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Money money money… Can a Family Law property settlement occur when a married couple are involuntarily separated?

At the breakdown of a relationship, when all is said and done, in most cases it then comes down to the dollars and cents. Each party wants a slice of the pie and even for rich multimillionaires Divorce and the resulting property settlement can be financially crippling. For example, Madonna’s separation with Guy Richie cost the queen of pop US$76 million.

In Australia, parties traditionally could only seek a property settlement after the breakdown of their marriage. In November, 2012 however, the High Court of Australia ruled in a cases called Stanford and Stanford that a property adjustment could be made even if the parties to a marriage are not separated or if they are separated involuntarily.

A Court must first determine however, if it is “just and equitable” to do so as a mere physical separation of the parties to a marriage would not cause a Court to intervene in ordinary circumstances.

The case of Stanford has caused much debate throughout family law circles as to the effect it may have on the future of family law property settlements. It threw into doubt the customary four step process used to determine property settlements that has been in place for over twenty years.

Those four steps include:-

  1. Identifying the assets, liabilities and financial resources of the parties;
  2. Assessing the contributions of the parties, both financial and non-financial, to the acquisition, preservation or maintenance of matrimonial property;
  3. Assessing the future needs of each party; and
  4. Considering what Orders are just and equitable given the circumstances of the case.

The Stanford case, whilst not overruling the above four step process, now seems to suggest that the first question a Court should have answered is whether it is “just and equitable” to make a property division order at all? This question depends on the facts and circumstances of each individual case.

The facts in the case of Stanford were quite unique. Due to ill health, the Wife was forced to reside in assisted care and was separated from her Husband, although her Husband was still supporting his Wife both emotionally and financially.

The Wife’s daughter from a previous marriage, in her role as her mother’s Guardian, lodged an Application for Property Orders seeking a property adjustment. The Magistrate held that a property adjustment should occur. An assessment of the parties’ various contributions and future needs then took place and as a result, the Federal Magistrate’s Court ordered that the Husband pay the Wife a lump sum cash payment.

The Husband appealed the decision to the Family Court of Australia however, whilst waiting for the Family Court’s judgement to be handed down, the Wife died. The Family Court initially held that the Magistrate should not have held that there was cause to order a property division. The Wife’s subsequent death however, made the Family Court rethink its position and it held that upon the Husband’s death, the cash payment originally ordered should be transferred to the Wife’s estate.

The Husband then appealed to the High Court of Australia. His appeal was ultimately successful and the High Court held that the mere fact of physical separation, when involuntary, does not necessarily open the gate for a property settlement. The High Court did indicate however, that in some unique cases it may be appropriate and that it may be “just and equitable” to do so.

Overall, any division of matrimonial property will need to be “just and equitable” in all of the circumstances and this should be in the forefront of your mind in deciding to make any family law property applicaiton.

For more information on family law matters, please contact our expert Family Law team at Brazel Moore Lawyers on(02) 4324 7699.

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