This case concerned an Appeal from a decision where the primary judge adopted a two pool / balance sheet approach including the non-superannuation property of the parties in one pool and the superannuation of the parties in a separate pool. Such an approach can differ from Judge to Judge and State/Territory to State/Territory despite family law being a federal jurisdiction.
The primary judge made orders which resulted in the division of two property pools in separate proportions as follows:
- The non-superannuation pool was to be divided in the proportions of 62.5% to the Wife and 37.5% to the Husband.
- The parties were each to retain their own respective superannuation entitlements which resulted in the Wife receiving approximately 36.2% of the superannuation pool and the Husband receiving approximately 63.8% of the superannuation pool.
The Appeal Court determined that despite an otherwise comprehensive and well-reasoned judgement, the primary judge erred in respect to the treatment of the parties’ superannuation and failed to adequately explain why she applied a different percentage adjustment figure to the apportionment of the parties’ superannuation to that which she applied to the balance of the parties’ non-superannuation assets.
The Appeal Court exercised its discretion to finalise the matter rather than remitting the matter for re-hearing (where a new trial would need to take place) and, in doing so, ordered that the Wife receive 65% and the Husband 35% of the parties’ complete property and superannuation. This was based on determining that the parties’ contributions to the superannuation are equivalent to that which they made to the balance of their property and determining that the Wife was entitled to an adjustment for future needs factors.
The Facts
The parties were in a relationship of approximately 18 years from 2002 to 2020. There were two children of the relationship aged 14 and 16.
The primary judge found the parties to have non-superannuation property totalling $14,060,433 and superannuation totalling $1,023,785.
The primary judge assessed the parties’ contributions as to 57.5% to the Wife and 42.5% to the Husband. Her Honour then made a further 5% adjustment in favour of the Wife having regard to a range of factors relating to the Wife’s future needs. This resulted in an overall division of 62.5% to the Wife and 37.5% to the Husband.
It was additionally ordered that each party retain their own superannuation entitlements in a joint self-managed superannuation fund (albeit with funds to be ‘rolled out'), with the Wife’s interest being $370,185 (36.2%) and the Husband’s interest being $653,600 (63.8%).
The Appeal
The Wife appealed the decision of the primary judge. The grounds for appeal from the primary decision included, amongst other things:
- The primary judge’s discretionary decision miscarried in relation to her approach as to the superannuation interests of the parties in that she failed to give any or any adequate reasons for:
- Determining a different ratio of division of the superannuation interests than the rest of the property of the parties.
- Departing from a single pool approach (inclusive of superannuation) which had been common to the approach of both parties and would have resulted in a consistent overall decision.
- Failing to explain her approach at all.
- The primary judge erred in fact in determining that the parties had agreed to an approach where their existing superannuation entitlements would be retained “on top of” the outcome of however she determined to divide the “non-superannuation pool”.
What was the outcome?
The Appeal Court determined that, in circumstances where the primary judge erred in relation to the first ground of appeal, it was not necessary to consider the other grounds of appeal. The Appeal Court indicated (amongst other things) that:
- No criticism can be levelled at the primary judge for taking the approach whereby she made orders that have the effect of adjusting the parties’ non-superannuation property and superannuation entitlements according to different proportions. That course was reasonably open to the primary judge. Equally, there was no demand for the superannuation contributions to be treated differently to the other contributions.
- Whereas the primary judge adopted a global approach to the assessment of the parties’ contributions, she applied a two-pool approach to the apportionment of their non-superannuation property on the one hand and their superannuation interests, on the other hand, without providing an adequate explanation as to why she took that course.
- The Wife was not afforded the opportunity to make submissions other than in the context of property being adjusted on the basis of a global rather than two pool approach and the reasons provided by the primary judge for adopting the two pool approach do not facilitate the Wife, or the appeal Court, understanding why the primary judge adopted the two pool approach in circumstances where the submissions by the parties that they each wished to retain their existing superannuation entitlements did not necessitate that outcome.
The appeal was allowed in circumstances where the primary judge erred in failing to explain her approach. The Appeal Court then re-exercised its discretion and determined that the Wife receive 65% and the Husband receive 35% of the parties’ property and superannuation.
Issues to Note
- The Court has the discretion to adopt a global approach utilising one property pool or to adopt an approach where there is more than one property pool. This will depend upon the circumstances of the case.
- Legal representatives and financial advisors should take care to ensure that proper consideration has been given as to why a certain approach to the property pool has been adopted and that all available evidence is before the Court in supporting why that approach should be adopted.
- Client’s financial objectives and circumstances need to be considered carefully when determining which approach is to be utilised. It may be, for example, that a client wishes to retain a greater share of superannuation.
