In the case of Surridge & Surridge</em> [2015] FamCA 493, the trial judge, Foster J adopted a two-pool approach with the wife’s pension being a discrete second pool and the parties’ other superannuation and non- superannuation assets being in the primary pool.

The wife was in receipt of a hurt on duty pension under the Police Regulation Superannuation Act 1906 (NSW). She received a pension of $900 net per week increasing to about $1,000 per week net at the time of trial. Foster J referred to the difficulty of assessing contribution-based entitlements to the type of superannuation interest held by the wife and quoted favourably from Watts J in Schmidt & Schmidt (2009) FamCA 1386. In Schmidt, the court assessed the wife’s contribution to the hurt on duty pension entitlement at 10%. In Schmidt, the parties were together for 71⁄2 years and the husband was in the police force for just over 21 years prior to his retirement.

In Surridge, the wife was aged 46 and her eligible service period commenced in June 1987. The parties commenced a relationship in 1991 and married in 1996. They separated in August 2012. Contributions to the primary pool were assessed as equal. A “s 75(2)” (of the Family Law Act 1975) adjustment of 121⁄2% was made in favour of the wife who had the continuing care of the children aged 16 and 15 with little prospect of financial support from the husband. The s 75(2) adjustment also took into account unexplained funds received and disbursed by the husband of $800,000.

The Trial Court Analysis

Justice Foster found that the wife was employed for 9 years with the police force prior to cohabitation. He seems to have made an error here. They apparently married nine years after she started with the police force but had 4 years of cohabitation before their marriage.

The value of the wife’s future pension was determined according to fund specific factors at $1,022,821. No lump sum was payable in the future to her but the effect of a splitting order was to allow an immediate lump sum to be paid to the husband or for a rollover of that lump sum to another superannuation fund or a combination of the two. The effect of any spitting order was to commensurately reduce the wife’s pension.

The wife’s contribution-based entitlement to the income stream was found by Foster J to be overwhelming and it was difficult to find any contribution-based entitlement of the husband to it. The pension was in effect unearned income, indexed and payable during the wife’s lifetime. The consequence of any splitting order of the pension entitlement was to commensurately reduce the wife’s pension and procure an immediate cash payment to the husband leaving the wife with the reduced periodic income.

His Honour made a modest adjustment of 5% in relation to the wife’s pension in favour of the husband which equated to an approximate lump sum of about $20,000. The outcome was that the wife had a cash equivalent of about $1,621,250 from the primary pool less an adjustment of $20,000 in favour of the husband from the pension pool leaving a net figure of $1,601,250. She otherwise retained her pension intact. The husband had an entitlement of $993,050 including the $20,000 adjustment of the wife’s pension.

The Full Court Analysis

On appeal, the Full Court found that Foster J’s approach to the wife’s hurt on duty pension was erroneous, even though both parties urged him to adopt that approach. The Full Court considered it to be “a matter of significance and is productive of injustice. We consider ourselves bound to correct it”. The Full Court found that it was not just and equitable to make a splitting order in respect of the wife’s pension. Indeed, there was “… a compelling case for not doing so” (at [27]).
The reasons for this conclusion were:
1. Importantly, the property and superannuation interests of the parties permitted justice and equity to be achieved without such an order. The wife had only a possible residual capacity for some form of future part-time employment, her pension income of $50,000 per annum was modest and she had the continuing full-time care of two children, one of whom was only 12, and had little prospect of receiving child support or other financial assistance from the husband, although he had a significant earning capacity.
2. Once the trial judge determined not to make a splitting order, there was no requirement to value the interest (s 90MT).
3. The wife could never receive the calculated lump sum amount. Nor could she commute any part of the pension to a lump sum. Her only entitlement was to an income stream for so long as she remained entitled to receive the pension. If no splitting order was to be made but an assessed percentage entitlement was attributed to the lump sum on account of the husband’s contributions (even if those contributions were assessed to be modest as the trial judge considered them to be) the husband was receiving a lump sum entitlement from a lump sum that the wife could never receive.
4. The pension was taxed, but the scheme-specific methodology by which the capital sum was calculated referred to the gross amount of the pension.
5. If the wife’s pension was to be included in the parties’ assets and liabilities, even if part of a separate pool, her very significant contributions to it needed to be considered and the trial judge did not do so.
6. The proper way to deal with the wife’s pension was under s 79(4)(e) as income in the hands of the wife.
There was no actuarial assessment of the “value” of the projected income stream of the husband of $340,000 per annum based on his earning capacity (as he had chosen not to work, his projected income was irrelevant), to compare to the lump sum calculation of the wife’s pension income stream.

The Full Court held that “to take up the gross value of the wife’s superannuation fund in the manner in which his Honour did, resulted in the miscarriage of the trial judge’s discretion leading to orders which were unjust to the wife”. In other words, the trial judge’s discretion of treating the wife’s pension as a form of superannuation to be included in the asset pool when it should not have been treated as a source of income (not included in the asset pool) resulted in a miscarriage of justice.


The Full Court increased the wife’s entitlements overall to 75% by way of s 79(4)(e) adjustment of 25%. This was largely due to the large transactions made by the husband which were unexplained and significantly depleted the pool, although they could not be precisely quantified.

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