GYDE & BRITTON

[2021] FamCA 43

FAMILY COURT OF AUSTRALIA

GYDE & BRITTON [2021] FamCA 43

FAMILY LAW – ORDERS – Variation – Where final orders in relation to property settlement were made in 2000 – Where West & Green orders were made in relation to the superannuation interests of the parties – Where the parties seek to set aside the order in relation to superannuation and seek a splitting order in lieu thereof – Where the final orders were made prior to the commencement of the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) – Where the order sought cannot be made by consent – Consideration of when an order can be varied or set aside – Where the parties’ superannuation funds have changed – Where it is impracticable for the parties to comply with the order and it is just and equitable for it to be set aside – Orders.

Family Law Act 1975 (Cth) ss 79A(1), 79A(1A), 90XT
Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) s 5

Agar & Dunst [2018] FamCA 782
La Rocca & La Rocca (1991) FLC 92-222
Rohde & Rohde (1984) FLC 91-592
West & Green (1993) FLC 92-395

Revised Explanatory Memorandum, Family Law Legislation Amendment (Superannuation) Bill 2001 (Cth)

APPLICANT: Ms Gyde

RESPONDENT: Mr Britton

FILE NUMBER: ADC 5390 of 2020

DATE DELIVERED: 15 January 2021

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 15 January 2021

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hawkes

SOLICITOR FOR THE APPLICANT: Lempriere Abbott McLeod

COUNSEL FOR THE RESPONDENT: Ms Tinning

SOLICITOR FOR THE RESPONDENT: White & White Lawyers

Orders

(1)That the letter directed to B Super dated 20 October 2020 and the response from B Super dated 30 October 2020 indicating that there is no objection to the proposed order being made be Exhibit “1” in the proceedings.

(2)That pursuant to Section 79A(1) of the Family Law Act 1975 (Cth) the order made by the Honourable Justice Dawe on 20 April 2000 be varied by deleting paragraphs 5.6 to 5.10 inclusive thereof and by substituting therefor the order set out below.

(3)That by way of superannuation split in relation to the superannuation interest of the husband in B Super Lump Sum Scheme Super ID No … (hereinafter called “the husband’s B Super superannuation interest”);

a.      This order shall have effect from the operative time;

b. Pursuant to Section 90XT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the husband’s B Super superannuation interest the wife shall be entitled to be paid an amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations2001 (Cth) using a base amount of $182,602.97;

c.      The trustee having been accorded procedural fairness this order binds the trustee of B Super;

d.      The operative time for this order shall be the beginning of the fourth business day after the day on which a sealed copy of this order shall be served on the said trustee of B Super;

e.      The parties retain their interests in any other superannuation funds for their own use and benefit and free from any future claim by the other.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym  Gyde & Britton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 5390 of 2020

Ms Gyde

Applicant

And

Mr Britton

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. By Initiating Application filed 6 November 2020, the wife seeks that pursuant to section 79A(1) of the Family Law Act 1975 (Cth) (“the Act”) orders made by Dawe J on 20 April 2000 be varied by deleting paragraphs 5.6 to 5.10 inclusive and by substituting therefor the following order:

   2. That by way of superannuation split in relation to the superannuation interest of the husband in B Super Lump Sum Scheme Super ID No … (hereinafter called “the husband’s B Super superannuation interest”):

   (a)This order shall have effect from the operative time. 

   (b)Pursuant to section 90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the husband’s B Super superannuation interest the wife shall be entitled to be paid an amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 using a base amount of $182,602.97.

   (c)The trustee having been accorded procedural fairness this order binds the trustee of B Super.

   (d)The operative time for this order shall be at the beginning of the fourth business day after the day on which a sealed copy of this order shall be served on the said trustee of B Super.

   (e)The parties shall retain their interest in any other superannuation funds for their own use and benefit and free from any further claim by the other.[1]

   [1] Initiating Application filed 6 November 2020, page 4.

2. By the husband’s Response to Initiating Application filed 22 December 2020, he seeks the same orders as set out by the wife in her Initiating Application.  The response provides that there should be a preamble to the above orders in terms of a notation that the parties acknowledge that upon the implementation of the proposed superannuation splitting order, all matters between them will be at an end.  The notation is self-evident in terms of its intent and purpose, but it is probably unnecessary.  Nothing turns on the notation.

3. The parties therefore consent to set aside paragraphs 5.6 to 5.10 of the final orders which relate to the parties’ separate superannuation interests. The difficulty is that it is not as simple as the parties being able to reach an agreement by consent. It is possible that parties can consent to an order under section 79A of the Act by reference to section 79A(1A), but the ability of the parties to consent is the subject of prohibition.

4. Neither the application nor the response identifies which subsection of s 79A is the gravamen of the application. It is conceded that ss 79A(1)(a), (1)(d) and (1)(e) of the Act have no application in respect of the current circumstances. If the order is to be set aside, then it is likely that grounds would have to be established in respect of sections 79A(1)(b) or (1)(c) of the Act.

5. The parties were married in 1981 and separated on 9 November 1999.  They obtained a divorce in February 2004.  As considered, the final orders were made by consent by Dawe J on 20 April 2000.  The paragraphs referred to in the orders sought by both the applicant and the respondent refer to orders of property settlement which make provision for the superannuation interests of the parties to be dealt with.

6. It is again uncontroversial that, at the time, the husband held an interest in two funds, namely, B Super, being the Lump Sum Scheme, and D Super Plan.  The wife held interest in F Super Fund and B Super, which was a G Scheme.

7. It is also likely to be the case that at the time of the consent orders the value of the husband’s superannuation interests were notionally or nominally greater than that of the wife’s interest.  A difficulty arises in that I am cognisant of the calculation approach as set out in the orders, but I have not been provided with any calculations which indicate the understanding of each of the parties as to the value of the separate superannuation entitlements.

8. There was a difficulty in dealing with superannuation matters prior to the year 2000 in that the superannuation interests of a party were not considered to be property of the parties and could not be dealt with under s 79 of the Act. Parties and practitioners adopted a method by which there could be some equitable consideration of the superannuation interests of the parties which could only be actually reflected upon a party satisfying a condition of release causing a superannuation entitlement to vest.

9. Historically, the formulaic approach adopted by practitioners prior to the amendments to the Act in respect of superannuation splitting orders were called West & Green[2] orders. They usually reflected a formula which brought to account the years of marriage and the years of contribution to a superannuation entitlement fund.

   [2]West & Green (1993) FLC 92-395

10. A further difficulty was the distinction between a defined benefit fund and an accumulation fund which was not well understood and often confused.  I do not know whether the funds held by the parties at the time of the consent order were accumulation or defined benefit funds. 

11. The obvious difficulty with a defined benefit fund is that irrespective of the issue as to whether it was property or not, a defined benefit fund was not capable of certain valuation. It is only as a result of the changes to the Act to allow a splittable interest from a party’s superannuation fund to be transferred to another party that the Act and the regulation provided for the necessary formula to ascertain a value.

12. Again, the only purpose to a value was only if the interests of the parties were considered to be property.  At paragraph 10 of the wife’s affidavit filed on 6 November 2020, the wife deposes to the agreement that was reached between the parties in terms of the West & Green formula. 

13. The husband was required to take out a life insurance policy with the wife as the owner.  The husband was to maintain premiums and other payments until such time as the payment was received.  There is good reason why that was a usual secondary order made in respect of superannuation orders. It ensured that if a party died before an entitlement was able to vest, then the benefit that would have passed to the other party was able to be dealt with via a life policy.

14. There are, of course, significant issues in respect of that process, but again, at the time, it was the best that could be done. I raise that specifically because the second limb of the matter is an argument under s 79A(1)(c) of the Act that:

    a person has defaulted in carrying out an obligation imposed on the person by the order...

15. The husband complied with the order by obtaining a life policy with H Limited in March of 2005.  It appears that that policy lapsed in or about 2007.  There is some basis as to why the husband allowed the policy to lapse.  The wife considered that the husband had not complied with the provisions of the order. The husband refers to correspondence in respect of that issue that passed between himself and the wife’s solicitors in or about 2005.

16. It is worth noting that in respect of the consent orders, a West & Green formula was applied not just to the husband’s superannuation entitlements ultimately to the benefit of the wife, but there was also a corresponding West & Green formula in respect of the wife’s superannuation entitlements in favour of the husband.  It appears that the wife’s superannuation interests in B Super, noting it being the Triple S scheme, and F Super Fund were rolled over into G Super.  The husband’s interests in D Super has now been rolled over into B Super.

17. At the time that the orders were made, each of the parties were represented and received advice from their solicitors that Parliament was contemplating changes to the Act which were likely to result in a superannuation interest being considered as property. The provisions of the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) were not provisions that applied retrospectively, and as such they could not apply to settlements which were finalised prior to 28 December 2002.

18. The parties have recognised that there are difficulties with the current circumstances. More than 20 years have passed since the parties reached their consent order, and it is hardly surprising, particularly in a changing financial climate and, indeed, in respect of the parties own personal circumstances, that significant changes have taken place.

19. The parties both recognise that their circumstances today are no longer properly reflected by the orders made in 2000.  The parties, collectively, are keen to try and resolve the issue and approach the matter by consensus and consent.  The husband has remarried, and there are two children of his current relationship.  He is 62 years of age and employed as an educator.  The husband indicates that he intends to continue to work full time into the foreseeable future.

20. The wife is 62 years of age, and she is currently employed as a personal assistant.  I am uncertain as to the current financial circumstances affecting each of the parties.  Under the current orders it might make the implementation of the order difficult, impractical or perhaps even impossible. Were the parties to have the benefit of the current legislation, it may well be that a lump sum interest payable to the wife could be an interest that she is able to take immediately if she has satisfied a condition of release.

21. There is clearly greater utility in respect of the current arrangements for dealing with superannuation than existed in 2000. The question is whether the provisions that deal with the superannuation interests of the parties in the consent order should be varied. I have considered s 79A(1) of the Act and I am of the view that whilst it may be possible to consider section 79A(1)(c) in circumstances where it appears uncontroversial that there is a default, the level of default may be a matter that could be dealt with by way of non‑compliance or enforcement.

22. If it is the case that the issue of default, in terms of the husband allowing his life insurance benefit in favour of the wife to lapse and that advice was brought to the attention of the wife and her solicitors in 2007, I hold the view that it is unlikely that default would be considered by the Court to be a default such that it would now not be considered just and equitable for the current orders to remain.

23. I am more attracted to s 79A(1)(b) of the Act, namely, that:

    in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out.

24. The Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) (“the amending legislation”) amended the way superannuation was considered and dealt with in family law proceedings. It also provided a manner in which superannuation interests of the parties could be split or flagged. Section 5 of the amending legislation detailed the application of the superannuation amendments as follows:

    (1)Subject to this section, the superannuation amendments apply to all marriages, including those that were dissolved before the startup time.

    (2)  Subject to subsections (3) and (4), the superannuation amendments do not apply to a marriage if a section 79 order, or a section 87 agreement, is in force in relation to the marriage at the startup time.

25. Importantly are the provisions of subsection (3):

    If a section 79 order that is in force at the startup time is later set aside under paragraph 79A(1)(a), (b), (c), (d) or (e) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the order is set aside.

26. Pursuant to s 79A(1A) of the Act, the Court is able to vary or set aside an order made pursuant to s 79 of the Act by consent. But s 79A(1A) is omitted from s 5(3) of the amending legislation; therefore, the superannuation amendments will not apply in circumstances where the parties consent to an order being varied or set aside. The Revised Explanatory Memorandum to the Family Law Legislation Amendment (Superannuation) Bill 2001 (Cth) states at paragraph 14 that:

    the policy intention is that people who have had a property settlement will not be able to elect to take advantage of the new regime.[3] 

    [3] Revised Explanatory Memorandum, Family Law Legislation Amendment (Superannuation) Bill 2001 (Cth) 19 [14].

27. It is not, at this stage, understood by me as to the legislative intent in respect of that condition or prohibition, but it is likely that it was considered that it may well open the floodgates to decades of superannuation arrangements which parties would now consider to be better dealt with pursuant to the amending legislation.  In the decision of Agar & Dunst [2018] FamCA 782 Benjamin J expresses the following view:

    9.The legislative intent was to allow parties to have superannuation splitting if there was a change in circumstances sufficient to set the orders aside under section 79A(1)(a) to (e) of the Act, but not allow parties to set aside orders that were made prior to the start-up date by consent, presumably to protect the courts and the community against a rush of applications to set aside old superannuation orders simply by consent. …

28. Section 79A(1)(b) deals with impracticability of an order. Pursuant to the section, where a court is satisfied that:

    …in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out

    the court may vary or set aside the order. It can only do so if it considers it appropriate. The Court can also make another order under section 79A in substitution for the order so set aside.

29. In Rohde & Rohde (1984) FLC 91-592, Gee J discussed the meaning of impracticable. At 79,768 his Honour made the following observations:

    (a)It is not enough that circumstances have arisen since the order was made which make it unjust for the order or part of the order to be carried out; the onus is upon the applicant to establish to the reasonable satisfaction of the Court, that in the circumstances that have arisen since 12 March 1982 it is impracticable for the order or part of the order to be carried out.

    (b)The word “impracticable” means, gleaning a definition from the Shorter Oxford Dictionary, “not practicable”; “that cannot be carried out or done”;  “practically impossible”;  “unmanageable”;  “intractable”.

    (c)“‘Impracticability’ is a conception different from that of ‘impossibility’; the latter is absolute, the former introduces at all events some degree of reason and involves some regard for practice.” (per Veale J in Jayne v. National Coal Board (1963) 2 All E.R. 220.)

    (d)Provided that more than one circumstance exists, and that the circumstances have arisen since 12 March 1982, it does not matter what the circumstances are or by whom they are brought about.

    (Original emphasis)

30. In La Rocca & La Rocca (1991) FLC 92-222 (“La Rocca”) at 78,536, Kay J noted that in examining the meaning of impracticable, Gee J had “concluded that it was something different from impossible.” In La Rocca, Kay J adopted the view that s 79A(1)(b) should be interpreted narrowly, and his Honour held the view that impracticability was similar to the application of the doctrine of frustration. In his concluding remarks at 78,539, Kay J said:

    it is not sufficient that it is impracticable, but that as a result of that impracticability the Court ought not exercise its discretion unless a serious inequity has arisen, bearing in mind that judgments are basically final in property matters. 

31. The superannuation circumstances of each of the parties are entirely different now than they were in the year 2000 when the consent orders were made.  The orders as set out cannot be complied with, even with the best intention of the parties.  It would be difficult to consider even what amendments could be made by consent which would enable the order to be subject of compliance.  It seems to me in circumstances where the order cannot be carried out that the test for impracticability is satisfied. 

1. It is otiose to suggest that there ought to be some distinction between imposing an obligation on the parties to try and correct, amend or deal with the current order, but that that would not enable the parties to have the benefit of being able to resolve the matter pursuant to the current provisions under the amended Act. 

2. For those reasons, I consider that I should find that it is impracticable for the parties to comply with the order and, further, that it is just and equitable that the order be set aside. The parties then have considered the order that they would wish to be made in substitution, and but for the amendment to paragraph 2(b) of the proposed order, namely, that s 90MT(1)(a) is to be varied to read s 90XT(1)(a), the parties consent to that order.

3. I am obliged to consider whether that order is just and equitable in all of the circumstances.  I accept that I have not received significant information that details the calculations as between the parties, but I am satisfied from the submissions of counsel that there has been considerable investigation about that issue and that the proposed splittable payment of $182,602.97 is an amount that has been reached by careful consideration of the financial circumstances of the parties, the state of their current superannuation entitlements and some reasonable attempt to try and replicate today what the outcome would have been if there had not been a change to the parties’ superannuation interests.

4. Importantly though, both parties consent.  It seems to me that if the consent is informed, little more is required before a court can find that it is just and equitable.  I consider that the parties have received informed consent, and I do not consider that more is required in that regard.  The final aspect, however, is that because the proposed orders deal with a superannuation split, there needs to be procedural fairness afforded to the trustees, in this case, of the husband’s B Super Superannuation Fund.

5. In that regard and by reference to Annexure D to the wife’s affidavit of 6 November 2020, I note that there is a letter from Lempriere Abbott McLeod to B Super dated 20 October 2020 and that the letter encloses an extract from the orders made on 20 April 2000, being paragraph 5.6, and that that letter also contains the proposed order which is consistent with the order being sought by each of the parties in their separate applications. 

6. That letter was the subject of a prompt response by the trustees of B Super dated 30 October 2020, indicating that subject to the amendment to the drafting of the order such that it reflects the correct section, namely, s 90XT and not 90MT, the trustees of B Super have no objection to the proposed order in relation to the splitting of the husband’s superannuation entitlement.  Importantly, B Super do not wish to be heard.  In those circumstances, then, I consider there is no impediment to the orders being sought by each of the parties being made.

I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 15 January 2021.

Associate: 

Date:  12 February 2021