Stanford and its aftermath
The end of the world as we knew it?
Paul Glass
Background
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• The parties married in 1971.
• The wife suffered a stroke in December 2008 and
developed dementia.
• The wife was admitted into full time residential care.
• The wife’s daughter (as case guardian) brought an
application for property settlement on her behalf.
• The husband contended the parties had not
separated and opposed the application.
A presentation by
Paul Glass
Trial Magistrates’ Findings
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• The parties had not intended to separate.
• This did not prevent the exercise of section 79
discretion.
• Contributions to the property pool of $1.59m were
assessed 62.5% in favour of the husband because of
his initial and recent contributions.
• No adjustment pursuant to s 75(2) was made.
• The husband was ordered to pay the sum of $612,931
to the wife within 60 days.
A presentation by
Paul Glass
First Full Court Judgment
Stanford & Stanford (2011) FLC 93-483
• Appeal allowed.
• ‘It is difficult to ascertain the reason why the
Magistrate came to her conclusion given the wife did
not have a need for a property settlement as such
and her reasonable needs could be met in other ways
particularly by maintenance.’
• ‘There are many aspects of this application which do
not require an immediate order finally altering the
interests of the parties in their property and
particularly so where it would require the husband to
leave his home of 48 years in which he is still residing.’
A presentation by
Paul Glass
First Full Court Judgment
Stanford & Stanford (2011) FLC 93-483
• ‘In considering what was just and equitable under s
79 and s 75(2) the Magistrate was required to
consider the effect of these orders on the husband
and the fact that this was an intact marriage.’
• The wife had died between the hearing of the appeal
and judgment.
• Written submissions were sought as to whether the
Full Court should re-exercise the discretion or remit
the matter for re-hearing.
A presentation by
Paul Glass
Second Full Court Judgment
Stanford & Stanford (2012) FLC 93-495
• The parties consented to the Full Court re-exercising
its discretion.
• Orders were made for the husband to pay to the wife
the sum of $612,931 upon his death.
• This reflected the 57.5% assessment of contributions
in favour of the husband found by the Magistrate.
A presentation by
Paul Glass
Power to make property orders where no separation
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• The High Court rejected the husband’s contention
that the court did not have power to make property
orders as the marriage was still ‘intact’.
• The conferral of the court’s jurisdiction is not limited
to situations where the parties have separated.
A presentation by
Paul Glass
“The Operation of S 79”
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• Family Law Act 1975 s 79(2):
The court shall not make an order under this section unless it is satisfied that, in
all the circumstances, it is just and equitable to make the order.
• Section 79(4) prescribed matters that must be taken
into account in considering what order (if any) should
be made.
• The requirements of the two sub-sections are not to
be conflated.
A presentation by
Paul Glass
“The Operation of S 79”
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• 3 fundamental propositions:
1. It is necessary to begin consideration of whether it is just
and equitable to make a property settlement order by
identifying, according to ordinary common law and
equitable principles, the existing legal and equitable
interests of the parties in the property.
The question posed by s 79(2) is thus whether, having
regard to those existing interest, the court is satisfied that
it is just and equitable to make a property settlement
order.
A presentation by
Paul Glass
“The Operation of S 79”
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• 3 fundamental propositions:
2. Although s 79 confers a broad power on a court exercising
jurisdiction under the Act to make a property settlement
order, it is not a power that is to be exercised according to
an unguided judicial discretion.
Whether it is ‘just and equitable’ to make the order is not
to be answered by assuming that the parties’ rights to or
interest in marital property are or should be different from
those that then exist.
The question presented by s 79 is whether those rights and
interests should be altered.
A presentation by
Paul Glass
“The Operation of S 79”
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• 3 fundamental propositions:
3. whether making a property settlement order is ‘just and
equitable’ is not to be answered by beginning from the
assumption that one or other party has the right to have
the property of the parties divided between them or has
the right to an interest in marital property which is fixed by
reference to the various matters (including financial and
other contributions) set out in s 79(4).
To conclude that making an order is ‘just and equitable’
only because of and by reference to various matters in s
79(4), without a separate consideration of s 79(2), would
be to conflate the statutory requirements and ignore the
principles laid down by the Act.
A presentation by
Paul Glass
Why is the cat loose amongst the pigeons?
Hickey (2003) FLC 93-143
• The case law reveals a preferred approach involving four
inter-related steps:
1. The Court should make findings as to the identity and value of
the property, liabilities and financial resources.
2. The Court should identify and assess the contributions of the
parties and determine the contribution based entitlements of
the parties.
3. The court should identify and assess relevant matters referred to
in s 79(4)(d, e, f and g) so far as they are relevant and determine
the adjustment (if any) that should be made to the contribution
based entitlements.
4. The court should consider the effect of those findings and
determination and resolve what order is just and equitable in all
the circumstances of the case.
A presentation by
Paul Glass
Why is the cat loose amongst the pigeons?
Martin v Crawley [2012] FamCA 1032 (10 December 2013) per Coleman J
• Stanford raises doubt as to whether the ‘four step’
approach remains permissible, and, if it does, how
the requirements of s 79(2) are addressed.
• Since Hickey, the justice and equity of proposed
orders for alteration of interests in property has been
considered after, and largely in light of, the Court’s
conclusions with respect to section 79(4) and 75(2).
A presentation by
Paul Glass
Get out of Jail?
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
In many cases where an application is made for a property
settlement order, the just and equitable requirement is
readily satisfied by observing that, as the result of a choice
made by one or both of the parties, the husband and wife
are no longer living in a marital relationship.
It will be just and equitable to make a property settlement
order in such a case because there is not and will not
thereafter be the common use of property by the husband
and wife.
No less importantly, the express and implicit assumptions
that underpinned the existing property arrangements have
been brought to an end by the voluntary severance of the
mutuality of the marital relationship.
A presentation by
Paul Glass
Get out of Jail?
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
That is, any express or implicit assumption that the parties
may have made to the effect that existing arrangements of
marital property interests were sufficient or appropriate
during the continuance of their marital relationship is
brought to an end with the ending of the marital
relationship.
And the assumption that any adjustment to those interests
could be effected consensually as needed or desired is also
brought to an end.
Hence it will be just and equitable that the court make a
property settlement order.
What order, if any, should then be made is determined by
applying s 79(4).
A presentation by
Paul Glass
Erdem & Ozsov
Erdem & Ozsov [2012] FMCAfam 1323 (5 December 2012) per Walters FM
• ‘Arguable’ effect of Stanford:
1. Identify, according to ordinary common law and equitable
principles, the existing legal and equitable interests of the
parties in their property.
2. Ascertain whether it is just and equitable to make an order
altering the interests of the parties in their property. In most
cases – relevantly, where the parties have separated and are no
longer living in a marital relationship – the underlying
assumptions that the parties had to the effect that the existing
property ownership arrangements were functional (or perhaps
irrelevant) and could be varied by agreement between them no
longer apply. That fact alone should ordinarily persuade the
Court that is just and equitable to make orders altering the
parties interests in their property.
A presentation by
Paul Glass
Erdem & Ozsov
[2012] FMCAfam 1323 (5 December 2012) per Walters FM
• ‘Arguable’ effect of Stanford if just and equitable to
make orders:
3. Assess the extent of each party’s contributions under the
various sub-headings described in section 79(4); and
4. Thereafter, consider the financial resources, means and
needs of the parties and the other matters set out in
section 75(2) so far as they are relevant.
Adopted by Burchardt FM in Dell & Nachman [2013] FMCAfam
37, Saito & Saito [2013] FMCAfam 112 and Singleton &
Singleton [2013] FCCA 9.
A presentation by
Paul Glass
‘just and equitable’ – what does it mean?
Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52
• Stanford:
o It is a qualitative description of a conclusion reached after
examination of a range of potentially competing considerations.
o It does not admit of exhaustive definition.
o It is not possible to chart its metes and bounds.
• Not just separation
o When separation not voluntary, the bare fact of separation does not
demonstrate that the husband and wife have any reason to alter the property
interests that lie behind whatever common use they may have made of assets
when they were able to and did live together.
o There may be circumstances other than a voluntary separation of the parties
marking the breakdown of their marital relationship in which a court may be
satisfied that it is just and equitable to make a property settlement order.
A presentation by
Paul Glass
Business as usual?
• ‘Step 1‘
Identify, according to ordinary common law and equitable principles, the existing
legal and equitable interests in the property.
• ‘Step 2’?
o Undisputed voluntary separation
o Mutual applications for adjustive section 79 orders
In this case the parties agree (as do I) that by reason of the
manner in which they conducted their marriage, which has now
irretrievably broken down, it is just and equitable that their
interests and rights in property are altered. Where they disagree
is in relation to what the adjustment should comprise. - Ryan J
Wolter & Wolter [2012] FamCA 1133 (21 December 2012)
Jayce & Carter [2013] FamCA 52 (1 February 2013)
A presentation by
Paul Glass