O is for out of time – A-Z of Family Law

Limitation periods are a key consideration for any family law application for a property settlement, with the Family Law Act 1975 (Cth) making it unambiguous that parties have 12 months to commence proceedings after a divorce order has taken effect (section 44(3)) or 24 months after the end of a de facto relationship (section 44(5)).

Exceptions to these limitation periods include where both parties consent to the application, or where ‘hardship would be caused to a party or a child if leave were not granted’ (sections 44(4)(a) and 44(6)(a)).

Naturally, applications are filed out of time occasionally, and absent the consent of the other party to the proceedings, the Court is required to consider whether or not to grant leave. This is colloquially referred to as a ‘threshold’ hearing, to satisfy the yes-or-no issue before any further property settlement determinations are discussed.

Judge Riley’s decision in Jie & Ting [2024] FedCFamC2F 311 in Division 2 of the Federal Circuit and Family Court of Australia is an example of such a threshold hearing, where the applicant sought leave under section 44(6).

The facts were as follows:

• There was a de-facto relationship for around 6 years, before a period of living separated under the same roof for a further 2 years.
• The applicant was arrested in 2022, this event marking the end of the post-separation cohabitation. The applicant remained in prison at the time of the hearing.
• The applicant was around 9 months out of time.
• The net asset pool was around $548,000, the significant majority of which was in the respondent’s name.

The decision of Whitford & Whitford (1979) 35 FLR 445 was consistently cited, with key references including:

• The court is satisfied that hardship would be caused to the applicant or a child … if leave were not granted. If the court is not so satisfied, that is the end of the matter. If the court is so satisfied, the second question arises … (being) whether in the exercise of its discretion the court should grant or refuse leave to institute proceedings.
• Hardship may be caused … although the applicant is not in necessitous circumstances. Whatever the financial situation of an applicant may be, … loss of a prospective entitlement to property including money, or … inability to have the financial and property relations of the parties adjusted or resolved, may constitute hardship.
• The loss of the right to institute proceedings is not the hardship … (it is) the consequences of the loss of that right.
• … where the costs which the applicant will have to bear … are about as much or more than what the applicant is likely to be awarded on a property claim, ordinarily hardship would not result if leave to institute proceedings were not granted
• If there is no real probability of success, then the court cannot be satisfied that hardship would be caused if leave were not granted.

The appropriate question to be put forward for determination was “is there a reasonable chance that, if the substantive property application is allowed to proceed, he will receive a substantial settlement, after taking into account costs? [25].

The Court thereafter considered the parties’ financial circumstances, contributions, and future needs, albeit without making any determinations or findings. In this particular set of proceedings, only the applicant put forward evidence; the respondent primarily relied upon her submissions.

Judge Riley noted that ‘the appropriate course in an extension of time application is to take the applicant’s affidavit evidence at its highest, “unless it is inherently unbelievable or contradictory” (Jacenko & Jacenko [1986] FamCA 25) [13].

Judge Riley estimated a reasonable entitlement of the applicant and, following a comparison of that entitlement with the assets in his control, concluded that hardship was satisfied and the first question was answered.

In relation to the second question, Judge Riley considered the length of the delay in filing an application and the rationale the applicant provided. The extensive period of cohabitation after separation, as well as the applicant’s arrest and incarceration, were important factors that lead to discretion being exercised in the applicant’s favor.

These proceedings illustrate that:

1. Limitation periods should be taken very seriously; consider the potential of filing an urgent application if a deadline is approaching, or obtaining the written consent of the other party.
2. Demonstrating hardship must be the primary focus, before rationalising why discretion should favour the applicant.
3. Out of time applications have a lower likelihood of success as the value of the net asset pool falls, given the costs consideration.