The importance of ensuring that separation arrangements are made into a legally binding document was highlighted in the recent family law decision of Arshad & Miata
In that case, a de-facto wife filed a property settlement application 10 years after the parties had separated. De-facto partners ordinarily only have 2 years after separation to make a claim and, therefore, the application was brought significantly out of time.
The parties commenced living together in 2000 when the wife was just 16 years old and husband was 23 years old. They had three children together. The wife was the primary carer and husband spent very limited time with the children after separation.
The pair had minimal assets at the commencement of their relationship. In 2006, they purchased a property in joint names for $281,000. The wife paid the initial deposit and the balance was paid by way of a mortgage. She then made the majority of the mortgage repayments and the husband assisted when he was employed.
The wife made extensive allegations of family violence perpetrated by the husband, both during the relationship and after separation. She made a number of reports to the police, however, the husband was never charged as she was too afraid to give evidence against him. After their separation, the wife remained in the property and was solely responsible for the mortgage repayments and all other associated expenses.
The parties did not formalise these arrangements which made them both vulnerable to a claim being brought by the other at any stage in the future. This was a particular risk to the wife because the property was in joint names and there was no guarantee that she would be able to keep it when its ownership eventually came to be determined. There was the added risk that, as the property would increased in value, in order to retain the property, she would have had to pay the husband a larger sum to buy him out of his share.
in 2019, 9 years after separation, the wife initiated property proceedings seeking to retain 100% of the couple’s assets, namely the property, shares and superannuation entitlements. The husband did not participate in the proceedings and, therefore, the matter proceeded undefended.
The Court first had to consider whether to grant the wife permission to file her application 8 years out of time. The relevant requirements to proceed out of time were identified as follows:
- the wife would have a real probability of success had she issued proceedings in time;
- the denial of a claim for relief would cause her hardship (for example due to the extensive contributions she made during and after the separation); and
- there was an adequate explanation for the delay (for example due to her fear of the de-facto husband, the stress of raising three children on her own and her lack of financial resources).
In these circumstances, the Court allowed the wife to file her application out of time. It then awarded her the entirety of the known assets which it found was a just and equitable outcome in all of the circumstances.
One of the key takeaways from the case are the benefits of formalising property settlement arrangements to ensure finality and a clean break. Although in this case the wife ended up keeping the whole of the asset pool, the outcome may have been quite different if the husband had initiated proceedings himself or participated in the proceedings that she had issued. Without a properly finalised agreement, it’s always possible for former partners to make a claim through the Court at a later date – perhaps even 10 years later – and regardless of what may have been agreed to beforehand.