High Court clarifies property rights of elderly couple living apart

24-January-2013 Family Law By Mark Streeter

The High Court recently provided clarification on a controversial decision in the Family Court regarding the court’s power to order the division of assets when a couple have separated involuntarily, due to the deteriorating health of one or both parties (Stanford & Stanford [2012] FAMCAFC 1 (19 January 2012).)

Streeterlaw Principal Mark Streeter said the High Court’s decision to overturn the Family Court of Australia’s property settlement orders mean the court must in future consider the individual needs and concerns of both parties prior to any property settlement order being made when a couple is separated due to illness.

“The High Court’s decision provides that involuntary separation of a couple due to illness is not sufficient cause to make a property settlement order,” Mr Streeter said. “The court must also consider the effect of any such order on the other party and whether or not the needs of the applicant party are being met.  
“Property settlement orders must be ‘just and equitable’ and be made for the couple’s wellbeing only, and not for any beneficiaries to their estate.” 
Case details 

Mr and Mrs Stanford were 87 and 89 years of age, respectively. They had both been married before and each had adult children from their first marriage. At the time of the hearing (and prior to Mrs Stanford’s death in 2011) the parties had been married for 40 years.

Both parties had current wills, which left their assets to the children of their first marriage, subject to a life tenancy of the matrimonial home in favour of Mrs Stanford. The matrimonial home, in which Mr and Mrs Stanford resided together for 37 years, was in the sole name of Mr Stanford, and had been prior to their marriage.   

In December 2008, Mrs Stanford was admitted into fulltime residential care and did not return to live with her husband. Following her admission, Mrs Stanford then developed dementia. The husband continued to provide for all of Mrs Stanford’s medical needs and requirements.   
However, Mrs Stanford’s daughter believed the care her mother was receiving was inadequate and therefore requested that she be moved to another aged care facility nearby, which required a $300,000 bond. No funds were available to pay this bond and hence Mrs Stanford’s daughter commenced legal proceedings on the basis that Mr and Mrs Stanford were separated and that the matrimonial home should be sold and the proceeds used to fund the wife’s care.  
In the initial hearing, the Federal Magistrate made an assessment of the parties’ contributions to the asset pool and ordered that the husband pay his wife $612,931 within 60 days. This decision was based on the fact that the couple would “never live together again” and that most of the elements of a normal marital relationship had ceased to exist.

Mr Stanford’s son, who was acting as Mr Stanford’s case guardian, then appealed to the Full Court of the Family Court of Australia, which found that the Federal Magistrate had not sufficiently considered the effect of the orders on the husband. It ordered Mr Stanford to pay Mrs Stanford’s representatives the sum of $612,931 upon Mr Stanford’s death or the sale of the matrimonial home, whichever occurred first. It is interesting to note that the Full Court recognised that Mrs Stanford’s needs could have been met in other ways such as Spouse Maintenance. 

Following the Full Court decision, Mr Stanford made an appeal to the High Court of Australia. 
High Court decision – November 2012 (Stanford v Stanford HCA 52)  

The majority of the High Court found the following:

  1. While it is within the jurisdiction of the Family Court of Australia to make orders in circumstances where a marriage was still intact but the parties had involuntarily separated due to the ill health of one of the parties, they stated:
    “The bare fact of separation when involuntary does not show that it is just and equitable to make a property settlement order.  It does not permit a Court to disregard the rights and interests of the parties in their respective property and make whatever orders they may see to be fair and just”
  2. It may be just and equitable to make a property settlement order when one party’s unmet needs cannot be answered by a maintenance order
  3. An order for Spousal Maintenance should be considered, rather than an order to alter a party’s interest in property where the marriage is intact and separation has not been voluntary.
  4. That Section 79(8)(b) of the Family Law Act applied. It gives the Court the power to make orders as it considers appropriate, with respect to property if the following conditions are met:
    a. That it would have made an order with respect to the property if the deceased party had not died; and
    b. that it is still appropriate to make an order with respect to property.
  5. That property settlement orders between husband and wife are made for their wellbeing, and their wellbeing only. It is vital to ensure that applications seeking a property settlement order in circumstances similar to these are intended for the benefit of the parties, and not any beneficiaries to their estate.

In summary, the High Court set aside the property settlement orders made by the Full Court on the basis that it was not just and equitable to have made an order for property settlement, particularly since Mrs Stanford’s needs were adequately provided for and her nursing home fees were being paid for.

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Written by Mark Streeter

Mark Streeter

The Director of Streeterlaw, Mark has been practicing Law since 1994. He has attained his Masters of Law in 1999 and in 2006 was awarded his Specialist Accreditation in Commercial Litigation. Mark is a member of ARITA, a graduate of the AICD and a member of AICM. A member of STEP, Mark enjoys working in the area of Wills and Estates. In 2020 Mark is the Chair of STEP NSW.

Call us on 02 8197 0105 to book an appointment with Mark Streeter!

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