Wife spends $137,421 of husbands superannuation payment without his knowledge

Court sets financial agreement aside where wife used funds which was husband’s “separate property”

In Gregory [2014] FCCA 106 (24 January 2014, published June 2014) Judge Baumann considered whether a financial agreement should be set aside in the context of a wife who “without the knowledge or consent of the husband” obtained the husband’s superannuation cheque for $137,421 and “put it into a joint account and then disbursed it as she saw fit” (para 23). The husband alleged that a further $235,084 transferred from his accounts to the joint account (a total of $372,505) was used by the wife for her own benefit (para 30).

As to the parties’ financial agreement, Judge Baumann said at para 35:

“The agreement is a simple document, which is explained in part by the fact that at the time of the agreement:

a) The wife owned a home and some other minor assets; and

b) The husband was bankrupt and had no assets … ”

The Court continued at para 42:

“In my view, the real intention of the parties at the time the agreement was entered into was that:

a) The wife’s property at Property S would be protected ‘as separate property’ of the wife from claims by the husband; and

b) The husband’s superannuation entitlement … would be protected ‘as separate property’ of the husband from claims by the wife … ”

The husband (who died after the hearing) sought a declaration that the wife held the funds on trust for him, being funds that were his property under the terms of their financial agreement, or alternatively that the agreement (referred to below by the Court as “BFA”) be set aside (para 2).

The Court said (from para 47):

“It is not in dispute that at the time of the execution of the BFA the husband (then a bankrupt) held an interest in the (omitted) Superannuation Fund. Exhibit 7 … confirms that as a result of a request made by the husband … a net payment of $137,421.20 was authorised on 31 August 2005. … I am satisfied … that this interest fairly falls within the definition of ‘separate property’ of the husband for the purposes of the BFA.

[49] The husband says, and I accept this evidence, that ‘my wife intercepted this final letter and cheque from the superannuation fund, and unbeknown to me at the time, banked the cheque immediately into our joint account and, immediately upon it being cleared, withdrew the monies entirely and placed them beyond ‘my reach …”’ …

[53] … I accept that the husband’s evidence that he was unaware of the receipt of the cheque (or its use) and only became aware of it 3 years later is difficult to fathom; however, the nature of the relationship, the wife’s dominance over the husband at that time, and his poor health, on balance, do provide some foundation for this otherwise difficult to explain time lapse.

[55] [Counsel for the wife] contends that the cheque having been deposited to the joint account and then withdrawn ‘their disposition was voluntary and the wife acquired co-title’ and further that ‘as the parties were married, any advance of funds by the husband to the wife is to be categorised with reference to the presumption of advancement’.

[56] In my view, the wife’s actions, as I find them to be in respect of this cheque and withdrawal of funds thereafter, are such that the presumption of advancement does not apply.

[58] The husband contends that ‘in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out’ (s 90K(1)(c)). The only asset that remains of any significance to the wife’s legal property at Property S, which I accept is clearly her ‘separate property’ and was in effect under the BFA to be protected from claims by the husband. The wife has no funds to ‘reimburse’ the husband or his estate now for the superannuation benefit.

[59] The term impracticable is not defined for the purpose of s 90K of the Act. However, the Full Court in Sanger & Sanger (2011) FamCAFC 210, at paragraphs 86-96 analyses this term and in particular the Full Court observed, relevantly to this case that:

“ … there is a material distinction between an agreement which is unable to be put in practice, and is thus impracticable, and an agreement which, although producing a potentially different outcome to that for which a party hoped, is able to be implemented, or put into practice.” ([82]).

[60] In my view, the agreement cannot be “put into practice” as a result of the manner in which the wife accessed the superannuation funds and in the absence of any other available funds.

[61] Furthermore, in this case, even if this ground of relief had failed, I would find that declining to set aside the agreement would be unconscionable.”

The financial agreement was set aside and the matter listed for directions as to determining each parties’ rights pursuant to Part VIII of the Act.

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