Family Law – Property Settlement

Family Law Property Settlement
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Add-back of post separation livestock sale proceeds in error where husband habitually relied on them.

In Cabadas (2019) FamCAFC 179 (11 October 2019) Kent J, sitting in the appellate jurisdiction of the Family Court of Australia, heard the husband’s appeal against an equal division made by a judge of the Federal Circuit Court of a $901,078 asset pool which included a notional $130,176 received by the husband from the sale of livestock over the previous five years.

In a Family Law property division application, a party may seek to ‘add back’ to the pool of assets of the parties, property which that party alleges has been used or dissipated by the other party and which amounts to a premature distribution of that property to that party. In this case, the wife sought to have ‘added back’ an amount of $130,176 received by the husband after separation from the sale of livestock over the previous five years. At first instance, the court agreed with the wife’s submission. However, the Family Court of Australia in its appeal jurisdiction found differently.

Kent J said : “Even more fundamental is the error of notionally adding back sums of money that may have been available to a party post-separation, as a notional asset, without any necessary finding to support that approach. Here it can be seen that the trial judge took no account of the husband’s longstanding dependence upon income from livestock sales for his livelihood which continued in the post-separation period; nor did his Honour have any regard to likely business or expenditure offsetting the gross livestock sales income over a five year period between the first recorded sale in August 2013 and a trial in August 2018. In short, his Honour gave no consideration to the fact that reasonably incurred expenditure by the husband either for his own living expenses and support or for business expenses to maintain the livestock/business operation, had to be taken into account as an offset to the gross amount of livestock sales income produced over a period of some five years.”

The appeal was allowed, discretion re-exercised and the adjusted pool (absent any notional add back) divided equally.

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