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Family Provision Claims and the Family Court

Family Law

Can children in certain circumstances utilise the Family Court to circumvent family provision orders?  The High Court case of Stanford v Stanford [2012] HCA 52 dealt with such a scenario.

In the Stanford matter the wife was 89 years and the husband was 87 years.  It was the parties’ second marriage and both had adult children from their first marriages and had been married 37 years.

The husband and wife lived in the home received by the husband from his first marriage.  In 1974 the wife sold her home to her daughter.

In March 1995 the husband made a will leaving his estate to be divided equally between his sons and the wife intended to leave her estate to her daughters.  The husband’s will provided for the wife to have a life tenancy in their matrimonial home.

In September 2005 the wife made an Enduring Power of Attorney in favour of her daughters. In December 2008 the wife suffered a stroke and the onset of dementia. The wife required full-time care and was unable to return to live with the husband.  The husband placed $40,000 into a bank account to provide for his wife’s medical treatment and care and visited his wife three times a week.

In August 2009 the wife’s daughter brought proceedings as her case guardian under section 79 of the Family Law Act 1975 in the Family Court for an order that the matrimonial home be sold and the net proceeds of sale together with the husband’s superannuation entitlements and joint savings be divided equally between the parties.  By now the wife had lost testamentary capacity to change her will.

The daughter succeeded and the Magistrate ordered that the property be divided 57.5% to the husband and 42.5% to the wife.  The husband was ordered to pay the wife $612,931 within 60 days on the basis that this was a just and equitable outcome.

The husband appealed to the Full Court of the Family Court.  Before judgment was pronounced the wife died.  In November 2011 the wife’s daughters jointly applied to the Family Court to be substituted as legal personal representatives of the wife on the basis that they were joint executors and beneficiaries of the wife’s last will and testament.  The husband submitted that due to the death of his wife it was inappropriate for any order for property settlement to be made.

In January 2012 the Full Court delivered its judgment that on the husband’s death the amount of $612,931 be paid to the wife’s legal personal representatives.

The husband sought special leave to appeal to the High Court. The High Court found that the Family Court had the power to make orders with respect to the property as the claim by the wife’s personal legal representative remained a claim arising out of the marital relationship of the parties.  However the High Court stressed that the first enquiry to be made by the Court is that under section 79(2) of the Family Law Act 1975 whether it is “just and equitable” to make an order including in circumstances where a party has died.

The High Court set aside the property orders made by the Full Court on the basis that the wife’s needs were already being met by the husband and that a maintenance order should have been made.

The Stanford matter highlights the difficulties which may arise for parties in second marriages with children from previous relationships.  The Family Court may provide an avenue for circumventing family provision orders, even in circumstances where a marriage is intact, if it is found by the Family Court on its first enquiry to be just and equitable in the circumstances to make property orders.