Lahiri & Saha (No 9)
[2024] FedCFamC1F 67
•15 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lahiri & Saha (No 9) [2024] FedCFamC1F 67
File number(s): BRC 8518 of 2020 Judgment of: JARRETT J Date of judgment: 15 February 2024 Catchwords: FAMILY LAW – PROPERTY – Evidence insufficient to identify parties’ interests in property – Where parties have repeatedly failed to rectify state of the evidence – All outstanding applications dismissed Legislation: Bankruptcy Act 1966 (Cth) s 302A
Corporations Act 2001 (Cth) ss 203B, 206B(3)
Family Law Act 1975 (Cth) ss 81, 90XD, 90XS(1)
Income Tax Assessment Act 1997 (Cth)
Retirement Savings Accounts Act 1997 (Cth)
Superannuation Industry (Supervision) Act 1993 (Cth) s 10
Family Law (Superannuation) Regulations 2001 (Cth)
Cases cited: Lahiri & Saha (No 6) [2023] FedCFamC1F 797 Division: Division 1 First Instance Number of paragraphs: 24 Date of hearing: 9 February 2024 Place: Brisbane Counsel for the Applicant: Mr Cahill Solicitors for the Applicant: AP Hodgson Counsel for the First Respondent: Mr Leneham Solicitors for the First Respondent: Sharma Lawyers Solicitors for the Second Respondent: No appearance Solicitors for the Third Respondent: No appearance Solicitors for the Fourth Respondent: No appearance Solicitors for the Fifth 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 Respondent
D PTY LTD AS TRUSTEE FOR THE D PTY LTD SUPERANNUATION FUND (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
15 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The amended application filed on 4 September, 2023 is dismissed.
2.Otherwise all outstanding applications and responses are dismissed.
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:
On the last occasion this application was before me I attempted to complete the final hearing of the remainder of the property adjustment application concerning the parties’ superannuation interests. For reasons that I delivered then (see Lahiri & Saha (No 6) [2023] FedCFamC1F 797) I was unable to do so. I sought further submissions from each of the parties in relation to particular matters about which I required assistance.
The applicant delivered his submissions on 1 November, 2023. They are unhelpful. Apart from reciting the matters that I had recited in my reasons (identified above) they advanced no argument or submission to help resolve the issues of concern. One of the matters of immediate concern was the court’s inability to identify the parties’ entitlements in their self-managed superannuation fund because of the concededly inaccurate and unreliable evidence about those values. The submissions did nothing to address this issue except repeat and rely upon the evidence that was the cause for concern in the first place.
The first respondent did not appear at the hearing on the last occasion. Since then, however, she has engaged lawyers who have taken some time to come to grips with the background to the application and obtain instructions. That is by no means meant to be critical of them. This is, on its face a complex application that since its inception, has had many moving parts.
The application has now come before me, again for completion of the finial hearing. I have very useful written submissions from counsel who now appears for the first respondent.
There was no appearance for the second respondent – his involvement in the proceedings ceased some time ago. The third respondent did not appear.
THE REMAINS OF THE APPLICATION
What remains for determination is the applicant’s claim for property adjustment orders in respect of the parties’ superannuation interests. The first respondent is an undischarged bankrupt and save for the property expressly excluded by the Bankruptcy Act 1966 (Cth), all of her property has vested in her trustee in bankruptcy. Her superannuation interests do not vest in her trustee and remain to be considered by this court as between she and the applicant.
The relief pursued by the applicant is not entirely clear. It seems to be summarised in his written submissions filed on 1 November, 2023 as follows:
29. There are 3 different types of benefits for the Applicant. Adding them together, gives a total benefit of $379,823.34 for the Applicant. The First Respondent has a single benefit of $2,249,476.08. These together are equal the total value of the fund, being the net of assets and liabilities, of $2,629,299.42.
30. Equating this into percentages results in the Applicant having a 14.45% interest while the First Respondent has an 85.55% interest.
31. This percentage is only the current interest before the adjustments of property interests to be determined by this Honourable Court. Due to the property that was held by the Super Fund being the most significant portion of the property pool by a sizeable proportion, a significant disbursement of the property from the Super Fund is required to meet the 60%-40% split in the Applicant's favour that the Applicant submitted as being the appropriate distribution.
32. In the distribution, it must also be noted that the property located at [B Street, Suburb C] in the State of New South Wales has been ordered to be provided to the Second Respondent, being the Trustee in Bankruptcy for the First Respondent, for the purpose of sale so that the funds can be used to discharge debts of the First Respondent.
33. For the purposes of distribution of property interests, the value of this property must therefore be notionally added back to the property pool and assigned to the First Respondent as she is receiving the benefit of the property being used to discharge her liabilities.
34. As the Super Fund is not properly constituted, there is no need for an order for the Super Fund to be dissolved.
These submissions seem confused in the sense that the applicant suggests that the value of a property owned by the super fund which is to be sold to acquit a debt owed to the second respondent should be added back to the “pool”. However, the debt arose because the first respondent transferred her interest in the relevant property to the parties’ superannuation fund in circumstances where her trustee in bankruptcy could avoid that transaction. There is no warrant on the facts to “add-back” the value of the Suburb C property to the parties’ superannuation property.
SUPERANNUATION
In my earlier reasons I set out the statutory provisions relating to superannuation that have a bearing on the outcome of this proceeding. For convenience and where relevant, I have reproduced portions of my earlier reasons in what follows.
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 (Cth)).
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
(b)a public sector superannuation scheme.
The applicant and first respondent were directors of the third respondent. It is the trustee of the D Pty Ltd Superannuation Fund established by a deed of trust. Clause 1 of the trust deed identifies the fund as a self-managed superannuation fund and as an “indefinitely continuing superannuation fund.” Both the applicant and the first respondent were and remain it seems, beneficiaries of the fund.
I accept that the D Pty Ltd Superannuation Fund is a superannuation fund as defined in s 10 of the Superannuation Industry (Supervision) Act 1993 (Cth) and an eligible superannuation plan as defined in s 90XD of the Family Law Act. I am satisfied that each of the parties’ interests as a member of the fund is a superannuation interest as defined in s 90XD.
I accept the parties’ submissions that the court therefore has power under s 90XS of the Family Law Act to make orders in relation to the superannuation interests of the parties in the fund, in accordance with Part VIIIB of the Act. Both parties accept that whilst the D Pty Ltd Superannuation Fund was intended to be a self-managed superannuation fund, it did not from at least a point six months following the first respondent’s bankruptcy, and continues to not comply with the requirements of the Superannuation Industry (Supervision) Act relating to self-managed superannuation funds.
A person is disqualified from managing corporations upon becoming a bankrupt and they remain so disqualified whilst an undischarged bankrupt: s 206B(3) of the Corporations Act 2001 (Cth). Consequently, the first respondent ceased to be a director of the third respondent upon her becoming a bankrupt in 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.
According to the fund’s trust deed, a member’s benefits are forfeited in certain circumstances. Clause 118 of the trust deed provides:
Circumstances of forfeiture
118All benefit entitlements of a person are forfeited in each the events in 118.1-118.6 - unless the trustee has determined otherwise within six months after the relevant event. The trustee's determination has effect from the date specified by the trustee which may be a date before the date of the event.
118.1The person assigns or charges, or attempts to assign or charge a benefit entitlement, except in accordance with superannuation law.
118.2The person's interest in a benefit entitlement becomes payable to or vested in another person or a government or public authority.
118.3The person is or becomes insolvent or has committed or commits an act of bankruptcy.
118.4The person is unable personally to receive or enjoy any part of the entitlement.
118.5In the trustee's opinion, the person is incapable of managing his or her affairs.
118.6In the trustee's opinion, the person is guilty of fraud or dishonesty. This clause does not apply to the extent that it would be made Ineffective by the Bankruptcy Act 1966 or superannuation law.
Here, cl 118.3 is engaged and the first respondent’s benefit entitlements in the fund are, prima facie forfeited. However, s 302A of the Bankruptcy Act 1966 (Cth) provides that a provision such as cl 118.3 of the trust deed is void. Section 302A of the Bankruptcy Act is engaged here and I am satisfied that there was, in fact, no forfeiture of the first respondent’s entitlement in the superannuation fund upon her bankruptcy.
On the last occasion the application was before me for hearing I raised a concern about my inability to identify the parties’ entitlements in the fund. In my subsequent reasons I said:
27In 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.
The position has not changed. The applicant, who is the sole director of the third respondent and who controls the superannuation fund, has placed no further evidence before me about the value of the parties’ interests. There is no evidence that the applicant has had the accounts of the superannuation fund finalised (something one might have thought would have been attended to as a matter of urgency), nor taken any steps to remedy the non-compliance with the Superannuation Industry (Supervision) Act. Nor is there any explanation for his failure to do so.
The first respondent submits that before any order of the court is made, the court needs to identify those interests. That is plainly so. Her counsel submits that the parties’ interests in the fund ought to be taken to be as they are shown to be in the accounts of the fund. But, the only evidence before me about that is some draft accounts, the accuracy of which is not sworn. In that respect the parties, or at least the applicant, seems to have assumed that the value of the parties’ interests in the fund were their entitlements recorded in the accounts of the superannuation fund. But I am not sure that is so. In 2018 the applicant turned 60 years of age and commenced receiving a pension from the fund. None of the interests have been valued according to the methods prescribed the Family Law (Superannuation) Regulations 2001 (Cth). Given that the applicant’s interest is being paid as a pension (at least in part) it may be that his interest is in the payment phase and must be valued under the Regulations as such an interest. However, as the first respondent submits, the applicant has not provided details of the amount of the pension. Indeed, the applicant’s own evidence is that his interest in the superannuation fund is not limited to the amount allocated to his member’s balance in the accounts of the fund.
I find myself in no better position, in terms of evidence and argument, than I was on the last occasion the matter was before me for determination. The lack of evidence prevents me from making findings about the nature and value of the parties’ superannuation interests.
It is for the applicant to prosecute his case. He has had ample opportunity to put evidence before the court that would permit the court to make the findings necessary to grant him the relief that he seeks. He has not taken up that opportunity.
The first respondent seeks that the application be dismissed. Given that I can make no findings about the very property in respect of which I am asked to make orders and notwithstanding s 81 of the Family Law Act, it seems to me inevitable that the remains of the application must be dismissed.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 15 February 2024
SCHEDULE OF PARTIES
BRC 8518 of 2020 Respondents
Fourth Respondent:
MS PP SAHA
Fifth Respondent:
MR L
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