Morton and Morton
[2008] FamCA 854
•10 January 2008
FAMILY COURT OF AUSTRALIA
| MORTON & MORTON | [2008] FamCA 854 |
| FAMILY LAW – PROPERTY SETTLEMENT – Concurrent proceedings in Australia and the UK – Application of clearly inappropriate forum test |
| Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 Henry v Henry (1996) FLC 92-685; 185 CLR 571 Lesbirel (2006) FLC 93-301 |
| APPLICANT: | Ms Morton |
| RESPONDENT: | Mr Morton |
| FILE NUMBER: | MLC | 9844 | Of | 2007 |
| DATE DELIVERED: | 10 January 2008 |
| PLACE DELIVERED: | Melbourne |
| JUDGMENT OF: | Watt J |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms A.R. Wynne/ Mr O’Shannessy at hearing |
| SOLICITOR FOR THE APPLICANT: | David Stagg Tonkin & Co |
| COUNSEL FOR THE RESPONDENT: | Mr McClelland/ Mr Weil at hearing |
| SOLICITOR FOR THE RESPONDENT: | Aitken Walker & Strachan |
Orders
The proceedings instituted in this court by the husband on 3 September 2007 be and are hereby stayed pending the outcome of proceedings issued by the wife in the T County Court in England, the particulars of which are set out in the wife's affidavit filed herein.
I further order that all interim applications be and are hereby otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Morton & Morton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9844 of 2007
| MS MORTON |
Applicant
And
| MR MORTON |
Respondent
REASONS FOR JUDGMENT
The proceedings before me concern whether this court is a clearly inappropriate forum for the determination of the financial matters arising out of the marriage of the applicant and respondent of nearly 18 years. A significant area of focus of the argument on this point, but by no means the only matter relevant or in respect of which submissions were made, was whether the Australian legislative provisions for treating superannuation as property set out in Part VIIIB of the Family Law Act 1975 apply to the husband's United Kingdom pension fund now in the payment phase. If this court is not a clearly inappropriate forum, then the issue is whether the wife should be restrained as the husband seeks, from proceeding with her applications issued on 23 August 2007 that are before a court in the United Kingdom where there are legislative provisions that enable a pension sharing order to be made.
The parties were represented by Mr Weil of counsel on behalf of the husband and Mr O'Shannessy of counsel on behalf of the wife. The applications before me are the application of the wife filed 12 November 2007 for an order that the proceedings before this court instituted by the husband for property settlement be stayed. The full terms of the orders sought are set out in her application filed 12 November 2007. In his response to that application the husband has sought orders dismissing that application and seeking that the wife be restrained from proceeding with the proceedings in the United Kingdom. That is set out in the husband's response to an application in a case filed on 12 November 2007.
The proceedings in this court were commenced by the husband filing an application for final orders for property settlement on 3 September 2007 together with a financial statement sworn 3 September 2007. On 12 November 2007 the wife filed the application in a case referred to above and a response to the husband’s application for final orders. The wife filed an affidavit in support of her applications on 12 November 2007. There was an irregularity in the swearing of this affidavit by the wife but there was no objection to the reception into evidence of its contents. On 12 November 2007 the husband filed a response to the wife’s application in a case and an affidavit in support sworn 9 November 2007. Mr Tonkin, the Australian solicitor for the wife, swore an affidavit on 3 January 2008 that was filed on the same day. Mr Daniel Robert Eames, the wife’s solicitor in England, swore an affidavit on 12 November 2007 on behalf of the wife and this was filed on 3 January 2008 also. I will shortly traverse the relevant facts.
The husband was born at B in the United Kingdom in July 1964 and is 43 years old. He presently resides in the suburb of M which is a suburb of Melbourne. He is employed by the Department of Defence. He previously served in the United Kingdom Armed Forces for many years, indeed for most of the parties’ marriage.
The wife was born in August 1958 at S in the United Kingdom and is 49 years old. She now resides at T and is presently unemployed. The parties married in September 1989 in S and resided in the United Kingdom from the time of their marriage until they moved to Australia in July 2006 save and except for periods when either the husband or both of them resided overseas in the course of the husband's military service.
The parties moved to Australia in July 2006. It is quite clear from the affidavit material before me that the parties intended their move to Australia to be a permanent move, not a temporary visit or holiday, and they had gone through the processes of selling up most of their assets and paying off most of their liabilities in England before leaving. As a condition of working in his role for the Australian Department of Defence the husband was required to apply for Australian citizenship: he did so and was made an Australian citizen in December 2006.
The parties separated on or about 3 June 2007 after nearly 18 years of marital cohabitation, and they ceased living together in the matrimonial home at E, Victoria, on 13 June 2007. There are no children of the marriage. The wife returned to the United Kingdom on or about 17 August 2007 and the husband remained in the matrimonial home in Australia until it was sold on 31 August 2007, settlement of the sale taking place on 26 October 2007. Shortly after her arrival in England in August 2007 the wife instituted proceedings for divorce and ancillary relief in the County Court of T, United Kingdom. Those proceedings were issued on 23 August 2007 and she was represented by a local firm of solicitors in instituting those proceedings. The initiating documents are annexed to her affidavit filed 12 November 2007.
The husband instituted proceedings for property settlement in the Family Court of Australia at Melbourne on 3 September 2007. He was at the time of issuing his proceedings aware that the wife had issued proceedings in England for property settlement and other relief (maintenance and divorce).
From the documents filed, it appears that the financial proceedings between the parties in this case will concern the division of the proceeds of sale of the former matrimonial home which are approximately AUD$131,713 and are held on trust by the wife's solicitors David Stagg Tonkin and Co. There is furniture which is yet to be valued, there is a Ford Territory motor vehicle with an estimated value of AUD$23,000. The husband has an entitlement to superannuation pursuant to his employment in the Department of Defence and the trustee of the Military Superannuation Benefit Scheme is the relevant trustee. The husband estimates the current value of that entitlement at AUD$8,500.
In the United Kingdom there is the husband's pension entitlement received from the Armed Forces Personnel Administration Agency at a weekly rate of $639. One of the matters that was in evidence before me was that using the valuation methods contained in the Australian legislation to value such pension entitlements, the present value of this income stream is $633,982. That valuation was presented as an annexure to an affidavit sworn by the wife's solicitor on 3 January 2008 and Mr Weil acknowledged that the person who had prepared the valuation was qualified to do so and frequently prepares such valuations for this court. If the matter proceeds in this court, he thought it unlikely that that valuation would be challenged.
The wife has a pension entitlement in the United Kingdom arising from her (former) employment there and the present value of that is stated by her to be $33,529. The parties also have combined debts of approximately $76,880, some of which is owed to Australian creditors, and a smaller quantity of the debt is owed to creditors in the United Kingdom.
A key issue in the case as argued before me was whether the Australian provisions for treating superannuation as property apply to what is in effect a foreign superannuation fund, namely, the husband's entitlement to a pension arising from his service with the British Armed Forces. In his submissions on this point Mr O'Shannessy on behalf of the wife submitted - and it is correct to say - that sections 90MS and 90MT of the Family Law Act 1975 provide the power for the court to "make orders in relation to superannuation interests of the spouses."
Section 90MD provides that, "Superannuation interest means an interest that a person has as a member of an eligible superannuation plan." Section 90MD provides that:
Eligible superannuation plan means any of the following:
(a) A superannuation fund within the meaning of the SIS Act, [Superannuation Industry (Supervision) Act 1993]
(b) an approved deposit fund,
(c) an RSA, [RSA means a retirement savings account within the meaning of the Retirement Savings Accounts Act 1997.]
(d) an account within the meaning of the Small Superannuation Accounts Act 1995,
(e) a superannuation annuity within the meaning of the Income Tax Assessment Act 1997.
The submissions made by Mr O'Shannessy then turned to the question of what is a superannuation fund under the relevant Act referred to in s 90MD as the “SIS Act”. Firstly, under s 10 of the SIS Act, a superannuation fund is defined as a fund that "is an indefinitely continuing fund and is a provident benefit superannuation or retirement fund of a public sector superannuation scheme." That same provision was relied on by Mr Weil for the husband as evidencing the fact that the Australian legislative provisions to which I have made reference in Part VIIIB of the Family Law Act 1975 apply to the husband's British superannuation fund, because it did not appear to be a matter of controversy that the husband’s UK pension falls within those definitions, being an indefinitely continuing fund, and a provident benefit superannuation or retirement fund.
Mr O'Shannessy's submission was that these legislative provisions do not bring a foreign superannuation fund within the purview of the Australian legislation. In this context he referred to two common law presumptions. Firstly, that Australian legislation is presumed not to have extra territorial effect. This was stated by O'Connor J in the case of Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309 at 363:
Most statutes, if their general words were to be taken literally in their widest sense, would apply to the whole world, but are always read as being prima facie restricted in their operation within territorial limits.
Secondly, Mr O'Shannessy relied on the judgment of Dixon J in the case of Wanganui-Rangitikei Electric Power Board v Australian Mutual Providence Society (1934) 50 CLR 581 at 601:
The principle is, I think, that general words should not be understood as extending to cases which, according to the rules of private international law administered in our Courts, are governed by foreign law.
Mr O'Shannessy also referred to s 21 of the Acts Interpretation Act 1901, which gives statutory effect to these common law presumptions.
Mr O'Shannessy submitted and I accept that there would have to be the clearest statement of intention in the Australian legislation if it was intended that it should apply to bind a third party, such as the trustee of the United Kingdom fund of which the husband is a member, before those presumptions would be rebutted.
In the case of Lesbirel (2006) FLC 93-301 the evidence provided to the court was that a French superannuation fund in which the wife had an interest did not fall within the purview of the Australian superannuation splitting legislation.
That case proceeded on appeal on other grounds - it was common ground at the trial that the Australian legislation did not apply to the French fund – and so it was not an issue that the appeal court had to deal with other than in passing. In paragraph 10 of their judgment the members of the Full Court in that case said:
In dealing with the wife's superannuation the trial judge identified the real question as being whether the superannuation was covered by what was then known as ‘super splitting amendments to the Family Law Act’.
In paragraph 11 of the judgment of the Full Court in Lesbirel their Honours state “the superannuation was treated by the trial judge as a financial resource in the hands of the wife," and indeed there was no argument on the appeal that that was an incorrect finding by the trial judge, namely that the superannuation splitting laws did not apply and that he should therefore treat it as a financial resource in the hands of the wife. The evidence before the trial judge in that case is of some assistance in understanding why the parties adopted the approach that the legislation did not apply to that French superannuation fund.
The evidence was provided by Mr Bourke who is co-author of a leading Australian work on the Australian superannuation splitting legislation and cases. In Lesbirel Mr Bourke's evidence at first instance - as found by the trial judge - was:
The real question with this interest, however, is whether it is covered by the super splitting amendments to the Family Law Act 1975. To be covered, the member must have an interest in an eligible superannuation plan (section 90MD of the Family Law Act 1975).
Then follows the definition of eligible superannuation plan that is set out in paragraph 13, above. Mr Bourke continues (as quoted in the judgment at first instance):
The retirement benefits held in the CAFAT retirement fund do not satisfy any of the limbs of the definition of eligible superannuation plan. In any event, the scheme has been established outside the jurisdiction of Australia and any order the court sought to make would not be enforceable. While the court does not have jurisdiction in respect of property held outside the jurisdiction (see British South Africa Co v Companhia de Mocambique [1893] AC 602 and also Nygh P E, Conflict of Laws in Australia, 6th Ed, Butterworths, Sydney 1995) it is able to make an order in personam (see In the marriage of Perry (1978) 3 Fam LN 77).
Even though the court cannot make an order to split the interests held in the CAFAT Retirement Fund, it will recognise it as a financial resource for the benefit of Edith Lesbirel and take it into account using the factors in section 75(2) of the Family Law Act 1975 before making an order under section 79.
It is quite clear from the case of Lesbirel that the reason the parties acknowledged in that case that the super splitting aspects of the Australian legislation Part VIIIB do not apply, included reliance on the expert evidence of Mr Bourke to the effect that an order made under the Australian legislation is not enforceable against a foreign fund. On behalf of the husband, Mr Weil went to some length to take me to various definitions within the Income Tax Assessment Act 1997 and advanced arguments by which he sought to persuade me that the wife, who bears the carriage and onus in this matter, had not satisfied me that the legislation did not apply, and that I could conclude in the circumstances that it did apply to this particular foreign fund. He advanced other arguments, including the matter raised in Mr Bourke’s evidence (set out above) that an order could be made in personam but primarily, the basis on which he sought to persuade me that the husband's British superannuation fund was amenable to an order of this court was that the wife had not established that the Australian legislation had no application to a foreign fund.
Having regard to the law as stated in the judgments in Lesbirel and as advanced by Mr O'Shannessy in terms of the presumptions to which I have made reference, I am satisfied that the Australian legislation does not apply to the husband's superannuation fund and it would not therefore be open to this court to make a splitting order pursuant to Part VIIIB which would have any effect whatsoever in dealing with the husband's superannuation interests in the United Kingdom as property amenable to an order of this court.
By way of confirmation of that conclusion, a letter was tendered in evidence of which one sentence only was relied on, and it was a letter prepared by the same person who performed the valuation of the husband's superannuation interest on behalf of the wife to which I have made reference. The sentence that was relied on was:
I have checked the APRA register and the UK Armed Forces Personal Administration Agency (or any other UK Armed Forces Pension Plan) is not listed. [“APRA” is the Australian Prudential Regulation Authority]
From the submissions that were made to me (which I accept) it appears that an approved deposit fund if registered with APRA would in fact be amenable to an order of the court. The fact that this British fund is not registered with APRA simply closes another door in my view to the argument that the fund is amenable to an order of this court. It is my view that Part VIIIB of the Family Law Act1975 only applies to superannuation regulated by the laws of the Commonwealth of Australia, not to funds in foreign jurisdictions (unless the foreign fund is registered with APRA) and such an interest should be regarded as a financial resource and taken into account under s 75(2) if indeed the property proceedings were proceeding in this court.
The inadequate recognition that the ‘financial resource’ approach can produce in taking into account an asset of the value of the fund now under discussion, namely, a guaranteed income stream in the payment phase, is to some extent demonstrated by the decision at first instance in the matter of Lesbirel.
A similar decision (although not put before me in argument) to the effect that a foreign superannuation fund was outside the operation of the Australian ‘supersplitting’ legislation and should therefore be treated as a financial resource was made by Moore J of this court in the decision of Cheung v Leung. That is an unreported decision of the Family Court of Australia cited as (2004) FCA 101: see paragraphs 42-43. The decision is consistent with the findings made by the judge at first instance (as endorsed by the Full Court) in Lesbirel.
I now turn to the clearly inappropriate forum test. As I indicated in the introductory paragraph to this judgment, a major focus of the argument before me concerned whether the husband's pension entitlement is not amenable to a splitting order of this court. If it is not, as I have now found, the wife argued that by being permitted to proceed in the UK she will gain a significant juridical advantage, and the prospects of justice being done between the parties in relation to the accumulations made during their marriage would be much greater. That is because the English legislation provides for a splitting order to be made in respect of that fund. When I say ‘splitting order’, it is called a ‘pension sharing order’ and in this context I refer to the affidavit of Daniel Robert Eames sworn 12 November 2007. Mr Eames is an English solicitor who appears, from his affidavit, to be appropriately qualified to express a view about these matters. In his affidavit he identifies section 24B of the Matrimonial Causes Act 1973, as enabling an English court to make a pension sharing order in respect of the husband's British Armed Forces pension pursuant to the divorce proceedings.
Under this legislation, Mr Eames states in paragraph 2 of his affidavit sworn on 12 November 2007:
… the [T] County Court, as a designated divorce county court, may make such an order. It is my professional opinion that. in a marriage of this length and in circumstances where such pension rights have been accrued during the marriage, [T] County Court will make a Pension Sharing Order in respect of the husband's British [Armed Forces] pension.
It was a source of complaint by Mr Weil that that opinion, which does not end at that point, goes no further into discussion of the quantum of such an order that might be made. I have to say that having regard to the Australian legislation and decisions on similar cases with which I am familiar, that does not surprise me at all. Where the non-superannuation assets are relatively modest as is the case here, and the capitalised or notional value of the income stream is a very large capital sum, the court is faced with a very difficult issue in deciding what is an appropriate discretionary order to make having regard to the inability of the owner of the income stream to do anything about realising it other than accepting it on a regular basis. These capitalised valuations, of pension funded income streams however, are part of the Australian legislative scheme and there is clearly a similar provision in the UK legislation, according to Mr Eames’ affidavit, for the valuation of the UK pension to which the husband is entitled and one can reasonably assume that, as occurs in Australia, that provision will enable the English court in determining issues between the parties in this case to do much more than simply treat the amount the husband receives each fortnight from that fund as a source of income that should be taken into account.
I reject the criticism of Mr Eames’ affidavit in so far as it does not prognosticate about what the outcome of the case might be if that legislation was applied to the facts of this case. In his material, the husband has not attempted any quantification of the value of his UK pension. His application for final orders by way of property settlement seeks no order at all in relation to the division of his own pension fund. He does however seek orders that divide the proceeds of sale of the house as to 65 per cent to himself and 35 per cent to the wife, and orders that provide that the parties otherwise retain their respective superannuation entitlements. Having regard to what would be the value of the husband's superannuation income stream if the proceedings were in this court and the fund was amenable to a splitting order, I have to say that that is an extremely unlikely outcome.
What the husband's documentation indicates to me - and this is no great criticism of him - is that in the short time that he had to respond to the situation created by the wife's (unexpected) issue of proceedings in England, he simply did not come to terms with the significance of this entitlement that he has in the context of property cases. He attempts no valuation of it in his financial statement filed in this court and as I have said seeks no relief in relation to it, other than that it should remain his. If he had sought relief in relation to it such as a significant splitting order in favour of the wife, that might bolster his case for a greater than half share of the proceeds of sale of the house. Such an application would, under our Act and Rules, have been required to be served on the trustee of the superannuation fund who would have responded, and, I have no doubt, would have responded by saying that they were not amenable to such an order.
The fact that that situation did not arise is not of central significance in the determination that I am making as to the application of the clearly inappropriate forum test. The High Court of Australia in the case of Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 set out the basis of the test and in a subsequent decision that arose in the context of a family law dispute, the Australian High Court again considered this issue in the case of Henry v Henry (1996) FLC 92-685; 185 CLR 571.
I will start by referring to Voth at page 564 where the majority held, under the heading, “Dealing with forum non conveniens applications”:
It follows that, subject to the question of onus discussed in the preceding paragraph, the principles to be applied in … applications to stay on inappropriate forum grounds are those stated by Deane J in Oceanic Sun …. In the application of those principles the discussion by Lord Goff in Spiliada … of relevant “connecting factors” and “a legitimate personal or juridical advantage” provides valuable assistance.
The High Court in Voth confirmed the rejection by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 of the application by the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460 of the clearly more appropriate forum or natural forum test. There is therefore a significant difference between the courts of Australia and the courts of the United Kingdom as to the appropriate test to be applied in cases such as the present case.
The clearly inappropriate forum test as set out by the High Court in Henry is as follows:
[T]he substance of the test in Voth is simply whether the chosen forum is a clearly inappropriate forum. And, as already indicated, that is to be determined by considering whether continuation of the proceedings would be "oppressive" or "vexatious", in the extended sense in which those words were used by Deane J in Oceanic Sun. (page 83,122 FLC; page 588 CLR)
In the context of local and overseas proceedings, the Henry High Court held:
There are more compelling considerations in favour of a stay of the local proceedings if, as can happen, there are proceedings in another country which has jurisdiction to entertain those proceedings and the proceedings are between the same parties and with respect to the same controversy. (page 83,123 FLC; page 590 CLR)
Further, the High Court stated:
It is prima facie vexatious to and oppressive, in the strict sense of those terms, to commence a second or subsequent action in the courts of this country if an action is already pending with respect to the matter in issue. (page 83,123 FLC; page 591 CLR)
I have already referred to the fact that the Voth High Court held that, in determining whether the local court is a clearly inappropriate forum, "the discussion by Lord Goff in Spiliada of relevant 'connecting factors' and 'a legitimate personal or juridical advantage' provides valuable assistance". In Henry, the High Court added this to the reference to Lord Goff:
In this last regard, Lord Goff of Chieveley expressed the view that legitimate personal or juridical advantage is a relevant but not decisive consideration, the fundamental question being “where the case may be tried suitably for the interests of all the parties and for the ends of justice.” (page 83,121 FLC; page 587 CLR)
I identify the "ends of justice" as a matter that I see as particularly relevant to this application before me, in determining whether the chosen forum is clearly inappropriate.
It was not disputed in the proceedings before me that the authorities referred to establish that the onus rests on the party seeking the stay to establish that the court is a clearly inappropriate forum, and that the power to grant a stay should only be exercised in a clear case.
Now, taking all those together, the most relevant to this determination before me appear both from the focus of argument as it was presented before me and in my own assessment of the relevant matters in this case to be the juridical advantage and the opportunity for the interests of all parties and for the ends of justice to be served by reason of the fact that the English court has jurisdiction to make an order in respect of the husband's pension whereas the Australian court does not, not in the ways provided in Part VIIIB of the Act. Clearly there are connections between the parties in both countries, they spent much longer in England but their time in Australia was much more recent. There is no doubt that they intended their ongoing connection to be with Australia when they came here, but the breakdown of the marriage has produced a situation where the wife has chosen to return to live in the United Kingdom.
Matters of witnesses and evidence are really evenly balanced in this case. The wife and evidence as to the value of the husband’s pension fund and her pension fund are all to be found in England. Proof of some of the debts is to be found in England. The greater number of debts are provable in Australia, but there is no evidence at this stage to suggest that proof of any of the parties’ debts is a matter of controversy. The husband draws attention to the fact that because the wife is seeking maintenance in the English proceedings the current circumstances of his cohabitation will be relevant and that his defacto spouse or partner is resident in Australia. Technology has in recent years provided opportunities for evidence to be received from overseas jurisdictions and notwithstanding the time difference between the two jurisdictions to which Mr Weil drew attention, I am of the view that there is nothing determinative, or even persuasive in the convenience issues as between a hearing in England and here - having regard to the availability of witnesses, or the place in which assets or liabilities are to be found.
Both courts could of course make orders in personam against the husband and wife requiring them to deal with the proceeds of sale of the house in a particular way, and in making discretionary orders for the division of that fund both courts could take into account other relevant matters as required by their legislation. The real difference in this case, however, between the justice that can be done at the end of an 18 year marriage as between this husband and this wife is that only one court, as I have found, has the capacity to make what is in the United Kingdom referred to as a pension division order, what here is referred to as a splitting order. The only court that has that power as I have found is the court in which the wife has issued in England and that in my view is a matter of considerable significance and one that tips the balance very much in favour of allowing the proceedings in the Court at T to continue and staying the proceedings here. That circumstance, not by itself but considered together with all the others, does in my view amount to a clear case within the meaning of the judgment of the High Court in Henry, and in my view the attainment of justice in this case will be much better served if the litigation takes place in a forum that has the capacity to deal with all financial issues arising out of this marriage, noting that in England the wife has instituted maintenance proceedings as well as property proceedings and proceedings for a pension sharing order. The wife has instituted proceedings for a divorce in England and so the English court will be able to deal with all matters arising out of the relationship and its breakdown, and indeed documents tendered to me show that the granting of a divorce may not be far away once this determination is made. In all the circumstances I consider that the Family Court of Australia is a clearly inappropriate forum for this matter to proceed in and I will therefore grant the order sought by the wife staying the proceedings instituted in this court by the husband.
In the circumstance where I have found that this court is a clearly inappropriate forum, it is not necessary for me to consider further the husband’s application for the grant of an injunction to restrain the wife from proceeding in England.
I certify that the preceding forty one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watt
Associate: …
Date: 7 March 2008
Key Legal Topics
Areas of Law
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Civil Procedure
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Family Law
Legal Concepts
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Stay of Proceedings
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Jurisdiction
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Abuse of Process
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