Tremayne and Steen

[2014] FCCA 2188

FEDERAL CIRCUIT COURT OF AUSTRALIA

TREMAYNE & STEEN [2014] FCCA 2188

Catchwords:
FAMILY LAW – Property.

Legislation:

Family Law Act 1975, ss.4AA(2), 79(1), 79(2), 75(2), 90SM(1), 90SM(3), 90SF(3)

Benenke v Benenke (1996) FLC 92-698
Bevan & Bevan (2013) FLC 93-545
Calverly v Green (1984) 155 CLR 242, (1994) FLC 91-565
Ferguson & Ferguson (1978) FLC 90-500
Hirst and Rosen (1982) FLC 91-230
Rogers & Rogers (1980) FLC 90-874
Mallett v Mallett (1984) 156 CLR 605, (1984) FLC 91-507
Stanford & Stanford (2012) 247 CLR 108, (2012) FLC 93-518

Applicant: MS TREMAYNE

Respondent: MR STEEN

File Number: CAC 1329 of 2012

Judgment of: Judge Brewster

Hearing dates: 19 July 2013, 9 April 2014

Date of Last Submission: 15 August 2014

Delivered at: Canberra

Delivered on: 26 September 2014

REPRESENTATION

Counsel for the Applicant: Mr Blank

Solicitors for the Applicant: Evans Family Lawyers

Counsel for the Respondent: Mr Nicholl

Solicitors for the Respondent: Nicholl & Co

ORDERS

1. That the respondent transfer to the applicant all his interest in the property situated at Property W in the Australian Capital Territory being Property W (“the property”).

2. That upon this transfer the applicant indemnify the respondent in relation to all liabilities with respect to the property and cause the respondent to be released from any liability pursuant to the mortgage on the property.

3. That in accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of Ms Tremayne from her interest in the (omitted) Super Scheme, Mr Steen is entitled to be paid by the Trustee the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $89,940 and there is a corresponding reduction in the entitlement that Ms Tremayne would have but for these orders.

4. That within 42 days of the date of these Orders, the respondent transfer to the applicant the sum of $68,856 from the term deposit currently held with (omitted) Bank (formerly the (omitted) Credit Union).

5. That in accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of Mr Steen from his interest in the (omitted) Superannuation Scheme (“the (omitted)”), Ms Tremayne is entitled to be paid (by the Trustee of the (omitted)) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $12,560 per annum (21.74% of $57,772) and there is a corresponding reduction in the entitlement that Mr Steen would have but for these orders.

6. That the solicitor for the applicant and the solicitor for the respondent send a copy of these Orders to the superannuation funds of their respective clients and request that any objections to these Orders be advised to the court within 28 days.  These orders will not be considered to be final orders until the expiry of that period or the determination of any objection.

7. That the operative time for Orders (3) and (5) is four business days after the service of the final Orders on the Trustees for the respective schemes.

8. That it is declared that as against the applicant the respondent is the sole legal and beneficial owner of the properties known as Property M in the Australian Capital Territory and Property H in the Australian Capital Territory.

9. That as against the other each party be entitled to retain the chattels in his or her possession and the choses in action in his or her name.

IT IS NOTED that publication of this judgment under the pseudonym Tremayne & Steen is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CANBERRA

CAC 1329 of 2012

MS TREMAYNE

Applicant

And

MR STEEN

Respondent

REASONS FOR JUDGMENT

Introduction

1. This matter concerns a dispute between the parties as to property division.

2. Although the parties in this matter never married I will refer to the sections in Part VIII of the Family Law Act. These relate to property division between people who are or were married. These are more familiar to me than the provisions of Part VIIIAB which concerns property division between de facto couples. In addition the authorities to which I will refer in this judgment deal with the sections in Part VIII. There is no practical difference between those sections and those dealing with property division between de facto couples found in Part VIIIAB. The sections in Part VIII to which I will refer are sections 79(1), 79(2) and 75(2). Their equivalents in Part VIIIAB are sections 90SM(1), 90SM(3) and 90SF(3).

Background

1. The applicant is aged 54 and the respondent is aged 57.  They commenced a relationship in December 1995 and separated on 27 September 2010.  There are no children of the relationship.  The applicant has two children, X who was born on (omitted) 1984 and is therefore aged 30 and Y who was born on (omitted) 1986 and is now aged 28.

2. The parties commenced to live together fulltime when they purchased a property in joint names at Property M, in February 1999.  There is a dispute between the parties as to the extent of their cohabitation prior to the Property M purchase.  The respondent was the owner and occupant of a house in Property W when the parties commenced their relationship.  The applicant was then renting a property in (omitted).  She says that from 1996 the respondent began to spend time at her house and that from 1997 onwards the respondent was staying the majority of the time there.  The respondent denies this and says that he would only stay at the (omitted) property about two nights a week.  The applicant’s account is corroborated to an extent by a friend Ms M.  There may have been evidence available which could have corroborated the respondent’s version.  He shared his Property W property with a friend Mr A.  Mr A did not provide an affidavit.  No explanation was given as to this.  In the absence of an explanation as to why he was not on affidavit I conclude that his evidence would not have assisted the respondent.  I find that the applicant’s account is more accurate than that of the respondent and I find that he would stay the greater part of each week at the (omitted) property. 

3. The parties’ written submissions addressed the issue as to whether or not the parties were in a de facto relationship prior to their moving into the Property W property. Although it is a very marginal case, on balance I find that there was a de facto relationship in this period. Section 4AA(2) of the Act sets out the factors that may be taken into account in determining whether a de facto relationship existed. There are nine criteria set out in that section and it is not necessary that all the criteria be satisfied. Having regard to paragraph (a), which refers to the duration of the relationship, paragraph (b), which addresses the nature and extent of the parties’ common residence, paragraph (c), which deals with whether a sexual relationship existed and paragraph (i), which refers to the reputation and public aspects of the relationship I find that there was a de facto relationship in this period. However in my opinion nothing hangs on this. The respondent says, and I accept his evidence, that he “paid his way” and was not a drain on the applicant’s finances. This is not a situation where the applicant was providing him with a roof over his head as he had his property in Property M. He did not rent this property out until after the Property W property was acquired. He did not change his mailing address from Property M until after the purchase of Property W. It is clear that, apart from the respondent’s contributing to household expenses, the parties did not share any significant form of economic life until the Property W purchase. I cannot see why the fact that the respondent was spending a good deal of time at the applicant’s house in (omitted) is relevant to the division of property between them. The applicant did not contribute to the respondent’s Property M property in any significant way. As I have said there are no children of the relationship. Often one finds that one party’s care of children of a relationship allows the other party to pursue employment, earn an income and accumulate superannuation. That is not the case here. The respondent was a (occupation omitted) at the date the parties commenced their relationship and remained in the (omitted employer) during the relationship. He was in the (omitted) Superannuation Scheme before the parties commenced their relationship and he remained in that scheme during the relationship. Nothing on the part of the applicant facilitated this.

The parties’ applications

1. The applicant seeks an order that the respondent transfer the Property W property to her and pay her the sum of $348,000.  This is said to represent a half share of the total assets of the parties, including superannuation.  The respondent’s position is that he transfer the Property W property to the applicant upon payment by her to him of $37,016.78.  This is said to represent a division of the non-superannuation assets 55%/45% in his favour.  He proposes that there be a superannuation split such that superannuation accumulated during the relationship be divided equally between the parties.  He has done the necessary calculations and has drafted orders accordingly.  I have not checked either party’s calculations.  The reasons for this will become apparent.

The process to be applied

1. The Full Court of the Family Court has indicated that a four step process is normally to be applied in cases of this type. The first step is to make findings as to the pool of property. The second step involves a consideration of contributions made by or on behalf of each party. The third step, for the purpose of this case, involves a consideration of such matters as set out in section 75(2) that may be applicable. The fourth step involves taking an overview of the case to determine what outcome would be just and equitable. However, before an order can be made altering the interests of the parties in their property, it is necessary to consider section 79(2) and to determine if the applicant has satisfied the condition imposed by that section. Section 79(1) allows the court to make an order altering the interests of the parties or either of them in their property. Section 79(2) provides that “the court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”

2. In this matter I shall address the first three steps and then turn to section 79(2). I shall then address the fourth step.

The pool

Assets

(a)Property W              $530,000

(b)Property M property    $330,000

(c)Applicant's Ford (omitted) motor vehicle    $31,700

(d)Respondent's Ford (omitted)    $18,000

(e)Respondent's (omitted) Investment                  $2,489

(f)Respondent’s term deposit    $292,400

Liabilities

(g)Mortgage on (omitted)    $254,000

(h)Mortgage on Property M    $104,500

(i)Ford (omitted) lease   $29,800

(j)Applicant’s Mastercard   $17,800

1. Each party has superannuation entitlements.  The applicant is in an accumulation scheme with her employer, (employer omitted), which is valued at $180,000.  At separation its value was $129,000.  As I have indicated the respondent was a member of the (omitted employer) having joined that organisation in 1975.  The value of his superannuation at separation, valued in accordance with the Regulations, was $1,070,045.  He retired from the (omitted employer) in July 2012.  He opted to take a lump sum of $304,000 and a pension of $1,111 a week.  The balance of the $304,000 is now reflected in the term deposit. 

2. It needs to be noted that at separation the applicant’s credit card debt was about $11,000.  When it was opened the respondent’s (omitted) Deposit was $47,349. These monies were from an inheritance he received shortly after the parties separated.  He has $20,000 in savings in a (country omitted) account.  This was saved after separation and is to cover an anticipated tax liability estimated at $17,000.  Given the small surplus and the fact that the money was acquired post separation I have disregarded this.  At separation he owed $20,000 on a credit card and had a lease on the Ford (omitted) of $35,000.  Both of these have been paid out.  At separation the mortgage on the Property M property stood at $65,570 but the respondent drew down on this mortgage post separation.  It is also to be noted that the respondent is the owner of another property at Property H.   This was purchased in 2012 for the applicant’s daughter Y and her partner to live in.  It was planned that Y and her partner would eventually buy this property when they could obtain finance.  They live in the property and pay the respondent rent to cover the outgoings.  It is agreed that this property should not form part of the pool.

3. In this judgment I will divide the assets into two pools, being the non-superannuation assets in one pool and the parties’ superannuation in the other pool.

Contributions

1. As I have indicated, when the parties commenced their relationship the respondent was the owner of the Property M property.  When he lived with the applicant in the Property W property the Property M property was rented and the rent covered all outgoings.  The applicant made no significant direct or indirect contribution to the Property M property.

2. At the commencement of the relationship the respondent also owned a property in Adelaide.  This was sold in about 1996 netting about $10,000 which was applied to purchase a motor vehicle.  This is of no significance now.

3. When the parties lived in Property W the respondent’s income was always significantly greater than that of the applicant and I infer that he contributed more financially than did the applicant.

4. As I have indicated the applicant’s two children lived with the parties in the Property M property.  Most of the time this was each alternate week.  X turned 18 in 2002 and Y turned 18 in 2004.  They would have been a financial drain on the parties.  The applicant claims that she met all the costs of the children from her own income.  Whilst this may be true for items such as clothes and pocket money it would not have been true for food, use of utilities and the like.  In any event it is irrelevant.  Monies applied by the applicant towards her children would have reduced the income she had available to apply to other household costs.  When I consider the financial drain that the applicant’s children would have imposed on them I bear in mind that the respondent’s parents lived with the parties for six months and did not pay any board. 

5. The respondent applied $6,000 in savings towards the purchase of the Property M property.  The parties borrowed the balance.  They were able to do this because the respondent’s parents put up their home as security for the loan.

6. The applicant had no assets at the date that the parties commenced their relationship.  As I have indicated she contributed financially through her income but that income was always significantly less than that of the respondent.

7. In about 2004 the applicant inherited $10,000 and I infer that this was applied for family purposes.

8. I am unable to make a finding that at any stage one party’s contributions as a homemaker exceeded the contributions of the other.

9. During the time the parties lived in the Property M property they both worked on improving the property by doing such things as painting and working on the garden. I am unable to find that one party’s contributions in this respect exceeded those of the other.

10. Post separation the respondent contributed an amount of $340 a week towards the mortgage on the Property M property.  He ceased making those payments in May 2011.  The applicant has been solely responsible for those payments since that date.  However as she has the benefit of occupying the Property M property since separation I do not take this into account.

Section 75(2)

1. The respondent’s income earning potential is considerably greater than that of the applicant although he is about four years older than her.  As I have indicated he has now retired from the (omitted employer) and he receives about $58,000 a year from a pension.  He presently works in (country omitted) on a contract (occupation omitted).  He earns about $76,000 a year through this contract.  His pension is secure and he has substantial assets.

2. The applicant is in employment earning about $75,000 a year.

3. In my opinion the fact that a relationship lasted some years does not of itself require that an adjustment be made by reason of section 75(2) factors so as to give one party a share in the property of the other. It is to be noted that the only reference to the length of the relationship found in section 75(2) is paragraph (k) which refers to “the duration of the (relationship) and the extent to which it has affected the earning capacity (of a party)”. The equivalent paragraph in section 90SF(3) is also paragraph (k). The relationship has had no adverse impact on the applicant’s earning capacity.

4. If the justice of the case required it (see paragraph (o) I would take account of the respondent’s contribution as a step-parent during the relationship.  It is apparent from the purchase of the second Property H property that he took this seriously.  However in the circumstances of the case I need not have regard to this aspect of the case.

5. There are no other matters that need to be taken into account

Section 79(2)

1. As I have indicated section 79(1) of the Act gives the court the power to alter the rights of the parties in their property. In this respect the High Court in Stanford & Stanford (2012) 247 CLR 108, (2012) FLC 93-518 made it clear that normally the starting point to any property division case is to ascertain the legal and equitable interests of the parties in their property. There is no doubt that the respondent is the sole legal and beneficial owner of his Property M property. The parties are the joint and equal legal owners of the Property W property. I do not need to consider whether or not the parties’ beneficial interests in that property are the same as their legal interests. If one applied the principles set out in Calverley v Green (1984) 155 CLR 242, (1994) FLC 91-565 the respondent’s beneficial interest in the Property M property would be found to be slightly greater than that of the applicant. That is because of the application by him of $6,000 towards the deposit on the house. I do not need to explain the principles that emerge from that case. Given that the end result of this case is an adjustment in the parties’ interests in that property in favour of the applicant it would be an arid exercise to determine the precise beneficial interests of the parties in that property.

2. As I have indicated section 79(2) of the Act provides that the court should not make any order adjusting the rights of the parties in their property unless it is just and equitable to do so. The significance of this section was emphasised by the High Court in Stanford. It is only when one has passed through this gateway that consideration can be given to the extent of any alteration in the interests of the parties in their property. Passage through the section 79(2) gateway is not a formality. In Rogers & Rogers (1980) FLC 90-874 the Full Court of the Family Court quoted with approval a passage from a decision of Strauss J in Ferguson & Ferguson (1978) FLC 90-500 where at page 77,615 his Honour said:

   It seems to me, that the main purpose of sec. 79(2) is to ensure that the Court will not alter the property rights of the parties, unless it is satisfied that cogent considerations of justice require it to do so, and that if the Court decides that it is requisite to make any order under the section, the Court must be satisfied that the alterations so ordered, will go no further than the justice of the matter demands.

1. That passage from Rogers was quoted with approval in the joint judgment of Bryant CJ and Thackray J in Bevan & Bevan (2013) FLC 93-545 at page 87,231 and (semble) with approval by Kay J in Benenke v Benenke (1996) FLC 92-698 at page 83,370.

2. The extent to which a trial judge may apply the “no further” stricture referred to in Rogers and be immune from appellate intervention is starkly illustrated by the High Court case of Mallettv Mallett (1984) 156 CLR 605, (1984) FLC 91-507. That case involved a marriage of some twenty nine years. The parties started with nothing but during the course of that marriage acquired assets to the value of about $680,000. The property pool consisted of:

   (a)A jointly owned matrimonial home with a value of $241,000.

   (b)Other property in the sole name of the husband to the value of about $261,000. 

   (c)Shares owned by the husband in a family company valued at $87,000.

   (d)Shares owned by the wife in that company valued at the same amount. 

   (e)A car owned by the wife worth about $6,000. 

3. The trial judge ordered the wife should keep her car, keep the shares in her name, receive one half of the value of the matrimonial home and be paid 20% of the value of the property (excluding the shares) owned by the husband.  The net result was a split of about 60%/40% in favour of the husband, or a difference in their entitlements of about 20%.

4. The Full Court allowed an appeal by the wife and ordered an equal division of the parties’ property.  The husband appealed to the High Court.  The High Court allowed the appeal and reinstated the trial judge’s division.

5. Whilst the judgments in that case referred to section 79(2) only in passing it is plain that the principles contained in that section were central to the reasoning of the Justices. They placed great emphasis on the fact that the parties’ assets comprised, in effect, two separate pools, one being jointly owned property and the other property owned solely by one or other of them. In this respect Gibbs CJ said (CLR page 613, FLC page 79,113) as follows:

   The fact that (the trial judge) allowed the wife 50% of the value of the jointly owned property and only 20% of the value of the property owned solely by the husband in itself provided no reason for the Full Court to interfere with the order made at first instance.  (He) was quite entitled to take the view that the wife should retain the half interest to which she was legally entitled in the absence of any order made under section 79 and to decide what proportion of remaining assets she should take in addition. 

6. Along the same lines Mason J (who dissented in the end result but agreed that the Full Court’s decision should be set aside) said (CLR page 626, FLC page 79-120):

   ..… the Full Court overlooked the circumstances that in the case of the wife’s interest in the jointly owned assets which was to be transferred to the husband it was a question of valuing her half interest, whereas in the case of assets solely owned by the husband it was a question of ascertaining whether the wife should receive some pecuniary payment in respect of a contribution to those assets and if so what amount.”

7. The present case is, of course, entirely different to Mallett but the differences all favour the respondent.  This was a shorter relationship.  In Mallett there were three children of the relationship.  And in Mallett all the assets were acquired during the relationship.  It was this last matter that moved the Full Court to allow the appeal.  In this case the respondent’s Property M property, the greater part of his superannuation and his inheritance were acquired before or after the relationship.[1]

   [1] It might be thought that I am being inconsistent in relying on Mallett in this case as in a case reported as Hoffman & Hoffman [2012] FMCAfam1061 I was critical of that decision.  However in Hoffman  my comments were directed at the way the High Court dealt with the wife’s contributions.  This is not the issue that I am concerned with in this case.

8. As I have indicated section 79(2) was considered by the High Court in the case of Stanford. In their joint judgment at paragraph 39 French CJ, Hayne, Kiefel and Bell JJ, said as follows:

   …… because the power to make a property settlement is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist.

9. Along the same lines at paragraph 40 their Honours said:

   (Whether) making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised in accordance with legal principles, including the principles which the Act itself lays down. To conclude that making an order is “just and equitable” only because of and by reference to the various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

10. In this case I need not decide whether the barrier imposed by section 79(2) has been surmounted by the applicant. This is because the respondent concedes that there should be an alteration in the property interests in the Property W property. The question then arises as to the extent of the adjustment. As Rogers provides it should go no further than the justice of the matter demands.  Does the justice of the matter demand an adjustment more favourable to the applicant than that proposed by the respondent?

11. There are cogent reasons why this should be answered in the negative.  The respondent’s financial contributions (and the contribution made on his behalf via his parents) to the acquisition of the Property W property and his contributions during the time that the parties lived in that property exceeded those of the applicant.  He also contributed to the mortgage on that property after separation even though he did not have the benefit of occupying the property.  Whilst there is a considerable disparity in the parties’ assets and income there is no nexus between the respondent’s superior financial position and the relationship.  The relationship had no impact on the applicant’s earning capacity.  The fact that the respondent has assets apart from his interest in the Property W property and the fact that he earns more than does the applicant is in no way attributable to the applicant or to the relationship.  I respectfully agree with the observations of Nygh J in Hirst and Rosen (1982) FLC 91-230 where his Honour said, in effect, that a disparity in assets is not enough on its own to satisfy the section 79(2) criteria and the court is not entitled to adopt, in his Honour’s words, a “soup kitchen” approach to property division. Put another way it appears to me that to a large extent the applicant’s claim to a share of the respondent’s property over and above his interest in the Property W property could be summarised by the famous statement by George Mallory “because it’s there”. That laconic retort may have been an adequate answer to the question asked of him why he wanted to climb Mount Everest. But it does not of itself provide a sufficient reason to alter the interests of the respondent in property owned solely by him in favour of the applicant.

12. However, with some reservations, I have decided that the adjustment should be greater than that conceded by the respondent.  I have decided to make an order that he transfer to the applicant his interest in the Property W property without any payment to him.  Whilst contributions substantially favour the respondent it was a reasonably long relationship to which the applicant also made financial and non-financial contributions.  Whilst the difference in the financial circumstances of the parties cannot be attributed to the relationship it is a fact that the respondent is significantly better off than the applicant.

13. Whilst I appreciate that the question of whether to take a particular course would be just and equitable is not to be answered by considering whether a failure to take that course would be unjust and inequitable it is, in my opinion, a useful cross-check to look at the matter this way.  When the parties commenced their relationship the applicant had no assets of any significance.  She did not have the ability to acquire a property of her own.  The acquisition of the Property W property was because of her relationship with the respondent, the monetary contributions made by the respondent and the contribution made on his behalf by his parents in obtaining a mortgage over that property.  Whilst it is not possible to speculate on what would have happened if there had never been a relationship between the parties there is no reason to assume that in those circumstances the applicant would not be still renting her (omitted) property.  In the result however she emerges from the case with the whole of the equity in the Property W property.  The fact that the respondent emerges from the case in a significantly better financial position than the applicant is of itself no reason to conclude that the failure to make an order more generous to the applicant would be unjust and inequitable.

Superannuation

1. As I have indicated the respondent would consent to an order which would provide the growth in each party’s superannuation during the relationship (which he dates from the purchase of the Property W property) to be aggregated and divided equally between the parties.  This would involve him receiving a share of the applicant’s superannuation using a base amount of just under $90,000.  Her share of his superannuation would be achieved by his paying her a lump sum of $68,860 and, insofar as his pension is concerned, ordering a split using a base amount for her share of $12,560 per annum or $241 a week. 

2. As I have indicated the applicant does not seek a superannuation split and instead seeks an order that the respondent pay her a lump sum which incorporates the respondent’s superannuation. 

3. I do not propose to accede to the applicant’s application that there be no split.  There are a number of reasons for this but it is sufficient to observe that the value of the respondent’s pension is somewhat artificial in that his pension cannot be commuted into a lump sum. 

4. The applicant’s counsel in his written submissions in reply took issue with the respondent’s calculations in relation to a superannuation split.  He also pointed out that a pension of $241 a week “does little to assist (the applicant) to build her superannuation or more quickly repay her mortgage.  A lump sum payment is far more beneficial to meet either objective.”  I do not agree that a lump sum would assist the applicant to build up her superannuation.  On my calculations a pension of $241 a week is of substantial value to the applicant.  She has a statistical life expectancy of 35 years.  On my calculations, using the 3% discount tables, the present value of $241 per week capitalised into a lump sum is equivalent to about $271,000.[2] Having said that I acknowledge that the written submissions of the applicant’s counsel show that she realised that she was giving up a long term income stream for a cash amount of lesser value.  But this is by the bye.  I am not making my orders on a paternalistic basis.  The respondent should not be required to pay the applicant a lump sum which represents a share of his pension.  He would, metaphorically speaking, be required to give the applicant additional apples in return for his retaining all his pears.

   [2] By way of explanation to the parties the concept of discounting emerged from compensation law where a loss extending over a period of years had to be converted into a lump sum.  If for example a person is to be compensated for a loss of a salary of $1,000 a week, or $52,000 a year, over a period of ten years this is not accurately represented by an award of $520,000.  The reason is that this amount could be put in an interest bearing account and, if $1,000 were withdrawn each week, there would be money left over after ten years.  On the other hand inflation would likely mean that the $1,000 a week salary would have increased over time.  In 1981 the High Court in Todorovic v Waller (1981) 150 CLR 402 ruled that a discount rate of 3% should be applied. In the hypothetical case I have used one would calculate the sum that would be required which, if invested at 3% per annum, would allow $1,000 to be withdrawn each week and be exhausted after ten years. Whilst what I am about to say is an oversimplification the 3% was said to represent the “real” rate of interest, that is the difference historically between the rate of interest that could be earned in a secure fund and the rate of inflation. Whether or not this is still true is debatable given the Global Financial Crisis and the resulting low interest rates now applying. In Todorovic v Waller reference was made to interest rates of 15% being obtainable in secure investments.  If, for example, a 2% discount rate were used the figure of $271,000 would increase to $333,000.  If a zero rate were applied, which would be appropriate if one used a “snapshot” approach, it would be $439,000.

5. I have indicated that the applicant’s counsel in his written submissions took issue with the respondent’s calculations as to what would represent an equal division of the increase in the value of the parties’ superannuation entitlements during the period they lived together in the Property W property. The orders I have made adopt the respondent’s calculations. In the event that the applicant is minded to appeal my orders on the basis that there was a miscalculation I point out that there was no error (in the sense of a miscalculation) on my part. The respondent’s concession that the increase in the value of the combined superannuation should be shared favours the applicant. It has relieved me of making a decision as to whether or not, having regard to section 79(2), the applicant should have any share of the respondent’s superannuation. I am satisfied that the question of whether or not the respondent’s proposal equates to an equal division is irrelevant. That proposal, whether or not his calculations are correct, represents the upper limits of any order I might have made.

Conclusion

1. The orders I have made provide for the Property W property to be transferred to the applicant and that there be a superannuation split as conceded by the respondent.  Looking at the case as a whole I am satisfied that, in the light of the authorities to which I have referred, the end result is just and equitable.

   Costs

2. Any application for costs should be made within twenty eight days.  It may be made informally by a letter to my chambers.  A date for the hearing of that application will be allocated and orders made as to the adducing of relevant evidence.  If the parties require more time to negotiate the court should be advised and further time will be allowed.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Brewster

Associate: 

Date:  26 September 2014