In the recent decision of R -v- T [2020] WASCA 109, the Western Australia (WA) Court of Appeal has upheld interim property orders of the WA Family Court to set aside contributions made by a de facto husband to an SMSF. We note that under current law, a superannuation fund in a de facto situation in WA will be taken into consideration as a financial resource that a party will have access to in the future, but the superannuation itself cannot be split between the parties.

Background

The de facto husband and de facto wife commenced living together in 1999, and were in a marriage-like relationship until they separated in 2008. The couple never married. The couples’ assets included interests in an SMSF, for which the de facto husband had assumed the primary management role.

The de facto wife sought several orders as part of the family law proceedings, including declarations that a series of contributions made by the de facto husband to the SMSF be set aside. The contributions included a non-concessional contribution of $96,859 in 2008, a non-concessional contribution of $450,000 in 2011, and a purported contribution involving certain transfers of interest in property syndicates from a discretionary trust in 2016.

Primary decision

Section 222 of the Family Court Act 1997 (WA) (Act) provides that a court hearing family law proceedings may set aside a transaction which is made to defeat an existing or anticipated order of the family court. The judge at first instance found that the relevant transactions had been done with the intention of defeating anticipated orders under the Act by removing property from the asset pool available for the making of property settlement orders, and relied on section 222 of the Act to set aside the contributions by the de facto husband. As a result those amounts would form part of the asset pool.

The appeal

On appeal, the de facto husband argued that the judge at first instance erred in law by not considering regulation 5.08 of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regs) (in relation to treatment of minimum benefits) and section 62 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) (including the sole purpose test) and thereby erred in ordering that the transactions be set aside.

However, the court of appeal found the orders did not result in a breach of the SIS Act or the SIS Regs because the effect of the orders was to reverse the dispositions from inception (ab initio), and to treat the contributions as never having occurred. Accordingly, the moneys were never part of the SMSF to which the obligations under superannuation law applied.

Relevance of the decision

Due to WA’s unique status in family law in Australia, the decision may have limited direct influence outside of that state. This is because superannuation is devisable in family court proceedings in other states.

However, this case could have indirect relevance, including:

Setting aside contributions made by persons who are not parties to the marriage – eg employers and associated entitles or contributions made by the parties to the marriage on behalf of others – eg children; and
The principle that contributions that are void ab initio are not subject to the SIS Act and SIS Regs. This could be relevant, for example, for contributions that are void under the doctrine of mistake.

To discuss further or for more information please contact:

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au