TETHYS & TETHYS
[2014] FamCAFC 125
•17 July 2014
FAMILY COURT OF AUSTRALIA
| TETHYS & TETHYS | [2014] FamCAFC 125 |
|
| Family Law Act 1975 (Cth) |
| Ho v Powell (2001) 51 NSWLR 572 House v The King (1936) 55 CLR 499 Jones v Dunkel (1958-1959) 101 CLR 298 Kannis & Kannis (2003) FLC 93-135 Kuhl v Zurich Financial Services (2011) 243 CLR 361 Weir & Weir (1993) FLC 92-338 |
| APPELLANT: | Mr Tethys |
| RESPONDENT: | Ms Tethys |
| FILE NUMBER: | SYC | 1303 | of | 2010 |
| APPEAL NUMBER: | EA | 131 | of | 2012 |
| DATE DELIVERED: | 17 July 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | May, Ainslie-Wallace & Austin JJ |
| HEARING DATE: | 18 March 2014 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 21 September 2012 |
| LOWER COURT MNC: | [2012] FamCA 811 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Hodgson |
| SOLICITOR FOR THE APPELLANT: | Fox O'Brien Solicitors & Conveyancers |
| COUNSEL FOR THE RESPONDENT: | Mr Gould |
| SOLICITOR FOR THE RESPONDENT: | Crawford Ryan Lawyers Pty Limited |
Orders
The Appeal be dismissed.
The Husband pay the Wife’s costs of and incidental to the appeal. The quantum of those costs to be agreed or assessed.
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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 131 of 2012
File Number: SYC 1303 of 2010
| Mr Tethys |
Appellant
And
| Ms Tethys |
Respondent
REASONS FOR JUDGMENT
Mr Tethys (“the husband”) appeals against property orders made by Rees J on 21 September 2013 in proceedings with Ms Tethys (“the wife”).
The effect of her Honour’s orders was to divide the property of the parties as to 50.5 per cent to the wife and the balance to the husband. The issue at the trial and on appeal did not so much concern the percentage division of the property, rather the assessment of the value of some assets, the impact of non-disclosure and appropriate section 75(2) of the Family Law Act 1975 (Cth) (“the Act”) factors.
Her Honour’s findings of fact are essentially unchallenged and we set out some background, which we believe to be uncontentious, to give a context to the appeal.
Background
The parties were married in 1970 and separated in 2008. They have two children, both of whom are adult. The husband and wife were aged 64 at the date of the hearing before her Honour.
Neither of the parties had assets or resources of significance when they married. However, throughout the course of their relationship, by dint of hard work and careful investing, at the date of the hearing, they had accumulated assets in the order of $5 million and had virtually no debt.
In 2011, the parties consented to partial property settlement orders that resulted in the former marital home being sold, the proceeds of which were divided and used by the parties to each buy a property.
At [17] her Honour noted that, with the exception of the husband’s inheritance, it was agreed between the parties that their contributions should be regarded as equal.
It is against that background that her Honour identified the issues in dispute thus:
19. 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].
20. The value of a [motor vehicle] that the husband purchased in Greece.
21. That the husband had not disclosed that he had a second property in Greece until the first day of the hearing and the way in which that non-disclosure should be dealt with.
22. 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.
23. Whether the husband has a greater earning capacity than the wife.
Each of those identified issues were also matters argued at the appeal.
Reasons of the trial judge
The judge found the assets of the parties to be as follows:
47.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 Greece
$56,150.00
Wife's Monies in Greece
$44,420.00
Husband's Recently disclosed Property in Greece
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 Greece)]
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
We will deal with the relevant findings of the trial judge under the headings given by her as they are also relevant to the appeal but in a different order.
Grounds 2, 3, 4 and 5 - Non-Disclosure of property in South East Europe
It is useful to set out the grounds to appreciate the issue in this respect. It is asserted:
2.That the Trial Judge was in error in the exercise of her discretion in allowing an adjustment of 3.5% in favour of the Wife to reflect Section 75(2) factors, namely the Husband’s use of his … motor vehicle in Greece and the failure by the Husband to disclose a property in …, Greece until the commencement of the hearing in relation to which there was no adequate evidence as to value.
3.That the Trial Judge was in error in the exercise of her discretion in failing to order a sale of the Greek property and the division of the net proceeds in accordance with her contribution findings or in the alternative, the transfer of the said property from the Husband to the Wife to achieve a just and equitable result.
4.That the Trial Judge was in error on the evidence in failing to determine that the Greek property had been acquired by the Husband after the time of separation with monies provided from a partial property settlement and in these circumstances, failing to recognise the contribution by the Husband to the acquisition of this property.
5.That the Trial Judge was in error in law in extending the principle in Jones and Dunkell [sic] such that she drew an inference that because the Husband had failed to seek an adjournment at the commencement of the hearing to adduce evidence of the value of the Greek property, that evidence of value would not have corroborated the Husband’s assertion that the Greek property had no or little value.
Each of the parties owned property in Greece which was disclosed. They agreed those properties should not be brought into account in the balance sheet save for a consideration of the treatment of joint moneys being contributed to a property formerly owned by the husband’s parent and later inherited by the husband.
Her Honour noted from [28] that on the first day of the hearing, for the first time, it was revealed that the husband owned an apartment, one of a block of six, in a suburb in Greece. She further observed that the existence of the husband’s ownership of this apartment came about because searches conducted by the wife in Greece had revealed it.
Her Honour noted at [30] that the husband said that when his mother died in 2004, his brother inherited the property and, when his brother became ill in 2009, he was given a power of attorney from his brother to sell the property or to register it in his name, as a gift. When the husband’s brother died in 2010, the husband transferred the property to his name. The husband said that the consideration for the property was about $20,000 being $5,000 spent on expenses relating to the property, $10,000 paid for his bother’s funeral and $5,000 given to his brother’s children.
Her Honour said:
30. ... During cross examination Counsel for the wife showed the husband a document prepared in Greek 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 paid that much. The legal fees paid by the husband to effect the transfer into his name were €6,000.
The primary judge rejected the husband’s evidence that his failure to disclose the existence of the property was inadvertent and found:
32.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.
Her Honour then said:
33. 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. …
34. 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.
Her Honour then referred to the well-known authority of Weir & Weir (1993) FLC 92-338 which concerns the approach that may be taken by a court once a deliberate non-disclosure has been revealed.
It can be seen from the balance sheet that the judge did not attribute a value to the property rather took it into account in [49], which we set out below:
The husband has the use of the [motor] vehicle in Greece and the benefit, of unknown value, of the residential unit in Greece. 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.
It is apparent from [48] of the reasons that the judge made an adjustment of 3.5 per cent by reference to s 75(2) of the Act.
The BMW in Greece
In July 2007 the husband purchased a BMW car in Germany which he had shipped to Greece. He said that he purchased the car for €8,800. Her Honour said:
27.… 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.
It is not readily apparent how her Honour took the car into account apart from what is contained in [49] of her reasons, to which we have already referred.
The work vehicle licences
In Ground 6 it is said:
That the Trial Judge was in error in failing to place any weight upon the fact that the [work vehicle licence] to be retained by the Husband would incur Capital Gains Tax if ever sold as a consequence of her determination that the parties businesses should be “swapped,” whereas the [work vehicle licence] to be retained by the Wife would not incur Capital Gains Tax if sold, in her assessment
Two work vehicle licences were owned by the parties. Both licences had been acquired by the parties during the marriage, one was registered in joint names, the other in the husband’s sole name. Each licence had an agreed value of $400,000. The issue for determination in relation to the licences concerned the licence originally registered in the parties’ joint names. It would attract Capital Gains Tax if sold and the issue was whether the value ascribed to that work vehicle licence should reflect the tax payable on it if sold. Pursuant to the consent orders of October 2010, the husband had transferred the licence in the parties’ joint names to the wife.
The primary judge said:
25.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 [licence]. The [work vehicle licence] currently derives an income of approximately $500 per week.
26.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 [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.
Although there is no appeal from the following issues ventilated at trial, the findings of the trial judge are otherwise relevant to other grounds of the appeal.
The husband’s inheritance
When the husband’s mother died in 2004, she left to the husband a property in Greece and a half share of her assets in Australia, included in which was a house in Suburb G. Her Honour also noted at [37] that, it seems before the death of the husband’s mother, the property had been renovated at the parties’ expense using joint savings of about $53,000. Her Honour regarded this as being a contribution by the wife to the husband’s inheritance.
The property in Suburb G, when sold, resulted in the husband receiving $332,970.
Her Honour noted at [40] that the husband sought that the inheritance be “recognised on a dollar for dollar basis” which we assume means that the entire value of the inheritance be considered to be a contribution by the husband. She indicated that, excluding the motor vehicle and house in Greece, the inheritance represented six per cent of the total property of the parties.
Her Honour said:
43.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.
44. There will be an adjustment in the husband’s favour of 3%
Considering the adjustment in favour of the wife, by reason of s 75(2) factors was 3.5 per cent, the adjustment in favour of the husband of 3 per cent by way of contribution led to the overall division of 50.5 per cent in favour of the wife.
The Husband’s earning capacity
Her Honour noted at [45] that the parties were both aged 64 and that the husband retired in 2010 and had not since worked. She continued:
46. 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 [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.
There was no reference to the wife’s earning capacity, about which there was complaint in the appeal.
The appeal
The notice of appeal filed 11 October 2012 raised eight grounds of challenge to her Honour’s decision of which one, Ground 7, was abandoned. During the hearing, counsel for the husband abandoned Ground 7 which concerned her Honour’s orders dealing with the parties’ superannuation interests. A number of grounds address her Honour’s treatment of the husband’s failure to disclose the existence of a property in Greece. It is useful to consider those grounds as a group and to deal with them first, because it will assist the disposition of the other grounds.
The undisclosed property in Greece – Grounds 2 to 5
In summary Ground 2 challenges her Honour’s adjustment pursuant to s 75(2) in favour of the wife based on the husband’s ownership of the car and property in Greece, where, it is argued “there was no adequate evidence as to value”.
Ground 3 asserts error in that the primary judge did not order a sale of the Greek property and the net proceeds of the sale to be divided between the parties, alternately that the property be transferred to the wife.
Ground 4 contends that the primary judge erred in failing to recognise that the Greek property was acquired by the husband after separation using money from the partial property settlement, thus failing to recognise the contribution of the husband to that property.
Ground 5 asserts that her Honour erred in drawing an inference adverse to the husband resulting from his failure to seek an adjournment for the purpose of adducing evidence of the value of the Greek property.
We have already mentioned her Honour’s reference to the well-established authority of Weir and in particular at 79,593 where the court 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.
Further her Honour said after referring to Kannis & Kannis (2003) FLC 93-135 at [36]:
…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.
It was not suggested that her Honour’s reference to or reliance on those authorities was erroneous. The error asserted in the grounds of appeal is said to be in her Honour’s treatment of the property once its existence was revealed.
Further, and, in our view, potent to the thrust of these grounds, is that there is no challenge to her Honour’s finding that the husband’s failure to disclose the existence of the property in Greece was deliberate. It is against that background of her Honour’s unchallenged finding that we consider the appeal grounds relating to the Greek property
Grounds 2 and 3
Ground 2 asserts her Honour erred in making an adjustment of 3.5 per cent in the wife’s favour where there was no adequate evidence of value of the property in Greece or the motor vehicle.
The husband took a deliberate course in not revealing his ownership of the property and, it seems, was brought to conceding its existence when presented with the wife’s evidence on the morning of the hearing.
It was the husband’s property. He chose not to disclose that he owned it and produced no value of it nor did he seek an adjournment to produce a valuation.
In the circumstances, his oral evidence that the property had no or little value could hardly be persuasive of the issue.
The written submissions assert that her Honour erred when considering this issue and it was submitted that her Honour should have relied on the evidence of the costs of acquisition of the property (obtained through the wife’s searches) to the effect that the property cost €37,941 plus €6,000 transfer fees rather than having “simply pulled a figure out of the air”.
We regard this submission to be flawed in several respects. First, we observe that the husband disputed that he paid this amount to acquire the property, asserting that he had paid some lesser figure. However, in any event, evidence of acquisition costs does not equate to evidence of value. This is especially so when the acquisition was between family members and not with a third party purchaser.
Secondly, her Honour did not as was submitted, “pull a figure out of the air” to value the property. She ascribed no value to the property in Greece and, in the circumstances, the judge had no other option. In failing in his obligation of disclosure, the husband robbed the primary judge of any rational means by which she could ascribe a value to the property.
Ground 3 contends that her Honour erred in failing to order the sale of the Greek property and a division of the proceeds, or transfer to the wife.
It was submitted for the husband that her Honour was presented with two options during the hearing – to sell the property and divide the proceeds between the parties or transfer the property to the wife. In not doing either, it was argued that she failed to deal with that property in a way which was just and equitable.
Dealing with the second aspect of this submission, the transfer of the property to the wife; it seems that this was raised by counsel for the husband in an exchange with her Honour during his re-examination of the husband
Counsel for the husband said to her Honour:
MR HODGSON: So, I'm only seeking to assist your Honour in relation to if the husband says, “Well, look, yes, sell the property or transfer it to the wife” that that’s - that might be one means of overcoming this difficulty.
HER HONOUR: Well, the latter, the proposition that it be transferred to the wife, is a matter that you can discuss with Mr Richards---
…
HER HONOUR: --- it’s not something I would force upon her if she doesn’t want it.
(Transcript of 5 September 2012 page 69 line 1)
Nothing was heard from either the wife or her counsel on the issue of the transfer of the property in Greece to her.
In submissions, counsel for the husband submitted to the primary judge that she could deal with the issue of the Greek property by giving it to the wife to which her Honour said: “She doesn’t want it”. Counsel then went on to submit on the suggestion that the property be sold (Transcript 5 September 2012 page 84 line 32).
During the appeal it was argued by counsel for the husband that the primary judge was wrong in saying that the wife did not want the property. It was said that her Honour’s comment was unsupported by the evidence. We reject that argument. As the extract of transcript which we have set out makes clear, the issue of whether the property would be transferred to the wife was raised with her Honour in court and she deflected the consideration as a matter to be discussed between counsel. It was conceded by counsel for the husband that nothing was said by the wife or her counsel which would indicate that the wife wanted the property transferred to her. It was entirely open to her Honour in those circumstances to conclude that she did not want it. Any suggestion that her Honour could equally have concluded that the wife did want it is rejected. Further we observe that when her Honour said to counsel for the husband that the wife did not want the property, he made no submission to the contrary.
Turning then to the argument that to make orders that were just and equitable, her Honour should have made orders that the property be sold and the proceeds divided, it was conceded that there was no evidence before the court as to whether the property could be sold, the nature of the title or whether consents or other procedures were necessary to effect a sale.
Any order that provided for the wife to receive part of the proceeds of the sale of the Greek property may have resulted in her receiving nothing at all. Her Honour, correctly in our view, adjusted the known property of the parties in the wife’s favour to take into account the husband’s ownership of the Greek property.
During his submissions, counsel for the husband contended to her Honour that the authorities to which the court would have regard in dealing with non-disclosure of assets do not provide a warrant to punish the party who failed to disclose. Her Honour said:
HER HONOUR: No. I agree with you, absolutely. What those cases say, and please correct me if you say I’ve got this wrong, is that I have to take the asset pool as I know it to be.
MR HODGSON: Yes
HER HONOUR: But the consequences of the non-disclosure are found in the exercise of discretion about how I divide the known asset pool.
(Transcript of 5 September 2012 page 68 line 7)
In our view, her Honour did exactly as she indicated. It was entirely appropriate for her Honour to make an adjustment in the wife’s favour on known assets in circumstances where the value of both the car and the property were unknown and the husband was to retain both assets. No error has been demonstrated in her approach.
Ground 4
Ground 4 argues that her Honour failed to take into account that the husband received a partial property settlement and that the property in Greece was acquired after he received those funds and after the parties separated. Thus it was contended her Honour failed to take into account the husband’s contribution to that property when considering the adjustment to be made in the wife’s favour.
It seemed to be accepted that the husband had used some of the money he received through the part property settlement to buy his interest in the Greek property and there also seemed to be no contention that he purchased that interest after the parties separated.
It was submitted that had her Honour taken these two matters into account, she would not have made the adjustment of 3.5 per cent in the wife’s favour.
The contributions to the property and her Honour’s determination of an adjustment in the wife’s favour pursuant to s 75(2) need to be considered against the value of the property. Where there is no evidence of value of the property, it is impossible to understand the effect of the husband’s contributions towards it and thus take the contribution into account.
We find no error in her Honour’s approach. This ground has not been made out.
Ground 5
Ground 5 challenges the inference drawn by the primary judge adverse to the husband.
Her Honour said:
34. 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.
The submission of the husband on this ground is:
It is submitted that the Trial Judge in error (sic) in law by essentially extending the principle in Jones and Dunkell (sic). This principle applies in circumstances where a party fails to call a witness in their case, an inference can be drawn that the evidence of such witness would not have assisted that party.
It is unnecessary to deal extensively with the authority of Jones v Dunkel (1959) 101 CLR 298 and the cases that follow it, however, we set out what was said in Ho v Powell (2001) 51 NSWLR 572, by Hodgson JA, with whom Beazley JA agreed:
15. In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular mater, and the extent to which they have in fact done so. As stated by Lord Mansfield in Blatch v Archer: “…[A]ll evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.” See also Azzopardi v The Queen (2000) 75 ALJR 931 at 935 [10].
16. The case of Jones v Dunkel (1959) 101 CLR 298 is a particular application of this principle. That case itself related to a situation where there was evidence supporting an inference against a party, and that party did not give or call evidence, which that party was plainly in a position to have given or called, in order to explain or contradict the material presented. In my opinion, a similar principle applies where a person bearing the onus of proof does not call or give evidence which that person is plainly in a position to give or call; and unless some explanation is given of this failure, the tribunal of fact is entitled to infer that this evidence would not have assisted that person’s case. cf Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389.
Further in Kuhl v Zurich Financial Services (2011) 243 CLR 361 at 384 Heydon, Crennan and Bell JJ said at [63] and following:
63.The rule in Jones v Dunkel is that the unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party’s case. That is particularly so where it is the party which is the uncalled witness. The failure to call a witness may also permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn. These principles have been extended from instances where a witness has not been called at all to instances where a witness has been called but not questioned on particular topics. Where counsel for a party has refrained from asking a witness whom that party has called particular questions on an issue, the court will be less likely to draw inferences favourable to that party from other evidence in relation to that issue…..
64.The rule in Jones v Dunkel permits an inference, not that evidence not called by a party would have been adverse to the party, but that it would not have assisted the party…..
(Footnotes omitted)
Her Honour said to counsel for the wife:
HER HONOUR: Can I put this proposition to you, Mr Richards, and I will ask Mr Hodgson also to comment: does the fact that no adjournment was sought in order to put evidence of value of the Greek property before the court, allow me to draw a Jones v Dunkel inference?
---
HER HONOUR: In other words, that to bring a valuation before the court would not have assisted the husband’s case. I don’t know that I have ever heard Jones & Dunkel used in that context.
MR RICHARDS: Well, it certainly falls within the principles that are espoused. That other evidence is no different to a witness that might be called. We’re not urging your Honour to do that. We don’t think it’s necessary for that purpose. He is in control of his case and disclosure. Your Honour can simply deal with your findings in relation to credit and your findings in relation to the fact that there has been a failure and a failure on a number of occasions, that is, financial statement, undertaking as to disclosure, notice to produce. You will probably find it was only yesterday in any case. No mention in the affidavit material. There’s clearly a failure to disclose. But we don’t urge your Honour to utilise the principles in Jones & Dunkel for that purpose.
(Transcript 5 September 2012 page 79 line 20)
While her Honour did not specifically advert to the principles in Jones v Dunkel, she drew an inference about evidence going to the value of the Greek property. Whether in reliance on the principles in Jones v Dunkel or otherwise, we are of the view that the inference was not open to her Honour.
The inference drawn by her Honour from the husband’s failure to seek an adjournment of the hearing to obtain valuation evidence was not reasonably open to her Honour. It assumes that the reason the husband did not seek an opportunity to bring the evidence was because he knew what the value of the property was and, further, knew that it would not support his contention that the property had little or no value. In the circumstances of this case, it could not be safely inferred that the reason why no adjournment was sought was for the reason found by her Honour.
It was argued that her Honour’s misapplication of the Jones v Dunkel rule provided the basis for her rejection of the husband’s evidence about the value of the property. We do not agree.
It was open to her Honour to infer, as she clearly did, that in the circumstances of the case where the husband, on a number of occasions, had failed to disclose his ownership of the property and only disclosed it when the wife’s searches revealed it, that his evidence as to the value of the property was not worthy of acceptance. We further note that the husband, when shown the documents associated with his acquisition of the property denied that he had paid what was there shown. His failure to disclose enabled her Honour to more readily draw the inference that his assertion of value may not be reliable.
Thus, although her Honour erred in drawing an inference based on the husband’s failure to seek an adjournment to enable him to bring evidence of value, there was ample reason which otherwise supported her rejection of the husband’s evidence.
Her Honour’s finding was well open to her and she did not err in law.
Grounds 6 and 8 – s 75(2) factors
Ground 6 contends that her Honour failed to take into account the impact on the husband of taking a work vehicle licence on which Capital Gains Tax (CGT) would be payable on its sale.
It is worth recalling that the husband’s evidence about the work vehicle licence when asked whether it was his intention to sell the licences, was; “No, because I find it’s a good investment”. In addition, it was the husband who asked that the work vehicle licence be transferred to him.
In submissions, counsel for the husband raised with the primary judge the incidence of CGT on any sale of the work vehicle licence. As to any liability to pay that tax by the husband, counsel said; “…that may be just a very minor factor on the section 75(2)(o).” The submissions then moved on to another topic.
Given the husband’s evidence about not wishing to sell the work vehicle licence coupled with the submission of counsel for the husband, her Honour could well have understood the incidence of CGT arising to be remote. While her Honour could have taken into account the potential capital gains tax it was not an error to fail to do so, especially in the circumstances of how the case was presented.
No error has been established in this ground.
Ground 8 asserts that her Honour erred in failing to take into account when assessing any adjustment under s 75(2), the wife’s income.
It must be said that the articulation of this ground in oral argument was somewhat opaque.
First, it was asserted that the wife, herself, had failed to disclose income. It was uncontentious that from May 2012, the wife commenced to receive weekly payments referrable to H Business shares. This income amounted to about $500 each week. On 2 August 2012 she filed a financial document in the trial which did not include any reference to the H Business income. Thus it was submitted that her income was not $1644 as deposed, but was in the order of $2,100. It was however conceded by counsel for the husband that in 2013 the wife would cease to receive a weekly workers compensation payment of $410 which would reduce her income to approximately that which appeared on the financial document. It is important to note that while the financial document does not refer to the H Business income, the income is disclosed in the wife’s income tax returns produced by her in the hearing.
Counsel addressed her Honour on this “non-disclosure”. However the submissions fell short of indicating in what way the asserted non-disclosure by the wife should be taken into account by her Honour.
Given that counsel himself made no submission on the effect of the
non-disclosure or suggested any particular course to her Honour, it is little wonder that her Honour did not take the matter any further.It was further submitted that, in any event, the wife would in the future be in receipt of $400 more per week than the husband, a factor it was argued was not taken into account by her Honour in considering s 75(2).
Her Honour was not asked to make an adjustment in this regard. In his submissions to her Honour, counsel for the husband submitted that she should deal with the Greek property by ordering its sale and dividing the proceeds. (Transcript of 5 September 2012 page 86 line 16)
Then, passing to matters of contribution, it was submitted by the husband that, but for the inheritance, the contributions of the parties had been equal and it was submitted that; “an overall division of the assets and including the superannuation there, then it’s somewhere to the tune of about 52.5, 47.5 … that means that the husband is getting in round terms an extra – the difference between the parties is somewhere to the tune of about 250-$300,000” (Transcript 5 September 2012 page 88 line 37).
Her Honour asked about whether any adjustment ought be made in favour of the wife pursuant to s 75(2) and counsel for the husband contended that no adjustment was necessary, he said:
…The wife is in a position – and we’ve got to look at the fact that we’re dealing with over $5 million, which the parties are essentially coming out with $2.5 million each. It’s not as if there’s a significant disparity, that the 2.5 per cent in favour of the husband doesn’t create a significant disparity between them, in my submission. It’s not as if someone is left with a 70/30 situation on contributions and there’s a big disparity that one has to adjust. There’s a fitting minimal disparity.
(Transcript 5 September 2012 page 89 line 12)
Counsel for the husband argued on appeal that this position put to her Honour, was made on the assumption that her Honour would deal with the Greek property by ordering its sale and dividing the proceeds. We accept that this is the context of his submissions; however, it is important to observe that any disparity in weekly income between the parties was not mentioned in this context.
In any event, as was clear on the evidence before her Honour, each party would receive when the orders were implemented assets approximately $2.5 million in value. Each had reasonably comparable weekly earnings as revealed in their financial documents albeit that once the wife’s workers compensation payments ceased in 2013, she would receive approximately $400 more each week than the husband. Both the husband and wife had a weekly excess of income over expenditure. In context of this evidence, and in absence of any submission to the contrary, it was entirely reasonable for her Honour not to take the wife’s slightly larger weekly income into account when considering the s 75(2) matters.
No error has been made out in this ground of appeal.
Ground 1
Ground 1 argues that her Honour’s determination and the orders were “plainly unreasonable and manifestly unjust”.
Counsel for the wife argued, and we agree, that the adjustment in the wife’s favour to take into account the husband’s retention of the Greek property did not, nor could it, involve a precise calculation.
There was little contention that her Honour was entitled to address the husband’s failure to disclose in an adjustment in the wife’s favour pursuant to s 75(2). The issue was the dollar value of the adjustment. In effect, it was argued for the husband that 3.5 per cent was excessive and it fell outside the reasonable exercise of her Honour’s discretion.
Counsel for the husband contended that in coming to this adjustment, her Honour took into account the motor vehicle and the property in Greece and argued that these two items could not account for the magnitude of the adjustment in the wife’s favour which in monetary terms amounted to $187,000.
True it is that the value of the motor vehicle was unknown but her Honour considered that it was unlikely to have increased in value since being purchased for €8,800. However, her Honour had no evidence of value of the property in Greece and in those circumstances it is difficult to understand how it can be maintained that a 3.5 per cent adjustment amounted to an error in the exercise of her Honour’s discretion. Further, given that the husband contended for a division of the property as to 52.5 per cent in his favour, it is difficult to see how a 3 per cent difference to that contention would warrant appellate intervention.
Reference to the well-known passage in House v The King (1936) 55 CLR 499 demonstrates that this ground has not been established.
None of the grounds of appeal has been established and it follows that the appeal will fail.
Costs
As is usual, we sought submissions from the parties on the question of costs in the appeal to save them the time, trouble and expense of making costs submissions after the delivery of our reasons.
Counsel for the wife asked for costs should the appeal be dismissed. In our view the relevant matters, having regard to s 117(2A) of the Act are as follows:
·The husband has the financial capacity to meet an order for costs;
·The appeal has been wholly unsuccessful; and
·Many of the grounds of appeal arise from circumstances where the husband had failed to make proper financial disclosure.
We will order the husband to pay the wife’s costs of the appeal.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 17 July 2014.
Associate:
Date: 17 July 2014
5
1