Branic & Sanberg

Case [2021] FCCA 1652

FEDERAL CIRCUIT COURT OF AUSTRALIA

Branic & Sanberg [2021] FCCA 1652

File number(s): NCC 1288 of 2018
Judgment of: JUDGE TERRY
Date of judgment: 23 July 2021
Catchwords: FAMILY LAW – property – 16 year marriage – children aged 14 and 16 – where the wife died after the proceedings were commenced – where payments made by B Insurance as a result of the wife’s illness and death make up a large part of the pool – contributions assessed on a two pools basis – contributions to the pool containing the payments assessed as 75% by the wife and 25% by the husband because that money only exists because of the wife’s illness and death – adjustment in the husband’s favour for s. 75(2) matters resulting in an equal division of the pool
PROCEDURAL – application to re-open – where the husband applied to re-open the hearing after he was made redundant in June 2021 – application to re-open dismissed
Legislation: Family Law Act1975 (Cth), ss 75, 79
Cases cited: Bonnici & Bonnici (1992) FLC 92-272
EB v CT (No. 2) (2008) QSC 306
Erdem & Ozsoy [2012] FMCAfam 1323
Falcken & Weule [2019] FamCAFC 140
G & G (1984) FLC 91-582
Miller & Miller [2009] CAFC 121
Norbis & Norbis (1986) FLC 91-712
Pericles & Hopman [2020] FamCA 465
Stanford & Stanford (2012) FLC 93-495
Yeates & Yeates [2013] FCWA 117
Number of paragraphs: 133
Date of last submission/s: 29 June 2021
Date of hearing: 5 February & 29 June 2021
Place: Newcastle
Solicitor for the Applicant: Felicio Law Firm
Counsel for the Applicant: Mr Levick
Solicitor for the Respondent: Ryan & Seton Lawyers
Counsel for the Respondent: Mr Weightman

ORDERS

NCC 1288 of 2018
BETWEEN:

MR BRANIC

Applicant
AND:

MS SANBERG (AS EXECUTOR OF THE ESTATE OF MS BRANIC (DECEASED))

Respondent

ORDER MADE BY:

JUDGE TERRY

DATE OF ORDER:

23 JULY 2021

THE COURT ORDERS THAT:

1.The Application in a Case filed on 24 June 2021 is dismissed.

2.Within seven (7) days of the date of these orders the applicant shall pay the respondent $1,105,919.50.

3.Contemporaneously with the payment being made in accordance with Order 2, the respondent shall do all things and sign all documents as shall be necessary to transfer to the applicant all of the estate’s right, title and interest in the property situate at and known as C Street, Town D in the State of New South Wales (“the C Street, Town D Property”).

4.Contemporaneously with the payment being made in accordance with Order 2, the applicant shall do all such acts and things and sign all such documents as shall be necessary to discharge the mortgage on the C Street, Town D property.

5.Within fourteen (14) days of the date of these Orders the respondent shall do all things necessary to remove from the C Street, Town D property the horse float and shipping container.

6.Paragraphs 7 to 10 (inclusive) of these orders are binding on Mr Branic as director of the…

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Branic & Sanberg [2021] FCCA 1652
Case
[2021] FCCA 1652
Decision Date

CaseChat Overview and Summary

This matter came before Justice Terry of the Federal Circuit Court of Australia concerning an application by Mr Branic against Ms Sanberg, in her capacity as executor of the estate of Ms Branic (deceased). The dispute centred on the division of property and superannuation interests following the death of Ms Branic. Mr Branic had sought to re-open his case to present evidence of changed financial circumstances due to his recent redundancy.

The court was required to determine whether to grant Mr Branic leave to re-open his case to adduce evidence of his redundancy and its impact on his financial position. Additionally, the court needed to make orders regarding the division of the parties' assets, including a property at C Street, Town D, and the Branic Superannuation Fund, and to address the applicant's request to dismiss his own application.

Justice Terry dismissed Mr Branic's application to re-open his case, finding that his redundancy, while a change in circumstances, did not warrant re-opening the proceedings given his long history of skilled employment and the nature of the dispute. The court then proceeded to make orders for the division of property, including the transfer of the C Street, Town D property to Mr Branic upon payment of $1,105,919.50 to the respondent, and the discharge of the mortgage on that property. The court also made superannuation splitting orders pursuant to s.90XT of the Family Law Act 1975, allocating $104,763.50 to the respondent from Mr Branic's interest in the Branic Superannuation Fund, and a further $126,363.50 to be paid to the respondent upon compliance with the superannuation orders. Finally, each party was declared the sole legal and beneficial owner of all other property in their possession.

Orders

Orders of the court

NCC 1288 of 2018

BETWEEN:

MR BRANIC

Applicant

AND:

MS SANBERG (AS EXECUTOR OF THE ESTATE OF MS BRANIC (DECEASED))

Respondent

ORDER MADE BY:

JUDGE TERRY

DATE OF ORDER:

23 JULY 2021

THE COURT ORDERS THAT:

1. The Application in a Case filed on 24 June 2021 is dismissed.

2. Within seven (7) days of the date of these orders the applicant shall pay the respondent $1,105,919.50.

3. Contemporaneously with the payment being made in accordance with Order 2, the respondent shall do all things and sign all documents as shall be necessary to transfer to the applicant all of the estate’s right, title and interest in the property situate at and known as C Street, Town D in the State of New South Wales (“the C Street, Town D Property”).

4. Contemporaneously with the payment being made in accordance with Order 2, the applicant shall do all such acts and things and sign all such documents as shall be necessary to discharge the mortgage on the C Street, Town D property.

5. Within fourteen (14) days of the date of these Orders the respondent shall do all things necessary to remove from the C Street, Town D property the horse float and shipping container.

6. Paragraphs 7 to 10 (inclusive) of these orders are binding on Mr Branic as director of the trustee of The Branic Superannuation Fund (“the Fund”).

7. Pursuant to s.90XT(4) of the Family Law Act 1975, the amount allocated to the respondent out of the interests of the Applicant in the Fund is $104,763.50.

8. In accordance with s.90XT(1)(a) whenever a splittable payment becomes payable in respect of the interest of the applicant in the fund, the respondent is entitled to be paid the amount of $104,763.50 and there is a corresponding reduction in the entitlement of the applicant which would have been made but for this order.

9. The applicant as director of the trustee of the fund must do all such acts and things and sign all such documents as may be necessary to allocate the amount in Order 8 to the wife’s accumulation account.

10. The superannuation splitting orders herein will have effect from the operative time and the operative time shall be four (4) business days after the making of this order.

11. Upon compliance with Orders 7-10 of these Orders the applicant shall do all such acts and things and sign all documents as shall be necessary to pay the respondent, the wife’s member balance in the Branic Superannuation Fund of $126,363.50.

12. Each party is otherwise declared to be the sole legal and beneficial owner of all real and personal property presently in their possession, custody or control.

13. In the event that either party refuses or neglects or is unable to execute any instrument or document being an instrument or document the execution of which is provided for in these orders or is necessary to put into effect the provisions of these orders then at the request of the other party a Registrar of the Federal Circuit Court of Australia is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute any such instrument or document in the name of the party refusing or neglecting or being unable to so execute the instrument or document.

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

I intend to dismiss the husband’s application to re-open. Background The husband and wife married and commenced cohabitation in 1999. They have two children, X born in 2004 and Y born in 2006. The husband worked full time as a manager throughout the marriage save for a 9 month period in 2013/2014 after he was retrenched. The wife was employed full time when the marriage commenced. At some point in 2004 she began working part time and she continued to do so for the remainder of the marriage. She was the primary homemaker and parent after X and Y were born. The parties bought and sold a number of real properties but at separation the only property they owned was C Street, Town D which was registered in joint names and which continues to be a significant asset in the pool. In 2009 the parties set up a self-managed superannuation fund which they called the Branic Superannuation Fund. The parties were the trustees of the fund and the wife rolled $36,000.00 into the SMSF and the husband rolled in $150,000.00. At the time the SMSF was set up each party took out an insurance policy with B Insurance. The husband said as follows in his affidavit:Ms Branic and I as trustees of the Self-Managed Superannuation Fund obtained insurance cover with B Insurance which provided that benefits would be paid if, in particular, Ms Branic suffered trauma, became totally and permanently disabled for employment or upon her death. I was declined trauma insurance due to pre-existing health condition, (a medical condition). I was able to obtain Life Insurance cover.[3][3] Paragraph 64 of the husband’s affidavit. The premiums for the wife’s insurance policy were paid from a bank account in the name of the parties as trustees’ for the Branic Superannuation Fund. The husband said that at the time the SMSF was set up the parties’ insurance broker suggested that they consider creating two death benefit agreements. He said that he and the wife discussed this and that the wife said words to the effect:There is no point as whoever survives will manage the finances and have the care of the children.[4][4] Husband’s affidavit paragraph 88.1 The husband said that he agreed with this. In 2012 the wife was diagnosed with cancer and a claim was made under the policy for a trauma benefit. B Insurance paid $100,000.00 which was deposited into an account in the wife’s name. In 2012 she went to Country G for two months to undergo medical treatment and $72,000.00 of the trauma payment was used to fund this. The wife’s cancer went into remission and the $28,000.00 remained in the wife’s account and was part of monies distributed between the parties at separation. The parties separated under one roof either on 1 September 2015 according to the wife or 1 February 2016 according to the husband. Nothing turns on which version about the date of separation is correct. In May 2016 the husband moved out of the C Street, Town D property and the children commenced living in a week about arrangement.

Evidence

Evidence Before The Court

If the respondent prevailed the estate would receive 79% of the assets and the husband 21%.The evidence The husband relied on his affidavit filed on 15 January 2021 and his amended financial statement filed on 22 January 2021. The respondent relied on the wife’s affidavit filed on 19 March 2019 and the affidavit of the respondent filed on 22 January 2021. Case Outline documents were filed on behalf of both parties and a small tender bundle was handed up. The trial took place on 5 February 2021 and proceeded by way of submissions. Judgment was then reserved. The application to re-open On 24 June 2021 the husband filed an Application in a Case seeking leave to re-open his case in order to call evidence about his changed financial circumstances since the hearing. The executor filed a Response opposing the application, and I heard submissions about this application on 29 June 2021. In his supporting affidavit the husband said that in 2021 he had been made redundant from his position as a manager with Employer E. He said that his last day of work would be in 2021. The husband said that he would receive a redundancy payment of $77,504.54 net of tax which included annual leave, long service leave, redundancy and pay in lieu of notice. He said that he intended to use this money to pay off his car loan of $15,000.00 and to pay an income tax bill of $6,000.00, a credit card debt of $10,000.00 and school fees of $13,000.00 and would retain the balance of $33,000.00 for living expenses. He said that due to his parenting commitments he intended to look for a position within 30 kilometres of Town F where he lived with his partner and where his children went to school. He said that alternatively he would consider a position that would allow him to be home by 4.00pm. He also said that he was looking for a role as a Manager so that he could work more autonomously. The husband said that he had applied for over 30 positions and had either received no response or been unsuccessful. He said that he expected that it would be difficult to obtain employment in the near future which met his requirements as a single parent. The executor noted that the husband had a long history of skilled employment. She said that the children were 14 and 16 and that the 16 year old would be able to obtain a provisional driver’s licence in 2020. She said that the estate had incurred significant costs to date and that she was concerned about further legal costs if the hearing was re-opened. During submissions the husband’s counsel relied on the material in the husband’s affidavit. He submitted that the only real dispute in the case was about s. 75(2) matters and that the husband’s loss of employment was therefore a significant issue and justified the case being re-opened so that this evidence could be given. The respondent’s counsel submitted that there was nothing out of the ordinary in a person losing their job and the husband had a long history of well-paid employment and had not had an accident or been diagnosed with an illness which would impact on his capacity to obtain another job.

Decision

Reasons for decision

The respondent’s counsel submitted that contributions to the remaining assets should be assessed as equal. He submitted that it may be open to the court to find that the husband brought in slightly more than the wife although it was not possible to put a figure on it due to lack of documentary evidence. He said that the wife brought in gifts and inheritances worth $119,000.00 and also contributed the trauma payment, although in line with the cases he referred to earlier in his submissions the husband would receive some credit for that. He submitted that contributions to this pool should be assessed as equal. Conclusion about contributions The assessment of contributions in cases where money has been received from a TPD and/or Death Benefit claim has been considered in a number of cases but many of them turn on their own facts. In some cases the TPD payment was received during the relationship and was mixed in with other funds. In other cases the money was received after separation and disposed of by the recipient and the argument was about whether some or all of it should be added back. An argument about contributions based on the payment of premiums is not apparent in all the cases. In some cases the argument about contributions rested on a claim about care given to the recipient of the payment by the other party. The respondent’s counsel referred me to Falcken & Weule, a case in which the wife suffered a stroke during the marriage and received a payment pursuant to an income protection policy. The husband argued that his contribution to the payment of the premiums for the policy meant that contributions to the amount the wife received should be assessed as equal. The Full Court said as follows:The husband correctly points out that the primary judge did not expressly refer to any contribution made by him to the premiums for the income protection policy pursuant to which the wife received her payment. He submitted that this was an error and that his Honour should have found that the receipt and use of the capital disability insurance payment was an equal contribution by both of them and not one that favoured the wife.The evidence relied on by the husband demonstrates that at some stage during the marriage the parties agreed that they should each obtain income protection insurance (Transcript 17 May 2018, p.24 lines 37–48; Affidavit of the wife sworn on 10 March 2017, p.23). Thereafter, the wife paid the premiums, seemingly from her income. Nonetheless, it was a joint decision to use family funds to obtain income protection.We accept that this can be a relevant consideration but we do not accept the husband’s contention that it follows from the facts relied on by him that there has been an equal contribution to the receipt and use of the benefits of the policy.[10][10] Falcken & Weule [2019] FamCAFC 140 The Full Court reviewed a number of cases and said as follows:As Thackray CJ said in Yeates and Yeates [2013] FCWA 117 at [208] and [209] the payment of insurance premiums cannot be compared with contributing to a superannuation fund and that “[t]he sad reality is that the money became available only because the husband was diagnosed with a terminal illness and then died”.Finally, we are content to adopt the following statement made by Strickland J in Miller & Miller [2009] FamCAFC 121:…This payment was not a windfall. It was a payment received by the husband because he suffered a heart attack. It matters not that it was a minor attack from which he recovered. Despite the husband’s good fortune in this regard, his health into the future is “significantly compromised” as a result according to the evidence of his cardiologist. Thus, although the fact that it was a joint decision to take out the insurance and the fact that the premiums were maintained out of the parties’ joint funds can be treated as contributions by each of the parties, there still needed to be a life-threatening event before a payment could be made. It is simply not open to the wife to argue that the parties have contributed equally to this payout. It is the husband’s money to which the wife has made an indirect contribution of a relatively minor nature…The upshot of these authorities is that a joint decision to take out insurance is a contribution by both parties. It is worth recording that in none of these cases was that contribution regarded as being anywhere close to equal.

Ratio Decidendi

Legal Principle Established

The wife also contributed the $28,000.00 which was the balance of the trauma insurance payment, and which was still in her account at separation.Post Separation Matters The parties largely shared the care of the children equally between separation and the wife’s death. The respondent’s counsel conceded that the husband had assumed full time care of the children in December 2019 shortly before the wife’s death. In the wife’s affidavit she gave evidence about issues with payment of child support and repayment of loans after separation. At trial no submissions were made about these matters. In the husband’s affidavit he said that after he moved back to the property in January 2017 he paid $7,500.00 to have the driveway upgraded. No evidence was provided about the impact if any this had on the value of the property and it was not referred to as a relevant matter in submissions.Submissions about contributions Counsel for the executor submitted that contributions should be assessed separately to the money deriving from the claims on the B Insurance Policy and the remainder of the assets. The husband’s counsel urged me to make a global assessment of contributions. Contributions are frequently assessed on a global basis but the court has a discretion about which approach it adopts. In G & G Nygh J said as follows:At the moment the Family Court is divided between those who favour the so-called global approach and those, of whom I am one, who seek to achieve some degree of precision. In my view, despite what was said in Norbis both approaches are legitimate unless the High Court rules otherwise provided that those who take the global approach heed the warning that the origin and nature of the different assets ought to be considered and that those who favour the more precise approach do not mistake the trees for the forest, i.e. add up their individual items without standing back at the end to review the overall result in the light of the needs of the parties.[7] [7] G & G(1984) FLC 91-582 The High Court hearing an appeal in Norbis & Norbis subsequently endorsed the view that either approach was legitimate.[8][8] Norbis & Norbis (1986) FLC 91-712 In Bonnici & Bonnici, a case in which the husband received a substantial inheritance late in the marriage, the trial judge adopted a global approach and assessed contributions as equal. The Full Court allowed the husband’s appeal and said as follows:In a case such as this, we think that the global approach, taken by his Honour, presents considerable difficulties. If the matter had been approached upon an asset by asset basis, we think that the task of his Honour and this Court would have been a simpler one. To approach the matter globally as his Honour did, in circumstances where the wife had clearly made no contribution to a major asset, must of necessity have involved a greater weighting of her contribution than that of equality to the assets to which she did contribute. There would, nevertheless, have been nothing wrong with his Honour having approached the matter globally if he had explained how he did so.[9][9] Bonnici & Bonnici (1992) FLC 92-272