Edwards & Edwards - [2008] FMCAfam 1025

FEDERAL MAGISTRATES COURT OF AUSTRALIA

EDWARDS & EDWARDS

[2008] FMCAfam 1025

FAMILY LAW – Property – wife’s entitlement to husband’s pension and super fund.

Family Law Act 1975, ss.75(2), 79(4)

C v C (2005) 33 Fam LR 414
West & Green (1993) FLC 92-395

Applicant:

MS EDWARDS

Respondent:

MR EDWARDS

File Number:

AYC 541 of 2007

Judgment of:

Henderson FM

Hearing date:

6 August 2008

Date of Last Submission:

6 August 2008

Delivered at:

Albury

Delivered on:

7 August 2008

REPRESENTATION

Counsel for the Applicant:

Mr Blackman

Solicitors for the Applicant:

Weatherly and Bartram, Albury, NSW

Counsel for the Respondent:

Ms Wheeler

Solicitors for the Respondent:

Terence O’Connor, Lawnton, QLD

ORDERS

Pursuant to s.90MT(1)(a) of the Family Law Act, that Mr Edwards a member of the Superannuation Fund First State Super and FSS Trustee Corporation ACN [1] Trustee of the superannuation fund do all acts and things, sign all documents and give all consents so that whenever a splittable payment becomes available to Mr Edwards from his interest in the Superannuation Fund that Ms Edwards is entitled to an amount calculated in accordance with Part 6 of the Family Law Superannuation Regulations 2001, using a base amount of $84,000 and there is a corresponding reduction in the entitlement of Mr Edwards had these orders not been made.
That for the purpose of the above order:
(a)The base amount to be allocated to Ms Edwards in the Superannuation Fund is $84,000.
(b)That the operative time for this order is 8 August 2008 and this order is to take effect from 8 August 2008.
The Husband transfer to the Wife all his right title or interest in the [B] Time Share property currently in the joint names of the Husband and Wife.
Unless otherwise specified in these orders:
(a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ALBURY

AYC 541 of 2007

MS EDWARDS

Applicant

And

MR EDWARDS

Respondent

REASONS FOR JUDGMENT

Introduction

The matter of Edwards was a property hearing listed on 6 August 2008. Mr Blackman of counsel represented the applicant wife and

Ms Wheeler of counsel the respondent husband.

Evidence

The wife’s evidence was contained in her application filed 23 November 2007, affidavit and financial statement filed the same date and an updating financial statement and an affidavit filed 12 July 2008.
A Case Outline and written submissions prepared by her counsel were also read by me.
For the husband, I read his response filed 13 February 2008, his financial statement and affidavit filed on the same date and a financial statement filed on 25 July 2008 together with a case outline.
A joint valuation was filed valuing the husband's two superannuation funds. His first fund is a DFRDB Fund in the payment phase and the other is a First State Superannuation in the accumulation stage.
A document entitled Agreed Facts was tendered and marked Court Exhibit 1. The hearing was dealt with on submissions thus avoiding the parties suffering the trauma and indignity of being cross examined.

Agreed facts

The wife is aged 64 and the husband is aged 61.
The husband joined the Army in 1969 and became a member of the DFRDB Fund in September 1969.
The parties were married in November 1971. The parties each had some assets at the commencement of the marriage, but that fact has no consequence for these proceedings.
The parties each worked during the marriage. They lived in New Guinea from 1972 to 1974 as a consequence of the husband’s Army career. The wife worked whilst in New Guinea until the birth of their first child who was born in New Guinea.
The parties returned to Australia in 1974 and lived with the wife’s parents.
The parties purchased land in [L] in 1974 and constructed a home. The wife and husband each worked on that home doing what they could as it was being built.
Two more children were born at [L] and the husband pursued his Army career ultimately becoming a Colonel.
In 1979, the husband was posted to Malaysia for three months. The wife remained in Sydney with the children.
The husband was posted to [A] on the Mornington Peninsula in Victoria in 1981. The parties lived at [M] in Victoria and rented their home in Sydney.
In 1983, the parties moved to Albury. In 1984 they purchased land at [T] and leased farming land at [R].
The wife said she did the majority of the farming. The husband said he also farmed however he was still with the Army. The wife undertook farming courses and I am satisfied she was the major force behind the farming operations
The wife continues in the occupation of farmer today.
In 1988 the parties purchased a property named “[G]” at [W] for $100,000 and commenced to live and work on that property.
In 1989, the husband went to Sydney for a promotion and the wife and children remained at [G].
The husband retired from the Army in November 1989 and commenced to receive his DFRDB Pension. He also received a lump sum of $61,119.30 at that time.
The parties purchased land at [E] in 1989.
In 1990 they purchased land at [W], where the wife continues to live for $128,856 using a mortgage and all but $14,000 of the husbands lump sum retirement money to purchase the property with the balance of his retirement monies being invested in a MLC rollover fund
In January 1991 the husband was working as a [occupation omitted] at [workplace omitted] in Albury.
In 1993 the parties separated. Fom the evidence, they each undertook work on the other's properties for some period of time after separation.
In February 1993, the wife and children moved to Wagga and the wife returned to the farm.
The parties effected their own division of property in November 1995. Effectively they divided their assets being the [L] property, farming properties and personalty equally between them. The wife retained the [W] farm.
This division did not include the husband's then superannuation with MLC or his DFRDB Fund.
The parties have been separated for 15 years. The husband's DFRDB Pension is in the payment phase. Part of his present First Sate Super Fund includes the $14,000 and interest accrued from his lump sum payment upon retirement from the Army originally placed into the MLC fund and his contributions to that fund from income earnt over the 5 years. This MLC fund was rolled over into the First State Super Fund in 2001.
The husband and wife made a contribution for two years to the

MLC Fund. The husband made sole contributions for the following three years before the Fund was rolled over to the First State Super fund and continued to make sole contributions to that Fund from his employment with the [occupation omitted] post separation.
At the time the MLC Fund was rolled over on 30 March 2001 there was $61,000 in the account.
The present value of the husband's First State Super Fund is $210,000 which includes part of the MLC fund which was set up 2 years prior to separation. The bulk of the fund is as a consequence of the husband’s sole contribution from his income and employment conditions since separation.
Although it is agreed that the parties separated in 1993, they each continued, for some short period of time, to assist each other in maintaining and repairing each others homes post separation.

The law and findings

The real issue is what entitlement, if any, has the wife to the husband's DFRDB Pension Fund and the First State Super Fund.
The DFRDB Fund has been valued at $313,994.66 and the First State Super at $210,000.
Going now to the husband's DFRDB fund. The agreed valuation is the result of statutory construction under the SIS regulations and the regulations to the Family Law Act. This valuation would be pertinent if the husband’s entitlement in the Fund was in the growth or accumulation stage. However, the husband’s entitlement in the Fund is in the payment phase and it has been since 1989.
Secondly this DFRDB fund cannot be split because it is in the payment phase.
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 pension entitlement when such an entitlement is in the payment phase.
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 DRFB fund in the payment phase namely what it provides to the husband in dollar terms each week.
That this is the correct approach is supported from reading of the decision in C v C (2005) 33 Fam LR 414. In that decision the Court accepted that the determination of the value of a superannuation benefit in the parties' hands is part of the overall discretion vested in the Court when the Court is determining its value. The value may not be as prescribed in the regulations because to take that as the value in all circumstances may not do justice and equity to the parties. As such I am not limited in determining the value of the husbands DFDRB Fund to the value prescribed under the regulations. This is particularly so when the superannuation being valued is, as here, in the payment phase and the fund cannot be subject to a super splitting order as it can in the growth or accumulation phase.
Further the husband has no ability to commute the pension. This is but another reason why the value of the Fund is the weekly payment it provides to the husband rather than a lump sum value
The facts here are very different to cases where a party has the capacity to commute a benefit to a pension or a part pension and a lump sum or just a lump sum. The husband made his election 19 years ago for a weekly pension and a part lump sum and this election cannot be undone. The wife 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.
There is no doubt that the greater proportion of the husbands now DFDRB pension accrued during the marriage. In the normal course of events, the wife's entitlement to a substantial share in that benefit is clear on the evidence. However the husband made the election for a pension about three years prior to the end of the marriage.
Three significant matters present themselves in my determination of the wife’s entitlement to a part of this pension.
The first is that I am 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.
Secondly I must have regard to the totality of the parties' assets and their financial positions before I make any decision
Thirdly I must 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.
The wife's position is that she should have an equal share of the husband’s fortnightly pension paid to her and a proportion of the husband’s interest in the First State Super Fund.
The husband asks the wife’s entitlement be adjusted from his First State Superannuation Fund by way of a splitting order.

Asset Base

The parties’ asset base was agreed.
The husband has a property at Caboolture which is mortgaged with net value of $322,000. He has $6,000 in the bank, a car worth $4,000 being a total of $332,000. His first State Super is worth $210,000 and his DFRB Fund is valued under the regulations at $313,994.63 or net $415 a week
For the wife she runs a farming property. There was a dispute as to the value of her stock, plant and equipment. The husband took the value she had given in a financial statement filed 12 months ago of $25,000. The wife's recent financial statement says due to the drought her plant, stock and equipment is only worth $11,000. I accept the evidence in the wife's most recent financial statement and I will value her stock, plant and equipment at $11,000.
She has her farming property which is mortgaged and has a net value $413,000. The wife has about $300 in the bank, a car worth $3,000, her stock, plant and equipment of $11,000 giving her a total asset base of liquid assets of $427,300. She has about $10,500 in superannuation.
There is a timeshare at [B] which the wife wishes to retain and the husband agrees. It has a minimal value.
It was put to me by Ms Wheeler, and I accept her calculations, that of the liquid assets, the wife has about 56 per cent and the husband 44 per cent.
Neither party seeks I disturb their present land holdings or personalty these 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.
In exercising my discretion under s.79(4) of the Family Law Act1975 I must look at the parties' past contributions, their present needs including the matters set out in s.75(2) of the Act and then determine whether the orders proposed to be made are just and equitable in all these circumstances.
On past contributions it was not contended that there would have been anything other than an equal division of the matrimonial assets. These were hard working people who did the best they could in all the circumstances of their long marriage of 22 years. At present, each party is supported by a form of pension; the husband on his DFRDB Pension and his Veterans Affairs Disability Pension, the wife on an Aged Pension and some farm relief benefits she receives due to the drought. The wife receives an income from her farm which is at present operating at a loss. These are matters I must take account of under s.75(2)(f) of the Act.
One relevant matter is what is the parties' respective financial capacity to meet their weekly needs from their own income and resources.
The wife says in her financial statement it is negative $15 because she runs a farming property which runs at a loss. However, she receives $303 a week by way of an aged pension, and farm support of $30 a week totalling $333.
The husband receives $625 consisting of $415 from his DFRDB Pension, $50 from his Disability Pension and $160 from his part-time work as a tutor.
At first blush the husband's income is twice the wife's income at $715 a week. However, the husband has remarried and has a legal obligation to support his wife. She receives a part pension of about $90 per week. Halving the husband's income of $715 a week is a sum of $357 a week for him. This is a similar amount to the wife’s income.
Secondly the husband will not always work as a [omitted] and he is now 64. When he ceases work his income will drop by $160 a week.
Further I note the wife would receive some benefits from her farm business such as electricity, petrol and the like which the husband as a PAYE tax earner would not receive.
I find there is 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.
The husband’s DFDRB fund cannot be split as it is in the payment phase. Only the income received in his hands can be split between the parties.
If, as Mr Blackman contended, I made an order to split the payment in the husband's hands of his DFRDB Pension 50/50, the wife would receive $207.50 a week. The consequences of that would be that there would be immediate impact upon the Age pension she receives and it would immediately impact on the husband's ability to support himself and his wife. The wife may not only lose the benefit of the Age pension but all the benefits that go with the entitlement to such a pension.
Consistent with Ms Wheeler's submissions, I find splitting the husband’s DFDRB equally between the parties would be a significant disadvantage for each of them. Both would be worse off financially than they are currently.
The most advantageous financial outcome for the parties is to split the husband's First State Super entitlement to satisfy the wife’s past contribution to his present DFDRB Pension.
The wife's legal team carried out a West & Green type analysis to assist in a calculation of the wife’s share to the husbands’ first state super fund. The result was an entitlement of 21.15 per cent having regard to her initial contribution to the now value of the fund prior to separation. I accept that calculation. They also contended for an equal division of the husband’s paid DFRB pension.
The husband's DFRDB Pension is not just an income stream; it is a valuable income stream. It is adjusted for CPI each year unlike the Age Pension which is a determination by Government. It is secured for his life and unlike investments or earnings from interest in the bank; it is not subject to fluctuations in interest rates. It is a valuable resource and a valuable income stream for the husband.
The husband sought the wife be paid an amount approaching 37 per cent of his First State Super to take account of her contribution to that Fund and her contribution to the husband’s DFRB pension. Ms Wheeler's submissions for the husband were that a pure mathematical approach in a matter like this will not necessarily result in a just and equitable division of the parties’ divisible assets.
The parties separated in 1993 after a 22 year marriage. They have been separated for 15 years
I have formed the view that it is 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.

Conclusion

The wife is seized of 56% of the parties’ liquid assets and the husband 44%. The husband has his wife to support from his income.
Having regard to all the matters above and the parties present financial and 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 fund and first state super fund .
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
This would leave the husband with $126,000 in his super fund and his DFDRB Pension.
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.
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%.
I find these orders are just and equitable in all the circumstances.

I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Henderson FM

Deputy Associate: A. Morris

Date: 30 September 2008