Infor­mal Prop­er­ty Set­tle­ments: When will the Court decline to make Prop­er­ty Set­tle­ment Orders?

The recent appeals deci­sion in the mat­ter of Hor­ri­g­an & Jen­nings [2018] 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