It is difficult for a couple to determine how they will distribute joint assets if they are separating. A marriage lawyer generally is familiar with clients who are involved in voluntary separations where as a result there is a need to distribute the parties’ assets to allow for each person to move on. However, what about situations where the parties have not been involved in a voluntary separation? Maybe it occurred by reasons outside of the parties’ control. The facts in the High Court case of Stanford v Stanford gave an example of such a situation. It also adjusted the legal test for courts to apply when making a property order (s 79 Family Law Act 1975).
The Facts
The husband and wife had been engaged in a long marriage. Together the parties did not have any children of their own, but each were a parent to children from previous marriages. In late December 2008, the wife suffered a severe stroke which caused her to require full time care. As a result, the wife was no longer permitted to live in the matrimonial home. Therefore, it can be said that the parties were required to separate through circumstances and not by intention.
A disagreement arose between the wife’s children and the husband in relation to which nursing care facility the wife could go to. The children sought that the wife be placed into a facility requiring a bond of $300,000. This was not agreed to by the husband. A few months later, the wife’s health deteriorated, and she was placed into a higher care facility. There was no bond required but instead the fees were to be paid from her pension. The husband also contributed a substantial amount of money into a trust account for her expenses. This was shortly followed by an application brought by the wife’s daughter for property settlement. The application claimed the husband pay the wife 42.5% of the marital assets.
The law
Before the High Court passed its decision, marriage lawyers and the court were required to follow a “four step” approach towards property settlement. These were:
- Identify and value the asset pool.
- Assess the contributions under s 79(4)(a)-(c)
- Take into account any matters in s 79(4)(d)-(g) including s 75(2) factors
- Determine whether the orders are just and equitable under s 79(2)
The terms ‘just and equitable’ are no stranger to a marriage lawyer. In fact, the very nature of the legal profession relies on ensuring lawyers perform their duties to a just and equitable standard. However, what exactly does this mean and how did it become a point of focus in Stanford?
Essentially, a court would be required to labour through the first three steps outlined above before proceeding to assess the appropriateness of the orders in step 4. Whilst the court and marriage lawyers would consider an order that is just and equitable to be readily satisfied where it is obvious the parties are no longer in a marital relationship, this presumption was not so clear given the facts above.
The High Court went on to emphasise that to chart the ‘metes and bounds’ of what is just and equitable is not possible. In other words, it is an extremely difficult concept to apply rules to and rather falls on an assessment of ‘how fair’ the proposed order would be for the parties. Instead, the court supported the idea that consideration of the first three steps cannot occur unless step 4 is determined first.
What does this mean for property settlement?
As a result of the extensive and complicated considerations of the court, the new legal test from Stanford confirms that step 4 is to be considered first. The effect of this means the courts will not engage with an application for a property order after the breakdown of a marriage in the event that it cannot see how it would be ‘just and equitable’ to the parties. It is therefore important to seek legal assistance from a marriage lawyer who is aware of these considerations so that you are able to avoid unnecessary and burdensome costs.
