HORVATH & HORVATH

[2019] FCCA 1510

FEDERAL CIRCUIT COURT OF AUSTRALIA

HORVATH & HORVATH [2019] FCCA 1510

Catchwords:
FAMILY LAW – Property – superannuation – Defence Force Retirement and Death Benefit Scheme pension – no other significant assets or financial interests – splitting order.

Legislation:

Family Law Act 1975 (Cth), s.79

Cases cited:

Cahill & Cahill (2006) FLC 93-253

Edwards & Edwards (2009) FLC 93-409

Surridge & Surridge (2017) FLC 93-757

Applicant: MS HORVATH

Respondent: MR HORVATH

File Number: DNC 549 of 2017

Judgment of: Judge Young

Hearing date: 25 February 2019

Date of Last Submission: 25 February 2019

Delivered at: Darwin

Delivered on: 4 June 2019

REPRESENTATION

Counsel for the Applicant: Ms Terrill

Solicitors for the Applicant: Terrill & Associates

Counsel for the Respondent: No appearance

Solicitors for the Respondent: No appearance

INJUNCTIVE ORDERS

1. That Mr Horvath be restrained and an injunction is issued restraining him from disposing of or dealing with any money or chose-in-action in any bank or financial institution, including any in

   (a)the ANZ Bank (including account no. …);

   (b)the Defence Bank (including account nos. …);

   other than for the purpose of giving effect to the orders below.

2. That Mr Horvath be restrained and an injunction is issued restraining him from disposing of, dealing with or rolling over any interest held in Super Fund A RSA or any other retirement or superannuation account other than for the purpose of giving effect to the orders below.

OTHER ORDERS

1. Within 60 days the husband is to pay the wife $63,455.

2. That the wife is to serve a copy of these orders on the trustee of the Super Fund A account in the name of Mr Horvath and the trustee is to be given 28 days to notify the court and the wife if the trustee wishes to be heard in relation to the orders.

3. That order 6 is to be binding on the trustee of the Super Fund A account in the name of Mr Horvath.

4. That pursuant to s 90XT(1)(b) of the Family Law Act 1975:

   (a)whenever a splittable payment becomes payable in respect of the husband’s interest in his Super Fund A the wife is entitled to be paid 100% of the splittable payment, and

   (b)there is a corresponding reduction in the entitlement of the husband.

5. That the operative time for order 6 is 42 days after service of a sealed copy of these orders on the trustee.

6. That the wife is to serve a copy of these orders on the trustee or chief executive of the Defence Force Retirement and Death Benefits Scheme and the trustee or chief executive is to be given 28 days to notify the court and the wife if the trustee or chief executive wishes to be heard in relation to the orders.

7. That order 10 is to be binding on the trustee or chief executive of the Defence Force Retirement and Death Benefits Scheme.

8. That pursuant to s 90XT(1)(b) of the Family Law Act 1975:

   (a)whenever a splittable payment becomes payable in respect of the husband’s interest in the Defence Force Retirement and Death Benefits Scheme the wife is entitled to be paid 32.5% of the splittable payment, and

   (b)there is a corresponding reduction in the entitlement of the husband.

9. That the operative time for order 10 is 42 days after service of a sealed copy of these orders on the trustee or chief executive.

10. In the event that orders 3 and 6 are not complied with then orders 9 and 10 are discharged and orders 13 and 14 are to be substituted for them.

11. That order 14 is to be binding on the trustee or chief executive of the Defence Force Retirement and Death Benefits Scheme.

12. That pursuant to s 90XT(1)(b) of the Family Law Act 1975:

    (a)whenever a splittable payment becomes payable in respect of the husband’s interest in the Defence Force Retirement and Death Benefits Scheme the wife is entitled to be paid 50% of the splittable payment, and

    (b)there is a corresponding reduction in the entitlement of the husband.

13. That the operative time for order 14 is 90 days after service of a sealed copy of these orders on the trustee or chief executive.

14. There is liberty to apply to the court in respect of these orders.

    Note

    The intention of the preceding orders is to permit time for compliance with orders 3 and 6 by a cash payment to the wife and a 100% split of the Super Fund A in her favour. If both those orders are given effect the husband’s DFRDB pension will be split 32.5% in favour of the wife.

    If both orders are not complied with then it is intended that there be substituted for those orders an order providing for a split of 50% of the husband’s DFRDB pension in favour of the wife.

15. All other property is to remain the property of the party who has possession of it at the time of these orders.

IT IS NOTED that publication of this judgment under the pseudonym Horvath & Horvath is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 549 of 2017

MS HORVATH

Applicant

And

MR HORVATH

Respondent

REASONS FOR JUDGMENT

1. This is an application for alteration of property interests pursuant to s.79 of the Family Law Act 1975 (Cth) (“the Act”).

2. The parties were married in … 1979 and separated in March 2015.  There were 3 children of the marriage, 2 of whom survive. Both are now adults. The wife is 58 years old and is a health care worker.  She earns about $37,898 a year. She currently lives in a rental unit which she shares with her son.

3. The husband is 59 years old and was employed by the Defence Force until his retirement in 2012. He described himself as “retired” in his affidavit filed in the proceedings. He did not appear at trial. He receives a Defence Force Death and Retirement Benefit Scheme (“DFRDB”) pension of $1,396 a fortnight.

4. During the marriage the wife was, according to her own description, “the primary care giver for the children” and “a stay at home mother” for the parties’ 3 children, with the husband acting as the primary financial contributor. In her trial affidavit the wife says that as a result of the husband’s employment with the Defence Force the family relocated frequently, every 20 to 24 months according to the wife, coinciding with his various postings. The wife says that this deprived her of the opportunity to develop a career of her own during the marriage. In 1998 the wife began work as a health care worker and in 2004 she obtained a qualification in this work. She is currently employed as a health care worker on a permanent part-time basis.

5. The husband has worked in the Defence Force for the majority of his working life except for an 18 month period from 1985 to 1987 during which time he worked as a tradesman – the wife says that the husband is a “fully qualified tradesman by trade”. The parties also entered into an unsuccessful business venture during this period, although this was not canvassed in any detail. The husband returned to the Defence Force in 1987 and remained there until his retirement in 2012.

6. The husband who, as noted, did not appear at trial says in his affidavit dated 27 April 2018 “the choice of who was the primary caregiver was made by my wife” which meant that he became the “main provider for the relationship”.  He suggests that the wife had never displayed an interest in returning to the workforce and goes on to say that she was “contented to sit at home and socialise, even though the children were at school and of an age that they could care for themselves…” and that currently she “chooses to work minimal hours”. I reject the claim that the wife was not an equal contributor during the marriage. 

7. On the husband’s retirement in 2012 the parties purchased a 4 wheel drive and caravan for the purpose of travelling Australia. The parties returned to Darwin in March 2015 and separated soon afterwards.

   Asset pool

8. The husband has not filed material since April 2018. As a consequence his financial position at the time of trial was unclear.

9. The husband’s DFRDB benefit was the focus of these proceedings. The benefit is now in the payment phase and the husband receives a pension of $1,396 per fortnight. The husband’s interest in the DFRDB pension was valued at $631,897.61 in accordance with the Family Law (Superannuation) Regulations.

10. According to the wife, the husband has a further superannuation fund or Retirement Savings Account with Super Fund A (“the RSA fund”) containing (according to her trial balance sheet) $73,403. As evidence of this the wife tendered a letter from the DFRDB Scheme dated 12 April 2012 which confirmed that $69,778.20 from the husband’s DFRDB interest was rolled into the RSA fund. It is unclear to me how the wife knows there is $73,403 in this fund. There was no evidence about it apart from the letter of 12 April 2012 and the RSA fund does not appear on the husband’s financial statement filed in April 2018. There was no evidence from the husband about this. The wife claims in her trial affidavit that the husband is unable to obtain this money until he turns 60 in … 2019 but there is no evidence that this sum is held in a superannuation account or in any other account. In her trial submissions the wife said she did not know if the husband had accessed these funds. There has been no subpoena to the trustee of Super Fund A to produce records to establish whether the sum exists or has been rolled over to another RSA.

11. With some hesitation I have decided this amount should be included in the pool but I am barely satisfied on the balance of probabilities that it still exists.

12. In his financial statement the husband discloses savings totalling $88,166.73. It is possible this sum is derived from the RSA fund but if, as the wife claims, the RSA fund must be preserved until the husband turns 60, this would appear unlikely. The source of these saving is unknown and it is unclear whether the savings or any other sum remain in the possession of the husband. No injunctive order has been sought to restrain the husband from dealing with or dissipating this sum. No subpoenas have been served on the relevant banks. Nevertheless, I will include this amount in the pool because the husband has stated it exists.

13. Apart from his savings mentioned above, the husband’s financial statement lists only the following assets: a Motor Vehicle B which he values at $39,900 and a trailer (caravan) which he values at $18,000. The wife disputes these valuations, claiming that the Motor Vehicle B and caravan are valued at a combined total of $111,990. In the absence of admissible evidence I do not accept the wife’s valuation. However, I will treat the husband’s asserted values as admissions against interest and give them those values. The wife was unable to confirm that the Motor Vehicle B and trailer were still in the husband’s possession. It appears unlikely that an order for the sale of these assets would be practicable or enforceable by the wife in circumstances where the husband’s location and contact details are unknown.

14. At trial, counsel for the wife provided bank statements showing that the husband had received a number of payments from the Defence Force upon his retirement in 2012, including $11,821 on 12 April 2012, $198,758 on 16 April 2012, $35,621 on 16 April 2012 and $61,848 on 27 April 2012, totalling $308,048. There is no evidence about how these funds were spent. It is unclear how much, if any, of these funds remained after the parties returned from their travels in 2015. I do not propose to include these amounts in the pool.

15. In 2016, after separation, the husband received an inheritance from his late father’s estate in the sum of $202,948.57. The husband said he spent this money on “dental work and overseas travel”. Whether the husband retains any of these funds is unknown, although the husband’s savings of $88,166 may be the residue of this. The husband gave no evidence on the topic.

16. The wife says that since separation the husband has “spent most of his time in Country D” and has re-partnered with another woman (apparently information she has gathered from his Facebook account). She says the husband and his partner have travelled together to Country D and back to Australia including one occasion where she claims to have seen him exiting a shopping centre. The wife says that “his bank accounts show that he has purchased a lot of expensive woman’s (sic) jewellery in Country D” implying that the husband maintains a level of financial security greater than the wife has enjoyed since separation. The wife did not provide any evidence of such transactions and it was unclear how she gathered such detail from his bank statements.

17. Although the wife’s evidence about the husband’s present situation appears somewhat speculative I accept, in the absence of evidence from the husband to the contrary, that the husband may have dissipated substantial matrimonial funds since separation. The assets remaining in the husband’s hands, if any, are unknown. Nevertheless, the husband is in a position to provide evidence about this and has chosen not to. In my view, a “broad brush” approach to alteration of property and superannuation interests is justified.  

18. The wife has minimal assets in her possession. She has a Motor Vehicle E which she valued at $3,000.00. I will include it at that value in the pool at her valuation on the same basis as the husband’s car and trailer. She also says she has savings totalling $156 and that she gave approximately $16,000 to the parties’ son to hold on trust for her should she need it for future medical expenses.

19. She also has a superannuation interest of $60,041.

20. In 2016 the wife received an inheritance from her mother in the sum of $31,712. She said this was spent on legal fees, the amount given to her son, expenses associated with medical treatment and a small gift to her daughter.  

21. The identified pool is as follows.

Assets	Wife	Husband	Total
1	Motor Vehicle E	$3,000
2	Savings (including money held by son)	$16,156
3	Motor Vehicle B and caravan	$57,900
4	Savings	$88,166
Liabilities	nil	nil
Total net assets	$19,156	$146,066	$165,222
Superannuation
5	DFRDB interest (valuation according to Regulations but is in pension phase)	$631,897
6	RSA fund	$73,403
7	Super Fund F accumulation fund	$60,041
Total superannuation	$60,041	$705,300	$765,341
Total	$79,197	$777,963	$930,563

Contributions

1. The parties agreed that neither possessed any significant assets at the beginning of their relationship.

2. The wife said in her trial affidavit that when she and the husband met in 1977 he was employed as an apprentice tradesman. They married in 1979 and she said that he was employed in the Defence Force during the marriage except for the period 1987 to 1987. He retired from the Defence Force in 2012 and the parties separated in 2015. Although the exact period of the husband’s service and membership of the DFRDB was not in evidence I infer that it was wholly encompassed in the period of the marriage.

3. The wife made non-financial contributions as homemaker and primary caregiver to the parties’ 3 children, allowing the husband to travel for extended periods with the Defence Force and presumably, although this was not canvassed in evidence, later made financial contributions to the household from her part-time employment as a health care worker commencing in 1998.

4. I am satisfied that her modest superannuation is in large part due to her role as homemaker and primary caregiver to the parties’ children and the demands of the husband’s work with the Defence Force which included extended periods of travel and relocation. I do not accept the husband’s claims that the wife made no contributions during the marriage and am satisfied that the parties’ contributions were equal.

5. The primary financial interest of the parties is the DFRDB pension paid to the husband. There is nothing to suggest that the DFRDB interest was anything other than a joint savings vehicle of the party or that the parties’ contribution to the acquisition of this interest was other than equal. I find the parties’ contribution to the remaining assets and the DFRDB were equal. The wife’s superannuation interest partly reflects post-separation employment but in the absence of evidence on the topic I am unable to make any precise finding about contributions to that fund. Overall I find contributions were equal.

Section 75(2)

1. Both parties assert that they suffer from health complications but neither party has provided any independent evidence to support their claims. The wife says that she was diagnosed with a brain tumour in 2010 which was surgically removed. She then required annual check-ups for 5 years following the surgery in which time no reoccurrence was detected. In 2014 she was diagnosed with vulva cancer. At her last check-up doctors detected “another cancer lesion” which will be operated on in … 2019. The wife also says that she suffers from osteoarthritis in her knees which can cause her pain at work and that having glandular fever in 2018 has left her “very tired”.

2. The wife currently works as a health care worker on a part-time basis and earns $728 a week. At 58 years of age the wife is now eligible to access her superannuation. She has given no indication of how long she intends to continue working. This might be expected to be dependent on her health prognosis.

3. The wife currently lives in shared accommodation with her son and says that she could not afford a private rental if she were not able to share the costs with her son.

4. The wife has a relatively small amount of superannuation and should she cease work I am satisfied that her superannuation would not adequately allow the wife to support herself.

5. The husband also complains of ill-health and claims to suffer the following injuries: a back injury, a leg injury, a skin rash, a swollen elbow and difficulty hearing. The husband also complains of an incident occurring during a telephone mediation. He made various claims about the conduct of the mediator and said she, the mediator, appeared “as a male hating person”.  He said the experience left him “deeply mentally scared (sic - possibly “scarred” was intended) and caused me to live life as a recluse, the only time feeling safe was overseas”. I give these claims little or no weight. He made other claims about the conduct of the mediation but as these were inadmissible I will not discuss them.

6. The wife says that the husband could find gainful employment as a tradesman, a field he has not worked in since 1987, some 30 years ago. In my view this is unlikely. I expect the husband’s working-life has come to an end. However, it is relevant that the husband will have a continued income stream for the remainder of his life.

7. I have been presented with little information about the husband’s standard of living and the claims made by the wife in relation to travel and expenditure are general at best. The wife claims the husband’s Facebook account shows his “girlfriend” owns a business called “…” in some unstated or perhaps unknown location. I make no finding about that.

8. The wife will continue to work for some indeterminate period. The husband does not appear to be working. Although he may have some residual earning capacity I consider it is probably limited. In my view the s 75(2) factors between the parties are evenly balanced with the exception that the husband is receiving a DFRDB pension in the sum of $1,396 a fortnight and will receive that pension, subject to any orders of this court, for the rest of his life.  

DFRDB interest in the payment or pension phase

1. As noted, the husband’s DFRDB pension is now in the payment phase and he currently receives $1,396 per fortnight or $39,296 per annum. The pension is paid for the life of the husband and is indexed to the CPI. It has been valued according to the Family Law (Superannuation) Regulations by an expert at $631,897.

1. Despite the form of statutory valuation it is clear that such a pension is not to be treated simply as a capital sum or the equivalent of a capital sum: Cahill & Cahill (2006) FLC 93-253. Regard must be had to the “real value and impact of the … DFRDB pension entitlement, and the effect of the orders proposed in relation to it.”: Edwards & Edwards (2009) FLC 93-409.

2. In this case I am satisfied that it is just and equitable to make an order splitting the DFRDB pension because there is no other or adequate  tangible asset or financial interest that any order, absent a split, could operate on that would result in justice to the wife: Surridge & Surridge (2017) FLC 93-757 at [28].

3. In her case outline filed before trial the wife sought, in summary, the DFRDB pension be split equally and that the RSA fund be “split 100% to the wife”, failing which the “Motor Vehicle B and caravan in the husband’s possession be sold” and the proceeds divided equally. No order was sought in respect of the husband’s cash savings.

4. The Wife’s case outline said that “precise terms” of the proposed order in respect of the (supposed) RSA fund would be provided. They were not. No account details have been given in evidence nor is there evidence that any proposed order has been provided to the trustee for comment to comply with the procedural fairness requirement of s 90XZD. I made an order that the wife make a further submission in relation to her proposed splitting orders but no submission was forthcoming. The lack of information about the RSA fund and the lack of any previous injunctive orders is likely to make enforcement of orders difficult for the wife. She would be well advised to obtain legal assistance about this without delay and to act quickly, including promptly serving orders on any trustee or bank.

5. I propose to make orders to “equalise” the non-superannuation assets and the superannuation interests as far as possible. In relation to non-superannuation assets I will order the husband to pay the wife $63,455. In relation to the superannuation interests I will, as sought by the wife, make a splitting order of 100% of the RSA fund. If that was achieved the wife would have $133,403 in accumulation superannuation or the equivalent of 17.5% (rounded up from 17.43%) of the superannuation interests of the parties, assuming the statutory valuation of the husband’s DFRDB of $631,897. The husband would have the remainder or 82.5%. To equalise these interests a splitting order of 32.5% of the DFRDB in favour of the wife will be necessary and a 32.5% reduction in the husband’s superannuation pension payment. This results in each party having 50% of the nominal value of the superannuation interests. Having regard to the fact that the DFRDB is in the payment phase I am satisfied that a reduction in the pension amount paid to the husband of 32.5% is just and equitable.

6. The balance sheet will then be as follows:

Assets	Wife	Husband	Total
1	Motor Vehicle E	$3,000
2	Savings	$16,156
3	Motor Vehicle B and caravan	$57,900
4	Savings	$88,166
Liabilities	nil	nil
Total net assets	$19,156	$146,066	$165,222
Husband required to pay wife	$63,455	($63,455)
Total	$82,611	$82,611
Superannuation
5	DFRDB (valuation according to Regulations but is in pension phase)	$631,897
6	RSA fund split 100% to wife	$73,403
7	Super Fund F accumulation fund	$60,041
Total superannuation (nominal based on statutory valuation)	$133,444 17.5%	$631,897 82.5%	$765,341
Split required in favour of wife	32.5%	(32.5%)
50%	50%

1. However, it must be doubted that the husband will comply with any order to pay money to the wife and, furthermore, there is a real doubt whether any cash or chattels remain in the husband’s possession should she seek to enforce orders. There is also a real doubt about the existence of the RSA fund. I propose to allow a period of 90 days for the husband to comply with the orders and for the wife to take steps to enforce the orders. If the orders are not complied with or cannot be enforced in that period I am satisfied that it is just and equitable to split the DFRDB pension equally.  

2. There will be liberty to apply to the parties and also to any trustee to apply in respect of the splitting orders.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Young

Date:  4 June 2019