Yule and Manners

[2016] FCCA 2050

FEDERAL CIRCUIT COURT OF AUSTRALIA

YULE & MANNERS [2016] FCCA 2050

Catchwords:
FAMILY LAW – Application for leave to bring application for property settlement out of time – considerations of hardship and exercise of discretion – leave granted – ex tempore reasons.

Legislation:

Family Law Act 1975, s.90SM

Cases cited:
Whitford & Whitford (1979) FLC 90-612
G & G [1999] FamCA 240
Althaus & Althaus (1982) FLC90-233
Montano & Kinross [2014] FamCAFC 231

Applicant: MS YULE

Respondent: MR MANNERS

File Number: HBC 315 of 2016

Judgment of: Judge McGuire

Hearing date: 28 July 2016

Date of Last Submission: 28 July 2016

Delivered at: Hobart

Delivered on: 28 July 2016

REPRESENTATION

Counsel for the Applicant: Ms Rofe

Solicitors for the Applicant: Wallace Wilkinson & Webster

Counsel for the Respondent: Mr Bugg

Solicitors for the Respondent: Lander & Rogers

ORDERS

1. That pursuant to Section 44 (6) of the Family Law Act 1975 the applicant have leave to bring an Application for property interests out of time.

2. That the respondent make, file and serve a Response, responsive Affidavit and Financial Statement if necessary within 21 days.

3. That the matter is listed before Judge Baker in the Federal Circuit Court at Hobart on Thursday 8 September 2016 at 10.00 a.m. in respect of children’s matters and for mention, directions and if necessary interim hearing with leave granted for the respondent’s solicitor to attend by telephone.

4. That the applicant’s application for the costs of the Application for paternity testing procedure be listed before her Honour on 8 September 2016 at 10.00 a.m.

5. That the parties attend a Conciliation Conference with a Registrar of the Federal Circuit Court of Australia at the Hobart Registry on Friday 16 September 2016 at 2.15 p.m.

6. That unless otherwise exempted from payment the Applicant must pay the Conciliation Conference fee of $370 in accordance with the Family Law (Fees) Regulation 2012 28 days prior to the Conciliation Conference.

7. That the parties’ solicitors (and if they are unrepresented, the parties themselves) send to the other, and the nominated organisation to conduct the conciliation conference, at least 7 days before the conciliation conference, copies of:

   (a)an outline of case document in the form set out below in the trial directions;

   (b)a copy of a market appraisal or valuation of any asset or financial resource, the value of which is in dispute and valuations of any superannuation interests;

   (c)a copy of the actual terms of orders required to give effect to their settlement proposal; and

   (d)written confirmation by each party or their solicitor that:

   (i)all relevant documents have been exchanged between the parties; and

   (ii)the superannuation trustee of any fund that may be the subject of a splitting order has been accorded procedural fairness.

8. That in the event that the matter does not settle at the conference and the parties have not complied with orders (no.7) (a) to (d), the Registrar is directed to contact the chambers of Judge McGuire, prior to the end of the Conciliation Conference, in order to urgently list the matter before Judge McGuire for further directions and submissions with respect to costs.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT HOBART

HBC 315 of 2016

MS YULE

Applicant

And

MR MANNERS

Respondent

REASONS FOR JUDGMENT

1. The application before me now is one by the applicant, Ms Yule, for leave pursuant to section 44(6) of the Family Law Act 1975 to bring proceedings out of time in respect to section 90SM of the Act for property alteration.  There are also from the response filed live issues in respect of the parties’ one child, X, who is three years of age.  The application was filed on 28 April this year.

2. The application is opposed by the respondent.  The applicant relies on two affidavits filed on 28 April and 25 July of this year together with her financial statement.  The respondent filed a comprehensive affidavit sworn 4 July 2016 together with a financial statement. 

3. Both parties are (occupation omitted).  They lived in a de facto relationship.  There is some dispute as to the date of commencement of cohabitation and the date of separation, but it is fair to say that the relationship occupied somewhere between eight and 10 years. 

4. The parties separated in about 2012 and, on its face, the application for leave to bring property proceedings is some two years out of time. The Act at section 44(5) provides that certain proceedings, including those contemplated by this application shall not be instituted except by leave of the Court in which the proceedings are to be instituted or with the consent of both parties after the expiration of the applicable time period. Section 44(6) of the Act provides that:

   The Court may grant the party leave to apply after the end of the standard application period if the Court is satisfied that:

   (a)     hardship would be caused to the party or a child if leave were not granted;  or

5. The Court’s approach in dealing with matters of this type is well established and both - or counsel for each of the parties has referred me to the well-known decision of the Full Court in Whitford & Whitford (1979) FLC 90-612 where the Court has stated:

   Thus, on an application for leave under section 44(3) dealing with the parties to a marriage, 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 the leave to institute proceedings.

6. Following Whitford, it is clear that an applicant for leave under the requisite section carries an onus and a threshold or hurdle exists in respect of satisfying the Court on the balance of probabilities that hardship would be caused if leave were not granted.  As Ellis J observed in G & G (1999) FamCA 240 at paragraph 22:

   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 section 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.

7. Noting his Honour’s comments in G & G, I return to the consideration of the Full Court in Whitford & Whitford in 1979 where their Honours observed as follows:

   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. 

8. In considering any potential hardship for an applicant the Court is not required to enter into a minute or detailed hearing on the merits of the application or the response in its substantive and anticipated forms.  Rather, the applicant, in such an application as now before me, must present a prima facie reasonable claim with some chances of success.  As a differently constituted Full Court observed in Althaus & Althaus (1982) FLC 90-233:

   In my opinion section 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 inquiry into whether hardship will be suffered by denying the applicant the right to litigate to the claim.

9. It is clear, on any understanding of the application now before me, that such an application seeks an indulgence of the Court and before considering its merits it is proper that I also refer to a more recent decision of a Full Court of the Family Court in Montano & Kinross (2014) FamCAFC 231 where their Honours observed the following:

   Like many applications for indulgence, an application for leave to apply at 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 wilful blindless or recalcitrance.  Equally, a desire to pursue a remedy out of time must be compared to the necessary for the parties to proceed with their post-separation lives free of the spectre of prospective litigation.

10. Their Honours comments are very much to the fore in the consideration now before me in this matter.  Returning to the hardship claimed by the applicant in this case, the now well-worn decision of Whitford continues at page 78,145 as follows:

    In ordinary parlance, hardship means something more burdensome than an appreciable detriment.  We consider that in subsection 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 in the relevant sense.  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 bear 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 subsection 44(3) or 44(4) for saying that the right or entitlement lost must be a substantial one:

    On the other hand, sections 44(3) and 44(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 that proceedings should be instituted within a year of the decree nisi.

11. The respondent here argues that the applicant’s case is sparse in particularised material in respect of actual hardship, but speaks in generalities as to gross property pools without any proper particularised reference to the net pool which would, of course, be the figures that activate the interest of a court in any substantive proceedings.  

12. The respondent says that on his figures the property pool is negligible in a net sense that, whilst there are parcels of real property that might find a value of somewhere between $4 million and $5 million, the figures he gives in his sworn affidavit suggest mortgages which are substantial and which would leave equity in those properties, although positive, of a trifling amount which, on his calculations, sit somewhere between 20 and 30 thousand dollars.  The argument against the application is that on those figures, if accepted, then the pool of property for a court to deal with would be minimal. 

13. There is some merit in the criticisms of the respondent’s counsel to the affidavit material put before the Court by the applicant.  I stress that in an application such as this seeking an indulgence, in respect of the evidence there is an onus on an applicant to cause a court to make findings on the balance of probabilities and, frankly, some of the submissions put in support of the applicant’s case would fit more properly in another jurisdiction as a form of plea in mitigation to elicit some sympathy from a court to the applicant’s peculiar situation.  Whilst I might have some sympathy, the fact is that the applicant has to give or adduce evidence which convinces the Court.  The applicant’s case, as I understand it, in respect of hardship is that:

    (1)There is a substantial gross pool;

    (2)There was a relationship of some 10 years;

    (3)That whilst there are liabilities, she was unable to quantify those liabilities; 

    (4)That the parties mingled their finances during the course of their relationship and with specific references as to payment of certain liabilities and utilities and following the advancement of some loans between the parties.  The applicant’s material references with some detail her asserted contributions of a direct financial nature, an indirect financial nature and a non-financial nature and the applicant sets out that there is a child of the relationship, and I understand from the submissions put to me that paternity of that child was but is no longer an issue. 

14. And the evidence of the applicant is that she has had, post-separation and continuing, the primary care of that three-year-old child together with substantial financial care.  The applicant, significantly in my view, asserts in her material that neither party had any significant assets at the commencement of their cohabitation which, of course, would probably be a starting point for any subsequent court’s considerations as to entitlement based on contributions. 

15. Finally, the applicant in her material or at least in the submissions of her counsel seems to assert that there may be an argument as to disparity in earning capacity. 

16. Whilst the material given and adduced by the applicant does not assist with any particularity as to an asset pool and, as I have said, there is some at least superficial merit in the submissions of counsel for the respondent that the pool may not be of any substantial value in its net sense, it is not, in my view, the role of a Court at this stage to place an arbitrary value in the sense of a property pool in terms of limiting a party’s opportunity to litigate in respect of that pool.  I am satisfied that there are gross assets of substantial value.  I am unable to attribute a net value to the pool with any precision.  It is worth of repeating the comments of their Honours in Whitford where their Honours say:

    …but, otherwise, we find no warrant in either section 44(3) or 44(4) for saying that the right or entitlement lost must be a substantial one.

17. To put that in more simple terms, it is not now for me to anticipate any award that either of the parties might receive in respect of relativity or the value of the property pool, but on the material before me I am satisfied equally that an application brought by this applicant would not fail or suffer simply because of the trifling value of her property pool.  Prima facie I am satisfied that there is an asset pool of such value that the applicant would receive an award and this being in circumstances where it is the respondent who holds the majority if not all of the valuable assets.  Taking all of those matters into account and on the balance of probabilities, and despite the difficulties that I have highlighted with the applicant’s material, I am satisfied that the applicant would suffer hardship if not granted leave to bring an application out of time. 

18. That finding leads to the exercise of my discretion as to whether or not to grant leave and I agree and accept the submission of counsel for the respondent that I must consider the length of the delay in bringing the proposed application; the reasons given or adduced by the applicant for that delay or failure to meet the time constraints; any issues of mutual prejudice to either party in either the granting or refusing of the application for leave; and finally, the prima facie merits of any application which, on the face of it, I have already dealt with. 

19. The delay of this matter outside of the statutory time limits is approximately two years.  It is not a minimal amount of days, weeks and months.  It is a relatively substantial period and one, in my view, which activates a heavier onus or responsibility on an applicant to give an explanation and a reasonable explanation for her failure to comply.

20. Again, the material in the applicant’s affidavit, in my view, is vague, at times ambiguous and at times selective, as pointed to by counsel for the respondent in his submissions.  As I understand the explanations for the delay, they can be summarised as the following:

    (1)That the applicant was under financial constraints;

    (2)That the applicant received some legal advice and acted on that legal advice;

    (3)That the other party made representations – and I stress this evidence is untested and I am referring only to the prima facie, untested evidence of the applicant, but the other party made statements or representations that any application for alteration of property interests might be met by his debtors petition for bankruptcy;

    (4)That the applicant had given birth to the parties’ child;

    (5)That she did not then receive any actual or financial support from the respondent, leaving her with the understandably difficult situation of being out of a relationship and a sole parent and without the immediate geographical support of her extended family and, as such, she moved herself and her child to (country omitted) for support;  and

    (6)If I interpret the applicant’s affidavit material correctly, that there were continuing communications between the parties, many of which were of a financial nature with, on the applicant’s evidence, the respondent’s reply or response to such communications being that he was on the verge of bankruptcy and the inference that I take, although no direct submission was made to me, that such communications from the respondent dissuaded the applicant’s compliance earlier or in time with the filing of her application.

21. There are difficulties with each of those arguments in their veracity or in the simple fact as to whether or not they lend to an explanation for delay.  They do, however, on their face represent some explanation which is plausible and in my view, reasonable. 

22. There are prejudices to each of the parties in the granting or refusing of leave to bring the substantive application. Quite obviously, if the applicant is not granted leave, then, on the face of it, she needs to seek other avenues for recourse of any entitlement that she may have following the demise of the de facto relationship with the respondent. And, in that sense, the Family Law Act offers an available and statutory course, perhaps, of greatest ease for the settling of such matters, although it is not the only avenue open to a litigant in such circumstances.

23. There is also prejudice to the respondent, not the least that, despite any allegations or assertions as to his behaviour, he might reasonably be able to watch time pass by and, after the expiration of two years, have the expectation that he can move on with his life actually, emotionally and financially.  And to be put in a position where despite such unambiguous statutory time limits that he is at jeopardy of traumatic, lengthy and expensive litigation is, in my view, itself a prejudice. 

24. It is proper that I note, however, that whilst the delay is not a minimal one, it is not of such length that the respondent’s participation or defence, if I put it that way, to the application is prejudiced or compromised by way of the lack of any available witnesses or evidence in other documentary form which might prejudice his conduct of the litigation.

25. I have already dealt with the prima facie merits of the applicant’s application.  On balance and in all of the circumstances, and despite my reservations as to the form and veracity of the affidavit material before me, I am persuaded on the balance of probabilities that my discretion should be exercised in favour of the applicant and I will grant the applicant to bring her application. 

I certify that the preceding twenty-four (25) paragraphs are a true copy of the reasons for judgment of Judge McGuire.

Date: 10 August 2016