A recent decision of the Supreme Court of Queensland in Alagiah v Crouch demonstrates the need for divorcing couples to finalise their property settlement in a timely fashion, or at the least, to commence Court proceedings before divorcing.
Shantha Alagiah was married to Dr. Ratnam Alagiah for 22 years until their divorce on 25 May, 2012. Throughout 2012, attempts were made by Mrs Alagiah’s Solicitors to reach an agreement with Dr. Alagiah regarding property settlement. Dr. Alagiah owned property in Australia and Malaysia and also had superannuation entitlements, all in his own name.
However, Dr. Alagiah died unexpectedly on 21 January 2013, before property settlement proceedings had been commenced in the Family Court. Dr Alagiah died without a valid will.
Because property settlement proceedings had not been formally commenced prior to his death, Mrs Alagiah had limited options to obtain an appropriate share of any of the matrimonial assets.
Her only option was to file a ‘family provision’ claim seeking orders that provision be made for her out of Dr Alagaih’s estate. She made this application 18 months late, seeking an extension of time from the court. That extension was granted due to extenuating circumstances:-she had been caring for her ill mother in India, her financial circumstances didn’t allow her to return to Australia, and she didn’t have reliable access to phone and internet services to contact her Solicitors.
Unfortunately, that was about the only area in the action where she had success.
Submissions were made by her counsel to the effect that she had been attempting to resolve property issues at the time of her husband’s death . It was also submitted that even though the parties were divorced, that she was still considered a spouse pursuant to the Succession Act and therefore entitled to make a family provision.
The Court considered whether Mrs Alagiah was entitled to receive maintenance from Dr. Alagiah. They concluded that in order for her to be entitled to receive a provision from the estate, she must have had “an actually crystallized right” to payment of maintenance at the date of the death of her husband. There had been no orders for maintenance made, so no such right was crystallised.
Further, the Court found Mrs Alagiah was not a dependant as defined under the Succession Act and therefore not entitled to make a claim for provision out of the estate. Her application failed as a result.
This was obviously a fairly awful result for someone at the end of a 22 year marriage. However, it should serve as a timely reminder that property settlement arrangements should begin fairly soon after separation, and in circumstances where one party holds significant assets in their own name, property settlement proceedings should always be commenced before a divorce becomes final, in order to preserve rights to property settlement.