WHAT DOES THE LAW SAY?
Section 44(3) of the Family Law Act 1975 (“the Act”) provides that a party to a marriage can apply for orders for property settlement or maintenance if an application is filed within 12 months after the date of divorce. The statutory requirements for de facto relationships are expressed in identical terms pursuant to section 44(5) of the Act but differs in that an application is to be filed within 24 months of the date of separation.
If a party wants to file an application after the 12 or 24 month timeframe, they must seek leave from the court to do so.
In determining if leave is to be granted to permit a party to commence property proceedings out of time, the court must be satisfied that hardship would be caused to a party or child of the relationship, if leave was not granted.
In assessing hardship, the court must be satisfied that:
- The party seeking to commence property proceedings out of time has a prima facie claim worth pursuing or a “real” probability of success, if the proceedings had been instituted in time;
- The likely costs to be incurred in pursuing the claim are not likely to outweigh any benefits the party will likely receive; and
- Having established the above, there is an adequate explanation that for the delay in commencing legal proceedings.
Once the above elements are satisfied, the court will then look at the prejudice which the respondent will suffer by reason of the delay.
RECENT CASE STUDY
In the case of Gadzen & Simkin  FamCAFC 218, the de facto wife, Ms Simkin brought an application for property settlement and spousal maintenance, seven (7) years out of time. This involved an eight (8) year relationship. There were no children. Parties separated in 2009 and both subsequently then married other parties.
At cohabitation, Ms Simkin had net assets of $83,000 and Mr Gadzen had net assets of $4.75m. It was accepted that Mr Gadzen had made the overwhelmingly greater financial contributions because of his initial financial contributions and his contributions made during the relationship.
Shortly after separation, the parties then entered into a series of informal agreements, including Mr Gazden agreeing to:
- Purchase a residential premise for Ms Simkin limited to a maximum sum of $450,000 upon the sale of a property owned by Mr Gadzen or as soon as his financial circumstances allowed;
- Pay Ms Simkin’s rent in the sum of $400 per week pending the purchase of a property on her behalf;
- Purchase furniture and electrical equipment for Ms Simkin in the sum of $15,000;
- Providing a legacy to Ms Simkin in the sum of $1m in his will with the terms of such will to remain unchanged for at least two years; and
- Bequeath to Ms Simkin one third of the balance of his superannuation account, following the transfer of a commercial property to the fund’s trustees per a binding death benefit nomination.
The trial judge, at first instance, found that Ms Simkin would suffer hardship if leave were not granted for her to bring property settlement and maintenance proceedings. An order was therefore made granting leave.
On appeal, the Full Court found that the trial judge had:
“erred in principle in failing to apply the correct test to determine the question of hardship … it is fundamental to such a determination that consideration is given to whether an applicant for leave demonstrates a prima facie or arguable case of substance having regard to all the circumstances of the case, taking into account the likely cost to be incurred by the applicant in pursuing the claim.”
In re-exercising the trial judge’s discretion, the Full Court found that Ms Simkin had received very significant benefits post separation. She had received $467,121 in benefits post-separation and had net assets of approximately $134,600, and on her own evidence she would likely expend $150,000 pursuing her claim.
In refusing to grant Ms Simkin leave, the Full Court found that it was:
“unable to see how [her] potential claim in property settlement proceedings could conceivably approach, let alone exceed, that which she holds together with that which she has received.”
IMPORTANT LESSON FROM THE CASE
The above case illustrates the importance of being aware that trifling and uncommercial claims in an application out of time are unlikely to succeed and that costs verses benefits are to be assessed.