Stanford v Stanford

Case [2012] HCA 52

HIGH COURT OF AUSTRALIA

FRENCH CJ,
HAYNE, HEYDON, KIEFEL AND BELL JJ

STANFORD  APPELLANT

AND

STANFORD  RESPONDENT

Stanford v Stanford

[2012] HCA 52

15 November 2012

P23/2012

ORDER

1.Appeal allowed with costs.

2.Set aside paragraphs 1 and 2 of the orders of the Full Court of the Family Court of Australia made on 19 January 2012.

3.Vary the orders of the Full Court of the Family Court of Australia made on 21 October 2011 by adding a paragraph dismissing the Form 1 Application for Final Orders filed on behalf of the respondent by her case guardian in the Family Court of Western Australia on 17 August 2009.

On appeal from the Family Court of Australia

Representation

P M Dowding SC with P W Johnston and J R Brady for the appellant (instructed by Carr & Co)

M R Berry with G Athanasiou for the respondent (instructed by Ferrier, Athanasiou & Kakulas)

Interveners

P J Hanks QC with R L Hooker and D M Forrester intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor)

G R Donaldson SC, Solicitor-General for the State of Western Australia with F B Seaward intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor (WA))

J G Renwick SC with S Robertson intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW))

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Stanford v Stanford

Family law – Family Court – Jurisdiction – Proceedings to alter property interests – Husband and wife lived apart after wife admitted into full time residential care – Husband continued to live in matrimonial home and provide financially for wife's care – Husband and wife had separate wills in favour of their children from earlier marriages – Wife by case guardian applied for order altering interests in marital property between husband and wife – Wife died before Full Court of Family Court delivered judgment and daughters continued proceeding as wife's legal personal representatives – Whether "matrimonial cause" within definition of Family Law Act 1975 (Cth) – Whether there was power to make property settlement order.

Family law – Proceedings to alter property interests – Property settlement order – Death of either party to pending proceedings – Whether it would have been just and equitable to make property settlement order had wife remained alive – Whether still appropriate despite wife's death to make property settlement order.

Constitutional law (Cth) – Powers of Commonwealth Parliament – Whether provision for adjudication of claim for property settlement order continued by legal personal representative is law with respect to marriage under s 51(xxi) or matrimonial causes under s 51(xxii).

Words and phrases – "intact marriage", "involuntary separation", "just and equitable", "moral obligations".

Constitution, s 51(xxi), (xxii).
Family Law Act 1975 (Cth), ss 4(1), 39(2), 43(1), 74‑75, 79.

  1. FRENCH CJ, HAYNE, KIEFEL…

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Stanford v Stanford [2012] HCA 52
Case
[2012] HCA 52
Decision Date

CaseChat Overview and Summary

The High Court of Australia heard an appeal concerning property settlement orders in a family law matter. The parties were a husband and wife who had married in 1971, each having children from previous marriages. The wife suffered a stroke in 2008 and was subsequently placed in full-time residential care due to dementia, leading to an involuntary separation from the husband. The wife, through her case guardian, initiated proceedings seeking an alteration of property interests. After the wife's death, her daughters continued the proceedings as her legal personal representatives.

The central legal issues before the High Court were whether the proceedings constituted a "matrimonial cause" within the meaning of the *Family Law Act 1975* (Cth), and consequently, whether the court possessed the power to make a property settlement order. Further, the Court had to determine whether it would have been just and equitable to make such an order had the wife remained alive, and if so, whether it remained appropriate to make an order after her death. The constitutional validity of provisions allowing for the continuation of such claims by legal personal representatives was also implicitly raised.

The High Court reasoned that the power to make property settlement orders under s 79 of the *Family Law Act 1975* is contingent on the court being satisfied that it is "just and equitable" to do so in all the circumstances. This assessment requires an initial identification of the parties' existing legal and equitable interests in the property. The Court found that the concept of "moral obligations" was misleading in this context, as rights were to be determined by law, not by non-legal considerations. Crucially, the Court concluded that it had not been demonstrated that it would have been just and equitable to make a property settlement order had the wife remained alive, particularly given the involuntary nature of the separation and the wife's needs being potentially met through other means.

Consequently, the High Court allowed the appeal, setting aside the orders of the Full Court of the Family Court of Australia. The Court varied the Full Court's orders to include a dismissal of the wife's application for a property settlement order, thereby upholding the husband's appeal against the initial property settlement order made at first instance.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Set aside paragraphs 1 and 2 of the orders of the Full Court of the Family Court of Australia made on 19 January 2012.

3. Vary the orders of the Full Court of the Family Court of Australia made on 21 October 2011 by adding a paragraph dismissing the Form 1 Application for Final Orders filed on behalf of the respondent by her case guardian in the Family Court of Western Australia on 17 August 2009.

Background

Background to the litigation

These reasons will demonstrate that it was not shown that, had the wife not died, it would have been just and equitable to make an order with respect to property. It follows that, after her death, it could not be found to be "still appropriate to make an order with respect to property"[6]. To explain these conclusions it is convenient to begin with the facts and the course of proceedings that preceded the appeal to this Court.[6]s 79(8)(b)(ii).Facts and course of proceedings The husband and wife married in 1971. It was the second marriage for each. Each had children by his or her first marriage. For 37 years the parties made their matrimonial home in a suburb of Perth in a house registered in the husband's name. (The husband had bought the house with his first wife but, after the end of that marriage, the house was transferred to him.) The husband and wife retired in 1989. In 1995, the husband made a will in which he left the house, subject to a life tenancy in favour of his wife, to the children of his first marriage. In 2005, the wife made a will leaving her estate to the children of her first marriage. In December 2008, the wife suffered a stroke. She was admitted into full time residential care and thereafter could not, and did not, return to live with her husband. She developed dementia. Through all this, the husband continued to provide for her. He put about $40,000 into a bank account to provide for the wife's medical needs or requirements. In August 2009, the wife, by her daughter as case guardian, applied to the Family Court of Western Australia for orders that the matrimonial home be sold and the net proceeds be divided equally between the parties and that the husband's superannuation entitlements and the parties' combined savings be divided equally between them. The application was heard in the Magistrates Court of Western Australia. At first instance, the magistrate (Duncanson M) determined the available assets of the parties and the contributions which each had made and concluded[7] "that the overall percentage based on contributions should be 57.5% to [the husband] and 42.5% to [the wife]". The magistrate ordered the husband to pay his wife $612,931 within 60 days. The magistrate said[8] that:"As a result of the division arrived at based on my assessment of the contribution of the parties to this long marriage, the needs of both will be catered for and I am satisfied therefore that the outcome is one which is just and equitable."[7]S by her Case Guardian R and S by his Case Guardian S [2010] FCWAM 26 at [132].[8][2010] FCWAM 26 at [163]. The husband appealed to the Full Court of the Family Court of Australia. After the appeal had been heard, but before judgment, the wife died. On 21 October 2011, the Full Court[9] allowed the appeal and set aside the magistrate's decision. The Full Court concluded that the magistrate had erred in a number of respects. For present purposes, it is sufficient to notice that the Full Court observed[10] that the magistrate had not sufficiently considered the effect of her orders on the husband "and the fact that this was an intact marriage" in considering what was "just and equitable". In particular, the Full Court said[11] that it was "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 that her reasonable needs could be met in other ways particularly by maintenance" (emphasis added).[9](2011) FLC ¶93‑483.[10](2011) FLC ¶93‑483 at 85,990 [112], 85,991 [119].[11](2011) FLC ¶93‑483 at 85,990 [112].

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FRENCH CJ, HAYNE, KIEFEL AND BELL JJ HEYDON J
Whether it was just and equitable to make a property settlement order in this case was not answered by pointing to moral obligations. Reference to "moral" claims or obligations is at the very least apt to mislead. First, such references appear to invite circular reasoning. On its face, the invocation of moral claims or obligations assumes rather than demonstrates the existence of a legal right to a property settlement order and further assumes that the extent of that claim or obligation can and should be measured by reference to the several matters identified in s 79(4). Second, the term "moral" might be used to refer to a claim or obligation that is based on the kind of contribution described in s 79(4)(b) – "the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage ... to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them". But nothing is gained by describing such a contribution as founding a "moral" claim or obligation. Moreover, if the word "moral" was being used in this context with some wider meaning or application, it is important to recognise that it is used in a way that finds no legal foundation in the Act or elsewhere. It is, therefore, a term that may, and in this case did, mislead. The rights of the parties were to be determined according to law, not by reference to other, non-legal considerations. The references by Brennan J in Fisher v Fisher[38] to moral claims should not be misunderstood as suggesting otherwise.[38](1986) 161 CLR 438 at 457‑458.Conclusions and orders It was not shown that, had the wife not died, it would have been just and equitable to make a property settlement order. It follows that it was not open to the Full Court to find that it was still appropriate to make an order with respect to property. The appeal to this Court should be allowed with costs. Paragraphs 1 and 2 of the orders of the Full Court of the Family Court of Australia made on 19 January 2012 should be set aside. Paragraph 3 of the Full Court's orders, by which the costs of the appeal to that Court were reserved for further consideration, should stand. The orders made by the Full Court on 21 October 2011 allowing the husband's appeal to that Court and setting aside the property settlement order made at first instance should be varied by adding an order dismissing the application for a property settlement order made on the wife's behalf and continued by her legal personal representatives. A husband and wife married in 1971. The husband had children by an earlier marriage. So did the wife. The husband and wife had no children by their marriage. On 31 December 2008, the wife suffered a severe stroke and was later diagnosed with dementia. There were disputes between her daughters and the husband about which nursing care facility the wife should be placed in. The wife's daughters favoured a facility that required payment of a $300,000 bond or entrance fee. The husband did not.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH CJ, HAYNE, KIEFEL AND BELL JJ, HEYDON J

The expressions "intact marriage" and "breakdown" of the relationship or marriage were evidently used in the husband's submissions as expressions of opposing meaning. But beyond that opposition, the content of neither was spelled out. In particular, the marriage in this case was described as "intact" even though the husband and wife lived apart with no prospect of resuming cohabitation and even though the wife's dementia would inevitably affect the mutuality of the marital bonds between them. The expression "intact marriage" appeared to be used in a way that gave definitive significance to the fact that the separation of the parties was not voluntary, but the legal significance of this fact for the husband's proposition about lack of power was not identified. Nor was its legal significance explored for the husband's second argument about the exercise of power by the magistrate and by the Full Court (if, contrary to the husband's principal argument, they had power to make a property settlement order in this case). Yet it is in this second context that the involuntary nature of their separation is significant. To explain why that is so, it is necessary to examine the operation of s 79.The operation of s 79 It will be recalled that s 79(2) provides that "[t]he 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) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub‑sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order. The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition[21]. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules"[22], nevertheless, three fundamental propositions must not be obscured.[21]See Mallet v Mallet (1984) 156 CLR 605 at 608 per Gibbs CJ; [1984] HCA 21.[22]Mallet v Mallet (1984) 156 CLR 605 at 608 per Gibbs CJ. First, 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. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. Second, 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. In Wirth v Wirth, Dixon CJ observed[23] that a power[24] to make such order with respect to property and costs "as [the judge] thinks fit", in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong[25]:"The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down". [23](1956) 98 CLR 228 at 231-232; [1956] HCA 71.[24]Given by The Married Women's Property Acts 1890‑1952 (Q), s 21, a provision which corresponded with s 17 of the Married Women's Property Act 1882 (Imp).[25](1976) 136 CLR 248 at 257 per Barwick CJ, Gibbs, Stephen and Mason JJ; [1976] HCA 39.