Windeyer-Potter and Potter

FAMILY COURT OF AUSTRALIA

WINDEYER-POTTER & POTTER

[2009] FamCA 635

FAMILY LAW – ORDERS – Enforcement of orders

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

W&W (2005) FLC ¶93-222

APPLICANT:

Ms Windeyer-Potter

RESPONDENT:

Mr Potter

FILE NUMBER:

SYF

3072

2006

DATE DELIVERED:

17 July 2009

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Justice Fowler

HEARING DATE:

15 May 2009

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Mr Burreket

COUNSEL FOR THE RESPONDENT:

Mr Foster

Orders

IT IS DECLARED THAT:

A.Pursuant to the Orders of this Court made by consent on 14 October 2008, the trustee of the Windeyer Potter Superannuation Fund is obliged to transfer to the trustee of the C W Superannuation Fund 60% the amount held in cash on behalf of the Windeyer Potter Superannuation Fund in the Adelaide Bank as at the 3 March 2009.
B.Pursuant to the Orders of this Court made by consent on the 14 October 2008, the trustee of the Windeyer Potter Superannuation Fund is obliged to transfer to the trustee of the C W Superannuation Fund 60% the amount held in cash on behalf of the fund by Potter Holdings Pty Limited account as at the 30 March 2009.

AND IT IS ORDERED THAT:

The husband is to do all such acts and things as may be necessary to cause the trustee of the Windeyer Potter Superannuation fund to pay to the C W Superannuation Fund any amount due and not paid having regard to the declarations made.
The Trustee of the Windeyer Potter Superannuation Fund is ordered to make payments to the C W Superannuation Fund accordingly.
In the event that sums due to the C W Superannuation Fund remain unpaid within 28 days of these orders then the husband is ordered to pay or cause to be paid to the C W Superannuation Fund interest on such sums calculated from the dates referred to in orders (A) and (B) to the date of payment at the rate prescribed by the Family Law Rules 2004.
Liberty is given to each of the parties to apply on 14 days notice to the Court and the other party for orders consequential upon and to give effect to the above declarations.
Otherwise the orders of the Court made 14 October 2008 are confirmed.

IT IS NOTED that publication of this judgment under the pseudonym Windeyer-Potter and Potter is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3072 of 2006

MS WINDEYER-POTTER

Applicant

And

MR POTTER

Respondent

REASONS FOR JUDGMENT

Introduction

On 14 October 2008 the Court made an order by the consent of the parties (“the consent orders”) which they thought ended the dispute between them in relation to their applications for property settlement. However, that was not to be the case, and a dispute has now arisen as to the interpretation of those orders and whether the orders that were made or, more accurately, whether part of them have been properly carried into effect.
The orders relevantly provided for the splitting of the parties’ superannuation entitlements in a self-managed superannuation fund in a slightly unusual way. There was a splitting order in favour of the husband as to 100% of the entitlements under the scheme and then a further splitting order in favour of the wife as to 60% of the husband’s entitlement. The scheme, “The [Windeyer Potter] Superannuation Fund” (“the Superannuation Fund”), is one in the accumulation phase. The intention of the parties was that the wife’s entitlement was to be rolled over into another self-managed superannuation scheme of which she was a member, namely the “[C W] Superannuation Fund”.
The Terms of Settlement giving rise to the consent orders were signed by each of the parties and by the trustee of the fund, a company, P Pty Limited of which company the husband and the wife were directors, and a company Potter Pty Limited, which was a party to the proceedings.
The nub of the dispute is whether a correct amount of money (the fund comprising cash and shares) has been transferred to the wife’s new self-managed superannuation fund, the C W Superannuation Fund. There is no issue before the Court in relation to the equities in the Fund having been properly transferred.
The dispute raises questions as to the date for the determination of the amount of cash to be transferred to the wife’s new fund.
Firstly, it is at issue whether the relevant date is the date of some special purpose accounts prepared by the accountants under instructions from the husband and produced in March 2009, but said to be operative from October 2008, or whether it is the amounts calculated in accordance with the regime specified in the Orders.
The effect of that regime alternatively is to require the amounts payable to the wife’s superannuation fund to be determined as at the date of the transfer of those assets to the fund.
The wife’s superannuation fund received payments representing the husband’s calculation as at 20 October 2008 of the amount due to it in relation to the funds held by or on behalf of the Windeyer Potter Superannuation Fund on

3 March 2009
in the Adelaide Bank.
On or about 30 March 2009 the wife’s superannuation fund received an amount said to be in compliance with the obligation with respect to the accounts held on behalf of the fund by Potter Holdings Pty Limited with the Macquarie Bank.
During the hearing Counsel for the husband told the Court he was instructed that the further figure of some $13,066 was paid to the wife’s Fund (Transcript page 25, line 26). The solicitor for the wife later confirmed via email to my Associate that the wife agreed with the husband’s assertion that on 13 May 2009 he paid the sum of $13,066.20 into the wife’s superannuation fund. The wife assessed that the amount so payable was $15,384.75. The husband asserts that the difference is due to an increase in the taxation liability for the June 2008 year by reason of the fact that the expenses were less and the income more.
It also involves a question if the husband’s assertions are correct whether payments not received by the Fund, at the operative date to the accounts of the Superannuation Fund and paid later should be split.
I find that the amount to be paid to the wife’s fund is the amount in the bank accounts of the Windeyer Potter Superannuation Fund at the relevant date as hereinafter set out and not amounts not yet received at that date. The wife’s entitlement to cash in accounts therefore cannot take into account any monies not held in the accounts at the relevant date.
The specific orders provided the following preliminary notations in relation to the Fund:
“B. In relation to the Superannuation Fund:
B.1The Superannuation Fund is a self-managed superannuation fund listed on the Register of Complying Superannuation Funds held with the Australian Taxation Office.
B.2The Husband and the Wife are the only members of the Superannuation Fund and [P Pty Ltd], of which the Husband and the Wife are directors, is the trustee.
B.3The Wife contends that the amount held in the Husband’s and the Wife’s members accounts as at 13 October 2008 is approximately $1,808,000 and the Husband is not in a position to concede the accuracy of the same.
B.4The Wife contends that the amount held in the Husband’s member account in the Superannuation Fund represents 8/14^ths of the amount available to pay member benefits in the Superannuation Fund and the Husband is not in a position to concede the accuracy of the same.
B.5The Wife contends that the amount held in the Wife’s member account in the Superannuation Fund represents 6/14^ths of the amount available to pay member benefits in the Superannuation Fund and the Husband is not in a position to concede the accuracy of the same.
B.6The parties seek that the total amount of members benefits in the Superannuation Fund should be split between the parties in the proportion 60% to the Wife and 40% to the Husband and that because of the shifting values of the various share parcels within the share portfolio held by the trustees of the Superannuation Fund, the parties understand that the only mechanism to achieve the desired result is as follows:
B.6.1to split 100% of the Wife’s benefit to the Husband such that he has 100% of the amount available to pay member benefits;
B.6.2Immediately following the split in favour of the Husband referred to above, to then split the 100% benefit held in the Husband’s name into two moieties for each of the Husband and the Wife in the proportion:
(a)60% to the Wife; and
(b)40% to the Husband.
B.6.3The Wife then executes all documents necessary to transfer out her moiety to a superannuation fund of her choosing (“the Wife’s new superannuation fund”).”

The operative orders provide:
“Superannuation
1.7.That, in accordance with section 90MS of the Family Law Act 1975 (Cth):
The Wife’s split of 100% to the Husband
1.7.1.That in accordance with Section 90MT(1)(b) of the Family Law Act 1975, the Husband is entitled to the specified percentage, being 100%, of the Wife’s interest in the Superannuation Fund and the entitlement of the Wife is correspondingly reduced.
1.7.2.That clause 1.7.1 of this Order has effect from the first operative time and the first operative time is four days after service of a sealed copy of this order on the trustee of the Fund.
1.7.3.That the Husband and Wife in their capacities as directors of [P Pty Ltd] the trustee of the Superannuation Fund shall do all such acts and things and have signed all such documents as may be necessary to:
1.7.3.1.calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement created for the Husband in clause 1.7.1 of this Order; and
1.7.3.2.pay the entitlement whenever the trustees make a splittable payment out of the Wife’s interest in the Superannuation Fund.
The Husband’s split of 60% back to the Wife
1.7.4.That in accordance with s.90MT(1)(b) of the Family Law Act 1975, the Wife is entitled to the specified percentage, being 60%, of the Husband’s interest in the Superannuation Fund and the entitlement of the Husband is correspondingly reduced.
1.7.5.That clause 1.7.4 of this Order has effect consequent upon and forthwith with the compliance with paragraphs 1.7.1 and 1.7.3 inclusive of this Order from the second operative time and the second operative time is five days after service of a sealed copy of this Order on the trustee of the Superannuation Fund.
1.7.6.That the Husband and Wife in their capacities as trustees of the Superannuation Fund shall do all such acts and things and have signed all such documents as may be necessary to:
1.7.6.1.calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement created for the Wife in clause 1.7.4 of this Order; and
1.7.6.2.pay the entitlement whenever the trustee makes a splittable payment out of the Husband’s interest in the Superannuation Fund.
Notice by each of the Parties
1.7.7.That, after service by the trustees of the Superannuation Fund of the payment split notice pursuant to r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994:
1.7.7.1.the Wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to requesting the trustees to transfer or rollover her benefit in the Superannuation Fund to the [C W] Super Fund;
1.7.7.2.the Husband shall do all such acts and things and sign all such documents as may be necessary, including but not limited to exercising his request pursuant to r.7A.05 of the Superannuation Industry (Supervision) Regulations 1994 for the creation of an interest in his name in the Superannuation Fund.
Meeting of Trustee
1.7.8.That following the receipt by the Trustees of the request made by the Wife as contemplated by clause 1.7.7.1 hereof, the Husband and Wife in their capacities as Trustees shall cause a meeting of the Superannuation Fund to be held in accordance with Rules of the Superannuation Fund Trust Deed, the purpose of that meeting being:
1.7.8.1.to note receipt of the request by the Wife to transfer her total benefit to the [C W] Super Fund; and
1.7.8.2.to note receipt of the election by the Husband to have a new interest created in his name in the Superannuation Fund;
1.7.8.3.to authorise the transfer to the trustees of the [C W] Super Fund of all the right title and interest in 60% of:
(a)     each parcel of shares, each parcel of units in unit trusts, each parcel of units in each managed fund, each parcel of each other equity and each parcel of any other security however described within the total share portfolio held as an asset by the trustees of the Superannuation Fund in the manner as contemplated at paragraph 1.7.9 below;
(b)     the cash held in the bank account of the Superannuation Fund, being with the Adelaide Bank; and
(c)     the sum of $377,000 being the portion of the monies held in the [Potter] Holdings Pty Limited No. 2 account with Macquarie Bank;
(d)     subject to such liabilities as may arise in respect of income tax and accounting and audit fees in respect of the periods up to 30 June 2008;
1.7.8.4.to authorise the transfer of the total amount of the Wife’s benefit to the [C W] Super Fund;
1.7.8.5.to authorise the creation of a new interest in the Husband’s name in the Superannuation Fund.
1.7.9.That in order to give effect to the superannuation splitting orders contained in paragraphs 1.7.1 and 1.7.4, the intent of which is agreed and acknowledged to divide all assets of the fund in specie in the proportion 60% to the Wife and 40% to the Husband [emphasis added] and to achieve a distribution of assets in such proportion also by reference to their cost base for capital gains tax purposes, that upon the trustees giving effect to the splitting orders the Wife shall forthwith make application to roll out her 60% entitlement to the [C W] Super Fund where upon the parties as trustees shall forthwith do all acts and things necessary to approve and give effect to that request, including but not limited to, in the course of rolling out her entitlement:
1.7.9.1.pay to the nominated fund 60% of all cash held by the fund at the date of such transfer; and [emphasis added]
1.7.9.2.cause 60% of each individual parcel of shares and other equities as historically acquired by the fund (and presently held) to be transferred to the nominated fund, and for avoidance of doubt such division and transfer to be carried out conformably with the following example:
Example: Assume that the fund holds 600 shares in
X Limited; 200 purchased for $1.00 per share in 2000 (“the 2000 shares”); 200 purchased for $5.00 per share in 2002 (“the 2002 shares”) and 200 purchased for $10.00 per share in 2005 (“the 2005 shares”). The obligation imposed on the trustee shall not simply be to transfer 60 shares in X Limited to the nominated fund, but to transfer shares comprising 120 of each of the 2000 shares, the 2002 shares and the 2005 shares.
1.7.10.That in order to facilitate these Orders, each of the Husband and Wife shall cause to be provided to the other all documents and records required to determine the identity and component parts of each parcel of shares, units in managed funds, other equities and each securities and the date ad cost of acquisition price of each of the same.
1.7.11.That for the purpose of giving effect to these Orders each of the Husband and Wife shall forthwith jointly instruct [A Accountants] to do all things and prepare all documents necessary to give effect to these Orders and each of the Husband and Wife shall forthwith provide to [A Accountants] all documents and instructions necessary for them to undertake such task.
Wife to Resign as Member & Trustee
1.8.That contemporaneously with the payments being effected in accordance with these Orders including compliance with paragraph 1.7.6.2 the Wife shall do all acts and things and sign all documents as may be necessary to resign her membership from the Superannuation Fund and to resign as a director of [P Pty Ltd] and transfer her shares in [P Pty Ltd] to the Husband.
…”
It appears that two sets of accounts for the Fund were prepared at a balance date of 20 October 2008. They were, it seems, prepared on the basis of instructions given to the accountant by the husband and not the wife. The husband asserted that the wife was not able to act as a trustee of the Fund since she had divested herself of her membership by reason of the splitting order made in his favour.
The first set of accounts was amended by reason of the inclusion of certain asserted management expenses claimed by the husband and to which he could not as a trustee have been entitled. The husband on advice accepted that they were wrongly included and they were deleted from the second set of accounts which were created.
The husband asserted that the accounts valued the husband’s interest in the fund (he then having pursuant to the provisions of the orders an entitlement to 100% of the fund) in the sum of $1,747,940. This was the sum which would have been the sum total of the benefits paid to the husband and the wife as at that date. The special purpose accounts were compiled by accountants the husband says in compliance with the requirement for calculation of the husband’s entitlement as a result of the order.
However, the orders then provided for the wife’s fund was to acquire 60% of the husband’s splittable interest in the Fund and the Fund was to pay to the wife’s new Fund the cash and property specified in the orders.
Under Order 1.7.8.3(d) this was to be subject to liabilities in respect of income tax and accounting and audit fees, up to 30 June 2008.
Under the orders the husband provided a general indemnity for any liability, including and not limited to taxation, including by reason of the wife having been a member of the superannuation fund, and indemnified her in respect of any liability, subject to certain nominated exceptions included in Order 1.5.2, which I do not set out herein.
It is asserted by the husband and denied by the wife that at the operative time the husband became the sole member of the fund and the wife became a non- member. As such, he says, she was unable to act as a Trustee of the fund. This does not sit well with the requirements of Order 1.8 which is an order, inter alia, requiring the wife to resign as a member contemporaneously with payments being effected in accordance with these Orders and in that regard it is noted that the last payment was made pursuant to the orders only a day or so before the hearing.
However, if the wife was a member, she was a member without a fund or entitlement to any part of the Fund under the Trust deed at the time of the splitting of the fund in favour of the husband. The wife’s entitlements arose only after she had divested her interest and arose by operation of the order of the Court.
The husband asserted that the relevant date for determination of the entitlement of the wife is the “operative date” in relation to the orders. The husband asserted that the latest operative time for the trustee to split the amount with the wife was 19 October 2008 and that it was at that date that the fund should be valued. This date is five days after service of the orders on the Trustee, and in oral argument the husband also pointed to the fact that the Trustee was part of the orders on 14 October 2008. I deem this to be sufficient service, and if I am wrong in that then I note that the husband forwarded to the Trustee a sealed copy of the Orders some four days later.
The wife contended that the valuation of the fund should be at the time that the benefits are transferred to her new Fund which in this case was over a period of time from the date of the making of the orders to a day or so before this hearing.

The wife said through her representative that she had no issue with the shares which her new fund had received in specie and that her problems lay with the amount of cash her fund received.
The husband referred the Court to the decision of the Full Court in W and W (2005) FLC ¶93-222 (Bryant CJ, Finn, Coleman, Warnick and O’Ryan JJ) in which it was said (at paragraph 62) that:
“…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 for the reason that the member’s interest may continue to grow from the date of valuation to the date the orders are made.”
The decision is advisory but does not make it mandatory for a court to determine the date of valuation as at the operative date.
The Regulations provide for no particular methodology for the valuation of a self-managed fund but the special purpose accounts which were prepared on the husband’s instructions, he says were for that purpose.
Order 1.7.11 required the parties to give all instructions to A Accountants to do all things and prepare all documents necessary to give effect to the Orders. It was this firm that prepared on the husband’s instructions the special purpose accounts referred to.
It is asserted by the husband that the wife’s entitlement was to be valued in accordance with Order 1.7.6.1 namely in accordance with the Family Law Act1975 and the Family Law (Superannuation) Regulations 2001.
For the purpose of the Orders the husband alleged the valuation was in accordance with the special purpose accounts prepared after the orders were made.
The wife, in her written submissions, argued that:
2.1.Order 1.7 of Orders made 14 October 2008 provided for a super split of:
2.1.1.100% of the wife’s interest in the parties’ SMSF to the husband (Order 1.7.2); and
2.1.2.back to the wife 60% of the husband’s (then 100%) interest in the parties’ SMSF (Order 1.7.4).
2.2.The purpose of the 2-stage split mechanism was to avoid any issue as to what the wife’s present entitlement was at the time of the making of the orders.
2.3.Order 1.7.9 requires the trustee in order to give effect the (sic) to super split to:
“pay to the nominated fund 60% of all cash held by the fund at the date of such transfer”
2.4. Order 1.7.8.3 (d) permits the split to be subject to:
“such liability as may arise in respect of income tax and accounting and audit fees in respect of the periods up to 30 June 2008.”
Order 1.7.9 provides:
1.7.9.That in order to give effect to the superannuation splitting orders contained in paragraphs 1.7.1 and 1.7.4, the intent of which is agreed and acknowledged to divide all assets of the fund in specie in the proportion 60% to the Wife and 40% to the Husband and to achieve a distribution of assets in such proportion also by reference to their cost base for capital gains tax purposes, that upon the trustees giving effect to the splitting orders the Wife shall forthwith make application to roll out her 60% entitlement to the [C W] Super Fund whereupon the parties as trustees shall forthwith do all acts and things necessary to approve and give effect to that request, including but not limited to, in the course of rolling out her entitlement:
1.7.9.1.pay to the nominated fund 60% of all cash held by the fund at the date of such transfer; and
1.7.9.2.cause 60% of each individual parcel of shares and other equities as historically acquired by the fund (and presently held) to be transferred to the nominated fund, and for avoidance of doubt such division and transfer to be carried out conformably with the following example:
Example: Assume that the fund holds 600 shares in X Limited; 200 purchased for $1.00 per share in 2000 (“the 2000 shares”); 200 purchased for $5.00 per share in 2002 (“the 2002 shares”) and 200 purchased for $10.00 per share in 2005 (“the 2005 shares”). The obligation imposed on the trustee shall not simply be to transfer 60 shares in X Limited to the nominated fund, but to transfer shares comprising 120 of each of the 2000 shares, the 2002 shares and the 2005 shares.
As to the wife’s cash entitlement, the wife summarises the differences between the parties’ calculations as follows:

Husband ($)	Wife ($)
Adelaide Bank Balance	259,943	267,466.23
RPH	402,087	447,175.50
Less Expenses	(27,058)	(14,900.00)
Total	$634,972	$699,741.73
Wife’s 60% entitlement	380,983.20	419,845.04
Less Amounts paid	(365,598.45)	(365,598.45)
Owing	$15,384.75	$54,246.58

On the wife’s submission the amount owing to the wife was $54,246. The wife asserted that what was owing by the fund, on the husband’s assertions as to the methodology to be applied, was $15,384.
Dealing then with the differences arising from the schedule the wife asserted that they arise as follows.

Adelaide Bank

A calculation in accordance with Order 1.7.8.3(b) required the trustees to transfer 60% of the cash held in the Adelaide Bank account of the Superannuation Fund, and justice and equity would require that on a plain reading of the Order this would have to be done at the time of payment. The Adelaide Bank would also be included in Order 1.7.9.1, as it included all cash held by the fund at the date of transfer.
The difference in the Adelaide Bank accounts between the balance nominated by the husband and that nominated by the wife is accounted for by interest which accumulated to the account from the date of the husband’s valuation to the date of payment, namely 3 March 2009. The wife’s entitlement to this amount therefore depends on when the appropriate time is for the determination of the wife’s entitlement.

The superannuation fund’s entitlement to certain assets held on its behalf by Potter Holdings Pty Limited (“the company”)

The entitlements of the fund under this heading were:
(1)Funds held in trust for the Superannuation Fund in Macquarie Bank by the company. The difference between the parties’ positions relates to the payment of interest between the date asserted by the husband as the relevant date for determination and that asserted by the wife.
(2)The company was the trustee of the M Trust that held on behalf of the Fund an entitlement to certain payments (escrow payments) in respect of an investment in HPP-TCC. In this regard the husband has said that he has accounted for all payments received from HPP-TCC as at the date of valuation, but it appears not all such payments received as at the date of payment viz 30 March 2009.
The husband asserted that the company accounts for its assets on a cash basis and as such it is only receipts which are taken into account for the purpose of valuation, not an entitlement to further funds payable at a later date or funds received after the date of valuation.
The husband refers to the accounting standard applicable to superannuation funds of this sort. It was the submission of counsel for the husband that the Australian Accounting Standards require that the expenses be determined on an accruals basis whilst permitting the income to be determined on a receipts basis only.
I agree with this submission and will not take into account any

HPP
-TCC payments not received at the date I determine as the proper date for calculation of the payment.
Any received amounts would be located in the Superannuation Fund’s account or be funds held on its behalf and would be part of the amount of 60% of those accounts to which the wife’s fund is entitled at the determined date.
I determine the relevant date for assessing the amount of cash to be transferred to be the date of the payment of the sum to the wife. I fix that date as 30 March 2009 with respect to the funds held by Potter Holdings Pty Limited on behalf of the Superannuation fund as at that date and 3 March 2009 with respect to the funds held by Potter Holdings Pty Limited on behalf of the Superannuation Fund.
I do so since:
a)An order for the splitting of superannuation is simply an order of the court requiring the trustee of a fund to disgorge part of the fund and pay it to another trust.
b)Such an order is made within the context of an order under section 79 altering the interests of the parties in property.
c)Any order made under that section has to be just and equitable.
d)It follows that any interpretation of an order has also to reflect the requirement of justice and equity.
e)In this case there is no doubt that the intention of the parties was that the wife receive 60% of the monies actually held in the self-managed Superannuation fund or on its behalf and it was the clear intention of the order that this be so.
f)The payments to the wife which have thus far been made do not give effect to that intention.
g)To fail to give effect to that intention would be unjust and inequitable
h)In addition, it would be an unjust, and inequitable interpretation of the order adopting the husband’s proposed interpretation since were that to be done the husband’s superannuation fund and ultimately the husband, would have the benefit of the amount intended to be paid to the wife’s superannuation fund and not paid.
i)The view of Mr Foster that the effect adumbrated above of such an interpretation is just “tough luck” for the wife is not one which I accept. There cannot be an acceptable basis for interpreting the order in an unjust way.
j)The dates specified are the dates upon which the majority of the monies were received by the wife’s fund.
k)The Superannuation Industry (Supervision) Regulations 1994 are facilitative but do not detract from the fundamental nature of the order for a split of superannuation entitlements referred to above.
For the reasons set out above in this case I determine that the correct date for determining the entitlement of the wife’s fund in the cash held by the Superannuation fund is to be determined with respect to the amount held to its credit with the Adelaide Bank as at 3 March 2009 and held on the Superannuation Fund’s behalf by Potter Holdings Pty Limited as at

30 March 2009.

Expenses

The orders, specifically Order 1.7.8.3(d) provide that from the wife’s entitlement from the cash distribution she is obliged to pay her proportionate share of the following expenses, namely:
a)Income Tax; and
b)Audit and Accounting fees
for the period up to 30 June 2008.
The husband gave instructions for the preparation of three sets of accounts on 30 June 2008, 14 October 2008 and 21 October 2008.
The wife says she disputes that all those fees claimed by the husband as due to A Accountants are ones which are claimable under the terms of the Order.
The wife asserted that the fees should be limited to those necessary to complete the 30 June 2008 figures. The wife has conceded that an account can be taken of the sum of $9,900 for the purpose of the hearing as being the amount to which she is obliged to contribute.
She estimated, but is unable to calculate, (as am I on the state of the evidence) the amount which should be taken into account for the purpose of determining her entitlement in lieu of the amount claimed by the husband for such fees of $13,200. In oral argument the wife further explained that of that sum of $13,200 the sum of $3,300 was paid from the Adelaide Bank account on

28 October 2008
, before the wife received her entitlement and says that the remaining figures represent sums for debts incurred past 30 June 2008. Having regard to the state of the evidence I am unable to do other than to note the argument.
The wife disputed that the sum of $25,620 for management fees is properly claimable and the husband conceded that this is so. The improper claim by the husband for this amount was in fact the reason that the second set of October accounts were prepared.
The wife further claimed an amount of $11.00 under the heading “Unknown” is wrongly taken. This is in the scheme of this case a de minimus and I will ignore it.
The wife disputed that expenses accrued for annual insurance premiums paid in stages should not be taken into account. The wife said that there was only one policy but later seemed to concede, as I find, that in fact there were two. They were assets of the Fund. In oral argument the solicitor for the wife argued that it was not an expense provided for in the Orders and the special purpose accounts did not provide for the premium’s proportional distribution across the full financial year. In any case it was the wife’s argument that the premiums are in fact a benefit of the husband’s and that it was not proper or reasonable to include them. The wife said that they ought properly not to have been included because they fall to the husband’s benefit. I find that as an asset of the Fund, to the extent that the premium is properly accruable to the fund, they are properly taken into account as a liability of the Fund.
The husband said that as at the date of the special purpose accounts on which he chose to rely it was proper to accrue the expense for the whole of the year even though not paid.
In relation to the Accounting Standard AAS 25 Financial Reporting by Superannuation Plans, I accept that the appropriate accounting standard is for the accounts to be prepared on a cash basis as to income but an accrual basis as to expenses.

Issues Remaining after the findings set out above

The husband asserted that the wife is entitled to no compensation by reason of the delay in the payment of the entitlements to be allocated to her fund. Given the relatively short period of time since they were due if the payments are made to the benefit of the wife’s fund as provided for in these orders within 28 days no interest shall accrue on the sums. In the event that it is not I propose to order the husband to pay or cause to be paid to the wife’s superannuation fund interest on the sums due but not paid calculated from the dates referred to in my declarations to the date of payment thereof, at the rate prescribed by the rules.
I accordingly make the declarations and orders set forth above.

I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.

Associate:

Date: 17 July 2009

[2009] FamCA 635

17 July 2009

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Consent

Remedies