Branic & Sanberg
[2021] FCCA 1652
•23 July 2021
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 dismissedLegislation: 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 117Number 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 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.
IT IS NOTED that publication of this judgment under the pseudonym Branic & Sanberg is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE TERRY
Introduction
These proceedings involve a dispute about the division of property following a marriage/cohabitation of about 16 years.
The proceedings are between the husband and the executor of the wife’s estate and a complication in the matter is that $1.575m of the pool of $2.46m is money received from B Insurance as a result of the wife’s total and permanent disability and later death.
The husband’s counsel proposed that the pool be divided as to 80% to the husband and 20% to the wife’s estate.
He submitted that the court should take a global approach to the assessment of contributions although he made submissions about contributions to the two separate components in the pool.
He submitted that it should find that contributions to the money from B Insurance were equal because the parties made a joint decision to take out the policy and the premiums were paid from the parties self-managed superannuation fund. He also submitted that the parties’ intentions about how the money would be used if anything happened to one of them were relevant. He submitted that the husband should be assessed as having made a greater contribution to the remaining assets because of his initial contributions and his care of the children since the wife’s death. He submitted that overall contributions should be assessed as 55% by the husband and 45% by the wife.
The husband’s counsel submitted that there should be a 25% adjustment in the husband’s favour for s. 75(2) matters because he had the care of the children and wished to have the freedom to step back from his employment to devote time to them, and the estate had no “needs”.
The respondent’s counsel submitted that the court should take a “two-pool” approach to the assessment of contributions. He submitted that contributions to the B Insurance monies should be assessed as 95% by the wife and 5% by the husband because it came into existence as a result of the wife’s illness and death and that contributions to the remaining assets should be assessed as equal.
The respondent’s counsel submitted that there should be no adjustment in the husband’s favour for s. 75(2) matters. He submitted that the husband had a strong income earning capacity and the children were 14 and 16. Pursuant to the terms of the wife’s will he would be able to make an application to the estate for money to be provided for the children’s maintenance and advancement in life, and another superannuation fund had paid the husband a death benefit of $74,000.00 to be held in trust for the children which could also be used for that purpose.
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.
He submitted that there would be considerable prejudice to the executor if the case was re-opened because of the attendant expense and the stress associated with a delay in this long running matter being concluded.
The respondent’s counsel referred me to Pericles & Hopman, a decision of Justice Bennett’s. It is a single judge decision and is not binding on me but it involved an application to re-open a property case and it contains a useful summary of the relevant principals and case law.[1]
[1] Pericles & Hopman [2020] FamCA 465
Justice Bennett pointed out that whether the court permitted the re-opening of a case was a discretionary decision and that applicant bore the onus of proving on the balance of probabilities that the interests of justice were best served by reopening the case rather than dismissing the application.
She referred to the Supreme Court of Queensland decision of ET & CT (No. 2)[2] which involved an application to re-open in a de facto property case and in which Applegarth J said as follows:
[2] EB v CT (No. 2) (2008) QSC 306
[2]The guiding principle in deciding whether to grant leave to re-open is whether or not the interests of justice are better served by allowing or rejecting the application. Reference is made in Finborough Investments Pty Ltd v Airlie Beach Pty Ltd and in the cases referred to in it to the need for finality in litigation.
[3]In Smith v New South Wales Bar Association the High Court stated that different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. As to the former situation, the court said it was difficult to see why the primary consideration should not be that of embarrassment or prejudice to the other side.
[4]In Reid v Brett the criteria governing the exercise of the discretionary power to re-open a case to admit further evidence where the hearing has concluded but judgment has not been delivered, were said to be as follows:
(a)the further evidence is so material that the interests of justice require its admission;
(b)the further evidence, if accepted, would most probably affect the result of the case;
(c)the further evidence could not by reasonable diligence have been discovered earlier; and
(d)no prejudice would ensue to the other party by reason of the late admission of the further evidence.
[5]Reference by the High Court to prejudice to the other party, and the guiding principle of the interests of justice, require account to be taken of the strain that litigation imposes on personal litigants. The prejudice caused by delay in the delivery of an expected judgment at the end of stressful litigation cannot always be measured in terms of money or cured by an order for costs. The interests of justice are served by finality in litigation, particularly where prolonged litigation imposes a strain on personal litigants.
Having regard to the criteria in the decided cases I cannot be satisfied that the husband has discharged the onus of establishing that the interests of justice require the case to be re-opened.
I cannot be satisfied that the evidence he wishes to adduce is so material that it would probably affect the result of the case. There is always a risk that a party in property proceedings may lose their job. It happened to the husband on one occasion during the parties’ 16 year marriage and he was successful after 9 months in obtaining another job. Other than that he has a long history of well-paid employment and he did not put forward any reason, other than the choices he wished to make about the employment he accepted, for why he would not be able to secure other employment.
The fact that the husband wishes to be selective about the employment he engages is not a new development. One of the reasons he gave at trial for seeking a substantial s. 75(2) adjustment in his favour was so that he could, if he felt it necessary for the support of his children, have a period out of the work-force.
The executor would be prejudiced if the husband was allowed to re-open his case. Further costs would be incurred, and although the executor is not a party to the marriage, she has a right to look forward to her job as executor (although not necessarily as a trustee) coming to an end. The litigation has been on foot for three years and it is in the interests of everyone, including the litigants in this case and other litigants patiently awaiting court time that it be concluded as soon as possible.
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.
In January 2017 the husband moved back in. This was not by agreement but the property was in the names of both parties and the wife took no immediate steps to try and change that situation.
On 30 April 2018 the husband filed an application for parenting and property orders.
The wife filed a response on 8 August 2018 and the parties attended a conciliation conference on 5 October 2018 but the matter did not settle.
In late 2018 the wife ceased to be in remission from cancer and her health progressively worsened. As a result the property matter was listed for hearing on 21 March 2019.
For a variety of reasons the matter was not ready to be heard on 21 March 2019 and the trial dates were vacated. The parties some discussions and on 28 March 2019 an order was made consent for the husband and wife as trustees of the Branic Superannuation Fund to do all acts and things necessary to make a claim against an B Insurance policy which insured the wife for total and permanent disablement.
The parties agreed that the matter should be adjourned until after that claim was determined.
An order was also made for the wife to be allocated $93,000.00 from the husband’s interest in the Branic Superannuation Fund but this order was never carried into effect.
The parties promptly submitted a claim to B Insurance but B Insurance took a considerable time to make their decision. They indicated in December 2019 that they intended to accept the claim but the wife’s health continued to decline and she died in 2020. The following day B Insurance paid $1,116,621.22 to the Branic Superannuation Fund.
On 30 January 2020 the wife executed a Binding Death Benefit Nomination which directed the trustee of the SMSF to pay 100% of her benefits under the fund to her legal personal representative. At or about the same time she made a will leaving her estate as to 10% to her sister Ms Sanberg, 10% to her sister’s children and the remaining 80% to X and Y.
After the wife’s death the husband made a claim for a Death Benefit under the B Insurance policy and in 2020 B Insurance paid a Death Benefit of $458,010.00 to the Branic Superannuation Fund.
The husband sought legal advice about the validity of the Binding Death Benefit Nomination and was advised that it was not valid and on 5 November 2020 he transferred $1,574,705.01 from Branic Superannuation Fund Bank account to his personal bank account. He said that he was permitted by the rules of the Fund to do so.
The husband has not however dealt with the funds. They remain intact in his bank account and it was not in dispute that they formed part of the pool available for division between the parties.
Once a Grant of Probate was obtained the wife’s executor was substituted for the wife as the respondent and the matter was listed for trial on 5 February 2021 and the hearing took place on that day.
The assets, liabilities and superannuation
The parties agreed that the assets were as follows:
Description Ownership Value C Street, Town D New South Wales Husband and the Wife’s estate as tenants in common $895,000.00 ANZ Account …28 Husband $1,575,377.00 Total $2,470,377.00
The money in the husband’s ANZ account derives from the TPD and Death Benefit payment made by B Insurance to the Branic Superannuation Fund.
The parties have the following liabilities:
Description Ownership Value CBA Home Loan Mortgage Account …05 Husband and the wife’s executor $258,538.00 Total $258,538.00
The parties have the following superannuation:
Description Ownership Value Branic Superannuation Fund Husband $166,231.00 Super Fund H / Employer E Husband $64,896.00 Branic Superannuation Fund Wife $21,600.00 Total $252,727.00
Prior to her death the wife had a small superannuation interest with Company J. Following her death her executor lodged a Death Benefit claim with Company J. Company J determined that there was an entitlement of $74,315.51 but they elected to pay this to the husband to be held in trust for the children. It does not form part of the assets but it is a relevant s. 75 (2) matter.
The parties have non-superannuation assets worth $2,211,839.00 and superannuation worth $252,727.00, a total of $2,464,566.00.
The applicable law
S.79 (1) of the Family Law Act 1975 empowers the court to make such orders as it considers appropriate altering the parties’ interests in property.
S.79 (2) provides that the court shall not make an order under this section unless it considers that it would be just and equitable to do so.
In Stanford & Stanford[5] the High Court stressed that when an application for a property settlement was made the court must first identify the parties interests in property and then consider whether it was just and equitable to make an order altering those interests. It stressed that this question could not be answered simply by considering whether a party had made contributions as set out in s. 79(4) of the Family Law Act.
[5] Stanford & Stanford (2012) FLC 93-495
I am satisfied that it is just and equitable to consider making property settlement orders. It would have been so prior to the wife’s death and it remains so. The husband and the executor cannot make use of the assets in the pool by agreement and the parties both asked the court to make orders altering the property interests.
I intend to take the usual steps to resolve the question of what particular alteration of interests would be just and equitable and those steps are:
(i)To assess the contributions of the parties under s79 (4) (a), (b) and (c) and to express those contributions as a percentage.
(ii)To consider the matters in s.79 (4) (d), (e), (f) and (g), which includes the matters in s.75 (2) so far as they are relevant, and determine whether any adjustment should be made as a result to the contribution based entitlements.
(iii)To consider the effect of those findings and resolve what orders are just and equitable.
Contributions
The wife alleged that at the commencement of cohabitation she owned:
(i)Motor Vehicle 1 estimated value $14,000.00.
(ii)Term Investment value $60,000.00.
(iii)Contents of minor value.
(iv)Minimal superannuation.
The husband said that the wife also had a HECS debt of $20,000.00 which was repaid during the marriage.
The husband alleged that he owned:
(i)A motor vehicle subject to a loan.
(ii)Furniture
(iii)Minimal superannuation
(iv)A share portfolio which was netted him $100,000.00 when sold prior to the purchase of the Suburb K property.
The respondent’s counsel noted that there was no documentary evidence to support the wife’s claim about the Term Investment or the husband’s claim about the amount he netted from the sale of his shares.
The husband was employed in management throughout the marriage save for nine months in 2013/2014 after he was retrenched and before he obtained another job.
The wife was working as a secretary and manager at the time of the marriage. In 2001 she commenced working a 4 day week in paid employment but also spent 1 day a week running a home based business. She worked full time for a period between 2003 and 2004 but in 2014 she became X’s primary carer and ceased to work full time.
For the remainder of the marriage she was the primary carer of X and Y and worked part time and tailored her work to fit around their care.
The wife said that she also did the majority of the household tasks. The husband said that he assisted with the care of the children when he was not working. This is likely to be true. The husband said that he provided some assistance with work inside the home and that he was responsible for the yard work and maintenance. This also is likely to be true.
The parties bought the following properties during the relationship:
Year Description Purchased With 2000 Street L, Suburb K Savings & Loan 2003 Town M, Queensland Loan 2009 N Street, Town O Loan 2011 C Street, Town D Loan
The Street L, Suburb K property was sold in 2011 and the N Street, Town O property was sold in 2013. In both cases the proceeds of sale were used to pay down other housing loans.
The Town M property was sold in 2016 and the proceeds of sale were used to reduce the loan secured over C Street, Town D. When the parties separated the only property they owned was the C Street, Town D property.
The wife said that she received the following gifts and inheritances:
Year Gift/Inheritance Application 2005 $56,000.00 from her paternal grandmother’s estate Applied to household expenses and purchase of cars 2011 $25,000.00 from her parents To assist in purchasing the C Street, Town D property 2012 $30,000.00 from her maternal grandmother Given to assist the wife with expenses connected with her treatment in Country G but she did not need it for that purpose. The wife said that the money was used toward the purchase of C Street, Town D.
The husband conceded that the wife received each of those amounts.[6]
[6] Husband’s affidavit, paragraphs 27, 29 and 33.
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
The husband’s counsel urged me to assess contributions globally so that the “myriad of other contributions” made by the husband during 16 year marriage were not overlooked. However there is a very large disparity between the amount deriving from the wife’s total and permanent disablement and death and amount deriving from the parties’ efforts during the relationship and I consider it appropriate to assess contributions separately to the different pools.
The husband’s counsel made submissions about contributions to the respective pools, so adopting this approach does not disadvantage the husband.
The husband’s counsel submitted that contributions to the pool deriving from the claims on the B Insurance Policy should be assessed as equal because the parties made a joint decision to take out the policy and the premiums were paid from a bank account in the name of the SMSF.
He submitted that the court should also have regard to the discussion the parties had in 2009 when the policy was taken out, which was to the effect that it was the intention of the parties that if something happened to one of them the other should have the benefit of funds available under the policy to assist with the care of the children.
The husband’s counsel did not refer to any case law which supported his position.
He submitted that contributions otherwise favoured the husband because of his initial contribution of the shares and his post-separation care of the children and submitted that overall contributions should be assessed as 55% by the husband and 45% by the wife.
The respondent’s counsel submitted that contributions to the monies paid by B Insurance should be assessed as 95/5 by the wife. He acknowledged that the husband had made some contribution to these monies because between 2009 and 2020 the premiums were paid by the SMSF. He said that even if they diminished the wife’s member balance they should be treated as a joint contribution by the parties. However he submitted that the fact that the payments were received because the wife had a terminal illness and later died meant that contributions to this pool overwhelmingly favoured her.
The respondent’s counsel submitted that whatever the parties’ intention about the use of the insurance monies if something happened to the wife might have been in 2009, they separated in 2016, and when the claim was made against the policy they were in the midst of a property dispute. There was no evidence that the wife had a continuing intention post-separation that money received pursuant to the policy would to go to husband to assist him to care for the children and indeed the fact that she executed the Binding Death Benefit Nomination suggested otherwise.
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.
The respondent’s counsel submitted that in the case before me contributions should be assessed as 95% by the wife and 5% by the husband. He did not explain exactly why he had picked those figures but he referred to a first instance decision of Erdem & Ozsoy[11] in which Judge Walters (as he then was) assessed contributions to money received from a superannuation fund upon the wife’s death as 97.5% by the wife and 2.5% by the surviving husband. Judge Walters said as follows:
In relation to the wife's superannuation and death benefits, Mr Salamanca endeavoured to argue that the parties' contribution should be treated as being equal. He argued that the death benefits were something similar to a windfall or an insurance payout with the parties had contributed equally, or something close to equally, to the acquisition which gave rise to the windfall or to the policy which generated the insurance payout. I reject that submission. While I accept that the husband may have made a contribution (directly or indirectly) to the policies or arrangements which gave rise to the wife's superannuation entitlements and, ultimately, her death benefits, there can be no doubt that it was the wife's death that generated the substantial lump sum payments. I do not know whether death can be regarded as the quintessential contribution in such circumstances, but it is difficult to conceive of a more "direct" contribution. But for the wife's death, the lump sums would not have been paid.[12]
[11] Erdem & Ozsoy [2012] FMCAfam1323
[12] Erdem & Ozsoy [2012] FMCAfam 1323
All cases turn on their own facts, and that case involved a 12 year relationship in which the parties largely kept their finances separate, and Judge Walters assessed contributions separately to 19 different assets one of which was the superannuation and death benefits payment.
The court is not required to try and align its decision with the outcome in other cases, indeed it would be impossible to do so because the facts in every case are different, but it is useful to consider the outcome in cases with similar facts and the facts in Yeates & Yeates bear some similarity to the facts in the case before me.
In Yeates & Yeates the parties had a 15 year relationship with no children, although the husband had a son from a previous relationship. The husband was diagnosed with inoperable cancer shortly after separation and in due course he received payments as a result of life insurance policies which were taken out during the relationship. In considering the parties arguments about how contributions to those payments should be assessed Thackray J said as follows:
It is also important to recognise that life insurance payments are quite unlike superannuation contributions. The latter are paid in the expectation that the funds will be available for later use. The former are paid, hoping the benefit will never be collected. Furthermore, as previously noted, it is only the last premium that results in the entitlement being available. All of the earlier payments are lost, once they have fulfilled their function of providing cover for the period of the premium.
The sad reality is that the money became available only because the husband was diagnosed with a terminal illness and then died. A large portion of the money is still available for distribution because he did not, for example, seek to expend it all on finding a “miracle cure” or “blow it” on luxuries prior to his death.
Yet, I find it difficult to ignore the fact that the insurance monies here become available because the husband and wife consulted, and jointly paid for, a financial planner who recommended they take out insurance and trauma policies. This turned out to be sound advice, even if the other investments made on the recommendation of the financial planner appear to have resulted in a significant loss of funds. The motivation in taking out the entitlements, at a time when the marriage was happy, was to provide security for the other party in the event of death or serious illness.
Attempting to reconcile what at times has appeared to me in preparation of these reasons to be the irreconcilable, I have determined that contributions to the remaining insurance monies (i.e. those worth in total $437,076) should be assessed at 75% by the husband and 25% by the wife. In fixing on that percentage I have taken into account the fact that there were more insurance funds, but these are no longer available for division
The respondent’s counsel pointed out that if this percentage was applied to the entire amount of the insurance money received by the husband it equalled the husband being entitled to 86% of the money on the basis of contributions and the wife being entitled to 14%.
The parties in the case before me also took out the policies on the advice of a financial planner and the superannuation fund paid the premiums. The respondent’s counsel accepted that in 2009 the wife saw the Death Benefits which were part of the policies as a protection for the children and it could be argued, indirectly for the other party who would be left with the sole care of the children if one of the parties died.
However it is instructive to note that when a claim was made for a trauma benefit in 2012 it was deposited into the wife’s account. The expressions of intention in 2009 only take the matter so far.
In addition, by 2016 the parties were separated, and the claim on the TPD component of the policy was not made until three years after separation. By then there were property proceedings on foot and it is clear from the wife’s actions not long before she died that she wanted to use the money that was due to be received as a result of the TPD claim to make provision for the children in the way that she preferred, and that was not by giving it to the husband to help him look after them.
I take into account that the B Insurance Policy was taken out as the result a joint decision of the parties and that the premiums were paid by the SMSF for ten years. I also take into account that the husband made contributions throughout the marriage in many and diverse ways and that these should not be lost sight of just because I am adopting a two pools approach. However I also take into account that the wife’s illness and death are the direct contributing factor to the money being in existence, and doing what Thackray J did and trying to reconcile the irreconcilable I am satisfied that contributions to the money received from the superannuation fund should be assessed as 75% by the wife and 25% by the husband.
This would entitle the husband to $393,844.25 and the estate to $1,181,532.75.
The remaining pool is worth $889,189.00 and I am satisfied that contributions to this pool to the date of separation should be assessed as equal. The husband may (and I say may) have brought in a little more but the wife received valuable gifts and inheritances and contributed the balance of the trauma payment in the amount of $28,000.00.
The relevant matter is the husband’s care of the children since December 2019. Under no circumstances could it warrant a 10% adjustment in the husband’s favour, which would equate to $88,819.90 but he did have the sole care of the children for over twelve months prior to trial and I intend to make a 2% adjustment in his favour from this pool, which would entitle him to 52% of the pool and the estate to 48%.
The husband is entitled to $393,844.25 from the larger pool and $462,378.28 from the smaller pool, a total of $856,222.53.
The estate is entitled to $1,181,532.75 from the larger pool and $393,844.25 from the smaller pool, a total of $1,608,343.47.
As a cross-check, this means that the husband is entitled to 35% of the total pool and the wife 65%, an outcome which fits comfortably with the fact that the pool which existed when the parties separated has been significantly augmented as a result of the wife’s illness and death.
S. 79(4) (d) (e) (f) and (g) matters
I am required to consider the matters in s. 79(4) (d) (e) (f) and (g) of the Family Law Act. The only relevant subsection is (e) which requires the court to have regard to the matters in s. 75(2) of the Act.
S. 75(2) matters
The husband is 55. He is employed as a Manager by Employer E and earns $126,568.00 per annum. He is in good health and has a strong employment history. He had nine months out of the workforce in the 16 years the parties were together, otherwise he was in continuous well paid employment.
The children are 16 and 14 and they are in the husband’s care. In his trial affidavit he said that they had had a difficult time since their mother’s death. He said that he worked in Sydney and had to commute from the Region P and was away for a lengthy period each day. He said that he would cease employment if the care of the children required him to do so and that access to a significant capital sum would enable him to give up work for as long as needed to support the children.
However these were really expressions of sentiment. The husband provided no evidence about the children’s emotional state or their educational or sporting needs which suggested that he needed to give up work to care for them.
The husband is in a new relationship. He did not provide information about his partner’s financial circumstances.
The respondent’s counsel submitted that there should be no s. 75(2) adjustment in favour of the husband.
On his case, pursuant to contributions the husband would have been entitled to $564,000.00 and he submitted that this would put him in a comfortable position even if he reduced his working hours. He pointed out that he would also have resources he could draw on to assist him with the care of the children. Pursuant to the wife’s will they were each entitled to 40% of her estate, and the death benefit of $74,315.00 paid by Company J was held in trust for them.
It was conceded by the husband’s counsel that the husband would be able to legitimately use some of the money he held in trust to the support of the children until they obtained their majority and that he could apply to the estate for money for the same purpose. However an argument that there should be no s.75 (2) adjustment in his favour would have been difficult to justify if the husband was only entitled to $564,000.00. It would have left him with superannuation worth $126,363.50 and an encumbered home and he would have been required to increase his mortgage on the C Street, Town D property to pay money to the estate if he wished to retain it.
On my assessment of contributions the husband is entitled to $856,222.53. If he retains C Street, Town D (net $636,462.00) and his superannuation ($231,127.00) he would have to pay the executor only $11,366.47 and such a de minimis amount might legitimately be put to one side and an order made which did not require him to make a payment. The executor also said that she was prepared to agree to a superannuation splitting order and if that occurred the husband would have some cash which would allow him to pay down, although not pay off, the C Street, Town D mortgage if he wished.
That would still leave the husband on a tight situation however, and given that there is cash available and that one of the s.75(2) matters I am required to take into account is a standard of living which is in all the circumstances reasonable, I am satisfied that there should be an adjustment in the husband’s favour for s.75(2) matters, so that he can pay off the mortgage and so that he is not obliged to go cap in hand to the executor seeking money for the children or dip unnecessarily into the Company J benefit to give the children some little luxuries in life and accommodate their needs in terms of future study.
An outcome which means that the pool is divided equally between the husband and the estate is appropriate. It effectively results in a 15% adjustment in the husband’s favour but as his counsel pointed out the husband has needs and the estate does not.
That would entitle the husband to $1,232,283.00 instead of $856,222.53.
Conclusion
The husband wishes to retain C Street, Town D subject to the mortgage and I will make an order to that effect.
The respondent’s counsel proposed that a superannuation splitting order be made so that part of the husband’s entitlement in the Branic Superannuation Fund was transferred to the wife and the husband and the estate retained an equal amount of superannuation. The effect of this order for the husband is that he will have a reduced superannuation balance but more cash.
The husband did not seek such an order and no submissions were made particularly directed to this issue. However the husband was aware that the wife was seeking it and did not protest against it and unless that order is not made the husband will have a much reduced amount of cash after discharge the mortgage. His case at trial was that he was keen to have sufficient cash to discharge the mortgage and provide him with a cash buffer and I therefore intend to make the superannuation splitting order proposed by the respondent.
If I make that order the husband will receive:
Description Value C Street, Town D New South Wales $895,000.00 Mortgage ($258,538.00) Superannuation $126,363.50 Cash $469,457.50 Total $1,232,283.00
Put another way the husband will be required to pay $1,105,919.50 from the money in his ANZ Account to the estate and he will retain $469,457.50 of that money. The estate will also receive superannuation of $126,363.50 making its’ total entitlement also $1,232,283.00.
I am satisfied that the outcome is just and equitable. The husband is well provided for. He will have an unencumbered home and he has a good income earning capacity. The fact that the estate has no “needs” does not mean that the wife’s right to dispose of her entitlement to a property settlement in the way she wished should be substantially swept away.
I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Terry. Associate:
Dated: 23 July 2021
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