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In what circumstances should a court make an order for the division of matrimonial property

This was the question considered by the High Court of Australia in the decision of Stanford & Stanford delivered in November 2012.

Background

The facts of Stanford & Stanford are somewhat unusual in that the Stanfords were an elderly married couple who had no intention of separating, nor of dividing their matrimonial property, and yet whom became embroiled in lengthy court proceedings in relation to the division of their matrimonial property.

Mr and Mrs Stanford married in 1971. It was the second marriage for both. At the commencement of the relationship each party owned a house. Consequently, Mrs Stanford sold her house and the parties resided together in Mr Stanford’s house.

Each party also had children from their previous marriages. In 1995 Mr Stanford made a will leaving the matrimonial home to his children, subject to a life tenancy in favour of his wife. In 2005 Mrs Stanford made a will leaving her estate to her children. The main assets of the parties were the matrimonial home and cash.

The physical separation of the couple arose in December 2008, when Mrs Stanford suffered a stroke and was admitted to a care facility. Mrs Stanford was 88 years of age and Mr Stanford 86 years of age. The costs of Mrs Stanford’s care were met out of her pension. Mr Stanford remained living in the matrimonial home and visited his wife on a regular basis.

Mrs Stanford subsequently developed dementia. In 2009 Mrs Stanford’s daughter sought to place Mrs Stanford in a different care facility which required the up-front payment of a $ 300,000 refundable bond. Mrs Stanford’s daughter asked Mr Stanford to pay the bond, which, given the parties financial means, would have required him to sell the matrimonial home.

Mr Stanford did not consider that it was necessary to place Mrs Stanford in a different care facility, and he declined to sell the matrimonial home in order to pay the bond. In August 2009 Mrs Stanford’s daughter commenced proceedings as Mrs Stanford’s case guardian in the Family Court of Western Australia seeking a division of matrimonial property. The proceedings were defended by Mr Stanford with his son as case guardian.

Mr Stanford unsuccessfully argued that the court did not have jurisdiction to make an order for the division of matrimonial property in circumstances where the parties were involuntarily separated. After finding that it did have jurisdiction, the Family Court of Western Australia ordered by way of property settlement that within 60 days the husband pay the wife the sum of $ 612,931. This figure represented a 57.5/42.5 division of the matrimonial property pool in the husband’s favour, and in practical terms would have required Mr Stanford to sell the matrimonial home.

Appeal to the Family Court of Australia

Mr Stanford appealed the Magistrate’s decision to the Family Court of Australia. Mr Stanford’s grounds of appeal were many, but the two main grounds of appeal relevant for the purposes of this article can be summarised as follows:

The Family Court of Australia rejected the husband’s argument that the court did not have jurisdiction to make an order regarding property, but allowed the husband’s appeal on the basis that, amongst other things, the learned Magistrate of the Family Court of Western Australia had erred in to determining that it was just and equitable to make an order for property settlement.

In September 2011 and before further submissions were made as to what orders should be made the wife passed away. However, this did not bring an end to the court proceedings, as the legal representative of a deceased party is able to continue proceedings if the court would have made an order regarding property if the deceased had not died, providing that it is still appropriate to make an order with respect to property.

The Family Court of Australia’s decision

On 19 January 2012 the Family Court of Australia re-exercised its discretion to decide that a division of matrimonial property should occur on the same basis as decided by the Family Court of Western Australia, except that the division of matrimonial property should not occur until the husband’s death. This would effectively allow the husband to remain in the matrimonial home. When the husband passed away the house was to be sold and the proceeds and other assets divided on the basis of the 57.5/42.5 split originally determined by Family Court of Western Australia, the proceeds of which would then form each party’s estate.

Appeal to the High Court

The husband appealed the Family Court of Australia’s decision to the High Court of Australia. He again argued, amongst other things, that neither the Family Court of Western Australia nor the Family Court of Australia had the jurisdiction to make an order. He also repeated his argument that if those courts had jurisdiction, given the circumstances of the parties it was not just and equitable to have exercised that jurisdiction.10

The husband again failed on the ground that the court had no jurisdiction to make an order. However, the husband’s appeal succeeded on the ground that the wife had failed to show that it was just and equitable to make an order for the division of matrimonial property. The High Court said:

…it was not shown that, had the wife not died, it would have been just and equitable to make an order with respect to property. It follows that, after her death, it could not be found to be “still appropriate to make an order with respect to property.”

In other words, the High Court found that it may not have made an order for the division of matrimonial property, even if the wife had not died.

Conclusions

In some respects the facts of Stanford & Stanford could be regarded as a pre-emptive dispute between adult children about the division of their parents’ estate, under the guise of a matrimonial property dispute. However the case gives rise to certain principles which may be relevant to all family law property disputes.

In particular, Stanford & Stanford emphasises that a court has the power to make order regarding matrimonial property, even in circumstances where the separation of the parties is involuntary.

Further, Stanford & Stanford establishes that the “bare fact of separation” does not of itself necessitate that an order for the division of matrimonial property occur. Instead, it is necessary for the court to consider at the outset whether it is just and equitable for a property order to be made at all, as opposed to some other order which may satisfy the other party’s financial needs.

If you have any questions about the case of Stanford & Stanford and how the High Court’s decision might affect your family law property matter please contact our office.

[2012] HCA 52. S & S [2010] FCWAM 15. S & S [2010] FCWAM 15, at [20]. S & S [2010] FCWAM 26, at [164]. Stanford & Stanford [2011] FamCAFC 208, at [6]. Stanford & Stanford [2011] FamCAFC 208, at [112], [119] & [121]. s79(2) Family Law Act 1975. Stanford & Stanford [2012] FamCAFC 1, at [60]. Stanford & Stanford [2012] HCA 52. Stanford & Stanford [2012] HCA 52, at [13]. Stanford & Stanford [2012] HCA 52, at [27] and [29]. Stanford & Stanford [2012] HCA 52, at [3]. Stanford & Stanford [2012] HCA 52, at [43].

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