Fung & Forbes

[2021] FamCA 42

FAMILY COURT OF AUSTRALIA

Fung & Forbes [2021] FamCA 42

File number(s):

SYC 2154 of 2017

Judgment of:

CAREW J

Date of judgment:

12 February 2021

Catchwords:

FAMILY LAW – PROPERTY – Property settlement in relation to marriage – Valuation of property – Where the parties are in dispute over the valuation of various assets – Where the applicant alleges that the respondent has hidden assets in either Australia, overseas or in a Superannuation Fund – Where it is just and equitable to alter the legal and equitable interests of the parties – Where the applicant has failed to prove that the respondent has hidden assets – Where the property pool, including Superannuation, is found to be valued at a total of $146,588 – Where the respondent is ordered to pay the applicant $88,000 over two equal instalments by way of property settlement.

FAMILY LAW – SPOUSAL MAINTENANCE – Whether the applicant has the capacity to support herself – Whether the respondent has the capacity to pay spousal maintenance – Where the arrears of spousal maintenance will be reduced to $16,000 and the respondent is ordered to pay spousal maintenance of $745 per week to the applicant.

FAMILY LAW – ORDERS – Contravention – Whether the husband has contravened the order made on 15 May 2018 by failing to pay the instalment due under the order – Where the respondent says he could not afford to make the payment – Where the respondent is found to have contravened the order without reasonable excuse and will be required to enter into a bond to be of good behaviour for two years including complying with the order finalising the proceedings.   

Legislation:

Child Support (Assessment) Act 1989 (Cth)

Family Law Act 1975 (Cth)

Family Law Rules 2004 (Cth)

Superannuation Industry (Supervision) Act 1993 (Cth)

Cases cited:

In the marriage of Bevan and Bevan (1995) FLC 92-600

Chorn and Hopkins (2004) FLC 93-204

Chranley & Smart (2013) 47 Fam LR 581

Hunt & Atkins [2014] FamCA 1076

Kane & Kane (2013) FLC 93-569

Mitchell & Mitchell (1995) FLC 92-601

Stanford v Stanford (2012) 247 CLR 108

Stein & Stein (2000) FLC 93-004

Number of paragraphs:

107

Date of hearing:

28 & 29 January 2021

Place:

Brisbane

Applicant:

Self-represented

Counsel for the First Respondent:

Ms Pendergast

Solicitor for the First Respondent:

Pan & Partners

ORDERS

SYC2154/2017

BETWEEN:

MS FUNG

Applicant

AND:

MR FORBES
Respondent

ORDER MADE BY:	CAREW J
DATE OF ORDER:	12 FEBRUARY 2021

THE COURT ORDERS THAT:

1.The husband pay to the wife the sum of $88,000 (“the settlement sum”) by way of two equal instalments with the first to be paid on or before 12 August 2021 and the second to be paid on or before 12 February 2022 secured by a charge over the Husband’s 30% interest in G Pty Ltd (held indirectly via H Pty Ltd which the husband controls).

2.In the event that the husband makes any drawdown of his loan account with G1 Limited prior to the payment of the settlement sum, he shall pay that sum to the wife until the settlement sum is paid in full.

3.The husband shall provide quarterly statements to the wife in relation to his loan account with G1 Limited until the settlement sum is paid in full.

4.The husband and wife shall use their best endeavours to sell their shares in J Limited and for this purpose any proceeds of sale shall be paid:

a)In payment of the costs of sale including government charges, fees and any costs of a party incurred to travel to and from Australia to effect the sale; and

b)The balance to the wife.

5.The wife shall have the conduct of the sale referred to in the preceding paragraph and the sole right to accept or decline any offer and both parties shall do all such things and sign all such documents as may be necessary to finalise the sale.

6.In the event that the husband receives any payment from the H Group in China (including but not limited to H1 Ltd, H2 Ltd, H3 Ltd) in reduction of his loan account or otherwise then the husband shall pay that sum to the wife.

Spousal maintenance

7.The husband shall pay spousal maintenance of $745 per week to the wife to date from the date of this order with the first payment to be made on 19 March 2021 and weekly thereafter.  

8.The wife shall inform the husband in writing as soon as she obtains employment and provide copies of her payslips to him upon request.

9.The arrears of spouse maintenance arising from the orders made on 17 July 2017 and 15 May 2018 shall be reduced to $16,000 and paid to the wife on or before 12 February 2022.

Contravention

The Court having found that on 1 July 2018 the husband contravened paragraph 2 of the order made on 15 May 2018 without reasonable excuse

IT IS FURTHER ORDERED THAT:

10.The husband, Mr Forbes, within seven days shall enter into a bond upon the following conditions:

a)The husband must be of good behaviour for the duration of the bond including complying with the order dated 12 February 2021;

b)The bond shall be for a period of two years commencing on the date the husband enters into the bond;

c)The bond is without surety and without security.

NOTATION
It is noted that the husband did not oppose the wife holding security for the settlement sum (although not the quantum of the settlement sum) over his shares and also consented to the wife receiving the entire proceeds, if any, of the J Ltd shareholding.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Fung & Forbes has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

CAREW J.

1. Ms Fung (“the wife”) and Mr Forbes (“the husband”) are in dispute about property settlement, spousal maintenance, and contravention of a previous spousal maintenance order.

2. The wife contends that the husband has hidden assets and that the balance sheet should reflect assets of over $11,000,000. The husband denies that he has hidden assets and contends that the asset pool is a modest $125,627 (not including his superannuation of $2,506).

3. The trial was conducted via a continuous translation of proceedings to the wife in Mandarin. The Court records its thanks to Ms K (the Court provided interpreter) who performed a very difficult task in circumstances made even more difficult by the wife’s representation of herself in the proceedings.

4. For the reasons which follow, the husband will be ordered to pay to the wife $88,000 within 12 months by way of property settlement. The arrears of spousal maintenance will be reduced to $16,000 and the husband will be required to pay ongoing spousal maintenance of $745 per week. The husband has been found to have contravened the order made 15 May 2018 without reasonable excuse and will be required to enter into a bond to be of good behaviour for two years including complying with the order to be made in finalising these proceedings.

   BACKGROUND   

5. The parties commenced a de facto relationship in 1999[1], married in 2009 and separated in March 2016. The wife is 51 years of age and the husband is 64 years of age. Throughout their relationship and marriage the parties lived for the most part in China but have both lived in Australia since 2017.

   [1] The husband made this concession at the commencement of the trial, previously contending the date of commencement of the de facto relationship with 2003.

6. The parties have two children, X aged 17 years and Y aged 14 years. The children live with the wife and spend time with the husband. They attend a private school and the husband pays their school fees of about $20,000 per annum. The husband also meets other expenses for the children from time to time such as dental and optometry. The husband’s child support assessment is a modest $36.25 per month based on an annual income of $25,917. I note the husband contends that his current income is derived from a consultancy fee of $35,000 per annum.

7. The husband describes himself as retired but he works part time as a consultant for G Pty Ltd with his two adult sons, Mr C, who is the internal accountant and Mr D who is the general manager and director of G Pty Ltd. The husband controls 30% of G Pty Ltd and together with his sons they control 50% of the business. A third party owns the remaining half. The husband contends that at his age he does not want to work full time and in any event he says there is no full time role available for him at G Pty Ltd.

8. The husband lives with his current partner, Ms F. She is 29 years of age and has undertaken a university degree in Australia. She works casually for G Pty Ltd while looking for full time work. Currently her average weekly income is $711 and she contributes $200 per week towards the household expenses. The husband and Ms F rent a property for $1,000 per week. The husband contends that he rented this three bedroom apartment last year on the expectation that the children would be living with him. That did not eventuate. He signed a 12 month lease which expired in December last year. He extended the lease “short term” due to the imminent trial dates. The husband intends to obtain a two bedroom apartment for about $650 per week.

9. The wife is unemployed and receives Social Security. As a condition of the benefits she receives, she is required to apply for eight jobs each month. The wife contends that she has met her obligations in this regard. The wife’s evidence was not challenged. The wife has applied for unskilled positions. The wife contends that her English is adequate for casual conversation only. As already noted, the entire proceedings were translated for the wife.

10. The parties’ relationship commenced while the husband was still married to his first wife. He and his first wife separated on a final basis in about 2003 and settled their property in 2007.

11. At the commencement of his relationship with the wife (in these proceedings), the husband had interests in businesses in China. Those interests expanded over the years and the income derived therefrom enabled the parties to live a very comfortable lifestyle in China. They travelled extensively and their children attended expensive international schools.

12. After separation, the wife and children remained in China for some months after the husband moved back to Australia. The wife’s living expenses continued to be met by the husband.

13. On 31 May 2017, an order was made in this Court and included a notation in the following terms:

    4.The Court notes that pending determination of the wife's application for partial property settlement and interim spousal maintenance, the husband intends to continue to pay or cause to be paid the following:

    a.the wife's rent and utilities, including management fees, electricity, gas and water usage fees in China

    b.        the children's school fees and expenses in China

    c.        the amount of AUD$4,000 per month to the wife.

14. The husband contends that he was happy to continue to meet the wife’s expenses at that time because he was still receiving income from his investments in China.

15. On 17 July 2017, an order was made that the husband pay to the wife $25,000 (130,000 Renminbi (“RMB”)) by way of interim property settlement, and spousal maintenance of $16,200 (84,240 RMB) per month. The husband does not seek to notionally add back the interim property payment in these proceedings. 

16. The husband contends that, once his income from China ceased, he was unable to pay the full spousal maintenance sum each month and applied for a variation of the spousal maintenance order to 20,000 RMB per month. On 15 May 2018, the husband’s application was dismissed and the arrears (assessed at 513,920 RMB)[2] were required to be paid by equal monthly instalments over a period of six months with the first payment to be made on 1 July 2018. No payment was made by the husband on 1 July 2018 and all payments made thereafter fell short of his spousal maintenance obligations. From 31 October 2018 to the present, the husband has paid the children’s school fees and the wife accepts that those payments can be off set against the husband’s spousal maintenance obligation. The arrears of spousal maintenance are agreed at $600,942.

    [2] The order does not contain a conversion into AUD but using the same conversion rate as the previous order the arrears were $98,830.

17. On 5 February 2018 and 8 May 2019 orders were made in the Court of First Instance in V City against the husband and another respondent, requiring them to pay HK$5,006,000 together with interest thereon in the sum of HK$1,334,939.04 to W Inc. On 18 March 2020 the High Court of V City ordered that the husband’s shares in H Group Ltd and L Ltd stand charged with the debt. The husband contends that no further action has been taken against him in relation to this judgment debt but that some of his business interests have been taken over by the M Group.

18. Mr AA was appointed a single expert and he has undertaken a valuation of the parties interests in the following:

    (a)G Pty Ltd

    (b)The G Trust;

    (c)G1 Limited (V City);

    (d)The Forbes Family Trust; and

    (e)The Forbes Family Super Fund.

19. The first three entities are collectively referred to as the “G Group”. G Pty Ltd (the main entity) manufactures specialised insulated building panels and associated fittings. The G Trust operates a factory that supplies G Pty Ltd with its insulated core materials. G1 Limited (V City) was originally primarily a holding company and maintained for a strategic purpose to act as a foothold in the region. It has been used as a vehicle to source raw material for G Pty Ltd and to facilitate business relationships in China. Historically, the husband also used the company to obtain a working visa when domiciled in V City prior to his return to Australia. The business operations commenced in about 2012. Initially when the company was established in March 2011, the shares in G1 Limited (V City) were owned by a third party (50%), by the husband (30%) and a second third party (20%). In August 2016, the second third party disposed of his shares for 1,500,000 RMB ($300,000) via a swap of loan accounts between himself and the husband in the H Group (comprising of various entities in China in which the husband has an interest) and, as part of the arrangement, these shares were then purchased by the husband’s sons, Mr D (10%) and Mr C (10%), for $100,000 each as a means of securing an opportunity to participate in the company’s possible future. 

20. The Forbes Family Trust was wound up in or about 2010.

21. Upon the husband reaching age 60 and retiring, the Forbes Family Super Fund (“the Super Fund”) was wound up on 31 October 2017. The Super Fund’s only asset as at 25 October 2017 was a loan to H4 Ltd (part of the separate H Group). H4 Ltd paid $34,937 to the Super Fund to pay out all tax obligations, superannuation charges and outstanding fees. The debt as shown in H4 Ltd’s accounts was then transferred to FF Pty Ltd (the trustee of the Super Fund) and then listed as owed to the husband. The final ‘payout’ of the Super Fund’s assets to the members (the husband, his son Mr D, and Ms Forbes) on 25 October 2017 included $793,667 to the husband (which is represented by the husband’s interest in the loan account with H4 Ltd) and seemingly unrecoverable. FF Pty Ltd was deregistered on 18 July 2018.

22. In Mr AA’s most recent report dated 31 July 2020, he values the parties’ interests as at 30 June 2019. Apart from the husband’s interest in a loan account in G1 Limited of $171,847, Mr AA opines that there is no other interest of value.

23. In July 2020, Mr AA was also appointed as a single expert to conduct an analysis of transactions and report upon the transfer and disbursement of $1,400,000 allegedly transferred from the Super Fund by the husband to the H Group in China.

24. Mr AA refers to Section A payments and Section B payments as follows:

    Section A payments

Date	AUD$
10/11/2009	200,000
15/12/2009	125,000
07/01/2010	100,000
12/04/2010	100,000
Total	$525,000

Section B payments

11/05/2015	100,000
12/08/2015	80,000
04/11/2015	219,000
17/12/2015	100,000
11/01/2016	100,000
14/01/2016	60,000
02/02/2016	25,000
08/03/2016	25,000
17/03/2016	50,000
18/05/2016	25,000
Total	$784,000
Total Section A and Section B	$1,309,000

1. While Mr AA is not able to conclusively determine that the Section A and Section B payments were transferred from or on behalf of the Super Fund to the H Group, he opines that it seems likely. 

2. The estimated value of the Super Fund as at 30 June 2009 was $1,491,321. In addition to the transfers from the Super Fund to the H Group, the husband contends that upon attaining 55 years of age (2011) he commenced to receive a transition to retirement pension from the Super Fund.

3. While the husband retains a loan account with H4 Ltd (part of the H Group) the husband and wife agree that recovery of any sum is unlikely. In 2019, the husband and wife retained a lawyer in China to assist them in recovering their investments in the H Group but were unsuccessful. It is for this reason that the husband, as part of his property settlement proposal, is content for the wife to retain any funds if she subsequently recovers them.  

4. The parties’ interests in the H Group in China have been separately valued by a single expert in China. The net interests are assessed as having no value.

5. The parties have shares in J Limited, a company in China that is part of the H Group, and were offered 2,000,000 RMB ($400,000) for them in October 2019.  The wife opposed the sale, informing the husband’s lawyers by email on 3 October 2019 that she was not interested in selling at that time. The wife again rejected the offer in June 2020 stating that the price was too low. Neither party considers it likely that the shares will now be sold but the husband is content for the wife to receive the entire proceeds if they are sold.

   ISSUES

6. On 7 September 2020, when this matter was set down for trial, the parties identified four significant issues requiring determination. Those issues were clarified during the trial and ultimately, the parties agreed that the significant issues for trial are adequately and accurately identified as follows:

   (1)What are the assets and liabilities of the parties and what is their value?

   (2)Has the husband hidden assets in Australia or overseas or in a superannuation fund?

   (3)Is the wife unable to support herself adequately and, if so, does the husband have the capacity to pay spousal maintenance?

   (4)Should the arrears of spousal maintenance (the quantum agreed at $600,942) be discharged?

   (5)Did the husband contravene the order made on 15 May 2018 by failing to pay the first tranche of the arrears of spousal maintenance on 1 July 2018?

7. The husband did not oppose the wife further amending her Initiating Application to seek ongoing spousal maintenance and took no issue with her failing to specify the quantum sought.

8. The husband did not require the determination of the wife’s contravention application before the property and maintenance applications. In Chranley & Smart[3] the Full Court (Bryant CJ, Finn and Thackray JJ) said, at [43]:

   In family law proceedings, it is generally the case that allegations of contempt/contravention are heard and decided before the substantive proceedings commence. This is because, as her Honour pointed out, if there is some risk that a party might be found guilty of breaching an order, there exist appropriate constraints on that party giving particular evidence. Without those safeguards, a party might, for example, be put in a position where he or she is required to give evidence or be cross examined about matters potentially of consequence in a subsequent contravention/contempt hearing, in which a finding of guilt may result in a fine or imprisonment, or both. It is thus usually the case that procedural fairness is occasioned by allowing the contempt/contraventions to proceed first.

   [3] (2013) 47 Fam LR 581 at 591, [43].

1. The husband also waived his rights to the procedural process set out in r. 21.08 Family Law Rules 2004 (Cth).

2. The first two issues concern the property dispute and I propose to consider them together but before doing so it will be helpful to set out the applicable legal principles in relation to property settlement.  

   APPLICABLE LEGAL PRINCIPLES – PROPERTY

3. In property settlement proceedings, the Court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property, including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties and an order requiring either or both of the parties to the marriage to make, for the benefit of either or both of the parties, such settlement or transfer of property as the court determines (s 79(1) of the Family Law Act 1975 (Cth) (“the Act”)).

4. The Court must not make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 79(2)).

5. In considering what order (if any) should be made in property settlement proceedings, the Court is required to take into account the following (s 79(4)):

   (a)The financial contribution made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;

   (b)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;

   (c)The contribution made by a party to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;

   (d)The effect of any proposed order upon the earning capacity of either party;

   (e)The matters referred to in s 75(2) of the Act so far as relevant;

   (f)Any other order made under the Act affecting a party; and

   (g)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the marriage.

6. The High Court of Australia in Stanford v Stanford[4] identified certain principles applicable to applications for property settlement. In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[5] Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way.[6] Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist.[7] The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 79(4). It is necessary to give separate consideration to s 79(2) and (4) and not to ‘conflate’ the two subsections.[8]

   [4] (2012) 247 CLR 108 (“Stanford”).

   [5] Ibid at 120, [37].

   [6] Ibid at 120 – 121, [38].

   [7] Ibid at 121, [40].

   [8] Ibid.

   Is it just and equitable to make an order?

7. Neither the wife nor husband contend that it is not just and equitable to make an order. That position is understandable given that the wife and husband separated in 2016 and “there is not and will not thereafter be the common use of property” by the parties.[9] Additionally “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 relationship”.[10] In such cases, the “just and equitable requirement is readily satisfied”[11] and I am satisfied in this case that it is just and equitable to make an order.

   [9] Ibid at 122, [42].

   [10] Ibid.

   [11] Ibid.

   WHAT ORDER DOES EACH PARTY SEEK?

8. By way of property settlement, the wife seeks the following: (as per original)

   (1)The respondent transfer 50% of his shares in G Pty Ltd to the applicant. And the applicant takes 60% of the loan owing to the respondent from G Pty Ltd (sic).

   (2)The applicant takes 60% of the loan owing to the respondent from G2 Pty Ltd (sic).

   (3)The applicant takes 60% of the loan owing to the respondent from the H Group.

   (4)The applicant takes 60% of total sales from the previously sold business (EE Business V City) and G Group V City shares (total amount $418,586 AUD).

   (5)…

   (6)That upon determination of the net asset pool (excluding G Pty Ltd) available for distribution between the parties that such net asset pool be distributed as to 60% to the applicant and 40% to the respondent.

9. The husband seeks the following by way of property settlement: (as per original)[12]

   [12] The husband amended the order sought as reflected in exhibit 4.

   (1)That the Husband retain his interest in any shares in the G1 Limited.

   (2)That in respect of the Husbands loan account in G2 Pty Ltd (sic) with a current balance of $117,327 (sic) then;

   (a)The Husband hold an amount of $58,663 in trust for the Wife.

   (b)Should the Husband make draw down of that loan, he will pay to the Wife an amount equal to ½ of any draw down until the amount of $58,327 is paid in full to the Wife.

   (3)That the Parties use their best endeavours to sell their interest in J1 Limited shares that own a 50% interest in the H Group (H1 Ltd, H2 Ltd & H Group Limited V City) and for this purpose any proceeds of sale be paid:

   (a)In payment of the costs of sale including government charges, lawyers' fees and any costs of a Party incurred to travel to and from Australia to effect the sale;

   (b)Any balance to the Wife;

   (c)The Wife have the conduct of the sale and the sole right to accept or decline any offer; and

   (d)Both parties to do all such things and sign all such documents as may be necessary to make the sale.

   (4)Otherwise each Party retain the Assets and Liabilities currently in their name, possession or control.

   WHAT ARE THE ASSETS AND LIABILITIES OF THE PARTIES AND WHAT IS THEIR VALUE? AND

   HAS THE HUSBAND HIDDEN ASSETS IN AUSTRALIA OR OVERSEAS OR IN A SUPERANNUATION FUND?

   Balance Sheet

10. The assets and liabilities of the parties or either of them (as contended by each party) are set out in the following balance sheet:

Ownership	Description	Wife’s value	Husband’s value
1.	Husband	30% shareholding in G Group	Nil	Nil
2.	Husband	Loan account G Group	171,847	117,327
3.	Joint	J Ltd shares	Nil	Nil
4.	Husband	Loan account The H Group	Nil	Nil
5.	Husband	Bank account	2,400	2,400
6.	Wife	Bank account	1,400	1,400
7.	Wife	Motor vehicle	4,500	4,500
8.	Husband	50% shares in  H2 Ltd	128,600	Nil
9.	Husband	Shares in BB Company V City	Nil	Nil
10.	Husband	Loan H3 Ltd	Nil	Nil
11.	Husband	Proceeds of sale O Street (2012)	780,000	Nil
12.	Husband	Proceeds of sale N Street (2012)	435,000	Nil
13.	Husband	Proceeds of sale P Street (2012)	395,000	Nil
14.	Husband	Proceeds of sale Q Street (2015)	1,065,000	Nil
15.	Husband	Proceeds of sale  of CC Company (2007)	5,000,000	Nil
16.	Husband	Proceeds of sale R Street (2009)	1,804,418	Nil
17.	Husband	Proceeds of sale  S Street (2011)	938,506	Nil
18.	Husband	Proceeds of sale EE Business V City (August/September 2016)	450,000	Nil
19.	Husband	Proceeds of sale of 20% shares in G Group (2016)	200,000	Nil
20.	Husband	Share in G1 Limited	Nil	Nil
21.	Husband	Loan to G2 Pty Ltd	Nil	Nil
22.	Husband	100% shares in G2 Pty Ltd	Nil	Nil
23.	Husband	Proceeds of sale DD shares	Nil	Nil
24.	Husband	Proceeds of sale T Street	Nil	Nil
Total assets	11,376,671	125,627
25.	Husband	Superannuation	2,506	2,506
Personal liabilities
26.	Husband	Westpac Mastercard	(15,000)
27.	Wife	Loan from friends in China	(57,000)

1. Before turning to consider each of the disputed balance sheet items, as already noted the single expert assessed the parties’ interests in the following:

   (a)G Pty Ltd – nil;

   (b)The G Trust – nil;

   (c)G1 Limited – loan account for husband $171,847;

   (d)The Forbes Family Trust – nil; and

   (e)The Forbes Family Super Fund – nil.

2. The husband holds a 30% interest in G Pty Ltd, held indirectly via H Pty Ltd which the husband concedes he controls.

3. The same expert, also undertook a forensic examination of the Forbes Family Superannuation Fund as a result of allegations made by the wife of missing funds. While the expert could not conclusively find that funds were invested in the H Group it seems likely on the evidence provided. I further note that self-managed superannuation funds are subject to regulatory oversight in Australia and are required to be independently audited.[13]

   [13]  Superannuation Industry (Supervision) Act 1993 (Cth), pt 4, div 3, ss 10 (definition of ‘Regulator’), 11 and 35C.

   Item 2

4. In relation to item 2 in the balance sheet, the single expert undertook his valuation based on the accounts as at 30 June 2019 and at that time the husband’s loan account was $171,847. Since that time the husband has drawn upon his loan account to meet the following payments:

   (a)2/8/19 - $10,000 (legal fees) and $5,005 (school fees);

   (b)15/10/19 - $7,500 (school fees) and $2,600 (personal expenses);

   (c)10/12/19 - $10,120 (legal fees);

   (d)31/1/20 - $5,500 (school fees);

   (e)30/4/20 - $5,000 (school fees);

   (f)13/7/20 - $11,000 (legal fees ) and $5,060 (school fees);

   (g)7/10/20 - $5,400 (school fees);

   Total $67,185[14] being $31,120 (legal fees) and $33,465 (school fees) and $2,600 (personal expenses)

   [14] The husband incorrectly totals these sums as $54,520 in his affidavit filed 20 January 2021 [7].

5. Thus the husband argues that the current balance in his loan account said to be $117,327 should be included in the balance sheet rather than the balance as at 30 June 2019. The wife argues that as the husband has spent the money on himself the higher figure should be included.

6. While the husband contends that the current balance in his loan account is $117,327 rather than $171,847 because of the above payments, the correct balance would appear to be $104,662. Whether or not to notionally add back legal fees is a discretionary matter and depends, in part, upon the source from which fees have been paid.[15] In this case, I propose to notionally add back the husband’s legal fees of $31,120 as I regard the use by the husband of the loan account for this purpose to be a premature use of property that would otherwise have been available for distribution between the parties. I do not propose to notionally add back the school fees and minimal personal expenses. Accordingly, the loan account will be included in the balance sheet as $135,782.

   [15] Chorn and Hopkins (2004) FLC 93-204, at 79,322 -79,323, [56] – [60]; See also Hunt & Atkins [2014] FamCA 1076 at 41-42, [236].

   Item 8

7. In relation to item 8 in the balance sheet, a different single expert valued the net interests of the parties in the H Group in China as having a nil value. The wife has simply cherry picked one item and sought to include it in the asset pool. I reject her attempt to do so.

   Items 11 - 16

8. In relation to items 11 to 16 in the balance sheet, the sale of the property identified in these items all occurred well prior to separation. Effectively, the wife is seeking an audit in relation to these funds. The husband’s evidence details what became of the funds and he has provided an undertaking to the Court that he has made full and frank disclosure of all documents relevant to the issues in the proceedings. While the wife may be justified in querying how the husband has been able to maintain his current lifestyle on his disclosed income, the wife has not identified any proper basis to justify an add-back of these items.

   Item 17

9. In relation to item 17 in the balance sheet, the husband contends that the proceeds of sale of EE Business V City in August/September 2016 were paid to the H Group to assist with its expansion program and he has provided an undertaking to the Court that he has made full and frank disclosure of all relevant documents. The wife could have retained Mr AA to clarify the situation as she did with the Super Fund. The wife has not identified any proper basis to justify an add-back of this item. In any event, both parties seem to accept that it is unlikely that any money paid to the H Group will be recoverable.

   Item 18

10. In relation to item 18 in the balance sheet, while this property was sold after separation there is insufficient evidence to justify its notional add back. The husband contends the proceeds were paid to the H Group to assist in expansion of the business interests and forms part of the money that is unlikely to be recovered.

    Item 19

11. In relation to item 19 in the balance sheet, the husband sold the shares in G1 Limited (V City) to his sons and used the proceeds to support himself in circumstances where he has chosen not to work full time. Mr C paid the husband his $100,000 by instalments over the period 2 January 2017 to 31 January 2019. Mr D paid his $100,000 on 24 June 2016 into “G Group”[16] and the funds were drawn down by the husband for his living expenses. While I do not propose to notionally add back the $200,000, I will take into account the husband’s use of these funds as a s 75(2) factor.

    [16] It is not clear which bank account of which “G Group” entity received these funds.

    Adjusted Balance Sheet

12. Accordingly, I propose to adjust the balance sheet by decreasing the husband’s loan account to reflect his expenditure save for the sums spent on legal fees which will be notionally added back.

Ownership	Description	Adjusted value
Husband	Loan account G Group	135,782
Husband	Bank account	2,400
Wife	Bank account	1,400
Wife	Motor vehicle	4,500
Total assets	144,082
Husband	Superannuation	2,506
Total assets (including superannuation)	$146,588

1. The remaining disputed items in the balance sheet at paragraph 42 above will not be included, as the wife has failed to establish a proper basis to do so. While it has already been acknowledged that the wife may understandably question the ability of the husband to maintain a lifestyle above his apparent means e.g. taking a twelve month lease at $1,000 per week when his taxable income was under $30,000, it does not follow that the wife has succeeded in establishing that assets have been hidden. In relation to the husband’s expenditure, I note that he had the use of $200,000 paid by his sons for shares in the G Group but without those funds it is unlikely the children’s school fees would have been paid. In this context, I also note the conclusion reached by the single expert, Mr AA, in relation to the Super Fund, discussed earlier in these reasons.

   Section 79(4) matters

2. Although it is the usual practice to allocate a percentage to each party’s contributions and then make adjustments if necessary when considering the s 75(2) factors, it is not a requirement of s 79 to do so nor is there a binding principle that prescribes such an approach.[17] It can of course be a useful tool to ensure that proper consideration is given to each relevant matter in s 79(4). However, I do not consider it necessary in this particular case and I prefer to adopt a holistic approach which, in my view, will better ensure that all relevant matters required to be taken into account are given proper weight.

   [17] Kane & Kane (2013) FLC 93-569 at 87,640, [3].

3. At the commencement of cohabitation the husband had interests in the G Group in Australia, the H Group in China, various real properties and superannuation. In 2007, he and his first wife finalised their property division with his first wife retaining a home, bank accounts, a property in Z Town which was part of a superannuation fund and $750,000. The husband retained the business assets, rural properties, the balance of the superannuation fund and $750,000. The wife (in these proceedings) contends that she had $40,000 cash funds at the commencement of cohabitation. It is not in contention that the husband’s initial financial contributions greatly exceeded those of the wife.

4. The husband was occupied throughout the relationship in the operation of his various business interests and the expansion of them. The parties enjoyed a high standard of living and travelled extensively.  

5. During their relationship, the husband was the major breadwinner and the wife was the major homemaker/parent although the husband contends that the wife was also involved in a number of business ventures which he financed. Whether or not this is the case, the direct and indirect financial contributions during the relationship greatly favour the husband and the homemaker/parent contributions greatly favour the wife.

6. In 2015, the wife inherited 650,000 RMB which she used for her living expenses and those of the children after separation. It is also likely that she used part of those funds to pay her legal fees.

7. After separation many of the husband’s business interests in China failed. The remaining interests became difficult to oversee when the husband moved back to Australia. After his departure from China, the husband was successfully sued in China and some of his business interests were taken over by the M Group. When the wife also moved to Australia, a third party with whom the husband operated his business interests in China as part of the H Group, appears to have become focussed only in furthering his own interests. The wife returned to China in 2020 with the husband’s assistance and retained a lawyer in China to pursue the third party but the attempts were unsuccessful. The parties agree that the recovery of anything from their investments in the H Group is unlikely. Nevertheless, as part of his proposal, the husband is content for the wife to receive anything that might be recovered.

8. The wife has remained the primary carer for the children since separation. The husband has paid the children’s school fees and some other expenses from time to time.

9. When considering the s 75(2) factors, I note the following:

   (a)The husband is 64 years of age and the wife 51 years of age. If the wife manages to obtain employment it is likely that her remaining working life will be greater than the husband’s;

   (b)The husband has a greater earning capacity than his current income suggests. The husband chooses not to work full time because of his age but there is no evidence that he is precluded from working more than he is because of ill health or other reason;

   (c)The wife has the major care of the two children of the marriage;

   (d)The husband is paying the school fees of about $20,000 per annum and a very modest sum by way of child support in addition;

   (e)The husband has had the use of at least part of the $200,000 from the sale of his shareholding in G1 Limited for his living expenses while at the same time failing to meet his obligations under a spousal maintenance order made on July 2017;

   (f)The wife received an interim property payment of $25,000 in 2017;

   (g)The husband paid the single experts’ fees;

   (h)The wife declined an offer to sell the parties’ shares in J Ltd for $400,000 and it now seems unlikely that any sum will be offered for the shares;

   (i)The husband’s current partner lives rent free with the husband in a $1,000 per week apartment (although I note that the husband proposes to obtain cheaper accommodation after the trial);

   (j)The husband’s current partner is 29 years of age and university educated yet her contribution to living expenses in the husband’s household is limited to $200 per week;

   (k)The wife has no employment history in Australia and has so far been unable to obtain any employment; and

   (l)The husband has spent $206,673 on legal fees and the wife $64,934. The source of funds for the husband’s legal fees has at least in part been the payment he received for the sale of shares after separation. The source of funds for the wife’s legal fees is likely to have been her inheritance.

1. I intend to make an order for ongoing spousal maintenance in favour of the wife and for the husband to pay a small proportion of the arrears of spousal maintenance.

2. The husband has paid the children’s school fees since October 2018 and evinces an intention to continue to do so. Currently his child support assessment is modest. He might be liable to pay an increased amount in the future depending upon what assessment is made for his child support income.

   WHAT PROPERTY ORDER IS APPROPRIATE?

3. The parties were together for 19 years and have two children together. There remains very little property. Having regard to the ‘myriad’ of contributions made; the relevant s 75(2) factors and the other s 79(4) factors outlined above, I am of the view that a just and equitable settlement would see the wife retain the modest assets in her name and receive a cash payment of $88,000. This represents about 60% of the total adjusted balance sheet assets (including superannuation).

4. The husband contends that his ability to draw down on his loan account is to some extent dependent upon the third party owner’s agreement and the cash flow of the business. That is a reasonable proposition and will impact on my decision as to the time the husband will have to meet his obligations.

5. The wife contends that the husband’s shares should be transferred to her. However, the husband is a minority shareholder and contends that the other shareholders oppose the wife becoming a shareholder. That seems likely given that two of the other shareholders are his sons. In addition, the registration of any transfer of shares is likely to be dependent upon the cooperation of parties who are not parties in these proceedings. I do not therefore propose to order a transfer of the husband’s shares to the wife.

6. In the event the husband was ordered to pay a sum to the wife, he sought time to pay and suggested that any sum should be paid in two tranches with the first in six months and the second tranche in twelve months. That seems reasonable in the circumstances. The husband did not oppose the wife holding a charge over his shares by way of security and accordingly I will so order. While I propose to give the husband time to pay, should he draw down any sum from his loan account during that twelve month period he will be required to pay it to the wife.

7. While neither party anticipate recovering anything from the H Group, in the event they do, I consider it appropriate that any sum recovered be paid to the wife. The husband endorsed such a course.

   IS THE WIFE UNABLE TO SUPPORT HERSELF ADEQUATELY AND, IF SO, DOES THE HUSBAND HAVE THE CAPACITY TO PAY SPOUSAL MAINTENANCE?

   APPLICABLE LEGAL PRINCIPLES – MAINTENANCE

8. Pursuant to s 72 of the Act, the husband is liable to maintain the wife to the extent that he is reasonably able to do so, if, and only if, the wife is unable to support herself adequately whether by reason of having the care of a child under 18, or by reason of age or physical or mental incapacity for appropriate gainful employment, or for any other adequate reason having regard to the matters set out in s 75(2) of the Act.

9. A determination of an application for spousal maintenance involves: 

   (a)A threshold finding under s 72;

   (b)Consideration of ss 74 and 75(2);

   (c)No fettering principle that pre-separation standard of living must automatically be awarded where the respondent's means permit it; and

   (d)A discretion exercised in accordance with the provisions of s 74, with reasonableness in the circumstances as the guiding principle. [18]

   [18] In the marriage of Bevan and Bevan (1995) FLC 92-600 at 81,982.

   DISCUSSION

10. The husband contends that the wife is able to support herself adequately and points to her historical employment in retail in China. The wife’s evidence that she complies with her Social Security obligations in Australia to apply for eight jobs per month was not challenged. I note that the interim spousal maintenance order made in 2017 was by consent, an acknowledgement by the husband, it would seem, that the wife was unable to support herself in China at that time. The wife and children subsequently moved to Australia and the wife has been reliant on Social Security since then. She has limited English.

11. The wife’s current income comprises the following:

Income source	Weekly	Annual
Social security	709	36,868
Child support	8.34[19]	435
Total	$717.34	$37,303

[19] This is the current assessment dated 12 May 2020 for the period 3 March 2020 to 28 February 2021 calculated on the husband’s income of $25,917.

1. In exercising its jurisdiction under s 74, a court must disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit (s 75(3)).  The child support is also disregarded as it relates to the children. The wife’s adjusted income is therefore nil.

2. The wife’s current expenses[20] (which were not challenged) are as follows:

   [20] The expenses related to the children have been disregarded – see Stein & Stein (2000) FLC 93-004.

Expense	Weekly	Annual
Rent	480	24,960
Car insurance	20	1,040
Visa card	60	3,120
Food	80	4,160
Household supplies	20	1,040
Gas	10	520
Electricity	20	1,040
Petrol	20	1,040
Car maintenance	10	520
Chemist/pharmaceutical	20	1,040
Hairdressing/toiletries	5	260
Total	$745	$38,740

1. The wife will receive $88,000 by way of property settlement but she is not required to utilise her capital to support herself.[21] I am satisfied that the wife is unable to support herself adequately.

   [21] Mitchell & Mitchell (1995) FLC 92-601.

2. The husband’s current income comprises the following:

Income Source	Weekly	Annual
Part time Consultancy	673	35,000
Loan account drawings[22]	500	26,000
Benefits from employment (motor vehicle and telephone)	125	6,500
Contribution to expenses by Ms F	525[23]	27,300
Total	$1,823	$94,800

[22] Taken from husband’s financial statement.

[23] Ms F currently contributes only $200 per week but I have included an additional sum for half the rent which in the circumstances is a reasonable inclusion.

1. The husband’s current expenses are as follows:

Expense	Weekly	Annual
Income tax	104	5,400
Rent	650[24]	33,800
Westpac Mastercard	200	10,400
Child support	8.34[25]	435
Food	200	10,400
Household supplies	50	2,600
Electricity	30	1,560
Children’s activities	80	4,160
Education expenses including school fees	400	20,800
Chemist/pharmaceutical	30	1,560
Total	$1,752.34	$91,115

[24] The husband currently pays $1,000 per week but anticipates his rent will be $650 shortly.

[25] This is the most recent assessment although the husband discloses that he is currently paying only $4 per week.

1. The husband’s income exceeds his expenses by $2,456 per annum or $47 per week.

2. However, it is not reasonable for the husband to avoid his obligations to pay spousal maintenance just because he does not want to work full time. In determining the husband’s capacity to pay spousal maintenance, I am required to take into account his physical and mental capacity for appropriate gainful employment (s 75(2)(b)). There is no evidence that the husband has any physical or mental condition that would preclude him working full time.

3. The husband asserts that there is not enough work for him at G Pty Ltd to work full time however, there is no evidence to support that assertion. Contrary to the husband’s assertion, Mr AA, the single expert, notes that the business is expanding. In 2018 the business employed 25 employees (other than the husband and his two sons) and in 2019 it employed 40 employees and in March 2020 it leased additional premises for an annual rental of $120,000 plus GST. I also note that in 2018 the husband was employed three to four days per week and in 2019 he had increased his work to four to five days i.e. less than full time. It is unclear how many days the husband currently works. The husband has previously worked as an accountant and has significant experience in business both in Australia and in China. 

4. According to the single expert, a reasonable salary for the husband for the work he was undertaking with G Pty Ltd in 2019 in a non-fulltime role was $115,000 after taking into account the general salary levels adopted for Mr C and Mr D and reducing them for a non-fulltime role of 80 to 85%. Doing the best I can, I consider it reasonable to adopt a full time earning capacity for the husband of $140,000 per annum.

5. Accordingly, the husband’s adjusted income is as follows:

Income Source	Weekly	Annual
Full time salary	2,692	140,000
Loan account drawings[26]	0	0
Contribution to expenses by Ms F	525[27]	27,300
Total	$3,217	$167,300

[26] As the husband will be required to pay the balance of his loan account to the wife by way of property settlement and arrears of spousal maintenance this source of income will not be ongoing. 

[27] Ms F currently contributes only $200 per week but I have included an additional sum for half the rent which in the circumstances is a reasonable inclusion.

1. The husband’s adjusted expenses are as follows:

Expense	Weekly	Annual
Income tax	709	36,868
Medicare levy	54	2,808
Rent	650	33,800
Westpac Mastercard	200	10,400
Child support	8.34	435
Food	200	10,400
Household supplies	50	2,600
Electricity	30	1,560
Children’s activities	80	4,160
Education expenses including school fees	400	20,800
Chemist/pharmaceutical	30	1,560
Total	2,411.34	125,390.72

1. I have allowed for increase in the husband’s income tax and Medicare levy. I am conscious of the possible increase to the husband’s child support assessment on a higher income, although I also note that the children attend a private school by agreement and that the husband is paying those fees which would perhaps entitle him to apply to reduce any assessment that failed to take that into account.  In any event, spousal maintenance can be varied if a party’s circumstances change.[28] The husband’s adjusted income and adjusted expenses would leave him with a surplus of income over expenses of $41,893 and therefore a capacity to pay spousal maintenance of $806 per week.

   [28] See Family Law Act 1975 (Cth) s 83(2).

2. The wife’s unchallenged weekly expenses are $745. Accordingly, the husband will be required to pay weekly spousal maintenance in that sum. While the order will date from the date of pronouncement of the order, the husband will have until 19 March 2021 to make the first payment.

3. As the wife is looking for employment she will be required to keep the husband informed when she obtains employment and provide copies of her payslips upon request.

   SHOULD THE ARREARS OF SPOUSAL MAINTENANCE (THE QUANTUM AGREED AT $600,942) BE DISCHARGED?

4. The husband concedes the arrears of spousal maintenance are $600,942 but on the evidence before me he does not have the capacity to pay those arrears. The wife has failed to prove that the husband has hidden assets and the property pool is modest. The husband is meeting the school fees for the children and will have an ongoing responsibility to pay spousal maintenance.

5. The husband’s loan account is the only current source from which arrears in a lump sum might be paid. If the husband accesses his loan account to meet his obligations for property settlement he would be left with $16,000. There seems little utility in requiring the husband to pay any further balance of spousal maintenance arrears when no other source is identified from which to meet that liability. I propose to discharge the balance of the arrears.

   DID THE HUSBAND CONTRAVENE THE ORDER MADE ON 15 MAY 2018 BY FAILING TO PAY THE FIRST TRANCHE OF THE ARREARS OF SPOUSAL MAINTENANCE ON 1 JULY 2018?[29]

   [29] The husband did not require the determination of the wife’s contravention application before the property and maintenance applications and waived his rights to the procedural process set out in r. 21.08 Family Law Rules 2004 (Cth).

   CONTRAVENTION

6. The wife alleges that on 1 July 2018 the husband contravened paragraph 2 of the order made on 15 May 2018. That order provides as follows:

   2. That the husband pay the wife the arrears of spousal maintenance assessed in the sum of 513,920 RMB as at 3 May 2018, in equal monthly instalments over a period of 6 months, with the first payment to commence on 1 July 2018.

7. As already noted earlier in these reasons, the husband did not oppose the hearing of the contravention application at the same time as the other applications before the Court and waived the procedural requirements set out in r 21.08 of the Family Law Rules 2004 (Cth).

8. It is not in contention that the husband failed to pay the instalment due on 1 July 2018, namely, 85,653 RMB or about $17,130.

   Applicable legal principles

9. Section 112AD of the Act provides for sanctions to be imposed against a person who has, without reasonable excuse, contravened an order under the Act. The sanction imposed must be one that the Court considers most appropriate in the circumstances (s 112AD(1)). The sanctions that are available to be imposed include:

   (a)To require the person to enter into a bond in accordance with s 112AF; or

   (b)To impose a sentence by order on the person, or make an order directed to the person, in accordance with s 112AG; or

   (c)To fine the person not more than 60 penalty units; or

   (d)Subject to subsection (2A) to impose a sentence of imprisonment in accordance with s 112AE.

10. The Court must not impose a sentence of imprisonment on the person in respect of a contravention of a maintenance order, unless the Court is satisfied that the contravention was intentional or fraudulent (s 112(2A)).

11. An order under s 112AD(1) may be expressed to take effect immediately, or at the end of a specified period or on the occurrence of a specified event (s 112AD(3)).

12. Where a court makes an order under s 112AD(1), the court may make such order as it considers necessary to ensure compliance with the order that was contravened.

13. A person will be taken to have contravened an order under this Act, if and only if, the person has intentionally failed to comply with the order or made no reasonable attempt to comply with the order (s 112AB).

14. The circumstances in which a person may be taken to have had a reasonable excuse for contravening an order under the Act include, but are not limited to, the person not understanding their obligations imposed by the order and if the court is satisfied the person ought be excused in respect of the contravention (s 112AC).

    Discussion

15. In this case the husband says he could not afford to pay the instalment (or indeed the other instalments or the ongoing spousal maintenance liability) and relies upon his income tax returns setting out his taxable income for the relevant years as follows:

    2017 - $48,571

    2018 - $30,000

    2019 - $25,917

16. The husband argues that he has either not contravened the order within the meaning of the Act or has a reasonable excuse for contravening the order.

17. It is not in dispute that the husband made no payment as required on 1 July 2018. He was required to pay the first instalment of six on that date, a payment of 85,653 RMB (about $17,130).

18. Although the husband’s income for the 2018 financial year may have been modest, the husband received payments for the sale of shares from his son, Mr C, on 4 May 2018 ($4,800), 1 June 2018 ($5,300); 7 June 2018 ($5,400); 19 June 2018 (2,800). The total was more than enough to pay the instalment required to be paid under the order. The husband does not provide any evidence as to why he could not have used those sums to comply with his obligations.

19. I am not satisfied that the husband made a reasonable attempt to comply with the order nor am I satisfied that the husband had a reasonable excuse for contravening the order on 1 July 2018.

20. The wife’s main focus is the recovery of the money but she also seeks that the husband be held to account for failing to comply with his obligations under an order of the Court.

21. The husband opposed the imposition of any sanction in the event it was found he had contravened the order without reasonable excuse. It was submitted that the following matters should be taken into account in the husband’s favour:

    (a)His age;

    (b)His limited income;

    (c)The length of the proceedings which has led to accumulation of further liability;

    (d)His ongoing relationship with the children;

    (e)He acknowledged his liability and “mistake”.

22. In my view, a bond is an appropriate sanction. The husband will be required to be of good behaviour for two years which will include an obligation to comply with the order I propose to make in finalisation of all proceedings between the parties. If the husband breaches his bond (s 112AA definition of ‘order under this Act’ includes a bond) more serious sanctions may be imposed such as a community service order (s 112AG of the Act), a fine (s 112 AH) or imprisonment (s 112AE).

I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew.

Associate:

Dated: 12 February 2021