When possession is 10**/10ths of the law

The interplay between legal principles, family law rules and estate planning can be complex.

Arguably, one of the highest profile examples of this was the High Court’s decision in Stanford, which was analysed in an earlier post (please contact me if you would like access to this content).

The decision in Paxton v Paxton [2016] FCCA 1689 (7 July 2016) provides another useful example. As usual, if you would like a full copy of the decision, please let me know.

Broadly, the factual matrix was as follows:

1. A married couple owned a home as joint tenants, as opposed to tenants in common.
2. Some years later, the husband of the marriage and commenced a de facto relationship.
3. Some years later again, the husband then commenced property proceedings seeking division of the matrimonial home, although he died before any decision was handed down.

The court confirmed that the key principle from Stanford contained two limbs namely:

1. Would the court have made an order in relation to property if the relevant party had not died?
2. Is it appropriate, despite the death, to still make that same order?

In confirming that the wife was entitled to keep the entirety of the property as the surviving joint tenant, the court confirmed:

1. So long as property proceedings commence before death, the person’s estate is permitted to continue with the proceedings.
2. Even though the parties had previously agreed that the property should be sold, the court refused to enforce this on the basis that it would not be just and equitable in all the circumstances. The relevant circumstances included the fact that the wife was of ill health, financially destitute, had limited employment prospects and had to care for an adult child from the marriage who had a disability.
3. Furthermore, the executor of the former husband’s estate was required to pay the wife’s costs of the proceedings.

While obviously open to conjecture, there is every chance that if the joint tenancy ownership of the property had been severed so that the parties owned it as tenants in common, the husband’s estate would have been likely entitled to retain most, if not all, of the 50% interest.

In this regard, it is important to note that the joint tenancy can be severed by the unilateral actions of one party (i.e. without requiring the consent of the other owner or owners as the case may be).

** for the trainspotters, a classic song from Pearl Jam’s album ‘Ten’, namely ‘Even flow’.