Chang & Song

Case [2023] FedCFamC1F 387

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Chang & Song [2023] FedCFamC1F 387

File number(s): SYC 4261 of 2018
Judgment of: CURRAN J
Date of judgment: 12 May 2023
Catchwords: FAMILY LAW – Property – Interim Hearing – Trusts – Valuations – Where the husband and his family have interests in complex network of companies and trusts – Where companies and trusts own various businesses and real property – Dispute over valuation of family trust - which assets are to be valued – Issue of valuation of personal property in the form of equitable chose in action – Where properties and businesses sought to be valued are owned and operated by third parties who have not been given the opportunity to be heard – Where wife to bare costs of the valuations at first instance – Orders for valuation of trust assets, disputed entities and properties allowed – Where an application to photocopy subpoena material made in circumstances where application had been determined by Senior Judicial Registrar and no review sought – Orders for photocopy access to subpoena refused  
Legislation:

Family Law Act 1975 (Cth) ss 75, 79

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 7.04

Cases cited:

Dovgan & Dovgan [2021] FamCA 306

Hall & Hall [2016] 257 CLR 490

Kelly & Kelly (No 2) (1981) 7 Fam LR 762

Kennon & Spry (2008) 238 CLR 366

Marvel & Marvel [2010] 43 Fam LR 348

Wheeler & Loggins [2023] FedCFamC1F 66

Woodcock & Woodcock [2021] FedCFamC1F 88

Division: Division 1 First Instance
Number of paragraphs: 67
Date of hearing: 10 May 2023
Place: Sydney
Counsel for the Applicant: Mr Henry SC
Solicitor for the Applicant: Pearson Emerson Family Lawyers
Counsel for the First Respondent: Mr Bunning
Solicitor for the First Respondent: Watts Mccray
Solicitor for the Second, Third and Fourth Respondents: Ms Todd of Petkovic & Todd

ORDERS

SYC 4261 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR CHANG

Applicant
AND:

MS SONG

First Respondent

MS Z

Second Respondent

MR F SONG (and another named in the Schedule)

Third Respondent

order made by:

CURRAN J

DATE OF ORDER:

12 MAY 2023

Amended pursuant to Rule 10.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021

THE COURT ORDERS THAT:

Valuation of property (owned by the G Family Trust)

1.That within fourteen (14) days the Wife is to nominate three (3) prospective valuers to be appointed as a single expert for the purpose of preparing written valuation reports for the properties (owned by the G Family Trust), being:

(a)H Street, Suburb J NSW;

(b)Y Street, Suburb AA NSW; and

(c)The property owned by CC5 Pty Ltd as trustee for the EE Trust, being the property situated at FF Street, Suburb AA NSW.

2.That within seven (7) days of receipt of the three proposed valuers, the Husband is to select one (1) of the three (3) single expert valuers nominated by the Wife for the…

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Chang & Song [2023] FedCFamC1F 387
Case
[2023] FedCFamC1F 387
Decision Date

CaseChat Overview and Summary

In Chang & Song, the wife sought to obtain information regarding the assets and financial resources of the husband, specifically a chose in action held by a trust. The dispute came before the court, which had to decide whether the wife could value the trust assets to ascertain the value of the husband's financial resources. The wife argued that the valuation was necessary to determine the husband's financial position, which was relevant to the overall determination of the matter. The husband, on the other hand, opposed the application, citing potential prejudice to the trust and the lack of notice to the trustees.

The court considered several legal issues, including whether the value of the chose in action could be ascertained by valuing the trust assets, and whether the lack of notice to the trustees would prejudice the husband. The court also examined the relevance of the valuation to the overall determination of the matter and the potential for prejudice to the trust. The wife contended that the trustees would likely co-operate with the valuation process, given their control over the trust and their alleged co-operation with the husband's litigation. However, the court was not as optimistic about the likelihood of co-operation.

The court ultimately decided that the wife should not be prevented from obtaining evidence of the husband's financial resources at an interlocutory stage. The court held that the valuation of the trust assets could occur even without the co-operation of the trustees, based on the material already available. The court also noted that the lack of notice to the trustees could be addressed by sending them a copy of the orders and giving them liberty to apply to have the matter re-listed. The court emphasised that the wife would bear the costs of the valuation if it turned out to be a futile exercise. The court also considered the relevant rules regarding a single expert and made the orders as indicated.

The court's decision in Chang & Song highlights the importance of considering practical considerations in family law disputes. The court was satisfied that it was appropriate to give notice to the trustees of the orders with liberty to apply, as in the decision of Woodcock. The court also emphasised the wife's case that the evidence could be obtained on the basis of the material already available and that the confidentiality of the information and the expert evidence is governed by the relevant non-disclosure obligations of the parties to these proceedings. Ultimately, the court's decision reflects the need to balance the rights of the parties and the interests of justice in family law disputes.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

These are practical considerations and, in my view, no one of them is fatal, but should be taken into account. I am satisfied that it is appropriate to give notice to the trustees of the orders with liberty to apply. If an application is made, as in the decision of Woodcock, consideration can be given to matters raised including the practicalities. Importantly, the wife's case was that the evidence could be obtained on the basis of the material already available, if necessary and that the confidentiality of the information and the expert evidence is governed by the relevant non-disclosure obligations of the parties to these proceedings.CONCLUSION Whether or not the value of the chose in action can be ascertained by a valuation of the trust assets as proposed is not clear to me, and may be unlikely. In any event, it must be the case of the wife that either it can, or that the value of the assets of the trust will assist the Court in the determination of what are the financial resources of the husband and that is a relevant factor to be taken into account. Ultimately it is a matter for the wife as to how she will run her case. It is her case that the husband's chose in action has significance to the overall determination of the matter and is a significant financial resource of the husband. She should not, at an interlocutory stage, be prevented from obtaining such evidence. The wife seeks to value the trust assets in order to put evidence before the court as to the value of the chose in action, or the value of the underlying trust assets, in other words, the value of any potential future financial resource of the husband. This may be relevant in the determination of the matter. The lack of notice to the trustee can be addressed by the order proposed by the wife in oral submissions, that a copy of these orders be sent to the trustee and that they have liberty to apply to have the matter re-listed to hear from them in relation to the form of order There is no prejudice to the husband in the wife undertaking the valuation. First, she is to meet the costs at the first instance as conceded, and if it is a futile exercise, she will bear the burden of her costs and that of the expert. If it is an expensive frolic, there may be further costs consequences for her. I have considered the relevant rules in relation to a single expert at rule 7.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 and on balance for the reasons set out above, make the orders as indicated.

Ratio Decidendi

Legal Principle Established

The wife submitted that with the factual contest as to the distributions made, what happened with the transfer of LL Investments and the 2017 signed loan agreement, that there is no other way to put the evidence of the value before the court. Indeed to refuse the application would "rob the court" of evidence of the financial resource that is the value of the trust.The question of the trustee's co-operation with any valuation The husband's senior counsel correctly observed that there was no evidence about the director's attitude to the application and that they had not been put on notice of the application. The wife's case was that the court should find that in the context of this matter that the trust would likely co-operate with the exercise of the valuation. This was contended as the directors of the trustee company who have control of the trust are the husband's mother and step-father. This was described by the wife's counsel as the "nexus of control." The trust, the wife alleges has paid significant legal costs for the husband, and the husband's mother has signed the costs agreement with the husband's lawyers. The trustees have co-operated and they have assisted the husband with the litigation, and she contends it could be assumed they will continue to assist the husband. I am not as optimistic as the wife's counsel in the respect of the likelihood of co-operation. It was put to her counsel that the directors may not be inclined to assist and co-operate, and as they had not been joined, there was no certainty in relation the production of relevant material, or for example, even obtaining their consent for the valuer's attendance at the real properties. The wife's position was that the trust had not been joined and this was a potentially unnecessary additional expense at this time. Importantly, she contended that the valuations proposed could occur even without the co-operation, on the basis of material already available. It was said that "many of the documents necessary to value the trust are already produced under subpoena" and that if necessary, further subpoena would address that issue.Valuation of Financial Resources There is no doubt that "a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee's discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation" as stated by the High Court in Hall & Hall [2016] 257 CLR 490 ("Hall"). Their honours at paragraph 55 said:"whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it." But, should a valuation of the assets of the trust be permitted, for the court to be apprised of evidence of the alleged financial resource of the husband? The reference to "financial resources" in the context of s 75(2)(b) has long been interpreted by the Family Court to refer to "a source of financial support which a party can reasonably expect will be made available to him or her to supply a financial need or deficiency"