Under Section 79(1)(a) and Section 90SM(1)(a) of the Family Law Act, the Family Court and Federal Circuit Court of Australia are empowered to make orders altering the interests of the parties to a marriage or de facto relationship in property.
In order to divide the property of the relationship, the Court must first be able to identify and value the property of the marriage or de facto relationship.
So what constitutes ‘property’?
The term ‘property’ is defined under Section 4(1) of the Family Law Act 1975 as:
(a) in relation to the parties to a marriage or either of them — means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion;
The same definition applies to de facto relationships and under Section 4(1)(b).
Property means presently existing entitlements, not future, contingent or potential interests.1 In family law proceedings, the definition of ‘property’ encompasses property acquired by the parties prior to the relationship, during the relationship and after separation.
The Full Court of the Family Court of Australia has given the term ‘property’ a very broad definition:
Property is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.
Duff & Duff (1977) FLC ¶90-217 at 76,133.
Property includes but is not limited to: real property (land, houses), personal property (furniture, savings, cars), shares in public or private companies, debts, livestock and foreign property amongst other things.
Is super considered ‘property’?
The treatment of superannuation by the family law courts has changed over time. In the 1979 case of Crapp v Crapp, superannuation was not treated as ‘property’, instead it was taken into account as a ‘financial resource’. A financial resource differs from property in that it cannot be divided between the parties pursuant to Court Order. In Crapp, a financial resource was considered to be:
[A] term which is clearly intended to be widely embracing. The term “resource” is defined in the Shorter Oxford Dictionary to include “‘a means of supplying some want of or deficiency; a stock or reserve upon which one can draw when necessary”.
Crapp & Crapp (1979) 5 Fam LR 47, 66-7, Fogarty J.
Examples of financial resources include rental income derived from a property,2 tax losses carried forward,3 accrued long service leave which can be accessed as a capital sum,4 or an interest in a trust over which the beneficiary does not exercise control. Instead of being divided between the parties, a financial resource is taken into account when considering the future needs of the parties under Section 75(2) and Section 90SF(3) of the Family Law Act.
It was not until the superannuation splitting scheme was introduced that the Court revisited the classification of ‘superannuation’ as a financial resource. On 28 December 2002, a suite of new regulations and amendments to the Family Law Act 1975 (Cth) came into operation allowing parties to a marriage or de facto relationship to divide and transfer their respective superannuation interests. Amongst those amendments, the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) introduced a new Section 90MC (now Section 90XC) to the Family Law Act, which states:
A superannuation interest is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.
In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervenor), the Full Court of the Family Court of Australia decided that the expression “treated as property” in Section 90MC, should be understood to mean “treated as if it were property even though it is not”. Accordingly, the superannuation must be valued, contributions assessed and Section 75(2)/90SF(3) factors considered.
What about foreign superannuation interests?
So now we know that superannuation was once considered a financial resource, and, not long after the introduction of the superannuation splitting scheme, the Australian family law courts treated superannuation as property, capable of being divided. But what about foreign superannuation interests? The Australian superannuation splitting scheme is Australian law, and the Courts jurisdiction in respect of a superannuation interest is limited to its powers under Australian law. Overseas superannuation interests therefore generally fall outside of Australian jurisdiction.
First-generation immigrants, migrants and expats returning to Australia may have accumulated superannuation or pension interests overseas prior to residing in Australia. Access to these overseas superannuation interests can be restricted if the fund member is both below retirement age and resident in another jurisdiction. Overseas superannuation funds have a range of access requirements, for example some foreign super funds cannot be accessed unless a member is both a citizen and resident in the country of the fund at the time of retirement.5
The 2006 case of Lesbirel v Lesbirel suggests that foreign superannuation may still be treated as a ‘financial resource’ in family law property settlements. In Lesbirel, the Husband appealed against a decision of the Family Court of Australia on the basis that the Wife’s overseas superannuation interests were incorrectly treated as a financial resource and the Trial Judge had therefore failed to properly to take them into account in the property settlement. The Husband also submitted, amongst other things, that the Trial Judge had erred in concluding there should be a 15% adjustment of property to the Wife on the basis of Section 75(2) factors, taking into account the Wife’s foreign superannuation interests.
In Lesbirel, the Wife was a French citizen and had previously worked in the French territory of Noumeau, New Caledonia. She had accumulated two French superannuation interests with a total agreed value of $97,351 AUD. The Husband held superannuation entitlements in Australia in UniSuper.
The Husband submitted that, “as his superannuation was not split the effective treatment of the parties’ respective superannuation entitlements should have been the same”. The Husband considered the Court should treat the Wife’s super as if it were ‘property’, as his super had been treated as property.
Although the Full Court upheld the Husband’s appeal on the issue of the overall adjustment of the property pool, they affirmed the Trial Judge’s decision to classify the Wife’s foreign super interest as a ‘financial resource’. The Full Court considered,
[H]is Honour was correct in observing that the monies do not become available to the wife for some considerable time. Regard should be had to the fact that the wife does not have immediate access to the asset.
Lesbirel v Lesbirel [2006] FamCA 1287 (15 August 2006) [47].
The classification of foreign superannuation entitlements can be complex and contested. If you or your ex-partner hold a foreign superannuation interest, contact one of our experienced family lawyers on 03 8393 0144 to discuss your family law rights and entitlements.
Sources:
- Affirmed by Kent J in Marlowe-Dawson & Dawson (No 2) [2014] FamCA 599.
- Kelly and Kelly (No 2) (1981) FLC ¶91-108, 76, 806.
- Cromwell and Cromwell [2006] FamCA 1454.
- Gould and Gould (1996) FLC ¶92-657.
- E.g. Employees Provident Fund in Malaysia.