BAR and JMR

[2005] FamCA 1097

[2005] FamCA 1097

FAMILY LAW ACT 1975

IN THE FULL COURT       
OF THE FAMILY COURT OF AUSTRALIA                   Appeal No SA36 of 2005
AT MELBOURNE  File No DGF36 of 2005

BETWEEN:

BAR
Appellant Husband
- and -

JMR
Respondent Wife

REASONS FOR JUDGMENT

CORAM:  KAY, HOLDEN & BOLAND JJ
DATE OF HEARING:                 6 October 2005
DATE OF JUDGMENT:             17 November 2005

APPEARANCES:  Mr Ackman, one of Her Majesty’s Counsel, with Mr Davis of Counsel, instructed by Maria Barbayannis & Co, Solicitors, DX 16804, Clayton, appeared on behalf of the Appellant Husband.

Mr Sweeney of Counsel, instructed by Richard Calley, Barristers & Solicitors, DX 19919, Frankston, appeared on behalf of the Respondent Wife.

BAR & JMR
SA36 of 2005
CORAM:                   Kay, Holden & Boland JJ
DATE OF HEARING:         6 October 2005
DATE OF JUDGMENT:     17 November 2005

Catchwords:           APPEAL – PROPERTY – Discretion - splitting superannuation - parties separated in 1997 after 13 years of cohabitation - in 1999 consent interim property orders made giving wife 60 percent of the assets (worth $113,000 excluding superannuation) but then allowing the wife to retain the husband’s interest in the parties home as an advance against her share of the superannuation– the matter was relisted after the superannuation amendments became law - in 2005 the trial Judge allowed the wife a further 35 percent of the husband's superannuation even though the parties had been separated for 8 years - the husband sought the share be reduced to 20 per cent and such 20 per cent to be further reduced by the sum of $100,000 plus interest to account for the wife having had the use of the matrimonial home - net result was the wife received assets of $280,000 and the husband $450,000 much of which was acquired post separation - held that whilst the outcome was generous for the wife there was no appealable error – appeal dismissed – husband ordered to pay the wife’s costs.

1. This is the husband's appeal against orders made by the Honourable Justice Young on 19 May 2005 requiring that 35 per cent of the husband's entitlements either by way of pension or lump sum, in a defined benefits superannuation scheme, be paid to his former wife on satisfaction of a condition of release.

2. By his amended Notice of Appeal the husband seeks that that sum be reduced to 20 per cent of his superannuation entitlements due under the scheme, such 20 per cent to be further reduced by the sum of $100,000 plus interest.

Background

1. At the time of the trial the husband was 51 years of age and the wife 44 years of age.  They had commenced cohabitation in August 1984, married in December 1985 and separated in May 1997.  The marriage was dissolved in June 1999. 

1. The parties have two children, L born in January 1987 and J born in July 1991.

1. In September 1999 Smithers J made consent orders that provided as follows:

“1.That on or before 14 December 1999 the husband pay or cause to be paid to the wife the lump sum of $10,000.00 (‘the payment’) for maintenance for the wife pursuant to Section 77A of the Family Law Act and representing capitalised spousal maintenance for the next 3 years.

2.Upon the payment the order for periodic spousal maintenance made by this Court on 9 July 1998 be and is hereby discharged.

3.By way of interim property distributions:-

(a)The husband and the wife do all such acts and things and sign all such documents as may be required to transfer to the wife, at the expense of the wife, all of his right, title and interest in the real property…currently valued at $195,000.00 and subject to a mortgage of approximately $82,000.00.

(b)The wife indemnify the husband against all payments and liability pursuant to the mortgage registered to the Commonwealth Bank of Australia (‘the mortgage’) and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.

4.The question of the wife’s entitlement to a further alteration of the property interests of herself and the husband pursuant to Section 79 of the Family Law Act be adjourned pursuant to Section 79(5) of the Act until the vesting of the husband’s entitlement under the Emergency Services Superannuation Fund (‘the Scheme’) or until further order. (my emphasis).

5.Until the determination of the wife’s entitlement under paragraph 4 hereof or further order of this Court the husband be and is hereby restrained from receiving, charging, alienating, encumbering or in any way dealing with his entitlements as a beneficiary of the Scheme.

6.The husband:-

(a)Sign an irrevocable authority prepared by the wife’s solicitors directed to the Trustees of the Scheme and/or its successors in title from time to time irrevocably authorising, directing and empowering the Trustees as follows:-

(i)To forthwith notify the wife of any events which would cause the entitlement or benefit of the husband to vest, including his resignation, retirement or retrenchment;

(ii)Not to distribute the proceeds of his entitlement under the Scheme other than in accordance with these orders until 28 days written notice of same has been given to the wife and her solicitors, R. Calley, Level 3, 454 Nepean Highway, Frankston.

(b)To authorise his employer to notify the wife and her said solicitor of any decision to terminate the husband’s employment or of any election or notice of the husband to terminate his employment.

(c)To authorise, nominate and maintain the wife as a beneficiary under the Scheme pending formalisation of the wife’s entitlement pursuant to this order.

(d)To use his best endeavours to provide documents (or copies of same) to the wife and her solicitors confirming the above irrevocable authorities have been served upon and acknowledged by his present and any future employer and the Trustee of the Scheme.

(e)To sign any other documents or do any other things as may be necessary to give effect to these orders.

7.That the husband his servants and agent further be and are hereby restrained from:-

(a)Receiving the proceeds of his entitlements under the Scheme other than by lump sum; and

(b)Undertaking any course of action and/or doing any act or thing that may deprive the wife of any future entitlements to receive payment under the Scheme.

8.A sealed copy of these orders shall forthwith be served upon the Trustees of the Scheme.

9.That the wife forthwith do all necessary acts and things and sign all necessary documents to transfer to the husband at the expense of the husband all her right title and interest in:-

(a)The 1984 Nissan motor vehicle in her name.

(b)The caravan, fittings and accessories presently in her possession shall be forthwith sold and the proceeds applied in reduction of the debt in his name (currently standing at about $7,000.00).

10.That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:

(a)each party be solely to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the real property being deemed to be in the possession of the wife);

(b)insurance policies remain the sole property of the owner named thereon;

(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

11.The application of the wife for spousal maintenance be otherwise dismissed.

CERTIFICATION

12.That pursuant to Order 38 Rule 13(1)(a)(i) of the Family Law Rules this matter reasonably required the attendance of Counsel.

IT IS DIRECTED

13.That all property/maintenance issues be removed from the Pending Cases List until the vesting of the husband’s superannuation entitlements or further order.

14.      That the Minutes of Consent remain on the Court file.

15.That the Solicitor for the wife file 3 clean copies of these Orders within 7 days.

THE COURT NOTES

(a)      Subject to paragraph 4 hereof these orders shall as far as practicable finally determine the financial (and other) relationships between them and avoid further proceedings between them.

(b)      An amount of $3,500.00 remains due and payable to the wife for costs ordered to be paid by the husband by this Court on 9 July 1998.

The Court notes further

The parties agree the value of the Nissan motor vehicle referred to in paragraph 9 hereof is $1,000.00 and the caravan $2,500.00 and the wife’s vehicle is of similar worth to the vehicle of the husband.”

1. In his reasons for judgment Young J the trial Judge said:

“47.The orders themselves are silent as to any percentage division of the then property assets as between the husband and wife.  By the interim property distribution the then matrimonial home…was transferred to the wife subject to its then mortgage liability of $82,000.00.  There was agreement between counsel that the interim property settlement was concluded on the basis that the wife then received 60% and the husband 40% of all net assets aside from superannuation.  This division was not recorded in the minutes pronounced 14 September 1999 but was not an issue in dispute before me in this hearing.

48.In the husband’s trial affidavit he deposes to the fact that, to enable the wife to retain the home, his agreed 40% share of its value was retained by the wife but subject to the offset against any share of his superannuation entitlements that she might be subsequently awarded.  The husband’s evidence was that the equity in the home was $113,000.00 and that 40% then foregone by him was valued at $44,800.00.  The husband says that the wife and her lawyers have at all times acknowledged his somewhat generous financial action in permitting the wife to retain that sum and thereby retain the…home.

49.I am and remain perplexed that such a significant financial circumstance was not recorded in the consent orders before Smithers J. or otherwise as an additional notation in that order.

50.The wife, in her evidence and when acting for herself, and subsequently her counsel have not actively challenged the husband’s contention that this sum should properly be taken into account in determining a current and overall just and equitable property order.

51.I accept the evidence of the husband and I will make an appropriate financial adjustment in my orders.”

1. The trial Judge noted that the children were aged 4 and 10 when the parties separated, and that after separation they remained in their mother’s care.  At the time of the trial L, then aged 18 was a student at Melbourne University, living away from home during the week.  She spent most weekends at her mother’s home.  She was in receipt of some financial assistance from each of her parents.  

1. At the time of the trial J was 13 years of age, spending four nights each fortnight with his father and the balance of time with his mother.  The father was paying $897 per calendar month child support and sharing the child’s secondary school expenses with the mother.

1. In March 2000 the husband married his present wife, Ms W.

1. At the date that the consent orders were made by Smithers J the former matrimonial home had an agreed value of $195,000 and was subject to a mortgage of $82,000.  The equity in the home was $113,000 and the wife received the entirety of the equity, notwithstanding the parties had agreed that the husband was to be notionally credited with a 40 per cent share of the property.

1. The wife sold the home, receiving the proceeds of sale in April 2002.  Its value had by then increased to $293,000 but the entirety of this increase of value was not reflected in the net amount available to the wife as the trial Judge found she had increased the mortgage on the property by $25,000 largely for the payment of legal expenses and for the installation of some ducted air conditioning.  She had invested the balance of proceeds in her present home in which, at the time of the trial before Young J, she had an equity of $130,000.

1. In December 1998 the husband and Ms W purchased a home in the Mornington Peninsula financed by a deposit paid by Ms W of $30,000 and joint borrowings of $104,000.  Young J found that the husband’s equity in that home as at the date of the hearing was $89,000.  There was evidence of the husband and Ms W having been involved in other real estate dealings but there were no findings made by the trial Judge that those dealings presently reflected any equity that the husband had in other real estate or in any proceeds of sale thereof.

1. The husband was a senior public official, having been a member of the public service since 1974.  He was earning approximately $90,000 per annum.  His present wife Ms W was also a public official earning $67,600 per annum.  She had a responsibility to contribute to the support of her two children.

1. The wife was working one day per week as a bookkeeper as well as teaching on a sessional basis.  Her income from all sources was slightly under $30,000 per annum plus child support. 

1. His Honour observed:

“135.The wife does not have the secure income and employment of the husband.  She does not have the financial benefit of a partner’s income.  Her standard of living as a s.75(2(g) factor has declined.

136.I have evaluated the wife’s income, employment and financial circumstances in the context of s.75(2) (a), (b), (k) and (o) of the Act.  I find that the duration of the marriage and the role adopted by each of the husband and wife therein has affected the wife’s earning capacity.  Predominantly her primary role was the upbringing of the children and whilst she has now acquired some business and tertiary experience and qualifications her income will never ’be in the same ball park’ as the husband.  Aside from contributions I have carefully assessed the age, income and financial resources of the parties and their physical capacity and available employment options in accordance with the evidence available to each of them for their continuing gainful employment.”

1. At the time of the trial the husband had an accrued entitlement to nine months long service leave in the sum of approximately $64,000 gross.  Young J indicated that the husband’s entitlement was to accrue three months long service leave for each 10 years of service.  He indicated that he would have regard to the fact that the husband was a serving member of the public service for approximately 10 years prior to cohabitation and that eight years had elapsed since the parties had separated.  He further concluded that when the husband retired he would take the long service leave in:

“the most appropriate and beneficial financial manner.  It was not likely to be taken, given the husband’s employment record, as ‘mere holiday leave’.” (para 149)

1. His Honour concluded that the likelihood was that the husband would remain a senior public official, retiring somewhere between the age of 55 and 60. 

1. At the time of hearing before Young J the husband had entitlements under two superannuation schemes.  When he had commenced his employment in 1974 he commenced making contributions to the State Superannuation Fund.  He transferred to the Emergency Services Superannuation Scheme (ESSS) in July 1987 and made contributions to that scheme until 1998. 

1. In 2002 the husband began to contribute to the Emergency Services Superannuation Plan (ESS).  This fund was described by the trial Judge as an accumulation interest superannuation fund where there are no employer contributions.  As at the date of the trial the husband’s entitlement to that fund was valued at $34,584.  His Honour said of the fund:

“178. A comparison of his superannuation entitlements in this plan, as identified in his two most recent Financial Statements filed with the Court show that, as at 21 July 2004 his interest was $16,500.00 and, in the eight months to 8 March 2005 it had more than doubled to its current entitlement value of $34,584.00.  That is a significant increase and it will provide a substantial future lump sum for the husband on his retirement.  This is a very relevant s.75(2)(b) and (f) factor to which I have had proper regard.”

The matter in issue

1. Ultimately the issue that Young J was called upon to determine was the extent, if any, to which it would be appropriate to alter the husband’s superannuation entitlements in favour of the wife.

1. In the course of his reasons for judgment his Honour made certain findings and observations relating to the valuation of the husband’s superannuation and the artificial nature of such an exercise having regard to his Honour’s obligations to act in a just and equitable manner as between the parties.  Those findings and observations were not the subject of any challenge in the appeal before us.

1. His Honour concluded because of the artificial nature of the exercise being conducted, and the possible rapid growth in the husband’s superannuation entitlements under the ESSS plan that:

“229    …the wife should be entitled, as a matter of justice and equity to share in any sustained growth in value of her allocated base amount or percentage split relevant to any splittable payment in her favour in this fund.”

1. His Honour described a number of uncertainties relating to the taxation treatment of the fund that were common ground between counsel for the parties and concluded that the justice of the situation demanded that the wife receive a splittable payment in “the payment phase” and not in “the growth phase”.  The wife had urged the trial Judge:

"244. …It is imperative in this case that the Court does not make an order for an allocated amount to be paid to the wife and that any order not be operative until the vesting of the superannuation in the husband.  It is important that the order be made in the payment phase.”

and his Honour said:

“245. I agree and conclude that for any order for a splittable payment to be just and equitable it must be paid on retirement, that is in the payment phase.”

1. The correctness of this approach by the trial Judge was not the subject of any challenge in the grounds of appeal argued before us.

1. After dealing extensively with matters concerning the nature of the superannuation entitlements and the manner in which it would be appropriate to order that the wife share in them, the trial Judge returned to ascertaining the pool of assets, determining the appropriate allowances for contribution and adjustments to be made to s 75(2) factors before pronouncing the outcome that he saw as just and equitable:

“CURRENT ASSETS AND LIABILITIES OF HUSBAND AND WIFE

291.I have previously evaluated the evidence as to the parties [sic] respective assets and liabilities and in summary they are as follows:

Wife

§  a net equity in her…home of
§  subject to the sum of $44,800.00 ‘left in’   $130,000.00;

§  superannuation, subject to compliance,  $5,408.00

§  liability to Australian Taxation Office  ($2,212.00)
§  the wife therefore has net property to a value of                $133,196.00

Husband

§  equity in [Mornington Peninsula property]  $89,000.00
§  equity in [2^nd Mornington Peninsula property]  $Nil

§  long service leave (current but subject to  $64,000.00
     specific findings in this judgment)
§  superannuation, as valued  $403,810.00

(but subject to specific findings in this judgment)

§  second superannuation, ESS Plan (post separation)           $34,500.00
§  profit on sale of [WS] unit subject to its
     expenditure as identified in the judgment  $35,000.00
§  $44,800.00 as interim property settlement  $44,800.00

$671,110.00

I will exclude the [WS unit] equity for reasons given in this Judgment and thus his balance of net property and financial resources is $636,110.00.

For the purposes of my identification of the asset pool, and having regard to the most recent Financial Statements of each of the parties I have excluded personal chattels, motor vehicles, personal credit card debts and legal fees (with each of them said to owe $20,000.00, albeit with the husband’s counsel appearing pro bono in the proceedings).

ASSESSMENT OF CONTRIBUTION

292.I have considered and assessed and made findings as to the various contributions, financial and non-financial, direct and indirect of the parties to the acquisition, conservation and improvement of their property and particularly, in the context of this judgment as to superannuation.  I have balanced the 60% interim property order and the $44,800.00 sum which the husband ‘left in’ the wife’s then property.  I have fully evaluated the contributions of the husband to superannuation prior to and after cohabitation and specifically the significant contributions made throughout that 12.9 years of cohabitation.  I have properly balanced the evidence of and related to homemaker and parent and, within the context of the contributions issue, the applicable s.75(2) factors as are there relevant.

293.The husband has, I find, made the principal contribution to his superannuation entitlements having regard to his long and continuous employment, his financial contributions, his rank within the public service and the particular and generous entitlements of the ESSS fund which are available only because of his employment.   The wife’s contributions are significantly lesser and are made in the role of homemaker and parent and as the then wife of a person in the husband’s job with the inherent stresses that that placed upon her and the family.

ASSESSMENT OF SECTION 75(2) FACTORS

294.Those relevant factors have been identified and considered throughout this judgment.  I have made specific findings on the employment and income of each of the parties and how the parties have and will continue financially to provide for themselves and their households. 

295.There must be an appropriate adjustment of these factors in favour of the wife having regard to all of my findings and, in summary:

§her current and future income when contrasted to the husband’s;

§the likelihood of her obtaining more extensive and full paid employment;

§her obligations for [J];

§the husband’s superannuation entitlements and generally other work related entitlements and benefits including accrued long service leave and other leave and payments for service;

§her reduced standard of living post separation;

§the 12.9 years of cohabitation and the limitation that that imposed upon the wife’s work qualifications, employment and earning capacity;

§the need of the wife to continue in her role as a parent to [J] and with the financial, emotional and time restraints thereby incurred;

§the financial circumstances of the husband’s marriage with [Ms W], her substantial income and superannuation and the ability of each of the husband and his new wife to invest, negatively gear property and otherwise earn a substantial combined income and provide for their lifestyle and future retirement;

§the existing interim order and the equity that the wife has therefrom in her…home with a significant mortgage encumbering its title;

§the current child support and additional payments made by the husband for [J] which substantially contribute to but do not remove from the wife the burden of at least an equal contribution to [J’s] schooling and general financial wellbeing;

§the financial responsibilities of the wife to support and maintain [L];

§the particular sub-paragraph (f) and (o) factors as I have discussed.

BASIS OF INTERIM SETTLEMENT ORDERS

296.It is common agreement that the interim orders altered the parties interests in property, other than superannuation as to 60% to the wife and 40% to the husband.  It is a matter of significance in the written submissions filed on behalf of the husband (page 17) that he and his counsel determined an apportionment of that 60% sum as follows:

§ s.79(4) contributions in the range of 35% - 40%; and

§  s.75(2) ‘needs factor’ in the region of 20% - 25%.

297.That acknowledgement of the importance and financial worth of the s.75(2) factors in that interim order is significant and it does properly form a basis for the further consideration of the alteration of superannuation entitlements of the husband in the full and proper context of the relevant facts as determined in this judgment.

ASSESSMENT IN PERCENTAGE TERMS

298.As to contribution I assess that the wife is entitled to 10% of the husband’s ESSS Superannuation Fund.  By my valuation of the s.75(2) factors the wife is entitled to an additional 25% of such superannuation entitlements.  I therefore assess that a proper order altering the parties [sic] interests in superannuation is an alteration by way of a splittable order in the payment phase for the husband to retain 65% and for there to be a percentage split of 35% to the wife.”

1. His Honour then looked at what his Honour described as “the monetary effect of the order” in the following terms:

“301    On the basis of a 35% alteration in favour of the wife of the husband’s interest in the ESSS Fund the net monetary position of the parties, based on the superannuation valuation of $403,810.00 would be:

Wife

§  current assets  $133,196.00

§  superannuation order  $141,333.00

§  wife’s superannuation  $5,408.00

$279,937.00
         Husband

§  home equity  $89,000.00
§  long service leave  $64,000.00
§  ESS Plan  $34,500.00
§  Superannuation  $262,476.00

$449,976.00

Inclusive of the earlier interim orders the difference therefore in dollar terms in favour of the husband is $170,039.00 which must be assessed in the context of his ongoing employment, income, additional superannuation and other issues as evaluated in this judgment.”

and then under the heading of “Fourth Step” said:

“302.In accordance with the requirements of case law I have now stood back from the orders and reflected upon the overall determination and judgment, both in percentage terms and in monetary terms and confirm, having considered and re-evaluated all of the evidence, that the proposed orders are just and equitable pursuant to the provisions of s.79(2) of the Act.

303.The effect of the splitting order in the payment phase is that each of the husband and wife will have to wait for their interests to become payable.  One party does not have the immediate access to a ready sum of money with the other party being delayed in payment.  The superannuation interests will incrementally increase in value pending payment and this cannot be viewed in isolation from the marital history.  Both parties, to the extent of their respective entitlements, will therefore continue to benefit by the earnings and investment income of the Fund.”

1. It has been conceded by counsel before us in the appeal that in paragraph 301 above his Honour made an error in favour of the husband in double counting of the wife’s superannuation.  As will be seen from paragraph 25 above that figure was already included in the list of current assets of the wife.

The appeal

1. The amended Notice of Appeal contained two grounds.  They were as follows:

“1.That the learned trial judge failed to give weight or any proper weight to the benefits conferred upon the Wife by the interim property Orders made by consent on the 14th September 1999.

2.That the finding by the learned trial judges allowing the Wife a 25 % adjustment in respect of Section 75 (2) factors fell outside a reasonable exercise of the trial judge [sic] discretion and amounted to an error of law.”

1. The gravamen of the first ground of appeal is that whilst his Honour had identified early in his reasons for judgment that he would make proper allowance for the husband having left the wife with his equity in the former matrimonial home, it is not apparent from the reasons for judgment that any such allowance was ever made.  As already set out it was common ground that the husband had allowed the wife to retain a benefit due to him of approximately $44,800 and that such benefit was to be subsequently off set against her entitlement to superannuation.  His Honour said:

“54.I record that Mr Davis submitted that, in reality, the then sum of $44,800.00 (or $45,200.00 as he subsequently referred to) has provided a very real financial benefit to the wife.  It facilitated her retaining the home which increased in value prior to its sale.  Without the husband’s decision to leave that sum in the control of the wife it is likely that she could not have retained the home and she would be in a significantly lesser financial circumstance today.  I accept that is a contribution which I have fully considered.”

1. Further, when discussing the history of the wife’s post-separation property dealings his Honour said:

“93.I find that the wife was most certainly placed in a superior financial position by the husband’s decision for her to be able to retain all of the equity in the home subject to the verbal agreement to adjust $44,800.00 in his favour at a subsequent date.  I conclude that the wife has overstated her maintenance, repair and decoration of the home in paragraph 42 but nevertheless she did devote time, work and effort, and some moneys to that home.  It was a combination of her improvements and the general increase in demand and prices for such properties that achieved its sale price in late 2001 and the financial benefit to the wife. 

94.It is very difficult for the Court to endeavour to fix that financial benefit after allowing the increase in mortgage and other financial expenditure by the wife but she likely benefited by a sum of approximately $50,000.00 over that period pending its sale.  I will have regard to the wife’s contribution in that sum.”

1. Under the general heading of “Assessment of Contribution” at paragraph 292 his Honour returned to give a consideration to this matter, saying:

“I have balanced the 60 per cent interim property order and the $44,800 sum which the husband had ‘left in’ the wife’s then property.”

1. Then, under the heading of “Assessment of s 75(2) factors” his Honour included as one such factor:

“The existing interim order and the equity that the wife has there from in her…home with a significant mortgage encumbering its title;”.

1. Finally he said at 298:

“As to contribution I assess that the wife is entitled to 10% of the husband’s ESSS superannuation fund.  By my valuation of the s 75(2) factors the wife is entitled to an additional 25% of such superannuation entitlements.”

1. It is correct that his Honour did not expressly say words to the effect that his assessment of the wife’s entitlement to the husband’s ESSS superannuation fund by way of contribution would have been higher than 10 per cent had he not made an allowance for the husband allowing the wife the benefit of the use of his share of the former matrimonial home, but in our view such a conclusion is implicit from the otherwise inappropriately low appraisal of the wife’s entitlements by way of contribution.  His Honour had earlier found that there had been very significant growth in the husband’s entitlements under the ESSS plan during the course of the marriage and that the growth in those entitlements had decelerated rapidly after separation.  His Honour said:

“86. Section 20C, sub-paragraphs (d), (e) and (f) [of the Emergency Services Superannuation Act 1986 (Vic)] are crucial to understanding the husband’s contribution and accrued benefit multiple accumulated during the marriage. The husband contributed at a rate of 8% for the period 1 January 1987 until 1992 where for a period of approximately twelve months he reduced his contribution to a sum of between 6% and 7%. That was his evidence. On the basis of such evidence therefore it must be the case that for the five years between 1987 and 1992 his multiple, pursuant to sub-paragraph (f) increased by no less than .32 per annum. In summary therefore over those five years of marriage his multiple increased by no less than 1.60. Between 1993 and separation date his multiple likely increased, with continuing contributions by between .24 and .28 per annum. Accordingly, and as a matter of importance, the significant financial contributions that the husband made from salary to ESSS were made during the 12.9 years of cohabitation and significantly between 1987 and 1998. Accordingly, on such an examination of the contributions, the period of cohabitation, together with the husband’s increase in salary and rank and length of service were fundamental to his current ESSS superannuation interests. That is not to say that I have discounted his membership period between 1974 and the commencement of cohabitation or the continuing accrued benefits and increase in multiple that the husband has and is continuing to receive post ceasing to make contributions in 1998.”

1. His Honour also found that after separation the wife had continued on in her role as the primary parent of the children which contribution had to be given proper and appropriate weight.

1. In those circumstances an assessment of an entitlement to only a 10 per cent share in the husband’s ESSS scheme would of itself have attracted justifiable criticism.  Such a low assessment can only be adequately explained by implying that the trial Judge had done what he had expressly said he would do, namely give proper weight in the assessment of contributions to the fact that the husband had allowed the wife to retain his interest in the former matrimonial home.

1. Accordingly we think there is no proper basis for supporting ground 1 of the grounds of appeal.

1. Effectively what is then left in support of the appellant’s position is the assertion that the further adjustment of another 25 per cent of the husband’s ESSS entitlements fell outside a reasonable exercise of the trial Judge’s discretion.

1. This is an appeal against a discretionary judgment. Section 79 grants to the trial Judge a very wide discretion: see De Winter and De Winter (1979) FLC 90-605 at 78,092 per Gibbs J; Mallet v Mallet (1984) FLC 91-507 at 79,110; (1984) 156 CLR 605 at 608; Norbis v Norbis (1986) FLC 91-712; (1986) 161 CLR 513. The role of the appellate court is a limited one. Unless there has been

• an error in approach or principle,

• the failure to take into account relevant circumstances,

• the taking into account of irrelevant circumstances,

• the making of findings of fact unsupported by the evidence,

the challenge must be that the orders fell outside a reasonable exercise of discretion, that is, that the orders were “unreasonable or plainly unjust”.

1. In this case ground 2 of the grounds of appeal seeks to establish only the last of those matters.

1. In its widest formulation the discretion, and its immunity from challenge, was described by Brennan J in Norbis v Norbis (1986) 161 CLR 540 at 539, (1986) FLC 91-712 at 75,178. His Honour said as follows:

“Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable.  How does the Full Court arrive at that conclusion?  In Bellenden (formerly Satterthwaite) v Satterthwaite (1948) 1 All E.R. 343 at p. 345 Asquith L.J. stated the rationale of an appellate court’s approach:

‘…It is, of course, not enough for the wife to establish that this court might, or would, have made a different order.  We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable.  It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.’

The ‘generous ambit within which reasonable disagreement is possible’ is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community.  The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.”

1. In Norbis v Norbis (1986) 161 CLR 540 at 518, (1986) FLC 91-712 at 75,165; Mason and Deane JJ said when dealing with an appeal involving s 79 of the Act:

“Here the order is discretionary because it depends on the application of a very general standard — what is ‘just and equitable’ — which calls for an overall assessment in the light of the factors mentioned in s 79(4), each of which in turn calls for an assessment of circumstances. Because these assessments call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, the making of the order involves the exercise of a judicial discretion.”

1. As Fogarty J said in Money and Money (1994) FLC 92-485 at 81,053; (1994) 17 Fam LR 814 at 815:

“Essentially the question in this case is whether the order of the trial Judge equally dividing the property between the parties was an order which fell outside a reasonable exercise of the wide discretion contained in s. 79 of the Family Law Act. Ultimately the answer to that question is one of impression and can be a matter upon which judges sitting on the appeal may differ.”

1. It appears to us that the allowance made for s 75(2) factors and thus the eventual outcome of these proceedings is certainly towards the extremity of the generous ambit of discretion that was vested in the trial Judge.  However, when attention is focused upon the observations of the trial Judge in paragraph 157 where his Honour said:

“…The contrast in income, financial assets and resources, future superannuation and earning capacity as between the wife and the husband and his new wife are stark and, in ongoing normal employment circumstances likely to remain significantly different.  One household has an income, significant ongoing earning capacity, an ability to service borrowings and improve their lifestyle.  In contrast the wife has limited income, child support and other government benefits and much uncertainty over her ongoing full-time employment prospects…”

then the result can be seen to fall within the bounds of an acceptable outcome.  Whilst the wife’s current assets, being basically her equity in her home exceed the husband’s equity in his home, the difference is not great.  The husband retains not only his 65 per cent entitlement in the ESSS fund, but his long service leave entitlements, his interest in the ESS Plan and an ability to continue to contribute to that at a rate far greater than any capacity that the wife has to secure her future financial viability.

1. In those circumstances, the retention by the wife at separation of the whole of the equity in the former matrimonial home, and an entitlement to 35 per cent of part of the husband’s superannuation entitlements when payable is not, in our view, an outcome which calls for appellate intervention. 

1. The appeal will be dismissed.

Costs

1. The wife sought an order for costs in her favour if the appeal was unsuccessful. The husband sought an order that each party bear their own costs. Bearing in mind the matters that we are required to give attention to under s 117 of the Family Law Act 1975 (Cth), particularly the disparity in the parties’ financial circumstances and the fact that the appeal has been wholly unsuccessful, we are of the view that costs should follow the event and accordingly we will order that the husband pay the wife’s costs to be agreed upon and in default of agreement as assessed.

Orders

1.        The appeal be dismissed.

2.        The husband pay the wife’s costs of the appeal to be agreed upon or in default of agreement as assessed.

I certify that the 47 preceding
 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.



Associate