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‘It’s a matter of trust’ – Goldsmith & Stinson and Ors [2019] FamCAFC 230 (2 December 2019) Case Note

In Goldsmith & Stinson and Ors [2019] FamCAFC 230, the wife sought declaratory relief pursuant to s78 of the Family Law Act 1975 (Cth) in the context of an overall s79 application, arguing that the trial judge erred by disregarding the courts s78 jurisdiction in determining the matter at first instance.

This case concerned the matrimonial home built by the husband and wife on the property of the husband’s father. The crux of the wife’s application was that the spouses constructed their house on land to which the husband’s father held exclusive legal title, following his alleged promises of their eventual proprietary entitlement to it. As such, the wife commenced proceedings pursuant to s78, seeking declaration that the property was owned by the husband’s father by way of constructive trust, and herself and the husband equally.  The husband’s father passed away after the trial had finished, which led to the reopening of the trial for evidence to be given regarding the husband’s inheritance of his deceased father’s property.

At first instance, the wife sought a s78 declaration against the husband to confirm that she owned 50% of the property beneficially. However, the court did not determine the matter with regard to s78, and instead decided on the basis of s79, finding that the matrimonial home was owned on a contribution basis of 60% to 40% in favour of the husband. Herein lies the main ground for appeal, in that the wife contended that the trial judge should have exercised the courts s78 jurisdiction.

The Full Court agreed in that the trial judge should have determined this matter within its s78 jurisdiction as opposed to ignoring it entirely. Therefore, the original orders were set aside, and the respective applications of the wife are to be remitted to the Federal Circuit Court for re-hearing by a judge other than the primary judge.  

In this way, Goldsmith & Stinson and Ors functions as a clarification of the High Court judgement in Stanford v Stanford [2012] HCA 52, whichrecognised the difficulty that the courts and lawyers had endured in their approach to determining parties property entitlements under s79 of the Family Law Act. As such, Stanford v Stanford suggested that the approach should begin with a determination of the legal and equitable interests of the parties, and then a decision as to whether under s79 (2) t is just and equitable to order these interests.  However, this judgement had since been read down, and perhaps not applied as intended. Indeed, in Bevan & Bevan [2013] FamCAFC 116, it was decided that it was not necessary to determine legal and equitable interests between parties.

In the current case, the full court aligned with the approach suggested in Stanford v Stanford by affirming that the trial judge should have worked out what the legal and equitable interests were before proceeding with the s79 process, and in doing so, clarified the approach that should be taken when determining matters of this nature.

By Nicholes Family Lawyers

 

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