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HomeApril 2013 Issue 81

New High Court family law decision

The issue of property settlement between married and de facto parties is complex and technical. A recent High Court decision just made this more the case.

If you are 40 something and one of your parents (or both) have re-partnered and you are wondering about the effect this may have on your inheritance, then read on.

If you think a property settlement cannot happen whilst you are not separated, think  again. Generally speaking, the Court cannot make a property settlement order unless it is   satisfied that, in all the circumstances, it is ‘just   and equitable’ to do so. The case of Stanford   v Stanford [2012] HCA 52 has highlighted the   importance of carefully considering this term.   The husband and wife were married for over   40 years. Both parties had been previously   married and had adult children. The family   home was registered in the husband’s sole   name. During the relationship, they each   made Wills basically leaving their estates to   the children of their first marriage, except that   the husband, in his Will, also left the home   subject to a life tenancy in favour of the wife.   You would assume these arrangements to   protect your inheritance would be sufficient –   but they are not. In December 2008, the wife   suffered a stroke and was admitted into full   time residential care. The wife also developed   dementia and did not return to live with the   husband. However, the parties never formally   ended their relationship. The husband put   some money into a bank account to provide   for the wife’s medical needs/costs.

At first instance, the Magistrate divided  the assets as to 57.5% to the husband and  42.5% to the wife. The wife’s care guardian  (the wife’s daughter from her first marriage)   had commenced the proceedings. The   husband appealed to the Full Court but after   the Appeal was heard, and before Judgement   was handed down, the wife died. The Full Court subsequently allowed the Appeal   and set aside the Magistrate’s decision on   the grounds that the Magistrate had not   sufficiently considered the effect of the   Orders on the husband and “the fact that this   was an intact marriage” in considering what   was ‘just and equitable’.

At the request of both parties (now in essence the executor of the wife’s estate – still her daughter – and the husband),the Full Court re-exercised discretion and ordered   that on the husband’s death, the sum   which had been fixed by the Magistrate as   representing the value of 42.5% of the marital   property to be paid to the wife’s personal   representatives (the wife’s children of her   first marriage in fact).The husband appealed   the property settlement orders made by   the Full Court on two grounds. Firstly that   there was no power to make the property   settlement orders because this was an ‘intact   marriage’ and that, upon the wife’s death, the   only persons to benefit would be the wife’s   children of a different marriage. The second   ground of appeal was that even if the Court   had the power to make the orders, it should   not have done so. The High Court confirmed   the existing law in relation to the continuation   of property settlement proceedings after the   death of a party (if proceedings have already   been commenced) and so the husband’s first   ground of appeal was rejected. However,   the High Court accepted the second appeal   ground and set aside the property orders,   resulting in the husband retaining all of the   assets in his name. The wife’s daughter from   her first marriage in effect received nothing.

The possible implication of Stanford is that property settlement matters may need to be dealt with in the following way:

Stanford confirms that although the Court has a very broad power to make orders in  relation to property settlement (whether the parties are separated or not),“it is not a power that is to be exercised according to an unguided  judicial discretion” and the Court cannot simply   disregard each party’s interest in their property. It also brings to the fore the importance of considering “just and equitable” as a stand alone consideration before making a property settlement order.

For Family Law Advice contact

Farrar Gesini Dunn

Level 5, Colonial , Mutual Building

17-21 University Avenue, Canberra City ACT

P (02) 6257 6477 | F (02) 6257 4382

E [email protected] | www.fgd.com.au

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