Sunday, 25 February 2018

What factors does the Family Court take into account when making property orders where one party to the marriage is under a disability?


The factors that the Family Court (and the Federal Circuit Court) will take into account in determining what orders to make on the hearing of an application for final property orders are set out in (among others) Sections 75(2) and 79 of the Family Law Act 1975. 

The High Court in Stanford v Stanford (2012) 247 CLR 108 set out what it considered to be the appropriate way to determine a case, especially in cases where one party to the marriage suffered a disability. 

In Teague v Teague [2017] FCCA 2251, the Federal Circuit Court dealt with a scenario where one party to the marriage suffered a disability. 

Judge Young stated the background as follows (at paragraphs 5 to 8):
5.    The wife was very seriously injured in a single vehicle motor accident in (omitted) 2001. She suffered a severe traumatic brain injury which left her permanently and severely disabled. She has severe cognitive impairment and severe memory loss. She has severe right-sided weakness, permanent sight impairment and impaired mobility. She can walk with a walking stick. She requires assistance with showering, oral care, grooming, dressing and using the toilet. She has diabetes which is well managed. She is otherwise in good health. Her treating GP gave evidence that he was unable to predict her life expectancy but she was, according to him, not likely to die "any time soon". There is no evidence that her life expectancy is reduced and, according to actuarial evidence, normal life expectancy for a woman of her age is a further 19 years.
6.    The wife has been assessed as lacking testamentary and legal capacity.
7.   
8.    The husband and the wife’s sister cared for the wife at home from 2001 until (omitted) 2009. She then entered a nursing home, initially for respite care, where she has remained since. The sister obtained a Guardianship Board order appointing her guardian and administrator of the wife’s estate in (omitted) 2009. The husband continued to visit the wife in the nursing home until about June 2010 when he was told he was no longer allowed to visit her. The reasons for that prohibition were not addressed in the evidence. The husband, it was clear from his evidence, did not seek separation but acquiesced in the arrangements. In cross-examination it was put to him that “separation” had effectively taken place from that time. He agreed. It seems to have been understood by everyone that the wife’s residence in the nursing home was permanent.

At paragraph 14 of Judge Young's reasons, His Honour notes: 
14. After observing that the requirements of subsections 79(2) and 79(4) of the Act should not be conflated the majority in Stanford said that in every case in which a property settlement order under section 79 is sought it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order. They said the expression "just and equitable" does not admit of exhaustive definition and while the power given under section 79 is not "to be exercised in accordance with fixed rules" three fundamental propositions must not be obscured. First, it is necessary to consider whether, having regard to existing interests, it is just and equitable to make a property settlement order. Secondly, "the power is not to be exercised in an unprincipled fashion" and it is not to be assumed that the rights to or interests in marital property  are or should be different from those that then exist. Thirdly, whether it is "just and equitable" to make a property settlement order is not to be answered by assuming that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property fixed by reference to the matters set out in subsection 79(4), including financial and other contributions.15. The majority said that in many cases the just and equitable requirement will be readily satisfied because:
The husband and wife are no longer living in a marital relationship … [and] there is not and will not thereafter be the common use of property by the husband and wife …the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship.
 16. The wife submitted in this case that it was just and equitable to make orders because the common use of property by the husband and wife had ended and the assumptions that underpinned the existing property arrangements have been brought to an end by the separation of the parties. In my view, that submission does not adequately address the circumstances of this case. In Stanford the majority said, after the passage quoted above, that “By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order”. In my view the evidence in this case does not permit the conclusion that the separation of the parties was voluntarily and there are indications that it was involuntary. These include that there is no evidence that the wife evinced any intention to end the marriage before her accident, that the wife was initially admitted to the nursing home for respite care and was, it appears, then too unwell or in capable to return home and that she lacked decision making capacity after her accident. Although I draw no inference from the fact, I note that there was no evidence of any inquiry about the wife's capacity at the time of her application for divorce. 
17. However, an important factor in this case, and a crucial point of distinction from the facts in Stanford, is that the husband did not provide any financial assistance to the wife after she became a permanent resident of the nursing home.18. The majority judgment in Stanford at paragraphs [44] and [45] is apposite to the facts of this case:
When, as in this case, the separation of the parties is not voluntary, the bare fact of separation does not demonstrate that the husband and wife have any reason to alter the property interests that lie behind whatever common use they may have made of assets when they were able to and did live together.  Common use of some assets may very well continue, as it did here when the husband made provision for the wife's care and accommodation.  Past arrangements that the parties have made about their property interests on the assumption, expressed or implicit, that those arrangements were sufficient and appropriate during the continuance of their marriage are not necessarily falsified.  If both parties are competent, it can still be assumed that any necessary or desirable adjustment can be made to their property interests consensually.  And if one of the parties has become incompetent it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments.  Contrary to the submissions of the husband in this Court, there may be circumstances other than a voluntary separation of the parties marking the breakdown of their marital relationship in which a court may be satisfied that it is just and equitable to make a property settlement order.  For example, demonstration of one party's unmet needs that cannot be answered by a maintenance order may well warrant the conclusion that it is just and equitable to make a property settlement order.  It may be that there are circumstances other than need. 
19. The majority went on to say at paragraph [46] that in the circumstances of that case the needs of the wife might have been met by the provision of full time care, a further provision of money against future contingencies and the possibility, if needed, of making a maintenance order.

In this case, the judge concluded that he was satisfied that the wife's financial needs were not entirely met under the present arrangements. Even though he was not satisfied that the separation of the parties was voluntary,  he was satisfied that some alteration of property interests was just and equitable in order to meet the unmeet needs of the wife. 


This case is a very good example of the factors that the Family Court and the Federal Circuit Court will take into account in determining what orders to make on the hearing of an application for final property orders in cases where one party to the marriage suffered a disability. 

WG Stark
Hayden Starke Chambers

Friday, 23 February 2018

What factors does the Family Court take into account when making final property orders?

The factors that the Family Court (and the Federal Circuit Court) will take into account in determining what orders to make on the hearing of an application for final property orders are set out in (among others) Sections 75(2) and 79 of the Family Law Act 1975. 

In the recent case of Knight v Knight (No 2), [2017] FCCA 2613, Judge McGuire of the FEDERAL CIRCUIT COURT OF AUSTRALIA analysed the current requirements for an application for final property order.

At paragraphs 13 and following of his judgment, it is noted:
It was previously thought that trial judges were to follow a rigid four-step approach to the considerations of interests and the alterations of those interests in property. However, the High Court in Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108) made it clear that the consideration under s.79(2) as to whether it be just and equitable to make any Orders for alteration of property interests is a preliminary question for the court and one not to be simply conflated with the considerations of contributions under s.79(4). Their Honours said at [40]:
…the question of whether it is just and equitable to make a property settlement Order should not be answered by starting with an assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s.79(4). The power to make a property settlement Order must be exercised in accordance with legal principles including principles which the Act itself lays down. To conclude that making an Order is “just and equitable” only because of and by reference to various matters in s.79(4) without a separate consideration of s.79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

14.Nevertheless, and as their Honours observed, the task of determining whether justice and equity would be served by the alteration of property interests is often a simple one. In the matter now before me, it is clear that the parties’ relationship has irretrievably broken down. There is a child of that relationship. The parties are the joint registered proprietors of property. Further, and as observed by Thackray CJ in Fielding & Nichol, that whilst contributions are not necessarily a determinative answer to the s.79(2) question, such contributions can be a factor in determining justice and equity under that subsection.  In the matter now before me, prima facie, the many and varied contributions by these parties together with their joint interests in real property serve to satisfy me that it would be just and equitable to alter their property interests.
15.Consequently, and pursuant to long standing authority, the Court is firstly to establish the content and value of the property pool as at the date of the trial. Property is inclusive of assets, liabilities, financial resources and, for these purposes, superannuation is to be “treated as property” although it is often prudent and permissible to deal with the property on a “two pool” basis of firstly, tangible assets and secondly, superannuation entitlements.
16.Having made the determination under s.79(2), the Court must then consider the contributions of the parties to the attaining, maintaining and improvement of the contents of the property pool in accordance with the subsections set out in s.79(4).
17.After considering the contributions, the Court then determines whether it is appropriate, just and equitable to make any further adjustments of entitlement between the parties after evidentiary reference to the factors set out in s.79(4)(d)-(g) including any relevant considerations under s.75(2) of the Act.

In that case, the Court then considered all of the relevant factors and concluded as follows (at paragraph 56): 
The husband owned the Property B property as at the date of commencement of cohabitation in 1999. He purchased the property in 1997 for $80,000 plus costs. He then had a mortgage loan of $50,000. That property now has an agreed value of $565,000. It has, however, been significantly improved including with contributions by the wife. The parties jointly obtained an historical valuation of the property as at 1999 at $150,000. The wife disputes that valuation but concedes a value of at least $110,000-$120,000 at that time. She did not bring the historical valuer to Court.  Although it has now been some 18 years since the commencement of the parties’ relationship, this property still sits in their pool of assets at considerable value relative to the total quantum of the pool and in line with the principles in Pierce & Pierce [1998] FAmCA 74; [1999] FLC 92-844, being directly traceable from 1999, it should be given some weight as an initial contribution by the husband but only when viewed against the numerous other contributions of various types and weight by each of these parties subsequently.

In relation to Superannuation, the Court concluded (at paragraph 74):
Neither party is yet near an age where they will be able to crystallise their superannuation entitlements. Consequently, I think it proper to consider the property pool of a two-pool basis. I am comfortable in concluding that the bulk of their entitlements were achieved during their relationship which commenced in 1999. I am satisfied, therefore, and given the distribution of tangible assets and the various contribution factors mentioned above, that there should be an equalising of the parties’ entitlements to superannuation. On the material before me, this would require a splitting Order of the husband’s policy in favour of the wife with a base amount of $44,484.00. The orders I make will be conditional upon the provision of procedural fairness on the husband’s superannuation fund.
The case is a very good example of the analysis that the Court will undertake in determining the orders that it will make on the hearing of an application for final property orders.
In the recent decision of the in Bellamy v Gladwell (no 2) [2017] FamCAFC 238, the Full Court of the FAMILY COURT OF AUSTRALIA was faced with an appeal by the wife from a property order.

The wife’s appeal was directed to complaints that the trial judge applied wrong principle, did not take into account material considerations and that the effect of the property settlement order was unreasonable and plainly unjust (House v The King (1936) 55 CLR 499).

The Full Court noted that trial judge adopted what he described as a “four staged approach” (consistent with the “preferred approach” described by the Full Court in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 78,386).

The appeal was allowed as a result of errors that the Trial Judge made in applying those relevant principles.

These cases illustrate the approaches that the Court can take in considering an application for final property orders.

However, it appears that the correct current approach was set out by the High Court in Stanford v Stanford in 2012, and followed by Judge McGuire in Knight v Knight (No 2). 

WG Stark

Hayden Starke Chambers

Tuesday, 19 December 2017

Can I lodge a second caveat if my first caveat is removed or lapses in Victoria?

I have recently come across a spate of cases where a caveat has been removed (either by the Registrar of Titles on application, or by Court order), only for the caveator to lodge the same caveat again!

Section 91(4) of the Transfer of Land Act, 1958 makes it clear that the second caveat cannot remain on the title. That sub-section provides:

A caveat that has lapsed or been removed by an order of a court shall not be renewed by or on behalf of the same person in respect of the same interest.

Case law – Section 91(4)
Gobbo J was called on to remove a caveat under section 91(4) in Gurwitz v Gurwitz [1988] VicSC 239.

At the end of the first paragraph on page 4 of the unreported judgment, Gobbo J noted:
… nothing was done and, accordingly, simply as a matter of the operation of s. 89(a) (sic), the first caveat lapsed. On 4 May the respondent lodged another caveat, which I will refer to as the second caveat, through different solicitors.

At the start of the first paragraph on page 5 of the unreported judgment, Gobbo J noted:
The applicant accordingly applied to remove the second caveat on the three bases ... Secondly, that the second caveat should be removed because it covers the same ground as the first caveat and falls within section 91 (4) …
At the foot of page 5 of the unreported judgment, Gobbo J noted:
… The section is not concerned with matters of grounds or evidence in support of the interest. The sub-section could scarcely have been intended to depend (page 6) upon whether the evidence in support of a particular interest varied and, for that reason also, perhaps the grounds in support of a particular interest. It seems to me that what the section is designed to do was to identify whether it was, in substance, the same interest that was set up.  
At the foot of page 8 of the unreported judgment, Gobbo J concluded:
I am therefore of the view that section 91 (4) applies in the present case. It is clear that this first caveat had lapsed. It further appears that the second caveat is one that is made on behalf of the same person in respect of the same interest in the same parcel of land, and that the prohibition against it being renewed applies here, and that provides good cause as to why the second caveat should be removed.
In Sinn v National Westminster Finance Ltd [1985] VR 363, Tadgell J considered the operation of section 91(4), in the following terms (at VR 365 – 6):
A provision equivalent to section 91 (4) of the Transfer of Land Act 1958 has stood in the Torrens title legislation of this State since the Transfer of Land Statute 1866 (Act No. 301) but it appears to have attracted remarkably little attention from the courts.Venerable of lineage and economical of words though section 91 (4) is, it is not a model of clarity. The following observations seem to be deserved. A caveat, once it has lapsed or have been removed, cannot in strictness be renewed in the sense of restored, revived, regenerated or re-established. The word “renewed” in the sub-section seems to mean “replaced” or, perhaps, “repeated”. The phrase “by your on behalf of the same person in respect of the same interest” evidently involves a kind of ellipsis. I think it must intended to convey, when read the words preceding it, that a person by whom or on whose behalf a caveat has been lodged that has lapsed or been removed shall not lodge or have lodged on his behalf another caveat in respect of the same interest as that in respect of which the first caveat was lodged. … the effect of s91(4), therefore, would appear to be that a person may not claim and specify by a caveat an interest which is the same interest as that which he has claimed and specified by a caveat that has lapsed or been removed.
In Burgtreus Pty Ltd v Burgin & Anor [2005] VSC 339, Cummins J dealt with another similar application. At paragraph 16, Cummins J noted:
The essential points are these in my view. First, in my view the caveat, being the second caveat, covers the same ground as the first caveat and falls within section 91 (4) of the Act. The first defendant lodged the first caveat … The stated interest there claimed was an estate in fee simple; the grounds of the claim an equitable interest by way of constructive trust. The second caveat, the subject of these proceedings, again claims an estate in fee simple; however the grounds of claim are “Financial contributions to purchase price of each property and labour and cost of improvements. Verbal agreements”. It is clear that a caveat ought not be accepted in the circumstance where the same interest is claimed in the second as the first. That was established in Gurwitz v Gurwitz; also Sinn v National Westminster Finance Ltd.
In Austwide Property & Developments Pty Ltd v Vukasinec [2004] VSC 333; BC200406309 Osborn J dealt with an application under section 91(4) as follows (at paragraphs 9 to 10):
[9] In the current case it is contended the caveat is bad for two reasons: firstly, it is said the caveat does not disclose a caveatable interest in land. Secondly, it is said that it has been lodged in breach of s 90(4) (sic) of the Transfer of Land Act. This provides: "A caveat shall not be renewed by or on behalf of the same person in respect of the same interest."
[10] Although it is strongly arguable that the caveat does not disclose a caveatable interest, I would have some reluctance to dispose of it on this basis if I were persuaded that what was really in issue was a matter of English expression by a litigant in person whose first language I infer is not English. It is strictly unnecessary, however, for me to determine this question because I have reached the view that there is no credible evidence that the grounds of the interest claimed could be sustained and that the caveat was lodged in breach of s 90(4) (sic) of the Transfer of Land Act.

In the matter of Jankovic v Dobrijevic (SCI 2017 03587), I appeared for the plaintiff who sought removal of a caveat lodged in breach of section 91(4). The Honourable Justice Jack Forrest of the Supreme Court of Victoria ordered the removal of the caveat and ordered the caveator to pay the plaintiff’s costs on an indemnity basis.

In the matter of Strathmore Views P/L and anor v High Street Projects P/L and anor (SCI 2017 04894), the Honourable Justice Keogh ordered the removal of the caveat and ordered the caveator to pay the plaintiff’s costs of the proceeding.

In both of these cases, the second caveat (claiming the same interest as the caveat that had already been removed), should never have been lodged.

Although it seems clear to me that neither of the caveats in question should have been lodged, and when requested to be removed, the caveats should have been removed without the need for proceedings, this didn't occur. 

As readers will know, if a Victorian practising lawyer lodged a second caveat in these circumstances, that would amount to professional misconduct, rendering the lawyer liable to be dealt with by the Victorian Legal Services Board + Commissioner.

As noted, the Court in Jankovic made an order for indemnity costs, on the basis that the registered proprietor of the property ought not be out of pocket as a result of the conduct of the caveator in lodging a caveat in circumstances where it should never have been lodged, and then refusing to remove that caveat.
  

W G Stark
Hayden Starke Chambers