Feng & Hong
[2022] FedCFamC1F 164
Federal Circuit and Family Court of Australia
(DIVISION 1)
Feng & Hong [2022] FedCFamC1F 164
File number(s): MLC 9277 of 2015 Judgment of: WILLIAMS J Date of judgment: 18 March 2022 Catchwords: FAMILY LAW – PROPERTY – Where the husband seeks orders adjusting their respective property interests but the wife seeks orders that no adjustment be made – Whether it is just and equitable to adjust property interests of the parties – Consideration of factors relevant to the exercise of discretion – Application of Stanford – Consideration of s 79(4) and s 75(2) factors – Consideration of legitimacy of husband’s loans and which assets/liabilities should be included/excluded from the property pool – Lack of disclosure – Similar quantum of Australian and overseas assets – Held, it is not just and equitable to exercise discretion to alter the property interests of the parties – Wife to retain Australian assets and husband to retain overseas assets – Discussion of alternative approach. Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75, 79
Cases cited: AJO & GRO [2005] FamCA 195
Bevan & Bevan [2013] FamCAFC 116
Bevan & Bevan [2014] FamCAFC 19
Chancellor & McCoy [2016] FamCAFC 256
Chang & Su [2002] FamCA 156
Dickons & Dickons [2012] FamCAFC 154
Fielding & Nichol [2014] FCWA 77
Gould & Gould [2007] FamCA 609
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378
In the Marriage of Hickey [2003] FamCA 395
Kannis & Kannis [2002] FamCA 1150
Stanford v Stanford (2012) 247 CLR 108
Trevi & Trevi (2018) FLC 93-858
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447
Division: Division 1 First Instance Number of paragraphs: 308 Date of hearing: 29 November – 2 December 2021 Place: Melbourne Counsel for the Applicant: Dr Ingleby Solicitor for the Applicant: Kordos Lawyers Counsel for the Respondents: Mr Puckey QC Solicitor for the Respondents: Kennedy Partners ORDERS
MLC 9277 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR FENG
Applicant
AND: MS HONG
First Respondent
MS FENG
Second Respondent
order made by:
WILLIAMS J
DATE OF ORDER:
18 march 2022
THE COURT ORDERS THAT:
1.The husband's Further Amended Initiating Application filed 19 November 2021 is dismissed.
2.Within 7 days of the date of this order, the husband do all such acts and things, and sign all such documents, as may be necessary to withdraw, at his expense, caveat number … registered against the titles of the following properties:
(a)C Street, Suburb D in the State of Victoria;
(b)Unit 1, E Street, Melbourne in the State of Victoria; and
(c)Unit 2, E Street, Melbourne in the State of Victoria.
3.Pursuant to section 106A of the Family Law Act 1975 (Cth), in default of the husband complying with order 2 hereof, a solicitor as nominated by the wife from Kennedy Partners (“the wife’s solicitor”) be appointed to sign all such documents on behalf of the husband and do all such acts and things in the name of the husband as may be necessary to give effect to order 2, upon the wife’s solicitor filing with the court an affidavit deposing to the default by the husband.
4.Within 28 days of the date of this order, the husband do all such acts and things, and sign all such documents, as may be necessary to:
(a)Assign to the wife or her nominee any monies which may be payable to the husband by F Pty Ltd ATF the Feng Family Trust and any monies that may be standing to the credit of the husband in the accounts of the Feng Family Trust and/or F Pty Ltd; and
(b)Relinquish any right or entitlement which he may have in F Pty Ltd and/or the Feng Family Trust.
5.Within 28 days of the date of this order, the second respondent do all such acts and things, and sign all such documents as may be submitted to her by the husband, to transfer to the husband, at the husband's expense, all her right title and interest in the property situate at and known as Unit 1 and Unit 2 G Street, City H, J Region, Country K.
6.Unless otherwise specified in these orders and save for the purposes of enforcing the payment of any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action and superannuation benefits) in the possession or legal or beneficial ownership of such party as at the date of this order;
(b)Any monies standing to the credit of the husband and the wife in any joint bank account are to become the property of the wife and the husband and the wife do all such acts and things and sign all such documents as may be necessary to close any such bank account;
(c)All insurance policies belonging to the husband or the wife shall remain the sole property of the owner named thereon;
(d)Each party be solely liable for any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
7.All extant applications are dismissed.
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 Feng & Hong has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILLIAMS J
INTRODUCTION
This is an application for property adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) ("the Act"). The husband seeks an adjustment of property between the parties, which is opposed by the wife because it would not be just and equitable to do so.
The husband is aged 82, is retired and lives in City L. The wife is aged 72, is retired and lives in Australia.
According to the wife’s trial affidavit, the parties commenced a relationship in 1974/1975 and married in 1976. Their marriage was registered in City L in 1977. According to the husband’s trial affidavit, the parties married and commenced cohabitation in 1976. The husband asserts they separated in 2014 and the wife asserts they separated in 1996. The husband relocated to City L in 1996 (in accordance with my finding) and the wife and three children remained living in Australia. The husband contends the family unit remained intact between 1996 and 2014, notwithstanding the parties lived in different countries, whereas the wife contends the parties led separate lives, including separate finances, after the husband’s return to City L.
The second respondent, Ms Feng (“Ms Feng”), is the parties daughter who is the registered proprietor of the City H property and did not seek to actively participate in the trial other than she swore an affidavit on behalf of the wife and was cross-examined. She consented to orders providing for her to transfer her interest in the City H property to the husband.
The following is a brief chronology of relevant events.
background
At the commencement of cohabitation, the wife was engaged in full-time employment as manager. The husband was involved in a business, prior to establishing M Ltd (“M Ltd”), with business partners, according to the wife in 1977 and according to the husband, between 1973‑1974.
The parties’ first son, Mr N was born in 1977. He is now employed as a public servant and lives in City L.
In 1977, the parties acquired an apartment in Suburb P where they resided until late 1986. In 1979, their daughter Ms Feng was born. She is now employed as a professional and lives with the wife in Melbourne. In 1981, the husband’s mother commenced living with the family in Suburb P, where she remained for five years.
In 1981, the parties youngest son, Mr Q, was born. He is not currently working and lives with the wife in Melbourne.
In 1983, two of the husband’s business partners at M Ltd left the business. In mid-1984, the husband incorporated R Ltd (“R Ltd”) in City L with another partner. In 1984, the husband established S Company with three other partners.
In late 1986, the family migrated to Australia where they commenced living in rented accommodation in Suburb T. The company in City L continued to operate in the husband’s absence. At the end of 1987 or early 1988, the parties established a business in Suburb U, V Company, using savings from City L.
In 1988, the husband left S Company at the request of his business partners and he also sold the Suburb P apartment for an undisclosed sum.
In mid-1988, the parties purchased a property in Suburb W for $174,000 and in mid-1991 the Feng Family Trust was established with the husband as trustee and appointor.
In 1994/1995, the family was involved in an accident, in which the husband sustained injuries.
In 1995, the parties sold V Company for about $55,000.
In 1996, the husband relocated to City L (in accordance with my findings referred to later in these reasons) and continued to operate R Ltd in City L. The wife and the children then aged about 18, 16 and 14, remained in Melbourne. Around that time, the wife asserts that the sum of $600,000 from the parties savings in City L was transferred to Australia. The parties agreed she would retain the family home and use the $600,000 to acquire assets to support herself and the children. The husband contends that the family remained intact, notwithstanding the parents lived in two different countries and that he continued to travel to Melbourne and the family travelled during summer holidays to visit the husband in City L.
In 1996, Mr N signed a contract to purchase a property in Suburb X which was registered in the name of the husband as trustee for the family trust. In the same month he signed a contract to purchase two properties in E Street, Melbourne, where the wife still lives, which were registered in the name of the husband as trustee for the family trust.
In 1996, Mr N signed a contract to purchase the Suburb D property in the name of the husband as trustee for the family trust. In 1997, the trust acquired shares in Y Company, Z Company and AA Company and in 1997 the husband executed a Power of Attorney in favour of the wife.
In 1998, the husband incorporated BB Ltd in the CC Region.
In 1999, the husband signed a contract to purchase an apartment in City H. Ms Feng executed a General Power of Attorney in 1999, appointing the husband as her attorney. She also executed an Enduring Power of Attorney in favour of the husband, at his request, later that month, prior to the registration of the City H property in Ms Feng’s name.
In 1999, the husband purchased an apartment in City L.
In 2002, Mr N, then aged 24 and Ms Feng, then aged 22 moved to City L and commenced living with the husband. Ms Feng returned to Melbourne to live with the wife in 2004.
In 2002, the wife sold the former family home and applied the proceeds of sale secured against other trust properties. She commenced living in E Street with Mr Q.
In 2004, the husband’s former business partner issued proceedings in City L against the husband, BB Ltd, R Ltd and others.
In 2004, the wife obtained legal and accountancy advice with respect to the structure of the family trust, prior to incorporating F Pty Ltd.
In 2004, the wife instructed Mr DD, solicitor to prepare documents to change the appointor of the family trust from the husband to herself and to remove the husband as trustee, in favour of F Pty Ltd.
In 2004, the husband relinquished his position as appointor of the family trust and resigned as trustee.
In 2005, Mr N opened a business in City L using $1 million in local currency which he received from the husband.
In 2007, the husband paid approximately $1.1 million in local currency to the relevant government department to remove the restriction on the City L apartment, enabling it to be sold. In 2007, the husband transferred the City L apartment to M Ltd for $3.6 million in the local currency. Two months later, M Ltd sold the property for nearly $3.7 million in the local currency and Mr Q moved to City H.
In late 2007, the wife sold the Suburb X property for approximately $500,000 and invested the proceeds of sale of approximately $430,000 in fixed term deposits at ANZ and Westpac.
In late 2008, Mr Q returned to Melbourne.
In mid-2010, an order was made by consent in the City L Court dismissing the petition filed by the husband’s former business partner.
In late 2012, R Ltd was dissolved.
In September 2015, the husband filed an initiating application in the Family Court of Australia.
THE PROPOSALS OF THE PARTIES
The applicant's proposal
The orders which the applicant sought from the court are set out in the Further Amended Initiating Application filed 19 November 2021.
They are as follows:
(a)within 30 days from the date of this Order, the Wife as the shareholder and director of the trustee company, F Pty Ltd, do all acts and things and sign all such documents as required to sell all the assets of the Feng Family Trust:
(i)C Street, Suburb D in the State of Victoria;
(ii)Unit 1, E Street, Melbourne in the State of Victoria;
(iii)Unit 2, E Street, Melbourne in the State of Victoria; and
(iv)share portfolio.
(b)the proceeds of sale of the properties listed in the above paragraph along with all other assets of the Feng Family Trust (or in the name of the parties) be divided in equal proportion between the Husband and Wife, after the payment of all costs, commissions and mortgage loans secured against any property.
(c)that in the event there is any Capital Gains Tax arising from the sales, the parties jointly obtain advice from an accountant to identify the estimated Capital Gains Tax payable, with such estimated sum to be quarantined from the proceeds of sale of the properties referred to under Order (a) herein.
(d)the Husband retain, to the exclusion of the Wife the balance of the proceeds of sale of the City H property.
(e)except as otherwise provided for in this Order, each party be solely entitled to the exclusion of the other to all property, including any enforceable legal rights, in possession of such party as at the date of this Order, including;
(i)each party hereby forgoes any claim they may have to any superannuation benefits owned by the other;
(ii)all insurance policies are to become the sole property of the owner and the person named therein;
(iii)each party retain any bank accounts and motor vehicle(s) in their names and/or possession; and
(iv)each party forego any claim they may have to any interest the other party may have in a company, trust or partnership.
(f)each party be solely liable for and indemnify the other against:
(i)any liabilities encumbering any item of property to which that party is entitled pursuant these Orders; and
(ii)any taxation liabilities.
Documents relied upon by the applicant husband:
The applicant relied upon the following documents:
(a)Further Amended Initiating Application filed 19 November 2021;
(b)Affidavits of the husband filed 29 June 2018, 9 August 2018 and 19 November 2021;
(c)Financial Statement of husband filed 19 November 2021;
(d)Affidavits of Mr N filed 27 January 2017, 9 July 2018 and 7 September 2018;
(e)Affidavits of Mr EE (Translator) filed 9 July 2018 and 29 November 2021;
(f)Affidavit of Ms FF filed 24 November 2021;
(g)Affidavit of Mr GG filed 24 November 2021;
(h)Affidavit of Mr HH filed 24 November 2021;
(i)Outline of Case document filed 26 November 2021;
(j)Documents tendered during the course of the trial.
The respondent's proposal
The orders which the respondent sought from the court are set out in the Outline of Case document filed 25 November 2021.
They are in summary as follows:
(a)the husband’s application be dismissed;
(b)the husband, at his expense, withdraw the caveat registered against the Suburb D property and two E Street, Melbourne properties;
(c)the husband assign to the wife or her nominee any monies which may be payable to the husband by F Pty Ltd ATF the Feng Family Trust and any monies that may be standing to the credit of the husband in the accounts of the Feng Family Trust and/or F Pty Ltd and relinquish any right or entitlement which he may have in F Pty Ltd and/or the Feng Family Trust;
(d)the second respondent transfer to the husband, at the husband's expense, all her right title and interest in the City H property;
(e)the husband return to the wife her jewellery and documents removed from the safety deposit box in the parties' joint names;
(f)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action and superannuation benefits) in the possession or legal or beneficial ownership of such party and any monies standing to the credit of the husband and the wife in any joint bank account are to become the property of the wife and the husband.
Documents relied upon by the respondent wife:
The respondent relied upon the following documents:
(a)Amended Response filed 27 April 2018;
(b)Affidavit of the wife filed 31 July 2018;
(c)Financial Statement of the wife filed 22 November 2021;
(d)Affidavit of Dr JJ filed 30 July 2018;
(e)Affidavit of Ms KK filed 30 July 2018;
(f)Affidavits of Mr LL filed 1 August 2018 and 9 July 2019;
(g)Affidavits of Ms Feng filed 3 August 2018 and 18 November 2021;
(h)Affidavit of Mr Q filed 3 August 2018;
(i)Affidavit of Mr MM filed 3 August 2018;
(j)Affidavit of Mr DD filed 9 August 2018;
(k)Outline of Case document filed 25 November 2021;
(l)Documents tendered during the course of the trial.
EVIDENCE
The standard of proof in this case is the balance of probabilities (s 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.
The husband and wife relied upon their respective affidavits. The affidavits exhaustively recounted the history of the parties’ relationship both in regard to the dispute. I have examined that evidence and do not propose to repeat it in these reasons. It is not necessary for a trial Judge to refer to every piece of evidence or argument presented during a trial.
In Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62], Gleeson CJ, McHugh and Gummow JJ said:
…A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
In Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385 – 386, Mahoney JA said this:
It is not the duty of the judge to decide every matter which is raised in argument.
…
Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matters to which he has had regard … Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear…
Credibility of Witnesses
The husband gave evidence and was cross-examined. The parties’ eldest son, Mr N, who lives in City L, also gave evidence on behalf of the husband and was cross-examined.
The husband was a highly unimpressive witness. He professed to have little recollection of events that did not suit his narrative and was a poor historian. His evidence frequently contradicted his own documents. Such an example was his evidence in this proceeding that he relocated to City L in 2000, which was directly contradicted by affirmations which he swore and filed in the City L proceeding which stated he had returned to City L in 1997, as effectively asserted by the wife. He gave multiple contradictory versions of the same event, in various affidavits, including three versions of the disposition of the proceeds of sale of the City L property. He ostensibly forgot to disclose the existence of loans exceeding $2 million which were supposedly advanced many years ago, until a week or so prior to the trial in December 2021, despite having sworn Affidavits and Financial Statements where smaller loans were disclosed. His explanations for deficiencies in evidence were woeful, he was frequently non responsive and much of his evidence seemed to be recent invention and made up as the questions progressed.
Senior Counsel for the wife submitted that the husband’s evidence was, inherently unreliable and that he had failed to make full and frank disclosure. The credit and nondisclosure problems for the husband amounted to five comprehensive categories namely:
(a)evidence about the move back to City L in 1996;
(b)evidence about the City H apartment;
(c)the purchase and sale of the City L property;
(d)the restructure of the trust in 2004 and the management and operation of the Australian assets;
(e)the fiasco about the personal loans in Country K.
The consequences of that are that the Court should prefer the wife’s evidence where it conflicts with the husband and secondly, as a result of the nondisclosure, the Court is required to err on the side of generosity in findings about the victim of the nondisclosure.
I agree with that submission and address in greater detail later in these reasons the husband’s evidence pertaining to each category and the non-disclosure.
Mr N sought to have the Court believe he was impartial and had no particular allegiance to either parent. His recollection of dates and events surrounding the trust restructure in 2004 was contradicted by the lawyer who prepared the documents to effect the restructure, Mr DD and his recollection of the date of the conclusion of the City L litigation was contrary to documents filed by the husband in that proceeding. Even when confronted with such evidence and documents, he was not prepared to concede his recollection was incorrect. Senior Counsel for the wife submitted that his evidence should be viewed in the context of Mr N feeling obligated towards his father , both as a traditional son and because his father had advanced him money to fund a business which was unsuccessful. I agree with that submission and do not place weight on his evidence. Where his evidence differs from Mr DD, documents tendered in the proceeding and other witnesses, I prefer the evidence of the other witnesses.
The wife gave evidence and was cross-examined. The parties’ two younger children, Mr Q and Ms Feng and the family accountant, Mr MM gave evidence on behalf of the wife and were cross-examined. Mr DD, solicitor, swore an affidavit on behalf of the wife, but was not required for cross-examination. I accept his evidence.
The wife was cross-examined. She also was a problematic witness, although not to the same extent as the husband. Contrary to her assertions that the parties had separated in 1996, she freely conceded that she had not advised the husband, nor anyone else, of the separation. Despite that significant deficiency in her evidence, she generally responded directly to questions. Much of her evidence was corroborated by other witnesses and documents. For example, her evidence about the date of the husband’s relocation to City L was corroborated by the husband’s own affirmations in the City L proceeding and by all three children, in particular Mr N, who was obviously in the husband’s camp. Her evidence about the restructure of the trust in 2004 was corroborated by both Mr MM, Mr DD and the two younger children. The email Mr N forwarded to Mr DD in 2007, requesting confidentiality and secrecy from other members of the family, supported her version of what occurred in 2004 in relation to whether or not there was ever any intention to reinstate the husband’s control of the trust structure. She readily conceded that the family had been on holidays together between 1996 and 2002, and in my view she gave a cogent reason why she participated in family holidays, namely because of the mental health challenges faced by Mr Q. She also presented acceptable reasons as to the circumstances of the photographs at the wedding of Mr N and his graduation from a training institution, although she was criticised about the inconsistency in her evidence about the wedding present for him.
Overall, the inconsistencies in the wife’s evidence pale into insignificance when compared to the inconsistent and recently invented evidence of the husband. The wife’s evidence about many topics was corroborated by documents and other witnesses, including two professional witnesses, whereas the husband’s evidence was not. For these reasons, I generally prefer her evidence to the husband’s, where their respective evidence conflicts.
Mr Q and Ms Feng both swore affidavits in support of the wife and were clearly supportive of her and dismissive of the husband.
Mr Q attempted to answer questions directly, although, unsurprisingly, he clearly did not know the answers to questions about the trust distributions to himself or the husband. When asked why his affidavit had not included details of the family holidays to Country NN and Country OO in around 2002, he replied he had answered questions asked by the lawyers. I accept that answer as truthful. Counsel for the husband characterised his evidence as pitiful, which I do not accept. I accept he was a witness of truth and prefer his evidence to the husband’s.
Ms Feng was responsive to questions and answered in a direct manner and made appropriate concessions about the City H property. I accept her evidence as truthful and prefer her evidence to the husband’s.
Mr MM is the accountant who acts on behalf of the family trust and was also involved in the restructure of the family trust in 2004. He impressed me as a truthful professional witness, who was responsive to all questions. I accept his evidence.
Mr HH, valuer, was jointly appointed as an expert to value the City H property. He was cross-examined by both counsel. I accept his evidence.
Mr HH impressed me as a competent professional witness, who was responsive and direct. I refer to his evidence later in these reasons.
RELEVANT LEGISLATION
Property proceedings between parties to the marriage are governed by the provisions of s 79 of the Act.
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.
Section 79(4) provides as follows:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(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
(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
(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
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(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) 247 CLR 108 (“Stanford”), 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 (“Hickey”).
The approach, as set out in Hickey 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, 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:
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 (“Bevan”), 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 s 79(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, Finn J stated at paragraph 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]:
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]:
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 s 79(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, 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:
…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 s 79(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 s 79(2), would be 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:
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.
This is not such a case. In this matter, although the parties have separated and both parties have made an application to the court, the husband seeks orders adjusting their respective property interests. However, the wife seeks orders that there be no adjustment of the parties interests in any property or superannuation, and that the husband’s application for property settlement filed 30 September 2015 be dismissed.
The orders which the wife seeks are premised on the fact that it would not be just and equitable to make an adjustment of the parties’ property.
Is it just and equitable to alter the parties’ property interests?
I will now consider whether it is just and equitable to make an order adjusting property in this particular case. In order to do so, I am required to adopt the pathway set out in the relevant authorities and to embark on a separate but very careful deliberation. As previously referred to, Stanford requires the first step of that inquiry to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
THE PARTIES’ EXISTING INTERESTS IN PROPERTY
The Joint Balance Sheet of assets and liabilities of the parties, which was provided on 2 December 2021 during the hearing, and which identifies disputed assets and liabilities, is as follows:
Description Husband’s value Wife’s value Assets in Australia 1 C Street, Suburb D $1,100,000 $1,100,000 2 Unit 1, E Street $685,000 $685,000 3 Unit 2, E Street $660,000 $660,000 4 Cash in Bank accounts as at 30/06/20 $337,612 $337,612 5 Share Portfolio
AA Company shares @ $... as at 25/11/21
Z Company shares @ $... as at 25/11/21
Y Company shares @ $... as at 25/11/21$3,599
$8,069
$1,281,648$3,599
$8,069
$1,281,6486 Funds held in Kennedy Partners’ Trust Account $53,959 $45,884 7 ANZ Bank …52 $123,813 $123,813 8 NAB …10 $22,296 $22,296 9 AA Company Shares $4,872 $4,872 10 Motor Vehicle 1 $3,000 $3,000 11 Motor Vehicle 2 Not known $NIL 12 Addback – funds received by the wife from the trust since 2004 Not known $NIL 13 Addback – funds reduced in bank accounts of F Pty Ltd Not known $NIL Australian assets subtotal $4,283,868 (excl not known addbacks) $4,275,793 Assets overseas 14 City H, Country K apartment $Disputed $4,092,000 15 PP Bank Account …88 $446,596 $446,596 16 QQ Bank …2-0 $351 $351 17 PP Bank Account …01 $1 $1 Assets Total $4,730,816 $8,814,741 Liabilities 18 PP Bank Credit Card $4,471 $NIL 19 Loan secured against the City H, Country K property to Mr RR $995,286 $NIL 20 Personal loan from Mr SS $830,000 $NIL 21 Personal loan from Mr TT $72,404 $NIL 22 Personal loan from Ms UU $72,404 $NIL 23 Personal loan from Mr VV $36,202 $NIL 24 Personal loan from Mr WW $157,479 $NIL 25 Personal loan from Mr XX $323,828 $NIL 26 Personal loan from Ms YY $1,675,846 $NIL Liabilities Sub-Total $3,337,920 $NIL Total $1,392,896 $8,814,741
In order to identify the existing legal and equitable interests in property of the parties, I must consider how to treat the assets/liabilities which both parties claim should be included/excluded from the asset pool. I will address each of the disputed assets/liabilities in turn.
Assets/liabilities the husband seeks to include in the pool and the disputed valuation of the City H apartment
The husband seeks to include in the pool liabilities of $3,337,920, which the wife seeks to exclude. I will address these liabilities in my discussion of the liabilities the wife seeks to exclude from the pool.
The husband also sought to include the value of Motor Vehicle 1, and addback funds received by the wife from the trust since 2004 and funds which he asserted reduced the bank accounts of F Pty Ltd.
In the joint Balance Sheet provided on 2 December 2021, during the trial, the wife asserted a second vehicle had a nil value and the husband contended that the value of the vehicle was not known. This issue was not pursued by the husband during the trial and I do not intend to include this as an asset.
At item 12 of the Joint Balance Sheet, the husband seeks to include as an add back, funds received by the wife from the trust since 2004 and at Item 13 he seeks to addback “funds reduced in bank accounts of [F Pty Ltd]”. In his Affidavit filed 29 June 2018, at paragraph 42, the husband asserts that the wife has failed to provide an accounting for the proceeds of sale of over $400,000 of a property in Suburb X which was sold in late 2007. He repeats that paragraph in his affidavit of 19 November 2021 at paragraph 86. In her affidavit of 31 July 2018, at paragraph 154, the wife’s evidence is that the funds were mixed with other trust assets.
In her Amended Case Outline filed 25 November 2021, the wife denies any basis for the add backs contended by the husband having regard to the principles set out in AJO & GRO [2005] FamCA 195.
The wife was cross-examined by counsel for the husband about the rental income received by the trust and trust distributions to the husband between 2010 and 2014. She was not cross-examined about any funds she received from the trust, other than whether she received any, and was not cross-examined about the quantum or application of the distributions. She did concede that she lived in the E Street property, no rental was received by the trust from that property, all rental income was from the C Street property and any income from the trust received by her was used for living expenditure, including expenses incurred for the children.
Counsel for the husband cross-examined Mr MM, the accountant about the distributions to the wife from the family trust. His evidence was that as far as he knew, the family trust was for the family living expenses including payment for the children’s study and it was very hard for the accountants to keep track of where the money actually went. Unless they receive contrary instructions from the client about distributions, he treated the distributions as a loan through the trust, from the beneficiary point of view, which was why a beneficiary loan account had been created. That was also why the money in the loan account would go up and down every year, depending on the family circumstances in a particular year. According to him, the family pretty much used the money in the trust “to pay all the family expenses and something like that”.
Furthermore, the increase in the beneficiary loan account of the wife, from 2019 to 2020, as stated in exhibit H-1, the trust accounts for the year 30 June 2020, did not mean that the actual funds comprising the increase in the loan accounts, were actually distributed to the wife. That loan account had been utilised as a general account to record the beneficiary distributions, to simplify the accounting procedure.
Notional add back of funds expended by parties into the pool of assets, is the exception rather than the rule. It is a matter for the discretion of the primary judge and what is crucial is an assessment of the reasonableness or otherwise of the expenditure: see AJO & GRO (2005) FLC 93-218; Trevi & Trevi (2018) FLC 93-858.
Neither cross-examination of the wife nor of the accountant established the trust distributions were not reasonable, particularly as the evidence of both witnesses was that the distributions from the trust were applied towards the family living expenses and it was not possible to identify from the accounts, the extent of the distribution to the wife. In accordance with established principles, there is no evidence to warrant an addback of amounts distributed to the wife from the trust and I do not propose to do so.
The husband’s contention in the Joint Balance Sheet at Item 13, that an unknown quantity of “funds reduced in bank accounts of [F Pty Ltd]”, was not pursued during the trial and the wife was not cross-examined about the disposition of the proceeds of sale of the Suburb X property, nor the bank accounts of the company. I do not intend to and could not possibly addback any such amounts.
The husband also disputes the valuation of the City H apartment, of which their daughter, Ms Feng, is the registered proprietor. Ms Feng, is the second respondent and for the purposes of the proceeding accepts that the City H apartment should be included in the asset pool and she did not seek to participate in the dispute to assert any entitlement to the apartment.
I will now address the value of the City H apartment. The property was valued by a single expert witness, Mr HH of ZZ Services. He filed an affidavit on 24 November 2021 annexing a valuation report of the property dated 18 November 2021. He was comprehensively cross-examined by counsel for the husband. His qualifications and expertise were not challenged. Cross-examination was directed to Covid-19 causing a slowdown in the residential property market and a credit squeeze on developers, only one of the six comparable sales was an actual sale, discount factors applied to the subject property relative to the comparable sales, such as the higher up floor in a building, the more desirable the property and location. Mr HH agreed with all the considerations put to him and said that he thought if the property was put on the market it would realise a large sum of Country K currency, plus or minus a range of 5–10%. He was unable to say how long a vendor would leave it on the market without adjusting the price, as “different owners have different decisions”. During cross-examination by Senior Counsel for the wife, Mr HH agreed during his consideration of transacted sales and properties on offer, he had considered the relevance that the subject property had not yet sold, he had compared the attributes of all properties to one another, he would have excluded a comparable property in terms of attributes if it was listed outside the range he considered appropriate because he had cross checked the price by reference to a government published price. He concluded that the asking price of the comparable properties were in a reasonable range of market value.
Mr HH impressed me as a diligent and competent expert who had made all relevant and necessary enquiries to establish the value of the City H apartment and cross-examination by counsel for the husband did not provide any reason to doubt his opinion nor his professionalism. I accept his expert evidence.
I intend to include the City H property in the pool at a valuation of over $4 million in accordance with the valuation of Mr HH.
Liabilities the wife seeks to exclude from the pool
The wife sought to exclude from the pool the liabilities referred to at items 18–26 of the Joint Balance Sheet. Apart from the husband’s credit card liability of $4,471, the liabilities amount to $3,333,449, which are asserted loans to the husband, one of which he asserts is secured against the City H property.
The husband contends that the loans were obtained between 2004 and 2008, however in his affidavit of 19 November 2021, filed a couple of days before the commencement of the trial, he deposes for the first time to having borrowed further funds between 2016 and 2020.
The wife does not admit the existence of the loans and even if the husband is able to establish that the loans are genuine, she does not admit they are enforceable or likely to be pursued and denies that she has received any benefit from the (alleged) borrowed money.
The husband’s evidence in chief about the liabilities is at paragraphs 87–91 of the husband’s affidavit filed 19 November 2021. That evidence is in stark contrast to his affidavit of 29 June 2018 and his Updated Financial Statement filed 29 June 2018.
In his Updated Financial Statement filed 29 June 2018, the husband refers to loans totalling $1,333,775 which are as follows:
(a)$995,286 advanced by Mr RR and ostensibly secured against the City H property;
(b)$72,404 advanced by Mr TT;
(c)$72,404 advanced by Ms UU;
(d)$36,202 advanced by Mr VV;
(e)$157,479 advanced by Mr WW.
In his affidavit filed 29 June 2018, the husband deposes to the circumstances of the advance of each of the loans. At paragraph 43(a), he deposes Mr RR advanced $367,470 in mid-2005 to enable him to repay the outstanding supplies referable to a company which was dissolved in 2004 during litigation in City L. The funds were allegedly deposited into the bank account operated by the company and were secured against the City H property. On 1 March 2017, the husband received a letter of demand from a solicitor for the lender demanding repayment of the loan, and the balance as at that date was $955,286.
At paragraph 43(b), the husband deposes Mr TT advanced him $72,404 in early 2004 which he applied to his living and medical expenses, as well as some previous debts. The amount remained outstanding to the lender.
At paragraph 43(c), the husband deposes Ms UU advanced him $72,404 in early 2005 which he applied for living and medical expenses and repayment of debts. The amount remained outstanding to the lender.
At paragraph 43(d), the husband deposes Mr VV advanced him $36,202 in late 2006, which he applied to living in medical expenses repayment of debts. The amount remained outstanding to the lender.
At paragraph 43(e), the husband deposes Mr WW advanced him $157,479 to continue to meet expenses and the amount remains outstanding.
In his affidavit filed 19 November 2021, the husband has replicated paragraphs 43(a)–(e) of his previous affidavit and seeks to provide further information about the application of the advances. At paragraph 88, he deposes that the borrowed funds were used in part to fund the 2004 litigation in City L as well as living and medical expenses. He additionally deposes to further advances, which were not referred to in the June 2018 affidavit, which total around $2,000,000 and are as follows:
(a)$1,656,970 advanced by Ms YY, primarily in cash, which was spent on renovation the City H apartment, paying interest on the debt, legal fees for this proceeding , living and medical expenses;
(b)Equivalent in local currency to AUD $323,828 owing to Mr XX.
The husband was comprehensively cross-examined about the loans. I will firstly address the loans referred to in the June 2018 affidavit and then the loans referred to in the November 2021 affidavit.
During cross-examination the husband agreed that the loan of $995,286 advanced by Mr RR, was advanced in 2005 (Item 19 of the Joint Balance Sheet). When confronted with his Financial Statement sworn 17 September 2015, he was unable to provide any explanation why the advance from Mr RR of $995,286 was not included in the Financial Statement, when the other loans which he had referred to in his affidavit of June 2018, and which were for much lesser amounts, were included in the document. He was also unable to provide a satisfactory explanation about:
(a)why the alleged loan first appeared in his affidavit in June 2018, when it was advanced in mid-2005;
(b)why these funds were borrowed in 2005 to support a company which had been dissolved the previous year;
(c)why he had sworn (at paragraph 87(a) of the November 2021 affidavit) that the funds were deposited into the company bank account in 2005, when his oral evidence during cross-examination was that he did not continue to operate the company bank account after dissolution of the company in 2004;
(d)his evidence that the debt was secured against the City H property, when his evidence during cross-examination was there is no mortgage on the City H property;
(e)how the current amount to repay the loan, 4,564,000 in Country K currency is the same as the amount required to repay the loan as referred to in the June 2018 affidavit, despite his evidence that the original amount advanced in 2005, 1,7000,000 in Country K currency had attracted interest to arrive at the 2018 payout figure;
(f)why the purported loan document was not signed by the lender, Mr RR.
The husband was unable to identify the year in which he last spoke to the lender, but it could have been 2017, when he supposedly repaid 200,000 in Country K currency, which he appeared to categorise as repayment of the loan. He did not adduce any evidence about the provenance of the loan, the advances having been made, receipt into a bank account, what the husband did with the money or communications with the lender. Nor did he obtain any affidavit from the lender.
The evidence of the husband during cross-examination about the loan from Mr TT (Item 21 of the Joint Balance Sheet) was that funds were borrowed in early 2004 to pay living and medical expenses and previous debts. His purported explanation why the current balance of the loan, $72,404, is the same as the amount advanced in early 2004 when the loan attracted interest, was because he had not included accrued interest in the amount currently owing.
He was unable to explain why the purported loan document between himself and Mr TT was signed by him but not the lender. He agreed that Mr TT was deceased.
His evidence pertaining to the debts alleged to be owing to Mr VV (Item 23 of the Joint Balance Sheet) and Ms UU (Item 22 of the Balance Sheet), was that Mr VV was his cousin, and he was also deceased. He had last spoken to Mr VV’s widow, Ms UU, two years ago and that there had not been any written demands for the repayment of the debt from either Mr VV or Ms UU. He could not recall when Mr VV had died, but thought it was a few years ago.
During cross-examination, he agreed that he had deposed to receiving in early 2008 870,000 in Country K currency from Mr WW (Item 24 of the Joint Balance Sheet), who was also his cousin, and to whom he had last spoken about two and a half years ago.
As to the application of some of the funds, the husband’s evidence in his affidavit of November 2021 (at paragraph 88) was that he had used about AUD $174,729 to fund the 2004 litigation and that the receipts and documents proving the expenditure were located in the City H apartment. Despite him living in the property until early 2020, and issue of the loans having been before the court since 2015, he had not obtained the documents from the property.
During cross-examination, the husband agreed that he had not referred to the existence of the alleged loan from Mr XX of $1.857 million in local currency, (Item 25 of the Joint Balance Sheet) prior to swearing his affidavit of 19 November 2021. He could not recall when the advances were made, as it was not one loan but several, with one perhaps being made “between this year and last year”. His evidence was that some of the funds were borrowed before 2020, but not that much and it was likely there were funds borrowed before 2018, but he could not remember. He was unable to provide any documentary evidence for the full advance, except a Promissory Note to pay legal fees of allegedly $80,000, which was not signed by the lender.
He also agreed that he had not referred to the loan from Ms YY (Item 26 of the Joint Balance Sheet) prior to his affidavit of 19 November 2021, despite the loan being equivalent to AUD $1,650,000 and having commenced in 2014. It was not referred to in the husband’s previous Financial Statements or multiple affidavits filed in the proceeding. The documents attached to the translated affidavit of 29 November 2021 affidavit refer to purported advances as follows (in Country K currency):
(a)2014 600,000;
(b)2015 530,000;
(c)2016 580,000;
(d)2017 470,000;
(e)2018 640,000;
(f)2019 500,000;
(g)2019 590,000;
(h)2020 400,000.
The advances total 4,310,000 in Country K currency. The husband attributed the discrepancy between the sums supposedly advanced and the 8 million in Country K currency currently owing, as interest. When challenged why he omitted to include in his affidavit of June 2018 the loans from Ms YY, which then exceeded 3 million in Country K currency, his explanation was that the person who had allegedly lent the money to him was reluctant for the husband to disclose the source, and she only agreed to disclosure of the source later. The husband also agreed that the promissory note which was annexure 10 to his affidavit of 19 November 2021 was only signed himself in the witness. He did not think that he had any documents with Ms YY’s signature.
In his affidavit of 19 November 2021, the husband asserted that the $600,000 which both parties agree was transferred to Australia from City L, was transferred in 1991 and was advanced by his cousin Mr VV and that is referred to as a “liability”. It is unclear whether he maintains this is a current liability owing to his deceased cousin. The wife asserts the monies were the parties’ savings and were transferred in 1996. I refer to this amount later in these reasons.
The husband’s evidence about each of the loans, individually and collectively, was unimpressive and unbelievable and did not convince me, to the requisite standard that the loans actually existed or were repayable by him, nor the asserted application of the proceeds. Counsel for the husband submitted in his final submission that it was not put to the husband that it was never the wife’s case that the monies were not advanced, rather it was the commerciality of the loans which were put into question. I do not accept that submission, as during cross-examination of the husband, it was put to him that the wife said she knows nothing about the loans, he was aware she disputed that the loans exist and he understands she disputes the loans are legitimate.
The husband’s evidence about the application of the alleged loans was unimpressive and not supported by independent documentary evidence which he asserted was in the City H property. He did not provide any satisfactory explanation why he had not obtained the documents during the many years he lived in the City H property.
I do not accept his evidence that the loans are current liabilities and so find for the following reasons:
(a)his own evidence during cross-examination, which had a distinct flavour of recent invention, which is referred to earlier in these reasons as follows:
(i)$995,286 advanced by Mr RR in 2005 at [110]–[111];
(ii)$72,404 advanced by Mr TT (now deceased) in 2004 at [112]–[113];
(iii)$72,404 advanced by Ms UU and $36,202 Mr VV (now deceased) at [114];
(iv)$157,479 advanced by Mr WW at [115];
(v)$323,828 advanced by Mr XX at [117];
(vi)$1,675,846 advanced by Ms YY at [118];
(b)failure to disclose the loans from Mr XX and Ms YY until his affidavit of November 2021;
(c)failure to produce adequate documentary evidence substantiating the advances;
(d)failure to produce documentary evidence of the disposition of the advances when his own evidence was that documentation was located at the City H property where he had lived until 2020, when he knew from early in the proceedings that the veracity of the loans was an issue between the parties;
(e)documents produced by him were not signed by lenders;
(f)absence of an adequate explanation why some of the amounts claimed by him included interest (advance from Ms YY) and other advances did not (advance from Mr TT);
(g)failure to adduce evidence from any of the lenders and no explanation why that was so;
(h)failure to adduce any evidence of recent demands for repayment leads to the conclusion that it is unlikely recovery will be pursued;
(i)failure to adduce evidence about the legal enforceability of the loans;
(j)the husband’s current bank account balance of $446,596, at item 15 of the Joint Balance Sheet and the funds in his solicitors trust account ($93,000 disclosed in the Statement of Costs), are inconsistent with the husband requiring borrowed funds to support himself, where he provides no adequate explanation how he now has such a significant amount in the bank and was able to provide his solicitors with $93,000;
(k)paucity of believable and cogent evidence about the loans and application of the alleged advances;
(l)lack of any rudimentary calculation of the interest accrued or payable on the initial advances;
(m)lack of evidence that the wife or family benefited from the advances in any manner;
(n)there is no evidence in any of the husband’s earlier affidavits about the alleged loan owing to Mr SS of $830,000, (Item 20 in the Joint Balance Sheet) notwithstanding the husband claims it as a liability in his Outline of Case document filed on 26 November 2021.
Senior Counsel for the wife submitted and I accept, there is no evidence of advances being made, receipt into the husband’s hands or accounts, what he did with the money, communications with the various lenders about the terms and conditions of the loans, evidence of demands or litigation for recovery except one letter in 2017 which relates to item 19 in the Joint Balance Sheet and no affidavit from any of the relevant people. The husband also confirmed there has been no further communication or contact from the lender ostensibly seeking recovery of the loan in 2017.
In his final submissions, in response to a question from the court about the husband’s evidence relevant to the loans, counsel for the husband conceded most appropriately, “the detail and precision of evidence in relation to some matters is sub optimal”. That description whilst applicable, is also overtly optimistic.
Senior Counsel also submitted, and I agree, the best that can be said about the husband’s evidence pertaining to the loans is that if the sums were advanced, it demonstrates the husband has no difficulty in accessing millions of dollars, some in cash, in Country K, as and when required. Whether the advances were ever made, are loans, gifts or return of funds the husband has lent to various people is impossible to determine. For the reasons referred to in the previous paragraphs and my findings, I do not intend to include the loans as a liability in the pool.
Additionally, the wife submits that the husband has failed to comply with his obligations to make full and frank disclosure and she is therefore unable to ascertain the extent of the husband’s financial position.
The wife also contend that the husband has divested himself of assets and has intentionally incurred liabilities to reduce the value of the parties. I will address these submission in my discussion of s 75(2)(o).
Conclusion as to the existing legal and equitable interests of the parties
As a result of my findings as to disputed assets, and the treatment thereof, the existing legal and equitable interests of the parties, is as follows:
Table of Assets Description Value C Street, Suburb D $1,100,000 Unit 1 E Street $685,000 Unit 2 E Street $660,000 Cash in Bank accounts as at 30/06/20 $337,612 Share Portfolio
AA Company shares @ $... as at 25/11/21
Z Company shares @ $... as at 25/11/21
Y Company shares @ $... as at 25/11/21$3,599
$8,069
$1,281,648Funds held in Kennedy Partners’ Trust Account $53,959 ANZ Bank …52 $123,813 NAB …10 $22,296 AA Company Shares $4,872 Motor Vehicle 1 $3,000 City H, Country K apartment $4,092,000 PP Bank Account …88 $446,596 QQ Bank …2-0 $351 PP Bank Account …01 $1 Assets Total $8,822,816 Table of Liabilities Description Value PP Bank Credit Card $4,471 Nett Total $8,818,345 Factors relevant to exercise of discretion as to just and equitable
The matters which the wife submits are relevant, in addition to consideration of the factors in s 79(4), to determine whether it is just and equitable to make an order adjusting property in this case are as follows:
(a)the parties separated in 1996;
(b)at the time of separation and by agreement between the parties, the wife received $600,000 from savings in City L, which was used to acquire assets in the Feng Family Trust and the wife accepted the husband would retain the parties’ assets in City L;
(c)after the husband relocated to City L, the parties lived separate lives consistent with the marriage in name only;
(d)in late 2004, the parties changed the structure of the Feng Family Trust, with the husband relinquishing his position as appointer of the trust in favour of the wife and voluntarily resigning as a trustee of the trust in favour of a corporate trustee, F Pty Ltd. The wife contends that these actions formalised the financial arrangements the parties put in place by mutual agreement at the time of separation in 1996;
(e)the husband did not file an application for property interests until 30 September 2015, some 20 years after the wife contends that the parties separated and 11 years after he relinquished his position as appointor of the family trust;
(f)even if the husband is successful in establishing the date of separation as 2014, in the context of the husband voluntarily relinquishing his positions in the trust in 2004, it is not just and equitable to interfere with the legal and equitable interests of the parties, and in particular the asset of the family trust over which the wife had complete control since 2004;
(g)the value of the property which would be retained by the husband on the wife’s proposal is approximately equal to the value of the property to be retained by the wife and there is no basis for any alteration of property between the parties, having regard to the relevant factors in s 79(4).
The husband submits that if the court accepts the husband’s evidence that the parties relationship continued until 2014, and no financial settlement occurred in 1996 as alleged by the wife, it is appropriate to exercise the court’s discretion under s 79(4).
I will now consider in more detail each of the factors referred to in the preceding paragraph.
Date of separation
The wife contends that the parties separated in 1996 when the husband informed her that he would be returning to City L to concentrate on R Ltd, as he did not like living in Australia. According to her, there was no discussion about the wife and children joining the husband in City L and she understood he wanted to “start a new life”. The wife was not unhappy about the husband’s decision and she was relieved he would no longer be living with the family, she enjoyed living in Australia and wanted the children to be educated in this country.
The husband denies that the parties separated in 1996 or that he moved back to City L in 1996. He contends the parties separated in 2014. His evidence is that he moved back to City L in 2000 to operate the business, R Ltd, although that was not permanent as he travelled to and from City L on a regular basis, as did the wife and children. In his affidavit of November 2021, the husband deposed to travel with the wife and children between 1996 and 2004 to Country OO, Country NN and several areas in Country K. According to him, the wife and children were with him in City L in 1997 and that was evidenced by the family photograph in City L which was taken in 1997. Additionally, his evidence was that he left his belongings in the family home in Australia subsequent to 1996 because he intended to return there and he and the wife continued to have a sexual relationship between 1996 and 2014. Between 1996 and 2014, the husband’s Medicare card was registered to the wife’s address and the wife forwarded two or three Medicare cards to him in City L until 2014. In 2009, they jointly attended their son Mr N’s graduation ceremony and the wife’s mother’s funeral, he contributed half of the costs of the funeral and in 2012 they jointly gifted their future daughter-in-law a gold necklace worth a large sum.
The wife was granted leave to adduce evidence in chief to respond to the husband’s affidavit of November 2021. She denied the sexual relationship between them continued beyond 1996, or that she initiated a sexual relationship after 1996, sending him Medicare cards in City L until 2014, attending their son’s graduation ceremony together, the husband contributing half of the costs of her adopted mother’s funeral, the joint wedding gift to their daughter in law, travelling to City H to furnish the apartment and staying there, travelling to visit relatives, signing a joint application to purchase the Suburb P property stating the purchase was for the whole family, the family trust receiving $140,000 from the husband around 1999/2000 to purchase a motor vehicle or being aware of a letter written by the husband to the City L immigration department about payment to her brother. She agreed she slammed a knife on the kitchen counter when the husband asked her for money but did not attack him with a knife.
During cross-examination, counsel for the husband took the wife to various photographs which were annexed to the husband’s November 2021 affidavit. A photograph of the wife’s arm linked through the husband’s honour was explained by the wife as a happy occasion when her son got married and the photographer asked the parties to do that.
The photograph of the family together in Country OO was when the parties’ youngest son was sick and a holiday was recommended by his doctor. She did not recall the year the photograph was taken although she agreed it was taken between 1996 and 2004. She denied that she and the husband were affectionate towards each other in the photograph and her evidence was that the tour guide suggested we should take a photo. Similarly, the photograph of the family in Country NN showed the husband and wife holding onto their son’s arm and the wife’s explanation was she did not want to upset the youngest son who was experiencing mental health difficulties at the time, and a family holiday had been recommended by his doctor to assist his recovery.
When it was put to the wife that she had not informed the children that the marriage was over, her response was that they could see something was wrong and had observed what had occurred. She agreed that she had not told anybody else and that she had not even informed the husband.
Annexure 5 to the husband’s affidavit of November 2021 is a letter written in late 2007 by the wife to the husband which was put to her. She disagreed that the letter was as a wife in writing to husband in a marriage. She also disagreed that the power of attorney which the husband gave to her in 1997 was so that she could manage the family business whilst the husband was in City L.
After considering the evidence of both parties, I am unable to find that the parties separated in 1996, as claimed by the wife. That is so primarily because her own evidence in cross-examination was that she had not informed the husband of their separation, nor anyone else. In that context, it is not surprising that the husband’s evidence was that they had not separated in 1996, but rather in 2014 following the knife incident. Notwithstanding my rejection of the wife’s asserted date of separation, it is evident that the parties primarily lived in different countries since at least from 1996 or 2000 and led substantially independent lives, although they did at times attend family events and trips together.
Date of relocation of husband to City L, was there an agreement between the parties and the source of $600,000 transferred from City L
According to the wife, in 1996 when the husband relocated to City L, there was an agreement between them, the wife would receive $600,000 from their joint savings, which she would use to acquire assets via the Feng Family Trust, to support herself and the children. The husband told her he would not support the family from City L. She also retained the former family home. The wife accepted that the husband retained whatever assets he held overseas including his business interests in City L.
According to the husband, there was no such agreement and from 1996 until they separated, they “continued to be a family living in separate countries from time to time”. He also deposes in his affidavit filed 29 June 2018, that in 2000 the wife and he agreed that he would return to live in City L and continue the operation of R Ltd. Thereafter, he contends that the wife and children continued to live in Melbourne and travel during the summer holidays to visit him in City L and he also regularly travelled to Melbourne to visit family.
The husband’s evidence of the date of his relocation to City L was inconsistent with the evidence of all family members, including Mr N. Mr N’s evidence during cross-examination was that he had a specific recollection that he was 18 years of age when his father moved to City L, which was in 1996. Additionally, the husband’s evidence in the City L proceedings was that in 1997, he was back in full-time management of the company and living in City L. That is apparent from the document exhibit W-2, an affirmation of the husband in the City L litigation in 2004, where he affirmed he migrated to Australia in 1986 but moved back to City L “in or about 1997”. That affirmation is entirely inconsistent with his evidence in this proceeding.
The husband made a further affirmation in the City L proceedings, the fifth affirmation made in 2004, which is exhibit W-3. That document refers to the husband moving back to City L in 1997.
The husband was cross-examined about the date on which he returned to City L and attempted to recast his time in Australia as “visiting” (his affidavit sworn November 2021), which was in direct contrast to his Outline of Case document filed 26 November 2021, which described him as remaining in City L in 1996 to investigate the extent of the fraud by his business partner. The husband agreed that by 1997 he was in City L observing problems in the business, while steadfastly refusing to concede that he moved to City L in 1997.
The husband’s evidence in this proceeding has been contradictory and inconsistent. Paragraph 11 of his affidavit sworn 19 November 2021 refers to the wife and children regularly visiting him in Country K and him visiting them in Australia, since 1996. Paragraph 20 of the same affidavit refers to the husband starting to visit City L to operate R Ltd in or about 2000. In his affidavit of June 2018, he refers to returning to City L in 2000, whereas his Outline of Case refers to the husband deciding to remain in City L, as from 1997, to investigate the extent of fraud perpetrated by his business partner.
The husband also purchased two properties in 1999, one in City L and one in City H. Senior Counsel for the wife submitted that the only family member insisting that his relocation to City L occurred in 2000, was the husband, and that evidence should be rejected. The only conclusion which the court should reach is that the wife’s evidence about the date of the husband’s relocation to City L is correct. I agree with that submission and accept the wife’s evidence as to the date of the husband’s relocation, as corroborated by their three children and effectively corroborated by the husband’s own evidence in the City L litigation (exhibits W-2 and W-3). The husband’s contradictory evidence in this proceeding about the date of his return to City L makes it impossible to find in that he returned to City L in 2000, as sometimes and intermittently asserted by him. For these reasons I find that the husband relocated to City L in 1996.
The wife was not cross-examined about the circumstances surrounding the asserted agreement in 1996 that she would retain the matrimonial home and would in the future provide for herself and the children by acquiring assets via the family trust, with the $600,000 transferred from City L. Neither was she cross-examined about the transfer of the funds from City L in 1996 and her evidence is therefore unchallenged.
The husband’s case was that $600,000 was advanced to the parties in 1991 by his late cousin, Mr VV to establish the family trust. The advance was recorded in the financial accounts of the trust until 2015, when the debt was no longer in the accounts of the trust because the wife removed from the ledger as she alleged the debt was unrecoverable due to a statute of limitations.
The wife disputes that the funds were provided by Mr VV and contends that the savings were remitted from City L to Australia by the husband transferring the monies to his cousin in City L, who then deposited the funds into an account held by the trust. She deposes to the husband preparing a loan agreement between the trust as borrower and his cousin as she understood from the husband that the false loan agreement enabled the funds to be remitted to Australia.
In accordance with the agreement, the wife asserts she used the $600,000 transferred from City L to acquire several properties as well as ASX listed shares, via the trust, in 1996 and 1997. The properties purchased by the trust were the Suburb X property in early 1996, Unit 2, E Street in early 1996, C Street, Suburb D in late 1996 and Unit 1, E Street in 1996. She contends that the husband was aware of the properties she investigated and purchased and he cooperated with signing of various documents as trustee of the trust. The husband retained all other assets in City L and Australia, if any, and she was unaware of the extent of his business interests in City L in M Ltd and R Ltd.
The husband was comprehensively cross-examined about the transfer of the $600,000 from City L and the acquisition of property by the trust.
The husband’s evidence was as follows:
(a)he agreed his affidavit of 29 June 2018 said that he established the Feng Family Trust in 1991;
(b)in his affidavit of November 2021 he added that he had established the trust by borrowing $600,000 from Mr VV;
(c)he was unable to recall when he borrowed the money other than it was a long time ago;
(d)he then said the money was borrowed in 1991;
(e)he agreed that he had to invest $600,000 in Australia in 1986 when he migrated for a family visa and he brought the money from City L;
(f)he agreed with the proposition that the money brought to Australia in 1986 was the money used to establish the family trust;
(g)he agreed that there were no other properties purchased by the trust other than E Street, C Street and Suburb X;
(h)the investments were made using the $600,000 in the family trust;
(i)the statement in paragraph 16 of his affidavit of 29 June 2018 that property and shares were acquired in Australia by funds from R Ltd was correct;
(j)he could not explain the inconsistencies in his affidavit of June 2018 and August 2018 about the source of the funds;
(k)he did not answer whether the money used to invest via the family trust was from funds transferred from R Ltd in City L or funds brought into Australia in 1986;
(l)he did not answer why his lawyers had made enquiries about a loan in the family trust in a letter dated 10 October 2016 (exhibit W-8) if he knew he had borrowed money from Mr VV;
(m)he could not explain the statements in his affidavit that he liked the configuration of the E Street property as at the date of purchase, because it was similar to the City H property, when he did not acquire the City H apartment until 1999, some years later.
The two versions of the husband’s evidence were contradictory and unbelievable as the $600,000 could not both have been transferred to Australia in 1986 at the time of the family move to Australia, and borrowed from Mr VV in 1991, some 5 years later.
I accept the evidence of the wife about the source of the $600,000 and how it was applied, particularly in the context of the husband’s evidence whilst being cross-examined and the evidence in his affidavit of 29 June 2018 at paragraphs 16, 17 and 18, as follows:
(a)funds received from R Ltd in City L were used to acquire property and shares in Australia;
(b)the C Street and E Street properties were acquired in late 1996, early 1997 and late 1997 respectively.
That evidence is consistent with an agreement between the parties, as asserted by the wife, that the wife would remain in Australia and have control of the Australian assets and the husband would remain in City L and retain control of the City L assets, notwithstanding that the parties remained married. My finding about the agreement should not be construed as contrary to my findings about separation. The husband’s Power of Attorney in favour of the wife, which he executed in 1997, is also consistent with the agreement as contended by the wife. I accept the wife’s unchallenged evidence about the agreement between the parties and find accordingly. I also find that the funds transferred from City L were from the parties own resources and were applied towards the acquisition of the properties and shares in Australia via the family trust, in accordance with the agreement between the parties and that agreement occurred in 1996 when the husband relocated to City L.
Parties lived separately and apart after the husband’s return to City L
There was no cross-examination directed to the assets of either party at the commencement of the relationship and that was not a significant consideration.
Contribution during and post the relationship
According to the husband, the parties had a traditional marriage in the sense that he was the primary income earner for the family and the wife raised the three children and carried out the role of homemaker. The wife did not work during or following the marriage and did not receive any income from any source other than passive income generated from investments established during the relationship.
In 1983, the husband and his business partner agreed to dissolve M Ltd and commenced a trading company, R Ltd. The husband also established S Company with three business partners however he sold his shares prior to relocating to Australia. In 1987, he established a business in Melbourne called V Company where he worked full-time until the business was sold in 1995, following the motor vehicle accident in 1994/1995 which prevented him continuing to run the business. During that time, R Ltd continued to operate and he continued to receive an income whilst living in Australia. In 1991, he established the Family Trust.
Unsurprisingly, the wife’s evidence of the respective contributions of the parties differs remarkably from that of the husband. She deposes that she continued working full-time in City L until the birth of their first child in 1977 and only taking a few months maternity leave before returning to work as a manager. She also assisted the husband with his business and apart from her adopted mother caring for Mr N when she was at work, she was solely responsible for the house cleaning, family’s laundry and preparation of meals. Subsequent to Ms Feng’s birth in 1979, she gave up her paid employment to care for the children but continued to assist the husband with his business. Their third child was born in 1981.
In about 1980, the wife deposes that as M Ltd was struggling the husband asked her to give him his wedding jewellery to sell, which she did and she assumed he invested the proceeds in M Ltd, although she was unaware of the extent of the proceeds of sale.
She further deposes that in 1981, the husband brought his mother out from Country K to live with the family in Suburb P, where she remained for five years, with the wife caring for her mother-in-law.
The wife agrees that the husband commenced R Ltd and then S Company, whilst they were living in Suburb P.
In her trial affidavit, the wife refers to the family’s relocation to Australia in 1986 and the establishment of V Company in 1988. Contrary to the husband’s evidence, she deposes that when not caring for the children, she worked within the business. She deposes to the children being taken to the business and sleeping in the van whilst both parents worked. She was not paid a salary for her work but was provided a housekeeping allowance each month for groceries and household supplies. In mid-1988, the parties purchased a family home in Suburb W with savings and a bank loan for the balance.
In 1994/1995, the family was involved in a serious motor vehicle accident which caused the husband serious injuries preventing him from working in V Company. According to the wife, the business was sold subsequent to the accident for about $50,000 to $55,000, although she is unaware of how the proceeds were spent.
In 1996, the husband relocated to City L and the wife remained living in Australia with the three children. Their living arrangements and finances were separated in accordance with my discussion and findings referred to at [157]–[173] and [174]–[181] hereof. It is self-evident that the wife was the sole homemaker and parent, whilst the husband was in City L, post 1996 and made a significant contribution in that regard.
I prefer the evidence of the wife to the husband relevant to contributions as it is inherently more believable that she would also have worked in the family business in Australia to the extent she was able given the constraints of caring for the children.
I refer to my findings as to contributions at paragraphs 297–299.
Section 79 (4)(d), (e), (f) and (g) and the section 75(2) factors
Section 79(4)(d): the effect of any proposed order upon the earning capacity of either party to the marriage.
The orders which I propose to make will not have any effect on the earning capacity of either party.
Section 79(4)(e): the matters referred to in section 75(2) so far as they are relevant
The husband is aged 82 and he describes himself as a retired businessman. The husband has many health conditions which are detailed in his affidavit.
The husband is in receipt of a pension which he deposes is insufficient to meet his needs, which is consistent with his updated Financial Statement.
The wife is aged 72 and is also retired. She also has many health conditions which are referred to in her affidavit.
In her Financial Statement filed 22 November 2021, the wife deposes to an income of $792 per week with expenses of $1,193.
In his Case Outline, the husband submits there are factors relating to the husband’s medical and personal needs and a significant disparity between the parties income generating assets and asset position.
Counsel for the husband in his final submissions conceded that it would be very difficult to argue that either of them had any difference in the future needs factors, which I accept.
Section 79 (4)(f) and (g)
There are no matters relevant to these sections.
Section 75(2)(o): any fact or circumstance which in the opinion of the Court, the justice of the case requires to be taken into account
The wife asserts that the husband’s failure to adequately disclose is a matter which should be taken into consideration to determine if it is just and equitable to exercise my discretion in adjusting property interests between them.
The matters which the wife alleges the husband did not fully disclose are:
(a)his business interests overseas, including businesses which were the subject of litigation in City L subsequent to 1996;
(b)his use and application of the sale proceeds of an apartment in City L, which the husband purchased in 1999 and sold in 2007;
(c)his personal expenditure;
(d)the source of funds used by the husband to assist Mr N to open a business in City L in 2005;
(e)the source of funds used by the husband to purchase and renovate the apartment in City H which was purchased in 1999 in the name of the parties daughter, Ms Feng;
(f)documents supporting the legitimacy of the husband’s loans.
On 14 December 2015, orders were made by consent requiring each party to provide a list of documents required from the other party and for the receiving party to provide the documents within 60 days of receiving the list of documents. In her trial affidavit, the wife refers to comprehensive documents which were requested and subsequent correspondence between the solicitors for the parties seeking disclosure. As at the date of her trial affidavit she deposes to significant documents still outstanding including details of the City L proceedings, financial statement accounts and reports relating to the husband’s business interests including various companies, documents relating to the ownership of the factory premises used by R Ltd trading in Country K, documents evidencing the source of funds used to pay for the removal of the land premium prior to the sale of the City L apartment, documents evidencing the application of the proceeds of sale the City L apartment and the purchase and renovations of the City H apartment and statements relating to the husband’s bank accounts with AC Bank and AD Bank.
According to the wife, the husband owned business interests in City L, including apparently a 65% interest in the company R Ltd. The court documents produced from the City L proceedings, indicate that the husband and/or his corporate entities may have owned the business premises in Country K used by R Ltd, which has not been disclosed. She asserts that the husband has failed to provide any disclosure about the City L litigation against the husband which was commenced in 2003 or 2004. The wife deposes that she sought financial disclosure from the husband with respect to the assets held, and income earned by R Ltd since 1996 and the winding up of the company in the City L litigation. The only response received by his lawyers on 8 August 2016 was to the effect that there were no documents for the preceding 10 years in relation to the company, given that the company ceased operation in 2004.
In 1999, the husband purchased an apartment in City L for approximately AUD $570,000 through a government scheme. In mid-2007 the property was transferred to a company for $3.6 million in local currency. The sole director of the company was a childhood friend of the husband. The wife asserts that no particulars of how the husband applied the sale proceeds have been provided by the husband. Neither has the husband explained how he paid a land premium of $1,098,000 in local currency which was paid in early 2007, prior to the sale of the property in mid-2007, nor the discrepancy in his estimate of the premium he paid of $1.5 million in local currency, as deposed in his affidavit.
In 2005, Mr N open a business in City L with an advance of $1 million in local currency from the husband. The husband has yet to disclose the source of funds he used to invest in the business.
The husband did not disclose his interest in the City H property at the commencement of the proceedings in 2015. The property was purchased in 1999 for approximately AUD $350,000. Between 8 August 2016 and 24 February 2017, in correspondence between the solicitors for the parties, which is referred to in considerable detail in the wife’s trial affidavit, the husband denied he had an interest in in the City H property, despite him living in the property and the children were aware of the existence of the property. On 24 February 2017, the husband disclosed the contract to purchase the property, dated 1999, with the husband named as purchaser. A copy of the contract together with an English translation is exhibit MH-7 to the wife’s trial affidavit. The husband did not disclose to the wife the source of funds used to purchase and renovate the property.
Senior Counsel for the wife cross-examined the husband about the purchase and sale of the City L apartment.
The husband provided three different versions of the disposition of the proceeds of sale in 2007. Firstly, of the $3.6 million in local currency, $1 million was paid to Mr N, $1.6 million was paid to discharge the mortgage and he was unable to account for the balance of approximately $1 million, other than it was probably less than that amount because of payment of additional land tax.
The husband said the money he gave Mr N for his wedding was from the City L proceeds of sale, notwithstanding that Mr N was married in 2012, some five years later. He later agreed with Senior Counsel for the wife that none of the City L funds were paid to Mr N in 2012.
Secondly, in his affidavit sworn 27 January 2017, the husband deposed to applying $500,000 in local currency to repay personal loans. His evidence was initially the loan was obtained for Mr N’s wedding gift and to pay his living expenses. His evidence during cross-examination was that the loan was obtained from Mr TT, the person who purchased the property from him, who has since died. In his affidavit of August 2018, the husband made no mention of repayment of a personal loan.
Thirdly at paragraph 87 of his affidavit of 29 June 2018, the husband deposed to payment of a land premium of $1.5 million in local currency and incurring a substantial loss. He also deposed “no sale proceeds were received following the payment of the land premium”.
When asked by Senior Counsel which of the three versions was correct, the husband was non-responsive and replied that he paid the land premium and gave money to Mr N for his business, and that version was true.
The husband was further cross-examined about whether the land premium was paid from the proceeds of sale and his evidence was that he borrowed the money from Mr TT after he sold the property and repaid the loan after the sale.
He agreed with the statement at paragraph 92 of the wife’s trial affidavit that the amount of $1,098,000 in local currency was paid to a government department by the husband with a cheque drawn from an account held at the AC Bank, as demonstrated by the documents MH-6 annexed to the wife’s trial affidavit. He agreed that he had not provided any statements from the AC Bank as the account was closed a long time ago and in relation to providing evidence of the loan from Mr TT, he could not remember and could not recall what year Mr TT died.
The husband’s evidence of three versions of the alleged application of the proceeds of sale is highly unsatisfactory. It is impossible to make any finding about the actual disposition of the proceeds of sale, other than the husband has failed to satisfactorily account for the application of the proceeds.
Senior Counsel for the wife cross-examined the husband about the correspondence between the solicitors with his denials of ownership of the City H property. He was unable to provide a satisfactory explanation as to why he continued to deny he had an interest in the property via his solicitors, notwithstanding that he lived in the property and his evidence was that everybody knew that he had purchased the property via Ms Feng. He did not provide a satisfactory response to the proposition that he did not instruct his lawyers prior to swearing his affidavit in November 2021 about the circumstances of purchasing the property.
As to the source of the funds of 1.7 million in Country K currency in 1999, his evidence was that part of the funds were loans from other people and some of it was his, although he could not recall how much was borrowed and how much was his, he estimated between 500,000 and 600,000 in Country K currency. That explanation is far from satisfactory, particularly in the context of my findings about the alleged loans the husband seeks to include in the pool.
It is apparent from the husband’s own evidence in cross-examination of three versions of how he disbursed the proceeds of sale of the City L property that he has failed to provide a satisfactory explanation for the disposition of the funds arising from the sale of the City L apartment. He has also failed to provide a satisfactory explanation for the source of funds enabling him to purchase and renovate the City H apartment. His evidence about vague loans from unidentified people, at the times he was unable to recall, enables me to find that he has not complied with his obligations for full and frank disclosure. It is also bizarre and inexplicable why the husband denied his interest in the City H property from the commencement of proceedings in 2015, until February 2017, in circumstances when he was living in the property and other family members were aware of its existence. His failure to instruct his solicitors about the existence of the property is incomprehensible.
It is not possible to find with any certainty whether the husband has any other assets which he has failed to disclose. I make that comment in the context of his conflicting and contradictory evidence about the disposition of the proceeds of sale of City L, the source of funds to purchase and renovate City H property, his extraordinary denial of the existence of the City H property until February 2017 and his insistence that he relocated to City L in 2000, particularly when confronted with contradictory documents such as his two affirmations in the City L proceedings, which demonstrate he relocated to City L in 1997 and not 2000 as he maintained.
Counsel for the husband cross-examined the wife and the trust accountant, Mr MM about the beneficiary loan account. Mr MM’s evidence is referred to in my discussion of the husband’s asserted addback at Item 12 of the Joint Balance Sheet.
In his final submissions, counsel for the husband submitted that the wife’s failure to disclose the trust loan accounts, in so far as whether they relate to the wife or other family members, excluding the husband, equates to the husband’s failure to disclose, as asserted by the wife.
I do not accept that analogy, as the husband’s failure to disclose and provide acceptable responses to questions about the disposition of proceeds of sale of properties is monumental compared to the allegation levelled at the wife. In accordance with my findings, that after 1996 the wife was required to support herself and the children from the trust income and that the husband did not meaningfully contribute to the support of the wife and the children, it is surely no surprise to the husband that the wife applied the income from the family trust to support herself and the children. Mr MM, the accountant for the trust, provided a reasonable explanation why the various trust distributions have been recorded in the trust accounts with only one beneficiary loan account and his understanding of the purpose of the trust was to support the wife and children.
The Full Court in Chang & Su [2002] FamCA 156 at [67] listed the relevant authorities of the law to be applied and the approach that may be adopted where the court is unable to determine the extent of the parties’ wealth, because of a lack of a full and frank disclosure.
The Full Court (Bryant CJ, Finn and Boland JJ) in Gould & Gould [2007] FamCA 609, set out the correct approach to be taken in relation to a failure to comply with the disclosure requirements. After considering past authorities, including Kannis & Kannis [2002] FamCA 1150 (“Kannis”), at [26]–[27] the Full Court set out the correct approach:
26.While the decision of the Full Court (and indeed also of Holden CJ) in Kannis confirms the earlier decisions which were cited by the Full Court and which establish that a robust approach can be taken by the court in cases of non-disclosure, neither that decision, nor any of the earlier decisions cited, would, in our view, support the approach which the trial Judge in this case took in paragraph 24 of his reasons for judgment, being to reduce his assessment of the husband’s contributions of account of the husband’s non-disclosure.
27.Rather the appropriate approach for his Honour to have adopted in this case would have been to have increased the asset pool to take account of non-disclosure by the husband, and indeed his Honour had already done this to some extent in accepting the schedule of assets prepared by the wife’s Counsel (see also paragraphs 12 and 14 of his Honour’s reasons). Alternatively, or even in addition, had his Honour been persuaded that on the balance of probabilities there existed assets other than those contained in the asset pool contained in his reasons, his Honour could have made some adjustment in favour of the wife on account of the husband’s non-disclosure pursuant to the provisions of s 75(2)(o), as did Holden CJ in Kannis.
In Kannis, the Full Court emphasised the “absolute” nature of the duty to disclose and stated at [51]:
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude that the asset pool is greater than demonstrated. In those circumstances it might be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour…
I accept the submissions of Senior Counsel for the wife that the husband’s failure to disclose is a consideration relevant to the exercise of my discretion (s 79(2)).
Conclusion as to exercise of discretion
In his final submissions, Senior Counsel for the wife submitted that it was not just and equitable to exercise my discretion for the reasons referred to in paragraph 129 hereof and the consideration of the s 79(4) factors.
Additionally, he submitted that any findings about the date of separation, do not ultimately matter and nor did the court need to find there was a deliberate decision or agreement to effect a property settlement and part their ways financially subsequent to 1996. It was open on the evidence to do so, but even if the court were not inclined to make findings in accordance with the wife’s case, the court is left with the proposition as to whether or not altering the current legal and equitable interests of the parties is just and equitable.
Regardless of what the intentions of the parties were, the communications between them and what the status of the marriage was, a division of property between the husband and wife as to how they would hold their resources was put in place with the demarcation of the boundaries of the two countries. The wife was left to make do with what she could of the Australian assets, which she has managed and accumulated throughout the years. The husband was left with all of the Country K resources, including a number of businesses and in 1999 he purchased apartments in City L and City H, all of which were under the control of the husband. There may well be additional cash in investments and resources which the husband has accumulated over the years. The husband has managed those assets and resources, independently of the wife and without reference to her. The management of those assets included navigating his way through litigation, selling the City L apartment, disposition of the proceeds in a manner which will never be clear and retention of the City H apartment. The husband made a series of deliberate and conscious decisions in accordance with the reality that the couple have operated independently from each other for the last 20 years.
The husband’s case is that the court should revisit the long-standing existing arrangements and effect a property settlement, which according to him should liquidate all of the Australian assets and divide the proceeds between the parties and that he either retain or sell the City H property.
It was further submitted that the wife has nothing to do with the City H property and it could not be just and equitable some 20 years after the 1999 decision of the husband to buy the property, to embroil the wife in any deferred sale of the property and sharing in some sort of formula to adjust the property between the parties, taking into account what it ultimately sells for, particularly in circumstances where the property is in Country K where the husband lives.
Counsel for the husband submitted that the wife’s evidence about the separation in 1996, which was not conveyed to the husband or anyone else, impugned her credibility to such an extent that her contention that the parties had effectively gone their separate ways in 1996 was not supported by the evidence. It was not just and equitable not to adjust property between them. Specifically referring to the wife’s Case Outline:
(a)the contention that the parties had separated in 1996 was gone;
(b)a separation of the parties finances, by agreement between the parties was not supported by the evidence;
(c)separate lives with a marriage in name only and at a permanent end was not supported by the evidence;
(d)no further involvement in each other’s financial affairs is nonsense;
(e)the husband made no financial or non-financial contribution to any of the assets is nonsense;
(f)the parties changed the structure of the trust because they were a family working together to protect their assets;
(g)the husband did not file his application until 30 September 2015, because it was the argument in 2014 which ended the marriage.
The trust distributions to the husband and the restructure of the trust in 2004, demonstrates an intact family working together to maximise wealth. For 20 years the wife had the sole benefit of the family trust, and which was increased by the contribution of the husband, via the distributions to him. It would not be just and equitable to tolerate a situation where only one party had assets to support themselves and the other one had to borrow money to support themselves.
In exercising my discretion, I have, as I’m permitted to do, considered the matters in s 79(4) of the Act, in addition to the matters referred to earlier in these reasons. I accept the submissions of Senior Counsel for the wife and do not accept the submissions of Counsel for the husband, other than my finding that the parties did not formally separate in 1996. I do not intend to exercise my discretion pursuant to s 79(2) as I am not satisfied it is just and equitable to do so, for the following reasons, in accordance with my findings:
(a)although the parties did not formally separate in 1996, as claimed by the wife, the husband relocated to City L in 1996 and the wife remained living in Australia with the three children;
(b)the parties lived in separate countries from 1996 onwards with sparse communication, particularly, according to the husband, subsequent to 2004;
(c)neither party provided financial assistance to the other subsequent to the husband’s move to City L in 1996 including the husband failing to pay child support for the benefit of the children;
(d)the living arrangements could not be described as a family living in two separate countries from time to time;
(e)irrespective of whether there was an agreement between the parties in 1996, the wife had effective control of the Australian assets subsequent to 1996 including the $600,000 transferred from the parties overseas funds;
(f)the wife was primarily responsible for the acquisition of the trust properties in Australia subsequent to 1996, although the husband cooperated to enable her to acquire the properties and other assets;
(g)the husband acquired the City L and City H properties in 1999, without reference to the wife;
(h)the husband sold the City L property without reference to the wife and has failed to satisfactorily account for the proceeds of sale, providing three contradictory versions of the disposition of the proceeds of sale;
(i)subsequent to 1996, the husband continued to operate his business interest in City L without any involvement of the wife or disclosure to her;
(j)the trust restructure in 2004 was instigated by the wife and not the husband or Mr N, to protect the Australian assets from the City L litigation;
(k)there was no agreement by the wife to reverse the trust restructure, to enable the husband to have control of the trust, after the conclusion of the City L litigation;
(l)the husband voluntarily relinquished his position in the family trust in 2004 and thereafter the wife continued to manage the trust assets without reference to the husband;
(m)there were no distributions made to the husband from the family trust, other than those between 2010 and 2014, which were suggested by an accountant and which, in the context of an asset pool exceeding $8 million, are not significant;
(n)apart from the trust distributions, there was no intermingling of finances between the parties subsequent to 1996;
(o)the failure to distinguish the extent of each of the beneficiary loan accounts in the accounts of the trust, was not a deliberate non-disclosure by the wife, but rather the accounting practice adopted by the trust accountant;
(p)the husband’s lack of disclosure, consistently contradictory and recently invented evidence, particularly in relation to his activities in City L, makes it impossible to determine the extent of the husband’s interests and assets in City L. An example is his failure to adequately explain how he acquired his current bank account balance of $446,596 (Item 15 in the Joint Balance Sheet);
(q)the wife should not be required to participate or share in the sale and disposition of the City H property, when she has never had any involvement with the property;
(r)in the context of my findings about the husband’s asserted loans, the insurmountable problems with the husband’s evidence about the loans, and non-inclusion of the loans in the asset pool, the wife retaining the Australian assets and the husband retaining the City L assets, would result in an approximate equal division of the assets, although slightly in favour of the husband, which does not provide a justifiable basis for alteration of property interests;
(s)the relevant s 79(4) considerations including s 75(2) factors as referred to in these reasons, do not support a justifiable reason to alter the property interests of the parties, as determined by me.
Alternative approach
In the event I have erred in the exercise of my discretion in concluding it is not just and equitable to make any order, I will now address what I consider to be the appropriate outcome in the event the matter had been determined on the basis that it was just and equitable to make an order adjusting the parties property. I note this was the approach adopted by his Honour Thackray CJ in Fielding & Nichol [2014] FCWA 77.
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 s 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 s 79(4)(d)–(g), including the matters set out in s 75(2) so far as they are relevant, and then decide whether any further adjustment is appropriate;
(d)consider whether the proposed orders are just and equitable.
I am also mindful of the comments of the Full Court in Bevan at [86], that the just and equitable requirement permeates the entire process.
Asset pool
The joint balance sheet submitted by the parties is referred to at paragraph 81 hereof.
The assets the husband seeks to include in the pool are referred to at paragraphs 83 to 97 hereof.
The liabilities which the husband seeks to include in the pool are referred to at paragraphs 98 to 127 hereof.
At paragraph 128 hereof, I have set out my conclusion as to the existing legal and equitable interests of the parties in property available for adjustment between them.
Discussion and conclusion of contributions
I have set out the assets at the commencement of the relationship as claimed by each party, at paragraphs 227–229 hereof.
I have set out contribution of both parties during and post 1996 when they commenced living in different countries, at paragraphs 232–238 hereof.
The wife did not pursue a Kennon argument (Kennon v Kennon (1997) FLC 92-757) although her affidavit was replete with evidence about the family violence she contends she was subjected to by the husband. I accept that the wife’s life would have been difficult after migrating to Australia in 1986, in circumstances where she did not speak the language and ultimately had three young children to care for as well as contributing to the family business.
Notwithstanding that, I do not find that the parties separated in 1996, as asserted by the wife, I have found that the husband returned to City L in 1996, where he primarily remained attending to business interests and purchasing property, and where he remains today. I have also found that the wife remained in Australia with the three children with little assistance from the husband, as I do not accept that the husband travelled frequently to Australia for long periods as he attempted to assert during cross-examination. I accept the wife’s evidence that the husband travelled infrequently to Australia subsequent to 1996 and that as between 1996 and 2004 there was some form of communication between the parties although not significant . As from 2004 there was negligible communication, according to the evidence of both parties, as the husband deposed to the communication between them deteriorating up to 2004.
Whilst the husband was in City L, I accept that he made business decisions and acquired property without reference to the wife .The City L property was acquired in 1999 for over $3.3 million in local currency. The purchase price was funded by a bank loan of $1.6 million, $671,000 from a public housing provider and according to the husband, he provided the balance. The City H property was acquired in 1999 for 1.7 million in Country K currency, and according to the husband, he borrowed about 500,000–600,000 in Country K currency and he provided the balance.
There was no dispute that the properties acquired in Australia, via the trust were purchased with the $600,000 transferred from Country K to Australia, although there is a dispute about the original source of the funds. I refer to my earlier findings about which party arranged for the purchase of the properties in Australia. I also find that the Australian assets have been managed by the wife since at least 2004 and probably since 1997 when the husband granted a Power of Attorney (Exhibit W-5) to her.
In relation to contributions, I find that the contributions of each party at the commencement of the marriage were not particularly significant. As to contributions during the relationship, I find that the contributions from the date of the marriage to 1996/1997 should be regarded as roughly equal, having regard to the respective roles of the parties, that is the wife as primary homemaker and parent and also engaging in employment in the family business, and the husband’s role in the family business. The contributions subsequent to 1996/1997 are also difficult to assess. Doing the best I can, each party made financial contributions to the assets, with the husband acquiring the overseas assets with funds which probably were generated by the parties’ overseas business interests and in the case of the City L property, advances from a bank and a public housing provider, and the wife acquiring and managing the properties in Australia. As previously remarked, it is self-evident after 1996 when the husband relocated to City L, and the wife and three children remained in Australia, the wife’s contributions as a homemaker and parent were greater than the husband’s non-financial contributions. The contributions of each party, post the husband’s asserted date of separation in 2014, were essentially similar to the contributions subsequent to 1996/1997, save that the children were all over the age of 18.
As the Full Court said in Dickons & Dickons [2012] FamCAFC 154:
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.
Having regard to my comments as to 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 the husband’s asserted date of separation, and their contributions as homemaker and parents I assess those contributions as approximately equal, although a slight adjustment in the wife’s favour would be appropriate.
Discussion and Conclusion as to future needs
Paragraphs 242–247 hereof refer to the future needs of the parties.
The husband initially sought an adjustment in his favour for his future needs factors however, most appropriately, his counsel conceded that the future needs of both parties were equal. I agree that there is no reason to make any adjustment for future needs with two retired people, when both say they have significant health problems and they will need to provide for themselves from their own resources.
Adjustment of Interests
At paragraphs 249–275 hereof, I set out the discussion about the husband’s failure to make full and frank disclosure, as a factor to be considered pursuant to s 75(2)(o) of the Act.
As a result of my conclusions and findings made relating to contributions, future needs and factors to be considered pursuant to s 75(2)(o), I am satisfied that it is just and equitable not to make any order adjusting the property between the parties, in accordance with the submissions of the wife.
On the basis of the property pool I have determined, the wife will retain the assets in Australia as follows:
Assets in Australia Description Value C Street, Suburb D $1,100,000 Unit 1 E Street $685,000 Unit 2 E Street $660,000 Cash in Bank accounts as at 30/06/20 $337,612 Share Portfolio
AA Company shares @ $... as at 25/11/21
Z Company shares @ $... as at 25/11/21
Y Company shares @ $... as at 25/11/21$3,599
$8,069
$1,281,648Funds held in Kennedy Partners’ Trust Account $53,959 ANZ Bank …52 $123,813 NAB …10 $22,296 AA Company Shares $4,872 Motor Vehicle 1 $3,000 Total $4,283,868
I have determined that the husband will retain the overseas assets as follows:
Assets overseas Description Value City H, Country K apartment $4,092,000 PP Bank Account …88 $446,596 QQ Bank …2-0 $351 PP Bank Account …01 $1 PP Bank Credit Card $4,471 Total $4,534,477
The assets to be retained by the wife are slightly less than those retained by the husband, however, the wife was content for this division of the assets. Had the wife failed to persuade me that it was just and equitable not to exercise my discretion to make an adjustment of assets between them, it may have been that she could have received some of the overseas assets. In that regard, I agree with the comments of Senior Counsel for the husband that a 50/50 division or parity outcome is the wife’s absolute worst case.
I do not intend to make any orders altering property interests between the parties. I will however make an order providing for the second respondent to transfer her interest in the City H property to the husband. The husband will then be at liberty to either retain or sell the property.
I will make orders accordingly.
I certify that the preceding three hundred and eight (308) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams. Associate:
Dated: 18 March 2022
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