Blackwell & Blackwell
[2022] FedCFamC2F 66
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Blackwell & Blackwell [2022] FedCFamC2F 66
File number(s): BRC 4886 of 2021 Judgment of: JUDGE MIDDLETON Date of judgment: 28 January 2022 Catchwords: FAMILY LAW – PROPERTY – Interim hearing, whether the superannuation fund is deemed to be a financial resource when adjusting the parties property pool. Legislation: Family Law Act 1975 (Cth), ss.79, 90XC, 90XD, 90XS Cases cited: Burge and Burge [2015] FamCA 178
Campbell v Superannuation Complaints Tribunal [2016] FCA 808
Goudarzi & Bagheri(No 2) [2017] FamCAFC 190
Hickey v Hickey [2003] FamCA 395
Norbis v Norbis [1986] HCA 17
Semperton & Semperton [2012] FamCAFC 132
Surridge and Surridge [2015] FamCA 493Division: Division 2 Family Law Number of paragraphs: 22 Date of last submission/s: 20 December 2021 Date of hearing: 22 November 2021 Place: Maroochydore Counsel for the Applicant: Mr Selfridge Solicitor for the Applicant: Mcduff & Guilfoyle Lawyers Counsel for the Respondent: Ms Cullen Solicitor for the Respondent: Law Essentials Hervey Bay ORDERS
BRC 4886 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS BLACKWELL
Applicant
AND: MR BLACKWELL
Respondent
ORDER MADE BY:
JUDGE MIDDLETON
DATE OF ORDER:
28 JANUARY 2022
THE COURT ORDERS THAT:
1.The Respondent’s application seeking a declaration that the superannuation interest of the Respondent be deemed a financial resource or in the alternative, that his superannuation interest be categorised as a separate pool is dismissed.
2.The Applicant’s costs of and incidental to this application are reserved
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
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 by this Court under a pseudonym Blackwell & Blackwell has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MIDDLETON
INTRODUCTION
These reasons relate to a discrete issue regarding the treatment of the Respondent husband’s superannuation entitlement. The Respondent seeks an order that his “defined benefit pension interest” be deemed a financial resource or in the alternative, that his interest be considered as a separate pool when determining the alteration of property interests pursuant to section 79. The Applicant wife seeks that the husband’s application for the declarations be dismissed.
The Respondent husband is a member of the C Super Fund. His superannuation entitlements are now being paid by way of a permanent disability pension.
The matter has proceeded by way of written submissions and the material relied upon by both parties as set out in their written submissions filed on 6 December 2021 and 13 December 2021 respectively.
CONSIDERATION
Section 90XD of the Family Law Act 1975 (Cth) (The Act) set out the definition of an eligible superannuation plan. Relevantly, it means a superannuation fund within the meaning of the SIS Act. C Super Fund is a fund within the meaning of the SIS Act.
When pensions are in the payment phase, this can pose particular challenges to the court. There have been many decisions relating to the treatment of “invalidity” or “Permanent Disability Pensions.” Counsel for the Respondent relies upon the authority of Burge & Burge [2015] FamCA 178 and Surridge & Surridge [2015] FamCA 493. Both of which are first instance judgements and where the pension in the matter of Burge was not considered a superannuation interest and in Surridge, the court determined that the matter should proceed on a two pool’s approach.
As counsel for the Applicant wife points out, superannuation assets within the meaning of the Family Law Act are not financial resources, they are generally treated as assets. I agree with Council’s submission that both the text and structure of the Act and the Full Court authorities of the Family Court demonstrate that this is so. (section 90XC and section 90XS of the Act).
In Goudarzi & Bagheri (No 2) [2017] FamCAFC 190 it can be seen the extent to which the recent cases that deal with a pension in the payment phase as to whether it is an income stream and a financial resource rather than an asset available for distribution is unclear. In this case, the Full Court confirmed the uncertainty at [4] and thereafter discuss the different approaches, referring favourably to the majority in Semperton & Semperton [2012] FamCAFC 132 and acknowledging the wide discretion invested in a judge in the position of the primary judge.
In my view, some of that uncertainty is now remedied as a result of the decision in Campbell v Superannuation Complaints Tribunal [2016] FCA 808. In that case, Justice Logan heard an appeal from the Superannuation Complaints Tribunal and held that Mr Campbell’s vested entitlement to an invalidity pension was, for the purposes of the Family Law (Superannuation) Regulations 2001 (FLS Regulations), an “accumulation interest.”
By way of letter dated 17 June 2021 information provided by C Super Fund provides confirmation that the husband’s interest is a “superannuation interest in the payment phase”. That letter informs me that the interest is splittable and that the lump sum valuation of the disability pension, calculated using the standard method as prescribed in the Family Law Superannuation Regulations 2001 is $976,925.38 at 20 February 2021 and $979,524.79 at 27 May 2021. Furthermore, the Respondent husband has an option of taking a lump sum payment in lieu of his pension at ages 60 or 65.
In Hickey v Hickey [2003] FamCA 395 the Full Court of the Family Court set out a summary of the general nature of the remedial measures relating to superannuation interests as follows:
[16] The Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) came into force on 28 December 2002. Part VIIIB was inserted into the Act. That Part enables courts exercising jurisdiction under the Act, in appropriate circumstances, to make an order in relation to the superannuation interests of the parties to a marriage. In addition, the Part contains provisions enabling the courts to make orders binding on the trustees of superannuation plans. The Family Law (Superannuation) Regulations 2001 (the Regulations) provides machinery for, inter alia, the operation of the scheme including provisions relating to the valuation of superannuation interests and the mechanism for splitting superannuation payments once an order is made. The Superannuation Industry (Supervision) Amendment Regulations 2001 (No 3) enables parties and trustees to obtain a clean financial break for certain types of superannuation interests by the creation of a new interest, a roll over or transfer of the benefit and the payment of a lump sum in circumstances where the non-member spouse has met a condition of release. The Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2001 (Cth) and the Family Law Legislation Amendment (Superannuation) (Consequential Provisions) Act 2002 (Cth) effected consequential amendments to other complimentary legislation; extended the powers of the courts exercising jurisdiction under the Act; and identified additional responsibilities imposed on the trustees of superannuation funds under both the Act, the Regulations, the Superannuation Industry (Supervision) Act 1993 (Cth) and the Superannuation Industry (Supervision) Regulations 1994.
Here the respondent argues that his permanent disability pension is not superannuation because it is paid by virtue of a medical condition. A similar argument was advanced by Mr Campbell before Justice Logan. Justice Logan highlighted this in saying at [17]
The essence of Mr Campbell’s submissions was that superannuation was a benefit paid in respect of age retirement, whereas his invalidity pension benefit was paid by virtue of a medical condition which occasioned a degree of incapacity to undertake remunerative work. Intuitively, with respect to what constitutes “superannuation”, this submission is not without attraction, although it gives insufficient acknowledgement to the nuance that ill-health as well as age might occasion retirement. This is apparent from a meaning given to the word “superannuation” by the Oxford English Dictionary, particularly in relation to the usage of that word in Australia and New Zealand:
Money, or an allowance or pension, paid to a retired person, or one who can no longer work. Also: a fund providing this, or regular payment made towards such a fund by an employed person.
Regulation 5 of the Family Law Superannuation Regulation is important to this determination. It provides:
5 Meaning of defined benefit interest
(1) Subject to sub regulation (2), for these Regulations, a defined benefit interest is:
(a) a superannuation interest that a member spouse has in an eligible superannuation plan, being an interest in respect of the whole of which the member spouse is entitled, when benefits in respect of the interest become payable, to be paid a benefit that is, or may be, defined by reference to one or more of the amounts or factors mentioned in sub regulation (1A); or
(b) a component of a superannuation interest that a member spouse has in an eligible superannuation plan, being a component in respect of which the member spouse is entitled, when benefits in respect of the interest become payable, to be paid a benefit that is, or may be, defined by reference to one or more of the amounts or factors mentioned in sub regulation (1A).(1A) For sub regulation (1), the amounts and factors are as follows:
(a) the amount of:
(i) the member spouse’s salary at the date of the termination of the member spouse’s employment, the date of the member spouse’s retirement, or another date; or
(ii) the member spouse’s salary averaged over a period;
(b) the amount of salary, or allowance in the nature of salary, payable to another person (for example, a judicial officer, a member of the Commonwealth or a State Parliament, a member of the Legislative Assembly of a Territory);
(c) a specified amount;
(d) specified conversion factors.(2) A superannuation interest, or a component of a superannuation interest, is not a defined benefit interest for these Regulations if the only benefits payable in respect of the interest, or the component, that are defined by reference to the amounts or factors mentioned in sub regulation (1A) are benefits payable on death or invalidity.
In this instance it can be seen that the Respondent is receiving what the C Super Fund trustee calls a defined benefit income stream. However, pursuant to regulation 5(2) this is not a defined benefit because the benefits are being paid as a result of invalidity.
In relation to the decision of Burge referred to above Justice Logan makes the following comment at [31]:
Burge & Burge is consistent with the construction promoted by Mr Campbell but its authority for present purposes is very much diminished by the absence of any need, in light of the agreement reached, for Kent J to express any concluded view as to whether an invalidity benefit was a superannuation interest under Pt VIIIB of the Family Law Act or, for that matter, a “defined benefit interest” under the FLSR.
Ultimately Justice Logan makes the following concluded finding at [53]:
As noted, it is not disputed that the MSBS is a superannuation fund within the meaning of the SIS Act and thus, definitionally (s 90MD), an “eligible superannuation plan”. The definition of superannuation interest in s 90MD of the Family Law Act, “an interest that a person has as a member of an eligible superannuation plan” is perfectly apt to cover the interest which Mr Campbell has in his ongoing invalidity pension benefit, which benefit is and remains wholly attributable to his membership of the MSBS. His notion of an “over-ride” of the Deed, flowing from s 90MB(1)(c) of the Family Law Act, so as somehow to negate his status as a “member of an eligible superannuation plan” for the purposes of that Act is, with respect, misconceived. There is no “over-ride” of the Deed. Instead, having regard to the definition of “superannuation interest”, and to the terms of the Deed, the interest which the Deed has conferred on him to receive, subject to the terms of that Deed (which include the possibility of re-classification), namely his invalidity pension benefit, is a “superannuation interest” as defined.
It is quite clear that the Respondent is a member of C Super Fund and furthermore, it is clear that C Super Fund is a superannuation fund within the meaning of the SIS Act and is therefore by virtue of section 90XD an eligible superannuation plan.
I am satisfied that the Respondent has a superannuation interest as defined in section 90XD because his interest comes about by virtue of his membership. Furthermore, the correspondence of 17 June 2021 specifically states that the Respondent’s interest is a “superannuation interest in the payment phase”.
Accordingly, I am not satisfied that the Respondent’s interest in C Super Fund is a financial resource.
The Respondent seeks an alternative order that a declaration be made that his interest be dealt with as a separate pool when finally determining the adjusted property interests of the parties pursuant to section 79 of the Act.
As a starting point it is important to acknowledge that the High Court in Norbis v Norbis [1986] HCA 17 has held that either the global approach or the two pool’s approach is a legitimate exercise of the court’s discretion.
Furthermore, the overarching principle in relation to the exercise of section 79 of the Act is that orders must be just and equitable. In those circumstances without considering the overall assets of the parties and the value attributed to those assets, the contributions made and any section 75(2) matters it is premature to make a determination in relation to which approach the court should adopt. Particularly having regard to the fact that this decision relates to a discrete and preliminary matter.
For these reasons, the Respondent’s application is dismissed and I reserve the Applicant’s costs.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Middleton. Associate:
Dated: 28 January 2022
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