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Getting Your Property Case Right – Where Husband Commenced Proceedings in an inappropriate Court

19/07/2021

Watson & Watson Lawyers have successfully concluded a property division case on behalf of the Wife.  It was a case where the Husband had commenced proceedings in the Supreme Court of New South Wales against the de facto Wife where the resultant order would be more favourable to the Husband.  The Husband wanted each of the Wife and Husband to sell their home and each of the Husband and Wife to receive 50% of the net enquiry in the home after payment of the mortgage.  The Husband made his claim under Section 66G of the Conveyancing (NSW) 1919.   

Watson & Watson provided advice to the de facto Wife and advised her to urgently commence proceedings in the Federal Circuit Court of Australia and seek injunctive relief against the de facto Husband on an interim basis and seek Orders to delay the sale and seek division of proceeds of sale in accordance with the Family Law Act. 

The Background

The parties had been in a relationship for some years and both had children from prior marriages.  The significant asset of the relationship was an executive home in Sydney.  The Wife owned the property before the relationship commenced but the Husband had invested money in the property.  After the Husband’s investment in the property, the Husband and Wife held the title to the property in equal shares and there was a mortgage.

The Husband and Wife separated and agreed that the property would need to be sold and that the proceeds of sale needed to be divided. The value of the property and the amount of the mortgage did not make it feasible for either party to “buy out” the other. 

The Wife wanted a delayed sale and more than 50% of the sale proceeds.  The Husband wanted the property sold immediately even though this would not allow the Wife time to properly rehouse herself and her children.  The Husband wanted all the money he had invested in the property returned to him and asserted that there should be a 50/50 split of the balance.

The Husband’s Supreme Court Claim

The Husband commenced proceedings in the Supreme Court of New South Wales. He sought Orders for the appointment of Statutory Trustees for sale.  The Husband sought an Order for equal division of the sale proceeds (after payment of the mortgage) despite the fact that the Wife had owned the property for many years and the value of the property had increased over time to a very high value.  The capacity for the Supreme Court to make an adjustment to the division of sale proceeds under s66G of the Conveyancing Act 1919 is limited.  Had the case proceeded in the Supreme Court, the Wife’s claim would have been limited to 50% of the equity in the property namely the value of the property after payment of the mortgage and only the possibility of an adjustment upwards.  In circumstances where by reason of the parties being in a de facto relationship the appropriate Court to determine the dispute was the Federal Circuit Court of Australia.

The Wife’s Position

The Wife wanted more than 50% of the net equity in the property.  In accordance with the advice of Watson & Watson Lawyers the Wife filed an Application in the Federal Circuit Court of Australia.  This allowed the Wife to obtain adjustments in her favour based on the principles set out in the Family Law Act 1975. 

Family Courts or Supreme Court – Why is it Important? 

The Supreme Court has power to appoint statutory trustees for sale under the Conveyancing Act 1919 – s66G.  Upon the appointment of Statutory Trustees for sale of the property, the Trustees receive the sale proceeds which are held in Trust for the co-owners.  The Trustees make adjustments usually in accordance with the financial contribution.  There are costs associated with the case and further significant costs incurred by the Trustee for sale to effect the sale of the property.

The Family Law Act 1975 sets out in section 79 and section 75 principles in relation to assessment of contributions towards the acquisition, maintenance and improvement of matrimonial property. This approach allows for recognition of the Wife’s superior contributions by reason of her having brought the property into the relationship.

The Family Law acts also provides for an adjustment in favour of a party in circumstances where one party may be disadvantaged. The factors that might convince a Family Court or the Federal Circuit Court of Australia to make such an adjustment are set out in Section 75(2) of the Family Law Act.

The Court will look at such factors as:

  • The age and state of the health of each of the parties.
  • The income, property and financial resources of each of the parties and their physical and mental capacity for gainful employment.
  • Whether either party have the care or control of a child of the marriage who is under 18.
  • Commitments of each party to support themselves, a child or another person that they have a duty to maintain. 
  • Standard of living.

Watson & Watson Lawyers – Advice and Action

Watson & Watson Lawyers advised the Wife that the Husband’s Application had been commenced in an inappropriate jurisdiction which was not favourable to the Wife’s claim.  Watson & Watson advised that the appropriate jurisdiction was either the Family Court of Australia or Federal Circuit Court of Australia where in proceedings are conducted in accordance with the principles of the Family Law Act and the Wife in the circumstances of this case, was likely to receive a better and more just and equitable outcome. 

Watson & Watson Lawyers sent an appropriate letter to the Husband’s solicitors advising them that they should not have commenced proceedings in the Supreme Court.  The letter advised of the Wife’s proposed Application to have the Supreme Court Application dismissed or transferred to the Family Courts and a proposed Application that the Husband pay the costs of the Wife.

Watson & Watson Lawyers were able to resolve the matter on the basis that the Supreme Court proceedings would be discontinued and that the proceedings in the Federal Circuit Court of Australia commenced by the Wife would proceed.  The Husband filed his response and financial documents in the Federal Circuit Court of Australia.  Thereafter following negotiations and provision of financial disclosure documents the matter was resolved favourably for the Wife.

Consent Orders were filed in the Federal Circuit Court of Australia and approved by that Court.  The Supreme Court proceedings were discontinued.

The Agreement reached provided for recognition of the Wife’s significant initial contributions and her need for an adjustment in accordance with Section 75(2) of the Family Law Act 1975.

If you are proposing to enter into financial/property settlement with your spouse or partner and are unsure of your rights and entitlements or which Court is the appropriate Court, contact our highly experienced and dedicated family lawyers who can assist you.  Please contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your matter and seek appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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