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When to Complete a Property Settlement – Leave to Proceed Out of Time

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By Rhiannon Foley

Time limits

The Family Law Act 1975 (Cth) (“the Act”) prescribes certain limitations on when parties to a marriage and/or parties to a de facto relationship can make an application to the Court with respect to property matters.

These limitations are set out under section 44 of the Act which provides that:

  1. Parties to a marriage must institute proceedings within a period of twelve months since the date that their Divorce Order took effect – section 44(3); and
  2. Parties to a de facto relationship must institute proceedings within a period of:
    • Two years after the date of final separation; or
    • Twelve months after a Financial Agreement entered into between the parties to the de facto relationship was set aside or found to be invalid – section 44(5).

These time limits however will not apply if proceedings are brought before the Court with the consent of both of the parties to the marriage or de facto relationship.

Leave to proceed

If the time period to make an application to the Court with respect to property matters has expired, the Court may still ultimately decide to hear the application. Sections 44(4) and 44(6) of the Act bestow upon the Court the discretion to grant parties to a marriage or a de facto relationship leave to proceed “out of time” if the Court is satisfied that:

  1. Hardship would be caused to a party or a child of the marriage/de facto relationship if leave were not granted; or
  2. With respect to an application for maintenance of a party to the marriage/de facto relationship, the party’s circumstances were, at the expiration at the “time limit”, such that they would have been unable to support themselves without an income tested pension, allowance or benefit.

Establishing hardship

In the decision of Whitford & Whitford [1979] FamCA3; (1979) FLC 90-612, the Full Court noted that:

In ordinary parlance, hardship means something more burdensome than “any appreciable detriment”. We consider that in subsec. 44(4) the word should have its usual, though not necessarily its most stringent, connotations.

(“the Whitford principles”)

This position was supported by the Full Court in the decision of Sharp v Sharp [2011] FamCAFC 150; (2011) 50 Fam LR 567 where it was observed that:

… it is apparent that an assessment of hardship requires the court to consider whether the applicant would suffer a substantial detriment as a consequence of the loss of the right to institute proceedings, although that detriment, in the circumstances of the particular matter, may not be entirely related to financial considerations.’

Sufficient likelihood of success

In the reasons for decision in the recent case of Hardwick & Hardwick (No 2) [2022] FedCFamC1A 216 (“Hardwick”), the Full Court made reference to the Whitford principles and commented that:

The applicant for relief’s prospect of success in the proceedings, if leave is granted, is relevant to both the question of hardship and the second task undertaken by the Court, which is to consider matters going to the exercise of discretion generally. This is because “[if] the probable result of the hearing on the merits is that hardship is not likely to be alleviated, then the Court cannot be satisfied that the applicant would suffer hardship if leave were not granted”: V and S [2006] FCWA 2 (“V and S”) …

… The appropriate test to apply is whether the applicant for relief had “sufficient likelihood of success” to prove hardship.’

Other relevant considerations

The Full Court in Hardwick went on to say that in the event that the Court finds that hardship would be suffered if leave to proceed “out of time” were not granted, it is then necessary for the Court to consider other matters going to the exercise of discretion. The Court cited the other potentially relevant considerations as to the exercise of discretion as set out in V and S as follows:

  1. The extent of the delay and the reasons (or absence of reasons for the delay);
  2. The extent of the hardship the applicant would experience if leave were not granted; and
  3. The extent of the prejudice that would be caused to the respondent if leave were not granted.

Don’t get “caught out” by time limits

Going through a separation is difficult, and most people are not ready to ready to commence the property settlement process immediately after separation.

While there are a few steps to go through under the Pre-Action Procedures before parties should start considering bringing an application before the Court with respect to property matters, it can be helpful to diarise the time limits so you don’t get “caught out” later down the track.

If you require legal advice or representation with respect to your Family Law matters, please contact our highly experienced Family Law Team at MST Lawyers on (03) 8540-0200 or at familylaw@mst.com.au