“Life after Stanford v Stanford”

The Facts

A couple married in 1971. It was the second marriage for both. For 37 years they lived in the same house in Perth. The house was registered in the husband’s name only. 
In 1989, both the husband and the wife retired. 
In 1995, the husband made a will in which he left the house to the children of his first marriage subject to a life tenancy for the wife. 
In 2008, the wife suffered a stroke and developed dementia. During this time, the husband continued to support the wife and paid for her medical expenses. 
In 2009, the daughter of the wife applied to the Family Court of Western Australia as a case guardian to have the house sold and the proceeds divided among the children.

Proceedings

In the first instance, the magistrate court determined that the matrimonial assets should be divided 57.5% to the husband and 42.5% to the wife. The magistrate ordered the husband to pay $612,931to the wife within 60 days. 
The husband appealed to the Family Court of Western Australia. After the appeal was lodged but before the hearing, the wife sadly died. The Family Court allowed the appeal and set aside the decision of the magistrate. The reason of the Family Court was that there was no divorce and the magistrate had not considered the effect of the order on the husband or turn their mind to whether the decision is just and equitable. The court then ordered that on the death of the husband, 42.5% of the estate should be paid into the legal representative of the wife. Importantly, the Family Court noted that “the many years of marriage and the wife’s contribution demand that those moral obligations be discharged by an order for property settlement.”

Legal Arguments

The husband argued that the court did not have the power to make the orders because the marriage was intact when proceedings commenced. Even if the court had the power if should not engage s 79 of the Family Law Act 1975. Section 79 sets out the circumstances and criteria for alteration of property interest for married couples. The High Court rejected the husband’s argument on jurisdiction and that applications for financial settlement should be allowed even if the marriage is intact. 
However, the High Court noted that s 79(2) provides that: “the court shall not make an order in all circumstances unless it is just and equitable to make the order. The High Court did not give a precise and exhaustive definition of what constitutes “just and equitable.”

Just & Equitable

However, the High Court proposed three considerations.

The first is to identify, using common law principles the existing legal and equitable interests of parties in the property. That is to say, what does each party own and is it fair to disturb respective interests of the parties in the property?

Whilst this is a broad power conferred on the Court to determine what is just and equitable, the High court warns that power should be exercised judiciously.

The court observed that in R v Watson 136 CLR 248 at 257 and Ex Parte Armstrong that judges called up to make that decision is not entitled to make that decision based on ‘palm tree justice’. Palm tree justice is a term describing an ad hoc judicial decision making founded on common sense rather than legal principles. There should not be a presumption that interest in matrimonial property should be altered without scrutiny of the legal principles.

“Whether it is ‘just and equitable’ to make the order is not to be answered by assuming that the parties rights to or interests in the marital property are or should be different from those that exist.” At [39]

Furthermore, before going to considerations of s 79(4) the Court must not proceed with the assumption that one or the other party has “the right to have property of the parties divided between them or has the interests in marital property which is fixed by reference to the various matters set out in s 79(4) because to do so is to conflate the statutory requirements and ignore the principles laid down by the Act. at [40]

Then the High Court want further and proclaim that “community ownership arising from marriage has no place in the common law.” Property settlement by parties to a marriage is to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses.”

Conclusion

The High Court decision is a call to Family Law practitioners to the principle that there is to be no presumption of community property just because two persons are married. First the Court must determine whether it is just and equitable in all circumstances to alter existing property rights. Only if it is satisfied that the circumstances warrant alteration should the Court make orders under s 79(4).

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