Bulow & Bulow (No 3)

Case [2021] FCCA 314


FEDERAL CIRCUIT COURT OF AUSTRALIA

Bulow & Bulow (No 3) [2021] FCCA 314

File number(s): ADC 1674 of 2014
Judgment of: JUDGE HEFFERNAN
Date of judgment: 15 March 2021
Catchwords: FAMILY LAW – property – limited rehearing after appeal – superannuation – nature form and characteristics of superannuation fund – contributions – where husband declined to attend trial – where hearing proceeded on undefended basis – final orders
Legislation:

Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (Cth)

Family Law (Superannuation) Regulations 2001 (Cth)

Family Law Act 1975 (Cth), ss 75(2), 79, 90XT(1)

Family Law Legislation Amendments (Superannuation) Act 2001 (Cth)

Federal Circuit Court Rules 2001 (Cth), r 13.03C(1)(e)

Superannuation Legislation Amendment (Family Law) Act 2004 (Cth)

Cases cited:

Bulow & Bulow [2017] FCCA 2657

Bulow & Bulow [2019] FamCAFC 3

Bulow & Bulow (No.2) [2019] FCCA 2251

Bulow & Bulow (No.2) [2020] FamCAFC 120

Garrett & Garrett (1984) FLC 91-539

Petruski & Balewa [2013] FamFCA 15

W & W (2005) FLC 93-222

Other:

Stephen Bourke, ‘Super Splitting for Family Lawyers’ (201,) Certus Law, 2010

Number of paragraphs: 78
Date of hearing: 13 August 2020
Place: Adelaide
The Applicant: In person
The Respondent: No Appearance

ORDERS

ADC 1674 of 2014
BETWEEN:

MS BULOW

Applicant

AND:

MR BULOW

Respondent

ORDER MADE BY:

JUDGE HEFFERNAN

DATE OF ORDER:

15 MARCH 2021
AMENDED 12 APRIL 2021

THE COURT NOTES THAT:

A.Order 3 of the orders of Judge Heffernan dated 21 November 2017 was not set aside by the Full Court in Bulow & Bulow [2019] FamCAFC 3.

B.Order 3 of these orders, and payments made as a result, will be affected by the Superannuation Legislation Amendment (Family Law) Act 2004 which came into effect on 18 May 2004 and the Family Law (Superannuation) Regulations 2001 which together provide for a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.

THE COURT ORDERS THAT:

1.Nunc pro tunc, noting that the terms of order 1(a) of the orders of Judge Heffernan dated 21 November 2017 in Bulow & Bulow [2017] FCCA 2657, as set aside by the Full Court in Bulow & Bulow [2019] FamCAFC 3, have already been effected by the parties, the Court orders that:

There be a 60:40 division of the non-superannuation assets of the parties in favour of the wife with the following orders to give effect to the same:

(a)The parties shall do all such acts and things to facilitate the balance of the proceeds from the sale of the property at B Street, Suburb C presently held in the Bank SA Account BSB: …92, Account Number …40 (controlled by Ms D, conveyancer) being disbursed as follows:

(i)The sum of $87,332.80 to the husband; and

(ii)The balance then remaining to the Johnston Withers Solicitors Trust Account for and on behalf of the wife.

2.Nunc pro tunc, the husband is to pay the costs of the wife in the amount of ELEVEN…

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Bulow and Bulow (No 3) [2021] FCCA 314
Case
[2021] FCCA 314
Decision Date

CaseChat Overview and Summary

In *Bulow & Bulow (No 3)*, Heffernan J of the Federal Circuit Court of Australia considered orders relating to the division of property and costs between Ms Bulow (the applicant wife) and Mr Bulow (the respondent husband). The proceedings involved the finalisation of property settlement orders, including the division of non-superannuation assets and the treatment of the husband's superannuation interests, in light of previous Full Court decisions and legislative amendments.

The court was required to determine the precise division of the parties' non-superannuation assets, the allocation of costs, and the method for splitting the husband's superannuation interest in the H Super Fund. This included considering the impact of the *Superannuation Legislation Amendment (Family Law) Act 2004* and the *Family Law (Superannuation) Regulations 2001* on the creation of a separate superannuation interest for the non-member spouse and the consequential effects on payments. The court also had to address the husband's post-separation contributions to his superannuation and their impact on the overall division.

Heffernan J applied the principles of property division under the *Family Law Act 1975* (Cth), taking into account the parties' financial resources, including the nature and characteristics of the husband's superannuation interest. The court accepted the expert evidence of Mr Stephen Bourke regarding the valuation of the husband's superannuation interest at different points in time and the potential impact of a splitting order. The judge found that the husband's increased superannuation contributions post-separation, while funded by his post-separation salary, were to be considered in the context of the wife's significant non-financial contributions. The court also noted that certain orders from a previous judgment had already been effected by the parties.

The court made orders for a 60:40 division of non-superannuation assets in favour of the wife, specifying the disbursement of proceeds from the sale of a property. It also ordered the husband to pay the wife's costs, noting this had already been effected. Crucially, the court made orders pursuant to s 90XT of the *Family Law Act 1975* (Cth) to allocate a base amount of $225,262 from the husband's H Super Fund interest to the wife, establishing her entitlement to a splittable payment from that interest. The proceedings were adjourned for mention regarding the wife's applications for costs of the first trial and expert evidence.

Orders

Orders of the court

ADC 1674 of 2014

BETWEEN:

MS BULOW

Applicant

AND:

MR BULOW

Respondent

ORDER MADE BY:

JUDGE HEFFERNAN

DATE OF ORDER:

15 MARCH 2021

AMENDED 12 APRIL 2021

THE COURT NOTES THAT:

A. Order 3 of the orders of Judge Heffernan dated 21 November 2017 was not set aside by the Full Court in Bulow & Bulow [2019] FamCAFC 3.

B. Order 3 of these orders, and payments made as a result, will be affected by the Superannuation Legislation Amendment (Family Law) Act 2004 which came into effect on 18 May 2004 and the Family Law (Superannuation) Regulations 2001 which together provide for a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.

THE COURT ORDERS THAT:

1. Nunc pro tunc, noting that the terms of order 1(a) of the orders of Judge Heffernan dated 21 November 2017 in Bulow & Bulow [2017] FCCA 2657, as set aside by the Full Court in Bulow & Bulow [2019] FamCAFC 3, have already been effected by the parties, the Court orders that:

There be a 60:40 division of the non-superannuation assets of the parties in favour of the wife with the following orders to give effect to the same:

(a) The parties shall do all such acts and things to facilitate the balance of the proceeds from the sale of the property at B Street, Suburb C presently held in the Bank SA Account BSB: …92, Account Number …40 (controlled by Ms D, conveyancer) being disbursed as follows:

(i) The sum of $87,332.80 to the husband; and

(ii) The balance then remaining to the Johnston Withers Solicitors Trust Account for and on behalf of the wife.

2. Nunc pro tunc, the husband is to pay the costs of the wife in the amount of ELEVEN THOUSAND, EIGHT HUNDRED AND EIGHTY NINE DOLLARS ($11,889.00) noting nothing that paying of this amount has already been effected by the parties in compliance with orders 1(a)(i) and (ii) of the orders of Judge Heffernan dated 21 November 2017.

3. Paragraph 3 (inclusive) of this order is binding on the Trustee of the H Super Fund (‘the Fund’):

(a) In accordance with s 90XT(4) of the Family Law Act 1975 (Cth) (‘the Act’) the base amount of $225,262 is to be allocated to the applicant of the interest of the respondent in the Fund (Member No: …44);

(b) Pursuant to s 90XT(1)(a) of the Act, wherever a splittable payment becomes payable in respect of the respondent’s interest in the Fund, the applicant shall be entitled to be paid an amount calculated in accordance with Pt 6 of the Family Law (Superannuation) Regulations 2001 (‘the Regulations’) using the base amount and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this order;

(c) Paragraph 3(a) has effect from the operative time;

(d) The operative time for the purpose of paragraph 3(a) of this order is 28 April 2020; and

(e) The applicant is to serve a copy of the sealed orders upon the Trustee of the H Super Fund within 7 days of receipt of the sealed copy of the orders.

4. These proceedings are adjourned for mention on a date and time to be advised with respect to the wife’s Application in a Case for costs of the first trial and her application that the costs of the expert evidence of Mr Bourke be paid by the husband.

* Pursuant to Paragraph 16.05(2)(e) of the Federal Circuit Court Rules 2001 (Cth), this Order is amended on 12 April 2021.

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.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

With respect to the factors in s 75(2)(b), I maintain the view I took with respect to income, property, and the physical and mental capacity of the parties, there being no further evidence tendered which would cause me to alter that view. With respect to the factor of financial resources referred to in s 75(2)(b), I take into account the nature, form and characteristics of the husband’s superannuation interest and the difference it has in that respect to the superannuation interests of the wife. I discuss those matters below. The evidence as to superannuation Mr Stephen Bourke gave oral evidence in amplification of his written reports. Mr Bourke is a legal practitioner and a specialist practitioner for the Self-Managed Superannuation Practitioners Association. He was admitted to practise in 1989. He has undertaken specialist studies in superannuation law. He has also completed a Diploma in Taxation with the Australian Taxation Institute which encompassed studies with respect to the taxation of superannuation. He is the former head of the Family Law and Legal Assistance Division of the Commonwealth Attorney Generals Department in which role he led a task force on the government’s proposed superannuation and family law reforms at the time Parliament passed amendments in the form of the Family Law Legislation Amendments (Superannuation) Act 2001 which provided for splitting of superannuation benefits. He is the author of the text Super Splitting for Family Lawyers which was published in 2011. He has given expert evidence on superannuation matters on numerous occasions. I accept that this witness has expertise to give expert evidence on matters relating to superannuation law and the nature, form and characteristics of superannuation funds. Mr Bourke was asked to provide a report and evidence in relation to the following:(a)Evidence in relation to the amount to be taken as the value of the husband’s H Super Fund superannuation interest at:(i)21 November 2017; and(ii)28 April 2020;(b)Evidence about the nature, form and characteristics of the husband’s H Super Fund superannuation interest and how any splitting order might impact upon the interest;(c)Evidence about the effect of a proposed splitting order upon the interest that would be created for the wife; and(d)Evidence about the increase in the value of the fund and the source of the increase post separation. With respect to the amount to be taken as the value of Mr Bulow’s superannuation interest in the H Super Fund, Mr Bourke has calculated this to be $688,764.81 as at 21 November 2017. He calculates the value as at 28 April 2020 as $849,498.70. He noted that the wife had two superannuation interests. Firstly an interest in P Fund, being an accumulation superannuation interest. She also has a superannuation interest in the K Fund superannuation plan which is a state government scheme. The K Fund superannuation interest is also an accumulation interest but in a constitutionally protected superannuation scheme.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The result would be that Ms Bulow would be entitled to an associate preserved benefit in the amount of $236,360 on the April 2020 figures.Post separation contributions by the husband to superannuation The husband’s H Fund has obviously increased in value since separation. At the time of the first trial, the husband’s H Fund had increased significantly as a result of his having increased his after-tax employee contributions to 10% of his salary, whereas they had previously been made at a rate of 2%. In the years between separation and the first trial, between 20 November 2012 and 20 November 2015, this had resulted in an increase in the Family Law value of his superannuation of $66,100.[19] There is no evidence before me as to the amount in which the husband’s superannuation has increased by virtue of direct voluntary contributions made by him since that time. The husband’s position at the first trial was that his post separation contributions should be disregarded for the purpose of the superannuation pool. Given his failure to attend at the present trial, no submission was made on that matter. I have proceeded on the basis that this remains his position, noting that it also formed the basis of one of his successful grounds of appeal. [19] Joint Statement of Experts ‘ 47’, [12]. The husband’s position is essentially that the wife made no direct financial contribution to his ability to make an increased amount of voluntary contributions towards superannuation. That is correct. It is in the implications arising from that fact that the husband’s submission is misconceived. In other words, he asserts that the increased contributions came from his post separation salary and they should by virtue of that fact alone, be regarded as entirely his own. This ignores the non-financial contributions made by the wife post separation, which were significant. I must assess contributions of all types, including post separation contributions.[20] The Joint Statement of Experts calculates that the amount of increase that can be attributable to the increased contribution of the husband over the relevant period, being the payment of contributions at 10% of salary rather than 2% of salary, is $44,437.[21] Applying the valuation formula for the Family Law Value of the H Fund interest to the portion of accumulated member contributions relating to the higher contribution rate of 10% of salary as opposed to 2% of salary and factoring in the additional accrued benefit multiple which related to the higher contribution establishes a resulting value of $66,100. The experts agreed that $66,100 is the portion of the Family Law Value of the husband’s H Fund superannuation that is attributable to his having made contributions at a rate of 10% rather than 2% during the relevant period.[22] [20] Bulow and Bulow [2019] FamCAFC 3 [47].[21] Joint Statement of Experts ‘ 47’ [7].[22] Ibid [11]-[12]. As can be seen from the above, the nature, form and characteristics of the husband’s H Fund superannuation interest resulted in a significant amplification of the effect of the husband’s contributions by virtue of the additional accrued benefit multiple. That is a feature of his H Fund interest from which he will continue to benefit in the event that he elects to continue to make increased voluntary contributions in the future.