Hankel & Kaplan
[2025] FedCFamC1A 103
•17 June 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Hankel & Kaplan [2025] FedCFamC1A 103
Appeal from: Kaplan & Hankel [2025] FedCFamC1F 41 Appeal number: NAA 69 of 2025 File number: SYC 9434 of 2021 Judgment of: AUSTIN, RIETHMULLER & CURRAN JJ Date of judgment: 17 June 2025 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Where the wife appeals against final property orders – Where the wife’s mother supports the appeal – Where the wife’s main complaint is that her former shareholding in a corporation should not be notionally treated as an asset – Where the wife had transferred her shareholding in the corporation to her mother – Where no legal or factual errors are demonstrated to vitiate the finding – Where the husband orally affirmed the contents of his affidavit at trial – Where the wife cannot now object to the admissibility of the affidavit – Where the wife was ordered to sell properties in default of a cash payment to the husband – Where the wife contends the primary judge erred by not making an allowance for capital gains tax in the event the properties were sold – Where the wife did not advocate for the primary judge to take the prospective liability into account and the primary judge was not obliged to do so – Where the wife argues the primary judge erred in their assessment of her proportional entitlement to property – Where the wife asserts the primary judge erred in failing to consider the husband’s conduct as vexatious – Where the wife contends the primary judge failed to take into account her various allegations of financial waste by the husband – No error of fact or law established – Application in an Appeal – Leave to adduce further evidence – Where the additional documents do not assist the wife’s case – Where the documents were available at trial or could have been made available – Application dismissed – Appeal dismissed – Self-represented parties – No question of costs. Legislation: Evidence Act 1995 (Cth) s 191
Family Law Act 1975 (Cth) Pts VII, VIII, ss 75, 79
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 26
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 13.12, 13.39
Cases cited: Browne v Dunn (1893) 6 R 67
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22
Kuhl v Zurich Financial Services (2011) 243 CLR 361; [2011] HCA 11
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop (2008) 237 CLR 66; [2008] HCA 42
Marlin & Henson [2025] FedCFamC1A 71
Rosati & Rosati (1998) FLC 92-804; [1998] FamCA 38
Smits v Roach (2006) 227 CLR 423; [2006] HCA 36
Zoef v Nationwide News Pty Ltd (2016) 92 NSWLR 570; [2016] NSWCA 283
Number of paragraphs: 92 Date of hearing: 5 June 2025 Place: Sydney The Appellant: Litigant in person The Respondents: Litigants in person ORDERS
NAA 69 of 2025
SYC 9434 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS HANKEL
Appellant
AND: MR KAPLAN
First Respondent
MS BRILEY
Second Respondent
ORDER MADE BY:
AUSTIN, RIETHMULLER & CURRAN JJ
DATE OF ORDER:
17 JUNE 2025
THE COURT ORDERS THAT:
1.The Application in an Appeal filed on 11 April 2025 is dismissed.
2.The appeal is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hankel & Kaplan has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN, RIETHMULLER & CURRAN JJ:
This is an appeal brought by the wife from property settlement orders made on 30 January 2025 under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) by a judge of the Federal Circuit and Family Court of Australia (Division 1), supported by her mother, who was the second respondent.
The husband resisted the appeal and it is dismissed for the following reasons.
BACKGROUND
The spouses disputed when they began cohabitation. The wife asserted it was in late 2011, shortly before they were married (at [18]–[19] and [68]). His Honour ultimately found they began a de facto relationship by late 2008 or early 2009 (at [69]–[70]), which finding the wife did not contest in the appeal. They married in 2011 (at [19] and [68]).
The parties also disputed when they finally separated (at [66] and [71]). The wife alleged it was in September 2017, but his Honour preferred the husband’s evidence and found they finally separated in April 2019 (at [72] and [159]), which finding was not contested by the wife in the appeal either. They divorced in 2020.
The financial proceedings under Pt VIII of the Act were first commenced in December 2021. The primary judge explained the tribulations encountered in the proceedings progressing to trial (at [5]–[13]). At the time of trial in January 2025, the wife was legally represented, but neither the husband nor the wife’s mother were.
Judgment was promptly delivered a couple of weeks after the trial ended.
Relevantly, the primary judge found the spouses’ assets and superannuation interests had a collective net value of just over $4 million (at [131]), the wife’s contribution-based entitlement should be measured at 70 per cent (at [162]), and no adjustment was warranted by reason of factors prescribed by ss 79(4)(d)–(g) and 75(2) of the Act (at [170]).
The husband’s 30 per cent share of the property amounted to $1,228,183, but he only possessed property represented by superannuation worth $63,535 before any adjustment order was made (at [131] and [175]).
The spouses held legal proprietary interest in two encumbered parcels of real property at Suburb D and Suburb E. The wife solely owned the Suburb D property, but they jointly owned the Suburb E property in unequal shares.
To retain sole proprietorship of the Suburb D property in which she lives with the children, as the wife wanted, she had to pay a lump sum to the husband and cause the removal of his bank liability in respect of the property. The wife, through her counsel, accepted that was so (at [172]–[178]). Orders to that effect were therefore made.
The wife was ordered to pay the husband $1,164,648 within three months (Order 1). Simultaneously, she had to remove the husband’s bank liability in respect of both properties (Order 2) while he had to transfer his part proprietary interest in the Suburb E property to the wife (Order 3). In the event of default, both properties would be sold and the net proceeds of sale used to achieve the same financial outcome (Orders 4–8).
The wife appealed from all orders.
APPLICATION IN THE APPEAL
On 11 April 2025, the wife filed an Application in an Appeal seeking numerous different types of relief, being: first, the grant of leave to adduce further evidence in the appeal (proposed Orders 1 and 2); secondly, permission to include more documents in the appeal book (proposed Orders 3 and 4); thirdly, the stay of the appealed orders (proposed Order 5); and fourthly, a declaration or a finding that the wife’s mother’s joinder to the original proceedings as a party was invalid (proposed Order 6).
Proposed Order 6 is connected to Ground 2 and is discussed in more detail in conjunction with that ground. Suffice to say at this point, the application is misconceived. Even if the wife’s mother was needlessly joined as a party to the proceedings, as is now contended, it caused neither of them any prejudice. The wife’s mother did not need to participate in the trial if she did not want to. Her joinder only gave her the chance to do so.
Proposed Order 5 is not made. The wife made an application to the primary judge to stay the appealed orders (r 13.12(3) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”)), but the stay application was dismissed in April 2025 and the wife did not separately seek leave to appeal from the dismissal order.
Proposed Orders 3 and 4 are not made. The documents the wife wanted added to the appeal book comprise some additional orders made between May 2023 and October 2024 and two affidavits of service filed in the original proceedings by the husband. The affidavits of service and the orders are irrelevant because they pertain only to Grounds 2 and 3, which complaints are rejected for reasons given below.
Accordingly, the dispute devolves to the application to adduce further evidence in the appeal, listed for hearing in conjunction with the appeal, as is usual (r 13.39(4) of the Rules).
The further evidence which the wife initially wanted to adduce comprised a tender bundle of documents collated by her mother for use in the trial, but which bundle was never tendered in evidence by either the wife or her mother. The affidavits filed in the appeal on 11 April 2025 by the wife and her mother supposedly explain the reason why such further evidence is relevant, probative, and hence admissible in the appeal, but neither affidavit acquitted that objective. Since the bundle of documents was not tendered as an exhibit at the trial, the primary judge had no occasion to consider the admissibility of its contents.
While the wife’s mother could feasibly have overlooked the need to tender the documents at the trial, due to her lack of legal representation, it is difficult to imagine how the wife’s lawyers could have overlooked their tender if they were truly important. It is the wife, not her mother, who now seeks to adduce the documents as further evidence in the appeal, so she bears the burden of adequately explaining why they were not adduced in evidence at trial. Blaming her unrepresented mother is not a satisfactory explanation. The wife’s lawyers were certainly aware of the documents because the wife deposed this:
25.My legal team failed to ensure my mother’s evidence was tendered as they were not representing her, despite being aware of its relevance and the procedural difficulty she faced.
(Wife’s affidavit filed 11 April 2025)
The wife deposed the subject documents comprise “bank records, handwritten education loan agreements, and financial evidence establishing the trust nature of the NZ company and [the wife’s mother’s] contributions to Australian matrimonial property”. Perusal of the hundreds of documents shows many are written in the Country G language. While some purport to be translated, the translations are not certified. Moreover, the provenance of many documents written in the English language is not proven.
The documents which do appear to be genuine copies of official documents in the English language have no apparent bearing on the issues now at stake in the appeal. In breach of the Rules (r 13.39(2)), the wife does not explain how the further evidence supposedly supports the grounds of appeal.
Just before the appeal hearing, the appeal registrar refused the wife permission to file another affidavit (affirmed on 3 June 2025) and another tender bundle of documents comprising over 900 pages. At the hearing, the wife confirmed she applied for leave to adduce the new affidavit and tender bundle of documents as further evidence in the appeal, in addition to the earlier affidavits and first tender bundle.
The wife deposed this in her new affidavit:
7. I rely on this affidavit to:
a) Establish jurisdictional and procedural errors made at trial;
b)Support the exclusion of third-party assets belonging to the [wife’s mother]
c)Demonstrate the scale and legal relevance of my post-separation financial and parenting contributions;
d)Adduce new evidence in support of contribution adjustments and My current financial hardship and practical barriers to complying with the sale orders;
e)Support a costs order under s 117(2) of [the Act] due to the [husband’s] litigation conduct.
(As per the original)
As to paragraph 7(a), neither the wife’s commentary nor the extra documents could possibly demonstrate “jurisdictional and procedural errors made at the trial”.
As to paragraphs 7(c) and 7(d), even assuming the documents could do the work the wife believed, she was impermissibly trying to retrospectively improve her case at trial rather than properly redress an error by further evidence which was formerly unobtainable.
As to paragraph 7(e), the legal costs of and incidental to the first-instance proceedings are a matter for the primary judge, who made a procedural order to that effect (Order 10). The costs of the trial, which are not the subject of any dispositive first-instance order, are not a matter for this Court exercising appellate jurisdiction.
As to paragraph 7(b), inferentially, the wife expects the further evidence will help undermine the primary judge’s finding that the shares she formerly held in a corporation, which shares she voluntarily transferred to her mother in 2021 and 2022, had been her property, but she is mistaken for the reasons given in the discussion of Grounds 2 and 3.
The vast swathe of documents now proffered by the wife to this Court do not obviously advance her case by contradicting these findings made by the primary judge:
60.The wife’s case and that of her mother for a trust relies upon an acceptance of their affidavit evidence which comprised a series of conversations and behaviours said to be consistent with the creation of a trust. Counsel for the wife conceded that there were no documents that supported the finding of a trust.
61.In light of the deficiencies and inconsistencies referred to above and more specifically below I place little weight on the evidence of alleged conversations between the wife and her mother said to have occurred many years earlier in preference to the non-contentious facts and contemporaneously prepared documents which I find are more reliable and upon which I place greater weight…
…
87.The wife’s counsel in the Case Outline contended as follows:
2.…In 2021, the wife transferred the shares to the maternal grandmother to repay the wife’s debt to her parents. The wife asserts that this was a legitimate transaction and was not intended to defeat the property application of the husband.
88.The transfer of shares, if in repayment of a loan, would be inconsistent with the notion that the shares were always the property of the parents held by the wife on trust for them. It would amount to the wife using their property to repay a loan owed to them. A factual and legal absurdity.
…
95.The [corporation] was incorporated in NZ [in early] 2009 and on incorporation 1,000 shares were issued to the wife. There is nothing on the face of the [corporation] records that disclose the wife as other than the beneficial owner of the shares (Pages 200–204 of Exhibit 7).
…
113.I am not so persuaded and am not satisfied that there existed a trust between the wife and her parents of the shares in the [corporation] or that the wife at the time of incorporation or at any time thereafter until after separation regarded the [corporation] as other than her own property. Nor am I satisfied that there was a loan to be repaid or repayment of a loan to her parents at any time by the transfer of shares.
114.I am satisfied that the wife transferred the shares in the [corporation] to her mother so as to reduce the pool of assets available for distribution as between her and the husband…
…
118.…
(a)There is no evidence of the creation of any declaration of trust in relation to the shares nor is there any document that indicates that the wife was at any time other than the beneficial owner of the shares.
…
(d)The wife declared in her income tax returns as a deduction the losses incurred by the [corporation] on the rental income. I find the claiming of such a deduction inconsistent with the existence of a trust.
(e)During the course of the husband’s cross-examination, counsel for the wife put to the husband the proposition that the wife used the [corporation] to buy property for herself. Such question being put to the husband, presumably upon instructions, is entirely inconsistent with the case now sought to be advanced by the wife.
…
(j)The transfer of shares to the wife’s mother alone is inconsistent with a trust said to exist for both parents.
…
119.I am satisfied on the basis of the matters referred to above and given the little weight I place on the evidence of the wife and her mother, that there was not a legally enforceable obligation to repay her parents and that the wife was at all times the legal and beneficial owner of the shares in the [corporation] and that the wife sought to reduce the pool of assets in these proceedings for division between her and the husband by transferring the shares to her mother.
With few exceptions, all the documents in the two tender bundles either were available at the trial or could have been acquired in advance of it. The wife’s lawyers, who were at least aware of the documents in the first tender bundle, elected not to tender any of them and she is now bound by their forensic decision. There is no proper premise for the documents to be adduced as further evidence in the appeal when they could have been tendered at trial and were not, as otherwise the distinction between original and appellate jurisdiction would be impermissibly obliterated (CDJ v VAJ (1998) 197 CLR 172 at [55], [111], [114], [116], [118], [148], [169] and [186.9]).
THE APPEAL
The grounds of appeal are pleaded within the Second Amended Notice of Appeal, filed on 30 April 2025.
The wife needlessly sought leave to appeal from the final judgment, in support of which application she made abundant allegations of legal, factual and discretionary error by the primary judge, venturing well beyond the parameters of the grounds of appeal.
To compound the problem, the wife’s mother filed a Summary of Argument making multiple allegations of legal, factual and discretionary error in respect of “grounds of appeal” which do not even correspond with those pleaded in any of the three successive Notices of Appeal filed by the wife. The wife’s mother did not separately appeal or cross appeal.
For clarity then, only the errors alleged within the latest iteration of the grounds of appeal are addressed. Sundry allegations within both the Second Amended Notice of Appeal and the Summaries of Argument filed by the wife and her mother are disregarded.
Grounds 2 and 3
These two grounds are addressed first because, in part, they purport to engage principles of procedural fairness in relation to a contentious issue at the trial.
The grounds are a concatenation of legal jargon, collectively alleging jurisdictional error, the denial of procedural fairness, legal error, and factual error, but all such complaints are directed to this single issue: the finding made by the primary judge that the wife’s former shareholding in a corporation should be treated as her asset. The wife now contends the finding should not have been made, but her arguments are no more than variations on the arguments she unsuccessfully advanced at the trial. They do not explain why the finding was wrongly made.
The primary judge discussed at length the evidence concerning the legal and beneficial ownership of the corporation shareholding, which the wife transferred to her mother in two tranches in June 2021 and November 2022 (at [60]–[61] and [74]–[120]). His Honour found the wife had been the legal and beneficial owner of the shares and therefore notionally brought them to account as her asset in the pool of property (at [131]) as being a premature distribution of property by her (at [113]–[114] and [119]).
That result followed from numerous pieces of evidence, including: the inconsistencies between the evidence on the issue given by the wife and her mother (at [60]–[61] and [94]); the inconsistent legal arguments on the issue maintained by the wife (at [75]–[76], [88] and [118(e)]); the contents of the corporation’s records (at [95]); the absence of any declaration of trust in respect of the shareholding (at [118(a)]); the contents of the wife’s tax records (at [118d]); the intermingling of the spouses’ money with the corporation’s funds (at [118(f)]); and the contents of an unexecuted separation agreement contemplated by the spouses in 2013 (at [118(l)).
No legal or factual errors are demonstrated to vitiate the subject finding.
The alleged jurisdictional error is said to arise simply because the corporation is registered in New Zealand and the wife’s mother is a Country G citizen, but those uncontentious facts do not disturb the efficacy of the finding made about the wife’s notional ownership of the shareholding in the corporation. The wife’s imagination of some jurisdictional impediment due to the international registration of the corporation and the citizenship of wife’s mother is mistaken because the primary judge only made orders which personally bound the spouses in respect of their Australian property interests.
As for the complaint of the denial of procedural fairness, it is made by the wife vicariously on behalf of her mother. It may be wondered how the wife even has standing to complain about procedural unfairness allegedly suffered by an independent party who makes no complaint of her own by way of appeal or cross appeal but, regardless, the complaint is without foundation.
The alleged denial of procedural fairness is asserted to be the failure of the primary judge to ensure the wife’s mother was properly served with the husband’s process and, furthermore, the failure to “consider her [mother’s] rights”. The wife conflated two separate complaints about her mother’s improper service with legal process and her improper joinder as a party to the financial cause, but neither complaint is valid because the wife’s mother voluntarily appeared at the trial and contested the proceedings. She was heard. There was no denial of procedural fairness.
There was probably no need for her mother’s joinder to the proceedings, since the spouses ultimately agreed the husband should be released from bank guarantees he gave in relation to encumbered property owned by the corporation, neither spouse ultimately made any claim against the wife’s mother, and she made no claim against either spouse (at [3]). However, she lost nothing by being present. She declined the opportunity to withdraw when offered (at [4]) and the wife intended relying upon her as a witness anyway. No appeal lay from the joinder order (s 26(2)(b)(i) of the Federal Circuit and Family Court of Australia Act 2021 (Cth)) and her joinder certainly did not taint the property settlement orders made between the spouses (Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 at 482–484 and 494–497).
The involvement of the wife’s mother in the litigation was first mooted in May 2023, when orders were made granting the husband leave to serve her with both the original and translated copies of his then current application for financial relief and his supporting affidavit filed in March 2023. The husband failed to comply with that order, even by February 2024. Finally, on 3 October 2024, an order was made joining the wife’s mother to the proceedings as the second respondent (Order 1) and the proceedings were listed for trial in January 2025 (Order 3). Although the wife’s mother made no appearance before the Court that day (Notation P), the presiding judge was satisfied the wife had informed her of the Court event (Notation H) and both spouses were ordered to thereafter serve her with relevant process (Orders 6, 11, 12, 13 and 14). The wife’s mother filed documents in readiness for the trial pursuant to the trial directions made in October 2024 (at [51]) and she then appeared at and participated in the trial with the benefit of an interpreter.
The evidence upon which the wife’s mother wanted to rely was received by the primary judge (at [51]–[52]). Relevantly, the wife and her mother both contended the shares formerly held by the wife in the corporation were held on trust beneficially for the wife’s parents, but the primary judge rejected that submission on the evidence. Consequently, his Honour did not fail to consider the wife’s mother’s property rights, as is wrongly alleged, but rather rejected the assertion the wife’s mother or parents beneficially owned the wife’s shareholding before she transferred it to them, which is a quite different thing.
Once found the value of the shareholding in the corporation should be notionally regarded as an asset in the wife’s hands, there was no dispute about the value of the shareholding because, months before the trial, the spouses agreed the shareholding would be valued by the net asset backing method. This notation was made in October 2024:
J.The parties agree by way of a notation made on 9 August 2024 that the value of the issued shareholding in [the corporation] is its net asset backing value.
These grounds fail.
Ground 1
This ground complains of evidentiary error. It contends the primary judge erred by admitting into evidence the husband’s affidavit dated 11 November 2024. The wife asserted in the appeal it was inadmissible because it was neither signed, sworn, or affirmed by him.
The evidence relied upon by the husband was identified by the primary judge (at [49]). It comprised a financial statement he filed on 6 November 2024 and his (unfiled) affidavit dated 11 November 2024. It will be recalled the trial did not start until two months later in January 2025, so the wife had both documents well in advance of the trial.
As the trial commenced, the husband confirmed he relied upon his affidavit. He then gave oral evidence-in-chief that he relied upon the affidavit. He was immediately challenged in cross-examination about not having sworn or signed the affidavit, which he conceded, but he denied failing to serve the affidavit upon the wife. Incidentally, the wife did not give any evidence (either in the trial or on a voir dire) alleging he failed to serve the affidavit upon her, so it may be wondered whether there was a legitimate ethical basis for the husband to be challenged by her counsel about service.
Following a helpful interjection by the primary judge, the wife’s counsel conceded the sensible way forward was to have the husband orally affirm and adopt the contents of the affidavit as being true and correct while in the witness box. Accordingly, with the wife’s consent, the husband did so and it was then received in evidence and marked as Exhibit 2. It is not now open for the wife to assert the affidavit was improperly received in evidence. By not having taken any objection to the admissibility of the affidavit when it was adopted by the husband before the primary judge, the wife cannot do so now in the appeal. She is bound by her counsel’s forensic decisions (Smits v Roach (2006) 227 CLR 423 at [46]; Zoef v Nationwide News Pty Ltd (2016) 92 NSWLR 570 at [118]). This ground fails.
Ground 6
This ground of appeal challenges the orders which require the default sale of the Suburb E and Suburb D properties. The wife’s complaint is that the orders do not make any allowance for the liability for capital gains tax (“CGT”) which the parties would incur in the event the properties are sold.
Despite the breadth of the complaint, it can only relate to the Suburb E property. The wife is the sole owner of the Suburb D property, which is her principal place of residence, so she cannot be levied for CGT upon its sale.
The spouses jointly own the Suburb E property, though in disparate shares (at [34]). The property is rented. The orders require the sale of the Suburb E property only if the wife defaults on the cash payment due to the husband.
If the spouses execute the primary orders (Orders 1–3), the default orders have no work to do and so no CGT gains tax would be incurred. On the other hand, if the Suburb E property must be sold and CGT is then incurred, it will be incurred by both spouses and calculated on their respective unequal shares of the net equity derived from the sale, even though Order 6 requires the whole of the net sale proceeds to be paid to the husband.
However, that possible enforcement outcome was expressly envisaged by the wife and she nevertheless did nothing about it at the trial. Even though she resisted the husband’s application, she knew he was seeking an outcome which would require her payment to him of more than $1.3 million from the assets (at [173]). Yet she did not propose any practical way she could pay the husband out. She resisted the sale of the Suburb D property, which she wanted to keep, even though it could yield net equity of about $1.725 million on sale (at [131]). She could not volunteer to liquidate any portion of the shareholding in the company which she transferred to her mother, at least without her mother’s consent, which was not offered. The shareholding was worth at least $535,000 (at [131]). The default sale of the Suburb E property was therefore eminently foreseeable and yet no evidence was adduced about the overhead costs of its sale.
The issue of CGT was only raised at the very end of closing submissions, at which point the primary judge had these exchanges with the wife’s counsel:
HIS HONOUR: …Now, if I were to make the order that the husband seeks – which is about 30 per cent – where’s your client going to get $1.3 million from?
[Counsel for the wife]: Yes. Well, on her case - - -
HIS HONOUR: So I’m giving you, now, an opportunity to address me on the mechanics of an order.
[Counsel for the wife]: Well, in terms of - - -
HIS HONOUR: Or do I just sell both [Suburb D] and [Suburb E]?
[Counsel for the wife]: No. I have no doubt that my client would like the opportunity to raise the funds that your Honour orders.
HIS HONOUR: Right. So tell me, because I’m giving you as a matter of procedural fairness an opportunity to address me on that, how is it to happen.
[Counsel for the wife]: Well, my client would like sufficient time to be able to pay the amount that your Honour orders.
HIS HONOUR: How long.
…
HIS HONOUR: I understand that. I’ve kept asking you how long.
[Counsel for the wife]: I will just take some instructions, your Honour. My client would like between four to five months…
…
HIS HONOUR: Why would I give four months?
[Counsel for the wife]: Because - - -
HIS HONOUR: And what happens in the event that it’s not paid within four months.
[Counsel for the wife]: Well, in the event that a sum is not paid, pursuant to the Rules, there would be interest accrued on it.
HIS HONOUR: Yes. But what about a default mechanism.
[Counsel for the wife]: Well, the default would have to apply to an Australian property, your Honour. Because those are the only properties that your Honour can make orders against…
…
[Counsel for the wife]: …The second respondent raised an issue of CGT, capital gains tax.
HIS HONOUR: Right.
[Counsel for the wife]: It may be an issue that your Honour needs to give some consideration to it - - -
HIS HONOUR: Why?
[Counsel for the wife]: - - - under section 75(2).
HIS HONOUR: Why? Where’s the evidence that there will be a sale of anything?
[Counsel for the wife]: Well, the husband seeks a cash payment. He doesn’t seek any property.
HIS HONOUR: Well, I engaged with you about that, and I indicated to you that, if there was to be a default, then it would apply to an Australian property. Where is the evidence that there would be capital gains tax payable, and why is this raised at 1 o’clock on the last day?
[Counsel for the wife]: Well - - -
HIS HONOUR: Part of the difficulty that your client has conducted a case that is so at the extremes that she is now back-pedalling on various issues in the case, [counsel for the wife].
[Counsel for the wife]: No. This is a submission made by me to the court because, having regard to recent authorities that, at certain times, courts need to have regard to CGT if, for no other reason, just under section 75(2) factor.
HIS HONOUR: That’s right. One of those authorities is one that I set on the Full Court.
[Counsel for the wife]: Indeed.
HIS HONOUR: But I have to have some evidence, and also I have to have regard to the fact as to whether or not there would be a capital gains tax liability. Now, there could not be a capital gains tax liability on the sale of [Suburb D] - - -
[Counsel for the wife]: No.
HIS HONOUR: - - - and that’s the property that obviously would be sold because it’s the only one that has sufficient equity to meet the extremes of the case that are sought as against you by the husband.
[Counsel for the wife]: If any other property were to be sold, there would be a capital gains, most likely.
HIS HONOUR: But no one’s asking me to sell any other property. I have no power to make an order nor would I make an order in relation to the New Zealand properties. Why would I make an order in relation to them?
[Counsel for the wife]: Your Honour doesn’t have the make that.
…
HIS HONOUR: There’s just nothing that would even enable me to do that, which is why I engaged with you earlier about, if there is to be a sale of a property, which property it should be. The highest it got from you was that your client wanted three to four months.
(Transcript 9 January 2025, p.168 line 40 to p.169 line 14; p.170 lines 20–23; p.170 lines 30–44; p.183 line 37 to p.184 to line 44; p.185 lines 9–12)
The wife’s counsel conceded the primary judge could not make any order compelling the corporation to sell any of its property to remedy the wife’s potential default of her primary obligation to pay the cash sum to the husband. The corporation was not a party to the proceedings and the wife no longer controlled it.
The discussion on the topic ended this way:
HIS HONOUR: …So why would I not order a payment of a sum and, in default, the sale of the [Suburb D] property? That’s the obvious property. It’s the only one with equity sufficient to meet the claim that’s sought by the husband.
[Counsel for the wife]: Thank you, your Honour. I don’t have anything further.
(Transcript 9 January 2025, p.185 lines 38–43)
Accordingly, the hearing concluded on the premise that, if the wife failed to pay the cash adjustment to the husband to fulfil his entitlement, the only feasible method of enforcement was the default sale of the [Suburb D] and [Suburb E] properties.
The wife sought to derive support for this aspect of her appeal from the principles espoused in Rosati & Rosati (1998) FLC 92-804, but her confidence was misplaced. In Rosati & Rosati, the Full Court dismissed the appeal and upheld property settlement orders made by the trial judge, premised upon a potential CGT liability being omitted from the balance sheet but instead considered as a factor under s 75(2) of the Act (at [6.44]).
Importantly, the Full Court said this:
6.36It appears to us that although there is a degree of confusion, and possibly conflict, in the reported cases as to the proper approach to be adopted by a court in proceedings under s 79 of the Act in relation to the effect of potential capital gains tax, which would be payable upon the sale of an asset, the following general principles may be said to emerge from those cases:–
(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3)If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4)There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.
(Italicised emphasis in original, but bold emphasis added)
Relevantly here, the uncontentious facts were these: the wife wanted to retain the Suburb E property; it was negatively geared and was therefore attractive for her to retain to help reduce her future taxation liability; the wife expressly sought a period of time within which to make a cash payment to the husband to avoid the sale of both the Suburb D and Suburb E properties, so she must have envisaged her capacity to raise sufficient funds do so; the wife’s counsel submitted she expected financial assistance from her parents to achieve that outcome, so she was not relying exclusively upon her own resources; there was no evidence about the likely quantum of CGT which would be levied against the parties if the Suburb E property had to be sold; the prospective CGT liability was not foreshadowed by the wife as a liability on the draft balance sheet (at [123]); and the wife did not submit the prospective CGT liability should be taken into account as a consideration under s 75(2) of the Act.
Given the wife expected to raise funds to pay out the husband, the sale of the Suburb E property was far from probable, let alone inevitable. Had some notional CGT liability been taken into account by the primary judge as a liability borne by the wife and no such liability ever crystallises, then she would have received an undeserved financial windfall via extra equity in the property she retains. As it is, the sale of the Suburb D property alone would yield enough net sale proceeds to satisfy the husband’s entitlement, which would entail no CGT liability, making it unnecessary to sell the Suburb E property and thereby incur CGT.
There is some risk the Suburb E property might still have to be sold, but that did not oblige the primary judge to take the prospective liability into account under s 75(2) of the Act, particularly when the wife did not advocate for that approach. When discussing the s 75(2) adjustment in final submissions, the primary judge had this exchange with the wife’s counsel:
HIS HONOUR: …Why do you say there would be a 75(2) adjustment? Just tell me that.
[Counsel for the wife]: My client has almost the sole care of the children.
…
HIS HONOUR: What other 75(2) factor is there?
[Counsel for the wife]: No other significant 75(2) factor.
(Transcript 9 January 2025, p.171 lines 10–13; p.171 lines 32–34)
Similar submissions made by the wife in this appeal were recently made by another appellant and rejected by the Full Court (Marlin & Henson [2025] FedCFamC1A 71 at [26]–[40]).
This ground fails.
Ground 4
This ground complains of the primary judge’s failure to properly assess the wife’s proportional entitlement to the spouses’ property on account of her superior contributions and future needs, seeking to characterise the failure as both legal and discretionary error.
There was certainly no legal error. Relevant legal principles were properly applied.
Nor was there any demonstrated explicit or implicit discretionary error.
The primary judge assessed the wife’s overall proportional property entitlement at 70 per cent, when she sought 85 per cent and the husband conceded her share should be 65 per cent. The result therefore fell comfortably between the spouses’ submissions.
In finding the wife’s share should be 70 per cent, the primary judge acknowledged her greater contributions of assets at the commencement of cohabitation (at [137]), her principal role in acquiring assets during the marriage (at [139] and [145]), the financial contribution to the parties advancement by the wife’s parents (at [140] and [147]), her vastly superior income during the marriage (at [141]), and her superior parenting and homemaking contributions (at [148] and [159]).
It was not contended the primary judge overlooked a material contribution or took an immaterial consideration into account. The wife’s complaint was singularly the lack of weight accorded to her contributions, which only left her with the untenable submission that the discretionary finding was manifestly unreasonable. It was not. By finding the spouses’ assets and superannuation should be divided in respective shares of 70/30 favouring the wife, his Honour effectively accepted the wife’s overall contributions were more than twice as valuable as those made by the husband. That conclusion was not manifestly unreasonable.
The primary judge made no adjustment on account of factors prescribed by ss 79(4)(d)–(g) and 75(2) of the Act (at [170]). The wife sought an adjustment in her favour of 10 per cent, but only due to her ongoing primary care of the spouses’ children (at [165]). However, that consideration was off-set by her vastly superior income (at [167]–[168]) and the wealth retained within the corporation not brought to account within the balance sheet (at [110]–[111], [118(f)], [120] and [170]). Nor could that discretionary finding be considered manifestly unreasonable.
Ground 5
This ground challenges the consequential orders which require the default sales of the Suburb D and Suburb E properties.
Given the husband’s share of the assets and superannuation was measured at 30 per cent, the adjustment orders had to ensure he acquired assets and superannuation with a net value of $1,228,183. Since he only retained property worth $63,535, he had to acquire extra property valued at $1,164,648.
When that prospect was raised with the wife’s counsel, he conceded the wife would need to raise funds in that amount for payment to the husband so she could then retain the Suburb D and Suburb E properties, as was her desire. Her counsel asked for and was granted the reprieve of several months so she would have the chance to raise such funds for payment to the husband. Her counsel also agreed there was no option but to sell the two properties if the wife defaulted in the payment to the husband (at [173]–[174]). Although trite to say, the wife is bound by the way in which the case was conducted for her by her lawyers.
It was not feasible to order the default sale of only the Suburb E property, so she could retain the Suburb D property as her family home, because the equity in it was only about $740,000 (at [131]), which was not enough to cover the payment of $1,228,183 due to the husband. There was no option but to order the default sale of the Suburb D property as insurance for the wife’s failure to pay the cash sum to the husband. Although the Suburb D property had net equity of about $1.725 million (at [131]), the wife was desperate to avoid its sale. If the sale of the Suburb D property proves necessary, the husband’s percentage share of its net sale proceeds is then discounted by any sum paid to him upon an earlier sale of the Suburb E property.
The wife does not complain of any legal, factual or discretionary error to vitiate the default sale orders. Rather, she merely contends the orders are unfair because: the time allowed to avoid the default sales is unrealistically short; Suburb D is the primary residence of her and the children; she lacks the financial incapacity to buy a new home in the Suburb D area close to the children’s school; and there is a paucity of alternate rental accommodation in the area.
The wife’s counsel asked for the orders to allow the wife “between four and five months” to raise the cash to pay out the husband and avoid the default sales. The primary judge gave her three months. We do not accept that period to be “unrealistically short”, as the wife contended in the appeal. It is sufficient time within which to raise finance secured by mortgage, even if she does not receive the anticipated financial help from her parents.
The wife’s perception of the children’s interests being promoted by them continuing to live in the Suburb D area is not a persuasive consideration. Her counsel did not submit to the primary judge that it was a material discretionary consideration. On the contrary, her counsel conceded there was no option but to order the sale of the two properties if she defaulted in the payment of the cash sum to the husband within the stipulated time frame. This ground fails.
Ground 7
This ground complains of the primary judge’s failure to consider the husband’s “abuse of process and vexatious parenting litigation”, by which she meant the husband’s unreasonable conduct of the parenting dispute they earlier contested under Pt VII of the Act was vexatious and “constituted economic abuse” in the financial proceeding because it caused her to expend more money on legal fees and depleted her financial resources.
This complaint must fail, principally for two reasons.
First, the spouses settled the parenting dispute and final consent orders were made between them in respect of their children in August 2024. Evidently, the parenting application brought by the husband could neither have been vexatious nor an abuse of process if it resulted in a compromise endorsed by Court orders.
Secondly, the asserted need for the wife to waste money contesting the parenting cause was not raised by the wife as a material issue in the financial cause and therefore did not require any finding by the primary judge. When a discretionary decision is required, to which many factors may be relevant, it is incumbent upon the party who contends in an appeal that attention was not given to a particular issue to demonstrate how the primary judge’s attention was drawn to the issue, at least unless it was fundamental and obvious (Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop (2008) 237 CLR 66 at [120]–[121]). This issue of “economic abuse” was neither fundamental, obvious, nor drawn to the primary judge’s attention as a supposedly relevant consideration to the discretionary decision.
Ground 8
This ground contends the primary judge failed to take the husband’s “financial waste” into account, but it is rejected for similar reasons to Ground 7. Various allegations of waste were made but not meaningfully pursued as factual issues before the primary judge and his Honour made no error by not discussing alleged financial waste by the husband when it was not genuinely part of the wife’s case.
The wife gave some vague evidence-in-chief about wasted expenditure by the husband on gambling, drinking, use of cannabis, and take-away meals, but she conceded she was not able to estimate his gambling expenditure. In her Case Outline document, the wife made further generic references to the husband’s “gambling habits”, but the factual issue was not one of those identified by her counsel as being material at the commencement of the trial (at [53]). Nevertheless, in a draft balance sheet tendered in evidence during the trial (at [123]), the wife identified the husband’s gambling expenditure as a notional asset from which he had already benefitted and, furthermore, quantified it at $250,000, though without any evidentiary basis. The husband was asked in cross-examination about his past gambling, but the challenge went nowhere near alleging expenditure of that magnitude and fell well short of enabling the wife’s counsel to responsibly contend for the add-back of any specific amount of money as a notional asset (Kuhl v Zurich Financial Services (2011) 243 CLR 361 at 387–388; Browne v Dunn (1893) 6 R 67).
The husband’s admissions during cross-examination were confined to, first, him having a gambling problem to “some extent” throughout the marriage, and secondly, that he would have spent an “absolute maximum” of $20,000 on gambling during the marriage. The wife adduced no evidence to contradict him by proving otherwise. The husband’s admission of such expenditure over the 10 years of the parties’ relationship was relatively benign, particularly when he was not asked to estimate his comparative winnings during that time.
In final submissions, the wife’s counsel had this candid exchange with the primary judge about the gambling expenditure being counted as a notional asset:
[Counsel for the wife]: And – sorry, your Honour. Also, item 8, I can make general – and I will be making general submissions about the husband’s gambling.
HIS HONOUR: So are you pressing item 8?
[Counsel for the wife]: No. I can’t press the quantum there.
(Transcript 9 January 2025, p.147 line 44 to p.148 line 1)
Despite conceding the add-back for gambling could not be responsibly pressed, the wife’s counsel later inconsistently said this in final submissions:
[Counsel for the wife]: …Your Honour has to weigh that with the fact that the husband had a gambling problem…
…
[Counsel for the wife]: …There is an admission that he has a problem with gambling. There is an admission that the parties regularly had arguments and confrontations, that that related to the husband’s computering, gambling and money…
(Transcript 9 January 2025, p.176 lines 17–18; p.177 lines 31–34)
These belated exhortations to take the husband’s gambling into account in some vague and unspecific way were an unworthy contradiction of the earlier factual concession, from which leave to resile was neither sought nor granted (s 191(2)(b) and s 191(3)(b) of the Evidence Act 1995 (Cth)). They should not have been made. This ground fails.
DISPOSITION
The appeal is dismissed.
The husband was self-represented in the appeal and so no question of costs arises.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Austin, Riethmuller & Curran. Associate:
Dated: 17 June 2025
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