Chaban & Chaban (No 2) [2023] FedCFamC1A 118

“Chaban & Chaban (No 2) [2023] FedCFamC1A 118 (25 July 2023)

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Chaban & Chaban (No 2) [2023] FedCFamC1A 118

ORDERS

THE COURT ORDERS THAT:

1. The Application in an Appeal filed 7 November 2022 is dismissed.

REASONS FOR JUDGMENT

TREE J:

INTRODUCTION

1. On 20 April 2021, a judge of the Family Court of Western Australia pronounced final property settlement orders by consent, including orders splitting Mr Chaban’s (“the husband”) interest in the parties’ self-managed superannuation fund (“the SMSF” and “the splitting order”) in favour of Ms Chaban (“the wife”).
2. Now by Application in an Appeal filed 7 November 2022, the husband seeks an extension of time to appeal against the splitting order. The application is opposed by the wife.
3. For reasons which follow, the application will be dismissed.

BACKGROUND

4. The consent orders were made by the primary judge after a brief oral hearing which her Honour had convened in order to address her concerns about deficiencies in the material which the parties had provided to the Court. During the course of that hearing, she was told by counsel for the wife:

[COUNSEL FOR THE WIFE]: Sure. So both the husband and the wife say that the net asset pool is circa 14.5 million. Various line items that the husband say, and the wife say, reflect in the associated percentages. So on the wife’s figures, the result is about 50.5 per cent in her favour. And on the husband’s figures, i

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Chaban & Chaban (No 2) [2023] FedCFamC1A 118

Appeal from:
Order dated 20 April 2021

Appeal number(s):
NAA 244 of 2022

File number(s):
PTW 5237 of 2020

Judgment of:
TREE J

Date of judgment:
25 July 2023

Catchwords:

FAMILY LAW – APPLICATION IN AN APPEAL – EXTENSION OF TIME – Where the husband seeks an extension of time to appeal from a superannuation splitting order made by consent in 2021 – Where the husband contends the splitting order is void as the primary judge allegedly failed to determine the value of the parties’ superannuation interest pursuant to s 90XT(2) of the Family Law Act 1975 (Cth) – Where the primary judge implicitly accepted the parties’ agreed value of the superannuation interest was the appropriate method to determine its value – Where, in any event, the husband would need to persuade the Court hearing the appeal that a materially different result favouring him may have ensued – Where there is no adequate explanation for the husband’s delay – Prejudice to the wife – Application dismissed.

Legislation:

Family Law Act 1975 (Cth) ss 79, 90XT, 106A
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 15.06

Cases cited:

Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Chaban & Chaban (2022) FLC 94-110; [2022] FedCFamC1A 162
Conway v the Queen (2002) 209 CLR 203; [2002] HCA 2
Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Scriven & Scriven (2020) FLC 93-988; [2020] FamCAFC 236

Number of paragraphs:
33

Date of hearing:
19 July 2023

Place:
Cairns (via video link)

Counsel for the Applicant:
Mr Hedges SC

Solicitor for the Applicant:
Kim Wilson & Co

Counsel for the Respondent:
Mr Rynne

Solicitor for the Respondent:
KDK Family Law

ORDERS

NAA 244 of 2022

PTW 5237 of 2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION
BETWEEN:
MR CHABAN

Applicant
AND:
MS CHABAN

Respondent
ORDER MADE BY:
TREE J
DATE OF ORDER:
25 JULY 2023

THE COURT ORDERS THAT:

The Application in an Appeal filed 7 November 2022 is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Chaban & Chaban (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

TREE J:

INTRODUCTION

On 20 April 2021, a judge of the Family Court of Western Australia pronounced final property settlement orders by consent, including orders splitting Mr Chaban’s (“the husband”) interest in the parties’ self-managed superannuation fund (“the SMSF” and “the splitting order”) in favour of Ms Chaban (“the wife”).
Now by Application in an Appeal filed 7 November 2022, the husband seeks an extension of time to appeal against the splitting order. The application is opposed by the wife.
For reasons which follow, the application will be dismissed.
BACKGROUND

The consent orders were made by the primary judge after a brief oral hearing which her Honour had convened in order to address her concerns about deficiencies in the material which the parties had provided to the Court. During the course of that hearing, she was told by counsel for the wife:
[COUNSEL FOR THE WIFE]: Sure. So both the husband and the wife say that the net asset pool is circa 14.5 million. Various line items that the husband say, and the wife say, reflect in the associated percentages. So on the wife’s figures, the result is about 50.5 per cent in her favour. And on the husband’s figures, it results in about a 53 to 53 and a half per cent result for her, and the balance with the husband. The relevant contributions are dealt with at paragraphs 9 to 34 of the wife’s affidavit filed on 2 July, 10 to 59 and 72 to 84 of the husband’s affidavit filed on 31 August.

Given it’s a 20 year relationship and subject to what my friend says later, we say contribution should effectively be assessed as being equal, having regard to those relevant paragraphs in the affidavit material. 75(2) factors are dealt with at paragraphs 38 to 50 of the wife’s affidavit, and 85 to 94 of the husband’s affidavit. We say there is a slight adjustment in favour of the wife, having regard to there being one child under the age of 18 living with my client.

…

[COUNSEL FOR THE WIFE]: And the husband’s earning capacity and current income. So that’s half a percent in favour to her on our figures, and about three to three and a half per cent in favour of the wife on the husband’s figures. The result to the wife is her retaining her personal assets circa in the sum of four to 450,000. So that’s cash at back. Personal chattels, cars, etcetera. 5.9 million from the sale of the former matrimonial home, which has been sold and will settle in mid-July.

HER HONOUR: Yes.

[COUNSEL FOR THE WIFE]: And half of the parties’ self-managed super fund member entitlements, which is about – and I do caution that it’s only the 2019 figures. It’s about a million dollars each. So that works out to be 50.5 per cent on her figures. There’s currently a binding child support in place, whereby the husband paid my client a lump sum of $125,00, which is excluded from the figures. There’s also a binding financial agreement in place which excludes – or deals with spousal maintenance.

(Transcript 20 April 2021, p.2 line 24 to p.3 line 18) (Emphasis added)
Her Honour thereafter found that the orders were just and equitable, and made orders as the parties sought, relevantly as follows:
Vesting of assets, resources and superannuation
Save for as otherwise provided, all of the right, title and interest of the Husband, if any, in the following vest in the Wife absolutely, namely:

…
(c) Any entitlements of the Wife arising from her membership of any superannuation fund, including but not limited to the [Chaban] Superannuation Fund (to be rolled out into another complying fund of her choice).

…

Superannuation splitting orders
Pursuant to paragraph 90XT(4) of the Act a base amount be allocated to the Wife from the Husband’s interests in the [Chaban] Superannuation Fund (“the Fund”) with that base amount to be calculated as follows:
(a) Half of the combined value of the Wife and Husband’s member entitlements in the Fund as at the date of the Orders; less
(b) The value of the Wife’s member entitlements as at the date of the Orders.

Pursuant to paragraph 90XT(1)(a) of the Act, whenever a splittable payment becomes payable in respect of the Husband’s interest in the Fund:
(a) The Wife is entitled to be paid the amount (if any) calculated in accordance with the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount allocated in the previous order; and
(b) There is a corresponding reduction in the entitlement of the person to whom the split or payment would have been made but for this order.

The previous order has effect from the operative time, being 7 days after the publication of these orders to the parties or their solicitors.
The parties as in their capacities as directors of [A] Pty Ltd, the Trustee of the Fund, (“the Trustee”) do all acts and things and sign all such documents as may be necessary, so that, in accordance with the obligations set out under the Act and Regulations, the Trustee can calculate the entitlement of, and make payment to, the Wife in accordance with these orders.
In 30 days of the orders being published to the parties or their solicitors through the Commonwealth Courts Portal, the parties do all such acts and things and sign all such documents, including but not limited to the signing of trustee minutes, rollover requests and related documents, that may be necessary to rollover or transfer the entitlement of the Wife in the Fund to another complying superannuation fund of the [wife’s] choosing.
Contemporaneously with the parties’ compliance with the preceding paragraph, the Wife do all acts and things and sign all documents necessary to resign as a director of the Trustee, resign as a member of the Fund and transfer her shares in the Trustee to the Husband.

(Emphasis added)
On 12 November 2021, the husband signed financial statements for the SMSF for the year ending June 2021, which were prepared on the basis of compliance with the 20 April 2021 orders, as they show a “rollover out” to the wife in the sum of $1,102,738, with an identical sum as being the accrued benefit of the husband. They also show that amongst the SMSF assets are units in an unlisted unit trust valued at $264,000 (“the units”).
Also on 12 November 2021, the husband signed a rollover benefit statement, confirming $1,102,738.32 was to be rolled out of the SMSF to a retail superannuation fund which had been nominated by the wife. However in fact that rollover never occurred.
That appears to be because, on a date which the evidence does not permit to be determined, the husband became “concerned about the value attributed to” the units. The unit trust in question owns land which has not been sold or developed. In his affidavit in support of this application for an extension of time filed 7 November 2022, the husband says “I am not aware of any party willing to acquire our units in the Unit Trust” (paragraph 13(h)) and on that basis it appears as though he contends they are worthless (paragraph 38). That is the only evidence as to the lack of value of the units.
On 14 July 2021 the wife filed an application seeking to enforce the splitting order, and on 10 June 2022 an order was made under s 106A of the Family Law Act 1975 (Cth) (“the Act”) permitting the wife to execute the necessary documents to effect the split if the husband continued to fail to do so for seven days. A subsequent application for leave to appeal from that order was dismissed on 11 October 2022. One of the husband’s contentions advanced in the application for leave was that the splitting order was null and void as the primary judge had failed to determine the value of the parties’ SMSF as he contends was required by s 90XT(2) of the Act. However the Court held that a superior court’s orders remains valid unless and until they are set aside (Chaban & Chaban [2022] FedCFamC1A 162; (2022) FLC 94-110 at [18]).
Now the husband seeks an extension of time in which to appeal the 20 April 2021 splitting order on the ground that the primary judge “erred by failing to make the required determination pursuant to s 90XT(2)” of the Act.
APPLICATION FOR EXTENSION OF TIME

Relevant legal principles

The discretionary power to extend time for the filing of a Notice of Appeal pursuant to r 15.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) has typically been referenced to the well-known statement by McHugh J in Gallo v Dawson (1990) 93 ALR 479 where his Honour said at 480–481:
… The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1978] VicRp 27; [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No.2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott [1986] FCA 365; (1986) 12 FCR 187 at 194-195. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VicRp 113; [1967] VR 871 at 872; Hughes, at 263-264; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has “a vested right to retain the judgment” unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200, at p 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice…

(Emphasis added)
Thus in determining whether a grant of leave is necessary to do justice, the following factors are established as being potentially relevant:
The merits of the appeal;
The length of the delay, and any explanation for the same;
The nature and history of the proceedings; and
Any prejudice or other consequence for the parties if leave is granted or refused.
The material

As I have already observed, in broad terms, the husband contends that the units shown in the 30 June 2021 financial statements of the SMSF (which holds a miscellany of various assets) as being worth $264,000, are in fact valueless. However because under Order 17, the wife has nominated a so-called “retail” superannuation fund into which her entitlement under the splitting order is to be paid, it can only receive monies, not other assets. Therefore the husband’s concern is that he will be left with the valueless asset, in consequence of which the effect of the splitting order would be that the wife gets 57 per cent of the SMSF, and he only gets 43 per cent. He contended that this was unjust.
Merits of the proposed appeal

Section 90XT of the Act relevantly provides:
(1) A court, in accordance with section 90XS, may make the following orders in relation to a superannuation interest (other than an unsplittable interest):
(a) if the interest is not a percentage‑only interest—an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i) the non‑member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations; and
(ii) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;

b) an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i) the non‑member spouse is entitled to be paid a specified percentage of the splittable payment; and
(ii) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;

(c) if the interest is a percentage‑only interest—an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:

(i) the non‑member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations by reference to the percentage specified in the order;
(ii) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;

(d) such other orders as the court thinks necessary for the enforcement of an order under paragraph (a), (b) or (c).

(2) Before making an order referred to in subsection (1), the court must make a determination under paragraph (a) or (b) as follows:
(a) if the regulations provide for the determination of an amount in relation to the interest, the court must determine the amount in accordance with the regulations;
(b) otherwise, the court must determine the value of the interest by such method as the court considers appropriate.

…

(4) Before making an order referred to in paragraph (1)(a), the court must allocate a base amount to the non‑member spouse, not exceeding the value determined under subsection (2).

(Emphasis added)
It was not contentious that the splitting order was made under s 90XT(1). Likewise it was not in dispute that s 90XT(2)(a) was not engaged on the facts, but s 90XT(2)(b) was.
I have already set out the transcript where the wife’s counsel advised the primary judge that the splitting order would, according to the 2019 SMSF financial reports, see the parties with “about a million dollars each”.
It follows that the Court was being advised that, as at 30 June 2019, the parties’ member entitlements in the SMSF were in the order of $2 million. No objection to that assertion was made by counsel for the husband, nor was any different figure contended for. More importantly, there was no suggestion that such figure was not, or even might not be, “the value of the [superannuation] interest” for the purposes of s 90XT(2)(b). Indeed to the contrary, counsel said that “I largely agree with everything that [counsel for the wife] has said. The only area of dispute about contributions … relates to certain issues and treatment of gambling and the like” (Transcript 20 April 2021, p.3 lines 40–44). Subject to very limited exceptions of no relevance here, parties are bound by their conduct of the case at first instance (Metwally v University of Wollongong (1985) 60 ALR 68).
It is quite apparent that the primary judge implicitly accepted the parties’ agreed, albeit outdated, value of the superannuation interest was the appropriate method to determine its value.
Before me, senior counsel for the husband contended that s 90XT(2)(b) required the primary judge to precisely determine the value of the interests, and the post 20 April 2021 mechanism of precisely determining the amount to be rolled over established by Order 16 did not satisfy the temporal direction of the commencement of s 90XT(2), namely “[b]efore making an order”. However as I explored with him at the hearing of the application, if the assets of a self-managed superannuation fund were volatile – say shares in technology companies – the value of the superannuation interest could change by the minute. Senior counsel then appeared to concede that the parties could agree on a date sometime in the past.
Such a construction of the requirement of s 90XT(2)(b) has the merit of being practically workable. Moreover that is, in effect, precisely what the parties did here, pragmatically accepting that the determination of the value of the interest should be by reference to the most recent figures available, namely 2019, albeit the precise amount to be paid should be determined by a subsequent calculation. Inferentially the primary judge accepted that as the appropriate method. In any event, the precise amount of the split would be ascertained under the orders; that does not mean that the determination of the value of the superannuation interest under s 90XT(2) was delegated, and only made after 20 April 2021.
Section 90XT(2)(b) was therefore complied with, and hence the proposed appeal is without merit. Thus Scriven & Scriven [2020] FamCAFC 236; (2020) FLC 93-988, which is authority that a failure to comply with s 90XT(2) renders a splitting order void, is of no application here.
Even if I am wrong as to that, and the primary judge did err, it is not automatic that the appeal must succeed, as the husband would need to persuade the Court hearing the appeal that a materially different result favouring him may have ensued (Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at [50]) as a new trial will not be ordered, if even an error of law has not resulted in any miscarriage of justice (Conway v the Queen (2002) 209 CLR 203). Here it is plain that, if the primary judge did not determine the value of the interest on 20 April 2021, had she then proceeded to do so, there were only two possible outcomes. The first was to have explicitly accepted the parties’ agreed, albeit likely outdated, value. The second was to require the parties to do what Order 16 required, albeit prior to making the formal splitting order. There is no reason to think that would have seen anything other than what in fact thereafter transpired, namely that the wife’s agreed equal entitlement would have been valued at $1,102,738.32. Indeed since it is only the husband’s lay opinion that the units are of no value, that would still likely be the result today, and if the evidence remains the same, also at the date of the hearing of any appeal. Thus on these scenarios the appeal is still bereft of merit.
Moreover, three things simply cannot be ignored. Firstly, that after the 20 April 2021 orders, the husband signed the 2021 financial statements which included a value of $264,000 for the units. Secondly, that on the same day, the husband signed a rollover benefit statement in which a retail superannuation fund was the named recipient of the wife’s superannuation interest, calculated including the units at a value of $264,000. Thirdly, that the assertion that the units are valueless is solely, and only inferentially, derived from the husband’s belief.
Therefore the error of law advanced in the proposed appeal is really done so solely to manufacture an opportunity to remedy an alleged mistake of fact, namely that the true value of the superannuation interest was other than what was represented to the primary judge by both parties on 20 April 2021. Axiomatically, this was not the husband’s position before the primary judge on 20 April 2021.
Length of delay and explanation for it

The delay is extraordinary, it being well over 18 months between the 20 April 2021 consent orders and the 7 November 2022 application to extend time. The explanation for that delay is at best inferential, namely that the “void for non-compliance with s 90XT(2)” argument was thought a viable defence to enforcement until 11 October 2022, when leave to appeal the enforcement order was refused. However in resisting enforcement, the husband was not proactively seeking to set aside the splitting order, but rather he only raised that contention by way of defence. Had he believed that the splitting order was void, once that occurred to him, he should have immediately appealed. There is no explanation proffered by him as to why he failed to do so.
I am not satisfied that there is an adequate explanation for the husband’s delay.
Nature and history of proceedings

The evidence does not permit any serious consideration of this issue, other than to say it appears the proceedings only commenced in 2020.
Prejudice or other consequence to the parties

Whilst the parties agreed to an equal split of the SMSF, it was but a minor component of the total pool being divided. If the $264,000 asset is in fact valueless, the slight disparity in the value of the parties’ superannuation entitlements is much diluted in the context of the overall $14.5 million pool – where the impact is only in the order of two per cent. Of course, all of this is predicated upon acceptance of the husband’s contention that the units are in fact valueless, something which is far from clear.
An extension of time would require the wife to litigate the appeal, which if successful, would see the matter remitted (at least on the husband’s material). Although the proposed Notice of Appeal purported to restrict the scope of the remitter solely to the superannuation split, of course that overlooks that there is only one exercise of discretion under s 79 of the Act, and hence remitter would need to be of the entire matter.
Moreover, it would defer the wife’s undoubted entitlement to some superannuation split until the matter is finally resolved. She wants to roll her entitlement in the SMSF to another superannuation fund. Not being able to do so is a form of prejudice, and no practical mechanism for minimising that prejudice was suggested by the husband. His contention that the wife does not presently have, nor is approaching, entitlement to access her superannuation, is not to the point.
Evaluation

Weighing these matters in the balance tells strongly against the grant of an extension of time, as it is not necessary to enable the Court to do justice between the parties.
OUTCOME

The Application in an Appeal filed 7 November 2022 will be dismissed.
COSTS

The relevant rules of court provide for an application as to costs, and hence no timetable is required to be ordered.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree.
Associate:

Dated: 25 July 2023″

Taken from: https://www.austlii.edu.au