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Case Study - Gadzen & Simkin [2018] FamCAFC 218 – Why Limitation Periods Matter


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Background


This case involves parties to a de facto relationship, who started living together in or around 2001. The relationship came to an end in 2009. After their separation, the parties married other people and the de facto wife had been living with a new husband in a home, which he owned at the time of the original trial.


The de facto wife commenced family law property proceedings in 2018. This was seven years after the two-year limitation period had lapsed for bringing such proceedings for de facto couples.


Nevertheless, the trial judge concluded that if the de facto wife's claim wasn't allowed to proceed, she would experience hardship. Therefore, the trial judge granted leave to the de facto wife to commence proceedings out of time, even though the time limit had already passed several years ago.


Appeal


The husband appealed the trial judge’s decision. He argued that the trial judge did not fully assess the likely expenses related to the wife's claim and that the trial judge had misapplied the definition of 'hardship' under section s44(6) of the Family Law Act 1975 (Cth). Lastly, he contended that the wife, given her employment and post-separation benefits, was not in a state of 'need' that could substantiate her claim of hardship.


In its reasons for judgment the Full Court (Murphy, Aldridge & Kent JJ) stated that the trial judge had accepted a submission from the husband that determining hardship required consideration of "the quality or character of the potential claim". However, it was noted that the trial judge did not actually undertake this consideration. Instead, Her Honour quickly moved on to discretionary considerations about delay and prejudice to the husband.


When dealing with the topic of hardship, the judge quoted paragraphs from the wife's affidavit related only to the wife's current income and expenses, and the husband's cessation of mortgage payments. Based on these aspects alone, the judge concluded that the evidence demonstrated hardship.


The Full Court was of the view that this conclusion was flawed as it relied only on the current financial circumstances of the wife and did not analyse her potential claim, nor did it consider the prospective legal costs of pursuing this claim. These are important factors in determining hardship, and their omission indicates that the trial judge applied the wrong legal test.


The trial judge did state that the wife had a prima facie claim under the Family Law Act. However, this conclusion lacked supporting analysis of the wife's claim. The Full Court opined that the trial judge did not consider whether the wife had a substantial prima facie or arguable claim considering all the circumstances, including her potential costs in pursuing that claim.


Outcome


During the Appeal, the de facto wife's counsel had argued that the case should be sent back to the Federal Circuit Court for rehearing so that she could present further evidence. However, it was established that there was no need to remit the case, as the only additional evidence was an estimated cost which was agreed upon.


Re-examining the case, the Full Court agreed to re-exercise discretion rather than send the case back to the Federal Circuit Court. Given the evidence and the circumstances of the relationship and separation, the Court concluded that the de facto wife did not establish "hardship" within the meaning of section 44(6) of the Act, and thus her Initiating Application filed in the Federal Circuit Court on 25 January 2018 must be dismissed.


The de facto husband was, therefore, wholly successful in his Appeal.


The de facto husband had requested the de facto wife to pay his legal costs if the appeal succeeded. The Court, while acknowledging that the de facto wife had been unsuccessful in her appeal, considered the substantial difference in the financial circumstances of the parties, and decided that no order for costs should be made.


Nonetheless, as the appeal succeeded due to legal errors made by the trial judge, both parties were entitled to receive certificates under the Federal Proceedings (Costs) Act 1981 (Cth).


Takeaway


This case demonstrates the importance of limitation periods when it comes to Family Law matters. In this particular case the de-facto wife was seven years out of time with her application and the Full Court ultimately decided that she should not be granted leave to commence proceedings out of time as she could not demonstrate “hardship” within the meaning of the Act.


Notwithstanding the fact that the parties received certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) covering some of their costs relating to the appeal, the de-facto wife incurred substantial legal costs, which could have been avoided had she received a more realistic legal assessment of her prospects of success.


The importance of receiving the right advice at the very early stage cannot be underestimated. Contact our experienced family lawyers at Surge Legal now if you have any complex family law issues that you wish to discuss.

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