Cheung and Cheung and Ors

[2009] FamCA 220

FAMILY COURT OF AUSTRALIA

CHEUNG & CHEUNG AND ORS [2009] FamCA 220

FAMILY LAW – PROPERTY – Maintenance – Interim Orders after failure to pay debts

APPLICANT: Ms Cheung

FIRST RESPONDENT: Mr Cheung

SECOND RESPONDENT: C Cheung

THIRD RESPONDENT: Y Cheung

CASE GUARDIAN: Mr Ming

FILE NUMBER: BRF 1286 of 2006

DATE DELIVERED: 5 March 2009

PLACE DELIVERED: Brisbane

JUDGMENT OF: Jordan J

HEARING DATE: 5 March 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Beacham

SOLICITOR FOR THE APPLICANT: Jones Mitchell Lawyers

SOLICITOR FOR THE FIRST RESPONDENT:

Mr Cooper from

Charles Cooper Lawyers

SOLICITOR FOR THE SECOND & THIRD RESPONDENTS: Ms Moles from Hopgood Ganim Lawyers

ORDERS

IT IS ORDERED

1. That the Husband do all acts and things to immediately cause Rudkin Hitchcock Lawyers to pay to Messrs Jones Mitchell Lawyers the remaining funds held by them in trust on behalf of the parties.

2. That Jones Mitchell Lawyers be at liberty to pay the sum of $30,396.37 to discharge the debts referred to by the Wife in paragraph 18 of her affidavit filed herein.

3. That Jones Mitchell Lawyers be at liberty to pay to the Wife the sum of $1,719.00 per week towards her support.

4. That the question of whether the funds in Rudkin Hitchcock Lawyers reduced for the purposes of payment of the debts referred to in Order 2 hereof and the weekly amounts to the Wife referred to in Order 3 hereof should be treated as a maintenance payment or a distribution of property be reserved.

5AThat pending further order, the Husband immediately do all acts and things necessary to appoint Mr TH of P Group, Taiwan, as the Husband’s Power of Attorney and as the trustee for sale to sell the properties known as P Road and K Road, more particularly described as:

No x P Road;

No x-1 P Road;

No x-2 P Road;

No x-3 P Road;

No x-4 P Road;

No x-5 P Road;

B1, No x-1 P Road;

B1, No x P Road;

B2, (Parking Space) No x P Road;

(hereinafter referred to as “the property at [P] Road”)

12F, K Road;

12F-1, K Road;

(hereinafter referred to as “the property at [K] Road”)

and to distribute the proceeds of sale in the following manner and priority:

(a)    to pay agent’s commission and legal fees relating to the sale;

(b)    to discharge the mortgage owing to Taipei Fubon Bank;

(c)    to remit the remaining sale proceeds to the trust account of P Group, to be invested on behalf of the parties pending further order of this Honourable Court.

5BThat for the purposes of Order 5A hereof, any document to be signed by the Husband to give effect to the terms of that Order will be deemed to be received by him upon its delivery to the offices of Charles Cooper Lawyers.

1. That pending further order, in the alternative and in the event that the said properties referred to in Order 5A hereof are sold by the mortgagee, Taipei Fubon Bank, through the Taipei District Court, the Husband and the Second and Third Respondents immediately do all acts and things necessary to authorise and to cause either the Taipei Fubon Bank and/or the Taipei District Court, as the case may be, to remit the remaining sale proceeds to the trust account of P Group, to be invested on behalf of the parties pending further Order of this Honourable Court.

2. That pending further order, the Husband and the Second and Third Respondents immediately and no later than seven (7) days from the date of these Orders, provide to the Wife documents setting out the amount of the rental income payable by each of the tenants in the property at P Road and the amount required each month to service the mortgage(s) secured against the properties known as P Road and K Road, Taiwan.

3. That pending further order, upon the payment by or on behalf of the Husband and/or the Second and Third Respondents of any money in payment of accounts

   (a)    rendered by the Husband and/or the Second and Third Respondents’ solicitors and/or Counsel, including Senior Counsel, in respect of these proceedings;

   (b)    rendered by any accountant, valuer or other expert engaged by the Husband and/or the Second and Third Respondents in respect of these proceedings;

   the Husband and/or the Second and Third Respondents shall pay or cause to be paid the same amount of money to the Wife’s solicitors, Jones Mitchell Lawyers, and to give effect to this Order, any amount paid to the solicitors at the time being instructed on behalf of the Husband and/or the Second and Third Respondents shall be held in escrow pending notification by Jones Mitchell Lawyers of the Husband’s and/or Second and Third Respondents’ compliance with the terms of this Order.

4. That in the event the Husband fails to execute any documents in accordance with these Orders within five (5) days of a request to do so, then pursuant to s106A of the Family Law Act 1975 a Registrar of the Family Court of Australia is hereby appointed to execute all such documents in the name of the Husband and do all acts and things necessary to give validity and operation to all such documents.

5. That the costs of all parties of and incidental to today’s proceedings be reserved.

IT IS NOTED that publication of this judgment under the pseudonym Cheung & Cheung and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER:  BRF 1286 of 2006

MS CHEUNG

Applicant

And

MR CHEUNG

First Respondent

And

C CHEUNG

Second Respondent

And

Y CHEUNG

Third Respondent

And

MR MING

Case Guardian

REASONS FOR JUDGMENT

ex tempore

1. Essentially, my deliberations in this matter and the reasons for my decision have emerged in the course of the argument. 

2. Consistent with my earlier findings, I conclude that the husband has, at all times, had all relevant authority and control in relation to the operation of the P Road properties. The loans in relation to those properties have been consistently serviced throughout the duration of the marriage and the duration of these proceedings. 

3. I made a decision in this case at the end of last year, a decision which rejected the husband's testimony and was against his wishes.  Subsequent to that event, the husband, who has, on my findings, actual and beneficial ownership of all properties in Taiwan and control over the income received from those properties and control of all the remaining proceeds of sale of the S property, has chosen to allow the mortgage in relation to the P Road properties to fall into arrears and has now exposed the parties to a sale by default by the mortgagee, the Taipei Fubon Bank.

4. That process, in itself, has exposed the parties to a penalty and loss of $590,000 and is indicative of the prospect that the husband, having clearly failed in proceedings before this Court in Australia, is taking the law into his own hands in a way which severely prejudices the wife and in a way which, if not designed to, has the effect of challenging the authority of this Court.

5. The material before me indicates that the penalty of $590,000 has now already been incurred and that the sale of that property is inevitable, and that the Court from this point on will be dealing, at best, with the proceeds of sale of the Taiwanese properties.

6. It has been submitted on behalf of the third and fourth respondents that, if I make the orders sought by the wife in these proceedings, I am predetermining the yet-to-be-determined proceedings between these parties, which included the applications of the third and fourth respondents for a declaration that they are the beneficial owners of the property.  The only reason I have not made a final order dismissing the third and fourth respondents' application for a declaration is because the substantive proceedings between the husband and the wife have been adjourned, pending investigations to be conducted by the Commissioner for Taxation.

7. I have, in the clearest possible way, determined that the third and fourth respondents, in fact, had no interest, beneficial or otherwise, in any of the Taiwanese property and that all of the property in Taiwan is the property of the husband and the wife.

8. The proceedings have not been adjourned in any sense to further consider the interests of the third and fourth respondents.  The proceedings have only been adjourned to enable this Court to properly determine what is the net value of all of the property which was the subject of these proceedings, which is the property of the husband and the wife on my factual and legal determinations.

9. Accordingly, although there may be a technical argument made on behalf of the third and fourth respondents, there can be no doubt, in my view, in anyone's mind by reference to the judgment that I have entirely rejected and clearly determined the third and fourth respondents' claim for declaratory relief and consequential orders.

10. Further, and in any event on the material before me, it appears that the arguments have been rendered academic because of the default of the husband which, even on the arguments of the third and fourth respondents, has exposed them and the Taiwanese property to immediate sale and to the imposition of penalties. 

11. The properties, on the material, will be sold.  The proposed orders of the wife are orders which can in no way prejudice the interests of the owners of that property, being the husband and the wife.  They may or may not be capable of implementation.  If they can be implemented, the parties only stand to gain by a controlled sale as opposed to a sale pursuant to foreclosure.

12. In the circumstances, I propose to make Orders (3)(a) and (3)(b), save that I will order that the proceeds be remitted not to Jones Mitchell Lawyers at this stage, but rather to the P Group Lawyers upon the same terms and conditions, that is, pending further order.

13. As to the wife's claim for spousal maintenance, without revisiting the 18 days of evidence and the hundred pages of judgments at this stage, I refer to, and have regard to, that evidence and to the evidence sworn by the wife in her application in the proceedings before me.  Her recent testimony is prima facie consistent with the evidence before me in the trial, and that is to the effect that the wife has not had any income now for a substantial period of time.  She has relied upon the preparedness of the husband to give her access to joint funds or joint credit cards for some time, and since that time she has been dependent on borrowings.  I accept that she currently does not have the capacity to support herself. 

14. In the context of this case, where I am dealing with millionaires, I accept that the weekly claims that she has made for her support as set out in her application and affidavit are not unreasonable.  I find that the husband has the capacity to make those payments from the assets and resources retained by him in Taiwan or elsewhere, largely being the residual proceeds of sale of the S site after making yet-to-be-determined proper allowance for joint expenditures.  I have regard to the apparent lifestyle continued to be enjoyed by the husband from those resources.

15. I accept that there is little prospect of the husband voluntarily making those payments. 

16. When weighing up the interests of the wife, the interests of the husband and the interests of the taxpayer, I am satisfied, on balance, that it is appropriate to access a comparatively modest portion of the property pool of these parties in the form of the moneys held by Rudkin Hitchcock Lawyers for the purposes of the wife's support.  I propose to enable her to access $30,396.37 thereof to meet pressing debts and I propose that, thereafter, she be allowed to access those funds to the extent of $1,719 per week.

17. In relation to the question of whether that money should be received, as it were, notionally by way of maintenance from the husband, or in a way which will reduce the property pool, I reserve that question to another day, in that if I determined that the husband has millions of dollars of joint funds remaining, then it is not appropriate that the $120,000 or $130,000 property which the parties would share in should be artificially reduced to meet those maintenance payments, when there was clearly the capacity from an income from millions of dollars of capital to properly provide the wife with support.

ORDERS DELIVERED

1. I decline, at this stage, to make Order (6).  I decline to make Orders (7) to (14).  I am not dismissing those applications.  I understand that there may be some merit in preserving those applications.  I am not formally dismissing them. 

2. I fall short of being persuaded that I should act in relation to the Australian property because of what has happened in Taiwan, having regard to my earlier determinations about the need to preserve property not only for the parties but for the Commissioner.  However, I do observe, as I have in the course of argument, that, if the circumstances in relation to Australian property are also jeopardised by the failure on the part of the husband to discharge obligations in relation to those properties, I would take the view that it would be entirely appropriate to reconsider such matters.

3. Again, consistent with the reasons at trial and my reasons today, I am satisfied that, at the present time, the wife does not have the capacity to meet outstanding legal expenses and expenses of other experts and that she does not have the capacity to meet ongoing legal costs. 

4. Regrettably, this is a unique case where, unless the parties can resolve the matter, we are a long way from finality and the wife will continue to incur legal expenses, as will the husband. 

5. In my view, it would be entirely inappropriate to allow the husband to continue to have exclusive access to what I have concluded is the joint property of the parties and a substantial amount of property to ensure that his legal representatives continue to be funded into the future from those joint resources which is the only source of income or capital available to him.  It is unfair to give him unlimited access to that joint resource to continue to fund his legal costs and allow the wife and her legal representatives to be without such access.

6. My findings at the trial support that view.  What has happened in Taiwan subsequent to the trial only reinforces my concerns and, in the circumstances, I propose to make Order number 14 in these proceedings. 

RECORDED   :   NOT TRANSCRIBED

ORDERS DELIVERED

1. I reserve the costs largely on that ground that, to determine those matters, amongst the things I need to take into account is the conduct of the parties, and I accept that short notice prevents your client from being given the opportunity to be heard.

RECORDED   :   NOT TRANSCRIBED

1. I reserve the question of costs.

I certify that the preceding twenty five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Jordan

Associate: 

Date: