Family law: April 2017

Property – Court erred in accepting capitalisation of wife’s TPD pension pursuant to s 90MT(2) where no splitting order made

In Welch & Abney [2016] FamCAFC 271 (22 December 2016) the Full Court (Murphy, Aldridge & Kent JJ) allowed the wife’s appeal against Austin J’s treatment of her non-commutable total and permanent disability pension (’TPD pension’) as an asset with a present capital value of $972,959. The wife began receiving her TPD pension after the parties separated in 2011. At first instance, the net pool was $2,797,777, but this included the TPD pension at its capital value. The Full Court observed
(at [20]-[21]):

‘The practical effect of the orders for the husband included that he received the entirety of his 40 per cent entitlement of $1,119,111 in cash or other tangible property capable of immediate conversion into lump sum cash or its equivalent … and the wife received or retained net tangible (non-superannuation) property worth $368,608 in an overall entitlement of $1,678,666 …’.

The Full Court said (at [6]):

‘We consider that the trial judge fell into error in the following respects:

1. By adopting, as the present value of the TPD pension, the capitalised amount determined pursuant to s 90MT(2) of the Act. This value (or, more accurately “amount”) is mandated solely for the purpose of a splitting order of a superannuation interest being made. No splitting order was made by his Honour and that decision is not the subject of any challenge on this appeal.
2. By disregarding the evidence of the single expert as to the TPD pension entitlement being considered in a similar manner to earnings from employment, and that expert’s evidence as to the different nature of the TPD pension entitlement from normal superannuation interests.
3. As a consequence of (a) and (b), ignoring the imposition of taxation upon the TPD pension and making orders which leave that substantial burden entirely with the wife.
4. As a consequence of (a) and (b), ignoring contingencies operative upon the TPD pension and making orders which leave those contingencies entirely with the wife, and conversely, relieve the husband of any impact of them.’