Gong and Wei

[2016] FamCA 773

FAMILY COURT OF AUSTRALIA

GONG & WEI [2016] FamCA 773

FAMILY LAW – PROPERTY – Interim – Where the wife seeks orders that the husband pay monies and orders for injunctions based on material non-disclosure of assets the husband held in China which he says he no longer holds – Where the payment of shortfall in mortgages has until recently been paid by the husband from income streams that the husband has caused to come into Australia from China –Where the wife asserts that the husband has vast assets in China but the nature and extent of those assets are unknown to her – Where it appears on the face of two financial statements filed by the husband he has failed to disclose either the existence of his interest in a Chinese company or alternatively the disposition of his interest in that company - Where the husband has filed to give any proper explanation as to what has happened to his shareholding in a company – Where the husband is ordered to pay a fixed sum to the Office of State of Revenue – Where the husband is ordered to pay a fixed sum to satisfy a default notice issued by a mortgagee.  

Family Law Act 1975 (Cth)

APPLICANT: Ms Gong

RESPONDENT: Mr Wei

FILE NUMBER: SYC 5655 of 2015

DATE DELIVERED: 5 September 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 22 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Elliott

SOLICITOR FOR THE APPLICANT: Barkus Doolan

COUNSEL FOR THE RESPONDENT: Mr Othen

SOLICITOR FOR THE RESPONDENT: Parker Law

Orders

(Orders made 22 August 2016)

1. The document entitled “Wife’s Minute of Orders Sought” as Exhibit 1.

2. I make an order in accordance with paragraph 1 except that the amount referred to in paragraph 1 will be a fixed sum of $49,342.52.

3. I make an order in accordance with paragraph 2 except that it will be a fixed sum of $35,532.72.

4. I make an order in accordance with paragraph 3 with the amendment made to the second last line where the words “amounts levied” appears, that will simply read, “levies”.

5. I make an order in accordance with paragraphs 4 and 5 as sought by the wife.

6. I reserve my reasons.

Exhibit 1

1. The Respondent Husband pay to the Office of State Revenue, forthwith, the amount of $49,342.52.

2. The Respondent Husband pay St George Bank, forthwith, the amount of $35,532.72.

3. Until further order, the Respondent Husband pay the difference between the rents received and mortgage payments to be made in respect of B Street, Suburb C, D Street, Suburb E, F Street, Suburb A, 1 & 2 G Street, Suburb H, and I Street, Suburb J, together with any other rates, taxes or other levies in respect of any one or more of those properties.

4. Until further order, the Respondent Husband be restrained from transferring, mortgaging or otherwise encumbering or disposing of any interest in any property of any kind whatsoever save for payments of cash in order to meet the payments referred to in Orders 1, 2 and 3 hereof and living expenses set out in his Financial Statement without the prior written consent of the Applicant Wife.

5. That the Respondent Husband pay the Applicant Wife’s costs of and incidental to these proceedings. 

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

Note: The form of the order is subject to the entry of the order 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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5655  of 2015

Ms Gong

Applicant

And

Mr Wei

Respondent

REASONS FOR JUDGMENT

1. On 22 August 2016 I made orders and reserved my reasons which I now provide.

2. The parties are waiting for a listing to have outstanding interim applications heard. They had previously not been reached in a duty list and then provided a specific listing for interim applications to be heard before a judge. The parties agreed between themselves not to take up that opportunity.

3. Whilst they have been waiting for another day to be allocated for the hearing of interim issues, the wife has filed a new Application in a Case seeking orders that the husband pay monies that the wife asserts need to be paid urgently and for orders for injunctions to be made against the husband, based upon material non-disclosure of assets which he held in China but in respect of which the wife has only just been told by the husband that he no longer holds in China.

4. Any orders that I make that require continuing payments on a regular basis to service mortgages in Australia and any order that I make in relation to limiting the husband’s access to assets overseas will be only made until the matter is more fully ventilated at an interim hearing whenever the list clerk might allocate that hearing to the parties in the future.

5. The wife says that having given up the date that the court had otherwise allocated for the interim hearing, pressing issues have arisen in respect of the preservation of property which require the urgent determination of the court.

6. The wife seeks that an order be made that the husband pay:

   6.1.A land tax bill in the sum of $49,342.52 to the Office of State Revenue in payment in respect of outstanding land tax liabilities;

   6.2.Monies owing referred to in a default notice issued by a mortgagee requiring payment of arrears of $35,532.72.

7. It is the wife’s contention that the payment of shortfall in mortgages, after receipt of income from properties in Australia has been taken into account, was until recent times been paid by the husband from income streams that he has received from China.

8. The Australian assets comprise of six parcels of real estate held either in the joint names of the parties or in the name of a company (Company K). The wife lives in one of the properties at Suburb C with the three very young children of the marriage. The five other properties are investment properties. Together the six properties have an estimated value of $10.4 million and the total debt secured by mortgage over all the properties is approximately $5.6 million.

9. The wife says that she has no income beyond the rental income stream which is insufficient to satisfy mortgage repayments and that she has very limited cash funds (about $75,500). She asserts her part interest in a business currently generates negligible income and that her day to day living costs far outstrip her income.

10. The husband points to the fact that the wife has known about the land tax liability for some time and in particular refers to the wife’s financial statement filed 9 March 2016 in which she both refers to the land tax liability at item 53 and to the $75,000 she has in her bank accounts at item 37. The husband also relies upon a letter written by his lawyers to the wife’s lawyers dated 16 June 2016 in which he asks the wife to explain what she has done with the deposits into four accounts which the husband asserts total over $900,000 (I am unable to deal with that assertion in any meaningful way in the context of this hearing).

11. It is the wife’s case that the husband has vast assets in China but that the nature and extent of those assets are unknown to her and will be a substantial controversy in the final proceedings.

12. The wife however points to the fact that throughout the entire course of the marriage the husband has received substantial funds from China and that those monies have funded any shortfall in income over expenses in respect of the six properties and also the parties’ relatively lavish lifestyle whilst they were together. The wife asserts that eight times each year, sums of between $100,000 and $200,000 were transferred by the husband from his HSBC account in China to an account in Australia.

13. The husband is now saying that those funds were not derived from Chinese assets held by him but instead from his parents in China, either by way of gifts or loans.

14. It is not controversial that the husband has a share portfolio of shares listed on the Chinese Stock Exchange worth at least $750,000.

15. The husband had also disclosed a minority shareholding in a proprietary company based in, China, called Company L. The husband estimated that his interest in that company as at 18 April 2016 was in the sum of an estimated $1,242,000. The husband said that his parents and older brother own that company and that his parents have transferred shares to him and that he received regular dividends in respect of those shares. At item 10 of the husband’s financial statement of April 2016 he says the amount of the regular dividend is $807 per week.

16. In an amended financial statement filed by the husband on 8 August 2016, he amends the earlier evidence given in April 2016 by saying that it is not dividends that he is receiving from the company but rather gratuities and the current gratuity he is getting on a regular basis from the company is nil (the note attached to item 10 in the amended financial statement filed 8 August 2016 still refers to income stream from the company as being dividends). So the amended financial statement is somewhat confusing as to what the current state of the income stream is that the husband receives from his interest in Company L.

17. A translation of a corporation registration document (page 72 of the wife’s affidavit filed 5 August 2016) would indicate that the husband’s interest in Company L is 14.856 per cent. The majority shareholding in the company is held by another company, M Co. Ltd. (“M Co.”). M Co. has a 70.287 per cent interest in Company L.

18. The wife raised in her affidavit her belief that the husband had not disclosed in the proceedings an interest that he had in M Co..

19. In his affidavit filed 19 August 2016 the husband deposes to the following:

    35.  I do not hold any interest in [M Company Limited]. That company is owned 100% by my mother. I previously had an interest in that company but my mother restructured that company. The restructure related to my mother’s affairs and occurred independently of me. Now annexed hereto and marked “G” is a true copy of certificate from Information Centre of … showing my mother owns 100% of shares in [M Co]. My mother gave me an interest in [Company L]. Now annexed hereto and marked “H” is a copy of the allocation of shares in [Company L] dated 30 November 2015.

20. I accept counsel for the wife’s submission that parts of this paragraph are so vague as to be meaningless. The husband does not provide any detail as to when he ceased to hold an interest in M Co. or when the asserted restructuring occurred. The annexure marked “H” is of no particular benefit given that it is not in the English language.

21. I was invited by counsel for the husband to infer that the date at which the husband ceased to hold an interest in M Co. was 30 November 2015. I am unable to comfortably do that.

22. In any event, even if I did, the husband would face the difficulty that in two financial statements he has firstly failed to disclose any interest in M Co. and secondly, failed to complete item 59 both in his original financial statement filed 19 April 2016 and in his amended financial statement filed 8 August 2016 which required him to specify property disposed of by him or on his behalf in the twelve months before separation and since separation. The wife asserts the parties separated on 21 August 2015 and the husband says it was February 2016. For the husband’s financial statement to be accurate, this disposition of the husband’s interest in M Co. had to happen prior to February 2015. The wife has had translated annexure “H” to the husband’s affidavit sworn 19 August 2016. That document would tend to indicate that the movement of shares from the husband to Ms Wei took place on 3 May 2016.

23. For the purposes of this limited interim hearing the husband has failed to give any proper explanation as to what has happened to his shareholding in M Co.. The wife has not been able to provide any information about what the husband’s interest in M Co. had been worth (nor did the husband provide that information in his financial statement of 19 April 2016). On the face of it there has been material non-disclosure by the husband.

24. I base my decision in this case on two determinative considerations:

    24.1.It doesn’t seem controversial that up until very recent times the shortfall in the funding of the Australian properties has been provided by income streams that the husband has caused to come into Australia from China;

    24.2.The husband has failed to make a full and frank disclosure of an interest in M Co. which, at the very least, holds 70 per cent of an interest in Company L which on the husband’s valuation of his 14 per cent interest in that company is a valuable asset held by M Co..

25. Given those two matters I am comfortable in making orders in substantially the terms sought by the wife, until at least a judge hears the other outstanding interim applications which await a hearing.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 5 September 2016.

Associate: 

Date:  5.9.16