Court Rules That It Was Not Just and Equitable to Sell Matrimonial Home after

Keywords: Family Law Act, section 79(2) and 79(8)(b); property distribution; property distribution following death; just and equitable property distribution.

Introduction

 The recent case of Paxton & Paxton [2016] FCCA 1689 (7 July 2016) heard by Judge Wilson, gave insight as to when the  Court will refuse to make an family law property order on the grounds that it would not be just and equitable to do so.

Particular emphasis was placed on the principles established in the High Court’s decision of Stanford v Stanford [2012] HCA 52 (‘Stanford’) and the Court’s interpretation of sections 79(2) and 79(8)(b) of the Family Law Act 1975 (‘the Act’) (dealing with the alteration of property interests following the breakdown of a relationship). In affirming Stanford, Judge Wilson also reiterated the importance of section 79(2) as a separate and distinct aspect in property settlements and its role in ensuring a just and equitable outcome.

Background

After a 20-year marriage, the parties separated finally when the husband left to move in with his de facto partner. The parties divorced some 10 years later in 2014. The wife remained in the matrimonial home which was owned by the parties as joint tenants. In 2014 the husband filed an initiating application seeking orders for the division of assets between himself and the wife.

The husband died early in 2015. His death fell between the dates the proceedings commenced and the trial in February 2016. In May 2015, probate of the husband’s estate was granted to the husband’s brother, Mr Paxton. Pursuant to orders made, Mr Paxon was substituted as applicant in the proceeding in his capacity of the husband’s legal personal representative. As joint tenants, the wife became the sole proprietor by survivorship of the matrimonial home.  Her status as a surviving joint tenant, however, was yet to be registered and she sought an order permitting her to ‘remain in the matrimonial home as a home for her and her children’.

Both parties agreed that the matrimonial home would have to be sold if any division of property in favour of the husband were to be ordered and agreed on the value of $380,000. The wife was of very poor health, financially destitute and had no apparent prospect of future employment. The adult son was mentally infirm, and the adult daughter suffered from a form of cerebral palsy as well as learning difficulties.

The wife continued to be the primary homemaker and care-giver to her children, although adults, who continued to reside with her. The physical and intellectual difficulties of the children meant they would likely reside with her well into the future. The ultimate question for the Court was whether it was just and equitable that the matrimonial home be sold in light of the factors above.

Decision

 The Court has a broad power under s 79 of the Act to alter the interests of parties to a marriage in relation to property. Notably, s 79(2) forbids the making of an order unless the Court is satisfied that in all the circumstances it is just and equitable to do so.

Section 79(8) of the Act addresses circumstances where one party to the marriage dies before property settlement proceedings are completed. Judge Wilson’s path of reasoning was based on the High Court’s judgment in Stanford, and particularly their Honours approach to s 79(8)(b)(ii).

Ultimately, his Honour considered whether, had the husband not died, it would have been just and equitable to make an order and whether, following the husband’s death, it was still just and equitable to make an order. Judge Wilson rejected Mr Paxton’s premise that the husband (or Mr Paxton) had the right to have the matrimonial asset divided between the wife and the estate. His Honour found, that even if the husband had not died, it was similarly not just and equitable for a property settlement order to be made.

The application on behalf of the husband’s estate was dismissed with costs against the estate. His Honour found it wholly inappropriate for Mr Paxton to pursue the proceedings knowing the hardship that was likely to have been occasioned to the wife and her dependent children.