Peterson & Davis (No 3)

In the case of Peterson & Davis (No 3), the Family Court of Australia was called upon to resolve a complex dispute concerning the division of property acquired during a marriage and the subsequent bankruptcy of one of the parties. The applicant, born in 1982, and the respondent, born in 1976, were married and had children together. The applicant was employed and received a salary and family tax benefits, while the respondent had been out of the workforce since 2009 due to a work-related injury. They had acquired several properties during their marriage, including two properties in Suburb B and D Town. The third and fourth respondents, the parents of the respondent, had financially supported the couple in acquiring these properties and had an equitable charge on the D Town properties.

The central legal issue before the court was the division of the proceeds from the sale of the Suburb B properties and the D Town properties in light of the respondent's bankruptcy and the equitable interests held by the third and fourth respondents. The court had to determine the respective entitlements of the applicant, the respondent, the trustee in bankruptcy, and the third and fourth respondents. The court also needed to consider whether the D Town properties should be sold immediately to realise the applicant's entitlement under section 90SM of the Family Law Act.

The court held that the trustee would retain his vested interest in the Suburb B properties and the D Town properties, subject to the equitable charge in favour of the third and fourth respondents. The applicant was entitled to 7.5% of the proceeds from the sale of the D Town properties, while the respondent would receive 42.5%. The court ordered the immediate sale of the D Town properties to ensure a just and equitable outcome, considering the respondent's lack of income and the ongoing dysfunctional relationship between him and the trustee. The proceeds from the sale would be distributed according to the court's determination, taking into account the equitable charge and other liabilities.

In conclusion, the court made orders for the sale of the D Town properties and the distribution of the proceeds, ensuring that the applicant's entitlement under section 90SM was realized as soon as possible. The court also made provisions for the adjustment of property in the balance sheet to account for uncertainties regarding the value of the equitable charge, selling costs, and capital gains tax.