Fung & Forbes
[2021] FedCFamC1A 6
•10 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTIONFung & Forbes [2021] FedCFamC1A 6
Appeal from: Fung & Forbes [2021] FamCA 42 Appeal number(s): NOA 12 of 2021 File number(s): SYC 2154 of 2017 Judgment of: AUSTIN, TREE & BAUMANN JJ Date of judgment: 10 September 2021 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal against final property settlement orders – Findings of fact – Where findings of the primary judge were reasonably open on the evidence – Where appeal seeks to raise matters of fact and contentions not raised at trial – No exceptional circumstances to raise matters on appeal – Appeal dismissed – No order as to costs.
FAMILY LAW – CROSS-APPEAL – SPOUSAL MAINTENANCE – Cross-appeal against a final spousal maintenance order – Whether the wife was unable to adequately support herself – Whether the husband had the capacity to pay spousal maintenance – Where the primary judge was engaged upon the task of assessing the husband’s earning capacity – Findings reasonably open on the evidence – No error demonstrated – Cross-appeal dismissed.
Cases cited: Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54
Gronow & Gronow (1979) 144 CLR 513; [1979] HCA 63
House v The King (1936) 55 CLR 499; [1936] HCA 40
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Division: Division 1 Appellate Jurisdiction Number of paragraphs: 53 Date of hearing: 26 August 2021 Place: Heard in Brisbane (via video link), delivered in Cairns Counsel for the Appellant: Mr Hartwell Solicitor for the Appellant: Tang Lawyers Australia Counsel for the Respondent: Mr Hackett Solicitor for the Respondent: Pan & Partners ORDERS
NOA 12 of 2021
SYC 2154 of 2017FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS FUNG
Appellant/Cross-respondent
AND: MR FORBES
Respondent/Cross-appellant
ORDER MADE BY:
AUSTIN, TREE & BAUMANN JJ
DATE OF ORDER:
10 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The Amended Notice of Appeal filed 28 June 2021 is dismissed.
2.The Notice of Cross-Appeal filed 12 March 2021 is 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 Fung & Forbes has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN, TREE & BAUMANN JJ:
INTRODUCTION
On 12 February 2021, a judge of the Family Court of Australia made final orders in property settlement and spousal maintenance proceedings between Ms Fung (“the wife”) and Mr Forbes (“the husband”). Relevant to this appeal, those orders provided for the husband to pay the wife the sum of $88,000 within a 12 month period, for the sale of shares owned by the parties and the proceeds (if any) to be paid to the wife, for payments to the wife of any sums recovered in respect of the husband’s loan accounts with companies in China, and for the husband to pay the wife spousal maintenance of $745 per week. The primary judge also ordered that the outstanding arrears of spousal maintenance pursuant to a prior interim order be reduced to $16,000 and paid to the wife within 12 months.
The wife appeals from all of these orders, and by his Notice of Cross-Appeal, the husband also appeals from the ongoing spousal maintenance order.
For the reasons which follow, both the appeal and the cross-appeal will be dismissed.
BACKGROUND
The parties commenced a de facto relationship in 1999, married in 2009 and separated in 2016. At the time of the hearing before the primary judge, the wife was 51 years of age and the husband 64 years of age. The parties lived in China for most of their relationship, however had both been living in Australia since 2017.
The parties have two children aged 17 years and 14 years, who live with the wife and spend time with the husband. The husband has re-partnered but the wife has not.
The husband works part-time as a consultant for G Pty Ltd, a company of which he indirectly owns a 30 per cent interest. The husband’s two adult sons (from a former relationship) also work in the company, and together the three of them control 50 per cent of the company, with a third party owning the remaining half.
The wife is unemployed and receives social security benefits. The wife’s English is adequate for casual conversation only, and indeed, the entire trial before the primary judge was continuously interpreted for the wife.
At the commencement of their relationship, the husband held interests in a number of corporations in Australia and China, conveniently referred to respectively as the G Group, and the H Group, together with various real properties and superannuation interests. As found by the primary judge, this enabled the parties to “live a very comfortable lifestyle in China” (at [11]). After the parties’ relationship terminated, the husband continued to meet the living expenses of the wife and the children, including the children’s private school fees.
Post separation, many of the husband’s business interests in China failed, and after being successfully sued by another company, some of the husband’s interests in the H Group were taken over by it (at [17] and [61]). In 2020, the wife, with the husband’s assistance, travelled to China and engaged a lawyer to seek to recover their investments in the H Group, but those efforts were entirely unsuccessful (at [61]).
In April 2017, the wife commenced these proceedings for property settlement and spousal maintenance.
On 17 July 2017, an interim property settlement order was made for the husband to pay the wife $25,000 and spousal maintenance of $16,200 per month.
Thereafter, contending that his income from China had ceased, the husband applied to vary the amount of spouse maintenance to approximately a quarter of what he was ordered to pay under the July 2017 orders. On 15 May 2018, that application was dismissed and the husband’s spousal maintenance arrears was required to be paid to the wife in monthly instalments over six months, although that did not occur. As found by the primary judge, the arrears of spousal maintenance at the time of trial was in the sum of $600,942 (at [16]).
For the purposes of the trial, a single expert was appointed to value the parties’ interests in the following property:
(a)G Pty Ltd;
(b)The G Trust;
(c)G1 Limited;
(d)The Forbes Family Trust; and
(e)The Forbes Family Superannuation Fund.
The first three entities comprise what we have referred to as the “G Group”. The Forbes Family Trust was wound up in about 2010. The Forbes Family Superannuation Fund was wound up on 31 October 2017. The final payout of its assets to the members (which consisted of the husband, one of his adult sons and a Ms Forbes) included an amount of $793,667 to the husband, which was found to be represented by the husband’s interest in a loan account with a Chinese company, and is seemingly irrecoverable (at [21]).
The single expert was also appointed to conduct an analysis of various transactions of the husband’s superannuation fund, as the wife challenged the husband’s claim that he had transferred about $1,400,000 from it to the H Group in China. The expert was unable to conclusively determine that those payments had been so transferred, but he opined it seemed likely (at [25]).
At the hearing of the trial, the parties agreed that the significant issues for trial included as follows:
(a)The assets and liabilities of the parties and their values;
(b)Has the husband hidden assets in Australia or overseas or in a superannuation fund?
(c)Is the wife unable to support herself adequately and, if so, does the husband have the capacity to pay spousal maintenance?
(d)Should the arrears of spousal maintenance (the quantum agreed at $600,942) be discharged?
In her reasons for judgment, the primary judge set out the balance sheet of the parties’ property with values as contended for by each party at [42]. By reference to it, it appears that the wife asserted the value of the parties’ assets was at $11,376,671, while the husband asserted a value of $125,627. It was the wife’s case that the value of certain items should be notionally added back in the property pool. Specifically, they were items 11–16 of the balance sheet, which consist of various properties owned by the husband which were all sold prior to separation, and items 17 and 18, which were investments paid into the H Group, the latter being conceded by both the husband and wife as unlikely to be recovered (at [51]–[52] and [61]).
Ultimately, the primary judge adjusted the balance sheet to find that the parties’ net assets totalled $146,588 (at [54]).
THE APPEAL
The Amended Notice of Appeal ran to four grounds, with several sub-grounds. At the commencement of the hearing of the appeal, the wife abandoned Ground 1.4, and later, sensibly abandoned Ground 4 during the course of argument.
Both the property settlement orders and the orders relating to spousal maintenance involve the exercise of a discretion. The constraints upon appellate interference with such orders are well-known and of long standing. In House v The King (1936) 55 CLR 499 (“House”) at 504–505 the High Court said:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The appeal and cross-appeal both assert factual mistakes by the primary judge. However an appeal court should not interfere with a finding of fact if it was reasonably open on the evidence (Edwards v Noble (1971) 125 CLR 296). Appeals which seek to challenge the weight given to competing evidence are therefore particularly fraught (Gronow & Gronow (1979) 144 CLR 513 at 519–520).
It should also be noted that both the wife and the husband in their respective appeal and cross-appeal seek to raise matters of fact and contentions not raised at trial, however absent exceptional circumstances a party is bound by the conduct of their case at trial (Metwally v University of Wollongong (1985) 60 ALR 68 (“Metwally”) at 71). Were it otherwise, trials would become “little more than a preliminary skirmish” (Coulton v Holcombe (1986) 162 CLR 1 at 7).
Ground 1
This ground reads as follows:
1.The primary Judge erred in finding that the total value of the assets of the parties was $146,588 [Reasons,[1] & [54]] because the learned primary Judge should have inferred, given the actual evidence before the Court, and applying the principles propounded in Jones v Dunkel (1959) 101 CLR 298, that:
1.1. the Respondent had not disposed of the proceeds of sale of the assets referred to at items 11 to 18 of the Balance Sheet in the manner described in his evidence [Reasons, [42], [50] – [52] & [55]];
1.2. that those proceeds should have been the subject of an ‘add back’ in the calculation of the assets and labilities of the parties to the marriage or, alternatively, have been treated as a financial resource of the Respondent to be considered pursuant to section 75 (2)(b) and/or (c).
1.3. the value of the Respondents shares in the G Group were not Nil [Reasons, [43]]; and
...
Consequently, the primary Judge erred in deciding that a just and equitable order would see the Appellant retain assets in her name and receive a cash payment of only $88,000 [Orders 1-3]; the balance of proceeds of sale (if any) of J Limited (if any) [Orders 4-5]; and any payment from H Group [Order 6].
(As per the original)
At the outset, it should be noted that no submission was made to the primary judge that the so-called rule in Jones v Dunkel (1959) 101 CLR 298 (“Jones & Dunkel”) should apply. As we have already noted, barring exceptional circumstances, a party is generally bound by their conduct of their case at trial (Metwally).
However this ground is, in any event, unmeritorious. Particularly, it fails to engage with the fact that, as counsel for the wife conceded, there was direct, and on occasion unchallenged, evidence before the primary judge of all of the matters raised in the three sub-grounds, and hence the findings necessarily were reasonably open. Moreover, the constant refrain during the oral submissions of the wife’s counsel, that the primary judge “should” have applied a Jones & Dunkel inference, fails to engage with the discretionary nature of the application of the rule, and more particularly, the permissible limits on appellate interference with such decisions. Indeed, on one view, this ground is really a weight challenge, which is, in the circumstances, bound to fail.
Grounds 1.1 and 1.2 must fail, because there was direct evidence from the husband of how the proceeds of sale of items 11–18 were dealt with by him, and it was therefore reasonably open to the primary judge to accept that evidence and act upon it.
As to Ground 1.3, the nil value attributed to the G Group was the unchallenged evidence of the single expert valuer. The criticism now made under cover of this ground, namely that the valuer should not have accepted information provided to him by one of the husband’s sons employed in the G Group, was not the subject of cross-examination, and more, not contended before the primary judge. Her Honour was thus perfectly entitled to accept and act upon the evidence of the valuer.
Ground 1 fails.
Grounds 2 and 3
Given the concession of counsel for the wife that, if Ground 1 failed, the balance of the grounds need not be considered, it is unnecessary to deal with them. However we should address an error asserted in Ground 2, namely that the primary judge, in finding that the husband had made proper disclosure, somehow erred. Particularly it was advanced before us that the primary judge ought have rejected the husband’s filed undertaking to the effect that he had made full and frank disclosure. It needs only be said that, absent some justifiable basis to do so, there was no occasion, much less compulsion, for her Honour to do so. No such justifiable basis was established by the wife.
Grounds 2 and 3 both fail.
THE CROSS-APPEAL
Grounds 1 and 2
These grounds provide:
1.Her Honour erred in ordering the Husband to pay spouse maintenance without making a “threshold finding” pursuant to s72
2.Her Honour erred in being satisfied that the wife is unable to support herself adequately (paragraph 77 of her reasons) as;
a)The evidence of the husband in paragraph 15k of his affidavit filed 7 January 2020 that the wife had extensive experience in retail food, beverage and clothing and, in China, dealt extensively with English speaking customers was unchallenged
b)The observation in paragraph 73 of the reasons that the wife was unable to support herself in China is contrary to the uncontradicted evidence that the wife operated several businesses in China
c)The observation in paragraph 73 of the reasons that the wife “complies with her Social Security obligations in Australia to apply for eight jobs per month” is the only evidence that the wife has attempted to support herself and it ought not be accepted that the wife has made any genuine attempt otherwise it would set the bar at a very low level
(As per the original)
Consistent with House, and the other cases we earlier referred to, in order to succeed on this ground, the husband must demonstrate that there was no reasonable evidentiary foundation for the primary judge’s finding that the wife was unable to adequately support herself. However there was an abundance of such evidence, reflected in the primary judge’s findings, none of which are challenged in this appeal, as follows:
(a)The wife had current weekly expenses of $745 per week (at [76]), yet no income (at [75]);
(b)The wife has limited English (at [73]);
(c)Since arriving in 2017, the wife has no employment history in Australia and has so far been unable to obtain any employment (at [63(k)]); and
(d)The wife has the major care of the two children of the marriage (at [64(c)]).
Therefore there was a reasonable evidentiary foundation for the primary judge’s finding. Indeed, this matter was all but conceded by counsel for the husband at trial (Transcript 29 January 2021, p.114 lines 44–47).
Grounds 1 and 2 fail.
Ground 3
This ground reads:
3.Her Honour erred in finding at paragraph 83 of her reasons that the Husband had an earning capacity of $140,000 per annum as;
a)It was never part of the case put by the wife that the husband had a greater earning capacity then he set out in his affidavit
b)Neither Her Honour or the wife put to the Husband a proposition that he had an earning capacity of $140,000 or any amount greater than he set out in his affidavits
c)The evidence of the expert at paragraph 2.51 of his report gives the consolidated business a future maintainable earnings FME at $403,000 negative
d)There is no evidence that the G business is willing or able to employ the husband on a full time basis or pay him at a higher rate and the report of the expert it that G [Pty Ltd] is paying others at less than the amount he assesses as appropriate remuneration;
i.the appropriate remuneration for Mr D at $150,000 per annum he was only being paid $85,000
ii.the appropriate remuneration for Mr C at $140,000 per annum he was only being paid $75,000
(As per the original)
Although not raised by the ground itself, nonetheless in his Summary of Argument and orally, additional challenges were raised under cover of this ground. They related to two components which her Honour included in arriving at a figure for the husband’s current income, namely a motor vehicle and telephone allowance of $125 per week, and a notional contribution to his expenses by his current partner of $525 per week. Challenge was also made to the primary judge’s acceptance of evidence from the single expert valuer that a reasonable salary for the work which the husband was then undertaking for G Pty Ltd was $115,000. It is convenient to deal with these matters first.
The $125 weekly allowance was included by the primary judge as being part of the husband’s current income, however her Honour did not carry that forward to her calculation of his adjusted income at [84]. That is, in itself, enough to dispose of this challenge. However, there was no error in the primary judge including the allowance in her calculation of the husband’s current income, given:
(a)It was the husband’s own unchallenged evidence in his Financial Statement filed 12 January 2021;
(b)Presented with the opportunity to identify any alteration needed to be made to that Financial Statement, the husband declined to do so (Transcript 28 January 2021, p.43 line 6);
(c)It is by no means clear, as the husband now asserts, that his evidence about the $125 is necessarily contradicted by an absence of relevant entries in his bank statements; and
(d)No submissions were ever put to the primary judge that the husband’s evidence of the payment of $125 per week should be rejected.
Her Honour committed no error by doing what the husband asked her to do so, namely, accepting his evidence. The irony of him now contending the primary judge erred by not rejecting his evidence is profound.
As to the amount of $525 per week notionally attributed to the husband’s current partner’s contributions to his expenses, a convenient starting point is to note that at the time of trial, the evidence was that his partner was in fact paying the husband $200 per week. Further, there was unchallenged evidence that the husband was then paying $1000 per week in rent, which the primary judge accepted would shortly reduce to $650 per week (at [79]). Additionally, there was again unchallenged evidence that his partner earned $24,616 in the 2019/2020 financial year (Annexure “27” to the husband’s affidavit filed 7 January 2021) and that she was tertiary qualified, including holding a master’s degree.
Against that evidence, the primary judge’s reasoning for arriving at the figure of $525 per week, namely that “[the husband’s] partner 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” (at [84], footnote 27) was entirely open to her Honour, particularly given that she was undertaking an assessment of earning capacity, by reference to the husband’s adjusted, not actual income.
The submission made by the husband before us, namely that there was no evidence as to the expenses of the husband’s partner, seeks to take advantage of his failure to lead the relevant evidence, which failure did not restrict the primary judge from acting upon such evidence, particularly as to his partner’s income, which was before her Honour.
This aspect of the challenges advanced under this ground also fails.
Turning then to the last additional matter sought to be argued under this ground, it was said that the primary judge ought to have rejected the evidence of the single expert that the reasonable salary for the husband’s work with G Pty Ltd was $115,000 per annum. The submission advanced before us, although not before the primary judge, was that the expert’s concession in his report that assessing reasonable salaries was not a matter within his expertise. This cannot overcome the fact that no objection to the admission of that evidence was made at trial, no cross-examination was directed to this issue, and as we have noted, no submission to that effect was put to the primary judge. Even more remarkably, the husband in his evidence expressly agreed with the contents of the single expert’s reports (husband’s affidavit filed 7 January 2021, paragraph 13(a)). Plainly therefore it was open to her Honour to act upon the expert’s evidence.
This challenge fails.
Turning then to the matters actually raised by, rather than under the pretext of, Ground 3, they are likewise without merit. It was necessarily the wife’s case at trial, that the husband had the capacity to pay spouse maintenance in the sum ordered, and indeed, she advanced a case for an even larger quantum. Her Honour was entitled to act upon the evidence before her in determining the husband’s earning capacity, and the matters complained of in Ground 3(a) and (b) did not preclude her from doing so.
Ground 3(c) overlooks that the primary judge was engaged upon the task of assessing the husband’s earning capacity; the fact that the future maintainable earnings of the relevant businesses were negative was not determinative of – or particularly relevant to – the question of his earning capacity. Indeed the primary judge specifically noted that, not only was the relevant business expanding, but in any event “[t]he [husband] has previously worked as an accountant and has significant experience in business both in Australia and in China” (at [82]).
Similar observations pertain to the challenge made by Ground 3(d), particularly insofar as it seeks to compare the husband’s notional salary with his sons’ actual salaries. Further, at trial, no challenge was made to the single expert’s assessment of the husband’s sons’ appropriate remuneration, and the primary judge was plainly entitled to act upon it. No error is thereby established.
Ground 3 fails.
OUTCOME
No ground of either the appeal or the cross-appeal succeeds. Both will therefore be dismissed.
COSTS
In the event that the appeal failed, the husband sought no order for costs.
In the event that the cross-appeal failed, the wife sought costs against the husband, by reference to a consolidated “Skeleton Bill of Costs” for both the appeal and cross-appeal. Leaving aside that it did not comply with the document which Order 16 of the Appeal Registrar’s order of 4 May 2021 required to be filed, that “skeleton” was so generally and inappropriately drawn, that it is simply not possible to even hazard a guess at what the wife’s proper party/party costs at scale for the cross-appeal might be.
In any event, the husband has no demonstrated capacity to pay the wife’s costs, and seeks no costs from her in relation to her failed appeal.
There will be no orders as to costs.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Austin, Tree & Baumann. Associate:
Dated: 10 September 2021
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