Mackah & Mackah
[2017] FamCAFC 62
•3 April 2017
FAMILY COURT OF AUSTRALIA
| MACKAH & MACKAH | [2017] FamCAFC 62 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Enforcement orders – Whether the primary judge erred in ordering the husband to access his superannuation fund to meet his obligations to the wife – Orders infringed the Superannuation Industry (Supervision) Regulations 1994 (Cth) – Benefits in a regulated superannuation fund were being cashed in favour of a person other than the member of the fund or his legal personal representative – Appeal allowed – No order as to costs. |
| Acts Interpretation Act 1901 (Cth) – s 2C(1) Superannuation Industry (Supervision) Regulations 1994 (Cth) – reg 6.18, reg 6.22 |
| Commercial Banking Co of Sydney Ltd v Colonial Financiers of Australia Pty Ltd [1972] VR 702 H. Meyer & Co Ltd v Jules Decroix Verley, et Cie [1891] AC 520 Kuru v State of NSW (2008) 236 CLR 1 |
| APPELLANT: | Mr Mackah |
| RESPONDENT: | Ms Mackah |
| FILE NUMBER: | PTW | 1140 | of | 2012 |
| APPEAL NUMBER: | WA | 26 | of | 2016 |
| DATE DELIVERED: | 3 April 2017 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Thackray, Aldridge & Moncrieff JJ |
| HEARING DATE: | 3 April 2017 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 16 November 2016 |
| LOWER COURT MNC: | [2016] FCWA 108 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Ashdown with Ms Farmer |
| SOLICITORS FOR THE APPELLANT: | Lewis Blyth & Hooper |
| COUNSEL FOR THE RESPONDENT: | Dr Dickey QC |
| SOLICITORS FOR THE RESPONDENT: | Leach Legal |
Orders
The appeal be allowed.
Orders 4 to 14 inclusive and Orders 18 to 21 inclusive of the orders made in the Family Court of Western Australia on 16 November 2016 be set aside.
Orders 1 and 2 of the said orders be varied by inserting at the commencement of each order the words “Until further order”.
The proceedings be remitted to the Family Court of Western Australia.
There be no order as to costs.
That the Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the appeal.
The appellant husband’s application for a costs certificate be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mackah & Mackah has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 26 of 2016
File Number: PTW 1140 of 2012
| Mr Mackah |
Appellant
And
| Ms Mackah |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
Thackray J
In June 2015 consent orders were made in proceedings in the Family Court of Western Australia between the appellant husband and the respondent wife pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
This appeal raises the question of whether the husband can be ordered to access his superannuation fund to meet his obligation pursuant to the June 2015 orders to pay a monetary sum to the wife.
Background
The June 2015 orders inter alia required:
i)the husband to pay to the wife $350,000 by a specified date; and
ii)the husband and his mother, as trustees of a superannuation fund, of which the husband was the sole member, to transfer to the wife certain assets held in the superannuation fund (pursuant to the power conferred by s 90MT(1)(a) of the Act).
After enforcement proceedings were issued by the wife, the order relating to the transfer of the superannuation assets was complied with, leaving the husband’s failure to pay the wife the sum of $350,000 as the only issue.
During the proceedings, the husband and his mother retired as trustees of the superannuation fund, and a corporation (“the Trustee”) was appointed sole trustee. The husband is the sole director and shareholder of the Trustee.
The original trustees of the superannuation fund (the husband and his mother) were named as parties to the enforcement proceedings. When the wife amended her application after the Trustee was appointed, she sought an order that the Trustee be joined as a “necessary party”. The primary judge concluded that this was unnecessary for reasons expressed at [95] to [99] of his reasons.
The wife sought orders requiring the husband to apply to the Trustee for payments to be made to him in the form of a Transition to Retirement Income Stream, with the intention that the wife would receive the funds she was owed over a three year period. Orders were sought obliging the Trustee to pay the income stream into an account nominated by the wife.
The orders appealed
The husband challenges all of the orders made by the primary judge, apart from Order 17 by which the husband’s mother was discharged as a party to the proceedings. The wife submits that if we find merit in the appeal the only orders that should be set aside are Orders 4 to 14 and Orders 18 and 19.
Order 4 was an order by way of preamble to the orders that followed.
Order 5 required the husband to make an application to the Trustee pursuant to the Governing Rules of the superannuation fund “to be paid a pension being a Transition to Retirement Income Stream which the Trustee is empowered to pay in accordance with Clause 15.3(b) of the Governing Rules”.
Order 6 specified the amount the husband was to seek to be paid from the fund, which was calibrated to ensure the wife received the full amount to which she was entitled.
Order 7 was in the following terms:
Within 35 days from the date of these orders, the [wife] shall inform the Trustee in writing of her nomination of an authorised deposit taking institution at which an account is to be established to make the payments of the Transition to Retirement Income Stream (“the TRIS Account”) and the Trustee shall forthwith upon receipt of the [wife’s] nomination establish the TRIS Account at the nominated authorised deposit taking institution with the withdrawal permissions being marked as “either to sign”.
Order 8 required the husband to request the Trustee to make all payments due to him into the account created in accordance with Order 7.
Order 9 restrained the husband by injunction from signing any withdrawal forms or operating the account so as to transfer or withdraw any of the money until such time as the wife had received her entitlement in full.
Order 10 gave the wife authority to operate the account by making withdrawals until she received her entitlement in full.
Orders 11 to 14 facilitated the orders referred to above.
Order 15 continued an injunction made on 30 March 2016.
Order 16 dispensed with personal service of the orders on the husband.
Order 17, as I have earlier said, discharged the husband’s mother as a party.
Order 18 dismissed all outstanding applications and responses, other than in relation to costs.
Order 19 gave liberty to the wife to apply for orders pursuant to s 106A of the Act.
Orders 20 and 21 laid down a program for filing of costs submissions. The time for filing of those submissions has now long passed.
The grounds of appeal
There were four grounds of appeal in the husband’s Amended Notice of Appeal filed on 13 March 2017.
Grounds 1 and 3 challenge the power of the court to make the orders.
In the alternative, Ground 2 challenges the exercise of the court’s discretion in making the orders.
Ground 4 asserts that orders could only properly have been made against the Trustee if it had been made a party.
In my view, it is unnecessary to consider all of the grounds and the elaborate argument mounted in support of them. I have formed this view as I respectfully consider the orders are inconsistent with the legislative scheme regulating Australian superannuation entitlements, and therefore cannot stand.
The Superannuation Industry (Supervision) Regulations 1994
It is not in dispute that the superannuation fund is a regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act1993 (Cth). Section 31 of that Act provides that regulations made under the Act may prescribe standards applicable to the operation of regulated superannuation funds including “(h) the payment by funds of benefits arising directly or indirectly from amounts contributed to the funds”.
Regulation 6.22 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (“the Regulations”) relevantly provides:
(1)Subject to … regulations … 7A.13, 7A.17 and 7A.18, a member’s benefits in a regulated superannuation fund must not be cashed in favour of a person other than the member or the member’s legal personal representative …
Importantly, Regulations 7A.13, 7A.17 and 7A.18, to which reg 6.22 is made subject, appear in Part 7A of the Regulations, the stated purpose of which is:
(a) to facilitate the payment splitting arrangements established under Part VIIIB of the Family Law Act 1975; and
(b) to provide for additional options that may be exercised in relation to superannuation interests that are subject to a payment split under that Act.
Part 7A has application to the type of superannuation splitting order made in the June 2015 orders, but clearly has no bearing on other types of orders made under the Act, including orders for payment of a monetary sum.
The argument advanced at first instance
Regulation 6.22 was not cited in argument before the primary judge. Instead, the statutory scheme was referred to only in very general terms in the written submissions filed on behalf of the husband (and not at all in the oral argument of his then counsel). This appears from the following paragraphs of his Honour’s reasons:
55 The husband asserts that the Court “should not exercise its discretion in favour of any enforcement remedy which is contrary to the objective of the superannuation legislative regime.”
56 Having made that assertion, the husband says very little in support of it.
57 The only reference to that assertion in the written submissions filed on behalf of the husband is at paragraph 30, which states:
Paying to the wife her entitlement in this manner quite clearly circumvents the intention of the superannuation legislative regime. It operates as a form of a back-door whereby the Wife gets to receive as cash assets that did not exist in non-superannuation form at the time the section 79 orders were made.
58 With due respect to counsel, the argument is difficult to follow. Were the wife seeking orders which would somehow convert into cash that which cannot be so converted under the superannuation legislation, or were she seeking (as in the case of Stant & Stant [2015] FamCA 734) what would in effect be a superannuation splitting order in favour of a third party to discharge a debt, the submission would have some weight.
59 In circumstances, however, where the orders sought by the wife seek only that the husband do that which the superannuation legislation permits him to do, the submission would be without merit.
The argument advanced on appeal
The husband advances the same argument on appeal as he did at first instance, but on this occasion his counsel has made extensive reference to the relevant statutory/regulatory provisions. He submits that the orders would require the Trustee to breach reg 6.22 since the effect of the orders is that the husband’s superannuation would be cashed in favour of the wife.
In support of his argument, counsel for the husband referred to Commercial Banking Co of Sydney Ltd v Colonial Financiers of Australia Pty Ltd [1972] VR 702 where the Full Court of the Supreme Court of Victoria was concerned with s 122(1) of the Bankruptcy Act 1966 (Cth), which at the time provided that:
A conveyance or transfer of property, a charge on property, a payment made or an obligation incurred by a person who is unable to pay his debts as they become due from his own money …. in favour of a creditor, having the effect of giving that creditor a preference, priority or advantage over other creditors … is void as against the trustee in the bankruptcy.”
(emphasis added)
In speaking of this provision, Smith J said at 705 (with the concurrence of Winneke CJ):
The words “in favour of a creditor” cannot, in my opinion, be read as relating only to cases in which a disposition or payment is made to the creditor himself or to another person on his behalf, in the sense of a trustee for him or a person authorized by him to receive the property or money on his behalf. The expression “in favour of” is very wide and general. In the Shorter Oxford English Dictionary the meanings given to it include “to the advantage of” and “so as to be payable to”.
These remarks have since been cited and approved many times (see for example Exception Holdings Pty Ltd (in liq) v Albarran (2005) 223 ALR 487; Shirlaw (now Rodgers) v Malouf (1989) 97 FLR 382).
Stepping back much further in time, counsel for the husband also relied on H. Meyer & Co Ltd v Jules Decroix Verley, et Cie [1891] AC 520 at 528–9, where Lord Herschell (as he then was) said:
The words “in favour of,” when used in relation to a bill of exchange, do not ordinarily mean that it is payable only to the person in whose favour it is said to be drawn; the words are equally applied when the bill is made payable to his order. The words “In favour of,” therefore, are properly paraphrased by “payable to, or to the order of” …
The wife’s senior counsel submits in response that the orders do not offend any superannuation law, nor cause the Trustee to offend any superannuation law. In particular he submits inter alia that:
Although regulation 6.22(1) … states (in short):
“A member’s benefits in a regulated superannuation fund must not be cashed in favour of a person other than the member”,
no provision of [the orders the subject of the appeal] formally contravenes this requirement. Whatever the term “cashed” might mean here (and it appears to be undefined), the Orders do not require the Trustee to make the payments to “a person”. Instead, the Trustee must pay the Husband’s superannuation income into an authorized deposit account with authority for “either [party] to sign”…
Disposition of the appeal
The effect of the orders is clear – money is to be removed from the husband’s superannuation fund and paid to the wife in satisfaction of a debt.
In my view, this is a clear contravention of reg 6.22 since the benefits in a regulated superannuation fund are being cashed in favour of a person other than the member of the fund or his legal personal representative.
I accept that Order 7 was expressed in somewhat cryptic terms (as the wife requested). The order does not expressly state in whose name the account into which the superannuation funds are to be paid is to be established. I nevertheless accept that the clear implication is that the husband’s name is to be on the account, as otherwise there would have been no need to restrain him from seeking to operate it. However, the order seems to contemplate the possibility that the wife too could be party to the account, given the usage of the words “with the withdrawal permissions being marked as “either to sign””. In any event, regardless of whose name will be on the account, the effect of the orders is that only the wife would be permitted to operate it – and she is expressly authorised to operate it to her own advantage.
Although I accept that the word “cashed” in reg 6.22 is not defined, it is a word in everyday usage and its meaning requires no elucidation. If doubt existed it would be removed when regard is had to other parts of the Regulations, for example reg 6.18 which provides:
6.18Voluntary cashing of preserved benefits in regulated superannuation funds
(1) A member’s preserved benefits in a regulated superannuation fund may be cashed on or after the satisfaction by the member of a condition of release.
(2) The amount of preserved benefits that may be cashed in accordance with subregulation (1) must not exceed the sum of:
(a) the amount of preserved benefits of the member that had accrued at the time when the member satisfied the condition of release; …
There can therefore be no doubt that the “cashing” of a member’s benefits in a superannuation fund involves the transmogrification of funds set aside for the benefit of the member into money (or “cash”) available to the member outside the fund. This is, of course, precisely the outcome that would be achieved in the event that the orders here were to be implemented.
I respectfully reject the proposition of senior counsel for the wife that the orders would not have the effect of requiring the Trustee to make the payments to a “person”, merely because Order 7 requires the money to be deposited into an account with authority for “either to sign”. Even if it were legitimate to distinguish between a “person” and a bank account held in the name of that person, the test is not whether the benefits in the fund are to be paid to a “person” but rather whether the benefits are to be “cashed in favour of a person”.
The proposition that the word “person” should be defined more widely than the wife contends gains support from s 2C(1) of the Acts Interpretation Act 1901 (Cth):
In any Act, expressions used to denote persons generally (such as “person”, “party”, “someone”, “anyone”, “no-one”, “one”, “another” and “whoever”), include a body politic or corporate as well as an individual.
Once it is accepted that a “person” can include a body politic or body corporate, it could hardly be argued that a payment of funds into an account in the name of such a body does not constitute a payment to that “person”.
In any event, I respectfully adopt what was said in the authorities cited to us by counsel for the husband which are to the effect that the expression “in favour of” is very wide and general, and should be interpreted as meaning “to the advantage of” and “so as to be payable to”.
The entire purpose of the orders the subject of this appeal is to ensure that funds held in a superannuation fund are used to the advantage of the wife and ultimately will be payable directly to her. Hence the husband’s superannuation entitlements are being cashed in her favour.
Senior counsel for the wife valiantly attempted to persuade us today that the orders were, in fact, made in favour of the husband. He argued this was so because the money from the fund is initially to be placed in an account in the husband’s name and because the husband will receive the benefit of the funds once the wife receives her entitlement. With respect to senior counsel, these arguments emphasize form over substance and should not be accepted.
It was not submitted on behalf of the wife that it would have been legitimate for the primary judge to make an order that would involve a breach of reg 6.22. My conclusion that the orders would have that effect would require the appeal to be allowed.
I turn then to the orders to be made in view of the merit that I have found in the appeal. It was common ground that Orders 4 to 14 inclusive and Orders 18 and 19 would need to be set aside. Counsel for the husband argued that Orders 1 to 3 were merely ancillary to the other orders and that they too should be set aside. I was not persuaded by the submission that Orders 1 to 3 were merely ancillary but I do accept that Orders 1 and 2 ought to be varied so as to provide that they are made “until further order”. The making of this variation will permit an application at first instance for them to be set aside, at which time there can be a full hearing as to the propriety of their continuation in light of whatever other enforcement relief the wife may now elect to seek.
The issue of costs at first instance will now need to be determined in light of the outcome of this appeal, and I would therefore discharge Orders 20 and 21.
I would otherwise remit the matter to the Family Court of Western Australia. This will afford the wife the opportunity to amend her enforcement application as she sees fit, rather than requiring her to institute fresh proceedings. In proposing this outcome, I consider it appropriate not to place any unnecessary impediment in the way of a party who is seeking to do no more than enforce orders of the court.
I would not direct that the matter be heard by a judge other than the primary judge. If my brethren are of the same view as me, the appeal would be allowed only on a question of law in relation to which his Honour received very little assistance from counsel. There is no reason his Honour cannot continue to have the conduct of the proceedings.
In conclusion, I note that while there were other significant issues raised in relation to the powers of the Family Court of Western Australia and the position of the Trustee, it is unnecessary to traverse these given the conclusion I have reached in relation to reg 6.22. In arriving at this conclusion I have not overlooked the various statements made by the High Court in cases such as Kuru v State of NSW (2008) 236 CLR 1, but I have taken account of the inordinately heavy workload of this intermediate Court of Appeal and the desirability of our announcing our decision today, rather than delaying delivery of judgment in order to allow a full treatment of the many arguments advanced.
For these reasons I would make the following orders:
1. The appeal be allowed.
2.Orders 4 to 14 inclusive and Orders 18 to 21 inclusive of the orders made in the Family Court of Western Australia on 16 November 2016 be set aside.
3.Orders 1 and 2 of the said orders be varied by inserting at the commencement of each order the words “Until further order”.
4.The proceedings be remitted to the Family Court of Western Australia.
Aldridge J
I agree with the reasons of the Presiding Judge and the orders proposed by him.
Moncrieff J
I agree with the reasons given by the Presiding Judge and the orders proposed.
Thackray J
On that basis there will be orders as I foreshadowed.
Costs
The issue now before the Full Court is the question of costs relating to this appeal. The appellant, although successful, does not seek an order for costs against the respondent. Accordingly there will be an order that there be no order as to costs.
The issue of contention is whether or not this Court ought to grant costs certificates pursuant to the Federal Proceedings (Costs) Act1981 (Cth). The appeal having undoubtedly been allowed on a question of law, there is no doubt that the jurisdiction of the Full Court to grant costs certificates is enlivened.
In this matter however, as I have indicated in the reasons that I have given and with which my colleagues have agreed, it is the case that the error of law has essentially come about as a result of the failure of then counsel for the husband at the hearing below to draw to his Honour’s attention sufficiently the provisions of the law to which we have been taken on this appeal.
It is true that the legislative scheme was alluded to by counsel below but it was not referred to in any detail. It was raised, as I have said, without reference to the legislation and the point on which this appeal has succeeded was not referred to in the oral submissions.
In those circumstances, I would not grant a costs certificate to the appellant, since to do so would have the effect of the taxpayer paying for the failure of the appellant to advance his argument adequately at first instance. The wife falls into a different category. She is seeking to enforce an order of the court and it was not for her to advance the appellant’s argument. I would therefore grant the wife a certificate pursuant to the provisions of the Federal Proceedings (Costs) Act1981 (Cth).
Aldridge J
I agree.
Moncrieff J
I also agree.
Thackray J
There will therefore be an order that the respondent wife have a certificate in the usual form of orders pursuant to the Federal Proceedings (Costs) Act1981 (Cth). The application of the appellant husband for a costs certificate will be dismissed.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Aldridge & Moncrieff JJ) delivered on 3 April 2017.
Associate:
Date: 6 April 2017
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