Hackett and Hackett
[2007] FamCA 1618
•21 December 2007
FAMILY COURT OF AUSTRALIA
| HACKETT & HACKETT |
|
| FAMILY LAW – PROPERTY SETTLEMENT – Superannuation – 1999 orders purporting to alter interests invalid, unenforceable – Setting aside orders – Miscarriage of justice – Setting aside orders – Default by party |
| Family Law Act 1975 (Cth) |
Stacy & Stacy (1977) FLC 90-324 at 76,707
Bailey & Bailey (1978) FLC 90-424 at 77,145
In the marriage of Crapp (1979) 5 FamLR 47
In the marriage of Whitehead (1979) 5 Fam LR 308 at 313 to 314
Coulter & Coulter (1990) FLC 92-104 at 77,685-7
Kearney & Kearney (1991) FLC 92-208 at 78423
In the Marriage of West & Green (1991) 16 Fam LR 811
RBH & JIH [2005] FamCA 226
In the Marriage of Clifton & Stuart (1990) 14 Fam LR 511
| APPLICANT: | Mr Hackett |
| RESPONDENT: | Ms Hackett |
| FILE NUMBER: | NCF | 2430 | of | 1998 |
| DATE DELIVERED: | 21 December 2007 |
| PLACE DELIVERED: | Newcastle |
| JUDGMENT OF: | Justice Mullane |
| HEARING DATE: | 13 August 2007 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Ms Melville |
| SOLICITOR FOR THE RESPONDENT: | Mr Kirsop |
Orders
The consent Orders made by the Court at Newcastle on 23 July 1999 are set aside.
Within 28 days the husband must pay to the wife a sum of $20,000 plus interest at the prescribed rate from 1 February 2007 on that sum to today and then on so much as is from time to time outstanding.
Whenever a splittable payment is payable in respect of the superannuation interest of the husband MR HACKETT in the A Superannuation fund:
3.1)THE WIFE is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations, 2001, using a base amount in the sum of $39,917 at the operative time of 1 February 2007; and
3.2)there is a corresponding reduction in the entitlement of the person to whom the splittab1e payment would have been made but for this order.
The above order binds the trustee of the superannuation fund and the trustee must implement the order.
The wife must arrange service of a sealed copy of these orders on the trustee(s) of the A Superannuation fund and the trustee(s) of the Universal Super Scheme as soon as practicable.
It is noted the husband directs the trustee of the Universal Super Scheme to surrender the MLC Whole of Life Policy Number ….
Whenever a splittable payment is payable in respect of the superannuation interest of the husband in the Universal Super Scheme:
7.1)THE WIFE is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations, 2001, using a base amount in the sum of $68,083 at the operative time of 1 February 2007; and
7.2)there is a corresponding reduction in the entitlement of the person to whom the splittab1e payment would have been made but for this order.
The above order binds the trustee of the superannuation fund and the trustee must implement the order.
By consent if either party refuses or neglects to sign any document necessary to implement these orders within 14 days of a request to do so, the Registrar of the Newcastle Registry is appointed to execute such document on behalf of that party.
Otherwise any outstanding application is dismissed.
The Registry Manager may return any documents produced on subpoena.
IT IS NOTED that publication of this judgment under the pseudonym Hackett & Hackett is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCF 2430 of 1998
| MR HACKETT |
Applicant
And
| MS HACKETT |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This was an application for orders setting aside consent orders made in 1999 by a Judicial Registrar and substituting other orders, including a superannuation splitting order. The 1999 orders purported to be orders altering property interests.
Numerous queries were raised in respect of the evidence after the hearing in August and the evidence was then supplemented. The final additional evidence was an affidavit of the wife’s solicitor received on 6 December 2007.
BACKGROUND
The orders made on 23 July 1999 provide:
1.1The Respondent shall pay to the Solicitors for the Applicant the sum of Forty Thousand Dollars ($40,000) not later than 23rd August, 1999.
1.2Upon payment of the aforesaid sum of Forty Thousand Dollars ($40,000) the Applicant shall deliver to the Solicitor for the Respondent a duly executed Transfer of the whole of the Respondents right, title and interest as joint tenant in the property situate at […, B] (Folio Identifier […]) ("the former matrimonial home").
1.3The Respondent shall pay to the Solicitors for the Applicant (in addition to the monies referred to in 1.1 hereof) the further sum of Forty thousand dollars ($40,000) not later than 23rd February, 2000.
1.4That the obligation of the Respondent pursuant to Clause 1.3 shall constitute a charge on the former matrimonial home in favour of the Applicant and the Applicant shall be entitled to register in respect of the title of the former matrimonial home a Caveat in respect of such charge.
1.5.In the event of payment of the monies referred to in Clauses 1.1 and 1.3 not being made on the respective dates due for payment then the Respondent shall in addition pay to the Solicitors for the Applicant the further sum being interest calculated in accordance with the relevant rate prescribed by the Family Law Rules for the period from the respective dates due for payment until the date of payment.
2.1That upon the Respondent's superannuation entitlements vesting being for retirement, resignation death or permanent incapacity the Applicant shall receive an entitlement from the same which said entitlement shall be calculated in accordance with the following formula;
½ x S x 17/Y
where S = total superannuation
Y = number of years husband was a member of the Fund.
AND the Respondent shall be entitled to the balance thereof.
2.2For the purposes of Clause 2.1 hereof "superannuation entitlements" shall include the entitlements becoming due to the Respondent from the following funds;
(a)[C] Retirement Income Fund – […] Superannuation Plan
(b)[C] Retirement Income Fund – […] Superannuation Plan
(c) MLC Policy […]
2.3That within 14 days of receipt by the solicitor for the Respondent the Respondent shall execute and cause to be returned to the Solicitor for the Applicant such form of request and/or Direction as may be required by the Trustee of any one or more of the funds referred to in Clauses 2.2 so as to give effect to the provisions of Clause 2.1.
3.1The parties shall respectively be entitled to such items of personalty including but not limited to moneys in financial institutions, motor vehicles and furniture and furnishings but excluding interests pursuant to any superannuation fund which shall be dealt with in accordance with Clauses 2.1 — 2.3 inclusive.
4That in the event of either party being in default for a period of 14 days in executing any document required to give affect to these Orders then the Registrar of the Family Court at Newcastle shall execute such document in lieu of the party in default.
The orders the parties both now propose are:
2That within 28 days of the making of these Orders that the Husband pay to the Wife the sum of $20,000.00.
3That Orders 4 to 7 of these Orders are binding on the Trustee of the [A] Superannuation Plan under the [A] Superannuation Fund ("the [A] Fund").
4That the base amount allocated to the Wife in these proceedings out of the interest of the Husband in the [A] fund is $36,301.00 ("the base amount").
5That pursuant to Section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the interest of the Husband [Mr Hackett] in the [A] Fund the Wife, [Ms Hackett], shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation 2001, ("the Regulations") using the base amount and there be a corresponding reduction in the entitlement of the person to whom a splittable payment would have been made but for these Orders.
6 That Order 5 above shall have effect from the operative time.
7That the operative time for the purposes of Order 5 above of these Orders is seven (7) business days after the date of service of these Orders upon the Trustee of the [A] fund.
8That Orders 8 to 13 of these Orders are binding on the Trustee of the Universal Super Scheme ("the MLC Fund").
9That the base amount allocated to the Wife in these proceedings out of the interest of the Husband in the MLC fund is $68,083.00 ("the base amount").
10That the member directs the Trustee of the Universal Super Scheme to surrender the MLC Whole of Life Policy Number […].
11Upon the Husband directing the Trustee of The Universal Super Scheme to surrender MLC Whole of Life Policy Number […], that pursuant to Section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the interest of the Husband [Mr Hackett] in the MLC fund the Wife, [Ms Hackett], shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation 2001, ("the Regulations") using the base amount and there be a corresponding reduction in the entitlement of the person to whom a splittable payment would have been made but for these Orders.
12 That Order 11 above shall have effect from the operative time.
13That the operative time for the purposes of Order 12 above of these Orders is seven (7) business days after the date of service of these Orders upon the Trustee of the MLC Fund.
14That should either party fail or neglect to sign any document necessary to give effect to the terms of these Orders within 14 days of written request to do so then the Registrar of The Family Court of Australia at Newcastle is hereby appointed pursuant to Section 106 A of the Family Law Act to sign such document on behalf of the defaulting party.
RELEVANT LAW
- Paragraphs 2.1 to 2.3 of the 1999 orders were not valid orders. The relevant power of the Court is under Section 79 of the Family Law Act and is to make orders altering property interests. Prior to the commencement of Part VIIIB of the Family Law Act (“Superannuation Interests”) in December 2002, it was the situation that unvested superannuation entitlements were not property within Section 79, because the interest was contingent. (See Stacy & Stacy (1977) FLC 90-324 at 76,707; Bailey & Bailey (1978) FLC 90-424 at 77,145; In the marriage of Crapp (1979) 5 FamLR 47; In the marriage of Whitehead (1979) 5 Fam LR 308 at 313 to 314; Coulter & Coulter (1990) FLC 92-104 at 77,685-7; and Kearney & Kearney (1991) FLC 92-208 at 78423).
Accordingly, the section 79 power did not extend to making orders altering interests in unvested superannuation, such as the interest of the husband at the time of the 1999 orders.
In property proceedings In the Marriage of West & Green (1991) 16 Fam LR 811, Kay J adopted a similar formula to that in the 1999 orders when ordering a husband who had unvested superannuation entitlements to pay the wife a sum upon resignation or retirement from his employment (when his superannuation entitlements would vest). But unlike the present case, the orders did not purport to give the wife an interest in the superannuation, there was other property the husband had that was sufficient to pay the wife at the time of the orders, and the husband was seeking deferral of the calculation and payment of the balance of the wife’s entitlement till his superannuation vested.
Kay J (at 814 to 817) held that as the husband was seeking the deferral, it was reasonable to impose conditions. The conditions imposed (at 819) were an order restraining him from dealing with or disposing of any of his entitlements other than in accordance with the orders, service of a copy of the orders on the fund and a requirement that he provide the wife with security by way of a charge over property or a life insurance policy.
The approach in the 1999 orders is quite different. It does purport to give the wife an interest in the husband’s superannuation.
Part VIIIB and other provisions of the Family Law Act were inserted by the Family Law Legislation Amendment (Superannuation) Act 2001. Relevant provisions inserted include Section 90MC and Section 90 MS. Section 90MC provides:
A superannuation interest is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.
Subsection 90MS(1) provides:
(1) In proceedings under section 79 with respect to the property of spouses, the court may, in accordance with this Division, also make orders in relation to superannuation interests of the spouses.
Note 1: Although the orders are made in accordance with this Division, they will be made under section 79. Therefore they will be generally subject to all the same provisions as other section 79 orders.
Note 2: Sections 71A and 90MO limit the scope of section 79.
Section 90MT sets out the types of splitting orders that can be made in respect of superannuation interests.
Section 5 of the Family Law Legislation Amendment (Superannuation) Act 2001 provides:
Application of superannuation amendments
(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.
(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.
(4) If an approval of a section 87 agreement that is in force at the startup time is later revoked on a ground specified in paragraph 87(8)(a), (c) or (d) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the approval is revoked.
(5) Part VIIIB of the Family Law Act does not apply in relation to a financial agreement that was made before the startup time.
It is clear that the Parliament intended by Section 5 that where orders altering property interests were made before the superannuation amendments, parties could not use Subsection 79A(1A) to set aside all or some of those orders by consent and substitute other orders by consent that did include orders made in reliance on the superannuation provisions. (See per Young J in RBH & JIH [2005] FamCA 226.)
The applicant husband relies upon para 79A(1) (c) of the Family Law Act in seeking to have the 1999 orders set aside and the new orders made. The respondent wife sought the same result but also raised a ground under para 79A(1) (a) of the Act.
Paras 79A(1)(a) and (c) require:
a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstances.
c)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order.
With regard to para 79A(1)(a),the Full Court discussed relevant authorities in its decision of In the Marriage of Clifton & Stuart (1990) 14 Fam LR 511 that miscarriage of justice does not mean an unjust result, but a failure to deliver justice according to Law which arises from the judicial process. Their Honours held that incompetence of a party’s legal representation, unless equivalent to no representation at all, or perverse (such as the representative being in league with the other side), does not affect the fairness of the trial, even though the result may be unjust to the party concerned. (See 14 FamLR at 516-520.)
The Full Court held that justice means justice according to law. It relates to the integrity of the judicial process, and a miscarriage of justice involves “such a departure from the rules which permeate all judicial procedure as to make that which happened not in the proper use of the word judicial procedure at all” (14 Fam LR at 519).
THE EVIDENCE
The evidence comprises:
1)Terms of Settlement dated 18 July 2007;
2)Consent Orders of 23 July 1999;
3)Affidavit of Mr Peter Kirsop sworn 26 July 2000
4)Application in a Case by the wife filed 8 December 2006;
5)Amended Response to an Application in a Case by the husband filed 23 July 2007;
6)Application for Final Orders by the husband filed on 25 June 2007;
7)Affidavit of Mr Peter Kirsop sworn 6 December 2006;
8)Financial Statement of the husband sworn 20 April 2007;
9)Affidavit of the husband sworn 27 April 2007;
10)Financial Statement of the wife sworn 3 July 2007;
11)Affidavit of the Ms Marie Anne Melville sworn 18 July 2007;
12)Affidavit of the husband sworn 3 October 2007; and,
13)Affidavit of Mr Peter Kirsop sworn 5 December 2007.
THE APPLICANT HUSBAND’S CASE – PARAGRAPH 79A(1)(c)
The husband was by order 1.2 of the 1999 Orders required to pay the wife $40,000 by 23 August 1999. He did not pay that amount till 29 September 1999.
The husband did not pay the wife the $40,000 he was required to pay her pursuant to Order 1.3 of the 1999 orders. The wife took enforcement proceedings. She has since recovered some funds.
By the time of the enforcement proceedings the husband no longer had his interest in the Miners’ Superannuation Plan and T Superannuation Plan referred to in the 1999 Orders. He had rolled over both interests into the A Superannuation Fund, apparently without notice to the wife.
Order 2.2 of the 1999 orders implies the husband has an interest in the MLC policy. He does not. The policy is owned by the Trustees of the Universal Super Scheme and the policy is held by the Trustees subject to the rules of the scheme. The Trustees notified the wife’s solicitors, when they sought to enforce against the MLC policy, that on legal advice it did not consider itself bound by the 1999 superannuation orders as regards the MLC policy because under the rules of the Universal Super Scheme all member benefits are fully preserved until a condition of release (such as permanent retirement at or after age 55) is fulfilled.
Order 1.4 purported to create a charge on “the former matrimonial home” to secure obligation of the husband under order 1.3 of the 1999 orders and declared the wife entitled to register a caveat on the title. The address is not disclosed in the orders, but it appears from correspondence in evidence that the property was at B and was sold by the husband in 2000. It appears part of the proceeds were paid to the wife in reduction of what he owed her under the 1999 orders.
At 23 August 2006 the husband still owed the wife under Orders 1.3 and 1.5 of the 1999 orders, $42,063.79. He has made no payment since.
It appears that the husband’s position as to property and superannuation now is:
His equity in a home owned jointly with his new wife $49,000
Savings owned jointly with his new wife $2,600
Household contents $7,000
$58,600
Superannuation valued at about 1 February 2007 $265,563
The husband proposes to fund the proposed payment of $20,000 to the wife (under the new orders proposed by the parties) by withdrawing some of his “non-preserved unrestricted superannuation entitlements”. He says in his affidavit that another $20,000 is added to the amount to be paid to the wife from his superannuation. These arrangements apparently are proposed by the husband rather than a sale by him and his new wife of their home which appears to be his only other option.
At 23 August 2006 the amount owing by the husband to the wife under the existing orders 1.3 and 1.5 was $42,063.79. The amount the wife would be entitled to under the 1999 superannuation orders if they had been implemented as at about 1 February 2007 would have been $84,384. The wife’s entitlements from both sources therefore would be more than $128,000 including interest on the $42,063.79 to 1 February 2007.
The orders proposed will see the wife receiving:
payment of $20,000
interest in A superannuation $36,301
interest in Universal Super Scheme $68,083
Total $124,384
The husband has established that he has defaulted under the 1999 orders, the former matrimonial home has been sold, and the wife now has no security for more than $46,000 the husband owes under the existing orders 1.2 and 1.5, and the only way the husband’s default can be rectified by enforcement is a forced sale of the home of the husband and his new wife.
THE WIFE’S CASE – PARAGRAPH 79A(1)(a)
For the respondent wife it was submitted that the miscarriage of justice alleged is that the wife when the consent orders were made on 23 July 1999 proceeded in the mistaken belief that orders in terms of paragraphs 2.1 to 2.3 dealing with the husband’s superannuation were within the court’s powers and would be valid and enforceable orders, and she would not have consented to the orders if she had known they were not.
Notwithstanding that on 21 August 2007 my associate communicated to the solicitors for the parties that there was no evidence by the wife that she believed the 1999 orders regarding the superannuation interests were valid and such evidence was needed, no such evidence has been provided. However, it is a reasonable inference that the wife would not have consented to the order if she knew is was not valid or enforceable and her solicitor’s evidence is that each party was represented by Counsel and at no stage did he or the wife’s Counsel or the Judicial Registrar express any opinion that the proposed orders regarding the superannuation might be invalid.
It is also obvious that the Judicial Registrar would not have made the order if he had been aware that the actual wording involved purporting to give the wife an interest in the husband’s superannuation and was beyond the Court’s then powers.
CONCLUSIONS
The wife was unaware in 1999 that the proposed part of the orders relating to superannuation so far as they purported to give her some interest in the husband’s superannuation, could not be valid orders and, if made, would be unenforceable. It appears that the Judicial Registrar probably was aware that the orders involved the use of a West & Green formula in relation to a payment to be made by the husband. But the Judicial Registrar was not aware that the orders purported to give the wife an interest in the husband’s superannuation.
Order 2.2 also assumes that the husband had an interest in the MLC Policy. The wife and the Judicial Registrar proceeded on that basis. But he did not. It was owned by the Universal Super Scheme and subject to the rules of the Scheme.
In my view those factors together establish that the making of the consent orders was not a proper use of the judicial procedure and was a miscarriage of justice within the expression “or any other circumstance”.
When that is combined with the husband’s defaults, the circumstances since the orders of the now absence of any security for the amounts he already owes and his present financial circumstances, there is no doubt that there would be serious injustice to the wife if the 1999 orders are not set aside.
In my view the husband has also satisfied para 79A(1)(c). He has defaulted under orders 1.3 and 1.5 and under orders 2.1 and 2.2 (by disposing of his interest in the Miners Superannuation Plan and the COSAF Superannuation Plan). Even if the superannuation orders had been valid, his action has frustrated the orders so far as they relate to his interests in those 2 superannuation funds. It is just and equitable to set aside the 1999 orders and make other orders.
Given the time that has elapsed since the valuations of the husband’s superannuation, if the wife’s entitlements are to approximate what the parties intended by the 1999 orders, it appears arguable justice and equity would require her entitlements should comprise the $20,000 payment by the husband, plus a payment of interest on that amount since 1 February 2007, plus superannuation with total base amounts at 1 February 2007 of about $108,000. The wife would have the benefit of the operative date for any superannuation splitting order being 1 February 2007, the approximate date of the valuations of the superannuation interests on which the calculations were based.
Yesterday the findings above were provided to the parties’ solicitors and written submissions requested from the husband’s solicitors. They have been received and are as follows:
SUBMISSIONS ON BEHALF OF THE APPLICANT HUSBAND
A.The proposal by the parties is that the husband pay to the wife the sum of $20,000 cash and $104,384 by way of superannuation split of the husband's superannuation entitlement.
B.The superannuation split is composed of a base amount of $36,301 from [A] Superannuation and a base amount of $68,083 from Universal Super Scheme.
C.In the Reasons for Judgement at paragraph 39 the cash payment is to be $20,000 by the husband together with interest from 1 February 2007 plus superannuation with a total base amount of $108,000. This is an increase of $3,616 in the base amount that would be payable to the wife as the parties agreed.
D.From the valuation evidence of the Universal Super Scheme it is noted that the withdrawal value as at 1 February 2007 was $68,083 which is the base amount proposed by the parties to be allocated to the wife. We submit that if the base amount is to be increased that the increase be with respect to the husband's [A] Superannuation entitlements as any increase in the base amount that the wife is to receive from the husband's entitlements in Universal Super Scheme will have the effect that the wife's entitlement would exceed the husband's withdrawal value in that fund. We submit that the base amount allocated to the wife from this fund be increased from $36,301 to $39,917.
The wife’s solicitors also proposed the form of orders. I have departed from the form of those orders to some extent but, I trust, not in any way that departs from the intention in the conclusions.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mullane
Associate
Date: 21 December 2007
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