Informal Property Settlements: When will the Court decline to make Property Settlement Orders?
The recent appeals decision in the matter of Horrigan & Jennings  FAMCAFC206 has highlighted the willingness of the Court to decline to make property settlement Orders, where it is not just and equitable to do so.
In this somewhat unusual matter, the parties were in a de facto relationship from 1987, with the de facto husband asserting separation occurred in April 2009, whilst the de facto wife asserted that separation took place on 22 July 2002. To invoke the jurisdiction of the Family Law Act, parties had to be in a de facto relationship as at 1 March 2009.
The de facto husband in this matter commenced proceedings under the Family Law Act in 2010. The parties entered into Final Property Orders by consent in March 2011. This was notwithstanding the de facto wife continued to assert that the date of separation was July 2002.
In December 2012, the de facto wife approached the Court seeking to set aside the Orders, whilst maintaining separation took place in July 2002. The de facto husband sought a summary dismissal of the de facto wife’s application, or in the alternative, a hearing as to the Court’s jurisdiction to entertain the application.
Justice Cleary ultimately held a hearing as to the Court’s jurisdiction to make the Orders of 11 March 2011. She was not satisfied that the relationship ended after 1 March 2009, and therefore the Court did not have the jurisdiction to make the original Consent Orders. Accordingly, the Consent Orders were set aside on 8 October 2015.
This then resulted in the parties having effectively entered into an informal property settlement – being a settlement which was not formalised by way of an Order of the Court, or Binding Financial Agreement.
The de facto wife sought to obtain a fresh property settlement in her favour, with a further cash payment to her in addition to what she had received in 2011. The de facto husband, for his part, sought that the Court dismiss her application and that there otherwise be no alteration of property interests. It was the de facto husband’s position that it was not just and equitable under section 90SM(3) of the Family Law Act, pursuant to which the Court “must not make an Order…unless satisfied that, in all the circumstances, it is just and equitable.”
Justice Cleary dismissed the de facto wife’s Application and declined to make order for a property settlement, having regard to the decisions in Stanford and Bevan. The de facto wife appealed this judgment.
In reaching her decision, Justice Cleary took into account the parties had voluntarily adjusted their property interests in 2011, with each party thereafter acting on that settlement in the expectation that they are entitled to deal with their property as they wish to do so. She also took into account the delay of the resolution of the matter, as a result of the de facto wife’s contention as to the date of separation, with her very late concession after the original Orders were set aside that in fact separation took place after March 2009. Justice Cleary also noted that the wife’s financial circumstances had in fact improved since the 2011 settlement, whilst the de facto husband’s circumstances had worsened.
On appeal, the Full Court confirmed that, in order for a Judge to determine if it is just and equitable to alter property interests, the Court is not required to consider the financial, non-financial and homemaker contributions of the parties under section 79(4) or section 90SM(4).
Having regard to the issues taken into account by Justice Cleary, the Full Court confirmed that it was not just and equitable for any property alteration of property interests to be undertaken. The Court approved the first instance Judgment, and confirmed that, in effect, the informal property settlement would stand and the de facto wife would receive no further adjustment of property in her favour.
If you have entered into an informal property settlement with a former partner, and are concerned as to whether or not that partner can bring further proceedings against you, our accredited specialists in Family Law are able to advise you. Please contact Swaab on +61 2 9233 5544.