Family law property adjustment cases see a wide variety of reasons proposed and considered for keeping particular items of property.  Sentimental reasons are relevant considerations in that regard, but they are not the only consideration, nor are they always the deciding factor.  In Moss & Moss [2012] FamCA 538 (16 July 2012) Austin J had to consider the significance of a claim of sentimental reasons for retaining some real property. The following facts, with some minor editing on my part, are taken from paragraphs [141] to [146] of that judgment.

The husband desired sole ownership of the X property. He asserted he only reluctantly departed the X property following separation. Significantly for him, the urns containing the ashes of his deceased parents are kept in a memorial garden upon the property, making it a place of sentimental value. There is no evidence the ashes are interred and no evidence the memorial headstones are immovably fixed.

The asserted intention of the husband was to return to work on the X property as a farmer. However over the preceding four years the agricultural businesses conducted on the farm by the parties showed relatively poor financial performance and there was little evidence to suggest the husband could make the property particularly profitable as a commercial farming enterprise.

The property has never carried more than a couple of dozen animals and, although the property has olive trees planted on it, the husband admitted in cross-examination he had only ever sold 10-20 bottles of olive oil to guests.

The husband adduced no evidence of any formulated plan about how he could rationally transform the X property from a hobby farm, as it was regarded by the parties, into a genuinely commercial enterprise. The chances of the husband deriving income from the farm that would even remotely compare to his current income are inestimably small.

The husband conceded in cross-examination:
•    The past income generated by the farm would not cover his current living expenses.
•    That he may well need to obtain paid employment elsewhere.
•    He was unsure whether his plans to farm X property would actually be successful.

The husband acknowledged:
•    The wife intended using the property to continue the hospitality business as a source of her income.
•    The wife had always worked hard:
    •    Around the house;
    •    In the garden around the “house block”; and
    •    In the conduct of the hospitality business.

The Court Held
•    The sole ownership of X property by the wife is the more just and equitable result.
•    The following considerations sway the decision:
    •    The continuity of her occupation;
    •    Her greater need for the property as a source of income; and
    •    The transportability of the mementos of the husband.

•    The orders:
    •    Make provision for the retention of the X property by the wife; and
    •    Permit the husband a short period within which to attend the property to recover:
        •    The ashes of his deceased parents; and
        •    Any other sentimental accoutrement from the memorial garden.

Conclusion
The ultimate order in a family law property adjustment matter is required to be just and equitable between the parties on the facts before the Court.

The Court found a way to compromise the wishes of the parties here to give the husband the ashes of his deceased parents and any other sentimental accoutrement from the memorial garden, while ultimately enabling the wife to retain the property on which they were currently held. That compromise was held to be the most just and equitable outcome between the parties on the facts before the Court.

Decisions such as this one can often be difficult to make. However giving proper weight to items of sentimental value can aid significantly in planning family law property adjustments and can help ease the burden of the emotional difficulties dealing with such matters can cause.

Ross Bowler LLB

In Provident Capital Ltd v Anderson & Anor [2012] NSWSC 525 Adamson J was asked to consider the following legal concepts: Family Law; Interlocutory injunction; priorities; personal property; restrain from dealing; contract; equity; purchaser for value without notice not bona fide; delay; lack of frank disclosure to the Court.

The Facts
By Deed of Loan dated 21 December 2006, Provident (“the Plaintiff") lent the First Defendant (“D1") the sum of $5.7m. On the same day, in order to secure the monies advanced, D1 granted a goods mortgage to Provident (the Goods Mortgage) and a real property mortgage over the property known as "Barry Station".

The effect of the Goods Mortgage was to charge all of the personal property of D1 that was intended to be, or which was in fact, used for his farming business, wherever it was conducted.

On 25 June 2010, by short form of statement of claim for possession against a mortgagor, Provident commenced these proceedings against D1 seeking a judgment for possession of Barry Station (the Possession Proceedings)

On 26 August 2010, D1 and the second Defendant (“D2") filed consent orders in proceedings brought by D1 against D2 in the Family Court (the Family Court Consent Orders)

By application filed on 11 May 2011 in the Possession Proceedings, Provident applied for an order to join D2 as second defendant and also sought orders restraining her from disposing of cattle which have been removed from Barry Station. D2 was joined as second defendant to those proceedings.

On 30 April 2012, it came to the attention of Provident that D2 had advertised four items for sale on an Internet site, one of which was already listed as sold.

By letter dated 2 May 2012, solicitors for the Plaintiff brought this matter to the attention of solicitors for D2 and requested undertakings that no further items be sold and that the proceeds of any sold items be paid into court or into a controlled money account.

On 3 May 2012, solicitors for D2 advised solicitors for Provident that three of the four items had in fact been sold and gave the undertakings sought until 17 May 2012.

By oversight, the solicitors for Provident did not take any further action to obtain either an extension of the undertakings of an order of the Court until 15 May 2012, when the solicitors for Provident realised the imminent expiry of the undertakings.

On 16 May 2012, Provident sought an extension to those undertakings which was not forthcoming.

Accordingly, on 16 May 2012, Provident approached the Court for short service.

On 17 May 2012 the interlocutory application was heard.

The Law
The task to be undertaken in an application such as this is to determine:
•    Has the Applicant established that it has a prima facie case; and
•    Where does the balance of convenience lie.
•    Are there any disentitling matters which may make the grant of relief inappropriate?

Prima Facie Case
 “The plaintiff must show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial."
(See Beecham Group Ltd -v- Bristol Laboratories Pty Ltd [1968] HCA 1; 118 CLR 618 at 622-623 & Australian Broadcasting Corporation -v- O'Neil [2006] HCA 46; 227 CLR 57 per Gummow and Hayne JJ at [65])

In determining the facts relevant to such an application, the Court is not entitled to determine facts on any final basis.
(See Shercliff -v- Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 724 and 1st Fleet Pty Ltd -v- Australian Cooperative Foods Ltd [2006] NSWSC 881 per White J at [5])

Balance of Convenience
Relegation from secured creditor to unsecured creditor was sufficient prejudice to warrant the interlocutory injunction orders being made in this case.

Disentitling Matters
The Court found there were no disentitling matters, such as delay, which would make the grant of relief inappropriate.

Result
The Court granted the relief sought by The Plaintiff.

Conclusion
Of itself this case may not be particularly remarkable. However it is a useful reminder that the reach of the family law goes well beyond the Family Court and into the commercial law arena.

Ross Bowler LLB

Family Law practitioners may have thought that the introduction of the Personal Property Securities Act 2009 (Cth) ('PPSA') would not have any significant impact upon them. This article seeks to show the inaccuracy of that assessment.The scenario is adapted from facts outlined in this blog article  and this previous blog post. I have massaged those facts to suit my purpose.

There are many ways I could have approached this topic. I have chosen to observe a property adjustment as it might unfold with the PPSA now in play. It seemed to communicate the impact more clearly than a case note.

The Boat and Some Less Than Smooth Sailing
The Husband and the Wife had ended their fifteen year marriage. They were now in dispute over what arrangements ought be made in respect of the property from that relationship.  Proceedings had been commenced in the Federal Magistrates Court, but no trial date had been set for the matter.  As a result of interlocutory proceedings the Court had made orders for the sale of a business owned by the parties.  The proceeds of the sale of that business were to be paid into the trust account of the solicitor for the Husband. The Wife did not have a solicitor, she was conducting her case by herself.

Not long after those orders were made the parties signed a contract to sell the business to The Purchaser. Prudently the solicitors for the Purchaser did a search of the Personal Property Securities Register ('PPSR') to ensure the Vendors were able to sell all of the business items without any relevant charge over them.

The search revealed that a Finance Company had registered a Security Interest on the PPSR over "all present and after acquired property" of the Vendors. That registration included the boat of the Vendors. That boat was the subject of a fixed charge by a Finance Company and had been in place prior to the PPSR commencing on Monday 30 January 2012. Significantly the debt the subject of the charge had been settled with the Finance Company prior to the PPSR commencing on Monday 30 January 2012.

At the relevant time that fixed charge was registered with ASIC and at REVS. When the PPSR started some errors occurred in the migration of fixed charges from ASIC and REVS registrations. The registration of the fixed charge in respect of the boat of the parties was one such error. The PPSR showed that charge as being a current security interest held by The Finance Company in respect of the boat.

Even though the boat was not included in the sale of the business, the PPSR registration affected the sale.  Without a release of the security interest relating to the boat, the Purchaser would not get a clear title to the business it wished to purchase. The Vendors necessarily became affected by this development, in addition to the Purchaser.  The "add on" that the Finance Company had included for "all present and after acquired property" meant that the Vendors could not sell their other items unencumbered or free from any mortgage or charge.

The Finance Company had no authority to maintain the registration of the Security Interest in the boat as it appeared on the PPSR.

The solicitor for the Purchaser wrote to the Wife requesting that she and the Husband take appropriate steps to correct the position in relation to the incorrect registration of the security interest registered in respect of the boat.  The Wife did not respond to that correspondence from the solicitor for the Purchaser.

The solicitor for the Purchaser the wrote separately to the Husband and the Wife formally requesting that they give The Finance Company an Amendment Demand (See S.178) to correct the boat security registration situation.  That correspondence pointed out that any Seriously Misleading Defect in data relating to the registration of a security interest will cause a registration to be ineffective (See s.164 & s.165).

That correspondence from The Purchaser to the Husband also said if no appropriate action was taken within seven (7) days The Purchaser would make an application under s.182 to the Federal Magistrates Court for Orders correcting the situation and would seek its costs of so doing from the Husband and the Wife.

The Wife told the Husband privately that she would do nothing to correct the situation in relation to the boat, that the Husband would have to do it all himself.

The solicitor for the Purchaser also wrote to The Finance Company similarly requesting that the boat security registration situation be corrected.  That correspondence also said The Finance Company may be liable to the Purchaser for any damages the Purchaser suffered as a result of the delay in the sale of the business due to the incorrect registration of the Security Interest.  The Finance Company did not respond to the correspondence of the solicitor for the Purchaser.

The solicitor for the Husband then formally wrote to the Finance Company giving it an Amendment Demand (See S.178) to correct the boat security registration situation. That correspondence further stated:
•    The Finance Company would be required to register a Financing Change Statement on the PPSR;
•    That The Registrar may give the Secured Party an Amendment Notice of the amendment demanded (See s.180 (1) & (5)); and
•    That it was expected the Financing Change Statement will be registered after five (5) days of the Amendment Notice being given (See s.181)

Whilst the Finance Company eventually changed the registration, the sale was delayed by over a week. At settlement of the business transfer transaction the purchase/sale price was adjusted to compensate the Purchaser for the loss suffered by the Purchaser as a result of the incorrect registration of the security interest in relation to the boat.

The Husband took the view that the amount of compensation he had to pay to the Purchaser for the incorrect registration of the security interest in respect of the boat and its impact on the transfer of the business transaction did not warrant him commencing proceedings to recover that compensation from The Finance Company. However he took a different view with respect to the Wife. He had his solicitor write to the Wife informing her that he would be seeking an appropriate adjustment at their property settlement trial in due course, commensurate with her lack of cooperation in relation to correcting the registered security interest position with respect to the boat.

Ultimately the Federal Magistrate hearing the property adjustment trial agreed with the Husband on that point and adjusted the property of the Husband and Wife accordingly.

Conclusion
Whilst this might not be the way you would conduct such a matter, it may be an approach that finds favour with your opponent. Knowing how to respond to the challenges raised above is an important aspect of the job of a litigation lawyer. Being caught short or not knowing is a mistake your client may not forgive.

Ross Bowler LLB

Footnote
This article has been published by CCH Australia in its Tracker Series

Ross Bowler, CCH, Australian Family Law Tracker, Issue 5, May 2012 "The Business, The Boat, The PPSA and The Family Law Property Arrangement"

Ross Bowler, CCH, Australian Corporate, Company and Securities Law Tracker, Issue 5, May 2012 "The Business, The Boat, The PPSA and The Family Law Property Arrangement"

In Eaton & Eaton [2012] FMCAfam 9 (17 January 2012) Jarrett FM had before him an application for property adjustment under s.79 of the Family Law Act 1975 (Cth). Relevantly this is what he found.

Insofar as married couples are concerned, the law in relation to property adjustment is relatively settled and the approach to the determination of such an application is well established.
(See:
•    In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626;
•    In the Marriage of Ferraro (1993) FLC 92-335;
•    In the Marriage of Clauson (1995) FLC 92-595;
•    In the Marriage of Hickey [2003] FamCA 395; (2003) 30 Fam LR 355; and
•    C v C (2005) Fam LR 414.)

Generally speaking there are four (4) stages to the proper consideration of an application for property adjustment under s.79 of the Family Law Act 1975 (Cth):

1 Identify the property, liabilities, and financial resources of the parties at the time of the hearing.

2 Evaluate the contributions of the parties as defined by s.79(4) of the Act, with particular reference to those matters listed in s.79(4)(a), (b) and (c).

3 Evaluate the matters to which the Court is directed by s.79(4)(d) to s.79(4)(g), and in particular, s.75(2) of the Act, insofar as any of those matters are relevant.

4 Be satisfied that the order that is proposed to be made is just and equitable in all the circumstances.

The justice and equity of the actual orders proposed to be made is what the Court must consider. (See Russell v Russell [1999] FamCA 1875; (1999) FLC 92-877)

The preferred approach is to:
•    Deal with the superannuation assets and the non-superannuation assets separately; and
•    Apply the four step process set out above to each class of assets.

However the parties to such an application often agree for the Court to approach the matter on the basis that there was one pool of assets, which included both superannuation and non-superannuation assets.

Ross Bowler LLB

Family law property settlements are the cause of great consternation for many people. Sadly adding to that consternation is the fact that the preparation of many family law property settlement cases is done badly, if not just plain wrong.  In an attempt to obviate some of that consternation I have prepared a short list of questions, which if answered correctly and completely, can put family law property settlement enquirers and litigants on a path to a proper understanding of their position.

The Information Required
What was your financial position at the start of the relationship?
What is your financial position now?
What did you bring to the start of the relationship?
What financial contributions were made to the relationship:
- Direct?
- Indirect?

Provide answers to those questions in respect of your former partner also.

What income did the household have during the relationship?
What expenditure did the household have during the relationship?
It is irrelevant for these purposes as to who paid which particular bill.

Was there any wastage of assets during the relationship?
Was there any wastage of assets after the relationship ended?

What is the earning capacity of each of the parties?
What are your future needs in terms of:
- Living;
- Education;
- Employment;
- Special Needs?

Similarly, what are the future needs of:
- Your Former Partner?;
- Any Children?

Prepare a chronology of all events relevant to the property settlement. That chronology will come in very handy later in proceedings. Update that chronology as new information comes to light.

Prepare a comprehensive statement from the litigant outlining the relevant events in chronological order.  That statement can be used as a guide for the evidence of the litigant, should the dynamics of the case require evidence to be given, in whatever fashion.  Accordingly the statement will form the basis of any affidavit material that might need to be filed in court.

Collate all documentation that supports this property settlement information eg bank statements, property valuations.

Case Assessment
Once provided with all this information and documentation I will then be in a position to assess the strengths and weakness of the case. From there I can advise on the outcome that might be reached if a Court were asked to decide the matter.

It is only at that stage, when a litigant has been properly advised as to the outcome that might be reached if a Court were asked to decide the matter, that the litigant is in a position to make an informed decision to compromise the matter at mediation or make an offer to settle. Anything less will involve making a less than fully informed decision about the outcome of the matter.

Conclusion
The family law property settlement process is one of many steps, but if approached methodically and the skills of experienced legal practitioners are properly utilised, that process need not be daunting. It can be informative, rewarding and empowering.

So embrace the opportunity to purposefully confront your family law property settlement and remember that help is available through the phenomenon called asking.

I have prepared a slide show presentation containing all of this information, which may also be of some assistance to you.
(Family Law: Property Settlements - Preparation Guide)

In a subsequent post I will deal with Family Law Relocation cases.

Ross Bowler LLB
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