Death-duty ruling may help others

Press, 5 July 1983, Page 1

Death-duty ruling may help others

Wellington reporter

Couples may escape death duties on property under the precedent of a Court of Appeal decision last month. The Commissioner of Inland Revenue lost the case he took on appeal from the High Court. In three separate judgments, the Bench confirmed a High Court finding that the commissioner did not act correctly in assessing $58,000 worth of property for estate duty. This represented about $16,000 in duty. The Bench comprised Mr Justice Cooke, Mr Justice Richardson, and Mr Justice McMullin.

They found that a transfer of two-fifths of a farm estate from Owen David Curin to his wife, Doreen Curin, was not a gift and therefore did not attract duty. The commissioner argued that the transfer was a gift. The Waikato couple, who were happily married, agreed to contract out of the Matrimonial Property Act, 1976. The act provides for the equal division of property between husband and wife in the event of marriage breakdown. It also

provides for parties to contract out of the act by setting up special legal agreements between themselves.

The commissioner, represented by Mr J. R. Fardell, argued that the transfer was a gift because money or money’s worth did not change hands. The Matrimonial Property Act was no defence because all and not just part of the estate would have had to have changed hands, the commissioner said.

However, the Bench said that because Mrs Curin would have had good prospects under the Matrimonial Property Act of getting an equal share of the farm in the event of marriage breakdown, her agreement to accept two-fifths (40 per cent) was money’s worth.

“If the Court had made an order under the act during the husband’s lifetime, fixing the wife’s interest in the farm at 40 per cent, it is hardly likely that any question of estate or gift duty would have arisen,” said Justice Cooke. The Matrimonial Property Act conferred valu-

able rights to the matrimonial property and these were enforceable, his Honour said. “There is no obvious reason why, if he predeceases her, his estate should have to pay duty on their value.”

The Bench acknowledged that the couple had in mind avoidance of $16,000 in estate duty. His Honour said the parties were married for 37 years, and the marriage was “long and happy.” The farm had been bought after 25 years of marriage. The wife had worked on the farm and looked after the house. The couple had had three children. ,

When Mr Curin knew that he was dying, he had wanted Mrs Curin to have a two-fifths share in the farm. There had been no matrimonial dispute. Mrs Curin had been advised that under the Matrimonial Property Act she would be entitled to 50 per cent, but she was satisfied with 40 per cent. The Court accepted, his Honour said, that the farm was the main asset of the marriage partnership.