TETHYS & TETHYS

[2012] FamCA 811

FAMILY COURT OF AUSTRALIA

TETHYS & TETHYS [2012] FamCA 811

FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Where the husband seeks an adjustment in his favour to account for an inheritance he received during the marriage following his mother’s death – Where the contribution of the inheritance must be assessed having regard to the contributions of the parties over 38 years of marriage and hard work and taking into account that the parties themselves contributed to the testator’s property

FAMILY LAW – PROPERTY – Disclosure – Where the husband failed to disclose his interest in a property in South East Europe until the first day of the hearing – Where the husband has not produced any documents in relation to the property – Court to err on the side of generosity towards the innocent party

Family Law Act 1975 (Cth) s75(2)

Kannis WA 9 of 2002
Lint & Lint [2011] Fam CAFC 115
Pierce and Pierce (1999) FLC 92-844
Weir v Weir (1993) FLC 92-338

APPLICANT: Ms Tethys

RESPONDENT: Mr Tethys

FILE NUMBER: SYC 1303 of 2010

DATE DELIVERED:	18 September 2012
ORDERS DELIVERED:	21 September 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 4 & 5 September 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richards

SOLICITOR FOR THE APPLICANT: Crawford Ryan Solicitors

COUNSEL FOR THE RESPONDENT: Mr Hodgson

SOLICITOR FOR THE RESPONDENT: Fox O'Brien

ORDERS
IT IS ORDERED

1. This Order is made by way of alteration of property interests pursuant to s.79:

1.1.That within thirty (30) days from the date of these orders the husband do all acts and things and sign all documents as may be required to cause the payment by way of bank cheque of $24,235 to the wife. 

1.2.That within thirty (30) days the husband do all acts and things and sign and execute all documents necessary to transfer to the wife his right, title and interest in work vehicle licence No. …7.

1.3.That simultaneous with Order 1.2 the wife do all acts and things and sign and execute all documents necessary to transfer to the husband her right, title and interest in work vehicle licence No. …7.

1.4.

1.4.1.Pursuant to s.90MT (1) (a) of the Family Law Act 1975   whenever a splittable payment becomes payable in respect of the interest held by Mr Tethys (Member No. …01) in the MasterKey Superannuation Fund, the Trustee of the MasterKey Superannuation Fund shall pay to Ms Tethys  born … 1948 an entitlement calculated in accordance with Part 6 of the Family Law  (Superannuation ) Regulations 2001 using a base amount of $255,403 held on behalf of Mr Tethysin the MasterKey Superannuation Fund and there will be a corresponding reduction in the entitlements held on behalf of Mr Tethys  which he would otherwise have had but for these Orders:

That for the purposes of this Order:

1.4.1.1.The base amount to be allocated to Ms Tethys is the amount of $255,403

1.4.1.2.These orders will have effect from the operative time

1.4.1.3.The operative date is 4 days after the Orders have been served upon the Trustees of the MasterKey Superannuation Fund.

1.4.1.4.These orders are binding on the Trustees of the MasterKey Superannuation Fund.

1.4.2.That each party and each of the Trustees have liberty to apply in relation to the implementation of the Orders effecting the superannuation interests of Mr Tethys in the MasterKey Superannuation Fund.

1.4.3.Pursuant to Section 90MZD of the Family Law Act 1975 as a matter of procedural fairness, the Trustees of the MasterKey Superannuation Fund, having been given notice of the intention of the parties to seek Orders set out herein are bound by them as and from the date of service upon the Trustees and shall give effect to these Orders.

1.4.4.Until the happening of :

1.4.4.1.The establishment of a separate account in the name of the wife or

1.4.4.2.The transfer or rolling into another superannuation fund of the payment created herein in favour of the wife or

1.4.4.3.The wife satisfies a condition of release  and is paid the payment created by the Orders herein or

1.4.4.4.The wife executes a waiver of rights within the meaning of section 90 MZA of the Family Law Act 1975 in relation to the payment split

The husband is forthwith restrained from drawing upon or encumbering the member’s interest in the Fund or executing any death benefit nomination in favour of any person or doing any act or thing that would have the effect of defeating, diminishing or otherwise reducing the allocated splittable payment or rendering any part of his interest as a “not splittable payment” within the meaning of Regulation 12 and 13 of the Family Law (Superannuation) Regulations 2001.

1.5.That within 14 days of the date of these Orders the husband do all acts and things and sign and execute all documents necessary to transfer to the wife all of his right title and interest in the … motor vehicle registration no. …4X.

1. Except as otherwise provided in these Orders, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.

2. That the parties do all acts and things, sign and execute all documents and give all consents necessary to give full force and effect to these orders.

3. That if either party refuses or neglects to sign or execute any document, instrument or writing or to comply with any order contained herein after seven days of being required to do so, pursuant to Section 106A of the Act that the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to orders herein.

4. Leave to either party to apply upon seven (7) days notice in respect of the implementation of any or all of these orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Tethys& Tethys has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1303 of 2010

Ms Tethys

Applicant

And

Mr Tethys

Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court are proceedings for property settlement arising out of the marriage of Ms Tethys (“the wife”) and Mr Tethys (“the husband”). The parties married in 1970 and separated in September 2008. There are two adult children of the marriage, S, aged 38, and M, aged 36.

2. The wife is 64 years of age and is retired.

3. The husband is 64 years of age and is retired.

4. Neither of the parties had any assets at the time of marriage. After the parties married they lived in rental accommodation in Sydney. The husband purchased a delivery run and worked as a storeman. The wife worked in personal services and assisted the husband with the delivery run. After several months the parties bought a business in Suburb G. The wife ran the business from 1970 to 1978 whilst assisting the husband with the delivery run.

5. In 1972 the husband bought a mixed business and premises situated in Suburb E and the parties lived at these premises. The husband worked full time in the business and was assisted by the wife in the business. The parties sold the mixed business and premises in Suburb E some time around 1979 or 1980.

6. In 1979 the parties purchased a property at Suburb K and engaged a builder to build their home on the property. During this time the parties rented a property in Suburb N. The husband purchased a hospitality business in Suburb T with his uncle in 1980 and later sold his interest in the business to his uncle in 1983. The husband sold the delivery run in about 1982.

7. The parties moved to the property at Suburb K in 1981 and the husband worked in a manual services business until about 1986.

8. In 1983 the wife commenced working in a factory and the husband started work in the transportation industry. The husband worked full time until 2001 and part time until 2010. The parties bought their first work vehicle licence in about 1984 or 1985 and the husband drove the vehicle they owned.

9. In 1987 the wife commenced working at Business C.

10. In 1994 the husband purchased a second work vehicle licence.

11. The wife was injured in 1998 at Business C and was away from work for a couple of months. The wife was injured again at work in 2001 and was advised that she needed to cease working. As a result the wife received a lump sum payment of $27,224.65 on 17 July 2002 plus another $1,275.35 in January 2003. The wife also received fortnightly workers compensation payments and will continue to do so until she turns 65.

12. In 2004 the husband’s mother passed away and the husband received an inheritance. There is a dispute as to the value to be ascribed to the inheritance. The husband deposited a substantial part of this inheritance into his superannuation account.

13. The parties separated in October 2008, with the wife moving out of the former matrimonial home at Suburb K to live with her daughter, M.

14. Pursuant to consent orders, the former matrimonial home was sold on 16 September 2011. With the proceeds of sale, the wife purchased a property at Suburb A where she now resides and the husband purchased a property at Suburb R where he now resides.

15. Pursuant to consent orders made on 12 October 2010, the husband transferred one of the work vehicle licences to the wife.

16. Each of the parties owns property in South East Europe which was disclosed. The wife has inherited two properties and the husband inherited one property. The parties agreed that those properties should not be brought into account in the balance sheet. The only issue of significance in relation those properties is that the parties, during the marriage, spent approximately $53,000 on renovations to the property which was then owned by the husband’s mother and ultimately inherited by him. That issue will be dealt with in conjunction with the issue of the weight to be given to the husband’s inheritance.

17. That the parties started their life together with nothing and now have significant assets is a credit to their hard work and determination and their joint efforts and application to their family and their assets. With the exception of the husband’s inheritance, it was agreed at trial that their contributions should be regarded as equal.

Issues

1. On the first day of the hearing Counsel identified the issues for determination to be:

2. Whether the value of the work vehicle licence in the wife’s possession should account for any Capital Gains Tax that the wife would be liable for should she decide to sell the work vehicle licence.

3. The value of a motor vehicle that the husband purchased in South East Europe.

4. That the husband had not disclosed that he had a second property in South East Europe until the first day of the hearing and the way in which that non-disclosure should be dealt with.

5. The adjustment that should be made for the husband’s contribution by virtue of the inheritance he received following the death of his mother in 2004.

6. Whether the husband has a greater earning capacity than the wife.

The Work Vehicle Licence

1. At the time of separation the parties owned two work vehicle licences, one registered in the name of the husband and one registered in the parties’ joint names. The work vehicle licences registered in the parties’ joint names is subject to Capital Gains Tax whilst the plate registered in the husband’s name is not. Pursuant to consent orders made on 12 October 2010, the husband transferred the work vehicle licence registered in the parties’ joint names to the wife.

2. At the commencement of proceedings, Counsel for the wife stated that he would be submitting that the value of the work vehicle licence in the wife’s possession should take account of the Capital Gains Tax that would be incurred should the wife decide to sell the work vehicle licence. The work vehicle licence currently derives an income of approximately $500 per week.

3. In re-examination, the husband gave evidence that he would have no difficulty if the work vehicle licences were swapped so that he had possession of the work vehicle licence subject to capital gains tax as he had no intention of selling his work vehicle licence. This would dispose of this issue expeditiously and I propose to make orders to that effect.

The Motor Vehicle In South East Europe

1. On 16 July 2007 the husband purchased a motor vehicle which he shipped from Germany to his property in South East Europe. The husband purchased the motor vehicle for a price of €8,800. The husband claims that the motor vehicle now has no value. There is no evidence to support that claim. However, there is also no evidence of the value of the vehicle. The only evidence I have as to the motor vehicle’s value is the purchase price of the vehicle of €8,800 in 2007. It is an asset available to the husband but not to the wife. In circumstances where there is no reliable evidence available as to the value of the motor vehicle, I will treat the asset as a financial resource belonging to the husband and will take it into account in the section 75(2) adjustment.

Non-Disclosure

1. On the first day of the hearing, for the first time, it became apparent that the husband owned a property in South East Europe, being a unit in a residential block of six flats.

2. The existence of the property was admitted only because the wife commissioned real property searches to be undertaken in South East Europe and the husband was confronted with irrefutable evidence.

3. In cross examination the husband stated that his brother inherited the property when his mother passed away in 2004. His brother fell ill, and in 2009, gave the husband a power of attorney to travel to South East Europe to sell the property or put it in his name as a gift. The husband’s brother then passed away, in early July 2010, and the husband transferred the property to his name. The husband states that the consideration for the property was roughly $20,000, comprising $5,000 spent for the property’s expenses, $10,000 that the husband paid for his brother’s funeral and $5,000 to his brother’s children. During cross examination Counsel for the wife showed the husband a document prepared in their native language by the husband’s lawyers. The husband agreed that the document indicated that the purchase price for the property was €37,941, however, he disputed the assertion that he had paid that much. The legal fees paid by the husband to effect the transfer into his name were €6,000.

4. The husband agreed with Counsel for the wife that the only disclosure he had made about this property was in the courtroom during the hearing. At no time did the husband produce any documents relating to the property. When asked why he failed to disclose that he had this property to the court the husband replied “it slipped my mind.”

5. I do not accept that the non-disclosure was inadvertent. The parties worked hard for all their adult working lives to accumulate their assets. They have been careful with their money. The husband had visited the property only a few months ago to check on it. The husband agreed that he understood his obligation of full disclosure. He did not disclose the existence of this asset because it was acquired after separation and the wife knew nothing of it.

6. When the existence of the property became apparent, it was open to the husband to seek an adjournment to bring before the court evidence of the value of the property. The husband asserted that the property had no, or little, value; that it was derelict and had been vandalised. That may be so but there is no evidence other than the husband’s. He did not seek to proffer even a photograph to corroborate his evidence. He says the unit is one of six in a residential block. The other units are occupied. There may be potential for renovation but that is speculation.

7. Because the husband did not seek an adjournment to bring evidence of value before the court, I can infer that evidence of value would not have corroborated the husband’s assertion that the property had no, or little value.

8. In Weir v Weir (1993) FLC 92-338, the Full Court, considering the implications which flow from a finding of non disclosure, said:

   It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature. 

9. The Full Court in Kannis (2003) WA 9 of 2002, after reviewing the authorities in relation to non-disclosure said:

   Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point.  The duty to disclose is absolute.  Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated.  In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour. 

the husband’s inheritance

1. The husband’s mother died in 2004 leaving to the husband a property in South East Europe and a half share of her assets in Australia which consisted of a house in Suburb G. The property in South East Europe had been renovated at the parties’ expense, during the marriage, using money, totalling approximately $53,000 from their joint savings. Thus there was a contribution made jointly by the husband and the wife to the husband’s inheritance.

2. When the Suburb G property was sold, the solicitors with the carriage of the conveyance wrote to the husband’s brother, indicating that the husband was entitled to $332,970.99 from the sale of the property. This sum was made up of one half of the net proceeds of sale, being $316,688.48, plus a further amount of $16,282.50.

3. The husband in his oral evidence said this further amount arose because, during his mother’s lifetime, his brother had been given money by her to meet his debts and the brother was accounting to the husband for half of those funds. That was not a matter which had ever been disclosed previously by the husband. It was not put to the husband that there was another explanation for the amount. Because the explanation is consistent with the solicitor’s letter, I accept the husband’s version of this transaction and I find that the inheritance was $332,970.99.

4. The husband seeks to have the contribution of the inheritance recognized on a dollar for dollar basis. In the context of an asset pool (excluding the motor vehicle and the recently disclosed property in South East Europe) totalling $5,351,492, the inheritance represents 6 per cent.

5. How a trial Judge should deal with an initial contribution was considered by the Full Court in Pierce and Pierce (1999) FLC ¶92-844. At page 85-881, the Court stated:

   In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.

6. The same principle must apply to any contribution, whenever the contribution was introduced.  In Lint & Lint [2011] Fam CAFC 115 the Full Court, dealing with contributions made by the husband’s family, stated:

   His Honour recorded, again correctly in our view, having regard to decisions of this Court such as Pierce v Pierce[1998] FamCA 74; (1999) FLC 92-844, that the “fulsomeness of the parties’ other contributions tends to diminish the impact of the assistance from the husband’s family, compared with what might have been expected otherwise”. It is apparent that his Honour was there recognising that the contributions by the husband’s family by or on his behalf were not to be viewed in isolation from the other contributions made by the parties during the course of their cohabitation.

1. Thus the contribution of the inheritance, must be assessed having regard to the contributions of the parties over 38 years of marriage and hard work and taking into account that the parties themselves contributed $53,000 to the testator’s property.

2. There will be an adjustment in the husband’s favour of 3 per cent.

THE HUSBAND’S EARNING CAPACITY

1. The husband and the wife are both aged 64 years. The husband retired in 2010 and has not worked since. Prior to 2010 he worked part time for some years.

2. The parties have accumulated ample funds for them to live in dignified retirement and the husband does not wish to continue to work. He may be able to remain working in the transport industry for some hours each week but there is no evidence that such work is available or what he could earn. Given the assets accumulated by the parties, he should not be required to work and I do not propose to make any adjustment.

The Balance Sheet

1. At the conclusion of proceedings the Court was provided with a joint balance sheet. The issues in dispute on the balance sheet were minimal, and my findings have been set out earlier in these reasons. I find the assets of the parties to be as follows:

Assets	Value
Suburb A Property	$730,000.00
Suburb R Property	$420,000.00
Work vehicle licence - agreed to be transferred to Husband	$400,000.00
Work vehicle licence - agreed to be transferred to Wife	$400,000.00
Wife’s savings with Citibank	$496,824.00
Husband’s savings	$795,607.00
Wife’s savings with CBA	$6,795.00
Vehicle 1999 (driven by wife)	$8,000.00
Husband's Monies in South East Europe	$56,150.00
Wife's Monies in South East Europe	$44,420.00
Husband's Recently disclosed Property in South East Europe	Not Known
Husband’s Business H shares (96,740 @  $5.71)	$552,385.00
Wife’s Business H shares (96,740  @  $5.71)	$552,385.00
Husband’s Telstra shares (1,279 @  $3.73)	$4,770.00
Wife’s Telstra shares (1,279 @    $3.73)	$4,770.00
Husband’s IAG shares (743  @  $4.05)	$3,009.00
Wife’s IAG shares (743  @   $4.05)	$3,009.00
Husband’s Metcash shares (600 @ $ 3.63)	$2,178.00
Wife’s Metcash shares (600 @ $ 3.63)	$2,178.00
Honda 1993	$3,000.00
Husband’s motor vehicle (in South East Europe)	Not Known
Cemetery plot	$8,000.00
Wife’s household contents	$15,000.00
Husband’s household contents & personalty	$4,000.00
Addback for husband's withdrawals/unaccounted joint funds	$52,000.00
Addback for legal fees paid by the husband	$18,017.00
Addback for legal fees paid by the wife (including monies held on Trust)	$53,626.00
Wife’s superannuation with MLC (30 June 2012)	$105,858.00
Husband’s superannuation with MLC	$609,511.00
TOTAL	$5,351,492.00

conclusion

1. Having determined that there should be an adjustment in the husband’s favour of 3 per cent in relation to his inheritance I turn to consider the section 75(2) factors.

2. The husband has the use of the motor vehicle in South East Europe and the benefit, of unknown value, of the residential unit in South East Europe. I cannot determine the real value of the pool of assets owned by the parties. I propose, therefore, in accordance with the authorities to which the Full Court referred in Kannis WA 9 of 2002, and to their Honours’ statement of principle set out earlier in these reasons, to make an adjustment in favour of the wife of 3.5% which ultimately results in a net adjustment to the wife of $26,757 and a division of net marital property between the parties of $2,702,503.46 to the wife and $2,648,988.54 to the husband.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 18 September 2012.

Associate: 

Date:  18 September 2012