This article examines the circumstances where an order for a final property settlement could be made where there is an intact marriage. In the recent decision of the High Court in Stanford v Stanford [2012] HCA 52 (15 November 2012), the Court  did just that. In this case, the parties had separated involuntarily after a long marriage due to the wife’s health. The wife suffered from dementia and had entered a nursing home.

Both the husband and wife had been married previously and each had children from their first marriages. Their major asset was the family home. Both the husband and the wife were in their eighties at the time of separation. Each had made a Will leaving their share of the family home to their children.

After the wife entered the nursing home, the husband deposited $40,000 into her bank account for her financial support. The wife’s daughters, as her case guardian, commenced proceedings in the Federal Magistrates Court for final orders. The husband opposed the orders sought by the wife which, in effect, would mean that he would have to sell their home in which they had lived for many years. The husband also challenged the power of the Federal Magistrates Court to make orders for a property settlement in circumstances where the parties had not separated voluntarily.

Federal Magistrate Duncanson determined that she had jurisdiction to make the orders sought by the wife and that she could exercise her power to do so. The orders she made in effect gave the wife 42.5% of the net pool of assets, which meant that the husband would be forced to sell his home to comply with the orders. The husband appealed to the Full Court of the Family Court of Western Australia. During the Full Court proceedings, the wife died.

When the Full Court gave judgment and made final orders they provided that the wife should receive 42.5% of the net pool of assets, either on the death of the husband or on the sale of the former matrimonial home, whichever first occurred. In the judgment, the Full Court looked at the moral and ethical considerations relating to the proceedings stating that “the many years of marriage and the wife’s contributions demand that these moral obligations be discharged by an order for a property settlement.”

The husband then sought leave to appeal to the High Court of Australia.

The husband’s submission in the High Court was that the Family Court did not have power to make an order pursuant to s.79 of the Family Law Act 1975 (Cth) for a division of the matrimonial assets, because the parties were not separated and their marriage was intact. He also argued that the wife’s legal representatives therefore could not commence proceedings in these circumstances.

The High Court by a majority dismissed the wife’s application for a property settlement. In so doing, the High Court looked at the circumstances where it would be just and equitable to make an order for a property settlement as required under the Family Law Act and the circumstances when it would not be just and equitable to make an order for a property settlement.

This case will no doubt be the subject of further commentary by family lawyers and estate planners.