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Report 113 (2006) - Relationships


6. Threshold requirements of financial adjustment proceedings

Updates and background for this project (Digest)





INTRODUCTION

6.1 Before proceedings for an adjustment of property interests or for an award of maintenance can be brought under the Property (Relationships) Act 1984 (NSW) (“the PRA”), the Court has to be satisfied that:1

    • there was a domestic relationship between the plaintiff and the defendant;
    • the parties have lived together for at least two years;
    • the parties, or one of them, has a residence-related connection with New South Wales; and
    • the application for property adjustment orders or maintenance is brought within two years of the termination of the relationship.
6.2 This Chapter examines these threshold requirements. It assumes that the Commonwealth Powers (De Facto Relationships) Act 2004 (NSW) will result in the enactment of federal law that covers the field as far as concerns financial adjustment proceedings in the context of the breakdown of de facto opposite sex relationships. Such proceedings will then only arise in State courts in respect of same sex partners or persons in a close personal relationship.



DEFINITION AND DURATION OF DOMESTIC RELATIONSHIPS

6.3 “Domestic relationship” refers either to a “de facto relationship” or a “close personal relationship”.2 Chapters 2 and 3 examine the meaning of these terms in detail. In particular, the Chapters deal with the requirement, which is part of the description of both de facto and close personal relationships, that the parties “live together” before their relationship can amount to a domestic relationship.



Cohabitation requirement

6.4 The problem with a requirement that parties “live together” for the purposes of establishing a domestic relationship is that it implies cohabitation in the sense of sharing a common residence or being members of the same household. The Commission is of the view that this is an unnecessary restriction on both de facto and close personal relationships. Accordingly, we have recommended that the PRA not require cohabitation as a necessary element of the definition of a domestic relationship.3 The nature and extent of any common residence of the parties, nevertheless, remains a factor (along with others) that is relevant to the determination of the existence of a domestic relationship.4

6.5 Section 17 of the PRA also refers to the parties living together. Subject to two exceptions (which are discussed below),5 that section requires that the parties have lived together in a domestic relationship for at least two years before the court can make a property adjustment or maintenance order. Submissions expressed support for the continuation of such a requirement, predominantly for the purpose of sifting out unmeritorious claims. This view also found support among respondents to the Commission’s Questionnaire on Same Sex Relationships and the Law6 and from some (but not all) participants in focus groups on the basis that a cohabitation requirement was an indication of the parties’ commitment to each other, and could properly form the basis of an entitlement to seek an order for an alteration of property interests or maintenance from the other party. Respondents to the Questionnaire were, however, divided on the length of the period for which parties should be required to live together.

6.6 In the Commission’s view, the same objections to requiring cohabitation apply in this context as in defining domestic relationships for the general purposes of the PRA.7 Cohabitation may exclude certain intimate non-traditional relationships where parties do not live together, but who nevertheless have been part of a committed and financially interdependent relationship. This is particularly important in the context of the breakdown of de facto gay and lesbian relationships where fear of homophobia may have prevented the parties from establishing a common residence. Moreover, the circumstances in which one person provides domestic support and personal care to another on a day-to-day basis may seem to satisfy the notion of a close personal relationship even though the parties do not share the same home.

6.7 On the other hand, there are compelling policy justifications for requiring some objective indicator of a relatively serious, long-lasting commitment to warrant the disturbance of private property rights. It is worth noting that, while some Australian jurisdictions have dispensed with a cohabitation requirement in their general definitions of domestic relationships, all Australian jurisdictions retain some minimum period either of cohabitation, or duration of the relationship, before the parties’ property interests can be adjusted.8 In our view, the duration of the relationship is the best objective indicator for this purpose. It should, therefore, be sufficient that a consideration of all relevant factors indicates the existence of a domestic relationship over a particular period of time. Section 17(1) of the PRA should be amended accordingly.


    Recommendation 24
        Section 17(1) of the PRA should be amended to provide that, except as provided by subsection (2), a court shall not make an order under Part 3 unless it is satisfied that the parties to the application have been in a domestic relationship for a period of not less than two years.




Exceptions to the two-year duration period

6.8 Currently, even if two people in a domestic relationship have not lived together for the requisite two years, a party to that relationship may still be able to bring a claim for property adjustment or maintenance if:

    • there is a child of the parties to the application;9 or
    • the applicant has made substantial contributions for which he or she has not been adequately compensated, or he or she has the care and control of a child of the respondent; and, in either case, the failure to make the order would result in serious injustice to the applicant.10
6.9 Similar exceptions apply in relationships legislation in other jurisdictions.11

6.10 The appropriateness of these exceptions, and the necessity for other exceptions, require examination.

A child of the parties to the application

6.11 An assumption on which this Report is based is that the current PRA will, so far as it affects financial adjustments following the breakdown of domestic relationships, come to be concerned solely with same sex and close personal relationships.12 This suggests that s 17(2)(a) of the PRA, which effectively dispenses with the requirement that the relationship has endured for two years where there is a “child of the parties” to the application, is of limited relevance since any child in question is unlikely to satisfy the current statutory definition of the phrase: the child cannot be born as a result of sexual relations between the parties or of adoption by both parties, and both parties may not have parental responsibility for the long-term welfare of the child under the Children and Young Persons (Care and Protection) Act 1998 (NSW).13

6.12 The Commission has, however, recommended that the definition of a “child of the parties” to a domestic relationship be expanded to include a child for whose day-to-day care and long-term welfare both parties exercise responsibility.14 If the PRA is amended in this way, the existence of such a child should permit a financial adjustment order to be made notwithstanding the fact that the domestic relationship has not endured for a period of two years for the reasons that underlie the current legislative provision. A financial adjustment order may be required in such circumstances to compensate for on-going contributions made as a parent or to provide maintenance in respect of child care responsibilities. The Commission, therefore, makes no recommendation in respect of s 17(2)(a).

A child of the respondent

6.13 The legislation provides that a court may make a financial adjustment order (without regard to the duration of the domestic relationship) where the applicant has “the care and control of a child of the respondent”, provided that the failure to make the order would result in “serious injustice” to the applicant.15 In the Commission’s view, this provision should be retained. “Care and control” is wider than the “day-to-day care and long-term welfare” that will be covered in s 17(2)(a). It is designed to cover the perhaps unusual case where the applicant retains practical care and control of his or her partner’s child after the de facto relationship ends.16 A court should have power to make an order in such cases notwithstanding the fact that the relationship has not lasted for two years, provided the applicant can show “serious injustice”.17

Substantial contributions

6.14 Section 17(2)(b)(i) of the PRA provides that a court may make an order under Part 3 where the applicant has made “substantial” contributions for which he or should would not otherwise be adequately compensated unless an order were made, again provided that failure to make an order would result in serious injustice to the applicant. This presents obvious difficulties of interpretation.18 Assessing whether, in a relationship spanning less than two years, the contributions of one party are “substantial” as opposed to ordinary, may produce seemingly inconsistent results.19 Usually, the assessment involves a broad estimate of the contributions and an evaluation of whether those contributions have already been compensated.20 Such an assessment necessarily involves an examination of the nature and incidents of the relationship as a whole.21 As part of the exercise, the Court generally looks at whether those contributions have been offset by the other party’s contributions.22 In one case, a plaintiff’s financial contributions towards renovating the defendant’s home, paying for a joint holiday and being a homemaker for the defendant and his son, were considered substantial and held to outweigh the defendant’s contributions.23 In Kolacek v Brezina, on the other hand, it was held that the plaintiff’s financial and homemaker contributions were more than offset by the defendant’s contributions, who provided her with rent-free accommodation and a high standard of living.24

6.15 In the Commission’s view, it is just that where a party to a domestic relationship has made “substantial” contributions that would not otherwise be “adequately” compensated, a court should have the discretionary power to dispense with the requirement that the relationship should have lasted for two years.25 That discretion is necessarily flexible to enable its proper application in the overall factual situation before the court.

Serious injustice

6.16 Where the relationship has lasted less than two years and the applicant asks the court to make an order on a substantial contributions basis26 or on the ground that the applicant has the care and control of a child of the respondent,27 the court must be satisfied that failure to make the order would result in “serious injustice” to the applicant.28 It seems clear from the structure of the legislation, as well as from the Commission’s recommendation on which the legislation is based,29 that this is an additional requirement to the two grounds in s 17(2)(b).

6.17 In DP 44, the Commission expressed a tentative preference for the view that “serious injustice” should not be an independent requirement in s 17(2)(b) at least in “substantial contribution” cases on the ground that, once it is found that the applicant has made substantial contributions for which he or she has not been adequately compensated, it should follow that he or she will suffer serious injustice if not allowed to proceed with his or her claim. The Victorian Bar supported this view.30 The Commission is, however, persuaded by the submission of the Equity Division of the Supreme Court that the “serious injustice” threshold has a real role to play in s 17(2)(b) in weeding out trivial claims.31 This is because there is a possibility that the meaning of “substantial” could, as in other legislative contexts,32 be equated to “non-trivial”. An additional reference to “serious injustice” is justified as a check on this possibility. It is, moreover, an important check both in “substantial contribution” cases and in cases where the applicant has the care and control of a child of the respondent, given the diversity of relationships covered by the legislation and the proposed removal of cohabitation from the duration requirement in Recommendation 24.

Registered relationships

6.18 In Chapter 4, the Commission recommends that a system for the registration of domestic relationships be developed. If a relationship is registered, the fact of registration is, at least, proof of the existence of the relationship.33 The question then arises as to whether or not the fact of registration should dispense with the requirement that a domestic relationship must have endured for two years before a financial adjustment order under Part 3 can be made. This question arises particularly in the case of de facto relationships.

6.19 The danger of relaxing the two-year period in de facto relationship cases is that Part 3 orders can then be made in circumstances where the parties have registered their relationship without a great deal of commitment on the part of one or both of them, with the result that the relationship endures for only a short period of time. There is also a possibility that the parties may not have been aware of the significance of registration in terms of the access it creates to Part 3 orders. On the other hand, there will be circumstances in which the parties’ decision to register their relationship is taken, after thoughtful reflection, in order to make a public expression of their commitment. Indeed, the parties may change their position (for example, by giving up particular employment) in order to devote their time fully to the partnership. Such parties may be fully informed of the consequences of registration as regards Part 3 orders. These arguments are finely balanced.

6.20 The Commission has, however, concluded that other factors tip the balance in favour of dispensing with the two-year duration requirement for Part 3 orders where a relationship is registered because:

    • the fact that the relationship has endured for only a short period of time will itself qualify the force of the commitment of the parties to a shared life evidenced in registration, and hence the extent (if any) to which the Court is prepared to make a financial adjustment order;34
    • by analogy, parties to a marriage are not required to have been married for any particular period of time before they become entitled to bring proceedings for property adjustment or maintenance under the Family Law Act 1975 (Cth) (“the FLA”);35
    • uniformity with the law in Tasmania favours allowing a claim for a financial adjustment order regardless of the duration of the relationship.36
6.21 The last point applies equally to close personal relationships. Moreover, in the case of close personal relationships, there will generally be fewer reasons for registration. Of the 56 domestic relationships that had been registered in Tasmania by November 2005, none were close personal relationships. The Commission considers that it is generally more likely than not that such relationships will be registered only after the parties have given the question full consideration and are fully informed of the consequences of registration.

    Recommendation 25
        PRA s 17 should not apply to domestic relationships that have been registered in accordance with the system proposed in Recommendation 15.

Registration and Commonwealth law

6.22 The implementation of the last recommendation will only apply to financial adjustment proceedings in State courts. The breakdown of a relationship between opposite sex couples registered under State law may result in financial adjustment proceedings in federal courts following the reference of powers. In the Commission’s view, it would be anomalous if such registered relationships were not recognised in the same way for the purpose of federal financial adjustment proceedings. It is, of course, beyond the competence of the New South Wales Parliament to pass legislation to apply to federal proceedings. It is, however, desirable that the New South Wales government should approach the Commonwealth government to achieve this end if, for this purpose, the definition of a de facto partner in federal law includes a requirement that the de facto relationship should have endured for a particular period of time. Recommendation 164, in paragraph 4.33 of Chapter 4, addresses this issue.



RESIDENCE



The legislative requirements

6.23 In order to have jurisdiction to hear the matter, the Court must be satisfied that:


    (a) at least one of the parties was resident in New South Wales at the time the application was made; and

    (b) both parties lived in New South Wales for a substantial period of their relationship (a substantial period being at least one-third of the length of the relationship), or the applicant made in New South Wales substantial financial or non-financial contributions to the parties’ property and financial resources.37


6.24 “Residence” takes its meaning from the context of the statute in which it is used.38 In the context of the PRA, “residence” cannot be satisfied if one party to the relationship lives in New South Wales as their home at the time of the application. Thus, under the Domestic Relationships Act 1994 (ACT) (which relevantly corresponds to the PRA), the Supreme Court of the Australian Capital Territory has held that where parties were living in Victoria at the time of the application, the jurisdiction of the ACT Supreme Court could not be founded on the applicant’s presence in Canberra for the purposes of initiating proceedings, notwithstanding the lengthy period in which the parties had previously lived as a married couple in the ACT, as well as the presence in the ACT of real property owned by the parties.39 Chief Justice Higgins commented:
      I recognize the inconvenience, indeed the potential injustice, of this result. Had the plaintiff decided to return to live in the ACT after the separation of the parties, orders might have been made … The relationship plainly had a real connection with the ACT. There is property situated here.

      However, I am bound to apply the clear meaning as it seems to me … of the Act. If the legislature considers that the Act is too restricted in its coverage or discriminates unfairly between classes of de facto relationships it is, of course, open to it to amend the Act.40

6.25 The legislation additionally requires a strong connection with New South Wales either in terms of the period that the relationship endured in New South Wales, or in terms of the applicant’s contribution in New South Wales to the property and financial resources of the parties. The Queensland Law Reform Commission has pointed out that the requirement that parties have lived in the State for one third of their relationship can lead to anomalous results. For example, it allows a claim by a couple who have lived in the jurisdiction for nine months of a two year relationship, but would exclude a couple who had lived in the State for five years of a 20 year relationship.41

6.26 In 1993, the Queensland Law Reform Commission suggested a modified residency requirement in the following terms:42

      A court may make an order under this Part only if its is satisfied –

      (a) that one or both of the de facto partners lived in Queensland on the day on which an application under this Part was made; and

      (b) that –

          i. both partners have lived together in Queensland for at least one year;

        ii. substantial contributions of the kind referred to in … have been made in Queensland by the partner making the application; or

        iii. a substantial part of the partner’s assets or a substantial asset is situated in Queensland.

6.27 This proposal was not pursued. In its 1993 Report, the Queensland Law Reform Commission recommended that the question of jurisdiction should be referred to common law principles, then recently reformulated in the “clearly inappropriate forum test”.43 The Commission pointed out that these principles enable a respondent to object to the Court’s jurisdiction, and that even if the respondent does not object, the issue may still be raised by the Court if it thinks it appropriate, by reason of its inherent jurisdiction to prevent abuse of process.44



Forum shopping

6.28 The requirement that the parties or one of them has a connection with New South Wales by way of residence has been a feature of the PRA since it was first enacted in 1984. It was recommended by the Commission in Report 36 as a means of providing a sufficient nexus with New South Wales. It was also intended to dissuade claims from people in other parts of Australia who had little or no connection with New South Wales but sought to bring a claim here because the implementation of the Commission’s recommendations would mean that New South Wales was the only State that provided a statutory regime for the division of property between de facto couples.45

6.29 Where a claimant having little or no connection with New South Wales seeks to bring a claim here and that claim itself has no connection with New South Wales (for example, because it does not concern property situated in New South Wales), the claimant is said to be “forum shopping”. Submissions addressing the residency issue tended to regard the prevention of forum shopping as a compelling argument to keep residency provisions in the legislation.46 Yet the temptation to forum shop in this area of the law should not now be exaggerated.47 Forum shopping is motivated by considerations of expense or convenience (where it is cheaper and easier in the circumstances for the claimant to litigate in New South Wales), or by the prospect of a more favourable outcome (where the New South Wales financial adjustment regime is more favourable to a claimant than that in a jurisdiction with which the claim is more closely related). Whatever may have been the situation when the Commission reported in 1983, when New South Wales was the only State to have relationships legislation, forum shopping is much less likely today. Now, all States and Territories have their own laws regulating property division on the breakdown of de facto relationships. All but South Australia extend those laws to same sex de facto couples,48 and some also cover the broader category of non-intimate caring relationships.49 The laws of most other Australian jurisdictions appear, at least at first glance, as favourable to claimants as the law of New South Wales.

6.30 It is, in any event, doubtful that removing the residency requirement would lead to forum shopping. Significant developments in the law since the Commission’s Report on De Facto Relationships ensure that New South Wales Courts have adequate power to deal with cases that possess no (or little) connection with New South Wales. In the first place, the courts can decline to hear a case. While the process of a New South Wales court can be served on a person anywhere in Australia,50 the defendant can object to the plaintiff’s choice of New South Wales as a forum and seek to have the proceedings stayed.51 The basis for staying the proceedings is that the Court of another State or Territory that has jurisdiction to determine all the issues between the parties is the more appropriate forum in which to try the case.52 Where the process originates in the Supreme Court, the Court may not stay the proceedings53 but may transfer them to a court in another Australian law district.54 The basis of such a transfer is that the other court is the more appropriate one to determine the proceedings, the wide test being simply “the interests of justice”55 or (less convincingly) that New South Wales is an inappropriate forum.56 Even where there is no connection with another Australian jurisdiction (but with some foreign jurisdiction), the court may decline to hear the matter on the basis that New South Wales is a clearly inappropriate forum.57

6.31 It is true that if it hears the case, a New South Wales court will then apply the law of New South Wales regardless of the connections that the parties or the case may have with other jurisdictions.58 If the law of New South Wales is more favourable to the claimant than that of a jurisdiction to which the parties or the case are more closely connected, an incentive to forum shop theoretically remains. This argument, however, overlooks the discretionary nature of financial adjustment proceedings in all jurisdictions, making it difficult to say with certainty that a more favourable outcome will be obtained in New South Wales than in another jurisdiction. It also ignores the width of the powers of courts in New South Wales in practice to refuse to hear cases that have little or no connection with this State.



The Commission’s view

6.32 It is obviously desirable that proceedings for financial adjustment in a New South Wales court should have some connection with New South Wales. The residence of the parties (or one of them) in New South Wales at the date of application provides one such connection. It should not, however, be a necessary connection. Nor should it be the only factor capable of connecting the proceedings to New South Wales.

6.33 The Commission notes that a residence condition can run counter to constitutional requirements in so far as it creates a relevant discrimination against residents of other States.59 Moreover, where the factual situation involves other connections with this State – for example, a past residency and the presence of property here – these other connections ought, taken singly or as a whole, to be capable of giving a New South Wales court jurisdiction to hear the matter in an appropriate case. Yet the current legislation recognises the force of factors other than residence only to the extent of requiring that an alternate additional requirement to residence at the date of application, is that substantial contributions in New South Wales to the property and financial resources of the parties have been made. The other alternative additional requirement merely specifies that the parties must have been resident in New South Wales for at least one-third of the duration of their domestic relationship. This injects an undesirable rigidity that is avoided at general law where a court can refuse to exercise its power to hear a case if, having regard to the overall factual situation, New South Wales is an inappropriate forum, or there is a more appropriate forum in which the proceedings should take place, or the interests of justice require that the proceedings should take place elsewhere.

6.34 The choice involved in reforming the law in this area is between (a) specifying in the legislation the connections with New South Wales that will justify the initiation of proceedings here (the current approach in s 15 of the PRA), and (b) relying on the general law and allowing the commencement of proceedings in unfettered circumstances60 but declining to exercise jurisdiction through a stay or transfer of the proceedings.61 The Commission prefers the second approach.

6.35 Part 3 orders will be sought on breakdown in gay, lesbian and close personal relationships. We have drawn attention to the lack of empirical data about such relationships.62 This and the assumption that parties in gay and lesbian relationships may constitute a highly mobile sector of the population, suggest that many factors other than residence ought to be relevant considerations in the determination of a court’s jurisdiction. The tests at general law allow the Courts to have regard to the factors referred to in s 15 of the PRA as well as to other relevant factors, according them such weight as is appropriate in the overall factual situation. Even the narrowest of general law tests, the inappropriate forum test,63 is more likely to yield satisfactory results than a legislative restatement of factors justifying the initiation of proceedings in PRA matters in New South Wales. As the interim, and subsequently abandoned, proposal of the Queensland Law Reform Commission demonstrates, a restatement is unlikely to reach all factors that ought to be relevant to the appropriateness of the Court’s determination of jurisdiction in all cases and also likely to be too rigid. Moreover, reliance on the general law is unlikely to provoke a spate of forum shopping.

6.36 We therefore recommend the repeal of s 15 of the PRA. This would bring the law of New South Wales into line with that in Queensland and Tasmania.


    Recommendation 26
        PRA s 15 should be repealed.




LIMITATION PERIOD

6.37 A time limit for bringing financial adjustment proceedings is specified in s 18 of the PRA. An action must be brought within two years of the date of separation where a domestic relationship has ceased.64 Applications may be brought out of time if the Court is satisfied that greater hardship would be caused to the applicant by refusing leave than would be caused to the other party by granting it. In the case of proceedings for maintenance, however, an extension of time will not be granted in cases where children are not involved.65

6.38 Similar provisions are found in the Australian Capital Territory, the Northern Territory, Tasmania and Victoria.66 In South Australia, proceedings must be brought within one year of separation, although the Court may hear an application brought outside the limitation period if, after considering both parties’ interests, it is satisfied that doing so is necessary to avoid serious injustice to the applicant. In Western Australia, an application must also be brought within one year of the relationship ending, but the Court may grant a de facto partner leave to apply out of time if satisfied that hardship may be caused to a de facto partner if leave were not granted.67 The position in Queensland is similar except that the general limitation period is two years and that leave to apply out of time can be granted where the Court is satisfied that hardship would result to the applicant or to a child of the de facto partners if leave were not granted.68 As in Western Australia, there is no need to consider any hardship or prejudice to the defendant.

6.39 Section 44 of the FLA provides that an application for property adjustment (or maintenance) must be brought within one year of a decree nisi becoming absolute or a marriage being declared null. Section 44(3) gives the Court a discretion to grant leave to an applicant to apply out of time where it is satisfied that greater hardship would be caused to the applicant or a child of the parties if leave were not granted.69



How it has been interpreted

6.40 Although s 18 of the PRA is framed differently from s 44 of the FLA, New South Wales courts have considered family law jurisprudence in the interpretation of s 18.70 In McDonald v McDonald,71 the Full Court of the Family Court held that an applicant seeking leave to bring proceedings out of time must establish:

    • a reasonable prima facie case for relief if the proceedings had been brought in time;
    • that denial of the applicant’s claim would cause hardship to him or her; and
    • an adequate explanation as to his or her delay.
6.41 The second of these elements is a statutory requirement while the first and third recognise the fact that the power to extend time is a discretionary one.72 In a subsequent case under the FLA, another element was identified, namely, to consider any prejudice that the respondent would suffer by reason of the delay in bringing the application.73 This element is, of course, expressly included in s 18 of the PRA.

6.42 Hardship has been defined to mean a substantial detriment.74 Of relevance in determining whether an applicant will suffer hardship is an assessment of their claim.75 An applicant who is likely to receive a substantial award, in light of their circumstances, will generally be able to show hardship if leave were not granted.76 The Federal Court hearing a matter under the FLA has held that hardship will not generally result if the claim is considered trifling in the circumstances of the applicant or a child of the relationship, or if the costs of pursuing an action are likely to add up to as much, if not more than what the applicant is likely to receive in terms of an award.77



Is hardship sufficient?

6.43 While a finding of “greater hardship” is necessary, it is generally accepted that such a finding may not be sufficient to persuade the court to grant leave to apply out of time. The Supreme Court has held that the use of the word “may” in s 18(2) gives the court a discretion to consider other matters of justice as well, such as whether there is an adequate explanation for the delay.78 Thus, although there is no statutory requirement for an adequate explanation to be given under the PRA, case law has required it.79 Indeed, some applications have been refused on the basis that no adequate explanation was given,80 even where there has been shown to be a case of greater hardship.81

6.44 The Supreme Court of Victoria has similarly interpreted the corresponding provision in Victorian legislation to require a reasonable explanation for the delay before it will grant leave to apply out of time.82 Gillard J took a contrary view in Harris v Harris, where he said that the primary concern was to do justice between the parties, and in particular, to consider where the greater hardship would fall. He considered that the requirement for an adequate explanation for the delay was “outdated” and should be consigned to the “judicial dustbin”. In his opinion, the failure to provide an adequate explanation should never be the basis for refusing to grant leave where there were factors that justified it.83 Subsequent cases have distinguished Harris and consistently held that while there is no statutory requirement, it is appropriate that the Court require the applicant to provide a satisfactory explanation for the delay.84

6.45 An adequate explanation need not be an entirely satisfactory one.85 As Cummins J said in Lockett v Duckett:

      … the standard is not a rigorous or high standard of satisfaction, but rather a standard of reasonableness; that is, a reasonable explanation, allowing, in particular, for the emotional and human factors involved in domestic arrangements and the complex of factors involved in such arrangements.86
6.46 The Family Court has taken the same approach in its interpretation of s 44 of the FLA.87 A court may grant leave to bring claims out of time in order to avoid hardship. But courts have said this discretion is to be exercised judiciously. The intention of Parliament in setting the limitation period is to ensure that the financial relationship between the parties to a marriage should, wherever possible, be resolved within a reasonable time frame after the dissolution of the marriage. Family Court decisions have consistently held that apart from hardship, the Court is to take into account the length of the delay and the reasons for it. As McDonalds case shows, other matters including the prejudice to the other party resulting from the delay, are also relevant.

Submissions

6.47 In DP 44, the Commission asked if hardship alone should be the only relevant factor in determining whether or not leave should be granted to proceed out of time. The Commission also asked specifically whether an adequate explanation for the delay should be required from claimants in such cases.

6.48 Most submissions received on this issue supported the current practice of the Court to require the applicant to provide a reasonable explanation for the delay. While many agreed that hardship should be the main factor, it was generally argued that the Court should also be able to take into account a wide range of other relevant or “subsidiary” factors when exercising its discretion to accept applications brought out of time. These factors include the length of the delay and whether the applicant has provided an adequate explanation for the delay.88 The Victorian Bar submitted that this should also include prejudice to the defendant if leave were granted.89



The Commission’s view

6.49 In the Commission’s view, there is no need to amend s 18. It accords with the practice of the Family Court and of courts dealing with relationship disputes in other jurisdictions; it is also consistent with the practice of the courts in a wide range of cases where time limits apply. The two-year limitation period, running from the date on which the relationship ceases, is generally a reasonable period of time both for the applicant to arrange to bring a claim and for the respondent to answer any such claim. It is, however, appropriate that the Court should retain discretion to grant leave to hear an application out of time. This discretion should continue to be exercised judiciously. The PRA aims to provide an avenue for people to adjust their financial positions within a reasonable period of time after their relationship ceases. The PRA also requires that, so far as practicable, the orders made should settle once and for all the financial position between the parties and avoid further proceedings between them.90 This enables people to move on with their lives. In the Commission’s view, while hardship should be the primary consideration, it is appropriate and just that all relevant factors are taken into account in the exercise of the Court’s discretion to achieve a balance between flexibility and the necessity of bringing the financial relationships between the parties to final determination.


FOOTNOTES

1. These factors are variously found in PRA Part 3 Division 1.

2. PRA s 5(1).

3. See Recommendations 5 and 10.

4. Recommendation 12. See also PRA s 4(2)(b) (de facto relationship).

5. See para 6.8-6.22.

6. See Appendix C.

7. See para 2.25-2.30, 3.21-3.25.

8. See para 2.13-2.14.

9. PRA s 17(2)(a).

10. PRA s 17(2)(b).

11. See, eg, Relationships Act 2003 (Tas) s 37; Property Law Act 1958 (Vic) s 281; De Facto Relationships Act 1991 (NT) s 16.

12. See para 1.33.

13. See PRA s 5(3).

14. See Recommendation 17 at para 5.36.

15. PRA s 17(2)(b)(ii).

16. See Report 36 at para 9.6.

17. See para 6.16-6.17.

18. See DP 44 at para 6.22-6.24.

19. For example, becoming a joint mortgagor (albeit never being required to make mortgage repayments) was not considered a substantial contribution in the 1993 case of Street v Bell (1993) 114 FLR 167 but it was in Dries v Ryan [2000] NSWSC 1163 (but note the issue arose in the context of commercial litigation).

20. Street v Bell (1993) 114 FLR 167 per Renauld J (of the Family Court heard under cross vesting legislation). See also Greenwood v Merkel (2004) 31 Fam LR 571.

21. Stelzer v McDonald [1999] NSWSC 602 at para 31 (Bergin J). Her Honour found that the plaintiff had made very large contributions to the property and financial resources of the parties as well as homemaker contributions, but so too had the defendant.

22. See for example Reilly v Gross (NSW, Supreme Court, No 787/86, 5 August 1986, unreported).

23. Reilly v Gross. See also Weston v Castle (NSW, Supreme Court, No 1813/89, 23 August 1989, unreported) where a disparity in contributions was found and an adjustment made.

24. Kolacek v Brezina [1999] NSWSC 578. See also Dorman v Beddowes (NSW, Supreme Court, No 1314/96, 22 April 1996, unreported).

25. See NSW Law Reform Commission, De Facto Relationships (Report 36, 1983) at para 9.6.

26. See para 6.14-6.15.

27. See para 6.13.

28. PRA s 17(2)(b).

29. See NSW Law Reform Commission, De Facto Relationships (Report 36, 1983) at para 9.7.

30. Victorian Bar, Submission at para 51.

31. Equity Division of the Supreme Court of NSW, Submission at para 50.

32. For example Tillmanns Butcheries Pty Ltd v Australasian Mean Industry Employees’ Union (1979) 42 FLR 331; Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 62 FLR 437 at 444.

33. See Recommendations 7 and 13.

34. See Chapters 7 and 9.

35. See S Landers, Submission; Sydney focus group (property).

36. See Relationships Act 2003 (Tas) s 37(3).

37. PRA s 15. See also Flett v Brough (NSW, Supreme Court, No 2638/97, 20 November 1998, unreported).

38. M Tilbury, G Davis and B Opeskin, Conflict of Laws in Australia (OUP, 2002) at 446-452.

39. Kempe v Webber [2003] ACTSC 7.

40. Kempe v Webber at [46]–[47].

41. Queensland Law Reform Commission, De Facto Relationships (WP 40, 1992) at 89.

42. Queensland Law Reform Commission, De Facto Relationships (WP 40, 1992) at 89.

43. Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538.

44. Queensland Law Reform Commission, De Facto Relationships (Report 44, 1993) at 36-38.

45. NSW Law Reform Commission, De Facto Relationships (Report 36, 1983) at para 9.16. See also Bentley v Marsters [2005] NSWSC 346 at para 32 (Malpass AJ).

46. Law Society of NSW, Submission at 7 (suggesting the adoption of the model in the Queensland Law Reform Commission’s Working Paper); NSW Young Lawyers, Submission at 5; Victorian Bar, Submission at 20.

47. Likewise, the Equity Division of the Supreme Court of NSW doubted that making s 15(1) the only jurisdictional requirement would result in a flood of claims in New South Wales: Submission at para 52.

48. With the exception of South Australia, though this is under review.

49. ACT, Tasmania.

50. Service and Execution of Process Act 1992 (Cth) (“SEPA”) s 5(1).

51. SEPA s 20. But note this section does not apply where the Supreme Court of a State is the court of issue. The transfer of proceedings between State Supreme Courts is dealt with under cross-vesting legislation: Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW).

52. SEPA s 20(3),(4). Under SEPA s 5(1) each Territory is to be regarded as a State.

53. SEPA s 20(1).

54. Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) s 5.

55. See Bakinvest AG v Seabrook (1988) 14 NSWLR 711.

56. See B Opeskin, “Cross-vesting of jurisdiction and the federal judicial system” in B Opeskin and F Wheeler, The Australian Federal Judicial System (Melb UP, 2000) 299 at 323-326.

57. Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. There are subtle differences in the application of the test depending on whether the application is to stay proceedings commenced in NSW or to serve process outside Australia: see Tilbury, Davis and Opeskin at 96.

58. P E Nygh and M Davies, Conflict of Laws in Australia (7th ed, LexisNexis, 2002) at 507.

59. Commonwealth Constitution s 117. See Goryl v Greyhound Australia Pty Ltd (1994) 179 CLR 463. Compare Transport Accident Commission v Sweedman (2004) 10 VR 31 (CA).

60. Or, in international cases, in cases that satisfy listed heads of jurisdiction and the Court’s discretion: Tilbury, Davis and Opeskin, at 63-77.

61. See especially SEPA s 5.

62. See para 1.46-1.48.

63. The inappropriate forum test is narrower than the others to the extent to which it creates a presumption in favour of the jurisdiction of the Court in which the proceedings are brought.

64. PRA s 18(1).

65. PRA s 18(2).

66. There is no provision to claim maintenance in either Victoria, Queensland or South Australia. See Chapter 10.

67. Family Court Act 1997 (WA) s 205ZB.

68. Property Law Act (Qld) s 288(2). Italics added.

69. FLA s 44(3) and (4).

70. Deves v Porter [2003] NSWSC 625.

71. (1977) FLC ¶90-317

72. Deves v Porter [2003] NSWSC 625 at para 38 (Campbell J).

73. In the Marriage of Frost and Nicholson (1981) FLC ¶91-051 at 76,422 (Nygh J).

74. Deves v Porter [2003] NSWSC 625 at para 40-41 (Campbell J).

75. Beattie v Reid [2000] NSWSC 97 unreported (Master Macready).

76. See for example, Brzezowski v Seewoo [2005] NSWSC 505 (Master Macready). The defendant had suffered a work injury, so despite the relationship coming to an end, the plaintiff continued to live with and take care of him for 4 years. Understandably, she only lodged an application under s 20 once he left the home. As he had collected a damages payout of $1.3m, the Supreme Court found that she would suffer greater detriment if leave were not granted.

77. In the Marriage of Whitford (1979) FLC 90-612.

78. Parker v McNair [1990] DFC ¶95-087 at 76,159 (McLelland J).

79. See Brzezowski v Seewoo [2005] NSWSC 505. For examples of successful applications for leave, see Stone v Wright (1989) 13 Fam LR 584 (NSWSC); Parker v McNair [1990] DFC ¶95-087 (NSWSC); Meyer v Melocco (1991) 14 Fam LR 765 (NSWSC).

80. Trelore v Romeo [1991] ¶DFC 95-108 (NSWSC); Reid v George [1996] DFC ¶95-173 (NSWSC).

81. Beavan v Fallshaw (1992) 15 Fam LR 686. In this case, Bryson J said that while an explanation for the delay is relevant, it should not in his view, “be viewed as an opportunity to impose order on litigants or to instil discipline in them” (at 688). Bevan v Fallshaw has since been distinguished: Joyce v Delany & La Patrice Holdings Pty Ltd [2004] VSC 338.

82. See for example, Joyce v Delany and La Patrice Holdings Pty Ltd [2004] VSC 338 at para 46 (Williams J), relying on Harris v Harris and Moore v Clarke; Lockett v Duckett (2004) 32 Fam LR 346 at 349 (Cummins J); Stott v Murphy [2004] VSC 373 at para 14 (Cummins J); McGibbon v Marriott [1999] VSC 381 at para 7 (Warren J) which was applied in Lockett v Duckett; and approved in Stott v Murphy.

83. Harris v Harris (1997) DFC 95-192 at 77,675 (Gillard J).

84. McGibbon v Marriott [1999] VSC 381 (Warren J) at para 7. Applied in Stott v Murphy [2004] VSC 373 (Cummins J).

85. Deves v Porter [2003] NSWSC 625.

86. Lockett v Duckett [2004] VSC 377 at para 21 (Cummins J).

87. See Whitford v Whitford (1979) 24 ALR 424.

88. Law Society of NSW, Submission at 7; Equity Division of the Supreme Court of NSW, Submission at 23.

89. Victorian Bar, Submission at 20.

90. PRA s 19.





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