What is a Stanford Argument in Family Law Property matters?

When solicitors indicate that they are going to run a "Stanford" argument, their position is probably that the factual circumstances of the particular case are such that there should be no orders altering "who gets what", and each party should retain what is in their current title and possession.

In the Australian High Court case of Stanford v Stanford [2012] HCA 52 the Court held that it was not "just and equitable" to make orders altering a married couple's property interests simply because they were involuntarily separated (one spouse was required to move into a nursing home). Following the case of Stanford, practitioners may argue that there should be no alteration of the parties property interests in particular cases.

In the case of Cosola & Moretto [2023] FedFamC1A 61 the Court decided that it was not fair to make orders altering the parties property interests after a 15 year de facto relationship. There were no children of the relationship. The parties separated in December 2018.

Prior to cohabitation the appellant de facto wife owned an unencumbered property at Suburb G (“the Suburb G property”) and the de facto respondent husband owned a property at Suburb D, subject to a debt to his parents (“the Suburb D property”). At the date of trial the de facto Husband's home was worth significantly more than the de facto wife's home and this is why the wife sought orders requiring the husband to pay her funds (altering their property interests in her favour).

At cohabitation, the wife moved into the husband's property, where the parties lived during their relationship. The wife did not directly contribute to the costs or outgoings associated with the de facto husband's property.

The de facto wife retained her own Suburb G property throughout the parties’ relationship. It was initially tenanted, and the wife retained all rental income received. It was later made available for occupation to the de facto wife's son. Her son made sporadic payments of rent or board to his mother and, when he did not pay rent, he effected repairs and renovations to the property. The husband did not directly contribute to the costs or outgoings associated with the Suburb G property.

The respondent husband is a tradesperson. He has limited reading and writing skills. Prior to cohabitation, he conducted an enterprise as a sole trader. In December 2003, he and the wife incorporated a company, of which the husband was the sole director. The parties were equal shareholders. It was the husband’s uncontested evidence, accepted by the primary judge, that the company was a vehicle to receive income by way of him undertaking skilled work for a company, who required a company rather than a sole trader to do their work.

Importantly, the parties did not operate or share a personal joint bank account during their relationship. They did not acquire real estate jointly, nor did they obtain any joint loans. There was no evidence before the primary judge that the parties discussed how they would manage their financial affairs, that they had made future plans for their life together, or that they had discussed how they would share their property if they retired or separated. The parties led mostly financially separate lives. This was exemplified by the de facto wife taking mortgage over her property without agreement or discussion with the husband and loaning funds to her son which totalled approximately $253,000, all sums had been repaid by the son by the time of trial. Each party contributed to one another by undertaking home maker duties.

A notable part of the judgment is set out as follows:

"85. I am satisfied that the unstated assumptions underpinning the parties’ relationships were that during the relationship they were each free to deal with their assets as they chose to do so. They gave effect to that assumption during the relationship. The parties did not intermingle their financial affairs and did not conduct a joint personal bank account. They held and dealt with their real property, being their single biggest asset, free of consultation or consideration of what the other party may have thought was appropriate to do. The [appellant] had the benefit of occupation of the [respondent’s] home rent free whilst making her home available for use to her son. Her children lived in the [respondent’s] home for periods of time."

"86. There is no presumption that following the breakdown of a relationship lasting 15 years that an order should be made adjusting the parties’ legal and equitable interests in their property. There must be a principled basis for doing so, arising out of how the parties conducted their relationship. I am not satisfied that one has been established. I am not satisfied that it is just and equitable to make an order."

This case exemplifies the extremely wide discretion that judges have when determining family law matters and that an order altering property interests is not necessarily guaranteed. The unpredictable nature of family law property and financial matters exemplifies the benefit to people finalising their arrangements at mediation rather than proceeding to final hearing and allowing a third party to determine the outcome, which may be unexpected and disappointing.

By Katherine Guilfoyle