Getting on with life after separation

Getting on with life after separation

We are often asked about whether or not the proceeds from certain transactions, particularly those involving businesses, can be added back to the asset pool and the answer is that generally the Court is reluctant to do so.

In a recent case of Cabadas & Cabadas [2019] FamCAFC 179 the Court held that the “parties were entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives”.[i]

In Cabadas, the trial Judge’s decision was to addback income made from selling livestock post-separation where the income was retained by the Husband. The Full Court over turned the Trial Judges decision and held that the livestock were not assets in a normal sense as rearing livestock is a time-consuming, labour-intensive, expensive affair whereas, if the issue concerned the sale of  a house or car – these assets have a fixed and calculable value.

Addbacks only occur in exceptional circumstances. In circumstances which are not exceptional, discretion is exercised in favour of using factors under s 75(2) of the Family Law Act i.e. adjusting percentages to achieve justice and equity.

In Cabadas, the sale of the livestock did not produce a “clean” profit from which the Husband derived sole benefit. Rather, the profit went in part to maintaining the livelihood of the livestock and the remaining profits went towards mortgages on matrimonial assets. Further, the Husband’s contributions in time and labour toward rearing the livestock offset the Wife’s claim to an adjustment in her favour.

If you have questions with regard to an addback or business transaction, we recommend that you contact our office and speak to one of our experienced Family Lawyers.

[i] Cabadas & Cabadas [2019] FamCAFC 179