Cun & Zhihui (No 4)
[2023] FedCFamC1F 581
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Cun & Zhihui (No 4) [2023] FedCFamC1F 581
File number(s): SYC 3261 of 2015 Judgment of: HARPER J Date of judgment: 13 July 2023 Catchwords: FAMILY LAW – PROPERTY PROCEEDINGS – Where wife sought orders for final property adjustment and relief pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”) – Where the only material assets in contention in Australia are two properties H Street, Suburb E (“Suburb E”) and G Street, Suburb D (“Suburb D”) – Where Suburb E and Suburb D were purchased by J Pty Ltd – Where husband was the sole director, shareholder and employee of J Pty Ltd – Where Suburb E and Suburb D were purchased prior to the husband and wife commencing cohabitation – Where second and third respondent are the adult children of the husband from a previous relationship – Shortly prior to separation Suburb E and Suburb D were transferred to the second and third respondents respectively – Where second and third respondents claimed to hold the properties on trust for the five children of the husband – Where wife claims the transfers were a sham and sought relief pursuant to s 106B of the Act – Where no proceedings were on foot at the time of the transfers – Where the Court was unable to find that the objective intention of the transfers was to defeat anticipated orders of the Court – Where second and third respondents entered into legitimate mortgages to pay for the properties in addition to family loans from Country M – Where second and third respondents provided market value consideration to J Pty Ltd for the purchase of Suburb E and Suburb D – Where the Court held second and third respondents were bona fide purchasers – Where the Court declined to make relief pursuant to s 106B of the Act to set aside the transfers of Suburb E and Suburb D to the second and third respondents –– Where the relationship between the husband and wife was of a short duration – Where on first blush it appears husband does not have sufficient assets to comply with any property orders – Where husband’s deficiencies of disclosure and deliberate refusal to engage with the Court processes precluded the Court any proper understanding of his current assets – Where J Pty Ltd received $870,000 prior to its deregistration in 2013 – Where Court held J Pty Ltd was the “alter ego” of the husband – Consequently, the Court treated the $870,000 as being received by the husband – Where husband led no evidence as to if or how those funds had been dispersed or dissipated – Where on the limited evidence the Court held the property of the husband is not less than $870,000 – Wife entitled to 40 per cent adjustment under s 79(4) - Where Court ordered the husband to pay the wife $361,600 being 40 per cent of $870,000.
FAMILY LAW – PRACTICE AND PROCEDURE – Where husband chose not to read any evidence relevant to property proceedings – Where husband maintained the Court did not have a right to hear the case – Where husband was asked multiple times if he wished to read any evidence – Where husband read no evidence in respect of the wife’s application for final property adjustment orders – Where husband remained able to cross-examine and make submissions – Where husband given ample opportunity to cross-examine the wife and her witnesses – Where the husband did not cross-examine any witnesses or make submissions – Where wife’s evidence was unchallenged – Where the Court held the husband had been afforded procedural fairness.
Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 75(2), 78(1), 79, 80(1), 81, 106B Cases cited: Aitken & Aitken (2023) 66 Fam LR 314; [2023] FedCFamC1A 69
AscotInvestments Pty Ltd v Harper (1981) 148 CLR 337
Barnell & Barnell (2020) FLC 93-961; [2020] FamCAFC 102
Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303
Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Bourke v Bourke (Final Hearing Costs) (2010) 43 Fam LR 139; [2010] FamCA 199
Burke and Burke (1981) FLC 91-055
Chang & Su (2002) FLC 93-117; [2002] FamCA 156
Chiefley & Ha [2017] FamCA 683
Cun & Zhihui [2022] FedCFamC1F 597
Cun & Zhihui (No 2) [2022] FedCFamC1F 598
Cun & Zhihui (No 3) [2023] FedCFamC1F 346
D and D [Section 85 application] (1984) FLC 91-593
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Elias & Elias Pty Ltd atf the Elias Family Trust v Antoun Toufic Chidiac [2010] NSWSC 1364
Equuscorp Pty Ltd and Another v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55
Fielding and Nichol [2014] FCWA 77
G and G (2000) FLC 93-043; [2000] FamCA 1075
Gollings and Scott (2007) FLC ¶93–319; [2007] FamCA 397
Grech v Deak-Fabrikant (No 3) [2015] VSC 581
Halabi v Artillaga (1994) FLC 92-470
Harris & Dewell (2018) FLC 93-839; [2018] FamCAFC 94
Haseloff & Kormann [2013] FamCA 1019
HDM & MM [2006] FamCA 47
Heath and Heath; Westpac Banking Corp. (1983) FLC 91-362
Heath and Heath (No. 2) (1984) FLC 91-517
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC 94-006; [2021] FamCAFC 19
Holland & Holland (2017) FLC 93-798; [2017] FamCAFC 166
Horrigan & Horrigan [2020] FamCAFC 25
Hurst & Hurst (2018) FLC 93-851; [2018] FamCAFC 146
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
JEL and DDF (2001) FLC 93-075; [2000] FamCA 1353
Kowalski and Kowalski (1993) FLC 92-342
Milankov and Milankov (2002) FLC 93-095; (2002) 28 Fam LR 514
Manolis & Manolis (No 2) [2011] FamCAFC 10
Monte & Monte (1986) FLC 91-757; [1986] FamCA 1
Morgan & Valverde (2022) FLC 94-100; [2022] FedCFamC1A 133
Norman & Norman [2010] FamCAFC 66
Penner & Conroy (No 2) [2021] FamCA 411
Public Trustee v Smith (2008) 1 ASTLR 488; [2008] NSWSC 397
Riemann & Riemann (No 3) [2017] FamCA 911
Shan & Prasad [2018] FamCAFC 12
Stamatou & Stamatou (2022) 66 Fam LR 139; [2022] FedCFamC1F 241
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Whiton & Dagne (2019) FLC 93-923; [2019] FamCAFC 192
Zaruba & Zaruba [2017] FamCAFC 91
Division: Division 1 First Instance Number of paragraphs: 120 Date of hearing: 1–3 May 2023 Place: Sydney Solicitor for the Applicant: Mr Ngo Solicitor for the Applicant: Goh Lawyers & Accountants Solicitor for the Respondents: Litigants in person ORDERS
SYC 3261 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CUN
Applicant
AND: MR ZHIHUI
First Respondent
MR CHEN
Second Respondent
MS CHEN
Third Respondent
order made by:
HARPER J
DATE OF ORDER:
13 July 2023
THE COURT ORDERS THAT:
1.Within 28 days of the date of this order, the first respondent pay to the applicant the amount of $351,600.
2.All applications and responses be otherwise dismissed.
3.In respect of costs:
(a)Any party seeking an order for costs is to file and serve an application, affidavit in support and written submissions of no more than three pages within 21 days of the date of these orders;
(b)In the event no application is filed within the time stipulated, there will be no orders as to costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cun & Zhihui has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are property proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) between the applicant wife, Ms Cun (“wife”) and the first respondent husband, Mr Zhihui (“husband”). The proceedings were commenced by the wife in the Federal Circuit Court (as it then was) in 2015 and transferred to the Family Court of Australia (as it then was) in 2016.
The second (“Mr Chen”) and third (“Ms Chen”) respondents are two adult children of the husband from a previous relationship.
The proceedings have a long and twisted history in this Court, which has been detailed in three earlier judgments: Cun & Zhihui [2022] FedCFamC1F 597; Cun & Zhihui (No 2) [2022] FedCFamC1F 598 and Cun & Zhihui (No 3) [2023] FedCFamC1F 346 (“Cun & Zhihui (No 3)”).
The judgment in Cun & Zhihui (No 3), recorded considerable detail about the history of the proceedings and disposed of an Amended Application in a Proceeding filed by the husband on 12 April 2023. This application, which I dismissed at the start of the trial on 1 May 2023, sought a range of orders including summary dismissal of the wife’s application, my disqualification for judicial misconduct and a range of other orders. It is unnecessary, therefore, to repeat the content of those earlier judgments except as necessary in the course of these reasons.
The spouse parties were married in 2007 and separated in November 2012.
There are two children of the marriage, X born 2007 and Y born 2009. Both children reside primarily with the wife. X was born with certain abnormalities and has had a number of health problems, and continues to need special medical attention and treatment.
The husband has five children in total.
The trial commenced on 1 May 2023. The morning of the first day was taken up with hearing and determining the husband’s Amended Application in a Proceeding, the subject of Cun & Zhihui (No 3). The final hearing commenced on the afternoon of 1 May 2023, after the husband’s amended application had been dismissed.
The wife relied upon her case outline filed on 1 May 2023, and her affidavit filed 18 April 2023. She also relied upon the affidavit of Mr Q filed 24 December 2020, Mr N filed on 24 December 2020 and Mr P filed on 24 December 2020.
It is also necessary to record that the husband, who appeared through an interpreter, was asked whether he wished to read any affidavits in relation to the final hearing. Beyond repeating that in his view the limited purpose of the listing on 1 May 2023 was to determine his Amended Application in a Proceeding, which was dismissed, and referring to the affidavit filed in support of that application, which was irrelevant to the issues for determination in the final hearing, the husband did not nominate reliance upon any affidavit. I explained to him that I took the view that he did not want to read any evidence in his case. He refused to engage with this problem and preferred to keep mentioning his Amended Application in a Proceeding. Consequently, the husband read no evidence in relation to the issues raised in respect of the wife’s application for final property adjustment orders.
I was satisfied that this approach was not procedurally unfair to the husband given his protracted and obdurate refusal to engage with the necessary steps for final hearing, even when appearing at final hearing. He remained able to cross-examine and make submissions, if he chose. The husband was asked several times if he wished to cross-examine the wife or any of her witnesses. Beyond asserting I had no right to hear the case, he did not answer these questions and I proceeded on the basis that neither the wife or her witnesses were required for cross-examination by the husband. See the discussion in Morgan & Valverde (2022) FLC 94-100 at [19]–[30].
Mr Chen and Ms Chen made clear that they did not wish to cross-examine the wife or her witnesses.
Accordingly, the wife’s evidence was unchallenged.
Mr Chen and Ms Chen each read an affidavit filed on 30 April 2020. They were both cross‑examined by the wife.
ASSETS, LIABILITIES AND FINANCIAL RESOURCES AT THE DATE OF THE HEARING
The only material assets in contention and located in Australia are two parcels of real estate, H Street, Suburb E (“Suburb E”) and G Street, Suburb D (“Suburb D”). The current registered proprietor of Suburb E is Ms Chen, and of Suburb D, Mr Chen. The wife seeks relief pursuant to s 106B of the Act in respect of these properties.
The wife provided evidence that the husband owned a property in Country M at R Street, Town S, Region T. She described the address as “[U Street, Town V, Region T, City W, Country M]” (wife’s affidavit filed 18 April 2023, paragraph 66) which is not obviously the same property. However, since this was not challenged I will accept the two addresses as referring to the same property. She annexed to her trial affidavit filed 18 April 2023, a valuation of the property dated 24 January 2014. The wife made reference to past conversations in which the husband’s mother referred to the property as belonging to him. The husband denied this from the bar table, but did not challenge the wife about it. I will assume the husband owned this property valued at $286,000 in September 2015. There was no direct evidence he still owned the property in May 2023.
The wife also claimed that eBay purchases of items by the husband totalling $54,861 should be included on the balance sheet. The evidence does not satisfy me that this expenditure can be related to any existing asset of the husband and I will exclude it.
The wife also claimed that Mr Chen owes the husband $277,386. The evidence did not support this claim and Mr Chen denied it. He was cross examined and I accept Mr Chen’s evidence. I will exclude this from the balance sheet.
The wife also sought an addback of $41,852 said to be loan funds drawn down by the husband after separation, about which there was no disclosure. The evidence does not persuade me that this item should be included on the balance sheet. The wife claimed the husband has superannuation, but there is no evidence of this entitlement. She has a modest entitlement to a Country M pension payment of $3,919 and Australian superannuation valued at $5,300.
Accordingly, as at trial the assets and liabilities of the spouse parties, apart from the two properties, total $9,219. The Country M property valued at $286,000 is not susceptible to a property adjustment order under Part VIII of the Act and therefore is more appropriately considered as financial resource under s 75(2)(o) which I will come back to below.
Suburb E and Suburb D
It is then the wife’s claim that the transferred properties should be included in the balance sheet. It is necessary, therefore, to consider closely the facts relating to the transfers of those properties.
At cohabitation, both properties were owned by a company called J Pty Ltd, of which the husband was the sole director and shareholder. J Pty Ltd was incorporated in 2000. The husband provided services to commercial and private clients through J Pty Ltd. There was no evidence of any employee of J Pty Ltd other than the husband. In substance, the husband generated income through his personal efforts, employed by J Pty Ltd.
In her affidavit, the wife claimed to have provided unpaid book keeping for J Pty Ltd during the marriage.
Suburb E was purchased by J Pty Ltd in 2001 for over $140,000. Suburb D was purchased by J Pty Ltd in 2003 for over $440,000. Both properties were, thus, acquired well before cohabitation. At cohabitation, they were subject to mortgages with a combined value of $485,867.
Suburb D became the matrimonial home for the spouse parties during the marriage.
Both Mr Chen and Ms Chen gave evidence that in 2012, the husband explained at a family dinner that he wanted to transfer Suburb D to himself and the wife, and Suburb E to Mr Chen to hold on trust for all his children. He claimed he wanted to do so because his health was declining and diminishing his capacity to carry on in his work. He told them he would be unable to service the mortgage secured over Suburb D. Both exhibited some medical records, which supported the contention that the husband had health problems in 2012.
It was put to Mr Chen and Ms Chen that they were lying about the topics discussed at the dinner, that there were no discussions surrounding any mortgages, the husband’s health, or any transfer of properties. They rejected this.
The wife gave no evidence about the dinner herself, although there was no dispute that she was present. She read an affidavit by her nephew, Mr P filed 24 December 2020, who was present at the dinner. He was not cross-examined. He stayed at Suburb D from July to November 2012. His evidence was that there was a large group at dinner, comprised of the wife, the husband, the wife’s sister and “all of their children including [Mr Zhihui’s] three older children”. Mr P stated: “I did not hear [Mr Zhihui] discuss anything about property or family matters”.
Both Mr Chen and Ms Chen also claimed that about a week after the dinner, the husband told them he had asked the wife if she wanted to join him on the title of Suburb D, but she refused. In her evidence, the wife agreed that the husband put this idea to her. However, her evidence was that she agreed to the proposal, but then heard no more about it.
In his answers in cross-examination, Mr Chen gave evidence that the husband’s proposal changed, because the husband claimed the wife did not want the burden of being the subject of a mortgage and would not agree to a transfer to her of Suburb D (Transcript 1 May 2023, p.28 line 45-p.29 line 11). Consequently, the husband wanted to transfer Suburb D to Mr Chen to be held for the husband’s five children, while Mr Chen took on responsibility for the mortgage. It was put to Mr Chen that this was fanciful because at the time he was a full time student with no employment. Mr Chen claimed he helped the husband at jobs and although the property was transferred into his name “…we’re transferring the property as a family unit, so we would all support each other to service the mortgage” (Transcript 1 May 2023, p.29 lines 41-42). He later agreed he was not paid any salary by the husband, but agreed he received Austudy (Transcript 1 May 2023, p.33 lines 10-14).
In August 2012, Mr Chen purchased Suburb D for $580,000. He claimed a mortgage broker came to the property. The wife denied any knowledge of this. In any event, Mr Chen obtained a home loan of $350,000 from Z bank, secured by a mortgage over Suburb D.
The balance of the purchase was funded by a loan of $250,000 from family members. Both Mr Chen and Ms Chen gave evidence that in about August 2012 they entered into a loan agreement with relatives in Country M. A document recording the loan was signed by both Mr Chen and Ms Chen and the husband as guarantor was annexed to the affidavits of both Mr Chen and Ms Chen filed 30 April 2020. Mr Chen claimed to have repaid $35,000 between September 2017 and March 2019. The evidence showed that of this amount, about 15,000 was supported by bank statements, and the balance was said to be received in cash over the course of two trips to Country M in 2018 & 2019. Ms Chen gave evidence that she repaid $46,000 between 2017 and 2019. This was supported by bank statements.
The bank statements exhibited by Mr Chen showed that from about September 2012, substantial payments well above the monthly instalment were paid towards the Z Bank mortgage. The loan from Z Bank was repaid by April 2018 and the home loan account secured by Suburb D was closed.
The evidence did not disclose clearly where Mr Chen obtained the funds to repay the loan from Z Bank.
Mr Chen also gave evidence that he spent $135,000 to build a granny flat at Suburb D in 2015. There was no dispute the granny flat exists. He annexed a tender for the design and construction, which was dated 16 July 2015, and was addressed to the husband not Mr Chen. However, he also annexed an agreement to certify the works addressed to him, an application for a complying certificate, and a complying development certificate, both of which were also addressed to him. He gave evidence, which I accept, that he borrowed $110,000 from a family member, Mr AA, to fund the construction.
The current value of Suburb D is $1,350,000. This valuation took into account the existence of the two-bedroom granny flat as an improvement.
In mid-2012, Suburb E was transferred to Ms Chen. The transfer nominated the price as $290,000. Ms Chen gave evidence that at the time of purchase, she paid the deposit of $29,000 and stamp duty of by a combination of the first home buyer’s grant of $7,000, and borrowing the remainder from the husband. She also gave evidence that J Pty Ltd provided vendor finance for the balance of the purchase price at the time of purchase. Ms Chen gave evidence that she agreed with the husband that this loan would have to be repaid to J Pty Ltd.
Then in August 2013, Ms Chen entered into a mortgage with Westpac with a limit of $300,000. This was a fixed interest facility, with interest only payments for an initial period. Ms Chen drew a cheque payable to J Pty Ltd to repay the vendor finance. The cheque was for $250,000. The balance of the $300,000, being about $50,000, was paid into a separate offset account #...19. The offset account #...19 was used to make the monthly interest-only repayments, and pay for rates and repairs. The wife tendered bank statements (Exhibit H), which showed that from October 2013 to January 2019, interest was debited to #...19. These bank statements also showed deposits which were consistent with Ms Chen’s affidavit evidence that the interest payments were met from renting the property and a weekly contribution by the husband of about $200.
The interest only period for the loan ended in January 2019, after which principal and interest payments commenced. After January 2019, each of the husband, Mr Chen and Ms Chen contributed $250 per week to help meet the payments at least up to the date of Ms Chen’s affidavit. Mr Chen annexed bank statements showing payments by him of $250. As at April 2020, Ms Chen gave evidence that the mortgage debt was $286,000. She tendered a further bank record (Exhibit M), which showed the loan balance, as at 3 May 2023, was $245,260.24.
The current value of Suburb E is $640,000.
Both Mr Chen and Ms Chen claimed to have paid council rates, water bills and insurance for their respective properties since 2012. They annexed rates notices and bills for other utilities supporting this.
Ms Chen annexed a declaration of trust in favour of the husband’s five children over Suburb E dated 19 November 2012.
It can be seen that according to their evidence, J Pty Ltd received a total of $870,000 as consideration, by reason of the purchases by Mr Chen and Ms Chen of the two properties.
J Pty Ltd was deregistered in November 2013, but reinstated by consent order of this Court in November 2019.
PROPOSALS
The wife’s proposed principal relief was as follows:
1. A declaration that the Third Respondent ([Ms Chen]) holds the whole property known as folio […] also known as [H Street, Suburb E] NSW […] (the “[Suburb E] Property”) on trust for the benefit of the Applicant and First Respondent or in the alternative on trust for [J Pty Ltd] (the “Company”) such that it forms part of the asset pool of the marriage.
…
2. A declaration that the Second Respondent ([Mr Chen]) holds the whole property known as folio […] also known as [G Street, Suburb D] NSW […] (the “[Suburb D] Property”) on trust for the benefit of the Applicant and First Respondent or in the alternative on trust for [J Pty Ltd] ( the “Company”) such that it forms part of the asset pool of the marriage.
…
3. A declaration that the properties mentioned at paragraphs 1 and 2 form part of the matrimonial property of the Applicant and First Respondent.
4(a) In so far as the orders or declarations at 1 to 3 do not provide for the following an order under section 106B(1) of the Family Law Act that the transfer and disposition and any associated instrument associated with such transfer and disposition of the [Suburb E] Property by the Company at the hands of the First Respondent to the Third Respondent be set aside and the [Suburb E] Property be treated as an asset of the family pool.
4(b)In so far as the orders or declarations at 1 to 3 do not provide for the following an order under section 106B(1) of the Family Law Act that the transfer and disposition and any associated instrument associated with such transfer and disposition of the [Suburb D] Property by the Company at the hands the the First Respondent to the Second Respondent be set aside and the [Suburb D] Property be treated as an asset of the family pool.
There follows a number of usual or standard consequential orders which need not be set out.
Overall, the wife claimed a percentage division of assets in her favour of 70 per cent.
ISSUES IN DISPUTE
Consequently, the issues to be determined are:
(a)Whether there is any basis to declare the existence of a trust over either Suburb E or Suburb D in favour of the spouse parties or J Pty Ltd;
(b)Whether the Court’s discretion under s 106B is enlivened with respect to the dispositions of either Suburb E or Suburb D to the second and third respondents, and if so whether it should be exercised; and
(c)On an assessment of contributions, what are the entitlements of the parties.
THE LAW
Part VIII of the Act sets out the legislative provisions relating to property orders that may be sought when parties are or were married. The central provision is s 79 of the Act, which gives the court power to make such orders for alteration of property interests as it considers appropriate.
Section 79(2) of the Act provides that:
The court must 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.
Section 79(4) of the Act set outs the factors to be taken into account in considering what order, if any, should be made.
APPROACH TO BE TAKEN
In property proceedings under the Act, parties generally rely upon the “four step process” set forth in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 in the determination of an application under s 79, as follows:
1.Identify and value, the parties' property, liabilities and financial resources at the date of the hearing;
2.Identify and assess the contributions of the parties as referred to in s.79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
3.Identify and assess the other factors relevant including, the matters referred to in s.75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4. Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
In Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) the High Court made clear at [37] it is necessary to begin consideration of whether it is just and equitable to make a 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 Full Court in Bevan & Bevan (2013) FLC 93-545 (“Bevan”) at [72]–[73] has held that the decision in Stanford has not overruled the four step approach.
Stanford also made clear that the requirement pursuant to s 79(2) that it would be just and equitable to make orders altering property should not be conflated with the requirements of s 79(4). The High Court further stated at [39] that the question of whether it is just and equitable to make an order “is not to be answered by assuming that the parties’ rights or interests in marital property are or should be different from those that then exist”, in other words, at the time when the discretion may be exercised.
The High Court has held that the very fact of separation may lead to the ready satisfaction of just and equitable requirement: Stanford at [41]–[42]. In most cases, “the court will not need to discuss the s 79(2) issue, because the cases will be conducted on the basis of acceptance by the parties that it is just and equitable to make some form of adjustment”: Fielding and Nichol [2014] FCWA 77 at [43]. But here, as I understood his position, the husband did not accept that any adjustment should be made. The court must also be satisfied that its proposed final orders are themselves just and equitable. I will return to this question later in these reasons.
I see no basis for the declarations of a trust sought by the wife. She made no submissions to explain how the alleged trust was said to arise in favour of the spouse parties.
I come then to the wife’s claim to relief pursuant to s 106B of the Act.
The wife made submissions in writing. She argued the transfers to Mr Chen and Ms Chen were “sham”, they were not bona fide purchasers for value, while the transfers were either intended to, or irrespective of their intention were likely to, defeat anticipated orders of this Court. It was the wife’s case that in truth, both properties remained property “of” the husband, and Mr Chen and Ms Chen were no more than his puppets.
I do not accept the wife’s argument that the transfers from J Pty Ltd were a “sham”. The legal meaning of “sham” has been explained by the High Court as referring to “steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences”: Equuscorp Pty Ltd and Another v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at [46]. I am satisfied the respondents all intended the transfers to Mr Chen and Ms Chen to have their ostensible legal effect. The borrowing by each of Mr Chen and Ms Chen from reputable banks and the expenditure on the granny flat at Suburb D satisfy me that it was the intention of the husband, Mr Chen and Ms Chen that ownership of each property should be transferred to Mr Chen and Ms Chen.
Before turning to the terms of s 106B of the Act, I find that J Pty Ltd was the “alter ego” of the husband, and while it held the properties, they were property of the husband and fell within the expressions “property of a party to the marriage” in the definition of “property settlement proceedings” in s 4 and the expression “property of the parties to the marriage” in s 79 of the Act. In particulars given in her contended Minute of Orders, the wife made this allegation. The evidence supports this conclusion. It was undisputed that the husband was the sole director and shareholder of J Pty Ltd, its sole employee and consequently all its revenue was a result of his personal exertions. Accordingly, J Pty Ltd and the husband can be treated as one and the same: AscotInvestments Pty Ltd v Harper (1981) 148 CLR 337 at 354–355. The property of J Pty Ltd was “property controlled by a party to the marriage [the husband] where the control is such as to put the party in the same position as if he or she were the owner of the property”: Public Trustee v Smith (2008) 1 ASTLR 488 at [125]: Harris & Dewelland Anor (2018) FLC 93-839 at [53].
The consequence of this conclusion is that by reason of the transfers, J Pty Ltd received $870,000 prior to its deregistration in late 2013. This amount should, therefore, be treated as received by the husband. But it must also be remembered that the High Court in Stanford at [39] made clear there is no “community ownership” of assets between spouse parties arising from marriage. Absent some properly based intervention by this Court or other court order, the husband was entitled to deal with the two properties as he wished. The receipt of the proceeds of the transfer to Mr Chen and Ms Chen however raise different issues, which I deal with below.
Section 106B
Section 106B is relevant in the following terms:
Transactions to defeat claims
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1A)…
(1B)…
(2)The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4)A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
(4AA) An application may be made to the court for an order under this section by:
(a) a party to the proceedings; or
(b) a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the instrument or disposition were made; or
(c) any other person whose interests would be affected by the making of the instrument or disposition.
(4A) In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).
(5) In this section:
"disposition" includes:
(a) a sale or gift; and
(b) the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.
"interest" :
(a)in a company includes:
(i) a share in or debenture of the company; and
(ii) an option over a share in or debenture of the company (whether the share or debenture is issued or not); and
(b) in a trust includes:
(i) a beneficial interest in the trust; and
(ii) the interest of a settlor in property subject to the trust; and
(iii) a power of appointment under the trust; and
(iv) a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and
(v) an interest that is conditional, contingent or deferred.
As can be seen, s 106B(3) requires the Court to have regard to, and make necessary orders protecting, the interests of bona fide purchasers or “other person interested”. Section 106B(4A) empowers the Court to do any or all of the things listed in s 80(1) of the Act, which include ordering the payment of sums of money, the execution of necessary deeds or instruments, the appointment or removal of trustees and imposition of conditions.
It is long settled that the test of bona fides is whether the purchaser at the time of the disposition was aware, or should have been aware by making due inquiry, that the disposition would be likely to defeat the claim: Heath and Heath (No. 2) (1984) FLC 91-517 at 79,191; D and D [Section 85 application] (1984) FLC 91-593 (“D and D”); Elias & Elias Pty Ltd atf the Elias Family Trust v Antoun Toufic Chidiac [2010] NSWSC 1364 at [15].
It is also well established that an applicant under s 106B must obtain a favourable answer to four central questions:
(1)Are there “proceedings under the Act?”;
(2)Is there an “instrument or disposition?”;
(3)Is the instrument or disposition made or proposed to be made by or on behalf of a party, or by direction of a party, or in the interest of a party?; and
(4)Is the instrument or disposition:
(a)made or proposed to be made in order to defeat an existing or anticipated order in the proceedings; or
(b)irrespective of intention, likely to defeat any such order?
I accept that there are proceedings under the Act and each of the dealings in respect of which the wife seeks relief meets the definition of a “disposition” for the purposes of s 106B. Since each disposition was made between the husband and either Mr Chen or Ms Chen, I also accept each was made “by or on behalf of, or by direction or in the interest of, a party” to the proceedings.
The fourth question raises the central difficulties. It requires consideration of intention, or, irrespective of intention, the impact or likely impact of the impugned disposition. It posits two situations. To fall within the first, it is necessary for the applicant to establish the existence of intention on the part of the party disposing of the asset to defeat an existing or anticipated order. To fall within the second, it is not necessary for the applicant to establish intention on the part of the party disposing of the asset. Rather, the requirement is to establish the likelihood of an existing or anticipated order being defeated by the disposition at the time it was made: Heath and Heath; Westpac Banking Corp. (1983) FLC 91-362 at 78,425 per Nygh J; D and D at 79,777 per Gee J; Bourke v Bourke (Final Hearing Costs) (2010) 43 Fam LR 139 at [45]; Haseloff & Kormann [2013] FamCA 1019 at [58]; Riemann & Riemann (No 3) [2017] FamCA 911 at [39]–[46] (“Riemann”).
In Chiefley & Ha [2017] FamCA 683 at [57], (“Chiefley”) Rees J pointed out that the applicant must show an order for property settlement was actual or anticipated at the time of the impugned disposition, and the disposition is likely to defeat an order for property settlement. In Grech v Deak-Fabrikant (No 3) [2015] VSC 581 at [400] (“Grech”), Daly AJ, after discussion of the authorities, held:
(a)it is necessary to establish a causal connection between the transaction and the defeat of the order;
(b)an order must be objectively foreseeable, not just a claim;
(c) the transaction must be foreseeably likely to defeat that order; and
(d) “anticipated” means “expected” or “reasonably probable” according to an objective test.
There was no relevant existing order under consideration in this case. The debate focussed on “anticipated” orders.
In relation to the second situation posited by s 106B(1), where intention is not required, McClelland J (as he then was), after consideration of the authorities including Chiefley and Grech, held in Riemann at [49]:
Accordingly, in order to satisfy the requirements of the second leg of section 106B(1) it is necessary for the applicant to establish:
•the transaction must be foreseeably likely to defeat the order or anticipated order, where ‘anticipated’ means ‘expected’ or ‘reasonably probable’ according to an objective test; and
•That there is a causal connection between the transaction and the defeat of the order or likely defeat of the order as opposed to the order being defeated by a supervening event.
In the frequently cited decision, Halabi v Artillaga (1994) FLC 92-470 at 80,885, Nicholson CJ set out the correct approach to the application of the section as follows:
… I think that the proper approach is to first determine whether the requirements of ss (1) have been satisfied, and if so, to treat the disposition as not having been made for the purpose of arriving at an appropriate order pursuant to s 79, and then having done so, to determine whether, having regard to the rights of the bona fide purchaser or person interested under ss (3), a discretion should be exercised to set the instrument or disposition aside. The exercise of such a discretion may well depend upon whether if this is not done there are sufficient funds available to the party who has made the disposition to satisfy the order without setting the instrument or disposition aside.
The wife made submissions to the effect that both dispositions were deliberate and collusive arrangements to remove assets from the matrimonial pool to deny the wife her entitlement. These submissions invite the Court to find that the husband, Mr Chen and Ms Chen intended to defeat anticipated orders of the Court in August and September 2012. Both Mr Chen and Ms Chen denied they intended to defeat any order of the Court. The wife’s case alleged ultimately that the husband remained the “true” owner of the properties and Mr Chen and Ms Chen conspired with him to hide this truth.
As noted, their evidence was that the husband told them in 2012 he offered to place the wife’s name on the title to Suburb D but she refused. As mentioned above, the wife’s evidence was consistent with this to the extent that she agreed the husband made this offer, but on her version, she heard nothing further. The wife invites the Court to find Mr Chen and Ms Chen were mendacious witnesses. She set the parameters of her argument to a high evidentiary standard, asking the Court to find that the series of transfers to Mr Chen and Ms Chen, and manner in which the transfers were financed constituted a “round robin” which in truth left the properties in the ownership of the husband.
I reject the wife’s arguments in this regard. On balance, I accept the evidence of Mr Chen and Ms Chen. I do not accept they are mendacious. I find that in 2012, the husband intended to transfer Suburb D into the name of himself and the wife. I am unable to determine why this did not happen, but the wife’s reluctance to be subject to mortgage obligations is neither implausible, nor so implausible as to destroy the credit of Mr Chen and Ms Chen. The fact that Mr P did not hear the husband make any reference to property matters or transfers at the dinner in 2012 does not exclude the possibility that he spoke to Mr Chen and Ms Chen about those matters on that occasion. The way in which Mr Chen and Ms Chen organised finance to make payments to J Pty Ltd as vendor is plausible and their youth and modest incomes were not factors which prevented to finance being obtained from reputable financial institutions. The fact that J Pty Ltd appears to have provided “vendor finance” is not inconsistent with this, nor is the fact that the husband help pay the deposit for Suburb E or made a contribution to cover repayments for both properties after transfer. I accept the proposition that the transfers were viewed as a family arrangement to which family members including the husband contributed in accordance with their cultural background. Family arrangement are often untidy and may be carried out in a manner which unlikely in a more commercial context, but this does not render them illegitimate or necessarily demonstrate the presence of the intention necessary to satisfy s 106B(1).
The wife asked the Court to infer from the objective fact of the proximity of the transfers to the date of separation that, as at the date of the transfers in August and September 2012, an order of this Court was objectively ‘expected’ or ‘reasonably probable’, and, as I understood it, from the fact of the transfers themselves as well as the manner in which they were financed.
She gave unchallenged evidence that she knew nothing about the transfers at the time they were made. But she also gave no evidence that at that time there was any basis to conclude that the separation was likely or the marriage was faltering, leading not only to a claim under Part VII of the Act, but an objectively and reasonably probable order. Indeed, the fact that the husband raised with her the possibility of transfer of Suburb D to the spouse parties themselves jointly in 2012, suggests the contrary, even if either she refused or the husband changed his mind. According to her own evidence, she was agreeable to the husband’s proposal, which is more consistent with the spouse parties remaining in a co-operative relationship in 2012.
The wife herself gave little evidence, despite claiming to agree with the husband’s suggestion about Suburb D, of what happened between mid-2012 and 18 November 2012; for example, she gave no evidence that she took any step to follow up the husband or ask him what was happening about the transfer. Nor did her evidence explain how the position between the spouse parties went from the husband offering to transfer to her an interest in Suburb D in 2012 to the ending of the marriage on 18 November 2012. I observe that any evidence from the wife in this regard would have been uncontested by reason of the attitude of the husband to the final hearing, mentioned above.
It is open to infer that, despite the wife’s agreement, the husband unilaterally changed his mind, and based on that inference to further infer that the marriage was faltering. But the wife did not submit this is what happened, and she was well placed to give evidence about the state of the marriage at the date of the transfers. It is equally open to infer that the reasons for separation, and otherwise the basis to conclude an order of this Court was objectively likely or probable, arose after the date of the transfers. Bearing in mind that separation took place on 18 November 2012, and there is no evidence of the circumstances surrounding, or the reasons for, separation, the evidence therefore does not support such a conclusion. The wife bears the onus of establishing that at the date of the transfers, an order of this Court was objectively expected or reasonably probable so as to satisfy s 106B(1) whatever the husband’s or respondents’ intention or irrespective of intention. I am unable to find that any order of this Court was objectively anticipated at the time the transfers were made. Section 106B(1) is not satisfied.
Therefore, there is no discretion to set aside the dispositions and Suburb D and Suburb E do not form part of the balance sheet between the spouse parties.
Even if this conclusion is wrong and the discretion is taken as enlivened, I would not exercise it as the wife seeks. I find that for the same reasons given above Mr Chen and Ms Chen were both bona fide purchasers and “persons otherwise interested” within s 106B(3). They both entered into legitimate mortgages to pay for the properties, at least in part. I am satisfied that there were family loans from Country M. I do not accept that there was a “round robin” of payments whereby the husband remained solely in control of the properties, as the wife contends. Mr Chen has spent money on Suburb D to construct the granny flat which I infer has added to its present value, although to an indeterminate extent. The increase in value since separation in 2012 has been significant. Suburb E remains subject to substantial mortgage of about $245,260.24. It relevant also to the question of any exercise of discretion to take account of the fact that since separation there is no evidence that the wife has made any contribution towards either property.
The result of refusing any relief pursuant to s 106B is that the actual assets of the parties in Australia are limited. J Pty Ltd was deregistered in late 2013. I infer from this fact that the husband must have received $870,000 before that date. Such an inference is grounded in the clear evidence of Mr Chen and Ms Chen and goes well beyond speculation (Aitken & Aitken (2023) 66 Fam LR 314 at [74]–[75] (“Aitken”)).
The discretion in s 79(1) is to make orders dividing existing property of the parties to the marriage. It appears at first blush that the husband has insufficient property in his own name that would enable him to comply with any orders: see Monte and Monte (1986) FLC 91-757 at 75,537 and 75,540 (“Monte and Monte”); Shan & Prasad [2018] FamCAFC 12 at [130]; Aitken at [64].
In Milankov and Milankov (2002) FLC 93-095 at [115] Kay J said:
In my view, the law is well settled. The Court cannot make an order for the alteration of property interests that extends beyond the available assets of the parties (see Walters v Walters (1986) FLC 91-733, 10 Fam LR 1006; Evans v Public Trustee (1991) FLC 92,223, 14 Fam LR 646; and Grace v Grace (1998) FLC 92-792, 22 Fam LR 442. However, this restriction does not require the Court to be able to clearly identify those assets (see Briese and Briese (1986) FLC 91-713, 10 Fam LR 642; Weir and Weir (1993) FLC 92-338, 16 Fam LR 154; Giunti and Giunti (1986) FLC 91-759, 11 Fam LR 160; Mezzacappa and Mezzacappa (1987) FLC 91-853, 11 Fam LR 957; Black and Kellner (1992) FLC 92-287, 15 Fam LR 343; and Monte and Monte (1986) FLC 91-757).
In Gollings and Scott (2007) FLC ¶93–319 after citing this passage from Milankovic, the Full Court held at [85]:
The case law as developed establishes that generally an alteration of parties’ interest in property under s 79 is to be made out of their identified property at trial. Exceptions are recognised to this general principle, for example, in the cases involving failure to make a full and frank disclosure of assets where the property at the date of trial cannot be precisely ascertained (see Weir and Weir (1993) FLC 92-338; (1992) 16 Fam LR 154; Chang v Su (2002) FLC 93-117; (2002) 29 Fam LR 406)…
In the circumstances of HDM & MM [2006] FamCA 47, the Full Court said at [27]:
There is a distinction between cases where the inadequacy of disclosure suggests the likelihood of undisclosed assets or income, and those where, despite such inadequacy, there is no real basis for so concluding. The present case falls into the latter category, as the quantum and fate of the inadequately disclosed funds were not in doubt at the conclusion of the trial, and the husband's inadequate disclosure was not suggested to have been deliberate, or calculated to deceive.
Despite the fact that I find the husband received the proceeds of the transfers over ten years ago, he has given no evidence of how these funds were used by him or disbursed. Their fate is unknown. His disclosure in this regard is inadequate, and, unlike the position in HDM I find he deliberately refused to engage with the Court’s processes to bring the proceedings to final hearing. This resulted in his failure to lead evidence which had the effect of denying to the Court any proper understanding of his current assets.
As McEvoy J explained in Stamatou & Stamatou (2022) 66 Fam LR 139 at [33]:
… If it is established that there has been a deliberate non-disclosure by a party then the Court should not be unduly cautious of making findings in favour of the other party, and it is open to the Court to find that an indeterminate undisclosed amount is held by one of the parties and to make such property orders without reference to the overall pool: see Weir at Fam LR 158; FLC 79,593-4: see In the Marriage of D & Chang and Su (2002) 29 Fam LR 406; (2002) FLC 93-117; [2002] FamCA 156 at [70] (Chang and Su).
In the circumstances I also find that there exists property of the husband, about the value of which I can only conclude on the limited evidence, is no less than $870,000: Monte and Monte at 75,540; Chang v Su (2002) FLC 93-117 at [65] and [72]. This is not “adding back” notional property to the balance sheet. It is a factual finding about which the Court feels actual persuasion.
I turn then to the contributions of the parties.
CONTRIBUTIONS
Section 79(4) sets out the considerations to be taken into account by the Court in determining what property adjustment order (if any) should be made
In accordance with s 79(4) of the Act, it has been settled for many years that the court must consider all the contributions, both financial and non-financial, to the acquisition, conservation, and improvement of the parties’ assets, as well as to the welfare of the family during cohabitation and after separation. The Court must consider the contributions in an overall sense: Norman & Norman [2010] FamCAFC 66; Kowalski and Kowalski (1993) FLC 92-342; G and G (2000) FLC 93-043. A broad approach is preferred, rather than reference to precise mathematical calculations: Burke and Burke (1981) FLC 91-055, although an evaluation of each party’s respective contributions is necessary: JEL and DDF (2001) FLC 93-075.
In Zaruba & Zaruba [2017] FamCAFC 91 (“Zaruba”), the Full Court considered a situation in which there had been a long period of separation, and on no view of the evidence could it be said any express or implicit assumptions arising from the relationship underpinned the acquisition, preservation or improvement of a specific piece of property. The Full Court said in relation to the s 79(2) question:
38. In the vast majority of cases, it will be appropriate to address the s 79(2) question by ascertaining the legal and equitable interests in property without making distinctions between individual assets. That is because the “express and implicit assumptions that underpinned the existing property arrangements” can be seen to apply (to the extent and degree to which they do apply) to all of the property of the parties or either of them, including property in which the legal interests vary.
39. However, the position is likely to be different in circumstances where, as here, the characteristics of the property and the circumstances of its acquisition, improvement and the like can be seen to differ significantly and where, as here, the parties’ relationship had taken on quite different characteristics during the period to which the s 79 inquiry is directed.
In Holland & Holland (2017) FLC 93-798, the Full Court approved the citation from Zaruba above, and said:
31. Thus, the nature of a particular interest or interests in property and when and how it was acquired, utilised, improved or preserved may be very relevant to each or all of three central questions: should a s 79 order be made at all; whether contributions should be assessed “globally” or “asset by asset” or by reference to two or more “pools”; and, what is the nature and extent of each party’s contributions. However, there is no basis for excluding from consideration any property in which the parties have an existing legal or equitable interest.
32. Importantly, while it might be convenient to describe property by reference to a characteristic (for example, as an “inheritance” or “post-separation” or “after-acquired” property), its place within the ambit of s 79 is determined by the fact that it exists as a legal or equitable interest of the parties to the marriage or either of them and that the nature, form and characteristics of it and the contributions of all types made by the party suggest that it should be treated in a particular way.
33. The consideration of the three central questions earlier referred to call in each case for the exercise of discretion by a trial judge. That discretion is exercised not by reference to whether property might conveniently be described as “an inheritance” or “after-acquired” but, rather, by reference to the nature, form and characteristics of the property in question and the nature, form and extent of the parties’ contributions of all types across the entirety of their relationship.
(Footnotes omitted)
There is no requirement to establish a causal link between any piece of property and a particular contribution, because the Court is required to assess contributions of all types, both direct and indirect, to the acquisition, conservation or improvement of property of either party to the marriage: Dickons v Dickons (2012) 50 Fam LR 244 at [15]–[18] (“Dickons”).
The Full Court made clear that the requirements of s 79 of the Act are met in Dickons :
21. …by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79. That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640-641 “...where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property...” or is it, for example, a union where parties lived very separate domestic and financial lives?
See also: Jabour & Jabour (2019) FLC 93-898 at [31]–[87] (“Jabour”); Horrigan & Horrigan [2020] FamCAFC 25 at [35]–[49]; Barnell & Barnell (2020) FLC 93-961 at [30]–[43] (“Barnell”); Benson & Drury (2020) FLC 93-998 at [35].
Where there has been a marriage of short duration, an asset by asset approach may be warranted. In Penner & Conroy (No 2) [2021] FamCA 411, I said the following about the differing approaches, which I adopt:
88. Clearly it is the circumstances of the case which primarily determine which approach may be preferable and either approach should yield a similar just and equitable outcome. While a global approach is often preferable, generally speaking, the asset by asset approach may be appropriate in cases where the nature of the financial relationship of the parties during the marriage was such that they treated some property as exclusively the property of one party to which the other party made no contribution: Zyk and Zyk [1995] FamCA 135; (1995) FLC 92-644 at 82,509-10.
89. While other cases, in which a choice between the approaches has been considered, do tend to turn on their own facts, they are helpful giving some insight into common issues where an asset by asset approach has been adopted. For example, in Elliott & Elliott [2007] FamCA 1232, O’Reilly J adopted a two pool approach by treating separately a garage property owned by the wife for the following reasons at [28]:
... (1) the wife owned it before the parties’ cohabitation and marriage; (2) it was, and remained throughout the parties’ cohabitation and marriage, a separate or exclusive interest of the wife, in that it did not become “mixed” into the parties’ financial affairs during the period of their cohabitation and marriage; (3) the period of the parties’ cohabitation and marriage was short; and (4) the husband made no contribution to this asset.
90. In Ashforth & Ashforth [2012] FamCA 621, Fowler J determined that an asset by asset approach was appropriate because the Court was faced with a short marriage of approximately 18 months, and the pre-existing assets and liabilities of the parties were kept in basic form as to the father during the marriage. In Keirn & Moxey [2017] FamCA 487, Rees J took an asset by asset approach by quarantining from the global pool a specific property owned by the wife to which the husband made no contribution. In that case, the parties married in 2006 and separated in 2014.
91. However, a short marriage of itself does not determine that an asset by asset approach should be adopted; it is but one factor which may weigh in favour of such an approach: Zagari & Habib [2010] FamCAFC 159 at [83]; Greer & Mackintosh [2013] FamCAFC 16 at [101].
The husband made a large initial contribution of the two properties. Otherwise, the financial records of J Pty Ltd for June 2007 show that its assets included very little cash, the two properties and unappropriated profit of $50,263, which must have accrued by the personal exertions of the husband. The wife had $10,000 in cash. During the marriage, the husband provided income through J Pty Ltd while the wife made contributions as parent and homemaker. The parties held a joint account during the marriage into which Centrelink payments for the mother were made.
In relation to Suburb D, according to the wife’s evidence, the spouse parties adopted an attitude of practical union, because it became the matrimonial home for some five years. The position in relation to Suburb E was different. It was an investment property brought to the relationship by the husband, to which the wife made no contribution.
If J Pty Ltd, and thus the husband, retained both properties, I would conclude that an asset by asset approach would be more just and equitable in the circumstances of this case in relation to Suburb D and Suburb E. However, Suburb D was joint in the sense of being the former matrimonial home, both properties have been sold to Mr Chen and Ms Chen, the husband has received the proceeds of sale through J Pty Ltd, and has failed to disclose what he did with those proceeds and his current financial position. I conclude that a global approach to contributions should be adopted.
During the marriage and after separation, the wife has made a far greater contribution to parenting the parties’ children, as sole carer for them and meeting their expenses.
(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.
The husband paid a total of $17,436 in child support between November 2012 and April 2023.
ASSESSMENT OF CONTRIBUTIONS
The only material assets of either spouse parties were the two properties during the marriage. The husband purchased these properties prior to the marriage, and brought them to the relationship. The marriage was relatively short. I am unable to find on the wife’s evidence that the marriage constituted a practical union of both lives and property, despite her claim in her trial affidavit that from the commencement of the marriage “we had joint finances”. She did not give any detail supporting this conclusion.
At the time of separation, there was no direct evidence of the value of the two properties but the husband ultimately received $870,000, as explained. He gave no evidence about how these funds were disbursed by him.
The wife gave unchallenged evidence that during the marriage she had of the children of the relationship and took care of the husband’s children from his previous relationship. She has had the sole care of the children since separation and made payments for their care. She performed home duties. She obtained a qualification between 2010 and 2011, studied English, and trained in care services. Between May 2020 and July 2012 the wife undertook unpaid book keeping and administration work for J Pty Ltd.
It is clear that both properties have increased significantly in value since separation, over a period of ten years. I do not consider this increase in value plays any part in the adjustment of property interests of the spouse parties. Firstly, as I have found these properties do not form part of the matrimonial pool. Secondly, and to the extent it is relevant, the capital gain in value of a piece of real estate as the result of rezoning or external market forces is in the nature of a windfall, for which neither party can take full credit, with the increase generally being a contribution by both parties: Hurst & Hurst (2018) FLC 93-851 at [26]; Whiton & Dagne (2019) FLC 93-923 at [34]; Jabour at [44]–[47] and [84]; Barnell at [41]–[42]. But here, the increase in value is as much a result of the properties being held, improved and conserved by Mr Chen and Ms Chen and subject to market forces, by payments they have made towards the mortgages secured against both properties and in the case of Suburb D, the construction of the granny flat, as any contributions by the spouse parties. There is no suggestion the wife made any contribution the properties after they were transferred to Mr Chen and Ms Chen.
I therefore assess the contributions 15 per cent in favour of the wife and 85 per cent in favour of the husband.
I now turn to s 79(4)(e) and the s 75(2) factors.
S 79(4)(E) THE MATTERS REFERRED TO IN SUBSECTION 75(2) SO FAR AS THEY ARE RELEVANT
The Act requires me to take into account the matters referred to in s 75(2) of the Act, so far as they are relevant, when considering what orders should be made in these proceedings. As disclosed in the arguments of the parties, the following matters are relevant.
The wife is 50 and the husband 61 years of age. The wife has casual employment earning $770 per week. The husband ceased his business and has some health problems which undermine his earning capacity.
The wife pays rent for accommodation for her and the children. The husband resides at Suburb D.
The assets of the parties have been discussed, and findings are made above. However, I take account here of the likelihood that the husband owned at one time after separation, and possibly still owns a property in Country M worth $286,000 in 2015. The evidence does not permit any safer conclusion.
Conclusion
There should be an adjustment in the wife’s favour of 25 per cent for s 75(2) factors.
The wife is entitled to 40 per cent of the Australian property pool, excluding Country M assets. The wife should receive a cash payment from the husband. While the evidence does not allow the Court to identify assets of the husband from which this payment can be made, I have found for the reasons given that he has assets of no less than $870,000, while the wife has no material assets in Australia. He has not provided any evidence of his current financial position despite being given the opportunity to do so. He possibly also holds a property in Country M. The proposed order is an example of the type of exception referred in Gollings and Stamatou where an order cannot be made out of identified property, because the overall pool cannot be fully identified. Forty per cent of $870,000 is $351,600. The will be ordered to pay this amount to the wife and she will otherwise retain her other property including the Country M pension.
WHETHER THE PROPOSED ORDERS ARE JUST AND EQUITABLE
Section 79(2) of the Act provides that:
The court must 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.
Although the parties agree that it would be just and equitable to make an order adjusting their property interests, s 79(2) requires the Court to be satisfied the proposed order itself is just and equitable: Manolis & Manolis (No 2) [2011] FamCAFC 105 at [65]–[66].
The High Court in Stanford commented on the meaning of “just and equitable” as follows:
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.
(footnotes omitted)
I am satisfied that a payment of $351,600 to the wife, together with her Country M pension is a just and equitable outcome. It can be seen to achieve substantial justice relative to the subject non-disclosure of the husband: Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC 94-006 at [87]. The husband has had the benefit of the $870,000 since about 2013. I do not consider it just and equitable to calculate an entitlement for the wife by reference to the present value of the properties, which have been owned by Mr Chen and Ms Chen for more than a decade, and to which the wife has made no direct contribution since separation.
COSTS
I will order that any party who seeks costs to file the relevant application within 28 days of these orders.
CONCLUSION
For all the foregoing reasons I am satisfied the orders set out at the commencement of these reasons should be made.
I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 13 July 2023
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