PALMER & PALMER
[2012] FamCAFC 159
•28 September 2012
FAMILY COURT OF AUSTRALIA
| PALMER & PALMER | [2012] FamCAFC 159 |
| FAMILY LAW – APPEAL – SUPERANNUATION – CONTRIBUTIONS – VALUATION – where the valuation of the respondent’s superannuation was undertaken at the date of separation – where the respondent was credited for post-separation contributions to superannuation – where there was no evidence of the value of the respondent’s superannuation following separation – error of fact – appeal allowed. FAMILY LAW – APPEAL – SUPERANNUATION – CONTRIBUTIONS – ADEQUACY OF REASONS – where the appellant sought 50 per cent of the parties’ total superannuation – where the appellant was awarded 32 per cent of the parties’ total superannuation – where the appellant received 42 per cent of the superannuation and non-superannuation assets – where the appellant contended the Federal Magistrate did not adequately assess contributions made during the relationship – where the respondent contended that a significant part of the superannuation was referrable to a period prior to cohabitation – where the Federal Magistrate failed to undertake the analysis required by Coghlan and Coghlan (2005) FLC 93-220 – where it is not possible to determine the weight attributed to pre-cohabitation contributions – appeal allowed. FAMILY LAW – APPEAL – SUPERANNUATION – VALUATION – where the Federal Magistrate made a mathematical error – where the error was conceded by the respondent – appeal allowed. FAMILY LAW – APPEAL – SUPERANNUATION – RE-EXERCISE OF DISCRETION – where the parties agreed that the Full Court could re-exercise the discretion if the appeal succeeded – where neither party wished to put further evidence before the Court – where the appellant received 57 per cent of the superannuation and non-superannuation assets – superannuation splitting order made against the respondent’s superannuation interest upon it becoming payable. |
| Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4), 90ME, 90MT(1)(a) Federal Proceedings (Costs) Act 1981 (Cth), s 6, s 9 Family Law Rules 2004 (Cth) Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (Cth) Family Law (Superannuation) Regulations 2001 (Cth), Part 6 |
| Allesch v Maunz (2000) 203 CLR 172 Bennett and Bennett (1991) FLC 92-191 Coghlan and Coghlan (2005) FLC 93-220 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 Kennon v Kennon (1997) FLC 92-757 M & M (2006) FLC 93-281 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Sun Alliance Insurance Ltd v Massoud [1989] VR 8 |
| APPELLANT: | Ms PALMER |
| RESPONDENT: | Mr PALMER |
| FILE NUMBER: | CAC | 1110 | of | 2009 |
| APPEAL NUMBER: | EA | 137 | of | 2010 |
| DATE DELIVERED: | 28 September 2012 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Bryant CJ, Finn & Strickland JJ |
| HEARING DATE: | 7 November 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 22 September 2010 |
| LOWER COURT MNC: | [2010] FMCAfam 999 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Haughton |
| SOLICITOR FOR THE APPELLANT: | Strong Law Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Self-represented |
Orders
The appeal be allowed.
Orders 10 and 15 of the orders made by Brewster FM on 22 September 2010 (entitled ‘Further Amended Under the Slip-Rule’) be discharged.
In lieu of Order 10, there be an order that within 45 days of the date of these orders, the father pay to the mother the sum of $241,059, less any sums paid pursuant to the orders made on 22 September 2010.
In lieu of Order 15, there be an order that in accordance with s 90MT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”), whenever a splittable payment within the meaning of s 90ME of the Act becomes payable on behalf of the father Mr PALMER from his interest in the Military Superannuation and Benefits Scheme, the mother Ms PALMER is entitled to be paid by the trustee an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) using a base amount of $385,968, and there is to be a corresponding reduction in the entitlement that Mr PALMER would have but for these orders.
The mother and the father each bear their own costs in relation to the appeal.
The court grants to the mother a costs certificate pursuant to the provisions of section 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the mother in respect of the costs incurred by the mother in relation to the appeal.
The Court grants to the father a costs certificate pursuant to the provisions of section 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the father in respect of the costs incurred by the father in relation to the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Palmer & Palmer has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT CANBERRA |
Appeal Number: EA 137 of 2010
File Number: CAC 1110 of 2009
| Ms PALMER |
Appellant
And
| Mr PALMER |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of a Further Amended Notice of Appeal filed on 31 March 2011, the mother, Ms Palmer, appeals Orders 1, 10 and 15 of the orders of Brewster FM made on 22 September 2010. Order 1 relates to parenting orders and Orders 10 and 15 relate to property settlement issues.
The appeal contains seven grounds in total. Grounds 1 to 3 relate to the parenting orders but are confined to a contention that his Honour fell into error in making an order that the parents have equal shared parental responsibility for the two children of the marriage, X, born in 1997 and aged 13 at the date of judgment, and Y, born in 1999 and aged 11 at the date of judgment. The remaining parenting orders, which provided for the children to continue living with the mother and to spend time with the father, were not the subject of challenge.
It became apparent at the commencement of the hearing of the appeal that the appeal in relation to the parenting orders had to be allowed. Ground 1, which contended that the mother was denied justice and procedural fairness, was found to have been established and a concession to this effect was made by the father. As the issue of parental responsibility was back before his Honour by the time of the appeal, the Court ordered that Grounds 1, 2 and 3 of the Further Amended Notice of Appeal filed on 31 March 2011 be allowed and set aside Order 1 of Brewster FM’s orders made 22 September 2010 (as further amended under the slip rule). The appeal then proceeded on property issues only.
Background
The parties commenced a relationship in 1991, began cohabiting in 1992 and were married in 1993. There were two children of the marriage, X and Y, aged 13 and 11 respectively at the date of judgment. Y was born prematurely and suffers health problems as a result.
The mother also has a son from a prior relationship who lived with the parties during their cohabitation.
The parties separated in 2009 when the mother left the former matrimonial home with the children.
At the time the relationship commenced, the father was employed in the military and continued in that employment throughout the relationship and after separation. The mother’s employment was terminated in 1993 when the parties married and she received a lump sum payout as a result. At the time of judgment, the mother was employed as a public servant.
The parties were both in their mid-forties at the date of judgment.
Reasons for judgment of the Federal Magistrate
His Honour determined to treat non-superannuation assets and superannuation in separate pools. His Honour found that the net pool of non-superannuation assets available for distribution between the parties had a value of $358,300, comprising equity in the former matrimonial home and two motor vehicles.
Each of the parties had superannuation. The mother had two accumulation schemes with the Public Service Superannuation Scheme together worth $26,988 while the father was a member of the Military Superannuation Benefits Scheme (“MSBS”), which he had transferred to from the previous applicable fund, the Defence Forces Retirement Benefit Fund. His superannuation interest had been valued for the purpose of the hearing as worth $864,386. Importantly, this was a valuation as at the date of separation.
The main dispute in relation to non-superannuation assets centred around the mother’s assertion that she should receive a contribution-based adjustment on the basis of her contributions having been made more arduous by violence allegedly perpetrated by the father towards herself and her son from an earlier relationship, and to a lesser extent towards X and Y during the marriage, relying on the Full Court decision in Kennon v Kennon (1997) FLC 92-757 (“Kennon”).
His Honour found that the parties had made an equal contribution to their assets during their cohabitation and he specifically rejected the argument of the mother based on the decision in Kennon. He did so based on findings specific to this case. In addition, his Honour declined to follow Kennon, asserting the principle which established that the Court could take account of the fact that contributions could be made more arduous by the violent conduct of another to be obiter dicta. His Honour was also critical of the basis underlying the decision.
His Honour found that, in relation to contributions more generally, including contributions both pre- and post-cohabitation, the mother should have an adjustment in her favour of three per cent, based on a lump sum contribution by her and her post separation contributions to the welfare of the family.
In relation to superannuation, the Federal Magistrate determined that the mother should receive a lump sum of $260,000 (this equates to approximately 30 per cent of the father’s superannuation, or 32 per cent of the combined superannuation of the father and mother).
His Honour’s orders provided that the mother transfer her interest in the former matrimonial home to the father and that he pay her the sum of $219,000 within 45 days. In the event that he was unwilling or unable to do so, the house was to be sold and the mother was to receive a sum which provided her with 73 per cent of the total pool (of non-superannuation assets). As to superannuation, an order was made that whenever a splittable payment became payable from the interest in the father’s superannuation, the mother would be entitled to receive an amount calculated in accordance with the Family Law (Superannuation) Regulations 2001 (Cth) using a base amount of $260,000, and a corresponding reduction would be made in the father’s entitlement.
The appeal
The mother sought leave out of time to file an application to adduce further evidence in relation to parenting issues. As at least part of the further evidence sought to be relied upon relates to an event which occurred after judgment, and as we were informed that the matter was back before the Federal Magistrates Court, leave to dispense with compliance with the Family Law Rules 2004 (Cth) to enable the application to be made was refused.
There are in total seven grounds of appeal. Grounds 1 to 3 inclusive deal with parental responsibility and we do not need to further address them. Grounds 4 to 8 (there is no Ground 7) assert the use of a mistaken figure for the total of the asset pool in relation to non-superannuation assets (Ground 4); errors in calculation of the amount of superannuation to be brought into account as well as errors of weight regarding the amount to be awarded to the mother for superannuation (Ground 5); failure to give sufficient weight to the mother’s contributions and matters under s 75(2) if the findings in relation to superannuation were to stand (Ground 6); and finally that his Honour erred in not accepting the mother’s argument that some additional non-financial contribution should be attributed to her, having regard to the principle in Kennon (Ground 8).
Ground 4
This ground asserts that his Honour made a mathematical error by finding that the value of the non-superannuation pool was $358,300 and later “mistakenly using” the figure of $328,300 instead, thereby incorrectly calculating the amount the mother was to receive from the father by “approximately $22,059” (further amended notice of appeal, Ground 4).
At [63] to [66] of his reasons for judgment, his Honour set out the value of various assets, including superannuation. There was no challenge to these findings. Although not then arriving at a total figure for the non-superannuation assets, the net figure can be simply derived by setting out the assets and then totalling their values as found by his Honour:
equity in the former matrimonial home: $327,000
father’s motor vehicle: $ 10,800
mother’s motor vehicle: $ 20,500
total non-superannuation: $358,300
father’s superannuation: $864,386
mother’s net superannuation: $ 26,988
However, at [120], under the heading “Conclusion and Overview”, his Honour stated the net non-superannuation assets had a value of $328,300, and divided this figure as to 73 per cent to the mother and 27 per cent to the father.
The mother contends that, using the correct figure, she was entitled to receive 73 per cent of $358,300, being a sum of $241,059, once regard is had to the retention of her motor vehicle. This compares with the sum of $219,000 his Honour ordered be paid to the mother.
Before us, the father sensibly acknowledged this error and conceded this ground.
Ground 5
This ground goes to the manner in which his Honour dealt with superannuation and comprises four complaints. The first complaint, Ground 5.1, asserts that his Honour’s discretion miscarried in providing that the mother receive only 32 per cent of the total superannuation funds held by the parties because each party sought an order that there be an equal split of their superannuation entitlements.
This argument is easily dealt with because the complaint by the mother is simply not correct. True it is that the mother sought in her Minute of Orders “[s]uperannuation splitting orders such that the parties’ current interests in their funds are equalised and that there are no deductions or credits in terms of pre cohabitation interest”, advising that “[d]raft wording” for such orders was “to be provided” (at [17]).
The orders sought by the father, however, were in different terms. He did not, as asserted, seek an order that there be an equal split of their current superannuation entitlements, as did the mother. The relevant order sought by him was as follows: “THAT the total superannuation accumulated during the relationship be equalised” (our emphasis) (at [12] of the father’s Minute of Orders). Thus it can be seen that the parties were asking for different orders and not, as asserted, the same order. Thus this complaint cannot succeed.
Of the remaining three complaints under Ground 5, two relate to weight (5.2 and 5.3) while the remaining one (5.4) asserts an error of fact. It is convenient first to deal with Ground 5.4, which reads: “The finding of His [sic] Honour that a significant part of the [father’s] superannuation is referrable to a period both before and after the relationship is against the evidence and the weight of the evidence”.
The parties had used the figure of $864,386 as the value of the father’s superannuation for the purposes of the trial, but the valuation relied upon was done at March 2009, being the date of separation and a period some 12 months earlier (annexure B to affidavit of the father affirmed 25 February 2010, being an expert report (“the expert report”)).
The absence of a valuation at the date of the hearing gains significance when the mother’s complaint on this point is understood. At [117] his Honour said that “[a] significant part of the [father’s] superannuation is referrable [to] a period both before and after the relationship”. The mother submits that, to the extent that his Honour appears to have taken into account, and subsequently given credit to the father for the period after, as well as before and during the relationship, he was in error because there was no figure in evidence for the value of the superannuation after the relationship ceased. Thus it is contended that when his Honour provided at [119] for the mother to have an amount of $260,000 of the father’s superannuation entitlements, he had, it would seem, allowed the father credit for post separation contributions to the fund which he erroneously thought were reflected in the valuation of $864,386 when it was only those before and during the relationship that could have been taken into account as the evidence then stood.
Put another way, counsel for the mother submitted in her written submissions at [35] that:
…the learned Federal Magistrate was in error when he found that some of the [father’s] superannuation valued at $864,386 was attributable to post-separation contributions by the [father]. The [father’s] superannuation had been valued at the exact date of separation and there was no evidence as to what the value may have increased to by the time of the hearing.
This is a clear error of fact which provides merit to this complaint.
The remaining complaints (Grounds 5.2 and 5.3) are as follows:
5.2His Honour erred in making a superannuation splitting order that resulted in the [mother] retaining only 32% of the superannuation assets of the parties when he had made a finding that the [mother’s] contributions to the date of the hearing in relation to the non-superannuation pool favoured the [mother] 53/27 and section 75(2) matters favoured the [mother] by a further 20%; and
5.3Ordering that the [mother] receive 30% of the [father’s] superannuation entitlements was not just and equitable and the resulting division of superannuation was manifestly inadequate to the [mother].
In his reasons for judgment, his Honour spent only three paragraphs dealing with superannuation and it is convenient to set them out:
117.A significant part of the [father’s] superannuation is referrable [to] a period both before and after the relationship. It is the same with the [mother’s] superannuation. It will be recalled that a part of that superannuation involves monies from the cessation of her employment in 1993.
118.If both parties were in accumulation schemes I would be entitled to assume that by reason of his greater income the [father] would accumulate more superannuation in the future than the [mother]. However he is in a defined benefits scheme and there is no evidence before me that his benefits will increase at a greater rate than will the [mother’s]. That assumes of course that some meaningful comparison can be made as to the quantum of the benefits of each scheme. I can infer that his military pension would increase if he were to be promoted but I am not willing to infer that this will happen. In the end result I decline to take into account the capacity of either of the parties to accumulate further superannuation.
119.I propose to make a split whereby the [mother] is to receive an amount equivalent to $260,000 of the [father’s] entitlements.
From [118], it seems clear enough that his Honour found that there was no evidence that the father’s benefits would increase at a greater rate than the mother’s. His Honour was not prepared to infer that the father’s pension would increase if he were promoted and declined to take into account the capacity of either of the parties to accumulate further superannuation. Effectively that left the adjustment of the superannuation to be made on the basis of contributions during the marriage and any contribution to superannuation made prior to the relationship between the parties (his Honour having, as we have pointed out, incorrectly attributed post-separation contributions to the value of the father’s superannuation).
While the mother had sought an order that superannuation be divided equally, the father’s position at trial on a division of superannuation was unexplained. His position was only reflected in the order he sought which was that “the total superannuation accumulated during the marriage be equalised”. No specific submissions were directed by the father to his Honour which might have illuminated what that phrase meant, nor did his Honour seek to clarify it. Nor did the mother’s counsel seek to ascertain its meaning. It begs the question of what constituted the “total superannuation accumulated during the marriage”. At first blush it might be thought to be the figure for the valuation of the father’s interest at separation, less the figure for his interest at or near to the date of marriage. However this was certainly not the position adopted by the father on appeal.
It can be seen that the amount his Honour awarded the mother was significantly less than 50 per cent of the value of the father’s superannuation as at March 2009, as the mother sought, even when her modest superannuation was added to it. Adding the two valuations together (whilst acknowledging that they are different kinds of funds), the total value of the superannuation about which his Honour had evidence was as follows:
father’s superannuation: $864,386
mother’s net superannuation: $ 26,988
total superannuation of both parties: $891,374
His Honour awarded the mother a figure of $260,000 which, together with her superannuation, amounted to $286,988. This represents approximately 32 per cent of the total superannuation of the parties or, disregarding the mother’s superannuation, approximately 30 per cent of the father’s superannuation.
His Honour did not explain his reasons for arriving at this figure. We accept that the line between adequate and inadequate reasons is not always readily drawn but given what we have previously said about his Honour’s error in attributing post-separation contributions to the father, it is impossible for us to know how he arrived at that figure and the extent to which his identified error affected his conclusion (see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, Sun Alliance Insurance Ltd v Massoud [1989] VR 8, and Bennett and Bennett (1991) FLC 92-191).
The question raised, in short, by these two grounds of appeal is whether this was a justifiable outcome having regard to the evidence and the otherwise wide discretion available to his Honour. Given the little attention paid in the judgment to this issue, and the factual error identified, support for his Honour’s decision would have to be found in inferences that could reasonably be drawn from the uncontroverted evidence and we now turn to that evidence.
The expert report furnished by the father was the evidence relied upon by both of the parties and was the only evidence his Honour had as to the value of the father’s superannuation interests. The expert report was not the subject of any challenge (save as later explained in [43] and [44]), nor was the expertise of the report’s author impugned in any way.
The expert report states that a valuation was undertaken of the father’s interest in the MSBS and that the advice set out in the report was prepared in accordance with the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 “using the relevant dates of 30 June 1993 and 18 March 2009” (at p 1).
The expert report observes that the father’s “eligible service period commenced [in] … 1982” and that “[t]he method for calculating a member’s eligible service is set out in Schedule 6 of the Military Superannuation and Benefits Rules” (at p 3). It appears that the father had previously been in a different scheme before transferring to the MSBS. The total period of eligible service up to 30 June 1993 was over 11 years. The calculation relying upon the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 and the Family Law (Superannuation) Regulations 2001 (Cth) (“the applicable legislative instruments”) resulted in a valuation of his superannuation at 30 June 1993 the “relevant date” of $92,450 (at p 3).
Based upon the methodology set out in the applicable legislative instruments, the value of the father’s MSBS interests as at the “relevant date” of 18 March 2009 was $864,386.
Thus, his Honour had valuations of the father’s superannuation at 30 June 1993 and 18 March 2009. The valuations were carried out by an expert, using methodology provided for in relevant and applicable legislation. The only attack on the valuation was by the mother, whose counsel submitted that the valuation at 30 June 1993 was based on an artificial valuation “derived by the Regulations” and deeming the father’s period of membership of an earlier fund to be backdated.
This challenge is misconceived. The expert report sets out the basis for the calculation in accordance with Schedule 6 of the Military Superannuation and Benefits Rules, which provides for a period of service in the previous scheme (of which the father was a member) to constitute effective service for the purposes of valuing interests in the current scheme. The mother’s counsel conceded that her contention, described above, was not put to the expert. The second argument, that the father’s interest was valued at the date of marriage rather than when the parties began to co-mingle their funds, does not impugn the valuation; it may however have been a matter for his Honour to consider when assessing contributions.
His Honour’s first obligation was to identify the superannuation asset pool at the time of the hearing. This his Honour did, although as we have indicated, he erroneously believed the father’s superannuation was valued at trial when it was in fact valued at separation. His task was then to assess contributions and matters arising under s 75(2). In accounting for pre-marriage contributions by the father alone, and then assessing contributions during the marriage by the father and mother (which in relation to the latter it should be noted were not in dispute), an option for his Honour would have been to deduct the value of the father’s superannuation as at 30 June 1993 ($92,450) from the value as at the date of separation ($864,386). The difference ($771,936) would have provided his Honour with a figure for the growth of the fund during the marriage.
Once his Honour had identified those amounts he was in a position to consider the various contentions of the father and the mother, and to assess their respective contributions to superannuation under s 79(4) as he had done with the non-superannuation assets. Whilst we acknowledge that the manner in which the issue of superannuation was dealt with in submissions at trial was not entirely satisfactory, his Honour did not carry out this exercise.
At trial, the mother sought an order that she receive the sum of $422,627. This was submitted to his Honour to be about 50 per cent of the total superannuation accumulated by the father of $864,386 together with the mother’s superannuation of $26,988. Thus the mother’s case was that she should have one half of the father’s superannuation without any concession as to contributions made by him prior to the cohabitation.
On appeal, counsel for the mother submitted that, in addition, the result arrived at by his Honour was, on any view, inadequate to properly take account of the contributions of the parties and the relevant s 75(2) factors.
In addition to involving a consideration of Grounds 5.2 and 5.3, this also brings into play Ground 6, although as was put to us at the hearing of the appeal by the mother’s counsel, the complaint in Ground 6 is also that the Federal Magistrate failed to apply s 79(2) of the Act and consider the issue of justice and equity in relation to the overall outcome.
Counsel for the mother explained the argument in this way. In relation to non-superannuation assets, the adjustment that his Honour made for s 75(2) factors was acceptable and not the subject of complaint. However, the mother should have received a greater sum to represent contributions made to superannuation accumulated during the relationship and his Honour’s orders did not adequately reflect her contribution.
Counsel for the mother submitted this could be checked by treating all assets (the superannuation and non-superannuation assets) as one pool and looking at the final result for the mother. She submitted that it was in this way apparent that the mother had received only 42 per cent overall, which was inadequate to account for her contributions and for factors arising from s 75(2), and that when all of the assets were considered, the orders ultimately arrived by his Honour were not just and equitable.
In support of the judgment, the father submitted that although his superannuation had been valued in 1993 (evidence of which he contended was the closest in time to the commencement of cohabitation), his Honour had a wide discretion as to how he might take account of pre-marriage contributions and his Honour’s decision was thus correct.
This, he contended, was because his total service in the military to the date of separation was 27 years and of that period, the first 10 years was prior to cohabitation of the parties commencing. The father submitted (at p 5 of his summary of argument):
…on a time basis and based on eligible years of…service, the component of the [father’s] superannuation attributable to the relationship is 62%. This correlates with his Honour’s finding in paragraph 117 of his Judgment that “a significant part of the [father’s] superannuation is referable [to] a period before and after the relationship”. While his Honour may have overlooked the fact that the [father’s] March 2009 valuation was actually at the time of separation, his observation of the non-referrable component being ‘significant’ (i.e. 38%) remains valid.
Applying a figure of 62 per cent to the total value of the father’s superannuation at the date of separation would provide a sum of $535,920 as the amount of superannuation accumulated during the relationship. If the mother were to receive 50 per cent of that sum, she would receive $267,960 which, having regard to her modest amount of superannuation, was quite close to the figure of $260,000 which his Honour had determined the mother should have.
However superficially attractive the father’s argument might be, there are several flaws in it. First, his Honour did not purport to explain the result on that basis. His Honour’s analysis (at [117]) is that “[a] significant part of the [father’s] superannuation is referrable [to] a period both before and after the relationship”. The latter part, as we have already indicated, is demonstrably incorrect. Thus it is impossible to determine what weight his Honour gave to the pre-relationship contributions and how he arrived at the figure of $260,000. More importantly, his Honour was obliged to consider the totality of the parties’ contributions to the superannuation and the non-superannuation assets, to take account of any relevant factors under s 75(2), and then to consider whether the overall result he arrived at was just and equitable (Coghlan and Coghlan (2005) FLC 93-220 at [65], [66] and [67] per Bryant CJ, Finn and Coleman JJ). Nowhere in his reasons is there to be found this analysis.
Secondly, his Honour had a valuation of the father’s interest at 1993 before him. This was a calculation prepared pursuant to the methods prescribed under the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 and was the only evidence his Honour had as to pre-cohabitation values. Any analysis would need to start with those valuations in mind.
Finally, the father did not submit to his Honour that he should adopt the calculation that resulted in his Honour’s orders as he now does in the appeal. The father submitted to his Honour that “the superannuation assets accrued over the relationship be equalised” (transcript 18 March 2010, p 22, lines 11 – 12). As we have already pointed out he did not submit what figure his Honour should adopt for “superannuation assets accrued over the relationship”.
In our view it is not possible to support his Honour’s judgment on the basis of what is an ex post facto assessment of how the result might be explained. In any event, as we have pointed out, it is impossible to determine what weight was placed by his Honour upon the father’s pre-cohabitation contributions as distinct from post-cohabitation contributions, which, it is conceded, should not have formed part of any consideration by his Honour because of the factual error we have identified.
For these reasons, we consider that his Honour fell into error when assessing the mother’s interest in the superannuation assets and that the appeal should be allowed as a result.
It is necessary, before turning to the remaining grounds, to mention a further argument advanced by the father to support his Honour’s conclusion about superannuation which is to be found at [28] to [32] inclusive of his written submissions. This can be dealt with in short compass. Some of the figures used to support his submission were simply never in evidence. This applies to the father’s contention that “[t]he [father’s] FAS multiple was 6.618 in 2009, the year of separation, and 2.308 in 1993, the year of marriage”. Nowhere in the material in evidence before his Honour (nor before us) does that concept appear It is a submission without an evidentiary foundation and thus must be rejected.
Remaining Grounds
The mother indicated that, if successful in her appeal against his Honour’s conclusion in relation to superannuation assets, she would not pursue her other grounds of appeal. We observe that although ultimately the mother did not pursue Ground 6, the complaints therein raised were closely related to the complaints raised in Grounds 5.2 and 5.3 which we have dealt with earlier in these reasons.
In respect of Ground 8, counsel for the mother did not seek to pursue the argument that his Honour was wrong in law, and as to issues of fact arising from Ground 8, she accepted that if the appeal was allowed on other grounds, then the question of contribution to the non-superannuation assets would not be pursued. As we propose to allow the appeal against his Honour’s conclusion in relation to the superannuation assets, it is unnecessary for us to address these grounds.
Re-exercise of discretion
Both the mother and the father agreed that if the appeal succeeded the Court could re-exercise discretion and sought it do so. Although invited, neither party wished to put any further evidence before the Court in relation to the re-exercise (Allesch v Maunz (2000) 203 CLR 172).
Apart from a mathematical error by his Honour in calculation of the non-superannuation assets, a matter conceded by the father, ultimately neither party challenged the constitution of the asset pool of the non-superannuation assets, or their values. Save for the mother’s complaint described in [43] and [44], which we have found was misconceived, neither party challenged the value of the father’s superannuation. His Honour had dealt with the superannuation in a separate pool (Coghlan) and neither of the parties submitted we should treat it differently.
Leaving aside the mother’s argument about Kennon (which was not pursued on appeal), neither party attacked his Honour’s findings regarding contributions during the marriage or the adjustment for s 75(2) factors. It is not necessary for us, therefore, to revisit his Honour’s findings in this regard. Having considered the evidence in the light of these concessions and having regard to contributions and matters under s 75(2), we consider the result reached by his Honour to be an appropriate division of the non-superannuation assets, that is, a division of 27 per cent to the father and 73 per cent to the mother. The appropriate amount to be allocated to the mother is to be calculated from the correct pool of $358,300 (see [18] to [22]).
The mother’s share of 73 per cent is $261,559 and deducting from that sum the value of her motor vehicle, the mother is entitled to a sum of $241,059.
Turning to the question of superannuation, we are satisfied that the evidence presented on behalf of the father via the expert report is the evidence of value upon which a consideration of the various contributions of the parties and any relevant matters pursuant to s 75(2) should be based. The Court traditionally considers assets at the date of the hearing, not separation (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143). However, as there is no evidence of the value of the father’s superannuation at the time of hearing, but only at the time of separation, we will endeavour to account for this factor in other ways.
The advice in the expert report as to the value of the superannuation was prepared according to statutory requirements for valuing superannuation interests. It is clear from this evidence that the father’s period of eligible service prior to 30 June 1993 was approximately 11 years and a calculation of this sum included the funded employer benefit and the member benefit. The application of the statutory formula for valuation resulted in a value of $92,450, representing the value of the father’s superannuation during the approximately 11 years of eligible service prior, or close, to commencement of his cohabitation with the mother. Although the mother asserted this figure was flawed, we have already rejected that analysis.
The same statutory provisions, when applied to the father’s superannuation entitlement as at 18 March 2009, provided a valuation of $864,386.
In Coghlan, Bryant CJ, Finn and Coleman JJ said:
65. 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:
(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.
66. 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; actual contributions made by the fund member at the commencement of the 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.
67. If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
We intend to give effect to the valuation of the father’s interest in the Defence Forces Retirement Benefit Fund, later transferred to the MSBS fund and calculated in the expert report as being $92,450 at a date close to the commencement of cohabitation of the parties. The further increase in value of the father’s interest took place during the marriage and in circumstances where both parties were making contributions under s 79(4) (a), (b) and (c). His Honour made findings that recognised the mother’s contribution to
non-superannuation assets as being 53 per cent compared to the father of
47 per cent. This disparity was due to a lump sum contribution by her and her post separation contributions to the welfare of the family. Otherwise he found that the contributions made by the parties during their cohabitation were equal. No challenge was made to that finding.
Applying that logic to the superannuation, there is no basis for a finding other than that the mother made equal contributions to all assets during cohabitation, including the father’s superannuation.
In M & M (2006) FLC 93-281 the Full Court said:
121. We do not find a contribution assessment based on a calculation of years of marriage divided by the years the member had been in the fund to be helpful. In the context of considering contributions pursuant to s 79 it has never been necessary to apply a mathematical formula in the way we have described. All that is required is that the contributions of the parties be evaluated in relation to superannuation as they are to other assets. Further there may be real injustice in doing so as there is frequently far less contributed to a fund in the early years of membership compared to later years. A formulaic approach does not take account of the years in which greater contributions were made, often later in a marriage, nor the effect of contributions over many years of marriage which may have diluted initial contribution. (Pierce and Pierce (1999) FLC 92-844).
122. In our view this was the approach that the majority (Bryant CJ, Finn & Coleman JJ) in Coghlan (supra) was proposing when they set out in paragraphs 65 and 66 (at page 79,646)
We have previously referred to these paragraphs at [70] of these reasons.
The Full Court continued at [123]:
123. In our view it is clear from those comments that the majority in Coghlan (supra) was concerned with a consideration of actual contributions where they were ascertainable. The relationship between years of fund membership and cohabitation might be relevant in a defined benefits scheme whereas actual contributions made by the fund member at the commencement of the cohabitation might be relevant to an accumulation fund where in both cases the marriage was of short duration. However, in our view there is nothing said by the majority in Coghlan (supra) that would give any support for the application of some kind of a formula or that contributions to superannuation whatever the nature of the fund, should be treated in a different way from contributions to other property under s 79(4). This is so in our view whether the superannuation is considered as part of one pool of assets or in a separate pool.
There is thus in our view no justification in this case to find some relationship between years of fund membership and cohabitation as the father submits. In a cohabitation of some 17 years where the father was at all times in military service, it is inevitably going to be the case that the superannuation will be of considerably less value in the early stage of his career and will increase as he advances through the ranks. In our view there is no reason to apply a formula which prevents the mother’s contributions from being given their full effect.
We do think it appropriate however to reflect the father’s initial contribution. We think that this can best be achieved in this case by application of the evidence of the value of the father’s superannuation in June 1993. That is done by deducting the sum of $92,450 from the total value of the father’s superannuation as at 18 March 2009. This would leave a sum of $771,936 as being the sum representing the father’s interest in the superannuation fund accumulated during the cohabitation of the parties. If the mother’s equal contribution, as we have found it, is applied, the mother would be entitled to $385,968.
The value of the father’s interest is not calculated at the date of hearing, but rather at the date of separation, and he will have the benefit of any further increase in value. In addition there is his Honour’s finding, unchallenged, that the mother made contributions to her superannuation interests pre-cohabitation, which is otherwise unaccounted for. To reflect these matters which both benefit the father, we propose to leave the mother with her modest amount of superannuation without making any adjustment to it.
Thus, when considering both non-superannuation and superannuation assets, the mother will be entitled to a total sum of $647,527, inclusive of the value of her motor vehicle. From a combined pool of $1,130,236, the mother will receive 57 per cent. Having regard to her contributions, her income earning capacity and her continuing obligation to support a disabled child, both financially and personally, as well as the relevant matters in s 79(4) and s 75(2), in our view, that outcome is a just and equitable one.
The nature, form and characteristics of the fund (the “real nature” described in Coghlan at [67]) do not require any further consideration as there will be an order in the mother’s favour which only takes effect when a splittable payment within s 90ME of the Act becomes payable on behalf of the father from his interest in the MSBS.
costs
The parties conceded that an error, if established, would be an error of law and not attributable to the fault of either party. We agree and therefore each party will bear their own costs. Both parties sought certificates in relation to the costs of the appeal. In the circumstances, we propose to provide certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) to the mother and the father.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Finn and Strickland JJ) delivered on 28 September 2012.
Associate:
Date: 28 September 2012
0
3
5