Bevis & Bevis
[2014] FamCAFC 147
FAMILY COURT OF AUSTRALIA
| BEVIS & BEVIS | [2014] FamCAFC 147 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Contributions – Where the assets were of negligible value, apart from a property acquired by the husband from an inheritance after separation – Where the parties had significant superannuation entitlements, mainly held by the husband – Whether the trial judge erred in assessing post-separation contributions by giving insufficient weight to the husband’s inheritance and the large increase in value of his superannuation – Whether the outcome was outside the range of discretion – Appeal dismissed – No order as to costs. |
| Family Law Act 1975 (Cth), s 75(2), s 79 |
| AMS v AIF (1999) 199 CLR 160 Bonnici& Bonnici (1992) FLC 92-272 Best & Best (1993) FLC 92-418 Coghlan & Coghlan (2005) FLC 93-220 Polonius & York [2010] FamCAFC 228 |
| APPELLANT: | Mr Bevis |
| RESPONDENT: | Ms Bevis |
| FILE NUMBER: | NCC | 1449 | of | 2011 |
| APPEAL NUMBER: | EA | 141 | of | 2012 |
| DATE DELIVERED: | 14 August 2014 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Thackray, Strickland & Ryan JJ |
| HEARING DATE: | 17 March 2014 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court of Australia |
| LOWER COURT JUDGMENT DATE: | 17 September 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 986 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Rugendyke |
| SOLICITOR FOR THE APPELLANT: | Catherine Henry Partners |
| COUNSEL FOR THE RESPONDENT: | In person |
| SOLICITOR FOR THE RESPONDENT: | In person |
Orders
The appeal be dismissed.
There be no orders as to costs.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bevis & Bevis 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 141 of 2012
File Number: NCC 1449 of 2011
| Mr Bevis |
Appellant
And
| Ms Bevis |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Bevis (“the husband”) has appealed property settlement orders made by Federal Magistrate Terry (as her Honour then was) on 17 September 2012.
The appeal is opposed by Ms Bevis (“the wife”).
The husband claims he received inadequate credit for contributions made after the parties’ separation. The contributions involved were an inheritance and payments to a superannuation fund, which greatly increased in value.
Background
These background facts are drawn from the judgment of the Federal Magistrate and may now be considered uncontroversial.
The husband and wife commenced cohabitation in about 1980, were married in 1983 and separated in December 2007.
There are four surviving children of the marriage who were aged 26, 24, 20 and 15 years at the time of trial. The parties’ firstborn child died in infancy.
The husband was in full-time employment throughout the relationship and accumulated superannuation in a defined benefit fund.
For about the first 20 years of the relationship, the wife had casual or part-time employment, interspersed with caring for the children. In 2001, she commenced studies to become a health professional, which she completed in 2007.
In the last few years of the marriage, the husband and wife purchased what became their final matrimonial home in H suburb (“H property”), as well as two investment properties; one in Newcastle, and the other in L suburb (“L property”).
After the parties separated in December 2007 the wife remained living in the H home with the two youngest children, who were still at school, while the husband moved into the Newcastle apartment.
The parties owed a large amount of money to the bank when they separated and agreed to sell all three properties to discharge their debt.
In April 2008, the Newcastle apartment was sold and the husband moved into rental accommodation. The L property was sold in May 2009. After the sale of these two properties, the parties still had debt of $568,500, which was comprised of three loans:
·a $355,000 (interest only) loan secured over the H property;
·an $84,000 personal loan taken out to pay debts after sale of the Newcastle property; and
·a $129,500 (interest only) loan relating to the shortfall remaining after sale of the L property.
In January 2010, the wife refused an offer to purchase the H property at the asking price. The Federal Magistrate accepted this was due to the husband having become entitled to an inheritance of $278,924 following his father’s death in 2009. The wife hoped she would receive a substantial sum from the husband, and decided it would be premature to sell her home.
After the wife refused to proceed with the sale, the husband refused to continue making the repayments on the loan relating to the property. The wife thereafter took on responsibility for that loan, while the husband continued to meet payments in relation to the two smaller loans.
In December 2010, the husband purchased another property in E Suburb, using $220,000 from his inheritance. He said he borrowed $328,000 to assist with the purchase.
In June 2011, the wife commenced proceedings for property settlement. At the time of trial in April 2012, the wife was still living in the H property with the two youngest children.
Reasons of the Federal Magistrate
The Federal Magistrate found that the “pool available for division” consisted of:
·superannuation worth about $750,000, mostly in the husband’s name;
·“non-superannuation assets” of miniscule net value; and
·the equity of $186,000 the husband had in the unit acquired from his inheritance of $278,924 (at [2]-[3]).
Her Honour recorded that the wife wanted the husband to pay her $150,000 and for the superannuation to be divided equally, whereas the husband proposed the wife receive only half of his superannuation, valued as at the date of separation, which would mean he would have the benefit of the $261,606 post-separation increase in value. Her Honour also noted that the husband proposed to pay the wife $20,000, but on condition that if there was a shortfall after the sale of the home, the wife would use the $20,000 to meet that shortfall.
Her Honour found that the assets and liabilities which “derive[d] from the relationship” comprised the following (at [33] and [35]):
Asset/Liability
Ownership
$
Assets
H property
Joint
555,000
Furniture
Wife
5,000
Motorcycle
Husband
6,000
Furniture
Husband
8,000
Total Assets
574,000
Liabilities
Mortgage on H property
Joint
355,000
NAB Loan (1)
Joint
63,612
NAB Loan (2)
Joint
129,500
Total Liabilities
548,112
Net Assets
25,888
The parties also had the following superannuation entitlements (at [38]):
Description
Ownership
$
First State Super (30.06.2011)
Wife
23,844
State Super (05.12.2011)
Husband
658,274
SANCSS
Husband
66,564
First State Super
Husband
1,864
Total
750,546
Her Honour also found that the E suburb unit purchased by the husband with his inheritance was now worth $535,000 and that the mortgage on that property was $349,000 (notwithstanding the original loan was $328,000). The “pool”, excluding superannuation, was therefore found to comprise $186,000 equity in the E suburb unit and $25,888 in non-superannuation assets.
Her Honour observed that any equity in the H property was “illusory” since it was to be sold and the selling costs would exceed the estimated equity (at [44]). Assuming the sale costs were in the region of $20,000, her Honour observed that the only assets of the parties would be their chattels worth $19,000 and that there would still be a shortfall from the H property of $13,112.
When her Honour came to discuss contributions, she accepted the husband’s submission that contributions should be assessed by reference to three groups, namely the superannuation, the non-superannuation assets and the husband’s home unit.
Her Honour then discussed contributions “during the marriage”, by which it is clear that she meant the period up until the date of separation. She indicated that she intended to assess those contributions “generally” (at [49]), because the assessment would be relevant to the final assessment of contributions to both the superannuation pool and the non-superannuation pool.
Her Honour briefly recorded the parties’ work histories and found that the wife had been the primary homemaker and parent, and had worked only part-time, while the husband worked full-time. She accepted that the husband had taken an increased role within the home to support the wife after she had commenced her studies in 2001.
The Federal Magistrate observed that during cohabitation the husband had accumulated a substantial interest in the State Superannuation Scheme (which had a value of $425,904 at the date of separation) and was also a member of the SANCSS scheme (which had a value of $39,192 at the date of separation). The wife’s superannuation was recorded as being worth $23,000 at the time of trial and there was no evidence of what it was worth at the date of separation. Although her Honour said she could not be sure, she thought it could be the case that the wife had a fairly small amount of superannuation at separation.
Her Honour went on to find that contributions to the superannuation and non-superannuation assets during cohabitation should be assessed as being equal.
Her Honour then turned to consider post-separation contributions to the non-superannuation assets. She recorded that the husband had initially paid the mortgage on the H property together with some of the outgoings on that property and made other financial contributions for the benefit of the wife and the two youngest children. Importantly, she recorded at [60] that the parties had “agreed these payments would stand in the place of child support”.
The Federal Magistrate next recorded that the two youngest children were aged 16 and 10 years at the date of separation and that although they had spent some time with the husband in 2008 and 2009, it was not extensive and the wife had undertaken by far the majority of the parenting.
Her Honour also recorded the wife’s submission that she had made an indirect contribution to loan repayments made by the husband because he had the benefit of tax refunds of $26,049 for 2007/08 and $15,727 for 2008/09. Although her Honour accepted the wife’s submission about these indirect contributions, she nevertheless found that, on any view, the husband had made the greater financial contribution during the first two years after separation.
Importantly, though, her Honour went on to say:
64.However the husband had emerged from the marriage with a strong income earning capacity to which the wife had made a contribution, and the wife made some indirect financial contributions and also had the primary care of the two dependent children. Nothing which occurred in those two years supports a finding that the husband’s post-separation contributions exceeded those of the wife.
Her Honour then recorded that a number of changes had occurred after the end of 2009, including the second youngest child completing school and taking up paid employment in March 2010, leaving only one child at school and dependent on the wife. Her Honour also recorded the change in arrangements concerning payment of the mortgage on the H property and responsibility for the other loans.
Her Honour then, again importantly, recorded:
69.After January 2010 the husband commenced paying child support for [the youngest child] but he did not pay the full assessed amount. The exact amount underpaid is unclear to me. The wife claimed it totalled $59,656.00, but I cannot confirm this one way or another on the papers the wife submitted. The husband considered any underpayment justified on the basis that he was solely responsible for the payments for the two joint loans.
Her Honour also recorded that, from 2010 onwards, the husband had been spending time with the youngest child, but this was only for one weekend a month and during school holidays, and that the wife had otherwise “continued to do the majority of the parenting of [the youngest child]” (at [70]).
The next few paragraphs of her Honour’s reasons are sufficiently important for this appeal for them to be recited in their entirety.
71.It was the husband’s case that in order to make repayments on the two loans he had to use his inheritance as well as his income and that he had dipped into his inheritance to the tune of at least $70,000.00. It is not possible for me to be certain that this figure is accurate either.
72.The difficulty with all of this is that what I am required to do is to assess contributions to a pool of $25,888.00 part of which is probably illusory and which is all that is left after 27 years of cohabitation and a four year post-separation period.
73.Even if I could find that the husband contributed more than the wife in the 2010 -2012 period this would not justify completely ignoring the wife’s 29 years worth of equal contributions, and given the size of this pool any adjustment in the husband’s favour would be almost meaningless.
74.I am not convinced however that I can find that contributions were unequal between 2010 and 2012, because the wife continued to make the greater parenting contribution during this period and she paid the interest on the largest interest only loan.
75.For what it is worth I assess contributions to the non-superannuation pool of $25,888.00 as being 50% by the husband 50% by the wife, entitling the wife to $12,944.00 and the husband to $12,944.00.
Her Honour completed this part of her discussion by saying there were other matters that she would take into account when she came to consider s 75(2) of the Family Law Act 1975 (Cth) (“the Act”), including the wife’s refusal to sell the H property and her failure to reduce the amount outstanding on the H property loan, as well as the wife’s complaint about the underpayment of child support.
Her Honour then turned to the post-separation contributions to superannuation, observing that the husband’s entitlement had increased in value by $261,606:
80.The husband’s solicitor submitted that the husband had contributed about $80,000.00 to his superannuation post-separation by means of contributions by his employer as part of his salary package. The information in the pay slips attached to the husband’s affidavits supports this submissions [sic].
81.The husband must be given credit for his direct financial contributions to superannuation post separation but the situation is not clear cut. First, the wife must be assessed has having made an indirect contribution to the husband’s ability to put $80,000.00 into his fund post separation because she has made an indirect contribution to his income earning capacity.
82.Second, other forces, either interest on the amount in the funds at separation or the effect of the husband’s years of service and salary level or both, have clearly been at work and have led to the remainder of the increase.
83.I consider that a 3% adjustment in the husband’s favour (equal to $21,801.08) is a proportional [sic] response to his post-separation contributions and I assess contributions to the husband’s superannuation as being 53% by the husband and 47% by the wife.
In then dealing with the wife’s superannuation, her Honour recorded that the wife had made the direct financial contribution to this entitlement after separation, but the extent to which she was able to do so was due in part to her studies during the relationship, in which she received some support from the husband. In those circumstances, her Honour assessed contributions to the wife’s superannuation as being made in the proportions 53:47 in favour of the wife.
The net effect of her Honour’s findings in relation to contributions to the superannuation was that the husband would be entitled to superannuation worth $396,359 and the wife would be entitled to superannuation worth $354,188.
Her Honour then turned to consider contributions to the husband’s unit. She acknowledged that the wife had made no contribution to the inheritance which had funded the unit, but went on to find:
88.It is reasonable to find however that the husband was assisted in being able to borrow the balance of the purchase price for the unit by the strong income earning capacity which he took out of his 27 year cohabitation with the wife, and the wife made a contribution to that income earning capacity. She took on the role of homemaker and parent of the parties’ four surviving children freeing the husband to pursue his career.
Her Honour therefore considered that the wife should be assessed as having made a “small non-financial contribution to the acquisition of the unit in the amount of 3% of its net value or $5,580.00” (at [89]).
The Federal Magistrate then considered various matters under s 75(2) of the Act. As there is no challenge to her assessment, it is unnecessary to set out her findings. Having made her findings, her Honour commenced her consideration of s 75(2) by observing that “the constraints imposed by the composition of the asset pool make it a challenge to arrive at a just and equitable outcome in this matter” (at [125]). Her Honour went on to observe that the s 75(2) factors clearly favoured the wife because the husband had emerged from the marriage with a very strong income earning capacity compared to hers, was a member of a “valuable superannuation fund” and had the benefit of a post-separation inheritance which enabled him to purchase a home (at [126]).
Importantly, her Honour also went on to say:
127.The wife devoted herself for over twenty years to being the primary homemaker and parent and emerged from the marriage with an income earning capacity less than half of the husband’s. Her accumulation superannuation fund will never return the same benefit to her as the husband’s defined benefit fund will to him. She will be entitled to a substantial amount of superannuation by way of a splitting order but if the [H] property is sold she will have to rehouse herself. No amount of superannuation will provide any immediate assistance to the wife in that regard.
Her Honour said that, leaving aside the large superannuation pool, the case had some resemblance to Best & Best (1993) FLC 92-418, where there were very little assets after a long marriage but one party would continue to be a high income earner. After describing the outcome in Best & Best, her Honour continued:
132.The wife has a need for cash immediately and one thing I can do is give her the entire value of the non-superannuation pool absent the illusory equity in the [H] property. This will require the husband to pay her $14,000.00. I can also require the husband to pay her $5,580.00 to which she is entitled on the basis of contributions from the pool containing the unit, a total of $19,580.00.
133.I could if I chose also order that the husband pay the wife an additional cash sum, and I am not constrained by the fact that the husband received his inheritance post-separation from ordering that he make a payment which can only be made by effectively utilising this money.
Her Honour next referred to Polonius & York [2010] FamCAFC 228, where the Full Court concluded it was erroneous, when considering a s 75(2) adjustment, to take account of only those assets in respect of which some contribution had been made. However, her Honour concluded that while it was open to her to make a further cash payment to the wife, it was impossible to justify ordering the husband to pay anything like the total of $150,000 which the wife had sought. Having explained why this was not an appropriate outcome (and why it was necessary to order the sale of the H property, even though this would likely result in a shortfall), her Honour continued:
143.An option open to me in order to ensure that the $19,850.00 the wife receives is preserved to assist her to rehouse herself is to require the husband pay the whole of the shortfall debt. There is some danger however in ordering that the husband pay the whole of the shortfall debt whatever it might be, because if the market has changed substantially this could result in an unfair burden being placed on him.
144.The husband’s solicitor conducted his case on the basis that the shortfall debt might be in the vicinity of between $13,000.00 or $14,000.00 (the difference between the equity in the property on its agreed value and the estimated selling costs). I intend to order that the husband bear the shortfall debt up to the amount of $20,000.00, but that any amount owing over this be paid as to 70% by the husband and 30% by the wife, which will spread this risk in a reasonable proportion bearing in mind their current incomes.
Her Honour said she did not intend to order the husband to “make any further cash payment to the wife” (at [145]), but went on to record her view that it was appropriate the wife receive a greater share of the superannuation than that to which she was entitled on the basis of contributions. Her Honour observed that the husband’s superannuation would continue to grow more quickly than the wife’s in the future, because he will be contributing from a higher salary and will continue to be a member of a defined benefit fund.
Her Honour then recorded that she considered an order should be made that the wife receive 50 per cent of the husband’s superannuation, which she noted would “give her an additional 3 per cent or $21,801.08 over her contribution based entitlement” (at [147]).
Her Honour then went on to say:
148.I am conscious of the fact that the husband is four years older than the wife and that he would prefer to retire in six years time. However his superannuation has increased by an average of $65,000.00 per year since separation on the back of contributions of an average of $19,000.00. I acknowledge that it may increase more slowly in the future after the splitting order is made and the base from which he starts is reduced, but we are already nine months past the date of the valuation of the husband’s fund during which period it must have continued to grow, and giving the wife an additional $21,801.88 is to give her only a third of one years increase in the fund based on past performance.
149.I also intend to order that the wife retain the whole of her own superannuation effectively giving her an additional $11,206.55.
Her Honour then summarised the effect of her orders by noting that:
·The wife would receive furniture worth $5,000, superannuation worth $387,195 and a payment from the husband of $19,850, making a total of $412,045; and
·The husband would receive chattels worth $14,000, equity in his unit worth $186,000 and superannuation worth $363,351, which would leave him with a net $543,501 after making the payment to the wife of $19,850. The husband would also remain responsible for the shortfall debt on sale of the home up to a figure of $20,000.
Her Honour completed her judgment by saying:
156.I expect that the husband will perceive the outcome as very unfair because he will on the face of it be left with something considerably less than the equity he currently has in the unit he purchased with his inheritance.
157.However he will have a greater share of the assets than the wife and he has emerged from the marriage with a strong income earning capacity which he can continue to exercise until he retires. He also has the good fortune of belonging to a valuable defined benefit superannuation fund and he owns a home, albeit subject to a mortgage.
158.In my view the orders I have made are the least I can do for the wife and I am satisfied that the orders, and the outcome, are as just and equitable as I can make them in the circumstances of the case.
Agreed further facts
We were informed on the hearing of the appeal that the H property had been sold and that the husband had paid the shortfall to the bank of $14,289. He had also paid to the wife the settlement sum of $19,850. We were further informed that the superannuation splitting order had been implemented. This order required the sum of $363,351 to be set aside from the husband’s superannuation fund as the base amount for the wife’s benefit.
We observe that quantification of the shortfall now permits calculation of the proportion in which the “pool” of assets was divided. The husband ended up with 56.2 per cent of the net assets/superannuation and the wife received 43.8 per cent. In dollar terms the husband received $117,168 more than the wife. However, were it not for the s 75(2) adjustment, the husband would have received $197,472 more than the wife (assuming that the shortfall on the sale of the former matrimonial would otherwise have been met equally).
The Grounds of Appeal
There were four Grounds of Appeal in the notice filed on 16 November 2012. Ground 1 was directed to a variety of findings related to the post-separation contributions. Ground 2 was specifically directed to the weight given to that part of the husband’s inheritance that had been applied in meeting joint expenses after separation. Ground 3 concerned failure to properly consider the effect of the orders. Ground 4 asserted that the outcome was outside the range of discretion.
Grounds 1(a), 1(b), 1(c) and 2 – contributions to non-superannuation assets
Counsel for the husband addressed the following grounds together:
1.That Her Honour erred in assessing post separation contributions:-
(a)In finding that the parties’ post-separation contributions supported a finding that the husband’s post-separation contributions did not exceed those of the wife;
(b)In finding that “the wife’s 29 years of equal contributions throughout the relationship” would offset the husband’s post-separation contributions;
(c)In finding that the husband’s post-separation contribution of in excess of $270,000 to the first pool “given the size of this pool would be meaningless”; ...
2.That Her Honour erred in consideration of the matters relevant to section 79 by not giving any, or any sufficient, weight to the part of the husband’s inheritance that had been applied to meeting joint expenses post separation.
In support of these grounds, counsel for the husband referred to the fact that the husband’s evidence that he had made post-separation contributions totalling $206,208 had not been rejected, although counsel conceded that some of these payments were in relation to joint liabilities, and some related to a property the husband himself had occupied post-separation. His essential submission, however, was that the husband had paid far more than he ought to have paid the wife by way of child support and had been given insufficient credit for this.
The difficulty we perceive in the husband’s argument is that it fails to account for the fact that, at trial, the husband asked the Federal Magistrate to assess contributions by reference to the three different “pools”. This was a perfectly sensible approach to adopt, given the disparate nature of the contributions to the different pools, and it is the approach her Honour adopted. However, the consequence of adopting the approach advocated by the husband was that the Federal Magistrate was left to assess contributions, made over a period of more than 30 years, to assets that were correctly described as being of “miniscule value”. Without factoring in the shortfall in sale of the home, the pool of available assets, excluding the husband’s unit, was worth only $25,888. And once the shortfall on sale crystallised, that pool was worth only $11,599.
It is clear that it was the “miniscule” size of the pool of the assets which led the Federal Magistrate to make the references in her reasons that are now the subject of the complaints in Grounds 1(b) and (c).
Ground 1(b) does not, in any event, fairly capture what the Federal Magistrate said in her reasons. Her Honour did not find that the “the wife’s 29 years of equal contributions throughout the relationship” would offset the husband’s post-separation contributions. It will be recalled that what her Honour actually said at [73] was:
Even if I could find that the husband contributed more than the wife in the 2010 -2012 period this would not justify completely ignoring the wife’s 29 years worth of equal contributions … (our emphasis)
Similarly, Ground 1(c) does not accurately reflect the Federal Magistrate’s reasons, since her Honour went on to say at [73] that:
… given the size of this pool any adjustment in the husband’s favour would be almost meaningless.
It will be readily seen that the Federal Magistrate was not dismissing the husband’s post-separation contributions as themselves being “meaningless”. Rather, we consider her Honour was merely stating the obvious – in an asset pool that ended up being worth $11,599, it was indeed “almost meaningless” to seek to make an “adjustment” which reflected contributions the husband quantified at a figure nearly 18 times that amount.
These complaints also do not take sufficient account of the finding her Honour made at [60] that the parties had themselves agreed that the husband’s payments, including the mortgage payments on the home, “would stand in the place of child support”. There was no ground of appeal directed against that finding.
We also consider the Federal Magistrate was right to say, as she effectively did at [74], that the financial contributions the husband made after the separation cannot be considered in isolation from other contributions, but especially those made by the wife in undertaking “the greater parenting contribution”, as well as paying “the interest on the largest interest only loan”.
Counsel for the husband properly conceded in the course of argument that he was not suggesting that the Federal Magistrate had been mistaken about the magnitude of the payments the husband made after separation. He also conceded that the husband could not receive adequate credit for his contributions in dealing with such a small pool and therefore went on to submit that her Honour erred by failing to have “more careful regard” to these contributions “when considering the justice and equity question”. Counsel was unable to take us to any authority to support that proposition, nor did he direct us to any part of the record to show that the Federal Magistrate had been asked to approach the issue in that way.
For these reasons, we consider these grounds lack merit.
Grounds 1 (d) & 1(e) – contributions to the superannuation entitlements
By these grounds it was asserted:
1.That Her Honour erred in assessing post separation contributions:-
…
(d)In finding that the wife should be assessed as having made an indirect contribution to the husband’s ability to put $80,000 into his superannuation fund post-separation because of her “indirect contributions”;
(e)In finding that the husband’s post separation contribution to his superannuation was only 53%, such finding being manifestly unjust in light of the $261,606.23 increase in the husband’s post-separation superannuation entitlements; ...
Counsel for the husband submitted that her Honour erred in failing to follow the process laid down in the following paragraphs of Coghlan & Coghlan (2005) FLC 93-220:
65. In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a) value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b) consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c) consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
(d) ensure that pursuant to s 79(2) the orders in relation to the parties' property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
66. In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse's present and/or future entitlements under the fund.
In our view, the complaint that the Federal Magistrate failed to follow the process recommended in Coghlan& Coghlan went well beyond the grounds of appeal. In any event, there is no challenge to the finding that contributions to the superannuation assets were equal up to the date of separation, and we are therefore concerned only with the period after separation. Furthermore, there was no ground of appeal suggesting that the Federal Magistrate had made any error of fact in identifying contributions to the superannuation post-separation, nor was there a ground complaining that her Honour had overlooked any evidence of some feature of the superannuation entitlements that was said to be important. Without such complaints, we have difficulty in seeing how her Honour’s failure to expressly follow the approach suggested in Coghlan & Coghlan led to any appealable error.
Although there was no ground of appeal to support the proposition, counsel for the husband submitted that if the Federal Magistrate placed significant weight on the fact that the husband’s superannuation entitlement increased in value as a result of interest, she erred because there was no evidence to that effect. It will be seen, however, that the Federal Magistrate did not make a finding that the fund increased as a result of interest being earned. She accepted at [82] that it might also have been as a result of “years of service and salary level”, which essentially is what counsel for the husband submitted had been the relevant factors.
There is no doubt that the Federal Magistrate treated the $80,000 as a post-separation contribution made by the husband – the only issue we need to consider is whether he was given sufficient credit for this contribution and other contributions made to the large increase in the value of his superannuation. In this context, counsel for the husband effectively submitted that the actual making of the monetary contribution was only part of the picture because, in a defined benefit fund, the husband’s additional years of service would also have been factored into the increase in value. He submitted it was the husband “who was undertaking the shift work” and that he need not have chosen to remain with the same employer. We were not taken to any part of the record to show that her Honour was asked to place any significance on the fact the husband was undertaking shift work, and the fact is he did remain with the same employer.
Counsel for the husband submitted that the husband personally received credit of only $21,801 for the post-separation contributions he made to his superannuation (i.e. 3 per cent of an entitlement worth $726,703). In fact, as counsel properly conceded, the 3 per cent “adjustment” created a 6 per cent disparity between the parties, and the husband therefore received “credit” to the extent of $43,602. However, counsel argued this was inadequate, since it represented only a little over 16 per cent of the overall increase in the value of the husband’s entitlements in the period after separation. While as a matter of arithmetic that is true, it diverts attention from the fact that the husband received 53 per cent of the total increase in value of $261,606, which amounts to $138,651. And, of course, at least on the assessment of contributions, the husband also received 47 per cent of the increase in the wife’s superannuation, albeit hers was much less valuable.
The real issue for determination here is to ask why it was that the Federal Magistrate thought it appropriate that the wife should receive 47 per cent of the post-separation increase in the husband’s superannuation. The only explanation she explicitly gave was that:
81.… [T]he wife must be assessed has [sic] having made an indirect contribution to the husband’s ability to put $80,000.00 into his fund post separation because she has made an indirect contribution to his income earning capacity.
82.Second, other forces, either interest on the amount in the funds at separation or the effect of the husband’s years of service and salary level or both, have clearly been at work and have led to the remainder of the increase.
We accept that, standing alone, these paragraphs may not provide a sufficient explanation for the conclusion reached by the Federal Magistrate, and that the reference to the wife having made an “indirect contribution to [the husband’s] income earning capacity” (at [81]) may have been a factor more properly considered under s 75(2)(j) of the Act. However, the reasons of the Federal Magistrate ought, in our view, be considered as a whole and should not be the subject of an “overly critical, or pernickety, analysis”: AMS v AIF (1999) 199 CLR 160, per Kirby J at 211.
In this context, it will be recalled that when her Honour was looking at contributions during the marriage, she said she intended to assess those contributions “generally” (at [49]), because the assessment would be relevant to the final assessment of contributions to both the superannuation pool and the non-superannuation pool. Similarly, when looking at contributions to the non-superannuation assets after separation, her Honour also considered them to be equal and, in so finding, placed emphasis on the wife’s contribution in providing the primary care of the children. Although she did not expressly mention this factor again when looking at post-separation contributions to superannuation, we consider it can be safely inferred that her Honour continued to have these earlier findings in mind. Counsel for the husband readily and properly conceded that the contributions the wife had made prior to separation to the parenting of children continued after the separation.
We therefore consider there is no merit in these complaints.
Ground 1(f) - wife’s contribution to the husband’s home unit
By this ground it was asserted that:
1.That Her Honour erred in assessing post separation contributions:-
…
(f)In her assessment of the wife making a 3% contribution to the husband’s home unit acquired post-separation from the husband’s post separation inheritance.
In support of this ground, counsel for the husband submitted that the husband’s borrowing capacity did not contribute to the equity in his home unit, but rather contributed to the form in which the asset was held – i.e. as equity in a property rather than money in the bank. It was also submitted that the equity in the property did not increase.
We consider there is merit in this argument; however, as counsel for the husband properly conceded, “it’s a small amount that flowed from it” and if this were the only complaint “there wouldn’t be an appeal”. When we pointed out to counsel for the husband that if this were the only successful part of the complaint, our options were to treat the error as de minimis or make a minor adjustment, he submitted we should adopt the latter course. When the options were explained to the wife she, unsurprisingly, submitted the error, if established, should be treated as being de minimis.
The amount in question is $5,580 and represents around .5 per cent of the asset pool. We consider the issue de minimis, and in the absence of any other error being established, we would not allow the appeal on the basis of this error.
Grounds 3 & 4 – outcome outside the range of discretion
The final grounds of appeal challenged the overall result in these terms:
3.That Her Honour erred in failing to properly consider the effect of the Orders proposed to be entered including pursuant to section 79(2).
4.That the entitlement of the Appellant pursuant to the Orders is manifestly inadequate being outside the range of discretion reasonably available to Her Honour from the undisputed facts before Her.
Counsel for the husband submitted that Ground 4 was essentially “the flipside” of Ground 3, because in allegedly failing to consider properly the effect of the proposed orders, her Honour had left the husband with an entitlement that was manifestly inadequate and outside the range of discretion.
In support of these grounds, emphasis was again placed on the husband having received an inheritance of $278,924, on his superannuation having increased by $261,606 and on the contributions he made exceeding $200,000 post-separation.
The difficulty from the husband’s perspective in continuing to rely on these factors in seeking to establish that the outcome was outside the range of discretion is that we have already examined the component parts of the complaint and found them to be without merit.
It is true that, in stepping back and looking at the overall result, it will be seen that the real estate the husband now holds representing his inheritance is of much lower value than the inheritance he received after separation. However, as the Full Court said in Bonnici & Bonnici (1992) FLC 92-272 at [2], “[a] property does not fall into a protected category merely because it is an inheritance”. The Federal Magistrate was asked to assess contributions to three asset pools and she did so. Save for the modest error we identified in dealing with Ground 1(f), her Honour accepted that the husband had made the entire contribution to what remained of the inheritance, and the husband was left with the property acquired from that inheritance as part of his entitlement.
Although we accept that other outcomes were available to the Federal Magistrate, we are not persuaded the outcome ordered was outside the range of discretion.
There is accordingly no merit in these grounds.
Outcome and Costs
There being no merit in the complaints, save for one found to be de minimis, we propose to dismiss the appeal.
The respondent wife was self-represented and advised that she had not incurred any costs in relation to the appeal. There will therefore be no order as to costs.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 14 August 2014.
Associate:
Date: 14 August 2014
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