When a party separates from a relationship there are time limits in place for the property settlement to be undertaken that is, the division of assets. If the parties were married, this is within 12 months of a divorce becoming effective; or for a de facto relationship, within 2 years of separation.
These time limits are strictly applied by the Court and are there to ensure that there is finality to a relationship, to achieve public interest and the principles of justice and equity. Outside of this time limit, the Court’s permission must be sought to commence proceedings “out of time”. Evidence must be provided to the Court explaining the delay and hardship. This is a threshold requirement which must be determined before the Court will even consider property settlement adjustment.
This power of the Court to permit proceedings out of time is an exception, not a rule. In practical terms, making this application to the Court will require the filing of an Initiating Application setting out the Orders a party seeks, including that leave be granted to proceed out of time. This will need to be supported by an Affidavit which sets out, amongst other things:
- What steps have been taking during the limitation period i.e., has there been negotiations, a mediation, etc;
- Why the proceedings were not filed within the limitation period;
- What hardship there will be to the party if the Court does not grant leave.
The “hardship” suffered is not necessarily what first comes to mind when thinking of the term i.e., necessity or poverty. The guiding authority on the issue of “hardship” is Whitford & Whitford (1979) FLC 90-612 wherein the Court states, “… the Court must be satisfied that hardship would be caused if leave where not granted, implies that 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 if leave were not granted. Further, the matter with which the Court is concerned is not whether the applicant or a child is suffering hardship, but the question is whether the applicant or a child would suffer hardship…”
This concept of merit is informed by the requirement in section 79(2) of the Family Law Act 1975 that “The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order” and the longstanding authority of the decision in Stanford v Stanford (2012) 247 CLR 108.
If the party’s case does not have merits or probability of success, then leave will not be granted. If, on the other hand, the Court finds hardship, it will then look to whether or not leave should be granted to proceed out of time. These discretionary considerations include whether the costs to be incurred are proportionate to the dispute i.e., that the benefit the party will receive will be greater than the legal costs they will incur in proceeding to a trial (Paletta & Quaney [2020] FCCA 1616).
Another consideration is the explanation for the delay. The decision in Waldmann & Paddack [2024] FedCFamC1A 100 considered this issue. In this case the de facto wife was seeking to bring the proceedings 2.5 years out of time. The Court was satisfied that hardship would be suffered if leave were refused, however, was not satisfied that the de facto wife’s explanation for the delay was caused by not being aware of the time limit. The Court considered that ignorance for the law was inadequate because in permitting the application on those grounds would invite any self-represented litigant to circumvent limitation periods, which goes against public policy.
The Court will finally consider the prejudice to be suffered by the other party if the leave application were granted. The longer the delay, the more likely it is that the Court will scrutinise the impact of leave being granted on the other party. This is because, on the face of it, the authorities suggest that any application filed beyond the statutory time limit will be prejudicial to the other party (Brisbane South Regional Health Authority v Taylor [1996] HCA 25).
The legal costs to be incurred by the other party is not necessarily going to prove prejudice, given that if proceedings were brought in time the other party would have incurred them anyway, but may where the legal costs to be incurred are disproportionate to the amount of the dispute.
Other factors that may amount to prejudice include where one party has actedon the reliance that the matter was finalised, and has gone on to restructure their finances, or a where a subsequent loss of records pertaining to the matter prejudices their ability to provide evidence in respect of matters such as contributions.
Although there is a process for commencing proceedings out of time, there are no guarantees. The best way to avoid the costs, risks and delay in having to run a threshold hearing is to ensure that parties promptly obtain legal advice following a separation, and negotiate a property settlement, or commence proceedings in advance of the limitation period expiring. Parties do not need to wait for divorce, or anything else, to undertake a property settlement. In fact, we recommend that the sooner the property settlement is undertaken post separation, the less complicated it is likely to be.
Written by
Ashlea Taylor
Family Law Solicitor
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