Townsend and Townsend
[2008] FMCAfam 548
•1 August 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TOWNSEND & TOWNSEND | [2008] FMCAfam 548 |
| FAMILY LAW – Property – long marriage - superannuation – relevant date of valuing superannuation – power to back-date orders – De Angelis considerations – just and equitable in overall circumstances. |
| Family Law Act 1975, ss.75 (2), (2)(a), (d), (d)(ii), (e), (g), (m), (o), 79 (4)(a) – (g), 90ME, 90MT(1)(a) Family Law Legislation Amendment (Superannuation) Act 2001 Superannuation Legislation Amendment (Family Law and Other Matters) Act 2004 (Cth) Family Law (Superannuation) Regulations 2001 |
| In the Marriage of De Angelis (2003) 30 Fam LR 304 G. Brzostowski SC, “One Pool or Two? A Distinction with a difference,” unpublished paper. | ||
| Applicant: | MS TOWNSEND | |
| Respondent: | MR TOWNSEND |
| File Number: | CAC 1353 of 2007 |
| Judgment of: | Neville FM |
| Hearing date: | 7 April 2008 |
| Date of Last Submission: | 8 April 2008 |
| Delivered at: | Canberra |
| Delivered on: | 1 August 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Brzostowski SC |
| Solicitors for the Applicant: | Dobinson Davey Clifford Simpson |
| Counsel for the Respondent: | Ms Tonkin |
| Solicitors for the Respondent: | Phelps Reid |
ORDERS
That within 14 days of the date of Orders the parties do all such acts and things and execute all such documents as may be necessary to effect a sale of the property situate at and known as Property E in the Australian Capital Territory on such terms and conditions as may be agreed between the parties and in default of agreement on the following terms:
(a)The property to be listed for sale by public auction at a reserve price agreed by the parties and in default of agreement at a reserve price fixed by the selling agent;
(b)The property to be listed with a selling agent agreed between the parties and in default of agreement by an agent appointed by the president for the time being of the Real Estate Institute of the Australian Capital Territory;
(c)The solicitor acting on the sale to be as agreed between the parties and in default of agreement, to be a solicitor appointed by the president for the time being of the Law Society of the Australian Capital Territory.
That the proceeds of sale of the property at Property E be distributed at settlement as follows:
(a)In payment of all expenses of and incidental to the sale, including Real Estate agents commission, advertising, legal fees and any necessary disbursements;
(b)In payment of any outstanding rates and taxes and other outgoings on the property;
(c)In payment to the Wife in the sum of $310,000; and
(d)The balance to be paid to the Husband.
That the Husband is entitled to be the sole legal and beneficial owner of all other property in his possession and/or control, including but not limited to:
(a)The household contents and personal items in the Husband’s possession;
(b)Any money standing to the credit of the Husband in his sole name in any bank, savings or other account; and
(c)The Husband’s superannuation entitlements
free from any interest of the Wife and the Husband shall indemnify the Wife in relation to any and all debts attached thereto.
That the Wife is entitled to be the sole legal and beneficial owner of all other property in her possession and/or control, including but not limited to:
(a)The household contents and personal items in the Wife’s possession;
(b)Any money standing to the credit of the Wife in her sole name in any bank, savings or other account;
(c)The Wife’s superannuation entitlements; and
(d)The motor vehicle in the Wife’s possession.
free from any interest of the Husband and the Wife shall indemnify the Husband in relation to any and all debts attached thereto.
Each party pay their own costs.
IT IS NOTED that publication of this judgment under the pseudonym Townsend & Townsend is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 1353 of 2007
| MS TOWNSEND |
Applicant
And
| MR TOWNSEND |
Respondent
REASONS FOR JUDGMENT
Introduction
One of Winston Churchill’s many famous speeches was given in a radio broadcast on 1st October 1939. He said: “I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma.” Without detracting from the perilous circumstances in which he made that broadcast, his words may otherwise be applied as a prophetic and apt description of the superannuation provisions of the Family Law Act 1975 (Cth) (“the Act”), and their attendant, prolix and tortuous regulations.
Lest it be thought that the Churchillian description is somewhat hyperbolic in its application to the superannuation provisions of the Act and its regulations, an experienced family law practitioner, who has written specifically on those provisions, recently described one part of them as being the subject of “a significant morass of law.” As well, commenting on judicial pronouncements on `the new superannuation regime,’ the same commentator states: “It should be something of a concern that judges of the calibre of those that sit on the Full Court of the Family Court are still at times expressing quite different views on some very fundamental premises of the new superannuation regime.”[1] Where that leaves lesser judicial mortals is, of course, anyone’s guess.
[1] G. Shoebrige, “Superannuation: Where are we at, five years on?” (2008) 13 Current Family Law 70 at pp.76 & 81.
Be that at it may, this case, in large measure, turns perhaps on the treatment of the respective superannuation interests of the parties. That is certainly the way in which the trial was run. That said, those interests are but part of the asset pool.[2] It is with due regard to each stage of the required “four step process,” and its application to the total asset pool in the light of all the relevant circumstances that the Court will determine what are the `just and equitable’ orders to be made in this case. That process has been described in many cases as the “four important steps to be taken in determining a property dispute [which] are:
(a)To identify and value the net property of the parties (usually at the date of trial);
(b)to consider the contributions of the parties within paragraphs (a) – (c) of s.79(4);
(c) to consider the s.75(2) factors; and
(d) to consider whether the order proposed is just and equitable.”[3]
[2] There was an issue in the proceedings regarding the import of likely inheritances and, therefore, whether the decision of the Full Court in In the Marriage of De Angelis (2003) 30 Fam LR 304 was directly relevant. I deal with that issue later in these reasons.
[3] This is the `four-step’ process as described in AJO & GRO (2005) ¶93-218, at p.79,619. More fulsomely, in In the Marriage of Hickey (2003) 30 Fam LR 355, the Full Court of the Family Court (Nicholson CJ, Ellis & O’Ryan JJ) said (at p.370 [39]): “First, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, the court should identify and assess the contributions of the parties within the meaning of s. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, the court should identify and assess the relevant matters referred to in s.79(4)(d), (e), (f) and (g), (the other factors) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances.”
Notwithstanding the fact that the case was conducted essentially on the basis of the superannuation issue, I am conscious of the injunction of the Full Court in Hickey, that: “Section 79 … requires the court to consider the whole of the property of the parties, however and wherever acquired, notwithstanding that the parties may only seek an alteration of interest in some of that property.”[4]
[4] In the Marriage of Hickey (2003) 30 Fam LR 355 at p.370 [40].
These reasons proceed in seven stages, which include the `famous four’ to which I have just referred. The “four steps” are preceded by a general factual background, to which I turn at the outset. This will be followed by, firstly, an outline of the orders sought and the basic arguments in support of the respective proposals of the parties, and secondly, by a separate section dealing with the evidence of the single expert witness, Mr Peter Skinner, and the submissions of the parties arising therefrom. In the result, it may be that the concentration on the superannuation and its labyrinthine paths and options were an unnecessarily complicated focus and a rather more simple approach, as I propose, would have achieved the `just and equitable’ orders ultimately sought. And as things transpired, in her closing submissions, Counsel for Mr Townsend (Ms Tonkin) offered a more straight-forward course as one of three options. But we will get to that more unadorned route and result soon enough. It is time for the journey to begin.
Background
The following material facts are seemingly not in dispute, and are taken, by and large, from the Respondent’s Submissions.
Both parties are 57 years old. They were married in 1973 and separated on 10th February 2001. Thus the marriage was of some 28 years duration or thereabouts. There are two children of the marriage, both of whom are financially independent and over 18 years of age.
The applicant, Ms Townsend, has very recently retired from the ACT Department of [omitted], while Mr Townsend continues to work in the public service, having commenced employment there in 1979. Ms Townsend intends to continue to work, on a consultancy/ contract basis as an [omitted]. She expects that work of this kind, with a number of State and Territory Departments of Education, will lead to employment on average of 4 days per month at a rate of $100-140 per hour.[5]
[5] See Transcript (7th April 2008) pp.20-21.
Ms Townsend was employed in the public service from 1996, having undertaken, before that date, what might be described – alas too glibly – as the usual and onerous responsibilities associated with Motherhood and home-making.
There is no issue regarding Ms Townsend’s health. There is an issue regarding Mr Townsend’s well-being and its impact on his gainful employment. There was evidence before the Court, albeit not from specialists but only from his treating general practitioners, which confirmed that he suffers from “post polio syndrome.”[6] While not doubting in any way that he suffers from this syndrome, it would have been of some assistance to the Court to have a medical specialist’s more thorough-going opinion on his capacity for work – of whatever kind - into the future in the light of his obvious medical condition.
I will deal with this aspect in more detail in relation to the consideration of s.75(2)(a) of the Act.
[6] The medical reports are from Dr K (3rd March 2008) and Dr S (28th March 2008).
Orders Sought
Both parties seek orders whereby the former matrimonial home is sold and the proceeds are divided equally. It was agreed, and confirmed at the outset of the hearing, that (a) the value of the former matrimonial home is $500,000.00,[7] and, (b) the contributions of the parties, from the commencement of the relationship until separation in 2001, were equal.[8] It also seems to have been agreed that a parcel of Tabcorp shares, otherwise not identified, be held in trust for [K], one of the now adult children of the relationship.[9]
[7] The agreement regarding the value of the property of course obviates the need to embark on an exercise to determine its value in accordance with established principle, such as set out by the High Court in Mallet v Mallet (1984) 156 CLR 605, and more recently (albeit in a non-family law context) in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 242 ALR 383.
[8] In relation to the agreed value, see Transcript (7th April 2008) p.10; in relation to the equality of contributions for the period noted, see Transcript (7th & 8thApril 2008) p.13, 78 & 94 respectively.
[9] See Transcript (8th April 2008) p.93.
Both parties also seek orders whereby each is entitled to all other property in their possession and or control, including moneys in bank accounts and, subject to one specific order sought by the applicant wife Ms Townsend, their respective superannuation entitlements.
The one specific order sought by Ms Townsend relating to superannuation, around which the hearing essentially was conducted, is as follows:
That in accordance with Section 90MT(1)(a) of the Family Law Act (1975) (“the Act”), whenever a splittable payment within the meaning of Section 90ME of the Act becomes payable to or on behalf of the respondent husband from his interest in the Commonwealth Superannuation Scheme (CSS), the applicant wife is entitled to be paid by the Trustee of the CSS the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $181,833 and there is a corresponding reduction in the entitlement the husband would have had but for these orders.
Contours of the Argument & Other Things:
Submissions from Counsel
Mr Brzostowski, Senior Counsel for the applicant, put his oral submissions in the following terms. Given their subtlety and complexity, and in a sense their uniqueness if not novelty, it is as well to set them out at some length directly from the transcript. I will do the same in relation to the succinct opening submission of Counsel for the respondent, Ms Tonkin, supplemented by submissions at the close of the trial, which in their own way had a significant refinement and nuance as well. I should add that there was a facility and directness of the three options offered or proposed by Ms Tonkin in her closing submissions, which for my part, was of particular assistance.[10] Put another way, Mr Brzostowski’s typically erudite submissions could be regarded as presenting a more unitary approach whereby the Court was encouraged to proceed [solely] (a) so as to deal only with and make orders exclusively in relation to the superannuation, and (b) that an adjustment should be made with respect to the superannuation in favour of the wife, Ms Townsend.
[10] See Transcript (8th April 2008) p.97.
The Transcript records the following from Mr Brzostowski’s opening submissions:
But the real question then comes to superannuation. My client has sought at all times that the tangibles would be divided equally and she seeks to achieve an equal division of the superannuation benefits as they stood as at date of separation which we can take to be 30 June 2001. That is not actually the date of separation, that’s close to that and we have calculations which are close to that date, 30 June 2001.
The way the trustee of the CSS scheme because both members are – both parties are members of the CSS, and both members are - both parties are also members of AGEST, which is the current embodiment, or the new embodiment, of the Australian Government Employees Superannuation Trust. The important thing is, therefore, for your Honour to decide whether your Honour will look at today’s value of the parties’ superannuation benefits and arrive at a figure that each party may owe the other by way of base amount.
And then there would be a net off from that and then basically you would be making an order against one of the funds - one of the accounts, there’s no point having both having splittable sums taken out and allocated as base amounts to the other, or whether your Honour would proceed on the basis of the 2001 figures.
What I have done, if I may hand up at this juncture, is extracted information from Mr Peter Skinner’s calculations and in one document just summarises [sic] the position. At the very top right hand corner is a very short summary, 2008, it’s the adjusted base amount would be 181,835. If you look at the 2001 figures it would be 125,769. It is important to bear in mind that when we’re talking about the 2001 figures it would be necessary to set the operative time back as at 30 June 2001.
And your Honour might ask the question, can that be done?[11]
[11] Transcript (7th April 2008) pp.1 & 2.
Later in his “opening”, Mr Brzostowski said:
… it’s important to get two things straight, one is the amount which I’m talking about, and secondly the operative time. Because the worst result would be a 2001 amount but at a 2008 operative time, that would be totally wrong.
And so of course vice versa, if one was to try and work on 2008 figures and somehow backdate that to 2001 would also be an error. So I would be recommending that that’s the way your Honour would take and that’s consistent with my client’s application and the orders sought by her, that we achieve that equality. So equality of the capital values of the superannuation components.[12]
[12] Transcript (7th April 2008) p.5.
Later still in his opening, Mr Brzostowski commented on the attractiveness of making the operative date for the purposes of a splitting order 2001. He said: “…the 2001 figure has another appeal then because you are categorically clear about a level, we have no contamination brought about because of some other contributions or because one person has had an acceleration in his or her salary and therefore producing an increase in the value of CSS benefits.”[13] He maintained his concern as being to ensure that there was “no contamination with post separation contributions.”
[13] Transcript (7th April 2008) p.6.
The central legal issue, Mr Brzowstoski contended, was whether the Court could make an order that was back-dated to 30th June 2001.
That is: could the Court make an order in relation to a date before the commencement of significant amendments to the relevant superannuation legislation in 2002 and again in 2004?[14] Unsurprisingly, on the basis of the trilogy of Full Court decisions in C & C, Wilkinson & Wilkinson, and Stevens & Stevens,[15] he submitted that there was no judicial obstacle to the course he proposed.[14] See the Family Law Legislation Amendment (Superannuation) Act 2001 and the Superannuation Legislation Amendment (Family Law and Other Matters) Act (Cth) 2004, as well as the Family Law (Superannuation) Regulations2001, which commenced on 28th December 2002, having been published in the Commonwealth of Australia Gazette on 15th October 2001.
[15] C v C (2005) FLC ¶93-220; Stevens and Stevens (2005) FLC ¶93-246; Wilkinson and Wilkinson (2005) FLC ¶93-222.
As I read those cases, I am not as sure as Mr Brzostowski that they are as strongly supportive of, or as unequivocal in relation to, his contention as he would wish. I say that mainly because the Full Court indicated, for example, in Wilkinson (at [62]) that they “did not have the benefit of full argument on this issue [of the operative date of a splitting order].” In the same place, the Full Court continued: “Having considered the matter we are of the view, at least as presently advised, that the operative date or time should as a general rule be the date of valuation of the interest….” (Emphasis added.)
For my part, I do not read the later decision in Stevens, particularly at [47], as shedding any greater luminosity or clarity on the issue, if for no other reason than it was not necessary to do so for the purposes of the appeal there under consideration. In any event, given the manner in which I have determined this matter, I need not make any further observations regarding the operative date for a splitting order, especially in circumstances where it is sought to be back-dated to such a significant degree. Even without Mr Skinner’s cautious advice (which was, in a number of crucial respects, questioned by
Mr Bzsostowski in his closing submissions - noted below), which suggested that a post-dated order is at least questionable, if not more, I have some reservation about the course proposed by the applicant. However, because of the avenue I have decided to take, I do not need to determine the aptness of that particular order. Nor is it necessary to determine the power of a Court to make a post-dated order, especially one which pre-dates the enactment of critical legislative and regulatory provisions.In my view, the submissions of both Counsel were central – even more so than usual - in determining the just and equitable resolution of this matter. I will deal firstly with Mr Brzostowski’s submissions. First, he noted (and not for the first time) that the difference in superannuation between the parties was, in essence, due to Ms Townsend being in unpaid employment during the time when she was performing the indispensable, inestimable but financially unremunerative tasks demanded of and associated with motherhood and homemaking.
He put it in terms of putting her career – and therefore her superannuation contributions - `on hold’ because of her parenting responsibilities. Secondly, after accenting the importance of the `capital value, that is the Family Law Value’ and not “the pension that dribbles out at the end of it but the values,” he said that the issue was that “there has been an emphasis on value, not an emphasis on trying to achieve some kind of final equality of pensions.”[16][16] Transcript (8th April 2008) pp.78, 79 & 83-84.
For her part, Ms Tonkin put her “opening” most succinctly, thus: “Your Honour has a summary of argument and in that your Honour will see that we would say that the husband has on his side such compelling 75(2) factors that no adjustment would be warranted in respect of superannuation of the type sought by the wife. And that basically is our case.”[17]
[17] Transcript (7th April 2008) p.11.
Ms Tonkin’s more expansive and nuanced approach was summarised in the following submission at the conclusion of the trial. She said:
So, we would say your Honour is in a good position, whether your Honour agrees with the husband's position in terms of there being no adjustment under superannuation or whether your Honour chooses to follow my approach that some adjustment is warranted under section 75(2) and a base amount that your Honour believes is just and equitable in the circumstances be transferred or whether your Honour would adjust the parties interests out of the non superannuation assets - it is a matter for your Honour.[18]
[18] Transcript (8th April 2008) p.97. Earlier, Ms Tonkin had put an alternative argument on the superannuation issue, submitting that I might consider that “5 per cent is an adjustment and 5 per cent comes across at a base amount of $50,000 from the husband’s interest being transferred to the wife.” Ibid. Of course, Mr Brzostowski followed Ms Tonkin and therefore had the opportunity to comment on any of Ms Tonkin’s closing submissions. I note later in these reasons – either directly or by reference to the relevant section of the Transcript - the issues that he addressed “in reply” at the conclusion of the trial.
On what might be described as the De Angelis issue concerning likely inheritances, the following may at least be said. First, there was little in the way of direct evidence regarding the respective entitlements of each party under their parents’ wills. The wills were not in evidence. Secondly, I accept Mr Brzostowski’s general and discreet description (but in my more brusque words below) of such a consideration as less than tasteless. At the same time, in the circumstances of the case where Ms Townsend’s very elderly Mother has advanced dementia, I understand Ms Tonkin’s somewhat delicate submission that the prospect of an inheritance (along with other siblings) is put “no higher than a financial resource.”[19]
[19] Transcript (8th April 2008) p.96.
For my part, I do not propose taking any prospective inheritance into account in these proceedings, principally because the evidence is so limited. As well, in my view, unless there is such an extraordinary sum of money involved, and the circumstances are so significant as to require a court – as a matter of equity and justice, not to mention general taste and common sense - to consider an inheritance, such matters should be left to the affairs of each family and its members.
To be making orders under the provisions of the Family Law Act that deal with property as between spouses, where the focus is essentially on spousal contributions of varying and various kinds, making orders on the basis of a possible inheritance borders on the odious, if not the ghoulish. Without intending or wishing any offence at all, a court should give no encouragement – real or imaginary – to circling vultures, benign or otherwise. Fortunately, there are no such beasts in this case.
Single Expert Evidence: Mr Skinner
Mr Skinner provided the Court with an abundance of evidence, and in different forms. Having been a former Deputy Commissioner of ComSuper for more than a decade, his evidence was comprehensive, to say the least. First, there was a detailed affidavit, sworn 28th March 2008. Although the text of it is brief, its annexures run to 95 pages. Secondly, he provided a letter, dated 6 April 2008 (Exhibit “C”) in which he presented further detailed calculations regarding various outcomes based on certain proposed “splitting orders.” Still further, he furnished two additional written reports, both dated 7 April 2008 (Exhibits “N” & “O”). Finally, he gave somewhat brief oral evidence in the course of the hearing.
I propose simply highlighting some of the more significant points made by Mr Skinner. One of the objects of this course is to facilitate something of a comparison between the superannuation order sought by the applicant and the orders that I propose which are, in my view, a more expeditious means to achieving the ends sought by the parties.
Annexure “M” to Mr Skinner’s affidavit of 28th March 2008 provides the superannuation valuations for Mr Townsend for three dates. Those dates and valuations are:
30th June 2001 $423,891.43
20th September 2006 $660,695.50
22nd February 2008 $748,213.48
Annexure “N” of the same affidavit does the same in relation to the superannuation valuations for Ms Townsend, and for the same dates, thus:
30th June 2001 $172,352,47
20th September 2006 $396,811.73
22nd February 2008 $482,268.32
The disparity between the valuations of the parties as at February 2008 is patent: $748,213.48 (husband), and $482,268.32 (wife).
In Exhibit “C”, Mr Skinner provided a large number of calculations regarding proposed splitting of superannuation interests, which were predicated upon a base amount of $307,042 from the husband’s CSS interest being split to the wife, a base amount of $125,210 from the wife’s CSS interest being split in favour of the husband, and a netting off proposal so that Ms Townsend retained the entirety of her CSS interest as well as a balance of $181,832.00 from Mr Townsend, that figure being the difference between the respective base amounts. Later in that letter (dated 6 April 2008, p.4) Mr Skinner referred to the greater growth in the wife’s superannuation: “[the] wife’s benefit grows faster than the husband’s CSS benefit as his CSS period of service exceeds 20 years and hers does not. The CSS is a front end loaded scheme where service in the first 20 years is rewarded almost 10 times more than service after 20 years.”
Shortly before and even during the course of the trial, Mr Skinner was asked to provide further calculations in the light of different scenarios. Accordingly, he wrote to Ms Reid (solicitor for the husband) on
7th April 2008 (Exhibit “N”), which set out the operative date for a splitting order of 22nd February 2008 and calculations predicated on there being determined a base amount that would equalise the pension and lump sum for both parties. In that letter (p.2) he stated the objective as follows: “To determine a base amount that would result in a pension split to the wife of $2,114.63 and a lump sum of $50,289.00. In percentage terms, this implies that the wife receives 7.7% of the husband’s pension and 23.03% of the husband’s lump sum.” In the following paragraph, Mr Skinner observed: “The fact that the husband has about $100,000 more in his lump sum is the single largest cause of the difficulties of this exercise.” He then explained at some length the difficulties with the calculations sought of him, concluding that it was not possible “to derive a single base amount that will achieve the objective. The best that can be done is to derive a base amount that best fits.”Exhibit “O” is a short letter from Mr Skinner to Mr Davey (solicitor for the wife), also dated 7th April, in which he commented that he was not aware of any case “where ComSuper has netted off one base amount against another where both parties are members of the same scheme.” He also said that there “is no legislative provision that would allow netting off to occur.” He conceded, however, that there “is no impediment to netting off to derive a singular base amount.”
In the course of his oral evidence, Mr Skinner referred to the practice relating to post-dated orders, which he noted “has always been a troublesome one for the administrator of ComSuper.”[20] After outlining the practice of ComSuper in relation to such orders he commented that “they [ComSuper] would not entertain any post-dated order that had an operative date before the operations [sic] of Part [VIII] of the Family Law Act which was 29 December 2002.”[21] Mr Skinner recalled, but not with great clarity, that during his time at ComSuper an advice was received in relation to these matters.[22] It will be recalled that the Court was urged by Senior Counsel for the applicant wife to make orders with an operative date as the date of separation – in February 2001 – and that the Court certainly had the authority to make such an order.
[20] Transcript (7th April 2008) p.66.
[21] Ibid.
[22] Ibid. I intend no criticism of Mr Skinner in relation to his lack of recollection on this point.
A final matter needs to be noted here in relation to Mr Skinner’s evidence, particularly to the later calculations to which I have referred earlier – Exhibits “N” and “O.” In the course of his submissions,
Mr Brzostowski SC expressed significant concern if not alarm about Mr Skinner’s calculations. He contended that there were serious questions about the methodology adopted by Mr Skinner such that they were “totally strange to the methods and factors that have been approved by the Minister in 2004.”[23] He submitted further that the methodology employed by the single expert was such that the Court could not be satisfied as to its correctness. He said that, among other things, the task sought from Mr Skinner was too complex and “was just not ever meant to be part of the exercise in these types of super splitting cases.”[24] He concluded this part of his submissions by contending forcefully that Mr Skinner’s approach and resulting calculations `were contrary to C v C.’[23] Transcript (8th April 2008) p.74.
[24] Ibid. Later the following exchange is recorded:
After submitting that the later labours of Mr Skinner were contrary to the Full Court’s decision in C v C, Mr Brzostowski said:
We know that if your Honour proceeds on the basis of the [C v C] instructions one would end up having a situation where if the husband worked for another three years he will end up catching up the wife insofar as his own pension stream will increase to the point where it will equal the wife’s in any event, even if a superannuation split order is made as was thought [sic] and as part of Mr Skinner’s earlier calculations.[25]
I will come back to these observations, which I largely accept, shortly.
[25] Transcript (8th April 2008) pp.74 & 75.
I am conscious of the two views expressed in the Full Court judgment in C regarding the importance of delineating and treating superannuation, on the one hand, either as “property” (as defined in s.4(1) of the Act and for the purposes of “the first step”) as a matter of judicial discretion according to the Full Court’s indicia or as a “another species of asset”,[26] or on the other hand always as “property”: the so-called “two pool” approach.[27] From what has already been said in relation to superannuation, and what is set out in paragraphs 26 and 27 above, I have provided an overview of the issues regarding superannuation and the respective pools of superannuation assets of the parties sufficient to enable the parties and those advising them, as well as any other interested person, to readily see what is going on and what is involved. As stated on a number of occasions, the issue concerns how Ms Townsend’s superannuation entitlements have been affected by her being out of the paid workforce during the time that she was occupied full time as Mother of [N] and [K], and as homemaker of and for the Townsend family.
[26] See C v C at [61 & 62] per Bryant CJ, Finn and Coleman JJ.
[27] See C v C at [75, 99 & 100] per Warnick J; [150-168] per O’Ryan J. See also the later Full Court decisions in M v M (2008) 37 Fam LR 150 at pp.170 ff. [94 ff.] and Pera & Pera [2008] FamFAFC 87 at [33] ff.
In my view, in accordance with the Full Court authorities of C v C, Ilett and Ilett and Hickey,[28] the answer to the superannuation issue must be determined in the light of the just and equitable consideration of the whole of the property of the parties and their respective contributions in accordance with s.79 and s.75(2). Having outlined their respective CSS superannuation assets, I turn to the remainder of the “pool,” which comprises AGEST superannuation and other assets. I should also note, as the summary table makes plain, there are no liabilities to speak of.
[28] Respectively, see C v C at [62], Ilett at [27 ff.], Hickey at [40]. See also M v M at [94-108].
The AGEST superannuation funds for each party, as at June 2007, are $53,000 (wife) and $18,600 (husband). For ease of reference I will include all superannuation assets referred to above (pars.28, 29 & 38) in the list below.
The asset pool of the parties is as follows:
JointWife Husband
Property E$500,000
Hyundai car $6,000
Toyota car $13,000
Telstra shares $4,000
IAG shares$4,300
NAB shares $1,623
St George Bank $1,213
Credit Union E$13,000
AGEST$53,000 $18,600
CSS $482,268 $748,213
$544,104 $801,113
On the above figures, the total asset pool is $1,845,217.
Mr Townsend’s Evidence
Before leaving the discussion of assets and `the contours of the arguments,’ two final matters should be noted. First, Mr Townsend’s presentation and detail of his financial affairs was less than fulsome. He confirmed in evidence that (a) he had not filed a tax return for three years (2005, 2006 & 2007) and (b) he had only estimated the amount of capital gains tax he owes on the sale of a home unit in the Canberra suburb of [X]. He said that he was reliant on his sister, and her accountant, for advice regarding capital gains tax. He also seemed to agree with Mr Brzostowski that he had over-estimated his CSS contributions somewhat, and similarly agreed with a question mark over his weekly (or was that fortnightly?!) car loan payments, and the accuracy of his figures regarding his credit card set out in his Financial Statement.[29]
[29] See Transcript (7th April 2008) pp.42-57. I need not canvass a couple of other financial irregularities that were the subject of his cross-examination. They too are recorded in the Transcript reference given.
For all of that, I did not take Mr Townsend to be engaged in some orchestrated and elaborate plan either to deny the Treasury of funds (once assessed) or to deceive the Court. Mr Townsend was at least careless (to put it somewhat charitably, rather than deliberate negligence or worse) in the preparation of Financial Statements. While serious, it is not a capital offence. It was also a less than helpful exercise in assisting the Court, not to mention Ms Townsend and her legal advisers, in providing – as he was required to do under oath or affirmation – an incomplete and, in a number of respects, inaccurate account of his financial affairs.
An Occupation Fee?
The second matter to mention is a tad more complex, although the impact on the ultimate result, it has to be said, is negligible at best.
It concerns whether I should impose or consider as relevant an occupation fee in the circumstances now to be briefly outlined.
The argument, shortly stated, is that because the wife remained in the former matrimonial home on a so-called “rent-free” basis for a significant time after separation in 2001, and which thereby enabled her to salary sacrifice more of her income into her superannuation, some accounting should be made or account taken of that.[30]
[30] See, for example, Ms Tonkin’s closing submissions, Transcript (8th April 2008) p.94.
For his part, Mr Brzostowski, submitted that, on the authority of decisions like Biviano v Natoli,[31] in order for such a fee to apply there must be some formal “ouster” from the property. Because that was not the case here, he submitted, there was no basis for making such a claim.
[31] (1998) 43 NSWLR 695 (NSW Court of Appeal).
Given the respective living situations of both parties – post separation – where Mr Townsend lived with his sister and paid her an agreed weekly amount for outgoings, while Ms Townsend lived in the former matrimonial home and obviously paid all out-goings in relation to it, in my view, no occupation fee arises. I need say nothing further on this point.
Having identified the property and its values, including the superannuation, I return to the well-trodden path of the remaining three steps concerning “contributions” under s.79(4), the “s.75(2) factors”, and finally, the “just and equitable” order. It may be noted immediately that these steps need not occupy a large amount of time and energy because of (i) the agreement of the parties in relation to a number of matters, (ii) the issues for consideration are quite limited in scope, and (iii) the extensive treatment already in these reasons of the primary issue in dispute – the superannuation. In my view, the remaining issues may be confined to (a) the impact on her superannuation of Ms Townsend’s time as Mother and homemaker, and (b) Mr Townsend’s health and consequent income earning capacity.
Contributions & s.79(4) of the Act
I have already recorded that for all practical purposes, there were no financial contributions of any of the parties at the commencement of the marital relationship. Similarly, it was agreed (also previously noted) that the contributions of the parties, up to the time of separation, were equal.
Formally, the “contribution” of Ms Townsend as parent and homemaker falls for consideration under s.79(4)(c) of the Act.
As already stated, the parties married in September 1973. At that time, they were both working. In 1974, Mr Townsend commenced employment in the public service. Between 1976 and 1978, the couple travelled overseas, having purchased a house in joint names a few years earlier, in 1974. In 1979, Mr Townsend (re)commenced employment in the public service, while Ms Townsend began full time university studies. Their first child, [N], was born in 1980.
Ms Townsend continued her studies part-time, and continued to do so essentially until the birth of their second child, [K], in 1982.
In 1985, Ms Townsend ran a [omitted] business from home (for which no details were provided), and later that year (November) she also undertook part-time work with the Australian Bureau of Statistics.
In 1989, she commenced work, seemingly part-time so as to enable her to care for the children after school, as an administrative assistant at a senior secondary school until 1994. She worked then at a lower level public service position (ASO2) for one year, before commencing full-time employment in 1996 with the ACT Department of [omitted].
On the basis of this narrative of Ms Townsend’s employment history, which is taken essentially from Mr Brzostowski’s “Summary of Argument on Behalf of Wife,” it is clear that she commenced full-time employment in either 1995 or 1996. In submissions, Mr Brzostowski submitted that Ms Townsend effectively put her professional career on hold until 1985, a date he repeated on a number of occasions in his closing submissions.[32] If this date was accepted, the youngest child would only have been 3 years old, and therefore, at an age in which it is hardly possible to say, as did Mr Brzostowski in his written submissions, that Ms Townsend “had completed her role as mother and homemaker.” As outlined, the evidence is that Ms Townsend undertook only part-time employment until 1995/1996, precisely so as to be the primary carer and home-maker. Indeed, the chronologies of both Counsel confirm that Ms Townsend did not resume full-time paid employment until 1995/1996. For the purposes of these reasons, I take this to be the correct date, which fits more credibly and accurately with the remainder of the submissions about the lengthy duration of a professional career “put on hold.”
[32] See, for example, Transcript (8th April 2008) pp.78 & 83. Mr Brzostowski’s written submissions also curiously refer to 1985.
Although there was clearly some paid employment during the years before 1996, it could not be regarded as allowing any, or any substantial accumulation of superannuation benefits. Doubtless too there would have been little or no consideration of such things during that time because Mr Townsend was in full-time employment and there would doubtless have been the natural expectation that his superannuation would have been accumulating for the benefit of the family, and particularly Ms Townsend.
Ms Townsend’s professional career was put on hold for just over half the duration of the marriage. That said, doubtless there were significant non-monetary rewards from that period which flowed from her time with the children and the family more generally. Such matters are, quite properly, beyond arithmetic and monetary calculation. In my view, given the significant period in question in which Ms Townsend was essentially the primary homemaker and carer of the children, a significant adjustment should be made in favour of Ms Townsend under s.79(4)(c) of the Act. That said, there must also be some regard to the parenting responsibilities undertaken by Mr Townsend and that Ms Townsend also had some gainful employment during those 16 years.
Section 75(2) Factors
I have previously indicated that the principal consideration here is
Mr Townsend’s health, a factor under s.75(2)(a). There is no dispute that he suffers from “post polio syndrome.” Two medical reports were admitted into evidence, both from general practitioners: Exhibit “B.”
Dr K’s report states baldly: “[Mr Townsend] has a number of health problems of serious concern. They are hypertension, non insulin dependant diabetes mellitis, hyperlipidaemia and post polio syndrome, all of which are likely to cause major health problems in the future, impairing his capacity to work.” Unfortunately, it goes no further.Dr S’s report, dated 28th March 2008, is more expansive, on a number of fronts, but still not completely helpful on others. For example, Dr S states: “Mr Townsend is an alert, intelligent man with obvious limp and severe atrophy of his left arm. Grip strength right hand = 40kg, grip strength left hand = 4kg (7kg of grip is generally needed to open a door). The left forearm and arm are markedly deformed by polio.
The left leg is considerably wasted compared to the normal right limb. There is reduction in strength of approximately 60% in all of the left leg muscles.” Most of these things were manifest in the course of his evidence during the trial.
On Mr Townsend’s prognosis, Dr S says: “The ultimate prognosis is that he will become increasingly disabled by his non-functioning left side, increasing the burden on his right side and therefore risk accelerated degeneration of the axial skeleton due to unequal forces.”
Dr S concludes his report with the following comments entitled “Employability”:
In my opinion Mr Townsend will be unable to work for more than the next 2-3 years as a result of previous progressive poliomyelitis affecting the left side of his body. He is developing a reactive depression as a result of his rapidly failing health and strength. He will have the equivalence of a dense left sided stroke within 2-3 years an [sic] will require assistance for activities of daily living. There is no treatment for his polio and post polio syndrome and, thus his outlook is grim.
In evidence, Mr Townsend said that he could no longer play volleyball. But neither he, nor obviously Dr S, explained how the post polio syndrome impacts now, or for the immediate future, on his current employment in the public service. Given that he has been so employed for a long time, presumably the Department for which he works has in place both policies and practices which facilitate persons with differing disabilities to be gainfully employed. And when Dr S says unqualifiedly that Mr Townsend “will be unable to work for more than the next three years,” it gives no assistance as to whether it is intended to apply to every kind of employment, including his current work, for which “grip strength” is not necessarily an essential condition.
There was no other medical evidence before the Court. It therefore stands unchallenged, but in my view it must be qualified somewhat for the reasons and concerns just expressed. It was also submitted by
Mr Brzostowski, and not challenged, that if Mr Townsend works for at least three years, his pension will be equal to that of Ms Townsend. That submission was predicated on the basis that orders were made after the pension split as proposed by the wife. In any event, due regard must be given to Mr Townsend’s obvious health situation and an appropriate adjustment will need to be made in his favour, subject to the qualifications I have mentioned. An adjustment in Mr Townsend’s favour will balance, somewhat, the larger adjustment that would otherwise flow in favour of his former spouse.
At the trial, Ms Townsend provided evidence of a recent loan approval from the Colonial Commonwealth Bank (Exhibit “F”) to enable her to purchase a residence at [P], on the far north coast of New South Wales. I took this evidence less to confirm her ability to service the loan of $435,799.00 but more so to reinforce the fact (which was not contested) that she was moving to be much closer to her very elderly Mother, who suffers from advanced dementia, and who resides in a nursing home, which is for most practical purposes just across the border in Queensland. That said, I do not take Ms Townsend’s move, and the perfectly apt motivation behind it, as warranting any adjustment under s.75(2)(d)(ii), (e), (g) or (o).
In my view, the circumstances of the case do not otherwise attract any other part of s.75(2).[33]
[33] During Mr Townsend’s cross-examination, there was a suggestion – but not very much more – that a longer term relationship, including a period of co-habitation, between Mr Townsend and Ms F, would resume once the current proceedings were concluded. Mr Townsend did not agree that co-habitation would necessarily be resumed. See Transcript (7th April 2008) p.47. In such circumstances, there is insufficient evidence to have regard to s.75(2)(m).
Conclusion
In the course of his closing submissions, Mr Brzostowski SC said: “In my respectful submission what is essential is for there to be an outcome which recognises in justice and equity what have been contributions.”[34] With respect, I agree.
[34] Transcript (8th April, 2008) p.84.
Given the difficulties, complexities and especially the question marks that attend the evidence of the single expert regarding the superannuation calculations, I propose, firstly, that each party keep their respective superannuation entitlements intact and untouched by these orders. In an extra-curricula piece of written (and presumably spoken) advocacy,
Mr Brzostowski suggested that “adopting a “splitting” philosophy would seem to minimise the risk of injustice in those cases where a party does not fit the actuarial model.”[35] In pursuing the course I have chosen, and given that, in a manner of speaking there are difficulties for both parties `fitting any relevant actuarial model,’ it is unnecessary to articulate any “splitting philosophy” in this case.[35] G. Brzostowski SC, “One Pool or Two? A Distinction with a difference,” on file with the author.
Secondly, I have had general regard to s.75(2)(o), but do not need to make any formal findings arising out of its application to (i)
Ms Townsend’s [likely greater] income-earning capacity in her post-retirement/consultancy life, or (ii) Mr Townsend’s [possible] renewed relationship/cohabitation with Ms F, or (iii) his capacity to remain employed to some significant degree in the public service in the event that his post polio syndrome does deteriorate significantly. In passing, I note that there was never any discussion during the trial about the prospect of Mr Townsend becoming entitled to any form of disability pension or other entitlement as a result of his medical condition(s).In the result, I propose to follow Ms Tonkin’s suggested `third way,’ which is to “adjust the parties’ interests out of the non superannuation assets.”[36] The asset that I will use for this purpose is the net proceeds of sale of the former matrimonial home, which has an agreed value of $500,000.00.
[36] Transcript (8th April 2008) p.97.
I noted earlier the following valuations of the parties’ superannuation interests as at February 2008: $748,213.48 (husband), and $482,268.32 (wife). I have also noted the health and [parenting] contribution factors, the former favouring Mr Townsend and the latter favouring
Ms Townsend. In the light of those adjustments, there should be a not insignificant adjustment to Ms Townsend under s.79(4)(c), and a lesser adjustment, the other way, in favour of Mr Townsend in relation to s.75(2)(a). In my view, there should be a net adjustment in favour of Ms Townsend of 12% in relation to the proceeds of sale of the former matrimonial home.Beginning from the agreed base of the parties that the proceeds of sale of the residence be split equally, a 12% adjustment in favour of the wife would give her 62% of those proceeds, resulting in the sum of $310,000, which sum is to be paid out of the net proceeds of sale. Mr Townsend would therefore receive the balance of the net proceeds of sale. Having regard to the evidence in the proceedings and the assets available to the parties, now and in the future, I regard these adjustments, and the consequential orders in relation to the other assets (which are very similar), to be just and equitable in accordance with s.79(2) of the Act.
Otherwise, I make orders as sought by the applicant wife,
Ms Townsend, which in large measure mirror those sought by the respondent, Mr Townsend.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Neville FM
Associate: Renee Davidson
Date: 1st August 2008
… one can’t simply fix something as complex as this, and nobody I suggest would be able to fix it in order to be [able] to explain precisely how Mr Skinner has gone about doing these things, in order to be satisfied that the concepts are all right. We are talking about concepts here, not just a calculator and a piece of paper and pencil.
… That is the problem, the concepts. That is what my friends have got and I am happy for it to go before your Honour because nobody can make head or tail about it and that will be part of my stance, of course.
Ibid, p.77.
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