FAMILY LAW – ALTERATION OF PROPERTY INTERESTS – tax debt exceeding value of pool – wife seeking entirety of pool – tax debt a joint debt – wife contending she is not liable for tax debt – child support debt – husband asserting that child support agreement was executed in circumstances of unconscionability – held, ATO and CSA take entirety of pool.
FAMILY LAW – TAXATION – joint liability – revenue authority entitled to all funds.
FAMILY LAW – EQUITY – unconscionable conduct – extensive review of authorities.
FAMILY LAW – STATUTORY UNCONSCIONABLE CONDUCT – extensive review of authorities.
Legislation:
Australian Securities and Investments Commission Act s 12CB(1)
Commissioner of Taxation v Worsnop (2009) 40 Fam LR 552
Commonwealth Bank of Australia v…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Cao & Trong [2022] FedCFamC1F 754
Case
[2022] FedCFamC1F 754
Decision Date
CaseChat Overview and Summary
The case of Cao & Trong before the Family Court of Australia involves a dispute over the distribution of funds held in a controlled money account, following the dissolution of a marriage. The wife had enjoyed a lavish lifestyle, largely due to the husband's failure to pay taxes, and the Australian Taxation Office (ATO) and CSR (a creditor) sought to recover debts from the controlled money account. The primary legal issue the court had to resolve was whether it was just and equitable for the wife to bear any portion of the tax liability, given her lifestyle, and how the available funds in the controlled money account should be distributed among the creditors.
The court found that it was not equitable to place the entire tax liability on the husband, as the wife had also benefited from the untaxed income. Consequently, the court decided that the wife must contribute to the tax debt. The available sum in the controlled money account, $3,099,868, was deemed insufficient to cover all debts, including those owed to the ATO and CSR. Therefore, the court ruled that the entire sum in the controlled money account should be applied rateably between CSR and the Commissioner, with neither the husband nor the wife receiving any distribution from this fund.
In its reasoning, the court emphasised that it was just and equitable for the debts owed to CSR and the Commissioner to be settled from the controlled money account. The court also noted that the debts had increased since the previous hearing, and therefore, updated certificates of indebtedness would be required. Final orders would be deferred until these certificates were provided, and the parties had an opportunity to challenge the entries in those certificates. The interim orders maintained the status quo until the final orders were made.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
In my view counsel for the wife adopted a peculiar approach in this case in failing to acknowledge or recognise that the wife had enjoyed a very luxurious lifestyle, mostly by reason of the fact that her husband failed to pay tax. It is not just and equitable to visit upon him solely the responsibility for meeting the tax liability. She must also meet that debt. As it happens, the only sum presently available to pay the debts due to CSR and ATO is the remaining amount in the controlled money account. The whole of that sum must be applied to CSR and the Commissioner. CONCLUSION As has been outlined in paragraph 2 of these reasons, I take the view that it is just and equitable for the whole of the sum presently held in the controlled money account ($3,099,868) to be applied rateably as between CSR and the Commissioner. It is not just and equitable for the husband or the wife to receive any distribution from that sum. While largely academic, the debt due to the Commissioner and to CSR has increased from the amounts debated when this proceeding was last before me. The proper sum due most proximate to the pronouncement of final orders should be included. In those circumstances I will defer making final orders until CSR and the Commissioner files updated certificates of indebtedness and the husband and wife, if they so choose, indicate whether either seeks to challenge the entries in those certificates. The orders I make in the interim are as recorded at the commencement of these reasons.