Spouses In Dispute Over Sale of Matrimonial Home
Farnham & Farnham [2022] FedCFamC2F 83 (4 February 2022)
Both parties wish to retain the matrimonial home. The parties signed a Heads of Agreement to sell the matrimonial home. However, the parties now dispute to whom the property should be transferred. The Court, in making its final orders, considered the possibility of selling the former matrimonial home for a greater amount than it is valued in the proceedings.
Facts:
Ms Farnham (‘the Wife’) commenced parenting and property proceedings against Mr Farnham (‘the Husband’) in the Federal Circuit Court of Australia on 15 May 2020. The Wife resides in City F, Tasmania. She is 40 years of age and works in retail. The Husband resides at Town C, Tasmania. He is 44 years of age and works as a tradesman. The parties have four children, W, X, Y, and Z.
The parties finalised their parenting dispute by consent on 27 January 2021. The consent orders provide that W spend time with each parent as agreed between him and his parents. The consent orders also provide that X, Y and Z spend time with their parents on a week-about basis with changeovers on Sundays. The parties also share Christmas and Easter time with X, Y and Z in alternating years, and share time on birthdays, Mother’s Day and Father’s Day as agreed. The parties have equal shared parental responsibility for all four children.
Ms Brown, on behalf of the Wife, indicated that the matter should be adjourned part-heard to allow the filing of more valuation evidence. Ms Brown submitted that the Wife’s valuation affidavit from E Valuers should be filed. She further submitted that the parties’ valuers, Mr F and Ms G, should confer pursuant to the orders of 28 May 2021. Mr Trezise, on behalf of the Husband, opposed the adjournment application.
The adjournment was allowed because the administration of justice required the Court to have before it proper evidence in relation to the parties’ most valuable asset, the property at B Street, Town C (‘the B Street, Town C property’). In 1998 the Husband had purchased a property at J Street, Town K (‘the J Street, Town K house’). He held the property in his sole name, and it was tenanted until the parties took up occupancy in 2000. The purchase price for that house was $142,000.00. While the Husband’s affidavit states that he paid a $40,000.00 deposit, he conceded during cross-examination that he could not corroborate this figure.
The parties’ first matrimonial home was the J Street, Town K house. They continued to reside there until the Husband sold that property in 2001. During their residence they undertook gardening, painting and other renovations. The parties agree that they both contributed in this respect.
The parties previously agreed, as recently as September 2020 as evidenced by the Heads of Agreement, that they would sell the B Street, Town C property. The Husband, as conceded, decided he wished to retain the property upon the contract of sale being provided to him for signature. The primary contention in respect of the B Street, Town C property is the Wife’s concern that, if the Husband retains the property, he will sell it for a value higher than $450,000.00.
The Wife said that if the B Street, Town C property is transferred to her, she will spend money improving it. She believes that the property will achieve a far greater price than the agreed valuation. If the B Street, Town C property is to be transferred to the Husband, he explained during examination-in-chief that it would allow him to retain a farming property which is close to the children’s school and his work. Both parties advanced alternative arguments that if the order does not have them retain the B Street, Town C property it should be sold.
Issues:
I. Whether or not the B Street, Town c property should be transferred to the Husband.
II. Whether or not the court is bound by the prior agreement of the parties.
Applicable law:
Family Law Act 1975 (Cth), s 90XT - pursuant to which whenever a splittable payment becomes payable in respect of the Husband’s interest in the Super Fund R superannuation fund (member number ...) the Applicant Wife shall be entitled to be paid an amount calculated in accordance with pt 6 of the Family Law (Superannuation) Regulations 2001 (Cth) using a base amount, in the sum of $67,242.00 and there will be a corresponding reduction in the entitlement the Husband would have had in the superannuation fund.
Woodcock & Woodcock [1997] FamCA 5 - provides that it may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ “the worst of both worlds” as it would be impossible to predict from case to case, exactly what weight ought to be given to the agreement.
Hsiao & Fazarri [2019] FamCAFC 37 - held that where parties enter into an agreement concerning property... the Court must determine the application on its merits having regard to the factors as set out in s 79(4) as they exist at the time of the hearing.
Stanford & Stanford [2012] HCA 52; 247 CLR 108 - provides that an agreement which in fact alters the parties’ property interests is, of course, relevant to identifying their existing legal and equitable interests.
Manifold & Alderton [2021] FamCAFC 61 - held that it is impossible to discern whether the outcome was indeed just and equitable, which enquiry the Act demands be made and answered affirmatively, without any findings at all being made as to the identity and value of the parties’ property interests, the parties’ respective overall contributions, and what, if any, adjustment was justified by reference to future circumstances.
Blatch v Archer [1774] EngR 2; (1774) 98 ER 969 - provides that all evidence is to be weighed according to the poof which it was in the power of one side to have produced, and in the power of the other side to have contradicted.
Williams & Williams [2007] FamCA 313 - provides that where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation.
Jabour & Jabour [2019] FamCAFC 78 - considered that the decision in Baker and Bilous indicate that the Court in Williams somewhat overstated the importance of the increase in value of a piece of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship”.
Wallis & Manning [2017] FamCAFC 14 - where the wife appealed a property order on the basis that the primary Judge did not afford her contributions sufficient weight.
Beck & Beck [1983] FamCA 7; (1983) FLC 91-318 - defined earning capacity as a capacity to obtain income which could be used to provide maintenance ... and not merely as current income from personal exertion or from the use of personal skills.
Clauson & Clauson [1995] FamCA 10; (1995) FLC 92-595 - where the Full Court stated that it has long been recognised that in most cases the most valuable “asset” which a party can take out of the marriage is a substantial, reliable, income-earning capacity.
Analysis:
Both parties clearly contributed a great deal to their nearly 20-year marriage. Both have detailed their own and each other’s health issues which, at times, prevented them from maintaining paid employment. The Husband has, by his own admission, conducted himself in a manner in which he purposefully undermined the potential sale of the B Street, Town C property. The contract was, however, conditional. There is insufficient evidence to support a finding that the sale would have been completed but for the Husband’s conduct. His conduct cannot be said to have had a ‘direct and deleterious financial effect’ or to have ‘produced’ the loss.
If the Husband retained the property, he would have to obtain a loan in excess of $273,000.00 to refinance the loan and to pay out the amount owing to the Wife as set out at paragraph 192. Further, he did not establish that justice and equity requires him (or the children) to continue occupying the B Street, Town C property. Neither party produced evidence from a financial institution that they had pre-approval for a loan sufficient to retain the property. Neither party has led sufficient evidence to the effect that they must, for some reason grounded in justice and equity, retain the B Street, Town C property.
The Wife’s position upon final submissions was that she should be given the opportunity to purchase the house at the price for which she was prepared to pay which is $480,000.00. No valuation grounded this figure as provided by the Wife
Conclusion:
The Court ordered the parties to immediately do all acts and things necessary to sell the B Street, Town C property. Both parties will list the B Street, Town C property with D Real Estate for a price not less than $450,000.00. Both parties will follow the reasonable advice of the Real Estate Agent engaged to sell the B Street, Town C property.
