Wyndham and Wyndham

[2016] FCCA 122

FEDERAL CIRCUIT COURT OF AUSTRALIA

WYNDHAM & WYNDHAM [2016] FCCA 122

Catchwords:
FAMILY LAW – Property – superannuation – (omitted) Retirement Fund– contributions – splitting order.

Legislation:

Family Law Act 1975, ss.75, 79

Child Support (Assessment) Act 1989

C & C [2005] FLC 93-220
Marsh & Marsh [2014] FLC 93-576

Applicant: MS WYNDHAM

Respondent: MR WYNDHAM

File Number: DNC 401 of 2013

Judgment of: Judge Young

Hearing date: 23 September 2015

Date of Last Submission: 30 November 2015

Delivered at: Darwin

Delivered on: 25 January 2016

REPRESENTATION

Solicitors for the Applicant: Ms V Farmer of Withnalls Lawyers

The Respondent appeared in person

ORDERS

1. That pursuant to section 90MT(1)(b) of the Family Law Act 1975, the wife is to be paid 45% out of the husband’s interest in the (omitted) Scheme (“the fund”).

2. That in accordance with section 90MT(1)(b) of the Family Law Act 1975, whenever a splittable payment within the meaning of section 90ME of the Family Law Act 1975 becomes payable to or on behalf of the husband or to any other person specified in section 90ME of the Family Law Act 1975 from the husband’s interest in the fund the wife is entitled to be paid by the trustee of the fund the amount calculated pursuant to the Family Law Superannuation Regulations and there is a corresponding reduction in the entitlement that the husband would have but for these Orders.

3. That the operative time for these Orders is four (4) business days after service of sealed Final Orders on the trustee of the fund.

4. That having been accorded procedural fairness in relation to the making of these Orders, these Orders are binding on the trustee of the fund.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 401 of 2013

MS WYNDHAM

Applicant

And

MR WYNDHAM

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is a property matter. The principal assets of the parties are their superannuation interests. In the case of the husband this is an interest in the (omitted) Fund a defined benefit fund, and the Productivity Benefit Scheme, an accumulation fund. These interests were valued at 12 August 2015 at $784,274.36 and $70,408.50 respectively, giving a total value of $854,682.86. In the case of the wife this is an interest in (omitted) Super with accumulated contributions of $44,669 at trial.

2. The parties also owned two cars of modest value. In addition there are credit card and personal loan liabilities.

Background

1. The husband is 43 years old. The wife is 35 years old. There are three children of the marriage aged 14, 10 and 6 years old. The children live with their mother and spend time with their father. The husband pays child support of $324 a week for the children of the marriage. Both parties have repartnered. The wife and her partner are expecting a child.

2. The parties commenced living together in early 1999 and married in 2000. They separated in August 2011. The parties cohabited for about 12 ½ years. The husband served in the (employer omitted) for the entirety of that period, having joined in 1990, and remained a member of the (employer omitted) at the time of trial. The wife was a homemaker and mother and was also employed at various times during the marriage. She was employed part-time at the time of trial.

3. The parties appear to have had negligible assets at the commencement of cohabitation. The husband had been a member of the (omitted) Fund for about 9 years before the commencement of cohabitation.

Assets and superannuation

1. The parties agreed on all significant valuations. The assets, liabilities and superannuation interests of the parties at trial with agreed values were as follows:

Wife	Asset	Liability
Ford Territory	$7,000
Household contents	$5,000
(omitted) bank loan	$9,562
Net	$2,438
Superannuation – (omitted) Super	$44,669
Husband
Ford Falcon	$10,700
Household contents	$5,000
(omitted) bank personal loan	$8,652
(omitted) Bank personal loan	$32,707
(omitted) Mastercard	$9,090
Net	($34,749)
Superannuation
-    (omitted)	$784,274
-    Productivity Benefit Scheme (component of (omitted) superannuation)	$70,408
$854,682

1. The husband asserted that the wife had removed about $80,000 worth of household assets at separation. There was no evidence to support that claim. The husband at one point pointed to an insured sum for furniture and contents during a house move at an earlier time but I do not consider that provides any assistance. The value for household contents were the same in each party’s outline of case document and I find that is the correct value.

2. At separation the parties agreed to “separate” their (omitted) personal loans which were then about $10,000 each. The husband has paid off slightly more of his loan than the wife. The (omitted) Bank personal loan was taken out by the husband after separation and used to pay out a pre-existing car loan of $15,000. In return the wife transferred the subject car, a Toyota Land Cruiser, to the husband. He later disposed of it for $3,000 and purchased the Ford Falcon. I understand that the personal loan of $32,707 largely reflected borrowings by the husband to pay out the existing car loan and borrow more to purchase the Ford Falcon. The parties did not seek any alteration of interests in respect of this loan. In fact neither party sought any alteration of interests other than superannuation splitting orders.

Contributions

1. Neither party suggested that contributions during the marriage, taking into account financial and non-financial contributions, were anything other than equal. The wife admitted that the husband’s financial contributions before the marriage were greater because of his membership of the (omitted) Fund from February 1990, that is, some 9 years before the commencement of cohabitation in “early 1999” (according to both parties). She submitted, however, that her:

   superior post-separation contributions equate to the Husband’s superior superannuation contributions at the commencement of the relationship, such that …all contributions, financial and non-financial should be considered equal as at the date of trial…

2. The wife did not precisely identify her claimed “superior post-separation contributions” in her submissions but I understood her to be referring to the fact that the children live with her and, therefore, she may be seen as their primary carer and thereby enabling the husband to continue his employment and increase his superannuation interests.

3. The wife also submitted that this factor should be taken into account under section 79(4)(e) of the Family Law Act 1975, that is, as an adjustment for section 75(2) matters.

4. The relevant parts of subsection 79(4) dealing with financial and non-financial contributions are:

   (a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last mentioned property, whether or not that last mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

   (d)...

   (e)…

   (f)the matters referred to in subsection 75(2) so far as they are relevant; and

   (g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

5. This court must identify the contributions of the parties to assets including superannuation interests[1]. It is accepted that the parties may continue to make contributions after separation, including to superannuation interests, and that those contributions may be direct or indirect financial contributions or non-financial contributions[2]. In this case the wife has continued to care for the children and this is an important factor enabling the husband to remain in employment. The husband has continued to pay child support in accordance with a Child Support assessment. I find that the post-separation contributions of the parties to the husband’s superannuation interests are equal.

   [1] C & C [2005] FLC 93-220

   [2] Marsh & Marsh [2014] FLC 93-576, per Ainslie-Wallace J at [59] and per Murphy J at [108].

6. Neither party provided a value for the husband’s superannuation interests at the commencement of cohabitation. The husband was ordered to do so prior to trial but failed to do so. I understand that the (omitted) Fund has a threshold number of years of membership before a member is eligible for benefits but no evidence was adduced about what that threshold might be nor was I told whether or not it was possible to value the husband’s superannuation interests at the commencement of cohabitation. The wife called expert evidence on the issue of valuation but the expert was not asked to assess the value at the beginning of cohabitation nor was he asked to say whether or not this was possible using the statutory valuation formula.

7. The valuation of the husband’s interests was based on 25 years and 166 days of effective service. As mentioned, about 9 years of this service was before the commencement of cohabitation. The variables determining the defined benefit under the (omitted) Fund are final salary and length of effective service. I am unable to calculate what the value might have been after 9 years of service, that is about 16.5 years ago, and indeed I doubt that the statutory formula is intended to make such a calculation, at least without some modifications to allow for inflation for example. I sought submissions from the parties about how I should approach the question of assessing the parties contributions taking into account the husband’s 9 years of effective service before cohabitation. The husband in oral submissions said I should find the wife made a 40% contribution to the acquisition etc. of his superannuation interests. In his case outline he said that I should make a splitting order in respect of his superannuation of 45% to the wife – although he did not say so expressly this seemed to be after allowing for section 75(2) factors – and a splitting order in respect of the wife’s superannuation of 50% to the wife and 50% to him. The wife submitted I should find that she made a 45% - 50% contribution to the husband’s superannuation and sought a splitting order for 50% of the husband’s superannuation and no order for hers.

8. Neither party was able to explain with any precision how they arrived at these contribution figures. It is not appropriate to simply apply a formula such as dividing the years of cohabitation by the total effective years of service and halving that figure (assuming equal contributions by the parties for that period) not least because the later period may be more important because the husband was earning a higher income and the (omitted) benefit formula may not give equal weight to each year of effective service. Doing the best I can I find that the wife’s contribution to the husband’s superannuation interests is 45%.

9. The wife also has a modest superannuation interest. The wife’s outline of case stated that the wife had accrued “some limited superannuation at the commencement of the relationship” without further detail. The wife did not say when she began to contribute to this superannuation or give any other information about it other than the balance at trial. The husband did not cross-examine her about it or give any evidence himself. I had the impression, however, because the wife was employed at various times during that marriage that the fund was accumulated almost entirely during the marriage. I find that the contributions of the parties to this fund are equal. The husband asserted that I should make a splitting order in his favour of 50% of this fund.

Section 75(2) factors

1. The wife did not make any submission as to a percentage adjustment that she sought for section 75(2) matters. However, she pointed to the following matters as relevant.

2. The wife is aged 35 and the husband aged 43. Both are, she submitted, in good health. The husband has assured employment and his earning capacity is greater. The wife devoted herself to looking after the parties’ family and her career opportunities were limited as a consequence. The wife has sole care of the eldest daughter, aged 14, and primary care of the other children, aged 10 and 6 years. The wife has re-partnered and is expecting a further child. The wife’s partner is employed and earns $3,500 gross per week. The husband has also re-partnered. His partner earns $908 gross per week. The wife seeks to continue her primary role as a parent of the parties’ three children and her new child. Both parties have appropriate accommodation and the husband continues to receive a (omitted) accommodation subsidy. The wife alleged that the husband was not regular with his child support payments. In relation to this, the parties at one point had a private arrangement and there was a disagreement. However, the wife has now taken steps to have the Child Support Agency collect payments. The wife does not propose that any orders be made for alteration of interest in property other than superannuation.

3. The husband pointed to much the same matters. However, the husband alleged that he suffers from Post-Traumatic Stress Disorder as a result of his (employer omitted) service and has received psychological treatment. Further, he claimed to have problems with his ankles and knees, also as a result of his (employer omitted) service. He agreed he had received a lump sum payment as a result of his physical injuries, apparently during the marriage. He asserted that he did not expect to continue for much longer as a member of the (employer omitted). However, the husband adduced no medical or other evidence in support of those claims. In cross-examination, although it was not put that these claims were false, it was put to the husband that he has no evidence to support them. The husband agreed. The husband said that the (employer omitted) had given him a timeline to show that he was fit for service but he gave no specific evidence about that. It appeared unusual that if the husband is facing discharge from the (employer omitted) because of medical issues that he was not in a position to produce any evidence whatsoever to support that claim. I asked the husband how a medical discharge from the (employer omitted), assuming it were to occur, would affect his superannuation entitlements. The husband said he did not know. While I do not entirely dismiss the husband’s claims I do not feel I can give them more than slight weight.

4. A factor that must be taken into account is the prospective entitlements of the parties under the superannuation schemes. The wife submitted (initially at least), and the husband did not disagree, that both parties in the ordinary course will not be able to access the (omitted) superannuation until they are aged 55 years. I sought further submissions from the parties about their future entitlements. The wife obtained a supplementary report from her expert, Mr S. The husband agreed to her obtaining the further report and to sharing the cost and I take him to have consented to the admission of it into evidence. I would have admitted the supplementary report into evidence in any event.

5. Mr S’s supplementary report explained that the wife’s superannuation interests, including in the (omitted) Fund, assuming a splitting order, will be “preserved” (that is, she will not be able to access benefits) until she is aged 60 if retired or aged 65 if she is still in the workforce. If a splitting order is made her interest in the (omitted) Fund will become a separate interest. It will increase in line with the long term bond rate, currently about 3% a year.

6. In 25 or 30 years, at the wife’s preservation age, the children of the parties will be adults. In 25 years the youngest child will be 31 years old. One might reasonably expect that the responsibilities of the parents and the mother in particular to support the children would be over by then.

7. Taking into account these matters I am not satisfied that any significant adjustment of the superannuation interests should be made for section 75(2) factors for either party.

8. However, I do not propose to make any order in regard to the wife’s accumulation superannuation fund. While there would be significant taxation consequences, she could possibly, in the case of necessity or hardship, access that fund before age 60 or 65.

9. Accordingly, I propose to make a splitting order in respect of the (omitted) fund (which technically includes two funds, the (omitted) and the Productivity fund) in the proportions 45% to the wife and 55% to the husband.

10. The result is that the value of the wife’s superannuation interests is $429,276 ($384,607 from the (omitted) fund and $44,669 from the (omitted) fund). This equates to 47.7% of the total superannuation interests of the parties.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Young

Associate: 

Date:  25 January 2016