Case Law

Case Update – FAMILY LAW – PROPERTY- Appeal on issue of Capital Gains Tax

FAMILYLAW – APPEAL – PROPERTY – Final property settlement orders – Whether the primary judge erred by failing to take capital gains tax liabilities into account – Where one property has been sold and another property has the possibility of being sold – Whether the primary judge failed to give sufficient weight to the appellant’s financial contributions – Appeal allowed in part – Limited re-exercise of discretion to take account of the capital gains tax liabilities – Adjustments made – Appeal otherwise dismissed.

FAMILYLAW – APPEAL – APPLICATION IN AN APPEAL – To adduce further evidence – Where the evidence was not available at trial and assists in the re- exercise of discretion – Application allowed.

• Mr Taffner (“the husband”) has appealed against a suite of final property settlement orders made by a judge of the Federal Circuit Court of Australia on 21 August 2020 in proceedings between him and Ms Taffner (“the wife”). The primary judge determined that it was just and equitable for the parties’ property to be divided so that the wife received 60.63 per cent, and the husband received the balance of 39.37 per cent.
• In order to give effect to that division, the orders provided for the wife to retain a property owned by her (“the K Street property”) and to become the sole owner of a jointly owned property (“the F Street property”), with the parties to take steps to refinance the latter property so that the husband and the wife be released from any obligations under the mortgage that encumbered it. If that could not be done, the F Street property was to be sold. Superannuation splitting orders were also made so that the wife was allocated a base amount of $18,421.43 from one of the husband’s superannuation funds and $122,487.25 from another.
• The husband was to retain a property at Suburb J (“the H Street property”) which was owned by him. It was to be refinanced so as to remove the wife from the mortgages. If that could not be achieved, the property was to be sold.
• The remaining orders dealt with sundry chattels and bank accounts.
• The husband appeals against the property settlement orders, asserting that there was a lack of procedural fairness in the making of the order relating to the H Street property, because neither party sought an order that it be retained by the husband and the primary judge did not raise with the parties the possibility of that order being made. The husband further asserts that the order for retention of that property by him, cast the burden of capital gains tax of that property solely on him, with the effect that the actual division of property was 65.87 per cent to the wife rather than the 60.63 per cent that had been assessed by the primary judge.

APPEAL ALLOWED

1. The best estimate of the capital gains tax payable on the H Street property is $139,476.
2. In order to maintain the percentage division intended, it was ordered that the wife should pay $30,000 to the husband to take account of the capital gains tax liability on the H Street property and the potential liability in relation to the K Street property.
3. The wife did not have these funds available, and so the Court ordered that there be an adjustment out of her superannuation in favour of the husband.

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