SEMPERTON & SEMPERTON
[2013] FCCA 1562
•9 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SEMPERTON & SEMPERTON | [2013] FCCA 1562 |
| Catchwords: FAMILY LAW – Property – contributions – long marriage – DFRDB pension – approach to “addbacks” post Stanford. |
| Legislation: Defence Force Retirement and Death Benefits Act 1973(Cth) |
| Best & Best (1993) FLC 92-418 Cahill & Cahill (2006) FLC 93-253 Coghlan & Coghlan (2005) FLC 93-220 Sebastian & Sebastian (No.5) (2013) FamCA 191 Semperton & Semperton (2012) FamCAFC 132 Stanford v Stanford [2012] HCA 52 Watson & Ling (2013) FamCA 57 |
| Applicant: | MS SEMPERTON |
| Respondent: | MR SEMPERTON |
| File Number: | BRC 3015 of 2010 |
| Judgment of: | Judge Howard |
| Hearing date: | 25 June 2013 |
| Date of Last Submission: | 25 June 2013 |
| Delivered at: | Brisbane |
| Delivered on: | 9 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hamwood |
| Solicitors for the Applicant: | John Nagel & Co |
| Counsel for the Respondent: | Mr Cameron |
| Solicitors for the Respondent: | Quadrio Lee Lawyers |
ORDERS
That each party shall provide a copy of a proposed Final Order to each other party by 4:00pm on 16 October 2013.
That the parties shall attempt to reach an agreed position in relation to the wording of the Final Order (reflecting the Reasons for Judgment) and shall send a copy of same to the Court by no later than 4:00pm on 23 October 2013.
That in the event the parties are unable to reach an agreed position in relation to the wording of the Final Order (and send a copy of same to the Court) within the time frame stated in paragraph (2) – the matter shall be listed for Mention and each party shall attend personally along with their legal representative (if any) on a date to be fixed by the Court.
IT IS NOTED that publication of this judgment under the pseudonym Semperton & Semperton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 3015 of 2010
| MS SEMPERTON |
Applicant
And
| MR SEMPERTON |
Respondent
REASONS FOR JUDGMENT
Background
The applicant wife was born on (omitted) 1954 in (omitted), Queensland.
The respondent husband was born on (omitted) 1951 in Brisbane, Queensland.
The parties commenced cohabitation in 1972.
The parties were married on (omitted) 1975.
The parties have two adult children. X (born (omitted) 1974) and Y (born (omitted) 1976). Both of those adults live independently of the parties.
The parties separated under one roof in September 2009.
The husband vacated the former matrimonial home – being the unit situated at Property K – on 24 November 2010 – as required by the original orders made by His Honour Federal Magistrate Baumann (as he then was). After leaving the Property K unit the husband initially resided with his daughter at (omitted) for approximately two months. He then moved into a rental unit at Property K(omitted) in about (omitted) 2011 where he has remained ever since.
The proceedings were commenced in the Federal Magistrates Court of Australia (as it then was) on 30 March 2010. The matter came on for final hearing before Federal Magistrate Baumann on 20 September 2010. Judgment was delivered on 13 October 2010 and final orders were made on 9 November 2010.
The husband filed a Notice of Appeal on 11 November 2010. The appeal was heard on 2 March 2012 by the Full Court of the Family Court of Australia. The appeal was allowed by judgment delivered on 24 August 2012. Orders were then made by the Full Court of the Family Court of Australia on 24 August 2012, 5 September 2012 and 12 November 2012.
The matter was remitted for hearing to this Court. It was allocated to the docket of His Honour Federal Magistrate Jarrett (as then was).
Trial directions were issued by Federal Magistrate Jarrett on 30 January 2013. The matter was initially listed for final hearing on 26 April 2013. The matter was then adjourned to 23 May 2013. The matter was further adjourned to 25 June 2013.
The matter was listed into my docket for final hearing on 25 June 2013.
Needless to say – these parties remain unable to agree how to divide their property.
The Four Step Process
Since the decision of the High Court of Australia in Stanford v Stanford [2012] HCA 52 – the well known “four step process” in property settlement proceedings has been called into question. The Court was at pains to point out that the requirements of section 79(2) and section 79(4) of the Family Law Act 1975 should not be blended or fused together. Section 79(2) of the Act states:-
“the court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
In s.79(4) the Act states:-
“In considering what order (if any) should be made under this section in property settlement proceedings, 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; and
(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; and
(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 homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.”
The High Court stated at paragraphs 35 and 36 in Stanford (supra) and 36 as follows:-
“35. It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order". Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36. The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition[21]. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules"[22], nevertheless, three fundamental propositions must not be obscured.”
It is apparent that the High Court intends that Australian Courts exercising jurisdiction under s.79 of the Act should first turn their minds to the question as to whether or not it is “just and equitable to make the order”.
I note that in paragraph 42 of the decision in Stanford the High Court stated:-
“42. In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).”
In the case which is currently before the Court the parties have separated on a final basis. The husband and the wife are no longer living in a marital relationship. Accordingly, it will (in this case) be just and equitable to make a property settlement order. As the High Court pointed out – “there is not and will not thereafter be the common use of property” by the husband and wife in this case.
As noted, I have come to the conclusion that it is just and equitable – in the circumstances of this case – to make a property settlement order. As to what order should then be made – is to be determined by this Court applying s.79(4) of the Act. Noting that the terms of the property settlement order to be made – must be just and equitable. It seems to me that so much is clear from s.79(2) of the Act. So that the Court must be satisfied initially that it is “just and equitable” to make “an order”. Having come to that conclusion and having considered the matters in s.79(4) – the Court must then be satisfied that it is appropriate to make “the order” contemplated.
It seems to me that the process (formerly known as the four step process) is still by and large applicable.
As to the first step – this Court now must be guided by what the High Court had to say in Stanford. Indeed, it is convenient to include the High Court’s comments in more detail at this stage:-
“36. The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition[21]. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules"[22], nevertheless, three fundamental propositions must not be obscured.”
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed[23] that a power[24] to make such order with respect to property and costs "as [the judge] thinks fit", in any question between husband and wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong[25]:
"The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down".
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law"[26]. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses"[27]. The question presented by s 79 is whether those rights and interests should be altered.
40. Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down"[28]. To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.”
The pool of property must be ascertained. But the Court must identify “according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”.
If property no longer “exists” then it cannot be identified – as required by the High Court. The concept of the “addback” – has had a stake driven through its heart by the High Court. It had been “fashionable” – by reason of various decisions of the Family Court – for there to be notionally “added-back” into a property pool assets which no longer exist.
It is important to note that in the High Court’s decision in Stanford – the Court has particularly highlighted the word “existing” in paragraph 37 of the decision. References also made to property which “exists” or is “existing” in paragraphs 39 and 41 of the decision.
It had been argued by Mr Cameron, counsel on behalf of the husband – that the sum of $110,000 which had been paid by the husband to the wife and then substantially utilised by the wife to pay for legal fees – ought be in essence “added-back” into the pool. I do acknowledge that Mr Cameron was not keen on using the terminology “add-back” – but the force of his submission was equivalent to an “add-back” argument.
In my view, the argument put forward by Mr Hamwood, counsel on behalf of the wife, is the correct argument – in light of the High Court’s decision in Stanford. My attention has not been drawn to any binding authority upon this Court which would alter my view in relation to this issue. Indeed I note that my view accords with comments made by Murphy J in Watson & Ling (2013) FamCA 57 and Young J in Sebastian & Sebastian (No 5) (2013) FamCA 191 (especially from paragraph 798).
Therefore, at this stage of the “process” – namely identifying the existing legal and equitable interest of the parties in the property – this sum of $110,000 paid by the husband to the wife cannot be included in the pool.
I also have noted the fact that the husband has, to date, incurred legal fees in the sum of approximately $71,000 and owes, approximately a further sum of $42,000. So that both the husband and the wife have incurred legal fees or are liable for legal fees in amounts which are reasonably similar. I accept the submission of counsel on behalf of the wife that this is a relevant factor for the Court to take into account in the circumstances of this particular case. Further, I note that the authorities which had dealt with the principle that “paid legal fees” should be “added back” into a property pool – are the same authorities which allowed an exclusion from the property pool of legal fees that had been paid for by a party from post separation earnings. That is, if one party had a large enough income – they could avoid the penalty of an “add-back” in respect of their own legal fees. After the decision in Stanford, any such unfortunate outcomes will hopefully be avoided.
I would add at this stage that the fact that the husband made the payment of $110,000 in accordance with the original orders – is not a fact that will be ignored by the Court. I will return to that issue when considering the question of contributions.
Mention should also be made at this stage of the husband’s military pension known as the – DFRDB pension. In accordance with the superannuation regulations – a pension payable pursuant to the Defence Force Retirement and Death Benefits Act 1973(Cth) must be valued (note the Family Law Superannuation Regulations 2001(Cth)). Following the appeal and the decision of the Full Court in this case – the parties seem to accept that – whilst the husband’s DFRDB pension has been valued for the purposes of the regulations in the amount of $354,824 – this is not a divisible asset and should not be included in the property pool. The husband’s interest in the DFRDB pension is limited to his entitlement to a guaranteed income stream totalling approximately $21,000 per year. This pension is in its payment phase and it cannot be commuted.
In relation to DFRDB pension I note the comments of the Full Court in the current case reported as Semperton & Semperton (2012) FamCAFC 132. In an earlier decision dealing with the DFRDB pension – Cahill & Cahill (2006) FLC 93-253 Coleman J stated from paragraph 75 as follows –
“75. It will be discerned that the Court at first instance, dealing with this case, is suggesting a distinction between taking into account, for the purpose of determining the assets of parties to proceedings, assets which have a theoretical value such as the husband’s DFRDB entitlements, and having regard to the realities of life surrounding such entitlements and reflecting them in the evaluation of contributions. The terms of s 90MC do not appear to raise an obstacle in the path of so doing. It is one thing to “treat” superannuation as “property” to enliven the jurisdiction of the Court to make an order in respect of superannuation, another altogether to suggest that superannuation must thereby be treated the same way as existing or tangible assets when entitlements of parties are determined pursuant to s 79 of the Act.
76.The Court thus moves to consider the DFRDB pension. As has been said, the formula provides a figure of $429,805 for that fund. The superannuation amendments to the Act do not detract from the Court's duty to do justice and equity to litigants appearing before it, as directed by s 79 of the Act.
77. The $429,805 is a conversion of what is clearly income to capital. The husband’s DFRDB pension is not, and can never be, capital. It is as simple as that. To apportion $429,805 as if it were an asset would be an exercise in artificiality no matter how it was approached. If one had regard to it and if one concluded that the wife's entitlement was any significant percentage that would be, in the Court's view, grossly unjust so far as the husband was concerned.
78.On the other hand, to avoid that kind of injustice and reflect the reality that this is no more and no less than a notional calculation of the capital value of an income stream and reflect the wife's entitlement in contribution terms as zero per cent would be grossly unjust to the wife.
79.As a reading of the transcript would reveal a number of possible approaches to this issue were canvassed yesterday and it would be accurate to say that none appeared at that time to be without fictional, artificial or undesirable features. The approach for which the Court has ultimately opted could be criticised in precisely that way, but the Court is persuaded that it is the least unjust approach to this difficult problem.
80.The DFRDB pension, which is currently just short of $1,000 a fortnight, comes about by virtue of the husband's contributions from the time he joined the (omitted) in 1960 through to his retirement from the (omitted) in 1985. He was in the (omitted) for almost 26 years. Of those 26 years about half were years he spent living with the wife. If one were looking at the retirement benefit, which one cannot, as it was received and applied in 1985 for the benefit of the parties, one would have to provide significantly for the wife having regard to her contributions from 1972 to 1985.
81. The Court is not persuaded that it is obliged to make a contribution entitlement finding in respect of the DFRDB figure thrown up by the formula. The Court is constrained under s 79(2) from doing things which are not just and equitable. In the Court's view any contribution finding in relation to this notional value of the superannuation would be unjust to both parties, the only question being which party would be more unjustly treated.
82. Accordingly, the Court does not propose to make a contribution finding in relation to this notional asset. It ought not however, be thought that so doing means that the DFRDB pension entitlement ceases to be relevant, nothing could be further from the truth. What it does mean is that, a guaranteed income stream, of a substantial order, will be treated within the context of s 75(2). It is income, it will always be income and it is a powerful s 75(2) factor.”
I agree with the approach taken by Coleman J in Cahill (supra). The DFRDB pension cannot be included in the property pool as a capital sum. Further, I have also concluded that the Court should not (in this case) make contributions findings in relation to the DFRDB “notional asset”. The DFRDB pension in this case – therefore stands separate and apart from the superannuation pool and the non-superannuation pool. This accords with the approach adopted by Coleman J in Cahill (supra).
I have come to the conclusion that it is appropriate for there to be two pools of property – namely the superannuation pool and the non-superannuation pool. This is because there needs to be a separate consideration by the Court of contributions made by the parties – in particular to the superannuation pool which – as I have just finished explaining – does not include the DFRDB pension. In my view such an approach is consistent with the view of the Full Court in Coghlan & Coghlan (2005) FLC 93-220. Counsel for the husband had submitted there should be one pool for both superannuation and non-superannuation interests. But in the circumstances of this case I have come to the conclusion that the submission put forward by counsel on behalf of the wife is correct in relation to this issue. As stated, the reason for such a conclusion is that there needs to be a separate consideration of the contributions made to both pools.
As to the question of the value of the wife’s motor vehicle. It can only be included in the sum that was conceded on behalf of the wife namely $10,000.
I have therefore come to the conclusion that the existing legal and equitable interests of the parties in the property (the non-superannuation pool of property and the superannuation pool) in this case is identified as follows:-
| Non-superannuation | ||
| Assets | Ownership | Value |
| Property K | Wife | $600,000.00 |
| Property L | Husband | $295,000.00 |
| Hyundai (model omitted) | Wife | $10,000.00 |
| Hyundai (model omitted) | Husband | $15,500.00 |
| (vehicle omitted) | Husband | $13,650.00 |
| Total Assets | $934,150 | |
| Liabilities | ||
| Property L mortgage | $152,879.00 | |
| (omitted) Bank Line of Credit | $29,452.00 | |
| Total Liabilities | $182,331.00 | |
| Net Assets | $751,819.00 | |
| Superannuation | ||
| (omitted) Super | Husband | $20,472.00 |
| (omitted) Pension | Husband | $34,575.00 |
| (omitted) Pension | Husband | $197,286.00 |
| Total Superannuation | $252,333.00 | |
The calculation of the DFRDB pension as a lump sum pursuant to the regulations totals $354,098 – but it is not included in the pool as a capital sum.
The Next Step
The parties were very young when they first met. The husband was 21 and the wife 18 years of age when they commenced cohabitation. They had very little by way of assets at that stage. They had no liabilities.
The husband served with the (omitted) between January 1967 and July 1992. During those years when the husband served in the (omitted) – the wife and the children (after they were born) moved to live in various parts of Australia (and elsewhere) to support the husband in his military career. At various times the family lived at (omitted), (omitted), Sydney, (omitted), (omitted), (omitted) and (country omitted).
The husband was the primary breadwinner throughout the marriage.
The wife cared for the children (noting in particular that the parties’ daughter, Y was asthmatic and spent a good deal of time in hospital when the parties were posted to (omitted)). Further, the wife did all of the cooking, cleaning, washing and ironing – including the ironing of all of the husband’s military uniforms. I do note that the husband polished his own (omitted) boots.
It is accepted between the parties – that up until the time of separation – the contributions based entitlements of the parties in respect of the non-superannuation pool are equal.
Separation occurred (albeit under one roof) in September 2009 – namely three years and nine months prior to this trial. Since separation the husband has paid the mortgage on the Property L unit. The husband has also paid rent in his rental unit. The wife has lived rent free at the Property K unit – being the former matrimonial home – and I note that the wife has maintained that unit.
Counsel on behalf of the husband contended that the contributions based entitlements of the parties in respect of the non-superannuation pool up until the time of this trial should be assessed at 55% in favour of the husband and 45% in favour of the wife. However, in the event that the Court concluded (as it has done) that the sum of $110,000 paid by the husband to the wife pursuant to the order made by the Court on 9 November 2010 – is not to be included in the property pool – then the Court should nonetheless take into account – at the contribution stage – the fact that the payment was made. Counsel for the husband therefore contends that in the circumstances as found by the Court (namely that the $110,000 will not be included in the pool) – the contributions based entitlements of the parties in respect of the non-superannuation pool as at the date of this trial should be assessed as 60% in favour of the husband and 40% in favour of the wife.
The counsel on behalf of the wife contends that the contributions based entitlements of the parties up to the date of this trial should be assessed as being approximately equal.
I should point out that, in addition to providing homemaking contributions, the wife also worked outside the home for wages at various times during the marriage. I accept the wife’s evidence in that regard. I also note that since the husband left the (omitted) in 1992 – he has continued to remain in full time employment – having developed skills as a (omitted) – particularly relevant in relation to (omitted). The husband continues in full time employment with (omitted). He is currently employed pursuant to a one year contract which will expire in March 2014.
The payment by the husband of the sum of $110,000 can be characterised, in my view, as a contribution made by him to a combination of the following – a financial contribution used by the wife to purchase her motor vehicle; a contribution which enabled the wife to maintain her own welfare by the payment of various bills and accounts as identified by her solicitor Mr Nagel. In those circumstances I am satisfied that the Court should take into account the fact that the husband made the payment in question and it is one of those facts which must be poured into the melting pot with the other facts relating to the question of contributions.
I also note that in order to pay the $110,000 the husband borrowed the money – by establishing a (omitted) Bank Line of Credit. The husband has been able to repay that amount relatively quickly – noting that the amount currently owing in respect of the (omitted) Bank Line of Credit is $29,452.
I have come to the conclusion that the contributions based entitlements of the parties up to the date of this hearing in respect of the non-superannuation pool – should be assessed as 55% in favour of the husband and 45% in favour of the wife. It was, indeed, a long marriage. Thirty-seven years elapsed between the commencement of co-habitation and the final separation (under one roof). I have come to the conclusion that the contributions favour the husband though because – since that separation the husband paid for various items whilst he still lived together with the wife (when they were separated under one roof); the husband paid the mortgage on the Property L unit and he paid rent for his own accommodation in Brisbane and the husband made the payment of $110,000 to the wife.
Superannuation
It appears to be accepted by the parties that – at the time of separation in September 2009 – the total superannuation of the parties was approximately $112,000. This, of course, does not include the DFRDB pension.
The total of the parties’ superannuation interests as at the date of the final hearing (excluding the DFRDB pension) is approximately $252,333.
Counsel on behalf of the husband contends that up until the time of separation the contributions based entitlements of the parties in respect of the superannuation pool should be assessed at 50/50. Up until the date of this final hearing – counsel for the husband has submitted that the assessment should be 77% in favour of the husband and 23% in favour of the wife.
The argument put forward on behalf of the wife is that the current superannuation balance has been significantly built up because of the earning capacity developed by the husband – primarily during the time the parties were together.
Counsel for the wife also points out that there is no evidence to confirm precisely what happened to the $112,000 in superannuation which existed at the time of separation in September 2009. That is – has that particular superannuation increased in value? The wife says there is no evidence on this point. What we do know is that the husband has continued to make superannuation contributions in the three years and nine months that have elapsed between the date of final separation and the date of this hearing.
It is also accepted by the parties that – because of their respective ages – they will both be able to immediately access superannuation interests. Counsel on behalf of the husband also submitted that the Court ought not run the risk of double dipping in relation to this issue by allowing to the wife a contributions based entitlement in respect of the superannuation pool – by reason of the fact that the husband developed an earning capacity while the parties were together for 37 years – and then also (so the argument goes on behalf of the husband) granting the wife an adjustment under s.75(2) because of the husband’s greater earning capacity. I note the submission made by counsel on behalf of the wife in this regard – that the Court ought not become so timid about avoiding a “double dip” that it fails to “dip” at all.
There is no evidence to precisely enable the Court to calculate whether the superannuation that was available at separation (apparently accepted in the sum of approximately $112,000) – whether that amount has increased – and if so to what extent. To put it another way – how much of the current sum of $252,000 in superannuation – is in fact represented by that initial amount of superannuation available at the time of separation – namely $112,000? Have the shares and other investments which constituted the superannuation itself (the $112,000) increased in value since September 2009?
The husband identifies that from the time he became an employee of (omitted) on (omitted) 2012 – all of his employer funded superannuation contributions have been paid into the (omitted) superannuation account. In addition to the employer contribution, the husband made one salary sacrifice contribution of $9,000. That accounts for the (omitted) superannuation total of $20,472. The most recent evidence therefore identifies the following specific contributions made by the husband to the superannuation pool since the parties separation –
a)a salary sacrifice contribution of $40,000 (in June 2011) to the (omitted) Pension “Transition To Retirement” account (but in relation to that issue I note that the husband does draw a pension of $411.48 per month from that account);
b)$27,000 – by way of three $9,000 salary sacrifice contributions to the (omitted) Pension “(omitted) Bank” account (since June 2011);
c)from 1 July 2012 – salary sacrifice contributions into the (omitted) Pension “(omitted) Bank” account of $1,100 per month totalling approximately $13,000; and
d)approximately $20,000 to the (omitted) superannuation account.
Therefore, it is possible to identify approximately $100,000 in direct contributions made by the husband to the superannuation pool in the last two years between June 2011 and June 2013.
At the time of separation it is accepted that the superannuation amount was $112,000. Paragraph 52 of the husband’s affidavit filed 12 April 2013 notes that at the date of the first trial in September 2010 – the superannuation amount was $157,686. There is no evidence read in these proceedings to explain the increase of approximately $45,000 in the one year between September 2009 and September 2010. At the commencement of this trial on 25 June 2013 counsel for the husband made it clear that the husband was relying upon his trial affidavit filed 12 April 2013.
Further, I note that nine months later in June 2011 the value of the superannuation interest had only increased by $1,607.03 to $159,293.03. This was the time when the husband rolled over his (omitted) superannuation into (omitted) Pension.
I note the decision of the Full Court in Best & Best (1993) FLC 92-418 and the reference there to the fact that the husband had acquired and developed his professional skills and earning capacity during the marriage. That is also the case here. In the particular circumstances of this case – I am very mindful of the danger of “double dipping”. Whilst it may be technically true that the wife has a “stake” in the husband’s earning capacity (and – so the argument runs – in the superannuation accumulated by reason of the exercise of the earning capacity) the fairer approach in this case is to examine the facts more closely – as urged by counsel for the husband. In the two years leading up to this final hearing the husband contributed significant amounts to the superannuation pool. These were made post separation. The conclusion that I have reached is that – in a broad sense – there will be no findings of a contributions based entitlement for the wife in respect of the post separation superannuation amounts accumulated by the husband. I will consider the issue again when considering s.75(2).
On the basis of those significant contributions directly identified by the husband (approximately $100,000) – made by the husband to the superannuation pool in the two years leading up to this trial in June 2013 – I have come to the conclusion that the contributions based entitlements of the parties to the superannuation pool up until the time of this trial do indeed favour the husband – but not to the extent contended for on behalf of the husband. In the absence of precise expert evidence to confirm the growth (or otherwise) of the initial superannuation figure in the sum of $112,000 – I consider that the assessment should be as follows – 70% in favour of the husband and 30% in favour of the wife. To a large extent I have accepted as correct the submission made by counsel on behalf of the husband concerning how it is that the Court should treat the assessment of contributions to the superannuation pool post separation in the particular circumstances of this case.
As to the question of the wife’s contributions to the DFRDB pension – I prefer the approach adopted by Coleman J in Cahill (supra). I do not propose to make any findings in relation to contributions concerning the DFRDB pension. I will consider the question of the DFRDB pension when considering s.75(2).
Section 75(2)
By s.75(4)(e) the Court is required when considering what order (if any) should be made under s.79 in property settlement proceedings – to take into account the matters referred to s.75(2) so far as they are relevant.
The husband is aged 62. The wife is aged 59. The husband continues to work full time. The husband enjoys reasonably good health. I note – for a hobby – the husband rides a (omitted) motorcycle. In relation to the speed of the motorcycle – the husband’s evidence is that it is “too fast”. It is apparent that the husband enjoys his hobby of motorcycle riding. I take notice of the fact that one requires skill, agility, and acuity to ride a motorcycle.
The wife has not enjoyed particularly good health. In 1991 the wife suffered an injury to her left shoulder. She was off work for six months and continues to take anti-inflammatory for the left should injury. The wife had her gallbladder removed in 1998. At times, the wife has also suffered from depression. Further, the wife has suffered from diverticulitis which required surgery in January 2008. The wife has also suffered health complications in relation to her urethra.
The wife has suffered from back problems – including problems with her discs and sciatica. The wife has also suffered from allergy problems. I note that in January 2010 the wife overdosed on sleeping tablets. Subsequently the wife was under the care of a psychiatrist at the (omitted) Hospital – Dr P. The wife has also received treatment from Dr M, clinical psychologist.
The parties both accept that the wife is not able to work more than four hours per week. The wife works at a (omitted) at (omitted) Shopping Centre from 11:00am until 3:00pm each Saturday. The wife earns $90 per week in that role.
In addition, the wife receives a disability support pension from Centrelink and a pension supplement totally $375 per week.
In contrast to the wife’s employment situation the Court must consider the evidence of the husband’s employment. I note the husband’s affidavit filed 12 April 2013 where he has stated:-
“15. I served with the (omitted) between January 1967 and July 199.
16. After my discharge from the (omitted) in July 1992, I commuted the maximum amount permissible of my Retirement and Death Benefits Scheme (“DFRDP”) interest and used those monies to part fund the construction of our first home at (omitted), I shall refer to my financial and non-financial contributions to our property elsewhere in my affidavit.
17. Immediately upon my discharge from the (omitted) I commenced employment with (omitted) as a (omitted). At the time, the (omitted) operated a resettlement scheme for serving members allowing them to carry out periodic unpaid work with a civilian organisation in the lead up to the member’s discharge, the idea being that the member could, upon discharge, start work immediately with the host civilian organisation or another employer. I availed myself of that scheme and so was able to obtain employment with (omitted) as soon as I left the (omitted).
18. I have read Ms Semperton’s affidavit filed on 2 September 2010. In particular, I refer to paragraphs 11 to 24 inclusive therein under the heading, “My Husband’s Employment”. I deny the contents of paragraphs 21 and 23 and with respect to the balance of the contents of those paragraphs, I say that Ms Semperton is by and large accurate, though she tends to omit some of my early working history after I discharged from the (omitted) and tends to overstate the periods she describes as “no full-time work”. I accept that there were some brief periods when I was not contracted or employed full-time. In those periods, I continued to receive my (omitted) pension monies, all of which monies I contributed towards our mutual maintenance and support.
19. I currently work as a (omitted) for the (omitted) of (omitted) (“(omitted)”). I was initially engaged as a subcontractor under the business name or style (omitted) (“(omitted)”) and was later made an employee on fixed term contracts, details of which are as follows:-
a. the first fixed term contract was signed on 12 December 2011, the contract period of which commenced on 1 February 2012 and ended on 30 March 2013; and
b. the second (and current) fixed term contract was signed on 14 March 2013, the contract period of which commenced on 1 April 2013 and will end on 31 March 2014.
20. I have worked for (omitted) since late 2005. The work that I am doing relates specifically to one particular part of a contract that (omitted) has with the (omitted) which involves the updating of (omitted) for the (omitted) maintained by the (omitted). It is my understanding that (omitted)’s contract with the (omitted) was supposed to have ended in November 2010 but was subsequently awarded a new contract due to the decision by the (omitted) to delay the retirement of its (omitted).
21. My current employment contract contains an option which can only be exercised by (omitted), to retain me if (omitted) still has need for the particular skill that I possess beyond 31 March 2014. However, I am not certain whether (omitted) will exercise that option.
22. In the event that (omitted) decides not to exercise the option, I will retire from full-time participation in the work force.
…
24. My incomes for the years ended 30 June 2007, 2008, 2009, 2010 and 2011, which includes the income from my work with (omitted), rental income from an investment unit situated at Property L in the State of Queensland (“Property L”) and my DFRDB pension, where:-
Taxable Income
Tax Payable
Net Income
a. 2007
$92,999
$25,050
$67,949
b. 2008
$87,643
$22,157
$65,486
c. 2009
$89,424
$21,770
$67,654
d. 2010
$62,893
$12,718
$50,145
e. 2011
$88,203
$20,585
$67,618
25. I have yet to file my Tax Return for the financial year ending 30 June 2012, which is not due until May 2013.
26. During the time I was engaged by (omitted) as a subcontractor, I was responsible for meeting all GST and PAYG payments to the ATO. I was also responsible for my own superannuation contributions as (omitted) did not make any contribution to superannuation on my behalf during that time.”
The husband worked during his last 15 years in the (omitted) as a (omitted) at a (omitted). The primary focus of the work related to (omitted). I have concluded that the skills which he developed during his years in the military have not gone to waste. The skills developed by the husband – are no doubt skills and experience which he is able to draw upon to assist him in his current employment which, I note, continues to revolve around (omitted).
I note exhibit 1 which is a letter dated 12 March 2013 addressed to the husband. It is in fact a contract of employment between the husband and (omitted). The husband’s gross salary is $116,105. The contract period is from 1 April 2013 to 31 March 2014 – “with option for further extension to be communicated by separate written advice”. I note from the husband’s affidavit (filed 12 April 2013) that he has worked for (omitted) since 2005.
At the time of the first trial the husband was concerned (in September 2010) that his employment might cease. The husband’s employment has continued.
The husband’s payslips or pay advices are contained in exhibit 3. The most recent payslip covers the period from 1 March 2013 to 31 March 2013. The husband’s employer pays $996.57 to his (omitted) superannuation account. On a monthly basis it seems that the husband banks $6,502.15 by way of salary. That payslip in fact confirms that the husband’s annual salary has increased to $119,588. In addition there is the husband’s superannuation contribution made by the employer and also I note that the husband is salary sacrificing $1,100 into (omitted) Pension per month.
I note the evidence of Mr H. Mr H is the general manager of (omitted) for (omitted). That group was formerly known as the (omitted) . He notes that the (omitted) was awarded a new contract by the (omitted). I note that it seems to be accepted between the parties that the contract was entered into in March 2011 and will run for five years. As note, that is an agreement between (omitted) and the (omitted) (more particularly the (omitted) I apprehend). I acknowledge Mr H’s evidence that he is not able to disclose details of the contract between (omitted) and the (omitted). I do also note that the fact of the existence of the five year contract between (omitted) and the (omitted) – was apparently only disclosed to the wife very late in the day.
Mr H confirms that the husband continues to work in the same position – namely as a (omitted) primarily in the (omitted) area of the business.
I note paragraph 7 of Mr H’s affidavit:-
“7. Mr Semperton’s contract also contains an option, which can only be exercised by (omitted), to retain him beyond 31 March 2014 if (omitted) has need for his skill set beyond that date. However, at this point in time, I am unable foresee whether or not such need might arise and cannot guarantee (omitted) will continue to require Mr Semperton’s services beyond 31 March 2014.”
I also note the significant skills developed by the husband in relation to (omitted).
I also note that the husband would have preferred to have retired at age 60. He would still prefer to retire.
I have come to the conclusion that the husband is both hardworking and frugal. It is highly likely that he will pay off his debts before retiring.
In particular I note paragraph 29 of the husband’s affidavit filed12 April 2013. He stated there that he wished to retain the Property L unit as part of any final orders made by the Court. I note there is currently a mortgage on that unit of $152,879. I have come to the conclusion that it is likely that the husband will retain the Property L unit and he may well be able to pay out that mortgage before he retires. That leads me to conclude that the husband is likely to continue in full time employment for as long as he can to at least attempt to achieve that outcome. I note that it has taken him about 18 months to repay approximately $80,000 in respect of the (omitted) Bank of Credit.
Further, and at the very least, the husband will be working until the end of March 2014 in his current position.
The husband does have a significant earning capacity. As to whether he chooses to exercise that earning capacity is a matter for him. But the Court does note that the husband does possess a significant earning capacity. The husband’s ability to earn an income is in stark contrast to the wife’s poor circumstances in that regard.
The husband has a guaranteed income stream from his DFRDB pension. It was contended on behalf of the husband that the wife’s disability pension is just as good or equates to the husband’s DFRDB pension. I do not accept that submission. The wife’s disability pension will be subject to government policy. The husband’s DFRDB pension is guaranteed for life.
I note that the husband currently pays $430 per week in rent.
I note that the husband has the following gross income per year:-
| Salary with (omitted) | $119,588 |
| DFRDB pension | $21,000 |
| Veterans Affairs | $2,345 |
| Rent from the Property L unit | $13,520 |
I note that the wife is not willing to agree to a splitting order in respect of the DFRDB pension. Apparently this would impact upon her ability to receive a Centrelink benefit.
I have come to the conclusion that it is not appropriate to make a splitting order in relation to the DFRDB pension. I consider that the wife’s position is reasonable. It also allows her to remain independent of the husband and not reliant upon his DFRDB pension.
I note that the Veterans Affairs Pension payable to the husband equates to about $44 per week. It is in fact a disability pension.
If the husband ceased work altogether then it is apparent (from his most recent financial statement filed 24 April 2013) that he would receive per week the following amounts:-
| DFRDB pension payment | $415.00 |
| Veterans Affairs Disability Pension payment | $45.00 |
| (omitted) Pension pension payment | $95.00 |
His total weekly income would therefore be $555.
If the husband retained the Property L unit he would continue to receive an additional amount of $260 per week.
If the wife stopped work altogether she would receive her disability pension payment in the amount of $375 (in the absence of any significant alteration in government policy concerning such a benefit).
Counsel on behalf of the husband has submitted that there should be an adjustment in favour of the wife under s.75(2) in the amount of 10%. It wasn’t at all clear – but – this submission on behalf of the husband may have been on the basis that the Court was to include the sum of $110,000 in the property pool as an asset of the wife.
Counsel on behalf of the wife contends for an adjustment in her favour of at least 15%. This submission was clearly made on the basis that the $110,000 would not be included in the property pool. It will be noted that, the Court has concluded, that the sum of $110,000 (referred at length earlier herein) should not be included in the property pool as an asset of the wife.
I have specifically taken into account the fact that the husband receives the DFRDB pension – and I note that I have not allowed to the wife a contributions based entitlement to that pension at any earlier stage in this process under s.79.
Furthermore, in relation to the superannuation pool – I note that I have specifically taken into account the ability of the husband to accumulate superannuation – this ability having been developed by the husband as part of his earning capacity – which – to a large extent he acquired during the long marriage. I note, specifically, that I have not allowed to the wife any contributions based entitlement to the superannuation pool post separation. I refer to my reasons provided in relation to this issue earlier herein.
I have come to the conclusion – on the basis of the husband’s significantly greater earning capacity, the husband’s better state of health, the husband’s entitlement to the DFRDB pension and his other financial resources to which I have referred – that there should be an adjustment in favour of the wife pursuant to s.75(2) factors in the amount of 10%. This adjustment in favour of the wife will operate in respect of the non-superannuation pool and also in respect of the superannuation pool.
Justice and Equity
It will be noted that I have earlier concluded that it is just and equitable to make a property adjustment order. In my view the making of such an order which would see the wife retain 55% of the non-superannuation pool and the husband retain 45% of that pool would be just and equitable.
Further, an order whereby the husband retains 60% of the superannuation pool and the wife retains 40% of the superannuation pool is also just and equitable.
The total of the non-superannuation pool is $751,819. The wife’s 55% share will see her entitled to non-superannuation property worth $413,500.
The husband will be entitled to 45% of that net asset ($751,819). The value of the non-superannuation property to which the husband will therefore be entitled pursuant to the Orders is $338,318. But the husband will have to repay the liabilities (notably the Property L unit mortgage and the (omitted) Bank of Credit) totalling $182,331. This will leave the husband with net non-superannuation property of $155,987.
In relation to superannuation – the wife will receive 40% of the superannuation pool. This, of course, excludes the DFRDB pension. The wife will receive superannuation of approximately $100,933.
The husband will receive 60% of the superannuation pool – this will equate to approximately $131,399.80.
The total net superannuation and non-superannuation property of the wife will be approximately $514,433.
The total net non-superannuation and superannuation property of the husband will be approximately $307,386.
It must be noted that these figures are approximates only and I reserve the right to make any appropriate corrections or alterations.
There is a reasonably large gap between the amount the wife is to receive and the amount the husband is to receive as a result of these orders. However it will be recalled that I have made a finding that the husband will keep the Property L unit and that he may well be able to pay out his existing debts/mortgages prior to retiring. But I do note that he will have the contingencies and vicissitudes of life to contend with. On the other hand he does have the certainty of his guaranteed (omitted) pension each year.
I note that the amount of property (superannuation and non-superannuation) to be received by the wife does not equal the value of the Property K unit. It may or may not be the case that the wife is able to retain that unit. I apprehend that the wife will be able to access the superannuation to which this judgment will entitle her – in the near future (if not already).
To the extent that there are any orders to be sought on behalf of the wife that would or could have the effect of enabling her to make some arrangements in which to retain the Property K unit – I will certainly consider such orders.
Indeed I would ask that the parties attempt to reach agreement in relation to the wording of the final orders.
In the event that it is not possible to reach an agreement concerning the wording of the final orders – the matter will be relisted for mention.
I certify that the preceding one hundred and twelve (112) paragraphs are a true copy of the reasons for judgment of Judge Howard
Date: 8 October 2013
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Family Law
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Civil Procedure
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Procedural Fairness
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