Time Limits for property settlement applications
Under the Family Law Act time limits apply for bringing applications to Court for property settlement in the event of a breakdown of a marriage or a de facto relationship. In the case of married couples the time runs out 12 months after the Divorce Order takes effect and in the case of de facto couples the time runs out 2 years after the date of separation. If married couples or de facto couples miss the above deadlines, they will need to obtain the Court’s permission in order to bring an application out of time.
When does the Court grant permission for out of time property settlement applications?
In order for the Court to grant permission to hear a property settlement application out of time it must be satisfied that:
- hardship will be caused to the applicant or a child of the relationship if permission is not granted;
- The applicant must establish that their claim has a real probability of success.
Once a party establishes hardship, the Court also takes into account the following considerations in determining whether to grant permission or not for an application to be heard out of time:
- The length of the delay;
- Whether there has been a reasonable explanation for the delay;
- Whether any prejudice will be caused to the respondent as a result of the delay.
What constitutes hardship?
Hardship is not defined in the Family Law Act. It is determined by the Court on a case by case basis. However there are two essential elements which the Court considers when determining the question of what constitutes hardship. These are as follows:
- The strength on the merits of the applicant’s potential claim;
- The prospective legal costs in pursuing the potential claim.
For example, if a party establishes that they have a reasonable claim which would probably succeed then it is more likely that the Court will be satisfied that hardship will be suffered by the applicant unless permission is granted for their application to be heard out of time. Therefore the mere loss of an opportunity to bring proceedings or showing that the applicant would be marginally better off if their application was heard, will not be sufficient to establish hardship.
The question of what constitutes hardship was recently revisited by the Family Court in a number of decisions. The different outcomes of those cases serves as an important reminder that the Court will analyse the particular circumstances of each case carefully before deciding whether it is appropriate to grant permission for a property application to be heard out of time.
Edmunds v Edmunds FamCAFC 121(6 July 2018)–out of time property application was successful
In this case the Wife filed an application for property settlement 6 years after the divorce order had been granted in 2009. The parties had been married for 14 years before separating in 2006. The had three children of the marriage all of which lived with the Wife after separation. The youngest child was 17 at the time of the hearing. At the commencement of the marriage the Husband owned one property of unknown value and another property of minimal value. The Wife had negligible assets. The Husband received a termination payment (redundancy, annual and long service leave) of $231,337 from his employment within 12 months of their divorce. The Husband had worked for the same employer throughout the relationship and ceased employment about 3 years after separation. Further the value of the Husband’s superannuation had grown substantially after separation despite not making any further contributions to it after leaving his employment.
After separation the parties had reached an informal agreement regarding the division of their assets. The Wife asserted the reason why she had not commenced proceedings earlier was because she had relied on the informal agreement and reasonably believed that she did not need to seek an order for the division of their assets. When it became apparent that the Husband had failed to comply with the Agreement, she commenced proceedings.
At the time of the hearing the parties had a jointly owned home worth about $900,000, the Husband’s superannuation worth about $617,000 and some other assets of modest value. The Wife had in her possession about 31% of the total assets. The Wife and the children lived in the jointly owned home rent free after separation for a period of about 10 years whilst the Husband paid the rates and the insurance. Otherwise the Husband did not pay the Wife child support after separation. In her application the Wife sought that she retain about 61% of the total assets.
Initially the Court dismissed the Wife’s claim. On appeal, the Full Court upheld the Wife’s application and found that there was a real probability that the Wife would receive a property settlement order significantly greater than 31% of the parties’ assets. In reaching this conclusion, the Court accepted that the Wife had made the greater contributions towards the welfare of the family during the marriage as well as after separation. She had also indirectly contributed to the Husband’s termination payment of $231,000 and his superannuation benefit of $617,000. The Court also accepted that the Husband had made the greater financial contributions as a result of bringing a property at the commencement of the marriage as well as an inheritance during the marriage.
The Court found that the Wife did not earn a significant amount of money and owed money to family members as she had borrowed money from them for the payment of school fees. Overall the Court was satisfied that the Wife’s ability to rehouse herself would improve if she did not simply rely on her present legal entitlements and was granted permission for her property claim to be heard out of time.
Gadzen & Simkin  FamCAFC 218(16 November 2018) –out of time property application was unsuccessful
The de facto Wife brought property (and spousal maintenance) proceedings 7 years out of time. The parties had been in de facto relationship for 8 years and at the time of the hearing they were both married to others. There were no children of the relationship. At the commencement of relationship the de facto Husband had assets worth $4,75 million whereas the de facto Wife’s assets were worth $83,000 at the time.
During the relationship the de facto Wife was responsible for the “tenant paperwork” and homemaker duties. She also had input into the design process of one of the parties’ properties. She also worked in one of the de facto Husband’s companies and was earning $54,000pa. She in fact continued working for the above Company for about 4 years after separation. It was accepted by the Court that the de facto Husband had made the overwhelmingly greater financial contributions because of his initial financial contributions as well as the financial contributions he made during the relationship.
Shortly after separation, the parties had reached an informal agreement whereby the de facto Husband was to purchase a property in the de facto Wife’s name for a value up to $450,000, pay her rent of $400 per week until the above property was purchased ( which the de facto Husband did for a period of 18 months) as well as making a number of other payments for her benefit. The de facto Husband had paid a deposit of $100,000 towards the purchase of the above property and for a period of 7 years after separation he continuously paid the interest only mortgage repayments of $2000 per month. In mid-2013 (about 4 ½ years after separation) the de facto Wife moved out of the above property and into her Husband’s property and since that time she was receiving the rent from the above property without making any contributions towards the mortgage. Since separation, the de facto Wife had received from the de facto Husband total payments of about $467,000 including a $100,000 contribution towards her superannuation. At the time of separation the de facto Wife’s superannuation was worth $213,000 (inclusive of the $100,000 contribution). Despite the above payments, at the time of the hearing, the de facto Wife’s assets had a total value of $134,600 and no longer held any superannuation. She did not account for the contributions she had received from the de facto Husband.
The de facto Wife’s prospective legal costs for pursuing her claim were estimated to be between $100,000 to $150,000. In dismissing the de facto Wife’s application, the Court said that it was “unable to see how the de facto Wife’s potential claim could conceivably approach, let alone exceed”, what she currently held in terms of assets together with the total payments she had received from the de facto Husband after separation.
Why are the above cases important?
The different results in the above cases highlight the importance of obtaining timely advice about your property entitlements and entering into a legally binging property settlement before the limitation period expires in order to avoid the uncertainty of making an application out of time which may ultimately be unsuccessful.
If you have separated from your spouse and you require assistance with finalising your property settlement agreement you should seek legal advice at the earliest possible opportunity. Further, if you are concerned that you may have missed the deadline for seeking a property settlement, you should discuss your case as soon as possible with our Family Lawyer, Ms Anthi Balafas on (02) 9299 4912 who is experienced in this area, to determine your prospects of success if you decide to commence property proceedings out of time.
Disclaimer: This information is not intended to constitute legal advice. it is general information only and should not be relied upon in specialist family law advice.