SHL & EHL

[2006] FamCA 1287

FAMILY COURT OF AUSTRALIA

SHL & EHL [2006] FamCA 1287

FAMILY LAW – APPEAL – Property Settlement – Section 75 (2) factors – Exclusion of foreign superannuation entitlements – Whether the trial Judge erred in excluding the respondent’s superannuation from the property pool – Whether the trial Judge erred in failing to construct an order that was just and equitable.

Family Law Act 1975 (Cth)

Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033; (2000) 26 Fam LR 237
Coghlan and Coghlan (2005) FLC 93-220
Hickey and Hickey Anor (2003) FLC 93-143
JEL v DEF (2001) FLC 93-075
House v The King (1936) CLR 499
Gronow and Gronow (1979) FLC 90-716.

APPELLANT:  SHL

RESPONDENT:  EHL

FILE NUMBER:  TVF737 of 2002

APPEAL NUMBER:  NA35 of 2004

LOWER COURT JURISDICTION:  Family Court of Australia  

LOWER COURT JUDGMENT DATE:               24 May 2004

LOWER COURT MNC:  [2004] FamCA 451
DATE DELIVERED  15 August 2006
PLACE DELIVERED  Brisbane
JUDGMENT OF:  Kay, May and Boland
HEARING DATE:  15 February 2005

COUNSEL FOR THE APPELLANT: Mr Galloway

SOLICITOR FOR THE APPELLANT:	Boulton Cleary & Kern Lawyers
COUNSEL FOR THE RESPONDENT:	Mr Read

SOLICITORS FOR THE RESPONDENT: Connolly Suthers Lawyers

ORDERS

1. The appeal is allowed.

2. Subject to neither party wishing to avail himself or herself of the provisions of Order 3 of these orders, the wife pay to the husband the sum of $20,000 within three months of today.

3. In the event either party wishes to put relevant material before the Court in respect of the re-exercise of the discretion then:

   (a)     the parties shall prepare and file with the Appeals Registrar, Northern Region, within 21 days an agreed statement of facts which the Court is asked to consider in the re-exercise of its discretion; and

   (b)     in the event the parties are unable to agree about the material to be contained in the agreed statement of facts then:

   (i) the husband shall within a further 21 days file with the Appeals Registrar, Northern Region and serve on the wife any affidavit on which he seeks to rely together with any written submissions in support of the re-exercise of the discretion; and

   (ii) the wife shall within a further 21 days thereafter file with the Appeals Registrar, Northern Region and serve on the husband any affidavit on which she seeks to rely together with any written submissions in support of the re-exercise of the discretion and serve such submissions on the husband.

4. The Court grant to the appellant a costs certificate, pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth), being a certificate stating that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under the Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

5. The Court grant to the respondent a costs certificate, pursuant to s 6 of the Federal Proceedings (Costs) Act1981 (Cth), being a certificate stating that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under the Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.

FAMILY COURT OF AUSTRALIA  AT BRISBANE

APPEAL NUMBER:           NA35 of 2004

FILE NUMBER:                  TVF737 of 2002

SHL
Appellant Husband

And

EHL
Respondent Wife

REASONS FOR JUDGMENT

Introduction

1. The appeal by the husband against orders made by Monteith J on 24 May 2004 concerns property settlement orders and in particular how the trial Judge treated the wife’s interest in a superannuation fund (referred to during the trial as ‘the French superannuation’) and adjustments made to the property division by reason of identified factors according to section 75(2) of the Family Law Act 1975 (Cth) (‘the Act’).

Facts

1. The essential facts in this appeal can be stated shortly. The parties were married on 29 November 1986. Although the actual date of separation was disputed, they had ceased living together on 17 June 2003. The wife was born on 8 July 1959 and was 44 years old at the date of trial. The husband was born on 25 October 1957 so was 46 years old at the date of trial.

2. The parties had two children, a daughter, born 19 February 1990 and a son, born 13 May 1993. The husband and wife entered into consent orders in July 2003 in relation to the children which effectively provided for shared residence. The husband pays child support on the basis of a Child Support Agency assessment, at trial the amount was $1006.25 per month.

3. At separation the wife remained living in the former matrimonial home which is unencumbered. She had a small income from employment and otherwise was dependant on Centrelink benefits. The wife was studying at university and expected to finish her course in about 3 years when she would obtain employment.

4. The husband was employed as an academic at a University in Northern Queensland.

5. The husband filed an application for property settlement and the wife responded seeking different orders together with spousal maintenance.

6. The parties represented themselves at the trial.

The decision of the trial Judge

1. There were three main issues identified by the parties. Firstly, the value of the wife’s superannuation and how it should be treated, secondly, the wife’s jewellery and thirdly, the impact of s 75(2) factors.

Superannuation

1. There was no dispute that the wife had an interest in two overseas superannuation funds which were described jointly as the French superannuation fund with an agreed value of $97,351. There was no dispute that this fund was one that could not be split, and that it did not satisfy any of the requirements of it being part of an eligible superannuation plan pursuant to the provisions of s 90MD of the Act. The information about the fund and its value came from an opinion obtained by the husband from Mr B. It was accepted by the wife.

2. In dealing with the wife’s superannuation the trial Judge identified the real question as being whether the superannuation was covered by what was then known as ‘super splitting amendments to the Family Law Act’ (para 32). An eligible superannuation plan is defined in s 90MD in the following terms: -

   ‘eligible superannuation plan means any of the following:

   (a) a superannuation fund within the meaning of the SIS Act;

   (b) an approved deposit fund;

   (c) an RSA;

   (d) an account within the meaning of the Small Superannuation Accounts Act 1995;

   (e) an eligible annuity.’

3. The superannuation was treated by the trial Judge as a financial resource in the hands of the wife. His Honour said at paragraph 35:

   ‘Consequently, on the evidence before me, I propose to treat the Uni Super of the husband as property at the agreed value of $143,694. On the other hand, I propose to treat the superannuation of the wife as a financial resource and take it into account under s.75(2)….’

4. There is no issue in the appeal that the wife’s superannuation was valued at $97,351 or that the trial Judge was incorrect in treating it as a ‘financial resource in her hands’ (AB1 page 26).

5. The complaint is that having found that there was such a resource, it was left out of his Honour’s calculations entirely thereafter. The appellant husband claims that the trial Judge failed properly to take the wife’s resource into account.

6. Under the heading ‘Section 75(2) factors’ his Honour said:

   ‘52. I need to consider the fact that the wife has some financial resources which I have previously referred to. However, as Mr B points out, they were accumulated by her in Noumea prior to the marriage. There is some uncertainty with respect to their real value and they do not become available to her for some considerable time.’

   As to the superannuation of the husband it was agreed that the value was $143,694 and it was included in the pool of property.

Jewellery

1. It was agreed that the value of the jewellery was $7,315 and that it was a gift by the husband to the wife, although the husband said it was purchased as an investment. As they were gifts the trial Judge did not include it in the asset pool to be divided between the parties.

Contribution

1. His Honour concluded that the husband and wife had provided equal contributions albeit in a different manner, in essence the husband from his career and the wife as homemaker and primary carer for the children with occasional employment. This finding was not challenged.

Section 75(2)

1. The particular factors the trial Judge relied upon were as follows: -

   ·The husband had a secure career path and very good prospects of promotion;

   ·The wife was just commencing her career and was found not capable of earning any, or any significant income for several years;

   ·The husband’s payment of child support;

   ·The wife’s living in the former matrimonial home and her wish to remain in that house for the stability of the children although the house is in need of repair and improvement;

   ·The wife’s interest in the French Superannuation fund albeit not available for several years;

   ·The wife’s state of health, the trial Judge finding ‘…she suffers from arthritis, rheumatism and asthma, all of which make her life more difficult and her employment prospects more problematic.’(para 53)

2. An allowance of 15 per cent was made in favour of the wife by reason of s 75(2) factors.

3. Ultimately the trial Judge found that a just and equitable division of the property would be 65 per cent to the wife and 35 per cent to the husband the effect being that the wife received the house, the car and half the value of the shares in addition to the jewellery (which was not included in the pool) and the French superannuation.

4. The wife’s application for spousal maintenance was dismissed.

5. The appeal is from orders numbered 1, 2 and 4 which are as follows: -

   1.   That the husband do all things and sign all documents so as to transfer to the wife within 21 days hereof, his interest in the property, [located at place A].

   2.   That the husband do all things and sign all documents necessary to transfer to the wife within 21 days hereof, the motor vehicle being a Toyota Camry.

   …

   4.   That unless specified in these orders, the husband and wife shall have the sole title, right and interest in: -

   a.   any chattels, goods, furnishings and other property currently in their possession;

   b.   any monies, shares, investments and superannuation entitlements which stand in their sole name or to their credit at the date of these orders.

The Appeal

1. In the amended Notice of Appeal filed 14 September 2004 the seven grounds of appeal principally relate to the approach taken by the trial Judge to the French superannuation. It is an appeal against the exercise of discretion, in particular that the effect of the orders is that the wife receives almost the whole of the parties’ available assets excluding the husband’s superannuation. Otherwise the appeal was directed towards a failure to give sufficient reasons, the jewellery not being included in the pool of assets and the conclusions in relation to s 75(2). During oral submissions by counsel for the appellant leave was given to add a further ground challenging the finding by his Honour in paragraph 51 of the judgment that the wife ‘is not capable of earning any, or any significant income, and it is unlikely that she will be able to for several years.’

2. It is asked that the appeal be allowed and that the Full Court re-exercises the discretion, or alternatively that the matter be remitted for a new trial.

Appellant’s Argument

1. The major submission in the husband’s appeal is that the trial Judge:

   ‘effectively ignored the fact that the Wife, by reason of her French citizenship and history of employment in Noumea, was entitled to French superannuation, the two components of which had an agreed value of $97,351.00 AUD. … The division ultimately determined by his Honour of 65% to the Wife and 35% to the Husband resulted in the Husband retaining his (inaccessible) superannuation together with a few thousand dollars.’

2. The appellant husband submitted that ‘as his superannuation was not split the effective treatment of the parties’ respective superannuation entitlements should have been the same.’ In addition as the husband ‘is not much older than the Wife and his superannuation was as removed as was hers’ the treatment of it by the trial Judge, it is submitted was incorrect: ‘[t]he utility of the funds to the respective parties was the same, for which fact, it is argued, his Honour did not make proper allowance.’

3. In circumstances where the husband’s fund was as inaccessible as the wife’s it is submitted that it was not to the point that the husband’s fund was capable of being split by an order of the Court, especially as no splitting order was made. The submission is that it was not in any real sense different in nature to the wife’s entitlement.

4. His Honour’s judgment includes extracts from the evidence of Mr B, which in turn refers to the decision of the Full Court in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143. The Full Court in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervenor) (supra) decided that the expression ‘“treated as property”’ as used in s 90MC of the Act should be understood as meaning ‘“treated as if it were property even though it is not”’ and that it should be so treated for the purposes of s 79. It is submitted that the trial Judge did not specifically apply the decision to the facts before him.  We note that the husband’s submission in this matter pre-dated the delivery of the judgment in Coghlan and Coghlan (2005) FLC 93-220. In Coghlan and Coghlan (supra) the majority said at paragraphs 37 and 38 that the interpretation of s 90MC in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervenor) (supra) ‘appears to us to be a “gloss” on the section’ and ‘s 90MC does no more than operate to extend the definition of “matrimonial cause” by extending the jurisdiction, which the various courts … have in proceedings between parties to a marriage with respect to their property … to make orders with respect to the superannuation interests of the parties to property settlement proceedings.’

5. Other grounds of appeal include assertions that his Honour left out of account the jewellery valued at $7,315 which the respondent wife would retain and gave insufficient reasons for his findings with respect to s 75(2) factors.

6. The wife received a further 15 per cent by reason of the identified factors. The percentage was applied to the pool of assets which included the husband’s superannuation and excluded the wife’s superannuation. It is submitted that if his Honour was wrong in dealing with the pool of assets in this way, then it follows that 15 percent of that sum cannot produce a figure which is just to the husband.

7. As to whether 15 per cent was justified in any event, the appellant argues:

   ‘(a)    That is the effect in money terms that matters and not the percentage; and

   (b)     That there were no reasons given for the election of that percentage figure, which ‘though discretionary is not arbitrary; and

   (c)     That as the parties shared nearly equally the responsibilities of child care and that the Wife was shortly to be capable of fully paid employment, 15%was excessive.”

8. It is also submitted by reference to the transcript (See p279, 280 & 289) that there was no evidence that the wife’s employment prospects were ‘more problematic’ because of her health. This submission appears to be correct. At best, the evidence revealed that she suffers from rheumatism and mild asthma. There was no medical evidence.

9. The trial Judge set out in paragraph 36 of the judgment (AB 1, page 25) a table of assets. His Honour did not include jewellery retained by the wife and arrived at a pool of assets as follows: -

House	$265,000
Car	$8,500
Shares	$9,895
Husband’s cash	$1,246
Wife’s cash	$3,000
Husband’s library	$1,500
Husband’s superannuation	$143,694
Wife’s superannuation	Nil
Total	$432,835

1. It is submitted that the orders made by the trial Judge that the wife should have 65 per cent of the pool as found, having the effect that the wife would receive the house, car, half the shares and cash, in total $281,447; whilst the appellant husband retains half the shares, cash, library ($7,693) and his superannuation, in total $151,387, was outside the range of a just and equitable order.

2. Finally, it was submitted that if his Honour has erred in his treatment of the parties’ respective superannuation entitlements, or has erred in excluding from the pool the wife’s jewellery, or has failed properly to take into account the requirements of section 79(2), then he has erred in law and the exercise of his discretion has miscarried. It is asked that this Full Court re-exercise the discretion of his Honour without remitting the matter to be re-tried.

3. It is submitted that the value of the jewellery should be included so that the assets to be divided are $440,150 in total, that the husband receive the value of one half of those assets, requiring a payment by the wife to the husband of $68,687.50 or the sum of $65,030 if the wife’s jewellery is not included in the pool of assets.

Respondent’s Argument

1. The main defence to the appeal is that it is against a discretionary judgment. In appealing against a discretionary judgment the respondent reminds the Court that the appellant must meet the criteria as stated in House v The King (1936) 55 CLR 499 at 504-505:

   ‘It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.’

   And in Gronow and Gronow (1979) FLC 90-716 at78,848 – 78,849:

   ‘The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion.’

2. It is useful to set out some of the submissions in response.

3. It seems that his Honour was of the view that there was some uncertainty as to the real value of the respondent wife’s French superannuation (para 52). This appears to have been based on part of Mr B’s opinion and appears in paragraph 34 of the judgment. It is submitted that this was a consideration open to the learned trial Judge upon the evidence.

4. His Honour correctly found that the respondent wife would not have access to the French superannuation funds for some considerable time.

5. In the written submissions made on behalf of the wife we are asked to consider that the learned trial Judge did not err in dividing the property of the parties so as to provide the respondent wife with the majority of the available assets and that it was within the reasonable discretion of the learned trial Judge, having regard to all the circumstances of the case including:

   ‘i.     the greater economic earning capacity of the Appellant Husband, his secure career path, and prospects of promotion and comparatively high income; (Reasons for Judgment App. Bk. Vol. 1 p.28 Para. 50)

   ii.     the Respondent Wife was at the commencement of her career path, was not capable of earning any, or any significant income, and is unlikely to be able to do so for several years; (Reasons for Judgment App. Bk. Vol. 1 p.28 Para. 51)

   iii.     the Respondent Wife desired to continue to reside in the former matrimonial home, to house the children of the marriage, which is close to the schools that the children attend; (Reasons for Judgment App. Bk. Vol. 1 p.28 Para. 51).

1. It is also submitted that his Honour provided adequate reasons for his decision to provide a 15 per cent adjustment for s 75(2) factors in favour of the respondent wife, and provided a proper basis for his determination including the factors referred to above and:

   ‘IV.   the value of the Respondent Wife’s “French” superannuation funds were uncertain, and did not become available to her for some considerable time; (Reasons for Judgment App. Bk. Vol. 1 p.28 Para. 52))

   V.     the Respondent Wife had a range of health problems which the learned Trial Judge considered made her life more difficult and her employment prospects more problematical (Reasons for Judgment App. Bk. Vol. 1 p.28 Para 53).’

2. In relation to the issue of the jewellery it is submitted that his Honour did not err in failing to take into account the respondent wife’s jewellery, because s 79(1) of the Act does not require that the Court must alter the parties’ interests in all the property of the parties.

3. Alternatively, it is submitted that if the Court considers that the jewellery should have been included in the asset pool, then the error of the learned trial Judge in not doing so, is minimal, and not of such significance to warrant intervention by the appeal Court.

4. It is submitted that the fact of the respondent having been found not to be capable of earning any or any significant income at present or for several years together with the fact that the respondent has to provide accommodation for the children of the marriage as well as herself, are factors heavily supporting the learned trial Judge’s orders.

Conclusions

1. Although the trial Judge said that he would treat the French superannuation as a financial resource of the wife, in reaching the decision that there should be an allowance of 15 per cent by way of the stated s 75(2) factors, the trial Judge appears to have given little consideration to the fund or alternatively has given it too little weight.

2. In addition, of the factors set out by his Honour allowing him to come to his conclusions the wife’s health difficulties seem to have been overstated. The evidence did not support his Honour’s findings in that respect.

3. Of lesser significance was the statement by the trial Judge that the value of the wife’s superannuation was uncertain. This finding is inconsistent with the agreed value of that fund. However, his Honour was correct in observing that the monies do not become available to the wife for some considerable time. Regard should be had to the fact that the wife does not have immediate access to the asset. At the same time it is equally important to observe that the husband does not have any immediate access to his superannuation which represents the most significant asset left in his control as a result of his Honour’s orders.  As the majority in Coghlan and Coghlan (supra) recognised in paragraphs 65 to 67, and particularly in the latter paragraph, a trial judge in following the preferred approach set out in those paragraphs will take into account the ‘real nature’ of the superannuation interest ‘both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.’

4. The finding that the parties made an equal contribution to the marriage was not challenged. Taking into account the disparity between the parties’ income and earning capacity together with their respective superannuation the finding of the trial Judge that a 15 per cent allowance should be made in the wife’s favour was erroneous. In our view the appeal should be allowed.

5. The effect of his Honour’s orders does not produce a just and equitable result.

6. As to the question of whether there should be a re-trial, or we should re-exercise the discretion, counsel for the wife submitted that we should consider that the wife’s application for spousal maintenance was dismissed and rather than re-exercise there should be a new trial to allow the issue to be considered particularly if the wife is to receive a different percentage of the property. There was no cross appeal by the wife. 

7. In view of the limited assets of the parties and the nature of the appeal it is appropriate in this case that the Court re-exercise the discretion.  We are satisfied that the exclusion by the trial Judge of the wife’s jewellery gifted to her by the husband was one open to him on the evidence. We therefore find it appropriate, subject to any written submissions which the parties may make to us and to which we will refer shortly, to use the pool as identified by the trial Judge to re-exercise the discretion.

8. In our view giving proper weight to the respective financial positions of the parties currently and the effect of the wife’s superannuation in the long term, whilst recognising the current arrangements in relation to the care of the children and the child support burden of the husband, we conclude that the proper division is 60 per cent of the assets as found by the trial Judge in the wife’s favour.

9. Whilst recognising the wife’s limited financial circumstances in our view it is just and equitable that the wife pay a further sum to the husband. The husband should receive assets in the order of $173,134 representing 40 per cent of the pool less the sum of $151,387 comprising his superannuation and other assets retained by him. Whilst a 60/40 division would require the wife to pay to him the sum of $21,747, in the circumstances we are of the view that the appropriate outcome is that the wife should pay to the husband the sum of $20,000 within three months.

10. We have already noted the differing positions of the parties in the event we found the appeal should be allowed.  In Hunt and Zuryn (2005) FLC 93-226 when considering the re-exercise of the discretion, the Full Court said:

    ‘53.   The options open to the Full Court at the conclusion of a successful appeal were canvassed in G & G [2001] FamCA 1453, a case determined before the special leave application to the High Court in Ruscoe and Walker (2003) FLC 93-093 was dismissed.  In G & G both parties sought that the Full Court should re-exercise the discretion.  However the Full Court noted there had been a significant time delay since the original hearing as well as a number of substantial developments.  The Full Court set out its conclusions on the parties’ contributions and relevant s 75(2) factors on the evidence before the trial Judge, as modified by the Full Court’s conclusions on the pool.  The Full Court noted the following options in the factual circumstances of the case before it:

·     the parties could present to the Court an agreed statement of relevant facts which had occurred since the judgment of the trial Judge to be taken into account by the Court in re-exercising the discretion;

·     the Court might allow the appeal, make such orders as flowed from a re-exercise of the discretion on the basis of their conclusions about contributions and s 75(2) factors and their conclusions about the pool of assets, designating the orders as either “partial final” or “interim” and remit for the determination of a single Judge as to whether any further adjustment should be made in respect of contribution or s 75(2) factors which had subsequently arisen;

·     the Court could uphold the appeal, set aside the trial Judge’s orders and remit the proceedings for a limited rehearing.

We would add to those options that in some limited cases a matter may regrettably be required to be remitted for a complete rehearing.

54.  Whilst we feel confident that we could re-exercise the discretion on the material that is before us, and avoid further proceedings, we feel constrained by reason of the decision of Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033; (2000) 26 Fam LR 237 to invite the parties to make submissions in writing to the Full Court as to any evidence they would wish to adduce relating to their circumstances as they presently exist.  As indicated by the Full Court in G & G the preferable course would be for the parties to provide an agreed statement of facts which have occurred since the judgment relevant to the re-exercise of the discretion.  It would only be after receipt of submissions that the Court could properly determine which of the options referred to above would be appropriate.  If we conclude that it is necessary to remit the matter for rehearing then we would not expect that the trial Judge would be bound by our suggested exercise of discretion.’

1. It may well be that the parties, given their modest assets, and having regard to minimising costs and achieving finality may be content to accept the pool of assets as determined by the trial Judge and our re-exercise of discretion based on that pool and not wish to place further evidence before us.