Property – whether husband’s rights under four discretionary trusts ‘property’…

…right to due consideration and due administration capable of valuation

In Woodcock (No.2) [2022] FedCFamC1F 173 (30 March 2022), Wilson J heard a wife’s application for determination of a preliminary issue: whether the husband’s interests in a collection of discretionary trusts was ‘property’ and capable of valuation.

The husband argued that his interests under the trusts amounted to no more than rights with respect to due administration and consideration of the relevant trusts, and such rights were incapable of valuation ([2]).

Wilson J said (from [73]):

“ … [It] seems to me that according to existing statements of principle of the High Court, the equitable choses in action of due consideration and due administration under a discretionary trust … are in fact and in law ‘property’ within the meaning of s4 and s79 of the (Family Law) Act (1975). I say that for several reasons. In each of the four trusts, the husband retained power permissibly exercised over a certain thing … He held what certain of the authorities describe as a ‘bundle of rights’. The husband enjoys a position of considerable influence … and historically the husband has received distributions of approximately $15 million. He also has the ability to block. To my way of thinking the husband enjoys a legally endorsed concentration of power over things or resources … “

(…)

[112] … [I]n my view, not only should the debate in this litigation about whether the husband’s rights are property be fully ventilated at trial but the value of those rights should also be fully ventilated at trial. I am not willing to hold at this interlocutory juncture in this litigation that [the husband’s expert valuer] … is necessarily correct when he asserts that the husband’s rights cannot be valued … [I]n my view, the husband’s contention that no arguable case can be advanced about the ability to value the husband’s equitable choses in action have not been made out, at least not on this application. The case, and that issue in particular, must go to trial.”

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His Honour determined that the husband’s interests under the trusts were property as defined in s4(1) of the Family Law Act and were capable of valuation.

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).