Ainscrow & Gilborne

Case [2021] FCCA 1182

FEDERAL CIRCUIT COURT OF AUSTRALIA

Ainscrow & Gilborne [2021] FCCA 1182

File number(s): SYC 8441 of 2017
Judgment of: JUDGE MONAHAN
Date of judgment: 28 May 2021
Catchwords: FAMILY LAW – property – costs – final orders – superannuation splitting – dispute over property owned by self-managed superannuation fund – delay in payment of transferable benefits – enforcement application – delay in payment not justified  – whether payment in December 2020 represents compliance – issue of interest accrued during operative period – Respondent to pay shortfall – costs order in Applicant’s favour – party/party costs
Legislation:

Family Law Act 1975 (Cth), Part VIIIB, ss 79, 90XD, 121, 117(1), 117(2), 117(2A)

Federal Circuit Court Rules 2001, r. 21.01, 21.02

Superannuation Industry (Supervision) Regulations 1994, Part 7A
Cases cited:

Arman & Arman [2009] FamCA 8

Bulow & Bulow [2019] FamCAFC 3

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248

Fennessy & Gregorian [2009] FamCAFC 44; (2009) FLC 93-399

Kohan & Kohan (1993) FLC 92-340; (1992) 16 Fam LR 245

Yunghanns & Yunghanns (2000) FLC 93-029; (2000) 26 Fam LR 331

Number of paragraphs: 82
Date of hearing: 22 April 2021
Place: Sydney
Solicitor for the First Applicant: Millie Whyte Solicitor
Solicitor for the First Respondent: Self-represented

ORDERS

SYC 8441 of 2017
BETWEEN:

MS AINSCROW
Applicant
AND:

MR GILBORNE
Respondent

ORDER MADE BY:

JUDGE MONAHAN

DATE OF ORDER:

28 May 2021

THE COURT ORDERS THAT:

1.Within 42 days the Respondent is to pay the Applicant:

(a)the amount of $16,935, to be paid to the Trustee of Super Fund B on behalf of the Applicant; and

(b)the amount of $7,539, to be paid to the Applicant in such method of payment as is directed in writing by the Applicant.

2.For the purposes of paragraph 1 herein, if the payments are not made by the required date, interest will accrue on the sum at the rate set by Rule 22.01 of the Federal Circuit Court Rules 2001 (Cth) from the due date until such time as the amount is paid in full.

3.All extant costs applications be otherwise dismissed.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment under the pseudonym Ainscrow & Gilborne is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

INTRODUCTION

  1. MS AINSCROW (“the Applicant”) seeks orders against the Respondent, MR GILBORNE (“the Respondent”) that he cause the amount of $16,935.02 to be paid to the Trustee of Super Fund B on behalf of the Applicant.

  2. The Applicant argues that the payment by the Respondent is needed to comply with the final property orders made on 4 October 2019.

  3. The Applicant also seeks an order that the Respondent pay her costs of these enforcement proceedings.

  4. The Respondent opposes the orders sought by the Applicant and seeks the dismissal of…

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AGLC
Ainscrow & Gilborne [2021] FCCA 1182
Case
[2021] FCCA 1182
Decision Date

CaseChat Overview and Summary

In the matter of *Ainscrow & Gilborne*, heard in the Federal Circuit Court of Australia, Ms Ainscrow (the Applicant) sought orders against Mr Gilborne (the Respondent) concerning compliance with previous financial orders, specifically relating to a superannuation splitting order. A dispute had arisen regarding the Respondent's contention that a superannuation splitting order should only take effect upon the delivery of certain artworks, which he claimed were property of the superannuation fund, while the Applicant argued the final orders were silent on this matter.

The court was required to determine two primary issues: first, whether a payment of $265,000 made by the Respondent constituted full compliance with the relevant final orders, or if a further sum of $16,935.02, as claimed by the Applicant, was still payable; and second, assuming the Applicant succeeded on the first issue, whether the Respondent should be ordered to pay the Applicant's costs of the enforcement proceedings. The court also noted its power to make superannuation splitting orders under Part VIIIB of the *Family Law Act 1975* (Cth), which operates in conjunction with Part 7A of the *Superannuation Industry (Supervision) Regulations 1994* (Cth) to effect the separation of superannuation interests.

Monahan J found that the Respondent's payment of $265,000 did not represent full compliance with the final orders. The court determined that a further sum of $16,935 was payable to the Trustee of Super Fund B on behalf of the Applicant, and an additional amount of $7,539 was payable directly to the Applicant. The Respondent was ordered to make these payments within 42 days, with interest to accrue on any outstanding amounts thereafter at the rate prescribed by Rule 22.01 of the *Federal Circuit Court Rules 2001* (Cth). All extant costs applications were dismissed.

Orders

Orders of the court

SYC 8441 of 2017

BETWEEN:

MS AINSCROW

Applicant

AND:

MR GILBORNE

Respondent

ORDER MADE BY:

JUDGE MONAHAN

DATE OF ORDER:

28 May 2021

THE COURT ORDERS THAT:

1. Within 42 days the Respondent is to pay the Applicant:

(a) the amount of $16,935, to be paid to the Trustee of Super Fund B on behalf of the Applicant; and

(b) the amount of $7,539, to be paid to the Applicant in such method of payment as is directed in writing by the Applicant.

2. For the purposes of paragraph 1 herein, if the payments are not made by the required date, interest will accrue on the sum at the rate set by Rule 22.01 of the Federal Circuit Court Rules 2001 (Cth) from the due date until such time as the amount is paid in full.

3. All extant costs applications be otherwise dismissed.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

Any statutory references I make in these reasons will be to the Family Law Act 1975 (Cth) (“the Act”), the Superannuation Industry (Supervision) Regulations 1994 (Cth) (“the SIS Regulations”) and to the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”).BACKGROUND The Applicant was born in 1955 and is currently 66 years of age. The Respondent was born in 1953 and is currently 67 years of age. The parties commenced cohabitation in approximately 1987 and separated while living under one roof in October or December 2011. The parties did not marry. There are three adult children of the relationship, namely Ms F born in 1988 and currently 33 years of age, Ms G born in 1991 and currently 30 years of age and Ms H born in 1994 and currently 27 years of age. On 19 December 2017, the Respondent commenced property proceedings against the Applicant. While those property proceedings were ‘out of time’, the Applicant consented to jurisdiction and the parties ultimately were able to settle their dispute with final orders made by me on 4 October 2019. A dispute subsequently arose in relation to compliance with the superannuation splitting order in the Applicant’s favour in relation to the Respondent’s entitlement in the Gilborne Self-Managed Superannuation Fund (“Gilborne Superannuation Fund”). The Respondent contended that the splitting order should only take effect upon the delivery of a number of artworks in the Applicant’s possession to the Respondent, the artworks being property of the Gilborne Superannuation Fund, whilst the Applicant contended that the final orders were silent on the issue of the artworks. On 11 February 2020, the Applicant, through her solicitor, advised the Respondent that interest was now payable owing to delay in payment of the transferable benefits from the Gilborne Superannuation Fund, however the Respondent maintained that payment would not be made until the artworks were delivered. On 25 February 2020, the Applicant ceased as a director for the Trustee Company, with her share in the company being transferred to the Respondent, and made the artworks available to the Respondent on 19 March 2020. On 25 March 2020, the Respondent collected the artworks and shortly thereafter the Applicant contacted the Respondent requesting that payment now be made, to which the Respondent instead proposed an in specie distribution of shares, as opposed to the transfer of the specified $265,000 (owing to the poor economic climate following the COVID-19 pandemic), by way of letter from his solicitor on 30 March 2020. Around this time, the Respondent requested that his solicitor cease to act for him and became self-represented. The Applicant’s solicitor sent a letter to the Respondent on 11 May 2020 requesting payment, and followed up on 27 May 2020 to request a response. On 1 June 2020, the Respondent advised by way of phone call that his position was as previously stated by his solicitor. On 15 July 2020, the Applicant requested to be re-appointed as director of Trustee Company, to which the Respondent replied reiterating that his position had not changed.

Evidence

Evidence Before The Court

The issues to determine in this decision are:·whether the payment of $265,000 made on 31 December 2020 represents compliance with the relevant final orders or whether the further sum of $16,935.02, as sought by the Applicant, is payable by the Respondent; and·(assuming the Applicant succeeds in relation to the first issue) whether the Respondent should pay the Applicants costs of the enforcement proceedings. EVIDENCE The Court was asked to read the following documents:Applicant The Applicant provided a case outline as directed indicating that she relied on the following documents:·Consent Orders made in Chambers on 4 October 2019;·Application in a Case filed 21 August 2020;·Affidavit of Millie Whyte (Applicant’s solicitor) filed 21 August 2020 and annexures;·Affidavit of Ms Ainscrow filed 21 August 2020 and annexures;·‘Super Fund Look up’ for Gilborne Super Fund showing compliance; and·Company Extract for Gilborne Pty Ltd showing Respondent as sole director and shareholder.Respondent Although the Respondent did not provide the required case outline document, it was clear to the Court that he relied upon the following documents:·Response to Application in a case filed 15 October 2020; and·Affidavit of Mr Gilborne filed 15 October 2020.LAW AND DISCUSSION The Court will firstly consider the issue of whether the payment of $265,000 made on 31 December 2020 represents compliance with the relevant final orders or whether a further sum of t final orders or whether the further sum of $16,935.02, as sought by the Applicant, is payable by the Respondent. The Court will then secondly consider whether a costs order should be made in these proceedings in the Applicant’s favour and against the Respondent. I also note at this point of my reasons that the Court provided the Respondent with copies of:·Part 7A of the SIS Regulations;·Section 117 of the Act; and·Schedule 1 to the FCC Rules. The superannuation splitting order and applicable interestOverview The power exercisable by the Court in accordance with Part VIIIB of the Act 1975 is a power to split superannuation payments as and when a payment is made by the relevant trustee.[1] A Court exercising jurisdiction under the Act does not have the power under section 79 to make Orders that have the effect of splitting an underlying superannuation interest. That is left to Part 7A of the SIS Regulations. This was confirmed by the Full Court in Bulow & Bulow [2019] FamCAFC 3 (“Bulow”) at [19]:19. The FLA provides, relevantly, for splitting orders to be made with respect to when splittable payments become payable – that is, when the member spouse satisfies a condition of release. The FLA does not provide for the underlying superannuation interests themselves to be split. That work is left, in the more usual course, to Part 7A of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (“SIS Regulations”). The SIS Regulations allow the creation of a new superannuation interest in the name of the non-member spouse such that their interest is separated from the interest of the member spouse within the fund. Finality in the financial relationship of the parties, as required by s 81 of the FLA, occurs through a combination of both the FLA and the SIS Regulations.[1] See also the definition of “splittable payments” in section 90XD of the Family Law Act 1975.

Decision

Reasons for decision

In the event that the above payments are not made by the due date, interest will thereafter accrue in accordance with the Act and FCC Rules. CONCLUSION The Court’s findings have now be stated. The Court has found that the Respondent should pay the following:·the amount of $16,935 to be paid to the Trustee of Super Fund B on behalf of the Applicant; and ·the amount of $7,539 to be paid to the Applicant in such method of payment as is directed in writing by the Applicant. The Court has allowed the Respondent the period of 42 days in which to make the necessary payments. If the payments are not made by the required date, interest will thereafter be payable pursuant to the Act at the rate set by the FCC Rules. There will be Orders of the Court to reflect this decision.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.