Case Study: Property Settlements For ‘Intact’ Marriages

TGB’s Jane Miller analyses the High Court case of Stanford and Stanford, where it was confirmed that the Family Court can make orders for property settlement and spousal maintenance for couples who are still married.

Most people think of the Family Court ordering a property settlement after a relationship breakdown and divorce.  However, the High Court of Australia has delivered a unanimous judgment confirming that the Court can order a property settlement for a couple who are separated because one is required to live in a nursing home due to poor health (Court decision 15/11/12). This decision has significant ramifications for Australia’s aging population, and especially those elderly couples who have children from previous relationships.

In the case of Stanford and Stanford, the elderly husband and wife were married for 37 years.  They each had children from previous marriages. In 2008 the wife suffered a stroke and was not physically able to live at home with her husband.  At the time of her stroke, the husband and the wife were happily married and living together like you would usually expect of a married couple.  However, as a result of the stroke, the wife moved to a nursing home.  She later developed dementia and lost her mental capacity.

After her stroke, the husband continued to provide emotional and financial support to the wife.  A year later, the wife’s daughter from her earlier relationship was appointed to act as the wife’s case guardian.  The daughter, on behalf of the wife who was then significantly suffering from dementia, applied to the Family Court asking for a property settlement.  The wife’s daughters would inherit the wife’s estate by will upon the death of the wife.

The Trial

On behalf of the wife, the daughter sought orders for the sale of the home the husband lived in and the division of the sale proceeds, savings and superannuation entitlements equally between the parties.  The trial judge initially delivered a judgment in similar terms, awarding the wife 42.5% of the assets and ordering that the husband pay her $612,931.00 within 60 days.

The First Appeal

The husband appealed this decision, disputing that the Court had the power to make such an order given their marriage was “intact” and they had not separated. In other words, they were happily married at the time of her stroke and it was only due to her illness that they could not continue to live together in the same home.

Before the husband’s appeal was determined the wife died.  The Full Court was concerned that the decision of the trial judge did not properly account for the circumstances that would follow for the husband by making the cash payment to the wife: it would have required the husband to sell the home he resided in and reduce his cash reserves for future contingencies.

When the appeal judgement was delivered, the Full Court varied the orders made by the trial judge so that the property settlement award would not need to be paid to the wife’s estate until after the husband’s death.  The percentage of property awarded to the wife remained 42.5%.

The husband remained dissatisfied with the decision of the Full Court, and appealed further to the High Court of Australia.

The High Court Appeal

Once again, the husband argued that the Court did not have the power to award a property settlement when a marriage is still “intact”.  Further, he argued that as a result of the wife’s death, the only people who stood to benefit from the property settlement were the wife’s children from her previous marriage.  In other words, the wife would not receive the benefit of the property settlement as she had already passed away.

The High Court confirmed that the Court does have the power to order a property settlement in cases where the husband and wife are involuntarily separated, such as for reasons of poor physical or mental health.   Not only can a Court award a property settlement for a marriage where the parties are separated for these reasons, but it also has the power to award spousal maintenance.  Spousal maintenance claims can be made in circumstances including if one spouse cannot meet their reasonable expenses due to poor health, and the other spouse has the capacity to meet those expenses.

Finally, the Court considered whether it was just and equitable for an order for property settlement to be made in these particular circumstances.  In the case of Stanford, the Court determined it was not appropriate to make any order for property settlement, saying “It was not shown that the wife’s needs during her life were not being or would not be met”.  Furthermore, in this case it was not appropriate to make an order for property settlement once the wife had died.

As a result, the husband’s appeal to the Full Court was unanimously allowed.  The order for property settlement made in favour of the wife was set aside, and the husband was not required to make any payment to the wife’s estate.

However, it is now clearly understood that a Court can award a property settlement and spousal maintenance in a relationship where there has not been a breakdown of the relationship or a separation. Whilst the husband in the above case did not have to provide a cash settlement to his wife, had her needs been different the Court may have enforced such a settlement.

TGB is South Australia’s largest family law firm. For further information or assistance with your legal matter contact your nearest TGB office.