Fane & Lemott
[2013] FamCA 604
•20 August 2013
FAMILY COURT OF AUSTRALIA
| FANE & LEMOTT | [2013] FamCA 604 |
| FAMILY LAW – PROPERTY – Superannuation – parties’ superannuation interests considered separately from one another and separately from the tangible assets – the husband’s superannuation interest in the form of a police service pension valued by the methodology prescribed by the Family Law (Superannuation) (Method and Factors for Valuing Particular Superannuation Interests) Approval 2006 (No.2) (Cth) – the husband’s pension is paid at 90 per cent of his former salary for life – husband close to retirement age at which point he may elect to commute the pension either wholly or partially – superannuation splitting orders made in respect of the husband’s superannuation interest. FAMILY LAW – PROPERTY – Contributions – parties’ contributions to their superannuation interests and tangible assets considered and determined separately – adjustment made in husband’s favour in respect of tangible assets by reason of factors prescribed by ss 79(4)(d)-(g) and 75(2) of the Family Law Act 1975 (Cth). |
Evidence Act 1995 (Cth) s 191
| Family Law Act (1975) (Cth) ss 75, 79, 90MT, 90MZD, 106A Family Law Rules (Cth) r 14.06 Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (Cth) Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2006 (No.2)(Cth) Family Law (Superannuation) Regulations 2001 (Cth) regs 38, 43A Police Superannuation Regulation 2010 (NSW) regs 18, 19, 22, 23 Police Regulation (Superannuation) Act 1906 (NSW) ss 4, 14K, 14P, 14Q |
Bevan & Bevan [2013] FamCAFC 116
Chorn v Hopkins (2004) FLC 93-204
Crawford v Crawford (2013) 48 Fam LR 539
DJ & AJ (2006) FLC 93-289
Mallett v Mallett (1984) 156 CLR 605
Marriage of Coghlan (2005) 33 Fam LR 414
Marriage of Kennon (1997) 22 Fam LR 1
Norbis v Norbis (1986) 161 CLR 513
Omacini v Omacini (2005) 33 Fam LR 134
Schmidt & Schmidt [2009] FamCA 1386
Semperton v Semperton (2012) 47 Fam LR 626
Stanford v Stanford (2012) FLC 93-518
Trott & Trott (2006) FLC 93-263
Wheeldon & Wheeldon [2011] FamCA 40
| APPLICANT: | Ms Fane |
| RESPONDENT: | Mr Lemott |
| FILE NUMBER: | NCC | 877 | of | 2007 |
| DATE DELIVERED: | 20 August 2013 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Justice Austin |
| HEARING DATE: | 29, 30, & 31 July & 7 August 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr R Maurice |
| SOLICITOR FOR THE APPLICANT: | Helen Volk Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr M Bateman |
| SOLICITOR FOR THE RESPONDENT: | Craney Family Solicitors |
Orders
The parties shall forthwith do all acts and things necessary to:
(a)Instruct and authorise the wife’s solicitor to pay all monies held by her in escrow for the parties in St George Bank account number …67 to the wife, of which monies the wife is declared the sole legal and beneficial owner (as between the parties);
(b)Close Bendigo Bank account number …69, held by them in joint names.
The husband shall do all acts and things necessary to pay to the wife the sum of $200,000 from Police Credit Union investment account number …8 forthwith upon maturity of the term deposit on or about 3 November 2013, of which monies the wife is declared the sole legal and beneficial owner (as between the parties).
Pending compliance with Order 2 hereof, the husband is restrained from making any withdrawals from any account held by him with the Police Credit Union bearing account number …8 other than for the purpose of enabling his compliance with Order 2.
The wife is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising the property described as B Road, B, NSW (“the property”).
The wife shall indemnify and keep indemnified the husband against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the property.
Declaration that the SAS Trustee Corporation as trustee of the Police Superannuation Scheme (“the trustee”) has been accorded procedural fairness in respect of the following superannuation splitting and ancillary orders.
Order that these orders are binding upon the trustee.
Declaration, pursuant to s 90MT(2) of the Family Law Act, that for the purpose of these orders the value of the husband’s interest in the Police Superannuation Scheme is determined to be $2,228,438 in accordance with the Family Law (Superannuation) Regulations 2001.
Order that a base amount of $298,748 is allocated, as required by s 90MT(4) of the Family Law Act, to the wife (Ms Fane) out of the husband’s (Mr Lemott) interest in the Police Superannuation Scheme.
Order, in accordance with s 90MT(1)(a) of the Family Law Act, that:
(a)The wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)The husband’s entitlement to payments out of his interest in the Police Superannuation Scheme, and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this order.
The trustee shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act and the Family Law (Superannuation) Regulations 2001, the entitlement created for the wife pursuant to these orders; and
(b)Pay the entitlement whenever the trustee makes a splittable payment out of the husband’s interest in the Police Superannuation Scheme.
Order that these orders shall have effect from the operative time, and for that purpose the operative time shall be 4 business days from the date of these orders.
Unless otherwise provided by these orders:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder and superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession and any debts in their respective sole names.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s.106A of the Family Law Act.
Costs are reserved for 28 days.
Any and all other outstanding applications are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Fane & Lemott has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC 877 of 2007
| Ms Fane |
Applicant
And
| Mr Lemott |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings were essentially necessitated by the parties’ failure to reach agreement about the characterisation and treatment of the husband’s superannuation interest, presently being paid to him in the form of a pension.
The husband was formerly a police officer. He ceased work in March 2007 and has never worked since, although he was not formally discharged from service until March 2010.[1]
[1] Wife’s affidavit, Annexure C (page 3)
After years of wrangling, it was ultimately determined the husband was entitled to a pension pursuant to the provisions of the Police Regulation (Superannuation) Act 1906 (NSW), the quantum of which pension is calculated as a percentage of his former salary. He is entitled to that indexed pension for life, although he may elect on his attainment of 60 years of age to commute the pension, either in whole or in part. He is currently 57 years of age.
The proceedings were commenced by the wife long ago in March 2007, but the parties mutually considered the proceedings could not progress until parallel proceedings instituted by the husband to establish his pension entitlement were finally resolved, so these proceedings were adjourned until that occurred.[2] The proceedings were revived and progressed to hearing once the husband’s pension entitlement was settled. Regrettably, nearly nine years have now elapsed since the parties separated.
[2] Order 1 and Notation 5 made on 16 March 2011
Background
The parties commenced their cohabitation in 1984 and married in 1986.
They finally separated in November 2004, after more than 20 years of cohabitation.
The husband adduced evidence to contest the date of final separation, but that evidence is rejected. The husband conceded that he and the wife jointly filed an application for their divorce in January 2006, wherein they disclosed their date of final separation as 3 November 2004. They attested to the truth and accuracy of that evidence. Consequently, a finding of fact about that being the date of their final separation was made by the Court in order to found the competency of their application and to pronounce the dissolution of their marriage. It is not now open for the husband to recant and challenge the veracity of either that evidence or that factual finding. In any event, the husband later acknowledged in his financial questionnaire, filed on 25 June 2012, that the parties separated in November 2004.
During their relationship the parties had four children. They were born in 1985, 1986, 1991, and 1996. Only the youngest is still a minor, although the two youngest children were minors at the time of separation. Parenting orders in relation to the children were made consensually between the parties in January 2006 and later consensually varied in October 2009.
The youngest child still lives with the wife.
The competing proposals
The wife pressed for the orders set out within the minute of orders she tendered,[3] although she abandoned her application for an order requiring the parties to submit amended taxation returns to the Commissioner of Taxation (Order 7). She abandoned her Amended Application.
[3] Exhibit W10
The husband pressed for the orders set out within the minute of orders he tendered.[4] He abandoned his Amended Response.
[4] Exhibit H1
There was a gulf between the parties’ contentions about how the proceedings should be determined.
The wife contended the parties’ assets and superannuation interests should be treated similarly and the parties’ contributions assessed globally, whereas the husband asserted the tangible assets, the wife’s superannuation interests, his superannuation interest, and the parties’ contributions thereto should all be considered separately.
The parties also harboured grossly disparate views about the extent of their respective contributions to the various superannuation interests.
As might be imagined in such circumstances, the orders proposed by the parties bore little similarity, either in character or quantum.
The evidence
The wife relied upon her affidavit and financial statement, both of which were filed on 17 February 2013.
The husband relied upon his affidavit filed on 11 March 2013 and his financial statement filed on 19 March 2013.
The parties also relied upon the report dated 12 October 2012 compiled by the single expert witness, Mr G, valuing and describing the husband’s superannuation interest. That report was tendered in evidence.[5] The single expert was cross examined by the husband, but not the wife.
[5] Exhibit W1
Legal principles
Orders under s 79 of the Family Law Act 1975 (Cth) (“the Act”) altering the property interests of parties may only be made if the Court is first satisfied, pursuant to s 79(2), it is just and equitable to make such orders. The Act then identifies in s 79(4) the matters the Court must take into account in considering what order, if any, should be made. Those two inquiries are not to be conflated (see Stanford v Stanford (2012) FLC 93-518 at [22], [35], [40], [51]).
It is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying the existing legal and equitable property interests of the parties. It must not be assumed that the parties’ rights to or interests in marital property are or should be different from those that then exist. A party has no automatic right to division of the parties’ property (see Stanford at [37]-[40], [50]).
In this instance, the parties mutually acknowledged it was just and equitable for the Court to entertain their applications and make property settlement orders between them. They recognised it was just and equitable to do so because the breakdown in their relationship ended their fiscal unity and deprives them of common use of their property, which is often the case (see Stanford at [42]; Bevan & Bevan [2013] FamCAFC 116 at [68]-[70], [82], [164]-[165]). There is considerable disparity between the parties’ respective existing legal and equitable interests in assets and their respective superannuation interests, which disparity is not reflective of their joint endeavours as a family unit over many years or their individual efforts since their separation. Indeed, as they agreed, it is just and equitable to make property settlement orders.
Once determined it is just and equitable for the property interests of the parties to be altered, the process of evaluating the proper orders to make is dictated by the factors enumerated within s 79(4) of the Act. It is necessary to identify and assess the parties’ contributions within the meaning of ss 79(4)(a)-(c) and then take account of the relevant matters referred to in ss 79(4)(d)-(g) and 75(2).
As already noted though, the parties were at odds about whether that methodology should be applied to all of their assets and superannuation interests collectively or by separate reference to their tangible assets and their individual superannuation interests.
The Court is generally exhorted to assess the parties’ contributions to superannuation entitlements separately, though that need not be the case (see Marriage of Coghlan (2005) 33 Fam LR 414 at 428-430). No submission made by the wife was sufficiently cogent to persuade deviation from the orthodox course adumbrated by the Full Court in Coghlan. It is appropriate in this instance to consider the parties’ superannuation interests separately from one another and also separately from their other assets. Nothing is lost by the wife through adoption of that approach, even though it was not her preference. The process of evaluation will simply be more intricate.
Consequently, consonantly with the husband’s submissions, three categories of assets and financial resources are constituted. The first contains the parties’ assets and liabilities, the second contains the wife’s two superannuation interests, and the third contains the husband’s single superannuation interest.
Assets and liabilities
The parties tendered a joint balance sheet which set out the assets, liabilities, add-backs, and superannuation interests contended by them.[6]
[6] Exhibit A
That exhibit forms the template for the parties’ respective assets and liabilities, which I find to be as follows:
No
Assets
Party
Value
Total
1
Proceeds of sale of former matrimonial home
joint
129,597
2
B real property
wife
550,000
3
Police CU account
husband
202,121
4
Police CU account
husband
10,695
5
Police CU account
wife
218
6
Greater BS account
husband
22,144
7
2009 Audi
wife
42,000
8
2012 Toyota
husband
40,000
9
NIB shares
husband
9,900
Sub-total
1,006,675
1,006,675
Add-backs
10
GE line of credit
wife
nil
11
Network Consumer Finance
wife
nil
12
Money expended from the Greater BS account
husband
nil
Sub-total
nil
1,006,675
Liabilities
13
School expenses
wife
2,725
14
Tax liability
husband
nil
15
St George bank loan
wife
402,503
Sub-total
405,228
601,447
Net assets
601,447
Including the parties’ joint entitlement to the residue proceeds of sale of the former matrimonial home, calculated to the nearest dollar, the wife presently has net assets worth $251,789 and the husband has net assets worth $349,658.
The parties disagreed over some of the items contained within the pool of property so it is necessary to explain the findings in some respects.
The Audi car (item 7) was purchased by the wife in January 2011 with the benefit of a loan, which loan she discharged in April 2012.[7] The wife was able to discharge the loan using cash payments of $18,000 she received from her niece. The wife explained how the cash paid to her by the niece was only by way of re-imbursement for expenses borne by the wife in the course of her past care for the niece, which expenses included the purchase of furniture and clothing for her, payment of her school fees, and payment of the deposit on an overseas trip she took. The list of liabilities does not include the car loan and the wife derives no credit for the cash she received to discharge the loan as a contribution. The parties did not argue the case otherwise.
[7] Wife’s affidavit, paras 200-201
The Toyota vehicle (item 8) was purchased by the husband in October 2012.[8] The asset was not valued by a single expert and the parties could not agree on the current value of the vehicle. Its value can only therefore be established by admissions made by the husband. In November 2012, only a month after purchase, the husband admitted the vehicle was worth $46,000.[9] By March 2013 he admitted the vehicle was worth $40,000.[10] Depreciation following purchase is to be expected so, in the absence of expert evidence, I adopt the current value of $40,000 admitted by the husband.
[8] Wife’s affidavit, para 199
[9] Exhibit W5 (item 7)
[10] Exhibit W6 (item 7); Husband’s financial statement, para 40
The parties argued over a series of add-backs (items 10, 11, 12), none of which are sustained.
Prior to the High Court’s authoritative pronouncement about the process of property adjustment under s 79 of the Act (see Stanford), it was fashionable for parties to contest the notional add-back of assets to a common pool of property, even though it was expressly discouraged as an exception rather than the rule (see Chorn & Hopkins (2004) FLC 93-204 at [24]). Save perhaps for exceptional circumstances, the practice may now be eradicated instead of merely discouraged. The first step in determining any claim under s 79 of the Act is to establish the parties’ individual existing legal and equitable property interests (see Stanford at [37]-[40], [50]). By definition, that process must preclude any inquiry about the notional inclusion of an extinguished legal or equitable property interest.
Any argument about the premature distribution of assets or the deliberate, reckless, negligent or wanton dissipation of assets can only conceivably be permissible when considering, pursuant to s 79(2), whether it is just and equitable to make property settlement orders at all, or when comparing the parties’ contributions under ss 79(4)(a)-(c) and considering the factors specified by ss 79(4)(e) and 75(2)(o) of the Act to determine what orders should be made. Such an approach is not novel (see Bevan & Bevan at [78]-[79], [160]).
In any event, in deference to the evidence adduced and the arguments advanced, the add-back disputes may be otherwise swiftly resolved.
The asserted add-back in respect of a line of credit (item 10) was abandoned. There was no evidence about it.
Shortly prior to separation the wife procured a loan from Network Consumer Finance, which was repaid (item 11).[11] The husband asserted no knowledge of it,[12] but when confronted with an apparently contemporaneous document in cross examination he had no option but to admit he had signed an authority permitting repayments of the loan to be made from a joint bank account.
[11] Wife’s affidavit, para 179(i)
[12] Husband’s affidavit, para 53
There was no evidence about what goods or services were procured with the borrowed funds, nor who enjoyed the benefit of those goods and services, nor why the wife claimed she bore sole responsibility for the loan repayments when the husband had authorised repayments from joint funds in a joint bank account. Neither party explained why they wanted or opposed the expenditure of the wife’s own funds added back to the pool of property as a notional asset in which the husband could then share. No aspect of the evidence suggested the expenditure should be added back to the pool on recognised principles (see Omacini v Omacini (2005) 33 Fam LR 134 at 144-146), especially in the absence of properly reasoned explanation.
The husband received significant lump sum payments between March 2010 and January 2013, totalling about $370,000.[13] Those payments were from a variety of sources, but were all related to his former employment as a police officer. Variously, the payments were in satisfaction of his past pension entitlements, re-imbursement of his costs in relation to the prosecution of his successful appeal over the pension claim, and the corrected re-calculation of his accumulated unused leave entitlements.
[13] Wife’s affidavit, paras 180-182, 379, Annexure I (Notice of Decision page 6)
The husband now has an account with the Greater Building Society (item 6), which he opened in March 2010 for the express purpose of deposit of one payment of $109,655 he received at that time from the police service.[14] By March 2013, the account contained only $40,200,[15] but the account now contains only $22,144. It follows that, in the space of little more than three years between March 2010 and August 2013, the husband expended capital sums from that account totalling some $87,000. The wife contended for the notional add-back of that amount to the pool (item 12).
[14] Wife’s affidavit, para 181, Annexure C; Exhibit W7
[15] Exhibit W6 (item 6)
In cross examination the husband was asked to account for that expenditure, but he was largely unable to do so. The failure of the party responsible for the dissipation or expenditure of “matrimonial funds” to afford a comprehensive explanation for it has ordinarily been a matter of significance in the determination of whether it is reasonable to notionally add-back the expended funds to the pool of property (see Omacini at 144-146). The wife asserted it was unnecessary for the husband to spend the money on ordinary living expenses because his income exceeds his expenses by a considerable margin,[16] which surplus only enlarged once the husband’s pension was recently increased.
[16] Husband’s financial statement, paras 16, 33
The lacuna in the wife’s submission was the lack of evidence to prove the expended funds were “matrimonial funds” in which she had some form of interest and of which she was deprived by the husband’s exclusive use of them. The money was paid to the husband in satisfaction of his outstanding entitlement to unused leave, accumulated during his police service. He and the wife separated in November 2004, but his police service did not end until March 2010.[17] There was no evidence about whether the leave for which he was paid accumulated wholly during cohabitation, wholly after separation, or partially across both periods. The evidence did not therefore fairly permit an inference the money was matrimonial in nature, even if the law did recognise community ownership of property, which it does not (see Stanford at [39]).
[17] Wife’s affidavit, Annexure C (page 3)
The small liability for the youngest child’s school expenses is included in the pool (item 13). Some evidence was adduced about the existence of a bursary to defray her current school fees, but there was no evidence to clearly elucidate whether the liability consensually included on the balance sheet[18] related to current school fees or something different, such as arrears or other expenses incidental to her education at the school. Given the uncertain state of the evidence, it would be unfair to permit either party to depart from the agreed fact (see s 191 Evidence Act).
[18] Exhibit A (item 13)
The husband’s former tax liability (item 14) is now nil because he said in cross examination it has been paid. In any event, the liability related to the husband’s income at times since separation.
Having established the parties’ assets and liabilities it is necessary to evaluate their contributions to that property.
At the time of cohabitation, both parties owned a car, some furniture, and had some superannuation entitlements.[19] There is no evidence at all about the values of those assets and superannuation interests.
[19] Wife’s affidavit, paras 19-21; Husband’s affidavit, paras 11-12
Early in their relationship the wife was injured in an accident, for which she was compensated with $10,000 in early 1988.[20] That money was contributed to the purchase of the parties’ first home shortly afterwards. To assist with the purchase, the wife’s parents loaned the parties another $10,000. Only a small portion of that loan was repaid over the next few years and the balance of the loan was forgiven.[21] The property was improved after its purchase by the husband’s realisation of two life insurance policies, worth about $11,000, and his expenditure of those funds on the improvements.[22]
[20] Wife’s affidavit, paras 25-26; Husband’s affidavit, para 17
[21] Wife’s affidavit, paras 27-29; Husband’s affidavit, para 17
[22] Husband’s affidavit, para 18
The parties were both employed on a full-time basis throughout their relationship, although the wife took leave of several months duration at times proximate to the birth of their four children. Each party contributed the totality of their income for the benefit of the family unit whilst the marital relationship subsisted. The wife did not contend otherwise. Although the husband deposed that the wife did not contribute the totality of her income, he rescinded that allegation in cross examination and admitted she did. Inferentially, the parties generated reasonably similar income throughout their relationship.[23]
[23] Wife’s affidavit, para 382
There can be little doubt the wife was primarily responsible for the performance of household duties and the care and supervision of the children. For extensive periods of the parties’ cohabitation the husband worked long distances away from the matrimonial home, requiring him to either live away from home or commute long distances each day. The wife did so too, but only on two relatively short occasions, amounting to only a few months in all. The husband’s work and travel commitments physically deprived him of the time which the wife devoted to homemaking. The wife’s homemaking contribution was much more substantial than the husband’s, notwithstanding that she too was employed on a full-time basis. The parenting orders made in January 2006 and October 2009 were a manifestation of the parties’ acceptance that the wife was the children’s primary carer and also of the husband’s confidence in her parenting capacity.
In the face of such incontrovertible facts, the husband surprisingly denied in cross examination any suggestion that the wife was more integrally involved in the management of the household and care of the children. The anomaly was clarified by the husband’s explanation in re-examination about how he perceives the quality of his relationships with the children to be equivalent with the quality of the relationships enjoyed by the wife with the children. I accept that is the husband’s honest belief. It might even be factually correct. However, his perception about the quality of filial relationships has no bearing upon the objective comparison of the parties’ contributions to the welfare of the family, particularly in the capacity of homemaker or parent. If I misunderstood the husband’s explanation and he really does assert his past equal contribution to domestic tasks and the care and supervision of the children, then his evidence was either disingenuous or gravely mistaken.
At the time of separation in November 2004 the husband was working in far western NSW, but thereafter he still intermittently returned to the former matrimonial home to stay and visit the children. He ceased staying at the former matrimonial home in January 2006, following serious disagreement between the parties. The husband has since continued to facilitate the children’s expenditure of time with him, but over the years since separation the wife has undoubtedly born the overwhelming responsibility for their care and supervision. That has been an onerous burden for her. The third child, who did not attain his majority until April 2009, was physically and emotionally unwell over a period of years and his care required enormous effort from the wife.[24]
[24] Wife’s affidavit, paras 218-237, 239
Upon final separation in November 2004 the wife and children remained in occupation of the former matrimonial home. At that time the husband retained a vehicle, the wife retained a caravan, and they equitably divided their furniture and effects. Neither party wants those assets factored into the property settlement.[25]
[25] Wife’s affidavit, paras 153-154
From the time of separation in November 2004, the husband gave the wife $650 per week, of which $200 was intended to be a one-half contribution towards mortgage repayments on the former matrimonial home and $450 was attributable to financial support of the children. That financial arrangement continued, notwithstanding the severance of their domestic arrangement in January 2006 and the wife’s residential relocation with the children to Sydney in July 2006, after which time the former matrimonial home was rented.
The parties’ financial arrangement prevailed until March 2007, when the husband was suspended from duty. Over the next few months the husband paid amounts to the wife in respect of only child support, but those voluntary payments ceased in late 2007. It was at that point the wife made an application to the Child Support Agency for an assessment of the father’s child support liability.[26] The husband thereafter paid child support, though the payments were not always consistent with the published assessments. Once in 2009 he was in advance with payments and once in 2012 he was in arrears with payments, but the arrears were rectified and his payments are now regularly made.
[26] Wife’s affidavit, paras 203-204, 240, 364-365, 367; Husband’s affidavit, paras 49-50
From March 2007 when the husband ceased making mortgage repayment contributions to the wife, with few exceptions, the wife received the totality of the rent payments and met the entirety of expenses in respect of the former matrimonial home.[27] Contrary to her evidence,[28] the wife thereafter declared her receipt of the whole of the rental income for tax assessment and claimed the whole of the outgoings as tax deductions.[29] The husband was plainly content with and acquiesced to that arrangement. The rent was paid into a joint account, to which he had unfettered access, but he took no steps to interfere with the wife’s management of the former matrimonial home.
[27] Wife’s affidavit, paras 160, 168-170
[28] Wife’s affidavit, paras 175-176
[29] Husband’s affidavit, paras 51, 61
During 2011 the wife fell behind with mortgage repayments and the mortgagee threatened to foreclose on the mortgage. The parties were joint owners of the property. Although the wife wanted to sell it, the husband prevaricated. He either stalled or refused to sign an exclusive agency agreement with a real estate agent. The wife therefore sought and obtained interim orders permitting her to sell the former matrimonial home. The former matrimonial home was then sold and the net proceeds of sale held in a solicitors trust account. As a consequence of further orders, the wife was permitted to use $150,000 from those funds to enable the encumbered purchase of her current home. The balance of the sale proceeds remain in escrow.[30]
[30] Wife’s affidavit, paras 195, 197, 198, 376; Husband’s affidavit, paras 84-85
The common approach is to assess the parties’ contributions globally (see Norbis v Norbis (1986) 161 CLR 513 at 523, 532-533, 541), which course should be presently adopted because neither party demurred.
The wife asserted her overall contributions sounded in her present entitlement to 60 per cent of the property, but that submission was made on the basis of there being a single pool comprising all property and superannuation interests.
When considering the wife’s submissions, it is also significant that she foreshadowed an argument prior to commencement of the hearing for her contributions to carry greater weight by reference to principles espoused in Marriage of Kennon (1997) 22 Fam LR 1, which partly accounted for the contention for her contribution-based entitlement to be 60 per cent. Given she expressly abandoned the Kennon argument at an early point in the hearing, she could not logically maintain her argument for entitlement to 60 per cent of the pool with the same vigour.
The husband contended for the parties’ equal entitlement to the parties’ net assets, excluding their superannuation interests.
Both parties’ submissions are rejected.
Their financial contributions were broadly equivalent. They both generated handsome incomes throughout their relationship, reflecting their respective career advancement.
To the extent the lump sum payments received by the husband in the period between March 2010 and January 2013 were benefits paid in satisfaction of leave accrued during his former employment, the wife indirectly contributed to the husband’s accumulation of those benefits both during cohabitation and after separation by taking principal responsibility for the care of the children so the husband could maintain his employment.
Otherwise, the lump sum payments to the husband were back-payments and re-imbursements pertaining to his superannuation interest. The husband is entitled to credit for his contributions of those benefits which now constitute tangible assets, but the wife also indirectly contributed to the husband’s acquisition of those funds. The parties’ respective contributions to the husband’s superannuation interest are separately considered, as the husband desired, but the conclusions reached in respect of the parties’ contributions to the pension entitlement are similarly applicable in respect of the lump sum payments from the same source.
The wife’s primary homemaking responsibility during cohabitation and her even greater responsibility for the care and supervision of the two youngest children following separation, whilst she too maintained full-time employment, is a significant feature of the evidence. Contributions as a homemaker and parent should be afforded substantial and not merely token recognition (see Mallett v Mallett (1984) 156 CLR 605 at 609, 623, 636, 646) and the wife’s contributions, recognised by s 79(4)(c), certainly were substantial.
The wife’s overall contributions were greater than the husband’s. The differential between the parties’ contributions should properly be assessed at 10 per cent, meaning the wife’s overall entitlement is 55 per cent and the husband’s is 45 per cent.
Wife’s superannuation interests
The wife’s two superannuation interests are respectively worth $922,837 and $82,441.[31]
[31] Exhibit A (items 16 and 17)
Given the wife’s admission she had nominal superannuation entitlements when cohabitation began,[32] the totality of her interests have been accumulated since January 1984.
[32] Wife’s affidavit, para 19(d)
The wife accumulated superannuation entitlements during the parties’ cohabitation of more than 20 years, but there is no evidence as to the value of her entitlements at the time of separation in November 2004.[33]
[33] Wife’s affidavit, para 151(g)
The wife continued to accumulate superannuation entitlements after separation, over a period now approaching nine years. Presently, from her gross salary of over $150,000 per annum, she contributes $555 to superannuation each week.[34] There is no evidence as to how long that has been her practice.
[34] Wife’s financial statement, paras 9, 20
The only inference fairly available is that most of the wife’s superannuation interests would likely have been accrued during cohabitation, but even the proportion accrued since separation would probably be quite valuable. It is impossible to finesse the quantification any further.
The husband submitted his contribution-based entitlement to the wife’s two superannuation interests was 20 per cent, but his reasoning was not exposed by his submissions. All that was submitted was the husband contributed equally up until the date of separation and, thereafter, the children stayed with him during some holidays, which enabled the wife to work.
Other than to concede the husband’s assessment of his own contribution was “very fair”, implying its modesty, the wife did not engage the debate. She did not make any alternate submission to her singular contention for there to be only one pool comprising all property and superannuation interests.
The husband’s assessment was indeed modest. Perhaps it was so modest because he was conscious of his allied submission about how the wife’s contribution to his own superannuation was even more modest and his realisation of the irony if he contended for material disparity between the parties’ reciprocal contributions to the superannuation interests. It is really unnecessary to speculate.
The husband’s contribution-based entitlement to the wife’s superannuation interests is, however, greater than he contends – more likely 30 per cent. That assessment properly recognises the husband’s indirect, but modestly inferior, contribution to accumulation of the wife’s superannuation interests over a period of roughly two-thirds of the total period during which her interests have accrued.
Husband’s superannuation interest
As already mentioned, the husband’s superannuation interest is currently paid in the form of a pension pursuant to NSW statutory provisions.
There is no evidence about the amount of superannuation entitlements accumulated by the husband over time. There is no evidence about the value of the husband’s accumulated superannuation interest at the time he began cohabitation with the wife in January 1984, but having regard to the division of property between he and his former wife, they were likely modest in value.[35] Nor is there any evidence about the value of his interest at the time of separation in November 2004.[36]
[35] Husband’s affidavit, para 11
[36] Wife’s affidavit, para 151(h)
Following the husband’s suspension from employment duties in March 2007 due to his unfitness for work, his application for payment of a pension was made in August 2009 and refused in March 2010.[37]
[37] Husband’s affidavit, para, 3; Wife’s affidavit, para 277, Annexure G
Despite the delay in applying for and the subsequent denial of the pension, the husband was not without income in the interim period. He initially received his ordinary pay, but when that ceased in November 2008 he was paid some other form of income, about which the evidence was unspecific and confusing.[38] Nevertheless, it is common ground the husband was never without income.
[38] Husband’s affidavit, paras 3-6; Wife’s affidavit, paras 34-36
The husband appealed against the refusal to grant his pension, which appeal was not successfully concluded until February 2012. The original decision of the Commissioner of Police to refuse the pension was set aside.[39] The husband was then re-assessed by the Commissioner of Police as being entitled to a pension under the Police Regulation (Superannuation) Act 1906 (NSW).[40]
[39] Exhibit H4; Husband’s affidavit, para 7
[40] Husband’s affidavit, para 7
In August 2012 the Police Superannuation Advisory Committee determined to calculate the pension at 85 per cent of his indexed salary, with retrospective application from 19 March 2010,[41] being the first day following the husband’s last day of service.[42]
[41] Exhibit H2
[42] Wife’s affidavit, Annexure C (page 3)
The husband then applied to have his pension calculated at the higher rate of 90 per cent of his indexed salary, which application was subsequently approved by the Police Superannuation Advisory Committee in January 2013, and also backdated to March 2010.[43]
[43] Exhibit H2
The husband’s pension will now be indefinitely calculated at 90 per cent of his “salary of office at exit”[44] and will be influenced by annual CPI increases.[45]
[44] Exhibit H2
[45] Husband’s affidavit, para 87
The statutory pension now represents the totality of the husband’s superannuation interest.
It is well known the Family Law Act (“the Act”) makes provision for superannuation interests to be split (Part VIIIB).
The Family Law (Superannuation) Regulations 2001 (“the Regulations”) give effect to the distribution of split superannuation interests.
The Act provides that a superannuation interest must be valued before it is amenable to a splitting order (s 90MT(2)) and the Regulations make provision for the manner in which different superannuation interests are valued for that purpose.
The Minister is empowered to approve the manner in which certain superannuation interests are to be valued (regs 38, 43A), pursuant to which regulatory power various written approvals have been issued from time to time. Otherwise, the Regulations prescribe how certain superannuation interests are to be valued in a more generic way.
Relevantly, the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (“the Approval”) makes specific provision for the valuation of superannuation interests in the payment phase under the Police Regulation (Superannuation) Act 1906 (see section 4 and Schedule 2 Division 5.3 of the Approval).[46] The NSW legislation endorses that position (see regs 18-19 Police Superannuation Regulation 2010).
[46] Exhibit W1, Appendix B
The fund-specific valuation methodology for police pensions under the Approval was introduced on 20 April 2006, when the Approval was amended by the Family Law (Superannuation) (Method and Factors for Valuing Particular Superannuation Interests) Approval 2006 (No.2).
The single expert, and more recently the parties, calculated the value of the husband’s pension in accordance with that specific methodology. It is an agreed fact the husband’s superannuation interest is presently valued at $2,228,438.[47] The single expert calculated a lesser amount, but that valuation was only current as at 23 October 2012.[48]
[47] Exhibit A (item 18)
[48] Exhibit W1, para 1.4
Notwithstanding the unimpeachable valuation of the husband’s pension, as the husband submitted, the “nature, form, and characteristics” of the pension need to be considered when evaluating the parties’ contributions to its existence and also when determining the nature of the final property settlement orders that should be made between the parties.
In support of his proposition, the husband cited an abundance of authority, including Trott & Trott (2006) FLC 93-263; DJ & AJ (2006) FLC 93-289; Wheeldon & Wheeldon [2011] FamCA 40; Semperton & Semperton (2012) 47 Fam LR 626; and Crawford & Crawford (2013) 48 Fam LR 539.
While consideration of the discussion and treatment of superannuation interests within those authorities is of general interest, they have limited bearing upon the outcome of these proceedings, which have their own unique facts and circumstances.
Although Trott similarly concerned a police pension in the payment phase under the Police Regulation (Superannuation) Act 1906, that case was decided before the Approval was amended to include the fund-specific methodology for valuing such pensions. Watts J was left to struggle valiantly with the question of how to value the superannuation interest and deal with it in the property settlement proceedings because the then generic valuation methodology was liable to result in a “quite artificial and largely arbitrary exercise” (at [96]-[101], [197]). That is no longer the case.
Additionally, the pensioner in Trott was much younger than the husband in these proceedings. There, the pensioner would not reach retirement age for many years, so the pension was ostensibly substituting for income that would otherwise have been earned if the pensioner was fit for duty. Here, the husband has already passed his “early” retirement date of 55 years and is less than three years away from his “normal” retirement date of 60 years. In these proceedings, that necessarily means the “invalidity benefit” component of the husband’s pension represents a much smaller proportion of the pension than the “retirement benefit” component.[49] The different characteristics of those two aspects of the pension led Watts J to find the pensioner’s spouse in Trott had different percentage entitlements to the two different components of the pension (at [94], [131]-[135], [137]-[172], [197]).
[49] Exhibit W1, paras 1.7, 1.8, 1.9
Watts J adopted a similar approach to a police pension in Schmidt & Schmidt [2009] FamCA 1386 at [62]-[64], [100]-[122]), but in that case the pension was capable of valuation pursuant to the fund-specific valuation methodology introduced under the Approval (at [79]).
DJ & AJ concerned a pensioner, who had been a teacher, receiving a quite different type of pension paid under the Retirement Benefits Fund of Tasmania. The pensioner’s appeal, on the basis of inadequate reasons and a manifestly excessive adjustment in the spouse’s favour, was dismissed. The spouse’s cross appeal was also dismissed. How that decision affected the current proceedings was not explained since, aside from citation, it was not mentioned.
Wheeldon concerned an invalidity pension paid to a former member of the NSW Emergency Services. Fowler J was confronted with conflicting evidence about the valuation of the pension (at [94]-[95], [99]-[101]), so unlike the case at hand, there was no definitive evidence of value. Accordingly, Fowler J found himself in the same predicament as Watts J in Trott and therefore unsurprisingly adopted a similar approach (at [109]-[121]). Also unlike the present case, both parties there sought splitting orders in respect of the husband’s pension (at [102]-[103]), whereas here only the wife seeks a splitting order in relation to the pension and the husband opposes it.
Semperton concerned a pension paid to a former serviceman under the Defence Force Retirement and Death Benefit Scheme. The pension was incapable of commutation and could only ever be an “income stream” (at [193]), but was nonetheless valued on a capitalised basis pursuant to the Regulations. Significantly, it was not possible to order a lump sum payment from the serviceman’s superannuation interest to satisfy the spouse’s entitlement (at [6]) and neither party wanted the pension split (at [135], [167]). That is not the case here, where the applicable legislation expressly enables the payment of a lump sum to the wife consequent upon splitting orders being made, which was the wife’s desire, and commutation of the husband’s pension at age 60 irrespective of any superannuation split. In Semperton the Full Court simply cautioned against double-dipping when considering contributions and adjustments in respect of pensions and ensuring practical equity in the orders ultimately made (at [143]-[157], [167]-[186], [195]-[197]).
As was eloquently observed in Semperton (at [187], [190]):
It is also important to bear in mind that approaches adopted at first instance are necessarily influenced by the facts of the particular matter. Furthermore, the decision of an appellate court that an outcome ordered by a trial judge was within the range of discretion does not mean the approach adopted by the trial judge was the preferred approach. An alternative approach may just as well have escaped appellate intervention...
Ideally, a judicial officer will be alive to the nuances of each individual dispute, including the wants and desires of each of the parties, and thus seek to craft an order that will provide individual justice for both parties.
In Crawford the pensioner similarly received a police pension under the Police Regulation (Superannuation) Act 1906, but neither party sought a splitting order in respect of the pension (at [17]). The pensioner in Crawford was considerably younger than the husband in this case. Therefore, as was the situation in Trott, the “incapacity” component of the pension, which substituted for income that would otherwise have been earned by the pensioner if fit for work, represented a large proportion of the pension (at [55]) and was a far more significant component of that pension than is the case with the pension at hand. The decision in Crawford abided its own facts, just as the Full Court in Semperton said should occur.
The retirement age of the pensioner is not “irrelevant”, as was contended in Crawford (at [49]), because the date of possible retirement marks, firstly, the point at which the pension is apt to lose its character as an income substitute and instead become a superannuation benefit, and secondly, the point at which the pensioner may elect to either wholly or partially commute the pension.
As summarised by the single expert, the uncontroversial salient facts about the husband’s pension in these proceedings may be simply stated:
a)The husband is now 57 years of age. He has already past his “early” retirement age of 55 years and is broaching his “normal” retirement age of 60 years.
b)The husband earlier forsook the opportunity to commute the pension, either wholly or partially, on his attainment of 55 years.
c)The husband will again have the opportunity to elect to commute the pension, either wholly or partially, upon his attainment of 60 years (see s 14K Police Regulation (Superannuation) Act 1906).
d)The husband chose not to adduce any evidence about his commutation election. It is therefore impossible to know whether he probably will or will not commute.
e)Any uncommuted portion of the husband’s pension will be paid to him for life, subject to him being re-assessed as fit for duty and required to return to work, which is highly improbable.[50]
f)If an order is made to split the pension it is only then possible for the wife to receive a lump sum. She cannot be paid a percentage of the pension payments.
g)The quantum of any lump sum paid to the wife pursuant to a splitting order is determined by reference to the valuation of the pension calculated pursuant to the Approval (see s 14P(6) Police Regulation (Superannuation) Act 1906).
h)Any lump sum paid to the wife may be taken by her in cash, upon which she would be taxed, or rolled over into a superannuation fund, which would attract more favourable taxation treatment (see s 14P(3),(4),(5) Police Regulation (Superannuation) Act 1906).
i)Any splitting order will not affect the husband’s entitlement to continued receipt of the pension, although it would thereafter be a lesser amount, nor his entitlement to make a commutation election on his attainment of 60 years (see reg 23(3) Police Superannuation Regulation 2010).
j)The pension payable to the husband, together with any portion of the pension he later elects to commute, will be reduced by a percentage amount that correlates with the percentage of the capital value of the pension (calculated under the Approval) which is split and paid to the wife (see s 14Q Police Regulation (Superannuation) Act 1906; reg 22 Police Superannuation Regulation 2010).
k)If the husband elects to commute his pension, either wholly or partially, on his attainment of 60 years then the quantum of the commutation will be calculated pursuant to the provisions of the Police Regulation (Superannuation) Act 1906, not by reference to the provisions of the Approval.
[50] Exhibit W1, para 1.5; Husband’s affidavit, paras 87-88, 89-92 (page 18)
Such an analysis reveals that the husband is not unfairly disadvantaged by any splitting orders. His rights under the Police Regulation (Superannuation) Act 1906 remain intact. The Approval only affords a method by which the current capitalised value of the pension can be determined for the purpose of determining any lump sum properly payable to the wife. The corresponding diminution of the pension received by him is no more an impost than any other superannuant suffers when his or her superannuation interest is split.
The vexed question is the assessment of the parties’ respective contributions to the pension the husband now receives.
As has been recognised in other proceedings, the husband’s pension presently has the characteristic of an income substitute because of his unfitness for work, but it will only retain that characteristic until the husband reaches his normal retirement age in less than three years at age 60. Thereafter, the pension will assume its guise as a retirement benefit to superannuate the husband for the remainder of his life.
The authorities cited by the husband tend to recognise the different qualities of the contributions made by the pensioner’s spouse in respect of the two components of the pension.
I accept the validity of the rationale offered in those authorities for why the contributions of the pensioner’s spouse will often be regarded as substantially inferior to those of the pensioner in relation to that component of the pension which simply substitutes for current income pending the pensioner’s retirement. But in this case, that is a relatively short period when compared with the periods canvassed in the authorities.
The synopsis of findings about percentage contributions set out in Crawford (at [54]) does not accurately summarise determinations made in prior authorities. That summary is confined only to a collection of findings about contributions in relation to the component of pensions paid in substitution for lost income. Generally speaking, the authorities have recognised significantly greater contributions by pensioner’s spouses to the component of pensions paid in the form of a retirement benefit. By way of example, such contributions were assessed at 40 per cent in Trott (at [150]-[153], [172]), at 35 per cent in Schmidt (at [113]-[122]), and at between 15 and 38.5 per cent in Wheeldon (at [146]).
In this case, the husband commenced service with the police force in March 1975.[51] He remained a police officer until his medical discharge in March 2010,[52] not April 2010 as he deposed.[53] His entitlement to the pension commenced from March 2010, as earlier described.
[51] Husband’s affidavit, para 8
[52] Wife’s affidavit, Annexure C (page 3)
[53] Husband’s affidavit, para 6
The husband made superannuation contributions during the 35 years he served as a police officer, but his length of service is only indirectly relevant. His entitlement to the pension was triggered by his sufferance of injury whilst on duty as a police officer, the date of which was notionally fixed at 21 March 2007,[54] and the quantum of the pension was determined by reference to the level of his departure salary and the extent of his disability.
[54] Exhibit H2
The parties cohabited for over 20 years of the period during which the husband served as a police officer. During that time the wife made substantial direct and indirect contributions, of both a financial and non-financial nature, that advanced the interests of the parties and their children. Even after the parties’ separation in late 2004 the wife continued to maintain primary responsibility for the care of their minor children, enabling the husband to maintain his employment with the police force until his ultimate discharge in 2010.
The husband was impelled to admit in cross examination that the wife’s past efforts in managing the family household and caring for the children enabled him to advance his career. He did so by undertaking training courses and accepting promotions, even when they were at police stations and other venues situated long distances from the family home. The husband’s career advancement was indeed impressive. He moved progressively from the modest rank of senior constable to the relatively lofty rank of superintendent.
He could not have simultaneously enjoyed such career achievements and managed the home and the children. He needed the wife and she delivered on his expectations. Of course, proper recognition of the wife’s role does not diminish the importance of the husband’s own contributions. No doubt he was good at his job and he worked hard, but his advancement would not have been possible without the wife’s solid support.
The significance of those facts is that, during cohabitation and perhaps even after separation while the wife predominantly cared for the children, the husband realised wage increases commensurate with his rising rank. His current pension is now calculated as a percentage of the high salary he received when he finally departed the police force, which benefitted the husband from when the pension was first paid in March 2010 and will continue to benefit him for the remainder of his life.
It is also apposite to heed the efforts of the husband in ensuring his payment of the pension. But for his willingness to challenge on appeal the original decision to refuse the pension, it might not have been paid at all. What superannuation interest the husband may then have had is unknown. The husband’s effort also ensured that his pension is calculated at 90 per cent instead of 85 per cent of his departure salary.
It is unnecessary to disparately assess the wife’s contributions to the husband’s pension by reference to its different “invalidity benefit” and “retirement benefit” characteristics, even though that course has been adopted in other cases. Neither party advocated for that approach, which seems logical in light of the husband’s proximity to normal retirement age.
Having regard to the evidence discussed, the wife’s contribution to the husband’s pension should be globally assessed at 40 per cent.
The husband contended the wife’s contribution-based entitlement was only 10 per cent, but other than to refer to findings in the cited authorities incompletely summarised in Crawford (at [54]), he offered no explanation about how he arrived at that conclusion on the evidence. His submission is rejected. It unjustifiably devalues the extent of the wife’s contributions and misconceives the principled discussions in the authorities.
Since the wife did not engage the debate about disparate contributions to different categories of assets and financial resources, as was the case in respect of her own superannuation interests, she made no alternate submission about quantification of her contributions to the husband’s superannuation interest.
As a consequence of those findings, the parties’ contribution-based entitlements may be conveniently summarised as follows:
Category
Wife
Husband
Net assets
55%
330,796
45%
270,651
Wife’s super
70%
703,695
30%
301,583
Husband’s super
40%
891,375
60%
1,337,063
Total
1,925,866
1,909,297
Sections 79(4)(d)-(g) and 75(2)
Neither party asserted the wife’s entitlements should be altered on account of factors prescribed by ss 79(4)(d),(e),(f),(g) and 75(2) of the Act.
Both parties acknowledged an alteration in favour of the husband might be warranted, but their submissions were fluid and remarkably different.
The wife did not concede there must be an alteration in the husband’s favour, but did acknowledge an alteration of up to 5 per cent was open. The implied caveat, however, was that the parties’ contribution-based entitlements were evaluated against a single pool of assets and financial resources and in conformity with her submission that her contribution-based entitlement to that pool was 60 per cent. That did not eventuate, so it would be unfair to construe the wife’s submission as an unqualified admission of the husband’s entitlement to an alteration. Nevertheless, 5 per cent of the single pool for which the wife contended would amount to $191,758.
The husband asserted his entitlement to any alteration depended upon the orders ultimately made in respect of his superannuation interest, which he was desperate to retain intact and free of a splitting order. In the event an order was made splitting his superannuation interest, he contended an alteration of up to 10 per cent was justified, with the quantum of the alteration dictated by the size of the lump sum split from his superannuation interest. In the event of an alteration, he contended it should be calculated as a percentage of only the tangible assets and liabilities. Since the net value of those assets and liabilities is $601,447, the husband contemplated an alteration in his favour capped at $60,145 – only about one-third the magnitude of the alteration contemplated by the wife as feasible.
The husband is 57 years of age. He was formerly diagnosed with Post Traumatic Stress Disorder, Co-morbid major depression, and alcohol abuse disorder.[55] It was an agreed fact he will never again be fit for gainful employment.[56]
[55] Husband’s affidavit, paras 89-90 (page 18)
[56] Notation AA made on 27 March 2013
Although the husband has a contribution-based entitlement of 30 per cent to the wife’s superannuation interest, valued at $301,583, he cannot unlock his share of that resource since neither party sought splitting orders in respect of the wife’s superannuation interests and there is no evidence the trustees of her superannuation funds have been afforded procedural fairness as the Act (s 90MZD) and Family Law Rules (r 14.06) require. The husband must therefore receive an asset or other resource of equivalent value.
In respect of his own superannuation interest, although his 60 per cent share of it has a capitalised value of $1,337,063, the interest will continue to be received by him as a pension. It is an income stream only, at least until he attains 60 years of age. The husband’s pension presently amounts to income of about $5,300 per fortnight, or $2,650 per week, allowing for its recent increase by reason of its calculation at 90 instead of 85 per cent of his final police salary. The quantum of the pension will be correspondingly reduced by any splitting order made in the wife’s favour.
The husband deposed, without challenge, that he spends $1,744 each week to support himself and to pay child support for the youngest child.[57] That equates to about 66 per cent of his current weekly pension. It follows that, provided any superannuation splitting order in respect of the pension eventually made in favour of the wife does not exceed 34 per cent of its current capitalised value, the husband will still be able to support himself and contribute to the support of the parties’ youngest child from his reduced pension without his need to resort to any other capital.
[57] Husband’s financial statement, paras 19-31, 60
While s 75(2)(b) of the Act obliges consideration of the parties’ income, property and financial resources in the adjustment process, it is important, as the Full Court warned in Semperton, not to double-count the husband’s pension at this juncture. The pension was attributed a capitalised value for the purpose of its treatment and division as a notional asset. The parties’ proportional shares of the pension were determined as part of the assessment process conducted under ss 79(4)(a)-(c) of the Act.
The wife will continue to earn income into the future, which will permit her preservation of the capital assets she receives through the property settlement, whereas the future income of the husband will be derived only from the pension, which means his share of the capitalised value of that notional asset will incrementally erode as he ages. He does not receive the income stream over and above his proportional share of its capitalised value.
The wife is 50 years of age. She remains in full-time employment in State government for which she is paid slightly in excess of $150,000 gross per annum, amounting to $3,098 per week. There is no evidence about the wife’s intended retirement date, but she is fit and healthy so retirement is probably quite some way off.
The wife’s future income is most probably secure until her voluntary retirement, at which point she will need to instead derive her income from assets and superannuation interests. By comparison, the husband’s entitlement to the pension for the remainder of his life is almost absolute.
However, until her retirement, the wife’s income is likely to be superior to the husband’s pension. The degree of superiority is ameliorated to some extent by the wife having the responsibility for continuing care of the parties’ youngest child, who will attain her majority in September 2014. The husband pays assessed child support for her but the predominant financial and non-financial burden of her care will be borne by the wife.
Neither party has any other dependent, even though both of them lend financial support to their other adult children in different ways from time to time.
The orders contemplated by the parties will not affect the earning capacity of either of them.
Both parties do, and will continue to, enjoy a reasonable standard of living.
No other aspect of the evidence was submitted to be relevant to the determination of any alteration of the parties’ contribution-based entitlements. However, the earlier mentioned unexplained expenditure by the husband from his investment account since March 2010 is a feature of the evidence that tends to curtail the extent of any alteration in the husband’s favour under s 75(2)(o) of the Act.
An alteration in the husband’s favour is warranted by the evidence. Its quantification at 10 per cent of the net assets, as the husband submitted, is probably too modest. An alteration of 17.5 per cent calculated on the net assets, amounting to $105,254, is more appropriate. That amount roughly equates to the wife’s net income for a year.
Consequently, the parties’ final entitlements may be summarised as follows:
Category
Wife
Husband
Net assets
37.5%
225,543
62.5%
375,904
Wife’s super
70%
703,695
30%
301,583
Husband’s super
40%
891,375
60%
1,337,063
Total
1,820,613
2,014,550
Orders
It is inevitable that the husband’s superannuation interest must be subject to a splitting order. The wife’s own superannuation interests and the totality of available tangible assets are insufficiently valuable to fulfil her entitlement.
The trustee of the husband’s superannuation fund has been afforded procedural fairness.[58] The splitting orders are crafted so as to comply with the trustee’s requirements as to form.
[58] Exhibit W9
Presently, the wife has assets (items 2, 5, 7, 10, 11), liabilities (items 13, 15), and her own superannuation interests. If she receives the whole of the jointly owned residue proceeds realised on the sale of the former matrimonial home (item 1), instead of only her half, then the property and resources in her possession is valued at $1,321,865.
Her overall entitlement is valued at $1,820,613, so it is necessary for her to receive a further $498,748 (= 1,820,613 – 1,321,865).
Since the husband is so keen to minimise any incursion into the income stream afforded to him by the pension, he can facilitate that outcome by paying $200,000 cash to the wife from his investment accounts. In that way the wife will only need to split the sum of $298,748 (= 498,748 – 200,000) from the capitalised value of his pension, which represents only 13.41 per cent of its value. The wife will also avoid the payment of any tax on the cash component she receives.
In such circumstances, the husband will retain assets (items 3, 4, 6, 8, 9) from which he will pay $200,000 to the wife. The net value of his assets will therefore be $84,860. He has no liabilities (item 14).
Having regard to the splitting orders made in respect of his pension, the husband will continue to receive a pension of about $4,589 per fortnight, or $2,295 per week, representing its reduction by about 13.41 per cent, correlative with the amount split from the pension. The capitalised value of that portion of the pension approximates $1,929,690.
That residue value of the pension, together with his net assets, comprises the husband’s proper overall entitlement ($1,929,690 + $84,860 = $2,014,550).
The orders make provision for the division of assets and resources between the parties in that manner, which is a just and equitable outcome. As was recognised in Bevan (at [62], [86]), the requirement for the orders to be just and equitable permeates the entire decision-making process.
The orders do not require the husband’s payment of $200,000 cash to the wife until his term deposit with the Police Credit Union (item 3) matures. It was an agreed fact the investment will mature on 3 November 2013. He would suffer a financial penalty if ordered to withdraw funds from the investment prior to its maturity in three months. That delay in payment will not occasion hardship to the wife. The husband is restrained from withdrawing from the Credit Union accounts other than to satisfy the payment due to the wife. He has his pension and an account with another institution to meet his expenses.
Although not disclosed in the balance sheet tendered by the parties,[59] it was disclosed in final submissions that the parties hold a joint banking account with the Bendigo Bank with a nil balance. An order is made, consistently with the parties’ request, for them to take immediate steps to close the account.
[59] Exhibit A
I certify that the preceding one hundred and fifty-two (152) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 20 August 2013
Associate:
Date: 20 August 2013
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