Bevan & Bevan [2013] FamCAFC 116 – How the Family Court deals with ‘notional add-backs’ and ‘wastage’ in the post-Stanford era

Section 79 of the Family Law Act (Cth) 1975 essentially deals with the distribution of property when a marriage relationship breaks down.

It was relatively well-settled law that in certain circumstances, a Court exercising jurisdiction under s 79 could notionally ‘add-back’ property which had been prematurely dissipated or ‘wasted’ from the asset pool.*

This is, however, arguably no longer the case.

The recent Full Family Court case of Bevan & Bevan [2013] FamCAFC 116, and the High Court case of Stanford v Stanford [2012] HCA 52 on which the Full Court relies, casts grave doubts as to whether it is at all appropriate for a Court exercising jurisdiction pursuant to s79 to ‘add back’ property to the pool which is no longer in existence.

Pertinently at [79] of Bevan, Thackray J and Bryant CJ observe that:

…“notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute
“property of the parties to the marriage or either of them”, and thus is not
amenable to alteration under s 79. It is important to deal with such disposals
carefully, recognising the assets no longer exist, but that the disposal of them
forms part of the history of the marriage – and potentially an important part.
As the question does not arise here, we need say nothing more on this topic,
save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to
ensure a just and equitable outcome when dealing with the unilateral disposal of property.

(emphasis added).

Further, [160] per Finn J notes, at [160} of Bevan that:

These reminders that the jurisdiction under s 79 is a jurisdiction to alter
individual interests in title to property and that there is no community of
property in this country, might also call into some question the current practices
in relation to the treatment of property which is no longer in existence but
which one party has had the use of (the so called “addbacks”), and perhaps also
of the unsecured liabilities of one or both parties. It may well be that these
matters should more strictly be considered in making findings under s 79(4)(e)
(i.e. s 75(2)), or in an extreme case, when considering the question under
s 79(2) as to whether it is just and equitable to make any order under s 79. But
these questions do not arise in the present case, and are thus for another day.

(emphasis added).

If, therefore, the ‘four-step process’ is still the correct approach for the majority of family law property cases (and this is by no means certain following the High Court’s comments in Stanford) it appears that, rather than dealing with ‘wastage’ in the first step (that is, identifying and valuing the property of the parties), the correct approach is to deal with it during the third step (and, more specifically, with reference to s75(o)).

It may be that if we are being true to the legislation, there is in fact no such thing as a ‘notional asset.’ This is a question that remains unanswered in light of the decision in Bevan.

* See, especially ‘Enlarging the Asset Pool – Adding Back Notional Assets‘ by the Honourable Justice Judy Ryan.

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Marc Testart

Principal Family Lawyer

Testart Family Lawyers

Experience. Excellence. Compassion.

Useful links:

• ‘Now You See It, Now You Don’t – Notional Property and Add-Backs in Family Law‘ by Paul Doolan
• Omacini and Omacini (2005) FLC 93-218
• Antmann (1980) FLC 90-908
• De Angelis v De Angelis (2003) FLC 93-133