Family law: October 2019

PROPERTY

No error in Court’s treatment of non-commutable military pension as a financial resource (income stream) 

In Carron & Laniga [2019] FamCAFC 115 (8 July 2019) the Full Court (Aldridge, Kent & Austin JJ) considered a property case where the wife had been made redundant from the Australian Defence Force and had interests in the Military Superannuation Benefits Scheme. The first was in the growth phase and the second was in the payment phase as a non-commutable pension of $520 per fortnight.

At trial, neither party sought a splitting order. The wife’s expert provided a notional capital valuation of the pension interest of $230,148, but otherwise confirmed that this amount could not be ‘cashed out’ in any way. Judge Egan treated the wife’s growth phase interest as property, but found that the pension interest was a financial resource. The husband appealed, arguing that both interests were ‘property’.

The Full Court said (from [29]):

‘The wife opposed her MSBS pension being attributed any notional capitalised value because it could not be commuted and the husband did not seek any … splitting order in relation to it, as the trial judge correctly recognised. 

[36] In property settlement proceedings, there is no need to ascertain the capitalised value of a superannuation interest, much less one in the payment phase being paid in the form of a non-commutable pension, unless a … splitting order is sought in relation to the interest (Welch & Abney [2016] FamCAFC 271 … At trial, neither party sought a … splitting order in respect of the wife’s MSBS pension.

[37] The Act only provides that a superannuation interest must be valued before it is amenable to a splitting order (s 90XT(2)). 

[39] Relevantly, the wife’s entitlement to the MSBS pension crystallised in 2000 following her redundancy from employment in the armed services, shortly after the parties’ marriage in 1998. She is entitled to receive the pension for life, during which time it cannot be commuted or alienated. While it will continue to be a modest income stream for her, it will not be enough alone to sustain her and she will always need to supplement it with other income from paid work. Such features of the pension made it readily identifiable as a financial resource rather than an asset.’