The Family law Act outlines that parties who are divorced have a one year window to begin proceedings relating to property matters and defacto couples have two years after the date of separation to do so as well.. There are various exceptions which allow a party to commence proceedings outside of this time, one of them being Hardship.
Should there be a real possibility that a party would suffer from hardship as a result of the proceedings not commencing, the Court is likely to allow the party to apply out of time. The term hardship has commonly been referred to in circumstances where the party applying out of time has a real and substantial chance of pursuing a successful claim. To be denied the opportunity to pursue such a claim would in turn cause hardship on that party. In addition to demonstrating that they would suffer hardship, the party must also explain why they were unable to file their initiating documents within the two year limit.
In the recent case of Lacy & Cloett [2020], the Applicant (Ms Lacy) sought to commence proceedings on the basis that she would suffer hardship should the court deny her the right to pursue a property settlement. Ms Lacy and Mr Cloett were in a relationship for five years during which Mr Cloett purchased a property with net equity of approximately $35,000.00. Mr Lacy claimed to have made monthly payments of $1,000.00 as well as a larger payment of $24,000.00 to this deposit, though Mr Cloett claimed these were rental payments which were ultimately repaid to Ms Lacy.
At the time that Ms Lacy attempted to commence proceedings the parties had been separated for five years. The value of Mr Cloett’s property had decreased from $575,000.00 to $499,000.00, with a mortgage of $376,000.00. Ms Lacy had also purchased a property after separation which was worth $500,000.00 with a mortgage of $385,000.00.
When considering her application to commence proceedings out of time, the Court made reference to Whitford & Whitford (1979), which expressed that “where the costs which the applicant will have to bear … are as much as or more than what the applicant is likely to be awarded on a property claim, ordinary hardship would not result if leave to institute proceedings were not granted”.
The court considered the gap in time between separation and Ms Lacy’s application, the modest asset pool and the possibility that her legal fees would likely meet, if not exceed, the amount that she would receive in a property settlement. As a result of these considerations the Court ultimately denied Ms Lacy from commencing proceedings out of time, as they determined that Ms Lacy did not meet the hardship criteria, nor did she provide a valid explanation as to why she attempted to commence proceedings three years after the limitation date.
Have you recently separated from your partner? Has your divorce been granted and you are unsure how you should approach dividing your property? Our friendly Family Law team are willing to assist you with your divorce and separation queries. Call us today on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
