Lahiri & Saha (No 6)
[2023] FedCFamC1F 797
•19 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lahiri & Saha (No 6) [2023] FedCFamC1F 797
File number(s): BRC 8518 of 2020 Judgment of: JARRETT J Date of judgment: 19 September 2023 Catchwords: FAMILY LAW – Property adjustment – no appearance by first respondent – Where majority of property held by third respondent as trustee for superannuation fund – Where evidence suggests superannuation fund may no longer be classed as self managed superannuation fund – Where evidence does not clearly establish the respective interests of the applicant and first respondent in the superannuation fund – Where submissions did not adequately address either of these issues – Order for further written submissions Legislation: Corporations Act 2001 (Cth) ss 203B, 206B(3)
Bankruptcy Act 1966 (Cth) s 58(1)(b)
Family Law Act 1975 (Cth) ss 79, 90XD, 90XS(1)
Income Tax Assessment Act 1997
Retirement Savings Accounts Act 1997 (Cth)
Small Superannuation Accounts Act 1995 (Cth)
Superannuation Industry (Supervision) Act 1993 (Cth) ss 10, 17A(1)(a), 17A(1)(d)(ii), 17A(1)(e), 17A(1)(f), 17A(1)(g), 17A(4), 17A(4)(a)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 2.27(1), 2.27(2)
Cases cited: Fitzgerald & Sapico [2005] FamCA 44
In the Marriage of Buljubasic [1999] 25 Fam LR 371
Lahiri & Saha [2021] FamCA 639
Lahiri & Saha [2022] FedCFamC1F 271
Lahiri & Saha(No 2) [2022] FedCFamC1F 273
Lahiri & Saha(No 3) [2023] FedCFamC1F 181
Lahiri & Saha(No 4) [2023] FedCFamC1F 182
Lahiri & Saha(No 5) [2023] FedCFamC1F 304
Saha & Lahiri [2022] FedCFamC1A 152
Saha & Lahiri (No 2) [2022] FedCFamC1A 181
Saha & Lahiri (No 3) [2023] FedCFamC1A 144
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 4 September 2023 Place: Brisbane Counsel for the Applicant: Mr Cahill Solicitor for the Applicant: A P Hodgson & Associates Solicitor for the First Respondent: Litigant in person, no appearance Solicitor for the Second Respondent: No appearance, attendance excused Solicitor for the Third Respondent: No appearance ORDERS
BRC 8518 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR LAHIRI
Applicant
AND: MS SAHA
First Respondent
MR FELTOS
Second RespondentD PTY LTD AS TRUSTEE FOR THE D PTY LTD SUPERANNUATION FUND
Third Respondent
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
19 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.By 4.00pm on 9 October, 2023 the applicant file and serve written submissions, supported by references to any filed evidence, dealing with the following issues:
(a)the nature of the trust known as the D Pty Ltd Superannuation Fund;
(b)whether the D Pty Ltd Superannuation Fund is a self managed superannuation fund for the purposes of the Superannuation Industry (Supervision) Act 1993 (Cth);
(c)if it is, then the value of the parties’ interests in that fund and how those interests should be divided to render a just and equitable outcome between the parties and why they should be divided in that way;
(d)if not, then what is the nature and value of the parties’ interests, if any, in the assets of the trust or perhaps its corporate trustee;
(e)what directions, if any, need to be made to ensure the resolution of the application as soon as possible.
2.By 4.00pm on 23 October, 2023 the first respondent file and serve written submissions, supported by references to any filed evidence, dealing with the issues set out in order 1 hereof.
3.The application be adjourned for further hearing to 3 November, 2023 at 9.30am in the Federal Circuit and Family Court of Australia (Division 1) sitting at Brisbane.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
The 4 September, 2023 was intended to be the date for the final hearing of this property adjustment application. But, consistently with the tortuous journey this application has taken since its inception, 4 September, 2023 has proven to be just another bump along the never‑ending road that is this litigation.
To be fair, the application has been complicated a little by the involvement of the first respondent’s trustee in bankruptcy and various applications, from time to time, by and against the trustee. There have been appeals along the way, too. The history of the application appears from the following series of decisions: Lahiri & Saha [2021] FamCA 639, Lahiri & Saha [2022] FedCFamC1F 271, Saha & Lahiri [2022] FedCFamC1A 152, Saha & Lahiri (No 2) [2022] FedCFamC1A 181, Lahiri & Saha(No 2) [2022] FedCFamC1F 273, Lahiri & Saha(No 3) [2023] FedCFamC1F 181, Lahiri & Saha(No 4) [2023] FedCFamC1F 182, Saha & Lahiri (No 3) [2023] FedCFamC1A 144 and Lahiri & Saha(No 5) [2023] FedCFamC1F 304.
When the application was called on 4 September, 2023 the applicant appeared by counsel, instructed by solicitors. The first respondent did not appear. That is not surprising. On 1 September, 2023 at 3.17 pm she sent an email to my associate in the following terms (errors in the original):
Dear Associate,
I have requested the Honourable Chief Justice to reassign the Docket Justice in this case to Justice Baumann, as I have been denied leave to appear by AVL at all hearings since October 2022 while all other parties have been granted leave to appear by AVL, and ex parte orders have been made without allowing me to be heard 3 or more times, including a large costs order of 200k against my superannuation fund made ex parte in chambers.
I am unavailable to appear on 4 September and until October 2023, as I am in other cases ans hearings until then.
I request that Jarret J recuses himself as Docket Justice, my applications of March haven't been listed in 6 months, or else the Honourable Chief Justice replaces him as Docket Justice.
If orders are made in my absence yet again on 4 September, I will refer this matter to the Honourable Attorney General.
Kind regards,
[Ms Saha]
As I indicated at the hearing on 4 September, 2023 to the extent that the email represented an application for me to disqualify myself from further conducting these proceedings, I dismissed that application because it was not supported by any evidence or argument. The first respondent did not appear to prosecute her application. Further, to the extent that her email represented an application for an adjournment of the trial, again it was unsupported by any evidence or argument and the first respondent did not appear to prosecute her application.
The second respondent (the first respondent’s trustee in bankruptcy) did not appear. That too, was unsurprising because any further attendance by the second respondent was excused on 13 February, 2023. The second respondent’s involvement in the proceedings has been concluded.
The third respondent did not appear either. It is the trustee of what is said to be a self-managed superannuation fund that was conducted by the parties. The applicant is the only remaining director of that company, but I have refused him leave to appear for the company in the past. He did not seek leave on this occasion.
At the commencement of the hearing, counsel for the applicant identified that his client relied upon a further amended initiating application filed on 10 February, 2023 and a series of affidavits all set out in his client’s case outline filed on 1 September, 2023 at 5:09pm. The case outline, however, referred to an amended initiating application filed by the applicant on 25 August, 2022. There was no reference to a further amended initiating application. After I pointed out the anomaly to counsel for the applicant however, a further amended initiating application was produced from the bar table which purports to be signed on 10 February, 2023 although it was unsealed. It bore no other markings that would suggest it had been filed.
On 4 April, 2023 I had attempted to conduct a final hearing of this application but was unsuccessful in doing so because the applicant sought to rely upon material which had apparently been either not served on the first respondent or served upon her the day before the hearing. After referring to Fitzgerald & Sapico [2005] FamCA 44 and In the Marriage of Buljubasic [1999] 25 Fam LR 371 I declined to deal with the application by way of final hearing that day because of a lack of procedural fairness to the first respondent. The final hearing was adjourned to my next available date – 4 September, 2023. Whilst the first respondent was unlikely to appear even if she had been properly served with that material, it is the opportunity to participate which is important, not whether the opportunity is taken up.
It seems to me that the present hearing suffers from this same difficulty. The applicant now seeks to rely upon a further amended initiating application which he says was filed in February, 2023. It was not so filed. Nor am I told if a copy of it was ever given to the first respondent.
For the purposes of preparing these reasons for judgment I have had recourse to the court file. The file records that on 4 September, 2023 the further amended initiating application that was handed to me during the hearing that day, was filed. The representation to me that the further amended initiating application had been filed in February, 2023 was clearly wrong. That also means that it could not have been served upon the first respondent because only filed documents can be served on a party under the Rules: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 2.27(1), 2.27(2).
If the differences between the relief sought in the two versions of the initiating application are immaterial, then the problem may be more illusory than real. Are there material differences between the two?
In his amended initiating application filed on 25 August, 2022 (the most recent iteration of his initiating application prior to that filed on 4 September, 2023) the applicant sought the following orders:
7.Full ownership of the property at the address [B Street], [Suburb C] NSW vests with the First Respondent.
8.Half ownership (50%) of the land at the address [H Street] [K State] … vests with the First Respondent.
9. Full Ownership of the property at the address [OO Street], [Suburb TT] QLD vests with the Applicant.
10.Surplus fund from the sale of [FF Street], [Suburb C] NSW vests with the First Respondent after paying out all the costs associated with this sale of land plus another $853,875.00 is paid out to the Second Respondent in settlement of the 139ZQ Notice served on the Third Respondent.
11.Such further or other Order as this Honourable Court sees fit.
In his most recently filed further amended initiating application, the applicant seeks the following operative orders in replacement of those sought in the August, 2022 amended initiating application:
1.That the [D Pty Ltd Superannuation Fund] be dissolved.
2.The Trustee of the [D Pty Ltd Superannuation Fund] do all things necessary to dissolve same pursuant to the provisions of the Superannuation Industry (Supervision) Act 1993 (Cth).
3.The Assets contained within the [D Pty Ltd Superannuation Fund] be distributed as follows:
a.That a Self Managed Superannuation Fund be created with the Applicant as trustee and the property situate at [OO Street], [Suburb TT]: in the State of Queensland, also known as [UU Street], [Suburb TT] in the State of Queensland, be transferred thereto; and
b.That a Self Managed Superannuation Fund be created with the First Respondent, or other representative within the provisions of the Bankruptcy Act 1966 (Cth), as trustee and all other assets from the [D Pty Ltd Superannuation Fund]be transferred thereto.
4.That unless otherwise specified in this Order except for the purposes of enforcing payment of any money due under these or any subsequent Orders:
a.Each party shall be solely entitled to the exclusion of the other to all property in the possession of such party as at this date including any jewellery, furniture, furnishings, shares and motor vehicles.
b.Moneys standing to the credit of the parties in any bank: accounts to be the property of the party in whose name such bank: account is held.
c.Each party hereby foregoes any claims they may have to any superannuation benefit to or owned by the other. The party in whose name any such policy of superannuation or insurance stand shall be deemed to be the owner and the beneficiary of such policy to the exclusion of the other.
d.Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this Order.
The first respondent is an undischarged bankrupt. All of her non-superannuation assets have vested in her trustee in bankruptcy. Whilst her trustee in bankruptcy is a party to these proceedings, his involvement has been finalised by orders between the applicant and the second respondent on 27 April, 2022, 13 February, 2023 and 21 June, 2023. What remains is a division of what is said to be the parties’ superannuation interests.
The orders sought in the August application would seem to have the effect of taking superannuation assets and vesting them in specie in each of the parties. There is no suggestion in the orders that they would continue to be impressed with the character of superannuation interests. Thus, insofar as the first respondent is concerned, the property to be transferred to her would probably be considered as after-acquired property for the purposes of s 58(1)(b) of the Bankruptcy Act 1966 (Cth) and vest in her trustee in bankruptcy.
The orders now sought might avoid that consequence, but they require both parties to establish separate self-managed superannuation funds. The evidence and argument do not deal with whether that is possible in the circumstances of this case. Nor is it immediately apparent that what the applicant seeks to accomplish, which on its face is markedly different to the relief he sought in his amended initiating application, can be accomplished at all.
The relief sought by the applicant raises critical issues about the nature of what he contends to be a self managed superannuation fund. These issues have not been addressed in either the evidence or submissions.
THE SUPERANNUATION
Section 90XS(1) of the Family Law Act 1975 (Cth) provides that in proceedings under s 79 of the Act with respect to the property of spouses, the court, in accordance with Division 3 Part VIIIB of the Act but not otherwise, may also make orders in relation to superannuation interests of the spouses.
For the purposes of the Act, superannuation interest means an interest that a person has as a member of an eligible superannuation plan but does not include a reversionary interest: s 90XD of the Act. Member, in relation to an eligible superannuation plan, includes a beneficiary (including a contingent or prospective beneficiary): s 90XD and relevantly, eligible superannuation plan means any one of the following:
(a)a superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth);
(b)an approved deposit fund as that phrase is defined in the Superannuation Industry (Supervision) Act 1993 (Cth);
(c)a retirement savings account within the meaning of the Retirement Savings Accounts Act 1997 (Cth);
(d)an account within the meaning of the Small Superannuation Accounts Act 1995 (Cth); or
(e)a superannuation annuity (within the meaning of the Income Tax Assessment Act 1997).
The Superannuation Industry (Supervision) Act 1993 (Cth) defines superannuation fund in s 10 to mean:
(a)a fund that:
(i)is an indefinitely continuing fund; and
(ii)is a provident, benefit, superannuation or retirement fund; or
(iii)a public sector superannuation scheme.
Section 17A of the same Act defines self managed superannuation fund as follows:
Basic conditions—funds other than single member funds
(1)Subject to this section, a superannuation fund, other than a fund with only one member, is a self managed superannuation fund if and only if it satisfies the following conditions:
(a)it has no more than 6 members;
(b)if the trustees of the fund are individuals—each individual trustee of the fund is a member of the fund;
(c)if the trustee of the fund is a body corporate—each director of the body corporate is a member of the fund;
(d)each member of the fund:
(i)is a trustee of the fund; or
(ii)if the trustee of the fund is a body corporate—is a director of the body corporate;
(e)no member of the fund is an employee of another member of the fund, unless the members concerned are relatives;
(f)no trustee of the fund receives any remuneration from the fund or from any person for any duties or services performed by the trustee in relation to the fund;
(g)if the trustee of the fund is a body corporate—no director of the body corporate receives any remuneration from the fund or from any person (including the body corporate) for any duties or services performed by the director in relation to the fund.
The first respondent and second respondent were directors of the third respondent. It is the trustee of the D Pty Ltd Superannuation Fund. Both the applicant and the first respondent were and remain it seems, beneficiaries of the fund. There is nothing in the evidence to suggest that the conditions prescribed by ss 17A(1)(a) and 17A(1)(e)–(g) are not met. On its face, therefore, the basic conditions that need to exist for a trust to meet the definition of self managed superannuation fund existed in this case. I say existed because the first respondent became disqualified from managing corporations upon her becoming a bankrupt and remains so disqualified whilst she is an undischarged bankrupt: s 206B(3) of the Corporations Act 2001 (Cth). Consequently, she ceased to be a director of the third respondent upon her becoming a bankrupt in late 2016: s 203B of the Corporations Act. There is no suggestion that the Australian Securities and Investments Commission or a court with jurisdiction under the Corporations Act has allowed her to manage a company for the purposes of s 203B of the Corporations Act.
The D Pty Ltd Superannuation Fund does not therefore appear to meet the conditions that must exist for it to be a self managed superannuation fund.
Section 17A(4) of the Superannuation Industry (Supervision) Act provides:
Subject to subsection (5), if a superannuation fund that is a self managed superannuation fund would, apart from this subsection, cease to be a self managed superannuation fund, it does not so cease until the earlier of the following times:
(a)the time [a constitutional corporation, body corporate, or group of individual trustees, that holds a licence granted under section 29D of the Act] is appointed;
(b)6 months after it would so cease to be a self managed superannuation fund.
There is no evidence to suggest that s 17A(4)(a) has been met. More than six months has passed since the fund ceased to be a self managed superannuation fund because of the failure to meet the condition specified in s 17A(1)(d)(ii) of the Superannuation Industry (Supervision) Act.
What all this means for this case is not addressed by the evidence or any submissions made on behalf of the applicant. The matters I have set out above raise real issues as to the nature of the property that is available for distribution between the applicant and the first respondent. On one view, having lost the benefit of being a self managed superannuation fund (if that is what has occurred), the parties’ interests in the real property that remains might arguably be seen as no more than the interest they have as shareholders in the third respondent. The first respondent’s interests in that regard arguably vest in the second respondent.
In any event, even if the answers to the above issues result in a conclusion that the interests I am being asked to deal with in this case are indeed superannuation interests, the evidence is in such a state that I cannot even carry out the first step of the exercise required in an application such as this, namely the identification of the parties’ respective interests. In that regard, on 4 September, 2023 the following exchange took place between me and counsel for the applicant:
HIS HONOUR: Is there – just tell me this. Is there any evidence that tells me what the parties’ respective interests in the self-managed superfund is?
COUNSEL FOR THE APPLICANT: Yes.
HIS HONOUR: Yes.
COUNSEL FOR THE APPLICANT: So there is – attached to the husband’s affidavit from 3 April, there is a draft financial report from the accountants for the self-managed super fund ending the end of financial year June 2022.
HIS HONOUR: Yes.
COUNSEL FOR THE APPLICANT: That’s the most up to date report as to the assets that are in the self-managed super fund. I’m instructed that there is – that that report has been finalised. My client has now produced a finalised version of that report. It hasn’t been filed before the court. I’m also instructed that another report is in the process of being completed for the 2022, 2023 financial year. Obviously, your Honour, there’s going to be a big change because a – one of the largest assets of that fund has now been removed from that fund. So yes. In terms of evidence that details what those assets are, it is contained in that report.
It seems to me that I have two options. First, I can simply dismiss the application and response. The latter because the respondent does not appear to prosecute it. The former because the applicant’s evidence does not permit findings to be made about the matters relevant to reach a conclusion as to whether any order for property adjustment is just and equitable, or what a just and equitable property adjustment order in relation to the parties’ superannuation interests might be. The applicant has had a long time to get his case in order. He commenced these proceedings in July, 2020. He has had legal representation on and off throughout the proceedings and most recently since February, 2023 by his current solicitors. He has not been without legal advice.
Second, I might, yet again, adjourn these proceedings so that the applicant can get his case in order and the respondent might choose to appear.
With considerable reluctance, I think that I should adopt the latter course. It might be the case that the involvement of the second respondent and the finalisation of the relief sought by him in these proceedings means that value of the parties’ interests in the superannuation fund (if that is what it truly is) has or is likely to change.
In the circumstances, I think it best to direct the applicant file and serve written submissions, supported by references to the evidence, dealing with the following issues:
(a)the nature of the trust known as the D Pty Ltd Superannuation Fund;
(b)whether the D Pty Ltd Superannuation Fund is a self managed superannuation fund for the purposes of the Superannuation Industry (Supervision) Act 1993 (Cth);
(c)if it is, then what is the value of the parties’ interests in that fund and how should those interests be divided to render a just and equitable outcome between the parties and why they should be divided in that way;
(d)if not, then what is the nature and value of the parties’ interests, if any, in the assets of the trust or perhaps its corporate trustee;
(e)what directions, if any, need to be made to ensure the resolution of the application as soon as possible.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 19 September 2023
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