Corporate Tax Debt in De Facto Property Settlements: Can the Court Treat a Company’s ATO Liability as the Parties’ Personal Debt When Dividing Property Under Pt VIIIAB?

Introduction (Mandatory Fixed Text) Based on the authentic Australian judicial case Oldham & Krantz (No 2) [2024] FedCFamC1A 238, this article disassembles the Court’s judgment process regarding evidence and law. It transforms complex judicial reasoning into clear, understandable key point analyses, helping readers identify the core of the dispute, understand the judgment logic, make more rational litigation choices, and providing case resources for practical research to readers of all backgrounds. :contentReference[oaicite:0]{index=0}

Chapter 1: Case Overview and Core Disputes

Basic Information

Court of Hearing: Federal Circuit and Family Court of Australia (Division 1) Appellate Jurisdiction
Presiding Judge: Austin, Harper & Hartnett JJ
Cause of Action: Family law appeal concerning de facto property settlement orders under Pt VIIIAB
Judgment Date: 16 December 2024
Core Keywords:
Keyword 1: Authentic Judgment Case
Keyword 2: De facto property settlement appeal
Keyword 3: Corporate liabilities and asset pool integrity
Keyword 4: Australian Taxation Office debt
Keyword 5: Pt VIIIAB discretion and error of law
Keyword 6: Self-represented litigation risk

Background

This case sits at the point where family law reality meets corporate law reality. Two former de facto partners came to court asking for a final division of their property. Like many property matters, the case was not only about who paid what and who gets what. It was also about whether the Court can treat a company’s debt as though it were the parties’ personal debt, simply because one party holds shares and the company was used to run a small business.

A company can feel like an extension of the people behind it. In ordinary life, people say, “It’s my business,” even when the legal owner of the business assets and liabilities is a corporation. That everyday language is exactly where litigation risk grows: family law must divide the parties’ property interests, but it must do so through the legal forms the law recognises. If the Court collapses the difference between a person and a company, the asset pool can be distorted, and the final orders can be built on a false foundation.

This appeal arose because the primary judge’s orders effectively required the parties to pay a corporate tax debt to the Australian Taxation Office out of their personal property, treating it as if it were a joint debt of the parties. The appellate court was required to determine whether that approach was legally permissible, and if not, what should be done to correct it.

Importantly, the appellate reasons also expose a practical lesson: where parties are self-represented, evidence and proposed orders can be incomplete, inadmissible, or simply not fit for purpose. But the Court must still apply law to facts, and errors of law remain errors of law, even in a case described as under-prepared.

Core Disputes and Claims

The legal focus question was narrow but decisive:

1. Can the Court, in exercising power under Pt VIIIAB of the Family Law Act 1975 (Cth), treat a tax debt owed by a corporation as a joint personal liability of the parties, and order them to pay it as part of the property settlement?

Around that focal point sat practical claims and relief sought:

Applicant for relief at first instance (in the sense of the party seeking Pt VIIIAB orders): The party who initiated the property proceedings sought financial orders under Pt VIIIAB and, over the life of the case, advanced positions about corporate interests, debts, and overseas property allegations.

Respondent at first instance: The other party resisted aspects of the claims and advanced competing proposals for how property and liabilities should be treated.

On appeal:

Appellant: Sought reversal of the primary judge’s approach, including complaints of legal and discretionary error, and argued the impugned treatment of the corporate tax debt affected the outcome.

Respondent: Filed a Notice of Contention seeking to uphold the result on the basis that even if error was shown, there were allegedly no distributable funds in any event.

The appellate court ultimately had to decide whether the identified legal error was material and, if so, whether to remit the matter or re-exercise discretion.

Chapter 2: Origin of the Case

This litigation began, as many do, with a relationship that once worked, and then stopped working, while money and responsibility remained tangled long after separation.

The parties commenced a de facto relationship in about 2011 and separated in May 2019. After separation, the financial story did not cleanly end. Property interests remained, a jointly owned real property existed at least for a time, and a small business operated through a corporation in which the Appellant held shares. These were not neat categories. They were the kinds of intertwined arrangements that couples build over years: shared assets, shared accounts, and business structures that feel like shared life.

Detail Reconstruction: Relationship and Financial Interweaving

Over the course of the relationship, the parties’ financial life involved:

1. Jointly owned real estate, ultimately sold, producing net proceeds that became a central source of funds.

2. Joint bank savings, which remained a pool of money available for division.

3. A corporation used as the vehicle for a small business. Corporate accounts and obligations existed alongside personal debts.

4. Third-party debts, where other entities sought recovery, and interveners entered the proceeding at points to ensure debts were recognised and paid.

The litigation was not only about dividing assets. It also concerned how to treat obligations: which were personal, which were corporate, and which were properly considered at all.

Conflict Foreshadowing: The Decisive Moments

Three decisive moments pushed this matter toward conflict escalation:

First: Procedural breakdown. The progress to trial was slow, marked by interlocutory skirmishes and ongoing non-compliance with procedural orders. This meant that by the time the final hearing arrived, the case was not shaped into a clear evidentiary and legal narrative.

Secondly: Corporate complexity. The corporation’s financial position featured significant liabilities, including a bank debt and an ATO tax debt. The treatment of those liabilities became the critical fault-line for the appeal.

Thirdly: The sale of jointly owned real property. The property was sold, and a secured bank loan associated with the corporation was discharged from the sale proceeds. That single step changed the practical reality of the corporation’s balance sheet and created a dispute about whether, and how, corporate value and corporate liabilities should influence the personal property division.

In family law terms, this was a case where the asset pool was not large, the debts were real, and the available cash was limited. In such cases, the correct characterisation of liabilities can decide whether the entire proceeding yields any meaningful distribution at all.

Chapter 3: Key Evidence and Core Disputes

This case demonstrates a common litigation pattern: parties may carry strong views about what is “fair”, but the Court can only act on admissible evidence, proper valuations, and legally accurate characterisations of assets and liabilities.

Applicant’s Main Evidence and Arguments

The party seeking relief relied on, and the proceedings involved, evidence including:

1. Evidence about the relationship timeline (commencement around 2011 and separation in May 2019).

2. Evidence about jointly owned real estate, its sale, and the net proceeds available.

3. Evidence about joint savings held in a joint bank account.

4. Evidence about the corporation and its financial position, including the existence of debts owed to the corporation by the parties, and the corporation’s own liabilities to a bank and the ATO.

5. Evidence about alleged overseas property links through relatives of the other party, said to reflect a beneficial interest or financial resource.

In practice, a key issue was that much of the evidence was found to be in inadmissible form and the parties’ proposed orders were described as largely unintelligible or incompetent. That fact alone shapes litigation outcomes: if the evidence does not properly establish a fact, the Court cannot safely find it.

Respondent’s Main Evidence and Arguments

The other party’s position included:

1. Resistance to joinder of overseas relatives, and opposition to the proposition that overseas property was an asset capable of being dealt with as property of the parties.

2. Positions about how debts and resources should be treated, including the characterisation of certain interests as financial resources rather than assets.

3. Participation in a litigation environment where third parties intervened for debt recovery but were ultimately dealt with by consent orders.

On appeal, the Respondent’s Notice of Contention took a strategic position: even if there was error, it was said that no funds remained for distribution once liabilities were paid, so the result should stand.

Core Dispute Points

The core dispute points can be framed as a modular chain:

1. Asset pool identification: What assets exist, what are their values, and what is the net pool?

2. Corporate interface: Is the corporation of value? Are debts owed to the corporation by the parties real liabilities? Is the corporate tax debt a personal liability of the parties?

3. Treatment of external interests: Is an alleged overseas property interest an asset, a resource, or neither?

4. Procedural justice and evidentiary integrity: Were parties afforded natural justice? Were the decisions based on properly established facts?

5. Discretionary structure: After establishing the net pool, what division is just and equitable under Pt VIIIAB, having regard to contributions and any adjustment factors?

The appeal was ultimately decided on the second module: the corporate tax debt issue, which is not a minor technicality. It determines whether the parties’ personal property is drained to pay a debt they do not owe.

Chapter 4: Statements in Affidavits

Affidavits are the spine of many family law matters. They do not merely “tell the story”. They attempt to prove the story, and they are often drafted with an eye to what is persuasive rather than what is strictly provable. This case illustrates how the difference between a story and evidence can become decisive.

How Each Party Constructed Their Narrative Through Affidavit Evidence

In broad terms:

1. One party asserted a narrative about financial transfers and expectations concerning overseas property, suggesting money was directed into land development, with an expectation of benefit. But the overseas property was registered in relatives’ names, and the evidence did not establish enforceable rights or a proprietary interest.

2. Both parties’ engagement with the corporation blurred personal and corporate lines. It is common for parties to describe corporate liabilities in personal language. But the affidavit evidence and valuation evidence needed to precisely distinguish personal debt from corporate debt.

3. Affidavits in under-prepared cases often include documents without proper proof, summaries of conversations without context, or assertions of control without documentary support. Courts regularly find such evidence unreliable for making final findings about property interests.

Boundary Between Untruths and Facts: A Comparative Lens

A reliable comparative method is to ask:

1. Does the affidavit identify a source document (bank record, contract, ASIC extract, tax notice) that objectively corroborates the assertion?

2. Is the asserted “control” of property matched by legal title, a trust deed, admissions, or other concrete evidence?

3. If a party claims an “interest”, is it a proprietary interest recognised by law, or is it better characterised as a financial resource?

In this matter, the overseas property allegations were not supported by evidence establishing either the nature or value of an interest capable of being treated as an asset. The court could not simply accept a strong allegation as a property right.

Strategic Intent Behind Procedural Directions About Affidavits

Where parties are unrepresented and the file is disorganised, judicial directions about affidavits aim to:

1. Narrow issues to what can be proven.

2. Ensure each party knows the case they must meet, reducing ambush and reducing the risk of procedural unfairness.

3. Convert a chaotic story into structured, legally relevant facts.

If affidavits do not do that work, hearings tend to become an uncontrolled contest of assertion. That increases the risk of errors because the Court is forced to decide with imperfect tools.

Chapter 5: Court Orders

Before the final hearing, the proceeding experienced multiple procedural arrangements and orders. The notable categories include:

1. Interlocutory directions designed to advance the matter to trial, including orders related to valuation evidence regarding foreign property, which were not complied with.

2. Orders involving participation of third parties and interveners seeking recovery of debts.

3. Orders joining and later removing a party associated with a new partner.

4. Registrar orders dealing with administrative control of the corporation and indemnity arrangements over a defined period, which later became a point of complaint on appeal but were found to have been considered at first instance.

For general readers, the key lesson is simple: pre-trial orders are not optional. When parties ignore valuation directions or fail to produce required evidence, the Court may be left with no reliable basis to treat a claimed asset as part of the pool. That can change outcomes more than any rhetorical argument.

Chapter 6: Hearing Scene: Ultimate Showdown of Evidence and Logic

The hearing environment in this case was shaped by an unusually high-risk combination: self-represented parties, an under-prepared file, inadmissible evidence, and a corporate structure intersecting with a family law property adjustment.

Process Reconstruction: Live Restoration

The trial proceeded despite the primary judge finding the matter to be woefully under-prepared and in a deplorable state, because the parties insisted they were ready and wanted the hearing to go ahead. In such hearings, the cross-examination process often reveals three recurring patterns:

1. Logical gaps: A party asserts “the other party controls the overseas property”, but cannot identify documentary proof of control, cannot explain the legal mechanism of control, and cannot show enforceability of Australian orders against foreign titleholders.

2. Valuation collapse: A party says “the company has value”, but the expert evidence may show liabilities exceed assets. Then, when the bank loan is discharged from sale proceeds, the valuation picture changes again, and the parties may lack the evidence to properly explain that shift.

3. Liability confusion: Parties often speak as if a corporate debt is “our debt” because the company was used for their life. But the law treats company debts as company debts, unless a legal basis exists to fix personal liability.

In the hearing, the decisive confrontation was not only about what happened between the parties during the relationship, but also about what the law permits the Court to do when a company exists as a separate legal entity.

Core Evidence Confrontation: The Decisive Financial Mechanics

Two pieces of financial reality drove the conflict:

1. The corporation was said to be valued at nil because its liabilities exceeded assets.

2. The corporation’s bank debt was discharged from the sale proceeds of a jointly owned property, relieving the corporation of that bank liability. That changes the corporation’s position. It also raises a question: if the corporation is relieved of one liability by use of personal sale proceeds, does that justify treating a different corporate liability as personal?

The answer is not a moral answer. It is a legal answer. Family law aims for fairness, but fairness is administered through lawful power. The Court cannot simply move debts from one legal person to another because it seems tidy.

Judicial Reasoning: How Facts Drove the Result

The appellate court’s key intervention was to identify that the primary judge made an error of law by fixing parties with joint and several liability for a debt they could never owe at law. The legal reasoning can be captured through the Court’s own words.

“His Honour erred at law by fixing the parties with joint and several legal liability for a debt which was not their own. They could never have assumed any derivative liability for the tax debt owed by the corporation.”

This statement was determinative because it draws a bright line: family law discretion under Pt VIIIAB does not override basic corporate law identity. The company’s tax debt is the company’s debt. Unless the law creates personal liability in another way, the parties cannot be treated as debtors to the ATO for the corporate tax debt.

The appellate court further held that while the Court can order parties to discharge a debt owed by one or both of them to a third party, it is not empowered to order the parties to pay a debt owed by one third party to another third party. That is not a minor procedural limitation. It goes to the nature of jurisdiction and power.

In practical terms, the hearing “showdown” was not a cinematic cross-examination moment. It was a legal architecture moment: the Court corrected the structure on which the primary orders were built.

Chapter 7: Final Judgment of the Court

The appellate court:

1. Allowed the appeal.

2. Dismissed the Notice of Contention.

3. Set aside the primary orders made on 23 May 2024 and substituted fresh orders under Pt VIIIAB of the Family Law Act 1975 (Cth) to finally determine the parties’ financial relationship.

Orders: What the Court Ultimately Directed

The substituted orders included, in substance:

1. Payment of AUD $63,000 to the Appellant from monies held on trust, then payment of the remaining balance to the parties in equal shares.

2. Equal division and closure of a joint bank account.

3. Declaration that the Appellant is the sole owner of specified items and interests, including proceeds from motor vehicle sale (agreed AUD $60,000), his shareholding in the corporation, and certain furniture and paintings to be surrendered within seven days.

4. Directions that the Appellant apply received money to satisfy liabilities to specified third parties in a set priority.

5. Indemnity orders requiring the Appellant to indemnify the Respondent against liability arising from the corporation, specified loan accounts, and specified third-party liabilities.

6. Declarations that the Respondent is sole owner of specified items including her motor vehicle and watch.

7. Directions that the Respondent apply received money to satisfy liability to solicitors, and corresponding indemnity.

8. A general provision that each party retains other assets in their possession, with deeming provisions for bank accounts and superannuation entitlements.

9. A facilitative order empowering the Registrar to sign documents if either party refuses or neglects to do so, pursuant to s 106A of the Family Law Act 1975 (Cth).

10. Notice provisions to furnish orders to specified third parties.

11. Dismissal of all other outstanding applications.

No costs orders were sought because both parties were self-represented.

Chapter 8: In-depth Analysis of the Judgment: How Law and Evidence Lay the Foundation for Victory

This chapter follows the required internal order:
Special Analysis → Judgment Points → Legal Basis → Evidence Chain → Judicial Original Quotation → Analysis of the Losing Party’s Failure.

Special Analysis: Jurisprudential Value and Unusual Aspects

This appeal has high jurisprudential value for one reason: it reasserts a boundary that can be tempting to cross in family law property disputes involving corporate structures.

Family law often deals with economic reality: who really controls what, who benefits, who pays, and who bears the risk. But economic reality cannot be translated into orders by skipping legal identity. The case confirms that:

1. Corporate separateness is not dissolved by relationship history.

2. A company’s tax debt to the ATO remains the company’s exclusive liability, even if the parties control the company or use it as their trading vehicle.

3. Family law powers do not include ordering parties to pay a debt owed by one third party to another third party.

The unusual aspect here is the practical temptation: the corporate tax debt was large compared to the parties’ modest pool. The primary judge aimed to ensure revenue law obligations were not evaded and to impose a tidy outcome. But the appellate court held that such an objective cannot justify orders beyond power.

This case also demonstrates a litigation reality: under-prepared matters can still produce appealable errors, and appellate intervention may be necessary to prevent unlawful depletion of parties’ personal property.

Judgment Points: Noteworthy Judicial Comments and Logic

1. The appellate court identified a pure error of law, not a mere disagreement about weighting evidence. This matters because errors of law require correction; they are not protected by discretionary latitude.

2. The court rejected the idea that broader policy objectives about protecting Commonwealth revenue could justify treating parties as personally liable for corporate tax debt when no legal basis exists.

3. The court relied on, and aligned with, the Full Court’s reasoning in Pavlic & Pavlic (2023) FLC 94-139; [2023] FedCFamC1A 54, emphasising that transposing a corporate tax debt into the parties’ personal liabilities is a distortion.

4. The court treated the parties’ preferences as relevant to procedure: both parties preferred re-exercise of discretion rather than remittal, and the appellate court re-exercised discretion.

5. The appellate court corrected a second practical distortion: it refused to ignore the parties’ personal debts absent accepted principles justifying that course, referencing Biltoft & Biltoft (1995) FLC 92-614; [1995] FamCA 45.

Legal Basis: Statutory Provisions and Doctrinal Anchors

The core statutory framework was Pt VIIIAB of the Family Law Act 1975 (Cth), including:

1. s 90SM and s 90SF, governing the alteration of property interests for de facto relationships and the types of orders that may be made.

2. s 90SM(4)(e) and s 90SF(3), relevant to adjustment considerations, including whether any further adjustment is required after contributions are assessed.

3. s 106A, supporting the facilitative mechanism whereby the Registrar can execute documents where a party refuses or neglects to sign.

The legal boundary enforced by the appellate court is not simply a statutory reading of Pt VIIIAB. It is the structural limit of family law power when directed at debts: the Court can order parties to pay debts they owe, but it cannot order parties to pay debts owed by one third party to another, as though the parties were substituted as debtor.

Evidence Chain: Conclusion = Evidence + Statutory Provisions

The appellate court’s logic can be disassembled into a five-link structure.

Victory Point 1: Correct legal characterisation of liabilities is non-negotiable
Statutory Provisions: Pt VIIIAB powers operate upon parties’ property interests and liabilities properly attributed to them.
Evidence Chain: The existence of a corporate tax debt to the ATO, shown in expert material and the factual matrix.
Conclusion: ATO debt was not a personal liability of either party simply because they were connected to the corporation.
Practical Effect: The asset pool was wrongly reduced by at least AUD $170,628 when the corporate tax debt was treated as joint personal debt, materially changing the outcome.

Victory Point 2: Policy goals cannot expand jurisdiction
Statutory Provisions: The Court’s power derives from the Family Law Act 1975 (Cth); objectives about revenue compliance do not create personal debtor status.
Evidence Chain: The primary judge cited authority about preventing evasion of Commonwealth revenue laws.
Conclusion: Even an admirable objective cannot justify imposing liability where the law does not allow it.
Practical Effect: Family law orders must remain within power, particularly where third-party rights and liabilities are involved.

Victory Point 3: Corporate separateness must be respected in the asset pool table
Statutory Provisions: Pt VIIIAB requires identification of parties’ assets and liabilities; corporate liabilities are not automatically transposed.
Evidence Chain: The corporation had liabilities to a bank and the ATO, and was valued at nil by the expert because liabilities exceeded assets.
Conclusion: The corporate balance sheet can affect the value of a party’s shareholding, but it does not convert corporate debt into personal debt.
Practical Effect: The correct approach is to value the shareholding interest accurately, not to shift corporate liabilities onto the parties as personal liabilities.

Victory Point 4: The Court must avoid internal contradictions in valuation logic
Statutory Provisions: The property adjustment must be based on coherent findings about value and liabilities.
Evidence Chain: The corporation’s bank debt was discharged from personal sale proceeds, changing the corporation’s value mechanics.
Conclusion: If the Court ignores debts owed to the corporation by the parties because they cannot pay, it must be logically consistent about what that implies for corporate value and personal liabilities.
Practical Effect: Incoherence distorts the pool, which then contaminates the discretion.

Victory Point 5: Notices of contention cannot rescue a materially distorted pool
Statutory Provisions: Appeals correct legal error; materiality is assessed by whether correction changes the practical distributable position.
Evidence Chain: The Respondent asserted there were no funds after liabilities for distribution.
Conclusion: Removing the corporate tax debt from personal liabilities altered the pool so that assets exceeded personal liabilities and surplus funds existed, even if those funds would be applied to personal debts.
Practical Effect: The legal error was material and required correction.

Victory Point 6: Re-exercise of discretion can be more efficient than remittal, but must be principled
Statutory Provisions: Appellate power to re-exercise discretion where appropriate, using undisturbed findings.
Evidence Chain: Parties’ equal contributions findings were not disturbed; no further adjustment was needed.
Conclusion: The appellate court could finalise the matter with substitute orders, consistent with parties’ preferences and procedural economy.
Practical Effect: Avoided the time, cost, and delay of remitting an already difficult matter.

Victory Point 7: Personal debts should not be ignored without accepted justification
Statutory Provisions: Adjustment must reflect the parties’ true financial position.
Evidence Chain: Personal debts existed to interveners; the primary judge ignored individual debts totalling AUD $120,000 and AUD $13,000.
Conclusion: Without a principled basis to disregard them as vague, uncertain, unlikely to be enforced, or unreasonably incurred, they should be taken into account.
Practical Effect: The court worked from the evidence as it stood, producing orders that reflect real-world obligations.

Victory Point 8: Indemnity orders are the practical bridge between legal form and economic reality
Statutory Provisions: Pt VIIIAB permits orders that allocate responsibility and protect parties through indemnities.
Evidence Chain: Corporate involvement and third-party debts created a risk that one party would be pursued for liabilities connected to the other.
Conclusion: Indemnity orders were used to allocate risk to the party connected with particular liabilities, preserving fairness without distorting legal identity.
Practical Effect: Achieved protection without unlawfully reassigning corporate liabilities.

Judicial Original Quotation: The Ratio in the Court’s Own Words

“However, the corporation’s tax debt could never be the parties’ debt in any circumstances. It was and would remain the exclusive liability of the corporation.”

This is determinative because it states the ratio in operational form. Once that sentence is accepted, the primary orders that required the parties to apply their personal sale proceeds and joint savings to pay the corporate tax debt could not stand. The remainder of the appellate reasoning is the logical consequence of that core proposition.

A second quotation captures the jurisdictional boundary:

“While there is no doubt the Court has power to order parties to discharge a debt owed by one or both of them to a third party, equally, there can be no doubt the Court is not empowered to order the parties to pay a debt owed by one third party … to a second third party …”

This matters because it prevents a common but dangerous drift in property settlement reasoning: the drift from “the parties should arrange their affairs to deal with liabilities” to “the parties are liable for liabilities they do not owe”.

Analysis of the Losing Party’s Failure

The losing position failed primarily because it attempted to preserve an outcome by treating legality as optional.

1. The Notice of Contention argued that even if error existed, it was not material because no distributable funds existed. That approach collapsed once the corporate tax debt was removed from the parties’ personal liabilities. Materiality turned on the legal correctness of the pool.

2. At first instance, the drive to ensure revenue compliance led to a misstep: policy concerns were allowed to contaminate legal attribution of liability. The appellate court held that such concerns, while legitimate in their place, cannot justify imposing personal liability for corporate debt without lawful basis.

3. The under-prepared nature of the case likely made the liability issue harder to articulate at trial. But the appellate court emphasised the error was plain: the parties could not be fixed with derivative liability for the corporate tax debt.

4. The corporate interface required disciplined thinking: corporate debt may reduce the value of a shareholding, but it does not become a personal liability in the pool. The losing position effectively treated the company as a transparent vessel rather than a separate legal entity.

Implications

1. You are not powerless in complex legal systems. Even if money and responsibilities feel merged in real life, law draws boundaries. Your self-protection begins by learning where those boundaries are, and insisting your case is argued within them.

2. In property disputes, clarity is a form of strength. If you can clearly separate personal debts, corporate debts, and financial resources, you reduce confusion and increase the chance of lawful, workable orders.

3. Evidence is self-agency in documentary form. If a claim matters, prove it properly. A belief about “control” or “ownership” is not enough; legal rights are built from documents, admissible facts, and coherent valuations.

4. Procedure is not bureaucracy. It is the pathway that ensures fairness. Complying with orders and preparing evidence is how you keep control of your case, rather than letting chaos decide the outcome.

5. When you feel pressure to accept an unfair outcome because the process is overwhelming, remember: legality is not optional. Even in a poorly prepared case, an error of law is still an error of law, and correcting it can protect your property and your future choices.

Q&A Session

Q1: If a couple runs a business through a company, can the Court treat the company’s debts as the couple’s debts in a property settlement?

No, not simply because the parties control the company or because the company was used as the family’s business vehicle. A company is a separate legal entity. Corporate debts remain corporate debts unless the law imposes personal liability by a separate mechanism. In property settlement, the Court can consider how corporate liabilities affect the value of shareholdings, and it can make orders about parties’ personal property interests, but it cannot order parties to pay a debt owed by one third party to another third party as though the parties were the debtor.

Q2: What can the Court do if it is worried parties might use a company to avoid paying tax?

The Court can and should be alert to evasion risks, and it can make orders that deal with parties’ property interests and their personal liabilities. It can also consider conduct and financial circumstances within the statutory framework. But concern about evasion does not permit the Court to impose personal liability for a corporate tax debt where the parties are not personally liable. If there are allegations of wrongdoing, the appropriate legal pathways may involve corporate law mechanisms, tax law enforcement, insolvency processes, or evidence supporting personal liability under specific statutory regimes. The family law orders must stay within power.

Q3: If you are self-represented, how do you avoid the kind of procedural and evidentiary problems seen in this case?

Focus on three self-agency pillars: (1) organise evidence into admissible documents, particularly bank records, valuations, title documents, ASIC extracts, and correspondence; (2) comply with procedural directions, especially valuation orders and disclosure; (3) draft proposed orders that are operational, specific, and legally coherent. If you cannot do these things alone, targeted legal assistance for discrete tasks can be relatively high value, even if you cannot afford full representation.

Appendix: Reference for Comparable Case Judgments and Practical Guidelines

Appendix: Reference for Comparable Case Judgments and Practical Guidelines

1. Practical Positioning of This Case

Case Subtype: De facto relationship property settlement appeal involving corporate structures and third-party liabilities under Pt VIIIAB
Judgment Nature Definition: Final Judgment (appeal allowed; substitute final orders made)

2. Self-examination of Core Statutory Elements

① De Facto Relationships & Matrimonial Property & Parenting Matters (Family Law)

Core Test: Existence of De Facto Relationship (Section 4AA)

When a court assesses whether persons have a de facto relationship, it considers the circumstances of the relationship, including, but not limited to the following factors. No single factor is decisive, and the weight given to each factor will tend to depend on the particular facts.

1. Duration of the relationship: The length of time the parties were together in a relationship that had the character of a couple.

2. Nature and extent of common residence: Whether they lived together, whether the residence was continuous or intermittent, and how their living arrangements reflected a shared life.

3. Whether a sexual relationship exists: Whether there was a sexual relationship, noting that absence of a sexual relationship does not necessarily negate a de facto relationship where other factors support it.

4. Degree of financial dependence or interdependence, and any arrangements for financial support: Whether the parties financially relied on each other, shared expenses, supported each other, or otherwise structured their finances in an interdependent way.

5. Ownership, use and acquisition of property: Whether property was held jointly or separately, whether property was acquired during the relationship, and how the parties used and treated property in practice.

6. Degree of mutual commitment to a shared life: Whether the parties demonstrated a mutual commitment consistent with a shared life, including future planning and how they presented their relationship to others.

7. The care and support of children: Whether the parties jointly cared for children or supported children in a way consistent with family life.

8. Reputation and public aspects of the relationship: Whether family, friends, and the broader community regarded them as a couple, including how the parties publicly presented their relationship.

9. The relationship is or was registered under a prescribed law of a State or Territory: Whether the relationship was formally registered, where that option existed and was taken up.

Self-agency guidance: If you need to establish a de facto relationship, gather objective evidence that tends to support the factors above, such as shared lease documents, joint bills, photographs and invitations demonstrating public presentation, bank records showing interdependence, and evidence of mutual commitments.

Property Settlement: The Four-Step Process

Although the language used by courts can vary, a disciplined approach to property adjustment commonly follows a structured pathway.

Step 1: Identification and Valuation
Identify the legal and equitable interests of both parties in property and liabilities, and value the property as at the relevant date. This includes real property, bank accounts, businesses, shares, vehicles, superannuation, and liabilities.

Self-agency checkpoint: In cases involving companies, separate the valuation of shareholdings from the company’s liabilities. A company’s debts may affect the value of shares, but they are not automatically personal liabilities.

Step 2: Assessment of Contributions
Assess contributions made by each party, including financial contributions (initial and during the relationship), non-financial contributions (such as renovations or labour), and contributions to the welfare of the family (homemaking and parenting).

Self-agency checkpoint: Contributions should be supported by records where possible: bank transfers, receipts, business documents, and witness evidence.

Step 3: Adjustment for Future Needs (s 75(2) Factors as applied by analogy where relevant)
Consider whether an adjustment is warranted based on future needs factors such as age, health, income earning capacity, care of children, and capacity to support oneself.

Self-agency checkpoint: Provide clear evidence: medical reports, income records, employment capacity evidence, care arrangements, and living costs.

Step 4: Just and Equitable
Conduct the final assessment: is the overall division just and equitable in all the circumstances?

Self-agency checkpoint: Test your proposed outcome with practical questions: Will the orders be workable? Will they create new disputes? Do they respect legal ownership boundaries?

Parenting Matters (Section 60CC of the Family Law Act 1975)

Even though this appeal centred on property, the Family Law Act framework commonly involves parenting considerations where children are involved. Under s 60CC, best interests considerations include:

Primary Considerations:
1. The benefit to the child of having a meaningful relationship with both parents.
2. The need to protect the child from physical or psychological harm, including exposure to abuse, neglect, or family violence, with protection from harm given greater weight.

Additional Considerations:
1. Views expressed by the child, considering maturity and level of understanding.
2. The nature of the relationship between the child and each parent and other significant persons.
3. Willingness and ability of each parent to facilitate and encourage a close and continuing relationship between the child and the other parent, consistent with the child’s best interests.
4. The likely effect of changes in the child’s circumstances, including separation from either parent or other important persons.
5. Practical difficulty and expense of the child spending time with and communicating with a parent.
6. Capacity of each parent to provide for the child’s needs, including emotional and intellectual needs.
7. Maturity, sex, lifestyle and background of the child and parents, including culture and traditions.
8. Any family violence involving the child or a member of the child’s family.
9. Any family violence order.
10. Whether it would be preferable to make an order least likely to lead to further litigation.
11. Any other fact or circumstance the Court considers relevant.

Self-agency checkpoint: Parenting disputes tend to be determined on credible, child-focused evidence and practical proposals. Avoid turning parenting cases into relationship grievance cases.

3. Equitable Remedies and Alternative Claims

This case primarily involved Pt VIIIAB property adjustment and the correct treatment of corporate liabilities. Where statutory pathways are constrained or where a party’s position is weakened, equity and common law doctrines can sometimes provide alternative angles, depending on the facts.

Promissory or Proprietary Estoppel

Key questions:

1. Did the other party make a clear and unequivocal promise or representation about property or financial outcomes?

2. Did you rely on that promise in a way that caused detriment, such as contributing labour, funds, or giving up opportunities?

3. Would it be unconscionable for the other party to depart from the promise?

Relatively common context: One party says, in substance, “This asset will be yours,” and the other reorganises life around that assurance. If evidence of the promise and reliance is strong, estoppel may offer a pathway even where legal title is not in that party’s name.

Self-agency warning: Estoppel tends to require strong, specific evidence of the promise, reliance, and detriment. Vague expectations tend to carry relatively high risk.

Unjust Enrichment and Constructive Trust

Key questions:

1. Has the other party received a benefit at your expense, such as money paid, labour provided, or value added to property?

2. Is it against conscience for them to retain that benefit without compensation?

3. Is there an identifiable asset or benefit to which a constructive trust or equitable remedy could attach?

In matters involving corporate structures, unjust enrichment arguments can sometimes arise where a party’s personal property was used to discharge obligations that ultimately benefited the other party, or where value was transferred without fair compensation.

Self-agency warning: Corporate and insolvency issues can complicate equitable remedies. Where a company is involved, consider whether the benefit is held by a party or by the corporation, and whether other creditors’ rights exist.

Procedural Fairness

While this case was not a judicial review matter, procedural fairness concepts can appear in family law when parties claim denial of natural justice.

Key questions:

1. Were you given a reasonable opportunity to present your case?

2. Did you have adequate notice of the case you had to meet?

3. Was the process free from apprehended bias?

Self-agency warning: Claims of denial of natural justice tend to require precise identification of what was denied and how it materially affected the outcome. Vague assertions tend to be rejected.

Ancillary Claims and Strategic Reframing

Where a property settlement involves business structures, consider:

1. Whether corporate law mechanisms or insolvency processes are relevant to deal with company debts, rather than trying to force family law orders to do corporate law work.

2. Whether indemnity orders can allocate risk without distorting the pool.

Self-agency warning: Attempting to make family law orders substitute for corporate enforcement tends to carry relatively high risk of legal error.

4. Access Thresholds and Exceptional Circumstances

Regular Thresholds

1. De facto relationship threshold: Commonly involves at least 2 years of relationship duration unless exceptions apply, and must satisfy the statutory conception of a de facto relationship.

2. Property settlement jurisdiction timing: Applications are subject to statutory time limits after separation; missing the limit tends to create significant risk, though in some cases leave may be sought.

3. Evidence thresholds: Claims about assets, resources, and debts must be proven on admissible evidence, particularly where third parties or foreign property is involved.

4. Corporate separateness threshold: Corporate liabilities are not personal liabilities unless a separate legal basis exists.

Exceptional Channels (Crucial)

Family Law: Less than 2 years of cohabitation may still attract jurisdiction in some circumstances, including where there is a child of the relationship, or where a party has made substantial contributions and failure to make an order would result in serious injustice, pursuant to s 90SB.

Self-agency guidance: Do not abandon a potential claim solely because a typical threshold appears unmet. Carefully compare your facts to statutory exceptions, and focus on collecting evidence that supports the exception pathway.

5. Guidelines for Judicial and Legal Citation

Citation Angle

This authority is recommended to be cited in submissions involving:

1. The correct treatment of corporate liabilities, particularly corporate tax debts, when identifying the parties’ net asset pool under Pt VIIIAB.

2. Appeals involving error of law where the primary decision-maker transposes corporate liabilities into parties’ personal liabilities without lawful basis.

3. The use of indemnity orders and re-exercise of discretion to produce final, workable outcomes.

Citation Method

As Positive Support:
When your matter involves a corporation connected to the parties and there is an attempt to treat corporate liabilities as personal liabilities, cite Oldham & Krantz (No 2) [2024] FedCFamC1A 238 to reinforce the principle that corporate tax debts remain the exclusive liability of the corporation, and that the Court cannot order parties to pay a debt owed by one third party to another.

As a Distinguishing Reference:
If the opposing party cites this case, emphasise factual and legal differences such as: the existence of personal guarantees, director penalty regimes, admissions of personal liability, or evidence establishing a personal debt to the ATO or other creditor, which may create a different legal footing.

Anonymisation Rule:
In summaries and practical explanations, refer to parties by procedural titles such as Appellant and Respondent. Avoid using personal names, even where the published judgment uses pseudonyms.

Conclusion

The core implication of this case is that lawful power is the foundation of fairness. In de facto property settlements, corporate structures may feel like shared life, but legal identity still matters. If you want a fair outcome, insist on a lawful asset pool, a coherent evidence chain, and orders that are workable in the real world.

Golden Sentence: Everyone needs to understand the law and see the world through the lens of law. The in-depth analysis of this authentic judgment is intended to help everyone gradually establish a new legal mindset: True self-protection stems from the early understanding and mastery of legal rules.

Disclaimer

This article is based on the study and analysis of the public judgment of the Federal Circuit and Family Court of Australia (Oldham & Krantz (No 2) [2024] FedCFamC1A 238), aimed at promoting legal research and public understanding. The citation of relevant judgment content is limited to the scope of fair dealing for the purposes of legal research, comment, and information sharing.

The analysis, structural arrangement, and expression of views contained in this article are the original content of the author, and the copyright belongs to the author and this platform. This article does not constitute legal advice, nor should it be regarded as legal advice for any specific situation.

---

Original Case File:

👉 Can’t see the full document?
Click here to download the original judgment document.