Cheung and Cheung and Ors (No 2)

[2009] FamCA 1281

FAMILY COURT OF AUSTRALIA

CHEUNG & CHEUNG AND ORS (NO. 2) [2009] FamCA 1281

FAMILY LAW – PROPERTY – Further hearing – Further deliberations – Non appearance of husband – Assessment of property pool – Percentage distribution – Draft orders

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: 16 November 2009

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Jordan J

HEARING DATE: 3 November 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr R Lethbridge SC with Mr G Beacham

SOLICITOR FOR THE APPLICANT: Jones Mitchell Lawyers, Southport, Qld

THE FIRST RESPONDENT: No appearance

THE SECOND RESPONDENT: No appearance

THE THIRD RESPONDENT No appearance

THE CASE GUARDIAN No appearance

Orders

1. That service upon the Husband of all orders made by the Court or any documents necessary to give effect to the Court’s orders be by way of substituted service by delivery of a scanned copy of the Court’s orders and/or documents by email to the Husband at …@gmail.com and …@hotmail.com.

2. That service of the Second and Third Respondents of all orders made or any documents necessary to give effect to the Court’s orders be by way of substituted service by delivery of a scanned copy of the orders and/or documents by email to the Husband’s email address as set out in Order 1 and to the offices of Mr Ming, the Case Guardian.

3. That pursuant to section 106A of the Family Law Act 1975, the Registrar and/or Deputy Registrars of the Family Court of Australia be forthwith appointed to sign the following documents in order to effect the transfer to the Wife of the property known as E Property and the marina berth associated with such property:

   (a)Form 1 and Form 24 for E Property in accordance with Annexure “A” hereto;

   (b)Form 1 and Form 24 for the E Property marina berth in accordance with Annexure “B” hereto;

   (c)Application for Consent to Transfer E Property marina berth in accordance with Annexure “C” hereto;

   (d)Authority authorising JR to release a key to E Property to Jones Mitchell Lawyers in accordance with Annexure “D” hereto;

   (e)Statutory Declaration in accordance with Annexure “E” hereto; and

   (f)Authority to Hickey Lawyers in accordance with Annexure “F” hereto.

4. That Order 2 of the Orders made by the Honourable Justice Jordan on 9 July 2009 be varied as follows:

   “2.Subsequent to the transfer of the [E] property to the Wife, the Wife be at liberty to:

   (a)within 2 days thereafter, provide a mortgage in favour of the National Australia Bank over the said [E] property as security for the National Australia Bank overdraft facility presently secured against the [M] property;

   (b)sell the [E] property and to apply the proceeds of sale in the following manner and priority:

   (i)such amount as is necessary to discharge the overdraft facility secured against the [M] property;

   (ii)the sum of $2,453.66 to Dunn & Bradstreet in relation to repair costs;

   (iii)the sum of $2,200.00 to the Australian Taxation Office in respect of late income tax return lodgement fees;

   (iv)in payment of the […] Council Rates for the [M] property in the sum of $1,626.18;

   (v)in payment of the […] Council Rates for the [E] property in the sum of $4,570.99;

   (vi)in payment of agent’s commission of sale and any ancillary sale costs; and

   (vii)the balance be paid to the trust account of the solicitors for the Wife, Jones Mitchell Lawyers, for payment out to her or as she may direct.”

5. That the Husband immediately do all acts and things to transfer to the Wife the whole of his right, title and interest in the property situate at and known as M Property in the State of Queensland, more particularly described as Lot … on Group Titles Plan of Resubdivision …, County of …, Parish of …, Title Reference …, and the Wife shall thereafter retain all right, title and interest in the said property to the exclusion of the Husband.

6. That in relation to Order 5 above, in the event the Husband has failed to execute documents necessary to give effect to the transfer within 7 days of the date of these Orders, then the Registrar be appointed pursuant to section 106A of the Family Law Act 1975 to sign all necessary documents, instruments and writings in the stead of the Husband to give effect to that order.

7. That in relation to Order 5 above, the Husband forthwith do all acts and things necessary to sign a Statutory Declaration in accordance with Annexure “G” hereto and an Authority to Hickey Lawyers in accordance with Annexure “H” hereto.

8. That in relation to Order 7 above, in the event the Husband has failed to execute documents necessary to give effect to any part of that order within 7 days of the date of these orders, then the Registrar and/or Deputy Registrars of the Family Court of Australia be forthwith appointed pursuant to section 106A of the Family Law Act 1975 to sign all necessary documents, instruments and writings in the stead of the Husband to give effect to that order.

9. That within 28 days of today’s date, the Husband pay to the Wife the amount of $9,500,000.00, such payment to be made into the trust account of the Wife’s lawyers, Jones Mitchell Lawyers (the relevant details being Jones Mitchell Lawyers Trust Account, National Australia Bank, BSB …, account number …), and that in the event that the Husband pays the said amount of $9,500,000.00 or any part thereof to the Wife after 28 days of today’s date, then the Husband is to pay those monies to the trust account of the Wife’s lawyers in Taiwan, P Lawyers, and the relevant details for the trust account of P Lawyers are as follows:

   Account Name:  P Lawyers

   Bank Name:…

   Account Number:                 …

   Bank Branch Address:          …

10. That in the event that the Husband pays the said sum of $9,500,000.00 to the wife within 28 days hereof, the Wife forthwith take all steps necessary and execute all documents necessary to transfer or assign to the Husband any interest she has in “T House”, being the whole of the land comprised in Title Reference …, Lot 14 on …, and Lot 15 on …, and Lot 13 on …, or otherwise relinquish as against the Husband any interest in the said property.

11. That in the event that the Husband fails to pay all or any of the $9,500,000.00 to the Wife within the time specified, then:-

    (a)the mortgage, if any, in favour of the Second Respondent and/or the Second and Third Respondents over the property being the whole of the land comprised in Title Reference …, Lot 14 on …, and Lot 15 on …, and Lot 13 on …, and being known as “T House” (“T House”) be set aside and the Registrar-General for the State of Queensland is requested to do all acts and things necessary to remove reference to that encumbrance from the title to the said property;

    (b)John David Andrew Punch, Solicitor of Short Punch & Greatorix, or if he is unable or unwilling to act, then any partner in the firm of Short Punch & Greatorix, be appointed Trustee for Sale (“Trustee”) on behalf of S Group International Pty Ltd, ACN …, as Trustee of the D Family Trust (“Trust”) to:

    (i)grant a mortgage over T House in favour of the Wife’s solicitors, Jones Mitchell Lawyers, to secure any costs (“costs”) owing to Jones Mitchell Lawyers by the Wife in respect of which a costs order has been made against the Husband and/or the Second and Third Respondents subject only to the first mortgage over T House in favour of ICBC PROVIDED THAT the said mortgage shall contain a provision to the effect that Jones Mitchell Lawyers shall provide a release of such mortgage to allow a sale of T House to settle if they receive the net proceeds of sale after payment of the costs of sale, any money due to ICBC and payment required under Order 11(b)(vi) AND even if the amount to be paid to Jones Mitchell Lawyers in consideration for such release shall be less than the monies due and owing to Jones Mitchell Lawyers in respect of costs;

    (ii)do all things necessary to manage and preserve T House and to keep it in a good state of repair;

    (iii)manage either directly or through an agent the letting of T House with the power to deal with and vary all existing leases, tenancies and licenses as may apply to any part of T House and with the power to grant leases, tenancies and licenses of any part of T House on such terms and conditions as the Trustee deems appropriate;

    (iv)sell T House at such price and on such terms as the Trustee deems appropriate;

    (v)sell the other assets of the Trust;

    (vi)pay the genuine debts of the Trust, excluding any amount howsoever arising due and owing by the Trust to the Husband and/or the Second and Third Respondents, but including any reasonable costs and charges incurred by John David Andrew Punch of Short Punch & Greatorix in the exercise of his proper duties in accordance with these orders and in his capacity as Trustee for Sale;

    (vii)pay any part of the costs due and owing to Jones Mitchell Lawyers; and thereafter -

    (viii)cause the whole of the then remaining funds of the Trust to be distributed to the trust account of Jones Mitchell Lawyers to be opened by the Wife as Trustee for the Husband and thereafter subject to Order 11(d) for payment out to him or as he may direct;

    (c)in relation to Order 11(b) above, in the event the Husband has failed to execute documents necessary to give effect to any part of that order within 7 days of the date of these orders, or if there is any impediment (connected with the authority of the Trustee to execute relevant documentation) to achieving registration of dealings at the Titles Office or at any other government office or body relating to the matters referred to in Order 11(b)(i), (iii) and (iv), then the Registrar and/or Deputy Registrars of the Family Court of Australia be forthwith appointed pursuant to section 106A of the Family Law Act 1975 to sign all necessary documents, instruments and writings in the stead of the Husband and if relevant, in the stead of the Trustee, to give effect to that order;

    (d)in the event that on the date of the Wife’s compliance with Order 11(b)(viii) there is any amount due and owing by the Husband to the Wife pursuant to Order 9 above, then the Wife be at liberty to apply, if necessary, the whole of the amount held in the trust account of Jones Mitchell Lawyers towards the satisfaction of the Husband’s obligations to her pursuant to Order 9 above.

12. That the Husband indemnify the Wife for all and any liabilities, including all revenue liabilities including but not being limited to any taxation liability (penalties and interest) now or in future arising as a consequence of the Wife’s association with any corporation or trust created, constituted or settled during the marriage, in which the Wife was a shareholder, office holder or beneficiary and including all tax penalties and interest arising from any future ATO investigation or assessment.

13. That each party sign all necessary documents and do all necessary things in order to give effect to the terms of these Orders and if either party should fail or refuse to sign all documents and do all necessary things in order to give effect to the terms of these Orders, then the Registrars of the Family Court at Brisbane are hereby appointed pursuant to s106A of the Family Law Act to sign all necessary documents and to do all necessary things in order to so give effect.

1. (a)       That the Husband pay the Wife’s costs of and incidental to these proceedings as and from 11 October 2006 on an indemnity basis.

(b)That the costs payable by the Respondents pursuant to this order shall be assessed by Douglas A Kerr, the Legal Practitioner Director of QICS-Law, a legal practice specialising in legal costs, a Solicitor of the Supreme Court of Queensland and the High Court of Australia, and an Approved Cost Assessor appointed under Rule 743L of the Uniform Civil Procedure Rules 2007 by the Registrar of the District Court of Queensland, on the basis of a short form assessment by way of an examination of the tax invoices delivered by the lawyers for the Wife, Jones Mitchell Lawyers, and such other enquiries as the said Douglas A Kerr considers appropriate.

(c)That upon the filing of an affidavit in the Registry which annexes the assessment of Mr Kerr pursuant to the order above, an order shall issue for payment of the sum assessed by Mr Kerr as the costs payable by the Respondents pursuant to this order.

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:  (P)BRF1286/2006

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

1. In this matter, the parties approach the Court to finalise proceedings and make orders designed to give effect to the determinations of this Court on this and a prior occasion.

2. The case was previously adjourned part-heard on 27 November 2008.  The matter had been the subject of protracted proceedings and a final hearing for some 18 days covering a period from 14 July to 23 October 2008.  On 23 October 2008, I reserved my decision pending the delivery of written submissions.  I delivered a lengthy judgment on 27 November 2008 and this judgment represents a continuation and completion of that final determination.

3. I do not propose to repeat the contents of the primary judgment of 27 November 2008, save to the limited extent necessary to provide the context for this final portion of the judgment.

4. As appears in paragraphs 144-170 and paragraphs 171-182 of the primary judgment, at the time of my previous deliberations, I reached the conclusion that the Court was simply unable to complete the first essential stage of the inquiry relating to the identification and valuation of the property pool.  The inadequacy of the evidence and the resultant uncertainty about the extent of the remainder of the proceeds of sale of the S site represented fundamental deficits in the information available to the Court.  Further, there was an unresolved question of the taxation implications of my findings, which was said to potentially be measured in many millions of dollars.

5. On the former issue, I set out in the judgment (paragraphs 160-170 and paragraphs 203-206) the further information required and indicated how I proposed to ascertain the real and notional property pool and how that pool might be divided between the parties (paragraph 207). 

6. On 15 December 2008, I made orders requiring the parties to confer with a view of reaching some resolution about the identification of that portion of the sale proceeds to be added back, which was to be the subject of agreement, and those portions which were to be the subject of some dispute.  I made further orders requiring the parties to file affidavit material in relation to any other outstanding issues.

7. On the supplementary issue of the taxation implications, I referred the papers to the Attorney-General’s Department for evaluation and investigation.  That referral was almost 12 months ago.  Somewhat surprisingly, given my findings, given the terms of the referral and given the evidence of the experts on the likely extent of the liabilities of the parties, the Australian Taxation Office has displayed little apparent interest in pursuing the matter.  The only response from the Australian Taxation Office to date has been correspondence from that office indicating that the Commissioner does not oppose this Court making the orders being sought by the wife.  Those orders would have the effect of ensuring that all of the property within the jurisdiction and the only property against which the Commissioner might readily execute any recovery remedy, will pass to the wife absolutely to do with as she wishes (see affidavit of Warwick Jones, 3 November 2009).

8. On the issue of the remainder of the proceeds of sale of S to be added to the property pool, each of the parties filed further affidavit material directly addressing those matters.  I will return to some of the detail of that evidence later but, for present purposes, the essence of the respective cases on this point may be summarised as follows.  The husband says that, subsequent to the receipt of the said proceeds, the parties expended funds well in excess of the remainder to meet debt, to repay investors, to pay costs and charges, to fund a variety of unsuccessful business ventures and to meet the very high living costs and expenses of the four family members.  He says that there are no remaining funds and that there should not be any notional add-backs.

9. At the other end of the scale, the wife argues that the Court should add back almost $18 million for this component.  She acknowledges some comparatively small portion of the alleged expenditure, but disputes most of it.  Further, she argues that the living costs should have been more than covered by the returns on the substantial capital as invested, either on the basis that the Court should infer that such capital would, indeed, be invested by the husband or, in the alternative, that it should find that any failure on the part of the husband to properly invest such funds should be the responsibility of the husband.

THE PROCESS

1. The husband failed to appear at the further hearing of this matter.  He was not further represented in the proceedings.  The husband’s previous solicitor, Charles Cooper, filed a Notice of Ceasing to Act on 7 September 2009.  The second and third respondents did not appear and their previous solicitors, Hopgood Ganim, filed a Notice of Ceasing to Act on 8 May 2009.  Of course, on the issue of the second and third respondents’ non-appearance, I had previously determined that they did not have any legal or beneficial interest in any of the property, the subject of these proceedings.

2. The husband was represented throughout the primary proceedings, including throughout the trial and at the time of the judgment and at subsequent hearings between December 2008 and September 2009.  He was well aware of the pending proceedings and he has continued to file affidavit material in relation to the outstanding issues, including an affidavit as recently as 13 October 2009.  The more recent material displays an acute awareness of the remaining matters in issue.  I am further satisfied that he has received notice of these proceedings and copies of all the wife’s recent material, including a copy of her draft final orders, by way of service in the variety of means set out in the material filed by the solicitors for the wife. 

3. I have determined that I should proceed in the husband’s absence.  It was submitted by counsel for the wife that I should proceed on an undefended basis and not consider any material filed by the husband.  Whilst there is some merit in that proposition in the circumstances, I have, nevertheless, chosen to admit the material filed by the husband subsequent to the previous judgment and to take it into account, subject, of course, to any submissions in relation to the reliability of such material and the weight which should be placed upon it.

4. It needs to be observed that the passage of time and the filing of material has not had the desired effect of ensuring that the Court is better informed.  For reasons I will discuss later, it appears that that state of affairs is unlikely to change.  The parties are entitled to a determination in this matter and the need to proceed to that final determination has become more pressing as a result of my now published decision to retire at the end of this year.  I have concluded that little purpose would be served by further delays and to do so would expose these parties to the prospect of a re-hearing after they have been litigating for some four years and have expended over $3 million in the process.

1. In the circumstances, I simply must do the best I can with the tools available to me.  In that regard, I am usefully reminded of the difficulties confronted by this and other Courts from time to time.  In particular, I was referred to the decision of the High Court in Commonwealth v Amann Aviation Pty Ltd (1991) 174 C.L.R 64, where members of the High Court made observations in relation to similar difficulties in the civil arena in the following terms:

   “The settled rule … is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can.  Indeed, in Jones v Schiffmann, Menzies J went so far as to say that the ‘assessment of damages … does sometimes, of necessity involve what is guess work rather than estimation’.  Where precise evidence is not available the court must do the best it can.”

2. I was also reminded of the often quoted observations of this Court as a consequence of its decision in Weir & Weir (1993) FLC 92-328, which decision has now enabled robust approaches in cases where one party has compromised adjudication by non-disclosure and concealment.

PROCEEDS OF SALE OF S – NOTIONAL REMAINDER TO BE ADDED BACK

1. I refer to my previous judgment which, I trust, explains my approach to this matter and I refer to paragraphs 149, 150 and 204 thereof, in particular.  As I have set out there and elsewhere in my judgment, I am satisfied that the sum of $20,423,028.00 is a proper measure of the proceeds of sale of S available to the parties after making proper allowance for the costs of realisation, repayment of all legitimate third party joint venturers and discharge of all genuine commercial liabilities in relation to those transactions.

ACCOUNTING FOR S PROCEEDS

1. As I have indicated earlier, the resolution of this aspect of the case presented difficulties in November 2008 and it remains a vexed question, notwithstanding the efforts to at least narrow the scope of the differences between the parties.  Those differences remain stark and are best illustrated by observing that the husband maintains that all of those funds have been accounted for and none should be added back, whereas the wife contends that there is almost $18 million unaccounted for and that all of that sum should be added to the property pool.

2. Some evidence was produced by each of the parties, including the second and third respondents at trial and I have commented in this judgment and previously about the inadequacy of that evidence.

3. The husband’s further evidence on this issue primarily emerges from his affidavit filed on 3 March 2009, as supplemented by the contents of his affidavit filed on 13 October 2009.

4. In my view, that material suffers from a multitude of fundamental deficits.

5. Firstly, and most fundamentally, that material is based upon a perpetuation of the premise that the relevant property is not and was not the property of the husband and/or the wife and that the husband did not have and does not have control over any of the proceeds and does not have entitlement to access to information about such matters.  Such notions are entirely discredited and have been firmly rejected by this Court for the multitude of reasons set out in the judgment of 27 November 2008.  That the husband would persist with his efforts to hide behind this façade represents a direct challenge to the Court, further damages his credit and necessarily greatly undermines the prospect of any reliance being placed upon his further testimony.

6. Secondly, in his most recent material, the husband continually relies upon sweeping generalisations, a global approach to figures and a distinct lack of particularity.  He does not provide documentary evidence to support many of his assertions.

7. Having made those general observations, I propose to now analyse precisely what the husband asserts in a little more detail.

8. In paragraphs 2 and 3 of his affidavit filed on 3 March 2009, the husband raises a number of irrelevancies in relation to taxes which were not paid and other repayments to investors which, on the evidence, were clearly paid from funds other than the remaining $20 million.

9. Paragraph 5 of the husband’s affidavit is nothing but a furphy which ignores the evidence and my findings in relation to the $20 million surplus available to the parties and rather refers to the asserted losses suffered by the Taiwanese investors.

10. Paragraph 6 contains a false assertion that the wife’s drawings on the D Company accounts and credit cards exceeded $3 million after receipt of the $20 million, when the evidence led by the husband during the course of the trial was nowhere near that figure and, further, portion of the reduced amount related to drawings which pre-dated the receipt of the proceeds of sale of S and is, therefore, entirely irrelevant to the exercise being undertaken.

11. In paragraph 8 of the affidavit, the husband refers to the cost of acquisition of five vehicles for an outlay of $500,000.00.  The wife has clearly established that three of the said motor vehicles were, in fact, purchased long before the S proceeds became available and thus again highlights the fundamental flaw in the approach adopted by the husband.

12. In paragraph 9 of his affidavit, the husband baldly asserts that the living expenses of the parties were some $3,200,000.00, notwithstanding in paragraph 6 he had already made reference to some $3 million expenditure.

13. In paragraph 10 of his affidavit, the husband again blandly asserts that the cost of various projects to be deducted from the $20 million was no less than $6 million.  There is no effort to break up or detail that expenditure and the husband asks the Court to erase that amount from the property pool with the stroke of a pen.  Whilst he may seek to hide behind his father’s alleged control in relation to other aspects of the matter, these were projects undertaken in Australia largely by the husband, or by the husband and the wife as joint ventures.  These pursuits were managed and controlled entirely by the parties in Australia, and the husband simply must be able to do better in terms of the detail if he expects the Court to act upon these assertions.  The husband has always been the principal operator dealing with matters financial during the marriage and he is the one who has the greater capacity to substantiate such claims.  The wife makes the obvious point that the parties did not lose every dollar invested in every one of these business ventures.  Indeed, she says that some returned a profit and that, further, some pre-dated the sale of S.  The husband simply fails to provide any proper basis upon which the Court could accept this aspect of his evidence.

14. Paragraph 12 of the husband’s affidavit is entirely indicative of the deficits in his own case in this regard.  It has the appearance of an entry designed to meet the need to account for another $1.5 million to enable his numbers to add up.  He seeks to justify the deduction of that sum from the asset pool again by the stroke of a pen, supported by one-and-a-half lines in an affidavit which assert that the parties lost $1.5 million in “an investment” in Taiwan.  That is the totality of the information provided.

15. As I observed in the primary judgment, I find that the husband entirely controlled all of the property and investments of the parties and entirely controlled the finances of the parties, other than those enterprises undertaken or shared by the wife, which included her involvement in TA Business, the beauty products project and the natural resources project.

16. Of course, the husband declined not only to produce documentary evidence and particulars in relation to such matters, he declined to make himself available for cross-examination in relation to the contents of his dubious affidavit material.

17. It is difficult to escape the conclusion that the style and content of the husband’s mere five page document as to the whereabouts of $20 million is a document designed to further deflect the wife and the Court from the valid exercise undertaken to determine the proper entitlement of the parties in this matter.  One suspects that the deficiencies in the information supplied are a reflection of the difficulties in maintaining and justifying the dishonest and the unjustifiable.

18. Of course, it is important to observe that the husband failed to make himself available to be tested in relation to his entirely inadequate account as to application of the S proceeds.

19. In all the circumstances, I am unable to place any reliance upon the evidence produced by the husband subsequent to the trial.

20. It could be equally said that the wife’s material suffers from similar deficits and similar lack of detail.  Of course, in her case, there would appear to be good reason for her inability to provide the Court with much of the detail.  Most fundamentally, the wife did not control the business or, in particular, the funds realised from the S sale.  The dealings with the proceeds were entirely controlled by the husband, who chose to repatriate them to Taiwan, where they were, on my findings, dealt with entirely under the direction of the husband.  I have further concluded that they were, in fact, dealt with in ways designed to deceive the wife.  The wife was necessarily dependent upon the husband making full and frank disclosure, which he has clearly failed to do. 

21. Having said that, as I observed in my earlier judgment, it is clear that the parties individually and collectively have, from time to time, had access to a substantial portion of the S proceeds for living and business purposes.  Such drawings have, at least on paper, had the potential to substantially reduce the balance which should be deemed to be remaining and be added back to the property pool.

22. In her primary affidavit on this topic filed on 7 April 2009, the wife concedes the sum of $2,500.00 should be deducted as set out in paragraph 23 of that affidavit.  At the same time, the wife has conceded in that affidavit and elsewhere in her evidence that the parties lived an extravagant lifestyle and incurred substantial expenditure.  In the relevant period after the sale of S, records produced would indicate that the living expenses alone of the family could easily have been of the order of $2 - $3 million.  In her oral evidence, the wife admitted to outlaying some $500,000.00 on jewellery alone during that period, which sum was outside the living expenses previously referred to.  Further, it does appear that the parties outlaid at least an additional $500,000.00 to lease luxury accommodation, which was only occasionally used.  There were no less than five luxury vehicles to acquire and/or maintain.  There were, indeed, a number of business ventures which were costly and unsuccessful. 

23. The wife endeavours to deal with such matters in part by reference to material filed and summarised in paragraphs 21 to 24 of her affidavit filed on 7 April 2009.  The proposition the wife asks the Court to consider emerges from an exercise undertaken by an accountant, Mr JB, which resulted in the production by Mr JB of schedules which appear as “LC6” attached to the wife’s affidavit.  The essence of the exercise is to have all the proceeds of sale of S notionally invested in short fixed term deposits and to calculate the returns on such invested capital from time to time.  As part of the exercise, the accountant was asked to make allowance for very substantial drawings for the family of between $150,000.00 and $200,000.00 per month up to November 2005, when all forms of support were withdrawn from the wife, and from November 2005 to December 2008 at half of those amounts to represent generous drawings for the husband alone.  The figures speak for themselves and suggest that, even on these most conservative investment scenarios and most generous monthly allowance scenarios, there would remain no less than $10 million of the proceeds available and as much as $18 million.

24. The wife does not rely upon these exercises as evidence of the current balance remaining, but rather refers to them in an effort to demonstrate that it would be entirely inappropriate to deduct all proven or estimated drawings without making proper allowance for the returns on the very substantial funds available to the husband since the sale of S.  It is submitted further, that the Court could, and perhaps should, conclude that it is likely that the returns to the husband would have been far greater than bank deposit returns, particularly having regard to exceptional returns on investments in Australia and Asia during the bulk of the period under review.

25. Consistent with my findings throughout this matter, I have concluded that the husband has had control of and access to the proceeds of sale since their receipt.  I take the view that it is inherently improbable that the husband would not have invested the $20 million in ways which would provide him with significant returns.  Further, if the husband deliberately chose not to so invest the funds, I accept that such a decision would be wanton and wasteful and that the consequences of which should rest with the husband.

26. Beyond those broad observations, it is, of course, impossible to be precise.  Nevertheless, I am satisfied that the exercise undertaken by the accountant on behalf of the wife provides her with legitimate arguments to meet the husband’s case that all drawings of the parties should be deducted from the capital sum.  For example, properly invested, the income from such invested funds should have been more than sufficient to meet at least the bulk of the parties’ living expenses.

27. Notwithstanding the above observations, I find myself in a somewhat difficult position balancing a justifiably robust approach against the need to try to do justice between each of the parties in the absence of reliable information.  Doing the best I can, I take the view that it has been established that a significant portion of the heavy drawings against capital appear to have occurred in the early stages after the sale of S.  The expenditure of funds utilised for extravagant lifestyles, the establishment of TA Business and to provide capital to be injected into a number of unsuccessful business ventures occurred in that early period and in a way which would have been likely to reduce capital and therefore reduce returns on the remaining invested capital.  In the case of the wife, her living expenses in Taiwan, her acquisition of one-half of a million dollars worth of jewellery and the lease of a luxury property in Australia are evidence of extraordinary expenditure which must have had some impact on the capital reserves.

28. Having weighed all of the evidence, having completely rejected the husband’s account, having accepted that there is legitimacy to the approach to consider the notional returns on invested capital, but having concluded that the wife’s concessions of $2.5 million is inadequate and is not a reasonable reflection of the reality, I have determined that I should allow for a total expenditure of $6 million, with the consequence that I have concluded that a figure of $14 million is the best estimate of the total of the funds that should remain and should be added back.

PROPERTY POOL

1. The remainder of the assets and liabilities of the parties were largely resolved by agreement between them.  I set out below the relevant remaining property and value.

   ASSETS

1	E Property	$1,400,000
2	M Property	$1,143,000
3	Shares in A International Pty Ltd - balance of proceeds from the sale of X Property	$234,900
4	Interest in the D Family Trust Relevant Asset:- Commercial property in Surfers Paradise known as T House	$5,200,000
5	Motor vehicles	$60,000
6	Wife’s SunSuper Entitlement	$15,000
7	2 Office units at K Road, Taiwan	$873,385
8	8 Units at P Road, Taiwan	$13,485,041
9	Land and parking space in Taiwan	$9,490
10	Proceeds from sale of S Site to be added back	$14,000,000
TOTAL	$36,420,816

JOINT LIABILITIES

1	Mortgage over M Property in favour of NAB	$225,000
2	Mortgage over “T House” in favour of ICBC	$1,700,000
3	CGT liability arising from the sale of X Property	$108,894
4	Mortgage over units at K Road, Taiwan in favour of Taipei Fubon Bank	$899,074
5	Mortgage over units at P Road, Taiwan in favour of Taipei Fubon Bank	$7,492,287
6	Trade creditors of TA Business	$116,700
7	Debt to Hotel, Taipei	$140,000
TOTAL	$10,681,955

1. The wife, in particular, referred to a series of liabilities arising from borrowings from a number of institutions and from individuals which, she says, were necessitated to provide for her living expenses and to meet legal costs.  The evidence does not enable me to treat those liabilities as anything other than the personal liabilities of the wife.  There are two exceptions, those being the $116,700.00 owing to the trade creditors of TA Business and the $140,000.00 owed by the wife to the Hotel in Taipei.  I am satisfied that each of those liabilities were incurred by the wife in pursuit of a legitimate joint business endeavour which was established prior to separation.  I am of the view they should be taken into account as joint liabilities.

2. The net value of the property pool is, therefore, some $25,738,861.00.

PERCENTAGE DISTRIBUTION

1. I refer to that part of my primary judgment under the heading “Part VIII Considerations” appearing from paragraphs 183-200 on pages 48-53, wherein I set out my deliberations to that point and suggested that a 45 per cent share to the wife of the identified property pool represented a proper, just and equitable distribution between the parties as the evidence stood at that time.

2. Having now completed stage one and identified the property pool, nothing has emerged subsequent to my earlier deliberations which has in any way caused me to reconsider or modify that assessment.

3. In all the circumstances, I remain satisfied that the wife should receive a 45 per cent share of that property pool.

4. As a consequence, I have determined that the wife should receive a property settlement in the sum of $11,582,487.00.

RELIEF SOUGHT BY THE WIFE

1. The wife seeks a head order for payment of a lump sum to adequately reflect her entitlement and seeks other orders designed to secure payment of as much of that sum as is possible by accessing the entirety of the property in Australia.

2. I am satisfied that such an approach is entirely justified in this matter.  The history I have outlined in my primary judgment and in this judgment establishes that the husband has illegitimately sought to deprive the wife of her proper entitlement and that he has been prepared to engage in unilateral and deceptive conduct to achieve that end.  He has removed substantial funds from Australia and a significant portion of the property of the parties remains in Taiwan.  Since the November judgment, the husband has persisted with his dishonesty and it would appear he has engaged in conduct designed to further deceive and frustrate.  He has remained overseas since December, despite his assurances to the wife and to the Court that he had no intention to do so.  He has failed to meet repayment obligations in relation to properties in Australia and Taiwan, with significant adverse financial consequences for each of the parties.  I am satisfied that he is unlikely to co-operate in any way with the implementation of the orders of this Court and, indeed, that he is likely to continue to take steps or fail to take steps in ways designed to deliberately frustrate the wife.

3. In the circumstances, I am entirely satisfied that it is appropriate that the wife have the fruits of this litigation secured against the remaining Australian property.

4. Under the orders proposed, the wife is likely to receive approximately $1.4 million upon the sale of E Property and approximately $918,000.00 upon the sale of M Property.  Accordingly, the wife would receive $2,318,000.00 of her entitlement from that source.

1. However, allowance must be made for the fact that from those funds she will be required to meet two joint debts identified by me, being the trade creditors of TA Business in the sum of $116,700.00 and the debt to the Hotel of $140,000.00, so that the net benefit to the wife from the property pool from these sources is $2,061,300.00.

2. In the orders sought by the wife, she seeks a specific order for payment of a lump sum and the ability to apply the proceeds of sale of T House in part discharge of that obligation in the event that the husband fails to make the lump sum payment.  On my assessment, the lump sum payable to the wife would be $9,521,187.00, being the balance payable after deducting the $2,061,300.00 from the total 45 per cent entitlement of $11,582,487.00.  I propose to round that figure off to $9,500,000.00.

COSTS

1. The wife seeks an order for costs of and incidental to these proceedings and seeks an order that such costs be awarded on an indemnity basis.

2. The wife refers to and relies upon my assessments that he husband’s primary case was based upon a falsehood and that that presentation has resulted in a substantial increase in the costs incurred by the parties.  She submits that such falsehood was entirely fundamental to the whole exercise best demonstrated by observing that the husband’s case was to the effect that the parties did not own any property and that the wife had no entitlement to any property settlement as contrasted against the fact that the Court has found that the parties had property to a value of some $27 million and that the wife’s entitlement was to a property settlement of some $12,000,000.00.

3. The wife asks the Court to take into account the fact that the husband has persisted with such a case even after the Court made positive findings to the contrary in November 2008.  She argues that the vast bulk of the costs were incurred in trying to meet the husband’s fraudulent case and, in particular, in trying to identify, trace and locate the property of the parties.

4. Needless to say, my judgments and assessments are entirely consistent with those submissions.

5. In considering the application for costs, I am obliged to have regard to the provisions of the Family Law Act and of ss 117 and 117(2A) in particular.

6. The fundamental starting point is that each party should bear their own costs.

7. The Court does, however, retain a discretion to make an order for costs and in considering whether it should do so, is obliged to take into account the provisions of s 117(2A) and I identify below some of the considerations under those provisions which are relevant on the facts of this case.

8. I make reference to the provisions of the following sub-paragraphs:

9. (a)      The financial circumstances of the parties are such that I have found that each of them will have access to substantial wealth.

10. (c)      As to the conduct of the parties in relation to the proceedings, I accept that the costs incurred were greatly increased by the husband’s deceptions and failure to provide proper discovery and production.  The wife’s solicitors found it necessary to engage solicitors in Taiwan, at least in large part, to cover such deficits.

11. (e)      The husband argued that the wife was not entitled to any payment as and by way of property settlement and sought an order dismissing the wife’s application.  The judgment of this Court was that the wife should receive a property settlement of approximately $12 million.  The husband was, in the circumstances, wholly unsuccessful in his application.

12. (f)      I admit into evidence and mark as Exhibits “A”, “B” and “C” on this costs application the following correspondence:

    i.Letter dated 20 September 2006 from Primrose Couper Cronin Rudkin to Jones Mitchell.

    ii.Letter dated 5 October 2005 (obviously incorrect as to the year) from Primrose Couper Cronin Rudkin to Jones Mitchell.

    iv.Letter dated 11 October 2006 from Jones Mitchell to Primrose Couper Cronin Rudkin.

    That correspondence discloses that, on 11 October 2006, the wife made an offer to accept the sum of $5 million in full and final satisfaction of her claim for property settlement.  The husband rejected that offer and failed to make any meaningful proposal in reply.  Obviously, the offer of the wife to settle proceedings must now be regarded as very reasonable and was substantially less than the $12 million awarded to her by this Court.  In my view, this matter became a purely commercial exercise from that point on.  The husband chose not to avail himself of the opportunity to accept a reasonable to generous resolution of the commercial litigation, with the consequence that each of the parties thereafter incurred the substantial costs of the exercise.  In my view, it is very difficult indeed to justify requiring the wife to be substantially out-of-pocket in the pursuit of her $12 million entitlement, which she was prepared to resolve three years earlier for less than 50 per cent of her full entitlement.

13. (g)      In this matter, it has been submitted by counsel for the wife that this is, indeed, an exceptional case where the combination of the conduct of the husband in the proceedings and the existence of the written offer for the wife justify an order for costs on an indemnity basis.  In the course of those submissions, I was referred to Colgate Palmolive Co & Anor v Cussons Pty Ltd 118 ALR248, which case discussed the grounds upon which a Court might contemplate making an order for indemnity costs. That case is authority for the proposition that such orders should be reserved only for exceptional cases with unusual features. It is suggested that a costs order on an indemnity basis might be justified in circumstances including those where the Court found that proceedings were commenced in wilful disregard of known facts or based upon groundless contentions. I have concluded that the husband’s entire case was based upon a wilful deception and his conduct since the primary judgment provides nothing by way of mitigation. He has persisted with the deception. He has remained overseas despite his assurances to the contrary. He has failed to properly participate in the further proceedings.

14. In my view, the offer of settlement made by the wife in October 2006 would have alone justified an order for costs on a party/party basis.  The conduct of the husband in the proceedings thereafter represented nothing less than a fraud upon the wife and I am satisfied that this is an exceptional case where I should make an order for costs on an indemnity basis as and from 11 October 2006.

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Jordan

Associate: 

Date: