Mackey v Mackey

[2007] HCATrans 408

[2007] HCATrans 408

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S357 of 2006

B e t w e e n -

DARREN JOHN MACKEY

Applicant

and

SUZANNE JOY MACKEY

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 AUGUST 2007, AT 3.39 PM

Copyright in the High Court of Australia

MR R.S. BELL:   May it please the Court, I appear for the applicant.  I appear with my learned friend, MS R.T. BELL.  (instructed by Farrar Gesini & Dunn)

MR P.G. MAIDEN, SC:   May it please the Court, I appear for the respondent.  (instructed by Mark Brown & Associates)

GLEESON CJ:   Yes, Mr Bell.

MR BELL:   Thank you, your Honours.  As your Honours observe, the application concerns – the point that we would seek to develop as the relevant point of interest – the way in which superannuation is dealt with.

GUMMOW J:   Where do we find the text of section 90MT?

MR BELL:   I have copies of those that I can hand your Honours as a bundle, if that is convenient?

GLEESON CJ:   Thank you.

MR BELL:   May I perhaps more conveniently hand the Part 8VIIIB bundle?

GUMMOW J:   Yes.

MR BELL:   Your Honour, it came into effect on 28 December 2002.

GLEESON CJ:   Is there some disagreement within the Family Court about the construction of some particular provision and, if so, what is the provision and what is the disagreement?

MR BELL:   It is not so much the provision.  As is sought to be developed in the written outline, it is the way in which the court will go about applying its regulatory process to the division of assets – if I can use that word with some caution – including superannuation interests, in this sense.  It is in all aspects a statutory claim that the parties bring pursuant to section 79 which is the power in which the interests are relevantly divided.  It is not controversial that that power triggers considerations which are called in that court 75(2) factors which are what I might very broadly call needs‑type adjustments.  The Part VIIIB amendments, your Honours would perhaps be aware, followed considerable discussion in the community about the way in which superannuation might be dealt with and the classic ‑ ‑ ‑

GUMMOW J:   I have read some discussion of Part VIIIB which suggest there are some constitutional questions that can arise but they are not on the horizon in this litigation, are they?

MR BELL:   Not in this case, your Honour.  That was not raised because I would have to say that, insofar as we, and also my friend’s client, ran the case at trial it would follow, one would have to accept on our side, that we acknowledged that what is at issue here would have fallen within section 79 which deals with property.

KIRBY J:   It is no longer controversial that this is part of property?

MR BELL:   No, I would not say it is no longer controversial but I am simply accepting that in this case it was not contended by us that the trial judge could not make the orders as it fell outside property.  Property, your Honours will see in the cases that have been referred to ‑ ‑ ‑

GUMMOW J:   You were not saying anything was done outside jurisdiction?

MR BELL:   Not in this case it was not said, no, I accept that.

KIRBY J:   I must say, I found the written submissions on both sides very good in this case.

MR BELL:   Thank you.

KIRBY J:   But one point that is made against you is that in the end the property distribution is a discretionary matter and what you are arguing about is 6 per cent of the total assets and that therefore we are not doing these parties a favour by bringing them up to the High Court and having the matter dealt with.  One day certainly, superannuation is an important issue but the question is, is this the day?

MR BELL:   May I take your Honours immediately to that issue and put on hold other matters for this reason.  I accept that the way in which a sum of money may be reviewed is going to be seen in objective terms as well as subjective terms and it can be said in this case that the difference in outcomes, be it notionally $80,000, $100,000, et cetera, is not necessarily in community terms a large sum, although we say the relevant item being considered, namely, an item valued at $1.1 million is of considerable value.  What we do say in this case is that the way in which the court at first instance will go about resolving matters of this kind is it is very, very important to have reasonable, if I could call it, tariffs as to what would happen.  Your Honour, without indulging in the trite observations that one tries to reasonably settle any litigation, there is a very special imperative in matrimonial cases to do so.

GUMMOW J:   Do you want us to set a tariff?

MR BELL:   No, your Honours, I am not ‑ ‑ ‑

GUMMOW J:   We would not be very good at that, I suspect.

KIRBY J:   There is some prospect.

MR BELL:   Your Honours, could I perhaps illustrate by way of an example.  If a matter of this kind is seen as being otherwise unremarkable as it presented to a trial judge, parties of a 13‑year marriage, a little over the national average now, three children, a police officer, a lady who has qualifications in a dental related field and they have about $500,000 or so in assets, they have $7,000 or $8,000 in separate superannuation funds, she has a $15,000 car, he has a car of light value, fully encumbered, one would say it is very unremarkable facts as it appeared before his Honour.

GLEESON CJ:   A case you would say you would hope would not make it to the High Court?

MR BELL:   I am trying not to talk your Honours out of an application before I answer your Honour’s question, at the very least.  The problem that will face the proverbial solicitor in the office at Parramatta on these facts would be that if this police officer had not been injured, it is a remarkably straightforward case to resolve.  It is going to be 50 per cent, 52 per cent, all those issues that were before the court and which I will not trouble your Honours with.  There is no problem with that.

Your Honours need no reminder from me that superannuation is in the air.  I am not sure if your Honours watch this but certainly anyone behind me would have been no stranger to the advertisements or information about superannuation on the TV during the course of year, it is uppermost in people’s thinking.  What has happened here is, if this applicant, a police officer, had not been injured in the course of his duties as an undercover officer, as to which there are double findings, it was a straightforward case, but what happened is, by virtue of the valuation placed upon what is no more than his pension, his entitlements to receive a three‑quarter wage for the appropriate period, the actuarial calculation done for that was $750,000; the $750,000 component of the $1.1 million overall valuation.

I will use approximate figures, if I may, your Honour, without being unfair about it.  Now, the problem with that is, is a solicitor on the result of the decision below seriously going to have to say to an injured police officer on a pension, “Your colleague who is not injured will get 50, 52 per cent, or whatever, I can settle that case with the solicitor next door, that will not be a problem, but in your case, because you are injured, because you are going to get three‑quarters of your wage, because an actuarial value can be placed upon that” – and it can be called $750,000 – “you will get nothing.  Never mind what section 75(2) might say about taking into account the reasonable needs of the parties, you will get nothing, or thereabouts”.

In my submission, the approach of the Full Court, your Honours would have seen, when their Honours went to say, what is the effect, what is the nature of the respondent’s claim, is to say, “What can we leave him with?”  In effect, their Honours left him with what was a superannuation interest but left him with some notional costs, left him with $10,000 in furniture, said they left him with a car – that was wrong, it was actually the wife’s car – and that is about it.

In my submission, it creates enormous uncertainty in the community to say, “Injured officer, I will capitalise your future income for a long time.  I will call it $750,000 and I will say you have that.  Uninjured officer, in a better position, I do not do that”.  Between the two parties, a $750,000 difference.  Or, to put it a different way, if one accepts that the treatment of superannuation in recent times involves a number of different products, if one assumes that they come in any nature of forms but by and large the drift is certainly to accumulation funds, we would submit that it is ill‑conceived to do as the Full Court did, one size fits all, “We are going to treat this applicant, this officer, as being in the same category as another person whose facts are in all respects the same except for one.  Instead of having a pension which we capitalise at $750,000 notionally, he actually, and his partner, actually have $1.1 million in cash and shares in their super fund”.

GUMMOW J:   Wait a moment, I think you might be doing an injustice to the Full Court who said they found it difficult.  If you look at pages 96 and 97, paragraphs 135 through to 137.

MR BELL:   Yes.

GUMMOW J:   It seems to me they wrestled with this case, in the absence of a splitting order application.

MR BELL:   Yes, but, your Honours, there are several levels to that.  It could be said against us that we did not seek it but one would ask rhetorically, what is the reality of seeking to split a pension which is three‑quarters ‑ ‑ ‑

GUMMOW J:   Indeed.  That is what was vexing the court, I think.

MR BELL:   Your Honour, in my submission, did it really vex ‑ ‑ ‑

GUMMOW J:   Particularly when you read 136.

MR BELL:   Your Honour, in relation to 136, I would submit that it is no more than a – lip service would be discourteous but the most superficial analysis of what is just and equitable to approach the outcome for these parties as being one where you say, “We can’t really take off him his notional legal fees, he should keep his $5,500” – he said was about $8,000 – “leave him his car” – which was wrong –  “to satisfy the wife’s entitlement”.

GLEESON CJ:   But the first line on page 97 is fairly important, is it not?  That is to say, one of the particular problems they had, and I imagine it is not an unusual problem, but one of the particular problems they had in the case was the extent of the readily available assets and they were doing the best they can within the confines of that situation.

MR BELL:   As, in my respectful submission, did the trial judge, but, in my submission, to look at it another way, it was not an appropriate intervention with the exercise of his Honour’s discretion to say, “In effect, you’ve come up with a certain figure that the husband would get and we will take that away”.  What is the real practical difference between those two figures?  The real practical difference – and I can take your Honours through the figures but again I am approximating them – the real practical difference is that, whereas the court below has taken the 1.1 and said, “I will without slavishly applying the percentage that the wife seeks being the 5 over 20 calculation, without slavishly saying that, we are aware that she would say that her percentage claim on contributions to that is $330,000.  How close can we go to it?  On a present day, never mind that it is discounted and never mind any delays, on a present day how close can we go to it?”  In my submission, that is a fair reading of 135 and 136.

GLEESON CJ:   What is the practical difference to the parties between what Justice Coleman did and what the Full Court did?

MR BELL:   The practical difference would be that his Honour Justice Coleman, the trial judge, gave force and effect to the components of the $1.1 million, that his Honour in substance did that.  I will just find that paragraph.  That, in my submission, is the real difference.  At paragraph 98 on page 37 of the application book his Honour ‑ ‑ ‑

KIRBY J:   But it is not wrong to say it is 6 per cent, is that not correct, give or take a fraction?

MR BELL:   In terms of it being a difference of $80,000 or $100,000, that is – well, no.  It depends what we are putting into the asset pool.  If we say that the trial judge gave the husband about $100,000 – the Full Court, I acknowledge, adjusted on some other features but if one looks at 80 or 100, depending on whether one goes back completely to the trial judge or accepts the adjustment below – if we look at $80,000 or $100,000, then that is a percentage of what?  It is either a percentage of 500‑odd, if one excludes the super, so that is about 20 per cent‑odd, or it will certainly drop to a much lower per cent if we do put a circle around all of the super and all of the immediately available net tangible assets.  One would get to a lower percentage by saying the adjustment is only – it could well be 6 per cent – of the total, but the mischief is in the total.  Your Honour, I do not want to engage in rhetoric, but ‑ ‑ ‑

KIRBY J:   I am not saying that the percentage is critical, as such.  I mean, if you had the divorce of a multimillionaire it would be a very substantial amount but in this case between these parties, an injured policeman and modest assets, it really is a question as to whether one would do the favour to the applicant if he were to be brought up.

MR BELL:   Your Honours, I am not suggesting for one moment that it is easier to meet the Court’s threshold for applications just by adding zeros and I am not suggesting that that is what is being put to me, however, in my submission, there should not be an impediment to the application based on the fact that this is what Justice Watson might have called “a Parramatta matter”.  One does not more easily get it by adding a zero and calling it an eastern suburbs matter.

GLEESON CJ:   What is that?

MR BELL:   “A Parramatta matter”.

GLEESON CJ:   That is not a reference to Justice Waddy, is it?  What is “a Parramatta matter”?

MR BELL:   One that one tries to resolve in a common sense way without undue point taking that might arise ‑ ‑ ‑

GLEESON CJ:   What is wrong with that?

MR BELL:   I agree with it completely, your Honour.

KIRBY J:   Nobody does that in the High Court.

MR BELL:   But we say that that is what Justice Coleman did.  He is a senior appeal justice.  He sat in the Coghlan appeal decision that their Honours refer to but he had reserved at that time.  Your Honours, if this decision below is applied it means this, that ‑ ‑ ‑

KIRBY J:   It is only a decision on its own facts and a discretionary matter dividing property in a modest joint property of people of modest means.  How can that become some great legal principle?  I hope that does not happen.

MR BELL:   When your Honour says “of modest means” we would respectfully submit that is a fair perception of the truth of these parties but by notionally adding $1.1 million to the other 500‑odd, in rough figures, they are not being treated as people of modest means in terms of the kind of matters that might come before his Honour conventionally.

GUMMOW J:   This is the problem that arises from working Part VIIIB into section 79, but that is the legislative will.

MR BELL:   Yes, I accept what your Honour says.

GUMMOW J:   It was controversial at the time but that was the legislative will.

MR BELL:   It was and I accept this is a fund which on the regulations is covered.  There is no issue about that.  It provides a mechanism for evaluation.  In that era there were no specific regulations for this particular kind of fund but I am not suggesting anything turns on that in our favour but it is, nevertheless, a valuation which is brought about and triggered by splitting applications.  There was no actual splitting application ultimately before their Honours below.  We do not say that as a criticism but they had regard to that valuation.

Perhaps this is the real difference.  To draw in what his Honour did in having regard to the two components – and his Honour distinguished to draw them in together is not appropriate – the percentage claim that the wife would have made would pretty much reflect the $330,000 – we would call it the real money component claim – but the $750,000 extrapolation is no more than that.  It is an unfunded scheme, it applies to all public servants and it means this, that a practical application – I appreciate they turn on their own facts but this is an appellate decision and it will guide first instance judges who, with an unfunded scheme, would on the principles case – I can draw no apparent distinction between one in which there is real money there.

The practical difference between two parties of an unfunded scheme and one where there is 1.1 in the bank is that, although on these facts the wife would be in an identical position, in the other case the husband will actually have $750,000.

GLEESON CJ:   We are familiar with unfunded pension schemes.

MR BELL:   I will not go there more than on the specific ‑ ‑ ‑

KIRBY J:   Some more than others.

MR BELL:   Your Honours, I am not saying that their Honours were oblivious to what his Honour said in paragraph 98 on application book 37, although it does not get much past noting it – it was noted, I think, in their paragraph 91 – but, in my submission, there is still a very, very significant difference.  The upshot is and the injustice of the case is this – I do not want to repeat what I have already put, but the overall injustice is this, that if he as a police officer, about whom the findings are quite plain at appellate level, injured in the course of his dangerous work as an undercover officer, if he had continued in employment, then this $750,000 would not be there.  So, he is being, in effect, allocated that, notionally.  That would not otherwise arise but for this notional analysis.

GLEESON CJ:   Yes, thank you, Mr Bell.  We do not need to hear you, Mr Maiden.

We are obliged to both counsel for their assistance in this matter.  Despite the careful arguments of the applicant, we are not ultimately convinced that the Full Court of the Family Court of Australia fell into error in the conclusion it reached as to the distribution of the property of the marriage of the parties since dissolved.

The question of the account that needs to be taken of superannuation entitlements as part of the property to be distributed may in an appropriate case be the proper subject of consideration by this Court.  However, in this case the differences between the parties appear to be confined to quite a modest percentage of their joint property.  Discretionary judgments are involved.

We are not persuaded that the appeal judges erred in their conclusion that an adjustment was needed to the orders of the primary judge.  An appeal would not enjoy sufficient prospects of success to warrant a grant of special leave and special leave is refused with costs.

AT 4.00 PM THE MATTER WAS CONCLUDED