Steele and Steele
[2011] FMCAfam 241
•1 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| STEELE & STEELE | [2011] FMCAfam 241 |
| FAMILY LAW – Interim hearing – interpretation of superannuation order made in 2000 – whether relevant order capable of enforcement. |
| Family Law Act 1975 (Cth), ss.79, 79A, 106A. Family Law Legislation Amendment (Superannuation) Act 2001 (Cth), s.5 Police Regulation (Superannuation) Act 1906 (NSW), s.5D |
| RBH & JIH [2005] FamCA 226 Yunghanns & Ors & Yunghanns & Ors [1999] FamCA 64; (1999) 24 Fam LR 400 |
| Applicant: | MS STEELE |
| Respondent: | MR STEELE |
| File Number: | SYC 5370 of 2010 |
| Judgment of: | Monahan FM |
| Hearing date: | 10 February 2011 |
| Date of Last Submission: | 10 February 2011 |
| Delivered at: | Sydney |
| Delivered on: | 1 March 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Battley |
| Solicitors for the Applicant: | Somerville Legal |
| Counsel for the Respondent: | Mr Kenny |
| Solicitors for the Respondent: | Kim Monnox & Associates |
ORDERS
THE COURT FINDS THAT:
Paragraph 21 of the Orders made by the Family Court of Australia on 17 August 2000 is not enforceable.
THE COURT ORDERS THAT:
All extant applications remain listed for mention on 4 March 2011 at 2:30pm but the interim hearing in relation to enforcement be vacated.
AND THE COURT NOTES THAT:
A.The Court encouraged the parties to have some meaningful discussions prior to the current interim hearing listing on 4 March 2011 at 2:30pm (“the interim hearing”).
B.The parties have liberty to approach Chambers in the event that they wish to vacate the interim hearing and seek a further listing after that date in light of the interim decision given by the Court today.
IT IS NOTED that publication of this judgment under the pseudonym Steele & Steele is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 5370 of 2010
| MS STEELE |
Applicant
And
| MR STEELE |
Respondent
REASONS FOR JUDGMENT
Introduction
In this matter, the Applicant, MS STEELE (“the wife”), and the Respondent, MR STEELE (“the husband”) are in dispute in respect of the following matters:
·the enforcement of property orders made in 2000;
·the setting aside of various child support agreements entered into by the parties during the period 2000 to 2005 (as sought by the husband); and
·adult child maintenance.
The matter initially came before this Court in a duty list on
7 September 2010, and on that occasion the parties were ordered to attend a conciliation conference with a Registrar of this Court. Orders were also made by consent restraining the husband from commuting his interests with the Police Superannuation Scheme, and directing that he serve a copy of the Orders made upon the trustee of that scheme.
The matter came before Registrar McNamara on 15 November 2010 for a Conciliation Conference, but, unfortunately, the matter did not resolve. The matter returned before the Court for mention on 13 December 2010 and on that occasion the Court made orders for the filing of documents and otherwise set the matter down for an interim hearing on 10 February 2011 noting that:
“The issues of the respondent’s superannuation entitlements will be the only issue considered by the Court at the interim hearing.”
The matter duly returned for interim hearing on 10 February 2011. On that occasion the wife was represented by Mr Battley of counsel and the husband by Mr Kenny of counsel.
Issues
The discrete issue which is the subject of this interim hearing is whether paragraph 21 of the orders made by consent on 17 August 2000 in the Family Court of Australia is an enforceable order. If so, the Court will consider interim enforcement issues when the matter returns to the list on 4 March 2011. The urgency of the matter arises because of the application of New South Wales law and regulations which only provide a window of opportunity for the husband to commute his current pension benefits into a lump sum, that ‘window’ being within six months either side of the husband’s 55th birthday. The opportunity to commute thereafter arises either side of the husband’s 60th birthday.
Background
The parties married [in] 1983 and separated on 13 September 1999. There are three children of the marriage, namely: [X], born [in] 1989 (“[X]”), [Y], born [in] 1992 (“[Y]”), and [Z], born [in] 1994 (“[Z]”). On 17 August 2000, final orders in relation to both parenting and property matters were made with the consent of the parties by a Registrar of the Family Court of Australia (“the final orders”). The final orders provided, inter alia, for the children to primarily live with the wife and at certain defined times with the husband. They also provided, inter alia, for the husband for the husband to pay $80,000.00 to the wife and for the husband to retain his interest in his business.
Of direct relevance for this hearing was paragraph 21 of the final orders, which stated:
“That the Husband do all acts and things and sign all necessary documents in order to transfer to the Wife the [sic] on or after [date omitted] 2010 when he turns 55 years of age at which time the police Pension benefits received by the Husband under the Police Regulation (Superannuation) Act 1906 [sic] will be converted to a lump sum and divided equally between the parties under the Commutation provisions.”
Both parties were legally represented when the final orders were made. Clearly paragraph 21 was made before the Family Law Act 1975 (“the Act”) was amended by the Family Law Legislation Amendment (Superannuation) Act 2001 (“the superannuation amending legislation”).
The parties divorced late in the year 2000. Since the parties’ separation and divorce, the three children of the marriage have commenced residing with the husband, in the case of [X] since October 2004, according to the husband’s evidence, [Y] from November 2005 and [Z] from January 2007. All three children, according to the husband’s evidence, continue to reside with him.
The wife commenced these proceedings by her Initiating Application filed on 26 August 2010, that is, in advance of the husband turning 55 years of age on [date omitted] 2010. This Application, as stated, effectively sought the enforcement of paragraph 21 of the final orders. The wife’s application has been amended twice since its initial filing, firstly by her Amended Initiating Application filed on 6 September 2010, and secondly by her Further Amended Initiating Application filed on 24 December 2010.
Despite these amending applications, the wife is not now seeking the superannuation orders sought in those amending applications. This is because she was effectively seeking a superannuation splitting order and such order or orders would not be possible because of s.5(2) of the superannuation amending legislation. At the commencement of the interim hearing, the wife through her counsel handed up a hand-written minute of orders now sought. Those orders were as follows:
“1. That the husband direct the trustee of the Police Superannuation Scheme to commute the benefits now due to the husband;
2. Such benefits to be distributed as follows:
(i) One half to be paid to Somerville Legal to be held on Trust for the wife; and
(ii) The other half to be paid to the husband as per his directions[.]
3. If the husband, within 7 days, fails to instruct the trustees as per Order (1), the Registrar or Deputy Registrar of this Court, pursuant to section 106A[,] to execute all documents necessary to give effect to Order 1 and 2.”
The husband opposes the making of the above orders sought by the wife. The husband has been seeking the Court to summarily dismiss the wife’s amending applications because the orders sought relate to an order made prior to the superannuation changes. Given the wife’s minute, it was agreed that this interim decision would be limited to one issue and one issue only. As stated, then, this decision will only consider whether paragraph 21 of the final orders is an enforceable order. This decision will not consider the Court’s discretion as to whether it should enforce the relevant order. That is an issue which the Court can consider on the adjourned date depending on the outcome of this decision.
Consequently, the interim hearing proceeded on the basis of submissions from each party. Given the need to determine the matter on or before
[date omitted] 2011, it was not possible for the Court to offer a more lengthy hearing, and clearly not possible to allow cross-examination of the parties and the like.
Documents relied upon
In addition to the minute, the wife relies upon her affidavit affirmed on 25 August 2010 and filed on 26 August 2010.
The husband relies upon his Amended Response filed on 5 November 2010 and upon his various affidavits filed in these proceedings, including his most recent affidavit sworn on 24 January 2011 and filed on 27 January 2011. The husband’s counsel also provided the Court with written submissions. While each of the parties have also filed financial statements, strictly speaking, they were not relevant to the issue of whether paragraph 21 is a valid order and capable of enforcement.
Submissions
The wife
Mr Battley, for the wife, argued that paragraph 21 of the final orders is capable of sensible construction. To quote Mr Battley:
“It only has one meaning, and we say it simply means this: that when the husband turns 55, which he did on [date omitted] 2010, he was obliged under this order to convert his benefits from the superannuation fund into a lump sum and such was to be divided equally between the parties. This is our argument, your Honour, as the cliché says, in a nutshell.”
In other words, the order was intended to require the husband to cause his police pension to be commuted following his 55th birthday and once commuted, further cause the wife to receive 50 per cent of the lump sum. Mr Battley also submitted the following:
“In essence, I say to your Honour, the article ‘the’ in the second line is redundant, and it could be argued, your Honour that the verb ‘will’ could have been more eloquently displaced or replaced by ‘is to be’, so then it would read ‘is to be converted’. This is my simple or simplistic submission, your Honour.”
Mr Battley reiterated the urgency of the Court considering the wife’s application given that the opportunity to commute the husband’s pension will be lost for some five years if it is not done by [dates omitted] 2011, that is, within six months of the husband turning 55 years of age.
The husband
Mr Kenny commenced his submissions for the husband by drawing to the Court’s attention that the wife was not pressing for the orders she had sought in either her Initiating Application filed on 26 August 2010 or her Amended Initiating Application filed on 6 September 2010, or even her Further Amended Initiating Application filed as recently as 24 December 2010. Rather, the wife was seeking orders set out in the hand-written minute provided to the Court at the commencement of the interim hearing, of which the husband had only received notice on the very day of the interim hearing. Consequently, the husband had been put to the expense of preparing his case in relation to matters not now sought by the wife. In other words, the husband’s legal representatives had made preparations to argue the issue of the lack of jurisdiction of the Family Court to make a superannuation splitting order at the time that the final orders were made, given that the final orders pre-date the superannuation amending legislation.
Mr Kenny’s written submissions deal with these arguments. Had the wife sought to press for the interim orders sought in her various applications, the husband would have pressed for summary dismissal. In his written submissions, Mr Kenny makes the following points about whether paragraph 21 of the final orders is an enforceable order. He states:
“(a) The order is ungrammatical and does not make sense on its face. The order is uncertain, it does not tell anyone what is to be done and when.
(b) It doesn’t say who is to divide moneys [sic][.]
(c) It doesn’t say how much of superannuation is to be commuted[.]
(d) It doesn’t say what commutation provisions are[.]
(e) There is confusion as to whether the ultimate obligation that seems to be attempted [sic] rests upon the trustee of the husband’s superannuation fund.
(f) A facts sheet attached to the husband’s most recent affidavit at Annexure ‘B’ indicates that at the time the orders were made it was not possible for the outcome contended by [sic] the wife to be put into effect.
(g) Order 21 does not say whether the whole of the husband’s benefits are to be converted or part thereof, the order does not say what is to be transferred to the wife because there are apparently words missing.
(h) Overall, the order is vague and uncertain as to its meaning and as to its timing. To use the terminology of the court in the RBH decision (cited hereunder) [he is referring, of course, to RBH & JIH [2005] FamCA 226], the court would have significant concerns about the orders and if in fact the wife continues to be aggrieved by an inability to rely upon this order, then she has alternative avenues possibly open to her, namely s.79A or the application to review the orders out of time. The husband does not concede that such avenues necessarily would assist the wife; however, they are clearly the more appropriate avenues and also the avenues that have been adopted where such similar circumstances have arisen in the past.
(i) If the 2000 order purports to be a splitting order in relation to the husband’s future superannuation, then the court did not have the power to make that order in August 2000. It is submitted that the order insofar as a meaning can be discerned, is purporting to confer upon the wife half interest in the husband’s superannuation or an amount of superannuation which is to be commuted at such time on or after the husband’s 55th birthday. This is in the nature of a splitting order and, again, the court had no power and it should not be enforced.
(j) It is submitted that pursuant to s.5D of the Police Regulation (Superannuation) Act 1906 if the husband does make a conversion election, the sum is to be paid to the husband’s [F] Superannuation Fund. It is submitted that if the husband is not paid the lump sum directly, it is therefore not the husband who is able to divide the moneys [sic] but rather the super fund. It is a splitting order and the court did not have the power to make it.”
So it would be fair to summarise the husband’s submissions thus:
·firstly, paragraph 21 of the final orders is not capable of sensible interpretation on its face and consequently not enforceable on that basis; and
·secondly, and in the alternative, paragraph 21 is, in effect, a superannuation splitting order which, by virtue of s.5(2) of the superannuation amending legislation, is not an order that is permissible as at the date the orders were made.
The consequence of either outcome would be that paragraph 21 is not an enforceable order.
The law
The Court has the power to enforce financial orders made under the Act. According to the decision of the Full Court of the Family Court of Australia (“the Full Court”) in Yunghanns & Ors & Yunghanns & Ors [1999] FamCA 64; (1999) 24 Fam LR 400 (“Yunghanns”), at page 435:
“It is a moot point whether in proceeding to enforce an order made under Part VIII the court is ‘exercising its powers under this Part’ or rather exercising its powers under Part XIII (‘enforcement of decrees’).”
Enforcement of orders is always a matter of discretion for the Court. There is a wealth of judicial authority that the Court should exercise its discretion against enforcement where the relevant order is unenforceable for reasons of it being vague and uncertain.
In relation to orders relevant to superannuation entitlements, the Act was radically amended by the commencement of the superannuation amending legislation that commenced on 28 December 2002. The amending provisions allowed superannuation to be treated as matrimonial property and enabled the Courts to make orders binding upon the trustees of relevant superannuation schemes.
That said, as stated in Mr Kenny’s submissions, the application of the superannuation amending legislation was not retrospective. Section 5 of the superannuation amending legislation states:
“(1) Subject to this section, the superannuation amendments apply to all marriages, including those that were dissolved before the startup 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 startup time.
(3) If a section 79 order that is in force at the startup 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.
(4) If the approval of a section 87 agreement that is in force at the startup time is later revoked on a ground specified in paragraph 87A(a), (c) or (d) of the Family Law Act, then the superannuation amendments apply to the marriage from the time the approval is revoked.
(5) Part VIIIB of the Family Law Act does not apply in relation to a financial agreement that was made before the startup time.”
There have been a number of decisions by the Family Court of Australia that have considered certain superannuation orders made prior to the commencement of the superannuation amending legislation that have found clauses to be invalid or otherwise unenforceable. This has been in the context of allowing a review of a decision of a Registrar of the Family Court to approve such orders out of time and then considering an application under s.79A of the Act. It is noteworthy that s.5(3) of the superannuation amending legislation allows for a superannuation splitting order where an order under s.79 of the Act made prior to
28 December 2002 is set aside pursuant to s.79A(1) of the Act.
Discussion
Clearly, the Court is faced with determining whether the clause is capable of clear construction and is otherwise enforceable, as submitted by the wife, or not, as submitted by the husband. It is clear to the Court that the use of the word “the” in the second line of paragraph 21, is, as the wife submits, redundant. If that had been the only issue as to the construction of paragraph 21 then the Court would move to the second question in issue, namely, whether the paragraph purports to be a superannuation splitting order in relation to the husband’s future superannuation entitlements.
However, the paragraph has other problems. The Court agrees with the husband’s submission that paragraph 21 is uncertain because it really does not tell anyone what is to be done and when. While the Court accepts that there appears to be a triggering effect on and from the husband’s 55th birthday, it is not clear that the trigger would require the husband to immediately commute his superannuation benefits upon turning 55 years of age. Indeed, there is evidence before the Court that when the final orders were made in the year 2000, the husband would not have been able to commute his pension benefits to a lump sum until the date of his retirement. Once the husband chose to commute, the entire pension had to be commuted as is made clear by the fact sheet which is annexure “B” to the husband’s affidavit filed on 27 January 2011.
The amendments made in 2006 to the Police Regulation (Superannuation) Act 1906 (NSW), now enable the husband to choose how much of his pension he wishes to commute, and more relevant to the wife’s argument, provides the opportunity to commute in the six months before and within six months after the husband turns 55 years of age. If the husband retires between the ages of 55 and 60 and does not commute any part of his pension at the time of retiring, a second opportunity to commute is provided when he turns 60 years of age. Such election to commute can be made in the six months before and within the six months following the husband turning 60. The date of effect of commutation would then be the day the member reaches the age of 60.
Consequently, there is logic in reading the clause as being triggered upon the husband retiring following his 55th birthday. The husband also submits that paragraph 21:
·firstly, does not state who is to divide the lump sum;
·secondly, does not state how much of the superannuation is to be commuted; and
·thirdly, does not state what the “Commutation provisions” are.
In relation to the issue of whether the paragraph fails to identify who is to divide the lump sum, one might assume it would have been the husband because the order is directed at requiring the husband to “do all acts and things”, and so on.
If the order is directed at the trustee of the relevant superannuation fund, that would be problematic because it would be in the nature of a superannuation splitting order.
In relation to the issue that the relevant provision of the final orders does not say how much of the husband’s pension benefits are to be commuted, the only logical way to read paragraph 21 is that the whole of the husband’s pension benefits would have to be commuted. This is consistent with the law and regulations that prevailed in respect of the husband’s benefits at the time that the final orders were entered into.
In relation to the issue of what the “Commutation provisions” are, logically this should be read in light of the relevant statute, that is the Police Regulation Superannuation Act1906 (NSW).
Conclusion
Having considered paragraph 21 of the final orders in light of the evidence and submissions, the Court finds that the paragraph is not capable of sensible interpretation and, consequently, it is not capable of enforcement on its face. That said, the Court is satisfied that the parties intended that, upon the husband’s retirement, the husband would cause his police pension to be converted to a lump sum and that a lump sum would be divided equally between the parties.
Given this decision, there is, perhaps, no necessity in retaining the interim enforcement hearing set down for 4 March 2011. The Court is willing to retain the listing of the matter to that day as a mention only and hear further submissions from the parties’ legal representatives as to whether a longer adjournment may be appropriate to facilitate negotiations between the parties.
The wife, and indeed the parties, may need to consider an application being made under s.79A of the Act. They may also need to think about the Court in which such an application should be filed.
The parties are granted liberty to approach chambers in the event that there is consent as to seeking the vacation of the listing on 4 March 2011 and setting a further listing date.
There will be Orders of the Court reflecting this decision.
The Court reserves the right to settle the reasons for this decision.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Monahan FM
Date: 22 March 2011
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