It is quite likely that if you asked anybody on the street whether a husband would be entitled to a property settlement after a twenty-year marriage in Australia, the answer would be a resounding yes!

however as the case of Paxton [2016] makes clear, that would reveal a fundamental misunderstanding of the way property divisions are determined in Australia since 2012 and the landmark High Court case of Stanford v Stanford.

Importantly, that case reminded the Courts, lawyers and family law litigants that a Court exercising family law jurisdiction in Australia is not ordering a “property settlement” at all. Rather, the Court has the power to make orders for the “alternation of property interests”, and this is so if, and only if, the Court is satisfied it is “just and equitable” to do so.

This means that a Court may determine that it is not just and equitable to make any adjustment of property interests upon the conclusion of a marriage or de facto relationship.  Although the published cases where the Court has determined it is not just and equitable to make any adjustment of property interests are few, such cases are almost universally factually very unusual and interesting!

An interesting case in which a Judge of the Federal Circuit Court of Australia determined it would not be just and equitable to make any orders for the adjustment of property interests is the case of Paxton [2016].

in that case:

• the parties had been married for 20 years before their final separation;

• the parties did not legal divorce for a further ten years;

• the husband applied to the Court for a property settlement, however he died before the final hearing.  The husband’s brother continued the case on behalf of the deceased;

• the wife had not reparteed since separation,. She continued to live in the former matrimonial home and had the care of two adult children, both of whom had disabilities;

• the husband and wife had brought the major asset of the marriage, being the former matrimonial home, together during the marriage as joint tenants and there being no property orders made or change to this legal ownership since the marriage ended, , once husband died, the Wife became the sole legal owner of the  home; and

• The husband’s brother, conducting the case on behalf of the husband, sought an order in the Court that the home be sold, and the Husband’s estate receive the share of the net sale proceeds the Court ordered.

The Court said in this case that the Husband’s brother (conducting the case on behalf of the Husband) was wrong to presume the Husband was entitled to an adjustment of property interests. 

Rather, in the circumstances of this case – because the Husband had died – section 79(8)(b) of the Act applied, which in summary by the Court “required a court considering an application for a property settlement order which is continued by or against the legal personal representative of a deceased party to determine first, whether it would have made an order with the respect to the property if the deceased party had not died and second, whether, despite the death, it is still appropriate to make an Order.”

This being the pathway the Court has to follow, the Court determined it would not be just and equitable to make an Order in favour of the husband, meaning that the Court would not have made an Order in his favour had he remained alive. 

That being the case, the Court did not have to move onto answering the second question of whether it is still appropriate to make the Order after the death of the husband.

The Court concluded:

• “Mr Paxon (the husband’s brother) has not demonstrated that it is just and equitable to make any order dividing he interests of the wife and her late husband.  Mr Paxton has not shown that his later brother’s needs were not being met during his lifetime, nor that they required addressing at this time”;

• “Even if the husband had not died, it was similarly not just and equitable for a property settlement order to be made in this case.  The husband died in …2015.  No material difference in the circumstances of the husband and wife existed between 2004 when the husband permanently departed the former matrimonial home [and] 2015 when he died and February 2016 being the date of the trial… Aside from the gradual deterioration in the health of both the husband the wife over a the period following the husbands’ permanent departure from the former matrimonial home until the date of his death, no material alteration occurred in the respective states of the legal and equitable interest in the property of the husband and wife.

The Court, giving great weight to the wife’s high needs, said that Mr Paxton should have paid closer attention to the appalling financial circumstances of the wife” and dismissed his application with costs against the Husband’s estate.

As the above makes abundantly clear, there is no “entitlement” to a “property settlement” or “adjustment of property interests” at the end of a marriage or de facto relationship in Australia. This remains the case even if the marriage is a long one and there has been a lengthy period of time between separation and the application to the court for Orders, or if the application was validly brought within one (1) year of the date of a legal divorce and validly continued by a legal personal representative. 

At Sanicki Lawyers, our expert Family Law Team are here to help you navigate the family law property system, whether it be by way of a negotiated property settlement or litigation in the courts. 

We can also assist you if you have concerns about a relative or close friend whom you worry may pass away without entering into a formal property settlement (whether it be Court Orders or a Binding Financial Agreement).

Call Sanicki Lawyers today on 03 95100 8999 to speak to Stephanie Hope, Senior Associate and Head of Family Law, or contact Stephanie at stephanie@sanickilawyers.com.au