Barrard & Fyner

[2008] FamCA 940

FAMILY COURT OF AUSTRALIA

BARRARD & FYNER [2008] FamCA 940

FAMILY LAW – PROPERTY – Property settlement

APPLICANT: Mr Barrard

RESPONDENT: Mr Fyner

FILE NUMBER: NCC 269 of 2007

DATE DELIVERED: 6 November 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Newcastle

JUDGMENT OF: Cohen J

HEARING DATE: I October 2008

COUNSEL FOR THE APPLICANT: Mr Austin

SOLICITOR FOR THE APPLICANT: LOCKHART QUINN & CO

COUNSEL FOR THE RESPONDENT: Mr Levick

SOLICITOR FOR THE RESPONDENT: BALE BOSHEV LAWYERS

Orders

1. That within one month the applicant shall do all things necessary and execute all documents necessary to transfer to the husband the whole of his interest as executor of the estate of Mrs Fyner, deceased, and of the estate of the said deceased’s interest in the following property:

   5000 IAG shares

   3000 Collection House shares

   22000 Industria (or GPS Online) shares

2. That within six months the applicant and the husband shall do all things necessary and execute all documents necessary to sell and shall sell the real property at and known as M property and from the net proceeds of sale after payment of all costs of and incidental to sale including agent’s commission advertising expenses and solicitor’s fees and expenses shall:

   (a)firstly pay the sum of $71,245.00 to the applicant as executor of the estate of the late Mrs Fyner;

   (b)secondly, pay 35% of balance to the applicant as executor of the said estate; and

   (c)thirdly, pay the remainder to the husband.

3. That leave to apply in relation to the implementation of the sale referred to in order 2. is reserved to each party.

4. Except as otherwise provided in these orders, all property currently held in the husband’s name, possession and/or control is hereby declared to be held by the husband as absolute proprietor at law and in equity.

5. That costs are reserved.      

IT IS NOTED that publication of this judgment under the pseudonym Barrard & Fyner is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: NCC 269  of 2007

MR BARRARD

Applicant

And

MR FYNER

Respondent

REASONS FOR JUDGMENT

1. These property proceedings, in which the solicitors and Counsel deserve acknowledgment for the proper, economical and skilful manner in which they were conducted, involve very few issues. The parties have agreed that contributions are equal and there is only one factual valuation issue. The parties also agree on the approach which should be taken to s.75(2) adjustment, although they are quite significantly apart on the extent of the proportional adjustments which ought to be made and on the degree of need the husband has which is to be reflected in the adjustment. They have also agreed that the major asset, the former matrimonial home, will have to be sold to meet any proper division of property.

2. The husband and wife commenced living together in February 1983 and married in May 1984. There are no children of the marriage. Each party to it had been married before and had children from another earlier marriage. They separated on 14 August 2006. The wife died in July 2007 and left a will for which probate was granted on 14 August 2007. It does not leave any of her estate to the husband. Her executor, Mr Barrard, has been substituted as applicant. The agreed assets are:

M property (tenants in common)                $750,000.00

Shares (joint) $29,000.00

Home contents (joint)  $1,500.00

Cash in safe (joint)           $400.00

Husband’s savings account: Building Society  $4,500.00

Husband’s truck $6,000.00

Husband’s motorcycle  $4,500.00

Husband’s farming equipment      $18,012.00

Produce sale proceeds 10/06-1/07 (husband)  $18,000.00

Husband’s superannuation      $15,644.31

$847,556.31

1. There are no liabilities. The $18,000.00 in produce sale proceeds has been used by the husband to pay part of his legal costs. This is properly, therefore, regarded as a notional asset of the husband. His total legal costs are $40,000.00, of which $18,000.00 has been paid. The applicant’s legal costs are $28,500.00. These, to the extent they have been paid, did not come from the assets of either party to the marriage.

2. The applicant claims that the husband has not declared $49,600.00 of the assets which should be available for division. It is submitted that I should find, on balance, that about $50,000.00 in cash was being kept in a safe in the former matrimonial home and that the husband has declared only $400.00 of it. The husband maintains that there was only $400.00 in the safe at the time the wife died and that that has been kept pending the outcome of these proceedings.

3. To determine, on balance, where the truth lies on this issue I must weigh the sworn evidence of the husband which has been tested by his cross-examination against the evidence from the wife contained in her affidavit sworn on 25 January 2007 which has not been tested by cross-examination, together with the evidence of the draft affidavit which was to be sworn by the wife. The wife personally gave her solicitor, Mr Quinn, instructions for the preparation of this affidavit only a few weeks before she died of the cancer from which she had been suffering for many years. Her will, which had been made in August 2006, left her whole estate to her children. In his affidavit, Mr Quinn said the draft affidavit he prepared was “based upon instructions given” by the wife. He was not required to be available for cross-examination.

4. I am quite conscious of the careful attention which must be given to untested evidence before it can be relied on, especially if there is tested evidence which contradicts it. I shall not give it the weight it would be given if it had been tested and not found wanting. I shall weigh it with the husband’s sworn version in the light of the other circumstances which appear to me to be relevant.

5. In her sworn affidavit made at the same time as she commenced these property proceedings, the wife made a relatively superficial reference to the $50,000.00. She said, at paragraph 37, “There is a safe installed in the premises at [M]. I believe that there are cash funds kept in safe custody in the safe and that the amount held in the safe presently is approximately $50,000.00”. It is to be recalled that she and the husband had separated about 5 months before she swore this affidavit, that she had left the former matrimonial home and the husband had continued living there.

6. The undisputed evidence is that, for many years, they had grown produce on the property where they lived. The property had been the sole source of their income for more than ten years. In her affidavit, the wife said that they had initially sold produce commercially but “later commenced to sell some of the [produce] privately from the [farm] premises” which had cold storage facilities. She also said that all the earnings from the farm were either saved or reinvested in the conduct of the farm business.

7. In the wife’s Statement of Financial Circumstances, also made at the same time she made her affidavit, the wife swore, consistently with her affidavit, that her share of the money in the safe was $25,000.00. It is significant that at that time she also held other significant liquid assets, being savings of $20,900.00 as well as shares in which her interest was worth a little more than $16,000.00. I regard the fact that she had other cash holdings and shares as consistent with having an additional nest egg at home, possibly saved from home sales.

8. It is very significant that the wife also mentioned in her affidavit that throughout the marriage she had worked “on a casual basis on a baker’s run, as a cleaner and also as [a farmer]”. In her affidavit she mentions the type of work she did on the farm, there is a critical omission. She particularised some of her labours such as pruning and harvesting. She also said “we” sold produce privately, but there is a failure to mention that on the farm there was a farm shop, something that others who have sworn affidavits in these proceedings made much of. There was a “shop” on the premises which was sufficiently busy in the summer months to have an employee who worked up to 7 days in a week.

9. Four of the applicant’s witnesses who swore affidavits and were not required for cross-examination swore that the wife used to sell produce she had from a shop on the farm. Her son, Mr C, describes it in this way:    

   …..my mother maintained a garden on the property in which there was growing a number of fruit trees and vegetables which she used to make […] other products which were sold on the property….I observed that the shop trade was conducted mostly by my mother with the help of [Ms H].

   And:

   When my mother became ill with cancer I visited her at least twice a month. I observed she was still…making [products]…and still selling [produce] and other products though the shop conducted on the property.

   Ms H is one of the witnesses referred to above.

10. The farm was first planted in about 1990 according to the wife’s affidavit. Ms H says that she commenced working on the property at M when the property first began to be productive a few years after the farm was established. Initially, the wife sold produce from the verandah. Later a three car garage was built and used for selling the produce. Originally Ms H worked assisting the wife to sell produce from October to January, on one or two days each week. As the farm matured and became more productive and the garage was put to use for selling, her work increased so she would assist the wife with sales every day during December and on three or four days every week in January. The wife apparently carried on selling without assistance at other times.

11. In the 2004/5 season Ms H worked in the shop seven days per week from mid November to mid January and in 2006/7 she worked from after the parties separated in August 2006 to sometime in December 2006 for three days each week. This was while the husband, but not the wife, was living at the farm. When Ms H worked in the shop the wife was also occupied with it, either making her products or selling them or maintaining her garden which had various trees, and other produce. Ms H says the wife used these as a source of the products which were sold in the shop. Ms H was not paid for her efforts. She received a quid pro quo. She, too, made products which she sold in the shop and kept the proceeds of sale. The husband, according to Ms H, sold products he made.

12. Another deponent in the applicant’s case, Ms L, confirms the evidence of the wife’s son and Ms H that both the wife and the husband sold products in addition to maintaining the farm. She said that the husband would sometimes not be home when she visited because he was out attempting to sell products.

13. A next door neighbour, Mr P, is the fourth person to have sworn an affidavit in support of the applicant’s case about the efforts the wife put into running the shop. He said “in the last couple of years” this was with “assistance from female helpers on a more regular basis”. He said that produce would be sold from the premises seven days per week during the season and that the shop would be open from 8am to 6pm.

14. The above evidence raises suspicion that the shop was operated as a tax free source of cash. The failure by the wife to give any details of what are obviously very substantial s.79 contributions with the fact of having a safe on the premises and the claim of having $50,000 in it without any explanation about its source creates such a strong inference that suspicions seem to me to be elevated, at least, to prima facie proof of the parties to the marriage being involved in the cash economy and therefore of the existence of the $50,000.00 in the safe if one also takes into account the claimed earnings of the parties for tax purposes.

15. All the affidavits I have mentioned, other than that of the wife and her Statement of Financial Circumstances, were filed in May 2008 and sworn in July or August 2007. The first affidavit of the husband and his Statement of Financial Circumstances were sworn on 9 March 2007. They could not be expected to address the relevant claims in the affidavits of mid 2007 filed on behalf of the applicant, but one would expect some response to the $50,000.00 claim of the wife in her original affidavit and her Statement of Financial Circumstances.

16. The husband in response said, during his oral evidence, that the safe was in the home because the parties needed it to keep small sums earned from cash sales safe because the home was in an area where burglary was common. He eventually said that there was only ever a small amount of money in the safe. Ultimately he said that, on separation two years ago, there was $900.00 in notes and $300.00-$400.00 in lose change. He denied the money in the safe was cash from the sale of produce. On might reasonably ask then, where did the money in the safe; the $1200.00-$1300.00, come from, and why were there so many coins.

17. The husband’s Statement of Financial Circumstances was relied on by the applicant’s counsel in asserting that the husband has been untruthful in his denials of the existence of the $50,000.00. It contains no mention of any safe or any money in it despite the fact that it is now agreed that at least $400.00 was in the safe. The only mention of what might be cash which could have been in the safe is a reference to the husband’s 50% share of the farm business being $14,000.00 of the $18,000.00 sale of proceeds from the October 2006 to January 2007 season. The latter could not have been in the safe in August 2006. As the husband says any money in the safe did not come from such a source, it can be assumed that he does not suggest that the value of the interest in the farm business, which he admits in his Statement of Financial Circumstances, does not include the money he admits was in the safe at the relevant time. The result is, as the applicant submits, the raising of doubt about the accuracy of the husband’s Statement of Financial Circumstances because it fails to declare the relatively small amount of cash which the husband now admits was in the safe at the relevant times and later held by him.

18. In the draft affidavit of the wife which was made on instructions given by her to her solicitor on 28 May 2007 she said, on sale in 1988 of a property which had been owned by the wife, she opened two joint accounts with the husband into which income from the farm was placed for the payment of the ordinary service bills which the parties received. It is not said that all the farm income was placed in these accounts. What is stated is that the wife saw the husband put cash funds from the income of the farm in the safe from time to time and that the husband would not allow the wife to know the combination and that, in July 2006, she demanded that the husband allow her to see inside the safe. The husband is said to have opened it and said “There is $50,446 in there”. She is said to have seen a large amount of cash and to have demanded half. The husband refused this demand, closed the safe and is said to have failed to give her any of the money.

19. In addition to any funds in the safe, at separation, the parties had $22,000.00 in a joint account which they divided equally. Yet the wife alleges that the farm partnership finances were:

Gross	Expenses	Net
2003	$20,010.00	$19,674.00	$336.00
2004	$30,270.00	$13,349.00	$16,921.00
2005	$28,585.00	$16,257.00	$12,328.00

1. The husband’s oral and written evidence is enlightening because of its inconsistency with the claim of the wife about the partnership income. He said the most that was ever in the safe was $17,000.00 or $18,000.00. One must ask why, if he was selling to wholesalers, he had so much cash and why he did not bank it. He also said he last worked the farm in the 2^nd week of January 2007. His Statement of Financial Circumstances filed on 9 March 2007 discloses an average net income from the farm of $340.00 per week which translates to $17,680.00 p.a and an average total expenditure of $353.14 per week or $18,363.00 p.a. Until then, his only admitted source of income since before 2000 had been the farm. The husband said the last tax return he had filed was in the 2004/5 financial year, that he had not done a return for the 2005/6 year. He claimed he did not have to because he was on a pension. I presume from this he must have intended to infer that the farm provided him with no significant income. Yet there is no suggestion he did not work the farm that year, in fact he specifically said he last worked it in January 2007 and did not mention that in the prior season he had not sold produce from the farm. As others have clearly said, they worked in the shop in the October 2005 to January 2006 season. It is noteworthy that the wife, in her draft affidavit claimed to be a disability pensioner receiving $437.00 per fortnight. She said she had no other source of income.

2. After an overview of the above material on the issue of $50,000.00 and taking into account the fact that  the husband impressed me as being of very little credit when giving his oral evidence – the impression he gave was of a modestly intelligent but cunning man with a very good memory who confidently believed he could deceive the Court and had successfully done so – and the fact that the force of the wife’s evidence was undermined because it was in part unsworn and wholly untested, I am quite satisfied on balance; sufficiently satisfied on application of Bringinshaw v Bringinshaw (1938) 60 CLR 336, to find that there was $50,000.00 in the safe and that, because the husband has neither declared it nor suggested it has been spent on ordinary living, it should be included in the value of property available for settlement pursuant to s.79.

3. Thus the sum to be divided is $897,569.81. It is highly likely that the husband and wife have been engaged for years in tax evasion by failure to declare part of their income, that from the shop and, in the husband’s case, from selling other products.

4. The husband claims that there should be an adjustment for s.75(2) factors of 20% to 25%. The applicant submits that I should exercise my discretion by refusing to make any adjustment but that if there is to be an adjustment in favour of the husband it should not be more than 5%. Both parties agree that there may be a larger than usual adjustment for the needs of a party when there can be no allowance for the other party to the marriage, as is the case here. Whereas in cases where each party is entitled to considerations based on s.75(2) each will be set-off against the other and the adjustment will be the differential, where there is no set-off for one party the whole allowance for the other party becomes the proper adjustment. It is not, therefore, so surprising that an adjustment of as much as 25% is sought despite the husband having no unusually pressing needs. The applicant argues that I should exercise my discretion to make no allowance under s.75(2) because the husband, despite claiming to have needs, has so little credit that I should reject his claims.

5. Despite his lack of credit some of the husband’s claimed needs are self-evident and not based on acceptance of his evidence. For example, the property on which he lives will have to be sold, so he will need to obtain an alternative home. It is obvious that he will lose the ability to earn either tax free or taxable income from the farm and shop once the property is sold, whether or not he has worked in it and earned income in 2007/2008 or more than he claimed to have earned in earlier years.

6. In recent times the husband has worked in the transport industry from April 2007 to November 2007 – and as a tradesman thereafter. He says he cannot work as a farmer because he has a bad shoulder. Whether he has or not, I accept that at his age, 60 years, he is unlikely to find or keep work involving farming or farm labour. It is much more suitable for a younger man. I also accept that he gave up working in the transport industry because of the long hours and poor hourly return i.e $8.00 to $10.00 per hour. He learnt to be a tradesman early in his life and has now returned to this form of employment. He works as an independent contractor and currently relies on a sign he has erected and on word of mouth to get work. He may or may not be able to continue relying on this sign, depending on where he lives, but could advertise in local newspapers. Currently, he works from between one or two and four days each week. He claims to have grossed $17,500.00 for the 2007/08 financial year. I find it difficult to accept that this is all he has earned and find, on balance, that his income is likely to continue to be greater for a few years.

1. However, he is already 60 years old and cannot expect to have a long working life. His claims to have disabling injuries reducing his ability to work with each arm is quite lacking in support from any qualified expert. I might have accepted his claims of pain in his shoulder, arms and hands if his credit was good, but it is not. He admitted he now works as much as four days a week as a tradesman. I think his earnings will be significantly more than $18,000.00 p.a. for the next three or four years. In March 2007 he said he was in fair to good health and working very hard on the farm. He swore this affidavit after the time he claimed in his oral evidence to have ceased working on the farm. Nevertheless, I do accept that he does have some problems doing heavy work because of pain and disability, but not as much as he claims. I accept that he is partially blind in one eye and has some back problems, but note that the former did not prevent him gaining a driver’s license. I also accept that his physical limitations will get greater and that by the time he reaches 65 years he will only be doing a little tradesman or other work but that he may continue selling his home-made products for longer. I doubt that he will have other than a very modest income from personal effort after he reaches 65 years.

2. The husband’s superannuation is small but is not yet available to him despite being regarded as an asset at its current value. He is unlikely to be able to gain access to it for about five years. What he will then receive will also reflect its earnings, which in the current financial situation could be much less than might have been expected a year ago, between now and the time of access. The husband submits, and I accept, that had he not given up his employment in about 1994 to work on the farm his superannuation would be worth much more. However, his $50,000.00 nest egg has taken its place to some extent. I do not accept that by working the farm the husband otherwise lost much of his earning capacity.

3. Without adjustment, the husband will be entitled to $449,000.00 approximately. The home and land on which he lives is agreed to be worth $750,000.00. He is used to living in a reasonably modern home on a farm. It can be assumed to be reasonably comfortable and commodious. He is entitled to obtain an alternative home which, to a large degree, continues his standard of living. It is unlikely, after purchasing a home, that he will have much left to invest, so will not receive more than about $3000.00 or $4000.00 p.a at 3% net from investments now that the benchmark interest rate on loans is 6%. His commitments to support himself are likely to remain much as they are; that is about $18,000.00 p.a.

4. Considering the above matters, and the legal costs including what has been paid by each side, being the only matters the evidence will permit me to consider and which I must consider under s.75(2) of the Act, I am of the view that an adjustment in the husband’s favour of 15% is appropriate and just. This will give the husband 65% of the assets including notional assets; that is, $583,672.00, if the home is sold for $750,000.00.

5. The husband already holds property worth $102,512.00 including the $50,000.00, the value of the furniture in the house, the notional $18,000.00 which he has paid for his legal costs and his superannuation, but not including his interest in the former matrimonial home and the jointly held shares. If the wife’s estate interest in the shares is transferred to him he will have an additional $29,800.00 which will make the total he holds $132,312.00. If the home is sold and $71,245.00 is paid to the applicant and 65% of the balance of the net proceeds of sale is paid to the husband and the remainder is paid to the applicant the division between the parties will be in accordance with my decision to settle 65% in value of the assets on the husband. Because it may be difficult to sell I shall allow six months for the sale of the real estate. I shall make orders which achieve this division in this manner, being:    

   (1)That within one month the applicant shall do all things necessary and execute all documents necessary to transfer to the husband the whole of his interest as executor of the estate of Mrs Fyner, deceased, and of the estate of the said deceased’s interest in the following property:

   5000 IAG shares

   3000 Collection House shares

   22000 Industria (or GPS Online) shares

   (2)That within six months the applicant and the husband shall do all things necessary and execute all documents necessary to sell and shall sell the real property at and known as M property and from the net proceeds of sale after payment of all costs of and incidental to sale including agent’s commission advertising expenses and solicitor’s fees and expenses shall:

   (a)firstly pay the sum of $71,245.00 to the applicant as executor of the estate of the late Mrs Fyner;

   (b)secondly, pay 35% of balance to the applicant as executor of the said estate; and

   (c)thirdly, pay the remainder to the husband.

   (3)That leave to apply in relation to the implementation of the sale referred to in order 2. is reserved to each party.

   (4)Except as otherwise provided in these orders, all property currently held in the husband’s name, possession and/or control is hereby declared to be held by the husband as absolute proprietor at law and in equity.

   (5)That costs are reserved.       

I certify that the preceding thirty two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen

Associate: 

Date:  6 November 2008