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Property Settlement – Be Aware - Time Limits Apply

21/11/2021

Obtaining a divorce from your spouse or separating from your partner does not resolve all the legal rights and liabilities in relation to matrimonial or relationship property that arise by reason of having been married or having been in a de facto relationship. 

Watson & Watson

In a recent case Watson & Watson advised the former husband in a case where his former wife had commenced proceedings in the Federal Circuit Court of Australia years after their separation and years after their divorce.  The limitation period for the commencement of proceedings had long expired. 

The background facts were that the husband and wife separated some years prior to the ex-husband consulting Watson & Watson.  After separation, the husband waited for two years before making an application to the Federal Circuit Court of Australia for a divorce.  The Federal Circuit Court of Australia granted the husband a divorce. 

The time limitation periods applying to the commencement of property proceedings commence on the date that the Divorce Order became final. 

It had not been imperative in the husband’s mind for him to commence proceedings as all the property that existed was registered in his sole name.  The wife lived in a property registered in the husband’s sole name however, did not make any application for property division. 

Some years after the making of the Divorce Order and after the expiration of the limitation period applying to commencement of proceedings, the ex-wife commenced proceedings in the Federal Circuit Court of Australia. 

The husband was surprised by this action as he thought that the whole issue of property division had been resolved at the time the Divorce Order was made.  He sought advice from Watson & Watson as to his rights and obligations. 

Outcome and Settlement

Watson & Watson advised the husband that the ex-wife was outside the time allowed (namely 12 months from the date the divorce took effect) for the commencement of proceedings; however the proceedings commenced by the wife sought leave pursuant to section 44 of the Family Law Act 1975 to commence proceedings out of time. 

Below we refer to the law and the factors that the Family Court and Federal Circuit Court considers when determining whether or not to grant leave to commence and continue the proceedings out of time. 

Watson & Watson advised the husband that the wife had a poor explanation for delay but had demonstrated hardship.  The practical situation was that the wife lived in a home that was registered in the husband’s sole name, had a low income and if the husband did not allow her to continue living in the home, she would become homeless. 

Watson & Watson took the view that on balance, the Court was likely to grant the wife leave to proceed out of time and that in those circumstances, the proper course of action her was to try to resolve the matter on the best possible financial basis that could be achieved. 

The matter proceeded to Conciliation Conference in the Federal Circuit Court of Australia and the matter was resolved on the basis that the wife would receive some property but that upon receipt of that property, she would have no further claims against the husband in the future for any further financial support.  The settlement reached was documented by the filing of Consent Orders which were approved by the Federal Circuit Australia and the entry by the parties into a Binding Financial Agreement excluding the right to any future claim by the ex-wife for periodic spousal maintenance. 

What is the Law

The Family Law Act 1975 imposes time limits for the commencement of proceedings for property division and spousal maintenance.  These time limits are known as Limitation Periods.  The Courts do not allow commencement of proceedings at any time a person may decide that he or she wishes to commence proceedings.  The failure to file an Application to commence proceedings in Court before the limitation period expires means that an Application cannot be filed or proceed in the Court without the Court’s leave (permission).

How Long do you Have to Commence Proceedings? 

If You Are Married

In the case of married persons, the Application for property division must be filed with the Court within 12 months after the date on which the Divorce Order took effect or the date of the making of a Decree of Nullity of Marriage.  

If You Are in a De Facto Relationship

In the case of a person in a de facto relationship, the Application for property division must be filed in the Court within 2 years after the end of the de facto relationship. 

Commencement of Proceedings Outside the Limitation Period – Leave of the Court is Required 

Proceedings which are not commenced within the applicable Limitation Period will not be allowed to proceed through to Final Hearing before the Court grants leave for the Application to proceed.  The Court can grant an extension of time and allow an Application filed late to proceed, but there are matters that must be satisfied before the Court will grant leave.

Onus of Proof

The Applicant in a case bears the onus of proof and must establish his or her grounds to proceed. There must be evidence of hardship as well as an explanation for the delay.  The determination of whether leave should be granted can be determined as a threshold matter before the case has been listed for hearing or at the commencement of final hearing.  The Court will examine the evidence in support of the Application to proceed out of time. 

When Will The Court Grant Leave

The Family Law Act 1975 does not permit the Court to grant leave unless it is satisfied that: 

(a)      Hardship would be caused to a party to the relevant marriage (or de facto relationship) or a child if leave were not granted; or 

(b)      In the case of proceedings in relation to the maintenance of a party to a marriage – that, at the end of the period within which proceedings could have been instituted without the leave of the Court, the circumstances of the Applicant was such that the Applicant would have been unable to support herself/himself without an income tested pension, allowance or benefits. 

(c)      The applicant for leave to proceed out of time must provide to the Court an explanation of the reason for the delay and failure to commence the proceedings with the limitation period. 

How does the Court approach the question granting leave to a person who has not filed within the time limitation periods?

In deciding a Leave Application, the Federal Circuit Court and Family Court of Australia:

  • Is not required to undertake a detailed hearing of the whole claim on its merits. 
  • Does not ask whether the claim would be successful overall;
  • Will determine as a threshold issue whether hardship would be caused to the Applicant by denying the right to pursue the claim. 
  • Will consider the explanation for delay. 

What Constitutes Hardship?

The Court may take a generous approach to an Application for Leave to proceed out of time.  The test for hardship is normally satisfied by showing that the Applicant has a prima facie claim of some consequence and will be significantly worse off if leave is not granted but it is not necessary to show poverty.  Hardship will not be established by merely showing the Applicant would be marginally better off, if leave were granted. 

Explanation for Delay

The Court will require evidence explaining why the proceedings were not commenced within time. 

Gadzen v Simpkin - Decision of the Full Court of the Family Court of Australia 

The case of Gadzen v Simpkin confirmed that the legal test for establishing hardship requires a consideration of the merits of the Application and whether there was a reasonable case to be heard

The Full Court of the Family Court heard the Appeal and found that the primary Judge failed to apply the test correctly and had only considered the Applicant’s de facto Wife’s financial position and had omitted to consider the costs associated with a case and the overall merits of her Application. 

If you are proposing to seek financial/property settlement with your estranged spouse or de facto from whom you have been divorced or separated and you are outside of the limitation period due to unforseen circumstances or you are within the time limitation period, our highly experienced Senior Family Law Solicitors can assist you down this sometimes challenging route.  Do not delay please contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your matter and seek appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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