Chancellor and McCoy
[2013] FCCA 740
•15 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CHANCELLOR & McCOY | [2013] FCCA 740 |
| |
| Legislation: Family Law Act 1975, Pt VIII, s.44 | |
| Sharp & Sharp [2011] FamCACF 150 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Whitford & Whitford (1979) FLC 90-612 Hall & Hall (1979) FLC 90-679 Althaus & Althaus (1982) FLC 91-233 Hedley & Hedley [2009] FamCAFC 179 Richardson & Richardson [2008] FamCAFC 107 McDonald & McDonald (1977) FLC 90-317 Gallo v Dawson [1990] 93 ALR 479 Ramadam v Leda Holdings [2001] NSWCA 41 McLean v Sydney Water Corporation [2001] NSWCA 122 Frost & Nicholson (1981) FLC 91-051 |
| Applicant: | MS CHANCELLOR |
| Respondent: | MS MCCOY |
| File Number: | BRC 1650 of 2013 |
| Judgment of: | Judge L. Turner |
| Hearing date: | 22 April 2013 |
| Date of Last Submission: | 22 April 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 15 July 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Jordan |
| Solicitors for the Applicant: | Murdoch Lawyers |
| Counsel for the Respondent: | Mr Page, SC |
| Solicitors for the Respondent: | Feeney Family Law |
ORDERS
That the application by Ms Chancellor to proceed out of time pursuant to section 44 Family Law Act 1975 with the de facto property proceedings filed on 8 March 2013 is granted.
That the costs of both parties in respect to the application to proceed out of time be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Chancellor & McCoy is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 1320 of 2013
| MS CHANCELLOR |
Applicant
And
| MS MCCOY |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties after being in a same sex relationship which spanned some 27 years are now before the Court with respect to a de facto property division.
There is an issue however as the proceedings have been filed out of time, with the applicant seeking an extension of time whereas the respondent argues that the application should be dismissed.
Issues
The issue that requires determination is:
a)Should the application for the de facto property proceedings to proceed out of time be granted?
Evidence
Both parties are legally represented.
The matter proceeded on written and oral submissions only, and
cross-examination did not occur.
In consider the issue I have had regard to:
a)the material as marked on the Court file;
b)the written and oral submissions of the parties;
c)Section 44 Family Law Act 1975;
d)the relevant case law on the issue of granting leave to proceed out of time.
The material filed by the respondent is scant, and her affidavit filed
12 April 2013 provides the Court with no information as to the financial and non-financial arrangements between the parties during the lengthy relationship.
Findings of fact are made on the balance of probabilities having regard to the evidence and in what follows statements of fact constitute findings of fact.
Objections to evidence
The respondent raises two objections to the affidavit filed by the applicant.
The first objection is in respect to [20] to [37] and the corresponding annexures, which relate to the private mediation.
The second objection is in respect to [38] and [39] of the applicant’s affidavit which relate to the applicant’s costs application. This objection extends to the affidavit of her lawyer, Mr H.
Objection to [20] to [37]
The respondent’s objection is based on the following:
a)The contents are irrelevant to the determination as to whether leave should be given for the matter to proceed out of time.
b)That the mediation agreement signed by the parties prior to the mediation provides for the results to be “without prejudice”.
c)There is authority for the proposition that prevents the admission of any agreement which is conditional upon the exercise of the discretion of the court applying the principals as contained in Part VIII Family Law Act1975.
The applicant argues that the evidence is relevant as it shows the intention of the parties and explains why the application was filed out of time.
Conclusion as to objection to [20] to [37]
I find that the steps taken by the parties in being part of the private mediation process, including what happened subsequent to the mediation, is relevant to this application as conduct of the parties is an issue that must be considered in determining whether leave is granted for the applicant to proceed out of time.
As to the contents of agreement reached at the mediation, and subsequent discussions for the purposes of the consent orders, this information is not relevant to these proceedings, although ultimately it may be an issue in the final hearing as well as an issue with respect to costs.
In respect to the applicant’s affidavit therefore, the following content has been struck out and has not been taken into account by the Court in considering the application:
a)[21] in its entirety.
b)[22] in its entirety.
c)[24] in its entirety.
d)[25] in its entirety.
e)In [26] the contents commencing with “for her” on the second line and concluding with “fairness” on the last line.
f)In [27] the contents commencing with “relating” in the second line and concluding with the word “account” on the last line.
g)In [28] the contents commencing with “and her approval” in the second line and concluding with the word “(QSuper)” on the last line.
h)[29] in its entirety.
i)[30] in its entirety.
j)[31] in its entirety.
k)[32] in its entirety.
l)In [33] the contents commencing with “33.2” on the fourth line and concluding with “mediation” on the seventh line.
m)In [34] the contents commencing with “The letter” on the second line and concluding with “GPC3” on the last line.
n)In [35] the contents commencing with “Their letter” on the second line and concluding with “advice” on the last line.
o)In [36] the contents commencing with “stating” on the first line and concluding with “GPC4” on the last line.
p)Annexure “GPC1”.
q)Annexure “GPC2”.
r)Annexure “GPC3”.
s)Annexure “GPS4”.
Objection to [37] & [38] and to the affidavit of Mr H
The respondent’s objection to [37] and [38] of the applicant’s affidavit and to the whole of the affidavit of Mr H, both of which deal with an application for costs as to the mediation and negotiation is that it is inappropriate to deal with the issue of costs until such time as a determination has been made as to leave to proceed out of time.
Further the respondent is concerned that the reading of Mr H’s affidavit may be prejudicial in determining the leave to proceed out of time application.
It is noted that the respondent is also seeking a costs order.
Conclusion as to objection to [37] and [38] and to the affidavit of Mr H
I find that it is premature to consider any costs applications at this stage of the proceedings.
In respect to the applicant’s affidavit therefore, the following content has been struck out and has not been taken into account by the Court in considering the application:
a)[38] in its entirety
b)[39] in its entirety.
As to the affidavit of Mr H, this has not been read or considered for the purposes of the current application.
An order has been made for both parties’ costs in respect to this application to be reserved.
The relevant facts
The applicant is aged 53 and the respondent is aged nearly 57.
The parties commenced a relationship in late 1982, have lived together since early 1983 and separated under the one roof on 4 December 2010.
The applicant physically left the former de facto home in December 2011.
The property pool consists of:
a)an unencumbered house property at (omitted) in the respondent’s name;
b)an encumbered house property at (omitted) in the applicant’s name;
c)separate share portfolios in each party’s names;
d)a motor vehicle in the applicant’s name;
e)various motor vehicles in the respondent’s name;
f)a bobcat, trailer and horse float in the respondent’s name;
g)a camper trailer in the applicant’s name;
h)household contents including tools;
i)a (omitted) partly owned by the respondent;
j)bank accounts in the individual party’s names;
k)credit cards in the applicant’s name;
l)credit card and line of credit in the respondent’s name;
m)Superannuation fund in the applicant’s name; and
n)Superannuation fund in the respondent’s name.
The property pool is worth around $2,000.000.
There is a dispute in respect to alleged monies owing to the respondent’s parents of $167,000.
In early 2011 the applicant received an inheritance from her uncle consisting of real property, motor vehicles, cash and a golf buggy, the total worth according to her estimates of around $400,000. The respondent claims that the estate is worth in excess of $560,000.
Both parties became involved in settlement negotiations resulting in the parties attending a private mediation with Mr G on 19 November 2012.
Both parties signed a mediation agreement prior to the mediation occurring.
The respondent was not legally represented at the mediation.
An agreement was reached at the mediation but attempts to convert the agreement into consent orders failed.
Legal letters as to the consent orders were exchanged until early February 2013 when respondent informed the applicant that she would not be consenting to the proposed orders.
On 8 March 2013 the applicant filed an initiating application seeking final orders for a de facto property division and on an interim basis for leave to be granted to proceed out of time and for costs, on an indemnity basis including costs related to the mediation.
On 12 April 2013 the respondent filed her response seeking that the application be dismissed and costs on an indemnity basis.
The law
Section 44(5) Family Law Act 1975 provides that a party can only make an application for a division of property arising out of a de facto relationship provided the application is made within two years from the date the de facto relationship has ended.
This period is referred to as the “standard application period”.
Pursuant to section 44(6) the Court may grant a party leave to apply after the end of a “standard application period” if “hardship” would be caused to the applying party if leave was refused.
Leave to proceed out of time pursuant to section 44 has been the subject of extensive case law.
The recent Full Court decision of Sharp & Sharp [2011] FamCACF 150, after an analysis of the many leading authorities spanning over years of legislative changes in this area, provides clear guidance as to process the Court must follow in exercising its discretion in determining whether leave is to be granted to proceed out of time.
In summary the Court must take into account the following:
a)There are reasons as to why time limitations exist and careful consideration must be given to an application for leave to proceed out of time.
b)The Court must be satisfied that hardship would be caused to the applicant if leave to proceed out of time is not granted.
c)Once hardship has been established, the Court must be persuaded that discretion should be exercised to grant the leave to proceed.
d)The Court in considering whether to exercise the discretion must be satisfied that the respondent will not be prejudiced.
e)Where the Court is satisfied that hardship to the applicant will be caused if the leave is not granted, and that granting of leave will not prejudice the respondent, consideration must be had to the circumstances of the matter before leave is granted.
As to the imposition of time limitations on actions and the principles to be adhered to in considering whether leave is to be granted to proceed out of time, the views expressed in the following authorities are noteworthy:-
a)McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at [551] states:
“The discretion to extend time must be exercised in the context of the rationales for the existence of limitation periods….The enactment of time limitations has been driven by the general perception that…where there is a delay the whole quality of justice deteriorates.”
b)In Whitford & Whitford (1979) FLC 90-612 the Full Court notes at 78,146 that although section 44 confers the power to grant leave for an extension of time in order to avoid hardship that the:
“power should be exercised liberally in order to avoid hardship, but nevertheless in a manner, which would not render nugatory the requirement that proceedings should be instituted within a tear from the decree nisi.”
As to what is meant by the term “hardship” and how hardship is to be assessed is the subject of numerous authorities:
a)The term “hardship” is not defined in the legislation.
b)In Whitford & Whitford the Full Court observes:
“In our view the meaning of ‘hardship’ in subsec44(4) is akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment.”
c)In Hall & Hall (1979) FLC 90-679 the Full Court states that the authorities:
“have considered what is meant by the term ‘hardship’… and the term ‘substantial detriment’ seems to be the generally accepted interpretation of that word.”
d)In Whitford & Whitford at 78,145:
“Hardship may be caused to an applicant if leave were not granted to institute proceedings, although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be ….loss of a prospective entitlement to property including money, or …ability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship. In some cases where a resolution of the property or financial relationships of the parties is desired, it might be, that the applicant would receive no more or even less, than he or she owns at law or in equity. Nevertheless hardship might be caused to the applicant if leave were not granted so as to facilitate such resolution….”
e)This position is supported by Sharp & Sharp at [131]:
“….it is apparent that an assessment of hardship requires the court to consider whether the applicant would suffer a substantial detriment as a consequence of the loss of the right to institute the proceedings, although that detriment, in the circumstances of the particular matter, may not be entirely related to financial considerations”.
f)In Hall & Hall at 78,627 “Fundamental to a [finding of hardship] is the determination of the quality and character of the potential claim.”
g)In Althaus & Althaus (1982) FLC 91-233 the Full Court observes at 77,267:
“the exercise is to determine whether there is a reasonable claim to be heard. That is the essence of the inquiry into whether hardship will be suffered by denying the applicant the right to litigate the claim.”
h)In Hedley & Hedley [2009] FamCAFC 179 Cronin J cites the Full Court in Richardson & Richardson [2008] FamCAFC 107 at [215] “it is not a decision about whether the claim will succeed but whether there is a reasonable claim to be heard.”
i)In McDonald & McDonald (1977) FLC 90-317 Evatt CJ at 76,688 states that a mere loss of the right to a Court action:
“is not in itself hardship….must be a right which in all circumstances is substantial…the applicant must establish …a prima facie case…that to deny the right to litigate would cause hardship…”
a)In Whitford & Whitford at 78,144 and 78,145:
“…it must be made to appear to the Court that the applicant would probably succeed if the substantive application were heard on the merits. If there is no real probability of success, then the Court cannot be satisfied that hardship would be caused in leave were not granted… the inability of an applicant to pursue a claim which in the circumstances of the applicant……is trifling, generally will not cause hardship. Similarly where the costs which the applicant will have to bear…..are about as much or more than what the applicant is likely to be warded on a property claim, ordinarily hardship would not result……otherwise we find no warrant …for saying that the right or entitlement lost must be a substantial one.”
b)In Sharp & Sharp at [17] and [18]:
“Hardship…is more than the loss of a right to commence proceedings. It is the consequences attending the loss of the right to commence proceedings that constitutes hardship…..the well established test is that the applicant must have a prima facie claim worth pursuing or a ‘real probability of success’…….However whether or not hardship exists is not to be assessed only by reason of monetary value of the probable order to be made if leave granted” and at [135] “…..what is required by the court is an assessment of the asserted hardship, and in view of that hardship, a determination of whether the applicant has established that there is a reasonable claim to be heard and has demonstrated that he or she would suffer hardship in the form of a substantial detriment as a consequence of the loss of the right to instigate proceedings…..then the court may then consider whether in all the circumstances leave should be granted….”
c)In considering whether the applicant has a prima facie or arguable case the following limitation is acknowledged in Sharp & Sharp at [68]:
“We accept that any such assessment may be somewhat circumscribed because of the limited nature of the evidence presented on an interlocutory application.”
As to the exercise of the Court’s discretion the following authorities provide guidance as to the factors to be considered:-
a)In Whitford & Whitford at 78,415 and 78,416 some of the factors to be considered in exercising discretion were identified, including:
“the length of the delay, the reasons for the delay….the strength on the merits of the applicant’s case….These matters are not necessarily the only ones.”
b)McHugh J in Gallo v Dawson [1990] 93 ALR 479 refers to the need to consider the history of proceedings, the conduct of the parties and the nature of the litigation.
c)On the issue of delay Evatt CJ in Althaus & Althaus at 77,267 to 77,268 states:
“…an explanation of the delay in bringing proceedings ….requires a consideration of the whole period from the date of the decree nisi to the lodging of the application. It requires the court to consider whether the wife took all reasonable steps to pursue her claim or whether, on the other hand, she acted at any time as if she had no intention of proceeding or pursuing her claim at all… It requires the court to consider whether it can reach conclusions as to why the proceedings were started beyond the time lodges and whether those proceedings are attributable to default on the part of the applicant”.
As to prejudice to the respondent the following must be considered:-
a)As discussed in McDonald & McDonald and Whitford & Whitford consideration must be had to the prejudice occasioned to the respondent by reason of the delay.
b)In Tamaniego & Tamaniego at [162] consideration must be had as to whether “to grant leave would prejudice or impose hardship on the respondent…”
c)Meagher JA in Ramadam v Leda Holdings [2001] NSWCA 41 at [6] in respect to the timing of the prejudice states “it is prejudice to the defendant as at the date of the filing….which must be examined…”
d)Giles JA in McLean v Sydney Water Corporation [2001] NSWCA 122 at [22] states that:
“…Prejudice engendered by delay and unlikelihood of a fair trial will be highly material, and if there is prejudice and unlikelihood of a fair trial, that will tell strongly, often conclusively, against the grant of an extension of time.”.
e)Nygh J in Frost & Nicholson (1981) FLC 91-051 at 76,425 defines prejudice “Prejudice here means that a party faced with an action which he or she had no reason to expect or had been led to believe would not be brought.”
f)In Hedley & Hedley Cronin J comments at [211]:
“If a respondent claims to have been prejudiced by the applicant’s delay, in many cases, that can be ameliorated by the court in the substantive property proceedings making assessment and giving weight to contributions and the various factors under s75(2)….Any prejudice to the respondent can be factored into the ultimate deliberation.”
As to whether the circumstances justify granting of leave, where hardship has been established, and where the respondent will not be prejudiced, is discussed in the following authorities:-
a)Evatt CJ in Althaus & Althaus at 77,268 warns:
“Where hardship to the applicant is established and there is no question of prejudice to the respondent, the Court should not seek to raise artificial barriers if the applicant has behaved in a reasonably diligent manner in prosecuting her claim.”
b)O’Ryan J in Tamaniego & Tamaniego [2010] FamCACF 254 at [162] states when exercising discretion “….the fundamental issue in any application for extension of time is whether this will enable the court to do justice between the parties….”
c)At [97] in Sharp & Sharp the Full Court comments:
“Even if the Court came to the view that there are no significant prejudice to the respondent, the Court may consider whether in all the circumstances of the case, it is just and reasonable to grant the extension sought.”
d)Sharp & Sharp at [143] places the onus of proving any injustice on the applicant:
“Generally, an applicant seeking an extension of time must demonstrate that strict adherence to the relevant provision or rule will result in an injustice.”
Application of the law to the issue
The parties separated on 4 December 2010 after a cohabitating in a
de facto relationship for 27 years.
The two year “standard application” within which to bring any property proceedings expired on 3 December 2010.
The parties attended mediation in November 2012 and negotiations to reach consent orders continued until early February 2013.
The initiating application was filed on 8 March 2013.
The applicant was three months and five days late in filing the de facto property proceedings.
The de facto property pool, not including the inheritance received by the applicant post separation of between $400,000 and $600,000 is worth around $2,000,000.
The applicant has retained the minority of the de facto property pool, consisting of an encumbered house property at (omitted) with a net value of $263,000, a share portfolio of $7,200, motor vehicle worth $2,700 and superannuation of $136,400. The applicant also retained household items and tools. The debt retained consists of a credit card debt of $4,800.
The respondent has retained the majority of the de facto property pool, consisting of an unencumbered house property at (omitted) worth $650,000, a share portfolio of $70,000, motor vehicles worth $161,000 and superannuation worth $963,000. The respondent also retained household items and tools. The debts retained consist of the disputed loan from the respondent’s parents of $167,000, a line of credit of $59,000 and a credit card debt of nearly $4,000.
It is in the context of these facts that the law will be applied.
The first question is, has hardship been established by the applicant?
Hardship
The applicant maintains that if leave is not granted for an extension of time, then this will result in her losing a right of action to which she is entitled and has a real probability of success.
The respondent claims that the Court could not find hardship because on her analysis of the facts, taking into account the applicant’s contributions to the relationship, the debt owing to the respondent’s parents and what the applicant has retained from the de facto property together with her inheritance, then the applicant would not, in effect, do any better in Court proceedings for a property division, and therefore is unable to establish a “loss” or “ substantial hardship” as required to be successful in an application for leave to proceed out of time.
Conclusion on hardship
I find that the applicant has established hardship.
I base my findings on the following:-
a)The applicant has a “prima facie” right as provided in Part VIIIAB Family Law Act 1975 to bring proceedings for a de facto property division. (McDonald& McDonald and Sharp & Sharp)
b)The pool is substantial and therefore the claim cannot be seen as “trifling”. (Whitford & Whitford)
c)It is little consequence that the applicant may not be in “necessitous circumstances”. (Whitford & Whitford)
d)As the de facto relationship was for 27 years, there is a “reasonable claim to be heard”. (Althaus & Althaus)
e)As a reasonable claim has been established, the ultimate outcome of the property division, as suggested by the respondent, is not a factor that need be considered in this matter. It is “not a decision about whether the claim will succeed” (Hedley & Hedley) or that “the applicant would receive no more or even less, than he or she owns in law or in equity”. (Whitford & Whitford)
f)It is not just about the “financial considerations” but the ability for the applicant to “have the financial and property relations of the parties adjusted and resolved.” (Sharp & Sharp)
g)I accept that the “applicant would suffer a substantial detriment as a consequence of the loss of the right to institute the proceedings” if leave was refused. (Sharp & Sharp)
This has been a long relationship where the parties intermingled their personal and financial lives over the years and where separation has been problematic.
The applicant is entitled to finalise the financial dealings by way of a property division.
Further it is evident from the limited information before the Court that emotionally it would also be of benefit to both party that their ties are severed on all levels and Court orders for a property division would assist in that regard.
Exercise of discretion
As a finding has been made that there would be hardship suffered by the applicant if leave to proceed out of time was not granted, consideration must be given as to whether, taking into account the circumstances, discretion to grant such leave should be exercised in favour of the applicant.
I find that the relevant factors to be considered in this matter are:
a)History of proceedings and conduct. I find that as both parties actively participated in property negotiations, private mediation and attempted to reach consent orders, with the last negotiations occurring in February 2013, that by their conduct it is evident that it was the intention of both the applicant and the respondent to finalise a de facto property settlement.
b)Delay. The delay consists of a period of three months and five days. I accept, as does the respondent, that given the circumstances of the negotiations, and that property proceedings were commenced shortly after the applicant was informed that consent orders were not being entered into by the respondent, the delay has been adequately explained by the applicant.
c)Nature of the proceedings. Commencing family law proceedings is an exhaustive, time consuming and expensive process. I accept that it was reasonable for the applicant not to commence proceeding to protect her interests during a period when the respondent was hopeful that the property division would be resolved by way of consent orders.
Conclusion on exercise of discretion
I find that based on the relevant factors it is appropriate for the Court to exercise discretion in favour of the applicant in granting leave to proceed with the de facto property proceedings out of time.
Prejudice/Hardship to the Respondent
Hardship
The respondent’s affidavit filed in these proceedings contains the heading “Ms McCoy Changed Circumstances since Separation in December 2010”.
Under this heading the respondent addresses the difficulty in living under the one roof, the emotional and financial stresses experienced by the respondent since separation and the impact on her employment, where the respondent has now resigned from (occupation omitted) and is caring for her elderly mother.
Undoubtedly the respondent has experienced hardship since separation, but unfortunately, this is not uncommon when relationships, especially long relationships, come to an end.
The issues raised by the respondent are issues relevant to the property proceedings and as foreshadowed in Hedley & Hedley:
“can be ameliorated by the court in the substantive property proceedings making assessment and giving weight to contributions and the various factors under s75(2)….Any prejudice to the respondent can be factored into the ultimate deliberation.”
Another underlying issue is the concern raised by the respondent of the applicant not providing adequate disclosure as to the extent of her inheritance, and the difficulty that has caused to the respondent in attempting to successfully negotiate consent orders and the applicant not acknowledging the debt to her parents.
Again these are issues that can be dealt with in property proceedings.
Conclusion on hardship
I find that the hardship suffered by the respondent does not in any way impact on the Court’s discretion to allow the application to proceed out of time.
Prejudice
As to prejudice, the respondent has already conceded that there was justification for the delay in the commencement of proceedings.
Further this is not a situation where the respondent is “faced with an action which he or she had no reason to expect or had been led to believe would not be brought”. (Frost & Nicholson)
The respondent must have known that if settlement was not reached, that Court action would be the next logical step the applicant would take.
Conclusion on prejudice
I find that prejudice has not been established by the respondent and therefore has no impact on the discretion of the Court to grant leave to proceed.
Do the circumstances justify the exercise of the discretion?
The overall tenure of the respondent’s argument is that as there is no basis to the substantive application, then the application for leave out of time should not be granted
Conclusion as to justification
I find that the argument put forward by the respondent is an “artificial barrier” (Althaus & Althaus) which should not interfere in the Court exercising discretion in favour of the applicant.
The property application must proceed to “enable the court to do justice between the parties”. (Tamaniego & Tamaniego)
I find that in all the circumstances it is “just and equitable to grant the extension sought”. (Sharp & Sharp)
I therefore find it appropriate that the application for leave to proceed out of time in the de facto property proceedings be granted.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Judge L. Turner
Date: 15 July 2013
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Limitation Periods
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Costs
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Appeal
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