Stanford and its aftermath

1. Stanford and its aftermath The end of the world as we knew it? Paul Glass

2. Background Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 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.

3. Trial Magistrates’ Findings Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 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.

4. First Full Court Judgment Stanford & Stanford (2011) FLC 93-483 Paul Glass • 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.’

5. First Full Court Judgment Stanford & Stanford (2011) FLC 93-483 Paul Glass • ‘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.

6. Second Full Court Judgment Stanford & Stanford (2012) FLC 93-495 Paul Glass • 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.

7. Power to make property orders where no separation Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 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.

8. “The Operation of S 79” Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 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.

9. “The Operation of S 79” Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 3 fundamental propositions: • 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.

10. “The Operation of S 79” Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 3 fundamental propositions: • 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.

11. “The Operation of S 79” Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • 3 fundamental propositions: • 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.

12. Why is the cat loose amongst the pigeons? Hickey (2003) FLC 93-143 Paul Glass • The case law reveals a preferred approach involving four inter-related steps: • The Court should make findings as to the identity and value of the property, liabilities and financial resources. • The Court should identify and assess the contributions of the parties and determine the contribution based entitlements of the parties. • 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. • 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.

13. Why is the cat loose amongst the pigeons? Martin v Crawley [2012] FamCA 1032 (10 December 2013) per Coleman J Paul Glass • 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).

14. Get out of Jail? Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass 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.

15. Get out of Jail? Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass 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).

16. Erdem & Ozsov Erdem & Ozsov[2012] FMCAfam 1323 (5 December 2012) per Walters FM Paul Glass • ‘Arguable’ effect of Stanford: • Identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in their property. • 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.

17. Erdem & Ozsov [2012] FMCAfam 1323 (5 December 2012) per Walters FM Paul Glass • ‘Arguable’ effect of Stanford if just and equitable to make orders: • Assess the extent of each party’s contributions under the various sub-headings described in section 79(4); and • 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.

18. ‘just and equitable’ – what does it mean? Stanford & Stanford (2012) FLC 93-518; (2012) HCA 52 Paul Glass • Stanford: • It is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. • It does not admit of exhaustive definition. • It is not possible to chart its metes and bounds. • Not just separation • 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. • 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.

19. Business as usual? Paul Glass • ‘Step 1‘ Identify, according to ordinary common law and equitable principles, the existing legal and equitable interests in the property. • ‘Step 2’? • Undisputed voluntary separation • 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)