Chong and Sung & Ors
[2020] FamCA 766
•15 September 2020
FAMILY COURT OF AUSTRALIA
| CHONG & SUNG AND ORS | [2020 FamCA 766 |
| FAMILY LAW – PROPERTY – Application by husband and wife for alteration of property interests – husband did not participate in the final trial – second respondent is the parties’ adult daughter – third respondent is a company in which the wife and second respondent hold shares – neither the second or third respondents participated in the trial – orders made for the trial to proceed undefended – consideration of composition of the asset pool for division between the parties – assessment of contributions of both parties – a property of which the second respondent is the registered proprietor found to be held on trust for the husband and wife – the second respondent’s shares in the company held on trust for the wife – orders made substantially in accordance with the proposal of the wife. |
| Family Law Act 1975 (Cth) ss75, 79, 117 Evidence Act 1995 (Cth) ss 140 |
| Stanford v Stanford [2012] HCA 52 In the Marriage of Hickey [2003] FamCA 395 Bevan & Bevan [2013] FamCAFC 116 Chancellor & McCoy [2016] FamCAFC 256 Dickons & Dickons [2012] FamCAFC 154 In the Marriage of I & I (No 2) (1995) 22 Fam LR 557 Worth & Worth (No. 2) [2019] FamCAFC 126 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 |
| APPLICANT: | Ms Chong |
| FIRST RESPONDENT: | Mr Sung |
| SECOND RESPONDENT | Ms Sung |
| THIRD RESPONDENT: | B Pty Ltd |
| FILE NUMBER: | MLC | 12064 | of | 2017 |
| DATE DELIVERED: | 15 September 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Williams J |
| HEARING DATE: | 20 August 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hall |
| SOLICITOR FOR THE APPLICANT: | Robinson Gill |
| THE FIRST RESPONDENT: | No Appearance |
| THE SECOND RESPONDENT: | No Appearance |
| THE THIRD RESPONDENT: | No Appearance |
Orders
Within 7 days of the date of these orders the applicant serve the first, second and third respondents with a copy of these orders and reasons for judgment.
Service as provided in the preceding paragraph be effected by email to the respective respondent’s usual email address.
IT IS DECLARED THAT:
The 2nd and 3rd Respondents hold their interest in the real property situate at and known as C Street, Suburb D being the whole of the land more particularly described in Certificates of Title Volume … Folios …, … and … (“C Street”) on trust for the Husband and Wife
The 2nd Respondent holds her interest in B (Aust) Pty Ltd on trust for the Wife.
IT IS ORDERED THAT:
E Street
Within 30 days of these orders, the Husband do all acts and things necessary to transfer to the Wife all of his right title and interest in the property situate at E Street, Suburb D being the whole of the land more particularly described in Certificate of Title Volume … Folio … (“E Street”).
Pending the transfer of E Street:
(a)the Wife have the sole right to occupy E Street and during such right of occupation she pay all outgoings of or with respect to the property;
(b)neither party encumber the property without the written consent of the other; and
(c)each party holds their interest in E Street on trust pursuant to these orders.
B (Aust) Pty Ltd and B Pty Ltd
Within 30 days from the making of these orders, the 2nd Respondent do all such acts and things and sign all such documents as may be necessary to:
(a)transfer all of her right title and interest including her shares in B (Aust) Pty Ltd to the Wife; and
(b)forego and abandon any claim she may otherwise have had in respect to any entitlements in B (Aust) Pty Ltd.
The 2nd Respondent be solely liable for and indemnify the Wife against any past, current or future liabilities owed by or relating to B Pty Ltd.
C Street
The Wife retain C Street to the exclusion of the husband.
Within twenty four (24) months of the making of these orders (“the date”) and within 30 days of a written request from the Wife, the 2nd Respondent in her personal capacity and in her capacity as the director and shareholder of the 3rd Respondent, do all acts and things as may be required to:
(a)transfer to the Wife all of her right title and interest in C Street;
(b)facilitate the discharge of the mortgage to F Bank encumbering C Street including but not limited to signing a discharge authority.
Contemporaneously with the transfer of C Street, the Wife discharge the mortgage to F Bank encumbering C Street.
Pending the transfer of C Street:
(a)the Wife have the sole right to occupy C Street and during such right of occupation the Wife pay all outgoings thereon;
(b)all parties are restrained from encumbering or further encumbering C Street without the written consent of all other parties; and
(c)the parties hold their interests in C Street on trust pursuant to these orders.
The Wife be at liberty to provide a copy of these orders to F Bank.
Enforcement
Should any party to these proceedings refuse or neglect to execute any document necessary to give effect to these orders, upon proof by affidavit of the defaulting party’s refusal or neglect to do so, a Registrar of the Family Circuit Court of Australia at Melbourne be appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and or instruments in the name of the defaulting party and do all acts and things to give validity and operation to the deeds and or instruments.
A party shall be deemed to have refused or neglected to execute any documents in the event that the same are not received back from the said party duly executed within five business days of the date upon which they were emailed to the said party.
The Wife may provide a copy of these orders to any Chinese court in any proceedings involving the Wife and the Husband.
Costs
Within 30 days of the date of these orders, the Husband pay the Wife’s costs of and incidental to the applications of 22 November 2017, 15 February 2018, 11 February 2020 and 6 May 2020 calculated on a party/party basis, and fixed at $17,041.
Omnibus
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(i)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party at the date of these Orders;
(ii)monies standing to the credit of the parties in any joint bank account are to become the property of the Wife;
(iii)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(iv)insurance policies remain the sole property of the beneficiary named therein;
(v)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(vi)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
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 Chong & Sung 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 12064 of 2017
| Ms Chong |
Applicant
And
| Mr Sung |
First Respondent
And
Ms Sung
Second Respondent
And
B Pty Ltd
Third Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for property adjustment pursuant to s 79 of the Family Law Act 1975. The wife seeks that the application be heard on an undefended basis due to the failure of the husband and the second and third respondents to participate in the proceedings.
The applicant wife is aged 54 and the respondent husband is also aged 54. The second respondent is their adult daughter who is aged 32. The wife works as a senior hospitality manager and the husband is a businessman who now resides in China.
The parties married on … 1987 and separated on 6 June 2015 when the husband commenced family law proceedings in China. There are four adult children of the relationship.
Issues in Dispute
The following issues were in dispute in the proceedings:
(b) The assets which comprise the asset pool;
(c) The extent of the parties’ contributions to the asset pool; and
(d) The section 75(2) factors in relation to both parties.
Synopsis
In relation to the property, I have determined that:
a)The asset pool as set out in paragraph 51 hereof; and
b)The asset pool be divided in accordance with the orders proposed by the wife;
c)The husband pay some of the wife’s costs on a party/party basis.
The reasons for my determination follow.
Background
The background of the relationship is as set out in the wife’s Outline of Case document which was filed by her in the proceeding on 18 August 2020. The chronology provided by the wife is as follows:
… 1965
Applicant Wife born (54).
… 1966
First Respondent Husband born (54).
… 1987
Parties marry.
… 1988
Second Respondent, Ms Sung born (32 F).
1988
Husband and wife open a business in City G. The costs are met by the wife’s mother.
… 1992
Mr X born (28 M).
… 1999
Mr Y born (20 M).
… 2003
Z born (17 F).
June/July 2004
Parties purchase E Street Suburb D (“E Street”) for $675,000 subject to a mortgage with F Bank. E Street is registered in the joint names of the husband and wife.
10 Dec 2010
Husband and wife enter into a contract for the purchase of an off-the-plan apartment at H Street Suburb J (“Suburb J apartment”) for $1,150,000 in the husband’s name.
15 Dec 2010
Husband and wife enter into a contract for the purchase of an off-the-plan property at K Street Suburb L (“Suburb L property”) for $3,200,000 in the husband’s name.
18 February 2011
Husband and wife purchase a commercial property at C Street Suburb D (“C Street”) for $2,000,000. The property is purchased for the benefit of the wife so that the wife can run a business from the property and facilitate the obtainment of Australian Visa's for the family.
Ms Sung executes contract of sale for C Street in her personal capacity.
A total deposit $285,300 is paid as follows:
· Ms Sung given $5000 in cash by husband. This is applied to deposit.
· Balance of $280,300 is transferred to real estate agent M Group from the husband and wife’s F Bank joint bank account #...42.
7 March 2011
Parties establish B Pty Ltd. Wife is the sole director and shareholder.
Parties also establish B Pty Ltd (Aust) Pty Ltd. The wife holds 80% of the shares and Ms Sung holds 20% of the shares.
7 May 2011
Wife unknowingly signs transfer of shares and directorship to Ms Sung
Ms Sung becomes the sole director and shareholder of B Pty Ltd.
Ms Sung subsequently signs a nomination form for C Street to be purchased in the name of B Pty Ltd.
3 June 2011
Approx. $460,000 is transferred from the parties’ F Bank joint account to F Bank Business Transaction a/c #...01 for the purpose of making further payments due under contract of sale of C Street.
6 June 2011
Further sum of $263,355.81 paid from B Pty Ltd F Bank a/c #...01 towards C Street, transfer labelled as ‘SHORTFALL FUNDS’.
15 August 2011
Purchase of C Street settles ($2,000,000) with a mortgage with F Bank of $1,655,000. C Street is registered in the name of B Pty Ltd. The F Bank loan is secured inter alia by way of mortgage over C Street and E Street, and a fixed and floating charge over the assets of B Pty Ltd and B Pty Ltd (Aust) Pty Ltd. Personal guarantees are provided by the wife, husband and Ms Sung.
Early 2012
Wife learns husband fathered a son with his mistress Ms N in 2005.
23 January 2012
Husband transfers $490,000 to Ms Sung from his F Bank a/c (#...12) without wife’s knowledge.
7 February 2012
Husband transfers $980,000 to Mr X from his F Bank a/c (#...12) without wife’s knowledge.
10 February 2012
Husband transfers $400,000 to Mr X from his F Bank a/c (#...12) without wife’s knowledge.
March 2012
B (Aust) Pty Ltd begins to operate business “O Business” from C Street. The wife manages the business.
3 June 2012
Ms Sung signs a Confirmation of Ownership document confirming that a number of properties, including C Street are held by her on trust for the husband and wife.
4 June 2012
Husband and wife enter into a financial agreement in China entitled “Division Agreement on Common Properties Owned by Husband and Wife” which provides for the wife to retain:
· C Street.
· P Street, City G (in the name of Ms Sung).
· Q Property (in the name of husband).
And for the Husband to retain:
· three properties in China (registered in the name of Ms Sung).
· R Street, City G (in the name of husband).
6 September 2012
Wife becomes the sole director of B Pty Ltd (Aust) Pty Ltd.
February 2013
Husband makes mortgage application to Westpac for Suburb L property of $1,890,000. Husband discloses a net monthly income of $24,424, real estate assets totalling $8.1 million and cash/bank accounts of $2 million.
14 March 2013
Purchase of Suburb L property settles ($3,207,128) with a Westpac mortgage of $1,890,000. The balance of approximately $1,050,000 is funded by the parties’ joint savings. Suburb L property is registered in the husband’s sole name.
13 Nov 2013
Husband signs nomination form for the Suburb J apartment to be registered in Ms Sung's sole name.
26 Nov 2013
Ms Sung makes mortgage application to Westpac for the Suburb J apartment. She discloses ownership of one apartment in China worth $120,000 as the only real estate in which she has an interest. She discloses her employment as a senior sales representative at a business in China where she claims to have been working since 2010.
16 Dec 2013
Settlement of the purchase of Suburb J apartment ($1,150,000) with a mortgage from Westpac in the amount of $682,500. The balance of $487,000 is funded by the savings in Ms Sung’s a/c which were gifted to her by her parents. Suburb J apartment is registered in Ms Sung’s sole name.
2014
Wife discovers that the husband has bought properties in the name of his mistress Ms N.
Parties enter into a further Chinese agreement providing for the properties registered in the name of Ms N be transferred to the wife by 30 July 2014. In the event that the husband fails to do so, the amount payable to the wife to be CNY30,000,000.
17 March 2014
Husband receives $1,334,182 into his F Bank a/c.
Husband opens a term deposit of $2,000,000 (a/c #...49).
6 January 2015
Wife begins making all mortgage repayments in relation to C Street mortgage.
30 March 2015
C Street mortgage with F Bank is refinanced by way of a new loan with F Bank for $1,185,000. The same securities and guarantees are provided as for the previous loan.
22 April 2015
E Street mortgage is discharged.
6 June 2015
Parties separate and husband commences family law proceedings in China.
Wife returns to China to attend the proceedings. She employs a manager for the business at C Street.
Late 2016
The wife and the children are granted permanent residency in Australia.
10 January 2017
Husband withdraws the term deposit of $2,022,247.39.
Husband transfers $1,500,000 to “S Pty Ltd Investment purposes Mr Sung" from his F Bank a/c #...12 without the wife's knowledge.10 January 2017
Husband transfers $200,000 to Ms Sung without the wife's knowledge.
15 May 2017
Orders made by Chinese Court relating to some of the parties assets. They provide for the wife to retain E Street and a property at Q Property, and for the husband to retain the Suburb L property and a property at R Street, City G. The orders also require the husband to pay the wife RMB31million (approximately AUD6.2million).
The orders do not deal with the properties held on trust by Ms Sung or business interests of the husband as they are in dispute between the husband and his brother.
1 July 2017
Husband lodges an appeal against orders of the Chinese Court.
4 Nov 2017
Wife returns to Melbourne having learned C Street is on the market for sale.
18 Nov 2017
C Street listed for auction despite wife's objections. Property is passed in.
22 November 2017
First return date in the Family Court of Australia – an injunction is made restraining Ms Sung from selling C Street or transferring her shares in B Pty Ltd.
January 2018
Appeal hearing heard in China.
February 2018
Ms Sung sells Suburb J apartment. No disclosure as to the application of funds. Although the property was gifted to Ms Sung, the wife considers it likely that the husband has retained some or all of the proceeds.
15 Feb 2018
Family Court of Australia interim hearing. Consent orders made re discovery, valuations and mediation.
Early 2018
Wife commences proceedings in China against Ms Sung in relation to the Chinese properties registered in Ms Sung’s name. Her application is dismissed in May 2018 and appealed by wife. Hearing adjourned pending outcome of other Chinese court proceedings.
July 2018
Upon reviewing subpoenaed documents the wife becomes aware of the $2million removed by the husband in January 2017 and the substantial transfers by the husband to the parties' children.
25 July 2018
Chinese Court of Appeal makes orders setting aside previous orders remitting the matter for re-hearing.
18 Dec 2018
Wife files urgent application in a case in the Family Court of Australia after the husband fails to pay the Suburb L mortgage and threatens to voluntarily surrender the Suburb L property to the mortgagee bank.
19 Dec 2018
Interim consent orders made in Family Court of Australia for the wife to conduct the sale of the Suburb L property. The orders provide inter alia for the net proceeds of sale to be held on trust by the wife’s solicitors, save that the wife is to be reimbursed for costs associated with repairing/renovating the property and preparing Suburb L for sale and meeting the mortgage repayments.
Early 2019
Chinese court re-hearing of Chinese family law proceeding.
23 May 2019
Suburb L property sold for $2,520,000.
24 June 2019
Settlement of the sale of Suburb L. From the sale proceeds, $315,000.00 is paid to ATO as Foreign Resident Capital Gains Withholding. The remaining net proceeds of sale in the sum of $240,464.83 are applied to partially reimburse the wife for the $304,384.77 in expenses she incurred in renovating Suburb L and paying the mortgage prior to sale.
September 2019
Husband withdraws his application in the Chinese court and the matter is dismissed.
31 January 2020
Husband’s Australian solicitors cease to act.
11 February 2020
Mention in Family Court of Australia. Husband fails to appear.
20 April 2020
Ms Sung’s Australian solicitors cease to act.
6 May 2020
Mention in Family Court of Australia. All respondents fail to appear
Mid 2020
Following delays arising from the coronavirus pandemic, the wife commences fresh proceedings in China in relation to the Chinese assets.
3 August 2020
Documents produced by the husband’s accountant pursuant to subpoena reveal that the husband already filed his 2019 tax return and claimed the $315,000 reimbursement of Foreign Resident Capital Gains Withholding, which is a breach of the interim orders of 19 December 2018 requiring that the entire net proceeds of sale of Suburb L be held on trust by the wife’s solicitors.
Procedural History
The current proceedings in Australia were commenced by the wife on 20 November 2017 with the first return date on 22 November 2017. The wife filed her application which included an application for an interim injunction, restraining the second respondent from selling a property situated at C Street or transferring her shares in the company B Pty Ltd Proprietary Limited. (“B Pty Ltd”). B Pty Ltd is the registered proprietor of the C Street property. On that day, Orders were made as sought by the wife.
On 15 February 2018, there was a further interim hearing where orders were made in relation to discovery, valuations and mediation.
On 18 December 2018, a further application was filed by the wife after the husband failed to pay instalments of the mortgage secured against a property in Suburb L and threatened to voluntarily surrender the Suburb L property to the mortgagee for sale.
On 19 December 2018, interim consent orders were made for the wife to conduct the sale of the Suburb L property and for the proceeds of sale to be held on trust by the wife’s solicitors, save that the wife be reimbursed for costs associated with repairing, renovating and preparing the Suburb L property for the sale and for the wife to meet the mortgage payments.
During these interim applications, the husband was represented by Australian solicitors, as was the second respondent, the parties’ daughter.
On 31 January 2020, the husband’s Australian solicitors filed a Notice of Ceasing to Act. That notice included an email address for the future service of documentation in the proceedings on the husband.
On 11 February 2020, at a mention in this Court, the husband failed to appear.
On 20 April 2020, the Australian solicitors acting on behalf of the second respondent also filed a Notice of Ceasing to Act.
On 6 May 2020, there was a further mention in this Court before the Chief Justice and both respondents failed to appear. However, on that day the solicitor of the second respondent appeared seeking leave to withdraw as solicitor for the second respondent. On that day orders were made by the Chief Justice providing as follows:
1. The matter be adjourned to the Family Court of Australia at the Melbourne Registry for an undefended hearing for no more than 3 hours on the issue of property only, on a date to be fixed.
2. By no later than 4pm on 28 days prior to the undefended hearing, the applicant wife file and serve:
a. statement of precise orders sought;
b. any supporting affidavit to be relied upon at trial; and
c. any other document to be relied upon at trial.
3. By no later than 4pm on 21 days prior to the undefended hearing, the respondent husband file and serve:
a. response to the orders sought by the applicant;
b. any supporting affidavit to be relied upon at trial; and
c. any other document to be relied upon at trial.
4.The applicant’s costs of today be reserved.
5. A copy of this order be served by the solicitors of the applicant wife on the solicitors of the respondent husband, the previous solicitors of the respondent husband, and the second and third respondents, and the solicitors for the applicant file an Affidavit of Service proving the same.
AND THE COURT NOTES THAT:
(A) There was no personal appearance by the first, second or third respondents today.
(B Pty Ltd) The previous solicitors for the respondent husband filed a Notice of Ceasing to Act on 23 January 2020.
(C) The previous solicitors for the respondent husband appeared today and informed the Court that they have forwarded the Notice of Listing of today’s hearing, and instructions for attending via Microsoft Teams, to the respondent husband and there has been no response.
(D) The respondent husband is currently residing in mainland China.
(E) This matter has been in the court system since 2017, has had a number of previous court hearings and requires trial.
On 5 August 2020, the matter was fixed for an undefended hearing before her Honour Justice Hartnett. The matter was unable to be reached and all parties were advised via email from Her Honour’s chambers that the matter would not proceed on the scheduled date due to judicial unavailability.
The matter was then initially listed before me on 17 August 2020 as an undefended matter, prior to the matter being moved to 20 August 2020 for an undefended hearing.
In relation to service of documents on the respondents, the applicant relied on two affidavits of her solicitor which were filed on 28 July 2020 and 19 August 2020. Both affidavits refer to service of documents on the respondents with the later affidavit summarising the dates of service of documentation on which the applicant sought to rely at trial.
In addition, my chambers advised both respondents via email forwarded to email addresses stated on the Notices of Ceasing to Act, that the final hearing of the applicant’s property application would proceed electronically on 20 August 2020. They were also provided with electronic links to the proceedings. Neither the husband nor the second respondent chose to participate on that day.
21.Accordingly, I am satisfied that the every effort has been made to advise the first and second respondents of the proposed hearing date and the documents on which the applicant proposed to rely. It is appropriate to proceed with the final trial on an undefended basis.
The Proposal of the Applicant
The orders which the applicant seeks from the court are set out in the minute of precise orders which were emailed to my chambers on 19 August 2020 and which have been served on the two respondents.
They are as follows:
IT IS DECLARED THAT:
1. The 2nd and 3rd Respondents hold their interest in the real property situate at and known as C Street, Suburb D being the whole of the land more particularly described in Certificates of Title Volume …Folios …, … and … (“C Street”) on trust for the Husband and Wife
2. The 2nd Respondent holds her interest in B (Aust) Pty Ltd on trust for the Wife.
IT IS ORDERED THAT:
E Street
3. Within 30 days of these orders, the Husband do all acts and things necessary to transfer to the Wife all of his right title and interest in the property situate at E Street, Suburb D being the whole of the land more particularly described in Certificate of Title Volume … Folio … (“E Street”).
4. Pending the transfer of E Street:
a) The Wife have the sole right to occupy E Street and during such right of occupation she pay all outgoings of or with respect to the property;
b) Neither party encumber the property without the written consent of the other; and
c) Each party holds their interest in E Street on trust pursuant to these orders.
B (Aust) Pty Ltd and B Pty Ltd
5. Within 30 days from the making of these orders, the 2nd Respondent do all such acts and things and sign all such documents as may be necessary to:
a) transfer all of her right title and interest including her shares in B (Aust) Pty Ltd to the Wife; and
b) forego and abandon any claim she may otherwise have had in respect to any entitlements in B Pty Ltd (Aust) Pty Ltd.
6. The 2nd Respondent be solely liable for and indemnify the Wife against any past, current or future liabilities owed by or relating to B Pty Ltd.
C Street
7. The Wife retain C Street to the exclusion of the husband.
8. Within twenty four (24) months of the making of these orders (“the date”) and within 30 days of a written request from the Wife, the 2nd Respondent in her personal capacity and in her capacity as the director and shareholder of the 3rd Respondent, do all acts and things as may be required to:
a) Transfer to the Wife all of her right title and interest in C Street;
b) Facilitate the discharge of the mortgage to F Bank encumbering C Street including but not limited to signing a discharge authority.
9. Contemporaneously with the transfer of C Street, the Wife discharge the mortgage to F Bank encumbering C Street.
10. Pending the transfer of C Street:
a) The Wife have the sole right to occupy C Street and during such right of occupation the Wife pay all outgoings thereon;
b) All parties are restrained from encumbering or further encumbering C Street without the written consent of all other parties; and
c) The parties hold their interests in C Street on trust pursuant to these orders.
11. The Wife be at liberty to provide a copy of these orders to F Bank.
Foreign Resident Capital Gains Withholding Refund
12. Within 30 days from the making of these orders (“the date”) the Husband pay reimburse to the Wife the sum of $315,000 (“the payment”) being the Foreign Resident Capital Gains Withholding Tax refunded following the sale of the Suburb L property.
13. In the event the payment is not made as ordered interest shall accrue at the rate prescribed by the rules of court from the Suburb L property sale settlement date namely 24 June 2019.
Enforcement
14. Should any party to these proceedings refuse or neglect to execute any document necessary to give effect to these orders, upon proof by affidavit of the defaulting party’s refusal or neglect to do so, a Registrar of the Family Circuit Court of Australia at Melbourne be appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and or instruments in the name of the defaulting party and do all acts and things to give validity and operation to the deeds and or instruments.
15. A party shall be deemed to have refused or neglected to execute any documents in the event that the same are not received back from the said party duly executed within five business days of the date upon which they were emailed to the said party.
16. The Wife may provide a copy of these orders to any Chinese court in any proceedings involving the Wife and the Husband.
Costs
17. The Husband pay the Wife’s of and incidental to these proceedings on an indemnity basis.
Omnibus
18. Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(i) each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party at the date of these Orders;
(ii) monies standing to the credit of the parties in any joint bank account are to become the property of the Wife;
(iii) each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(iv) insurance policies remain the sole property of the beneficiary named therein;
(v) each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(vi) any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
19. The wife serve a sealed copy of this order on the husband and 2nd respondent by email within seven days.
THE COURT NOTES
A. Pursuant to Section 81 of the Family Law Act 1975 it is intended that these orders shall as far as practicable finally determine the financial relationship between the parties and avoid further proceedings between them.
B Pty Ltd. If fully implemented, these Orders will divide the Australian matrimonial property as to $2,757,000 to the Wife, and as to $3,664,000 to the Husband.
C. In percentile terms this represents a division of Australian property 43% to the Wife and 57% to the Husband. This settlement is:
(a) all that can practically be conferred upon the Wife in light of the available Australian assets; and
(b) at the lower end of the range of her entitlements pursuant to Part VIII of the Family Law Act 1975.
The documents relied upon by the applicant are set out in paragraph 2 of the applicant’s case outline. They are as follows:
a)The Further Amended Initiating Application and Statement of Claim filed 28 May 2018;
b)Affidavit of Mr T filed 14 February 2018;
c)Affidavit of Ms Chong filed 3 May 2020;
d)Trial Affidavit of Ms Chong filed 8 July 2020;
e)Financial Statement of Ms Chong filed 8 July 2020;
f)Statement of Precise Orders Sought filed 24 July 2020;
g)Affidavit of Adele Katzew (solicitor) filed 28 July 2020; and
h)Affidavit of Adele Katzew (solicitor) filed 19 August 2020.
The Respondent’s Proposal
There were no final orders proposed by the respondents other than his response which was filed on 8 March 2018. There were no documents filed other than the first respondent’s affidavit filed 17 January 2018, in response to the then interim orders sought by the applicant.
Evidence
The standard of proof in this case is the balance of probabilities (section 140 Evidence Act 1995 (Cth)).
Section 140 of the Evidence Act 1995 (Cth) provides:
(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject- matter of the proceeding; and
(c) the gravity of the matters alleged.
As the matter proceeded undefended, there were obviously no objections to any evidence filed on behalf of the wife.
Relevant Legislation
Property proceedings between parties to the marriage are governed by the provisions of s.79 of the Family Law Act1975.
Section 79 (1) of the Act provides that the court may make such orders as it considers appropriate altering the interests of the parties in the property.
Section 79 (2) provides as follows:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
If the Court is satisfied that it is just and equitable to make an order altering the interests of the parties in property, s.79 (4) of the Act sets out the matters which the court must take into account when considering what order (if any) should be made.
That section provides as follows:
Section 79(4): In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
Section 79(4) (a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
Section 79(4) (b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
Section 79(4) (c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
Section 79(4) (d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
Section 79(4) (e) the matters referred to in subsection 75(2) so far as they are relevant; and
Section 79(4) (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
Section 79(4) (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Prior to the decision of the High Court in Stanford v Stanford [2012] HCA 52 the preferred approach to determine property matters was set out by the Full Court in the matter of In the Marriage of Hickey [2003] FamCA 395.
The approach, as set out in Hickey (supra) may be summarised as follows. Firstly, the court should make findings as to the identity and value of the property pool. Secondly, the court should determine the contributions of the parties both direct and indirect, including financial and non-financial contributions and then determine the contribution based entitlements of each of the parties; as a percentage of the value of the property of the parties. Thirdly, the court should determine whether any further adjustment should be made to the contribution based entitlements of the parties, after giving consideration to the relevant matters referred to in s.75(2) of the Act. Fourthly the court should consider the effect of those findings and decide what order for division of property is just and equitable.
In Stanford (supra) the High Court noted that s.79(1) enables the court to make such orders as it considers appropriate. However, prior to making any orders for the adjustment of parties interests in property, the court must determine whether it is just and equitable to make any property orders, or to alter the parties interests in property.
At Paragraph [36] of Stanford, the High Court said:
[36] The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
In Bevan & Bevan [2013] FamCAFC 116 the Full Court considered which matters might be taken into account in determining whether it is just and equitable to alter existing property interests.
At paragraphs [84] and [85], Bryant CJ and Thackray J said:
[84] Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79 (4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s79(4) which make clear that in considering “what order (if any) to make, the court must take into account the matters referred to in that subsection.
[85] This requirement to consider the s79(4) matters, in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, we determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
In Bevan (supra) Finn J stated at paragraph 169:
[169] Findings of fact concerning of the parties financial history (i.e. the contributions) and their present circumstances and future prospects made in the context of s 79(4) will also assist, but such findings cannot (according to Stanford) be conclusive in determining whether or not it is just and equitable to make an order altering any particular property interest.
The Full Court in Chancellor & McCoy [2016] FamCAFC 256 said at paragraph [42]:
[42] In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) (“the Act”) when determining whether it is “just and equitable” to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters.
The High Court stated in Stanford at [37]:
[37] First, it is necessary to begin consideration of whether it is just and equitable to make property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property……. The question posed by S79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
At paragraph [40] of Stanford (supra), the High Court stressed that the question of whether it is just and equitable to make property settlement orders should not be answered by starting with an assumption:
[40] that one or other party has the right to have the property of the parties divided between them, or has the right to an interest in a marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s79 (4). The power to make a property settlement order must be exercised. “In accordance with legal principles, including the principles which the act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79 (4) without a separate consideration of s79 (2), B Pty Ltd to conflate the statutory requirements and ignore the principles laid down by the act.
The High Court further stated at [42] that in most cases:
[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
In summary, in the majority of matters the decision as to whether or not it is just and equitable for the Court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the court for orders altering their respective property interests.
Is it Just and Equitable to Alter the Parties’ Property Interests?
In this matter the parties have separated and both parties have made applications to the court seeking orders altering their respective property interests, although the husband did not participate in the final trial.
The parties are no longer living in a marital relationship, and as stated at paragraph [42] of Stanford (supra), there will not “thereafter be the common use of property by the husband and the wife”.
I am satisfied that it is just and equitable to alter the parties’ property interests.
Having satisfied myself that it is just and equitable to make an order altering the interests of the parties in the property, the approach and considerations I must make are as follows:
a)Attribute value to the assets comprising the property pool;
b)Identify and give weight to the various contributions of each of the parties as set out in section 79(4)(a)-(c) and make an assessment as to the entitlements of the parties based on their respective contribution;
c)Identify the relevant considerations as set out in section 79(4)(d)-(g) including the matters set out in section 75(2) so far as they are relevant, and then decide whether any further adjustment is appropriate; and
d)Consider whether the proposed orders are equitable.
The Parties’ Existing Interests in Property
The wife at paragraph 4 of her Outline of Case document sets out the asset pool, as between husband and wife. She also seeks the inclusion of the C Street property of which the third respondent is the registered proprietor.
That asset pool is as follows:
Asset
Registered Owner
Estimated value
E Street Suburb D
Husband & Wife
$1,330,000
C Street Suburb D
B Pty Ltd
$1,950,000
CGT Withholding reimbursement (from sale of K Street, Suburb L)
Husband
$315,000
B (Aust) Pty Ltd trading as the O Business
Wife 80% shares
Ms Sung 20% shares
NIL
Funds unilaterally withdrawn by the husband from F Bank term deposit account in 2017
Husband
$2,021,013
Funds transferred by the husband from F Bank account …12 to the parties’ eldest son Mr X in 2012 without the wife’s knowledge or consent
Husband
$1,350,000
Sale proceeds of Unit, H Street Suburb J in 2018
Husband
$290,000
Sub-total gross assets
$7,256,013
Liabilities
C Street mortgage at 30.04.2020
B Pty Ltd
($384,000)
Debts to wife’s family and friends
Wife
($454,000)
Sub-total liabilities
($838,000)
NET ASSETS
$6,418,013
Additionally, during submissions the wife’s Counsel advised that the sale proceeds of the Suburb J property which were retained by the husband after examination of documentation produced pursuant to subpoena were approximately $290,000. I have included that in the relevant table of the wife’s asset pool.
There was no evidence adduced or filed by the husband as to the assets comprising the asset pool. The wife seek to include in the he pool the C Street property and the shares in B Pty Ltd.
I note that the wife’s pool comprises of two amounts which she alleges were withdrawn by the husband from the parties’ F Bank accounts. The first amount is $2,021,013 which the wife asserts the husband withdrew from an F Bank term deposit in 2017. The second amount is funds transferred by the husband from an F Bank account number …12 and which was transferred to the parties’ son in the amount of $1,350,000.
During submissions, I asked Counsel for the wife, what the husband’s evidence was in relation to those two withdrawals. In response, I was advised that the husband had not referred to either of these alleged withdrawals in his affidavit material as the only affidavit which the husband had filed in the proceedings was in response to the wife’s application to prevent the sale of the C Street property. He did, however, refer to correspondence between the solicitors for the parties dated 7 September 2018 whereby the husband asserted that the funds had been applied as follows:
a)$2,021,013 had been transferred to the husband to ostensibly repay loans and debts in China; and
b)$1,350,000 had allegedly been transferred to the parties’ son to repay loans and debts in China.
Despite that assertion, the husband had failed to provide any source documentation to substantiate the alleged loans and debts in China. Given the lack of evidence by the husband I accept the wife’s assertions that those funds were transferred by the husband and I intend to include the amounts in the asset pool.
In relation to the sale proceeds of Suburb J, the wife was apparently unaware of the sale of the property until after the event. She caused title searches to be carried out on her behalf, which is referred to in paragraph 83 of her Trial Affidavit. The property was sold for $996,000 in February 2018. The sum of $682,446 was applied to discharge the mortgage to Westpac which encumbered the property. Allowing for approximate selling costs of 2% of the sale price, then the wife asserts that the husband received approximately $290,000 from the proceeds of sale of the Suburb J property. I accept that evidence of the wife.
In relation to the valuations of both the E Street and C Street properties, I was referred to valuations which had been filed in an affidavit of 14 August 2020 as accurate valuations of both properties. I accept those valuations.
In relation to the CGT withholding reimbursement from the sale of K Street Suburb L, the sum of $315,000 was set aside from the sale of the property and paid to the ATO, in accordance with the CGT withholding regime of the Commonwealth government for non-Australian citizens. When the precise orders were filed by the husband, the wife was under the impression that the funds still remained in the ATO and she sought orders enabling those funds to be released to her.
Subsequent to those orders in the last day or so prior to the hearing, she has established that the husband in fact had filed his 2019 tax return and the funds had been released to the husband as there was a capital loss on the sale of the Suburb L property and no capital gain.
I am satisfied that that amount has been transferred to the husband and he has had the benefit of that although there was no evidence as to where those funds may have been applied.
THE C STREET PROPERTY
The wife also seeks that the property situated at C Street be included in the asset pool for distribution between the husband and the wife.
She initially sought a declaration pursuant to section 78 of the Family Law Act 1975 that the second and third respondents hold their interests in C Street on trust for the applicant wife and the first respondent husband.
The basis of her claim that the C Street property should be included in the asset pool is that prior to, and at the time that the second respondent executed the contract of sale to purchase the C Street property, it was the intention of the wife, the husband and the second respondent, that the C Street property would be purchased for the benefit of the wife so that the wife could:
a)Run a business from the C Street premises; and
b)Facilitate the attainment of Australian visas for the parties and their family.
After the time of the contract of sale was executed and prior to the settlement of the purchase of the C Street property:
a)In March 2011, the parties established B Pty Ltd Investment Proprietary Limited, with the wife as a sole director and shareholder; and
b)In May 2011, the wife unknowingly signed documents transferring her shares in B Pty Ltd Investment Proprietary Limited to the second respondent, and resigned as a director.
The second respondent was aged 23 years when the property was purchased and did not contribute any funds to the acquisition, conservation or improvement of C Street. At no time did the husband and wife gift the property to the second respondent.
C Street was purchased with funds belonging to the husband and the wife. In addition, the husband and the wife provided personal guarantees to the mortgagee bank, F Bank. The mortgage was also secured by way of a fixed and floating charge over the assets of B Pty Ltd (Aust) Pty Ltd.
Since March 2012, the wife has run her business “O Business” from C Street.
On 3 June 2012, the second respondent signed a document in Mandarin Chinese entitled “confirmation of ownership” which contains a declaration from her that the “true owners” of C Street are the husband and the wife. The document was filed by the husband in the original Chinese family law proceedings which commenced in 2015.
On 4 June 2012, the wife and the husband signed a document in Mandarin Chinese entitled “division agreement on common properties owned by husband and wife” which was filed by the husband in the Chinese family law proceedings whereby the parties agreed that the wife was to retain the ownership of C Street.
From August 2012 to December 2014, the C Street mortgage repayments of $16,500 per month were made using funds sourced from the husband and wife’s joint account.
In the application of the second respondent to Westpac for a mortgage for the Suburb J apartment in November 2013, she asserted that she lived and worked in China and the only real estate in which she had an interest was an apartment in China worth $120,000. There was no mention in that application of her interest in either the business conducted by B Pty Ltd (Aust) Pty Ltd, nor in the C Street property.
Since January 2015, the wife has made all mortgage repayments for C Street, totalling almost $1 million. In the circumstances, I am persuaded that and find, it was the intention of the husband and the wife at all times that the C Street property be purchased by the second respondent on trust for the husband and the wife and I intend to include the property in the asset pool for distribution between the parties, and to make appropriate orders.
B Pty Ltd (Aust) Pty Ltd
The wife also initially sought a declaration pursuant to section 78 of the Family Law Act 1975 that the second respondent holds her interest in B (Aust) Pty Ltd on trust for the applicant wife. She now seeks a transfer of the shares to her.
The basis of her assertion is that B Pty Ltd was established in 2011 and is the company through which the wife operates her business.
Prior to, and at the time that the second respondent acquired shares in B Pty Ltd, it was the intention of the wife, the husband and the second respondent that B Pty Ltd would be acquired by the wife and the second respondent for the benefit of the wife, so that the wife could:
a)Run a business from C Street; and
b)Facilitate the obtainment of Australian visas for the parties and their family.
The wife is the sole director of B Pty Ltd and holds 80 per cent of the shares in the company with the remaining 20 per cent shares held on trust by the second respondent.
The shares in B Pty Ltd were not gifted to the second respondent and she made no contribution to the acquisition of the shares.
The second respondent was not involved in the running of the business, although until 2015 she occasionally assisted the wife from time to time with bookkeeping and appointments with accountants. She played no further role in the business.
Her application to Westpac for a mortgage to purchase the Suburb J apartment in November 2013 did not disclose any ownership or interest of any shares in B Pty Ltd.
In addition, the wife relies on her affidavit filed in the proceedings which attests to conversations between the deponent and the second respondent that the second respondent did not consider that she had any beneficial interest in the property nor the company.
In the circumstances, I find that at all times the second respondent held her shares in B Pty Ltd on trust for the wife and that the shares should be included in the asset pool.
Accordingly, I am satisfied that the existing legal and equitable interests of the parties is as set out in the asset pool in the preceding paragraphs.
Conclusion as to asset pool available for distribution
As a result of my findings in relation to the C Street property, B Pty Ltd and the uncontested evidence of the wife, I find the asset pool available for distribution of the parties is as set out in paragraph 51 hereof.
Contributions
The evidence of contributions is summarised in the wife’s Case Outline document. Those contributions, both financial and non-financial, may be summarised as follows:
i)At the commencement of the marriage, neither party had any significant assets;
ii)During the marriage both parties worked in the family business in China and in Australia, and made direct financial contributions to the acquisition, conservation and improvement of the matrimonial assets;
iii)Additional financial contributions were made by the wife’s mother;
iv)The wife was the primary carer for the parties’ four children;
v)The wife suffered physical and emotional family violence at the hands of the husband during the marriage. Her contributions were made more arduous by reason of the family violence she suffered. In that regard, the wife has detailed evidence of family violence in her affidavit material and has annexed photographs of the injuries which she says were inflicted on her by the husband;
vi)The wife made greater financial contributions after separation in 2015 to the preservation of the parties’ asset pool and the reduction of the mortgage encumbering the C Street property. As from January 2015 to date, she has paid $16,500 per month in mortgage repayments and her contributions since that date and post separation total approximately $990,000. When I questioned the extent of the mortgage payments on that property, Counsel for the wife advised me that the mortgage was a 10 year mortgage requiring repayment of principal and interest with the original advance being $1,655,000. The mortgage now is just under $400,000 which equates to a reduction by the wife of some $1.2 million in principal since 2015.
There was no evidence from the husband as to contributions and I accept the wife’s evidence as to contribution.
Section 75(2) Factors
These are set out in summary in the wife’s Case Outline document and are as follows:
(i)The length of the marriage was over 20 years;
(ii)The husband is 54 years old, and to the wife’s knowledge enjoys good health;
(iii)The wife is 54 years old and suffers from depression and has been hospitalised on a number of occasions. She was subjected to significant family violence during the marriage;
(iv)The wife’s business has been significantly impacted by COVID-19 and she is currently receiving job keeper payments;
(v)The wife seeks a 24 month settlement period given that she is unlikely to obtain finance in the current climate due to COVID-19 and her business may take time to recover; and
(vi)The husband’s income earning capacity is very high. In 2013 the husband disclosed a net annual income exceeding $290,000 in his loan application to Westpac. In regard to the husband’s current financial circumstances, the husband has not filed a Financial Statement since March 2018. In that statement he deposed to earning an income of $1,300 per week with assets of $2.6 million and liabilities of $1.9 million.
There was no evidence of the husband’s future needs and I accept the wife’s evidence as to future needs.
The asset pool, at the very least, without taking into account the dispositions of large sums of cash which are over $3,000,000 by the husband, remaining in Australia is over $3,000,000. There was no explanation why the husband had chosen to refuse to participate in the proceedings given that he had been represented up until early 2020. It is inconceivable that a person who is as impecunious as the husband deposed to in his financial statement of 21 March 2018 would not choose to participate in proceedings in this court in relation to the division of matrimonial property.
Proceedings in China
The chronology set out in the wife’s Case Outline details the history of the proceedings in China between the parties. As previously referred to, proceedings were instituted in China by the husband on 6 June 2015. Those assets dealt with the distribution of the Chinese assets and the wife’s application before me is limited to a distribution of the assets located in Australia.
Subsequent to the husband commencing family law proceedings in China, the wife returned to China to defend the proceedings. On 15 May 2017, orders were made by the Chinese court relating to some of the parties’ assets, including the property at E Street. The orders provided for the wife to retain the E Street property, a further property in China, and for the husband to retain the Suburb L property and a further property in China. The orders also required the husband to pay to the wife approximately A$6.2 million. The orders did not deal with the properties held on trust by the second respondent, namely the C Street property, nor the Suburb J property, or the business interests of the husband in China as he was in dispute with his brother as to the extent of those interests.
On 1 July 2017, the husband lodged an appeal against the orders of the Chinese court. In January 2018 the appeal hearing took place in China.
In early 2018, the wife commenced proceedings in China against the second respondent in relation to the Chinese properties registered in her name. The wife’s application was dismissed in May 2018 and the wife filed an appeal. The hearing of that appeal was adjourned pending the outcome of the other Chinese court proceedings.
On 25 July 2018, the Chinese Court of Appeal made orders setting aside previous orders and remitting the matter for rehearing.
In early 2019, the Chinese court reheard the Chinese family law proceedings. In September 2019, prior to a decision being reached in the Chinese court, the husband withdrew his application in the Chinese court and the application was dismissed.
In mid-2020, following delays arising from the Coronavirus pandemic, the wife commenced fresh proceedings in China in relation to the Chinese assets. Those proceedings remain to be determined.
Conclusion
The wife seeks in the proceedings that she retain both the E Street and the C Street property, her shares in B Pty Ltd and that the husband pay to her the sum previously held by the ATO arising from the sale of the K Street property. The financial effect of the orders sought by the wife are as follows:
| Wife | |
| Assets | Value |
| E Street | $1,330,000 |
| C Street | $1,950,000 |
| Sub-total assets | $3,280,000 |
| Liabilities | Value |
| B (Aust) Pty Ltd trading as the O Business | NIL |
| C Street mortgage | $384,000 |
| Debts to wife’s family and friends | $454,000 |
| Sub-total liabilities | $838,000 |
| NET TOTAL | $2,442,000 |
| Husband | |
| Assets | Value |
| Sale proceeds Suburb J | $290,000 |
| Funds withdrawn by the husband from F Bank term deposit in 2017 | $2,021,013 |
| Funds transferred by the husband from F Bank account …12 to the parties’ son Mr X | $1,350,000 |
| CGT Withholding reimbursement (from sale of K Street, Suburb L) of which $63,919.94 is due to be reimbursed to the wife per orders of 19.12.18 | $315,000 |
| NET TOTAL | $3,976,013 |
Counsel for the wife submitted that I should assess that the wife’s contributions were substantial as are her future needs. He did not make any submissions about the relative percentages which should be attributed to contribution nor future needs. The case was run on the basis of the overall result in terms of the respective percentages for the husband and wife, which are set out in the table of effect of the wife’s proposals.
I do not intend to attach percentages to the parties’ various contributions made during and post the marriage. In that regard, the Full Court in Dickons & Dickons said as follows:
[23] We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
[24] There can be little doubt that the classification of contributions by reference to terms such as "initial contributions", "contributions during the relationship", and "post-separation contributions", can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties' respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
I have had regard to the evidence of the wife which was not contradicted and as to the contribution and weighing up and assessing the myriad of contributions of the parties, both financial and non-financial, direct and indirect, at the commencement of the relationship, during the relationship and post-separation and their contributions as home-maker and parents. I assess those contributions to be in excess of the amount which the wife would receive from the eventual distribution of assets which remain in Australia.
Counsel for the wife urged me to make an order compelling the husband to effect a transfer to the wife of funds the funds held by the ATO. Whilst it is attractive to make an order that the husband pay that amount to the wife, the reality is that there was no evidence to substantiate that it would ever be paid to the wife. In the circumstances, I am not inclined to make an order that the husband repay those funds to the wife. On the asset pool as determined by me, excluding a payment from the husband to the wife of that amount, I have determined that the wife will receive $2,442,000 and the husband will have received $3,976,013. That may well be less than the wife would receive, had more assets been located in Australia, but she will receive all of the remaining Australian assets.
The division of assets will result in the wife retaining the property at E Street and on the basis that I have determined that the second respondent holds the C Street property on trust for the husband and that the wife will receive a transfer of that property into her name.
The husband will have received the benefit of the funds which he transferred to himself in 2017 and to the parties’ son from the F Bank accounts which are in excess of $3,000,000. I do not have any evidence about the current asset pool in China and what the determination the subject of these proceedings will mean in terms of the overall percentage of distribution of assets between the parties. It is only being sought to adjust the Australian assets and I am satisfied that the division of the assets which I have made is a just and equitable division of the assets available for distribution or which have been distributed in Australia, and I intend to make orders accordingly.
Costs
Counsel for the wife sought that the husband pay the wife’s costs of the proceedings on an indemnity basis.
The costs are set out in a cost estimate provided by the solicitors for the wife, although there was no cost agreement put into evidence which would enable me to determine the basis of the costs which the wife seeks on an indemnity basis.
The wife seeks an order for costs in regard to the husband’s conduct including the following:
a)The wife was required to commence proceedings in 2017 seeking urgent injunctions in circumstances where the respondents were proposing to sell the C Street without her consent;
b)The respondents failed to file an amended response as required by the orders of 15 February 2018;
c)The wife was required to make another urgent application in the case in December 2018 when the husband ceased paying the Suburb L mortgage and threatened to voluntarily surrender the property to the bank; and
d)The husband breached the orders of 19 December 2018 by retaining $315,000 from the sale proceeds of the Suburb L property. The orders required all of the net proceeds of sale to be held in trust by the wife’s solicitors and the wife sought an order for the funds to be paid back to her, although in reality that is unlikely to happen. Additionally, the wife is still owed $63,919 pursuant to orders of 19 December 2018 by way of reimbursement for mortgage, repairs, improvements carried out by her to the Suburb L property. The husband failed to disclose that he had lodged his 2019 individual tax return and had received $315,000. The wife only became aware of that as a result of a subpoena addressed to the husband’s accountant.
e)The failure of the respondents to make full and frank disclosure has necessitated the issuing of a number of subpoenas at significant expense to the wife.
f)The husband failed to disclose the removal of millions of dollars from Australian accounts. The transfers were only discovered by the wife from material subpoenaed in these proceedings.
g)The husband’s lack of proper participation in the proceedings has made it impossible for the wife to engage in any meaningful negotiations for settlement and has rather, incurred substantial legal fees preparing for and running a final hearing.
h)Excluding the final hearing, the matter has had six court events including private mediation.
i)Costs were reserved on the following hearings: 22 November 2017, 15 February 2018, 11 February 2020 and 6 May 2020.
The wife’s Counsel relied on a party/party assessment of the costs incurred in all of the hearings where costs were reserved and those are quantified at $17,041.
Legal principles
Section 117(1) of the Family Law Act 1975 (“the Act”), states, subject to the provisions of s.117(2), that the general rule in proceedings in this court, is that each party to proceedings, shall each bear his or her own costs.
Section 117(2) of the Act provides as follows:
If, in proceedings under this act, the court is of the opinion that there are circumstances that justify it in doing so, the court may subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Section 117(2A) of the Act provides, that in considering what order (if any) should be made for the payment of costs, the court shall have regard to the following matters:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
In the Marriage of I & I (No 2) (1995) 22 Fam LR 557, the Full Court said that the relevant matters in s.117(2A):
“…must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”
Taking into account the relevant legal principles and the submissions of the applicant referred to in paragraph 106 hereof, I am persuaded that it is appropriate to depart from the usual principle that each party be responsible for his/her own costs.
As I am satisfied that there are justifying circumstances for an order for costs, the outstanding issues are whether costs should be ordered on the usual party/party basis, or the exceptional indemnity basis.
The principles as to the basis on which indemnity costs should be ordered is set out by the Full Court in Worth & Worth (No. 2) [2019] FamCAFC 126, as follows:
[9] The authorities are clear, that for the usual basis to be departed from, exceptional circumstances need to be demonstrated (see, eg, Limousin & Limousin (Costs) (2007) 38 FamLR 478). The categories of such circumstances are not closed (Yunghanns & Yunghanns (2000) FLC 93-029), but some examples are provided in the oft-quoted decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive Co”), and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:
(a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts.
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.
(c) Evidence of particular misconduct causing loss of time to the court and to other parties.
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
(e) An imprudent refusal of an offer to compromise.
Relying on the principles stated in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, the applicant submits an order for indemnity costs is appropriate because, there exists some “special or unusual feature in the case to justify the court in departing from the ordinary practice”.
There were no additional submissions why an indemnity costs order should be made and the costs agreement between the applicant and her solicitor was not in evidence.
Whilst the conduct of the respondent husband is less than acceptable, his failure to participate in the proceedings does not warrant an order for indemnity costs, particularly in circumstances where a substantial portion of the cost’s claimed is referable to previous court dates.
In conclusion, I intend to order that the respondent pay the applicant’s costs for the dates on which costs were previously reserved, in the amount claimed in the document submitted which calculates costs on a party/party basis.
I certify that the preceding one hundred and eighteen (118) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Williams delivered on 15 September 2020
Associate:
Date: 15 September 2020
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