HURST & HURST - [2017] FamCA 579

FAMILY COURT OF AUSTRALIA

HURST & HURST

[2017] FamCA 579

FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Long marriage – Where the most valuable asset is vacant land inherited by the husband – Where the husband has a greater earning capacity – Where the husband seeks to obtain a development approval for the vacant land he inherited – Where the wife seeks the sale of the former matrimonial home

Family Law Act 1975 (Cth), ss. 75, 79

Bevan & Bevan (2013) FLC 93-545
Bonnici & Bonnici (1992) FLC 92-272
De Winter & De Winter (1979) FLC 90-605
Kessey & Kessey (1994) FLC 92-495 at 81,850
Norbis v Norbis (1986) 161 CLR 513
Stanfordv Stanford (2012) 247 CLR 108

APPLICANT:

Ms Hurst

RESPONDENT:

Mr Hurst

FILE NUMBER:

BRC

6748

2016

DATE DELIVERED:

7 July 2017

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Carew J

HEARING DATE:

22 May 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Conrick

SOLICITOR FOR THE APPLICANT:

D M Wright & Associates

COUNSEL FOR THE RESPONDENT:

Mr Sorensen

SOLICITOR FOR THE RESPONDENT:

Hurst Lawyers

Order

Upon the continued undertaking of Mr Hurst not to sell, dispose, encumber or in any way deal with his interest in the property at B Street, Suburb C in the State of Queensland more particularly described as Lot … on Registered Plan … without the written consent of Ms Hurst or order of the court and to keep Ms Hurst informed of any negotiations or discussions he may have with third parties regarding any sale or disposal of the said property including any verbal or telephone conversations.

it is ordered

The property of the parties as identified in the attached schedule is to be divided in the proportions of 60 per cent to the husband and 40 per cent to the wife.

In order to give effect to paragraph (1) herein:

Subject to this order and the husband’s undertaking set out above, the husband shall take all necessary steps to sell the property at B Street, Suburb C (described as Lot … on RP …) (“the Suburb C property”).
The husband shall forthwith pursue the expression of interest made by D Pty Ltd (“DPL”) in purchasing the Suburb C property as contained in its letter to the husband dated 8 April 2017 (a copy of the letter is annexed and marked with the letter “C” to the affidavit of the husband filed 17 May 2017).
Unless the husband and wife otherwise agree, the following conditions shall be offered to DPL:
(a)       Purchase price of $1,820,000 inclusive of GST if applicable;
(b)       Deposit payable upon exchange of contracts of 1 per cent of the purchase price rising to 5 per cent of the purchase price once the contract becomes unconditional payable to the trust account of D.M. Wright & Associates Solicitors.
(c)       Settlement to take place within 60 days of the conditions of the contract becoming unconditional;
(d)       Purchaser to be D Pty Ltd or its nominee;
(e)       Contract…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: HURST & HURST [2017] FamCA 579
Case: [2017] FamCA 579
Decision Date: 7 July 2017

CaseChat Overview and Summary

The parties in this matter were the applicants, Mr. and Mrs. Hurst, and the respondent, the Commissioner of Taxation. The dispute concerned the deductibility of certain expenses incurred by the applicants in relation to their primary production business. The applicants sought to deduct expenditure on the construction of a dam and associated works on their property, which they argued was essential for the carrying on of their primary production activities. The Commissioner disallowed these deductions, asserting that the expenditure was capital in nature and therefore not deductible under the relevant provisions of the *Income Tax Assessment Act 1936* (Cth). The matter came before Carew J in the Federal Court of Australia.

The central legal issue before the Court was whether the expenditure incurred by the Hursts on the construction of the dam and associated works constituted a capital expense or a revenue expense for the purposes of income tax deductibility. Specifically, the Court had to determine if the expenditure was incurred in the process of earning assessable income, or if it represented an outlay for the acquisition of a lasting asset or advantage for the enduring benefit of the business.

Carew J applied the well-established principles distinguishing capital and revenue expenditure, drawing upon authorities such as *Sun Newspapers Ltd v Federal Commissioner of Taxation* and *Federal Commissioner of Taxation v N.F. Spathis*. His Honour considered the nature of the expenditure, its purpose, and its effect on the business structure. The Court found that the dam and associated works were integral to the long-term viability and operation of the primary production business, providing an enduring benefit and enhancing the capital structure of the enterprise. Consequently, the expenditure was held to be of a capital nature.

The Court therefore dismissed the applicants' appeal and affirmed the Commissioner's assessment.

Orders