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Latest Notable Cases samples

This is a sample (posted 17 January 2019) of "latest notable cases", which is posted monthly with live links for members at the Members' Home Page under Members' Practice News. Also available at our Members' Home Page (along with our E-Book, our up-to-the-minute family law and child support practice news, our online forms and precedents and our free legal help line) is our online members' Archive of all our back issue indexed case notes (assembled by topic and with live links to AustLII), useful papers and client brochures.

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Property – De facto partner wins appeal against leave to proceed granted to his partner 7 years out of time – Court must consider likely legal costs of pursuing alleged prima facie case when considering “hardship” – No hardship to an applicant with an uncommercial claim

In Gadzen & Simkin [2018] FamCAFC 218 (16 November 2018) the Full Court (Murphy, Aldridge & Kent JJ) heard Mr Gadzen’s appeal against leave granted to his former de facto partner by Judge Cassidy to apply for property orders seven years out of time. The parties’ childless relationship lasted 8 years. While the respondent’s initial contributions were $83,000 (primarily superannuation) the appellant’s initial contribution was $4.75 million. The parties had entered into a non-binding agreement during their relationship which the appellant had implemented in part by buying the respondent a property and paying mortgage payments in respect of it.

At first instance, Judge Cassidy found that the wife would suffer hardship if she were not granted leave, having regard to her financial circumstances. The appellant appealed, arguing that the respondent could not have a prima facie case worth pursuing once the likely costs of her claim were considered and that the Court had failed to consider those costs.

The Full Court agreed, saying (from [3]):

“( … ) [I]t is fundamental to [a determination of hardship] … that consideration is given to whether an applicant for leave demonstrates a prima facie or arguable case of substance having regard to all the circumstances of the case, taking into account the likely cost to be incurred by the applicant in pursuing the claim. Here, as will be discussed, the trial judge did not undertake that consideration. The trial judge focussed upon the applicant’s evidence as to her current financial circumstances, and relied upon that evidence, without undertaking the fundamental consideration to which we have referred, in making a finding of hardship.

( … )

[36] In Edmunds [[2018] FamCAFC 121] the Full Court recently cited with approval the judgment in Sharp [[2011] FamCAFC 150] and said:

‘47. As the Full Court pointed out in Sharp at [18], “the well-established test is that the applicant must have a prima facie claim worth pursuing or a ‘real’ probability of success. Further, leave will not be granted if to do so would not, in the substantive result, alleviate that hardship”.

48. That involves a consideration, but not a final determination, of the nature of the applicant’s claim. In doing so, the Court must weigh the applicant’s case against that of the respondent’s and form a view as to whether there is in fact a prima facie case, or a real probability of success, that would, if leave were granted, alleviate hardship.’

[37] It follows from these authorities that the starting point in determining an application for leave is to consider the question of hardship which requires for its existence a conclusion that an applicant has a prima facie or arguable case of substance having regard to all of the circumstances of the case. That must take into account the costs or likely costs to be incurred in pursuing the claim.

( … )

[42] … An analysis of the potential claim of the de facto wife was necessary to determine whether or not hardship would be occasioned to the de facto wife if she were not granted leave to pursue that claim. Further, as the authorities to which reference has been made demonstrate, an essential element is to consider the prospective legal costs of pursuing the identified or identifiable claim. Obviously, the prospective costs may render the conclusion that no hardship would be occasioned to an applicant to pursue an uncommercial claim. The trial judge gave no consideration to this essential element and was therefore in error.

[43] We accept the submissions of the de facto husband that having recited the evidence of the de facto wife as to her current financial circumstances the trial judge wrongly found that such evidence was ‘sufficient to demonstrate hardship’ without addressing or otherwise referring to the nature or quality of the de facto wife’s potential claim. All the trial judge expressed as one of her conclusions … is:

‘The applicant has prima facie a claim under the Family Law Act.’

That conclusion is unsupported by any analysis of the de facto wife’s claim.

[44] The trial judge thus applied the wrong legal test to determining the question of hardship and failed to consider and determine whether or not the de facto wife had a prima facie or arguable claim that was substantial having regard to all the circumstances of the case, including her potential costs in pursuing that claim.”

Re-exercising the discretion, the Full Court found that the wife had failed to establish hardship and dismissed her application, saying (from [57]):

“… A striking feature of this case is that the de facto wife has received very significant benefits post-separation, including the product of the de facto husband’s significant contribution to her superannuation during the relationship.

[58] We give full weight to the de facto wife’s homemaking contribution (from which she benefited equally with the de facto husband in the household with no children); her role in Company L; her involvement to some extent in the de facto husband’s tenancies in commercial premises in the Northern Territory; and her assistance to the de facto husband in planning and designing the Suburb D home (in which the parties lived for about 18 months up until their separation).

[59] Yet, this was an approximate eight year relationship which produced no children. None of the informal agreements earlier referred to have binding force. … [T]he de facto wife has received $467,121 in post-separation benefits (including the superannuation contribution of $100,621 made in 2007). … She holds net property interests worth $134,600. … She estimates that she will expend approximately $150,000 pursuing her claim. We are unable to see how the de facto wife’s potential claim in property settlement proceedings could conceivably approach, let alone exceed, that which she holds together with that which she has received.

[60] In arriving at that conclusion we repeat the unchallenged evidence … which includes the following:

• The direct financial contributions made by the parties at the commencement of the relationship, expressed in percentage terms, is 98.3 per cent by the de facto husband and 1.7 per cent by the de facto wife. There can be little doubt that the respective direct contributions is an overwhelmingly important factor in the circumstances of this case and all the more so because of the amounts received during and after the relationship by the de facto wife;

• The parties separated nine years ago. They have been separated longer than they cohabited. In that time the de facto husband’s assets (including superannuation) have diminished by approximately $1.75 million;

• The de facto wife cannot be seen to have made any contribution of any kind to the de facto husband’s assets. For his part, the de facto husband’s continuing contributions are not only to the conservation of his own assets but contributions to the de facto wife and her principal asset which have already been discussed;

• The de facto wife entered the relationship with assets (predominantly unvested superannuation) of approximately $83,000. She currently has total property interests worth $470,600 and liabilities of $336,000 – net $134,600. She received from the de facto husband contributions to her superannuation of approximately $100,621 during the relationship. She now discloses no superannuation. There is no accounting for the contributions received by her; and

• The de facto husband has paid to or for the benefit of the de facto wife a total of $467,121 since separation …

[61] Counsel for the de facto wife’s contention that some or all of the payments made to the de facto wife might be characterised as maintenance must be rejected. The de facto wife could not, on the evidence, establish the required need. …

[62] To the extent that the de facto wife’s prospective claim might be seen to rest more upon s 90SF(3) factors than a contributions based entitlement, a potentially significant matter is the difference in wealth between the parties. Yet, a greater disparity existed at the start of the relationship and, to repeat, the parties’ current financial circumstances arise in a post-separation period greater than the length of the relationship. Otherwise, reference to the relevant s 90SF(3) factors does not admit of any conclusion supportive of the asserted hardship.

[63] For these reasons we are not satisfied that the de facto wife establishes hardship within the meaning of s 44(6) of the Act. …”

The appeal was allowed but not with costs, the Court taking into account the disparity in financial circumstances between the parties.

.......

NOTE – A further 6 cases are summarised for members this month at our Members' Home Page under "latest notable cases" under the following headings:

Property – Court not obliged to provide mathematical justification for its finding that disparity of earning capacity was “huge” – Appeal against 65:35 division of $7.6m asset pool dismissed – Child support order set aside for failure to consider de facto wife’s capacity to derive income from her $5m property settlement – Maintenance order set aside for failure to consider de facto husband’s expenses

Children – Court erred by staying mother’s contravention application pending her compliance with previous costs order – Common law rule discussed in Fahmi [1995] FamCA 106 (that applicants in contempt of orders should not be heard in respect of their fresh applications) did not apply as the costs order was not made in the same cause or proceedings – Section 69F did not apply either

Property – Wife liable under loan agreement despite a fumbled refinancing in which the original lender mistakenly discharged its mortgage without being paid out – Equitable estoppel by promissory representation rejected

Property – Full Court dismisses appeal by ATO and husband against order that wife pay 10 per cent of husband’s $2m tax debt but otherwise retain 71 per cent of a pool that excluded that debt

Children – Overseas travel – Father loses appeal against order allowing travel by mother and child to Japan – Appellant refused leave to adduce a US report that Japan (a signatory to the Hague Child Abduction Convention) lacks an effective means to enforce return orders

Children – Jurisdiction for parenting order over child in foreign country – Child unilaterally taken by mother to non-convention country was still habitually resident in Australia – Court had jurisdiction to hear father’s application