Plaintiff v Defendant

"We are instructed to advise that the proposed transfer of our client's interest in this property to Mr Tran has not taken place. Moreover, it is our client's present intention to retain her interest in this property."

Having referred to this letter the defendant said that he had not received an English education in Australia, was unable to write or read English and that he understood little spoken English. I note that the plaintiff did not respond to these statements.

28 In or about December 2003 the plaintiff consulted solicitors, Messrs Luat Tran & Associates, and instructed them to apply for a division of the parties' jointly owned property including the land. On 26 December 2003 they wrote to the defendant seeking consent orders for a division of the matrimonial property. The defendant did not respond.

29 On 20 April 2004, acting on advice of Messrs Luat Tran & Associates, the plaintiff lodged a caveat forbidding dealings in the land.

30 On 26 April 2004 Messrs Luat Tran & Associates wrote to the defendant referring to their letter of 26 December 2003 and noting that he had not responded. The letter stated that if they did not hear from the defendant in two weeks they would apply to the Federal Magistrates' Court "for the division of properties and custody of the children".

31 Again, it is clear, the defendant did nothing.

32 In January 2005 the plaintiff engaged her present lawyers, Messrs Hicks & Oakley. They wrote to the defendant on 2 February 2005. Among other things, the letter stated that for the plaintiff to have transferred her interest in the property to the defendant would have been "entirely inappropriate and unfair" to her in view of her contribution to the property. The letter stated that the plaintiff now required a property settlement on the basis of an equal provision.

33 On 5 April 2005 a caveat was lodged on the title to the property by a third party who, it would seem, had lent money to the plaintiff.

34 The defendant said that on 13 April 2005 he made an appointment to see his current solicitor as he was "becoming concerned about the letters referred to above" as he always believed that he and the plaintiff had reached agreement on the division of assets. He said that he requested his solicitor "to formalise and transfer the plaintiff's interest in the property to me pursuant to the separation agreement". And, on or about 12 May 2005 he executed the agreement and transfer of land. The only amendment was to change the consideration in the transfer to "Breakdown of a de facto relationship".

35 On 15 April 2005 the defendant's solicitor, Francis Lhanh, wrote to Messrs Hicks & Oakley denying the contents of the letter dated 2 February 2005.

36 On 13 May 2005 the transfer was stamped with duty on the application of the defendant's solicitor. On 17 May 2005 the defendant's solicitor sent a copy of the transfer to the Director of Housing and requested his consent to the transfer and his requirement to make the title available to enable the transfer to be registered.

37 As mentioned earlier, the originating motion was filed on 20 May 2005.

38 On 8 June 2005 the Director of Housing wrote to the defendant's solicitor confirming that the Director would not waive the requirement of consent and release and requiring information from the defendant as to his financial capacity.

39 The defendant added to the above that after separation he had no real contact with the plaintiff except in 2000 when they had discussions relating to division of assets. After that he had no real contact with her until October 2004 when he was visited by a real estate agent who the plaintiff had engaged to sell the property. A week or two later the plaintiff contacted him requesting he sign documents to enable her to borrow $90,000. He refused to do so and did not hear from her again until recently through her solicitors.

40 I note that the plaintiff says that she arranged for the estate agent to visit the property after she heard through her daughters that the defendant had agreed to a sale.

Plaintiff's explanation for delay and defendant's responses

41 Further to what may appear from the above, in an affidavit sworn on 29 August 2005 the plaintiff sought to explain her failure to commence an application under Division 2 of Part IX within the period of two years after separation. Stated as summarily as possible the points she made are these. In the first instance, negotiations to resolve all issues commenced in or about October 1998, as a consequence of which in July 2000 her solicitor sent the defendant the separation agreement. Under that agreement the defendant was to procure her release from the mortgage. But, the defendant did not respond.

42 To this the defendant replied that he did not respond because he did not have the funds to see a solicitor, and that he did not sign the documents because he did not understand them.

43 In the circumstances the plaintiff came to determine not to transfer her interest in the land as provided in the agreement, but to retain it. Accordingly her solicitors so advised the Director of Housing and sent a copy of a letter containing that advice, marked "Draft", to the defendant. To this the defendant replied that he believed he received the copy letter "in or about early late 2004". He also gives hearsay evidence that solicitors who act for the Housing Commission do not have a record on their file of the Commission having received the "Draft" letter or the letter dated 4 April 2002.

44 The plaintiff states that at no time after April 2002 did her solicitors tell her that she should seek to commence a proceeding pursuant to Part IX of the Act for an adjustment of property interests. Nor did they advise her to take any other action to recover her interest in the land.

45 The next step is that in or about December 2003 she instructed Messrs Luat Tran & Associates to apply for a division of the jointly owned property including the land. Those solicitors wrote in December 2003 and April 2004 but the defendant did not respond. The plaintiff states that Messrs Luat Tran & Associates did not tell her to make an application pursuant to Part IX of the Act. Again, the defendant's reply to not responding to these letters is a lack of funds to see a solicitor and not understanding the documents because of his poor English.

46 The final step was that on 17 January 2005 the plaintiff consulted her present solicitor who told her of Part IX of the Act, that she was out of time for an application, and that in the circumstances the most straightforward course was to pursue a half interest in the land. Accordingly, counsel was briefed to advise and draw the papers for a partition proceeding under s 223 of the Act. On 2 February 2005 her solicitor sent a letter of demand which led the defendant to take the separation agreement and transfer to Francis Lhanh and, on 12 May, to sign the agreement and transfer.

47 Then, on 11 April 2005 the plaintiff was advised by counsel that she had three choices, namely to apply for a partition, to apply for a court ordered sale and an equitable accounting between the parties, and to apply for leave to commence an application under Part IX. Initially the plaintiff opted for the first course but upon further advice and on considering the defendant's affidavit sworn 14 June 2005 she decided to seek leave to apply under Part IX.

The parties' circumstances

48 The plaintiff's current business is Unifos Promotions Pty Ltd. It is her only source to generate income. It commenced trading in or around May 2005 and has not done well. She has not drawn wages since it commenced trading. She has also been overseas for seven weeks which contributed to the situation. In her affidavit sworn on 12 September 2005 she said that she had $1,500 cash in hand and that she had no savings.

49 The plaintiff lives at Braybrook with her elder sister and her daughters. The property is owned by her brother and the rent is $650 per month. The property has three bedrooms. The plaintiff and her sister have a room each while her daughters share the third. I note that the defendant states that the daughters only go to the plaintiff 's home from about 9 pm to sleep.

50 The plaintiff relies on her sister for financial support. Her sister pays for the plaintiff's share of the living expenses including rates, taxes and services on the property, food and necessities, and does the household chores as the plaintiff works seven days a week.

51 The plaintiff married on 27 June 2005. Her husband resides in Vietnam and will migrate to Australia shortly. He is aged 41 years. He runs a small business in Vietnam. He will be studying full-time when he arrives in Australia and thus not be able to support the plaintiff financially.

52 The parties' daughters are mostly self supporting, each having part-time employment. The plaintiff provides them with housing and meals.

53 Finally, the plaintiff states that she is suffering great hardship in not being able to acquire a house for herself, her children and her husband unless and until she obtains her interest in the property. In the meantime she is obliged to live on the charity and support of her sister.

54 As to the defendant, the plaintiff states that he and his wife have been working "for the past few years" but only started declaring their incomes when this proceeding commenced. She further states that she believes the defendant was entitled to a share of his late father's estate. Finally, she states that the defendant never provided financial support for the daughters and that when they were under 18 he collected the single-parent grant for his own use. He continued to collect the grant after they commenced living with the plaintiff.

55 As to these allegations concerning himself, the defendant denies having received any benefit from his father's estate, denies the allegations about his employment and not disclosing his earnings and the allegations about receiving the single-parent support. He states that he has been in part-time employment from the end of 2004 and has advised Centrelink. He describes himself as being a factory worker.

Statement of claim and defence

56 The statement of claim commences with allegations concerning the relationship between the parties and the matter of financial contributions to the purchase of the property and payment of the mortgage. The defence responds with a mixture of non-admissions, denials and allegations to the contrary. It is clear that there is a range of disputed facts.

57 The statement of claim then deals with the separation agreement. It is first referred to as an executory agreement made in or about February 1999. Then it is alleged that in or about May 2000 the parties "made a Separation Agreement". The agreement was written and oral constituted by the written agreement drawn by Messrs Graham Sievers & Lee and by conversations between the parties. Then, after referring to the defendant's failure to sign and return the agreement and transfer, the statement of claim refers to Messrs Graham Sievers and Lee's letter to the Director of Housing on 4 April 2002. That letter is relied on as a signification by the plaintiff of her decision to retain her interest in the property.

58 The statement of claim then proceeds to contend that the agreement and transfer of land were sent to the defendant "as an escrow to be held by him and was [sic] not to become effective" until the conditions in the agreement had been fulfilled. Those conditions were that the defendant sign and return the agreement and transfer and all such further documents necessary to release and discharge the plaintiff from further liability under the mortgage. It is alleged that the plaintiff renounced the escrow and gave notice to the defendant of that renunciation by the "Draft" letter dated 3 April 2002 in early 2004 and by the letter from Messrs Hicks & Oakley dated 2 February 2005. These events occurred prior to the defendant signing the agreement and transfer.

59 There is then an alternative plea that the defendant by his conduct between 20 July 2000 and early 2004 evinced an intention to repudiate the agreement which repudiation was accepted by the plaintiff in early 2004 when the "Draft" letter was delivered to the defendant or alternatively upon Messrs Hicks & Oakley sending their letter dated 2 February 2005 to the defendant.

60 The statement of claim then makes a claim for partition under s 223 of the Act, followed by a claim under Part IX which claim depends on leave being given on the present application. The latter plea is supported by a pleading of financial and non-financial contributions to the parties' property and the welfare of the family.

61 The defence, and the defendant's submissions before me, indicates that the defendant's position is that at all times after February 1999 the parties substantially conducted themselves pursuant to the oral and written separation agreement and that when the defendant signed the agreement, and the transfer, he acted pursuant to and in furtherance of it. It is denied that the agreement and transfer were delivered as an escrow. It is alleged that the defendant has either performed the conditions required of him by the agreement or that he is ready, willing and able to do so. Accordingly the agreement is valid and enforceable. It is further alleged that based upon the agreement the defendant since separation has paid the mortgage and outgoings on the property, that the plaintiff retained her company and income from it, and that the defendant retained the day to day care of the children. In the circumstances it would be unconscionable for the plaintiff to assert the agreement is unenforceable, and she is estopped from doing so.

62 The counterclaim seeks a raft of relief concerning the separation agreement, namely a declaration that the plaintiff is estopped from denying the existence of the oral and written separation agreements, a declaration that the separation agreement is enforceable, a declaration that the separation agreement took effect as a Deed or as a simple contract, a declaration that the parties' disputes have been compromised, and an order that the plaintiff perform the agreement. Other orders are sought including the removal of the third party caveat, and costs.

Decision

63 I mentioned earlier that the parties are in dispute on a range of factual and legal matters. This is evident from the affidavits and the pleadings. Overall, the disputes are extensive. And, even though the defendant's central point of reliance against leave being granted is the separation agreement, because it releases the defendant from claims under Part IX, there are yet a range of disputed issues as to and concerning that agreement.

64 The issues concern the defendant's inaction in relation to signing the agreement and the transfer and his reasons for that inaction over a period of years. Although the plaintiff did not dispute the defendant's statements as to his lack of skill with the English language, the case is yet one that requires a hearing and adjudication on the facts to be able to resolve the various issues. On what basis did the parties act from time to time? Why did the defendant not respond to letters and, in particular, sign the agreement and transfer and do all things necessary to complete the agreement? Were the plaintiff's actions sufficient to renounce the escrow, assuming that the separation agreement was delivered as an escrow? Did the defendant fail to act in a reasonable time thus leaving it open to the plaintiff, in combination with any other relevant circumstances, to withdraw from the arrangement? That question would seem to arise whether or not the agreement was delivered as an escrow. Further, did the defendant repudiate the agreement and, if so, did the plaintiff accept such repudiation and thereby bring the agreement to an end? Is the plaintiff estopped from denying the agreement is enforceable? Doubtless there may be other or related issues. Then there are the issues concerning contributions to the acquisition and maintenance of the property, the parties and the welfare of the family. These issues cannot be determined on the present application. But the reference to them is sufficient to indicate the nature of the case sought to be brought and the breadth of the issues that would arise.

65 It is in this context that I turn to the question of hardship.

66 In the argument before me counsel concentrated on the separation agreement and the question whether the plaintiff was bound by it. If the plaintiff is bound to the separation agreement the terms thereof preclude her from applying under Part IX. Doubtless that is why the defendant's counsel placed such emphasis upon the agreement and why the defendant asserted that the parties had acted under it. Prima facie, if the plaintiff is bound by the agreement she is restricted to her partition application under s 223 under which, at best, she would receive a net one-half share of the value of the land. But that claim too is met by the separation agreement and the transfer of land given pursuant to it. What follows from this is that unless the plaintiff abandons the claim under s 223, and thereby her case, the validity and enforceability of the separation agreement, and the transfer, will in any event be an issue for determination at the trial. That will bring in all of the disputed issues of fact and law referred to above. So the parties will have to litigate those issues whether or not the plaintiff has leave to apply under Part IX. This is a relevant factor to be considered in assessing the matter of hardship.

67 From the point of view of the plaintiff the loss of the right to apply under Part IX is a substantial hardship in itself[1]. And that is her present position as a result of the effluxion of the period of two years. The defendant, on the other hand, does not suffer the loss of a right to make a claim.

68 In Harris v Harris[2] Gillard J held that an applicant for leave should not be subject to a requirement to adequately explain delay in making the application. His Honour repeated that view in Moore v Clarke[3] where he said (at 77, 856) that what is important is the length of the delay and what flows from the failure to bring the application in time. In particular, what prejudice has the defendant suffered as a result of the delay. However, in McGibbon v Marriott[4] Warren J held that an applicant should provide at least a reasonable explanation for the delay. I find it unnecessary to consider the difference in these views. Whatever view be correct as to the need to explain the delay, in the absence of cross-examination and any external indicator to the contrary I accept the evidence of the plaintiff that she was ignorant of the time limitation until advised of it earlier this year. The delay may be considerable but I accept the explanation. It is difficult to know how the plaintiff would have acted in relation to varying the interests in the property if she had been aware of the right to claim under Part IX at an earlier time, although it is reasonable to infer that at least from early 2002 if not before the plaintiff would have acted on the basis of that right. Beyond this it is difficult to assess how or when the plaintiff might have acted, and to seek to do so would take one into the area of speculation without the benefit of having heard the parties give evidence.

69 As I have said, the loss of the right to apply constitutes a substantial hardship. The defendant denies the existence of hardship, submitting that as the agreement is an enforceable contract the plaintiff's loss of the right to apply under Part IX is properly to be characterised as resulting from the agreement and not the effluxion of time. It is, however, important to consider the submission in the overall context. It is seen that what happened was that there were discussions in which time passed and at the end of which the agreement was put to the defendant for his approval and signature by which time the period of two years had passed without the plaintiff being aware of the ability to claim under Part IX.

70 Next it is necessary to make an assessment of the likely outcome of the claim under Part IX, if leave to apply is granted. As to this, while I can not resolve the many disputed issues of fact it is apparent that the plaintiff's evidence of financial and non-financial contributions, could, if accepted, well warrant an adjustment of interests in the property in her favour. As to the non-financial contributions, it is accepted that contributions of a welfare nature for the family are to be recognised in a substantial way[5]. At the very least the plaintiff has a reasonable or arguable claim of a substantial and not trifling nature. The inability to pursue the claim would be a hardship to the plaintiff.

71 As against this, what is the position of the defendant? His hardship nowhere approaches that of the plaintiff. Whether or not leave is granted his defence will rely on the separation agreement and transfer. He suffers no loss of right if leave is granted beyond the loss of the present benefit of the claim being barred by the effluxion of time. He does not otherwise suffer prejudice. Further, if leave is granted the plaintiff will only succeed on a claim under Part IX if she is held entitled to do so as a matter of law in the circumstances including that the defendant fails in his reliance on the separation agreement and transfer. However, and this is important, the granting of leave does not affect the ability of the defendant to set up the separation agreement in defence of the claim. If that defence is successful the plaintiff's claim under Part IX will fail. If the defence is not successful the plaintiff's claim under Part IX will be determined on its merits. And, in the final analysis, costs will be ordered as the justice of the case requires in light of all the relevant circumstances.

72 Regarding the matter overall I am of the view that greater hardship would be suffered by the plaintiff if leave were not granted than would be caused to the defendant if leave were granted. I am further of the view, having considered all of the relevant circumstances and counsel's submissions, that there is no reason why the discretion under s 282(2) should be exercised adversely to the plaintiff. Leave should be granted to the plaintiff to apply under Part IX.

Orders

73 I will make the following orders subject to hearing counsel. The first order is for the avoidance of any doubt as to the efficacy of the application due to the form in which it was commenced. The orders I propose are:

(a) The summons filed on 29 August 2005 be deemed to have been filed in the form of an originating motion in Form 5C for the relief sought therein and the requirement to file a summons on that originating motion and to comply with any procedural requirements pertaining to a proceeding commenced by such an originating motion be dispensed with.

(b) Leave be granted to the plaintiff to apply for an order against the defendant pursuant to Division 2 of Part IX of the Property Law Act 1958 ("the Act").

(c) The plaintiff, on or before 16 November 2005, file and serve an amended originating motion, such amendment to include a claim for an order under Division 2 of Part IX of the Act.

(d) The statement of claim filed on 1 August 2005 be deemed to have been filed and served in respect of the claims in the said originating motion amended as aforesaid.

(e) The plaintiff file and serve a reply and defence to counterclaim on or before 23 November 2005.

(f) There be mutual discovery without notice on or before 14 December 2005.

(g) Costs be reserved.

[1] McCarron v Unsworth (1978) FLC 90-444; McGibbon v Marriott (1999) DFC 95-221.

[2] (1997) DFC 95-192.

[3] (1998) DFC 92-208.

[4] (1999) DFC 95-221.

[5] Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605.