Fatt & Fatt
[2004] FMCAfam 254
•11 February 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FATT & FATT | [2004] FMCAfam 254 |
| FAMILY LAW – Property – superannuation. PRACTICE AND PROCEDURE – Party sought to amend to include application for a splitting order – trustee notified two days prior to hearing – procedural fairness to trustees – what is fair can vary from case to case – superannuation splitting or flagging order made without notice to trustee is voidable not void – leave to amend given – hearing adjourned – costs ordered. |
Family Law Act 1975, ss.79, 90MZ, 90MT(1), 90MU
Family Law Legislation Amendment (Superannuation) Act 2001 (Cth)
Family Law (Superannuation) Regulations 2001
Federal Magistrates Act 1999, s.10
Federal Magistrates Court Rules 2001, Parts 4.03, 4.07, 24.07
Ascot Investments v Harper (1981) FLC 91-000
Hickey (2003) FLC 93-143
Re Macks ex parte Saint (2000) 204 CLR 158
Craig v South Australia (1995) 184 CLR 163
Maddison [2003] FMCAfam 351
K & K [2003] FMCAfam180
Anderson [2003] FamCA 635
| Applicant: | CASSANDRA JANE FATT |
| Respondent: | STANLEY BENJAMIN FATT |
| File No: | PAM 2644 of 2003 |
| Delivered on: | 11 February 2004 |
| Delivered at: | Parramatta |
| Hearing date: | 11 February 2004 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Schroeder |
| Solicitors for the Applicant: | Lamrocks |
| Counsel for the Respondent: | Mr J. Wilson |
| Solicitors for the Respondent: | Ian Bullock Partners |
ORDERS
That the respondent has leave to make an oral application to include an order splitting his superannuation entitlements.
Leave is given in terms of the relief included in the husbands case outline document.
That the matter is adjourned to a date to be fixed.
That the respondent pay the applicant’s costs in the sum of $2500.00, with the date upon which this is to be paid to be determined at the final hearing.
I DIRECT that the respondent’s solicitor give the trustee of the NTAA Superannuation Fund written notice of the hearing date no later than 4:00pm 13 February 2004.
I DIRECT that both parties file and serve any further affidavits upon which they rely by 4:00 pm on 1 March 2004.
That the respondent pay the applicant's costs in the sum of $2500 within 21 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM 2644 of 2003
| CASSANDRA JANE FATT |
Applicant
And
| STANLEY BENJAMIN FATT |
Respondent
REASONS FOR JUDGMENT
These reasons were delivered orally.
Introduction
On 6 November 2003 this matter was set down for hearing concerning parenting applications and the adjustment of property pursuant to s.79 of the Family Law Act 1975. But for one small issue the children's matters have been compromised. The controversial issue is the respondent's application that he be granted leave to make an oral application to amend his s.79 application to include a superannuation splitting order. The form of order is set out in his counsel's case outline document. These reasons address this issue alone.
When trial directions were made the court directed that in the event either party sought a superannuation splitting or superannuation flagging order notice of the order sought was to be given to the trustee of any relevant superannuation fund no later than 12 January 2004. Notice preceded the date for the filing of affidavits by two weeks. Thus, if the nature of the relief sought changed, both parties would have the opportunity to present evidence tailored to suit the relief sought. Relevantly, and no less importantly, this afforded the trustee of any superannuation fund procedural fairness.
The respondent gave notice to the trustee by a letter forwarded by facsimile on Friday last that he sought a superannuation splitting order. That is two working days prior to the start of the hearing.
The respondent's counsel submitted that the court would allow the amendment and hear the evidence. Then, either reserve its decision until after period sufficient to accord the trustee notice or alternatively make orders but stay their operation for a period of time sufficient to again give the trustee the opportunity to be heard in relation to the order.
Procedural fairness
The Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) came into effect in December 2002. These amendments allow the court to make a new range of orders affecting superannuation interests. The Family Law (Superannuation) Regulations 2001 provides the machinery for the operation of the scheme including provisions relating to the valuation of superannuation interests and the mechanism for splitting superannuation once an order is made. Importantly, the new amendments enable the courts to make orders, which have the effect of splitting superannuation entitlements or otherwise making orders, which are binding on trustees of the superannuation fund. The court is given the power to bind third party trustees without the third party trustee being joined to the proceedings. Trustees of superannuation funds are thus in a special category whereby the reach of Part VIII of Family Law Act 1975 extends further than it can with other third parties. See Ascot Investments v Harper (1981) FLC 91-000. However courts must accord the trustees of the relevant funds procedural fairness. This is mandated by s.90MZD of the Family Law Act.
Section 90MZD reads as follows:
(1) An order under this Part in relation to a superannuation interest may be expressed to bind the person who is the trustee of the eligible superannuation plan at the time when the order takes effect. However:
(a)in the case of a trustee who is not a secondary government trustee — the court cannot make such an order unless the trustee has been accorded procedural fairness in relation to the making of the order; and
(b)in the case of a secondary government trustee:
(i)The court cannot make such an order unless another trustee of the eligible superannuation plan has been accorded procedural fairness in relation to the making of the order; and
(ii)The court may, if it thinks fit, require that the secondary government trustee also be accorded procedural fairness.
(2)If an order is binding on the person who is the trustee of an eligible superannuation plan at the time when the order takes effect, then the order is also binding (by force of this subsection) on:
(a)person who subsequently becomes the trustee of that eligible superannuation plan; or
(b)in a case where s.90MUA applies — a person who is the trustee, or any person who subsequently becomes the trustee, of the new ESP.
If the court is only making a declaration in respect of superannuation, notice of the relief sought is not required. See Hickey (2003) FLC 93-143, where the Full Court held, “If the superannuation interest is not to be altered in accordance with s.90MT(1) although the superannuation interest is to be treated as property for the purposes of s.79 the provisions of Part VIII, procedural fairness to the Trustee and valuation in accordance with the Regulations, do not have to be complied with.”
Whilst the Act does not define “procedural fairness”, it is apparent that a trustee is required to be given notice of any intended orders relating to the superannuation fund and be provided with the opportunity to be heard in respect of them. The section is a direction to the court not to make an order against the trustee unless procedural fairness has been accorded. If procedural fairness were not accorded despite the requirement there would be an error of law justifying an appeal. Arguably, there would also be jurisdictional error as a result of failure to fulfil a precondition to making an order.
It has been said that failure to observe the provision will result in the court being deprived of jurisdiction.[1] It is settled by well established authority that a decision of a superior court, even if in excess of jurisdiction, is valid unless and until it is set aside. As a superior court, the Family Court has authority to decide its jurisdiction and if it purports to act pursuant to its jurisdiction, any orders that it makes will not be nullities and will continue to be binding until set aside. See Re Macks ex parte Saint (2000) 204 CLR 158; Craig v South Australia (1995) 184 CLR 163 at 179-180). That may be through an appeal or through an application seeking prerogative or constitutional writs in the High Court on the basis that the court acted beyond its jurisdiction.
[1] Bourke, S. (2002) Family Law: The New Super Splitting Laws extracted from http:>
The Federal Magistrates Court is not a superior court. The Federal Magistrate's Court is by virtue of s.10 of the Federal Magistrates Act 1999 a court established by Chapter 3 of the Constitution. Federal Magistrates are appointed as Justices pursuant to Chapter 3 of the Constitution. The court is a court of law and equity. It is a court of record that exercises power given to it pursuant to the Family Law Act 1975, inter alia. In my opinion the relevant distinction is not between superior and lower courts but between courts and an administrative tribunal. Thus, the fact that an administrative decision made without procedural fairness may be liable to be set aside and treated as void ab initio does not apply to the situation of orders by courts. For this reason orders made by the Federal Magistrates Court without notice to the trustee will be voidable, that is valid until set aside.
If a trustee, despite not having had an opportunity to make submissions, considers there is no reason why it would have sought such an opportunity and it is prepared to accept the orders made so far as they are applicable to it there is nothing that stops the trustee from giving effect to those orders. Those orders remain binding on all parties affected, including the trustee, until set aside. In these circumstances, any action taken by the trustee pursuant to obligations arising from the order will be protected and can be regarded as taken pursuant to a valid order.
Decisions where notice was not given to the trustee
The respondent’s counsel referred the court to a number of decisions where a court had allowed a hearing to proceed notwithstanding that no notice had been given to the trustee. All are instances where courts have attempted to facilitate the hearing while the system has been in transition.
In Maddison [2003] FMCAfam 351 Federal Magistrate Baumann raised with counsel the equity of making a splitting order in respect of the husband’s superannuation, which was significantly higher than the wife’s superannuation entitlement. He noted that although the parties had reached agreement on valuation of the respective interests, no notice had been given to the trustees at the time of trial of any proposed order. During the hearing the court was advised that the husband would give notice forthwith and by agreement the court would be informed by letter of the attitude of the relevant trustee to the splitting order. The matter proceeded to finality and a splitting order formulated “the operative time for this order is 14 days from the date the order is received by the Trustee”.
In K & K [2003] FMCAfam180 at the start of the hearing I asked the wife’s counsel whether the trustee had been given notice that the wife sought a splitting order in compliance with s.90MZD. When counsel confirmed that notice had been given the trial proceeded. For completeness at the end of the hearing later I asked for a copy of the notice to the trustee. Regrettably it became clear that notice had not been provided to the trustee. All that had occurred was that the trustee had been requested to provide member details sufficient to enable a valuation to be completed. To resolve the problem counsel for the husband and wife agreed on the following orders:
(i)“No later than 5:00pm tomorrow the solicitor for the applicant wife shall give notice in writing to the trustee of the wife’s superannuation fund of her intention to seek a splitting or flagging order.
(ii)That the solicitor for the wife submit a copy of the notice given to the trustee to the court, which notice will become an exhibit in the proceedings.
(iii)That the trustee shall re-list this matter by arrangement with my associate no later than 5 June 2003 if the trustee wishes to be heard in relation to the orders sought by the wife vis her superannuation.
(iv)The court otherwise reserves its decision”.
On 28 May 2003, by agreement the court received a letter forwarded to the trustee by the wife’s solicitor that day. When the trustee had not sought to re-list the matter by the date specified in the orders, I was satisfied that they had been afforded procedural fairness and did not want to seek to be heard in opposition to the relief sought. Orders including a splitting order were then made.
In Anderson [2003] FamCA 635 – Justice Young determined that for various reasons the trial could not proceed. One of the issues in relation to any interim order was the necessity of affording procedural fairness to the trustee. His Honour said that s.90MZD requires that the trustee be given notice of the order that has been sought and the opportunity to be heard in relation to the making of the order. The court had two letters from the wife addressed to the relevant trustee, which his Honour was satisfied was appropriate notice to the trustee in relation to the orders sought generally as to superannuation. The issue, however, was the flagging orders that were sought by oral application pursuant to s.90MU. His Honour was advised by the wife’s solicitor that that morning he gave telephone notice of the proposed flagging order and the trustee indicated that they did not wish to be heard on the matter. His Honour noted that had they wished to be heard he would have stood the matter down to a convenient time to enable the superannuation fund to appear.
Rules of Court
Part 24.07 of the Federal Magistrates Court Rules (FMCR) requires that a party must serve a sealed copy of an application, response or reply in which a splitting or flagging order is sought “immediately after filing the application, response or reply”. Part 4.03(2) FMCR requires a respondent to file a response within 14 days of service of the application to which it relates. If a reply is filed Part 4.07(2) FMCR requires service within 14 days of service of the response to which it replies. The effect of these rules is that a trustee will be served months prior to the hearing. By Part 7.01(1) FMCR a party seeking to amend must have leave to do so. The court may grant leave on conditions, including time limits for service. The Family Law Rules provide that notice to trustees must be given 28 days prior to the hearing. There is no comparable rule in the FMCR. That is because the rules to which I have already made reference require immediate notice and also what is fair can vary from case to case. There are different considerations between procedural fairness to a trustee of a private superannuation fund, the only members of whom are the parties, compared to the trustee of an independent fund in relation to which the parties are but one of a number of members. However the Family Law Rules provide a useful guide as to what will be regarded as minimum adequate notice in most cases.
Conclusion
The respondent submits that he will be denied substantive justice unless he is given the opportunity to obtain orders that include a superannuation split. Given the modest size of the asset pool, I accept that prima facie that is so. Although the wife opposes it I will give leave to amend. The respondent pursues that application, aware that that it is highly likely that the proceedings will be adjourned.
In this case the court determined service time limits that would accord the trustee procedural fairness when the matter was listed for trial. That is that the trustee would be served no later than 12 January 2004, one month prior to the hearing. Notice given on 6 February 2004 was inconsistent with my prior ruling. The husband must have understood that the court would not regard notice, other than in accordance with my directions, as satisfying the court's obligation pursuant to s.90MZ(d)(i). While the court has power to proceed as the respondent submitted the process is undesirable for a number of reasons and should be taken only in most unusual circumstances, an example of which does not come to mind. The cases referred to were all decided shortly after the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) came into effect. These cases are examples of courts attempting to accommodate transition arrangements which common sense suggests were necessary at that time. It is no longer appropriate for parties and practitioners to expect the same latitude proffered earlier.
As to the issue of the wife’s costs, I am not satisfied that I should reserve the costs. Quantum is agreed at $2500.
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate: S. Mashman
Date: 31 May 2004
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