Edwards and Edwards

[2009] FamCAFC 139

FAMILY COURT OF AUSTRALIA

EDWARDS & EDWARDS [2009] FamCAFC 139

FAMILY LAW – PROPERTY SETTLEMENT – SUPERANNUATION – APPEAL FROM FEDERAL MAGISTRATES COURT – DISCRETION – APPLICATION OF THE LAW – Not established that the Federal Magistrate’s assessment of contribution based entitlements of parties erroneous – Not established that s 90 MT Family Law Act 1975 (Cth) erroneously applied – Not established that Federal Magistrate’s order with respect to husband’s superannuation and DFRDB interests represented a manifestly inadequate award to the wife – Not established that Federal Magistrate’s decision otherwise unjust or inequitable – Not established that further evidence would render erroneous decision of Federal Magistrate – Appeal and application for leave to adduce further evidence dismissed.

Family Law Act 1975 (Cth) Section 90MT(1)(a); Section 90MT(1)(b)

Australian Coal & Shale Employee’s Federation & The Commonwealth (1953) 94 CLR 621
Banque Commerciale SA En Liquidation v Akhil Holdings Pty Limited (1990) 169 CLR 279
CDJ v VAJ (1998) 197 CLR 172
Coghlan & Coghlan (2005) FLC 93-220
Coulton v Holcombe (1986) 162 CLR 1
House v The King (1936) 55 CLR 499
Metwally (No 2) v University of Wollongong (1985) 60 ALR 68
Norbis v Norbis (1986) 161 CLR 513

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418

APPELLANT: MS EDWARDS

RESPONDENT: MR EDWARDS

FILE NUMBER: AYC 541 of 2007

APPEAL NUMBER: EA 101 of 2008

DATE DELIVERED: 6 August 2009

PLACE DELIVERED: Parramatta

JUDGMENT OF: FINN, COLEMAN & CRONIN JJ

HEARING DATE: 30 January 2009

LOWER COURT JURISDICTION: Federal Magistrates Court

LOWER COURT JUDGMENT DATE: 7 August 2008

LOWER COURT MNC: [2008] FMCAfam 1025

REPRESENTATION

COUNSEL FOR THE APPELLANT: Michael Kearney

SOLICITOR FOR THE APPELLANT: Gavin Howard
Farrar Gesini & Dunn

COUNSEL FOR THE RESPONDENT: Robyn Wheeler

SOLICITOR FOR THE RESPONDENT: Terence O'Connor

Orders

1. That the appeal be dismissed.

2. That the application for leave to adduce further evidence be dismissed.

3. That there be no order for costs.

IT IS NOTED that publication of this judgment under the pseudonym Edwards v Edwards is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT CANBERRA

Appeal Number: EA 101 of 2008
File Number: AYC 541 of 2007

MS EDWARDS

Appellant

And

MR EDWARDS

Respondent

REASONS FOR JUDGMENT

Finn J:

1. As is well explained in the joint reasons of Coleman and Cronin JJ, this appeal arises out of an unusual case in which at the time of the trial before Federal Magistrate Henderson the parties had separated some fifteen years earlier (after a marriage of almost 22 years) and then divided all their assets (other than their superannuation interests) on a broadly equal basis. The matter before her Honour was the wife’s application for a share in the husband’s interests in two superannuation funds.

2. Her Honour’s reasons and orders and the basis of the wife’s appeal against those orders are also well explained in the reasons of Coleman and Cronin JJ.

3. Having regard to the manner in which the case was conducted before her Honour, to the width of the discretion vested in her, and to the limitations on appellate interference with the exercise of that discretion, I am not persuaded that the appeal should be allowed. In so concluding, I agree broadly with the reasons given by Coleman and Cronin JJ.

4. I also agree with their Honours and for the reasons which they have given, that there should be no order for costs in relation to the appeal.

Coleman and Cronin JJ:

1. By Amended Notice of Appeal filed 19 November 2008 Ms Edwards (“the wife”) appealed against orders made by Federal Magistrate Henderson on 7 August 2008 in proceedings for settlement of property between the wife and Mr Edwards (“the husband”).

2. The orders of the learned Federal Magistrate provided, pursuant to section 90MT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”) that the base amount of $84 000 be allocated to the wife in the First State Superannuation Fund of which the husband was a member.

3. The wife sought, in addition to such interest, that an order be made pursuant to section 90MT(1)(b) of the Act as to 50 percent of the husband’s interest in the Defence Force Retirement & Death Benefits Scheme (“the DFRDB Fund”).

4. In the alternative, the wife sought that the learned Federal Magistrate’s order with respect to the First State Superannuation Fund be increased from the sum of $84 000 to the sum of $150 000.

5. The husband resisted the wife’s appeal and sought to maintain the learned Federal Magistrate’s orders.

Background

1. The following matters, which find expression in the learned Federal Magistrate’s Reasons for Judgment, and are not controversial, provide background to the appeal.

2. The wife is aged 64, the husband is aged 61.

3. The parties married in November 1971.

4. The husband was a serving member of the Australian Regular Army at the date of marriage. The husband retired from the army in November 1989.

5. The parties separated in 1993.

6. By November 1995 the parties had effected a broadly equal division of their real estate and other personalty. Such division did not include the husband’s superannuation interest in MLC (which ultimately became his interest in the First State Superannuation Fund) or the husband’s DFRDB Fund entitlement.

7. Upon his retirement from the army, the husband received $61 119.30 by way of lump sum. Such lump sum appears to have been substantially subsumed in assets which the parties divided between themselves subsequent to separation. $13 000 of the husband’s DFRDB Fund lump sum was invested in what became his First State Superannuation Fund interest.

8. The husband received an indexed pension from the DFRDB Fund after his retirement from the army. From the date of separation to the present time the husband has received the entirety of such pension.

9. The husband’s First State Superannuation Fund interest was agreed at trial to be worth $210 000. The husband’s DFRDB Fund interest was agreed at trial to be worth $313 994.66. The wife had a superannuation interest which was agreed to be worth $10 500.

10. The property which the parties had divided between themselves subsequent to separation and which neither party sought to disturb, was worth, in the case of the wife approximately $427 300, and in the case of the husband, approximately $332 000.

11. The learned Federal Magistrate concluded that the wife should receive 40 percent of the value of the husband’s First State Superannuation Fund interest by way of splitable payment. Her Honour reached that conclusion after deciding that 21.15 percent of the husband’s First State Superannuation Fund interest should be received by the wife in respect of her entitlement to that fund, together with a further 18.85 percent of such fund by way of adjustment to reflect what her Honour considered should be the wife’s entitlement to the husband’s DFRDB Fund interest.

The Federal Magistrate’s Reasons for Judgment

1. Having identified the competing applications before her, the learned Federal Magistrate recorded a series of “agreed facts” which Counsel for the parties had provided to her in a document which became an exhibit in the proceedings. In addition to the background matters referred to earlier in these Reasons for Judgment, and of potential relevance to the appeal against her decision, the learned Federal Magistrate recorded the parties’ agreement that they had “effectively” divided their assets “equally between them” in November 1995. It was not suggested that such division included the husband’s interest in the two superannuation funds to which we have earlier referred.

2. Her Honour recorded, accurately there is no doubt, the value of the husband’s interest in the DFRDB Fund ($313 994.66), and of his interest in the First State Superannuation Fund ($210 000).

3. She further noted, accurately, that the husband’s interest in the DFRDB Fund was in the payment phase and had been since 1989, and concluded that the interest could not be split “because it is in the payment phase”.

4. Thus, her Honour concluded:

   38.For these reasons I have formed the view that a valuation under the regulations is of less relevance than the value to the husband of the fortnightly payment from his DFDRB (sic) pension entitlement when such an entitlement is in the payment phase.

5. The husband’s fortnightly indexed pension was $415 per week at the date of judgment. This, her Honour concluded to be “the preferred approach in ascribing the value of husband’s DFRB (sic) Fund in the payment phase namely what it provides the husband in dollar terms each week”.

6. Her Honour further observed that the husband had no ability to “commute the pension”, that being “another reason why the value of the Fund is the weekly payment”, rather than “a lump sum value”.

7. The husband had made his election 19 years earlier, and it “cannot be undone”.  The wife had, as her Honour recorded “benefited from the part lump sum as it formed part of the monies used to purchase the property she has lived in and worked since separation”.

8. The learned Federal Magistrate concluded that “[i]n the normal course of events, the wife’s entitlement to a substantial share in that benefit [the DFRDB Fund interest] is clear on the evidence”.

9. Three “significant” matters were suggested by the learned Federal Magistrate to be pivotal to the determination of the wife’s entitlement to the husband’s DFRDB Fund pension. Those matters were that her Honour was “able to adjust what I regard to be the wife’s entitlement to a share of the DFRDB Pension from other assets available to the parties if the evidence supports that this is a just and equitable approach in my determination”. No part of the appeal to this Court involves any challenge to that proposition.

10. Her Honour further recorded that she must “have regard to the totality of the parties’ assets and their financial position before I make any decision”. That proposition too is largely uncontroversial in the appeal to this Court.

11. The third matter which her Honour identified as relevant to the exercise of her discretion was “the consequences of the orders the parties ask I make and what would be the effect on the parties’ present and future financial position of the orders each seek”. Whilst her Honour found the parties to have equally divided their non- superannuation assets in 1995, 13 years thereafter, such division favoured the wife on the agreed values of non-superannuation assets by some 12 percent (56 percent to the wife, 44 percent to the husband). That position is factually also largely uncontroversial for present purposes.

12. Having identified the non-superannuation assets, and their agreed values, the learned Federal Magistrate recorded that:

    56.Neither party seeks I disturb their present land holdings or personalty assets having been divided between them many years ago and only ask that I adjust the wife’s further entitlement from the husband’s superannuation entitlements.

13. The learned Federal Magistrate recorded, accurately there is no doubt, that “on past contributions it was not contended that there would have been anything other than an equal division of the matrimonial assets”. Her Honour added that “these were hard working people who did the best they could in all the circumstances of their long marriage of 22 years” (emphasis added).

14. The learned Federal Magistrate thus appears to have concluded, as she was invited to and was open to her, that at the date of separation the parties’ contributions to their superannuation interests and non-superannuation assets were equal on a contribution basis.

15. Reference was then made to the financial positions of the parties, each of whom was “supported by a form of pension”. The husband was reliant upon his DFRDB Pension and his Veterans Affairs Disability Pension. The wife was reliant upon the “Aged Pension and some farm relief benefit she receives due to the drought”.

16. The wife’s aged pension ($303) and farm support ($30) provided the wife with $333 per week, whilst the husband received $625 ($415 from DFRDB Pension, $50 from Disability Pension and $160 from his part-time employment.

17. Notwithstanding that “at first blush the husband’s income is twice the wife’s” the learned Federal Magistrate acknowledged that “the husband has remarried and has an obligation to support his wife” who is in receipt of a part pension of about $90 per week. Halving the husband’s household income, a figure of $357 income a week for the husband resulted. The learned Federal Magistrate considered such sum to be “a similar amount to the wife’s income”.

18. The learned Federal Magistrate further acknowledged that the husband would not “always work as a …” as he is aged 64. His income was thus “likely to drop by $160” per week when he ceased part time employment.

19. Conversely, the wife had the benefit of “some benefits from her farm business such as electricity, petrol and the like which the husband as a PAYE tax earner would not receive”.

20. Ultimately, in the light of the matters to which she referred, the learned Federal Magistrate concluded that there was “a degree of equality in the monies each party has to support themselves. I accept the husband’s financial position is slightly superior to the wife and that he and his wife can share expenses unlike the wife in these proceedings”.

21. The consequences of granting the relief sought by the wife with respect to the husband’s DFRDB Pension were then discussed by the learned Federal Magistrate. Her Honour concluded that “splitting the husband’s DFDRB [sic] equally between the parties would be a significant disadvantage for each of them. Both would be worse off financially than they are currently”.

22. The most advantageous financial outcome for both parties was thus considered to be by way of splitting the husband’s First State Super entitlement “to satisfy the wife’s past contribution to his present DFDRB [sic] Pension”. It is not controversial in this appeal that the learned Federal Magistrate was entitled to exercise her discretion in that manner.

23. Her Honour then observed that the wife’s “legal team” contended that the wife should receive 21.15 per cent of the husband’s First State Superannuation Fund. Her Honour accepted that submission. Unsurprisingly, and sensibly in our view, no part of the wife’s appeal to this Court ultimately involves any challenge to that conclusion. As will become apparent, the crux of the wife’s appeal to this Court relates to the adjustment made in favour of the wife to such entitlement by virtue of the husband’s retention of DFRDB pension since retiring.

24. The learned Federal Magistrate reiterated that the husband’s DFRDB was a “valuable income stream”, was CPI adjusted annually “unlike the Aged Pension”, was “secured for his life” and, “unlike investments or earnings from interest in the bank; it is not subject to fluctuations in interest rates”. Her Honour recorded the husband’s contention that the wife receive 37 percent of his First State Superannuation Fund interest in the light of the wife’s contributions to the husband’s DFRDB pension.

25. The learned Federal Magistrate concluded that it was “a just approach to allocate to the wife, by way of a splitable payment, a significant percentage of the husband’s First State Super as a means of adjusting her clear entitlement to a share of his DFRDB pension which she will not share in due to their separation”.

26. Under the heading “Conclusion”, the learned Federal Magistrate reiterated the percentages in which the parties held their “liquid assets” (56 percent to the wife, the husband 44 percent) and that the “husband has his wife to support from his income”.

27. Her Honour thus concluded that:

    76.Having regard to all the matters above and the parties present financial commitments to support themselves and others I assess a payment to the wife of 40 per cent of the husband’s first state super fund to be an order that takes account of the wife’s contribution to the husband’s DRDFB (sic) fund and first state super fund.

28. The effect of such orders was then considered. Her Honour said in that regard:

    77.On the present value of the fund of $210, 000 the splittable payment of 40% is $84,000. This would leave the wife with a total super of $94,500 being $84,000 from the husband's fund and $10,500 from her fund.

    78.This would leave the husband with $126,000 in his super fund and his DFDRB Pension.

    79.The husband can continue to contribute to his super as he is working part-time although this will be of a small amount. The wife can continue to contribute to superannuation because she is still running a business.

    80.The wife has 56% of the liquid assets and the husband 44%. Of the available splittable superannuation funds which are the parties accumulation phase super funds totalling $220,500 the wife has 43% per cent and the husband 57%.

Relevant Legal Principles

1. The legal principles which govern this appeal are not in doubt and do not require extensive restatement.

2. The presumption that a trial Judge’s decision is correct is outlined by Kitto J in Australian Coal & Shale Employee’s Federation & The Commonwealth (1953) 94 CLR 621 (at 627):

   I shall not repeat the references I made in Lovell v Lovell (1950) 81 CLR 513, at pp 532–534 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong.

   The wife thus bears the onus of demonstrating that her Honour’s decision was “clearly wrong”.

3. In House v The King (1936) 55 CLR 499 the High Court said at 504-505:

   The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

4. In Norbis v Norbis (1986) 161 CLR 513 Brennan J said at 539 – 540:

   The difficulties in the way of developing guidelines beset an appellate review of the exercise of discretion under s.79. Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable. How does the Full Court arrive at that conclusion? In Bellenden (formerly Satterthwaite) v. Satterthwaite [1948] 1 All ER 343 at p.345 Asquith LJ stated the rationale of an appellate court’s approach:

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

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

1. In CDJ v VAJ (1998) 197 CLR 172, Kirby J said at 230 – 231:

   Discretionary and evaluative decisions

   186.A number of general propositions may be stated:

   1.   Neither this Court, nor the Full Court in relation to appeals to it, has authority to disturb a decision under appeal simply because the appellate judges, faced with the same material, would have reached a conclusion different from that under appeal. To approach the appellate function in such a way would contravene established authority. It would involve one level of the judicial hierarchy, without lawful warrant, intruding into the decisions of another. To authorise appellate disturbance, where the decision under appeal is discretionary or involves quasi-discretionary evaluation, it is necessary for those mounting the challenge to demonstrate that, in reaching the orders the subject of the appeal, the court below has acted on a wrong principle or (although the precise error of principle cannot be identified) has reached a conclusion which is plainly wrong. Obviously, what is “plainly wrong” will vary in the eyes of different beholders. It is not necessary for an appellant to demonstrate the kind of unreasonableness that must be shown to authorise judicial intervention in the decision of an administrator otherwise acting within power. The reference to “plainly wrong” is designed to remind the appellate court of the need to approach an appeal with much caution in a case where an error of principle cannot be clearly identified.

   2.   Such reasons for appellate restraint are of general application. However, they have particular relevance to appeals within, and from, the Family Court of Australia. This is because of the functions and purposes of that Court and the difficult and evaluative decisions which it often has to make. The peculiar nature of decisions relating to the intensely personal questions of the division of the property of parties to a failed marriage and the welfare of their children makes it essential that those who decide appeals respect the onerous responsibilities of those whose decisions they review. They need to recognise that it is of the very nature of such decisions, including those relating to the residence of children, that any two decision-makers may, with complete integrity and upon the same material, often come to differing conclusions. This is an inescapable feature of the nature of this jurisdiction.

The Grounds of Appeal

1. As will become apparent, the main thrust of the wife’s challenges to the learned Federal Magistrate’s decision was that the adjustment made in her favour by virtue of her Honour’s conclusion with respect to her entitlement to the husband’s DFRDB pension was manifestly inadequate. Before considering that issue, it is convenient to address other discrete challenges to her Honour’s decision.

Ground 1

1. Ground 1 of the wife’s Amended Notice of Appeal provided: -

   1.That Her Honour erred in approaching the determination in the proceedings as one directed to a determination of the entitlement of the Appellant to the Respondent’s superannuation/pension entitlements.

2. In support of this challenge it was submitted that the learned Federal Magistrate’s observation that the “real issue is what entitlement, if any, has the wife to the husband’s DFRDB Pension Fund and the First State Super Fund” operated “to focus the discussion undertaken by the Magistrate regarding the net assets, contributions of the parties and section 75(2) in a way which precluded a proper consideration of such matters”

3. As Counsel for the husband’s submissions correctly assert, given that both parties asked that the current non superannuation assets of the parties not be disturbed, without more this complaint could not be upheld.

4. On any view of the case before her, the learned Federal Magistrate was correct in identifying the issue requiring determination as being the wife’s right and entitlement to the husband’s superannuation interests. The real issue is whether her determination of the issue fell beyond the ambit of a reasonable exercise of discretion.

Ground 2

1. Ground 2 provided:

   2.That Her Honour erred in relation to her approach and findings in relation to the Respondent’s DFRDB entitlement including by:

   2.1finding the value of such entitlement to be the fortnightly pension received by the Respondent;

   2.2failing to properly consider the value of such entitlement as determined by the Regulations; and

   2.3failing to have proper (if any) regard to and afford appropriate weight to the contributions of the Appellant to such entitlements; and

   2.4failing to make any finding in relation to the contributions of the Appellant and Respondent to such entitlements.

2. Learned Counsel for the wife referred to the Federal Magistrate’s statement, that notwithstanding that the husband’s DFRDB pension had been uncontroversially valued pursuant to the regulations at $313 994.63:

   39.I find the value of this superannuation fund is the fortnightly indexed pension it provides to the husband for life which is today $830 net a fortnight or $415 a week.  I find this to be the preferred approach in ascribing a value to the husband’s DFRDB fund in the payment phase namely what it provides to the husband in dollar terms each week.

3. It was submitted that so doing led the learned Federal Magistrate into error “having regard to the relevant legislation and authority”.

4. Reliance was placed upon the terms of section 90MT in support of the contention that, effectively, the learned Federal Magistrate could not “go behind” the valuation of the husband’s DFRDB pension determined in accordance with the regulations.

5. We do not understand her Honour to have ever done so. As is apparent from her Reasons for Judgment, her Honour was well aware that the husband’s DFRDB pension had been valued at $313 994.66 pursuant to regulations.

6. Her Honour however, as was sensibly conceded that she was entitled to, then had “regard to the nature and characteristics of the DFRDB pension, particularly the receipt of the entitlement by way of pension for life”.

7. There is no challenge to the accuracy of any of the matters to which her Honour referred in her analysis of the nature and characteristics of the DFRDB pension. They relevantly included that the payment of the entitlement, which was in the payment phase as a pension, could not be commuted to a lump sum and would thus forever remain a pension. In our view, nothing said by the majority in Coghlan & Coghlan (2005) FLC 93-220, or the legislation, precluded her Honour from taking that approach. Indeed, there was logic in so doing, as her Honour explained.

8. Nor do we accept, as this ground asserts, that her Honour’s approach to the “value” of the husband’s DFRDB pension led her into error in her assessment of the contributions relating to it, or the impact of section 75(2) upon her conclusions in that regard.

9. As we have earlier noted, as at the time of separation, having regard to their efforts over the previous 22 years, the parties were entitled, as her Honour recognised, to an “equal division of the matrimonial assets” on a contribution basis.

10. Her Honour was clearly conscious of the need to have regard “to the totality of the parties’ assets and their final positions” before she made any decision with respect to the husband’s DFRDB pension, and that she was required to “look at the consequences of the orders the parties ask I make and what would be the effect on the parties present and future financial position of the orders each seek”.

11. Nothing to which we have been referred on behalf of the wife persuades us that the learned Federal Magistrate’s approach to the determination of the wife’s entitlement to the husband’s DFRDB pension was flawed. Whether the consequences of that approach withstand challenge is another, and more difficult, question.

Ground 3

1. Ground 3 provided:

   3.That Her Honour erred in the assessment of the parties’ contributions and, in particular:

   3.1in failing to properly assess the contributions of the parties to the date of hearing;

   3.2in failing to consider properly or at all the contributions of the parties following separation and to hearing;

   3.3in failing to accurately recognise the contributions of the Appellant to the Respondent’s First State Superannuation entitlements; and

   3.4in the manner advanced in ground 2.3 herein.

2. It was submitted in support of this challenge that:

   25.The Magistrate’s contribution based finding was that “on past contributions it was not contended that there would have been anything other than an equal division of the matrimonial assets” [Appeal Book: 20]. It appears that this finding related to the non-superannuation assets given the discussion that subsequently occurs [Appeal Book: 26], although this is not entirely clear.

3. It was further submitted that:

   26.In any event, the Appellant submits that the Magistrate has erred in so finding in circumstances where:

   26.1the Appellant did contend that there ought be a contribution finding other than equality as a result of the post-separation contributions of the parties to the non-superannuation assets. The Appellant submitted that, the parties having effected an equal division of such assets in 1995, the unequal asset position at trial should be found to reflect the parties’ contributions following that time [Appeal Book: 136, 162] such that there be a finding of greater post-separation contribution by the Appellant; and,

   26.2consequent upon the finding complained of, the Magistrate did not proceed to consider the contributions of the parties to the non-superannuation assets.

4. Whilst we accept that it is not clear beyond doubt, we are not persuaded that her Honour’s conclusion with respect to contributions to the date of the parties’ separation in 1993 was limited in the way asserted on behalf of the wife.

5. The statement made by her Honour upon which Counsel for the wife relied was followed immediately by a sentence which read “these were hard working people who did the best they could in all the circumstances of their long marriage of 22 years”. The passage followed her Honour’s consideration of the superannuation and non superannuation interests and assets of the parties.

6. In our view, both having regard to her Honour’s words, their context, and to other parts of the judgment, it is apparent that her Honour concluded that, as at the date of separation, the parties were equally entitled on a contribution basis to both their non superannuation assets and their superannuation interests. The consequences of so concluding are ultimately pivotal to the fate of this appeal.

7. It was asserted that the learned Federal Magistrate erred by having regard to the fact that the parties’ equal division of non superannuation assets in 1995, which 13 years later favoured the wife, militated against reducing her entitlements to the husband’s DFRDB fund. We are not persuaded that her Honour necessarily did this, although it may superficially appear that she did. To the extent that her Honour may have been so inclined, we are not persuaded that so doing ultimately led to her discretion miscarrying, as our consideration of the wife’s major complaint will reveal.

8. With respect to learned Counsel for the wife, there is no suggestion that her Honour misunderstood or misstated the evidence with respect to the post separation contributions of the parties to either the non superannuation assets or the superannuation interests.

9. Her Honour was clearly aware of the period over which the husband’s entitlement to his DFRDB pension accrued. She was well aware of the fact that the DFRDB entitlement was in the payment phase prior to the parties’ separation and that no contributions were made to it by the husband from that time. Her Honour also was well aware that the husband had the “sole benefit” of the DFRDB pension over the 15 years between separation and trial.

10. As our consideration of the primary challenge to the learned Federal Magistrate’s decision will further explain, we do not accept that it is “unclear how the Court moved from a finding of equality of contribution to the non-superannuation assets to the conclusions reached pursuant to section 79(2)”.

11. In summary, the learned Federal Magistrate concluded, as was undoubtedly open to her, that as at the date of separation the parties were equally entitled to their non superannuation assets and superannuation interests. The equal division of non superannuation assets which the parties agreed upon and implemented in 1995 was not disturbed by the learned Federal Magistrate’s orders. Nor should it have been. No more could productively have been said about the DFRDB pension in the post separation period. No contributions had been made to it in the post separation period and the husband had received all of the payments made by the DFRDB Fund. These were all matters well understood by her Honour.

12. Similarly, the analysis of the effect of the orders she proposed undertaken by the learned Federal Magistrate leaves little room for doubt as to why her Honour concluded as she did. We shall have more to say on this topic when considering the wife’s primary challenge.

13. To the extent that it was complained that the learned Federal Magistrate erred in failing to find that the wife had an equal entitlement to the husband’s First State Super Fund entitlement by virtue of her contributions, as we have earlier noted, the conclusion made by her Honour in that regard was the conclusion urged upon her, for reasons which were suggested by Counsel then appearing for the wife, and accepted by her Honour. In those circumstances, absent being persuaded that refusing to do so was unjust and contrary to law, this Court would be most reluctant to interfere with her Honour’s exercise of discretion.

14. Nothing to which we have been referred provides a basis for appellate intervention in relation to her Honour’s conclusion with respect to the wife’s entitlement to the husband’s First State Super Fund interests. Sensibly, on the hearing of the appeal, learned Counsel for the wife acknowledged that he was “stuck with” the learned Federal Magistrate’s conclusion with respect to the husband’s First State Super Fund interest.

15. We are not persuaded that this ground, or any of the matters raised in support of it have substance.

Ground 4

1. Ground 4 provided:

   4.That Her Honour erred in the consideration of the matters relevant to section 75(2) and, in particular:

   4.1in finding that the Appellant’s pension would not be adversely affected by the Orders entered;

   4.2in finding that the Husband’s commitments to his new wife were to be prioritised to the entitlements of the Appellant;

   4.3in failing to properly consider the respective financial circumstances of the parties; and,

   4.4in failing to make any finding as to the adjustment (or otherwise) warranted pursuant to section 75(2).

2. These complaints fall within the ambit of the wife’s primary challenge, and are particular aspects of that challenge. They are accordingly better dealt with in that context.

Ground 5

1. Ground 5 provided:

   5.That Her Honour erred in failing to consider or properly consider the effect of the Orders proposed to be entered, including pursuant to section 79(2).

2. In support of this ground it was submitted:

   42.The Magistrate has regard to the overall effect of the Orders entered by reference to the “liquid assets” and “available splittable superannuation assets” [Appeal Book: 27]. The reasons record the division of those categories on the basis of 56% and 43% respectively to the Appellant.

3. It was further submitted:

   43.Whilst the subject of discussion in various earlier parts of the reasons, the Magistrate does not recognise that the Respondent also retains the DFRDB pension valued at $313,995 which alters the percentage outcome such that the Appellant received 17.7% of the superannuation assets of 39.5% of the total assets (a difference between the parties of some $142,317).

4. As the authorities recognise, the percentages resulting from the exercise of judicial discretion do not have any particular “magic”. In a case such as this, that is particularly so. Nothing to which we have been referred persuades us that her Honour was obliged in the circumstances of this case to include the husband’s DFRDB pension at the value determined in accordance with the regulations.

5. As her Honour clearly recognised, the husband’s entitlement to the DFRDB Fund was in the payment phase, had always been in the payment phase and could only ever be in the payment phase as a pension. In those circumstances, regarding the husband’s pension in the way in which her Honour did was logical and realistic. So doing did not lead to her Honour’s discretion miscarrying. Her Honour carefully considered the real value and impact of the husband’s DFRDB pension entitlement, and the effect of the orders she proposed in relation to it.

6. We are not persuaded that this challenge has substance.

Ground 6

1. The wife’s Amended Notice of Appeal raised a number of challenges to the learned Federal Magistrate’s exercise of discretion. The written submissions of learned Counsel for the wife and the husband engaged with each of those grounds. As the transcript of the hearing of the appeal would confirm, both Counsel accepted that the appeal ultimately, and decisively, turned on this Court’s conclusion with respect to the challenge to the adequacy of the adjustment made by the learned Federal Magistrate to the 21.15 percent entitlement of the wife to the husband’s First State Superannuation Fund in the light of her consideration of the wife’s entitlement to share in the husband’s DFRDB pension.

2. The learned Federal Magistrate calculated the 40 percent payment to the wife of the husband’s First State Superannuation Fund interest which she considered to be just and equitable. It comprised two elements: $44 415 and $39 585. The former, represented uncontroversially, the wife’s entitlement to a share of the husband’s interest in the First State Superannuation Fund. The latter represented the adjustment of such entitlement which her Honour concluded to be just and equitable with respect to the husband’s DFRDB pension. No mathematical error is asserted to be relevant to this challenge.

3. On behalf of the wife it was contended that an adjustment in the sum of $39 585 of an interest worth $313 994.66 was manifestly inadequate and fell beyond the ambit of a reasonable exercise of discretion.

4. On behalf of the husband it was submitted that, whilst this Court may not have reached the same conclusion, the appellate intervention was not properly enlivened.

5. The essential matter for determination in the appeal is most squarely and effectively raised in Ground 6 of the wife’s Amended Notice of Appeal which asserted “[t]hat the entitlement of the Wife pursuant to the Orders is manifestly inadequate”. As we have earlier noted, Ground 4 also raises issues relevant to the wife’s major challenge.

6. Although Counsel for the wife’s written Summary of Argument appears to challenge the learned Federal Magistrate’s conclusion that the wife should be entitled to 21.15 percent of the husband’s interest in the First State Superannuation Fund on account of her contributions to that interest, on the hearing of the appeal, learned Counsel for the wife acknowledged that he could not properly persist with such challenge and was “stuck with” the learned Federal Magistrate’s conclusion.

7. We have earlier noted that such concession was in our view sensible and appropriate. Only in exceptional circumstances, and these do not appear to be such circumstances, could this Court countenance a challenge to a conclusion which has been urged upon the court below in circumstances such as occurred in this case (see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 (at 438); Metwally (No 2) v University of Wollongong (1985) 60 ALR 68 (at 71); Coulton v Holcombe (1986) 162 CLR 1 (at 7); Banque Commerciale SA En Liquidation v Akhil Holdings Pty Limited (1990) 169 CLR 279 (at 284)). The wife was represented by competent Counsel before the learned Federal Magistrate. The basis of the 21.15 percent was not in doubt and had some underpinning in logic and authority.

1. As the wife’s learned Counsel sensibly acknowledged, the wife’s challenge can only succeed if an adjustment of 18.85 percent of the husband’s First State Superannuation Fund interest by way of reflection of the wife’s entitlement to the husband’s DFRDB pension was manifestly inadequate.

2. In support of his challenge, learned Counsel for the wife relied upon the mathematical implications of her Honour’s conclusion, submitting that to allow the wife $39 585 of an agreed value of $313 994.66, or approximately 12.6 percent of that interest, could not constitute a reasonable exercise of discretion.

3. Whilst, as a matter of arithmetic, the figures are instructive, they are not, and are not suggested to be decisive of this issue. Learned Counsel for the wife referred to a number of the learned Federal Magistrate’s findings and conclusions which it was submitted could not individually or cumulatively provide an adequate basis for the adjustment which the learned Federal Magistrate made.

4. Reliance was placed on the fact that at trial neither party suggested that the parties’ contribution based entitlement to their non-superannuation assets should be seen as altered from the position of equality by virtue of the fact that the assets retained by the wife had become more valuable than those retained by the husband. It was thus submitted that the learned Federal Magistrate could not have permissibly reduced the adjustment to which the wife would otherwise have been entitled with respect to the husband’s DFRDB pension by reference to the non-superannuation assets. There is force in that submission, whether or not the husband conceded the issue at trial.

5. Under the heading “Conclusion”, the learned Federal Magistrate referred to the disparity in the values of the parties’ “liquid assets”. It was submitted on behalf of the wife that her Honour had impermissibly, in the circumstances of the case before her, relied upon the disparity in value of the non-superannuation interests to reduce the adjustment she would otherwise have made by virtue of the husband’s DFRDB pension.

6. Learned Counsel for the wife also submitted that, as at the date the parties separated in 1993, the wife had established an equal entitlement to the husband’s DFRDB pension. Reliance was placed upon the duration of the parties’ cohabitation (22 years), the fact that contributions from the husband’s earnings to the DFRDB Fund had concluded prior to separation in 1989 and that there was no reliable evidence as to the value of the husband’s interest in the DFRDB Fund at the date of marriage, which is 2 years and 2 months after the husband became a member of the DFRDB Fund. As we have earlier recorded, we do not understand her Honour to have concluded other than an equal entitlement to the DFRDB fund at the time of the parties’ separation.

7. Learned Counsel for the wife also relied upon the learned Federal Magistrate’s acceptance of the proposition that “an equitable division of the matrimonial assets” as at 1993 was appropriate, if not inevitable. He also relied upon the fact that, notwithstanding that the learned Federal Magistrate may have accepted that the parties had contributed equally to the totality of their assets at 1993, and that no contributions to the DRFDB Fund were made after separation, the husband had received the totality of the DRFDB pension.

8. It was submitted on behalf of the wife that no part of the learned Federal Magistrate’s analysis of relevant section 75(2) factors could, or was suggested to provide a basis for reducing the wife’s entitlement to an adjustment by reason of the husband’s DRFDB pension. Reliance in that regard was placed upon the learned Federal Magistrate’s conclusion that there was “a degree of equality in the monies each party has to support themselves”, and that “the husband’s financial position is slightly superior to the wife and that he and his wife can share expenses unlike the wife in these proceedings”.

9. It was further submitted that, although the learned Federal Magistrate had halved the $715 weekly income of the husband’s household in support of her conclusion that the husband and wife had approximately “similar” amounts available to them personally, the husband did not assert in his financial statement that his present wife’s expenses approximated one half of the total household income.

10. It was thus submitted that, both on the facts as found and the reasons adopted by the learned Federal Magistrate, no basis for having made an adjustment out of the husband’s State Superannuation Fund interest for the wife’s entitlement to the DFRDB pension of the magnitude determined by her Honour could be successfully asserted.

11. On behalf of the husband it was submitted that the learned Federal Magistrate’s reasons revealed a number of factors which, cumulatively, provided an adequate foundation for the adjustment which she considered to be appropriate with respect to the husband’s DFRDB pension.

12. Learned Counsel for the husband reiterated that, although an agreed figure, arrived at in reliance upon a valuation calculated in accordance with the regulations, the $313 994.66 valuation of the husband’s DFRDB pension was not directly comparable with his interest in the First State Superannuation Fund, as the learned Federal Magistrate clearly recognised in the passages of judgment to which we have earlier referred. It was thus submitted that, as her Honour thus recognised, in comparing the two interests, she was not able to directly compare like with like. 

13. It was submitted to be relevant to the exercise of discretion that the adjustment in the wife’s favour by reason of the husband’s DFRDB pension was based on a benefit which could not be commuted to a lump sum but that such adjustment, when made, resulted in an adjustment which could be commuted to a lump sum. The wife was thus submitted to have received a benefit which was not, and could not be, available to the husband.

14. There is substantial logic underpinning that proposition. The learned Federal Magistrate was clearly alive to the differing natures of the superannuation interests with which she was concerned.

15. It was further submitted on behalf of the husband that the learned Federal Magistrate had regard to the reality that the wife was “seized of 56% of the parties’ liquid assets and the husband 44%”, and that her Honour had regard to that imbalance in reaching a conclusion. Support for that contention was said to be provided by the fact that her Honour’s statement appears in the paragraph immediately preceding the paragraph in which her conclusion is expressed.

16. We have some difficulty with this submission having regard to the way in which the case was presented to the learned Federal Magistrate. There is no suggestion that her Honour inaccurately found that the parties had effected an approximately equal division of their non-superannuation assets in 1993.

17. It was not vigorously suggested at trial, or before this Court, that the wife’s entitlement to a share of the husband’s DFRDB pension should be reduced by reference to the disparity in current value of the parties’ non-superannuation assets. In circumstances where the parties intentionally and sensibly divided them equally after separation, and have not contributed to each other’s assets in any significant way for 15 years, it would be surprising if the apparently fortuitous disparate increase in the value of their non-superannuation assets could operate in that fashion.

18. We are not persuaded that her Honour could have permissibly reduced the adjustment in favour of the wife out of the First State Super Fund by reason of her entitlement to the husband’s DFRDB pension in reliance upon the fact that the non superannuation assets which the parties had appropriately divided equally in 1993 had 15 years later assumed unequal values. The evidence before her simply did not allow such an approach. Her Honour may thus have erred, but we are not persuaded that she necessarily did. It remains, however, to be seen whether such an error would have vitiated the exercise of her Honour’s discretion.

19. It was further submitted that the wife had the benefit of an Aged Pension of some $303 per week to which the learned Federal Magistrate was obliged to have regard to under section 75(2), together with the other unquantified benefits to which her Honour referred as incidental to the wife’s conduct of her “farm business”.

20. It was thus submitted that the learned Federal Magistrate was entitled to find that there was “a degree of equality in the monies each party had to support themselves” and as such, that the wife was not entitled to an adjustment in her favour.

21. The Court was reminded of the learned Federal Magistrate’s unchallenged finding that the husband, who was then aged 64, could reasonably be expected to cease part time employment within a year, his income thereby decreasing by $160 per week. It was further submitted that the husband had greater health problems than did the wife.

22. The facts to which we have referred, combined with what was submitted to be the reality that the value of the husband’s DFRDB pension was unrealistic in that the husband can never commute that entitlement to a lump sum, was submitted by the learned Counsel for the husband to deny the wife’s challenge success.

23. It was submitted that, whilst the learned Federal Magistrate may have made a more generous adjustment in favour of the wife, it could not be successfully asserted that an adjustment of $39 585 out of the husband’s First State Superannuation Fund interest fell beyond the ambit of a reasonable exercise of discretion.

24. As the authorities to which we have referred make clear, only if this Court is persuaded that the learned Federal Magistrate’s decision was plainly wrong can appellate intervention be enlivened. It is in the nature of the exercise of discretion that different minds will reach different conclusions without, as Brennan J acknowledged in Norbis (supra), and Kirby J acknowledged in CDJ v VAJ (supra), thereby being in error.

25. As we have noted, the effect of the learned Federal Magistrate’s decision was that the wife received out of the husband’s First State Super Fund interest a “base amount” of $84 000. As is not in doubt, once the splitting order took effect, the wife, having attained 60 years of age, could receive, inclusive of the $10 500 in her own fund, $94 500. For his part, the husband could receive the balance of the First State Super Fund of $126 000, in addition to his DFRDB Pension. Those figures emerge from the learned Federal Magistrate’s Reasons for Judgment and are not controversial.

26. The wife would continue to have the income which the learned Federal Magistrate uncontroversially found her to have together with such further income (presumably after the imposition of some income tax) as her vested entitlement in the First State Superannuation Fund would provide her with.

27. The husband would continue to have the sources of income available to him which the learned Federal Magistrate uncontroversially found together with such additional monies (also presumably after tax) as investing the $126 000 would produce. The major component of the husband’s ongoing income would continue to be the DFRDB pension.

28. Within less than 12 months, to the extent that the husband’s household income would thus likely be greater than that of the wife by reason of the husband having a greater sum to invest than would the wife, that would be offset by the reality that the husband would be likely to have ceased part time employment with a consequential loss of $160 per week. When allowance was made for the expenses of the husband’s present wife, there would be little difference in the parties’ incomes.

29. The learned Federal Magistrate’s conclusion was that the parties were equally entitled to their assets and superannuation interests in 1993. We are satisfied that, quite independently of the disparity in the values of the parties’ liquid assets, which favoured the wife in any event, the effect of the learned Federal Magistrate’s orders was to place the parties in substantially the same position. Erroneously having had regard to the fortuitous disparity in the value of their non-superannuation assets thus would not vitiate the exercise of her Honour’s discretion.

30. In our view, whilst her Honour may have been more generous to the wife in the adjustments she made out of the husband’s First State Superannuation Fund interest, it has not been established that the order she made represented a manifestly inadequate adjustment in the wife’s favour. We would thus reject this challenge to the learned Federal Magistrate’s decision.

Conclusion

1. No ground of appeal having been successful, the wife’s appeal should be dismissed.

2. To the extent that Counsel for the wife sought to adduce further evidence, as he tacitly acknowledged at the commencement of his oral submissions, such further evidence could not render erroneous the Federal Magistrate’s decision in the sense discussed by the majority in CDJ v VAJ (1998) 197 CLR 172.

3. Whilst, as learned Counsel for the wife submitted, such further evidence would undoubtedly be relevant in the event of the wife’s appeal succeeding and the learned Federal Magistrate’s discretion being re-exercised in accordance with the decision of the High Court in Allesch v Maunz (2000) 203 CLR 172, having concluded that the appeal lacks merit, that situation does not eventuate.

4. The appeal will be accordingly dismissed as will the application for leave to adduce further evidence.

Costs

1. Counsel for the husband sought an order that the appellant wife pay his costs of successfully resisting the appeal if, as it transpired, the wife’s appeal was unsuccessful.

2. Such applications are governed by the provisions of s 117 of the Act. The Court must be satisfied that circumstances justify the making of a costs order having regard to the matters identified in s 117(2A). In Penfold v Penfold (1980) 144 CLR 311 at 315 the High Court (per Stephen, Mason, Aickin & Wilson JJ) said (at 75,054):

   It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec, (1) is expressed to be subject to subsec. (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently…we do not agree with the suggestion…that an order can only be made under sec. 117(2) in a ‘clear case’.

3. In Collins and Collins (1985) FLC 91-603 at p 79,877, the Full Court said:

   “[I]n deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subsec. (2A) so far as relevant.  Those factors … are not to be read in a restrictive way, however, the discretion remaining a broad one: Penfold v Penfold (1980) FLC 90-800 at pp. 75,053-75,054; quoted in Mallet v Mallet (1984) FLC 91-507 at pp. 79,123-79, 124 (by Wilson J.).

4. The obstacles to success in an appeal against the exercise of an undoubtedly broad discretion are well known. The wife’s failure in this case provides strong support for the husband’s costs application.

5. We accept the submission of learned Counsel for the wife that, although unsuccessful, issues of substance were raised on the appeal. The appeal was prosecuted with diligence and expedition. The issues requiring determination were not without complexity. Albeit not fatal to the exercise of discretion, we have acknowledged the possibility that her Honour erred in one respect advanced on behalf of the wife.

6. The financial circumstances of the parties are relevant. The purpose of the learned Federal Magistrate’s decision was, in our view, to place the parties in approximately equal financial positions. It would be regrettable if that equilibrium was disturbed.

7. Given the financial position of the parties, which slightly favour the husband, and the issues raised in the appeal, we are not of the opinion that the circumstances justify the making of a costs order.

I certify that the preceding one hundred and forty (140) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court

Associate: 

Date:  6 August 2009