Chen & Chen (No 3)
[2024] FedCFamC1F 722
•31 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Chen & Chen (No 3) [2024] FedCFamC1F 722
File number MLC 5805 of 2016 Judgment of WILSON J Date of judgment 31 October 2024 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – application by the first respondent for a freezing order against the second respondent – claim that matrimonial assets were used in the acquisition of three properties – insufficient evidence to support such contention – application dismissed. Cases cited Chen v Chen (2020) 63 Fam LR 448
Dasreef v Hawchar (2011) 243 CLR 588
Dering v Earl of Winchelsea (1787) 29 ER 1184
Honeysett v R (2014) 253 CLR 122
Lang v R (2023) 95 ALJR 758
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Paviello & Paviello [2022] FedCFamC1F 592
Woodcock v Woodcock (2021) 64 Fam LR 489
Division Division 1 First Instance Number of paragraphs 17 Date of last submission 31 October 2024 Date of hearing 31 October 2024 Place Melbourne Counsel for the applicant Did not participate Counsel for the first respondent Mr N. Dour Counsel for the second respondent Litigant in person Counsel for the third respondent Did not participate Solicitors for the fourth, fifth and sixth respondents – the liquidators Mr N. Ayliffe Counsel for the seventh respondent Did not participate Counsel for the eighth respondent Did not participate Solicitors for the receivers Did not participate Counsel for the ninth and tenth respondents Did not participate ORDERS
MLC 5805 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS CHEN
Applicant
AND MR CHEN
First Respondent
MS QUEN
Second Respondent
ORDER MADE BY
WILSON J
DATE OF ORDER
31 OCTOBER 2024
THE COURT ORDERS THAT –
1.The application in a proceeding dated 30 October 2024 filed by the first respondent is dismissed.
2.The further hearing of this proceeding is adjourned to 10.00am on 17 February 2025.
3.Costs of this day are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Chen & Chen has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
WILSON J
The first respondent has brought an urgent application sealed 30 October 2024 against the second respondent. In that application in a proceeding the first respondent seeks a variety of orders. They include the following –
(a)orders in the nature of injunctions (both prohibitory and mandatory) restraining the second respondent from dealing with the proceeds of sale of a parcel of land at AA Property (being the land more particularly described in certificate of title volume … folio …) (“the [AA] property”);
(b)orders compelling the second respondent to pay into court the proceeds of sale of the AA property;
(c)an affidavit explaining what happened to the proceeds of sale of the AA property if the second respondent does not have physical possession of those proceeds;
(d)orders restraining the second respondent from dealing with the mortgage proceeds in respect of BB Property (“the [BB] property”);
(e)orders compelling the second respondent to transfer into court the money derived from mortgaging the BB property;
(f)if the second respondent no longer possesses the money derived from mortgaging the BB property, an order requiring the second respondent to depose to the application of those proceeds;
(g)an order restraining the second respondent from disposing or encumbering the property known and described as Y Property, being the whole of the land described in the certificate of title volume … folios … and … ("the [Y] property");
(h)an order restraining the second respondent from disposing of or encumbering the BB property; and
(i)an order requiring the second respondent to file an affidavit in respect of all relevant documents concerning the sale of the BB property and the sale of the AA property.
Mr Ayliffe, solicitor for the liquidators of the fourth, fifth, and sixth respondents and Mr Dour of counsel appeared on a direct brief from the first respondent. The second respondent was served with all relevant documents (so I was told) on 26 October 2024, a Saturday, meaning that service was reckoned as having taken place on Monday, 28 October 2024.
The second respondent appeared by video link as she was in Country U (so she said). Prior to the case being called on shortly after 10.00 am today the second respondent sent an email to me being a four-paragraph memorandum in perfect English. In it she pointed out –
(a)no cost notice had been provided by the first respondent;
(b)any fees arrangement between Mr Dour and the first respondent needed to be disclosed now that Mr AB had ceased to act;
(c)she asked for a month before this application could be heard, although she gave no reason for what seemed to me to be little more than an ambit claim for time; and
(d)she consented to the applications restraining any further dealings with the BB and Y properties pending the application being heard before me in a month's time.
The second respondent filed no affidavit material in opposition to this application. However after reserving my decision before lunch she emailed my chambers saying she no longer gave consent as recorded in her memorandum. Obviously, she participated in this proceeding and heard everything that was said during the morning debate. In support of this application sealed on 30 October 2024 the first respondent made an affidavit affirmed 26 October 2024. In it the first respondent made a collection of assertions very few of which were statements of fact within his direct knowledge as required by the rules of court. He prepared that affidavit by himself unassisted by a legal practitioner. In his affidavit the first respondent revealed at least some familiarity with the rules of the court because he quoted in paragraph four of that affidavit from rule 6.06(2) and he described his affidavit as having been filed in support of an application for a freezing order.
Before going to the first respondent's contentions on this application it is relevant to point up that this case, while ageing, has progressed very little on its path to trial. It has recently faltered by the involvement of insolvency specialists who understandably are pursuing entitlements for the benefit of unsecured creditors. Whether any assets remain to be divided in this s 79 application is yet to be seen.
This morning Mr Ayliffe informed me that on two dates in late 2024 a public examination will be conducted before the proper officer of the Supreme Court in which Mr Ayliffe's clients will examine the second respondent and others about the fate of assets of companies to which the liquidators have been appointed. Mr Ayliffe informed me that information will or may be sought from the second respondent about issues including the source of funds to acquire certain real property.
Central to the first respondent's application is his contention that matrimonial assets were used in the acquisition of the Y property, the AA property and the BB property. Mr Dour conceded quite properly that no evidence on this application existed by which I could be persuaded on the balance of probabilities that the second respondent was involved in the removal of matrimonial assets and in the application of those assets (mostly money) towards purchasing in the second respondent's name the Y property or the AA property or the BB property.
The height of the first respondent's evidence on the point was paragraph two of his affidavit. It read as follows –
On 20 May 2022, the second respondent, [Ms Quen], placed the [G Pty Ltd] business and asset holding trust into liquidation and receivership. Released bank records identified that she has transferred large amounts [sic] of business funds out for uncommercial purpose in excess of $20 million. In the last 30 months, while liquidators claiming investigation [sic] of the missing funds, [Ms Quen] continues to dissipate family pool assets for final distribution.
Mr Dour conceded no other evidence on this application provided an evidentiary platform for the making for the granting of the applications the first respondent made. Nowhere did the first respondent depose to whether he learned of any dispositions of matrimonial assets assuming he demonstrated the existence of matrimonial assets used in the acquisition of real property. In Chen v Chen[1] I observed that this case raises issues of resulting trusts. The first respondent's former wife has endeavoured to establish that claim by documentation the second respondent has refused to give.
[1] (2020) 63 Fam LR 448.
In other words, even though it may be arguable that a resulting trust might be established if it is shown that matrimonial funds were used to purchase real property in the second respondent's name, proof of that contention has eluded the applicant. She has said the first respondent and the second respondent acted jointly in collectively taking money from the [G Pty Ltd] business operated by the husband and the wife and then acquiring real property in the second respondent's name. It was a most peculiar contention for the first respondent to advance in submitting that this court should restrain the second respondent from selling real property when on one version of the evidence it may transpire that the first respondent himself assisted the second respondent to acquire those funds in the first place.
On that analysis, the first respondent would not come to court with clean hands (Dering v Earl of Winchelsea.[2]) The precise facts surrounding the second respondent's acquisition of real property is yet to be determined and will not be determined until a trial is held in this case. The first respondent purported to depose to the value of real property in his affidavit. He is not a valuer so he lacks the requisite expertise to give that evidence as the High Court has held in such authorities as Dasreef v Hawchar,[3] Honeysett v R[4] and Lang v R.[5] Makita (Australia) Pty Ltd v Sprowles[6] is a decision of the Court of Appeal, Supreme Court of New South Wales, to like effect.
[2] (1787) 29 ER 1184.
[3] (2011) 243 CLR 588.
[4] (2014) 253 CLR 122.
[5] (2023) 95 ALJR 758.
[6] (2001) 52 NSWLR 705.
A matter that has caused me to hesitate on this application is the delay exhibited by the first respondent. He deposed to the sale of City YY properties in 2016 and 2017 yet he has taken no step in respect of any grievance he may have arising from those 2016 and 2017 transactions. The lapse of up to seven years is inexplicable. In respect of each of the Y property, the AA property and the real property in City YY I was not persuaded that the first respondent has demonstrated that those properties were acquired by the second respondent by the use of assets generated by the spouse parties in this litigation.
It fell to the first respondent to prove that. He failed to do so. The first respondent informed me that it would be sufficient for his purposes if the second respondent were ordered to file affidavit material deposing to her dealings with the sale proceeds of various parcels of land. Two things must be said of that submission. First, parties are bound by an ongoing duty to make disclosure as I held in Paviello & Paviello[7] no matter at what phase of the litigation the document emerges.
[7] [2022] FedCFamC1F 592.
Second, according to the apparent relevance test which I surveyed in Woodcock v Woodcock[8] the apparent relevance in this litigation of the Y property, the AA property, or the City YY real property has not been revealed. I am presently unable to see how matrimonial funds have been used to acquire those parcels of land which might otherwise make the dealings with those properties relevant. I decline to order the affidavit sought by the first respondent.
[8] (2021) 64 Fam LR 489.
Finally, on this application for orders in the nature of prohibitory injunctions I asked Mr Dour whether his client was capable of providing an undertaking as to damages which was anything but hollow. He said the first respondent was only able to provide a hollow undertaking. The first respondent failed in his various applications set out in the application in the proceeding filed 30 October 2024. The upshot of this application should not be taken to mean that an application for an asset preservation order will never be made. To the contrary. In Morris & Morris[9] I extensively examined the learning on the issue of asset preservation orders and orders that might properly be made when unjustified dissipation of assets was disclosed by the evidence.
[9] [2023] FedCFamC1F 429.
In this case the evidence fell very well short of making out any comparable claim. Mr Ayliffe said he would prefer this case to be listed on a date other than its current return date of early December. He submitted that the liquidators will report to the court on or about 5 December 2024 and the public examination will not be completed by that date. Such a suggestion makes sense.
In those circumstances I adjourn the further hearing of this proceeding to 10.00am on 17 February 2025. Costs of this day are reserved.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the extempore reasons for judgment of the Honourable Justice Wilson. Associate:
Dated: 31 October 2024
SCHEDULE OF PARTIES
MLC 5805 of 2016 Respondents
Third Respondent
C PTY LTD
Fourth, Fifth and Sixth Respondents – the Liquidators
MR OO AND MR UU IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF QUEN PTY LTD (IN LIQUIDATION), E PTY LTD (IN LIQUIDATION) AND F PTY LTD (IN LIQUIDATION)
The Receivers
MR OO AND MR UU IN THEIR CAPACITY AS JOINT AND SEVERAL RECEIVERS OF THE ASSETS AND UNDERTAKING OF THE QUEN FAMILY DISCRETIONARY TRUST , E FAMILY TRUST AND F FAMILY TRUST (ABN 19 219 052 692)
Seventh Respondent
G PTY LTD
Eighth Respondent
MR A CHEN
Ninth Respondent
MS K
Tenth Respondent
MS J
0
5
0