Bulow & Bulow (No 4)
[2021] FCCA 1175
•1 June 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Bulow & Bulow (No 4) [2021] FCCA 1175
File number(s): ADC 1674 of 2014 Judgment of: JUDGE BROWN Date of judgment: 1 June 2021 Catchwords: FAMILY LAW – property settlement – superannuation – application for a stay of proceedings – long marriage – superannuation held in different forms – contributions made during the marriage – financial and non-financial contributions – splitting order under s 90XT of the Family Law Act 1975 (Cth) – equalisation of superannuation – just and equitable outcome Legislation: Family Law Act 1975 (Cth) Pt VIIIB, ss 75, 75(2), 79, 79(4), 90XT(2), 90XT(4)
Family Law (Superannuation) Regulations 2001 (Cth)
Cases cited: Bulow & Bulow [2017] FCCA 2657
Bulow & Bulow [2019] FamCAFC 3
Bulow & Bulow [2020] FamCAFC 120
Bulow & Bulow (No 3) [2021] FCCA 314
Jackson & Balen [2009] FamCAFC 131
Number of paragraphs: 143 Date of hearing: 14 May 2021 Place: Adelaide Counsel for the Applicant: The Applicant in person Counsel for the Respondent: The Respondent in person ORDERS
ADC 1674 of 2014 BETWEEN: MS BULOW
Applicant
AND: MR BULOW
Respondent
ORDER MADE BY:
JUDGE BROWN
DATE OF ORDER:
1 JUNE 2021
THE COURT ORDERS THAT:
1.The application for a stay is refused and the earlier interim stay order is dismissed.
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.
IT IS NOTED that publication of this judgment under the pseudonym Bulow & Bulow (No 4) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BROWN:
INTRODUCTION
These reasons for judgment relate to an application for a stay of orders relating to matrimonial property proceedings, following a final hearing. The applicant for the stay, Mr Bulow “the husband” has filed an appeal to the Full Court of the Family Court. The respondent to the appeal, Ms Bulow “the wife” opposes the granting of the stay.
The history of the litigation between the parties is complex to say the least. It involves two other appeals, besides the current one and numerous other applications. The proceedings have been on foot since 14 May 2014. There have been two final hearings in the Federal Circuit Court, each conducted by Judge Heffernan, who is no longer a member of the Court, which has resulted in the current application being listed before me.
In the first trial, Judge Heffernan found the parties had assets with a net worth of $465,321.00, the chief component of which was the proceeds of sale of the parties’ former family home amounting to $268,138.00.
The main focus in that trial and indeed in the second trial was on the parties’ respective superannuation interest, particularly given that the parties had interests in distinct types of superannuation funds.
The husband, until recently was a public servant, employed by the Australian Government. As a consequence, he was and remains a member of the H fund “the H fund”. This is a defined benefit scheme.
In general terms, a member of such a scheme, on permanent retirement from the paid workforce, is entitled to a pension for the remainder of his or her life. The amount of this pension is calculated by reference to the member’s years of service and level of salary on retirement and is not limited to the amounts actually contributed to the fund in question, during the member’s working life, either by the member concerned or the employer, although such sums are relevant.
Accordingly, as the date of a person’s death is intangible, the exact amount to be paid by pension cannot be calculated with exactitude, prior to the demise of the person concerned. Rather such pensions are funded, on an open ended basis, usually by Government from recurrent revenue.
The wife is a health care worker, who has held managerial positions. She is a member of two superannuation schemes – the P Fund superannuation fund and the K Fund, which is a fund established for South Australian Government employees. Each of these funds is an accumulation fund, although the latter is constitutionally protected.
This means the amount of funds to be released to a member, when his or her entitlements crystallise, most usually upon reaching a designated age or upon permanent retirement from the workforce, is calculated by reference to the sums contributed to the fund by both the employee concerned and his or her employers. Accordingly, the value of the fund in question is amenable to a transparent form of valuation based on the finite sums contributed.
Accordingly, the nature of the two types of superannuation fund are essentially different. This poses problems when a Court, exercising its jurisdiction under Part VIIIB of the Family Law Act 1975 (Cth), is called to assess the value of separated spouses’ superannuation holdings and potentially split those interests between the spouses concerned according to principles of justice and equity.
In these circumstances, provisions within the Family Law (Superannuation) Regulations 2001 (Cth) and related Commonwealth regulations provide formulaic methods to allocate values to specified defined benefits superannuation funds for family law purposes.
However, such methodology does not, of itself, resolve other evidentiary controversies potentially arising between spouses about how the Court should apportion superannuation upon marital breakdown.
BACKGROUND
The husband was born in Country H in 1962. He migrated to Australia in 1991. By training he is an engineer. He commenced working for the Australian Government in 1994.
The wife was born in 1965. The parties married in 1993. They are the parents of four children, now all adult, born between 1994 and 1998. The parties separated in November of 2012 and were divorced in October 2014.
The wife commenced proceedings, in the Federal Circuit Court of Australia, at the Adelaide Registry, on 14 May 2014, now over seven years ago. It must cause any dispassionate observer concern that the litigation remains un-finalised, notwithstanding the time which has elapsed. It is also concerning that there is a further appeal in progress.
The case was first listed for trial in, mid-June of 2016, by way of an order made on 1 September 2015. The case was listed before Judge Mead (as Her Honour then was). The case was not reached and was transferred to Judge Heffernan, who ultimately made directions that it proceed to final hearing in late November of 2016. Judgement was delivered on 21 November 2017, approximately a year later.
THE FIRST TRIAL
Judge Heffernan found that each of the parties had been employed, in the paid workforce, during their marriage, apart from the times the wife had been engaged in home duties and parenting.
He was in a position to tabulate each of the parties’ income between 1994 and 2012. This enabled a finding that the wife’s direct financial contributions had ‘reduced with the arrival of the children and began to significantly increase with her return to full time work in early 2004’.[1]
[1] Bulow & Bulow (No 1) [2017] FCCA 2657 [60] (Heffernan J).
In purely arithmetic terms, the husband had earned around 30% more than the wife. However, Judge Heffernan found that the wife’s contributions, as a parent and homemaker, were more significant than those of the husband. Judge Heffernan also found that the wife had brought a greater amount of capital, into the parties’ marriage at its outset.
It was also found that the wife had had greater superannuation in 1994 but the husband had been able to contribute more, to his fund, as a consequence of his more consistent work record and, at times, greater salary.
Other controversies arose between the parties in respect of improvements undertaken to their home during their marriage and issues relating to fees incurred, for each of them, in respect of university courses undertaken to improve professional qualifications.
The parties also disagreed about issues relating to their post separation contributions, particularly child support and mortgage payments relating to their former home at B Street, Suburb C, which was occupied post separation by the husband, until its sale, in June of 2015.
The husband largely acted on his own behalf during the proceedings. The wife was critical of him for not being frank to either her or the Court regarding his financial position. She also brought an application to sell the B Street, Suburb C property, which could not be agreed.
She sought costs from the husband in respect of this application and a later application regarding a partial distribution of the proceeds pending trial. In his judgment delivered 22 November 2017, Judge Heffernan determined to award her costs in an amount of $11,889.00.
Ultimately, in exercising his discretion in what he characterised as a ‘holistic approach’,[2] Judge Heffernan determined that, the parties’ various and different contributions should be assessed as favouring the wife 60/40% and should be applied to the division of their non-superannuation assets in this proportion.
[2] Ibid [88].
In addition, given the parties were each of a similar age and had a professional background enabling them to earn a similar salary and given their children were each over eighteen years of age, Judge Heffernan did not propose to make any further allowance, in favour of either party, pursuant to the provisions of section 75(2) of the Family Law Act 1975 (Cth).
As indicated above, there was no controversy that the net proceeds of sale, as at the date of trial, were $268,138.00. It was also agreed that the parties had sold a small parcel of G shares recouping $989.00, the proceeds of which the husband retained.
In addition, as a consequence of the earlier application made by the wife, each had received an earlier partial or interim distribution of cash from the sale – in wife’s case $96,000.00; in the husband’s case $80,000.00 – which sums needed to be added back into the pool of assets.
This left only modest items of property to be tabulated into the parties’ pool of assets, in the form of two motor vehicles owned by the wife and valued in total at $5,400.00. Other controversial items of property, namely a grand piano and a piece of land in Country H, inherited by the husband, were not included.
With the add backs and these items of property, Judge Heffernan calculated the parties’ pool of non-superannuation assets to amount to $450,527.00, which if divided 60/40% in the wife’s favour required her to receive assets to the value of $270,316.00 and the husband assets to the value of $180,211.00.
After taking into account the partial property distribution; the proceeds of sale of the G shares; and the award of costs to be made to the wife, Judge Heffernan calculated that the husband should receive $87,332.00 from the proceeds of sale of the B Street, Suburb C property.
Given the nature of the husband’s superannuation interest, it was necessary for a value to be allocated to his H fund. This valuation was undertaken by Mr E. Mr E valued the fund at $636,013.00 as at November 2016 (the date of trial). Mr E was not cross-examined by the husband at trial.
In respect of the wife’s superannuation, in the two funds concerned, it was calculated her entitlements, also at trial, amounted to $289,705.00. The wife sought the equalisation of these amounts on the basis of these figures.
Judge Heffernan summarised the husband’s position in respect of his superannuation in the following terms: Mr Bulow was opposed to any split being made from his fund and contended that any notional equalisation of the superannuation should be accommodated by the wife receiving more of the non-superannuation assets.[3]
[3] Ibid [38]-[39].
Judge Heffernan said as follows of Mr Bulow’s position in the first judgment:
In his affidavit of 20 November 2016, the respondent states that he is “opposed to a split order of the superannuation interests”. He states that he seeks “an equal division” of the financial value of the superannuation pool as at the date of separation. He proposes “any financial compensation of the difference to be drawn from the value of the other financial assets in the pool.”
In his summary of argument, he asserts that he accumulated over half of his superannuation since separation, as opposed to the wife, the majority of whose entitlements were accumulated during the marriage. He submits that his higher superannuation accumulation was as a result of contributing 25% of his after tax salary into superannuation. He submits that he has limited time in which to further accumulate superannuation.[4]
[4] Ibid.
Mr E valued the husband’s H fund, at separation, at $386,000.00, which the husband asserted should be utilised for the proceedings before the Court, with the wife not sharing any of the post separation increase in value. In this context, Judge Heffernan found as follows:
I am satisfied that it is appropriate in the circumstances to include the value of the respondent’s post-separation contribution as to superannuation in the assets pool. I accept the submission that the wife’s actions amount to a contribution towards the husband’s ability to accumulate superannuation both during the marriage and post-separation.[5]
[5] Ibid at [43].
Judge Heffernan made the following findings in respect of the superannuation issue:
I am satisfied that it is appropriate to order that there be an equalisation of the parties’ superannuation. I accept the evidence of the wife that at the commencement of the relationship, she had already accumulated a significant amount by way of superannuation. The husband had no superannuation accumulated at the time of cohabitation. However, the vast majority of superannuation entitlements of both of them were accumulated during the course of the marriage. There is not a significant disparity in age between the parties. Both have a significant number of years in the work force potentially ahead of them and it would be many years until either of them will be able to access their entitlements. In part, the level of entitlements accumulated by the husband are as a result of his ability to work full time at a time when the wife was primarily involved in caring for the children and otherwise engaged in home making.[6]
[6] Ibid at [89].
It became apparent when the matter proceeded to its first appeal that the value of the husband’s H fund had been increased by an amount of $66,100.00 by dint of salary sacrifice made by him in the period between separation (November 2012) and 20 November 2015. As will become clear in due course, this is a complaint Mr Bulow now makes in respect of the longer period arising between separation and the date of the second hearing.
The resulting orders were that that the proceeds of the sale of the B Street, Suburb C be allocated as to $87,332.80 to the husband, with the balance to the wife. Otherwise each retain property in their respective possession. There be a split, pursuant to the provisions of section 90XT of the Family Law Act 1975 (Cth), in the wife’s favour, from the husband’s H superannuation, in an amount of $173,154.00. The operative time for the split being four days after service of the order on the trustee of the fund.
THE FIRST APPEAL
The husband lodged an appeal in respect of these orders, out of time, on 21 March 2018, on thirty grounds, which the Full Court characterised as ‘insufficiently particularised, repetitive and masking of the true nature of the husband’s central challenges’.[7]In this context, the Full Court found that the husband’s challenge to the reasoning of Judge Heffernan fell into two broad categories described as follows:
The first category is comprised of an attack on his Honour’s splitting order and the process by which it was arrived at. Those issues form the main focus of the appeal.
The second category comprised a collection of disparate complaints that comprise, broadly described, asserted factual errors; errors in the exercise of discretion; errors in the assessment of contributions; and error in a finding of non‑disclosure by the husband. The husband also appeals orders by which the husband was ordered by his Honour to pay the wife’s costs of three interim applications heard and determined prior to the trial.[8]
[7] Bulow & Bulow [2019] FamCAFC 3 [3] (Strickland, Murphy and Kent JJ).
[8] Ibid [4] – [5].
Section 90XT of the Family Law Act 1975 (Cth) delineates the machinery by which a splitting order is made in respect of superannuation. This can be done by means of the allocation of a percentage or a specified amount. It requires the allocation of a base amount in order to establish a preserved benefit for the non-member spouse and a corresponding reduction in the preserved amount of the member spouse, who must also be allocated a base amount.
Section 90XT(2) requires the Court to value the interest of the non-member spouse pursuant to any applicable regulation. Section 90XT(4) requires the allocation of a base amount to the non-member spouse, which is utilised to calculate the level of benefits to be paid on crystallization of funds.
On appeal, the Full Court noted the significant difference between a defined benefit interest and an accumulation interest, whilst each was in the growth stage. It noted as follows:
Those differences include the method by which the ultimate benefit is calculated; the risk to the member inherent in each and, very importantly, the effect of a s 90XT(1)(a) order (an order which allocates a base amount to the non-member spouse). Each and all of those differences can, and very often do, have a dramatic impact upon the justice and equity of a proposed splitting order and, in turn, its place within just and equitable orders for settlement of property.[9]
[9] Ibid [18].
In these circumstances, the Full Court held that it was crucial that a Court, prior to making any splitting order consider the governing rules of the fund concerned and the implication of those rules for how the member spouse’s would be effected particularly in respect of any formulaic changes arising. Such issues needed to be considered within the Court’s broader framework of discretion regarding the justice and equity of any splitting order.
In this context, the Full Court noted Judge Heffernan had not had available to him evidence of the ‘nature, form and characteristics of the husband’s superannuation interest nor how any splitting order sought by the wife (or any other splitting order) might impact upon that interest’.[10] In these circumstances, he had been unable to exercise properly his jurisdiction arising under section 79. The Full Court holding as follows:
the single most significant consideration in seeking to achieve justice and equity in an alteration of the parties’ superannuation interests and, in turn, s 79 orders as a whole, is the nature, form and characteristics of the particular interests involved and what consequences and effects flow from the same. The relevance of those matters is measured by the fact that a decision about justice and equity cannot be made without a consideration of them.[11]
…
His Honour made no mention of the nature, form and characteristics of the parties’ respective interests in superannuation. There is no reference in the reasons to the wife having superannuation interests of one type and the husband having a superannuation interest of a very different type. His Honour did not refer to the husband’s interest being a defined benefit interest governed by scheme-specific rules. His Honour also made no mention of the potential effect/s of any proposed splitting order upon the husband’s interest or, indeed, upon the interest that would be created for the wife by reason of the splitting order to be made.[12]
[10] Ibid [28].
[11] Ibid [35].
[12] Ibid [37].
Accordingly, the Full Court identified that it was necessary for a Court, prior to making a splitting order pursuant to section 90XT to consider the practical implications of the split in terms of what would follow from it, particularly in terms of how any trustee, pursuant to the applicable rules of the fund concerned, was required to implement it.
In addition and crucially, in order to be able to discharge its obligation to ensure a just and equitable outcome, the Court needed to be aware of and to consider these practical issues. Necessarily, as in the present matter, where the parties concerned held superannuation in different forms, it was necessary for issues of contribution to be considered in this context.
In this context, the Full Court said as follows:
where, as here, one of the superannuation interests in that “pool” is a particular defined benefit interest, the particular form and characteristics of that interest will often however demand particular attention being paid to the effect of particular direct financial contributions. How those contributions might be weighed and assessed is, of course, ultimately a matter of discretion, but it must be apparent that a trial judge is cognizant of, and has considered, contributions that have particular relevance to an interest of that type.[13]
[13] Ibid [48].
Other issues were ventilated in respect of the husband’s direct financial contributions to his fund, by way of personal salary sacrifice, between separation and trial. A sum of $66,100.00 was calculated as being a part of the overall value of the husband’s superannuation which was attributable to his direct financial contribution in this period and which had not been considered by Judge Heffernan in the exercise of his discretion arising under section 79(4) leading to a further error.
In my reading of the Full Court judgment none of the other grounds of appeal were made out. However, the Full Court determined that the order made by Judge Heffernan, in which he allocated a specific sum to be paid to the husband, from the proceeds of sale of the B Street, Suburb C home, with the balance to the wife, was also set aside. It would seem to be the case that this order has led to significant confusion in the period since, particularly since the terms of the order have been carried into effect.
In this context, the Full Court said as follows:
The form of his Honour’s orders saw each of the parties retaining property in their respective ownership or possession; a cash sum payable from the proceeds of sale of the former matrimonial home being paid to the husband and the balance of proceeds paid to the wife. Separately, as has been seen, a splitting order was made in respect of the husband’s superannuation interest. We consider that error attends the assessment of contributions applicable to the latter.
However, as we have sought to explain, that error, which pertains to the nature, form and characteristics of the husband’s superannuation interest, has ramifications for the totality of the s 79 orders. A consideration of the same impacts potentially upon any splitting order but also, by reason of the scheme‑specific provisions in respect of any splitting order, upon an assessment of the relevant s 75(2) factors.
As a consequence, both paragraph 2 of his Honour’s orders and paragraph 1(a) of those orders must be set aside.[14]
[14] Ibid [106]-[108].
The appeal was heard on various dates between August 2018 and December 2018 with judgment being delivered on 18 January 2019. As is the case in the present matter, each party was unrepresented.
THE SECOND TRIAL
The second trial took place on 13 August 2020, approximately eighteen months after the appeal judgement was delivered. In the interval between these two dates, its seems to be the case that there were numerous interlocutory applications directed towards determining what issues were to be reheard and whether it was appropriate for Judge Heffernan to conduct the hearing required.
The husband’s position appears to have been that Judge Heffernan should not conduct the rehearing, which should be directed towards a recanvassing of all the issues traversed in the first hearing, including the division of non-superannuation assets. He sought that Judge Heffernan recuse himself on the basis of pre-judgement and bias.
On 11 April 2019, following an unsuccessful Conciliation Conference, the wife sought procedural orders as to how the trial should proceed, particularly that the rehearing should be confined to issues relating to superannuation, particularly expert evidence relating to the implications of any split. She proposed that Mr Stephen Bourke provided this evidence. On 15 April 2019, the husband sought an order that Judge Heffernan recuse himself and further orders directed towards issues related to non-superannuation issues.
On 29 July 2019 Judge Heffernan declined to recuse himself. This order was subject to an appeal to the Full Court, which was heard by Justice Strickland on 25 February 2020, with judgment delivered on 19 May 2020.[15] The appeal was dismissed.
[15] Bulow & Bulow [2020] FamCAFC 120 (Strickland J).
During the course of discussions occurring during the hearing, the appeal Judge, who had been a member of the previous Full Court, indicated that Judge Heffernan had been correct, when he indicated to the parties, that a full rehearing of the property was not a necessary corollary of the first appeal orders.
The matter seems to have returned before Judge Heffernan in April of 2020, when Mr Bulow indicated that he was seeking special leave, from the High Court, to appeal the decision of Justice Strickland. The husband was directed to provide information regarding the progress of his application and the case was adjourned until 7 May 2020. No such material, as far as I can ascertain, has ever been filed.
On this date, both parties, who remained unrepresented, attended Court by telephone, no doubt as a consequence of the pandemic emergency, which was at its height at the time. After having noted that the husband had elected to block emails from the wife, Judge Heffernan made orders with to the following effect:
•The scope of the future re-hearing be limited to the Superannuation Splitting order [as its] amount relates to a dollar value in calculating the 50/50 superannuation equalisation;
•The husband is to file and serve a Notice of Address for Service with 48 hours;
•The wife provide the husband, via the Court portal, her contemporary valuation of the husband’s superannuation and serve and file an affidavit detailing her own current superannuation position;
•The wife file and serve any report from Mr Bourke by 1 June 2020;
•The husband file any report of any expert retained by him by 17 July 2020;
•The case be listed for a limited issues trial on 13 August 2020, with submissions to be filed by each party ten days prior.[16]
[16] Orders of Judge Heffernan dated 7 May 2020.
Accordingly, it seems apparent that the husband was aware of the date allocated for the final hearing. In any event a further directions hearing was allocated for 7 August 2020. On this occasion, the parties again attended Court electronically. The husband applied to vacate the trial, which was opposed by the wife, with the application dismissed.
On 7 August, Judge Heffernan noted that the husband had declined to accept correspondence from his postal box address, which had been sent there by the wife. The documents sent included her affidavit filed 20 May, two affidavits of Mr Bourke and her summary of argument. In this context, Judge Heffernan’s order further indicated that these documents had also been sent to the husband by the Court itself and were also accessible electronically via the Court’s portal. In this context the 13 August 2020 trial was confirmed.
The husband did not file any expert evidence or any submissions as directed. The wife complied with the directions in respect of filing. The husband did not attend the hearing scheduled for 13 August 2020. I accept at this time, social distancing restrictions, arising from the pandemic emergency, were still in force and as such, at this time, many hearings were conducted by electronic means.
I also accept that Judges of this Court had authority, from the Chief Judge, to waive restrictions preventing litigants attending Court in person. In this context, in the reasons for judgment arising from the second hearing, Judge Heffernan recorded what occurred in the lead up to the 13 August hearing, from the Court’s perspective, in the following terms:
At the conclusion of the directions hearing on 7 August it was abundantly clear that this matter would proceed to trial as listed and that the parties were required to be physically present at Court.
At approximately 4.27pm on the day prior to the trial, the husband emailed to my chambers an application to appear by telephone. The application was made on the grounds of ‘Safety and Medical’. The obvious tardiness of the application to one side, there was nothing in the wording of the application or accompanying it which explained why such a course was necessary or desirable. No medical certificate was presented. The potential difficulties that a telephone appearance might produce given the arrangements made for the expert witness were quite apparent. My chambers responded by indicating the application was refused, that he was required to attend in person and advising him of the protocols adopted and precautions taken by the Court in light of COVID-19. He was also advised by chambers that the hearing will be proceeding and that orders may be made in his absence if he does not attend.
At approximately 9.25am on the morning of trial the husband sent an email to my chambers headed ‘By the way of service’, attaching an Application in a Case. That email was sent as a response to the email sent to him by my chambers the night before, removing any doubt as to whether he had received it. Under the heading ‘Orders Sought’ the application read as follows:
That this Honourable Court takes note of the pending appeal case LOD-002537 in the High Court of Australia appealing case SOA43-2019 heard 25 February 2020 appealing recusal decision case ADC1674-2014 heard 2 July 2019.
That within 7 (seven) days the applicant husband file and serve upon the Family Court of Australia and the respondent the Notice of Appeal case LOD-002537 in the High Court of Australia
That Honourable Judge Heffernan gives no further consideration to the matter and issues no further orders to alter property interests of the parties in case ADC1674-2014.
That the Respondent Husband is excused from future hearings before Judge Heffernan.
Any such further and other Orders as this Honourable Court consider appropriate.
The application indicated that it was supported by an affidavit of the husband dated 12 August 2020, which it claimed had been filed some time that morning.
At approximately 9.26am, the husband emailed my chambers again, attaching a copy of an affidavit which indicated it had been affirmed the day before. Beyond making reference to the Application in a Case, that affidavit did not refer to the substance of the application. There was no affirmation of the apparent existence of an application for special leave to the High Court. The affidavit referred to matters apparently pertaining to the issues at trial.
At approximately 9.33am the husband sent an email to my chambers attaching a Financial Statement which had apparently been affirmed on 22 July 2020.
I caused certain urgent enquiries to be made with respect to the matters referred to in the Application in a Case before commencing my morning directions hearings list. Those enquiries confirmed that the Appeals Registry of the Family Court had no notice of the asserted application for special leave to appeal in the High Court and that it did not recognise the asserted action number as one which had emanated from the High Court.
The trial was called on at 10.47am. Mr Bulow was not present. The matter was called three times and he did not answer the call. Ms Bulow confirmed that she had received the above materials by email at about the same time as my chambers. She had not had an opportunity to consider them. For obvious reasons, the matters referred to in the affidavit and attachments had not been made available for the consideration of Mr Bourke who was scheduled to give evidence that morning.
No outline of submissions was received from Mr Bulow.
In the circumstances, I determined that the trial should proceed on an undefended basis. I was comfortably satisfied that the actions of the husband, at least in the months leading to trial and at the time of trial, were calculated to frustrate the ability of this Court to hear the matter on the basis on which it had been remitted. I declined to receive into evidence the emailed affidavit and Financial Statement. There was no basis on which to entertain the Application in a Case, it had not been filed in the usual course and there was no one to prosecute it. There was no case for the respondent husband on the rehearing.
My chambers has subsequently been advised that an application for special leave to appeal the non-recusal appeal judgment was filed in the High Court by Mr Bulow on 21 August 2020. This was just over a week after the date of the rehearing before me. That application was refused by the High Court on 5 November 2020.[17]
[17] Bulow & Bulow (No 3) [2021] FCCA 314 [12]-[22] (Heffernan J).
Mr Bulow does not dispute that he was not present at the hearing scheduled for 13 August 2020. He has not asserted that he was unaware of it or its importance. He has not otherwise asserted that he was under any misapprehension regarding its nature. In my view, it must be the case that he was fully appraised of the issues arising in the case.
It seems to be the case that Mr Bulow considered that there was a possibility the Full Court (or the High Court) might entertain an application, from him, to adjourn the trial or, in some way, recast the procedural decisions made by Judge Heffernan as to what material would be canvassed at it. Certainly, it seems to be the position that he asserted this was (or would be) his stance.
However, it appears that any suggestion made to Judge Heffernan, by the husband, on 7 August 2020 that such application(s) had already been made was disingenuous. There were no such applications on foot as at 7 August 2020 or the date of trial and Justice Strickland had dealt with the appeal regarding the recusal and the related ancillary challenge made by the husband in respect of issues regarding the conduct of the re-hearing.
Accordingly, I am left to conclude that Mr Bulow elected both not to appear and not to file material. Whether he did so under some misconception that he might derive some form of tactical advantage, by not appearing, is a mystery to me. If this was his motivation, in my view, it would represent an abuse of the Court’s proper process.
Whatever is the reason, the fact remains that he was not in a position to put any matters to Mr Bourke or make any personal submissions to the Court about the implications of any splitting order for him personally. In my view, it must be the case that the husband was well aware that this was the central issue for Judge Heffernan’s consideration, following the first appeal decision. Merely because he disagreed with this approach, he was not entitled to ignore the Court’s order as to when and how the hearing would occur.
Equally significantly, notwithstanding his contrary assertion made to Judge Heffernan on 7 August 2020 that he would file his own expert evidence and affidavit material, he did not do so. In my view, Mr Bulow elected not to engage with the trial process, which was properly engaged to take place on 13 August 2020.
Necessarily, such an approach cannot be without risks. The Court has an obligation to consider the interests of both parties to a piece of litigation before it. The wife is entitled to hold the expectation that any application, which she may bring before the Court, will be dealt with expeditiously and her rights and entitlement to a hearing and then an adjudication will be respected, notwithstanding the opposition of the husband.
In the judgment following the second trial, Judge Heffernan identified the task set for him by the Full Court in the following terms:
[T]he Full Court identified that I had failed to consider evidence with respect to the effect of a superannuation splitting order on the superannuation interests of the husband and the nature of the husband’s interests in his fund. Evidence of that nature was not tendered by either party during the trial and for that reason before my reconsideration could take place, further evidence had to be obtained. The orders I have now made and these reasons are to be read in conjunction with my earlier judgment, the findings of fact and credit previously made by me not having been disturbed on the appeal.[18]
[18] Ibid [1].
Given his view of the parameters set by the Full Court, Judge Heffernan did not consider that it was necessary for him to revisit his earlier findings in respect of the parties’ level of contributions to their assets and in respect of his findings regarding the factors arising under section 75(2) of the Family Law Act 1975 (Cth).
In these circumstances the issues for his determination centred on the mechanics and implication of any superannuation split arising giving the different nature of the funds held by each of the parties concerned. In this context the evidence derived from Mr Bourke by the wife, which the husband had not sought to rebut formally, was of central importance.
It had been arranged that Mr Bourke would give evidence electronically via a video computer link, whilst it was anticipated each party would be physically present, in Court, with Judge Heffernan. Given the nature of the Full Court ruling, Mr Bourke was a most significant witness given his expertise and experience in respect of superannuation law in Australia.
Mr Bourke provided two reports each of which was tendered before the Court. He was asked by the wife to provide evidence as the following matters:
·The value of the husband’s H fund as at November 2017 and 28 April 2020;
·The nature, form and characteristics of the husband’s interest in that fund;
·the effect of the split sought by the wife on this interest; and
·The increase in value of the fund post separation and this source of this increase.
Judge Heffernan summarised the orders sought by the wife in the following terms:
The wife seeks an order binding on the H Fund (‘the fund’) for the allocation of $225,262 as the base amount and $236,360 as the separation amount to establish an associate preserved benefit for the applicant as non-member spouse. She contends that the valuation date of the parties superannuation assets be 28 April 2020, as any earlier date would disadvantage her because it would result in a decrease to the separation factor and loss of interest earnings. She seeks an order which would achieve a 50/50 superannuation equalization.[19]
[19] Ibid [25].
Judge Heffernan summarised Mr Bourke’s evidence and reports in the reasons for judgment. It was found that the husband’s interest was to be defined as defined benefit in its growth phase. As at 21 November 2017 it was valued at $688,764.81; and as at 28 April 2020 valued at $849,498.70.
The wife was identified as having two superannuation interests, each in accumulation funds, valued, in total, at each of these dates, at $340,031.74 and $398,974.56 respectively. Both Mr Bourke, in his report and Judge Heffernan, in the judgment made reference to the provisions of section 90XT(2) which require the Court to determine an amount in respect of any interest pursuant to either any applicable regulation or if no such regulation exists by such method as the Court determines.
Necessarily, as a consequence of the nature of a defined benefit fund, there is a gap between the value of the fund itself and the contributions made by the member concerned. In this case, as at November 2017, Mr Bourke calculated that Mr Bulow had directly contributed a sum of just over $300,000.00 to the fund,[20] whereas the funds actual value was more than double this. This differential is characterised as the ‘unfunded component’.[21]
[20] It includes an amount referred to as the transfer amount which is invested by the trustee and paid as a lump sum when other aspects of the fund crystallise. At the relevant time it was $7,664.73
[21] Bulow & Bulow (No 3) [2021] FCCA 314 [41] (Heffernan J).
It is unfunded in the sense that there is no financial provision for the payment of future benefits by way of a recurrent pension but the employer concerned (in this case, in effect, the Commonwealth of Australia) has promised to pay the sums in question, when the funded portion is expended. This promise is not effected by any exigencies of financial markets.
In his evidence, Mr Bourke calculated the sum of $688,764.81 as being the amount that a reasonably prudent trustee, should ought to have in its superannuation fund to be fully funded, in respect of contingent liabilities, taking into account the age and gender of the member and what the extent of the benefits it was obligated to pay, under the rules applicable to the fund. Essentially these are actuarial considerations.
This sum is greater than the sum to which Mr Bulow would be entitled if he took a lump sum payment on retired, reflecting the great liability potentially arising as a consequence of having to pay a pension. In contrast, accumulation funds, such as those pertaining to the wife, have no unfunded aspects.
The effect of these arrangements is that on the husband’s retirement from the workforce, the H pays what funds it has accumulated to the Commonwealth, which will utilise the sum so acquired to pay Mr Bulow’s entitlements until the source is exhausted.
It will then pay what is due to him from the resources available to government, until its obligations are fulfilled with Mr Bulow’s death. It is open to Mr Bulow to take the amount, calculated by the trustee as its funded obligations, on his retirement, as a lump sum.
Mr Bulow’s pension entitlements (and so the extent of the unfunded portion) are effected by his salary on retirement and other factors, which are characterised as the benefit multiple, which include the level of any contributions made by a member in addition to those paid by the employer. Under the terms of the H scheme applicable, members can contribute anything between 2% and 10% of their after tax earnings, to the fund, which will increase the benefit multiple.
Judge Heffernan quoted Mr Bourke’s report verbatim, regarding the nature of a H Fund superannuation interest.[22] This evidence can be summarised as follows:
[22] Ibid [50].
·A superannuation interest in a defined benefit is to be regarded as inchoate as it is contingent on conditions for its release being met;
·The characteristics of the H fund are as follows:
·Members can contribute up to 10% from after tax income increasing the benefit multiple;
·Investment losses do not affect the end benefit;
·A member has a choice of the form of benefit – pension, lump sum or combination;
·The pension is indexed;
·Pension is non-commutable following payment;
·It has a reversionary aspect to the spouse of a member;
·It is susceptible to being split.
In the context of the fact that a H fund is amenable to being split pursuant to the provisions of Part VIIIB of the Family Law Act 1975 (Cth), Mr Bourke provided evidence as to the mechanics of this process. It requires the calculation of a value at the operative time of split, which involves the following:
·a differentiation between the value of the fund for family law purposes and for the purposes of the scheme itself, which has built into demographic assumptions;
·the higher value being utilised for the split; this in turn creates a base amount, which has both a funded and unfunded component;
·this leads to the creation of an ‘associate preserved benefit for [the] non-member spouse’;[23]
·which, in turn, is subject to adjustment in relations to the rate of return of Treasury bonds.
[23] Ibid [51].
In Mr Bourke’s terminology, adopted by Judge Heffernan, the effect of this process, given the unfunded aspect of both the member and non-member spouse interest, is ‘a splitting of the trustee’s liability not a splitting of the member’s entitlement’.[24]
[24] Ibid [46].
One salient issue in the case, which remains germane to the present time, is the fact that the value of funds in the H Fund can increase independently of employer contributions, leading to a higher benefit multiple.
As previously indicated, these factors include employee contributions and average salary. In addition, members of the H Fund are protected against downturns in the investment market, which result in a negative return. For obvious reasons, this is a significant advantage.
As noted above, it was the wife’s position that an operative time of April 2020 should be utilised to calculate her associate preserved benefit, which would also be affected by investment returns.
One of the difficulties confronting Judge Heffernan, in the second trial, was that although he was aware, in general terms, that the husband had been availing himself of the opportunity to make post tax contributions to the fund, he had not been informed of any contemporary figures in this regard or what were the husband’s intentions in respect of the fund, particularly when he would seek to access it and in what form that would take. He said as follows:
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. 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.[25]
[25] Ibid [54].
In this context, Judge Heffernan noted that it had been Mr Bulow’s position, at the first trial, that his wife had made no assessable contributions towards the post separation increase in the value of his H fund and therefore the increase in its worth should be excluded from any split. This submission also has implications for what should be the operative time of any such split. The wife seeking an operative time of April 2020.
In my view, this was a significant factor. Although Judge Heffernan was required to ensure a just and equitable outcome, it was not his responsibility to make the husband’s case for him, given his (Judge Heffernan’s) findings regarding the husband’s lack of engagement with the trial process. This, in turn, must have implications for any assessment of the merits of appeal and overall bona fides.
In this context, Judge Heffernan did allude both to the increase in the amount of the husband’s fund and the manner of such increase, within the purview of the operative time proposed by the wife. In particular, he noted the husband’s contributions had resulted in a ‘significant amplification of the husband’s contributions by virtue of the accrued benefit multiple’.[26]
[26] Ibid [56].
However, he also noted that it was necessary to consider these matters in the light of what he viewed as the wife’s significant contributions towards the welfare of the children, which in turn had allowed the husband to conceivably make the additional superannuation contributions. In this context, the absence of the husband posed difficulties, which were characterised as follows:
That of course does not deal with the issue of how to treat any voluntary contributions, if any, made by the husband in the period since the first trial. By virtue of his failure to participate in these proceedings, the husband has failed to provide me with any evidence of the extent, if any, of his voluntary contributions since that time or what his intentions are in that regard into the future. He has not provided any updated evidence that might suggest he will not work in his present employment until at least the usual retirement age. With regard to the nature of the H scheme, he has not provided me with any evidence of the form in which he will elect to take his superannuation entitlement.[27]
[27] Ibid [60].
However, in my view, as a consequence of the manner in which Mr Bulow had elected to approach the case, which had resulted in Judge Heffernan determining that the proceedings should be finalised on an undefended basis, the trial was compelled to proceed with finalising the case, notwithstanding these lacunae, significant though they were, particularly in the light of the first appeal determination, which required the Court to consider the nature of a H Fund interest and the effects of any split.
In my view, Judge Heffernan did what he had been directed in this regard. He said as follows:
The husband joined the H fund in 1995. A significant component of his entitlement in the fund was accrued during the course of the marriage. The wife made contributions both financial and non-financial during the course of the marriage. As I found in my first judgment, the level of entitlement accumulated by the husband during the course of the marriage was as a result of his ability to work full time at a time when the wife was the primary care-giver and otherwise engaged in homemaking. In addition, the wife made the indirect contribution to the husband’s post superannuation accumulation that I have identified above. As I have noted, the wife seeks an equalisation of superannuation entitlements based on the valuations performed in April 2020. Since the reversal of the splitting order I made at the first trial by the effect of the orders of the Full Court on the appeal, the superannuation entitlements of the wife have also increased significantly. A properly informed consideration of the financial resources of the parties into the future cannot be made without using the 2020 valuations. I am satisfied that it is appropriate to use the valuation made in accordance with the prescribed method in April 2020. If I were to do otherwise, any portion of what I found to be the wife’s entitlement in the husband’s superannuation would not have the benefit of investment earnings in the five years which have elapsed since the valuation relied on at the time of the first trial in the Joint Valuation of the experts. There would be a similar disadvantage to the wife as that identified below, where I discuss the significance of the operative time. To the extent that the wife contributed indirectly to the ability of the husband to accumulate superannuation during and after the marriage as identified, if I were to use the valuation from the first trial, the husband would solely receive the benefit of that contribution for the period since the first trial.
It is relevant to consider the comparative future growth of the associate preserved benefit and the future growth of the member entitlement. In the event that I make a splitting order, Ms Bulow’s associate preserved benefit will be comprised of a funded component and an unfunded component. The funded component would be allocated interest earnings by the scheme which would reflect the performance of the scheme. The unfunded component would be allocated interest at the long term bond rate for Treasury bonds having a ten year term. Her total entitlement would be the combined value of the funded and unfunded components. As Mr Bourke has observed in his report, the superannuation interest of the husband would continue to increase after a splitting order with benefit multiple and salary. I take into account that any splitting order I make will have a corresponding effect on the husband’s entitlements and to that extent he will suffer a detriment. Mr Bourke gave oral evidence on this matter:
The advantage of this scheme to the member is that while there is a reduction in his end benefit because of the allocation of the associate benefit, it still accrues at a very handsome rate …
Mr Bourke said that in practical terms that could be demonstrated by reference to the splitting order made by me at the time of the first trial. Had that order not been overturned on appeal, then during the period between the order and the 2020 valuation obtained for the purpose of this trial, the wife’s associate preserved benefit would have increased by approximately $26,000 and the husband’s member entitlement would have increased by $213,000.
The impact of any splitting order on the husband’s superannuation entitlement is also reflected in the fact that the H Fund is a defined benefit scheme. The husband has the option to access his superannuation entirely as a lump sum or entirely as a life pension or partly as a life pension and partly as a lump sum. There is no evidence before me as to which of these options the husband intends to avail himself of on his retirement. Nonetheless, a splitting order will have an impact on each of those options. In practical terms, if his benefit is reduced by the creation of an associate preserved benefit for the wife, this would inevitably have some impact on the amount of a pension he could draw on retirement if that was the option he chose. As I have observed, I have no evidence of the husband’s intentions in that regard.
As observed by the Full Court, the question of contributions is a matter of judgment and not computation. Not only is there no particular science in assessing contributions, a holistic approach being required. I am satisfied that contributions towards superannuation interests should be assessed as being equal. I am satisfied that a just and equitable division of the parties’ entitlements requires an equalisation of their respective interests. I remain satisfied that it is appropriate to make a splitting order with the respect to the superannuation on the basis of a 50:50 division. Such a split would produce the result on the April 2020 figures referred to in paragraph [52] above.[28]
[28] Ibid [61]-[65]
Accordingly, it does seem to be apparent that Judge Heffernan, against a background of incomplete evidence vis-à-vis the husband, analysed the nature of his H superannuation and the implications of it being split, both from the wife’s perspective and from that of the husband. For the reasons provided, the trial judge determined what should be the operative time for the split and what should be the value of it, as required by section 90XT of the Family Law Act 1975 (Cth).
As indicated above, there was a period of about seven months between the taking of evidence in the second trial and the delivery of judgment. During this period, neither party sought to re-open the case or adduce further evidence. Orders were made on 15 March 2021, which were amended to correct a minor typographical error, on 12 April 2021.
THE APPEAL
On 9 April 2021, the husband lodged an appeal in respect of the matter containing eight grounds. I do not propose to set out the grounds in full. They are lengthy in nature and I did not find them easy to interpret. I will do my best to summarise them as follows:
·The trial judge misconstrued the order of the Full Court regarding the re-hearing required and was biased towards him;
·The trial judge misapplied sections 79 and 75 of the Family Law Act 1975 (Cth) and, in particular, failed to value all superannuation interests and then provide reasons as to why the parties’ superannuation should be equalised;
·The trial judge failed to take into account relevant evidence, particularly in relation to child support assessments;
·The trial judge failed to conduct the hearing in a procedurally fair manner, particularly in refusing to grant him an adjournment whilst proceedings were on foot in respect of his appeal arising from his application to have the judge recused;
·The trial judge denied him natural justice by demonstrating actual bias against him during the conduct of the proceedings;
·The trial judge provided inadequate reasons for the orders;
·The trial judge demonstrated actual or ostensible bias in relying on the evidence of Mr Bourke, who had been retained by the wife;
·The trial judge failed to consider the future earning capacity and financial resources of the husband prior to making the relevant orders and accordingly the discretion investing in him miscarried.
The notice of appeal was attached to an affidavit deposed by Mr Bulow on 12 April 2021. This affidavit supported an application to stay the operation of the order made by Judge Heffernan pending the disposal of his appeal. It is this application which is the subject of these reasons for judgment.
Mr Bulow turned fifty nine years of age in 2021. I have not been advised as to what is the specific preservation date in respect of Mr Bulow’s interest in the H Fund. Also attached to his affidavit was correspondence between him and a customer information representative of the H which occurred between November 2020 and February 2021. It is apparent that Ms Bulow was not copied into any of this correspondence.
On 20 November, Mr Bulow submitted an Estimate request form to the H Fund. The H Fund responded on 11 December 2020 indicating that his pension conversion factor, as at age 59 would be 11.00 but by 12 February 2021 would be 11.1989. The email provided to the Court, by the husband, indicates that his benefit estimate has been completed and was attached. It has not been provided to the Court. Whether this was an oversight is unclear to me and I omitted to clarify the issue directly with Mr Bulow.
In his affidavit, the husband deposed that the splitting order made by Judge Heffernan would ‘inflict extreme and immediate hardship on the applicant in that it would impact upon his ability to conduct his life and prevent him from accessing the only source of income following retirement from the workforce in 2020’.[29]
[29] Affidavit of Mr Bulow filed 12 April 2021 at [7] – [8]
In this context, the husband complained that Judge Heffernan had not considered his transition to retirement, which had commenced in 2020. This complaint appears to contain the gravamen of Mr Bulow’s appeal, namely that the trial judge did not properly consider the implications of any split on his personal financial circumstances in prospective terms.
As I understand, the husband’s complaints, he contends that the trial judge did not properly assess his post separation contributions made to the H Fund, which came, to a significant degree from his after tax income and which resulted in an increase in the relevant multiplier factor to be applied to the calculation of his pension, in respect of which the wife had made limited, if any, contributions.
Secondly, he contends that the split will unfairly reduce his pension to such an extent that he will not be able to support himself adequately in his retirement, which is a factor Judge Heffernan has failed to take into account.
In this context, he submitted that there would be no prejudice to the wife arising from any stay of the order given she would not be able to access any non-member interest split off in her favour until she attained her preservation age, which was 60, which was some four years in the future, whilst the immediate prejudice to him would be great, given the implications for him being able to support himself in retirement.
The husband requested that his stay application be listed urgently and it was given a first return date of 14 April 2021. An affidavit of service deposed 14 April 2021 indicates that his application was served, by electronic means, to the wife at what is apparently her work email address. The affidavit does not indicate a time at which the email was despatched. This email address has been shown on Court documents filed by her.
The wife was not present in Court on 14 April 2021 when the husband’s stay application was first called on. In these circumstances, I elected to make orders to the following effect:
·The stay was granted on an interim basis pending the wife filing any response documents;
·The wife was granted a period of 28 days to do so;
·The case was adjourned for further hearing on 28 May 2021;
·The order was to be personally served on the wife;
·The wife had liberty to apply on short notice.[30]
[30] Orders of Judge Brown dated 14 April 2021.
The wife availed herself of the liberty to apply provision and the case was relisted on 11 May 2021. The wife opposes the granting of the stay. In an affidavit in support of her application, Ms Bulow deposed as follows:
•The husband’s application had been sent to her, after business hours (5:32 pm), on the evening prior to the first mention date and she had been unaware of the application;
•She served Judge Heffernan’s order on the H fund on 15 March 2021;
•She was informed by the H Fund that the split was created and an associated preserved benefit created in her name on 12 April 2021;
•She was informed that the split had been reversed on 19 April 2021.[31]
[31] Affidavit of Ms Bulow filed 23 April 2021.
In particular, the H Fund wrote to her, on 19 April, in the following terms:
Under the Court Orders, you were allocated a base amount of $225,262.00 of Mr Bulow’s interest in the H Fund and an associate preserved benefit was created for you effective from 28 April 2020 (the operative time). The ‘operative time’ is a term used in the Family Law Act 1975 and means the date when the superannuation split takes effect and is stated in the Court Order.
We have since received further Court Orders made on 14 April 2021 wherein “Order 3 of the Order made by Judge Heffernan on 15 March 2021 be stayed”. This means that the family law split has been reversed pending further direction of the Court and your non-member spouse account has now become void.
We note that if the Court does not revoke the Court Orders made on 15 March 2021, the family law split will then be reapplied to those Court Orders and a non-member spouse account would be re-established in your sole name.[32]
[32] Ibid.
It is the wife’s contention that she is prejudiced by the stay in the split because she will lose interest which will attach to her non-member spouse account. The husband contends that there is no such prejudice because any lost interest can be potentially calculated if the splitting order is confirmed by the Full Court.
On the other hand, he submits that there is prejudice to him because his retirement benefits will potentially be curtailed. In submission made to me on 14 May 2021, Mr Bulow indicated that he had retired in 2020 but had not as yet accessed his superannuation in full but had applied to do so. This had resulted in him received a small lump sum payment, presumably the transition to pension sum, the week previous to the hearing.
My impression, from his submissions, was that he had not as yet begun to receive any recurrent pension payments. In these circumstances, I am not aware of what is the potential difference to the pension amount to be received by Mr Bulow if there is or is not a split in the form encompassed in the recent order of Judge Heffernan, which he seeks to stay.
The inherent difficulty with much of the submissions made by the husband, in the stay application, is that the trial judge did not know with any certitude what were Mr Bulow’s retirement plans and he did not provide any expert evidence in respect of the implication of these plans in respect of the calculation of his pension in the lead up to the August 2020 hearing and then failed to attend the hearing concerned and so was unable to cross-examine Mr Bourke.
In this context, Mr Bulow submitted that he had informed Judge Heffernan that he was planning to retire prior to the hearing in his affidavit material filed on 28 June and 2 July 2019. I can find no reference to retirement in the first affidavit. No affidavit was filed on 2 July but one was filed on 8 July, in which Mr Bulow deposed that he made the affidavit concerned to disclose voluntarily evidence in relation to my superannuation and future income following my forthcoming retirement from the workforce.[33]
[33] Affidavit of Mr Bulow filed 8 July 2019.
This statement is made in the context of Mr Bulow providing, as an annexure, some pages referencing him, from the H Fund, which date to the financial year ending 30 June 2018 and which indicate a preservation age, for him, of 57 and indicate his benefit options as at this date, a follows:
·a preserved amount of $515,966.32;
·a CPI-indexed pension of $48,505.27 with a lump sum of $5,941.50;
·a lump sum of $831,805.68, with a preserved benefit of $484,180.66; or
·a part CPI-indexed pension of $41,299.05 and a lump sum of $$31,805.66.
These figures seem to be general in nature and are not provided in the light of a specific application by Mr Bulow to access his superannuation. In any event, in my view, it was incumbent upon Mr Bulow to provide evidence to the Court of what would be the implications of the split sought by Ms Bulow on those sums, which he did not do.
THE LEGAL PRINCIPLES APPLICABLE
The legal principles applicable to determining a stay application are not controversial. In Jackson & Balen,[34] the Full Court summarised the relevant principles applicable to the grant of a stay, pending appeal, in the following terms:
[34] [2009] FamCAFC 131.
•the onus to establish a proper basis for the stay is on the applicant for the stay. However it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;
•a person who has obtained a judgment is entitled to the benefit of that judgment;
•a person who has obtained a judgment is entitled to presume the judgment is correct;
•the mere filing of an appeal is insufficient to grant a stay;
•the application must be bona fides;
•a stay may be granted on terms that are fair to all parties - this may involve a Court weighing the balance of convenience and the competing rights of the parties;
•a weighing of the risk that an appeal may be rendered nugatory if a stay is not granted – this will be a substantial factor in determining whether it will be appropriate to grant a stay;
•some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case.[35]
[35] Ibid [28] (Warnick, Boland and Crisford JJ).
DISCUSSION
Given the length of the marriage between the parties and the significant contributions each made during it, it appears axiomatic that there will be a split made in respect of the parties’ superannuation. Certainly nothing the Full Court has indicated does anything to dissuade me that this is the case.
In this context, it would appear to be the case that the parties’ non superannuation assets, principally in the form of their long sold former home, have effectively been divided in the form anticipated following the first trial.
Given the discrepancy in the value of the parties’ superannuation, which is largely attributable to the fact that Mr Bulow’s interest has a different quality to that held by the wife, chiefly as a consequence of the fact that it has an unfunded aspect, which will be met by the H Fund, it seems that the split will come from his superannuation and be made in Ms Bulow’s favour.
In my view, Judge Heffernan was cognisant of the fact that Mr Bulow’s superannuation had this different aspect to more conventional accumulation funds. As such, he discharged the obligation arising from the first appeal decision. He did not, as he was initially criticised, mechanically divide the apparent value of the funds between the parties, but considered expert evidence of what was the value of those funds, in the context of one fund being a defined benefits fund and the other(s) being accumulation funds.
Mr Bulow was given an opportunity to take part in this fact finding exercise and elicit his own evidence in respect of it. He did not avail himself of either opportunity. In addition, in my assessment, he has not behaved in a transparent manner in respect of his future plans so far as his superannuation is concerned.
In this context, I am concerned about his overall bona fides. There is no principle of law that a stay must follow the lodgement of an appeal. Rather, it is a discretionary decision, which is open to being influenced by the conduct of the parties in the whole of the proceedings concerned.
It does not seem fair to me that, after having concealed his date of retirement, from both the Court and the wife, Mr Bulow should be able to derail the split made in favour of the wife, by raising these considerations, after they have occurred and after he has rejected the opportunity to give evidence about them at the time appointed by the Court.
In this context, I must also consider whether not granting the stay will render any successful outcome of the appeal, in effect nugatory, because Mr Bulow will not be able to return to the previous status quo ante if no split is made in Ms Bulow favour, on appeal or the split takes a different form to that envisaged by the order of Judge Heffernan.
As was pointed out in the judgment following the second trial, the effect of a splitting order is to split the trustee’s liability not the entitlements of the member concerned. That the trustees of the H Fund will have some form of non-member spouse liability, for Ms Bulow, cannot be doubted.
It will accrue interest, once it is split off, as calculated by reference to the operative date. I presume that if the current order remains stayed and the appeal is ultimately unsuccessful, the original operative date will be reinstated and, as a consequence, any interest lost will be re-calculated and added to the split off amount. This appears to be the import of the letter dated 19 April 2021 from the H Fund.
I concede that, if a stay is not granted, it must be the case that the amount of any pension calculated to be receivable by Mr Bulow must be reduced as a consequence of the split made in the wife’s favour. However, there is no evidence available as to the actual quantum of that reduction. Accordingly, it is difficult to assess its impact in anything other than hypothetical terms. This difficulty largely arises as a consequence of the husband’s lack of engagement with the earlier proceedings.
It would seem probable that, whatever is the outcome of the prospective appeal, there will be some form of split made in Ms Bulow’s favour at some time, which necessarily will result in the reduction of whatever pension payments the husband elects to take. In addition, as previously indicated, the correspondence received by the wife, from the H Fund, indicates that the split envisaged by Judge Heffernan will be reinstated if the stay is discharged and no different splitting order is made. This seems to indicate that any recent election made by Mr Bulow, in respect of retirement from the workforce has effected it.
If the stay remains in place, it will be the case, I assume that Mr Bulow will begin to receive a pension from the H Fund, which will begin to consume the funded portion of his superannuation. Depending on when the appeal is heard and its outcome – it being conceivable that the Full Court will remit the case back for yet another hearing – the corpus of Mr Bulow’s superannuation will be reduced to varying degrees.
In my view, this has the potential to be prejudicial to the wife, if she is ultimately successful in the appeal. The prejudice will be greater, the longer the appeal and any subsequent rehearing remains unresolved, as more of the funded superannuation will be allocated to Mr Bulow.
However, any refusal of the stay will not result in Mr Bulow’s appeal having no practical consequences – the appeal will remain effective rather than nugatory. He will be able, as he currently wishes, to challenge the outcome of the second trial.
The continuance of the stay may, however, cause him some form of financial inconvenience, the extent of which will depend on the success or otherwise of the appeal. It being conceivable that the split or something approximate to it will be confirmed, on appeal.
Accordingly the continuation of the stay and its withdrawal has the potential to cause some level of prejudice to each of the parties. These aspects of convenience must be balanced against one another. In this context, it seems to me to be highly probable that there will ultimately be some form of split made in Ms Bulow’s favour.
Apart from asserting that he disagrees with the orders of Judge Heffernan, in my view, Mr Bulow has not demonstrated what are the legal errors attaching to the judgment. Many of his grounds of appeal are somewhat inchoate statements that Judge Heffernan was biased or unfair to him or exercised the discretion conferred upon him unreasonably.
However, the major difficulty confronting him on appeal is the fact that he did not take part in the second trial. As such, he was given the opportunity to put any evidence regarding the nature of his H superannuation and the consequences of any split to Judge Heffernan but failed to take up this opportunity. It seems to me to be fundamentally unfair to the wife that she should be penalised as a consequence of the husband’s omission. She is entitled to the benefits of the judgment made in her favour, which does not seem to me to be tainted by obvious error.
In addition and significantly, many of his complaints about Judge Heffernan’s refusal to recuse himself and other issues in respect of the manner in which the Judge proposed to deal with the proceedings have been dealt with by the Full Court and were dismissed. Special leave was refused by the High Court.
Given Mr Bulow’s approach to the litigation, throughout the seven years it has been on foot, I am also concerned that there is a significant possibility that he is using the mechanism of an appeal as an instrument to delay the inevitability of his H superannuation being split.
For all these reasons, the application for a stay is refused and the earlier interim stay order is dismissed.
I certify that the preceding one hundred and forty-three (143) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Brown. Associate:
Dated: 1 June 2021
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