comparatively small monetary value”.[7] As was raised with counsel for the applicant in submissions, the cost of litigation must be taken into account when considering hardship.[8]
[7] Whitford & Whitford (1979) FLC 90-612 at 78145.
[8] Ibid.
On a final basis the applicant seeks orders for 50% of the net value of the asset pool; a $500,000 adjustment. As asserted by the applicant, the parties had a relationship of approximately 16 years, with two children.
The respondent made significant initial contributions, commencing the relationship with an investment property, and a 50% interest in another property, with a modest mortgage. He had some savings and shares. Those assets of the respondent were used for the purchase of the home.
The applicant was the primary carer of the children during the relationship. The respondent has taken responsibility for the children’s from separation, when he made arrangements from gaol for the children to be cared for by his cousin, when the applicant left the home at separation. Once released from custody he has undertaken the care of the children.
The applicant asserts financial contributions, in that she paid for and organised for air conditioning in the G Street, Suburb H property in 2001. Further that in around 2002 her father and brother replaced the roof on the G Street, Suburb H property and did tiling on some parts of the house supplying all the materials for the work at no cost to the parties.
While the respondent was incarcerated for a period of six years the applicant contributed to the family financially, and through being a parent and homemaker for the children in the respondent’s absence. The respondent argues that funds were paid into the mortgage to meet payments whilst he was incarcerated, and that the applicant was able to control the use of funds through a power of attorney.
The respondent’s arrest and subsequent criminal proceedings resulted in expenditure of some $322,227. The applicant argues this use of funds would be a significant consideration in substantive property proceedings.
The applicant gives evidence that the respondent’s criminal conduct and conviction, including becoming aware of his drug use, resulted in an emotional toll on her. She submits this had a negative impact on her ability to work and achieve her potential earning capacity. It is unclear on the evidence whether she concedes she was charged at the same time as the respondent, and what occurred with those matters.
The applicant’s evidence is that she has very limited financial resources. She is employed as an office worker with Employer N and earns approximately $1,240 per week. She has weekly expenses of $1,191 per week. She has $1,000 savings in the bank and a motor vehicle worth approximately $7,000. She has superannuation interests of $6,000. She owes $5,500 to her father. The applicant does not have any formal qualifications, and is unlikely to earn a high income in the future.
The applicant asserts that the respondent has a greater earning capacity as a driver, and that in 2018 he received income of approximately $2,500 per month after tax. The respondent’s current average weekly income is $847. The respondent has net assets of approximately $1 million in his name. He has the fulltime care of the parties’ two children, one of whom is now 18 years.
The respondent submitted that the applicant’s prima facie case in relation to a property adjustment was not inherently implausible. There is some merit to this argument. There are a number of findings that would need to be made in the applicant’s favour to support her contentions with respect to contributions during the relationship. The respondent’s significant initial contributions and post separation contributions are not at issue.
The costs of proceedings would not be insignificant, and are a matter that must be weighed into the hardship argument. I accept there would be some financial hardship to the applicant were she not granted leave, but it is not clear that it would be to the extent argued by her.
DELAY
If the Court is satisfied that hardship would be caused if leave were not granted there is a second step, where the Court is required to consider whether to exercise its discretion to grant leave. Matters to be considered are the length of the delay beyond the standard application period, and the reasons for it, and any prejudice occasioned to the respondent by reason of delay.
The applicant asserts that the parties separated in February 2016, although there is some evidence that it may have been a month or two after that. She filed her application in November 2019, so on her case the proceedings were commenced between 18 and 20 months out of time.
The applicant’s explanation for delay has two main elements. Firstly that the respondent held out false promises to the applicant in relation to settlement of the matter. The applicant claims that her reliance on these promises contributed to the delay. Secondly that she had significant emotional and financial stress following separation.
The applicant has had treatment for cancer in 2001 and 2010. This caused her a level of ongoing stress. This was not assisted by the respondent’s incarceration. She has had unreliable employment, and had difficulty raising funds to provide to solicitors to commence proceedings. She felt overwhelmed. Her evidence is that after completing an anxiety and depression checklist she was diagnosed with depression, and prescribed medication which she did not take.
In 2015 the applicant first received legal advice on the time frames for filing an application following the breakdown of a de facto relationship. On her evidence this was before separation. She provided instructions for a caveat to be lodged at that time.
During 2017 the applicant contacted various solicitors with respect to assistance for her family law matter. In October 2017 she was again advised of time lines for filing an application, and that she was running out of time to commence an application. In November 2017 she made an application for a grant of Legal Aid, which was rejected. She then applied to the Law Society pro bono scheme, which was also rejected in February 2018.
In February 2018 the applicant again sought legal representation. She was advised the firm required $10,000 before commencing proceedings, and took the matter no further. She makes no reference to seeking assistance from her father, or anyone else, to assist fund initiating the application. In June 2018 she again saw a solicitor, was advised she was out of time but that the solicitor could assist her negotiate a resolution of the matter. The solicitor wrote to the respondent. The applicant asserts there was a discussion where he offered to resolve the matter with her. She took no further steps at that time.
In September 2018 she was served with a statement of claim in relation to a debt of $10,767.24 for accrued toll fees. In February 2019 she was served with a bankruptcy notice and certificate of judgement for $12,165.25. She was assisted by the ombudsman in reaching an agreement for a payment plan of $50 per week to repay the total debts of $6,120. I accept that these issues were difficult for the applicant to deal with.
In November 2018 the applicant sought legal advice from her current solicitors and was advised to commence proceedings immediately. They requested a retainer of $2,200. She says she was without funds to pay the retainer, particularly just before Christmas. She returned to WMD in March 2019. She borrowed $1,500 from her father, and with savings was able to pay the retainer.
In April 2019 the respondent advised her he required heart surgery, and they agreed she would care for the children while that occurred. She moved into the G Street, Suburb H property to care for the children for about two weeks. Her evidence is she did not want to commence proceedings when the respondent required surgery.
She again met with her solicitors in July 2019 and was advised to commence proceedings immediately. A retainer of $5,000 was sought. The funds she had intended to use were used for the purchase of a motor vehicle, as hers broke down. Ultimately she borrowed money from her father, and a retainer of $4,000 was paid on 16 October 2019, and proceedings were filed on 7 November 2019.
The applicant asserts that to grant leave would not occasion any particular hardship on the respondent. The respondent has the care of the parties’ children, and resides in the home. He made no submissions about hardship that would be caused to him.
I accept that the applicant was advised on a number of occasions of the time frames for filing. This advice was provided prior to separation, and on a number of occasions in the two years following separation. On her evidence there were attempts to negotiate with the respondent, both directly between them, and through solicitors. Nothing came of those efforts. Notwithstanding that she filed no application until 7 November 2019. This history makes it impossible to accept that the applicant could reasonably expect the respondent would resolve the matter. She had the benefit of advice, which was clearly to initiate proceedings to preserve her position.
There is no satisfactory explanation of why she did not commence proceedings within the required time frame. The applicant has not provided evidence of mental health reports, or similar material, supporting that she has a vulnerability affecting her ability to deal with the matter. The occasions on which she sought legal advice suggest the opposite.
CONCLUSION
I accept that there will be hardship occasioned to the applicant if leave is not granted. However, I am not satisfied that in all the circumstances I should exercise the discretion to grant leave. The applicant took no steps to file proceedings despite having legal advice on her evidence a year prior to separation, and on a number of occasions following separation, to do so. I therefore dismiss the application filed 7 November 2019.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Boyle. Associate:
Dated: 7 June 2021
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