S & S

[2007] FamCA 973

FAMILY COURT OF AUSTRALIA

S & S [2007] FamCA 973

FAMILY LAW – SUPERANNUATION – Consent Orders – Application to set aside superannuation orders made prior to the commencement of superannuation legislation – Impracticability – Review of Decision of Registrar – Extension of Time to Review – Leave to Review – Order made splitting superannuation.

Family Law Act 1975 (Cth) s 79A
Family Law Legislation Amendment (Superannuation) Act 2001 (Cth)

RBH & JIH [2005] FamCA 226

APPLICANT: Ms S

RESPONDENT: Mr S

FILE NUMBER: HBC 527 of 2007

DATE DELIVERED: 5 July 2007

PLACE DELIVERED: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 5 July 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr M. Trezise

SOLICITOR FOR THE APPLICANT: Dobson Mitchell and Allport

COUNSEL FOR THE RESPONDENT: Mr I. Guest

SOLICITOR FOR THE RESPONDENT: Ian Guest and Associate

Orders

BY CONSENT

1. THAT an extension of time be granted to the Wife to review the property adjustment Orders of Registrar Weidmann made 18 December 2001 (“the Orders”).

2. THAT paragraph 7 of the Orders be set aside.

3. THAT in relation to the Husband’s superannuation interest with the X Superannuation Fund – Member No. … (“the Fund”):-

   (a)having been accorded procedural fairness, sub-paragraphs 3(b), (c) and (d) below are binding on the Trustee of the Fund;

   (b)pursuant to Section 90MT(4) of the Family Law Act 1975 the base amount allocated to the Wife out of the interest of the Husband in the Fund is $13,500.00 (“the base amount”);

   (c)pursuant to Section 90MT (1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the interest of the Husband in the Fund, the Wife is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount and there will be a corresponding reduction in the entitlement of the Husband;

   (d)sub-paragraph (c) has effect from the operative time and the operative time for these purposes is four (4) business days after the date of service of a sealed copy of this Order upon the Trustee of the Fund.

   (e)within fourteen (14) days of becoming entitled to receive a superannuation benefit from the Fund, the Husband will give the Trustee of the Fund:-

   (i)all such forms as are necessary to enable it to determine the nature and quantum of the Wife’s superannuation entitlement; and

   (ii)any other related information it may reasonably require;

   (f)there be liberty to each party and the Trustee of the Fund to apply regarding the implementation of this Order affecting the interests of the Husband and the Wife in the Fund;

   (g)in the event that the superannuation split to the Wife pursuant to this Order can be rolled over into a separate account to the Wife each of the parties will do all such acts and things and execute all such documents as may be necessary to facilitate and to implement that roll over.

   (h)until such time as the superannuation split to the Wife pursuant to this Order can be rolled over into a separate account to the Wife:-

   (i)the Husband will give to the Wife written notice not less than twenty-eight (28) days before such time as he elects to retire from and/or take voluntary retirement and/or for any reason accept or become entitled to access in whole or in part his entitlement in the Fund;

   (ii)the Husband will direct and authorise the Trustee of the Fund to communicate with the Wife and/or any person authorised by her in writing:

   -to answer any reasonable enquiries as may be made by her or on her behalf from time to time regarding her entitlement in the Fund; and

   -to give to the Wife and/or her authorised representative a copy of any notice of any application or request by the Husband which seeks release of entitlements in the Fund in so far as that release may affect the Wife’s entitlement in the fund pursuant to this Order;

   (iii)the Husband by himself, his servants and/or agents be and are restrained from doing any act or thing which would prevent the Wife, her heirs, executors, administrators or nominees from receiving the benefits in the Fund to which she is entitled pursuant to this Order;

   (i)each party sign all such documents and do all such things as may be required to implement the terms of this Order.

1. THAT all extant applications be otherwise dismissed.

   IT IS DIRECTED

2. THAT a transcript of the reasons for these orders be taken out and placed on the Court file.

   IT IS CERTIFIED

3. THAT pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym S & S has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT HOBART

FILE NUMBER: HBC 527 of 2007

Ms S

Applicant

And

Mr S

Respondent

REASONS FOR JUDGMENT  

1. In this matter, there is an application before me, which I take to be a joint application in essence, by Ms S (“the wife”) and Mr S (“the husband”), that an extension of time be granted to the wife to review the property adjustment orders made by Registrar Wiedmann on 18 December 2001, that paragraph 7 of the orders be set aside and further consequential orders which are in fact superannuation splitting orders.

2. Mr Trezise of counsel appears for the wife and Mr Guest, counsel, appears by telephone for the husband.

3. The parties negotiated a settlement of their property proceedings some time during 2001 and executed terms of settlement on 5 December 2001.  They applied to the Court for a deputy registrar to make orders which in fact were made by consent on 18 December 2001.

4. Those orders were determined and the parties still concede were just and equitable and ought to have been made, with the exception of order 7 which provides:

   That the husband and wife have liberty to apply in relation to the division of superannuation held in the husband's name for the wife to receive a set amount of $10,000 in superannuation.

5. The solicitors for the parties had filed financial documents and had acted, as I understand it, on the basis that the superannuation legislation was to be introduced into parliament, which in fact was not passed until the following year.  The superannuation legislation was in fact passed or assented to on 18 September 2001 and provided that it would commence on 28 December 2002.

6. The parties were under the misapprehension that the legislation was such that they would be able to finalise their superannuation split at some later time, hence the provision for liberty to apply.

7. The factual basis of the application is set out in an affidavit of the wife, sworn 23 April 2007.

8. I was referred to a similar factual case delivered by his Honour Young J on 23 March 2005, which has been reported as RBH v JIH [2005] FamCA 226 (23 March 2005). The observations of the Court in that case are apposite:

   7.That order raises a number of significant concerns.  On its face it is both confusing and uncertain.  It was drafted by then [sic] solicitors and adopted by the parties on the assumption that the then discussed superannuation legislation would be introduced into and approved by Federal Parliament.  It otherwise provides uncertainty as to the calculation and payment of interest and the interest rate to be determined by the trustee of the fund, and otherwise as to the "escape clause" should payment not be made. 

   8.Nevertheless, with that order as part of the overall property settlement, the Deputy Registrar approved in February 2000 those orders and pronounced that pursuant to section 79 they would then operate as between the husband and wife in alteration of their property interests. 

   9.By reference to the further documents filed by the solicitors for the husband what has occurred in this case is that the trustees of ESSS have declined to implement those orders.  There is an affidavit of the husband filed 11 March 2005 annexing various correspondence from the superannuation fund trustees.  That correspondence highlights the real difficulties that the trustee has in its interpretation and understanding of the order and in any jurisdiction it might have to implement the order. 

   10.There is no retrospectivity applicable to the operation of the Family Law Legislation Amendment (Superannuation) Act 2001.  It simply does not apply to property settlements that have already been finalised prior to the date when the legislation came into effect, that being 28 December 2002. 

   11.The trustees highlighted that fact, together with the issues of and related to the operative date of the commencement of the order, their obligation to assess interest and make provision for interest payments in favour of the wife in accordance with those orders.  The trustees by letter suggested to the husband that he needed, as at January 2004, to obtain further legal advice in relation to the superannuation split and that letter and then the husband obtaining such legal advice has led to the institution of proceedings in this court and ultimately to the submissions made this day. 

   12.On 11 March 2005 the husband's solicitors filed a Form 1 application for final orders.  What was sought was in the following terms:

   1.That pursuant to section 79A(1)(b) of the Family Law Act 1975, paragraph 6 of the orders of Registrar Boers dated 2 February 2000 be set aside.

   (3That this Honourable court make the following orders by consent:

   i.that subparagraph (i) to (v) of these orders are binding upon the trustees of the Emergency Services Superannuation Fund;

   ii.that the base amount to be allocated to the wife out of the interest of the husband on the fund … is $100,000;

   iii.that whenever the trustee of the fund make a splittable payment in the interest held by the husband in the fund, the trustee pay to the wife, which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, there be a corresponding reduction in the entitlement the husband would have had but for these orders;

   iv.that paragraph (ii) is effective from the date set out in subparagraph (v) of these orders;

   v.that the operative date is four business days from the date that these orders are served on the trustee of the fund, and insofar as the fund is permitted to do so, the husband and the wife thereafter do all things necessary and sign all documents necessary to effect the rollover of the wife's entitlements in the fund to an alternative complying fund;

   vi.that the husband pay all taxes and charges payable on the splittable payment to the wife”.

   13.The husband filed a Form 2 application on the same day seeking identical interim orders.

   14.In support of each of those applications the husband filed his affidavit earlier referred to of 11 March 2005, together with an updated financial statement. 

   15.There are no affidavits or responses on file from the wife.  She did appear at court this day, together with her solicitor.  The wife filed a document by way of an acknowledgment of service and her solicitor filed a notice of address for service. 

   16.It was fundamental to the proceedings before me that all orders sought were by consent.  The wife through her legal representative confirmed her consent to the proposed orders this day, the only variation being that she requested the court in respect of the sum of $100,000 to direct that payment to her recently established superannuation fund (the Australian Retirement Fund).

   17.The first matter to be observed is that in paragraph 6 of the original orders what was proposed was a sum of $80,000 be assigned to the wife together with interest thereon calculated from 1 September 1999. The parties have agreed and by consent asked the court to adopt the position that that interest equates to $20,000. That explains the variation in what is sought today, rather than a lump sum of $80,000, a lump sum of $100,000 which includes all interest payable up to and including 1 December 2004.

   18.The parties have a private arrangement in respect of the period for which interest would be paid from 1 December 2004 until this day.  There has or will be a financial adjustment of $2000 as between themselves in that regard.  Accordingly, therefore, what the court was asked by consent to do was to fix the splittable payment in favour of the wife as at this day in the sum of $100,000 and direct the trustee of ESSS to pay or transfer that sum to the nominated superannuation fund of the wife and thereafter, in her own fund, she will derive bonuses or interest payments thereon. 

   19.The court was made aware, in general terms, of certain of the current financial circumstances of the parties by the husband filing his updated form 13 financial statement.  The facts were before the court that there has been a significant growth in the value of the husband's superannuation entitlements.  They now total $780,000 approximately, whereas, as at December 1999, they were valued at approximately $405,000.  The court does not know the increase in value of the wife's property which, from the document filed on her behalf this day, it would seem that she still owns and occupies.  I record these brief updating financial circumstances not on the basis that the court is inclined to investigate a section 79 order, but to confirm that there has been some updating of the financial circumstances of the husband and therefore the wife and her solicitor appearing this day are aware that there are, as could only be reasonably expected, significant ongoing financial changes in the circumstances of the parties, certainly the husband, over the past five years.

   20.I take care to repeat that the court is not asked to re-exercise any section 79 jurisdiction.  It is not asked to set aside the totality of the orders made in chambers by Deputy Registrar Boers.  It is by consent asked only to vary Order 6 of those orders and substitute, with the consent of the parties, what is now considered to be an appropriate order. 

   21.I turn now to the legislation. The Federal Parliament enacted the superannuation legislation as from 28 December 2002. These superannuation splitting laws establish a regime of powers given to courts exercising jurisdiction under the Family Law Act 1975 (Cth) and responsibilities given to trustees under both the Family Law Act and the Superannuation Industry Supervision Laws. As I have already considered, this legislation has no retrospectivity and does not apply to property settlements finalised prior to the date of the implementation. Accordingly parties are not able, simply by consent, to set aside a final property order previously made so that it could then be varied by way of an appropriate superannuation split.

   22.Section 5 of the Family Law Legislation Amendment (Superannuation) Act 2001 provides as follows:

   (1)     Subject to this section, the superannuation amendments apply to all marriages, including those that were dissolved before the start-up time.

   (2)     Subject to subsections (3) and (4), the superannuation amendments do not apply to a marriage if a section 79 order, or a section 87 agreement, is in force in relation to the marriage at the start-up time.

   (3) If a section 79 order that is in force at the start-up time is later set aside under paragraph 79A(1)(a), (b), (c), (d) or (e) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the order is set aside.

   23.I otherwise in the particular facts of this case will not refer to subsections (4) and (5) of that section. 

   24.It is important to understand that the exclusions provided within subparagraph (2) of section 5, apply only to an order made setting aside or varying an order pursuant to section 79A of the Family Law Act. I say that because the qualification does not extend to section 79(1A) of the Family Law Act 1975 which provides:

   “A court may, on application by a person affected by an order made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them, and with the consent of all parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside”.

   25.On the facts of this case and with the consent of the husband and wife in my opinion it is, nevertheless, not open to the court to make any order on the basis of section 79(1A) as that is expressly excluded from operation as one of the qualifications to section 5 of the Family Law Superannuation Legislation (supra).

   26.The basis of the husband's application is that the order should be set aside on the grounds set forth in section 79A(1)(b), that is:

   “In the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out”.

   27.The submission of the solicitor for the husband is that it is impracticable for part of the order, that is, paragraph 6 of the order, to be carried out. The basis of that suggestion of impracticability is that the trustee of the superannuation fund has declined on the basis of its understanding of its jurisdiction to implement the order and calculate the interest and establish a splittable payment to the benefit of the wife.

   28.I have previously had the occasion in an unreported decision in the matter of PAJ v GMJ (2003) FamCA 751 (2 July 2003) to consider this issue and the earlier cases touching on what is impracticable. In that case it said as follows:

   48.Kay J in La Rocca v La Rocca (1991) FLC 92-222 set out the definition of "impracticability".  This has received Full Court approval in Cawthorn v Cawthorn (1998) FLC 92-805 (Ellis, Lindemeyer and Joske JJ).

   49.At page 85,059 Kay J expressed the view that, "… section 79A(1)(b) should be narrowly interpreted … my own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters.  When the parliament is concerned with and what ought to be concerning the court is the happening of events which can be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to … now, in my view, what the appropriate application of section 79A(1)(b) ought to be is that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.

   50.I do not accept the submission of the solicitor for the husband.  The orders are not impracticable of performance.  The orders were drafted with a lack of care and attention to detail.  There was an attempt to "second-guess" the pending superannuation legislation, its commencement date, implementation and effects”. 

   29.The same observations that I made in PAJ v GMJ (supra) are applicable in this case.  The solicitors did endeavour to second-guess the legislation, did provide alternatives within Order 6 itself and were clearly aware - and no doubt their clients were so advised - that the settlement was predicated upon and the orders depended upon the future introduction of Federal Legislation as was anticipated.  I observe in this case that these orders were settled by the parties in December of 1999, almost three years prior to the passing of that legislation. 

   30.I otherwise on the issue of impracticability have considered the definition provided for the In the Marriage of Rohde (1984) FLC 91-592 at p.79,768. What is said in that case expanded upon as it was in Cawthorn (supra) confirms to me the risks associated with pre-empting the legislation, and as in PAJ v GMJ in this case I am not able to accept that the ground of impracticability is satisfied.

   31.The other subsection to section 79A that has been suggested might be applicable and that provided for as an exception within section 5 of the superannuation legislation relates to subparagraph (a) thereof which provides as follows:

   (a) that there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance.

   32.There is no issue or fact to found any claim for fraud, duress or suppression of evidence. The issue in this case can only be whether there has been a miscarriage of justice by virtue of any other circumstance. As I understand the way an argument could be developed, it is that the Deputy Registrar in February of 2000 exercised a power or made an order that was not then within the jurisdiction of the Family Law Act and dealt with superannuation in a manner that the court could not and should not have sanctioned. The parties themselves are therefore not able to have concluded their section 79 alteration of interest in property order because that part as dealt with in paragraph 6 of their orders remains incomplete.

   33.I have considered for the purposes of this extempore judgment the decision In the Marriage of Suiker (1993) 17 Fam LR 236, (1993) FLC 92-436, a decision of a Full Court (Nicholson CJ, Baker and Strauss JJ). There are three paragraphs in that judgment that I found of considerable assistance were I to make a determination that there has been a miscarriage of justice in this other circumstance. Those paragraphs from the Full Court are:

   “It is implicit that the consent to an order must be informed consent.  The consent to the order is itself part of the judicial process on which the court places reliance.  If that consent is based on misleading or inadequate information, then there may be, in our opinion, a miscarriage of justice either by reason of "the suppression of evidence" or by reason of "any other circumstance." (at page 242)

   In our view, in appropriate cases, the order itself in the light of the true facts may bear upon the question whether there has been a miscarriage of justice.  (at page 242)

   As regards the views expressed in Clifton v Stuart (1990) 14 Fam LR 511 that the expression "miscarriage of justice" relates to the integrity of the judicial process, we are of the opinion that this passage was not intended to refer only to the hearing in the Family Court, but that the expression "judicial process" can refer to a variety of matters and circumstances which had an influence on the outcome of the litigation.  It is neither necessary, nor desirable to attempt to define the matters which may amount to a miscarriage of justice by reason of any other circumstance in the relevant sense. (at page 243)”.

   34.I do not propose on the particular facts of this case and because of the issue to which I will next turn to make a finding that the facts fall within a miscarriage of justice because of any other circumstance.  To my mind it is certainly arguable but not conclusive. 

   35.The orders made by the court on 2 February 2000 were made in chambers by a Deputy Registrar.  The solicitor for the husband has this day sought at the invitation of the Court, the leave of the court to make an application to extend the time in which to review and thereafter to embark upon a review of the decision of the Deputy Registrar.

   36.The solicitor for the husband’s submission is substantially that the actions of the Deputy Registrar in making the orders in chambers were inappropriate given his then delegated powers, and more particularly, given that the Federal superannuation legislation was contemplated but long from enacted.

   37.Pursuant to the Family Law Rules, the court has a specific power to extend time as provided for in Rule 1.14 which states that a party may apply to the court to extend the time fixed pursuant to these Rules or by a procedural order. That application was made orally this day. It was not opposed. Indeed it was consented to by the solicitor for the wife. On that basis I indicated to practitioners that I would grant an extension of time so that I could this day review the decision of the Deputy Registrar to pronounce these orders in chambers.

   38.The power to review the decisions of a Deputy Registrar or indeed of a Judicial Registrar or Registrar are provided in Part 18.2 of the Family Law Rules. Specifically, the power of the court on review is detailed in Rule 18.10 which provides that a court must hear an application for a review as an original hearing and details the evidence that the court may receive in that hearing.

   39.I pause there to emphasise that by consent of the husband and wife the court is asked only to review paragraph 6 of the order. I am not asked to reopen the entirety of the section 79 proceedings. I am not asked to look at the current market value of the property, both real property and superannuation entitlements. I have before me a draft order that the husband and wife wish to implement and pursuant to which $100,000 will be directed as a superannuation splittable payment to the wife's current superannuation fund.

   40.I have determined in the particular facts of this case and on the basis of what the legal practitioners for the parties have addressed the court and with the consent of the parties that I can and will restrict my consideration of the varying of the current order to that contained within paragraph 6.

   41.In Gallo v Dawson (1990) 93 ALR 479 it was said by McHugh J, at 480 (and cited with approval by the Full Court of the Family Court in McIntyre (1994) FLC 92-468 at 80,859) as follows:

   The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties … this means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant.  In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of an application for extension of time.

   42.In the Marriage of Tormsen (1993) FLC 92-392; (1993) 18 Fam LR 232 the Full Court (Fogarty, Nygh and Burton JJ) said:

   “The fundamental issue in application for extensions of period of time prescribed by rules of court is whether this will enable the court to do justice between the parties … In that connection the court must weigh the right which the respondent to the application prima facie has to attain the benefit of the judgment … A failure to explain the delay adequately can certainly lead to a conclusion that justice demands that the application be dismissed, but in appropriate cases the interest of justice may outweigh the absence of an adequate explanation”.

   43.The property orders which the parties agreed to in 1999 and which are the subject of an order of the court cannot be completed.  In the current circumstances the trustee of ESSS will not, rightly, implement the orders that are beyond its jurisdiction and, on their face, are very difficult to understand.  The parties are effectively in somewhat of "a no-man's land".  There is no issue of delay.  The parties, or at least the husband either personally or through his current solicitor, has been endeavouring to negotiate an appropriate order or outcome with the trustee.  There is no hardship to the wife.  She desires to retain the benefit of her property judgment subject to the renegotiated superannuation splittable interest whereby she now receives $100,000 but with no interest arrears. 

   44.In the circumstances, bearing in mind that the parties and the court desire a just outcome, bearing in mind the main purpose of the Family Law Rules as provided for in Rule 1.04, and accepting of the need to vary the order by way of rehearing, in all of the facts and circumstances relevant to that consideration I propose to exercise my powers of review and to set aside paragraph 6 of the orders of the court made 2 February 2000 and to substitute therefore orders which have been negotiated and fine-tuned between the parties and which this day are said to be appropriate, just and equitable.

   45.Before I pronounce the orders I do want to respond to one other submission made by counsel for the wife and supported by counsel for the husband. That was the suggestion that on the basis of my earlier decision in PAJ v GMJ I should find that paragraph 6 of the orders of the court of 2 February 2000 was in fact an interim order, and on that basis there would be jurisdiction with the court to make orders of a final nature in relation to the issues now before the court. I made it very clear to the solicitors during their submissions that I do not regard paragraph 6 when it was made as an interim order. First, it is artificial to remove paragraph 6 from the balance of the orders. Secondly, all of the orders were intended as final orders and I am more than certain that was what the parties then intended with their then solicitors. For those purposes I reject any submission that part of the prior orders of the court were interim in nature.

1. In particular, counsel for the wife submits that I ought to have regard to the reasoning of his Honour in paragraphs 36, 37, 38, 39 and 40 through to paragraph 45 where his Honour discusses the powers of a registrar to make such an order, albeit in good faith and on the urging of the party, or such that the time for reviewing the determination of the registrar ought to be extended.

2. I adopt the reasoning of his Honour in relation to this matter, but I make it clear this is in no way a criticism of the Registrar who acted in accordance with submissions by the parties' legal representatives at that time.

I certify that the preceding 10 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin

Associate:     

Date:              5 July 2007