Jasper and Thorp
[2016] FCCA 2981
•30 November 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JASPER & THORP | [2016] FCCA 2981 |
| Catchwords: FAMILY LAW – Property – husband in receipt of a ‘hurt on duty’ police pension – property pool otherwise very modest – where the parties agree that there should be a splitting order but disagree about the amount. |
| Legislation: Family Law Act 1975, ss.75, 79 Police Regulation (Superannuation) Act 1906, ss.10, 10C, 12D, 14K, 14P |
| Crawford & Crawford [2012] FMCAfam 1315 Darcy & Darcy [2011] FMCAfam126 G & G [1994] FLC 91-582 Robb & Robb [1995] FLC 92-555 Schmidt & Schmidt [2009] FamCA1386 Stanford & Stanford [2012] HCA 52 T & T [2006] FLC 93-263 |
| Applicant: | MS JASPER |
| Respondent: | MR THORP |
| File Number: | BRC 11356 of 2011 |
| Judgment of: | Judge Terry |
| Hearing dates: | 10 and 11 February 2016 |
| Date of Last Submission: | 3 March 2016 |
| Delivered at: | Newcastle |
| Delivered on: | 30 November 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Levick |
| Solicitors for the Applicant: | Carroll and O’Dea Lawyers |
| Counsel for the Respondent: | Ms Frizelle |
| Solicitors for the Respondent: | Freedom Law |
ORDERS
The wife shall within 42 days of the date hereof pay all monies and do all acts and things required to discharge the mortgage registered over Property C being the whole of the land comprised in Certificate of Title Folio (omitted) (“the Property C property”)
Contemporaneously with the wife complying with Order (1) the husband shall sign all documents and do all acts and things to transfer to the wife at the expense of the wife the whole of his right title and interest in the Property C property.
The wife shall and as and from the date of transfer indemnify the husband and keep him indemnified from liability to the mortgagee and for all rates taxes and outgoings owing in respect of the Property C property.
A base amount of $237,482.78 is allocated, as required by Section 90MT(4) of the Family Law Act 1975, to MS JASPER out of MR THORP’S interest in the Police Superannuation Scheme.
That in accordance with Section 90MT(1)(a) of the Family Law Act 1975:
(a)MS JASPER is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations (2001); and
(b)MR THORP entitlement to payments out of their interest in the Police Superannuation Scheme and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this Order.
The Trustee of the Police Superannuation Scheme (“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 the Family Law (Superannuation) Regulations 2001, the entitlement created for MS JASPER by Order 4; and
(b)Pay the entitlement whenever the Trustee makes a splittable payment out of MR THORP’S interest in the Police Superannuation Scheme.
These Orders have effect from the operative time and the operative time for this Order is four (4) business days from the service of valid Orders upon the Trustee of the husband’s Police Superannuation Scheme.
This Order binds the Trustee of the Police Superannuation Scheme.
Subject to the preceding order each party is otherwise declared the owner to the exclusion of the other of all assets and superannuation in their possession or under their control.
If either party refuses or neglects to sign or execute and return a document within 14 days of a written request to do so then the Registrar of the Newcastle Registry of the Federal Circuit Court is appointed under Section 106A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.
IT IS NOTED that publication of this judgment under the pseudonym Jasper & Thorp is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
BRC 11356 of 2011
| MS JASPER |
Applicant
And
| MR THORP |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Jasper and Mr Thorp separated in April 2009 after a 23 year marriage/relationship.
On 3 June 2013, shortly before the twelve months from the date of the parties divorce was due to expire, the wife filed an application for a property settlement. The husband filed a response in September 2013 and the parties spent the rest of that year and part of 2014 working through disclosure and valuation issues.
A conciliation conference was held in July 2014 but the matter did not settle and it was listed for hearing on 20 February 2015.
The hearing date was vacated on the husband’s application because he was suffering from a serious health issue and the matter was relisted for hearing on 27 & 28 July 2015. Those dates were also vacated and the matter was relisted on 10 & 11 February 2016. The hearing proceeded on those days.
The challenge in the matter arises out from the fact that the only substantial asset in the pool is the husband’s hurt on duty police pension which has a capitalised value of $804,067.00. The parties agree that a splitting order should be made in the wife’s favour but disagree about the amount she should receive. The wife seeks a base amount splitting order of at least $421,939.35; the husband proposes $163,563.23.
The evidence
The wife relied on her affidavit and financial statement filed on 13 February 2015.
The husband relied on a trial affidavit filed on 2 July 2015, a supplementary affidavit filed on 17 July 2015 and his financial statement filed on 13 February 2015.
In her written submissions the husband’s counsel referred on a number of occasions to the husband’s trial affidavit filed on 13 February 2015 notwithstanding that in his case outline document filed on 24 July 2015 the husband stated that he was relying on his trial affidavit filed on 2 July 2015. I have had regard to the 2 July 2015 affidavit rather than the earlier affidavit because although the affidavits are virtually identical the 2 July 2015 affidavit contains a small amount of additional information for example in paragraphs 22(b), 23(a) and 24(e).
The parties also relied on two affidavits of Mr P of (omitted), one of which was filed by the husband on 9 February 2015 and one of which was filed by the wife on 23 July 2015. Mr P provided evidence about the husband’s hurt on duty pension and his (omitted) entitlement.
Both parties and Mr P were cross-examined.
The parties counsel provided written submissions and the last submission was received on 3 March 2016.
I relisted the matter on 28 November 2016 to inquire about whether there was any evidence that procedural fairness had been accorded to (omitted) Super, the trustee of the husband’s hurt on duty pension and the wife’s counsel tendered a bundle of letters from 2014 confirming that procedural fairness had been given and the trustee had no objection to a base amount splitting order being made in the form proposed.[1]
[1] Exhibit T.
The credit of the parties
Both counsel submitted that there were credit issues with the other party.
The husband’s counsel submitted that the wife’s evidence about her relationship with Mr S was unreliable and somewhat suspect and that her evidence about her prospects of future employment was misleading.
These are not strong credit points. The wife’s evidence about Mr S was unsatisfactorily vague but I am puzzled about why the wife felt she needed to be vague. As for the wife’s evidence about her employment despite the pessimism she expressed in her affidavit she conceded in cross-examination that she was very hopeful of retaining her employment with (employer omitted).
The concerns the wife’s counsel raised about the husband’s credit were more serious.
One issue with the husband’s evidence was that in his trial affidavit he said that he received about $28,000.00 in late 2009 for long service leave, recreation leave and other employee benefits but this was not in fact the case. He did receive $28,000.00 but it was a gratuity paid pursuant to S.12D of the Police Regulations (Superannuation) Act 1908 and was referrable to various injuries he had sustained. The amount he received for long service leave, recreation leave and other employee benefits was $80,000.00 (net $60,000.00 after tax) and he made no mention of this in his affidavit.
Taking a charitable view this error could be put down to carelessness and failure to check the facts about things which happened a long time ago but the husband’s evidence about his involvement in the (employer omitted) cannot be so readily excused.
The wife alleged that the husband was continuing to earn income as a member of the (employer omitted). The husband failed to disclose any income from this source in his financial statement filed on 13 February 2015 and in his trial affidavit filed on 2 July 2015 he said that he had last worked for the (employer omitted) in late 2014.
The husband’s counsel sought and was granted leave to ask him some questions about this issue before he was cross-examined and he said that he had ceased active involvement with the (employer omitted) in November 2014 but had been called in to do three days in January 2015 and received a small payment.
Upon being confronted in cross-examination by subpoena material obtained from the (employer omitted) however the husband admitted that he had done four or 5 days with the (employer omitted) in June, July, October, November and December 2015 and 1 day in August 2015 and none in September 2015 because in August/September he went on 6 week holiday to the (country omitted).
The husband admitted that he had earned $18,000.00 from this employment in the 2014/15 financial year and $6,000.00 odd to January 2016. He said that his work for the (employer omitted) was “money for jam.”
The husband must have been aware that his capacity or otherwise to earn income was an important issue in the case and his evidence about his involvement in the (employer omitted) has the appearance of a deliberate attempt to mislead the court.
The husband gave other unsatisfactory evidence. He disclosed only one (omitted) Bank account in his financial statement which he said was connected with a car loan. When confronted with documents in cross-examination he admitted that he had three (omitted) Bank accounts. He said the one he did disclose was associated with a car loan but upon being challenged admitted that there had been transfers from this account to his (omitted) Bank account after the car loan was paid out.
The husband failed to disclose in his 2 July 2015 affidavit that on 20 June 2015 he had redeemed part of his pension and received $202,652.39 (net $179,585.39 after tax) and to make matters worse the evidence he gave in the supplementary affidavit he filed on 17 July 2015 about what he did with this money proved after cross-examination to be inaccurate.
On both occasions the husband said that used $121,917.00 to pay legal fees but in his affidavit he claimed that he used $13,000.00 to pay a joint (omitted) mortgage insurance loan debt and $2,000.00 to satisfy a joint debt on a holiday time share and that he intended to pay a lump sum off his mortgage. In cross-examination he said that he used the balance of the money after paying the (omitted) Bank and (omitted) debts to pay outstanding medical expenses, living expenses and clear accrued debts including body corporate fees and home loan payments and that he did not pay anything off his mortgage.
The husband’s counsel asked the court to attribute any failings in the husband’s evidence to the fact that he suffered from Post-Traumatic Stress Disorder. I do not accept that this explains the evidence the husband gave about his (employer omitted) service which was just plain wrong or is an adequate explanation for his failure to disclose bank accounts or accurately recount how he used the money he obtained in July 2015.
I cannot, as the wife’s counsel urged me to do, say that just because the husband was not a witness of credit I will prefer the wife’s evidence about every issue in dispute; I will still need to assess the evidence about each matter in dispute as it arises. However the husband’s complete lack of credit as a witness will have a bearing on my assessment of issues in dispute.
Background
The husband and wife commenced a relationship in (omitted) 1995 and commenced cohabitation in (omitted) 1996. They married on (omitted) 1988 and separated on 1 April 2009 and thus had a relationship/marriage of about 23 years.
They have one child, Ms R, born on (omitted) 1989. She is now an independent adult.
The wife has two children from a previous relationship, Mr D born on (omitted) 1982 and Ms E born on (omitted) 1984. Mr D and Ms E lived with the parties throughout their relationship and took the husband’s surname. They are also now independent adults.
When the relationship commenced the husband was a (occupation omitted). However in 1987 he joined the (employer omitted) and in (omitted) 1989 he also joined the (employer omitted).
The husband’s employment with the police force required the parties to live in a number of different locations in NSW.
The wife was working at the (employer omitted) when cohabitation commenced and until 2006 continued to work for the (employer omitted) at the various locations in which the parties lived.
In 1991 the parties purchased a home at (omitted) but it was taken by the bank in 1997 due to non-payment of the mortgage.
In 2002 the husband was transferred to (omitted). The wife remained in (omitted) for a period to continue her employment there but later joined the husband in (omitted) and in July 2004 the parties purchased Property C in joint names.
In July 2006 the wife commenced work for (employer omitted) as a (occupation omitted).
The husband ceased active service in the police force in (omitted) 2008 as a result of a number of health issues and the parties separated six months later.
The wife has lived in the Property C property since separation and it was not in dispute that she should retain it as part of the property settlement proceedings. She has also continued to work for (employer omitted).
The husband went to Queensland after separation and lived alone in rented accommodation for 2 years. In (omitted) 2011 he formed a relationship with Ms J. They commenced cohabitation in (omitted) 2011 and married on (omitted) 2012 and later in 2012 they purchased a unit in (omitted) in their joint names.
Ms J and the husband separated in January 2015 and I shall consider the evidence about that and about ownership of the Property D unit in the next section of the judgment.
The husband was medically retired from the NSW Police Force in March 2010 and he has been in receipt of a pension pursuant to s.10 of the Police Regulation (Superannuation) Act since that time. He can work in other employment without it affecting his pension and he has worked regularly for the (employer omitted).
The assets and liabilities
The non-superannuation assets are as follows:
Description
Ownership
Value
Property C
Joint
$270,000.00
50% interest in Property D
Husband
$145,000.00
(omitted) Jeep Cherokee
Husband
$19,000.00
Household Contents
Husband
$5,000.00
Hyundai (omitted)
Wife
$5,000.00
(omitted) Hyundai Registration (omitted)
Wife
$9,000.00
Household Contents
Wife
$5,000.00
Total
$458,000.00
The only disagreement about the asset pool was whether the Property D unit should be included as an asset which was 100% the husband’s or whether only 50% of its value should be attributed to him.
This became an issue because of evidence which emerged at trial.
In late 2014 the husband was diagnosed with prostate cancer. He made a claim on an insurance policy and in January 2015 he received $78,500.00. When he was asked at trial what happened to this money he said that Ms J took $54,000.00 of it out of his bank account when he and Ms J separated shortly after the money was received. He said that in property settlement negotiations between them it had been agreed that Ms J would keep the $54,000.00 plus a car and he would keep the Property D unit.
The wife’s counsel submitted that in the light of this evidence the Property D unit should be included in the pool as wholly the husband’s and not half the husband’s. He submitted that the court could be satisfied on the balance of probabilities that Ms J had ceded her interest in the unit to the husband.
The husband’s counsel submitted that there had been no change of legal ownership and that only the husband’s 50% legal interest in the unit should be included.
In my view the only course open to me is to treat the husband as having a 50% interest in the unit. I cannot be satisfied on the balance of probabilities that there is any enforceable agreement between him and Ms J. The husband was a most unreliable witness. He might have spun a story about the insurance money and there was no evidence that he had entered into a binding agreement with Ms J about ownership of the unit.
I could consider again when dealing with s.75(2) matters whether the husband is likely to ultimately become the sole owner of the unit to the exclusion of Ms J without any further outlay of money but I do not intend to do so because on the state of the evidence I will not be able to reach a conclusion about it.
The liabilities are as follows:
Description
Ownership
Value
(omitted) Bank Mortgage ((omitted))
Joint
$202,000.00
(omitted) Mortgage (Property D)
Husband
$116,000.00
Personal Loan Account with (omitted) Bank
Wife
$1,200.00
Loan for Hyundai Motor Vehicle with (omitted) Pty Ltd
Wife
$8,500.00
Total
$327,700.00
The husband’s counsel noted in written submissions that there was a dispute about whether the wife’s liabilities to (omitted) Bank and (omitted) should be included as matrimonial debts. He also noted however that the wife was not cross-examined about these matters and the husband’s counsel included these liabilities in the balance sheet contained within her written submissions without comment. I have therefore included them in the above table.
The parties have the following superannuation:
Description
Ownership
Value
(omitted) Super
Wife
$109,600.00
(omitted)
Husband
$33,000.00
(omitted) (the husband’s S.10 pension) Husband $804,067.00 Total
$946,667.00
The only item in the above list which required further comment is the husband’s s.10 pension, sometimes called a “hurt on duty” pension.
The husband joined the (employer omitted) in 1987 and as a result became a member of the (omitted) Superannuation Fund created by the Police Regulation (Superannuation) Act 1908 (PRSA Fund). The fund closed to new members on 1 April 1988.
The PRSA Fund makes provision for an annual superannuation allowance to be paid to a member who retires but s.10 of the Act also provides for an annual superannuation allowance to be paid to a member who has ceases to be a police officer as a result of being hurt on duty.
A person who becomes entitled to a s.10 superannuation allowance receives an indexed pension for life and may work in another occupation without it affecting their pension. The amount they receive is 72.5% of their attributed salary of office. In certain circumstances they may become eligible to receive an additional percentage but the husband said that he did not anticipate ever being eligible for an increased percentage. The allowance is indexed.
The husband suffered two injuries of significance during his policing career being injuries to his neck, right shoulder, back and hip in 1989 and 2006 respectively and since March 2010 he has been in receipt of an s.10 pension. He is paid fortnightly and the payments are taxed at normal PAYG rates less a 15% tax offset until the husband turns 60 and are then tax free.
The annual amount the husband was receiving before he redeemed part of his pension in July 2015 was $63,225.46 per annum or $2,431.74 per fortnight.
The trustee of the husband’s fund determined the gross value of his interest in the fund using scheme specific factors as being $1,118,985.31 as at 11 March 2014.
The husband has a right under s.14K of the PRSA Fund to commute some of his entitlement into cash at 55 or all of it at 60. He has not yet reached either age.
Pursuant to s.10C of the PRSA Fund a disabled member may apply to redeem the amount which would have been payable to them by way of weekly payments under the Division 2 of Part 3 of the Workers Compensation Act if the disabled member were a person entitled to compensation under that Division in respect of a period of total incapacity for work occurring after the first 26 weeks of incapacity.
On 22 June 2015 the husband with no notice to the wife redeemed $202,652.39 of the pension under s.10C. He had to pay tax of $22,944.00 and received $179,585.39 net. He used $121,917.00 to pay legal fees and gave conflicting evidence about what happened to the remainder.
The trustee of the fund was asked to value the husband’s pension following this redemption and advised that the gross value of the interest as at 17 July 2015 was $804,067.32. After the redemption the husband began receiving $1,783.74 per week which later increased to $1,822.00 per week as a result of indexation.
The husband’s redemption of $202,652.39 was a premature distribution of matrimonial funds to himself and this could be dealt with in one of two ways; either by pretending that it had not occurred (i.e. dealing with it by way of add back) or treating it as a s.75 (2) matter.
In her written submissions the husband’s counsel on the one hand eschewed the idea of add-backs but on the other proposed that the court proceed as if the redemption had not occurred.
The wife’s counsel initially eschewed the idea of add-backs and proposed that the redemption be dealt with as a s.75(2) matter. However in his submissions in reply he conceded that the matter could be dealt with by acting as if the redemption had not occurred.
I intend at this stage to include the husband’s pension in the pool at its current capitalised value. I will return to the question of how to treat the premature distribution later in the judgment.
Conclusion about the assets and liabilities
The parties agreed that it would be appropriate to treat the assets as being in three separate pools, as follows:
Pool 1
Net non-superannuation assets
$130,300.00
Pool 2
Wife's (omitted) Superannuation and husband’s (omitted)
$142,600.00
Pool 3
Husband’s police pension
$804,067.00
Total
$1,076,967.00
However it was the husband’s case that Pool 1 actually consisted of three sub-pools being:
Pool 1(a)
The non-superannuation assets acquired during the marriage
$81,800.00
Pool 1(b)
Property D and the husband’s jeep which were both purchased post separation
$48,000.00
Pool 1(c)
The wife’s (omitted) Hyundai less debt which was also a post-separation acquisitions
$500.00
The parties have been separated for seven years. Post-separation contributions need to be carefully considered and there is merit in the husband’s counsel’s proposal that the non-superannuation assets be put into three different sub-pools.
The applicable law
S.79 (1) of the Family Law Act 1975 empowers the court to make such orders as it considers appropriate altering the parties’ interests in property.
S.79 (2) provides that the court shall not make an order under this section unless it considers that it would be just and equitable to do so.
In Stanford & Stanford the High Court stressed that when an application for a property settlement was made the court must identify the parties legal interests in property and then carefully consider whether it was just and equitable to make an order altering parties’ interests in property. It stressed that this question could not be answered simply by considering whether a party had made contributions as set out in s. 79(4) of the Family Law Act.
I am satisfied that it is just and equitable to consider making property settlement orders in this case as it clearly comes within the following situation referred to in Stanford:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship and the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). [2]
[2] Stanford & Stanford [2012] HCA 52
I intend to take the usual steps to resolve the question of what particular alteration of interests would be just and equitable and those steps are:
i)to assess the contributions of the parties under s79(4)(a), (b) and (c) and to express those contributions as a percentage;
ii)to consider the matters in s.79(4)(d), (e), (f) and (g), which include the matters in s.75(2) so far as they are relevant, and determine whether any adjustment should be made as a result to the contribution based entitlements;
iii)to consider the effect of those findings and resolve what orders are just and equitable in all the circumstances of the case.
Contributions
Both counsel proceeded on the basis that the court should adopt an asset by asset (in this case more accurately described as a pool by pool) approach to the assessment of contributions.
It is legitimate to assess contributions in this way rather than to adopt the more usual global approach and I agree that it is appropriate in this case in light of the long post-separation period and the special nature of the police pension. However I will need to make sure as Nygh J said in G & G that I:
do not mistake the trees for the forest, i.e. add up their individual items without standing back at the end to review the overall result in the light of the needs of the parties.[3]
[3] G & G (1994)FLC 91-582
Pool 1(a) – the non-superannuation assets acquired during the relationship
Neither party had any significant assets when the relationship began. The husband asserted in his affidavit that he had savings of $10,000.00 but his counsel did not refer to this during submissions.
The husband was employed for all but the last six months of the relationship and for the majority of it was employed as a police officer or in the (employer omitted). The wife followed the husband to the various locations in New South Wales to which he was posted as a police officer and she worked in various (employers omitted) and in the last few years was employed by (employer omitted).
It is likely that the wife carried out the majority of the homemaker and parenting tasks but I am satisfied that the husband made homemaker and parenting contributions and it would seem, although the issue was only lightly touched on, that for some of the 2002/4 period he cared for Ms R in (omitted) while the wife continued to live in (omitted) during the week.
The parties agreed that their contributions overall to the non-superannuation assets acquired during the relationship should be assessed as equal and this is entirely appropriate.
The husband alleged that he had made some relevant post-separation contributions.
First he alleged that he had paid for some work done to the Property C property including painting, new carpet, a new triple carport and colorbond fencing.
The wife disputed this and produced receipts which showed that the carpet was purchased in August and September 2005. The husband was unable to produce any documents in support of his assertion and he was not a witness of credit. I do not accept his evidence that he spent money on the Property C property after separation.
Second the husband alleged that after separation he paid joint debts totalling $10,466.15 being $8,466.16 to (omitted) Bank and $2,000.00 to (omitted) in respect of the time share the parties purchased during the relationship.
I accept the husband’s evidence that he paid these debts in January 2015 after he received the trauma insurance payment. In written submissions however his counsel proposed that these payments be dealt with as a s.75 (2) matter and not a matter relevant to the assessment of contributions and I will therefore return to this matter later.
I am satisfied that the parties contributions to Pool 1(a) should be assessed as equal.
Pool 1(b) contains a jeep purchased by the husband post separation and the Property D unit.
The jeep appears to have been purchased with a loan. The unit was purchased by the husband and his wife Ms J in or about 2012 and the husband’s unchallenged evidence was that he contributed $10,000.00 of post-separation savings to this purchase and that Ms J contributed $30,000.00.
The wife’s counsel made no particular submissions about the jeep but submitted that there was reason to suspect that the $10,000.00 the husband put into Property D may have derived from the net $60,000.00 employer payments he received in November 2009 which was money by and large acquired during the relationship.
Alternatively the wife’s counsel asserted that if the husband had saved $10,000.00 he had done it as a result of being entitled to the pension payments and as the wife was entitled to a share of the pension she had therefore made an indirect contribution to the acquisition of Property D. He submitted that contributions to the Property D unit (and by implication to Pool 1(b) as a whole) should be assessed as equal.
I am not comfortable with this proposition.
First, there was no evidence about what happened to the $60,000.00 the husband received at separation more than three years prior to the purchase of the unit and the fact that the husband had sole use of this money is better dealt with as a s.75(2) matter.
Second it is not necessarily true that any savings the husband accrued between 2009 and 2012 came from his pension. He earned money from his (employer omitted) service each year after separation.
Third, even if the husband saved money from the police pension it does not follow that the wife should be deemed to have contributed to these savings.
I do not accept that the wife should be treated as having made a contribution to the Property D property or the husband’s jeep which is also a post separation purchase. I am satisfied that the husband made all of the contributions to Pool 1(b) which contains Property D and the jeep worth in total $48,000.00.
The wife all the contributions to Pool 1(c) which contains her second motor vehicle worth net $500.00.
Pool 2 – the wife’s (omitted) Super and the husband’s (omitted)
Both these superannuation funds were commenced during the relationship and the parties contributed to them throughout the relationship. However they have been separated for seven years which complicates an assessment of contributions to these funds.
At separation in April 2009 the wife had superannuation of $42,329.00. She continued to work for (employer omitted) following separation and at the date of the hearing her superannuation was worth $109,597.00, an increase of $67,271.00.
The wife’s counsel submitted that this increase would largely have been due to post-separation contributions by the wife who was employed on a salary of $70,000.00 to $75,000.00 per annum. Interestingly given his submission about the Property D he did not suggest that the husband had made an indirect contribution to this increase because he contributed to the wife and maintaining an income earning capacity during the relationship and taking an income earning capacity with her at separation.
To use a rough rule of thumb which is all I can do, if the wife contributed to superannuation at the rate of the superannuation guarantee levy she would have put about $44,100.00 into superannuation post-separation if her salary was $70,000.00 and $47,250.00 if her salary was $75,000.00. $20,000.00 or thereabouts of the increase would therefore be due to growth in the amount based on what was there at separation, bearing in mind that some of the growth in each of the last 7 years is attributable to the additional contributions put in each year.
I stress that this is a rough calculation but I have to make some sort of rational assessment and on the basis of these figures I assess contributions to the wife’s superannuation overall as being roughly 80% by the wife and 20% by the husband.
There was no evidence about the amount the husband had in (omitted) at separation or the extent to which it had increased since separation. The husband alleged that he did not accrue superannuation as a result of his (employer omitted) work in Australia so it might well be that there has only been a modest increase in this fund since separation.
If contributions to this fund are assessed as 55% by the husband and 45% by the wife then the combination of the two figures means that the wife would be entitled to $102,527.60 of the total pool containing her (omitted) superannuation and the husband’s (omitted) and the husband $40,069.40.
The wife’s counsel suggested that rather than attempt an assessment of percentages the parties should simply keep their respective superannuation from Pool 2. Given how close my assessment of contributions comes to the amount each party has in their fund there is merit in this proposal.
Pool 3 – the husband’s s.10 pension
By far the most difficult task is assessing contributions to the husband’s s.10 pension.
Once such a pension is awarded it is payable to a member for life and the issue of retirement becomes irrelevant. However the payment is intended to provide to a former police officer who can no longer work as a police officer with both income until retirement age and income in retirement and it is therefore commonly accepted that these pensions have both a compensation component and a retirement component.
In T & T, a hurt on duty case decided by Watt J in 2006, Mr B of Superannuation Splitting segmented the husband’s s.10 interest into two separate components namely a non-commutable indexed pension to the age of 60 with a partial right to commute at age 55, and a commutable indexed life pension after the age of 60 and provided a capitalised value for each component which Watt J termed the husband’s category 1 and category 2 superannuation interests. [4]
[4] T & T [2006]FLC93-263
In assessing contributions to the category 1 or compensation component Watt J said that:
Between now and his retirement the amount of the husband’s current superannuation interest is not primarily based upon the amount of time that the husband was in the (omitted) pooled fund. It is based on:-
(i)The husband being hurt on duty;
(ii)The circumstances in which the husband was hurt on duty;
(iii)The amount of the husband’s salary at the time that he was hurt on duty.
Watt J held that the wife could not be taken to having directly contributed to the category 1 interest as it arose out of the husband being injured but had made a contribution to the amount he received because she had supported him in his police career and made one move to assist his career. He assessed the wife as having made a 15% contribution to the Category 1 interest.
Watt J held that the category 2 interest was different. It represented savings by the parties during their relationship to assist them in retirement. The husband had been in the fund for 10 years before cohabitation commenced and the relationship was 10 years in length and Watt J assessed the wife’s contributions to the Category 2 interest as being 40%.
Watt J made two separate splitting orders, one to come into effect immediately and one to come into effect upon the husband turning 60 (the husband was 42).
In the 2008 case of Schmidt & Schmidt the husband’s s.10 PRSA pension was also treated as having two separate components and Watt J again assessed contributions to each component separately and made two separate splitting orders.[5] The parties in that case had a marriage of about seven and a half years and had 2 children. Watt J assessed the wife’s contributions to the compensation component as being 10% and to the superannuation component as being 35%. He again made two separate splitting orders to come into effect at different times.
[5] Schmidt & Schmidt [2009] FamCA1386
After these decisions the Trustee of the PRSA took a stand against the categorisation of s.10 pensions into two components and said that it would not recognise orders which purported to divide the superannuation into two separate categories and would only accept orders providing for a single split and in December 2008 S.14P of the PRSA Fund was amended to provide that if a splitting order was made the value of the entitlement would be calculated and the amount would be immediately paid in full either to the spouse or to a complying superannuation fund.
Notwithstanding this people grappling with how to assess contributions to S.10 pensions continue to be attracted to the device of valuing the pre-retirement and post-retirement components of the pension and the parties in this case asked Mr P to provide an opinion about the value of these two components.
At the request of the wife’s counsel using the capitalised value of $1,118,985.31 Mr P valued the pension to age 60 (the compensation component) as having a capitalised value of $458,511.04 and post age 60 (the retirement component) as having a value of $660,474.27
He said that if a 50/50 division of the retirement component was to be achieved then a percentage splitting order of 29.5% would be required.
At the request of the husband’s counsel Mr P valued the components on the basis that the appropriate retirement age was 65 and valued the pension to age 65 as $666,333.00 and thereafter at $452,652.19. He said that in this scenario a percentage split of 20.23% would result in a 50/50 division of the retirement component.
Mr P was cross-examined about the issue of whether 60 or 65 was the appropriate age to use if the pension was to be compartmentalised. He said that to his knowledge the vast majority of police officers retired at 60 but of course this is not something within his areas of expertise and it is also not necessarily the end of the matter when it comes to deciding whether the retirement component should be deemed whether to commence at 65 (the normal retirement age for males born at the time of the husband) or 60.
The husband did not give any evidence about when he might have retired absent being hurt on duty.
It is impossible for me to make a definitive finding about the age which should be used if the pension is to be compartmentalised.
Another difficulty was that the wife’s counsel took issue with the value assigned to the compensation component in either scenario. He submitted that the value of $458,511.04 was too high and relied on the fact that the husband had asked the Trustee to calculate the commutation available to him pursuant to s.10C of the PRSA and that the Trustee calculated the “Workers Compensation” component of the pension which could be commuted at $243,484.43 which was paid to the husband. He submitted that this represented the compensation component of the pension and that the balance of $875,500.88 should be treated as the value of the retirement component.
I cannot determine that the s.10C payment represents a redemption of an equivalent amount which would have been payable to the husband pursuant to s.10 for some of the period of his pension. It represents the amount he might have received under the Workers Compensation Act for a certain period but the husband may receive more as a result of a pension (which is a 72.5% of his wage) than he would have done pursuant to the Workers Compensation Act 1987. I am not knowledgeable about Workers Compensation law and cannot be expected to come to a conclusion about this matter without evidence.
The parties submissions
Both counsel made submissions about the appropriate outcome if the fund was still worth $1,118,985.31.
The wife’s counsel submitted that the wife should be considered to have made a 20% contribution to the compensation part of the husband’s superannuation based on her contributions to his police career and her care of him when he was hurt and a 50% contribution to the retirement portion of the superannuation on the basis that the entirety of it accrued during the relationship.
Based on the valuation of the components for which the wife advocated this would entitle her to $486,447.31. On the valuation of the components Mr P advocated for if the retirement age was 60 it would entitle her to $421,939.35 or 37.5% of the superannuation.
On the valuation of the components to age 65 it would entitle her to $359,692.00 which is 32% of the pension.
The husband’s counsel submitted that the wife should be taken as having made a 5% contribution to the compensation component of his superannuation but conceded a 50% contribution to the retirement component.
On the component breakdown using the age of 65 the husband’s counsel submitted that the wife was entitled to split of $259,642.74 or about 23.5% of the pension.
It is interesting to compare these outcomes to the outcomes in other s.10C cases.
In T & T and Schmidt & Schmidt Watt J applied different percentages to different portions of the entitlement but in both cases the overall outcome was that the wife received 20% of the capitalised value of the pension.
Of course Schmidt & Schmidt involved a 7 ½ year marriage and T & T involved a 10 year marriage and a situation where the husband had been in the police force for 10 years before the relationship commenced. In the case before me the parties lived together for 23 years and the husband’s entitlement to a pension arose almost entirely during the marriage.
In Darcy & Darcy I assessed contributions by the wife as being 30%. The husband had been in his fund for a period of time before commencing his relationship with the wife but the wife provided years of support to the husband while he fought for and obtained his s. 10C pension and supported him within the household while he was significantly ill at the same time as parenting young children.
In Crawford & Crawford Judge Altobelli assessed contributions by the husband to the wife’s s. 10 pension as 18% but only because the wife proposed that; left to himself he said that he would have fixed on 15%. That case involved a 20 year marriage with three children and the wife had been in her fund for about 3 years before the relationship commenced.
Crawford & Crawford post dates the amendment to s. 14P of the PRSA but each party in that case called expert evidence which placed a value on the pension as if it had two components.
Just as in the case before me the experts disagreed about whether the appropriate retirement age if the pension was divided into components was 65 or some other age.[6] One expert also contended that once a Hurt on Duty pension had been granted retirement age was no longer a relevant concept although conceded that the pension could be broken down into components.
[6] Crawford & Crawford [2012]FMCAfam1315
Judge Altobelli did not attempt to resolve the dispute about the retirement age and said as follows:
Ultimately, neither Mr B nor Mr S’s expert evidence directly assists the court in assessing whether, and if so to what extent, the husband has made a contribution to the wife’s pension. Indirectly, however, their evidence confirms that in reality the wife’s pension does have some component to it that is not exclusively referable to her injury. To that extent the husband must have contributed to it, a fact conceded by the wife who submits his contribution should be assessed at 18 per cent. [7]
[7] Crawford & Crawford (supra) paragraph 53
Judge Altobelli was not attracted to the submission that the husband had made a contribution to the compensation component of the wife’s superannuation whatever it might be and although he accepted that the pension had two components he made a broad brush assessment of contributions overall rather than assessing contributions as two separate components. He said as follows:
Given that the husband’s own expert, Mr S, conceded that the value of the wife’s pension consisted of both a compensation and a retirement component, it is hard to understand, let alone accept the husband’s submission which seems, with respect, to gloss over the “nature, form and characteristic of the wife’s pension”, or pay mere lip service to this fact. Once it is accepted that a sizeable component of the value of the pension merely compensates the wife for the income she is no longer earning, there can be no logical basis for claiming to have contributed to this. To accept the husband’s logic invites a further logical step – to consider the husband’s post-separation income as some form of property to which the wife can claim to have contributed. What the husband contends for is beyond the bounds of current family law jurisprudence, and authority.
A close examination of the husband’s evidence reveals that there is in fact little that he contends he contributed as a direct result of the wife’s retirement. At paragraph 22 of his affidavit sworn 25 October 2012 he explains that between 7 April 2006 when the wife retired, and 10 May 2009 when they separated, she did not work. Thus he contributed during this period as the sole breadwinner, though the evidence of the wife indicates that she was receiving her pension as well as some lump sum payments referrable to her retirement. If the husband’s case is that he did make significant contribution to the compensation component of the wife’s pension, it is a poorly articulated case. The court accepts, however, that over a long marriage he did make a contribution to what Mr S described as the retirement component, without necessarily preferring Mr S’s methodology over that of Mr B.[8]
[8] Crawford & Crawford (supra) paragraph 56 & 57
Conclusion about contributions to the s.10 pension as it stood prior to 20 June 2015
Both counsel based their submission on the compartmentalised approach and there is some attraction in adopting this approach because it leads to a readily explicable outcome. However considerable difficulty arises in using this approach when there are differences of opinion about the value of the components as there are here and when I cannot definitively resolve one of the differences.
In view of the fact that there can be legitimate disputes about the value of the two components of the pension I feel considerably more comfortable with the approach of recognising that the pension has two components but making a broad general assessment of contributions than the approach of breaking the pension down into components and assessing contributions to each component and adding them up.
There is also considerable force in the opinion of Judge Altobelli that to give a party credit for contributing to the level of payments received during the compensation period is flawed when it is not suggested that the person receiving the pension should receive credit for the post-separation wages received by the other party.
There is certainly evidence that the wife in the case before me supported the husband in his police career. She supported his transfers to (omitted) and then (omitted); she followed him to these locations as soon as she was able consequent upon her employment. She played her part as homemaker and parent which assisted him in pursuing his career and the fact that he stayed in the police force as long as he did and thus increased his salary has had an impact on the amount he is now receiving. However there is also force in the submission by the husband’s counsel that the husband supported the wife in her career and it was not suggested that the wife’s salary between now and retirement should be capitalised and the husband assessed as having made a contribution to it.
There is evidence that the wife provided support to the husband when he was injured but it was not extensive in the context of the length of the marriage overall nor was it out of the ordinary in terms of impacting on the wife’s capacity to maintain employment or raise the parties child, and there is force in the submission by the husband’s counsel that just as the husband does not receive any adjustment or special recognition for supporting the wife when she suffered an injury during the marriage her support of him should not attract an adjustment in the context of determining contributions to his hurt on duty pension.
There is force in the observation of Judge Altobelli that it is difficult to justify a finding that the one party has contributed to the compensation component when all they can claim is to have supported the other party in their career, and there was almost nothing more than that in this case.
Further compounding the difficulty for me is that the husband’s counsel seemed in one part of her submissions to be asserting that the wife could not be found to have contributed to any part of the compensation component but later proposed a finding that the wife had made a 5% contribution to this component.
On the facts in this case I do not consider that the wife should be treated as having made a contribution to the compensation component of the pension whatever that might be but the parties were together for 23 years and almost the entirety of the husband’s entitlement, which will carry over into retirement, accrued during that period, a period moreover when the parties made equal contributions to the acquisition conservation and improvement of the non-superannuation assets.
The husband was 48 when he began receiving the pension so even with a retirement age of 65 a very substantial part of his benefit may be attributable to the retirement period.
In my view a contribution assessment of 30% would be appropriate given that the parties were together for almost the entire time the husband was in the fund and the wife has a strong claim to an equal finding on contributions to at least part of the pension.
This results in an outcome consistent with most of the outcomes in other cases (noting of course their different fact scenarios). It is .5% higher than the amount Mr P suggested was appropriate if the retirement age of 60 was used but .5% is not significant in the overall scheme of things. It should not be seen as an acceptance of the retirement age of 60 as being appropriate but rather as an attempt to do justice and equity in a situation where the husband’s pension accrued almost entirely during a long relationship but contains a component attributable to his ceasing work in the police force at the age of 48.
If the wife was entitled to 30% of the husband’s pension as it stood at 11 March 2014 she would be entitled to $335,695.59.
The effect of the redemption
The difficulty of course is that the husband no longer has $1,118,985.31 in his fund. He now has $804,067.00 and 30% of the reduced amount is $241,220.10. If the wife received $335,695.59 now she would effectively be receiving about 42% of the husband’s entitlement.
The redemption could be dealt with either by way of add back or by way of a s.75(2) adjustment.
In his written submissions dated 22 February 2016 the wife’s counsel said the law on add backs was settled and that the husband’s removal of $202,000.00 in June 2015 should be dealt with as a s. 75(2) matter. He submitted that there should be an adjustment of $100,000.00 in the wife’s favour for the premature redemption.
This would result the wife receiving 50% of the amount removed even though she is only entitled to 30% of the pension (and even on the wife’s case 40%) and that cannot be right.
The husband’s counsel also submitted that the law on add-backs was settled but then submitted that the parties entitlements to a share of the pension in dollar terms should be in accordance with the findings on dollar terms as if the husband had not removed any of the money.
In written submissions in reply the wife’s counsel indicated that the wife could live with that outcome although of course it was his case that the outcome in dollar terms should be as the wife proposed.
There are problems with the approach by both counsel.
The submission by both counsel that the law on add-backs is settled seems to imply that the tool of an addback could no longer be used in property matters and that is simply not correct. There are cases where using this tool is essential to ensure that one party is properly compensated for the premature distribution of the asset pool in their favour by the other party.
However this is not a matter which can be dealt with simply by adding back $202,000.00. As the wife’s counsel pointed out during submissions although the husband redeemed $202,652.89 the difference between the two valuations is $314,918.31. No evidence was provided to explain the reason for this.
The two valuations were prepared 16 months part and in the report attached to his 9 February 2015 affidavit Mr P observed that while the family law value would increase each year assuming a CPI increase of at least 2% it would also decrease each month as life expectancy was used up. He advised that the family law value would remain relatively stable over the short term. However he did not say what he meant by the short term and the evidence simply does not allow me to determine exactly why the value of the pension was $314,918.31 less the redemption. It would therefore be unjust to require the husband to bear all the additional loss.
I intend to deal with the matter in this way.
I am satisfied that the husband should be brought to account in dollar terms for the amount he removed. The tax of $23,000.00 was incurred because of his decision to redeem, he used $121,000.00 to pay his legal fees, I can deal with any payment he made to joint debts as a separate s. 75(2) matter and he provided no evidence which would justify him using some of the money for living costs and payment of bills. He had an adequate income after separation to meet his day to day living costs.
However it would be unjust for me to make the husband responsible for all of the additional loss of $112,000.00 and the way to bring the husband to account in these circumstances is to use the amount remaining in the fund in July 2015 as the yardstick but to adjust the percentages.
If the wife is deemed to be entitled to 37% of the July 2015 capitalised amount and the husband 63% it brings the husband to account for the $202,000.00 he removed. In dollar terms as the value of the fund stood in July 2015 this would entitle the wife to $297,504.79 and the husband to $506,562.21. It gives the wife more than she would have if she received 30% of the reduced amount but ensures that the loss of $112,000.00 does not fall solely on the husband.
The overall effect of a division of property on the basis of contributions in this scenario is that the wife would be entitled to:
i)$40,900.00 being 50% of Pool 1(a)
ii)$500.00 being the whole of Pool 1(c)
iii)$109,600 being her (omitted) Superannuation
iv)$297,504.79 being her share of the husband’s s. 10 pension
The husband would be entitled to:
i)$40,900.00 being 50% of Pool 1(a)
ii)$48,000.00 being the whole of Pool 1(b)
iii)$33,000.00 being his (omitted) superannuation
iv)$506,562.61 being his share of the s.10 pension.
S. 79(4) (d) (e) (f) and (g) matters
I am next required to consider the matters in s. 79(4) (d) (e) (f) and (g) of the Family Law Act. The only relevant subsection is (e) which requires the court to have regard to the matters in s. 75(2) of the Act.
S. 75(2) matters
The wife is 54. At the time of the hearing she was working as a (occupation omitted) for (employer omitted). Her oral evidence was that her income for the year ended 30 June 2015 was $73,268.00. Her annual income between June 2009 and June 2014 varied between $70,000.00 and $77,000.00 and it is open to me to find that the wife has an income earning capacity of about $74,000.00.
The wife’s current income per week is $1,486.50 gross and $1135.50 per week net.
The wife said in her affidavit that her employment with (employer omitted) was coming to an end and that she was required to apply for an alternative position. However when the issue was explored in cross-examination it emerged that (employer omitted) were restructuring and that the wife had some confidence that she would be successful in retaining a position with (employer omitted).
Even if that does not happen the wife has a lengthy employment history and does not have any health problems and it is reasonable to suppose that she will both look for and be able to obtain alternative employment. The wife will continue to accrue superannuation until retirement although the issue of when she is likely to retire was not explored.
With an income of $74,000.00 per annum the wife is able to maintain a reasonable standard of living. She is able to meet her mortgage payments and living costs and there was no suggestion that one way or another she would not be able to refinance so that she retained the Property C property. Her car loan was allegedly costing her $1,401.00 per month which seems high but it is due to be paid out in February 2017.
The wife has been in a relationship with Mr S for five years. She said that they were engaged but lived separately although Mr S spent some nights each week at her home. She said that Mr S assisted her with the care of X but alleged that Mr S did not financially assist her.
Mr S is in receipt of a disability support pension. In cross-examination the wife claimed to have little or no knowledge of his financial situation or state of health. However she admitted that she had been designated Mr S’s carer at some point in the past and in her financial statement filed in February 2015 she named Mr S as a member of her household and said that his income was $600.00 per week.
I do not accept that the wife is as ignorant about Mr S’s circumstances as she claimed during cross-examination.
It is possible that the wife was less than frank about the extent to which Mr S resided in her home and possible that his income is beneficial to her on the basis that two can live cheaper than one. However this is not a spousal maintenance case and there was nothing to suggest that anything about Mr S’s circumstances or the wife’s relationship with him was relevant to the wife’s entitlement to a property settlement.
The wife said that she had the care of her granddaughter X aged 9 although there was no evidence that this was a formal as opposed to an informal arrangement. Her counsel submitted that this was a relevant s.75(2) matter but as the husband’s counsel pointed out the wife did not provide any evidence about the costs of supporting X and about whether X mother or indeed her unnamed father were contributing to her support and I cannot take this matter into account in any meaningful way.
On the basis of contributions the wife is entitled to $40,900.00 from Pool 1(a) which contains Property C, her furniture and one motor vehicle, the whole of Pool 1(c) worth $500.00, her (omitted) Super superannuation of $109,600.00 from Pool 2 and on the basis of contributions $297,504.79 from the husband’s pension.
The wife wishes to retain Property C and my findings about contributions mean that she will be required to either pay the husband a sum of money or accept a lesser pension split to adjust for the fact that the husband is entitled to 50% of Pool 1(a) on the basis of contributions.
Once a splitting order is made in favour of the wife its value will be calculated and she will receive her entitlement in a lump sum and she can access that lump sum at any time as the preservation status is unrestricted non-preserved. There may be tax consequences if she accessed it before age 60.
Mr P estimated that if the wife received 50% of the pension the tax payable by her if she wanted to access the superannuation in cash rather than roll it into a superannuation fund would be $23,066.92. Whether the wife chooses to do that is a matter for her. There was no evidence that she would have to do it in order to refinance the mortgage on the home.
I was not provided with any evidence about the wife’s legal fees nor was I asked to take into account at the end of these proceedings that she might have an outstanding debt for legal fees.
The husband is also 54. The s.10 pension currently provides him with $911.12 per week or $46,363.98 per annum.
Mr P said that the percentage of the split would be directly reflected in the husband’s pension payment so for example if he lost 30% of his entitlement his payments would reduce by 30%. If the husband lost 37% of his pension his income would reduce to $574.00 per week.
The husband can work and still receive the pension and he worked for the (employer omitted) between 2008 and 2014. In most years this seems to have been part-time but he spent either 6 or 9 months in the (country omitted) with the (employer omitted) in 2012 and he accrued superannuation during this period. The husband earned $18,000.00 per annum as an (occupation omitted) in 2014/2015 and had earned $6,840.45 to January 2015.
The husband rejected the wife’s contention that he could continue to earn income from this source but if the wife is right even his recent income from this source would add $200.00 per week and his bring his income to $774.00 per week.
The husband did not concede that he had any capacity for employment. He said that he had health problems as a result of having suffered a cervical spine injury in 1989 and a lower back injury in August 2006. He had a heart attack in November 2007 and is diagnosed as suffering from Post-Traumatic Stress disorder. He was diagnosed with Prostate Cancer in January 2015.
The husband claimed that his heart condition, back condition, prostate condition and PTSD disabled him from returning to the workforce. He also claimed that he could not continue to work for the (employer omitted) unless he moved to Canberra which he had no intention of doing.
There is no reason to doubt that the husband is suffering from the health conditions he claimed. The wife’s counsel pointed out in submissions that (omitted) Super, which decided that the husband was entitled to a s.10 pension, specifically said that the conditions referred to in paragraph 189 being the heart attack and PTSD were not the result of any injuries he suffered at work[9] but it does not follow that they do not impact on his employability.
[9] Exhibit H.
There are two problems for the husband however in running a case that he is unlikely to earn additional income in the future and the first is that he did not provide any expert evidence about his current state of health and its impact on his capacity to work. He was a most unsatisfactory witness and I have considerable reservations about whether I can simply accept his assertions. He has health conditions, there is no doubt about that, but he is mobile and articulate and it is somewhat difficult to accept that he would be unemployable in any capacity although having said that if at the end of the proceedings he has sufficient money to live on he may not be motivated to take a menial position.
The second problem for the husband is that he has been working for the (employer omitted) for many years and he was not honest about his (employer omitted) employment. He insisted that he could only continue to work for the (employer omitted) in the future if he relocated to Canberra which he did not intend to do but he was not a witness of credit and described the (employer omitted) work as “money for jam”.
I cannot say that the husband has no capacity to earn income in the future but at the same time the reality is that he ceased work as a police officer in 2008 and his only employment since then has been in the (employer omitted). There is no basis for a finding that the husband has a capacity for highly paid employment in the future or that he is likely to take up employment other than in the (employer omitted).
The husband’s case was that all he had to live on was his pension and from that he had to meet living expenses including food, fuel, motor vehicle registration and maintenance, home repairs and maintenance, clothing and medical expenses. His mortgage payment is $415.00 per week for his mortgage and said that he had over $100.00 worth of medical expenses each week. It was effectively the husband’s case that on an income of $574.00 he would not be able to enjoy a reasonable standard of living and that even adding some additional income (which he did not admit he was capable of earning) would still leave him on the breadline.
The husband does not have a responsibility to support any other person and there was no evidence that he had re-partnered after breaking up with Ms J.
On the basis of contributions the husband is entitled to $40,600.00 from Pool 1(a), the whole of Pool 1(b) which contains his interest in Property D and his post-separation motor vehicle worth $48,000.00, his (omitted) superannuation worth $33,000.00 from Pool 2 and his hurt on duty pension worth $567,847.12.
I accept that he will still owe money for legal fees at the conclusion of the hearing although given the amount he has paid I certainly hope that the bill will not be too high.
Pursuant to s. 75(2)(o) I must have regard to any other matter which the justice of the case requires be taken into account and both parties raised matters which are properly considered pursuant to s.75(2)(o).
The wife raised in her material and during the trial the fact that after separation the husband received and retained three lump sums namely:
i)$23,668.00 on 2 November 2009 pursuant to s.12D of the (omitted) Fund;
ii)$60,662.91 net ($88,430.32 gross) being long service leave and other employee benefits; and
iii)$78,300.00 being a trauma benefit paid pursuant to a life insurance policy in late 2014.
Interestingly the wife’s counsel did not ask me to consider these matters as s.75(2)(o) matters during final submissions but that is the appropriate place to consider them.
The amount paid pursuant to s. 12D of the (omitted) Fund consisted of $5,102.00 for a 15% permanent impairment of the husband’s neck due to injury, $6,818.00 for 10% loss of use of his right leg due to injury, $3,000.00 for pain and suffering for these injuries and $8,750.00 being 7% whole person impairment relating to injuries to his lumbar spine.
In his affidavit the husband provided evidence about what he said happened to the $23,668.00 but he did not mention the amount of $60,662.91. He was repeatedly asked by the wife’s solicitors to provide information about what happened to this amount prior to trial including in correspondence in 2013 and by means of Notices to Produce dated February and July 2015 but he simply failed to provide any satisfactory information about it.
It remains unclear whether the information the husband gave in paragraph 40 of his affidavit in fact referred to the $23,668.00 or to the $60,662.91 or bits of both but his evidence that after separation he paid out loans of $8,000.00 for a Hyundai (omitted) and $23,000.00 for a Subaru 4WD was not challenged by the wife. He also said that he repaid loans from friends who assisted him while he was waiting for his back-pay for 8-12 weeks. He did not provide any further detail but this is not incredible evidence notwithstanding the submission by the wife’s counsel about the date on which he received his pension.
The husband’s evidence such as it was about what happened to the two lump sum amounts is unsatisfactory and incomplete but the wife did not commence proceedings for a property settlement until more than four years after separation and it is conceivable that the husband either lost paperwork or could not accurately remember exactly how all this money was spent, and some of it certainly appears to have been spent either on living expenses or paying out post-separation debts.
The husband also would have had costs of re-establishing himself which the wife did not have because she remained in the former matrimonial home.
It is not possible for me to fix on a part of this money as having been unreasonably spent by the husband and the money is long gone and I do not intend to take the husband’s receipt of it into account as a s.75(2) matter.
The husband received $78,000.00 trauma insurance in January 2015 but it seems that Ms J took $54,000.00 of it.
The husband’s counsel submitted that the receipt of the trauma insurance was irrelevant as the wife had made no contribution to this amount and the husband was entitled to dispose of it as he thought fit and there is merit in this submission.
The husband raised two s.75 (2) matters.
First he submitted that the court should take into account that the wife’s children lived with the parties throughout their relationship and that he had made a financial and non-financial contribution to them. He relied on Robb & Robb as authority for the proposition that the court could take his contribution to children he had no legal obligation to support into account as a s.75(2)(o) matter.[10]
[10] Robb & Robb [1995] FLC 92-555
I have always been troubled by the proposition that as a matter of course a person who took on the care of the other parties children as an incident of the relationship decades ago could retrospectively claim an adjustment in their favour for having done so when such a thing was never originally contemplated by the parties and I am not satisfied that the facts in this case justify the husband’s contribution to the wife’s children being taken into account as a s.75 (2) (o) matter.
The remaining issue was that the husband said that he used $10,466.15 from his trauma insurance to pay joint debts namely $2,000.00 to (omitted) and $8,466.15 to (omitted) Bank.
I accept that the husband made these payments and it is likely that they came from the trauma insurance payout. However I have not taken into account the husband’s retention of $83,000.00 at separation and I do not intend to take into account as a factor favouring the husband that he paid these two debts.
Conclusion about s. 75(2) matters
Before I consider in the light of the above findings whether there should be any adjustment for s. 75(2) matters in favour of either party I need to adjust the parties entitlements on the basis of contributions to reflect the property they will actually keep because it was not in dispute that the wife should keep the Property C property and this requires an adjustment of the amount the wife should receive from the pension. There is nowhere else it could come from other than the wife’s superannuation and nobody suggested that should be split.
If an adjustment is made for the fact that the wife will retain the whole of the Property C property she will receive the following
i)$ 74,900.00 being Property C, her furniture and her pre-separation motor vehicle
ii)$500.00 being her post separation motor vehicle
iii)$109,600 being her (omitted) Superannuation
iv)$261,604.79 being her share of the husband’s s. 10 pension on a contribution basis ($297,504.79) less the amount the husband is entitled to if the wife keeps Property C ($35,900.00).
It is unreasonable of the wife to suggest she should retain all of the post-separation increase in her superannuation ($62,271.00) and yet maintain that because the husband acquired Property D and a motor vehicle post separation worth $48,000.00 post-separation somehow she is thereby entitled to retain the husband’s share of the Property C property as well as her own.
The husband will receive:
i)$5,000.00 being his furniture
ii)$48,000.00 being his post-separation motor vehicle and Property D
iii)$33,000.00 being his (omitted) superannuation
iv)$542,462.21 being his share of the s. 10 pension.
This will increase the husband’s pension income by about 4.5% to about $615.00.
The wife’s counsel sought to justify this sort of outcome by focusing on the individual trees but as Nygh J said in G & G it is necessary for me to consider the overall outcome at this stage and I do not accept that this outcome is just and equitable.
The difference between the parties’ circumstances is that no matter how much the husband has in the form of a capitalised pension, it also represents his income for the next 11 years during which it is reasonably to be expected that the wife will work and earn income. She has her share of the pension on top of her income; for the husband it is his income.
The husband may have some additional income earning capacity but his only likely source of additional income on the face of it at present is from the (employer omitted) and in recent times he has earnt $18,000.00 per annum from this source and has not acquired any additional superannuation as a result. Otherwise he will have to live on his share of the pension.
The parties were married for 23 years. The wife emerged from the marriage with an intact earning capacity. The husband did not and part of the “property” he is to retain is in the form of his capitalised future income.
I am conscious of the fact that the husband removed $202,000.00 from his superannuation fund and that absent that his share of the s.10 pension would have been $742,462.21 but had he not removed the money I might have been forced to confront as a s. 75(2) matter the reality that the husband has incurred legal fees of over $121,000.00 in this litigation and had no other means to pay it other than drawing down on his pension.
In my view a s. 75(2) adjustment in favour of the husband is required to ensure that the overall outcome is just and equitable but I consider that a 3% adjustment in the husband’s favour in respect of the pension component is appropriate. It will give the husband an additional $24,122.01 and create a differential of $48,244.02 between the parties.
Arriving at this figure may as Altobelli FM observed in Crawford & Crawford be more art than science but it is some adjustment for the difference in the parties income situations but bearing in mind that the husband may exercise an income earning capacity to some extent during the next ten years.
This means that the wife will be entitled to a superannuation split of $237,482.78.
The overall outcome is that the wife will retain assets and superannuation to the value of $422,482.78 and the husband assets and superannuation to the value of $652,584.22 without the $202,000.00 but $854,584.22 with it.
This is close to a 63/37 division overall in the husband’s favour of the assets as they currently stand. Given that the wife has an superior income earning capacity outside the pension and the fact that the hurt on duty pension which makes up the majority of the pool came in as a result of the husband’s injuries at work this is a just and equitable outcome.
It is a 69/31 division overall if the $202,000.00 the husband removed is added back but as noted earlier there is a problem if it is treated as a straight add back and I am satisfied that the outcome remains just and equitable.
The order will mean that the husband will lose 29.5% of his income; it will reduce to $642.34 per week. Without income from an additional source he will be considerably less well off than the wife but the reality of the situation for the parties is that the wife must receive some of the pension and the only way to give it to her is a superannuation splitting order; this will inevitably reduce the husband’s present income, not just his income when he reaches retirement age; and the legal fees he has incurred and his decision to redeem part of the pension have made a very unfortunate dent in his financial position but that is not the fault of the wife.
It will not necessarily mean the husband must lose the unit but he may need to look at other options including renting out a room.
In written submissions the husband’s counsel proposed that the husband’s (omitted) Super be transferred to the wife to lessen the impact of a split of his pension on his income. This was not an order sought by the husband in his response and there was no evidence that procedural fairness had been given to the trustee of the fund and I do not intend to consider making this order.
I cannot be certain about the current value of the husband’s pension and as nearly 18 months have passed since the last valuation as indicated on 26 November 2016 I would have preferred to make a percentage splitting order. However part of Exhibit T is a letter from (omitted) Super advising that because of the complex nature of the husband’s fund they will not recognise a percentage splitting order.
This potential problem must have been apparent throughout the proceedings. Neither party has sought to re-open the case to raise a concern about the valuation of the pension given the lapse of time since judgment was reserved and the last valuation was already seven months old when the trial occurred. I have no option but to make a base amount splitting order and I will do so.
For all of the above reasons the orders will be as set out at the beginning of this judgment.
I certify that the preceding two hundred and thirty five (235) paragraphs are a true copy of the reasons for judgment of Judge Terry
Date: 30 November 2016
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Statutory Construction
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Jurisdiction
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Procedural Fairness