Mr Wrigley v MS Wrigley

[2003] FamCA 888

[2003] FamCA 888; (2004) FLC 93-182

FAMILY LAW ACT 1975

FAMILY COURT OF AUSTRALIA

AT DANDENONG   

No. DGF 1457 of 2003

IN THE MARRIAGE OF:

MR WRIGLEY

(Husband)

and

MS WRIGLEY

(Wife)

EX TEMPORE JUDGMENT DELIVERED BY

THE HONOURABLE JUSTICE YOUNG

Date of Hearing:  2 July 2003
Date of Judgment:                 2 July 2003

Appearances:  Mr Ludbrook, solicitor appeared for the Applicant Wife

Mr Harrison, solicitor appeared for the Respondent Husband

1. The husband MR WRIGLEY and the wife MS WRIGLEY have agreed out of court, with the assistance of their legal and accounting advisers all property and financial issues and, pursuant to Order 14 of the Family Law Rules presented consent orders to a Deputy Registrar of the Family Court.

2. Those consent orders were signed by the husband and wife (“the parties”) and dated 13 June 2003.

3. The intention of the parties and the basis of negotiation of the orders was summarised in Notation B which provides:

   “It is the intent of these orders that there be a 50/50 division and/or split of the assets owned jointly and/or individually by the parties, the Family Trust and Superannuation Fund save and except the wife is to retain the … business including all stock, plant, equipment, goodwill, bank account and the [van]”.

4. Pursuant to paragraph 3(b) of the orders the court was informed of the existence of the Wrigley Superannuation Fund (“the Superannuation Fund”).

5. The orders as presented to the court in relation to the Superannuation Fund provided:

   “6.That the husband shall roll over assets or funds equivalent to 50% of the value of the Superannuation Fund to a fund nominated by the husband being his agreed split of the superannuation fund.

   7.That the parties jointly indemnify and forever hold each other harmless against any and all liability arising from their holding any position as a director, shareholder, secretary or employee of the Company or as an office holder, beneficiary or employee of the Family Trust and the Superannuation Fund including but not limited to any taxation liability arising from all activities of the Company, Family Trust and the Superannuation Fund up until the date of payment.

   8.That order 7 has effect from the operative time.

   9.That the operative time of these orders is 1 July 2003.

   10.That, having been accorded procedural fairness in relation to the making of this order it is intended to bind the Trustee of the Wrigley Superannuation Fund.”

6. In the orders, (paragraph 1), the court is advised that T Pty Ltd (“the company”) is the trustee of the Wrigley Family Trust.

7. I have been advised from the Bar Table this day, by solicitors appearing for each of the husband and wife (who were not present at Court) that they are the directors and equal shareholders in T Pty Ltd and that the company is the corporate trustee of the Superannuation Fund.

8. The consent orders came before Deputy Registrar Windebank on 19 June 2003. 

9. The Deputy Registrar declined to make the orders by consent and by letter advised the solicitors for the parties of the following reasons:

   “1.Order 6 purports to be a superannuation splitting order under Part VIIIB of the Family Law Act. In my view, this order is not sufficiently concise to have the required effect. In particular, the order appears to require the immediate transfer of assets from the Fund (an “interest-splitting order”) while the Court’s power is limited to making a payment splitting order (“payment splitting order”).

   2.There is no clarity as to the value of the interests of each of the members in the Fund.  No evidence of the value of the wife’s interest has been provided.

   3.        Taxation issues have not been addressed”.

10. Accordingly the Deputy Registrar listed the matter for submissions and determination in the Judicial Duty List on 23 June 2003 at Dandenong and required an appearance on behalf of both parties on that date.

11. The Superannuation Fund is a self-managed fund. It complies with the provisions of Section 17A of the Superannuation Industry (Supervision) Act. The husband and wife are the sole members of the Fund.

12. The husband has filed and the wife now has leave to file the appropriate Form 6 Superannuation Information document as a result of which the court is advised that the members entitlements of the parties are as follows:

    ¨   The husband - $130,445.00;

    ¨   The wife - $103,032.00.

13. The court however is not advised of the cash, investments and assets that comprise the Superannuation Fund and the individual members entitlements. It is therefore impossible without such information for the court to determine an appropriate payment split or to have regard to taxation consequences, or indeed whether the division is just and equitable having regard to the provisions of section 79 of the Family Law Act 1975.

14. The husband is 45 years of age and the wife 46 years of age. 

15. Section 90MS empowers the Court to make orders pursuant to section 79 of the Family Law Act 1975 which include orders in relation to superannuation interests. S.90MS provides:

    90MS(1) [Property orders may include superannuation interests]

    In proceedings under section 79 with respect to the property of spouses, the court may, in accordance with this Division, also make orders in relation to superannuation interests of the spouses.

    90MS(2) [Order must comply with this Part]

    A court cannot make an order under section 79 in relation to a superannuation interest except in accordance with this Part.

16. The splitting provisions of Part VIIIB of the Act are provided for in section 90MT and provide:

Section 90MT(1) [Types of splitting orders]

(a)if the interest is not a percentage-only interest – an order to the effect that, whenever a splittable payment becomes payable in respect of the interest;

(i)the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations; and

(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;

(b)an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:

(i)the non-member spouse is entitled to be paid a specified percentage of the splittable payment; and

(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;

(c)if the interest is a percentage-only interest – an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:

(i)the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations by reference to the percentage specified in the order;

(ii)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;

(d)such other orders as the court thinks necessary for the enforcement of an order under paragraph (a), (b) or (c).

1. Section 90MT(2) directs the court, before making an order as referred to in sub-section 1 (above) to make a determination under either sub-paragraphs (a) or (b) as follows:

   (a)if the regulations provide for the determination of an amount in relation to the interests, the court must determine the amount in accordance with the regulations;

   (b)otherwise, the court must determine the value of the interest by such method as the court considers appropriate.

2. The Family Law (Superannuation) Regulations (Regulation 22 thereof), provides that interests in a self-managed superannuation fund are not subject to the determination of the valuation provisions either as to the growth phase (Division 5.1) or the payment phase (Division 5.2), (see Regulation 22(2)(b)).

3. Valuations of self-managed superannuation funds are to be determined by such methods as the court considers just and equitable and, in practice, the court would normally require evidence of the valuation of the assets in accordance with accepted methods and principles of valuation.  Accordingly then the determination of the superannuation interest falls under Section 90MT(2)(b).

4. The powers of the Family Court, as given in the Regulations are only to split superannuation payments.  The Family Court does not hold a power to split a superannuation interest.

5. Section 90MD is the definition section and it provides:

   “Splittable payment” has the meaning given by section 90ME.

6. Section 90ME provides that the following payment in respect of a superannuation interest of a spouse is a splittable payment

   (a)         a payment to the spouse.

7. The other payments referred to in sub-section (b) – (e) of Section 90ME are not relevant on the particular facts of this case.

8. I return to consider paragraph 6 of the proposed consent orders.  There is no identification of the particular assets of the superannuation fund before the court and therefore no information of the value of a 50% interest therein.  The order provides for the husband to undertake a roll over of such assets or funds as may be equal to 50% of the value of the fund to a separate fund established and controlled by himself at the joint expense of the parties, this being the agreed split of the parties self-managed Superannuation Fund.

9. By these orders the court is not asked to order a payment split.  I conclude that the Court is being asked to split a superannuation interest.  In the manner in which the order is drafted and in which the parties have negotiated their property and financial settlement this is beyond the power given to the Family Court.

10. I further highlight that the husband has the sole discretion, by the orders proposed, to select his preferred assets and investments to his long term benefit.  There may be particular taxation consequences or other investment criteria applicable to various assets within the Superannuation Fund.  There may be applicable tax or surcharge payments outstanding.  His selection of long term investments may indeed be the better income producing assets.  There is no prior agreed division which would enable the court to determine that the valuation is appropriate and in all of the circumstances just and equitable.

11. Further insofar as there may be tax and surcharge payments owing there is no information before the court for it to be satisfied that the party retaining the existing Superannuation Fund, in this case the wife, might not be left with liabilities or potential payments yet to be assessed.  There is no evidence that the superannuation fund is fully compliant, particularly in regards to the lodgement of its taxation return and other required documents for the current financial year in which the proposed roll over was to occur prior to the operative date of 1 July 2003.

12. On the facts before me and upon my understanding of the recently enacted superannuation legislation and accompanying regulations I decline to pronounce the proposed consent orders.

I certify that the preceding 28 paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate: 
Date: 2 July 2003