The Family Law Act 1975 (“the Act”) sets out the time period in which both married and de facto couples have to bring an Application with the Court for an alteration of property interests. Broadly, the Act provides that:

1. parties to a marriage may not bring an Application after the date which is 12 months from when their divorce Order takes effect as per section 44(3) of the Act; and
2. parties to a de facto relationship may not bring an Application after the date which is two years from the date of separation as per section 44(5) of the Act.

The above is referred to as a limitation period and it is the last date that a party may file an Application with the Court without first having to seek leave of the Court to bring an Application “out of time”. This means that if you have not finalised your property settlement before your limitation date has lapsed, there is no guarantee that the Court will grant permission for an Application to be brought in the future, even where there has been no property adjustment made.

How does the Court determine whether to grant leave?

Section 44(4) and 44(6) of the Act sets out that the Court shall not grant leave to a party to a marriage or a de facto relationship respectively, unless it is satisfied that hardship would be caused to a party to the relevant marriage or a child if leave were not granted.

In the event that the Court is satisfied as to hardship, the Court must then determine whether to refuse or grant leave to the party under the second limb of the test.

What constitutes hardship?

In assessing whether the Applicant would suffer hardship if leave to bring the Application out of time were not granted, the Court has opined both that the usual definition of ‘hardship’ should be adopted, though not necessarily its most stringent connotation and that the hardship must be more burdensome than “any appreciable detriment”.

Where hardship has been established, when will the Court grant leave?

Even where the Court has established that hardship would be caused if leave were not granted, the Court may still, in exercising its discretion, refuse leave should it be determined that the hardship to be suffered by the Applicant would be outweighed by the prejudice to the Respondent in allowing the Application to be brought after the time limitation has lapsed:

“… a desire to pursue a remedy out of time must be compared to the necessity for parties to proceed with their post separation lives free of the spectre of prospective litigation.”

The Full Court has outlined that some of the factors to be considered in exercising the Court’s discretion to grant leave include:

1. the length of delay;
2. the reasons for the delay;
3. any prejudice to the Respondent caused by the delay;
4. the strength of the Applicant’s case; and
5. the degree of hardship which would be suffered if leave were not granted.

Ultimately, the chief consideration is the overall requirement to do justice between the parties.

As outlined above, the decision to not formalise your property settlement carries with it an inherent risk that an Application could be brought before the Court at any date in the future, and no amount of time having passed since separation offers the Respondent to that Application certainty that the Court will not grant leave for the Application to proceed. Given this risk, it is important to take steps to formalise your property settlement so that you are able to move forward after your separation with financial certainty.

If you would like to read about the options available to parties to formalise a property settlement, click here.