HINCHMAN & HINCHMAN
[2014] FamCA 354
•3 June 2014
FAMILY COURT OF AUSTRALIA
| HINCHMAN & HINCHMAN | [2014] FamCA 354 |
| FAMILY LAW – PROPERTY – 12 year relationship – modest non-superannuation pool – husband in receipt of public service pension – dispute about the percentage of the pension that should be paid to the wife – pension treated as a separate property pool – the “real nature” of the pension taken into account – husband currently uses the pension as a secondary income stream – adjustments made in favour of the wife – wife to receive 35 per cent of the pension FAMILY LAW – COSTS – Application for costs made by the Independent Children’s Lawyer – where parenting issues had been finalised prior to property settlement out of Court – where payment of the Independent Children’s Lawyer would cause financial hardship for both parties |
| Family Law Act 1975 (Cth) ss 75, 79, 90MT, 117 |
Family Law (Superannuation) Regulations 2001 (Cth)
Darcy & Darcy [2011] FMCAfam 126
Fane & Lemott [2013] FamCA 604
| Marriage of Coghlan (2005) 33 Fam LR 414 Stanford & Stanford (2012) 247 CLR 108 |
| APPLICANT: | Mr Hinchman |
| RESPONDENT: | Ms Hinchman |
| FILE NUMBER: | NCC | 1545 | of | 2011 |
| DATE DELIVERED: | 3 June 2014 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Cleary J |
| HEARING DATES: | 12, 13 February; 21 June; 11 December 2013 and written submissions received by 12 February 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Levick of Counsel |
| SOLICITOR FOR THE APPLICANT: | Charlestown Law Firm |
| COUNSEL FOR THE RESPONDENT: | Mr Boyd |
| SOLICITOR FOR THE RESPONDENT: | Virginia Taylor |
Orders
That the base amount of $359,302 is allocated as required by s 90MT(4) of the Family Law Act 1975 (Cth) to Ms Hinchman out of Mr Hinchman’s interest in the Public Service Agency D Superannuation Fund.
That in accordance with s 90MT(1)(a) of the Act:
(a)Ms Hinchman is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation 2001 and
(b)Mr Hinchman’s entitlement to payments out of his interest in the Public Service Agency D Superannuation Fund and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this Order.
That the Trustee of the Public Service Agency D Superannuation Fund (“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 1975 and Family Law (Superannuation) Regulation 2001, the entitlement created for Ms Hinchman by Order (1); and
(b)Pay the entitlements whenever the Trustee makes a splittable payment out of Mr Hinchman’s interest in the Public Service Agency D Superannuation Fund.
(c)That these Orders have effect from the operative time and the operative time for this Order is four business days after the Trustee is served with this Order.
That this Order binds the Trustee of the Public Service Agency D Superannuation Fund.
That the husband and the wife each pay the costs of the Independent Children’s Lawyer up to and including appearances on 12 February 2013.
That the parties each retain all personalty and other asset currently in the possession of that party.
BY CONSENT IT IS ORDERED:
That the wife cause to be delivered to the husband the following art works:
(a) Watercolour ‘Subject C’ (unknown artist); and
(b) his Public Service Agency D Award (if located).
That the Independent Children’s Lawyer’s application for costs is dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hinchman & Hinchman 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: NCC1545 of 2011
| Mr Hinchman |
Applicant
And
| Ms Hinchman |
Respondent
REASONS FOR JUDGMENT
Introduction
These are competing applications for alteration of interests in property. The applicant is the husband Mr Hinchman (51) and the respondent is the wife Ms Hinchman (49).
The parties began living together in mid-1998. They married two years later in May 2000. Two children were born to the parties, in 2001 and 2004. There were short separations and reconciliations until the final separation on 23 April 2010.
The parties were divorced in October 2011.
The parties have reached agreement about parenting arrangements for their two children now aged 13 and 10. Relevant parenting orders were made on 12 February 2013.
The parties have little more than household contents. Their significant assets are superannuation funds worth $1.1 million approximately. Within that class of assets is the Public Service Agency D Super Pension, (“Agency D Pension”) of the husband, which has an agreed value of $1,026,577. If it were not for that asset, there would likely be no dispute before the Court.
Issues
The relevant issues in this matter are:
· The appropriate split of the Public Service Agency D Super Fund, (“Agency D Super Fund”) received by the husband as a pension (Type B) in the overall context of adjustment of interests in an otherwise small pool of assets.
· Costs of the Independent Children’s Lawyer in the parenting proceedings finalised on 12 February 2013.
Evidence
The husband relied on the following documents and was cross examined:
a)Minute of Order contained in his Case Outline document (Orders 14 to 19 inclusive);
b)Affidavit of husband filed 7 December 2012;
c)Financial Statement of the husband filed 7 December 2012; and
d)Affidavit of Ms A filed 7 December 2012 (wife’s mother).
e)Written Submissions and Supplementary Submissions on behalf of the Husband, both dated 12 February 2014
The wife relied on the following documents and was cross examined:
a)Amended Response filed 22 March 2012;
b)Affidavit of wife filed 21 December 2012;
c)Updated Financial Statement filed 7 February 2013.
d)Final Submissions for Respondent Wife filed 13 January 2014
The expert evidence relied upon is as follows:
f)Affidavit of Mr G filed 14 June 2013;
g)Affidavit of Mr S filed 13 August 2013;
h)Joint Report of two experts dated 6 November 2013.[1]
The two experts were cross-examined together.
[1]Exhibit 3
Procedural history
On 23 June 2011 the husband filed in the Federal Circuit Court (formerly Federal Magistrates Court) an Initiating Application for adjustment of interests in property (inter alia). The wife filed a Response two months later.
The proceedings were transferred to this Court. Subsequently, Amended Applications and Responses were filed.
The matter was set down in mid-2012 for a four day hearing commencing
12 February 2013.
At the conclusion of the first day of hearing, final parenting orders were made by consent. An application for costs was made by the Independent Children’s Lawyer and opposed by both parties. The application was reserved to the final hearing.
On 13 February 2013, the property aspects were adjourned unopposed, on the application of the husband, to 20 June 2013 (subsequently 21 June 2013). The remaining hearing dates in February were vacated.
The adjournment was:
a)To enable the preparation of a valuation by Valuer Mr G of the superannuation fund and “[Type B]” pension of the husband.
b)There was also provision for both parties to bring evidence in relation to the state of health of the husband.
On 21 June 2013 the hearing commenced. The husband had filed the valuation report. Superannuation represented the parties’ most significant asset. The husband gave evidence and was cross-examined.
On 13 August 2013 the hearing resumed. There was an Application in a Case to introduce an adversarial expert, Mr S. The application was successful.
There was an order for the husband to pay the costs of the wife with such costs to be agreed or assessed.
The matter was then adjourned part heard to 11 December 2013 and the Court noted that both experts would be available to give evidence on the next occasion.
On 14 November 2013 an order was made by consent in relation to the provision of costs for the single expert report.
On 11 December 2013 the evidence was concluded including that of the two experts given jointly.
An order was made for written submissions and judgment reserved.
By 12 February 2014 written submissions were complete.
Approach to alteration of interests in property
In considering applications for alteration of property interests and transfer of property the Court must:
(i)Identify the existing legal and equitable interests of the parties in property;[2]
(ii)Consider whether it would be just and equitable in the particular circumstances to make an alteration; and
(iii)
If an alteration should be made, to consider the matters contained in
s 79(4) and s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) in coming to an adjustment; and
(iv)Analyse and consider whether the adjustment under consideration would be just and equitable.
[2] Stanford & Stanford (2012) 247 CLR 108
Identify the assets and liabilities of the parties
The interests in property assets and liabilities of the parties were identified in a joint Balance Sheet[3] as set out below:
[3]Exhibit 11
Assets:
1.
Wife’s household contents
9,000
2.
Husband’s household contents
3,000
3.
Husband’s AMP super withdrawal
13,090
$25,090
Liabilities:
1.
[E] School
5,000
2.
Personal loan from Mr [A]
45,000
3.
Wife’s Commonwealth Bank Card
8,590
4.
Wife’s ATO arrears
18,930
$77,520
Superannuation:
1.
Husband’s [Agency D] Super
1,026,577
2.
Husband’s PSSAP
48,042
3.
Husband’s First State Super
3,374
4.
Husband’s BT Super
1,500
5.
Wife’s BT Super
4,802
$1,113,575[4]
Net Equity
$1,061,145[5]
[4] Should be $1,084,295
[5] Should be $1,031,865
The parties disagreed to some extent over what should constitute the net asset pool. Certain assets and liabilities should be excluded from the pools.
Assets (Item 3): Prior to separation the husband had approximately $15,000 in BT Super Trust (AMP Flexible Life Time Super). After separation he withdrew the unrestricted amount and used the funds of about $13,000 to establish a household for himself (and the children when they were with him) in rented accommodation. I accept that evidence. The value of some of the goods purchased is included in Assets Item 2. Item 3 is excluded.
Liabilities (Item 1): The husband paid off the joint debt of the parties owed to E School. The wife was solely financially responsible for the children during that period. This item is excluded.
(Item3) This debt was accrued post separation and is a personal debt of the wife. It is excluded.
(Item 4) Monies owing by the wife to the ATO relate to income earned post separation. This debt is excluded.
The other consideration is how the pool of assets should be approached. Given this particular set of facts the most appropriate course is to analyse two pools of property.[6] The first being the Agency D Pension of the husband. The second being the other assets including the lesser super funds which still have the character of superannuation interests:
[6] Marriage of Coghlan (2005) 33 Fam LR 414
Accordingly the two pools are:
1.
Agency D Super Fund of husband
$1,026,577
2.
Net assets including lesser super funds
$ 24,718
Total
$1,051,295
The present interests of each of the parties are:
(a)The wife:
Pool One
Household contents
$9,000
BT Superannuation
$4,802
Debt outstanding to one or both of wife’s parents agreed[7]
($45,000)Pool Two
Nil
Net position of wife (debt)
($31,198)
[7] It is accepted that the debt to the wife’s parents was incurred during the marriage and should be repaid.
(b)The husband:
Pool One
Household contents
$3,000
Superannuation Funds:
1. PSSAP $48,042
2. First State Super $ 3,374
BT Super $ 1,500
$52,916
Net position of husband
$55,916
Pool Two
Agency D Super received as pension
$1,026,577
Overall net position of wife (debt)
($31,198)
Overall net position of husband
$1,082,493
Would it be just and equitable to make an alteration?
It is apparent that each party is reliant on income respectively earned. There are no other realisable assets. Both parties worked hard during the marriage in paid employment and as parents. For a variety of reasons assets have not been accumulated.
Each party accepts and proposes that there should be an adjustment to the assets by way of a split of the Agency D Super Fund of the husband.
The point of difference is what percentage the split should be; the wife proposing 55 per cent, the husband 20 per cent.
It is apparent that the superannuation pension was partly accumulated during the course of the relationship, between 1998 and 2005. The husband was the sole contributor for 12 years prior to the marriage.
After October 2005, the superannuation fund was the source of an income stream for the husband, continuing for five years until separation in 2010 and thereafter for the benefit of the husband alone since then.
In those circumstances and where the fund has been properly valued according to the Family Law (Superannuation) Regulations 2001 (the Regulations), it is just and equitable to alter interest in that fund.
Consideration of contributions of each of the parties and of adjustments pursuant to Section 75(2) factors
Initial Contributions
The parties began living together in Sydney in mid-1998. The husband was a public servant in Agency D in New South Wales; the wife was employed in the property industry in Victoria. They initially lived with a friend of the husband for a little over a year. They then moved into a property in F Street, Suburb H. The wife supplied most of the household items, with the parties who were both working, sharing the cost of otherwise setting up the household.
At the time of moving in together, the relative positions of the parties were as follows.
The husband had been a member of his Agency D Superannuation Scheme since April 1986, about 12 years. It had an agreed value of not less than $114,707. He had been married previously and there are two adult children of his first marriage. To the extent that there were assets in that marriage, they were not retained by the husband and brought forward into this marriage. He had a motor vehicle and some personal possessions.
The wife had an interest in a property at Melbourne Suburb I, jointly owned with her parents. She had purchased that property for approximately $126,500 and a mortgage was obtained for the whole of the purchase price. The wife had lived in that property for about five years and when she moved to Sydney to live with the husband, rented out the property. The parties thereafter paid the shortfall between the mortgage and rental payments. The wife also had a motor vehicle and a small number of shares.
Neither the interest in real estate of the wife, nor the interest in superannuation of the husband, brought any tangible benefit to the marriage nor made any significant difference to the parties until approximately 2005. Accordingly their initial contributions were similar.
Contributions during the relationship
In 1999 the husband took 8 months paid long service leave and became a licensed in the property industry.
The parties married in May 2000.
During the course of their relationship and marriage, two children were born. The first child R was born in 2001 (now 13). After R’s birth the wife was in ill health. At the same time the father’s mother was critically ill and the wife and R moved to live with her parents. The wife took 18 months off from work.
For two to three months after R’s birth, the parties regarded themselves as separated, but reconciled after counselling.
In 2002 the wife commenced a company called J Pty Ltd to operate her property industry business. Soon after the parties purchased a property at K Street, Suburb L for $483,000 (100 per cent financed). The parties never resided in this property.
In February 2004, the parties’ second child M (now 10) was born.
The following month, March 2004, the husband was injured at work and went off on medical leave.
Soon after, the wife sold her Melbourne Suburb I property with no financial benefit to her.
In August 2004, the parties separated again for a short period, two to three months; reconciling in October 2004.
In May 2005 the husband began a return to work program, suffered a further injury and was off work for a further three months.
The husband continued to have problems with his ankle and was removed from fulltime employment in Agency D pending a medical discharge.
Critically for these proceedings, in October 2005, the husband was discharged from Agency D and commenced receipt of a pension of 72.75 per cent of his previous fulltime salary (indexed for CPI).
He also received a lump sum payment of $65,000, representing his long service leave entitlements. These funds were used to renovate the Suburb L property, discharge debts and for a family holiday.
He received a second lump sum from Agency D of approximately $23,000 at the same time. He opened a super account, BT Super, now known as AMP Flexible Life Insurance and deposited the second payment (Item 3 asset in the Balance Sheet).
Whilst the husband was off work, he was at home fulltime with the two children; from the second half of 2004 until early 2006. He cared for them during the day and also attended to the majority of the domestic work. The wife was working fulltime and also assisted with the care of the children and domestic work.
These events in 2004 and 2005 represent a change in the character of contributions. The wife made a greater contribution through income from her fulltime work; the husband contributed his salary and also provided for care of the children and domestic work for about 18 months.
It has to be said that there was no longer a contribution by the wife to the superannuation asset of the husband, once he began to receive a pension income. Indeed, he contributed the pension to the household as an income stream from that time.
In April 2006, the husband began work for the Public Service Agency N with a gross salary of $56,000.
In September 2008, he changed jobs at the request of the wife and became employed by Public Service Agency O.
In June 2009 the husband returned to his previous job at Agency N.
In April 2010 the parties separated.
Analysis
In the period between 2005 and separation, the arrangements in the household were that the husband would usually collect the children from school and pre-school at the end of his day, which finished early; would take them home and that he and the wife would later share the domestic duties and the care of the children in the evenings.
The wife’s busiest day in the property industry was on Saturdays, and the children would usually be in their father’s care on that day.
In November 2006 the wife was approached by a person in the property industry offering a salary package which included school fees for R and costs of relocating to the Central Coast.
At that time the husband was still working in Sydney and commuting each day. It became increasingly difficult for him in terms of travel and for the wife in terms of the care of the children. It was largely for that reason that he ceased working at Agency N on the first occasion to take up work for Agency O.
When the husband returned to his job at Agency N in Sydney, the pressure on the family unit increased, with the wife indicating that she was unable to cope with the working and caring arrangements.[8]
[8]Affidavit of husband filed 07/12/2012, par 64-67 inclusive
In April 2010, the parties separated, with the wife and children remaining in the family home. At that point I consider that the contributions of the parties had been equal; each one working hard and providing substantial care for the children, with some fluctuation in their roles.
After separation, the parties struggled with two households and costs, including private school costs for both children. The mortgage on the parties’ property was drawn on to cover the costs of credit card expenses incurred by the wife post-separation.
The husband was assessed and re-assessed on several occasions for child support, which he has consistently paid. Unfortunately there were acknowledged errors by the Child Support Agency, which indicated arrears for the husband from time to time. However I accept that they were errors and anomalies and that the husband has been responsible in respect of payment of child support.
Post separation the wife has had the majority care of the children. The husband has continued in fulltime paid employment, with a second income stream of the Agency D Pension. He had formed a new relationship with Ms P. She is also in employment and as at 7 December 2012, had an average weekly income of $1,529.
The orders made in respect of the children reflect residence with their mother and substantial and significant time with their father, alternating weekends, half school holidays and other special times. The children have lived with their mother since separation and accordingly her working arrangements have been affected by the need to provide for their supervision and care.
The father has been substantially involved in their lives, moving back to the Central Coast in order to be more closely involved with them. He has also paid child support. However, I do consider that there should be a modest adjustment in contribution to reflect the reality of the mother having the care of the children on a day to day basis for the majority of the time.
Accordingly by date of hearing the contributions of the parties slightly favour the wife in the ratio of 52.5 per cent; 47.5 per cent.
Relevant s 75(2) factors for adjustment
Of the factors to be taken into consideration, I note the following.
Age and state of health
The parties are aged 51 and 49 years respectively and although they have both had difficulties with their physical and psychological health, there is no medical evidence for either party to support any incapacity. Each of the parties is in fulltime work and each proposes to continue.
Both parties are responsible for their two children, aged 13 and 10 and there is a minimum of a further eight years before the children will be independent. The wife will be more affected by the need to provide for the needs of the children on a day to day basis.
Superannuation
The husband has the benefit of a pension income with CPI increases for life. The wife does not have that benefit.
Standard of living
Despite hard work and active attention to assets, the parties ended their marriage with minimal assets to divide.
Duration of the marriage
The parties lived together for approximately 12 years. Both of them have worked and cared for the children to differing degrees over that period of time. Both parents wish to continue their role as parent and take that role seriously.
Cohabitation
The husband is living with a partner who is in paid employment.
Child support
The husband pays child support at the rate of approximately $883 per month. That payment was divided between re-payment of school fees to a previous school the children attended, as well as payment to the mother. If that debt has not already been extinguished, it soon will be.
Other factors
Taking the contributions of the parties and their future needs into account, there should be an adjustment in favour of the wife. That requires a close consideration of the particular character of the parties’ only significant asset, the Agency D Super Fund of the husband.
Agency D Super Fund
Contained in the joint report of the experts, Mr G and Mr S, is a useful summary of the husband’s interest in his super fund as follows:[9]
The husband was born on … 1963 and joined [Agency D] Super at age 23 on … 1986.[10] The husband and wife commenced cohabitation around 30 June 1998. The husband was injured on 24 November 2004. He was deemed [Type B] and his last day of [employment] was 7 October 2005. From 8 October 2005 the husband has been in receipt of a [Type B] pension from [Agency D] Super. The parties separated on or around 23 April 2010.
(a)The value of the husband’s interest In [Agency D] Super as at 7 March 2013 is $1,026,577.
(b)The value of the husband’s interest as at 30 June 1998 (cohabitation) was $114,707.
(c)The value of the husband’s interest as at 7 October 2005 (granting date of [Type B] pension) was $292,271.
(d)The value of the husband’s interest as at 8 October 2005 was $967,550.
[9]Exhibit 3, p 2
[10]The Mr S/Mr G Report refers in error to the husband having been 25.
I note that this increase in value reflects the immediate transition from the husband having been a contributing member to the fund with his interest in the growth phase, to the husband being a recipient of his Type B pension, with his interest now being in the payment phase.
The joint experts note the nature, form and characteristics of the interest as follows:
(a) The husband’s pension is a Type B Pension payable for life and indexed to CPI. The husband may be required to undergo a medical examination and if deemed fit, resume Agency D duties or have his pension suspended or cancelled. However, anecdotally, this rarely occurs.
(b) The husband is currently in receipt of a pension based on 72.75% of his salary at the time of exit. Members in receipt of Type D Pensions may apply for higher percentages to be payable in certain circumstances such as injuries resulting in total incapacity for work or severe injuries.
(c) While in receipt of the invalidity pension, the member is able to undertake other gainful employment outside Agency D, without any reduction to the member’s entitlement to the invalidity pension.
(d) The husband has an opportunity to commute part or all of his pension to a lump sum at age 55. In the event that he does not commute part of the pension at age 55, the husband will also have the opportunity to commute part or all of the pension to a lump sum at age 60. If he has commuted part of his pension at age 55, he will not be able to commute any of his remaining pension at age 60.
(e) Should the husband choose to commute the pension to a lump sum, the amount of the lump sum will be calculated by applying a multiple of 11.82 or 10.92 (for ages 55 and 60 respectively) to the annual pension payable.
The joint experts also produced a useful table setting out the estimated amounts of the husband’s fortnightly Agency D Pension in the event that the alternative base amounts were allocated to the wife.[11]
[11]Exhibit 3, Joint Experts Report, p 3
Percentage of Pension
Amount to Wife
Fortnightly Pension Amount
0%
$0
$2,157
10%
$102,658
$1,941
20%
$205,315
$1,725
30%
$307,973
$1,510
40%
$410,631
$1,294
50%
$513,289
$1,078
60%
$615,946
$863
65%
$667,275
$755
70%
$718,604
$647
80%
$821,262
$431
90%
$923,919
$216
100%
$1,026,577
$0
The questions becomes, what is the appropriate split of the husband’s super pension which adequately reflects the following factors:
(1) The fact that the husband had been contributing for 12 years prior to commencing his relationship with the wife.
(2) The change in character of his interest in October 2005, at age 42 the husband entered into the payment phase of his pension.
(3) The fact that the income stream from the Type B Pension was available to both parties from October 2005 until separation in 2010.
(4) The fact that the husband re-entered the workforce and has been in fulltime paid employment since April 2006.
(5) That the husband would have the right to commute his pension either in four years at age 55, or in nine years at age 60.
(6) That the split of the pension to any extent, reduces the consequent income stream for the husband and that matter has particular reference to the risk of double counting in respect of the submission that the husband has a superior superannuation position to that of the wife.
In this matter, it is crucial that the “real nature of the superannuation interests in question” be taken into account.[12] On that issue the Full Court said this:
When we refer to the real nature of the relevant superannuation interest, we are referring to the fact that notwithstanding that its value according to the regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum or perhaps a future lump sum, the value of which at date of receipt is unknown.
[12] Marriage of Coghlan (2005) 33 Fam LR 414 at 429-430
The wife urges the Court to order a split of superannuation of the husband’s fund 55 per cent 45 per cent in favour of the wife. To do so, in my view, would be to ignore the real nature of the fund. It has a value pursuant to the Regulations of more than $1 million. In reality, it is a secondary income stream for the husband and on this particular set of facts, that pension has been not a substitute for income, but a supplement to income in the nature of an entitlement created by the conditions of the husband’s employment with Agency D.
Recognition should be given to the husband’s choice to re-enter paid employment, with the benefit provided both to himself and the wife during the marriage, and to himself and the children post-separation (with reference to his capacity to pay child support at quite a high level). It is clear that the nature of his pension is not purely compensatory in the peculiar circumstances of this case.
It may well be the policy basis for the existence of Type B Pensions; that the pension is compensation for income not being earned, but it also has the character of an entitlement for injury working for Agency D. There is a possibility of applying in the event of future difficulties, to having the percentage adjusted up. Accordingly I reject the submission on behalf of the husband that this pension is purely compensation.
However I do not accept the submission made on behalf of the wife,[13] that it is a “windfall”. It is an industry based entitlement to which the husband contributed from the date he joined the fund, aged 23 in 1986. He has now been a member of the fund for 27 years. His marriage endured for 12 years. Of those 12 years, he was contributing to superannuation for seven years and receiving superannuation in the payment phase for five years (2005 to 2010).
[13]Exhibit ‘E’ 5, p 5
From commencement in the fund, until the payment phase commenced, the husband was contributing for 19 years (1986 to 2005). Of those 19 years, seven were during his marriage.
The facts of this matter do not fit within such decisions as Darcy & Darcy,[14] where there was a heightened burden on the other partner due to injury. Unusually in this matter, the husband was able to offer a level of assistance in the care of the children and the running of the house, during the period when he was unable to work between 2004 and April 2006.
[14] Darcy & Darcy [2011] FMCAfam 126
Another consideration is that the value of the pension increased so significantly in the way that it did in October 2005, as a result of the transition from growth to payment. It is simply a reflection of the fact that the husband began to receive income from that date.
This matter cannot be neatly categorised as a contest between the compensatory and retirement component of the fund. For the husband in reality, it has been neither. Fortunately for him, he has been able to continue to work so the pension has not compensated him for income lost, nor is it yet a retirement benefit, because he has not reached retirement age. It is recognition of his injury and a means of return in the event that injury triggered such a return for a re-categorisation.
In the matter of Fane & Lemott,[15] such an Agency D Pension was considered, where the husband was somewhat older and the length of the parties’ marriage somewhat longer, at 20 years.
[15]Fane & Lemott [2013] FamCA 604
The husband is entitled to receive his pension for life with CPI increases. For the foreseeable future, it will continue to have the category of a secondary stream of income. I must also take into account that a split enables the wife to receive the immediate benefit of a lump sum, whereas the husband has a minimum of four years before he could access a lump sum in the same way, presumably he may be less inclined to do that given the benefit of an income stream for life.
Accordingly I take the view that there was a modest contribution by the wife to superannuation for a seven year period during the course of the parties’ relationship, but in terms of future needs, the Type B Pension provides for the husband’s future, whether or not he is employed. There is no equivalent provision for the wife, who has the care of the parties’ two children. An adjustment pursuant to s 75(2) is appropriate.
Taking into account the obligation of the wife to provide care and supervision for the children for at least 10 years, and the likelihood that the wife has little superannuation, the wife should receive 35 per cent of the value of the husband’s superannuation fund as a base amount, namely $359,302. From that it is conceded that she will pay some tax and other charges; she will be liable to repay the loan to her parents of $45,000; she will retain her superannuation fund and household contents.
Accordingly the overall division will be:
To the wife:
Split of Agency D Super Fund
$359,302
Household contents
$ 9,000
BT Super
$ 4,802
$373,104
Less loan to A
$ 45,000
Cash sum but repayment of 20 per cent ($71,860) payable in tax and Medicare
$328,104
Cash in hand (approximately)
$255,000
To the husband:
Balance of Agency D Super Fund
(Notional lump sum)$667,275
3 Lesser Super interests
$ 52,916
Household contents
$ 3,000
$ 723,191
$1,051.295
The husband contributed to his super alone from 1986 to 1998; together with his wife 1998 to 2005; and not at all thereafter.
The pension granted was to compensate and ultimately superannuate the husband.
Because he was able and willing to find paid work fulltime, the pension operates both as compensation, and as a recognition of his entitlements related to work for Agency D, whether or not he is able to work again.
Until he turns 55 he will not have a lump sum of superannuation, presuming he continues to work.
He has the assets of three smaller superannuation funds in retirement. Otherwise he has modest household contents, together with his current salary.
The adjustment favours the husband on the basis of the parties having contributed almost equally to Pool One and the wife having contributed minimally to Pool Two in the years 1998 to 2005.
Is the adjustment of interests under consideration just and equitable
The reduction in the husband’s fortnightly amount will be from its current $2,157 per fortnight to $1,412 per fortnight. Of course the wife has the option of rolling over the base amount into a superannuation fund for withdrawal at a later time herself. In the event that she did that and did not withdraw the balance until after age 60, she would not pay any tax on withdrawal. However it seems likely that the wife will withdraw all or at least part of the base amount, with maximum tax 20 per cent plus Medicare.[16]
[16]Exhibit 3, p 4
Overall I am satisfied that the outcome is just and equitable for each of the parties, balancing contributions and future needs in the context of the one significant asset in Pool One being adjusted as ordered.
Costs of the Independent Children’s Lawyer
The Independent Children’s Lawyer seeks a contribution by the parties to his costs of approximately $8,000. Both parties oppose such an order.
Consideration of this issue was reserved to the hearing of the property applications when their respective financial positions would be clear.
Section 117(2) and (3) of the Act is a source of power for such an order.
It is now clear that there are minimal assets. Each party has income from fulltime employment. The wife has a lump sum which she will probably apply to accommodation for herself and the children. The husband has the additional income stream from his super pension, but does not have permanent accommodation.
I take into account that in this matter the parties took the initiative, engaged in private mediation (without the Independent Children’s Lawyer) to address the parenting issues. The parties issued subpoena as required. The matter was resolved and orders made on 12 February 2013 without proceeding to hearing.
I accept that the presence of an Independent Children’s Lawyer is a source of assistance to parties. However these parties did everything they could to reach agreement expeditiously about their children without going to hearing.
In the absence of a significant asset pool and where each party has their own costs to pay, in my view the impact of that order would cause financial hardship for the parties and their children.
I decline to make an order and that application will be dismissed.
I certify that the preceding one hundred and nineteen (119) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 3 June 2014.
Associate:
Date: 3 June 2014
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