Shamon & Shamon [2025] FedCFamC1A 150 (8 September 2025)

In Shamon & Shamon [2025] FedCFamC1A 150, the Full Court of the Federal Circuit and Family Court of Australia dismissed a husband’s appeal against property settlement orders that left his former wife with 80% of the matrimonial pool. The case grappled with disclosure failures, premature trust distributions, tax liabilities, and alleged double counting of business profits. Ultimately, the Court upheld the primary judge’s wide discretion, reinforcing principles of justice and equity under s 79 Family Law Act 1975 (Cth).

Facts and Issues

• The parties married in 2004 and separated in 2020.
• The wife (homemaker, limited income) cared for three children, while the husband (accountant/tax agent) ran BB Pty Ltd through trust structures.
• The husband withdrew and distributed over $1.3m post-separation, including a $400,000 mortgage drawdown and $958,000 trust distributions, much of which flowed to family members.
• The primary judge assessed contributions at 55/45 in favour of the wife, then adjusted under s 75(2) by 25%, awarding her 80% of the pool ($1.39m).
• The husband appealed, raising six grounds, including:

1. Failure to account for his $41k ATO tax liability.
2. Unfairness by not ordering sale of BB Pty Ltd and not accounting for CGT.
3. Alleged “double counting” of business profits as both asset value and income.
4. Misapplication of s 75(2) factors.
5. Breach of s 81 FLA (requirement to finally resolve financial ties).

Issues:

• Should the husband’s tax debt be included in the property pool?
• Did the trial judge err in refusing to order sale of the business?
• Was there double counting of business income and assets?
• Were the adjustments under s 75(2) excessive or unjust?

Rule (Law)

• s 79 Family Law Act 1975 (Cth): Court may alter property interests if just and equitable.
• s 75(2): Allows adjustments for earning capacity, financial circumstances, premature distributions.
• s 81: Court must, as far as practicable, make final orders to end financial ties.
• House v The King (1936) 55 CLR 499: Appellate court may only interfere with discretion if clear error shown.
• Rosati & Rosati (1998) FLC 92-804: Capital gains tax (CGT) only deducted if sale is inevitable or imminent.
• Weir & Weir (1993) FLC 92-338: Non-disclosure can justify adverse inferences.
• Clauson & Clauson (1995) FLC 92-595: Adjustments under s 75(2) may exceed 20% if justified.

Application (Law to Facts)

• Tax liability: The trial judge accepted the debt existed but excluded it, finding the husband had funds yet chose to gift $140k to his sister instead of paying tax. The Full Court agreed—liabilities are not automatically “property” and need not be included.
• Sale of BB Pty Ltd/CGT: The husband argued fairness required ordering sale and accounting for CGT. The Court held sale was not necessary, and there was insufficient evidence of tax consequences.
• Double counting: The Court held the business valuation reflected capitalised profits, but the judge only treated the husband’s salary and benefits as his income under s 75(2). Thus, no double counting occurred.
• s 75(2) adjustment: The 25% adjustment was justified given the husband’s premature distributions of over $1.3m and the wife’s ongoing child-rearing responsibilities.
• s 81 FLA: The orders allowing the wife to retain units in the trust did not offend s 81 since they resolved the parties’ rights clearly and enforceably.

Analysis of Judgment & Reasoning

The Full Court upheld the trial judge’s discretion, noting:

• Appellate intervention requires showing the decision was “plainly wrong” (House v The King; Gronow v Gronow (1979) 144 CLR 513).
• The husband’s financial conduct—deliberately diminishing the pool through distributions and gifts—justified heavy adjustment against him.
• The trial judge gave adequate reasons, consistent with Bennett and Bennett (1991) FLC 92-191, explaining why the ATO debt and potential CGT were excluded.
• No breach of procedural fairness occurred; the husband had opportunity to address these matters.

Take Home Lesson

This case illustrates that:

• Full and frank disclosure is critical—failure to disclose or misusing funds can result in adverse adjustments.
• Tax liabilities are not automatically included in the pool; their treatment depends on context and discretion.
• CGT consequences are only considered if a sale is inevitable or imminent.
• Courts will heavily adjust against a party who dissipates assets post-separation.