P and P
[2005] FMCAfam 576
•11 November 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| P & P | [2005] FMCAfam 576 |
| FAMILY LAW – Property – marriage of approximately twelve years in duration – major item of matrimonial property husband’s interest in defined benefits military superannuation scheme (DFRDB) – assessment of contributions – assessment of section 75(2) factors – just and equitable. |
| Family Law Act 1975 – ss.75, 79, 90 Family Law (Superannuation) Regulations 2001 – s.90MT |
| Lee Steere v Lee Steere (1998) FLC 91-626 Ferraro v Ferraro (1993) FLC 92-335 |
| Applicant: | B A-M P |
| Respondent: | B P P |
| File Number: | MLM 4778 of 2004 |
| Judgment of: | Brown FM |
| Hearing date: | 26 September 2005 |
| Delivered at: | Darwin |
| Delivered on: | 11 November 2005 |
REPRESENTATION
| Counsel for the Applicant: | Ms D |
| Solicitors for the Applicant: | D N & A |
| Counsel for the Respondent: | Ms T |
| Solicitors for the Respondent: | D G & A |
ORDERS
That other than the husband’s entitlements currently standing in his name in the D F R and D B S (hereinafter referred to as the “DFRDB”) each of the parties be entitled to retain all property currently in his or her possession, including choses-in-action and superannuation standing in his or her name as at the date of these orders.
That the parties each receive a fifty percent share of their matrimonial property as calculated pursuant to these reasons for judgment (excluding the husband’s accrued recreation leave and long service entitlements) and accordingly the proceeds of the sale of their interest in the real property situated at 26 Drive A, D and Unit 1, 56-60
E Drive, C be distributed between them to give effect to such division taking into account the property and superannuation retained by each of them pursuant to order 1 hereof and excluding the husband’s entitlements in the DFRDB.
That pursuant to section 90MT(4) of the Family Law Act 1975 the base amount of $160,000.00 be allocated to the wife in respect of the husband’s superannuation interest in the DFRDB and that pursuant to section 90MT(1)(a) whenever a splittable payment becomes payable in respect of that interest the wife is entitled to be paid the amount to be calculated in accordance with the Family Law (Superannuation) Regulations 2001 in respect of that base amount and there is a corresponding reduction in the entitlements of the husband.
That the trustee of the DFRDB and the husband and the wife in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all such documents as may be necessary to calculate the payment entitlement of the wife in accordance with order 3 hereof.
That order 3 of these orders has effect from the operative time which shall be on 13 January 2006.
That the solicitor for the husband serve a sealed copy of these orders on the trustee of DFRDB and the trustee is given leave to re-list these proceedings on the giving of seven days written notice in the event that it is unable to comply with these orders.
That the application and the response herein be otherwise dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
MLM4778 of 2004
| B A-M P |
Applicant
And
| B P P |
Respondent
REASONS FOR JUDGMENT
Introduction
These are matrimonial property proceedings. The applicant is B A-M P “the wife”. The respondent is B P P “the husband”.
The parties began to live together in July of 1991. They married on
29 February 1992 and finally separated on 24 April 2003. They are now divorced. Accordingly, the relationship between them and the subsequent marriage is one of just under twelve years in duration. The parties do not have any children.
Mr P is a long serving member of the R A A. He joined the A in April of 1985. As a result he is a member of the D F R and D B S (DFRDB). He has been a member of the DFRDB for over twenty years. This is a defined benefits superannuation scheme. Mr P’s future entitlement to retirement benefits, pursuant to this scheme, forms by far the most substantial of the parties’ marital assets. At the present time, the value of those benefits is calculated to be in excess of $450,000.00.
At the commencement of their marriage, neither party had any items of real or personal property of significant value. However, during their marriage, both took part in paid employment and, as a result, they acquired several pieces of real property and other items of personal property. It is Mr P’s position that these items should be divided equally between the parties. Mrs P believes that the appropriate division is one which would result in her receiving 60% of the net value of these various items of property.
However, the most significant issue in dispute between the parties is how Mr P’s entitlements in the DFRDB should be divided. Mrs P contends that a splitting order should be made in her favour so that she receives 55% of the fund’s current value. Mr P contends that this would be unfair to him, as he was a member of the DFRDB for approximately six years before the parties met and has been a member for a further period of two years since they separated. In these periods the wife cannot be said to have contributed to the fund in any way. Accordingly, it is Mr P’s position that, at best, a splitting order should be made in Mrs P’s favour in respect of the DFRDB fund in an amount of one third of its current value.
Mrs P was also a member of the D F, when the parties met. Like Mr P, she has skills as a chef. However, she resigned from the A in 1994. Ever since then, she has worked in a variety of capacities, including as a kitchen hand and chef and, more recently, as an administrative assistant. She has also suffered two episodes of serious illness in 1996 and early 2004.
It is Mrs P’s position that her current employment position is significantly less secure than Mr P’s is. She has earnt and will continue to earn significantly less than him. In contrast to her Mr P has all the benefits which come from employment with the d f, particularly generous provision for retirement and compensation in the event of disability incurred in the course of employment, benefits which are denied to her. As a result of these factors, it is Mrs P’s position that she should receive the greater proportion of the parties’ actual marital assets and a substantial proportion of Mr P’s DFRDB entitlements.
Mr P does not accept that this should be the case and asserts that his future is not as secure as Mrs P would have the court believe it. In 1988 Mr P was involved in a motorcycle accident. He injured his ankle. As the accident occurred whilst Mr P was travelling to hockey, an A approved physical activity, the injury was accepted as a work related one and Mr P received compensation for it. It is Mr P’s case that he continues to suffer a significant and increasing level of disability because of his ankle injury and that it will be necessary for him to have some surgery on the ankle in the near future.
Mr P deposes that he currently finds it difficult and painful to stand for long periods of time, essential requirements for a chef. He also believes that he would not be able to achieve the level of physical fitness required of a s in land command – that is pack marches and physical training because of his level of disability. At present Mr P is posted to a training facility but is due to return to land command at the start of 2006. He believes that it is likely that he will not pass a “battle fitness test”, when this occurs and so he will be discharged from the A as medically unfit. If this occurs, which he believes is likely, it is his position that his work future will be uncertain as his only employment capacity is as a chef. Employment he currently finds difficult to perform. In Mr P’s submission, these are factors which militate against any significant split in his DFRDB entitlements in Mrs P’s favour.
These proceedings will resolve these various issues between the parties.
The documents relied upon
The wife relied on the following documents:
i)Her application filed 14 July 2004;
ii)A statement of her financial circumstances filed 14 July 2004;
iii)Three affidavits of herself filed on 14 July 2004, 8 February 2005, and 23 September 2005.
The husband relied on the following documents:
i)His response filed 23 November 2004;
ii)A statement of his financial circumstances filed 21 September 2005;
iii)Three affidavits of himself filed on 18 August 2004, 14 September 2005 and 21 September 2005.
The wife’s application only sought an order “that the real and personal property of the parties be divided in such proportions as this Court deems appropriate.” Thereafter her solicitor did not provide any additional formal minute of any orders sought on her behalf. However, at the outset of the final hearing, a document was provided headed “Applicant wife’s proposal”. This document proposed that Mrs P should retain items of real and personal property to the value of $212,643.00, which was said to be 60% of the marital pool and that there should be a 55% split in her favour in respect of the husband’s DFRDB and an associated superannuation scheme, of which he is a member, the D F P B S (PBS).
Mr P’s solicitor filed a minute of the orders sought by him in his case outline document filed shortly before the final hearing commenced. The orders sought were as follows:
“1. That the wife retain the nett sale proceeds of the property situated at and known as 26 D Avenue, D.
2. That the wife indemnify the husband in respect of all outgoings in relation to the D real property.
3. That the wife transfer to the husband at the expense of the husband all her right title and interest in the property jointly owned by the wife and the husband and the husband’s parents at C/R in W A and the husband indemnify the wife in respect of any and all payments with respect to any mortgage affecting the property.
4. That the husband indemnify the wife in respect of all rates taxes and outgoings with respect to the real property at C/R in W A.
5. That the wife retain as her own property absolutely the Daewoo Ceillo registration number 700023 and the golf buggy and the furniture currently in her possession.
6. That the husband retain as his own property absolutely the Kawasaki motor cycle registration CH 3641 currently in his possession.
7. That each party equally share the total value of the leave entitlements of the husband and the wife.
8. That each party keep every other item of property including superannuation, insurance and the like in their respective possession.
9. Such further or other Orders as the Court deems appropriate.
ALTERNATIVELY
10. That the parties equally share the nett sale proceeds of the property situated at and known as 26 D Avenue, D.
11. Orders 2-7 as listed above.
12.i. That the base amount allocated to the wife out of the interest held by the husband in the D F R and D B S and the P B S (“the interest”) is one third of the total holding;
ii. That in accordance with Section 90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the interest in the Funds, the wife is entitled to be paid an amount calculated in accordance with Part IV of the Family Law (Superannuation) Regulations 2002 and there is a corresponding reduction in the entitlement the husband would have had but for these Orders;
iii.That Order 11(ii) has effect from the operative time;
iv. The operative time for these Orders is four (4) business days after the date of the service of the Orders on the Trustee.
13. That the wife be solely entitled to her superannuation in S and P S S.
14. That the Husband be solely entitled to his superannuation in S.
15. That each party keep every other item of property including insurance and the like in their respective possession.
16. Such further or other orders as the court deems appropriate.”
The parties themselves were the only witnesses who gave evidence in these proceedings. In particular, no expert medical evidence was provided by either party. Accordingly there was no expert evidence before the court in respect of the extent of the husband’s ankle injury or the wife’s current level of health, apart from what the parties deposed themselves.
The wife’s solicitor tendered a valuation report in respect of the husband’s superannuation interests. This report was prepared by T L of L (Aust) Pty Ltd and gave a value for Mr P’s interests in the DFRDB of $457,583.55 as at 8 September 2005. The solicitor for the husband did not object to the tender of this report and by necessary implication accepts its conclusion and the necessary calculations which precede it.
In addition, the solicitor for the husband tendered a letter from the husband’s commanding officer, which indicated the monetary value of Mr P’s recreation leave and long service leave as at 20 September 2005.
The evidence
This is not a case which turns on credit. In my estimation, both the husband and the wife are decent and hard working citizens, whose integrity is beyond reproach. To their mutual credit, both parties acknowledged the contributions of the other. Where there were differences in their respective accounts of events, these were minor and had more to do with difficulties of recollection than any suggestion of deceit. As is commonly the case in matters such as this, both parties shared the common tendency to recall their own contributions with more clarity than they recalled the contributions of the other.
I have no doubt that the parties regarded their marriage as being one of equals and that they pooled their resources during it. Both contributed to the marriage, in different ways during it, to the full extent of their respective capacities. The parties opened a joint bank account during their marriage and their respective salaries were paid into it. Their household expenses and other necessary outgoings were paid from this account. In addition, during their marriage, the parties purchased a number of pieces of real property. These properties were jointly owned by them.
In these reasons for judgment, findings of fact are made on the balance of probabilities, following my observations of the witnesses concerned. In what follows, statements of fact constitute findings of fact.
Chronology
The wife was born on 23 November 1968 and is thirty-six years of age. The husband was born on 8 December 1964 and is forty years of age. The parties met in P when both were members of the R A A. Subsequently both were posted to T and they began to live together in T in July of 1991. This point marks the beginning of their financial relationship. At the time neither had any property of significant value. Both had second-hand motor cars and items of personal property. In addition, when the husband was aged fifteen, he began to contribute to a retirement savings account with C. He has kept up the required monthly payments ever since. The monthly payments have been modest.
The husband joined the R A A on 9 April 1985, when he was sixteen years old. He was required to join the DFRDB superannuation scheme on his enlistment. He joined the A as a private recruit. He has been in the A ever since. In 1992 he was promoted to corporal. In 1996, he was further promoted to s. In 2001, he was again promoted to w o class two, the rank he continues to hold.
The husband received training to become a chef in the A. Currently he is stationed at the C S Training Facility at HMAS C in V. He is an instructor in the cookery school there. He has been posted there since the parties separated. He enjoys this work and I accept that it is less physically demanding than being an actual chef attached to a regular A unit.
The wife also acquired training as a chef in the A. The evidence does not disclose when Mrs P joined the A. It is however clear that she voluntarily sought discharge from the A in 1994. At this time she received her accrued superannuation from her membership of the DFRDB. It amounted to a sum of about $16,000.00. The parties are in some disagreement about the circumstances surrounding the wife’s resignation from the A.
The parties married at W W, N S W on 29 February 1992. This marriage was dissolved by order of the Federal Magistrates Court at M on 22 July 2004. The marriage produced no children. The parties agree that they finally separated on 24 April 2003.
The parties lived in T between July 1991 and January 1996. They purchased their first home in K, a suburb of T in 1994. The purchase price was $129,000.00. Most of the purchase price was borrowed. Mr P received a lump sum of compensation from the A in respect of his ankle injury in September of 1991. The sum was about $21,000.00. The money was used for joint matrimonial purposes. The wife concedes it is likely that at least some of this money was directed towards the purchase of the K property. The house was also furnished by the parties from their combined savings.
In the early years of their marriage, the parties’ salaries were approximately equal. Mrs P was discharged from the de f at sometime in 1994. Her payment on resignation amounted to approximately $16,000.00. This sum was used for the parties’ general living expenses. No doubt part of the sum was used to purchase items of furniture.
After leaving the A, Mrs P obtained work as a chef at the T Casino, for a short period of time and thereafter was a cook at J C U in T for a period of about eighteen months. She estimates her annual salary during this period at between $36,000.00 and $38,000.00.
As previously indicated, the parties disagree somewhat regarding the precise reason why Mrs P left the A. From Mr P’s point of view, he believed Mrs P was generally unhappy in the services and wanted to leave. He deposed that he was happy to support the wife in her decision in this regard.
From Mrs P’s perspective, the parties mutually decided, at an early stage in the marriage, that they would concentrate on Mr P’s m career, which would necessarily involve postings throughout Australia. It is her evidence that the parties thought it was likely to be difficult for both of them to secure postings to the same location, whilst both remained in the A, in spite of their married status. As a result, it was decided that Mrs P would leave the A and her career would be somewhat subservient to that of Mr P in the m so that she could easily follow Mr P wherever he was posted.
I believe that there is likely to be an element of truth in both parties’ evidence. Regardless of that, it is clear that Mr P is a career s. His m career has meant that he had been posted throughout Australia from time to time. Necessarily, Mrs P has had to move with him. That is part and parcel of married life with a s. It was significant thing for Mrs P to leave the A when she did. Both parties were aware of the potential benefits she was giving up when she did so. I do not think Mrs P would have left the A if she believed at the time that the A was likely to provide the perfect career for her. The important thing however is that it was a joint decision of the parties for Mrs P to leave the A and to some extent both must bear the financial significance of that decision now.
In 1996 Mr P was posted to D by the A. The K property was rented. The rent received covered the necessary mortgage repayments but produced no profit. The parties had problems with the tenants at the property. As a result, they decided to sell it. The property market in T was flat at the time. The property could not be sold until 2000 and produced a sale price of $119,500.00, a loss on the purchase.
Between 1992 and 2002, Mr P’s father lived with the parties. He was a r s and received a v’s pension. He was not otherwise employed. Both Mr P and Mrs P held him in high regard and were happy to share their home with him. In a technical sense, the A regarded him as a dependent of Mr P. This enabled him to live in A accommodation with Mr and Mrs P and to receive other benefits, such as annual airfares.
The parties are in dispute as to how Mrs P’s father’s living expenses were managed. It is Mr P’s position that he largely utilised his pension for his own uses, paying for his own telephone use and buying groceries on an ad hoc basis. Accordingly, it is Mr P’s position that the gentleman concerned was heavily subsidised from his income and this is a matter which the court can now take into account, as he (Mr P) was under no legal obligation to support him.
On the other hand, it is Mrs P’s position that her father largely paid his way, making generous contributions towards household expenses and groceries. Again I suspect that the truth lies somewhere between the parties’ competing positions. What however is clear to me is that Mr P cherished his relationship with Mrs P’s father. He has not indicated in his evidence that he had any objection to the living arrangements per se. Again it seems to have been a mutual decision of the parties that the gentleman would live with them. Sadly he has since died as a result of stomach cancer. Apparently he suffered poor health in the last years of his life.
The parties lived in D between 1996 and January of 2000. Mrs P joined the A P S. She was a kitchen hand at the R A B in D. Her salary remained in the mid $30k. The posting coincided with Mr P’s promotion to the rank of s. I assume that his income was significantly larger than Mrs P was, a trend that grew more pronounced as the parties marriage progressed.
Unfortunately in July of 1996, Mrs P was diagnosed with breast cancer. She was treated with chemo and radiation therapy. The illness was a great shock to Mrs P. She resigned from her job and was unemployed whilst she received treatment. However she was able to regain her position in February of 1997. She was a permanent casual employee. Her recollection is that she was earning approximately $36,000.00 per annum during this period, whilst Mr P was earning approximately $45,000.00.
In January of 2000, Mr P was posted to P. As a result of the posting, Mrs P elected to take a redundancy from her position at R B at the end of 1999. She received a payment of $3,000.00 on her redundancy. She was able to obtain work in P. Initially she worked as a chef at the R C C’s C and later at an aged care hostel. In each case, her annual salary was $34,000.00.
Whilst they were in P, the parties purchased a home in K. The purchase price was $200,000.00. The parties did not remain in P for very long. The K property was sold at the end of 2000 for $220,000.00. By this time Mr P had been posted back to D.
In 1997 the parties purchased an investment property in P in conjunction with Mr P’s parents. The investment property was situated at unit 1, 56–60 E Drive, C. The parties had a half share in the property, which was tenanted, the rental on the property being used to pay the mortgage on it. The property was negatively geared, the outgoings on it being greater than the income produced. Mr P regularly contributed the sum of $75.00 per fortnight towards the mortgage.
The C property has recently been sold. The sale price was $188,000.00. The sum of approximately $72,000.00 was required to discharge the mortgage on the property. In addition, the sale attracted an agent’s commission of $8,700.00. As the property was an investment, the proceeds of sale will attract capital gains tax. However neither party is aware of how much this will be at this stage.
The parties’ return to D coincided with a decision to purchase a home for themselves in the D suburb of D. This property, located at 26
D Avenue, D was purchased in mid 2001. The parties both contributed to the deposit required to purchase the property and other monies were borrowed from the A Bank.
Once again, upon her return to D, Mrs P was able to find work. She rejoined the A P S and obtained work as a clerk with the D of D. Her taxable income for the years ending 30 June 2002, 2003 and 2004 was respectively $30,395.00; $34,229.00 and $38,836.00.
It is common ground between the parties that they separated in April of 2003. At this stage Mr P took up his position at the cookery school at the C S F at HMAS C in V. He is a lecturer and instructor at the cookery school. The posting was initially for a period of two years but has been extended by one year. His evidence is that the posting cannot be extended again and he will be required to return to an operational unit. When this occurs it will be necessary for him to pass a “battle fitness test”. He does not think he will pass this test.
On the parties’ separation, Mrs P continued to live in the D Avenue property. She paid all the outgoings on the property, including the mortgage which was $310.00 per week. She was able to reduce the mortgage by about $2,000.00. The D Avenue property includes a self-contained flat, which can be rented out. Mrs P rented this property out for approximately six months in the period following the parties’ separation. She applied the rent she received of $120.00 per week towards the parties’ mortgage and on upkeep of the property.
The parties came to the conclusion that it would be necessary for the
D Avenue property to be sold. Mrs P spent approximately $1,100.00 on preparing the property for sale and also did much work herself. Settlement of the sale of the property took place on 17 August 2005. The proceeds of sale, a sum of $154,208.28 are being held in the trust account of the wife’s solicitor pending the outcome of these proceedings.
Mr P continues to live at HMAS C in V. He pays rent of $76.00 per week to the D of D. His current annual salary is $63,048.00 gross. He receives a modest pension of $12.00 per week in respect of the injury to his ankle. He has not re-partnered since the parties’ separated.
Since the D Avenue property has been sold, Mrs P has relocated from D to E H in N S W. She wishes to live closer to her mother who has recently suffered a stroke. Fortunately Mrs P has been able to transfer her employment with the A P S to N S W. Presently she works as an administrative clerk level 2 at the G RAAF B. She believes that she has a “fairly slim chance” of being promoted to a higher level within the p s. Her salary remains at approximately the same level it was in D, namely $40,000.00 per annum. She also receives a modest pension of $32.00 per week from the D of V’s A in respect of an injury to her back she sustained whilst in the A.
Another reason Mrs P wished to return to live in N S W was that it would mean she was closer to the oncologist who has been treating her. Unfortunately Mrs P suffered a recurrence of breast cancer in early 2004. She had to undergo a mastectomy. For obvious reasons she remains anxious about her health, particularly as her father died from cancer. However fortunately she has suffered no recurrence of her illness to date. She has to undergo regular screenings. At this stage, in the absence of definitive medical evidence, I have no reason to believe anything other than that she has fully recovered her health. Mrs P herself deposed that her prognosis in respect of cancer was “fine”. In the New Year Mrs P is scheduled to undergo reconstructive surgery following the mastectomy. She has ample leave to enable her to have this surgery and recuperate from it without direct financial loss.
Mrs P has re-partnered since the parties separated. Her present partner, Mr A G is employed as a gardener. He is a modest wage earner, who takes home on average $500.00 net per week. He assists with household bills but not the rent on the premises Mrs P shares with him. Mrs P major recurrent weekly expense is her rent of $330.00 per week. She has savings of $2,000.00 in the bank.
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[1] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[1] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial. This does not create a great deal of controversy between the parties. Largely they have been able to agree on the value of most of the relevant property. The relevant real property has been sold and there can be no doubt about its value. The most significant item of property, Mr P’s interest in the DFRDB has been valued according to the applicable methodology. The one area of dispute is whether all of Mr P’s leave entitlements should be included in the pool.
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property. The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a contribution to property.
This second step occasions a great deal of controversy between the parties in one particular area relating to the husband’s future entitlements to superannuation. The husband’s entitlements are held in a defined benefit fund in its growth phase. Years of service and salary at the crystallisation of the superannuation entitlements are two of the key components used in the formula to calculate the value of a member’s entitlement in the DFRDB scheme. Mr P argues that it must follow that his contributions towards the fund are significantly superior to those of Mrs P in that he was a member of the fund for six years before his relationship with her began and has been a member for two years after the relationship has ended. This is the most significant area of dispute between the parties.
It is also Mr P’s position that the wife has made little or no contribution towards his C M S – the fund of which he has been a member since he was fifteen years of age. These differences of view lead the husband to the conclusion that the wife’s contributions to his various superannuation funds should be assessed conservatively by the court. It is his position that the parties’ contributions to the other items of property, particularly the proceeds of sale of their jointly owned real property should be assessed as being essentially equal.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act. Pursuant to section 75(2) (o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. In the main, section 75(2) deals with the prospective needs of the parties. This area too, occasions controversy between the parties.
It is Mrs P’s position that she is likely to earn a significantly lesser income than Mr P for the remainder of her working life and is also likely to be less well prepared for retirement than him. In her submission these factors call for there to be a significant distribution of property in her favour, particularly in regards to the husband’s entitlements in the DFRDB scheme at this stage of the court’s deliberation. She also argues that there are some question marks hanging over her health, which is a matter which also favours her.
Mr P does not accept that this is the case. To the contrary he argues that his future employment history is far from secure. It is his case that his ankle injury is likely to precipitate his premature retirement from the A and launch him into an uncertain employment future. In those circumstances his future employment is far less secure than the wife’s is. As has already been indicated the lack of expert medical evidence in the case poses problems for both the parties in regards to the court assessing their respective employment potential in future because of likely health problems.
Finally in determining what order the Court should make under section 79, the Court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the Court must consider.[2]
[2] See Russell v Russell (1999) FamCA 187
At the outset, I am at pains to point out to the parties that the task I must undertake, as I have just outlined it, is not a simple accounting or arithmetical exercise. In the jargon of the times, I cannot “crunch the numbers” to come up with an exact division of their property, which is not open to challenge or incapable of different interpretation. The task set for me, in this case, requires me to balance and compare contributions which are by their nature different. The discretion I have is a wide one.
The first step – the pool of assets
One of the difficulties in this particular case is that a large proportion of the parties’ matrimonial property is held in the form of superannuation and so is not immediately realisable or accessible by them. The purpose of superannuation is to prepare its beneficial owner for retirement. In this case the parties are in their mid thirties and early forties respectively and so likely to be some way away from retirement and the period of their lives when superannuation will be of pressing concern to them. Obviously many unforeseen thing may occur to them both in the period between now and retirement.
In addition superannuation funds are not homogeneous in the manner in which they hold their members’ funds or calculate how their final benefits will be paid. Of particular difficulty are a number of m superannuation funds which are funded in large part from government revenue and are open-ended in the benefits which are paid. The ultimate calculation of benefits depends on factors which are unknowable until retirement occurs. In the case of m superannuation such factors include the length of service and rank on retirement. Accordingly the valuation of such funds is necessarily problematic and too some extent artificial. Yet such a valuation is required before any splitting order can be made in respect of any superannuation fund.
The relevant section of the family law legislation, dealing with the valuation of superannuation interests, where one of the parties to the marriage seeks a splitting order in respect of that superannuation, is section 90MT of the Family Law Act, which reads as follows:
“(1)A court, in accordance with section 90MS, may make the following orders in relation to a superannuation interest (other than an unsplittable interest):
(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 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).
(2)Before making an order referred to in subsection (1), the court must make a determination under paragraph (a) or (b) as follows:
(a)if the regulations provide for the determination of an amount in relation to the interest, 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.
(2A)The amount determined under paragraph (2)(a) is taken to be the value of the interest.
(3)Regulations for the purposes of paragraph (2)(a) may provide for the amount to be determined wholly or partly by reference to methods or factors that are approved in writing by the Minister for the purposes of the regulations.
(4)Before making an order referred to in paragraph (1)(a), the court must allocate a base amount to the non-member spouse, not exceeding the value determined under subsection (2).”
Accordingly, pursuant to section 90MT(2), it seems clear that the valuation of superannuation is a mandatory step, before any splitting order is made. It also seems clear from the wording of placita (a) of section 90MT(2) that the application of the Family Law (Superannuation) Regulations is the mandatory method of arriving at that valuation.
The husband’s superannuation is held in a defined benefit fund in its growth phase. A defined benefit interest is defined [3] as the interest a member has in a particular superannuation fund, which on vesting will be defined by reference to one or more of the following:
[3] See Regulation 5 of the Family Law (Superannuation) Regulations
·the amount of:
- the member’s salary at the date of termination of employment or retirement, or another date; or
- the member’s salary averaged over a period.
·a specified amount;
·specified conversion factors.
and the release of monies from a defined benefit plan will be in one of four forms:
·lump sum only;
·pension only;
·combination of lump sum and pension where member is able to take more than 50% as a lump sum; or
·combination of lump sum and pension where member is required to take 50% or more as a pension.
The method for the valuation of a defined benefit interest coincides with these four forms.
The Attorney General has approved a method of valuing superannuation in both the DFRDB and the PBS. This is contained in the Family Law (Superannuation) (Methods and factors for valuing particular superannuation interests) Approval 2003. The solicitors for the wife have engaged an expert to perform the necessary calculations in respect of the husband’s interests in the DFRDB scheme pursuant to the methodology prescribed by this legislation. The expert is Mr L of L (Aust) Pty Ltd.
Mr L has acted on the assumption (as indeed he is required to do so) that Mr P’s salary is $63,048.00; he is not an officer; and he has twenty years of completed service. As at 8 September 2005, these factors when coupled with the necessary valuation methodology give a value for the husband’s superannuation of $457,583.55. A significant sum when compared to the parties’ other assets, particularly their non-superannuation assets.
Otherwise the parties agree as to the value of their other superannuation assets. Given the very significant value of the superannuation assets and the dispute between the parties as to the manner in which their respective contributions to these various funds should be assessed, it is appropriate that the parties’ entitlement to superannuation should be placed in a separate pool to their other assets in accordance with the principles laid down by the Full Court in C and C.[4]
[4] C and C [2005] FamCA 429
As already indicated, given that both pieces of real property, in which the parties had an interest, have been sold, the funds which relate to the realisation of those properties can be readily ascertained and is not the subject of controversy. In addition the parties agree as to the value of their other significant pieces of personal property.
During the course of his evidence, counsel for Mr P tendered a letter from M M, the C O of the A D F S of C. This letter showed that Mr P has accrued 44 days of recreation leave, which has a value of $6,617.14 and 3.9 months of long service leave with a value of $17,733.48. No evidence was provided in respect of Mrs P long service leave (if any) or her recreation leave other than it was said that she has substantial leave entitlements to cover her proposed surgery and recuperation next year. Counsel for Mrs P, Ms D sought that the total amount of Mr P recreation leave and long service leave entitlements – an amount of $24,350.62 should be included in the parties’ pool of assets.
Apart from the letter itself, there was little evidence regarding Mr P’s long service leave, particularly how he proposed to utilise it – that is whether he proposed to access it as a lump sum at some stage in the future or whether he in fact proposed to take it as leave. A similar difficulty existed in respect of his recreation leave. No evidence was provided as to whether Mr P’s employers require him to take his recreation leave regularly and so effectively preclude him from stockpiling it for lengthy periods of time. There is also no evidence regarding any taxation liability which may attach to these sums. These are significant omissions in the evidence. He was not cross-examined about these matters.
As the evidence before me stands, there is considerable doubt about
Mr P’s future plans so far as his employment is concerned. He himself asserts that it is highly probable that he will be discharged from the A due to physical incapacity. But no time frame has been specified in which that will occur and certainly no medical evidence has been provided which is capable of indicating the degree of likelihood. Whether or not Mr P will be discharged from the A in the next year or so remains a matter of conjecture. Certainly it would seem to be Mr P preference to remain in the A.
In my view, the law is clear that whether or not contingent payments – such as long service leave or recreation leave – are treated as property or in some other way by the court depends very much on how and in what form they are taken by the recipient to whom they are entitled. In this case, if Mr P’s retirement was imminent and there was clear evidence that he intended to take the payments concerned as cash, the argument that the nominal sums to which he is entitled should be regarded as property and so should be “added back” into the pool as notional property of the parties would be easier to make. But that is not the case here. Mr P fears that he may be discharged from the A but he is not actively planning towards such an eventuality. Accordingly I do not think that the sums concerned can be regarded as property and so should be included in the pool of the parties’ assets available for immediate division between them.[5]
[5] See Tomasetti & Tomasetti (2000) FLC 93-023 at 87,381 where the Full Court held “… we think that an inability to enforce payment in lieu of the accrued leave [except in case of retirement] would militate against a conclusion that such an entitlement, held by a person who has not yet reached retirement age, could constitute ‘property’ as defined in Section 4(1) of the Act.”
That is not to say that these substantial sums of money cannot be treated as a financial resource available to Mr P at some stage in the future. In my view they clearly can be so regarded. In Gould & Gould [6] the Full Court of the Family Court said as follows:
“As a matter of principle, we find it difficult to accept that an entitlement to substantial long service leave may only be regarded as a financial resource when the employee spouse is likely to retire and receive a lump sum payment in lieu of leave taken. The ability to take a lengthy period off work, but still be paid a normal salary during that period, may constitute a financial resource in at least some circumstances. In a given case, for example, that alibility may enable the relevant party to undertake other temporary employment, pursue a course of further education or retraining, or even commence or develop a business, during such paid leave, none of which would otherwise be available to him or her. In such circumstances such a facility would be likely to give that party an economic advantage which can be properly categorised as a financial resource.”
[6] Gould & Gould (1996) FLC 92-657 at 82,774
For these reasons I am not persuaded that I should conclude that Mr P’s leave and long service entitlements should be treated as property. They are, however, financial resources to be taken into account in assessing the impact of the section 75 (2) factors.
Accordingly I find that the property available to be divided between the parties and their relevant financial resources are as follows:
| Property (non superannuation) assets at date of hearing | $ (k) |
| Net proceeds of sale of D Avenue property | 154,208 |
| Net proceeds of sale of E Drive property (agreed) | 53,000 |
| Gold mine shares (wife) (agreed) | 2,000 |
| Motor vehicle (wife) (agreed) | 3,500 |
| Golf buggy[7] (agreed) | 4,000 |
| Motor cycle [8] (agreed) | 8,000 |
| Furniture (wife) (agreed) | 7,500 |
| Total non superannuation assets | 232,208 |
| Financial resources at date of hearing | |
| Husband’s entitlements to long service leave | 17,733 |
| Husband’s entitlements to recreation leave | 6,617 |
| Total financial resources | 24,350 |
| Superannuation assets | |
| Husband’s DFRDB (agreed) | 457,583 |
| Husband’s PBS (agreed) | 26,576 |
| Husband’s C M (agreed) | 29,024 |
| Wife’s P S S (agreed) | 28,371 |
| Wife’s S S | 13,064 |
| Total Superannuation assets | 554,618 |
[7] I am uncertain who of the parties currently has possession of this item of property.
[8] I am uncertain who of the parties currently has possession of this item of property.
The second step – assessment of contributions – section 79(4)(a) to (c)
I now turn to the second of the steps in the exercise under section 79, namely an assessment of the parties’ contributions within the context of section 79(4)(a) to (c). These provisions are as follows:
“Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of home maker or parent.”
Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. The task required of me pursuant to section 79(4) of the Family Law Act thus is to weigh and assess the disparate contributions of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances.[9] Contributions, which are different in quality and nature, must be compared. The exercise is not purely an arithmetical or accounting one.
[9] See Pierce &Pierce (1999) FLC 92-844
In assessing the parties’ contributions towards the acquisition of the assets of their marriage, it is necessary to consider whether the court should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property. Both approaches are legitimate, however the High Court has held that the global approach is generally more convenient, particularly when it is necessary for the court to assess contributions, which are different in nature. In Norbis v Norbis[10] it was said as follows:
“Although it is natural to assess financial contributions under sec. 79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as home maker and parent either by reference to the whole of the parties’ property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.”
[10] Norbis v Norbis (1986) FLC 91-712 at page 75, 268 per Mason C J & Deane J
Pursuant to section 90MC of the Family Law Act 1975 superannuation interests are to be treated as property. Specifically, pursuant to section 90MS of the Act, such superannuation may attract the provisions of section 79 of the Act. The difficulty in this case is how to assess the parties’ various contributions, pursuant to section 79, to the somewhat amorphous property which is the husband’s DFRDB entitlements and clearly the most significant item of the parties’ assets. I say amorphous because of the artificiality of the valuation of that superannuation, given that it remains in its growth phase and its final extent depends on factors which are currently unknown, namely Mr P’s salary at retirement; his years of service; and his rank on retirement. Given the central importance of years of completed service to the calculation of both a member’s lump sum on leaving the service and the level of his or her future entitlement to retirement pay, the court, to my mind, must also closely consider the issue of pre-marital contributions in this form.
Clearly, these attributes, give the DFRDB entitlements a very different quality to other types of property, whose value can be readily ascertained by sale and can be easily transferred to others, such as real or personal property. This also raises the question as to whether the section 79(4) exercise has a different quality, when it is applied merely to superannuation.
In C and C [11]the majority of the Full Court considered:
“…section 90MC does no more than confer jurisdiction on the relevant courts to make orders in relation to superannuation interests in proceedings with respect to the property of parties to a marriage (or indeed in proceedings between such parties where the only asset of any significance is a superannuation interest) and that s 90MS does no more than provide that superannuation interest are but another species of asset (in addition to property as defined in s 4(1)) in relation to which orders can be made in proceedings between parties to a marriage.
“Importantly, the conclusion, that by virtue of s 90 MS superannuation interests are to be regarded as another species of asset in relation to which orders can be made, will mean that the Court will be relieved from having to determine in any particular case the question of whether “a superannuation interest”, which comes within the definition of that term contained in s 90MD, may in fact also come within the definition of “property” in s4(1) … or whether it is only a financial resource. It is interesting to note in this regard that, from its inception, s 75(2) has contained reference in paragraph 75(2)(b) to “property and financial resources” and then in paragraph 75(2)(f) has contained reference to “a…benefit…under any superannuation fund or scheme.” Thus, the treatment by the legislation of a superannuation benefit or entitlement as a concept separate from property and financial resources is not new.”[12]
[11] C and C [2005] FamCA 429 at paragraph 52
[12] See C and C (supra) at paragraph 53
The majority in C and C provided some guidance as to how this different “species of asset” was to be treated in the exercise of the court’s discretion pursuant to section 79. The majority of the court said as follows:
“Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as “the first step” in determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. This approach could be adopted where the parties agree that it should be adopted, or where the Court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are feature about the interest which leads the Court to conclude that this would be an appropriate approach.
The parties’ contributions to all items on that list (including superannuation interest) would then be assessed on either a global or an asset by asset basis. It might then be necessary in the s 75(2) context to have regard to the parties’ future superannuation entitlements (having regard of course to any division proposed on the basis of their contributions), with consideration then being given to the overall justice and equity of any proposed award or order ( including any proposed splitting order). Indeed, this is the approach which the Full court has used on its re-exercise of the trial Judge’s discretion in Ilett and Ilett (which will be delivered contemporaneously with the decision in this case).
However, given the conclusions we have reached above, we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of times of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). This of course is the approach which the trial Judge adopted in this case.
Then for the reasons we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s 4(1)) and also the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered. Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered. The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.”[13]
“The reasoning in Hickey would seem to overcome this legislative omission in that if the words in paragraph (ca) of the definition of “matrimonial cause” in s 4(1) are read not, as we hold, as merely enlivening the jurisdiction to make orders concerning superannuation interest, but rather as meaning that in all proceedings under s 79 (irrespective of whether or not a splitting order is sought), superannuation interest are to be treated as property.”[14]
“In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
[13] See C & C (supra) per Bryant CJ, Finn and Coleman JJ at paragraphs 61-64
a) value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
b) consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
c) consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
d) ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.”[15]
[15] See C & C (supra) per Bryant CJ, Finn and Coleman JJ at paragraph 65-66
Accordingly, it is necessary to examine in more detail the nature of
Mr P’s interests in the DFRDB and PBS and what occurs when a split is made in those entitlements.
Members of the DFRDB scheme are required to contribute 5.5% of their fortnightly salary, for superannuation purposes, to the scheme. The scheme is designed to provide its members with an income when they have left the defence forces after either fifteen or twenty years of service or in the event of invalidity. The primary form of benefit is a combination of an indexed pension and a lump sum payment or commutation. DFRDB members are also entitled to a productivity benefit pursuant to the “D F (Superannuation) (Productivity Benefit) Determination”. This benefit is paid at the same time as a member’s DFRDB entitlement crystallises.
The amount of a member’s indexed pension and commutation is calculated pursuant to the provisions of the Defence Force and Retirement Death Benefits Act 1973. Section 23 of the Act provides the basis to calculate a member’s indexed pension or to utilise the terminology of the Act his or her “entitlement to retirement pay”. Essentially, after fifteen completed years of service, a member is entitled to receive 30% of his termination salary as retirement pay. This percentage increases incrementally after each subsequent completed year of service. For example, after thirty-nine years of completed service, the percentage increases to 73.5%.
Section 24 of the Defence Force and Retirement Death Benefits Act 1973 provides the legislative basis for the calculation of any commutation a member of the DFRDB scheme may wish to pursue. Essentially a member may commute a maximum of five times his or her annual rate of retirement pay on exit from the services. For obvious reasons, the degree of commutation has implications for the calculation of retirement pay.
Accordingly completed years of service is a highly influential component in regards to the calculation of a member’s benefits, as is salary on exit from service. It is unclear what Mr P’s likely salary will be on his retirement from the A. Indeed it is far from clear when he will leave the A. His retirement may be imminent, as he contends is highly likely, or it may be over ten years away. Mr P is in his early forties, he is not liable to compulsory retirement due to his age until he is fifty five years of age. In the absence of specific medical evidence regarding his level of disability resulting from his ankle injury and also evidence regarding the A’s likely attitude to this injury, I do not believe that I am in a position to make any specific finding as to when Mr P is likely to retire.
In the event of a split in the entitlement of a member of DFRDB scheme, the spouse in whose favour such a split is made does not become a member of the DFRDB scheme. Where the member’s interest is in the growth phase, as is the case here, the non-member spouse becomes what is known as an Associate B Member of the MSBS scheme with a benefit based on the amount of the split transferred. The same occurs in respect of any split in the PBS. In each case, there is a reduction in the benefits to which the member of both the DFRDB and PBS would have otherwise been entitled to. An Associate B Member of the MSBS is not entitled to any indexed pension or retirement pay. Rather his or her interest accrues interest at the long-term bond rate between the operative time (the effective date of the splitting order) and the date when the associate benefit becomes payable.
The provisions of the Military Superannuation and Benefits Rules, in particular rules 86 and 87, deal with the payment of associate B benefits. In certain circumstances an Associate B Member may apply for an early release of benefits. These circumstances include total and permanent incapacity for work; compassionate grounds as determined by the Australian Prudential Regulation Authority pursuant to mandated criteria;[16] and severe financial hardship, again as determined by reference to mandated criteria.[17]
[16] See sub-regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994
[17] See sub-regulation 6.01(5) of the Superannuation Industry (Supervision) Regulations 1994
No specific evidence was provided to me by either of the parties regarding the likely effect of the split, as proposed by him or her at this stage, on Mr P’s future entitlement to either retirement pay or a lump sum, when he retires from the A. In particular I do not know what consequences making a split in Mr P’s DFRDB would have on the level of his retirement pay or commutation if he is retired shortly on the grounds of ill health. In addition neither party has provided any specific evidence regarding the consequences of any finding of disability by the A in respect of Mr P for his future entitlements. Nonetheless, in spite of these omissions, both parties wish the case to be determined.
The parties’ non superannuation assets amount to a sum of $232,208.00. The duration of the marriage between the parties was a significant period of time, being about twelve years in duration. Putting aside superannuation, neither party brought any specific item of property into the marriage. Both worked hard and consistently during the marriage, although the wife’s salary was mostly lower than the husband’s was. I do not regard this as a significant factor, as it is offset by the fact that she was compelled to resign her employment from time to time to follow the husband to his various postings throughout Australia. She has contributed her lump sum termination payments to common matrimonial purposes.
Nor do I think that the parties’ joint contributions towards the support of Mrs P’s father should be regarded as significant. Both Mr and Mrs P seem to have had a shared affection for the gentleman concerned and it was a joint decision to take him in. As I have already indicated, I have no difficulty in coming to the conclusion that the marriage between the parties was one of equals and both Mr P and Mrs P contributed during it to the full extent of their respective capacities. In every sense their marriage was “a genuine partnership”.[18] They clearly mingled their funds and put those funds towards jointly agreed upon enterprises. They both seem to be to be careful and frugal people. Currently they have little or no debt. In all these circumstances, I believe that the parties various contributions towards the acquisition and preservation of their actual or non superannuation assets must be regarded as being equal.
[18] See Figgins (2002) Fam LR 544 at p 566
In my view the issues surrounding the assessment of the parties’ various contributions towards their superannuation assets are significantly more complicated and problematic. The parties’ combined superannuation totals some $ 554,618.00. Of this sum $457,583.00 or 82.5% is represented by the husband’s as yet uncrystallised interest in the DFRDB superannuation. In the light of these figures, Mrs P’s decision to leave the A in 1994 must be regarded as fateful. The figures also underline the obvious benefits of being a member of a defined benefits superannuation scheme such as the DFRDB, after the member concerned has achieved one or other of the necessary criteria which define the final benefit or benefits available on crystallisation. When Mrs P elected (in conjunction, as I find with Mr P) to resign from the military and so abandon her membership of the DFRDB scheme, due to the short period of her membership in the scheme, she was entitled only to a comparatively meagre amount of superannuation of some $16,000.00. Obviously she was many years away from the stage when she would have been entitled to receive a commutation payment and retirement pay on her discharge from the A. As Mr P has now reached the necessary crystallisation thresholds, these factors are recognised in the actuarial methods used to calculate the value of his ultimate benefits.
It is interesting to note that the discrepancy in the parties’ superannuation, held in non defined benefit schemes, is not unduly pronounced – $55,600.00 in Mr P’s case and $41,435.00 in Mrs P’s case. No doubt this reflects the fact that there have not been great discrepancies in their respective salaries over the years of their marriage and the level of their contributions to these various funds in cash terms has not been greatly different. This underlines the difficulties apparent in assessing how the parties’ contributions to
Mr P’s DFRDB entitlements should be assessed. Mr P’s’ entitlements under the DFRDB scheme are open ended, as their final extent essentially depends on how long Mr P will live – obviously an unknowable fact at this juncture. Accordingly the retirement benefits under such a scheme cannot be funded by member and employer contributions alone made prior to retirement but rather rely on further government contributions after retirement. These factors greatly increase the value of the superannuation.
When consideration is given to the dollars actually contributed by Mr P to the DFRDB scheme, during the twenty or so years of his m service to date, these direct financial contributions are likely to be greatly overshadowed by the financial contributions which will be made by the Australian Government over the remainder of Mr P’s lifetime after his retirement from the m. The rationale behind such defined benefits schemes as the DFRDB is not difficult to glean. The Australian Government of the time no doubt wished to encourage its service personnel to remain in the service of its country for as long as possible and to reward (and in appropriate circumstances compensate them) for the arduous and sometimes dangerous circumstances which are part of m life.
Mr P joined the DFRDB scheme in April of 1985, when he joined the A. This was approximately six and a quarter years prior to the commencement of the relationship between the parties. In addition
Mr P has been contributing to the scheme for approximately two and a quarter years since the parties separated. By use of the word “contributing” I mean not only in a financial sense by the contribution of a regular proportion of his salary to the scheme but also in terms of his continuing m service. In rough terms the period during which Mr P has been a member of the scheme but has not been cohabiting with
Mrs P equates to forty percent of the whole. On any view this is a significant factor.
In its assessment of his contributions to the DFRDB, Mr P asks the court to take in account what he says are not only his undoubtedly superior financial contributions to that fund but also his completed years of service, which are central to the calculation of his current benefit and to the rationale of the scheme of m superannuation itself. In this latter sense he argues that a significant proportion of the current contribution to the DFRDB must be regarded as his alone – he alone contributing the years of m service which have brought his membership of the DFRDB over the threshold to the point where the substantial benefits of m service “kick in”, about eight of his twenty years of service having been given when he was not involved with Mrs P.
This is a powerful argument. But in my view it would be both unwise and contrary to principle to assess the parties’ contributions to the DFRDB scheme in arithmetical terms alone. I cannot loose sight of the fact that Mrs P herself was once a member of the DFRDB scheme and over the period of the marriage (and before it) contributed to the scheme. During the course of the marriage a decision was made for her to resign from the m and so abandon her possible future retirement benefits arising from her m service. It seems to me to be unfair in all of the circumstances of this case that the consequences of her premature resignation from the m and the scheme itself should now be sheeted home to her alone. Mrs P may have been unhappy in the m when she decided to leave but I am satisfied that this was a decision that both parties endorsed, perhaps without understanding its full financial ramifications at this point of their relationship together. It is also clear to me that over the several years of the parties’ marriage
Mrs P’s career was largely subservient to that of Mr P. Frequent changes of posting are one of the travails of m life. Mrs P shared those travails and the incumbent requirement for her to change her employment from time to time. There can be no doubt that she contributed indirectly to Mr P’s DFRDB entitlements during the years of the marriage. The issue is how to balance those contributions during the marriage with Mr P direct contributions both before and after the marriage to arrive at a result which is just and equitable in all the circumstances.
In this regard, I bear in mind what was said by the Full Court in Danielian and Danielian[19] as follows:
“The task of the court in proceedings under s 79 is not akin to an accounting exercise. The task is to examine the facts of each case carefully to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions. By and large, marriage is a joint venture where parties can expect to buffer each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or indeed contrary to the wishes of the other. But there can be no certain answer to how much that should be when applying s 79 principles.”
[19] Danielian & Danielian [2003] FamCA473 at paragraph 49
To adopt the metaphor used by the Full Court in Danielian I do not think that Mrs P was engaging in “individual sailing” when she decided to resign from the A in 1994. The decision she made was not a capricious one but one which was made in full consultation with Mr P. Accordingly both parties should now, too some extent share in the financial misfortune which follows that decision at this point in their relationship. However, in my view, the fact that Mr P has contributed years of service (and financially) to the DFRDB in periods independent of the marriage between the parties is a factor that militates against an equal division of the superannuation at this point.
The question is what weight should be given to the fact that Mr P brought into the marriage a significant part of the m service upon which would be based, at a much later stage, his entitlement to receive both a regular retirement income and a significant commutation, which, if the marriage between the parties had continued, would have benefited them both. Are these years of prior service analogous to an initial contribution of capital prior to the commencement of the marriage?
In Doolan and Doolan [20], Justice Warnick considered this issue in a somewhat different context. The case concerned a spouse (the husband) who, largely prior to the commencement of the marriage between the parties involved, had spent long years of study to attain the necessary qualifications to become a specialist anaesthetist, which, had enabled him to have a capacity to earn a high income during the marriage. It was argued that these skills comprised such an initial contribution. His Honour accepted that, in certain circumstances, pre-cohabitation training could be taken into account in favour of its contributor. In the course of his reasoning Justice Warnick considered the situation of a person in the military who became entitled to receive a military pension during a marriage who had acquired much of that entitlement prior to the marriage beginning. His Honour said as follows:
“…a person spending time in the armed forces sufficient to be entitled to a retirement pension and all or most of that period occurs prior to the relevant period of cohabitation. The pension is then received throughout the cohabitation. It cannot be said that the other spouse makes any contribution to its receipt. It seems strongly arguable that the contribution ought to receive a particular weighting and has something of the character of an initial contribution.”
[20] Doolan and Doolan (Unreported) Warnick J delivered 24 November 2003 in BR 2202 of 2002
In such a case, the spouse concerned brings into the marriage a potential to earn or receive a significant income, which potential is realised during the course of the marriage. In this case, Mr P brought a significant amount (although not all) of such a potential into the marriage between the parties concerned here. The potential has now been realized as a result of Mr P passing the requisite number of year of service required for him to become entitled to receive retirement pay.
Mrs P also had, at the outset of the marriage between the parties, some potential to receive a significant amount of income during the marriage, in the form of her membership of the DFRDB. However she has foregone that potential for a mixture of personal and family reasons. As this potential has not been realised during the parties’ marriage and now can never be so realised, it is difficult, to my mind, to give it a great deal of weight as a contribution in the present circumstances of this case. The situation would possibly be different if Mrs P had foregone her career in the m to become a primary homemaker and parent. However, although I accept that she largely left the A because she did not like it, I also accept that at least part of the decision was motivated by the perceived desirability of the couple being able to concentrate on Mr P’s m career to the detriment of her own. Accordingly I do not discount it as a contribution altogether.[21]
[21] I acknowledge the useful analysis in respect of this issue provided by Federal Magistrate Slack in a paper entitled “The Impact of Income and Earning Capacity on Property Settlement Outcomes” delivered on 12 September 2005.
As a result of these matters, I have come to the conclusion that Mr P’s period of m service and his concomitant membership of the DFRDB scheme must be regarded as being akin to an initial financial contribution. As a consequence, it is necessary for me to consider the authorities which deal with the degree of weight the court is to afford to such contributions. In this regard, I bear in mind what has been said in the Full Court of the Family Court in a number of cases. In Quaresimini & Quaresimini[22] the Full Court said as follows:
“The section 79 exercise is not a pure accounting exercise. It is an exercise in identifying the various matters to be considered under section 79 and weighing them up against the other before reaching what is an appropriate order to be made, which order may not be made unless it is just and equitable. The manner in which disparate contributions have to be measured, especially initial capital contributions, has been the subject of much discussion.”
[22] Quaresimini & Quaresimini (1999) Fam CA 1314
In Pierce & Pierce,[23] Ellis, Baker & O’Ryan JJ made reference to several of the authorities. Their Honours said as follows:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution.”
“…there is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with ‘a particular contribution’. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome, which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.”
[23] Pierce & Pierce (1999) FLC 92-844 at page 85,811
In my view, the interrelationship between his years of completed service and the amount of Mr P’s retirement pay and so the extent of his commutation, gives great significance to Mr P’s pre-marriage contributions as identified by me, which now merit special recognition at this stage, notwithstanding the lengthy marriage of twelve years between the parties.
The task required of me pursuant to section 79(4) of the Family Law Act is to weigh and assess the disparate contribution of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances. Contributions, which are by their nature and quality different, must nonetheless be compared. A corporation or government department is able to ascribe value to the efforts of its servants by the amount of salary it attributes to them for the performance of those efforts. Such a task is not so easy to perform in respect of an exemplary parent or homemaker, who receives no actual salary for the labours, he or she perform. The task is not necessarily easier to perform when both parties are in the full time workforce but one won of them earns more than the other.
In this case Mrs P has clearly made great contributions during the marriage. She worked hard in a number of positions and contributed her wages to the common good of the parties. She showed a significant ability to find fresh employment when it was necessary for her to give up work and move in response to Mr P’s changes of posting. She contributed her redeemed superannuation at the conclusion of her army service and also a subsequent redundancy payment to joint matrimonial purposes. As I have already indicated I do not regard the lesser extent of Mrs P’s salary as being greatly significant in this regard. She chose, in consultation with Mr P, to give up the security of a position in the A F and its associated system of promotion at least in part so that the difficulties in respect of Mr P’s inevitable changes in posting would be minimised. I accept that the parties did decide to concentrate on Mr P’s career in the A in the realisation that this would be of long term benefit to them both.
Very often, the court is called upon to compare and contrast the disparate roles of parties to a marriage, when performing its responsibilities pursuant to section 79(4). In addition, the task must be performed when members of society hold very different views as to the nature of marriage and the economic consequences of divorce.[24] Accordingly, the task set for the court pursuant to section 79(4) cannot be regarded purely as an arithmetical or accounting exercise. Section 79(4) carries with it an extremely broad discretion. The parameters of the discretion are that the orders made pursuant to section 79(4) must be appropriate and must not be made unless it is just and equitable to do so.
[24] See Mallet v Mallet (1984) 156CLR 605 at 607-8
Accordingly, along with all the other contribution factors during the period of the parties’ marriage, I must balance and assess the significance to be given to the husband’s initial contribution of his DFRDB superannuation, in the sense of its potential to provide a significant retirement income, after a number of specific criteria relevant to the fund had been satisfied. In my view, it is an inevitable conclusion that, when consideration is given to the husband’s initial contribution of approximately six years completed m service and the conjunction of that contribution with his subsequent contributions to the superannuation in the period after the parties separated, Mr P’s overall contributions to the DFRDB superannuation must be regarded as superior to the contributions to it of Mrs P too a significant degree. In my view the parties’ various contributions to the DFRDB superannuation should be regard as favouring Mr P in the ratio of 65/35 %.
Given the disproportionate value of the DFRDB superannuation when compared to the parties’ other assets – both in the form of non-superannuation and other superannuation – this division represents a significant advantage so far as Mr P is concerned. In respect of the parties’ other superannuation, it is my assessment that the parties’ various contributions towards the acquisition and conservation of that superannuation should be regarded as being essentially equal, in spite of Mr P’s assertion that, due to the fact that he has been contributing to the C M S since he was fifteen years of age, this is a factor which calls for some form of special recognition because of his initial contribution to the fund prior to the commencement of the parties’ relationship.
In my view this is a less easy argument to mount in respect of the
C M S than in respect of the DFRDB for a number of factors. Firstly the value of the fund is obviously far less than the DFRDB fund. Secondly the superannuation is not held in a defined benefit scheme, which is dependent on years of membership to calculate its value. Thirdly it is not possible to ascertain the value of the fund when the parties commenced their relationship.
Both parties were largely in permanent employment for the duration of their relationship. As a result they have both made contributions to and had contributions made on their behalf to various superannuation fund currently standing in their respective names. At present there is an approximately $14,000.00 discrepancy, in the husband’s favour in respect of that superannuation. In the overall scheme of things it is not a great discrepancy and most likely flows from the fact that the husband has had a higher salary than the wife and has been a member of the C M fund for many years. In all the circumstances of this case, I propose to include the parties’ superannuation entitlements (other than the DFRDB) in the pool of the parties assets and make orders that would see each of the parties receiving an amount of assets and superannuation that is nominally equal to half that pool.
The third step – section 75(2) factors – the prospective needs of the parties
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party. The section 75(2) factors are as follows:
a)the age and state of health of each of the parties;
b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them to obtain meaningful and gainful employment;
c)whether either party has the care or control of a child of the marriage who is not attained the age of 18 years;
d)the commitments of each of the parties that are necessary to enable the party to support:
i) himself or herself;
ii) and a child or another person that the party has a duty to maintain;
e)the responsibilities of either party to support any other person;
f)the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
(iii)and the rate of any such pension, allowance or benefit being paid to either party;
g)where the parties have separated or the marriage has been dissolved, a standard of living, which in all the circumstances is reasonable;
h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training;
j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
l)the need to protect a party who wishes to continue that party’s role as a parent;
m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
n)the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
na) any child support under the Child Support (Assessment) Act that a party to the marriage has provide, is to provide, or might be liable to provide in the future, for a child of the marriage;
o)any other fact or circumstance;
p)the terms of any financial agreement that is binding on the parties.
Sub-section (a) – Mr P is forty years of age. He asserts that he is not presently in an ideal state of health to pursue his chosen calling as a chef in the m. Mr P has been a lecturer at the C S C S at HMAS C in V. He has been posted there since the parties separated. It is work he enjoys and which has a component of administration attached to it which is largely sedentary. He is able to cope physically with this work.
Many years ago now, Mr P was involved in a motor vehicle accident and injured his ankle. The level of his injury resulted in him being adjudged sufficiently incapacitated to be entitled to receive a part disability pension. There is no other evidence before me to indicate that this injury has otherwise impacted upon Mr P ability to earn his income in the A. In particular no evidence was led which indicates that Mr P has been compelled to take time off work because of his injury or is unable to satisfy the current requirements of his position.
Mr P believes that it is likely that he will have to undergo surgery to have the injured bones in his ankle fused. It is his position that he cannot remain indefinitely in his present posting at HMAS C but must be sent back shortly to his regular battalion as he remains a regular soldier. When he is so returned he will have to undergo a battle fitness test and fulfil the ordinary requirements of a regular s, which include route or pack marches and other physically demanding tasks. He does not believe that his ankle injury will allow him to pass the battle fitness test or permit him to complete the other onerous physical requirements of a regular soldier. More importantly he will have to return to his normal duties as a m chef – that is cooking for a large number of soldiers in a m kitchen. He will have to stand up for long periods of time. An activity he currently finds painful and difficult. In all these circumstances he believes that it is inevitable that the A will take steps to have him discharged as medically unfit.
Mr P has been a member of the R A A since he was sixteen years old. He gained his qualifications as a chef in the A. In addition, during his period of m service, he has gained skills as a truck driver. However, it is position that as his injured ankle is the one which ordinarily operates the accelerator of any vehicle he is driving and as his injury makes this a difficult and painful process, he is effectively precluded from working as a driver in the future.
As a result of these matters, Mr P asserts that his continued employment in the A is doubtful and upon his discharge he is likely to find that his injury will render him unfit to do the two jobs for which he is qualified, namely being a chef or driving. Accordingly he asserts that his future employment prospects are far from rosy and it is likely that he will require the vast bulk of his DFRDB entitlements to sustain him financially through a long retirement.
I confess that I am greatly troubled by this aspect of Mr P’s case.
I accept that he has a significant and long standing injury to his ankle, which he sustained in a motor cycle accident in 1988. The A have recognised the permanent nature of his injury by awarding him a disability pension of $12.00 per week. However there is no evidence before me to indicate that this injury has been a significant impediment to the advancement of Mr P’s career in the seventeen years since it occurred. Certainly Mr P has not deposed as such in his evidence and no material has been submitted from his employers in this regard. There is no specific medical evidence in regards to the current level of his injury and its consequences for his future employability. In my view it is a matter of conjecture whether or not Mr P will be discharged from the A as medically unfit in the near future.
Up to this stage I have no reason to believe anything other than that the A has regarded Mr P as a valuable employee. He has progressed through the ranks during his period of his military service. He seems currently to have a responsible position at the Cookery School.
I accept that he must leave this position shortly. I accept that this is likely to have ramifications in regards to the assessment of his level of “battle fitness”. However, in the absence of any specific medical evidence or evidence from the A itself, I am unable to accept that, on balance, it is likely that Mr P will go from a position where he has an ability to earn an income of approximately $60,000.00 per annum to a situation where his income earning capacity is essentially nil.
In my assessment of him Mr P is an intelligent person. He clearly has valuable skills as a chef. He also has some skills in administration, particularly in the Cookery School. On the evidence before me, I am unable to conclude that it is likely that in future all his skills as a chef as a chef will be negated by his injury. He has deposed that he believes he will have surgery on his ankle in the future. What is the nature of that surgery and its likely prognosis is unknown to me.
Mrs P is thirty-six years of age. Due to her serious illness in 1996 and again in 2004, she is anxious about her future health. Her anxiety is compounded by the fact that her father died from cancer. I can readily understand why Mrs P would suffer from such anxiety. However at the present time there is no medical evidence to indicate anything other than she is in a good state of health. She herself has deposed that her prognosis so far as a further relapse is concerned is “fine”.
Like Mr P, Mrs P receives a veterans’ disability pension. She receives a sum of $32.00 per week. The pension relates to an injury she sustained to her back whilst part of the m. She did not provide any specific medical evidence in regards to this injury. There is no evidence before me to indicate that this injury has significantly impinged on her income earning capacity in the many years which have elapsed since she left the A.
Sub-section (b) – Mr P is a skilled tradesman. During his period of service, he has gained qualifications as both a truck driver and more importantly as a chef. More recently he seems to have acquired skills in administration and as a vocational lecturer, particularly in his chosen field of catering. He is an intelligent person. He has acquired the attributes of self discipline which come from m service. For reasons already provided, I am not of the view that it is likely that he will become bereft of all capacity to earn an income if and when he is discharged from the military. I accept that he must retire from the m at the age of fifty-five years.
At present Mr P is earning an income of about $63,000.00 per annum. It is his evidence that this income is likely to drop significantly in the near future. In my estimation the evidence lacks sufficient clarity for me to safely conclude that this is a likely outcome. In my assessment Mr P is likely to have some capacity to earn an income for the foreseeable future. His injury to his ankle may have some impact on his career options. However in the absence of specific medical evidence in this regard it is unwarranted for me to speculate about this. I also consider it to be the case that Mr P has skills other than those that relate to an ability to stand for long periods of time or drive a motor vehicle.
As a result of his membership of the a f, Mr P is entitled to benefits in DFRDB. Too a large extent, the Australian Government funds Mr P’s entitlements in the scheme, which are open-ended. Mr P is entitled to receive some level of retirement pay for the rest of his life, when he leaves the R A A. These entitlements will begin at the latest at fifty five years of age. He is entitled to receive this retirement pay regardless of whether or not he obtains other employment in future. This is of considerable benefit to him and means that he has a level of income security for the rest of his life. Given that there will be a split of the DFRDB in Mrs P future as a result of these proceedings and given that it is uncertain precisely when Mr P will retire from the military, it is not possible to determine what his level of retirement pay will be. But on any view a life-time entitlement to a salary is a considerable benefit indeed.
Mr P also has access to a significant amount of superannuation in funds other than the DFRDB. Of particular importance in this case is the fact that Mr P has the potential to access the financial resources represented by his long service leave entitlements and accrued recreation leave. In the event that Mr P is compelled to leave the A he is likely to have access to a considerable sum of money to buttress him against any short term financial difficulties between periods of employment. This is a considerable advantage which Mrs P does not enjoy, although it seems she has some accrued leave as she is apparently able to take time of work for her surgery during next year without financial penalty.
Mrs P has some skills as a chef. These skills are now somewhat out of date as Mrs P has not worked in this field for many years. Since she left the a, Mrs P has been in regular employment apart from the periods of time when she has been ill. She has worked principally as either a kitchen hand or in a clerical capacity. In these fields her income has been consistent but not a particularly large amount. Mrs P has a capacity to earn an income in the mid $30ks to the low $40ks. She cannot be regarded as a high income earner. She does however have the security of being a member of the A P S. Her employment for the foreseeable future appears to be secure.
Apart from her cooking skills, which now appear out moded, Mrs P has no specific work qualifications to speak of. Currently she is working as an administrative clerk. Mrs P is obviously a reliable and valued employee but I accept that her chances of promotion within the P S are not particularly great. It is likely that she will remain on the same level of remuneration indefinitely. Mrs P has been able to make some provision for her financial security in retirement through superannuation. She is however not as well prepared for retirement as Mr P.
In spite of the question marks Mr P has himself raised over his ongoing physical capacity to maintain employment but which, in my view, he has been unable to satisfactorily substantiate, I am satisfied that the matters for consideration under this criteria favour Mrs P. I consider it highly likely that for the foreseeable future there will be a marked disparity between the incomes of the two parties concerned.
Sub-section (c) – This is not a relevant consideration in this matter.
Sub-section (d) – At the end of their marriage, both parties find themselves in full-time employment. Both are currently living in rented accommodation. They both appear to live within their means and neither is currently presented with any pressing financial need. The matters for consideration under this criterion are not generally relevant in this case.
Sub-section (e) – Neither party has any legal responsibility to support any other person.
Sub-section (f) – Up to this stage, after having worked for most of her adult life, Mrs P has accumulated superannuation to a value of just over $41,000.00. It is not a great sum. In the past she has voluntarily foregone the security of m employment and taken a redundancy package. However, given her age at present, it is likely that she has many years of employment before her and so an opportunity to prepare for her financial needs in retirement.
As matters currently stand, Mr P is well prepared for retirement due to his membership of the DFRDB scheme. When he retires, he will receive a significant payment of cash and be entitled to some level of retirement pay for the remainder of his life. I appreciate that as a result of the assessment I have made of the parties contributions during the marriage towards the accumulation of the DFRDB entitlements, Mrs P will receive a significant proportion of these monies which will be deposited in an accumulation superannuation scheme. This must affect both the quantum of Mr P’s termination payment and the level of his retirement pay. No evidence was provided to me as to what the likely consequences would be in actual dollar terms.
However, regardless of these matters, it is my view that Mr P is significantly better prepared for retirement than Mrs P. In addition, he has access to the financial resource of his accrued long service leave and recreation leave. Accordingly, the factors for consideration under this criterion favour Mrs P.
Sub-section (g) – It is a usual corollary of the end of a long marriage that both parties to it usually suffer some measure of financial hardship. Two families cannot live as cheaply as one. In this case, it is not my impression that one party is living more comfortably financially than the other. Accordingly, I do not think that the matters for consideration under this criterion are specifically relevant in this case.
Sub-section (h) (j) (k) (l) – The matters for consideration under this criteria are not specifically relevant in this case.
Sub-section (m) - Of the two parties, only Mrs P is cohabitating with another person. Mr G is a modest income earner. He contributes some monies to his and Mrs P’s living expenses. However, I have no difficulty in coming to the conclusion that Mrs P is still solely reliant on her own personal exertions for her ongoing financial support. Accordingly, the matters for consideration under this criterion are not greatly relevant in this matter.
Sub-section (n) – As a result of the earlier assessment I have made of the parties’ contributions to their various assets, it is clear that both parties will receive a significant sum in cash. Although no specific evidence was provided in regards to the issue specifically, it would seem that the amount of cash in each case will be sufficient to at least allow the parties to purchase accommodation if they should so wish. This is not a case where one party will be left with superannuation and the other party left with a significant asset, such as a former matrimonial home.
In addition, the parties will both be left some superannuation in the form of superannuation held in contributory superannuation funds. The amount so held will be roughly equal.
The most significant area of dispute between the parties relates to how the court should approach the splitting of Mr P’s entitlements in the DFRDB scheme. As matters currently stand Mrs P will receive a significant split in that superannuation. The monies split from Mr P’s entitlements will be placed in the M S B S and receive interest at the long term bond rate. I also I accept that Mr P is at a financial advantage because of his entitlement to receive retirement pay for the remainder of his life, this represents a significant advantage so far as Mrs P is concerned. In my assessment, at the end of the second stage of the court’s considerations in this matter, Mrs P has been left in a position of some considerable financial security, buy is not as financially secure as Mr P.
Sub-section (na) (o) (p) – I do not consider that these sub-sections are relevant in this case.
Conclusions on section 75(2) factors
After considering the various section 75(2) factors, it seems that the most important considerations for the court, under the section’s ambit, are the current disparity in the parties’ level of income ($63,000.00 per annum for Mr P; $40,000.00 per annum for Mrs P) and the level of their respective preparedness for retirement. I am not in a position to make any definitive decisions regarding the likely future state of health of either party and the ramifications of that for their respective future earning capacities. There is simply no medical evidence in this regard.
Mrs P is in secure employment. The end of the marriage between the parties does not see her bereft of financial resources for the future. She will be able to rehouse and support herself in future. It has already been determined that Mrs P will receive 35% of the husband’s DFRDB entitlements, which will be invested on her behalf until realisation. In addition, she will receive half of the parties’ immediately realisable property and half of their contributory superannuation.
The question I have to determine in these circumstances is how any of the section 75(2) factors should impact on this outcome to achieve a result that is just and equitable in all the circumstances. It is an issue which causes me concern, given that I have found Mrs P leaves the marriage with an intact earning capacity. It is true that her decision to leave the A in 1994 has deprived her of opportunities for promotion within the A and the benefits of membership of the DFRDB scheme. However, the fact remains that her income has remained relatively consistent throughout the marriage. In such circumstances, it is difficult to assert that the marriage between the parties, of itself, has had a serious impact on her income earning capacity.
In Waters and Jurek[25]His Honour Justice Forgarty said as follows:
“…the major issue in this case specifically and in other cases more generally – when are the one or more of the paragraph in s.75(2) “relevant”. The answer to that is to be found in the imperative words contained in s.79(2), namely that the Court shall not make an order unless it is satisfied that it is “just and equitable” to do so. These words were described by Dawon J in Mallet v Mallet (1984) FLC 91-507 at p 79,132; (1984) 156 CLR 605 at 647 as the “overriding requirement” of s.79.
Consequently, the various paragraphs in s.75(2) come into play and are to be given appropriate weight when it is concluded that they are relevant to making a property order between the parties which is “just and equitable”. This same test applies to the other paragraphs in s.79(4). The application of the “just and equitable” criterion to paragraphs such as (a) to (c) does not present the same difficulty as it does in relation to para. (e) and s.75(2). That is because (a) to (c) are directed to the contributions to the parties’ property and family to the time of the trial. They are more easily identified and are more readily translatable into the distribution of property. Paragraphs (a), (b) and (g) are also relatively specific.
In the majority of property cases little difficulty is encountered in the contribution step and increasingly in the general run of cases the conclusion is likely to be one of equality or thereabouts. There is no doubt that the centre of gravity in the determination of property cases has, especially in more recent times, moved to the evaluation of the s.75(2) factors, and the significance of that has been heightened because of recent Full Court decision which have emphasized those provisions and indicated that they should be given real rather than token weight.
The connection between the s.75(2) factors and a just and equitable property order is more difficult since the criteria are expressed very broadly and are fundamentally prospective in their operation. The provision does not invite a process of social engineering (Clauson and Clauson (1995) FLC 92-595 at 81,912). In Mallet, supra, at FLC p 79,127; CLR 638 Wilson J said that:-
“The objective of the section is not to equalise the financial strengths of the parties. It is to empower the court, following a dissolution of a marriage, to effect a redistribution of the property of the parties if it be just and equitable to do so…”
The court can only apply one or more of the paragraphs of that provision where it is satisfied that that step is relevant to arriving at a just and equitable result.”
[25] Waters and Jurek (1995) FLC 92-635 at 82,375
In this case, I am not persuaded that it is necessary to achieve a just and equitable outcome in these proceedings to apply any of the section 75(2) factors in this case. I do not think that the disparity in the parties’ income or the amount of property each will take from the marriage is so pronounced that a further adjustment is necessary in this case. Mr P acquired his not inconsiderable benefits in the DFRDB scheme as a result of his twenty years of continuous m service. As Justice Wilson remarked Mallet, the objective of section 75(2) “is not to equalise the financial strengths of the parties” or indeed to equalise their preparedness for retirement. Due to the nature of his employment, Mr P has accrued retirement benefits which are more attractive than those available to many other members of the community. As a result of those benefits, which result from his extensive period of m service, it is inevitable that he will be better prepared for retirement than Mrs P. I do not think that considerations of justice and equity demand that any further distribution of property be made in Mrs P’s favour at this stage or that there should be an additional split made in respect of Mr P’s DFRDB entitlements.
Although considerations of justice and equity must inform the court’s deliberation throughout the exercise provided by section 79(4), which incorporates the provisions of section 75(2), pursuant to section 79(2) the court is directed not to make an order unless it is satisfied, that in all the circumstances, it is just and equitable to do so. This is often described as the fourth or final step, which requires the court to stand back and consider whether the proposed result overall is just and equitable.
In all the circumstances of this case, I am satisfied that the outcome
I propose represents a just and equitable outcome. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and fifty-two (152) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: C White
Date: 11 November 2005
and Clauson v Clauson (1995) FLC 92-595
0
5
2