Clives v Clives - [2005] FamCA 430

[2005] FamCA 430

FAMILY LAW ACT 1975

IN THE FULL COURT OF

THE FAMILY COURT OF AUSTRALIA

AT SYDNEY Appeal No. EA 35 of 2004
File No. SYF 3350 of 2002

BETWEEN:

Appellant Husband

-and-

Respondent Wife

REASONS FOR JUDGMENT

BEFORE: Bryant CJ, Finn, Coleman, Warnick & O’Ryan JJ

DATE OF HEARING: 15 September 2004

DATE OF JUDGMENT: 2 June 2005

APPEARANCES:

Mr Lethbridge of Senior Counsel with Ms Winfield of Counsel (instructed by White Barnes Solicitors) appeared on behalf of the appellant husband.
Mr Stewart of Counsel (instructed by Flynn Conn Solicitors) appeared on behalf of the respondent.

APPEAL SUMMARY

MATTER:W and W
APPEAL NUMBER: EA 35 of 2004
(SYF 3350 of 2002)

CORAM:Bryant CJ, Finn, Coleman, Warnick and O’Ryan JJ
DATE OF HEARING: 15 September 2004

DATE OF JUDGMENT: 2 June 2005

CATCHWORDS: FAMILY LAW – APPEALS – PROPERTY SETTLEMENT – SUPERANNUATION INTERESTS – ASSESSMENT OF CONTRIBUTIONS – Trial Judge found to have erred in failing to give weight to the increase in the husband’s superannuation interest between separation and trial and the husband’s contribution to that increase – Discussion of the merits of adopting an asset by asset approach to assessing contributions to superannuation interests where the time between separation and trial is lengthy – SECTION 75(2) ADJUSTMENT – Trial Judge found to have erred in concluding in the context of the s 75(2) matters that the husband’s superannuation far exceeded that of the wife in circumstances where a splitting order was to be made in relation to the husband’s superannuation interest in favour of the wife – TREATMENT OF SUPERANNUATION – FORM AND CONTENT OF SPLITTING ORDER – Requirement for an operative time to be specified in a splitting order discussed – As a general rule, the operative time should be the date of valuation of the interest – Whether a splitting order ought to be made on an “in personam” rather than on an “in rem” basis.
FAMILY LAW – APPEALS – APPLICATION TO ADDUCE FURTHER EVIDENCE – Application to adduce further evidence of the impact on both parties’ future superannuation entitlements of the splitting order in relation to the husband’s superannuation interest made in the wife’s favour – Further evidence not received as the grounds of appeal had already been found to have sufficient substance to warrant the Full Court’s interference and because the further evidence did not sufficiently set out what the impact of the splitting order would be.
FAMILY LAW – APPEALS – RE-EXERCISE OF THE DISCRETION – Both parties requested the Full Court re-exercise the discretion if the appeal was found to have substance – Refusal to re-exercise the discretion.

Caselaw cited:

Kowaliw (1981) FLC 91-092

Gronow v Gronow (1979) FLC 90-716

Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143

Appeal allowed and matter remitted for re-hearing.
Application to adduce further evidence dismissed.
Directions made for the filing of submissions as to costs.

This is an appeal by the husband against an order for property settlement made by Lawrie J on 10 February 2004 after a hearing conducted on 21 and 22 July and 5 December 2003. The intended effect of her Honour’s orders was to divide a pool of property which she had found to have a net value of $470,601 and which included superannuation interests valued at $214,293, in the proportions of 60% to 40% in favour of the wife.
There is no challenge on the appeal to her Honour’s findings in relation to the value of the property, including the value of the parties’ superannuation interests. Rather, the challenge relates to her Honour’s assessment of the parties’ contributions, to her adjustment on account of the matters contained in s 75(2) of the Family Law Act 1975 (“the Act”), and thus to the justice and equity of her 60% to 40% division in favour of the wife; in addition to her Honour’s treatment of the parties’ superannuation interests both in arriving at the 60% to 40% division in favour of the wife and in the terms of her order so far as it related to a division of the husband’s superannuation interest is challenged.

The judgment and orders of the trial Judge

Her Honour commenced her judgment with the following findings concerning the factual background of this case:
·the husband (born 1948) and the wife (born 1950) married and began cohabitation in March 1971; they separated after 26 years in August 1997;
·the marriage produced four children born, respectively, in 1972, 1979, 1981 and 1982; and
·when the parties separated, the second eldest child (then not quite 18) and the youngest child (then not quite 15) had continued to live and remained living in the matrimonial home with the husband, with the wife paying no child support for those children who had remained with the husband.
After referring to the so called “four stage approach” to the determination of a property settlement application, her Honour found the property of the parties to be as follows:
·the former matrimonial home with an agreed value of $280,000;
·a property owned by the wife and her new partner valued at $60,250;
·the husband’s Mitsubishi vehicle valued at $2,000;
·the husband’s State (NSW) Superannuation which was (according to her Honour) agreed in a joint statement of experts to be worth $120,997 as at 28 August 1997 (that is, at separation) and $197,467 as at 17 July 2003 (that is, just prior to the trial);
·the wife’s superannuation with AXA $5,359;
·the wife’s superannuation drawn down and spent $10,000; and
·the wife’s retirement security plan $1,467.
Her Honour then found that there were two mortgages registered on the former matrimonial home with balances of $28,942 and $57,000 respectively.
She concluded that the total pool was $556,543 and the liabilities were $85,942 resulting in a net pool of $470,601. She noted that of “the net pool of $214,293 (45.53%) is in the form of superannuation”.
Her Honour also found that since separation, the wife had incurred significant debts including a Visa credit card debt of $8,700 and an AGC loan of over $9,000.
In the context of her consideration of the parties’ contributions, her Honour considered the husband’s claims concerning the wife’s drinking and gambling during the marriage and the adverse effect which these activities had had on the parties’ ability to save. However, her Honour was not persuaded that the wife’s behaviour should be taken into account against her.
Her Honour concluded that up until separation, the wife’s contributions should be assessed at 60% with the husband’s at 40% on the basis, it would seem, of the wife’s contributions as a wage-earner and parent. However, having regard to the husband’s contributions after separation to the matrimonial home and to the raising of the children who remained with him, her Honour adjusted her contribution assessment to one of equality.
So far as the s 75(2) factors were concerned, her Honour concluded that an adjustment of 10% in the wife’s favour was warranted because:
·the husband had “much greater superannuation that the wife which would “provide him with financial security for the future”; he also had long service leave worth $14,000 while the wife had debts;
·the wife was living at a lower standard than the husband because the husband had retained, and had the use of, the principal asset which the parties had accumulated;
·the wife had borne the brunt of the financial impact of raising the children in that she did not have continuity of employment with consequential benefits such as long service leave and superannuation; and
·the wife’s de facto partner was on a disability pension with no resources other than being a joint owner of a property (which the wife had apparently purchased).
Having concluded that the property should therefore be divided on a 60% to 40% basis in favour of the wife, her Honour then concluded:
45.This means that the wife should receive $282,360.60. The wife seeks that she receive cash rather than an interest in the husband’s superannuation. Of the wife’s share of 60% of the total pool I consider it is just and equitable that the makeup of the wife’s share should be the same as the makeup of the pool, that is that of the $282,360.60, 45.53% should be in the form of superannuation. 45.53% of the wife’s share of $282,360.60 is $128,558.78. Of that she has in her own name $16,826. There is therefore $111,732 to be allocated to her from the husband’s superannuation. I consider that this course is appropriate as it would not be just and equitable for the husband to have most of his share of the property in a form which was unavailable.
46.In terms of non superannuation assets the wife has therefore a balance to receive of $282,360 less $128,558 which is $153,802. The value of the home in which she is living is $60,250. That leaves a balance of $93,552 to be paid to her by way of cash.
The significant provisions, for present purposes, of the order then made by her Honour are as follows:
1.That pursuant to Part VIIIB of the Act that the superannuation interest of the husband in State Super be reduced by an amount of $111,732 (the base amount) and from the amount by which the husband’s interest as reduced an interest can be created in the name of the wife equal to the base amount.
2.That within one month the husband pay to the wife the sum of $93,552 and that upon the husband so doing the wife transfer to the husband all her right title and interest in the former matrimonial home … and thereafter the husband indemnify and keep indemnified the Wife in respect of:
a.first mortgage to St. George Bank … and
b. second mortgage to St. George Bank …

The grounds of appeal

The ten grounds of appeal relied on by the husband before us raise two broad, and to some extent interrelated, groups of issues. First, there are challenges to her Honour’s assessment of the parties’ contributions; to her “s 75(2)” adjustment; and to the overall justice and equity of her award. Secondly, there are challenges to her Honour’s treatment of the parties’ superannuation interests both in the terms of the orders she made and in the way in which those interests were taken into account for purposes of the assessment of contributions, the s 75(2) adjustment and the consideration of the overall justice and equity of the award.
Notwithstanding that the argument before us was directed primarily to the “superannuation aspects” of the appeal, we consider that the logical approach to dealing with the issues which arise on this appeal, is to address first her Honour’s exercise of the discretion and to do so following the so called “four stage approach” which her Honour used. In the context of examining her Honour’s approach to the matters contained in s 75(2) of the Act, we will consider an application by the husband to adduce further evidence concerning the effect of the splitting order which her Honour made in relation to the husband’s superannuation interest. Finally, we will consider a number of technical issues relating to the form of that splitting order.

The trial Judge’s assessment of the parties’ contributions

Grounds 1, 2 and 4 are directed to her Honour’s assessment of the parties’ contributions and are in the following terms:
1.Her Honour erred in failing to give adequate weight to the evidence that in the 6 years since separation the Husband had;
(a)spent $37,000 in improvements to the former matrimonial home valued at $280,000.00 for the proceedings;
(b)paid the mortgage ahead by $17,000.00 since separation;
(c)from June 2002 made mortgage payments on the home which the Wife purchased after separation;
(d)after separation increased the value of his superannuation by 30% of its value at separation from ($120,997 to $197,467.48);
(e)provided sole support and care from (sic) [the child L] for 3 months and for [the child S] for 3 years and 4 months without child support from the Wife
and in the principles to be applied pursuant to section 79(4) in finding:
(f)that to separation the Wife’s contribution was 60% and the Husband’s 40% (paragraph 40); and
(g)that the Husband’s post separation adjusted to (sic) “50% to the Wife’s 50%” (paragraph 41).
2.Her Honour erred in failing to give adequate weight to the evidence that on the Wife’s own evidence she drank in the evenings from 1986 to 1989 and from 1994 to separation in 1997 and that she was withdrawing sums of money which she put through poker machines (on the evidence no less than $12,000) and in finding at paragraph 40:
“In terms of contribution I would have seen the wife as having made a greater contribution up to the date of separation… 60% to the Wife and 40% to the Husband”.
…
4.Her Honour erred in failing to [give] adequate weight to the evidence that in the 6 years since separation the Husband had increased the value of his superannuation by 38% of its value at separation from ($120,997 to $197,467.48) and in finding at paragraph 45 “There is therefore $111,732 to be allocated to her from the husband’s superannuation,[”] which amounted to 92.34% of its value at separation and 56.58% of its value at hearing.
In the course of her discussion of the parties’ contributions, her Honour recorded her impression of the parties as witnesses and she also discussed the husband’s claims concerning the wife’s drinking and gambling. Thus, for purposes of our discussion of grounds 1, 2 and 4, it is necessary to set out in its entirety her Honour’s discussion of the parties’ contributions:
21.There was a disagreement between the parties as to the contributions which had been made during the marriage.
22.The husband presented as being very bitter and critical of the wife and very suspicious of her. His application seeks that the wife receive about a quarter of the assets.
23.The husband has remained in the same employment since separation whilst the wife has not been able to obtain employment. She says that this is because none is available in the area in which she lives. The husband says that this is a deliberate choice by the wife.
24.The husband also says that during the marriage the wife was drinking and gambling and that if she had not been doing so the parties would have been able to accumulate savings. He points to the improvement in his financial position since the wife’s departure.
25.The husband says that during the marriage, the wife handled all the financial affairs of the parties. He says that his income went to a bank account and was all used by the family but that the wife kept her money. He says that it was not until towards the end of the marriage that he began to look at the bank statements and to “take over the financial management of the house.”
26.He says that when he asked the wife for an explanation as to why there had been three withdrawals from the bank on the one day, 26 June 1997, she was angry and would not give him an explanation. This was about three months before separation.
27.The first withdrawal is at a St. George automatic teller machine … for $50. The second with a [different] St. George Automatic teller … for $300, and the third is an Eftpos withdrawal from [a supermarket in] Gosford for $183.95. I would not see that as an extraordinary pattern of withdrawal for someone who was working a considerable distance from home and living in a family with four children.
28.The second claim is that he has examined the St. George Bank Statements for 1996 and 1997 and “I found that there was between $5,000 to $7,000 each year of 1996 and 1997 which had been withdrawn by the Respondent at various clubs....” The husband annexes copies of the statements ... with the St. George Bank. He has a mark beside various withdrawals.
29.If however all of those withdrawals in the calender year 1996 which explicitly refer to a club … are added up they do not come to $5,000. They total $2,680 (an average of $51 per week). Various other withdrawals are marked by the husband which appear to be normal automatic tellers … but without any reference to a club. These have been marked and included by the husband, as have for instance a reversal on 22 December 1996 where $60 was withdrawn twice but with a reversal, is apparently included at $180.
30.The husband not only in this example, tended to exaggerate the financial “misdeeds” of the wife. At the same time he tended to understate both his income and his assets. He did not include his long service leave, or the fact that he had a new Nissan Pulsar motor vehicle.
31.The husband has made the greater contribution to maintenance and improvement of the former matrimonial home since separation, but he has also had the sole use of it. It is a comfortable home with a swimming pool. After the separation the husband with the assistance of friends completed landscaping around the pool installed a downstairs toilet, replaced further carpets, repaired old guttering and downpipes and painted the interior of the house.
32.The husband has also made a significant contribution to the acquisition of the wife’s property as he has made the payments on the second mortgage which secured the loan which was used to purchase the wife’s property. This property is extremely basic and really consists of a fitted-out shed on rural ground… The husband says that the wife has made a “lifestyle” choice and that this should not be held against him.
33.The wife impressed as a more measured witness who made various admissions against interest in terms of her drinking and gambling. In addition to the four children who reached adulthood the wife also had three further pregnancies, suffering two miscarriages and one termination.
34.The wife had shown some emotional frailty during the marriage. She had a period in 1983 during which she was admitted to a psychiatric hospital. This was a time when the parties had one income and the wife was at home with four children. She says that she was very stressed because there was not enough income coming into the home. Her mother flew out from Ireland to look after the children. It took her “about a year” to recover. When she was well she returned to the workforce which relieved the financial pressures.
35.She was not happy at her work and not happy in the relationship. She started drinking in the late 1980s. Whilst it moderated at different times at 1995 she was drinking half a cask of wine a day. It is however notable that she retained her employment during the whole of this time.
36.Even if all money withdrawn at clubs was being spent on gambling and drinking, I would not see it as being evidence that the wife behaved in a way designed to reduce or minimise the value of the assets or that the wife had acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their values. In other words I would not see that her behaviour fell within the guidelines set out in Kowaliw’s case (1981) FLC ¶91-092.
37.I accept also her evidence as to how she applied her income for the benefit of the family.
38.In terms of the descriptions of the marriage’s finances, I prefer the evidence of the wife, who I thought was a more accurate witness, to that of the husband and also the child whom he called as a witness to support him, whose evidence was coloured by very obvious bitterness. I also accept that her difficulties with employment are genuine and that the financial difficulties she found herself in are in large measure attributable to her leaving the marriage with an inadequate access to the resources which she had helped to accumulate over twenty-six years.
39.This was a long marriage where four children were raised. The husband has been in steady employment. He has been a shift worker for much of the marriage. The wife has worked a number of jobs, at times her income exceeded the husbands. In addition I accept her version of the contribution which she made as a parent.
40.In terms of contribution I would have seen the wife as having made a greater contribution up to the date of separation. I would have seen the contributions at that stage as 60% to the wife and 40% to the husband.
41.Since the separation the husband has made the greater contribution both in terms of direct financial contribution to the maintenance and improvement of the former matrimonial home and the acquisition of the wife’s property and to the raising of the children who remained with him in the home. Against that he has had the comfortable accommodation that the matrimonial home provided. I would have seen his contribution adjusting to 50% to the wife’s 50%.

We are not persuaded that there is any substance in the husband’s complaint, contained in ground 2, to the effect that her Honour did not give adequate weight to the wife’s own evidence concerning her drinking and her spending on poker machines. In paragraphs 27, 28, 29 and 35 her Honour analysed the evidence concerning the wife’s expenditure and drinking and she expressed her conclusions in relation to this evidence. In paragraph 33 of her judgment, her Honour referred expressly to the wife’s own evidence about these matters and also to the impression which the wife created as a witness. Her Honour had earlier in paragraph 30 referred to the impression which the husband had created as a witness. She ultimately concluded in paragraph 36 that the evidence did not establish that “[the wife’s] behaviour fell within the guidelines set out in Kowaliw’s case (1981) FLC 91-092.”
In these circumstances, the following observations of Stephen J in Gronow v Gronow (1979) FLC 90-716 at 78,849 are in our view particularly pertinent:
When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.
Thus, as we have said, we are not persuaded that ground 2 has substance.
There is, however, considerably more substance in the complaint contained in ground 4 and also in ground 1(d) to the effect that her Honour did not give adequate weight to the fact that in the six years from separation to trial, the husband’s superannuation with the NSW State Superannuation Scheme had increased from $120,997 to $197,467, that is, an increase in the order of 30%.
It seems clear from the material before us that her Honour had before her:
·as part of the wife’s case, an affidavit sworn 16 July 2003 by an accountant Suzanne Louise Delbridge-Bailey with an annexed report containing a valuation in accordance with the Family Law (Superannuation) Regulations 2001 (“the Regulations”) of the husband’s superannuation interest in the State scheme as at 28 August 1997 being the time of the parties’ separation and being a valuation of $120,997;
·also as part of the wife’s case, a further affidavit by Ms Delbridge-Bailey sworn on 17 July 2003 to which was annexed “a supplementary report” containing a valuation of the husband’s interest in the same scheme as at 17 July 2003 (which was a few days prior to commencement of the trial before Lawrie J), being a valuation of $198,872; and
·as part of the husband’s case an “advice” dated 2 December 2003 from a lawyer Mr Stephen Bourke also containing a valuation of the husband’s interest in the State scheme as at 17 July 2003 and also carried out in accordance with the Regulations. Mr Bourke valued the husband’s interest at $197,467.48.
There is a small discrepancy in the valuations as at 17 July 2003 of Ms Delbridge-Bailey and Mr Bourke, but the valuation as at 17 July 2003 was apparently agreed at $197,467. It was also apparently agreed that, as at separation (August 1997), the valuation was $120,997. (It would seem that there was a joint statement from both experts about these matters before her Honour but it does not appear in the Appeal Book.)
When early in her judgment her Honour set out a list of the parties’ property, she included the superannuation interest of the husband at its agreed valuation as at separation and also at its agreed valuation at hearing. However, her Honour made no further reference to this increase in the husband’s superannuation interest nor to the reasons for this increase in the period between separation and hearing either in her consideration of the post separation contributions of the parties (which, given the husband’s continued employment during the separation period, is the context in which one would expect to find reference to the increase), or elsewhere in her judgment.
Further, when her Honour came to divide the parties’ property according to the percentages (60% to 40%) upon which she had determined, she appears to have done so in relation to a pool which included the value of the husband’s superannuation interest at the hearing (as opposed to at separation).
In our opinion, the increase in value of the husband’s superannuation between separation and trial and the reasons for that increase were important matters in the circumstances of this case where the assets are relatively few and the husband had continued his employment in the post separation period. It could be assumed in the absence of any other evidence that the reason for the increase in the value of the husband’s superannuation was his continuing employment. Her Honour’s failure to refer to these matters (other than in her findings concerning the pool of property) would support the conclusion that she failed to give these matters adequate, or indeed any, weight. We consider that this was a significant error which requires our intervention.
It should be observed that this error illustrates that it may well be useful for an asset by asset approach to be employed in cases where the parties have significant superannuation interests, particularly where there has been a relatively long period of time between separation and trial, or in a case where a significant portion of a party’s superannuation interest or of other assets has been acquired prior to the parties’ cohabitation. In such circumstances, the asset by asset approach is likely to facilitate the evaluation of the parties’ direct and indirect contributions to the acquisition, conservation and improvement of their assets (including their superannuation interests).
As to the complaints by the husband that her Honour did not attach sufficient weight to the mortgage payments, improvements to the home, and support of the children in the separation period, her Honour made mention at least in a general way of all of these matters in the course of considering the parties’ contributions (see paragraphs 31, 23 and 41 of her judgment). It seems clear, however, that she effectively set off these matters against the husband’s occupation of the home, in determining the weight which should be accorded to them. Given her Honour’s failure to refer to the increase in value of the husband’s superannuation in the separation period, it seems likely that the 10% adjustment, which was made in the husband’s favour to the 60% to 40% assessment in the wife’s favour of contributions prior to separation, was in fact made on account of all the husband’s post separation contributions (other than the superannuation increase). We consider that adjustment would be well within an appropriate exercise of the discretion. Accordingly, we conclude that there is no substance in the complaints made concerning the weight given to the husband’s post separation contributions (other than the increase in his superannuation interest).

The s 75(2) adjustment made by the trial Judge

Grounds 6 and 7 are directed to her Honour’s s 75(2) adjustment and are in the following terms:
6.Her Honour erred in failing to [give] adequate weight to the evidence of the Wife that she had worked since separation and moved to the rural property by choice and in finding at paragraph 43 “To take account of those factors (section 75(2) factors) there should be an adjustment in favour of the Wife of 10%.[”]
7.Her Honour erred in failing to give adequate weight to the health problems suffered by the Husband the consequent possible effect on his ability to continue working.
Her Honour’s discussion of the s 75(2) matters was as follows:
42.In terms of the section 75(2) factors I would see the following as being most relevant 75(2) matters. The matters to be so taken into account are:
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment.
Both the parties have the physical and mental capacity for appropriate gainful employment although the husband has some physical difficulties that make an earlier rather than a later retirement likely. He has much greater superannuation than the wife. It will provide him with financial security in the future. Although it is included in the pool at $197,467 if he were to retire at 58 (March 2006) he would be entitled to $258,878. The wife has “lost” the bulk of her superannuation because it was needed for living expenses. Because of the number of jobs which she has had for shorter periods she has had termination sums which have been contributed to the family, whereas the husband’s have all been contributed to the one fund. The husband has been able to accrue Long Service Leave worth $14,040. The wife has also incurred the finance company debt because she was unable to acquire a motor vehicle. The husband has always had a motor vehicle.
(g)where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable.
The wife is living at a much lower standard of living than the husband because the husband has retained for his own use the principle item of property which the parties accumulated.
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
I would see the wife as having borne the brunt of the financial impact of the raising of the children in not having the same continuity of employment as the husband with the consequential benefits in relation to such matters as long service leave and superannuation.
(m)if either party is cohabiting with another person - the financial circumstances relating to the cohabitation
The wife is in a de facto relationship. Her partner is on a disability pension and has no resources other than being a joint owner of the wife’s property.
43.To take account of those factors there should be an adjustment in favour of the wife of 10%.
In relation to ground 10, we cannot be confident from what was said by her Honour under the heading of the matters mentioned in paragraph (b) of s 75(2), that her Honour had regard to the fact that the wife had worked since separation, and it would certainly seem that she had no regard to the fact that the wife had moved to a rural property by choice. Thus ground 10 appears to have substance.
So far as ground 7 is concerned, while her Honour did make a brief reference to the husband’s health problems and the possibility of his early retirement, we find it difficult to assess whether appropriate weight was given to that matter. This is because we have considerable reservations as to whether it was appropriate for her Honour to take into account the matters which she apparently took into account in favour of the wife under paragraphs (g), (k) and (m) of s 75(2). But, the husband’s grounds of appeal do not appear to be directed to these matters which are subject to our reservations.
However, the real difficulty, in our view, with her Honour’s 10 % adjustment in favour of the wife on account of the s 75(2) matters arises because of her statement under the heading of the matter mentioned in paragraph (b) of s 75(2), that the husband “has much greater superannuation than the wife. It will provide him with financial security in the future.”
This finding or conclusion by her Honour and its apparent consequences or impact on her final award is the subject of grounds 3, 5 and 9 of the husband’s grounds of appeal which are in the following terms:
3.Having found at paragraph 42(b) that the Husband “has much greater superannuation than the Wife. It will provide him with financial security in the future” Her Honour erred [by] failing to take into account the impact of the order she was making in reducing the Husband’s superannuation by $111,732 which amounted to 56.58% of its value at hearing or 92.34% of its value at separation.
…
5.Her Honour erred in failing to [give] adequate weight to the impact of reducing the Husband’s superannuation by $111,732 and in finding at paragraph 42(b) that the Husband “has much greater superannuation than the Wife. It will provide him with financial security in the future”.
…
9.Her Honour erred in failing to consider the effects of the order 1 by her, and in failing to take into account the impact of the application of Regulation 45D of the Family Law (Superannuation) Regulations 2001 and accumulation interest payable on the fund.
Regulation 45D, which is referred to in ground 9, is in the following terms:
(1)The rate of interest that applies to a superannuation interest in an adjustment period is the interest rate that applies to the interest for the adjustment period under this regulation.
(2)If the whole of the superannuation interest is an accumulation interest (other than an interest in a self managed superannuation fund), the interest rate for the adjustment period is:
(a)for an interest in a regulated superannuation fund, an approved deposit fund or an RSA:
(i)the rate of any allotment (being the allotment of a positive amount, a nil amount or a negative amount) to the member spouse of net earnings of the eligible superannuation plan for the adjustment period; or
(ii)if there has been no such allotment to the member spouse for the adjustment period, the rate at which net earnings of the plan would be allotted to the member spouse if he or she voluntarily ceased to be a member of the plan on the day when the relevant splittable payment becomes payable or the terminating action, within the meaning given by subregulation 45C (2), occurs; and
(b)if the interest is in an exempt public sector superannuation scheme or a superannuation fund that is not a regulated superannuation fund:
(i)the rate of any allocation (being the allocation of a positive amount, a nil amount or a negative amount) to the member spouse of investment earnings (however described) of the eligible superannuation plan for the adjustment period; or
(ii)if there has been no such allocation to the member spouse for the adjustment period, the rate at which those investment earnings would be allocated to the member spouse if he or she voluntarily ceased to be a member of the plan on the day before the relevant splittable payment becomes payable.
(3)If:
(a)the whole, or any component, of the superannuation interest is a defined benefit interest, or the superannuation interest is in a self managed superannuation fund; and
(b)the adjustment period is a financial year;
the interest rate for the adjustment period is the rate determined by the Australian Government Actuary, and published in the Gazette, being a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary time earnings for all persons in Australia, as published by the Australian Bureau of Statistics during the year ending with the February quarter immediately before the beginning of the adjustment period.
(4)If:
(a)the whole, or any component, of the superannuation interest is a defined benefit interest, or the superannuation interest is in a self managed superannuation fund; and
(b)the adjustment period is a period of less than 12 months that begins and ends within a financial year;
the interest rate for the adjustment period is the rate calculated in accordance with a method determined by the Australian Government Actuary, and published in the Gazette, being a method that provides for calculation of a rate by reference to a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary time earnings for all persons in Australia, as published by the Australian Bureau of Statistics during the year ending with the February quarter immediately before the beginning of the financial year in which the adjustment period occurs.
(5)If:
(a)the whole, or any component, of the superannuation interest is a defined benefit interest, or the superannuation interest is in a self managed superannuation fund; and
(b)the adjustment period is:
(i)a period of exactly 12 months ending on a date other than 30 June in a year; or
(ii)a period of less than 12 months; and
(c)the adjustment period commences before 30 June in a financial year and ends during the following financial year;
the interest rate for the adjustment period is the rate calculated under subregulation (6).
(6)For subregulation (5), the rate is calculated in accordance with a method determined by the Australian Government Actuary, and published in the Gazette, being a method that provides for the calculation of a rate by reference to the following rates:
(a)a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary time earnings for all persons in Australia, as published by the Australian Bureau of Statistics, during the year ending with the February quarter in the financial year ending immediately before the commencement of the adjustment period;
(b)a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary time earnings for all persons in Australia, as published by the Australian Bureau of Statistics, during the year ending with the February quarter in the financial year in which the adjustment period commenced.
There was before us at the hearing of the appeal an application by the appellant husband, which was ultimately unopposed by the respondent wife, to adduce further evidence directed to the impact of Regulation 45D on the allocation by her Honour’s orders of the base amount of $111,732 out of the husband’s superannuation interest to the wife. We will return to the application to adduce further evidence shortly.
First, in relation to grounds 3, 5 and 9, it must be said out of fairness to the trial Judge that she did not have before her any evidence which would have enabled her to make precise findings in relation to the impact which the appellant husband now claims that the order which she made would have on his future superannuation entitlements.
Nevertheless, we are satisfied that when her Honour said in the course of her consideration of the s 75(2) factors that the husband had “much greater superannuation than the wife”, her Honour failed to have regard to the fact that she would shortly make a splitting order, the effect of which would be that out of the husband’s superannuation interest then valued at some $197,000 she would allocate to the wife a base amount of a sum of over $111,000.
In other words, as is asserted by grounds 3 and 5 and to some extent ground 9, her Honour does not appear to have had regard to the fact that her eventual order would have to operate to reduce significantly the husband’s previously expected superannuation entitlements and, at the same time, to improve the wife’s superannuation prospects. This was an oversight on the part of her Honour which also calls for our intervention.
This apparent oversight which amounts to an appealable error, on the part of her Honour, highlights the need for caution when considering the operation of s 75(2) with respect to superannuation entitlements (including orders which are proposed to be made adjusting such entitlements). On the one hand, any form of “double counting” must be avoided, whilst on the other the implications of the conclusion reached with respect to contributions based entitlements to benefits cannot be overlooked.

The application to adduce further evidence in relation to the impact of the allocation of a base amount of $111,732 to the wife

Prior to the hearing of the appeal, the appellant husband had filed on 14 September 2004 an application to adduce “fresh evidence relating to interpretation of the Family Law (Superannuation) Regulations 2001”. The affidavit in support of that application foreshadowed that the further evidence would be constituted by an agreed report from the parties’ experts “addressing the operation of Regulation 45D of the Family Law (Superannuation) Regulations 2001 in respect of Defined Benefit Schemes.” (The husband’s superannuation fund to which her Honour’s order was directed is a defined benefit scheme.)
Given the content of the experts’ report which was ultimately sought to be put before us (and our decision in relation to the further evidence application), we do not need to concern ourselves with the issue of whether an expert’s opinion “relating to the interpretation of regulations” (as referred to in the application to adduce further evidence) could be received as evidence.
We also mention at this point that we did not understand Counsel for the appellant husband to pursue any application to put before us as further evidence (or to have us receive on any other basis) a document which was Annexure A to the affidavit in support of the application to adduce further evidence and which was headed “Advice”, was dated 30 March 2004 and signed by “Stephen Bourke”, “Barrister and Solicitor”.
Ultimately, the document which Counsel for the appellant husband sought to put before us by way of further evidence, both in support of the appeal and also to be relied on in any re-exercise of the discretion, was a document headed “Joint Statement of Experts Pursuant to Rule 15.69”. It was dated 14 September 2004 and signed “on behalf of the wife” by Suzanne Delbridge-Bailey (whom we know from other material before us is an accountant), and on behalf of the husband by Stephen Bourke (who, as mentioned above, is a barrister and solicitor).
As already indicated, the ultimate position of Counsel for the respondent wife was that he would not object to our receiving into evidence this joint statement of the experts.
We think it preferable to set out the full terms of this statement, rather than attempt to summarise it. Its content (but without the attached schedules) is as follows:
1.1We the undersigned experts have conferred on 14 September 2004 in relation to:
·the growth of the base amount allocated to the wife out of the husband’s superannuation under the Order made on 10 February 2004; and
·the growth of the husband’s superannuation out of which the adjusted base amount is to be paid to the wife.
1.2The Order made on 10 February 2004 allocated an amount of $111,732 to the wife out of the husband’s superannuation in the SAS Trustee Corporation Pooled Fund. The husband’s interest is governed by the State Authorities Superannuation Act 1987 (NSW) and the State Authorities Non-contributory Superannuation Act 1987 (NSW).
1.3After allocation of the base amount, the trustee of the SAS Trustee Corporation Pooled Fund, having been accorded procedural fairness, is bound by the Order and required to adjust the base amount commencing from the operative time and continuing until a splittable payment becomes payable.
1.4The SAS Trustee Corporation is then required to pay the adjusted base amount to the wife in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001.
1.5The husband’s interest governed by the State Authorities Superannuation Act 1987 (NSW) is a defined benefit interest and the husband’s interest governed by the State Authorities Non-contributory Superannuation Act 1987 (NSW) is also a defined benefit interest.
1.6In the prescribed method of valuation for defined benefit interests, the valuation is discounted by reference to the assumptions made by the Australian Government Actuary in deriving the lump sum valuation factors in Schedule 2 of the Family Law (Superannuation) Regulations 2001. Those assumptions included:
1.6.1an interest rate of 6.5%;
1.6.2a salary inflation rate of 4.0%;
The difference between these assumptions results in a discount of 2.5%, which is then used in determining the growth factor in adjustments to the base amount.
The valuation factors do not make any allowance for the fact that the payment will not be received for a number of years.
1.7The rate of adjustment for defined benefit interests is provided by reg. 45D(3) of the Family Law (Superannuation) Regulations 2001 as being the interest rate “determined by the Australian Government Actuary, and published in the Gazette, being a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary time earnings for all persons in Australia, as published by the Australian Bureau of Statistics during the year ending with the February quarter immediately before the beginning of the adjustment period.”
1.8The interest rate for the period commencing at the date of the order until 30 June 2004 is 7.1% and the interest rate for the period from 1 July 2004 until 30 June 2005 is 7.8% (see Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2004).
1.9For the purposes of this report, the following assumptions are made:
1.9.1The operative time was not set by the court and we agree that operative time should be the date of valuation on the basis that the member’s interest will continue to grow from that date and the base amount should also grow from that date – 17 July 2003. A later operative time will result in a gap where the base amount is effectively frozen.
1.9.2The long term percentage change for full-time adult ordinary time earnings for all persons in Australia is 4%, making the long term adjustment rate 6.5% for defined benefit interests in accordance with reg.45D(3) of the Family Law (Superannuation) Regulations 2001.
The Conclusions
2.1The growth of the husband’s superannuation interest, assuming a constant benefit multiple, being the accrued benefit multiple and personal account balance at 17 July 2003, adjusted for wages growth and personal account earnings only is (Schedule 1):
2.1.1Age 58:            $260,051
2.1.2Age 65:            $370,976
2.1.3Age 70:            $485,397
2.2The adjusted base amount payable to the wife and percentage of the forecast benefit is (Schedule 1):
2.2.1Age 58:            $132,348 (50.9%)
2.2.2Age 65:            $205,667 (55.4%)
2.2.3Age 70:            $281,782 (58.1%)
The adjusted base amount takes an increasing portion of the member’s final benefit because it is being adjusted at 2.5% above assumed wages growth.
2.3The growth of the husband’s superannuation interest, assuming growth in the husband’s benefit multiple due to additional service, wages growth and fund earnings on the personal account is (Schedule 2):
2.3.1Age 58:            $305,991
2.3.2Age 65:            $537,206
2.3.3Age 70:            $755,140
2.4The adjusted base amount payable to the wife and percentage of the forecast benefit is (Schedule 2):
2.4.1Age 58:            $132,348 (43.3%)
2.4.2Age 65:            $205,667 (38.3%)
2.4.3Age 70:            $281,782 (37.3%)
The adjusted base amount takes a decreasing proportion of the member’s final benefit because the member’s additional service results in growth of the benefit multiple and therefore growth in the ultimate retirement benefit payable to the member.
Notwithstanding the lack of objection from the respondent wife, we are not prepared to receive this joint report into evidence in support of the appeal. This is because, while we apprehend that the purpose of the report is to demonstrate the long-term impact of her Honour’s splitting order on either party’s superannuation entitlements given particularly the operation of Reg 45, we are uncertain as to what that impact would be. The report would certainly need further elaboration in this respect. But in any event, it is unnecessary that we receive this evidence in support of the appeal, given that we have already found sufficient substance in grounds 3 and 5 and to an extent ground 9 to warrant our interference with her Honour’s order.

Future course of this matter

We understood that both parties were anxious that if we found error on the part of the trial Judge, we should re-exercise the discretion and thus save the parties the costs and inconvenience of a new trial. We have of course found errors in her Honour’s assessment of the contributions in relation to the husband’s superannuation interest and in her treatment of the parties’ future superannuation entitlements for the purposes of the “s 75(2)” adjustment. Unfortunately, given the lack of findings by her Honour particularly in relation to the s 75(2) matters, we consider that we cannot re-exercise the discretion. We would also explain that in view of her Honour’s relatively strongly expressed views concerning her impressions of the parties, it is impossible for us to attempt to make findings on the basis of the affidavit evidence and transcript of the oral evidence. Regrettably, therefore there must be a re-trial.
Our decision that there must be a re-trial means that it is unnecessary for us to determine whether the further evidence constituted by the joint experts’ report should be admitted on a re-exercise of the discretion by us.
However, we can say that we would have been reluctant to receive that further evidence on a re-exercise of the discretion. This is because we have reservations about its probative value, given that it seems for the most part to be based on assumptions about future events. We appreciate that certain assumptions are built into the prescribed or approved valuation methods for superannuation interests, but these assumptions are supported by legislative direction.

The form and content of the order allocating the wife an interest in the husband’s superannuation interest (ground 8)

A further complaint relating to her Honour’s treatment of the husband’s superannuation interests related to the form of the splitting order which her Honour made and the terms of which we here repeat:
1.That pursuant to Part VIIIB of the Act that the superannuation interest of the husband in State Super be reduced by an amount of $111,732 (the base amount) and from the amount by which the husband’s interest as reduced an interest can be created in the name of the wife equal to the base amount.
Again, out of fairness to her Honour, it should be noted that in his amended application filed 16 July 2003, the appellant husband had sought an order in the following terms which were the same as that made by her Honour save for the passages which we emphasise:
“Order pursuant to Part VIIIB of the Act that the superannuation interest of the husband in [State Super] be reduced by an amount of $40,000 (the base amount) and from the amount by which the husband’s interest is reduced an interest can be created in the name of the wife equal to the base amount which may be rolled over or transferred to a fund nominated by the wife.”
Notwithstanding the terms of the order which he sought at trial, the husband now complains by ground 8 that her Honour erred in making order 1:
(a)in failing to set an operative time;
(b)Having regard to the State Authorities Superannuation Act 1987 (NSW) and the State Authorities Non-Contributory Superannuation Act 1987 (NSW) in requiring the creation of an interest in the name of the Wife;
(c)in making an order “in rem” not “in personam”.
The terms of the order which the husband would seek in the event that his appeal is successful and which is contained in his amended notice of appeal (filed 3 June 2004) is as follows:
4.In respect of the Husband’s membership … of the superannuation scheme under the State Authorities Superannuation Act 1987 (NSW) and the Trustee appointed under the State Authorities Non-Contributory Superannuation Act 1987 (NSW):
(a)the base amount of $40,000 allocated to [the wife] out of interest held by [the husband] payable under the State Authorities Superannuation Act 1987 be in the amount of $40,000.00;
(b)that whenever the Trustee of the SAS Trustee Corporation Pooled Fund makes a splittable payment under the State Authorities Superannuation Act 1987 to [the husband], the trustee shall pay [the wife] the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, and make a corresponding reduction in the entitlement [the husband] would have had but for these orders.
(c)this order have the effect from the operative time;
(d)the operative time is the date of these orders;
(e)this order binds the Trustee of the SAS Trustee Corporation Pooled Fund.
4A. Pending payment of the sum referred to in 4 above:
(a)The Husband provide to the Wife a copy of the State Authorities Superannuation Scheme statement received by him within 14 days of the receipt of same by him each year;
(b)The Wife keep the Husband informed of a current address for her for the purpose of receiving the statement referred to in (a) above.
(c)The Husband give the Wife 30 days notice of his intention to retire or any event which may give rise to the payment referred to in 4 becoming available.
Before considering the complaints contained in ground 8, it will be useful to set out the terms of s 90MT of the Act which is the source of power for the making of a so-called “splitting order”:
(1)A court, in accordance with section 90MS, may make the following orders in relation to a superannuation interest (other than an unsplittable interest):
(a)if the interest is not a percentage‑only interest—an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i)the non‑member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations; and
(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;
(b)an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i)the non‑member spouse is entitled to be paid a specified percentage of the splittable payment; and
(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;
(c)if the interest is a percentage‑only interest—an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i)the non‑member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations by reference to the percentage specified in the order;
(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;
(d)such other orders as the court thinks necessary for the enforcement of an order under paragraph (a), (b) or (c).
(2)Before making an order referred to in subsection (1), the court must make a determination under paragraph (a) or (b) as follows:
(a)if the regulations provide for the determination of an amount in relation to the interest, the court must determine the amount in accordance with the regulations;
(b)otherwise, the court must determine the value of the interest by such method as the court considers appropriate.
(2A)The amount determined under paragraph (2)(a) is taken to be the value of the interest.
(3)Regulations for the purposes of paragraph (2)(a) may provide for the amount to be determined wholly or partly by reference to methods or factors that are approved in writing by the Minister for the purposes of the regulations.
(4)Before making an order referred to in paragraph (1)(a), the court must allocate a base amount to the non‑member spouse, not exceeding the value determined under subsection (2).
Note:The base amount is used to calculate the entitlement of the non‑member spouse under the regulations.
We point out that the husband’s superannuation interest in question in this case is not a percentage only interest.

The need for an operative time to be specified in a splitting order

Section 90MD, which is the definition section of Part VIIIB (Superannuation Interests) of the Act, contains a definition of “operative time” in the following terms:
(a)in relation to a payment split under a superannuation agreement or flag lifting agreement—has the meaning given by section 90MI; or
(b)in relation to a payment flag under a superannuation agreement—has the meaning given by section 90MK or paragraph 90MLA(2)(c) as appropriate; or
(c)in relation to a payment split under a court order—means the time specified in the order.
In accordance with paragraphs (a) and (b) of this definition, the term “operative time” is then given meaning by s 90MI, s 90MK and s 90MLA(2)(c) for purposes of the operation of Division 2 of Part VIIIB, which is the Division of the Part concerned with superannuation agreements.
Curiously, however, given the provisions of paragraph (c) of the definition of “operative time” in s 90MD, there is no express requirement in the section (being s 90MT) which confers power on the Court to make a splitting order in relation to a superannuation interest (or indeed any where else in Part VIIIB – apart from in the definition of “operative time”) for the Court to specify any time in relation to the operation of the order. There is certainly no guidance given to the Court as to what the operative time in relation to the splitting order should be. (Again this situation is to be contrasted with the time periods contained in the definitions of “operative time” for superannuation agreement purposes in s 90MI, s 90MK and s 90MLA.)
It is clear, however, as was submitted on behalf of the appellant husband, that an operative time must be provided in a splitting order in order to provide the trustee of the relevant superannuation fund with a reference point from which to commence the adjustments to the base amount for the purposes of the operation of Reg 45D of the Family Law (Superannuation) Regulations 2001. In the orders sought in the husband’s amended notice of appeal, the operative time was the date of these orders.
It was the submission of Counsel for the respondent wife that it was clear from the terms of her Honour’s judgment that “the relevant date is the relevant order”, and further that this was clear from s 90MI of the Act.
However, s 90MI only defines the operative time for a payment split under a superannuation agreement, which in any event is “the beginning of the fourth business day after the day on which a copy of the agreement is served on the trustee” (together with certain other documents).
As we have indicated above, where a splitting order is made by a court, the order should include an operative date. It appeared to be common ground between the parties’ legal representatives that the operative time specified in the splitting order should in this case be the date of the order and thus we did not have the benefit of full argument on this issue. Having considered the matter we are of the view, at least as presently advised, that the operative date or time should as a general rule be the date of valuation of the interest for the reason that the member’s interest may continue to grow from the date of valuation to the date the orders are made.

The purported creation of an interest in the wife’s name

The second complaint made in ground 8 is to the effect that it was beyond the power conferred on the Court by s 90MT to make an order which purports to split the husband’s underlying interest in the relevant superannuation fund and that the power is limited to the splitting of payments arising out of that interest.
It will be seen from the terms of s 90MT (set out above) that the power of the Court is indeed limited to the splitting of payments (as opposed to the underlying amount), although “a base amount” must be allocated to the non-member spouse by the Court in order for the non-member’s entitlement to be calculated under the regulations.
Counsel for the respondent wife did not seek to submit to the contrary although he did submit that this complaint went to form rather than to substance and that this defect in the order could be remedied under “the slip rule”. We agree with that submission.

The need for a splitting order to be “in personam”

The third complaint embodied in ground 8 is that her Honour’s order was drafted on an “in rem” rather than on an “in personam” basis, and is thus arguably ineffectual. Again, the only submission made by Counsel for the respondent in relation to this complaint was this was a matter which could be remedied under the slip rule.
As a general rule an order made under s 79 of the Act for the transfer of an interest in property should be drafted on an in personam basis, in order to ensure that the order is effective and enforceable. (See in this regard the observations of the Full Court in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 78,389.)
However, in relation to a splitting order made under s 90MT it would be sufficient, in our view, to include an express statement in the order that the order binds the trustee or trustees from time to time of the superannuation fund. We take this view because of the express provision in s 90MZD that an order under Part VIIIB in relation to a superannuation interest may be expressed to bind “the person who is the trustee of the eligible superannuation plan at the time when the order takes effect” (subject to procedural fairness having been accorded to the trustee).
We note that the order sought by the appellant in this case adopts both approaches. We consider that that course is certainly open.

Costs

It was agreed at the conclusion of the hearing of the appeal that it would be appropriate in this case for the parties to make written submissions in relation to the costs of the appeal after the delivery of the judgment. We will make the necessary directions for such submissions (including submissions in relation to certificates under the Federal Proceedings (Costs) Act 1981).

Orders

That the appeal be allowed.
That the order made by the Honourable Justice Lawrie on 10 February 2004 be set aside.
That the parties’ cross applications for property settlement be remitted for re-hearing.
That the application to adduce further evidence be dismissed.
(a) That each party be at liberty to file and serve any written submissions in relation to the costs of the appeal within 28 days of the date hereof.
(b)That each party have a further 28 days in which to file and serve any written submissions in answer to any submissions filed by the other party.

I certify that the preceding 70 paragraphs

are a true copy of the reasons for judgment

of this Honourable Full Court

Associate

(c) That each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.