Mayne v Robbins
[2009] SADC 58
•27 May 2009
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MAYNE v ROBBINS
[2009] SADC 58
Judgment of His Honour Judge Lovell
27 May 2009
PROCEDURE - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE - VARIATION AND SETTING ASIDE OF CONSENT JUDGMENT
Application to set aside consent order made pursuant to De Facto Relationships Act 1996 - Defendant alleged to have not made full disclosure of her superannuation entitlements - whether "Duty of disclosure" arises under De Facto Relationships Act - whether Consent Judgment became a "Cohabitation Agreement" - Application of r 84.12 - Application of s 8 of De Facto Relationships Act.
Held: Pursuant to r 84.12 Consent Judgment set aside.
De Facto Relationships Act 1996 (SA) ss 8, 10, 11; District Court Rules 1992 r 84.12, referred to.
Livesey v Jenkins [1985] AC 424; Wilson v Vine [2003] NSWSC 341; Hayes v Marquis [2008] NSWCA 10; Mohtar v Mohtar and Seputis (1988) 146 LSJS 377; Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471; Cavanagh-Lang v O'Callaghan & Ors [2000] SASC 187; Van Jole v Cole [2000] NTSC 18; Huddersfield Banking Company Limited v Henry Lister & Son Limited [1895] 2 Ch 273 at 280; Taylor v Taylor (1979-1980) 143 CLR 1; Harvey v Phillips and Anor (1956) 95 CLR 235, considered.
MAYNE v ROBBINS
[2009] SADC 58
For many years the plaintiff and defendant lived in a de facto relationship. The family home was a small farming property at Basket Range. The two children of the relationship were raised on the farm.
Unfortunately the relationship broke down in March 2003 and they separated. Mr Mayne issued proceedings in the District Court pursuant to the De Facto Partners Act (the Act) seeking a property settlement. The matter was listed for trial. Shortly before trial the parties attended a mediation conference and the matter settled. A consent judgment recording the terms of settlement was entered.
Mr Mayne now alleges that Ms Robbins, prior to the mediation conference, did not disclose all of her assets namely her full superannuation entitlements. He alleges that had he known the true position of her superannuation he would not have agreed to the terms of settlement and therefore he would not have agreed to consent to judgment. He asks this Court to exercise its discretion and set aside the consent judgment.
Ms Robbins alleges she disclosed all information and documents required, and even if she did not, the Court should not exercise its discretion to set aside the consent judgment.
Witnesses
Three witnesses gave evidence.
Mr Mayne’s evidence-in-chief consisted of his affidavit of 31 May 2007. He was cross-examined by Mr Wells QC. Mr Mayne was an impressive witness and I accept his evidence. Part of a further affidavit[1] of Mr Mayne was also tendered.
[1] Affidavit dated the 16th June 2008.
Ms Robbins’ evidence-in chief consisted of her affidavit of 21 September 2007. She also filed a later affidavit.[2] She was cross-examined by Mr Tallarida counsel for the plaintiff. I found parts of her evidence puzzling. It was not suggested that she tried to mislead me in her evidence. I accept that she genuinely held various beliefs; I do not accept that she ought to have held them as will appear later in the judgment. If there is any conflict in the evidence between Mr Mayne and Ms Robbins I prefer the evidence of Mr Mayne.
[2] Affidavit dated the 24th April 2008.
Mr Watson is an Actuary and he gave expert evidence about various superannuation entitlements. He was an impressive witness and I accept his evidence.
The affidavit of Mr McDiarmid of 12 December 2007 was tendered. He was not required for cross-examination.
Common Ground
There was no dispute that an Inter parte Summons and Statement of Claim under the De Facto Relationships Act 1996 (the Act) was issued by the plaintiff on 27 February 2004.
On 12 May 2004 the defence was filed. On 13 September 2004 an amended reply to the defence was filed.
On 17 February 2005 copy documents were filed. The matter was listed for hearing. The precise date was not in evidence but I understand that it was some time in July/August 2005. A private mediation was conducted on or about 19 June 2005. Agreement on terms of settlement was reached on that day. On 18 July 2005 the Court entered judgment on certain terms with the consent of both parties and the order was sealed.
The issues
The plaintiff alleges that in his Statement of Claim filed in the original proceedings (“Statement of Claim”) he disclosed fully his superannuation entitlements. The plaintiff complains that the defendant did not, prior to the consent judgment being entered, fully disclose her superannuation entitlements. He alleges that she had an obligation of “full disclosure” or, in the alternative, an obligation to discover the document that disclosed her entitlement in full as it was “directly relevant” to the cause of action.
The plaintiff alleges that in paragraph 8 (h) of the defence filed by the defendant, she stated that she had “a superannuation entitlement with Super SA worth approximately $65,943.00 as at the 30th June 2003”. This disclosed only part of her superannuation entitlements. The plaintiff complained that at no time did the defendant disclose any other information relating to her superannuation.
By letter of 12 May 2004 the defendant’s solicitors provided a copy of their client’s superannuation “at 30/6/03.” It is alleged that what was disclosed was only part of the overall entitlements; the document provided was not complete.
Neither Mr Mayne nor Ms Robins updated their superannuation details prior to a settlement being agreed on 18 July 2005. A consent judgment was entered on that day and sealed by this Court.
The plaintiff’s complaint is that subsequent to the settlement he became aware that the defendant had only disclosed one part of her “superannuation entitlements” as at the June 2003 date.[3]
[3] Paragraph 11 of affidavit.
The plaintiff alleges that[4] the defendant had an ongoing obligation to disclose all aspects of her Super SA superannuation policy during negotiations and prior to the consent judgment which should have included the defendant’s “employer component” (as it was later identified) of her superannuation policy. This component included the Superannuation Guarantee amount. Further the plaintiff alleges that the defendant did not disclose at all the existence of another superannuation scheme known as the “Triple S Scheme”.
[4] Paragraph 14 of affidavit.
The plaintiff alleged that[5] he would not have settled for the sum that he did had he been aware of the true position as to the defendant’s superannuation.
[5] Paragraph 18 of affidavit.
The defendant acknowledged not disclosing certain information and/or documents but argued that there was no requirement for her to do so either by way of “full disclosure obligation” or discovery. She also disputed that the plaintiff had fully disclosed his entitlements.
The evidence
The plaintiff’s evidence
The Statement of Claim sought an order for the division of property pursuant to Section 10 of the De Facto Relationships Act 1996. The plaintiff alleged in paragraph 8 of the Statement of Claim that the parties, as at the date of separation, had various assets. He alleged in paragraph 8.9 that his “AXA Superannuation entitlement” was worth “approximately $33,526.00 as at 29th October 2003.” That pleading was not strictly correct as the documentation later showed that the account balance was $33,526.00. Whether strictly that was its value is a different question.
The plaintiff discovered the entire document from AXA dated 29 October 2003.[6] That document included information about Death Benefits and Total and Permanent Disablement Benefits. It contained information as to what his retirement benefit may be given a particular (assumed but not guaranteed) earning rate for his fund. Of importance in this case is that the document contained all the information as to the account balance of the plaintiff whether he was going to access that balance or not. There was no other “fund” from which other benefits attached or flowed. He had no “entitlement” to any other “benefit”. Indeed the projections for a retirement benefit were simply based on the account balance. In effect he had no other benefits attached to his “superannuation”. His disclosure included “additional employer contributions including Super Guarantee vouchers”.[7]
[6] Exhibit “ITM3” of plaintiff’s affidavit.
[7] See “ITM3”
On 12 May 2004 the defence was filed. The defendant responded to paragraph 8.9 of the Statement of Claim as follows:
8(h) that the defendant has a superannuation entitlement with Super SA worth approximately $65,943.00 as at the 30th June 2003.
On the same day that the defence was filed the defendant’s solicitors wrote to the plaintiff’s solicitors.[8] At page 2 of the letter it is asserted: “My client’s superannuation at 30/6/03 (statement enclosed) 65,943.16”.
[8] Exhibit “ITM1” of the plaintiff’s affidavit.
The statement enclosed was most likely that exhibited to the plaintiff’s affidavit and marked “ITM2”.[9]
[9] See also Annexure “JM1” to the affidavit of Mr McDiarmid which contains the same information as “IMT2”.
The “statement enclosed”, as discussed later, was in fact only part of a document. The defendant deliberately did not disclose the entire document. Her reasons for not disclosing the document are discussed later. The failure to disclose this document was the substantial reason for this application. The entire document was tendered and marked Exhibit P4.
The plaintiff on 13 September 2004 filed an Amended Reply admitting paragraph 8 (h) of the defence.
The plaintiff stated that he later withdrew his funds from AXA and placed the funds with a different company. He changed to a MLC MasterKey Superannuation fund. He had to pay an exit fee to extract his account balance from his AXA superannuation and “rolled the fund” over.[10] By 2005 his account balance had grown to $42,513.21. When cross-examined the plaintiff agreed that he did not send a full copy of his superannuation “statement of account” to the defendant.[11] He agreed that he only supplied the AXA document and never provided further information to the defendant about his “account balance”. He agreed he did not seek from the defendant, prior to the matter settling, an update of her superannuation.
[10] T 40.
[11] Exhibit “ITM4” of the plaintiff’s affidavit.
Mr Mayne agreed that once the pleadings had closed admitting the defendant’s superannuation entitlements in the sum of approximately $65,000, superannuation entitlements were not again mentioned. He agreed with the proposition put by Mr Wells QC that from that time on any settlement discussions were directed towards trying to resolve the dispute and did not involve negotiations regarding the superannuation entitlements. This included the negotiations at the mediation. His attitude was that he was to keep his superannuation and she was to keep hers. The main issues between the parties became the value to be ascribed to the Basket Range property and the plant and equipment. There was a dispute as to what percentage of the value of the assets each party should get. The plaintiff agreed that during the negotiations he wanted a fifty/fifty distribution of the assets and the defendant wanted a sixty/forty distribution of the assets.
Mr Mayne agreed that his brother acted as a facilitator to assist the settlement process. An agreement was reached and a document prepared to record that agreement. This is the document that led to the court order being made.[12]
[12] T 62.
Further the plaintiff agreed that the amended reply filed in the action was done on his instructions. He also accepted that he gave his solicitor instructions that his entitlement as at 29 October 2003 was worth approximately $33,526.00. He gave evidence that he believed the amount of money in his superannuation account was what he had invested over the years and the interest that it had earned. He accepted that he stood to gain benefits of a much higher amount in the future but he was not aware that any of his benefits were guaranteed. Benefits would arise only from further investment by him and earnings by the fund on the contributions.
Mr Mayne agreed that he did not provide the defendant with details of his superannuation after the initial disclosure including his change of fund. When questioned by Mr Wells QC he stated that he had assumed that when the defendant got to retirement age there would be more in her fund than $65,000 that had been declared. He assumed that it would have grown by way of contribution investments just like he assumed his would, although perhaps not at the same rate.
Mr Mayne agreed that the document attached to his affidavit (“ITM3”), that was the discovered document of the defendant, included a reference to her benefit being determined in accordance with “the Superannuation Act 1988 and regulations governing the scheme”: had he wanted to know more he could have gone and looked at the Act or been advised about the Act. He agreed that he did not do that.[13]
[13] T.54.
Mr Mayne agreed that an agreement was reached at the mediation with the defendant. He believed he saw a copy of the agreement and that he signed it and was aware of the fact that a consent order was going to be drawn up and finalised in court.[14]
[14] T 69 and also Exhibit P8.
At that stage the plaintiff’s evidence was completed. The defendant then gave evidence. It later arose that further evidence was required to be called by the plaintiff and I will turn to that later.
The defendant’s evidence
The defendant gave evidence and her affidavit was tendered.[15]
[15] Exhibit D9.
The defendant’s affidavit, not surprisingly, responded to both the amended Notice for Specific Directions and the plaintiff’s affidavit. It did not respond in a detailed way. Objection was taken in the defendant’s affidavit to some of the allegations. Some of what was contained in the defendant’s affidavit was admitted by Mr Mayne during the course of cross-examination. In relation to the suggestion that the defendant had disclosed only one part of the policy during property settlement negotiations the defendant’s affidavit, at paragraph 25.2, objected to the allegation on the basis that it was inadmissible as it related to settlement negotiations. However, the defendant did admit that the document exhibited to Mr Mayne’s affidavit “ITM2” was the only document that she ever disclosed.
The defendant stated that she borrowed against the property at Smith’s Road, Forest Range to pay the $205,000 to Mr Mayne as agreed under the settlement.
Ms Robbins was cross-examined about Exhibit P4.[16] This was her superannuation statement for the year ended 30 June 2003. It shows a closing balance as at June 2003 as $65,943.16; that is the amount that she disclosed in her defence. Underneath that figure is an item described as Superannuation Guarantee of $36,493.91. When asked why she had not disclosed that in her defence she replied that “its superannuation guarantee and I had no entitlement to it unless I resigned and I had no intention of resigning”.[17] When pressed about that she stated:
If I retired or resigned at the end of my career when I was 55, 56, 65 whichever I chose, no, I still wouldn’t get the superannuation guarantee because it’s what’s called a defined benefit which is calculated as a formula on your final salary. It’s rather complex. [18]
[16] As discussed earlier part of this document was “ITM2”.
[17] T 78.
[18] T 79.
Ms Robbins agreed that she did not disclose the figure of $36,493.91 to the plaintiff. She agreed she had removed the ID number from the document that she discovered. She stated that she gave the figure to her solicitor that she believed needed to be disclosed.[19] Ms Robbins agreed that she did not discover the document Exhibit P5 which is the 30 June 2004 statement. Exhibit P6, the 30 June 2005 statement, was not in existence at the time of the mediation.
[19] T 81.
The defendant had also been contributing to a scheme known as the Triple S scheme, a further superannuation scheme.[20] In relation to that scheme, Ms Robbins agreed that she did not disclose those documents to Mr Mayne. She stated that the closing balance in Exhibit P1 as at 30 June 2003 of $12,655.13 was not disclosed because it was a salary sacrifice that post dated the separation.[21] As it transpires that was not totally correct as the salary sacrifice commenced before separation. The defendant agreed that she did not disclose any documentation or information relating to Exhibits P1-P3.
[20] Exhibits P1, P2 and P3.
[21] T 86.
When the defendant was questioned again about why she did not disclose the figure of $36,493.91 from Exhibit P4 to Mr Mayne she simply replied that she did not believe there was a need to. She explained that she considered the Superannuation Guarantee amount to be a notional amount which she would only obtain if she were to retire before age 55. She said she had no intention to retire.[22] When asked:
QWas there going to be any benefit to you from that figure when you retired from work.
ANo not from that figure.
QThat would become zero would it.
AYes because you’re actual retirement benefit is calculated in a different way.[23]
[22] T 89.
[23] T 89.
This was picked up again later in the cross-examination.[24]
[24] T 92.
Whilst it is true to say that her actual retirement benefit is calculated in a different way what the defendant did not say was that the benefit was over and above what she would get on retirement from her own contributions and earnings.
Later evidence established that the plaintiff was entitled to a benefit if she attained the age of 55. She did not disclose to the plaintiff prior to the settlement of the matter any information relating to that aspect of her retirement benefits/superannuation.
In relation to the question of her belief with regard to the pleadings she was re-examined by Mr Wells QC. She stated:
AI believe that I was giving an equivalent or in a qualitative sense a similar figure. I wasn’t – because the plaintiff hadn’t disclosed or given a figure which reflected his future entitlement, it was his current entitlement not a retirement benefit I was replicating that in mine.[25]
[25] T 94.
The defendant only saw the need to disclose her “current entitlement” as that is what the plaintiff had done. Even taken at face value her response is incorrect. Her current entitlement included the Superannuation Guarantee amount or at least part of it. That was, in part at least, her entitlement if she chose to exercise the option. The fact that she did not intend to exercise the option does not mean she had “no entitlement”. If she did not retire prior to age 55 she clearly had other entitlements unrelated to her contributions.
Whilst the defendant may have had that belief, her non-disclosure had the effect of hiding from the plaintiff the fact that, not only would she benefit from whatever growth was achieved in relation to the amount of $65,943.16, but that there was a further fund from which benefits flowed. Indeed if the defendant retired at aged 60 she would receive “4.4936 times Final Annual Benefits Superannuation Salary”. If she retired at age 55 she would receive the total of the account plus 3.6808 times the Final Annual Benefits Superannuation Salary. If she retired before aged 55 then she would have received at least the Superannuation Guarantee amount. The plaintiff had no such “retirement benefit”. He had disclosed all funds from which benefits flowed. The defendant, quite simply, did not.
In addition the defendant admitted that she did not disclose the existence of the Triple S account. The balance of that account at 30 June 2003 was $12,655.13.[26] The balance at 30 June 2004 was $40,102.22.[27] The balance as at 30 June 2005 was $68,056.38.[28] It is clear that those amounts reflect “salary sacrifice contributions” of the defendant plus “account earnings” over the time.
[26] Exhibit P1.
[27] Exhibit P2.
[28] Exhibit P3.
I make the following findings of fact.
The plaintiff disclosed the account balance of his superannuation as at 30 June 2003. That disclosure included his contributions and any contributions that had been made by his employer. The plaintiff had no further fund from which entitlements or benefits flowed.
The defendant deliberately did not disclose all of Exhibit P4 to the plaintiff. She disclosed that part of her superannuation that related to her contributions. The defendant did not disclose the employer component of her superannuation as at 30 June 2003. The defendant did not disclose the existence of the Triple S Scheme to the plaintiff at any stage prior to the consent judgment being entered.
The plaintiff did not personally or through his solicitors make any further enquiry about the defendant’s superannuation after the letter of the 12th May 2004 from the defendant’s solicitor to his solicitor. I find that the plaintiff assumed that the defendant had disclosed all of the funds from which benefits flowed and, from the time of the receipt of the letter and the Defence, was therefore content to allow negotiations to proceed on the basis that each party kept their superannuation. The negotiations at the mediation proceeded on that basis. Neither the plaintiff nor the defendant “updated” their respective superannuation material prior to the mediation.
I find that had the plaintiff been aware of the entire contents of P4 he would not have adopted such a position. I accept his statement that had he been made aware of the contents of P4 or indeed of P4 itself his attitude to the manner in which he approached the question of superannuation generally and at the mediation would have been different. It is almost inevitable that he would have sought a valuation of the defendant’s entitlements.[29] I accept that he would not have compromised the District Court action in the amount that he did.
[29] Affidavit of plaintiff dated 16/6/08 at [17].
Was there an obligation on the defendant to disclose the information?
The plaintiff instituted his action in the District Court of South Australia pursuant to s 9 of the Act. Pursuant to s 10 of the Act he sought an order for the division of property. Section 11 of the Act deals with the matters a court takes into account when deciding whether to make an order for division of property.
The plaintiff argued that once proceedings are issued, the Act by its terms, imposes a duty or an obligation of full disclosure. Further he argued that duty of disclosure is one of utmost good faith. The plaintiff relied upon the English decision of Livesey v Jenkins[30] to support his position that each party owes a duty to the court to make full and frank disclosure of all material facts to the other party and the court. The principle of full and frank disclosure applies, it was argued, not only to contested proceedings heard with full evidence, but also to exchanges of information between parties and their solicitors leading to the making of consent orders without further inquiry by the court.[31]
[30] [1985] AC 424.
[31] Supra at 473 [H].
The defendant argued that no such duty of disclosure exists under the terms of the Act. Mr Wells QC submitted that there was nothing in the terms of the statutory provisions which would lead to the importation of a “duty to disclose”.
The defendant sought to distinguish Livesey v Jenkins on the ground that it involved an action under the Matrimonial and Family Proceedings Act, a jurisdiction that had its own procedures, that ensured full and frank disclosure. Whilst acknowledging that the Family Court of Australia has consistently held that there is a clear obligation as a party to proceedings in that Court to make a full and frank disclosure of all relevant circumstances, the defendant sought to distinguish those cases on the same basis.
Mr Wells QC submitted that the plaintiff chose to issue proceedings in the District Court, as he was entitled to do, and so the normal District Court procedural rules applied. He submitted that Parliament had placed this jurisdiction in the hands of established courts namely the District Court and therefore the parties have to accept that “you take your court as you find it”. He developed the submission by saying that the parties were in the civil division of the District Court and the rules are therefore adversarial; it is not an investigative process. The rules, he argued, provide no procedure to file, for example, an affidavit by a party making full disclosure.
Further, Mr Wells QC pointed to the certification section under the Act whereby a lawyer’s certificate would be a warranty disclosing all assets. He argued that there would be no need for that in the legislation if there was an over-riding duty of disclosure.
It could not be said that the Act is clear and unambiguous in its terms.
I do not accept the argument of the defendant. The comments made about the necessity of full and frank disclosure in the various matrimonial jurisdictions are equally applicable to proceedings under this Act. It is hard to see how a court could fulfil its statutory obligations under s 11 of the Act without there being such an obligation.
It must be borne in mind that parties who have been in a de facto relationship may well be in quite different positions regarding the knowledge of assets of the relationship. One party may well be in a strong position to know the material facts and the other party in a weak position to discover them.
After a de facto relationship ends, either of the de facto partners may make an application for the division of property.[32] That is what occurred here: the plaintiff made such an application.
[32] s 9 of the Act.
On an application for the division of property the court may make orders it considers necessary to divide the property in a way that is just and equitable.[33] I accept that s 10 of the Act does not require that an order necessarily be made.
[33] s 10 of the Act.
However in considering that matter the court must have regard to the matters set out in s 11.
Section 11 of the Act states:
11—Matters for consideration by the court
(1)In deciding whether to make an order for the division of property under this Part, and if so the terms of the order, the court—
(a) must consider the financial and non-financial contributions made directly or indirectly by or on behalf of the de facto partners to—
(i)the acquisition, conservation or improvement of property of either or both partners; or
(ii)the financial resources of either or both partners; and
(b) must consider the contributions (including homemaking or parenting contributions) made by either of the de facto partners to the other partner or to children of the partners or either of them; and
(c) must have regard to the terms of any relevant cohabitation agreement; and
(d) may have regard to other relevant matters.
(2)If a relevant cohabitation agreement—
(a)is a certificated agreement; and
(b)provides for the exclusion of the court’s power to set aside or vary the agreement,
an order for the division of property under this Part must be consistent with the terms of the agreement.
“Property” is defined in s 3 of the Act to include—
(a) a prospective entitlement or benefit under a superannuation or retirement benefit scheme;
(b) not relevant;
(c) not relevant;
(d) any other valuable benefit.
There is no discretion. The court cannot comply with s 11 if the parties do not disclose all the information to the court. When the court considers an order under s 11 it is not for one of the parties to determine what information they will provide.
In my opinion there is an obligation on each party, once proceedings are issued and an order for division of property sought, to make full and frank disclosure of those matters referred to in s 11 of the Act.
Whilst the provisions of the De Facto Relationships Act (NSW) are not identical to this Act, a duty of full and frank disclosure has been consistently held to be appropriate under that Act. [34]
[34] Wilson v Vine [2003] NSWSC 341, Hayes v Marquis [2008] NSWCA 10.
In any event, I do not accept the argument of the defendant that the manner in which the pleadings evolved in this matter, meant that the defendant did not have to disclose the full extent of her superannuation entitlements under the normal rules of discovery. In my view Exhibits P1, P2, P4 and P5 were all directly relevant to the issue of superannuation as pleaded.[35]
[35] Exhibit P3 and P6 came into existence after the mediation had finalised.
Mr Wells QC referred to rule 58.03 of the District Court Rules relating to discovery. He relied on the fact that proceedings under the De Facto Property Act were adversarial in nature.
He submitted that there was no issue relating to superannuation as the defendant had pleaded her superannuation and the Reply admitted it. There was therefore no ongoing obligation of discovery. Mr Wells QC submitted that to conclude that there was an obligation of discovery would be fundamentally unfair to the defendant and that the defendant was entitled to respond as she did. I reject that argument.
The defendant pleaded that she had “a superannuation entitlement with Super SA worth approximately $65,943 as at the 30th June 2003” (my underlining). That pleading was correct in the strict sense. The use of the indefinite article cannot be overlooked. The defendant did not plead that the entitlement mentioned was her only entitlement. As shown earlier it was not her only entitlement; she had a further entitlement that she had chosen, however innocently, not to disclose. The plaintiff’s admission in the Reply does no more than admit that fact. It cannot be read as an admission that the defendant’s entire superannuation entitlements were pleaded in the defence. In my view the pleadings demonstrate no more than the fact that the plaintiff disclosed the existence of and amount contained within his superannuation fund. The defendant responded by disclosing part of her superannuation entitlements; the plaintiff in reply admitted that as being an entitlement amount she had. It is no more than that. She continued to have an obligation to discover the fact that there were other entitlements for superannuation. In my view s 11 makes documents relating to (but not limited to) superannuation entitlements directly relevant in the proceedings. Otherwise a court, when exercising its powers under s 10 and s 11 may be doing so without being in possession of all of the relevant facts.
In my view even if there was no obligation of “full disclosure”, compliance with her obligations of discovery meant she should have sent the rest of the document Exhibit P4 in any event. She should also have discovered Exhibits P1, P2 and P5. The plaintiff also had an obligation to disclose and discover the additional superannuation documents that he obtained. He did not do so.
In my view the defendant had a duty to disclose the entire document (or information) or at the very least had an obligation to discover the document.
Reopening of the case
After the close of the evidence and during the course of submissions the plaintiff alleged that he had been caught by surprise by the defendant’s case. That, without more, is not a basis for reopening the case of the plaintiff.
The defendant gave evidence when cross-examined by Mr Tallarida, that the reason she did not disclose the full extent of her superannuation entitlements was due to the fact that they were of “no value” as she had “no intention of resigning before aged 55” and that the Superannuation Guarantee amount simply disappeared.
Mr Wells QC during the course of submissions maintained that this was a correct position for her to adopt. I reject that argument. For reasons that are discussed later the amount does not simply disappear. It is the existence of the employer component that is important not what exactly happens to it at various stages.
The plaintiff sought leave to reopen his case to deal with those matters.
Affidavits, as mentioned earlier, had been filed by both the plaintiff and the defendant. Particulars of the plaintiff’s claim had been sought by the defendant and provided.
Particulars 1.3 and 1.4 of the Notice for Specific Directions were as follows:
1.3At paragraph 8(h) of her defence, the defendant asserted that she had “a superannuation entitlement with SuperSA worth approximately $65,943 as at 30 June 2003.
1.4The defendant did not disclose to the plaintiff or his solicitors any other sum or any further information in relation to her superannuation entitlements.
In her affidavit the defendant admitted paragraph 1.3. She denied paragraph 1.4. Her sworn evidence at the hearing was more extensive. When questioned under cross-examination about the topic of non-disclosure of the Superannuation Guarantee component of her superannuation entitlements the defendant admitted not disclosing the figures but claimed she believed she did not have to do so.[36] Her oral evidence on this topic was not mentioned in any way in her affidavit. Her answer in the affidavit gave the plaintiff no notice of such a position. The answer is ambiguous. I accept that it could arguably be interpreted as consistent with her answers in cross-examination. It could also be interpreted, if one is to assume that the Superannuation Guarantee amount as “any other sum or any further information in relation to her superannuation entitlements”, as inconsistent.
[36] T 78 line 30 ff, T 81 line 24 ff, T 89 line 14 ff, T 90 line 7 ff.
It is unfortunate that the defendant chose to answer the plaintiff’s allegations in that way.
The plaintiff in his affidavit at paragraph 7 refers to having received the annexure “ITM2” to his affidavit from the defendant’s solicitors on the 12 May 2004. The defendant’s response to that at paragraph 19 of her affidavit is to simply object to the contents of the paragraph “on the basis that it relates to settlement negotiations”.
Paragraph 13 of the affidavit of the plaintiff alleges that the defendant disclosed only one part of her policy during property settlement negotiations. The defendant’s response was to assert that part of the plaintiff’s affidavit was inadmissible as it related to settlement negotiations.
I note that when the plaintiff and defendant gave evidence no such objections were taken by the defendant’s counsel. Why the defendant did not answer the allegations more fully remained unexplained.
It is unfortunate that the defendant chose to answer in those ways. The defendant avoided in her affidavit joining issue with the plaintiff.
It is true to say that the affidavit of Mr McDiarmid contained relevant information as to how the defendant’s superannuation scheme operated. The affidavit was a general explanation of the scheme depending upon the age of retirement or resignation of the defendant.
However, as mentioned earlier, the plaintiff learnt for the first time when the defendant gave her oral evidence that she was asserting that she did not have to disclose the Superannuation Guarantee amount because she had no intention to retire at age 55 and that amount “simply disappeared”.
This point was then developed by Mr Wells QC in his address. He asserted that the defendant’s evidence was correct. He asserted that the Superannuation Guarantee “benefit” was replaced by other benefits. The Superannuation Guarantee ceases to be relevant. “It’s a book entry its not funded”.[37] As mentioned it is puzzling that the defendant did not clearly assert this position in her affidavit.
[37] T 167.
The principle which should guide the court in determining whether to grant an application to reopen is whether the interests of justice are better served by allowing or rejecting the application as the case may be.[38] When considering the exercise of the discretion the principle factors such as likely prejudice to the other party, whether the decision not to call the evidence was a deliberate and tactical decision and the need to bring proceedings to a close as expeditiously as possible, are all factors to be taken into account.
[38] Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471.
The plaintiff by his affidavit and the particulars made his position clear. The defendant’s response was, at best, ambiguous. However her position was certainly not made clear. I accept that the plaintiff was caught by surprise by the defendant’s position which in my view was not made clear until her cross-examination.
I do not accept that “materiality”, as submitted by the defendant, was not a part of the plaintiff’s case. It always was a part of the case for the plaintiff. The plaintiff relied on the stated amount of the Superannuation Guarantee and the amounts in the Triple S documents to establish “materiality”. What caught the plaintiff by surprise were the assertions that disclosure was unnecessary because “she did not intend to resign before aged 55” and that therefore the Superannuation Guarantee amount was basically of no value. It “disappeared”.
It was asserted that the reopening of the case would cause serious prejudice to the defendant. I took into account the further affidavit of the defendant. I accept that the prolongation of the proceedings would undoubtedly be stressful for her as well as time consuming. However that is only one of the factors I have to look at when considering this question. The question of costs of the prolongation of the proceedings is a matter that can be argued in due course.
There was no suggestion that the decision by the plaintiff not to call further evidence was simply a tactical one. They were caught by surprise.
I had no doubt that the interests of justice were best served by allowing the application. I therefore allowed the application to reopen.
Mr Watson the actuary was called by the plaintiff to give evidence about the value of certain entitlements.
What was the value of the “Award and Superannuation Guarantee (SG) and/or Retirement Benefit?
Mr Watson obtained his fellowship of the Society of Actuaries of Australia in 1990. His expertise was not disputed. He provided a report dated 6 June 2008 that in effect adopts a report of his partner, Mr Brett of 14 April 2008. Mr Brett was unavailable to give evidence and Mr Watson gave the evidence.
The report of Mr Brett of 14 April 2008 was tendered. It became Exhibit P14. The reports of Mr Watson were tendered and became Exhibit P14b and P14C.
In order to understand the evidence of Mr Watson it is necessary to reproduce the relevant part of Exhibit P4.
| PSESS Account | Roll Over Account | Member Account | Total | |
| Opening balance as at 1/07/2002 | $9,381.19 | $0.00 | $54,019.86 | $63,401.05 |
| Contributions | $2,768.40 | $2,768.40 | ||
| Roll over from another fund | $0.00 | $0.00 | ||
| Investment earnings (@ -0.35%) | -$32.83 | $0.00 | -$193.46 | -$226.29 |
| Closing balance as at 30/06/2003 | $9.348.36 | $0.00 | $56,594.80 | $65,943.16 |
| AWARD & SUPERANNUATION GUARANTEE (SG) | $36,493.91 |
| LEAVING SERVICE BENEFIT Amount of Leaving Service Benefit that is preserved | $102,437.07 $45,842.27 |
| RETIREMENT BENEFIT The total of your accounts plus: At Age 55 3.6808 times Final Annual Benefits Superannuation Salary At Age 60 4.4936 times Final Annual Benefits Superannuation Salary |
The defendant did not disclose any information relating to the Award and Superannuation Guarantee, Leaving Service Benefit and Retirement Benefit. The document (or part of it) that was given to the plaintiff stopped at the figure $65,943.16.
The Superannuation Act provides benefits which are made up of two components – the employee component and an employer component. The employee component reflects the member’s contribution with interest (in this case the sum of $65,943.16). The employer component (referred to as the Defined Benefit Interest) reflects the benefits that the scheme provides that are in addition to employee component and financed by the employer. The Superannuation Guarantee component always fits within the employer component. The benefit is dependent on salary at the time of ceasing service. The employer component (Defined Benefit Interest) benefits consisted of the Superannuation Guarantee, the Leaving Service Benefit and the Retirement Benefit.
Mr Watson[39] referred to what was disclosed by the defendant as the “Accumulation interest component”. This was the employee component and was equal to the sum of the Member Account (member contributions accumulated with interest) and the PSESS Account (consisting of Public Sector Employees Superannuation Scheme transfer amount as at 30 June 2002, accumulated with interest).
[39] Exhibit P14C.
It is important to understand that what was not disclosed by the defendant was information as to the existence of the employer component of the scheme, this part of the scheme arising from the contributions made by the employer. The benefits that arise from this part of the scheme do not rely upon the contributions made by the employee. For example the existence and amount of the Superannuation Guarantee was not disclosed to the plaintiff. Nor were the “Leaving Service Benefit” and the “Retirement Benefit”.
The “Defined Benefit Interest” was also called the “undisclosed superannuation” by Mr Watson. Under the Defined Benefit Interest various consequences flow depending on the age of the member upon exiting the scheme.
What is the value of the Defined Benefit Interest if a member resigns before age 55?
On resignation prior to age 55 the scheme provides three options. These relate to what was called the Superannuation Guarantee.
In his report of 6 June 2008[40] Mr Watson explained the “Superannuation Guarantee” (SG) and what options were available to the defendant in relation to it. He set out in his report various valuations in tabular form as follows:
Option Description Employer Component as at
30 June 2003 30 June 2005Cash and SG $36,494 $57,478
Preserved # $117,622 $167,123
Transfer # $131,368 $195,616#Note, these have been estimated in the absence of complete data. The preserved benefit calculation assumes payment at age 60.
[40] Exhibit P14C.
He explained that an employee has the choice to take the member accumulation cash (not the PSESS amount) in addition to the Superannuation Guarantee amount. If a member took that option the Employer Component is equal to the Superannuation Guarantee amount. This option is the only occasion when the Employer Component is equal to the Superannuation Guarantee amount. If the defendant had exercised the cash option in June 2003 the value of her employer component would have been $36,494: as at June 2005, the value would have been $57,478. This option would be the least attractive one and fixes the minimum value of the employer component.
A member who resigned prior to age 55 could consider the two other options. A member could elect to take the “preserved” option. If Ms Robbins resigned but decided not to access the money immediately but took the second option, namely “the preserved option” she is in effect preserving her benefit.
In this case the employer component is calculated as a defined benefit (as described in the Superannuation Act) and as at 30 June 2003 it would have been worth $117,622 at aged 60 increased in line with the CPI.[41] In other words, looking at the table dealing with the Superannuation Guarantee the preserved amount as at 30 June 2003 of $117,622 is in fact the value of the entitlement as at that time and when paid at age 60 would be worth more than that and indeed its value would increase in line with the consumer price index. Preserved simply means in this case that it stays in the same retirement fund.
[41] T 338.
The third option a member has on resignation is to transfer the entirety of their benefit to another fund. Mr Watson explained the transfer option under that table as being where a member has on resignation transferred the entirety of their benefit into another approved superannuation fund. This invokes a different section of the Superannuation Act and that is why the calculation is different. The estimated value of that option as at 30 June 2003 was $131,368.
It was not suggested that the defendant considered either of those options although she had that entitlement.
What is the value of the Defined Benefit Interest if a member resigns after 55 years of age?
Benefits are dependent upon the salary of the member at the time of ceasing service. In order to value the “Defined Benefit Interest” a number of assumptions had to be made. The economic assumptions adopted by Mr Watson are set out in his report and are those required to be adopted for valuations under the Family Law Act. Mr Watson considered those assumptions to be appropriate for this matter.
In his report Mr Watson set out his valuations in tabular form. The “accumulation interest” represents the defendant’s contributions and earnings. The “defined benefit interest” represents the employer component.
Component Present Value of Superannuation Interests at Valuation Date
30 June 2003 30 June 2005
Accumulation interest $65,943 $97,043
Defined benefit interest $87.515 $129,053
Total $153,458 $226,096The “Defined Benefit Interest” shown in the table above, represents the present value of the accrued benefits taking into account contingencies such as death, retirement, invalidity or resignation. It also allows for future salary growth between 30th June 2003 and when the benefit would actually be paid; with regard to resignation it allows for the probability of a member taking any of the various options. The projected amount was then discounted to calculate the present value of those benefits.[42] It takes into account the possibility of resignation before aged 55.
[42] T 340.
If one were to assume Ms Robbins were to retire after aged 55 the value of the Defined Benefit Interest would have been greater than $87,515[43] as there was no longer a possibility of retirement before age 55. As at 30 June 2005, close to the date of the mediation, the Defined Benefit Interest was $129,053.
[43] T 341.
Mr Watson was of the opinion that the employer component is equal to the Superannuation Guarantee amount only when a member elects the cash and Superannuation Guarantee option on resignation prior to age 55. In all other circumstances the employer component is greater than the Superannuation Guarantee amount. In other words the superannuation guarantee amount does not “disappear” at age 55 but rather is replaced in the employer component with an alternative benefit which has a greater value than the Superannuation Guarantee amount.
Thus in Mr Watson’s opinion the value of the superannuation interests of the defendant as at 30 June 2003 was a total of $153,458 and not the $65,943 that was disclosed by the defendant. Thus the Defined Benefit Interest (undisclosed superannuation) as at 30 June 2003 had according to Mr Watson a value of $87,515. The calculation of that figure can be seen in Mr Brett’s report.[44]
[44] Exhibit P14A at p 4.
The figure of $87,515 was based on the annual salary of Ms Robbins from her annual statement as at 30 June 2003.[45]
[45] T 332.
As can be seen from Mr Watson’s report by 30 June 2005, the accumulation interest was $97,043 but the Defined Benefit Interest had increased to $129,053. By 30 June 2005 the value of the superannuation was $226,096. By contrast the plaintiff’s superannuation had a balance (members contributions plus earnings) of $42,513.21.
I accept, as Mr Watson stated, that superannuation entitlements are distinct from their value. The Superannuation Act governs the entitlements of the contributors. The entitlements are paid from the SA Superannuation Fund under that scheme.
Part IV of the Superannuation Act governs the entitlements of the scheme of which the defendant was a member. Part IV of the Superannuation Act does not tell you the value of those entitlements. To determine the value of such entitlements requires the provision of an opinion by an expert such as an Actuary.
Mr Watson conceded in cross-examination agreed that the Superannuation Guarantee amount was itself only paid in the limited circumstances provided by s 28(1)(c) of the Superannuation Act and further that the benefit entitlements relating to the Superannuation Guarantee do not apply once a member turns 55 years of age.
However Mr Watson did not agree that, when using the formula mentioned in his report, the Superannuation Guarantee did not constitute a component of the formula.[46]
[46] T 373, T 384.
I make the following findings.
1.The Superannuation Guarantee entitlement had a minimum value as at 30 June 2003 of $36,493.
2.The Superannuation Guarantee entitlement had a minimum value as at 30 June 2005 of $57,478.
3.I accept the defendant’s evidence that she had no intention of resigning before aged 55.
4.On the basis of (3) the value of the Defined Benefit Interest as at 30 June 2003 was at least $87,515.
5.On the basis of (3) the value of the Defined Benefit Interest as at 30 June 2005 was at least $129,053.
Does the Court have the power to set aside a perfected order?
The plaintiff argued that this Court has jurisdiction to set aside an order made or judgment entered by consent and which has been perfected. As the Court stated in Cavanagh-Lang v O’Callaghan & Ors[47] the provisions of r 84.12 are equally available to set aside a provisional imperfect judgment as well as one that has been perfected. That case did not deal with however a perfected consent judgment.
[47] [2000] SASC 187. See also Taylor v Taylor (1979-1980) 143 CLR 1
Mr Wells QC conceded that even before rule 84.12 came into existence the court had a jurisdiction to set aside even a sealed consent judgment.[48] Rule 84.12 enables the application to be made in the action itself and not by a separate action.
[48] Huddersfield Banking Company Limited v Henry Lister & Son Limited [1895] 2 Ch 273
In Mohtar v Mohtar and Seputis[49] Von Doussa J held that r 84.12 vests the court with wider powers than previously existed, to vary and set aside a judgment or order entered by consent. His Honour’s comments were made in the context of considering whether or not the plaintiff in that case compromised by consent or simply “capitulated”.
[49] (1988) 146 LSJS 377.
Given the expansive interpretation given to the power under r 84.12, in my opinion this Court under rule 84.12 has the power to set aside a judgment entered by consent and that includes a perfected order.
Factors involved in applying Rule 84.12
In Harvey v Phillips and Anor[50] the Court approved the principle enunciated in Huddersfield Banking Company Limited v Henry Lister & Son Limited[51] that whether a compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example being non-disclosure of a material fact where disclosure is required (amongst other grounds).
[50] (1956) 95 CLR 235.
[51] [1895] 2 Ch 273 at 280.
The discretion of the Court in applying rule 84.12 is fettered only by the expression “if the justice of the case so requires”. In Mohtar[52] Von Doussa J held that the intent of the rule was not to alter the substantive law of contract. His Honour confirmed that where a judgment entered by consent embodies an agreement between the parties by which an action is compromised, the principle that a consent judgment will only be set aside on grounds sufficient to render a simple contract void or voidable still applies.[53]
[52] Supra at 391.
[53] Supra at 391.
As already discussed there was an obligation on the defendant to fully disclose the document P4 (or discover it) and the information contained therein. The question arises therefore was the non-disclosure a “material” matter.
Was there non-disclosure by the defendant of a material fact?
The plaintiff particularised his claim in an Amended Notice for Specific Directions dated 7 September 2007. After discussion the plaintiff confined his application to paragraphs 1.4-1.8, namely that the defendant failed to disclose to the plaintiff her true position concerning her superannuation entitlements.
The defendant did not disclose that part of Exhibit P4 which related to the Superannuation Guarantee and/or the “Retirement Benefit” and/or the “Leaving Service Benefit”. As mentioned the defendant failed to disclose the “employer component” of her superannuation entitlements.
The material date up to which full disclosure must be made is the moment at which the binding contract is concluded. Mere relevance to the issues is not sufficient. Material means “of such significance as to be likely to influence the determination of a cause.” [54] Materiality therefore depends upon an assessment of the whole of the evidence.
[54] The Shorter Oxford Dictionary
The plaintiff gave evidence that had he known about the further superannuation entitlements he would not have settled the action on the terms he did. I have no doubt that is his belief. However materiality must also have an objective component. That is, in determining whether a non-disclosure is material, the court must look at the non-disclosure in the context of the case as a whole and it must do so on an objective basis.
It was submitted by the defendant that whatever entitlements may or may not have been available to the defendant the value of those entitlements are not disclosed or recorded in Exhibit P4. It was argued that to establish the value of the entitlements an opinion would be needed from someone such as an actuary. To establish the value of the entitlements an actuary needs to look outside “ITM2” or “JM1” (Exhibit P4) and as such the information contained within those documents does not satisfy the requirement for materiality. It was submitted that therefore the information that was not supplied was not “material” The defendant argued that what was not disclosed was information not “value”.
Further it was submitted that the information was available if the plaintiff had chosen to go and look up the Superannuation Act. He knew the defendant was employed as a teacher. It was submitted that what was disclosed on “ITM2” was the fact that her benefits or entitlements could be ascertained from the Act.
The defendant argued that sufficient notice or information was given such that the plaintiff if properly advised could have ascertained the fact that extra entitlements existed. In particular the defendant relied on the words printed on the bottom of Exhibit P4 (“ITM2”) which stated as follows:
While every effort has been made to safeguard against errors or omissions your benefit remains that which is determined in accordance with the Superannuation Act 1988 and regulations governing the scheme and no responsibility will be accepted for any error or omission.
I reject the defendant’s arguments.
First, a minimum value of the entitlement is established as at 30 June 2003 as the Superannuation Guarantee amount of $36,493 and as at 30 June 2005 as $57,478.
Secondly, whilst I accept that there was no obligation to provide the plaintiff with the “value” of her superannuation entitlements (as done by Mr Watson) what is material here is the information not disclosed namely the existence of the employer component of the scheme that was of some value.
The defendant disclosed information that related to her entitlement flowing from her contributions. She did not disclose, and deliberately so, that information relating to her employers contributions and entitlements flowing from that.
In my opinion the non-disclosure was material to both the assessment of the superannuation entitlements and also material to the assessment of the assets of the parties the subject of the action. What was not disclosed here was information relating to the existence of a fund of employers contributions from which flowed a group of further entitlements.
Thirdly, materiality is not confined to that piece of information in isolation. Having not disclosed information that would lead to the ascertainment of the existence of further entitlements a court can then look at other evidence to determine their value in deciding the question of whether the information not disclosed is “material”. Simply because there are alternative methods of obtaining information that can be used to obtain a value of the entitlements does not mean that the failure to provide the information in Exhibit P4 is not material.
Mr Wells QC also submitted that even if there was a requirement for disclosure, which was not admitted, and that the information was relevant, there was no evidence at all as to the fact it would have made a difference. He submitted that I lacked any of the contextual evidence that would enable me to draw with any confidence a conclusion as to whether the disclosure would have made any difference. He submitted that I would have to speculate without evidence. As Mr Wells QC submitted it is not simply a matter of isolating a figure for example of $36,000 or $42,000 and simply saying that was not brought to account. It had to be “material”.
He submitted that when the parties were engaged in negotiation for the purpose of seeking resolution what was at the forefront of their minds was the value of the major items of property, which was the farm at Forest Range and the plant and equipment and secondly how the distribution should be made, in other words in what proportion. The plaintiff was seeking fifty/fifty and the defendant was saying sixty/forty in her favour. Mr Mayne basically had agreed with that in evidence.
However I have found that the plaintiff did so but only on the basis that at the time of the mediation he was not aware of the full entitlements of the defendant. His evidence at this hearing was that he would not have approached the mediation in the way he did had he known of the defendant’s full superannuation entitlements.
There was some evidence before me about the value of the pool of assets discussed at the mediation. There is evidence of the division of some of the assets in the consent order itself. There is evidence of purported values in the letter of the defendant’s solicitors to the plaintiff’s solicitors of 12 May 2004.[55] Some information as the value of the property can be inferred from the defendant’s own affidavit.[56] There is the evidence of Mr Mayne as to the respective positions of the parties.[57] The main asset apart from the superannuation was the Basket Range property. No doubt the parties had different valuations in mind depending on what they sought to achieve at the mediation. I infer that its value was around $400,000-$425,000 as at the time of the mediation. It may well have been less than that.
[55] “ITM 2”of the plaintiffs affidavit of the 31st May 2007.
[56] “SR3” of the defendants affidavit of the 21st September 2007.
[57] Paragraph 7 of the affidavit of the Para 8-16 were not admitted.
The plaintiff sought leave to reopen his case and call further evidence. I allowed the application. Mr Watson was called and gave evidence about the “value” of the entitlements. It was submitted that Mr Watson’s evidence did not assist due to the lack of information as to the “value” of the other assets the subject of discussion at the mediation.
Accepting in general the valuation of Mr Watson it can be seen that the value of the defendant’s superannuation entitlements as a proportion of the total assets is significant. I do not have to be satisfied of the precise values of all of the assets.
I infer from the plaintiff’s evidence that had he been given the information about the defendant’s further entitlements he would have investigated the entitlements to ascertain their potential value. Paragraphs 12 and 18 of his affidavit of the 31 May 2007 show that the plaintiff considered the Superannuation Guarantee amount of $57,477.00 as at 30/6/05 was sufficiently high for him not to have settled as he did. In actual fact the “value” as estimated by Mr Watson as at 30/6/05, taking into account the “Retirement” benefits, was actually $129,053.00.[58] As at 30/6/03 it was $87,515.00.
[58] Exhibit P14C, p 2.
Of course the plaintiff’s attitude is not determinative of the issue of materiality. It must have an objective component. However what is does show and I accept is that the plaintiff would have taken a different attitude to ascertaining the true position of the defendants superannuation had the full document been provided.
It is not possible to know with certainty what course the plaintiff would have adopted had the information been disclosed. At the time he gave his evidence he did not understand the true nature of the entitlements flowing from the defendant’s employer contributions.
I infer that it was likely that had the information been disclosed he would have required further advice from his solicitors. I have no doubt that the plaintiff would have sought to add the defendant’s further entitlements into the pool of assets the subject of the court action. Whether this meant he would have obtained a valuation cannot be stated with certainty but I find it was probable. At the very least he would have added, in addition to the defendant’s contributions, the superannuation guarantee amount $57,478.00.[59] The “accumulated interest” amount as at 30th June 2005 was $97,043. Those two figures combined, namely $154,521, was the minimum value of the defendants superannuation as at the (approximately) the time of the mediation. It is likely that the true value was higher. In the opinion of Mr Watson the actual value of the two components (Accumulation interest plus Defined Benefit interest) as at the 30th June 2005 was $226,096.
[59] Or just under that amount as the matter settled at mediation just prior to 30/6/05.
I accept that the defendant had disclosed the “Accumulated Interest” (employee component) amount in the 30th June 2003 document. Thus the $97,043 (as at 30th June 2005) amount could have been ascertained by the plaintiff simply by asking for an update. He did not do so but he cannot argue that it was in anyway “not disclosed”.
However I find that his approach was dictated by his lack of knowledge of the existence of the other entitlements. I find that had he been aware of the further entitlements he would have sought full particulars prior to the mediation.[60]
[60] Affidavit of the plaintiff dated 16th June 2008 paragraph 17.
When looking at all the circumstances in my view the information was, beyond question, material.
The defendant admitted not providing the plaintiff with information relating to what was called the Triple S Scheme.[61] The exhibits establish that the closing balance of the account as at 30 June 2003 was $12,655.13; at 30 June 2004 $40,102.22; as at 30 June 2005 $68,056.38.
[61] Exhibits P1, P2, P3.
It is clear that the account comprised of amounts “salary sacrificed” by the defendant in addition to investment earnings on the amounts salary sacrificed. The defendant stated as I mentioned earlier that her reason for not disclosing the existence of the scheme was that it “post-dated” the separation. As mentioned, this account was opened by the defendant a few months prior to the settlement.
In any event, whether it did or did not post date the settlement, that matter did not relieve the defendant from the obligation of disclosing the information. Leaving aside the question of the Superannuation Guarantee information, the defendant should have disclosed the figure of $12,655.13 in her defence and should have provided the documentation in the letter of the 12th May 2004.
How she was able to run the farm, support the children and herself whilst salary sacrificing just under $2,000 a month remains largely unexplained. Her suggestion that she was able to “salary sacrifice” because she and the children were living in “straitened circumstance” has an inconsistent ring about it. If she was in “straitened circumstances” the ability to salary sacrifice for superannuation, in addition to her other superannuation fund, would be diminished. It may be her “straitened circumstances” came about because she was “salary sacrificing”.
I note that her personal contributions to the other super scheme continued through this period. Whatever was happening, the plaintiff was entitled to know, as at the time of mediation, that the defendant had close to $68,000 in a separate superannuation scheme. On her own admission the defendant withheld that information. It was not suggested that the plaintiff had any ability to ascertain this information from other sources.
However it was information to which the plaintiff was entitled; that information was also material.
Discretion under Rule 84.12
Simply finding that the information was material does not without more call for the exercise of the discretion. The defendant submitted that such a finding is a necessary but not sufficient condition for the application of rule 84.12. Even if the non-disclosure was about a material fact the court can only set aside the consent order “if the justice of the case so requires”. I agree with that submission.
The power to set aside a judgment must be exercised sparingly and with great care.[62] Factors that have been considered relevant in the exercise of the discretion include the public interest in the finalisation of litigation, whether there has been any delay in bringing the application and whether third parties have acquired rights pursuant to the judgment.
[62] Mohtar v Mohtar (1988) 146 LSJS 377 at 391.
In this matter the plaintiff brought this application relatively quickly after discovering the “non-disclosure”. However third parties have acquired rights which potentially could be affected. The terms of the judgment have been fully performed. Some years have passed since the consent judgment was entered. The plaintiff did in this case treat the superannuation question in a somewhat naïve and cavalier fashion. However I am satisfied that he did so as a result of the non-disclosure. Whilst it could be said that he failed to follow up the defendant for an updated statement prior to the mediation (and indeed he did not update his superannuation information) his attitude was determined by the non-disclosure. I am satisfied that had the defendant made full disclosure of her entitlements as she was requested to do the plaintiff’s attitude would have been quite different.
The plaintiff agreed that his mother died shortly before the mediation. The defendant was aware of the death as she attended the funeral. However he agreed that he did not include in the settlement discussions at the time of the mediation anything of value that he may have received under his late mother’s will.
I have taken into account the affidavits of the defendant. I accept that the defendant has now organised her own affairs as a result of the consent judgment. Third parties have acquired rights. To set aside the judgment now will cause significant difficulties for the defendant in addition to the stress of having the issues of property settlement re-opened. It will lead to more expense for the parties and to the stress of further potential litigation. I have taken into account the submissions of Mr Wells QC that it is not simply a matter of bringing into account a figure for the entitlements when considering the discretion. I have not overlooked the public policy of bringing finality to legal proceedings. However the non-disclosure was in the context of the case very significant. It was a deliberate choice by the defendant. The defendant did not supply the information to her own solicitors. She decided on a course of action on her interpretation of matters. She deliberately did not disclose her Triple S accounts.[63] Whilst the Triple S accounts were of lesser importance the plaintiff was entitled to know before the mediation the defendant’s financial position including superannuation. The conduct of the defendant, however genuine, denied him that opportunity. The plaintiff approached the mediation without the benefit of the full facts of the defendant’s superannuation. As I have already found the value of the entitlements not disclosed was significant. I do not intend to repeat my findings in that regard but the “value” of the entitlements as compared with the total of the assets is a relevant consideration.
[63] Exhibits P1, P2, P3.
Leaving aside the Triple S material I find the justice of the case requires the setting aside of the judgment. Adding the Triple S material into the factual basis simply strengthens that position.
Taking all those matters into account in my view the justice of the case requires the setting aside of the judgment.
Does s 8 of the Act apply?
The defendant argued that rule 84.12 did not apply in this case. Mr Wells QC submitted that the effect of the consent order was that it met the statutory requirements of a cohabitation agreement under the Act. The defendant argued that whilst there had been a consent judgment entered which could ordinarily attract the discretion under rule 84.12 what the parties had done was to, in effect, enter into a Cohabitation Agreement pursuant to s 5 of the Act. The power to set aside such an agreement is found in s 8 of the Act. Thus it was argued rule 84.12 does not apply and the statutory test is applicable. Pursuant to s 8, if satisfied that the enforcement of a cohabitation agreement would result in serious injustice the court may set aside or vary the agreement to avoid the injustice.
It was argued that the Consent Judgment met the terms of s 5 of the Act as it was in writing and signed by the parties. Copies of the proposed consent order were signed by both parties. Both the plaintiff and the defendant sent their signed copy to the plaintiff’s solicitor. The plaintiff’s solicitor transmitted an E-application for the consent judgment: she did so with the consent of both parties.
It was argued that signed instructions constitute the agreement in writing signed by the parties. Further it was submitted that by virtue of the Electronic Transactions Act 2000 both the E-application and the judgment itself satisfy the requirement of writing and appropriate signatures. I accept those factual matters.
I do not accept the argument of the defendant. The De facto Relationships Act Part 2 governs “Cohabitation agreements”. It provides a method whereby parties may enter into such an arrangement and in due course, if necessary, vary it, set it aside or enforce it.
Part 3 of the Act provides a different approach. It allows a party to apply to the court for a division of property. This, unlike Part 2, can only operate after the “de facto relationship ends”.[64] Section 10 provides the power for a court to make orders for division of property in a “way that is just and equitable”.
[64]s 9(1).
In deciding whether to make an order under Part 3, s 11 states the court must consider various matters including the fact that the court must (my underlining) have regard to the terms of any relevant cohabitation agreement. That in my view refers to a pre-existing cohabitation agreement; that is one that exists prior to the termination of the de facto relationship. In my view the Act does not contemplate the signed proposed consent order as being a cohabitation agreement for the purposes of the Act.
The Act contemplates alternate approaches. Once Part 3 is invoked as it was in this case, any application for consent judgment cannot be a cohabitation agreement for the purpose of the Act.
It would be an odd conclusion to hold otherwise as an oral application by the parties’ solicitors in court for judgment and an order then being later sealed by the court would be subject to rule 84.12 but an E-application for the same judgment would be subject to s 8 of the Act.
In my view s 8 has no application to this matter.
Application of s 8 of the Act
However, as the matter was argued before me, I will consider the test propounded under the Act. I will accept for the purpose of this discussion (although I have found otherwise) that both the written and signed instructions and the consent judgment itself are cohabitation agreements. I also accept that the terms of the judgment are the source of the rights and obligations created by the judgment in which the terms of the prior agreement have merged.
Pursuant to s 8 of the Act if the court is satisfied that the enforcement of a cohabitation agreement would result in serious injustice, the court may set aside or vary the agreement to avoid the injustice.
It is not profitable in my view to attempt to compare this test with that stated in rule 84.12. The tests are expressed differently although many of the factors to be taken into account in exercising the discretions would be common to both.
Pursuant to s 6 of the Act a cohabitation agreement is subject to, and enforceable under, the law of contract. Section 8 is expressed in terms of the enforcement of the agreement resulting in serious injustice as the test. Whether the test proposed in Harvey v Phillips mentioned earlier is the appropriate starting point to consider the discretion under s 8 was not the subject of argument before me. It could be argued that perhaps it is not the appropriate starting point. However given the argument proceeded on the basis that the question of the exercise of the power to set aside a cohabitation agreement depended upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it I will accept that as the relevant starting point.
For the reasons expressed earlier in relation to rule 84.12 I find that there was a material non-disclosure by the defendant. The question therefore arises whether the “enforcement of the cohabitation agreement would result in serious injustice”. The court has to be satisfied not simply of “serious injustice” arising from the agreement but rather that the enforcement of the agreement would result in serious injustice.
Both parties referred to the decision of Riley J in Van Jole v Cole[65] for his discussion about the meaning of the expression “serious injustice” in the context of similar legislation. The expression “serious injustice” is not defined in the Act. It should be understood in the sense in which it is commonly used in the English language. I agree, with respect, with the observations of Riley J that injustice includes the concept of a wrong or of unfairness.
[65] [2000] NTSC 18.
The inclusion of the word “serious” must mean that Parliament did not consider that unfairness, if found, would be sufficient to permit a court to interfere with an agreement. There must be more. As Riley J suggested the word serious in this context suggests weighty, grave or considerable.[66] I gratefully adopt his remarks.
[66] Supra, [16].
When considering the questions of injustice, factors such as the effect on the defendant, the question of third parties having acquired rights, the public policy of matters not having to be re-litigated are relevant considerations. The court should look at the whole of the surrounding circumstances of the matter to determine the question of whether enforcement of the agreement would result in serious injustice. I refer to all of those matters discussed in relation to rule 84.12. They are relevant to the question of the exercise of the discretion under s 8. The significance of the value of the entitlements not disclosed compared with the value of the other assets is a relevant matter.
Taking into account all matters, had s 8 been applicable, I would have been satisfied that the enforcement of this cohabitation agreement would result in serious injustice and I would therefore have ordered that the cohabitation agreement be set aside.
Final Order
Pursuant to r 84.12 I set aside the consent order dated 18 July 2005.
I will hear the parties on any further orders and the question of costs.
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