Leave to Proceed with Property Settlement Refused where Parties own Houses together

 
The parties were divorced on 16 January 2009 and the Wife sought leave to proceed with a property settlement application on 17 October 2017, 6 years & 9 months after the time limit had expired.

The time limit for property settlement for married couples is 1 year from when their Divorce becomes final.

The parties commenced living together in 1992, were married in 1993 and had 3 children born in 1994, 1997 and 2000. 

When they commenced living together the Respondent Husband still owned / had interest in 2 properties owned with his first Wife and the Applicant had a motor vehicle and very little else of value. 

In 1994 the Applicant Wife’s parents loaned (the Applicant’s position) or gifted (the Respondent’s position) them $25,000 which went into a property the parties bought together and to which they did signficant renovations. They sold that property and bought and sold more properties.  The Respondent had been responsible for parties’ finances. 

When they separated they owned 2 properties in joint names and had superannuation.  The equity in the 2 properties and the value of superannuation totalled at least $552,000 being a net property pool to be divided as at that time.  The asset position of the Respondent was significantly greater years later when the Aplication was heard, than it had been years previously when separation occured. 

A significant part of the Applicant’s case was that shortly after separation they agreed informally on a property settlement as to who would keep which property, cars and superannuation.  The Respondent Husband denied this.  Regardless, no agreement had ever been formally documented.  

The Judge noted the law on the issue of an Applicant seeking leave to proceed out of time, is that the Applicant bears the onus (duty) of showing evidence & proving to the Court that the justice of the case is such that it requires the Application to be granted.  It is not for the Respondent to have to prove the Application should not be granted. 

It was noted it is for the Court to consider whether the Applicant has established:

1. A reasonable prima facie case for property settlement to be granted had the Application been made within the time limit (prima facie means a case likely to be sucessful on a face value look or initial brief look at it);
2. That denial of the claim would cause the Applicant hardship; and
3. An adequate explanation as to the delay.

All 3 elements must be proved, however it may also be that the reasons for hardship outweight an inadequate explanation for the delay. 

If proved, then the Court must also look at whether the Respondent would suffer any prejudice if the Application were granted. The Court will look at:

• the history of the proceedings;
• the conduct of the parties;
• the nature of the litigation & its consequences to the parties if the Application were granted or refused.

The fundamental question in an Application for Leave to Extend Time is whether granting the Application will do justice between the parties.  

In this case, the court considered:

• the financial contributions of each party; 
• the non-financial contributions of each party;
• all of the evidence;
• the likely outcome if the Court was deciding the percentage division in a property settlement application, as compared with the value of what each of the parties currently already retained in their own name;
• the likely costs that would be incurred by each party if leave was granted and litigation then occured pursuing property settlement orders;
• the prejudice to the Respondent Husband, including the passage of time on the availability of documents, witnesses and his recall of some relevant matters from 25 years previously, the court finding the prejudice to the Husband was significant;
• the length of the delay before the Application was made, meaning the limitation period had expired 6 times over;
• she knew of the time limit as at January 2009 but elected not to take any action and her explanation for the delay was not really adequate;
• her actions after separation were not likely to raise a reasonable expectation that she would later bring an Application for Property Settlement;

and refused to grant leave to proceed with a Property Settlement Application out of time, saying that hardship had not really been proved. 

This left the parties owning properties together, meaning they would need to reach agreement to sell them (or puruse State based laws to force sale) and divide the proceeds equally, since they were held in joint names.

---

NOTE:  This case has been published by the Court under a PSEUDONYM, rather than using the real names of the parties.  

Edmunds & Edmunds [2017] FCCA 2493 (19 October 2017)

Last Updated: 2 November 2017

FEDERAL CIRCUIT COURT OF AUSTRALIA

REPRESENTATION

ORDERS

(1) The Initiating Application filed 17 October 2016 is dismissed.

(2) Any submissions in respect of costs are to be filed and served:

(a) By the Respondent within 28 days; and

(b) By the Applicant within a further 14 days thereafter.

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

PAC 4882 of 2016

Applicant

And

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application for leave pursuant to section 44(3) of the Family Law Act 1975 (Cth) to commence property adjustment proceedings out of time. The respondent opposes the granting of such leave.
2. The parties were husband and wife years ago.
3. They were divorced on 16 January 2009.
4. Under the Act they each had the right to seek an alteration of property interests within 12 months of their divorce^[1]. The limitation period expired on 16 January 2010. Neither of them commenced such proceedings within that time period.
5. Rather, the applicant sought to commence such proceedings on 17 October 2016, 6 years and 9 months after the expiration of the limitation period.
6. The leave proceedings took approximately one day of Court hearing time, albeit the matter was heard over the course of two days. Lengthy affidavits were filed on behalf of each of the parties and read in the proceedings. Each party had filed their Financial Statement. There were lengthy and detailed submissions made on behalf of each of the applicant and the respondent.
7. Each of the parties was also cross-examined, and in its deliberations, the Court has considered all of the evidence before it. The general principle being that on the issue of the establishment of a prima facie case the Court proceeds on the basis that the evidence of the applicant is taken at its highest.^[2]

Relevant Law

8. It is important to reflect on the rationales for the existence of limitation periods.
9. As stated by Justice McHugh:

A limitation period should not be seen … as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated. … A limitation provision is the general rule; an extension provision is the exception to it. The extension provision is a legislative recognition that general conceptions of what justice requires in particular categories of cases may sometimes be overridden by the facts of an individual case.^[3]

10. The above passage has been cited with approval by the Full Court of the Family Court in respect of applications for leave to commence proceedings out of time, both on appeal but also, importantly for present purposes, with respect to leave pursuant to s44(3).^[4] It is an expression of law which is respectfully adopted here.
11. Section 44 (3) provides relevantly, that proceedings pursuant to section 79 shall not be instituted except by leave of the Court, more than 12 months after the date on which the divorce order took effect. As noted earlier in the circumstances of this case, the time to commence proceedings expired on 16 January 2010.
12. Section 44(4) provides that leave under sub-section (3), shall not be granted unless the court is satisfied that “hardship would be caused to a party to the marriage or a child if leave was not granted”. The applicant argued before this Court that hardship would be caused to her, rather than to any child of the parties, if leave was not granted.
13. Even after it is satisfied that hardship in the requisite sense would be caused, the Court is not obliged to grant leave, rather it may grant such leave. Sections 44(3) cannot be read as giving the applicant a presumptive right to an order for leave once she has satisfied the conditions in s44(4). Rather, an applicant for an extension of time who satisfies those conditions is entitled to ask the court to exercise its discretion in his or her favour.
14. The discretion to grant leave to commence proceedings outside of the 12 month limitation period, is a discretion to grant, not a discretion to refuse. ^[5] The applicant bears the onus of showing that the justice of the case requires the exercise of the discretion in her favour.^[6]
15. Whilst the Full Court in Whitford & Whitford^[7] considered that the power to extend time ought be exercised “liberally in order to avoid hardship” the Court also stated that it should be done

… in a manner, which would not render nugatory the requirement that proceedings should be instituted within a year from the decree nisi.

16. The authorities on the issue of an application pursuant to s44(3) are numerous. The Court must consider whether the applicant has established^[8]:
    1. A reasonable prima facie case for relief had proceedings been instituted in time;
    2. That denial of the claim would cause the applicant hardship; and
    100. An adequate explanation as to the delay.
17. In appropriate cases the degree of hardship to be suffered by the applicant may well outweigh an inadequate explanation of delay.^[9]
18. Once the three elements are satisfied, in determining whether to exercise its discretion to grant relief, the question of prejudice which the respondent would suffer by reason of the delay in bringing the application ought be considered.^[10]
19. Once the legislature has selected a limitation period, to allow the commencement of an action outside that period is prima facie prejudicial to the respondent who would otherwise have the benefit of the limitation.^[11]
20. The Full Court^[12] has endorsed in proceedings for leave pursuant to s44(3) the principles applicable to the question of leave to appeal out of time as enunciated by the High Court in Gallo v Dawson^[13]. There Justice McHugh referred, inter alia, to the need to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequence to the parties of the grant or refusal of the extension of time.
21. Even if the court came to the view that there was no significant prejudice to the respondent, the Court may consider whether in all of the circumstances, it is just and reasonable to grant the extension sought.^[14] It might be said that the fundamental issue to be considered in any application for extension of time is whether this will enable the court to do justice between the parties by reference to the relevant discretionary considerations.^[15]
22. Finally, the appropriate approach to a determination under section 44(3) necessitates a clear distinction to be made between the proof of hardship and a consideration of the consequential exercise of discretion.^[16]

Hardship?

23. It is apposite to be reminded of what the High Court said in Stanford v Stanford^[17]:

[35] It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.

[36] The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.

[37] First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property”… The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.

[38] Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. And as four members of this court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:

The judge called upon to decide proceedings of that kind is not entitled to do what has been described as “palm tree justice”. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down.

[39] Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”.26 Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”.27 The question presented by s 79 is whether those rights and interests should be altered.

[40] Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

[41] Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to “the need to preserve and protect the institution of marriage” identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act. If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot29 make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.

[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (citations omitted)

24. In one obvious sense the hardship or prejudice to the applicant is absolute if her application is refused^[18]. She can never litigate her claim. But that cannot be enough of itself to warrant an extension of time; because in truth there would then be no discretion to be exercised.^[19]
25. Hardship for these purposes is more than the loss of the right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship. That is a matter to be determined by the circumstances of the particular case^[20].
26. Whether a denial of the applicant’s claim would cause her hardship, is an issue which relates to the situation of the applicant as at the date of the hearing.^[21]
27. The parties commenced cohabitation in 1992. At the commencement of their cohabitation:
    1. The applicant owned a motor vehicle^[22] the value of which is not the subject of any admissible evidence. She had savings of approximately $5000. The applicant was employed as a (occupation omitted) on a casual basis and she also worked as a (occupation omitted). Her earnings were in the vicinity of $300-$350 per week ($15,6000 to $18,200 per annum);
    2. The respondent owned property with his first wife. He also owned a motor vehicle. There was no admissible evidence about the value of the husband’s interest in the property or the value of his motor vehicle before the Court. The respondent had savings. The respondent was employed and also worked independently as a (occupation omitted). His earnings were in the vicinity of $65,000 per annum.
28. The applicant asserts that the respondent had a further interest in a property with his first wife at the commencement of their relationship. The applicant’s evidence is that the respondent was a 50% owner of a property at Property A with his first wife, which was owned by his mother. The respondent’s evidence is that his mother was the owner of a property at Property A and that he never held any interest in that property. The respondent says that this property was later sold and the parties were given $300,000 by the respondent’s mother which was used towards a purchase of a property by them.
29. The parties were married on (omitted) 1993. They had three children together:
    1. X, born (omitted) 1994;
    2. Y, born (omitted) 1997; and
    100. Z, born (omitted) 2000.
30. In or around 1994, the parties purchased a property at Property C, for $145,000. The applicant says that the deposit for the purchase came by way of loan from her parents in the amount of $25,000 and joint savings of $2,000. The respondent says that the deposit of $27,000 came from his savings with the balance of the purchase price being financed by way of a mortgage. The respondent says that the applicant’s parents then gave them $25,000 towards the house, which was utilised to fund renovations.
31. The parties renovated the Property C property. They each give differing accounts of their contributions to such renovations. The renovations were not insignificant, involving work to the kitchen, bathroom and flooring.
32. The respondent’s earnings, which were significantly greater than the applicant’s, were deposited into an account held in the parties’ joint names, and utilised for the payment of the mortgage in its entirety and other outgoings associated with the property. The applicant’s earnings were deposited into a different account, and were used to meet some of the family’s living expenses.
33. In 1999, the Property C property was sold for $243,000. At around the same time the parties purchased a property at Property D for $270,000 (“Property D”). A deposit of $12,700 was funded from savings held by the parties, and the parties obtained a loan for the balance through (omitted) Bank. The net proceeds from the sale of the Property C property in the amount of approximately $100,000 were applied towards the purchase price of the Property D property. The mortgage repayments of the Property D property were solely met from the respondent’s earnings.
34. In early 2004 the parties purchased a second property at Property B (“Property B”) for $450,000. The respondent says that purchase price was funded from the sale of the Property A property in the amount of some $300,000.^[23] The respondent says that the balance of the purchase price came from savings^[24]. No documentary evidence is before the Court in respect of these matters, and there may be difficulties with some of the arithmetic. This is the property in respect of which the applicant seeks relief by way of property adjustment orders.
35. In mid-2004, the respondent received an inheritance, on his case of $97,000 and on the applicant’s case of $180,000. The respondent says such monies were used for family expenses and towards the purchase of new furniture, decorations and fit-outs for the Property B property. The applicant says the money was used towards the purchase of the Property B property.^[25]
36. At the time of the purchase of the Property B property it was the parties’ intention to demolish the existing home and build a new one. This did not eventuate. Initially the parties lived in the Property B property for approximately six months, then moved to rented accommodation, and then moved back to the Property B property in 2007.
37. The applicant asserts that the respondent purchased shares in or about 2005 which were later sold in 2007. She says the shares were in the respondent mother’s name. There is no evidence as to the value of the shares at the time of purchase, where the purchase price came from, nor where the proceeds of sale went to.
38. In or around 2005, the parties sold the Property D property for either $425,000 or $450,000. Neither party put before the Court any documentary evidence which would have gone to the purchase price. The parties agree that they paid six months’ rent up front from the Property D proceeds of sale. The respondent says that the balance of the net proceeds^[26], was ultimately used towards the purchase of a third property at Property E (“Property E”).
39. The Property E property was purchased by the parties at the end of 2005 for $795,000. They took out a mortgage of $680,000 with (omitted) Bank.
40. The parties separated in late 2006/early 2007.
41. At around the time of separation, the respondent had between $125,000 and $149,000 in superannuation.^[27]The applicant’s superannuation was minimal.
42. At separation it appears the parties had the following assets:
    1. Property B property (jointly owned) with equity of at least $300,000 but probably more;
    2. Property E property (jointly owned) with equity of approximately $100,000 – $130,000;
    100. Respondent’s superannuation of approximately $137,000^[28];
43. It also appears that the parties anticipated that the respondent would likely receive a redundancy or termination payment of some significance when and if, the role he was employed in was made redundant.
44. The parties agree that they both worked in paid employment throughout their relationship and that the respondent’s earnings were significantly higher than that of the applicant. Both parties’ earnings are accepted to be financial contributions.
45. On the applicant’s case the respondent’s financial contributions during the relationship were made up as follows:
    1. Initial contribution of a motor vehicle, value unknown;
    2. Initial contribution of some savings;
    100. Initial contribution of a half interest in the property at Property F, value unknown (although applicant deposes that she believes the property was worth in total approximately $80,000);
    4. Initial contribution of the property at Property A, value unknown;
    5. Inheritance from the estate of the late Ms M in 2004 asserted to be $180,000;
    6. Wages/earnings throughout the relationship.
46. The applicant’s financial contributions were made up as follows:
    1. Initial contribution of a motor vehicle;
    2. Initial contribution of approximately $5000 in savings; and
    100. Wages/earnings throughout the relationship.
47. It is noted that both parties’ evidence is silent as to what happened to the respondent’s interest in the Property F property he had at the commencement of the relationship, except to the extent the applicant says it was sold in 1993, and that the respondent said he had used his share to buy the parties a new house. For that reason, such initial contribution is difficult to assess, and will for the purposes of this application, be considered as being of minimal weight.
48. The Court is conscious of the discrepancy in the evidence between the parties as to the Property A property. On the applicant’s case such contribution was made at the commencement of the relationship. On the basis of authorities such as Pierce & Pierce^[29], the use made by the parties of that contribution, being a substantial contribution to the purchase of the Property B property, means that the Court would assess such contribution as significant.^[30]
49. On the applicant’s case at its highest, the financial contributions by the respondent both at the commencement of the parties’ relationship and throughout the parties’ relationship were significantly greater than those of the applicant.
50. The applicant asserts that she was the primary home maker and carer for the children. She asserts that the respondent contributed by putting the children to bed at night until the age of 7 or 8 and to mowing the lawns once per month. She says she prepared the meals, and attended to the housekeeping. The parties agree that the applicant’s aunt provided assistance to the parties in looking after their children when the applicant was at work.
51. As such, on the applicant’s case at its highest the applicant’s non-financial contributions, including contributions as homemaker and parent, throughout the parties’ relationship were greater than those of the respondent.
52. The parties agree that the respondent managed the parties’ finances throughout their relationship. The parties renovated the first property they lived in. The respondent says he was responsible for much of the work in organising and conducting the renovations, while the applicant uses the term ‘we’ and is not specific about the matter.
53. A significant part of the applicant’s case was the assertion that shortly after separation the parties entered into an agreement in respect of their property interests. The applicant says that the agreement was to the effect that she would retain the Property B property and her car, and that the respondent would retain his superannuation, the Property E property, any redundancy payment and all the moneys he otherwise held. Such an agreement would have seen the applicant retaining more than 50% of the parties’ assets at the time of separation^[31].
54. The respondent denies any such agreement, and instead asserts that there existed an agreement between the parties at separation that the applicant would remain living in the Property B property with the children, until the youngest turned 16 at which point that property would be sold and each party would retain half the proceeds. Otherwise, each of the parties would retain all their other assets, including superannuation. Such an agreement would have seen the respondent retaining more than 50% of the parties’ assets at the time of separation.
55. It may be that each of the parties acted in accordance with what they understood was the agreement that was reached between them. However, there are certain discrepancies in the evidence and it appears that neither party necessarily acted wholly consistently with the agreement^[32] they each assert existed shortly after separation.
56. While there was much disagreement between the parties as to what occurred after separation, and what if any, agreement was reached between them in respect of their property, the fact is that neither party is seeking to enforce such agreement. Furthermore, the respondent does not argue that the applicant is estopped from commencing these proceedings because of the agreement which he says existed between the parties at the time of separation. Each of them recognises that the law permits the applicant to seek relief pursuant to the Family Law Act but that at present such relief as sought is outside of the limitation period.
57. In any event, it is not necessary to make any findings about the assertions by each of the parties in respect of any agreement reached between them after separation. It is ultimately a relevant matter going to the explanation of the delay in commencing proceedings by the applicant, but otherwise would not be relevant to the consideration of hardship, except in so far as it could go to the issue of credit. Because of its assessment of the applicant’s case at its highest, issues of credit were not considered relevant for the purposes of determining the present application.
58. From the date of separation, the applicant remained living in the Property B property with the parties’ three children. At the time of separation the children were aged 12, 9 and 6.
59. After separation, the respondent provided to the applicant some financial support, said to be for the children. He also paid the majority of the council rates and insurance on the Property B property. The applicant paid for the children’s private school fees.
60. After separation, the respondent lived with his mother, his son and then with his mother again, where he remained until November 2016. The respondent spent time with the children of the parties, although only to a limited extent.
61. From the date of separation until its sale in late December 2007, the respondent met the mortgage repayments on the Property E property. The Property E property was sold for $720,000. The net proceeds of sale were approximately $115,000^[33]. Such moneys were deposited into the parties’ joint bank account in late 2007/early 2008, one year after the parties separated. These funds were in part utilised by the applicant. Although that joint bank account was ultimately closed, there was no evidence before the Court as to the balance in the account when it was closed, or where any such balance went. The applicant asserts it was largely retained by the respondent. The respondent was cross examined. There were very few questions put to him about where such moneys ultimately went.
62. The respondent’s employment with (employer omitted) was terminated on or about (omitted) 2009. Consequent to the termination of such employment he received a termination payment, consisting of annual leave, time in lieu, long service leave, sick leave and a redundancy, totalling $231,337 net. This was paid to the respondent on or about 15 February 2010^[34]. The respondent worked for this same employer throughout the parties’ relationship, and as such the vast majority of the entitlements paid to the respondent upon termination were accrued during the relationship.
63. The respondent says that he used the termination payment moneys towards purchase of business equipment to establish (business omitted). This included an excavator, two utility vans, (omitted) equipment and electrical tools. He also used the moneys for his living expenses and to pay out a credit card debt, which he attributed to the applicant, in the amount of $8,000.
64. After separation, the applicant expended monies and effort in renovations to the Property B property. She says that the funds mostly came from her mother. There is no evidence as to any improvement of value as a result of the renovations, but they are relevant in respect of the applicant’s maintenance and upkeep of the property.
65. In 2015, the applicant received an inheritance of approximately $60,000. She applied $10,000 towards the children’s living and educational expenses, and she retained approximately $50,000 in a bank account.
66. The applicant runs a business. There is no independent valuation of the business operated by her.
67. As at March 2017, the respondent had $10,486 in a bank account. There is no independent valuation of the business operated by the respondent.^[35]
68. As at the date of the hearing, the balance of the respondent’s superannuation was $617,124. This is a deferred benefit.
69. The applicant’s assets at the time of hearing comprise at least of the following:
    1. Half interest in Property B property estimated by the parties to be between $380,000-$450,000;
    2. Motor vehicles net value estimated at $23,500;
    100. (business omitted) estimated at $6,250; and
    4. Money in bank account of $50,200.
70. The respondent’s assets at the time of hearing comprise at least of the following:
    1. Half interest in Property B property estimated by the parties to be between $380,000-$450,000;
    2. Superannuation of $617,124;
    100. (business omitted)^[36] estimated to be worth $0;
    4. Motor vehicle net value estimated at $5,000; and
    5. Money in bank account of $10,486.
71. The application as presently couched, is that the respondent transfer his interest in the Property B property to the applicant and that otherwise each party retain all other assets and liabilities in their names.
72. The respondent contends that the applicant is unable to establish any prima facie case as to an entitlement to an order pursuant to section 79. The Court accepts the submission made on behalf of the respondent that it is difficult to conceive of a different result to the parties legal interests having been arrived at the time of the parties separation in 2006 and now, in circumstances where whilst the respondent retained a greater share of the then available property, and the applicant retained the benefit on a cost free basis of sole occupation of the property in which the respondent otherwise has a legal entitlement of 50%, the realisation of which he has postponed for some 11 years. However, it is not impossible to do so.
73. The fact is that the respondent received the very significant termination payment within the 12 month post-divorce period, and that he appears to have retained shortly after separation the majority of the net proceeds of the Property E property. This could be as much as $330,000 in total.
74. The Court is mindful of the greater non-financial contributions made by the applicant throughout the relationship as well as post separation. The applicant will continue to have the bulk of the care and financial responsibility of the parties’ children (although only one is still a minor but already 16 years old). The moral obligation is likely to continue. The Court is also mindful of the applicant’s financial contributions throughout the relationship as well as post separation.
75. However, given:
    1. the significant and overall much greater financial contributions, particularly those in 2004^[37] but also throughout the relationship, by the respondent;
    2. the increase in the respondent’s superannuation of some $480,000 over the 10 years post separation as a result of his continued employment and contributions;
    100. the post separation contribution by the respondent to the upkeep and maintenance of the Property B property;
    4. the applicant’s continued use of the Property B property for over 10 years post separation, albeit she has been responsible for its upkeep and maintenance, and has conducted some renovations to it;
    5. that both parties contributed to the welfare of the children by virtue of the fact that the children remained living in the Property B jointly owned property;
    6. the assets of the parties at the date of separation;
    7. the likely costs to be borne by the parties in pursuing a s79 application;
    8. that the post separation period of over 10 years^[38] is not insubstantial when compared to the period during which the parties lived together of approximately 14 years;^[39]and
    9. the myriad of other matters arising for consideration pursuant to s79(4) from which no relevant distinction between the parties emerges,

it is not apparent that the applicant would receive any money or property by way of property settlement once all of these factors are considered.

76. The applicant seeks an order which would see her retaining the vast majority of the parties’ current non-superannuation assets. If the Court acceded to her application, the applicant would walk away with approximately $750,000 – 800,000 in readily realisable assets, while the respondent would receive $617,000 worth of superannuation and some $20,000 worth of other assets. The applicant has not established prima facie case in respect of her application as presently couched.
77. However, a prima facie or arguable case for property adjustment orders at large is established, albeit it is a weak case. It must however be kept in mind that prima facie even an applicant with a weak case has a right to be heard.^[40]
78. The applicant’s prospects of success are not to be considered in isolation. In determining if there is a reasonable claim to be heard, the likely costs of the hearing should be taken into account to give a proper analysis of the probable outcome^[41].
79. It is likely that the costs of the hearing of the application for property adjustment orders would be considerable, requiring valuations of each of the parties’ businesses and a valuation of the Property B property. It is the court’s view that the assets would also need to be valued at particular points in time; for an example at the date of separation, the date of hearing and at the date of the expiration of the limitation period. It is also likely that the parties were incur costs of a number of directions hearings, a conciliation conference and possibly a mediation, and if the matter did not resolve it is the court’s assessment that a final hearing would take at least two, if not three days. In the court’s experience such costs could be anywhere between $30,000 and $130,000 for each of the parties. To add to this is the cost of the present application.
80. Indeed, taking the applicant’s evidence at its highest and the current asset pool, it may be that ultimately there would only be a very small adjustment in the applicant’s favour, should a s79 application be permitted to be brought out of time. Any benefit to the applicant will likely be closely balanced by the costs which she will need to incur and has incurred to date.
81. Furthermore, a denial of the application for leave will result in the applicant retaining her 50% interest in the Property B property and her ability to realise the same. She will otherwise retain the interests in her name, earnings and earning capacity. There would likewise be a significant costs saving to her.
82. As such, the Court finds that hardship in the requisite sense has not been established. If the Court is wrong about this, for reasons explained below, the applicant has not persuaded the Court that its discretion ought be exercised in her favour in any event.

Discretionary Considerations

83. The Full Court in Sharp & Sharp^[42] said that

“Merely because the respondent to an application for leave does not point to particular prejudice that might arise if leave were granted, does not dispose of the question”.

84. However, the respondent herein points to particular prejudice. The Court accepts that having regard to the amount of time which has lapsed since the parties’ separation the ability of the respondent to meet the contentions of the applicant is impaired. This is so not only by the passage of time and the effect of the same upon the availability of documents and witnesses, but also because of the ability to recall matters some of which will go back as far as 25 years^[43].
85. Furthermore, the law presumes prejudice to flow to a person sought to be joined in litigation after the effluxion of the relevant time limits.^[44]
86. In considering the question of prejudice, the Court does not merely look at the time which has elapsed since the expiration of the limitation period, which in this case is significant. The limitation period for property adjustment proceedings is much shorter than some other limitation periods, such as for example for breaches of contract. The legislature must have had a reason for such a short limitation period. The length of the limitation period when compared to the delay is a significant matter – that is, the limitation period had expired 6 times over before the applicant sought to commence proceedings.
87. The applicant contends that the reason why she did not commence proceedings within the time provided for in the Act, is because of the asserted agreement she says existed between the parties at the time of separation. It was submitted on her behalf that she commenced proceedings very shortly after the respondent indicated to her that he wanted the Property B property sold and the proceeds divided equally between them in accordance with their legal title.
88. The applicant says that she didn’t want to “rock the boat” so to speak, and put herself in a position where the respondent might change his mind about their agreement. She argued that the respondent was abusive during the parties relationship and that she was fearful of his reaction should she have sought to enforce the agreement or otherwise to pursue her legal rights in relation to property adjustment orders.
89. The court does not find such allegations of family violence established on the balance of probabilities. Even if they were so established, at their highest and taking into consideration all of the applicant’s evidence, there is simply no basis for a finding that the applicant was so controlled or coerced that she did not seek to enforce either the agreement she asserts was reached between the parties at the date of separation or her rights pursuant to the Family Law Act.
90. It is the applicant’s evidence that:
    1. The respondent had already changed his mind about their agreement by about late 2008/early 2009, in that he ceased paying child support two years after the parties separation;
    2. She knew as at January 2009 that there was a time limit in respect of seeking relief for property adjustment and she elected not to seek such relief;
    100. She knew at all times that the respondent had a legal interest in the Property B property; and
    4. The respondent was paying the rates and the contents insurance in relation to the Property B property post separation.
91. As such, the Court finds that the explanation for the lengthy delay is not adequate.
92. Notwithstanding such finding, the lack of adequate explanation does not itself mean that the extension of time is refused. It is however, a factor which the Court has taken into account.
93. The applicant’s actions post separation are unlikely to have raised in the respondent a reasonable expectation that she would later bring an application.
94. Lastly, it has been held that where hardship to the applicant is established and there is no question of prejudice to the respondent, the court should not seek to raise artificial barriers if the applicant has behaved in a reasonably diligent manner in prosecuting her claim.^[45]
95. However, in the present circumstances, not only has hardship not been established and there is prejudice to the respondent but the Court also finds that the applicant has not behaved in a diligent manner in prosecuting her claim.
96. In all of the circumstances, the Court considers that it is not just and reasonable^[46] to grant the extension of time sought.

Costs

97. The respondent seeks costs.
98. An application for costs in circumstances where the applicant seeks an indulgence of the Court, whatever the outcome, would prima facie be difficult to resist.
99. The Court notes that neither party has made any submissions in this regard. If the application for costs is to be pressed, the parties are directed to file submissions in respect of same within 28 days and a further 14 days respectively.

Conclusion

100. For all of the reasons above, the application for leave to commence proceedings out of time is refused.

I certify that the preceding one hundred (100) paragraphs are a true copy of the reasons for judgment of Judge Obradovic

Date: 19 October 2017

---

^[1] See sections 79 and 44(3) generally

^[2]Jacenko & Jacenko [1986] FamCA 25; (1986) FLC 91-776 at 75,643

[3] Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 at 553 – albeit in the context of civil proceedings.

^[4] See Sharp & Sharp(2011) 50 FamLR 567; [2011] FamCAFC 150 at 14 where the majority said “There is nothing to suggest that this expression of law in general is not entirely applicable to a consideration of s44 of the Act. Indeed so much is seen from the opening words of the s44(4), “[t]he court shall not grant leave under subs(3) unless..”. See also Casano & Antipov[2017] FamCAFC 50; Oaks & Udall [2016] FamCAFC 96 in the context of appeals which have been commenced out of time.

^[5]Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 at 547 per Toohey & Gummow JJ

^[6]Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 at 551 per McHugh J, with Dawson J agreeing

^[7][1979] FamCA 3; (1979) FLC 90-612 at 78,146

^[8]Jacenko & Jacenko [1986] FamCA 25; (1986) FLC 91-776 at 75,644; referred to in Slocomb & Hedgewood [2015] FamCAFC 219 at [43]

^[9] ibid

^[10]Slocomb at [43] Jacenko 

^[11]Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 at 544 per Dawson J

^[12] See Sharp & Sharp at [75] where the Full Court cited with approval the relevant High Court authority by reference to another decision of the Full Court of Tamaniego v Tamaniego [2010] FamCAFC 254

^[13][1990] HCA 30; (1990) 93 ALR 479

^[14]Sharp & Sharp at [57]

^[15]Gallo v Dawson (1990) HCA 30

^[16]Sharp & Sharp at [27]

^[17][2012] HCA 52

^[18] Save for a successful appeal

^[19] See for example the discussion by Toohey & Gummow JJ in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 at 549

^[20]Sharp & Sharp at [17]

^[21]Jacenko at 75,645

^[22] The respondent says that this vehicle was purchased brand new around the time of cohabitation by him, but that it was used by the applicant and he drove his ute for work purposes

^[23] The applicant is silent as to how the purchase of the Property B property was initially funded, except as noted in the paragraph directly below. She says that $180,000 came from an inheritance which the respondent received. Therefore, it is likely that the purchase price of Property B was funded from both the sale of Property A and the inheritance which the respondent received.

^[24] The respondent asserts that these were savings he held. In the context of the parties’ marriage, while the moneys might have come from an account held in the respondent’s name, it is unhelpful to refer to them as ‘his’

^[25] This would mean that on the applicant’s case there was a significant financial contribution of $180,000 by the husband in mid-2004

^[26] The respondent says that the net proceeds were approximately $250,000, from which the parties paid 6 months’ up front rent and then purchased Property E

^[27] Exhibit 5 shows that the opening balance as at 1 July 2006 was $124,997 and the closing balance as at 30 June 2007 was $148,780. There is no evidence of the balance of the respondent’s superannuation at the commencement of the relationship.

^[28] This is the average of the balance as at 1 July 2006 and 30 June 2007

^[29][1998] FamCA 74

^[30] On the husband’s case, such contribution came in by way of a large financial contribution much later in the relationship, and towards the latter end of it. This would ultimately mean, if such evidence was accepted, that the contribution would be even more significant. Given the exercise of assessing hardship on the wife’s case at its highest, the Property A property contribution is assessed for the purposes of ascertaining a prima facie case in accordance with the wife’s case.

^[31] The respondent had not received any redundancy payment as at the date of separation

^[32] For example, the applicant says that it was part of the agreement that the respondent continue to pay child support, which he stopped doing approximately 2 years after separation and yet she didn’t seek to have the property transferred into her name at any point in time. On the other hand the respondent says that they were each to keep their own assets, yet the Property E property was in joint names and the applicant was not given a sum of money at separation or upon the sale of that property representing her interest (albeit the proceeds were for a time in the parties’ joint bank account)

^[33] At the time of the sale of this property the mortgage stood at $585,193. There were also costs associated with the sale.

^[34] Within the 12 month limitation period contained in s44(4)

^[35] There are differing references in the respondent’s material to (business omitted); (business omitted) and (business omitted). It is not clear to the Court how many businesses the respondent operates and what the business structure is.

^[36] Interestingly, the respondent’s evidence is that in 2010 a company (business omitted) received the benefit of $231,000 in early 2010 which was used to purchase equipment et al. This is a different entity to the one disclosed on his Financial Statement. It was not explained by the respondent whether such moneys were loaned by him to the company or whether he was an investor. It is not clear whether he was the sole director and shareholder of this company either, whether such company still exists and how this was or may have been related to the business referred to in his Financial Statement.

^[37] On the applicant’s case, the respondent made a financial contribution of $180,000 in 2004, and an assessed significant initial contribution comprising of property which was utilised by the parties as explained earlier in these Reasons. On the respondent’s case, he made a financial contribution of almost $450,000 in 2004.

^[38] Late 2006/early 2007 to date of hearing being over 10 years

^[39] 1992 to late 2006 being 14 years

^[40]Hedley & Hedley [2009] FamCAFC 179; (2009) FLC 93-413 at [220] per Cronin J

^[41]Sharp & Sharp at [70]

^[42][2011] FamCAFC 150 at [97]

^[43] Any final hearing will likely be in either 2018 or 2019, this is >25 years since the parties commenced living together in 1992.

^[44]Sharp at [97]

^[45]In the Marriage of Althaus (1982) FLC 91-233 at 77,268 cited with approval and with emphasis added by the Full Court in Sharp & Sharp at [77]

^[46]Sharp at [97]

 

NOTE:  This case has been published by the Court under a PSEUDONYM, rather than using the real names of the parties.  Section 121 of the Family Law Act 1975 makes it an offence, except in very limited circumstances, to publish or distribute a report of a case or part of a case, including information contained in a Judgment, which identifies parties, related or associated persons, witnesses or others involved in the case.  A breach of the section is a criminal offence.  The section also sets out certain limited defences to criminal liability.  An example is where the Court has expressly authorised the publication.  

A printable version can be accessed from Austlii without pictures or advertisements here, which should be used if you wish to provide the case to the Court in your matter.