…contained error as trailing commissions remained a joint contribution
In Candle & Falkner [2021] FedCFamC1A 102 (23 December 2021), the Full Court (McClelland DCJ, Berman & Harper JJ) allowed an appeal from a decision of Foster J in a case involving a 13-year marriage where the parties established and operated a residential home lending business (C Pty Ltd).
After litigation, in 2010 the husband received a payout from a third party on the condition that he resign as director, after which the wife was sole director and conducted operations of the company.
The court assessed the wife’s contributions at 65%, finding that from 2010 onwards, the wife had “overwhelmingly contributed to the evolution of the current asset pool through her ongoing management of C Pty Ltd” ([38]). The husband appealed.
The Full Court said (from [82]):
“We are … persuaded that the primary judge failed to take account of relevant contributions of the husband.
[83] It was common ground that C Pty Ltd was a joint enterprise of the parties from inception until March 2010, when the husband ceased to be a director. … [T]he business of C Pty Ltd produced an income stream for the benefit of the parties from trailing commissions, which continued for an average of five to six years. It followed that some trailing commissions continued past 2010, and thus some of the income produced by C Pty Ltd post-2010 must be seen as the result of the parties’ joint efforts in the business before 2010 (…)
[90] The husband argued that the ultimate result of 65% to the wife could only be justified by ignoring the husband’s contributions to the business of C Pty Ltd … after December 2010 (…)
[92] … [H]is Honour assessed contributions by reference to his detailed findings about the course of contributions … The problem is that nowhere in those paragraphs is there any mention of specific contributions by the husband to C Pty Ltd … after 2010. Consequently, we are unable to conclude his Honour took those contributions into account, despite, or even because of, the reference to [the husband’s] ‘minimal contributions’ in … the reasons. …
[93] Once it is accepted that the primary judge failed to take account of contributions by the husband to C Pty Ltd … even if more modest than those of the wife, the percentage assessment of 65% in favour of the wife is unsafe and cannot stand.”
Craig Nicol and Keleigh Robinson are co-editors of The Family Law Book. Both are accredited specialists in family law (Queensland and Victoria, respectively). The Family Law Book is a one-volume loose-leaf and online family law service (thefamilylawbook.com.au).
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