26 Years Later: Out of Time Property Settlement Granted
TGB's Wendy Barry writes about the importance of formally finalising property settlements, after a recent matter where a settlement occurred 26 years after divorce.
TGB’s Wendy Barry writes about the importance of formally finalising property settlements, after a recent matter where a settlement occurred 26 years after divorce.
Ordinarily married couples have one year to settle property matters after a divorce is finalised otherwise permission has to be sought from the court for the time period to be extended (or two years, for separating defacto couples).
Factors to be considered by the court in extending the time period are:
1. whether hardship would be caused to a party to the relationship or a child of the relationship if permission was withheld; and
2. in the case of an application for spousal maintenance, if the person making the application would have been unable to support him or herself without an income tested pension, allowance or benefit.
In the case of Ordway [2012] FMCAfam 624 (13 July 2012) the Federal Magistrates Court (now known as the Federal Circuit Court of Australia) granted leave to hear a property settlement 26 years after a Divorce was granted to the parties.
How could this happen?
The Court ruled that the wife gave an adequate explanation for the delay in proceedings as the wife provided the Court with the following evidence:
1. That there was an unregistered agreement between the parties.
2. The husband had promised to convey a property title to her and the wife, until 2009, believed this would occur.
3. The wife was employed by the husband and she did not want to jeopardise her employment.
4. The wife did not wish to engage in a dispute with the husband in relation to property matters.
5. There was a significant power imbalance relating to the parties finances.
6. The wife did not seek legal advice as she made the assumption that the informal agreement originally made by the parties was final and binding.
7. The wife took all the appropriate steps once she understood the agreement was not binding.
The Court also found, in granting leave to hear the matter, that there would not be prejudice to the husband for these reasons:
1. The husband did not advise the wife that he would not transfer the property to her until 2009 when the wife had engaged a solicitor.
2. The husband was aware of the circumstances at all relevant occasions.
3. The standing arrangement between the parties allowed the husband to secure and progress the financial position of himself and his second wife by using the equity in the property.
4. The husband was “aware of the unfinished business at all times”.
The judgment was not appealed and settlement has now taken place in accordance with the Orders.
This case is important for a number of reasons.
Firstly it highlights the need for separating parties to formalise their property settlement in a way that is binding to avoid either of them making a claim against the other in the future. Informal settlements are simply not adequate to protect against and prevent against future claims.
Secondly it shows that a claim can be made at any time (ie not limited to 12 months after a divorce or two years in the case of separated de facto relationships) in circumstances where the court can be satisfied that hardship would be caused to one of the parties if the time limit was not extended.
If you are separated and need assistance finalising the division of the property of your relationship in a way that is binding you should seek advice and assistance as early as possible with one of our family lawyers who are experienced in this area.