Beware of Delaying Commencing Family Law Property Settlement Proceedings After Separation!

The Supreme Court of Queensland delivered a judgment on 8 October 2015 which tragically demonstrates the risk of receiving nothing in a property settlement after separating and ending a long term marriage/defacto relationship.

In the matter of Alagiah v Crouch, Justice Ann Lyons refused an application by a divorced wife (“the Applicant”) seeking to be entitled to make a claim on the Deceased former husband’s estate (“the Deceased”).

In summary, the background is as follows: –

1. The Applicant aged 54, and the Deceased were married for 22 years.
2. They divorced on 25 May 2012.
3. The Deceased was a university professor residing in South Australia, although dying whilst on holiday in Canada on 21 January 2013
4. Prior to the death, the Applicant, who at that time was residing in India and caring for her sick mother, was conducting negotiations via her Australian lawyers with the Deceased to try and finalise a property settlement.
5. The court accepted that the net value of the Deceased’s estate (in reality the matrimonial pool of assets) was approximately $650,000.00.
6. Critically (and unfortunately fatally to the Applicant’s rights), the Applicant had not commenced court proceedings in relation to the property settlement before the Deceased’s untimely death.
7. These Supreme Court proceedings were brought by the Applicant seeking the ability to make a claim on the estate of the Deceased given she never concluded, nor received any value from a property settlement.
8. It is not clear whether the Will referred to in the proceedings purportedly having been made by the Deceased on 19 August 2012 is going to be considered a valid Will. The Deceased’s signature was not witnessed. In the Will he appointed the Local Spiritual Assembly of the Bahá’í Faith of Charles Sturt to be his executor and for his estate to be divided according to the tenets of the Bahá’í Faith. If that Will is found to be valid then clearly the beneficiary of the Deceased’s estate worth about $650,000.00 will be whoever is determined according to the tenets of the Bahá’í Faith and presumably not the Applicant!
9. Alternatively, if that Will is not valid under Queensland succession laws, given there were no children of the Applicant and deceased, the Deceased’s next of kin will inherit his estate. There was evidence that he was survived by a brother, three sisters and eight nieces and nephews who reside in Malaysia, Mozambique or Australia.

The court found that the Applicant is not entitled to challenge the Deceased’s estate essentially by combination of two reasons: –

1. She and the Deceased were divorced prior to the Deceased’s death; and
2. The divorce extinguished the Applicant’s claim to be a person entitled to make a claim for adequate provision from the Deceased’s estate unless she could be found by the court to be a spouse as defined by the Succession Act 1981. The Applicant’s lawyers argued that the definition of spouse included a dependant former wife.

To satisfy the definition of ‘dependent former wife’ in the Act, the Applicant pursuant to section 5AA(4)(a)(iii) was required to prove that at the time of the Deceased’s death, the Applicant was receiving, or entitled to receive, maintenance from the Deceased.

The court went on to find the Applicant was not receiving, nor entitled to receive any maintenance from the Deceased at the time of his death, because that could only arise if an order of a family court had been made for such an entitlement.

Accordingly, the Applicant not having applied to the court for an order that the Deceased provide maintenance for her, was not considered a dependant former wife for the purposes of the Act.  Therefore she was not entitled to make a claim against the estate.

The Lesson
The court commented that morally the Applicant should have received part of the Deceased’s estate.

However, by application of the law she had lost her legal rights and therefore missed out completely on receiving any part of the matrimonial assets around $650,000.

The Applicant could have avoided this situation by having commenced court proceedings for a property settlement and/or spousal maintenance prior to the Deceased’s death which occurred just shy of 8 months after the divorce.

The Applicant’s lawyers and the Applicant were probably aware that if they did not achieve a property settlement by negotiation with the Deceased by informal negotiations which were occurring, there was a time limit running against them, in that they would have to start court proceedings before the date which was 12 months after the date of the divorce, otherwise the Applicant lost her rights to start court proceedings.

The Applicant and her lawyers presumably did not factor in the risk of the Deceased dying before the Applicant had commenced court proceedings and the consequent effect that would have by precluding the Applicant from making a claim against the Deceased’s estate.

This case demonstrates the prudence in not unduly delaying concluding a property settlement and/or commencing property settlement proceedings in court if early pre-court negotiation fails.

If you find yourself in the unfortunate predicament of having to affect a property settlement, please contact one of our experienced lawyers to obtain the right advice promptly.