Clements and Clements (No.2)

[2014] FCCA 2615

FEDERAL CIRCUIT COURT OF AUSTRALIA

CLEMENTS & CLEMENTS (No.2) [2014] FCCA 2615

Catchwords:
FAMILY LAW – Property orders – s.79A application – whether the husband is obliged to effect a further superannuation split in fulfilment of the requirements of orders made in December 2012.

Legislation:

Family Law Act 1975, s.79A(1)

Applicant: MS CLEMENTS

Respondent: MR CLEMENTS

File Number: MLC 2119 of 2012

Judgment of: Judge Small

Hearing dates: 11 February and 12 November 2014

Date of Last Submission: 12 November 2014

Delivered at: Melbourne

Delivered on: 24 November 2014

REPRESENTATION

Counsel for the Applicant: Ms Smallwood

Solicitors for the Applicant: Stephen Farmer & Associates

Counsel for the Respondent:

Mr Mawson S.C. & Mr Matta (11 February)

Mr Holmes (12 November 2014)

Solicitors for the Respondent: Peter Falconer & Associates

ORDERS

1. Pursuant to s.79A(1) of the Family Law Act 1975, the Orders of 6 December 2012 shall be varied so that:

   (i)Order 20 reads:

   In addition to the amount of $183,379.04 split on 10 October 2013 from the husband’s entitlements in the (omitted) Superannuation Fund administered by (omitted) Financial Services Limited with (omitted) Pty Ltd as Trustee, the amount of $69,189 shall be determined as a base amount out of the interest held by the husband in the (omitted) Super Fund with (omitted) Investment Management as Trustee (“the (omitted) Fund”).

   (ii)Order 21 reads:

   For the purposes of these Orders:

   (a)     The Husband is the member spouse;

   (b)     The Wife is the non-member spouse:

   (c) The superannuation fund is the (omitted) Fund.

   (iii)In Orders 22, 23, and 25(a), the words “Superannuation Funds” are replaced by “Superannuation Fund”;

   (iv)Order 22 reads:

   The base amount allocated to the Wife out of the interest held by the Husband in the (omitted) Fund is the amount so ordered in paragraph 20 hereof.

   (v)Order 24 reads:

   The operative date for the purposes of the Orders in paragraphs 20, 21 and 22 hereof is 14 days after the service of these Orders upon the Trustee of the Superannuation Fund.

IT IS NOTED that publication of this judgment under the pseudonym Clements & Clements (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 2119 of 2012

MS CLEMENTS

Applicant

And

MR CLEMENTS

Respondent

REASONS FOR JUDGMENT

Introduction

1. Ms Clements and Mr Clements were married on (omitted) 1995. They separated on 1 February 2012. They are not yet divorced.

2. They have one child, X, who is now ten years old.

3. The parties settled their property dispute on 6 December 2012. Orders were made by consent including an order providing for a superannuation split of Mr Clements’ entitlements such that the sum of $231,161.00 was to be rolled over into a fund specified by Ms Clements.

4. Because of technical difficulties that split was not effected until October 2013 and then only partially.

5. The parties are now in dispute as to what (if any) further superannuation split would entirely fulfil the requirements of the 6 December 2012 orders.

6. Therefore, the issues to be decided in this case are:

   A.     Is the wife entitled to a further superannuation split by operation of the orders of 6 December 2012?

   B.If the answer to that question is yes, what further sum should form the base amount to complete the superannuation split ordered on 6 December 2012?

Procedural History

1. Ms Clements filed an Initiating Application and Affidavit in support on 9 March 2012 in which she sought parenting and property settlement orders.

2. Mr Clements filed his Response on 16 April 2012 together with an Affidavit in support.

3. The matter was listed for final hearing on 4 December 2012 for two days when final property orders were made by consent before Federal Magistrate Riethmuller (as he then was).

4. On 31 January 2014, Ms Clements filed an application under s.79A of the Family Law Act 1975 for variation of the Orders of 6 December 2012 to effect a further superannuation split from the husband’s entitlements. 

5. That matter was heard initially by way of submissions which were, in a sense, tacked on to the parties parenting orders trial on 11 February 2014.

6. I gave judgment on the parenting orders application on 1 May 2014 but asked the parties to provide further evidence as to exactly what orders they sought in relation to the further superannuation split. That is, I asked them to tell me what amount, if any, I should order by way of a further superannuation split to give full effect to the Orders of 6 December 2012.

7. I listed the matter for mention on 12 November 2014 in circumstances which are described below.

8. On that date, an Affidavit sworn by an actuary engaged by the wife was handed up and I gave leave for it to be filed without any objection from the husband’s counsel.

9. As these reasons had essentially been drafted between the hearing on 1 February and 12 November 2014, the matter was adjourned for judgment so that I could consider the Affidavit of the actuary.

The Issues and the Evidence

A.     Is the wife entitled to a further superannuation split by operation of the orders of 6 December 2012?

1. The relevant property orders made on 6 December 2012, whose operation is now in dispute, state as follows:

   20. The amount of $231,161.00 shall be determined as a base amount out of the interest held by the husband with the (omitted) Superannuation Fund administered by (omitted) Financial Services Ltd with (omitted) Pty Ltd as Trustee in its entirety and as to the balance required to make up the Base Amount from (omitted) Superannuation Fund with (omitted) Investment Management Ltd as Trustee (“Superannuation Funds”).

   21. For the purposes of these Orders:

   (a)     the Husband is the member spouse;

   (b)     the Wife is the non-member spouse;

   (c) the superannuation fund is the Superannuation Funds.

   22. The base amount allocated to the Wife of the interest held by the Husband in the Superannuation Funds is the amount so ordered in paragraph 21 hereof.

   23. In accordance with section 90MT(1)(a) of the Family Law Act 1975 whenever the Trustee of the Superannuation Funds makes a splitable (sic) payment of the interest held by the Husband in the Superannuation Funds, the trustee shall pay to the Wife the entitlement calculated in accordance with Part 6 of the (Superannuation) Regulations 2001 and there is a corresponding reduction in the entitlement of the Husband would have had (sic) but for these Orders.

   24. The operative date for the purpose of the Orders in paragraph 21(a), 21(b) and 21(c) herein is 14 days following the making of these orders.

2. The meaning and operation of those orders at the time of their making is fairly clear in my view: on the operative date, Ms Clements would receive superannuation entitlements worth $231,161.00 from Mr Clements’ superannuation entitlements, and if the whole of the amount held in the (omitted) Superannuation Fund were not enough to satisfy that amount then the remainder would be taken from Mr Clements’ entitlement in the (omitted) Superannuation Fund.

3. Mr Matta, for the husband, submitted that “it’s not a matter for this court, or any court for that matter, to look behind the intent of the orders”[1].

   [1] Transcript p 155 paragraph 45.

4. I agree. The authorities are clear on that point. However, it is the operation of the orders and not their intent that is the subject of this judgment.

5. On the operative date, 20 December 2012, the amount of the husband’s interest in the (omitted) Superannuation Fund was $148,707.51. Had the rollover taken effect on that day, the sum of $82,453.49 would have remained to be rolled over from his (omitted) Fund.

6. The complication in this matter arises because one small procedural issue had been neglected by the parties’ lawyers.

7. Before 6 December 2012, the trustees of the relevant superannuation funds had been provided with a set of proposed orders to which they had agreed. Those, however, were not the orders actually made on 6 December 2012. That is a serious omission, and if either party considers that he or she has been disadvantaged by it in light of the orders I make today, then they are of course at liberty to take that matter up with their respective lawyers.

8. In any event, when presented with the orders, the trustees refused to release the entitlements and it was not until 10 October 2013, after much correspondence between the solicitors for the parties and the trustees, that the split was partially effected.

9. It is not in contention between the parties that on 10 October 2013 an amount of $183,379.04 was rolled over to Ms Clements’s superannuation fund from Mr Clements’ entitlements in the (omitted) Superannuation Fund. Prima facie, the sum of $47,781.96 remains to be paid from the (omitted) Superannuation Fund to bring the amount to the $231,161.00 specified in the 6 December 2012 orders.

10. However, the delay in transferring the entitlement has given rise to a dispute as to whether Ms Clements is entitled only to the base amount of $231,161 specified in Orders 20 to 24 of 6 December 2012, or whether she is entitled to the accumulated interest that would have accrued to that sum had it been rolled over on the date foreshadowed in the orders. That date was 14 days after the making of orders on 6 December 2012 – that is on 20 December 2012.

11. Obviously the accumulation to the husband’s interest in the (omitted) Superannuation between 20 December 2012 and 10 October 2013 was $34,671.53[2].

    [2] The difference between the $148,707.51 that existed at 20 December 2012 and the $183,379.04 which was rolled over on 10 October 2013.

12. So the issue before the court is whether Ms Clements is entitled to a variation in the Orders of 6 December 2012 which would provide for a further superannuation split to account for the shortfall and interest which would have accrued on the total sum of $231,161.00 from 20 December 2012.

13. Ms Clements says that she is so entitled, as she was entitled to the whole payment on 20 December 2012 and any interest accruing on that sum should (and would) have been hers from that date. She says that she is entitled to the sum already paid, the amount of the rest of the payment ($47,781.96) plus its interest, plus the interest of $34,671.53 on the 20 December sum of $148,707.51, which, she says, comes to a total of a further $87,453.49.

14. Mr Clements argues that the orders of 6 December 2012 require the rollover only of the stated sum of $231,161.00 and he has rolled over $183,379.04 of that sum. He says he therefore should have to roll over only the sum of $47,781.96 to Ms Clements.

15. As I calculate the figures, Ms Clements has already had the benefit of the following sums:

    ·The sum in Mr Clements' Superannuation Fund as at 20 December 2012 of $148,707.51

    ·The accumulation on that sum of $34,671.53 from 20 December 2012 to 10 October 2013

    ·Any accumulation on that resulting total sum of $183,379.04 since 10 October 2013.

16. She has not had the benefit of the remainder of the original sum ordered, that is $47,781.96, or its accumulated interest.

The Law

1. Ms Clements’ application in this matter is made under s.79A of the Act which provides for a variation to final property orders to be made in certain circumstances. Those circumstances are set out in s.79A(1) of the Act, which states as follows:

   Where on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

   (a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or

   (b)     in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or

   (c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or

   (d)     in circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or

   (e) a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;

   the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside

2. In submissions, counsel for the wife asserted that the application made is “a mechanical thing and it would be any other circumstance”[3].

   [3] Transcript p160 paragraph 15.

3. I take that to mean that the application is brought under s.79A(1)(a).

4. The fact that the superannuation split ordered on 6 December 2012 did not take place until 10 October 2013, and then only partially, is, in my view, a circumstance which has given rise to a miscarriage of justice under that section.

5. If the superannuation split had been effected on 20 December 2012 as the orders of 6 December 2012 mandated, Ms Clements would have had the benefit of any interest accruing on the whole sum rolled over from that date. It is none of her doing that she has not had that benefit.

6. It seems to me to be a matter of simple logic to say that she is therefore entitled to that interest.

7. I am not an actuary. On 1 May 2014, I therefore asked the parties to provide me with an agreed figure which would account for the remaining $47,781.96 and its accumulated interest.

8. Nothing was received from the parties despite that fact that on at least two or three occasions between 1 May and 30 September 2014 my chambers staff contacted the parties’ solicitors to inquire as to what was happening.

9. Finally, after several requests for the information being made by my chambers, I was forced to list the matter for mention on 12 November 2014.

10. On that day an Affidavit sworn by Mr D, actuary (“Mr D”), on 11 November 2014 was handed up.

11. Attached to that Affidavit is a report which calculates what Ms Clements’ superannuation entitlements in the (omitted) Superannuation Fund and the (omitted) Super Fund would have been on 11 November 2014 if the whole of the $231,161.00 had been rolled over from Mr Clements’ entitlements on 20 December 2012.

12. Mr D’s report, which is the only evidence the court has as about the calculations, states the following:

    ·Ms Clements’ entitlements in the (omitted) Superannuation Fund would have been $281,484

    ·Her actual entitlements in the (omitted) Superannuation Fund are $297,237.

    ·Ms Clements’ entitlements in the (omitted) Super Fund would have been $228,595.

    ·Her actual entitlements in the (omitted) Super Fund are $143,653.

13. When Ms Clements’ actual total entitlements ($440,890) are subtracted from the entitlements she would have had if the full superannuation split had been effected on 20 December 2012 ($510,079), the amount remaining is $69,189.

14. Therefore, as I have found that it would be a miscarriage of justice for Ms Clements not to receive the full effect of the Orders of 6 December 2012, she is now entitled to a further superannuation split of $69,189.

Conclusion

1. Mr Clements’ argument is essentially that he should be entitled to the windfall which results from the fact that accurate procedural fairness was not afforded to the trustees.

2. I cannot see how allowing him to retain that windfall could be other than a miscarriage of justice. The order I propose to make places him in no worse a position than that ordered on 6 December 2012, while Ms Clements will be in a considerably worse position than she was in at that time if I do not make an order.

3. Therefore, the Orders of 6 December 2012 will be varied to account for an extra superannuation splitting payment of $69,189.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Small

Date:  24 November 2014