Learn what time limits apply to file for property adjustment orders.
Are there time limits for me to apply for my property settlement entitlement?
Yes. It is important to seek legal advice from an experienced Family Lawyer to know what your property settlement entitlement is and what time limits apply to you in the specific circumstances of your case.
Is there a minimum time limit you have to wait before formalising your property settlement?
No. You can do your property settlement as soon as you want after separation. However, it may be wise to take some time to emotionally adjust to the separation prior to formalising division of your assets.
What is the maximum time limit to commence proceedings to formalise your property settlement?
You must file your application for property settlement/spousal maintenance within the following time limits:
- If you are married – 1 year after your divorce becomes final: s44(3) Family Law Act;
- If you are in a de facto relationship – 2 years after separation: s44(5) Family Law Act.
If you are negotiating with your ex partner and you are approaching your time limitation period, and you have not reached an agreement, you will need to commence court proceedings within the time limitation period to stop the clock, so as to preserve your rights, or you may lose your right to pursue a property settlement with them. A negotiated agreement is still possible after court proceedings have been commenced. The court will happily make orders at any time during the proceedings by consent of the parties.
If you are married, we recommend not filing your application for divorce until you have agreed on your property settlement as otherwise the clock will start ticking for you to reach an agreement and formalise that agreement within 1 year of your divorce.
After the time limitation period has lapsed, you cannot commence property settlement/spousal maintenance proceedings without permission (leave) of the court. The Court will not always grant leave to proceed where an application is made out of time.
The court will require you to show the reasons why you were not able to make the application for property adjustment orders before the time limits lapsed.
We highly recommend seeking legal advice from an experienced family lawyer as soon as you separate to avoid missing out on your entitlements.
What if the time limitation to formalise your property settlement has lapsed?
The Court has discretion to grant a person permission (leave) to commence proceedings outside of the time limitation if they can prove that hardship would be caused if they are prevented from making a claim outside of the limitation period: s44(4) and s44(6) Family Law Act.
The three main elements the applicant will need to establish to make out hardship are:
- The denial of the claim would cause the applicant or a child hardship;
- a Prima facie case (that is, a case that is likely to be successful on face value);
- An adequate explanation of the delay.
Whilst all three elements are relevant, it may be that the hardship likely to be suffered outweighs any inadequate reasons for the delay.
If the above are proved, the court will look at whether there would be any prejudice suffered by the Respondent if leave were granted.
Element 1 – Will a party or a child suffer hardship if leave is not granted?
Hardship is defined as substantial detriment: Whitford & Whitford (1979) 24 FLC 90 – 162.
Hardship does not mean poverty. Hardship can be made out regardless of the financial circumstances of the applicant seeking leave. A person in relatively affluent circumstances may be able to demonstrate relative ‘hardship’. His or her loss of a prospective entitlement to property and his/her inability to have property of the parties adjusted, may constitute hardship.
The loss of the right to institute proceedings itself is not a “hardship”, rather, it is the consequences of the loss of that right. In assessing hardship, the Court is concerned not with whether the applicant is currently suffering from hardship, but whether denying the applicant the right to initiate court proceedings will cause injustice.
In assessing hardship, the court must be satisfied that the costs the applicant will incur in pursuing the claim are not likely to outweigh the any benefit that party is likely to receive: Gadzin & Simkin [2018] FamCAFC 218.
Element 2 – A reasonable prima facie case
The Applicant seeking to commence proceedings out of time must establish a prima facie case, in other words, that the case has a reasonable probability of success.
When making an assessment as to whether there is a reasonable prima facie case, the court does not undertake a detailed analysis of the merits of each party’s case, as if it were a preliminary hearing, as each of the steps under s79 carry with it subjective judgments. Rather, the court’s task is to determine whether, if the evidence remained the same, bearing in mind the subjective judgments required at a hearing, the applicant would have a reasonable probability of success in obtaining a property settlement in his/her favour: Hedley & Hedley.
In Gadzen & Simkin [2018] FamCAFC 218, the Court determined on appeal that the Trial Judge had erroneously failed to give consideration to whether the Wife had a prima facie case and the costs of pursuing the claim. The unchallenged evidence was that it was an 8 year relationship, the Husband had introduced 98 of the assets, the Wife had received $467,000 in benefits post separation which was some years ago, she had net assets of $134,000 and she would spend $150,000 pursuing her claim. The original decision was overturned and the Wife’s application was dismissed on the basis that she had not established she would suffer hardship as the Wife was unlikely to receive any further adjustment over and above what she had already received.
Element 3 – Exercise of Discretion – is there an adequate explanation for the delay?
If the hardship requirement and the prima facie case requirements are satisfied, the Court then looks to whether it should exercise discretion and grant leave.
Due weight is given by the Court to the policy in s44(3) and s44(5) and s81 of the Family Law Act, that financial relationships between parties be brought to finality within a reasonable time frame hence the court considers the the following matters in determining whether to exercise discretion to grant leave:
- The length of the delay;
- the reasons for the delay;
- conduct of the parties;
- the merits of the applicant’s case; and
- the degree of hardship which would be suffered by the Applicant if leave were not granted;
- the degree of hardship suffered by the respondent if leave were granted;
- whether any previous order/provision of property has been made: In the Marriage of Whitford.
- The fundamental question – whether the extension of time will enable the Court to do justice between the parties.
When applying for leave to institute proceedings out of time, the Applicant should demonstrate to the Court that they have adequate reason for their delay. To do so, applicants must detail the efforts they have made to resolve property settlement matters in a timely fashion.
The significance of the delay will depend on the circumstances of the case. A lack of explanation for the delay is not fatal but it is a factor the court will consider.
In the case of Ordway & Ordway [2012] FMCAFAM 624, leave was granted for the Wife to institute proceedings 26 years out of time in circumstances where she had an informal financial agreement with the Husband whereby the Husband had promised to transfer a property to the Wife and she believed this would occur, the wife was employed by the Husband and did not want to put her employment at risk and was concerned about disrupting the status quo by instituting proceedings, there was a significant power and financial imbalance between the parties, the Husband was aware of the legal position and the Wife was not and the wife took appropriate action once the husband advised her that he would not transfer the property and she subsequently became aware of her legal position.
In the case of Neil & Kholer [2019] FCCA 281, The court granted leave where the Applicant’s explanation for the delay was (despite having a solicitor prior to the time limitation lapsing) that she lacked understanding of the time limit applicable and because of personal difficulties (bi-polar, stress, anxiety). The Court inferred the possibility that she had received inadequate legal advice and that the delay was not her fault personally. Her explanation of the delay was an adequate explanation in the circumstances.
But we already did our property settlement? Why do I need to formalise it?
If you have separated and are yet to formalise your property settlement with your ex partner, you should do so without delay, by way of a consent order filed in the Family Court of Australia.
It is important to legally formalise your property settlement agreement for two reasons:
- It makes the deal legally binding so your ex partner can’t back out of it at a later date;
Making an agreement legally binding ensures you get what was agreed and there will be legal ramifications if your ex does not follow through with the deal.
- It protects you in the future from a claim by your ex partner in relation to your current and future acquired assets.
It is important to be aware that any oral agreement or even a written one signed by you and your ex partner in front of a justice of the peace which sets out the division of your assets, has no legal effect. Therefore, it is vital for you and your ex partner to legally cut your financial ties by signing a consent order, so that you can move on with your life without potential litigation hanging over your head. Say you broker a deal with your ex partner amicably after separation and the deal is honoured by you handing over an asset or a sum of cash to them, what’s to stop your ex partner from coming back and making a claim over another piece of your asset pool at a later date? Your increased superannuation, your new house, that new car you have purchased, all of it will fall under the umbrella of the pool of assets that your ex can potentially make a claim from, if you fail to legally formalise your property settlement.
Learn More
If you would like more information on similar topics, check out the following information and articles:
- Why you should formalise your property settlement
- When can future inheritances be taken into account
- How do I apply for property and financial orders
You can also check out our family law video on this topic: Time Limits on property settlements.
Our advice: formalise your property settlement ASAP
We recommend that you seek legal advice promptly after separation to legally formalise any agreement reached with your ex partner, to ensure you are not caught outside of the legal time limits.
Are you divorced or have you been separated from your partner for a long time and are yet to resolve your property matters?
If yes, it is extremely important that you seek legal advice as to your ability to commence court proceedings out of time.
The longer you wait, the more you prejudice your right to litigate.
For more information, contact us today and book a reduced rate initial consultation with one of our family law experts to have a confidential discussion about your specific circumstances.
