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Is there a time limit on property settlement?

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If you have separated from your spouse or partner, you might be asking yourself is there a time limit for a property settlement?  It is critical you are aware there are time limits for a property settlement after divorce if you are married, or a property settlement after separation if you are in a de facto relationship. 

Our experienced team of family lawyers at Forge Legal can advise you as to the time limits that apply to your property settlement so you don’t miss the critical date and potentially lose your rights to make property settlement claim.

What are the time limits for a property settlement after divorce / separation?

If you are married the time limit is one year after your divorce becomes final.  You do not need to wait until you are divorced to commence your property settlement and any claim for maintenance. 

If you are in a de facto relationship the time limit is two years from the date of separation.

The property settlement process can start any time after separation.  We recommend you commence property settlement negotiations soon after you have separated so that if you are able to reach agreement your property settlement can be finalised without having to go to Court.  If you do not start the property settlement process shortly after you separate, or you wait until after you are divorced, there is a risk that negotiations may take longer than you expect.  You may then have to file a court application so that property settlement proceedings are commenced before the time limit ends.

If you have not finalised your property settlement you need to commence court proceedings before the time limit passes or you may forever lose your rights to seek a property settlement.  Once the time limit passes, if you have not filed proceedings, unless both parties consent to an application being filed out of time, you need permission from the Court before you can make an application for property settlement.  This is known as obtaining the ‘leave of the Court’ to proceed out of time.  Leave is usually only granted in exceptional circumstances and there are strict grounds that must be met. 

What if the time limit has already passed?

There may be certain factors as to why you have not finalised or commenced proceedings for property settlement before the time limit passed.  Our team of expert lawyers at Forge Legal have helped many clients obtain the leave of the Court to proceed out of time and achieve successful outcomes as to their property settlement.

Grounds for obtaining leave to proceed out of time for property settlement?

In order for the Court to grant leave to proceed out of time you need to satisfy the Judge that:

  1. Hardship would be caused to you, or a child of the relationship if leave is not granted;
  2. You have a real probability of being successful in your property settlement claim;
  3. In relation to claims for maintenance, at the end of the period before the time limit expired, your circumstances were such that you would have been unable to support yourself without an income tested pension, allowance or benefit.

If you satisfy these requirements the Judge will then also consider the following factors in determining whether to exercise his/her discretion in granting leave to proceed out of time:

  • Length of the delay outside the limitation period;
  • Reasons for the delay;
  • Strength on the merits of your case;
  • History of the proceedings;
  • Conduct of the parties;
  • Any likely prejudice and consequences to be caused to the other party or third parties if leave were to now be granted;
  • Degree of hardship likely to be suffered if leave is not granted;
  • Weighing the desire to pursue a remedy out of time against impinging on the capacity of the parties to proceed with their post separation lives free of prospective litigation.

The overall factor that the Judge will consider is whether granting leave will do justice between the parties.  The onus of proof is on you, the applicant party seeking to proceed out of time.


Cases

In Hertwig & Hertwig [2018], leave was sought by the husband to commence property settlement proceedings some four months after the limitation period.  The husband had attempted to commence proceedings about two days before the limitation date expiring but encountered difficulties with the filing of the documents.  It was asserted by the husband that the wife had diverted a property, being a significant asset, to a trust entity controlled by her parents, in circumstances where prior to separation the property had been financially supporting the parties and their children.

The Judge considered that the consequence for the husband if leave was not granted was that he would be prevented from asserting any right to an interest in the property (now held in a trust controlled by the wife’s parents) based on a consideration of the various contributions the husband made during a relatively lengthy relationship, other than at the discretion of the trustee of the trust.

The Judge considered the loss of the right to institute proceedings was a significant consequence to the husband, particularly given on his case the property constituted the only asset of the property pool of the parties.  The Judge took into account that the wife had taken the benefit of a significant asset which financially supported the parties and their children before separation and if leave was not granted the husband would lose the opportunity to seek orders in relation to the property.

In this case, the parties were still to resolve parenting matters.  The Judge granted leave for the husband to institute proceedings for a claim for property settlement taking the view that the potential for injustice to the husband of being unable to pursue a property settlement if leave was refused, was more significant than any prejudice to the wife of having to engage in property settlement proceedings at the same time as the parties were engaged in finalising their parenting dispute.

In Edmunds & Edmunds [2017], neither party commenced proceedings within the limitation period.  The wife sought leave to proceed with a property settlement application 6 years and 9 months after the time limit had expired.  The Judge noted that the wife as the applicant had the onus (duty) of proving the fundamental question, that the justice of the case required leave to be granted.  It was not for the husband as respondent to prove whether the application to proceed out of time should be granted.

The parties were married for around 17 years and had 3 children, the youngest being seventeen at the time the application was made by the wife.  When the parties commenced living together the husband had an interest in 2 properties with his first wife and the wife had little assets of value.  During the relationship, the wife’s parents loaned/gifted the parties $25,000 which was used towards the purchase of a property that was renovated and later sold.  When the parties separated they owned 2 properties in joint names and had superannuation.  The total net value of the asset pool was around $552,000.  By the time the wife’s application for leave was before the Court, the husband’s asset position had become significantly greater than it was at the time of separation.  The wife contended there was an informal agreement as to property settlement but the husband denied this and there nothing was ever formally documented.

In this case, the Judge considered:

  • the financial and non-financial contributions of the parties;
  • all of the evidence given by the parties;
  • the likely percentage division if a Court was to determine a property settlement claim, in comparison to the value of the assets already retained in each party’s own name;
  • the likely costs to be incurred by each party if leave was granted and property settlement proceedings pursued;
  • the significant prejudice to the husband in responding to the wife’s claim for property settlement, including the passage of time on the availability of documents and witnesses and his recollection of relevant matters from 25 years prior;
  • the length of the delay, being the limitation period had expired 6 times over;
  • the wife’s failure to take any action despite being aware of the time limit and her inadequate explanation for the delay;
  • the wife’s actions after separation not being likely to raise a reasonable expectation she would later make a claim for property settlement.

The Judge refused to grant leave for the wife to proceed with a claim for property settlement on the basis that hardship had not been proved.  Consequently, the parties were left to reach agreement or seek orders through State based laws for the properties to be sold, meaning the proceeds would be divided equally as the properties were held in joint names.

Legal Advice

If you require legal advice as to your likely prospects of obtaining leave to proceed out of time, contact our family lawyers at Forge Legal.  Act now, don’t delay as this may impact on your prospects of success.  Our friendly and understanding team will provide you with the expert advice you need and guide you through the property settlement process.

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