Wong on Family Law

Select topics on Family Law in Australia -- Property (alteration of property interests)

Work-in-progress, 11 April 2025 (last updated)


[!] Process


[!.A] Disclosure


[A] Threshold Issue - De Facto Relationships - Property

> see discussion in Jonah & White [2011] FamCA 221.

> See also, 'Foulsham & Geddes successfully defends claim against late solicitor’s estate – Amprimo v Wynn' (Foulsham & Geddes, Webpage) <https://www.fglaw.com.au/amprimo-v-wynn/>. 

> "... However, the nature of Ms Amprimo’s occupation was a factor to be taken into account by the court in determining whether the de facto relationship existed.9 In this case the plaintiff failed to establish any of the grounds advanced for a family provision order. The case is an interesting demonstration of the broad acceptance given to de facto relationships- and the reality that the nature of these relationships often makes proving them very difficult. For example, a factor which was considered to militate against a finding that there was a de facto relationship was that the plaintiff continued to work as a prostitute at various times. 10 (Had Ms Amprimo been a lawyer I doubt the fact that she continued to earn a livelihood would have troubled the trial judge.) Counsel for the plaintiff said in submissions that the fact that the plaintiff was a prostitute did not concern the deceased and it ought not have concerned the Court.11": Michelle Painter SC, 'All in the Family: Equity, the Succession Act and Family Provision' (Learned Friends Conference, Sri Lanka, 8 January 2015) [23] <https://learnedfriends.com.au/getmedia/0ab2a1cd-c2d4-4b53-a8cc-e6f2dad98125/All-in-the-family.aspx>, <https://static1.squarespace.com/static/538e6312e4b03cefc2a8a0c3/t/54c0a527e4b082dba72c94d3/1421911335839/All+in+the+family+.pdf>  archived at <https://perma.cc/SGQ8-CTT9>. 

> see also, Nigel Nicholls and Cathie Blanchfield, 'Determining De Facto Relationships: Finding Certainty in Murky Waters' (Paper, 2021) <https://www.blanchfieldnicholls.com.au/wp-content/uploads/2021/09/Determining-De-facto-Relationships-Finding-Certainty-in-Murky-Waters.pdf>.  


[B] Property Settlement; Asset Split; Expert Evidence; Valuation

> Carolyn Sparke KC, 'Trusts in Family Law' (Paper, Svensons List Family Law CPD, 22 March 2024) <https://svensonbarristers.com.au/wp-content/uploads/2024/03/svenson-cpd-day-trusts-and-family-law-0324.pdf>, archived at <https://perma.cc/H9EP-4VK6>. 

> Control of the trust: Kennon v Spry [2008] HCA 56; purpose of the trust and history of trust structure.

> Paul Fildes and Carly Boekee, 'Adjusting for Future Needs in Property Settlements: Time to Take Out the Crystal Ball?' (Paper, Taussig Cherrie Fildes, 31 May 2019) <https://www.tcflawyers.com.au/wp-content/uploads/2021/06/Adjusting_for_Future_Needs_in_Property_Settlements__Time_to_Take_out_the_Crystal_Ball_.pdf>, archived at <https://perma.cc/5KV5-QGWZ>. 

> focus on the word "reasonable": "A standard of living that is in all the circumstances reasonable (s 75(2)(g))   A reference to ‘reasonable’ in this sub-paragraph imputes a necessity to economise if necessary. Neither party will be able to spend a lavish amount on accommodation. It is likely that at least one of them will have to live in rental accommodation.": Linwood & Linwood (No 3) [2024] FedCFamC1F 393, [184].

> see also discussion in Lisa Wagner and Stuart Colderick, 'How are pre-relationship assets treated after a separation?' (Webpage, 24 October 2020) <https://www.familylawyersdw.com.au/how-are-pre-relationship-assets-treated-after-a-separation/>, archived at <https://archive.is/NP2EE>. 

> See ee, Wei & Xia [2024] FedCFamC1A 65 - parent's funds from overseas used to purchase assets in the name of the couple, turns on evidence. 

> family trust, where wife was appointor but never had control, not alter ego: Barrett & Winnie [2022] FedCFamC1A 99.

> Effect or non-effect of separation on inheritances: 

> see discussion in Brendan Herbert, 'inheritances can be included in property pool when relationships break down' (MacPherson Kelley, 23 April 2021) <https://mk.com.au/inheritances-can-be-included-in-property-pool-when-relationships-break-down/>, archived at <https://archive.is/tk4rk>. 

> see also, > see also, John Werner, 'The Treatment of Inheritances' (Paper, Svenson Barristers, 2018) <https://svensonbarristers.com.au/wp-content/uploads/2018/03/JOHN-WERNER-CPD-SUPER-DAY-15.03.18-.-INHERITANCE-IN-FAMILY-LAW.pdf>. 

> see also, 'It’s my inheritance, I got it after we broke up' (Carr & Co, 19 October 2023) <https://carrco.com.au/2023/10/its-my-inheritance-i-got-it-after-we-broke-up/>, archived at <https://archive.md/mrxdv> - capable of being quarantined.

> monies reasonably incurred on living expenses, school fees, legal fees, may be excluded, notional addbacks: see eg, discussion in Judy Ryan, 'Enlarging the Asset Pool - Adding Back Notional Assets' [2006] FedJSchol 1 <https://www6.austlii.edu.au/cgi-bin/viewdoc/au/journals/FedJSchol/2006/1.html>. 

> non-commutable pensions: Preston & Preston [2022] FedCFamC1A 157: "The military pension ought not have been notionally identified as an asset when it was not, as it could neither be commuted nor alienated. It was no more than a right, entirely personal to the husband, to receive defined income whilst ever medically unfit."

> See also, discussion in Kate Wild, 'Treatment of non-commutable superannuation pensions in family law property settlements' (Blackwood Family Lawyers, 4 December 2023) <https://www.blackwoodfamilylawyers.com.au/insights/treatment-of-non-commutable-superannuation-pensions-in-family-law-property-settlements/>, archived at <https://archive.md/rSCtT>. 

> defined-benefit superannuation interest: see discussion in [L] below. But see also, Semperton v Semperton [2012] FamCAFC 132 - treatment as a financial resource.

>> financial resources and adjustment of division of asset pool. 

> "I am well aware of the pitfalls involved in the so-called "double counting" or "double dipping" that can sometimes occur in business valuation cases. The problem arises when a valuation of the business occurs through the utilisation of a capitalisation rate in respect of the future maintainable earnings of the business. In McF & McF [2004] FamCA 1309 (‘McF’) at paragraph 18 the Full Court (per Kay J – with Bryant CJ and Holden J agreeing) stated that: “16.         Of more concern is the issue of the s 75(2) adjustment. The trial Judge said he recognised the husband had the child, B, but having regard to the fact that he is only one of three children and the younger ones being shared between the parties, and that he was already 15 years old, his Honour was of the view it was not appropriate to place significant weight on that factor. He then went on to say that the wife had the shop which was a functioning and profitable business and would continue to be so. The husband would improve his earnings significantly with the finalisation of the case. In a modest adjustment of 10 per cent, a variation would only be $47,000, and that he thought such an adjustment was appropriate on account of these factors. 17.          Whilst his Honour was correct to suggest the adjustment meant that arithmetically there was $47,000 from the wife's half share to be transferred to the husband's share, the reality is that this creates an outcome where the husband gets half again as much as the wife, that is the ratio of six parts to four.  I am of the view that the trial Judge fell into error at this point in the process and that he failed to actually stand back and see whether it was fair in the circumstances where the wife's share of assets, based on contribution, was about $225,000, to require her to give the husband $47,000 when the factors that remained between them were of fairly small compass, namely the full time care of the 15 year old, who will be capable of being supported to some degree by appropriate child support orders or assessments, and the fact that the wife retained the business, which was producing for her wages of $44,000 plus profits of another $38,000 in circumstances where the trial Judge had found the husband will improve his earnings significantly on the conclusion of the case. 18.          The profit making capacity of the business was already factored into the valuation, and I perceive there is an element of double dipping, paying attention to the income it earnt. If the wife sold the business, she lost her greater earning capacity. Accordingly, whilst its value was appropriately included in the pool of divisible assets, the fact that she will be required to buy out the husband's half share immediately compensates him for that difference, while increasing her outgoings by borrowings necessary to finance the purchase. Once that factor is recognised, there is really very little difference between the parties' positions.” Cases (such as McF) are relevant for consideration here, of course, because the value of the F Company business (or at least the husband’s interest in that business) has been included in the pool in the sum of $2,497,659. That valuation has been achieved by utilising a capitalisation rate in respect of the future maintainable earnings of the F Company business. It is important to note that the conclusions of the Court (in the present case) concerning the justice and equity of an uplift pursuant to s 75(2) in favour of the wife on account of a disparity in earning capacities – does not rely upon the profitability of the F Company business and nor does it rely upon the husband's possible income from F Company (which is in fact not known). However, I would point out that, unlike McF, in the present case there is no finding by this Court that the wife (the person not retaining the business) is likely to improve her earning capacity significantly at the conclusion of the case. The wife is still studying and has not been in the workforce for more than 20 years. In McF, Kay J observed in paragraph 18 that if the wife (in McF the wife was taking the business after the marriage breakdown) sold the business in question – "she lost her greater earning capacity".  That is not the case with the Gristwood family.  If the husband (Mr Gristwood) at some stage in the future decides to sell his interest in F Company – it could not be said that he has "lost" his greater earning capacity. That will be apparent because of the reasons that I have outlined above. His skill set and experience across a broad range of business ventures is undoubted. In addition, there is a further point to distinguish the current case before the Court with the decision of McF. In that case, the wife (who was retaining the relevant business) needed to borrow money in order to finance the "purchase" of the business from the husband as part of the property settlement. That is not the case with the Gristwood family. There is no evidence that the husband will need to borrow any money for the property adjustment contemplated pursuant to s 79. McF was decided on 25 October 2004. Not long thereafter there were two further decisions, namely C & C [2005] FamCA 159 (‘C ’) and GBT & BJT [2005] FamCA 683. C  was decided in March 2005 and GBT & BJT was decided in July 2005. Both of those cases confirmed the correctness of the reasoning (on this point) in McF. Indeed, the trial judge (Warnick J), whose decision had been overturned in McF, joined Kay J in confirming the correctness of McF (relating to this s 75(2) issue) in both C and GBT & BJT. I do accept that it may be considered the case that the husband has to keep invested a certain proportion of his share of the assets – in the business of F Company (at least at some stage in the future once he’s able to take up the Call Option). On the other hand, the wife will have available her share of the assets which she would be able to invest and seek a return – thus diminishing the gap between the parties’ income earning capacities. It is not a factor that I have overlooked. It is a matter I have taken into account. I still come to the view that – because of the particular circumstances of this case and the husband's undoubtedly significant business acumen – there will remain a disparity in earning capacities as I have outlined. In addition, of course, there is an important factor in this case (not present in the other cases to which I have referred) –  that there will be a delay and quite possibly a reasonably significant delay between judgment and the completion of the sale of the  retail stores – during which time the husband will continue to receive an income (stated by him to be $8,683 per week) – far exceeding the wife’s income. In my view, the adjustment should be 5% in favour of the wife. I have also noted that Ms B continues to live with the wife and I have taken this into account in this assessment. Indeed, I have had regard to all of the various subsections of s 75(2). I have only specifically referred to the subject matter of some of the subsections in s 75(2). I should point out that in reaching this conclusion (of a 5% adjustment in favour of the wife) I have also taken into account that once the final order is pronounced the wife will not be in receipt of any further spousal maintenance. In this regard, see later in these reasons for judgment. I am aware of those cases which require the Court to have regard to the actual outcome in dollar terms – without (necessarily) having reference to the percentages. Because the Court has come to the conclusion that a just and equitable outcome requires the sale of the family’s interests in the retail stores – the actual capital sums to be received are not yet known.  It makes the kind of assessment contemplated in cases such as Clauson & Clauson (1995) FLC 92-595 at 81,911 and Trevi & Trevi [2019] FamFACF 51 at [48] somewhat difficult. It will be apparent that the view which I have formed is that an adjustment in favour of the wife of 5% (pursuant to s 75(2)) is just and equitable in the circumstances. It will also be apparent that I consider the amount sought on behalf of the wife by way of an adjustment (by Mr Kirk QC) is not justified. This is primarily because of the (likely) size of the pool and the net impact of a 5% adjustment.": Gristwood & Gristwood [2022] FedCFamC1F 725 [130]-[135]. 

> BUT SEE: "It was submitted by senior counsel for the husband that his Honour’s finding concerning P Company being available to the husband: was not open to the learned trial judge because it constitutes double dipping in circumstances where the full (and in the husband’s submissions, far more than the full) value of [P Company] is already divided between the parties by reason of the contribution-based entitlements…[by which it was found that contributions to all the assets were equal]. In response, senior counsel for the wife submitted there had been no “double dipping” because “the methodology the single expert used to value [P Company] was net asset backing and not future maintainable profits” and, as a consequence of that valuation method having been used, the “husband’s substantial income was not taken into account in the valuation”.It was therefore submitted by senior counsel for the wife that it was open to the trial Judge to make the s 75(2) adjustment in circumstances where: (i)          the husband’s income from [C] Hospital was $360,000 per year, from [the University] $48,246 per year, from honoraria ($56,128 in 2008 and $163,067 in 2009), from his private practice (not quantified by the trial judge) and an anticipated cash surplus in [P Company] for the 9 months to 31 March 2010 (not 2012, as stated) of $233,275.46… (ii)         the husband’s present wife’s income was $320,480 as at 30 June 2009… She also earns honoraria through the entity [X Company]… (iii)        the s75(2) adjustment excluded the husband’s superannuation valued at $1,084,709; after a 16 year marriage with 4 children left primarily in the physical care of the wife, given the husband’s work & travel commitments. We observe that the evidence indicates the honoraria referred to in paragraph (i) of this submission were earned by Dr B, as well as by the husband.  We further observe that the “cash surplus” of $233,275.46 incorporated the final M Foundation payment, and hence had already been included in the pool of assets for distribution. In any event, we consider there is merit in the proposition that, in referring to the “significant financial benefit of [P Company]” when considering the s 75(2) adjustment, the trial Judge appears to have taken the value of P Company into account twice. His Honour had already included the entire assets of P Company in the asset pool, and the effect of his contribution finding was that the wife would receive an amount equivalent to the value of half of those assets. She therefore had as much of “the financial benefit of [P Company]” as did the husband. We do not accept that the evidence provided a basis for concluding that P Company would have an income stream that was not reflected in the value of its assets.  Apart from the unit in suburb E and money in the bank, P Company had no assets from which it could earn income save for the patents. The Single Expert’s report found that “future economic benefits (in the form of earnings or cashflows) have yet to emerge from the patents”.  Furthermore, the husband was not challenged on his evidence that the “patents themselves do not generate any income and are not of any value, however, they require capital expenditure to be maintained”.  Nor was he challenged on his evidence that the cost of maintaining the patents was approximately $70,000 per annum.   (Husband’s affidavit, 17 May 2010, paras 51 and 53). Dr Z gave evidence that the University had discontinued negotiations with the husband to acquire the patents after it received “an intellectual property due diligence report” which indicated that the University “would be unlikely to receive a commercial return” from the patents.  (Affidavit of Dr Z, 13 May 2010, paras 34, 36 and 37, and see also the due diligence report by the patent attorneys at AB 1208). P Company’s only sources of income had been: ·    the grant moneys (with no guarantee of any further funds from these sources); ·    interest earned on funds in the bank (largely sourced from the grants); ·    rent from the property in suburb E (which was included in the valuation); ·    personal exertions of the husband and Dr B (and his Honour had already taken into account, at paragraph 279,  the husband’s capacity to earn income from his own exertions). It is true that the draft agreements foreshadowed an opportunity for P Company to earn income from contract services at the Institute’s premises; however, there was no evidence to indicate the likelihood of any income being generated, or the extent of any possible profit.   P Company had been able to undertake such work in the past, but the accounts show no income ever being received from such work.  On the contrary, the only previous contract referred to in the evidence was the Laboratory Services Agreement with D Company, and the husband was not challenged on his evidence that the entire income from that contract had been received by the University. For these reasons, we accept his Honour erred in treating the retention of the P Company assets as part of the husband’s settlement as constituting an advantage for him which weighed in the balance in the assessment of the s 75(2) factors.": Martin & Newton [2011] FamCAFC 233, [319]-[330]. 

> See also, IN CONTRAST, "In support of his submission that the Court cannot “double-dip” by including the value of the Wife’s interest in P Business and then take her income earned from that business into account under section 75(2) of the Act the Wife’s Counsel referred the Court to the Full Court decision of C & C [2005] FamCA 159 (“C & C”). ... Counsel for the Wife was unable to refer the Court to any decision of this Court where a business with an agreed value was not be included in the pool of assets for division between the parties but rather was considered pursuant to section 75(2) in circumstances similar to this matter. For these reasons I reject the submissions made on behalf of the Wife that her interest in P Business is not an asset for inclusion in the property pool. To not do so is inconsistent with the Court’s mandate to identify the parties’ existing legal and equitable interests in property. That does not mean however the Wife’s ownership of P Business and its current circumstances are not factors be considered under section 75(2) of the Act.": Mignone & Barton [2024] FedCFamC2F 344, [296], [304]-[306]. 

> "In Semperton & Semperton (2012) 47 Fam LR 626, one of the spouses held a non-commutable DFRDB pension interest which the trial Judge took into consideration both in the Balance Sheet (where it was included as an asset at a high capitalised value) and then taking it into consideration again later as a relevant future factor given that it was an income stream. The Full Court (May, Thackray & Ryan JJ) held this to be an error. Thackray & Ryan JJ observed in their joint judgment that, in the context of assessing future factors, it is not improper for the Court to refer to property that has already been included in the Balance Sheet. Indeed, s 75(2)(b) of the Act – or s 90SF(3)(b) in this case – expressly authorises the Court to take such assets into account. But as their Honours warned: 146       This would, however, usually be relevant only in the following circumstances: •            to highlight a significant discrepancy between the value of assets to be retained by each of the parties which calls for some further adjustment…; or •            to show that the extent of assets to be retained by each party following assessment of contributions is such that there is no warrant for further adjustment…or that a further adjustment is required…; or •            where the nature of the property to be retained by one of the parties has a quality about it which is not accurately reflected in the value ascribed…[14] (my emphasis) The Husband’s argument was based upon the third bullet point above.  Mr Graham also referred me to the Full Court’s decision in Jabour & Jabour [2019] FamCAFC 78 wherein Alstergren CJ, Ryan & Aldridge JJ agreed with earlier jurisprudence that where one of the initial contributions of a party is a property which suddenly increases in value during the relationship as a result of a rezoning, the party who introduced the property should not necessarily receive the whole contributions credit for that increase. Such an increase is in the nature of a “windfall” to which both parties (or perhaps neither party) may have contributed. But here the rezoning has not happened; there may never be a “windfall”.   Mr K is aware of the rezoning issues; the property has been valued against that backdrop; and future rezoning/redevelopment of the site is simply too speculative and/or remote to warrant a further adjustment.  In the end, having regard to the state of the evidence as set out in paragraph [147] above, I adhere to my preliminary view expressed during the trial - namely that to make some further adjustment or allowance in the Husband’s favour on account of this future potential would be to impermissibly “double dip” in relation to the same asset.": Walls & Keeble (No 2) [2023] FedCFamC2F 477, [148]-[150]. 

> "Both Ms R and Mr S are beneficiaries of the K Trust. It is plain, from the evidence, that, to the extent that their mother has been responsible, as director of the trustee company, for making a distribution of trust income to them, they have not retained that income. Accordingly, deducting the $105,000 from the wife’s income does not accurately record her income. The annual figure should more properly be $933,946.24 or a weekly amount of $17,960.50. I must also take note that to the extent that the wife’s interest in the Q Company Partnership appears as an item of value in the balance sheet (as an asset of the Trust) it represents (save for the capital account) her earnings and so I have had regard to that fact when approaching the issue of income disparity in the next few years so as to make sure that any adjustment does not overstate the income disparity and run the risk of “double dipping”. It is also important to consider that the wife has significant losses which she will be able to utilise to offset taxation liabilities. There is no quantification of the effect of this in the evidence but it will provide her with a greater net income.": Helbig & Pietri [2023] FedCFamC1F 258, [79]-[81]. 

> "The primary judge’s methodology caused the military pension to be impermissibly counted twice – first as an asset and then as a source of constant income. Moreover, when taking the military pension into account as a financial resource for the purpose of s 75(2) of the Act, the primary judge did so at its gross value of $976 per week and did not seemingly take into account its taxable component (at [88], [91b] and [93a]). The Full Court plurality in Semperton v Semperton (2012) 47 Fam LR 626 warned against both of those dangers, saying: 143.         The husband complains there was “double dipping” because the Federal Magistrate referred to the benefit to the husband of the DFRDB when making the adjustment in favour of the wife on account of the s 75(2) factors. 144.         This was said to constitute “double dipping” because the DFRDB had been included in the pool for the purposes of determining contribution entitlements. … 148.         It will be immediately apparent that the learned Federal Magistrate was alive to the importance of not “double dipping”. It appears he properly accepted it would be impermissible to take the DFRDB into account against the husband’s interest at this stage, unless there was some aspect of the entitlement that had not already been taken into account when assigning it a value. The question that then arises is what additional aspect of the benefit did his Honour have in mind when mentioning it in the context of the proposed adjustment? … 152.         The only benefit we can see to the husband that is not already accounted for in the valuation of the DFRDB is the fact that he might live much longer than the valuation formula assumes. To that extent, we accept it can be seen as providing the husband with “security”, as his Honour said.  And the corollary is that if the husband lives longer than the formula assumes, the DFRDB will turn out to be worth more to him than the calculation suggests.  However, the flipside is that the husband might die at an age much earlier than the formula assumes, in which case its real value to him would have been much less. … 154.         It is significant that the wife made no submission to the Federal Magistrate to suggest that the retention of the DFRDB by the husband should result in a further s 75(2) adjustment in her favour. Absent such submissions, and absent any evidence of benefit to the husband not accounted for in the valuation, we do not consider it was open to his Honour to take the DFRDB into account at the s 75(2) adjustment stage. To that extent, we consider his Honour erred. … 157.        As we have already said, we consider his Honour erred in allowing the DFRDB to play any part at this stage of the process. … … 162.         It is unsurprising the Federal Magistrate failed to place any emphasis on the fact that the DFRDB would adversely impact on the husband’s current taxation and his future aged pension, since neither party asked his Honour to take those matters into account.  However, the evidence disclosed that tax was being paid on the DFRDB.  In any event, the fact that tax would be payable is a matter of law.  Similarly, it is a matter of law that a DFRDB will impact on a means tested pension, which was one of the reasons the wife did not want any part of the DFRDB. The primary judge did not heed such principles and so this ground of appeal succeeds.": Preston & Preston [2022] FedCFamC1A 157, [20]-[22]. 

> "54. In relation to s 75(2)(g), the Court must take into account the standard of living that in all the circumstances is reasonable. Given that the parties divorced, to extract a further $1,000 a month from the applicant, on the evidence before this Court, would be anything but reasonable and would not permit the applicant to have a standard of living that is in all the circumstances reasonable. The cessation of the spousal maintenance order does not in any way diminish the standard of living currently being enjoyed by the respondent. 55. In relation to s 75(2)(h), it is apparent that the respondent is in receipt of a government pension and has now ceased working. The applicant does not have an adequate income to make the spousal maintenance payments which are purported amounts the subject of a lifetime order. 58. In relation to s 75(2)(k), the Court has taken into account the duration of the marriage prior to the divorce, as identified above. It is apparent that the parties continued to work until the respondent retired, and that the applicant is still working in his business. 59. In relation to s 75(2)(l), there is no relevant role to be protected, given their child is now an adult. 60. In relation to s 75(2)(m), the Court has taken into account that the applicant is now cohabitating with a partner, and that they are paying what is, on his income, a significant rent, and are hoping to travel overseas. 61. In relation to s 75(2)(n), the Court has taken into account that the order will discharge a liability in the amount of $244,353.24, as well as restraining the respondent from seeking to enforce the spousal maintenance order in any other country.": Edelsten & Agosti [2024] FedCFamC2F 1258. 


[C] Defined Benefit Superannuation Interest - s 79


[D] Property Pool Adjustments for Step-Children / Adjustment - Care for Non-Biological Children: 

> Robb & Robb (1995) FLC 92-555.


[D.A] Interplay between adjustments for spouse future needs (in relation to a child who is the other spouse's step child) and adjustment for contributions in supporting step-child 


[E] "Unsupportive Domestic Environment"


[F] Short relationships: 


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