Agar and Dunst

[2018] FamCA 782

FAMILY COURT OF AUSTRALIA

AGAR & DUNST [2018] FamCA 782

FAMILY LAW – PROPERTY – Superannuation – Consent Orders – Application to set aside superannuation orders made prior to the commencement of superannuation legislation – Impracticability – Order made splitting superannuation.

Family Law Act 1975 (Cth)

APPLICANT:  Ms Agar

RESPONDENT:  Mr Dunst

FILE NUMBER: HBC 256 of 2018

DATE DELIVERED: 10 July 2018

PLACE DELIVERED: Hobart

PLACE HEARD: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 10 July 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Saunders

SOLICITOR FOR THE APPLICANT: Fitzgerald & Browne

COUNSEL FOR THE RESPONDENT: Ms Grant

SOLICITOR FOR THE RESPONDENT: Butler McIntyre & Butler

Orders

1. The financial orders made 29 October 2001 be varied by way of deletion of orders 3(b) and 4(b) contained therein.

2. The orders be further varied to provide the court allocate, as required by s 90MT(4) of the Family Law Act 1975 (Cth) (‘the Act’) a base amount of $60,652 to the applicant out of the interest of the respondent in his fund with [F Super] (‘the fund’).

3. Pursuant to s 90MT(1)(a) of the Act whenever the trustee of the fund makes a splittable payment in respect of the respondent’s interest in the fund, the trustee will:-

   (a)pay to the applicant the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation 2001 (Cth); and

   (b)make a corresponding reduction in the entitlement that the respondent would have had in the fund but for this order.

4. The splitting order has effect from the operative time and the operative time is the expiration of four (4) working days from the service of a certified copy of this order on the trustee of the fund or within twenty eight (28) days from the date of this order, whichever is the earlier.

IT IS DIRECTED

1. A copy of the reasons for these orders be taken out and placed on the court file.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage Counsel to attend.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT HOBART

FILE NUMBER: HBC 256 of 2018

Ms Agar

Applicant

And

Mr Dunst

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. Ms Agar the (‘wife’) and Mr Dunst (‘the husband’) entered into consent orders on 29 October 2001. This arose after a joint application for consent orders was filed about six weeks earlier. The wife was at that time represented, and the husband was apparently not represented at that time. This is an application made by the wife, which is supported by the husband, to vary those orders pursuant to s 79A(1)(b) of the Family Law Act 1975 (Cth) (‘the Act’) on the basis that the superannuation orders cannot be put into place as it is now impracticable for them to apply. That latter application was filed on 28 March 2018.

2. It is helpful for me to set out a background.  The husband was born in 1958 and is now aged 60.  The wife was born in 1958 and is aged 59.  It appears that the parties commenced living together in 1979.  They married in 1981 and separated in the year 2000.  In 2001, the property orders to which I earlier referred were made, and in 2002 they were divorced.  It is clear that the parties have gone on their own separate ways since that time.  The husband is a manager and is working, and it appears intends to continue to work into the foreseeable future.  The wife is semi-retired.

3. The parties have provided a statement of agreed facts which are:-

   1.     The [wife] was born on … 1958 and is currently 59 years of age. The wife is currently in casual paid employment with the [B Group] and has recently set up a new business ... The wife is working part-time as she is semi-retired.

   2.     The [husband] was born on … 1958 and is currently 59 years of age. The husband is currently employed as the General Manager of[C Pty Ltd.

   3.     The parties commenced cohabitation in 1979 and were married on … 1981. They separated in 2000 and a divorce order was made in 2002.

   4.     Property Orders were made by consent by the Family Court of Australia on 29 October 2001 (“the 2001 Order”).

   5.     Paragraph 3(b) of the 2001 Order provides that the husband shall hold in Trust for the wife the sum of $30,512.00, it being agreed that that is her entitlement to his superannuation as at the date of the Order, held in the following funds; a) [D Super]; and b) [E Super] and that upon the husband’s retirement or upon him being able to legally access the same he shall pay that sum increased in line with the interest applicable to the whole fund from the date of this Order to payment.

   6.     Since the 2001 Order was made and before the husband’s retirement or him being able to legally access his superannuation, the husband rolled over his superannuation from [D Super] and [E Super] to [F Super].

   7.     Paragraph 4(b) of the 2001 Order provides that the wife shall hold in Trust for the husband the sum of $4,057.00, it being agreed that that is his entitlement to her superannuation as at the date of the Order, held in the [D Super] Superannuation Fund and that upon the wife’s retirement or upon her being able to legally access the same she shall pay that sum increased in line with the interest applicable to the whole fund from the date of this Order to payment.

   8.     Since the 2001 Order was made and before the wife being able to legally access her superannuation, [D Super] has ceased to exist. The wife rolled over her superannuation to [G SUPER].

   9.     The husband obtained a valuation from [a web calculator] based on calculations that adopts a Superrating/Mercer median balance investment return from 1 July 2001 up until 1 January 2018, less 1.5% for administration costs. The wife accepts this valuation. …

   10.    The effect of this calculation is that the husband’s superannuation of $30,512.00 at the time of the 2001 Order would be worth $66,774.00 as at 1 January 2018 and the wife’s superannuation of $4,057.00 would be worth $8,878.00 as at 1 January 2018.

   11.    Based on [Mr H’s] estimated 5% return for 1 July 2017 to 1 January 2018, the parties have agreed to adopt a 10% rate for the full 2017/2018 financial year for the purposes of these proceedings. On this basis, the husband’s superannuation of $30,512.00 at the time of the 2001 Order would be worth $69,953.00 as at 30 June 2018 and the wife’s superannuation of $4,057.00 at the time of the 2001 Order would be worth $9,301.00 as at 30 June 2018.

   12.    The consequence of the agreed figures in paragraph 11 above means that the wife’s entitlement to the husband’s superannuation as at 30 June 2018 is calculated to be $60,652.00.

   13.    Whilst the husband is still working, he cannot access his superannuation until he is 65 years of age. The husband does not have any intention to retire in the near future. The wife seeks to secure her entitlement to the husband’s superannuation.

   14.    The husband has filed a Financial Statement. He does not own any real estate in his name. The wife is therefore unable to secure her entitlement by way of a mortgage.

   15.    The husband does not have sufficient savings or any other assets he can call on to make an adjusted cash payment to the wife in substitution for her entitlement to his superannuation.

   16. Taking into account the above considerations, pursuant to section 79A(1)(b) of the Family Law Act 1975 (“the Act”) it is submitted that in the circumstances that have arisen since the 2001 Order was made, it is impracticable for paragraphs 3.(b) and 4.(b) of the 2001 Order to be carried out.

   17.    [F Super] have been afforded procedural fairness. …

   18.    [F Super] responded by letter dated 3 May 2018 to confirm that they have no objection to the orders sought by the Applicant. …

   19. The Wife (with the consent of the Husband) asks that this Honourable Court set aside paragraphs 3(b) and 4(b) of the 2001 Order and make a superannuation splitting order in favour of the Wife pursuant to section 79 of the Act, in substitution for the paragraphs so set aside.

   20.    The Wife, with the Husband’s consent, seeks that a base amount of $60,652.00 be split from the Husband’s superannuation interest with [F Super] to the Wife.

4. The statement of agreed facts is agreed evidence, as is a report prepared by Mr H in relation to the superannuation. The problem in this case arises because the orders that were made in 2001 were made shortly before the amendments to the Act which enabled the splitting of a superannuation fund.

5. The orders were made in the light of the funds remaining in their current circumstances and growing in accordance with the wishes of the parties until such time as they retired.  A number of things have occurred since that time which the parties assert to me make it impracticable for those orders to be put into effect as the parties had intended in 2001.  First, the two funds which the parties referred to in the 2001 orders have been transferred or rolled into other funds, and the company, which was the trustee of the fund, is either no longer in existence or no longer trading in that area. 

6. Second, the orders require the parties to take action in respect of those particular funds and not the funds in to which they have been rolled.  Third, there are no funds available to the husband, given his current financial circumstances, by which he can apply the funds which would otherwise be payable to the wife, to her.  It is argued by counsel for each of the parties that this has the effect of making the application of the orders impracticable.  There is evidence before me that the trustees of the current funds have been given notice of the application to set the orders aside and of the orders which the parties seek, and I am therefore satisfied that procedural fairness has been applied to the trustees. 

7. The provisions of the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) do not act retrospectively and, as such, cannot apply to settlements which were finalised prior to 28 December 2002, upon which date the superannuation splitting legislation came into force. Section 5 relevantly provides:-

   (1)Subject to this section, the superannuation amendments apply to all marriages, including those that were dissolved before the startup time.

   (2)Subject to subsections (3) and (4) of the superannuation amendments, do not apply to marriages if a section 79 order or a section 87 agreement is in force in relation to the marriage as at the startup time.

8. [which is December 2002]; and

   (3)If a section 79 order that is in force at the startup time is later set aside under paragraph 79A(1)(a), (b), (c), (d) or (e) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the order is set aside.

   …

9. The legislative intent was to allow parties to have superannuation splitting if there was a change in circumstances sufficient to set the orders aside under s 79A(1)(a) to (e) of the Act, but not allow parties to set aside orders that were made prior to the start-up date by consent, presumably to protect the courts and the community against a rush of applications to set aside old superannuation orders simply by consent. Accordingly, whilst the application is by consent, the reasons are pursuant to s 79A(1)(a)(b) and not simply a consent application under Part 10.4, Rule 10.15(1)(b) of the Family Law Rules 2004 (Cth).

10. Kay J in La Rocca & La Rocca (1991) FLC 92-222 set out the definition of impracticability, and this was approved by the Full Court in Cawthorn & Cawthorn (1998) FLC 92-805, comprising of Ellis, Lindenmayer and Joske JJ. Given the agreed facts of the parties in this matter, I am satisfied that it is impracticable for the order made in 2001 to operate insofar as it apply to superannuation. The parties have gone to enormous trouble and expense to obtain a report from a consulting actuary as to what the impact of those orders would be given the state of the funds between 2001 and 2018. That is in evidence before me.

11. The orders that the parties seek gives effect to that evidence.  Accordingly, I make the following orders.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 10 July 2018.

Associate:     

Date:              26 September 2018