Chen and Chen & Ors
[2020] FamCA 602
•24 July 2020
FAMILY COURT OF AUSTRALIA
| CHEN & CHEN AND ORS | [2020] FamCA 602 |
| FAMILY LAW – INJUNCTION – husband making further attempt to enjoin his alleged former de-facto wife from dissipating assets – events relied on for application dating back to 2018 – no more recent evidence – no serious issue to be tried – balance of convenience not in husband’s favour – application refused. |
| Family Law Act 1975 (Cth) s 106(B) Family Law Rules 2004 (Cth) r 14.05 |
| Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 Chen & Chen and Anor [2016] FamCA 758 Chen & Chen and Anor [2017] FamCA 115 Chen & Chen and Anor [2017] FamCA 285 Chen & Chen and Anor [2017] FamCA 555 Chen & Chen and Anor [2018] FamCA 828 Chen & Chen and Anor [2019] FamCA 88 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 Waugh & Waugh (2000) 27 Fam LR 63 |
| APPLICANT: | Ms Chen |
| FIRST RESPONDENT: | Mr Chen |
| SECOND RESPONDENT: | Ms Quen |
| THIRD RESPONDENT: | C Pty Ltd (ACN…) |
| FOURTH RESPONDENT: | Quen Pty Ltd (ACN…) |
| FIFTH RESPONDENT: | E Pty Ltd (ACN…) |
| SIXTH RESPONDENT: | Company F (ACN…) |
| SEVENTH RESPONDENT: | B Pty Ltd (ACN…) |
| EIGHTH RESPONDENT: | Mr A Chen |
| NINETH RESPONDENT: | Mr B Chen |
| TENTH RESPONDENT: | Mr C Chen |
| FILE NUMBER: | MLC | 5805 | of | 2016 |
| DATE DELIVERED: | 24 July 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 16 July 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | No Appearance |
| SOLICITOR FOR THE APPLICANT: | No Appearance |
| COUNSEL FOR THE FIRST RESPONDENT: | No Appearance |
| SOLICITOR FOR THE FIRST RESPONDENT: | Jano Family Law |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr L Glick QC |
| SOLICITOR FOR THE SECOND RESPONDENT: | Kenna Teasdale Lawyers |
| COUNSEL FOR THE THIRD RESPONDENT: | No Appearance |
| SOLICITOR FOR THE THIRD RESPONDENT: | No Appearance |
| COUNSEL FOR THE FOURTH RESPONDENT: | Mr L Glick QC |
| SOLICITOR FOR THE FOURTH RESPONDENT: | Kenna Teasdale Lawyers |
| COUNSEL FOR THE FIFTH RESPONDENT: | Mr L Glick QC |
| SOLICITOR FOR THE FIFTH RESPONDENT: | Kenna Teasdale Lawyers |
| COUNSEL FOR THE SIXTH RESPONDENT: | Mr L Glick QC |
| SOLICITOR FOR THE SIXTH RESPONDENT: | Kenna Teasdale Lawyers |
| COUNSEL FOR THE SEVENTH RESPONDENT: | No Appearance |
| SOLICITOR FOR THE SEVENTH RESPONDENT: | No Appearance |
| COUNSEL FOR THE EIGTH RESPONDENT: | No Appearance |
| SOLICITOR FOR THE EIGTH RESPONDENT: | No Appearance |
| COUNSEL FOR THE NINTH RESPONDENT: | No Appearance |
| SOLICITOR FOR THE NINTH RESPONDENT: | No Appearance |
| COUNSEL FOR THE TENTH RESPONDENT: | No Appearance |
| SOLICITOR FOR THE TENTH RESPONDENT: | No Appearance |
Orders
The first respondent’s application in a case filed 10 July 2020 is dismissed.
The matter remains listed for a directions hearing on 10 August 2020.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Chen & Chen has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 5805 of 2016
| Ms Chen |
Applicant
And
| Mr Chen |
First Respondent
And
| Ms Quen |
Second Respondent
And
| C Pty Ltd (ACN…) |
Third Respondent
And
| Quen Pty Ltd (ACN…) |
Fourth Respondent
And
| E Pty Ltd (ACN…) |
Fifth Respondent
And
| Company F (ACN…) |
Sixth Respondent
And
| B Pty Ltd (ACN…) |
Seventh Respondent
And
| Mr A Chen |
Eighth Respondent
And
| Mr B Chen |
Ninth Respondent
And
| Mr C Chen |
Tenth Respondent
REASONS FOR JUDGMENT
Introduction
When this proceeding was before me on 21 May 2020 the primary focus was on whether the wife had adequately articulated her claims in the case as recorded in her fourth amended initiating application. By arrangement between counsel for the wife, Dr Dinelli, and counsel for the second respondent, Mr Glick QC who then appeared with Mr Matta of counsel, a regime had been agreed by which answers to questions akin to interrogatories were to be provided by 6 August 2020.
In the course of debate on 21 May 2020 it became apparent that a substantial amount of cash was involved in the facts of this case and a risk of asset dissipation existed. I cautioned the parties against taking any precipitous steps to dissipate property pending the hearing and determination of this proceeding.
By application in a case filed 10 July returnable on 16 July 2020 the applicant in the case (the respondent husband in this litigation) sought a variety of orders. They included –
a)orders compelling the second respondent not to dissipate property during the pendency of this proceeding;
b)orders allowing the second respondent to have sufficient funds for ordinary living expenses and legal fees as and when they become due;
c)orders allowing the second respondent to deal with or dispose of the second respondent’s assets in discharging obligations bona fide and properly incurred under a contract entered into prior to the making of orders subsequent to the 21 May 2020 orders;
d)orders for the second respondent to provide certain bank documentation to the husband in relation to National Australia Bank accounts maintained from 1 June 2019 to date concerning the second respondent and others;
e)orders for the second respondent to provide bank documentation over the same period in relation to Australia and New Zealand Banking Group Ltd concerning the second respondent and other entities;
f)orders for the second respondent to provide bank documentation over the same period in relation to R Bank concerning the second respondent and other entities;
g)orders for the second respondent to provide bank documentation over same period in relation to Westpac Banking Corporation concerning the second respondent only;
h)similar orders were sought in respect of documentation concerning the second period with S Bank and T Bank, V Bank and Commonwealth Bank; and
i)orders requiring the second respondent to direct her bank to cause various banks to disclose to the husband’s solicitors such information as may be requested by them.
The husband also sought accounting records over the period 1 July 2016 to date in relation to 10 companies in the B Pty Ltd group of companies. He sought orders requiring the second respondent to produce all accounting records of businesses and companies of which the second respondent is a legal or equitable owner or in which she had a legal or equitable interest for the financial year ended 30 June 2019 and 30 June 2020. Other relief has been sought as well.
On behalf of the second respondent Mr Glick QC’s clients opposed each application brought by the husband, as recorded above. Mr Glick QC contended –
a)the husband had already brought similar applications, unsuccessfully;
b)discovery issues did not require this urgent hearing;
c)the relevant period on which the husband relied as grounding the alleged urgency went back to 2018, over two years ago, there being no other contemporaneous evidence on which the husband’s expert witness relied;
d)Mr W’s report was flawed in a number of respects; and
e)this application should be dismissed.
synopsis
For the reasons that follow I dismiss the husband’s application for an injunction.
short factual history
This proceeding was commenced in 2016 since which time it has been before judges of this court on not less than 21 occassions. Since 2016 Cronin J dealt with various applications on five separate hearings[1] and Macmillan J[2] once each resulting in written decisions. On one occasion, Cronin J said that it was “an understatement to say that the facts (perhaps also the law) in this case are complicated and indeed, very unusual if not at times, baffling.”[3]
[1] [2016] FamCA 758, [2017] FamCA 115, [2017] FamCA 555, [2018] FamCA 828 and [2019] FamCA 88.
[2] [2017] FamCA 285.
[3] [2016] FamCA 758, at [2].
So far as needs to be recorded for this application, the more pertinent background facts may be shortly stated. They can be extracted from previous reasons for judgment –
a)the applicant wife married the respondent husband in 1983;
b)they have three children of their marriage, all of whom are now adults’
c)in 1999 or thereabouts the husband commenced a relationship with the second respondent who was then 25 years of age;
d)the second respondent had previously been employed in a business conducted predominately[4] by the husband;
e)in 2013 the wife (the applicant in this litigation) learned of the husband’s relationship with the second respondent; and
f)the husband and the second respondent have two children of their de facto relationship, one nearing 18 years of age and the other nearing 13 years of age; and
g)the three adult children from the marriage between the applicant wife and first respondent husband are the eighth, ninth and tenth respondents in this litigation and who jointly control the entity C & C Developments.
[4] Cronin J added the work “apparently” to his Honour’s recital of that point.
On 15 October 2015 the husband and the second respondent executed a binding financial agreement.
The husband at one stage owned 51% of the issued shares in the capital of B Pty Ltd. The second respondent owned 49% of the issued shares in the capital of B Pty Ltd. That company carried on business providing services to at least one major corporate client in Australia.
The “complex web of commercial interests”[5] as Cronin J called it included the parties described as the third, fourth, fifth, sixth and seventh respondents. In previous reasons for judgment, the wife has been described by her assumed name Ms Chen, the husband as Mr Chen and the second respondent as Ms Quen. I shall do likewise.
[5] [2018] FamCA 828, at [2].
Cronin J determined that Ms Chen’s application for orders that the financial agreement between Mr Chen and Ms Quen be set aside should succeed. His Honour set aside the agreement.[6] In the course of his Honour’s reasons, Cronin J made various observations about certain factual matters that have ongoing relevance in this litigation. Among them were the following –
[6] [2018] FamCA 828.
a)Mr Chen undertook property development activity;
b)Mr Chen established the Quen Trust of which Mr Chen was appointor;
c)B Pty Ltd was incorporated in 1990, the shareholders in which were originally Mr Chen and his two brothers;
d)B Pty Ltd acquired real property and constructed the factory in which its operations were conducted;
e)Mr Chen was involved in the purchase of 14 properties in either joint names, in Ms Quen’s name or in the name of the Quen Trust;
f)the money used to acquire the 14 properties came from B Pty Ltd;
g)years later property development was undertaken and C Pty Ltd was incorporated;
h)despite the three adult children holding 85% of the shares and Ms Chen holding 15% Mr Chen remained in control; and
i)construction activity was undertaken on a number of investment properties and completed by C Pty Ltd.
The disposal of the business was an issue with which Cronin J was concerned. His Honour found that Mr Chen transferred ownership by a sale of shares in B Pty Ltd to Ms Quen without the knowledge or agency of Ms Chen. His Honour held that nothing in the evidence suggested Ms Quen paid the approximate value for her acquisition of her shares in the business.
In setting aside the financial agreement between Mr Chen and Ms Quen his Honour found Mr Chen had knowingly precluded Ms Chen interests, Ms Quen was reckless in regards to Ms Chen’s interests and that Ms Chen was unaware of what her children were undertaking.
Following Cronin J’s handing down of judgment in February 2019, this proceeding was case managed by the Honourable Justice McEvoy until it came into my docket in April 2020 upon a callover of my judicial docket (as a result of the dislocation to court lists caused by the global pandemic colloquially known as COVID-19).
By 22 April 2020 various applications were outstanding and had not been determined. Ms Parker of counsel appearing for Ms Chen and Mr Donnelly, solicitor for Mr Chen pressed the hearing of Ms Chen’s application for litigation funding. Mr Glick QC appearing for Ms Quen and related respondents opposed Ms Parker’s application and instead pressed the hearing of his client’s strike out application. I made orders to hear the strike out application brought Ms Quen on 21 and 22 May. In addition I indicated to the parties that all outstanding applications would be dealt with after the hearing of the strike out application.
On 21 May 2020 Mr Glick QC on behalf of Ms Quen and related respondents advanced his submissions to strike out Ms Chen’s claims. Dr Dinelli of counsel on behalf of the Ms Chen provided submissions in response. Mr Hall of counsel for Mr Chen had little to add beyond his support for the submissions advocated by Dr Dinelli on behalf of the Ms Chen.
At the conclusion of the first day the parties reached a consent position for the filing of material. Orders were made as follows –
1.On or before 4pm on 4 June 2020 the applicant serve a request to answer specific questions on the respondent and the second respondent with respect to any monies applied towards the acquisition of the following properties –
a. Y Property;
b. Z Property;
c. AA Property;
d.BB Property;
e.CC Property;
f.DD Property;
g. FF Property;
h. GG Property;
i. KK Property;
j. LL Property;
k. MM Property;
l. NN Property;
m. PP Property;
n. QQ Property;
o. RR Property;
p. SS Property;
q. TT Property;
r. VV Property; and
s. HH Property.
2.As to paragraph 1 above –
a.the questions asked pursuant thereto are not to be treated as a set of questions for the purposes of r 13.26(2) of the Family Law Rules (“rules”), thereby allowing the applicant wife to serve a set of specific questions on another party, if she so desires; and
b.to the extent it may be applicable, the limit in r 13.26(3)(b) of the rules be dispensed with.
3.On or before 4pm on 18 June 2020 the respondent and second respondent answer, fully and Mr JJ, each specific question in an affidavit that is to be filed and served, and provide by way of discovery any documents in support of the answers to the specific questions.
4.The orders made pursuant to paragraph 3 of the orders of the Honourable Justice McEvoy made 2 May 2019 are varied to provide –
“3. On or before 4.00pm on 14 June 2019:
(a) the Applicant;
(b) the Eighth, Ninth and Tenth Respondents; and
(c) the First Respondent;
file and serve a Statement of Claim setting out the legal and factual basis for the Orders sought by them insofar as they assert any claims that arise other than under Section 79 of the Family Law Act:
(d) Section 79 of the Family Law Act in respect of the Applicant, the Eighth, Ninth and Tenth Respondents; or
(e) Section 90SM of the Family Law Act in respect of the First Respondent.”
5.On or before 4pm on 9 July 2020 the applicant and respondent must make, file and serve any amended statement of claim.
6.On or before 4pm on 6 August 2020 all parties must make, file and serve a defence to the statements of claim pleaded against them.
7.I adjourn the further hearing of this proceeding for mention on 10 August 2020 at 10am.
8.Each party is to provide to the court at the commencement of the mention a statement setting out the costs incurred to date by that party in the proceedings up to the date of the mention and copies of all office and trust account ledgers.
9.Liberty to apply, including, specifically, to the third and seventh to tenth respondents if they wish to be heard on paragraphs 6-8 above.
The matter was adjourned to 10 August to enable the applicant and respondent to file any amended statement of claim and for all parties to file a defence to the amended statement of claim. I was resistant to Dr Dinelli’s and Mr Hall’s submission to hear the litigation funding application in June before all steps had been completed.
At the conclusion of the hearing on 21 May 2020 I cautioned the parties about the dissipation of assets. I said the following –
If anyone does anything precipitous to dissipate property during the pendency of this fight knowing that all of these issues are live, they would need to think very carefully about that because there are certain sanctions that can be imposed by me whether on the application of a party or otherwise and I do invite you to heed what I am saying, so no precipitous actions anyone.
Mr Chen contended that the above supported his filing of the application in a case dated 10 July 2020. At paragraph 3 above I have set out the orders sought in Mr Chen’s application.
Before addressing each of the orders sought and the submissions made on behalf of Mr Chen I must record that on 14 July 2020 a letter of urgency was filed with the court requesting that I hear Mr Chen’s application in a case during the week commencing 20 July 2020.
Subsequently my associates were contacted and my senior associate listed the application before me 16 July 2020.
Mr Chen’s case
On 16 July 2020 Mr Janowski, solicitor, appeared on behalf of Mr Chen Mr Janowski opened his case by truncating the application into two separate issues. The first was his application for an injunction against the dissipation of assets. The second issue raised by Mr Janowski concerned further and better discovery. Let me turn to them both in greater detail.
Mr Janowski limited his injunction application so that Ms Quen had assets available to meet daily living expenses, to run the business and to meet reasonable legal fees.
In discussions with Mr Janowski I probed with him aspects of his client’s Mareva injunction. The High Court in Jackson v Sterling Industries Ltd[7] and Cardile v LED Builders Pty Ltd[8] set out the circumstances in which a Mareva injunction can be granted. In very broad terms, such an order may be made in circumstances where a danger exists that the assets are removed from the jurisdiction or disposed of within the jurisdiction.
[7](1987) 162 CLR 612.
[8] (1999) 198 CLR 380.
In discussions with both counsel I canvassed the decision of the Full Court of this court in Waugh & Waugh.[9] In that case the court held that a risk of disposal of property in order to defeat a judgment must be established before ordering such an injunction.
[9] (2000) 27 Fam LR 63.
Mr Janowski submitted that this was the first instance in this proceeding in which an injunction of this sort has been applied for. Mr Janowski submitted that the application was grounded in the caution I had given at the conclusion of the last hearing.
In support of his client’s application Mr Janowski relied on cash withdrawals made by Ms Quen as revealed in the affidavit of Mr W affirmed 9 July 2020. Mr Janowski took me to Mr W’s summary of report, specifically for the financial years ending 2017 in which over 800 cash withdrawals were recorded as having been made totalling $997,000, for the financial year ending 2018 in which 736 cash withdrawals were made totalling $841,000 and for the financial year ending 2019 in which 378 cash withdrawals were made totalling $710,000.
Mr Janowski relied on the Full Court’s decision in Waugh & Waugh to establish that Ms Quen’s actions create a pattern of dissipating assets through large withdrawals of cash. Mr Janowski alluded to the inexplicable number and value of the cash withdrawals given the convenience of credit and debit card facilities available in 2020.
Mr Janowski said an order in Mr Chen’s favour was to the benefit of all parties so as to conserve the property pool for final determination.
Ms Quen’s case
Mr Glick QC opposed Mr Chen’s application for an injunction. In his submissions Mr Glick QC addressed the following –
a)Mr Chen had engaged six different solicitors over the course of this litigation, with different counsel each time, some of whom are unaware of the events that had transpired previously;
b)all applications were adjourned on 21 May to August to allow the parties time to file material so as to ascertain a clear picture of the parties’ positions before deciding on any interim applications;
c)Mr Chen simply copied the wife’s statement of claim word for word and has now abandoned that statement of claim and returned to relying on his previously filed statement of claim making a s 106(B) claim alone;
d)Mr Chen has conveyed to the court that this application was urgent when in fact there is no urgency;
e)Mr Chen is basing his application on an observation given at the last hearing without any change in asset position; and
f)this is the fifth time Mr Chen has brought an application for an injunction on the same material, being 19 August 2019, 6 September 2019, 31 January 2020 and 3 February 2020 relying on the evidence of different experts.
Mr Glick QC opposed any reliance on Mr W’s evidence. Mr Glick QC raised an issue with Mr W’s letter of instruction dated 12 June 2020 as Mr W was asked to form his expert opinion on the balance of probabilities. Mr Glick QC submitted that it was improper for an expert to be asked such a legal question. Further, Mr Glick QC submitted that the material on which Mr W was asked to express an opinion was from 1 July 2018 to 30 September 2018, almost two years ago.
Mr Glick QC submitted that on the last occasion Mr Hall, then representing Mr Chen, pressed the hearing of his client’s application in July in response to which I rejected his request and adjourned the matter to August. Mr Glick QC highlighted that from the 21 May hearing until now no new evidence had been adduced by Mr Chen to support the filing of this application. Mr Glick QC took me to various portions of Mr W’s report to demonstrate that no recent transactions were considered in his report. Mr Glick QC was correct.
Next, Mr Glick QC took me to r 14.05 of the Family Law Rules which sets out the steps that must be taken for an asset preservation order to be granted. Mr Glick QC argued that the first respondent did not satisfy such requirements. I agree.
Consideration
In my view it is not proper for the first respondent to bring an application in a case on the foundation of an observation I gave at the conclusion of the hearing on 21 May 2020. Mr Chen needed a proper factual and legal foundation on which to bring this application.
I agree with Mr Glick QC’s submission that no new evidence since the hearing before me on 21 May 2020 has been adduced to support the urgent hearing of Mr Chen’s application in a case. The evidence on which Mr Janowski relied to support the making of the injunction dates back to 2018, almost two years ago. Mr W’s bases his opinion in his report on a three month period from 1 July 2018 to 30 September 2018. Injunctions against the dissipation of assets are customarily sought with speed, usually immediately following facts that come to light about the sale or disposal of assets. Mr Chen is seeking these orders in July 2020 and bases his application on financial records from 2018. That is too long ago.
Mr Janowski’s submissions do not provide sufficient foundation to grant the order Mr Chen seeks. Mr Janowski has failed to demonstrate the existence of a danger of the assets being removed or disposed of from or within the jurisdiction or a risk of disposal of property in order to defeat a judgment as espoused in the leading and most relevant authorities of Jackson v Sterling Industries Ltd, Cardile v LED Builders Pty Ltd and Waugh & Waugh.
I do not agree with Mr Janowski’s submissions that the current global pandemic Covid-19 operates as a change in circumstances. The material upon which Mr Chen relies, namely Mr W’s report, does not support his contentions as Mr W bases his expert opinion on financial statements from 1 July 2018 to 30 September 2018.
In addition, on the last occasion before me I decided that all outstanding applications were to be discussed at the directions hearing in August.
For the reasons I have set out above I refuse the application made by Mr Chen. Any orders sought for further and better discovery are to be discussed at the next hearing before me.
The matter will remain listed for a directions hearing on 10 August 2020.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 24 July 2020.
Associate:
Date: 24 July 2020
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