HUA & LIU
[2019] FamCA 732
•18 October 2019
FAMILY COURT OF AUSTRALIA
HUA & LIU [2019] FamCA 732
FAMILY LAW – PROPERTY – Discussion of s. 79(2) of the Family Law Act 1975 – Is it just and equitable to adjust property interests of the parties – Consideration of husband’s disposition of assets between separation and trial – Whether the principle of Chang & Su apply to husband’s non-disclosure – which assets should be included/excluded from the asset pool – Discussion of s.75(2) factors – Held it is just and equitable to alter property interests of the parties.
Family Law Act 1975 (Cth) ss. 75(2), 79
Stanford v Stanford [2012] HCA 52
In the Marriage of Hickey [2003] FamCA 395
Bevan & Bevan [2013] FamCAFC 116
Chancellor & McCoy [2016] FamCAFC 256
Jabour & Jabour [2019] FamCAFC 78Wallis & Manning [2017] FamCAFC 14
Browne v Dunn (1893) 6 R 67.Jones v Dunkel (1959) 101 CLR 298
Oriolo & Oriolo (1985) 10 Fam LR 665
Chang & Su [2002] FamCA 156
Gould & Gould [2007] FamCA 609
Kannis & Kannis [2002]FamCA 1150
Jamine & Jamine (No.2) [2012] FamCAFC 104
Omacini & Omacini [2005] Fam CA 195
Trevi & Trevi [2018] FamCAFC 173
D’Cruz & Pierce [2008] FamCA 819
Pierce & D’Cruz and Pierce & T [2010] FamCAFC 99
APPLICANT: Mr Hua
RESPONDENT: Ms Liu
FILE NUMBER: MLC 6285 of 2013
DATE DELIVERED: 18 October 2019
PLACE DELIVERED: Melbourne
PLACE HEARD: Melbourne
JUDGMENT OF: Williams J
HEARING DATE: 12 – 15 February 2019;
18 – 22 February 2019;
6 – 10 May 2019.
WRITTEN SUBMISSIONS: 7 June 2019;
10 July 2019;
23 July 2019.REPRESENTATION
COUNSEL FOR THE APPLICANT: Ms Vohra of Senior Counsel & Ms Colla
SOLICITOR FOR THE APPLICANT: Baker Jones Lawyers
COUNSEL FOR THE RESPONDENT: Mr O'Shannessy & Mr Fuller
SOLICITOR FOR THE RESPONDENT: Peter Szabo Family Law
Orders
(1)The matter be listed for a further Mention before the Hon. Justice Williams on a date to be fixed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hua & Liu has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 MELBOURNE FILE NUMBER: MLC6285 of 2013
Mr Hua Applicant
And
Ms Liu Respondent
REASONS FOR JUDGMENT
Introduction
1.This is an application for property adjustment pursuant to s.79 of the Family Law Act 1975 (“the Act”) as the parties are unable to reach agreement about the division of their property.
2.The Response of the wife sought parenting orders in relation to their son, E born in 2012. Parenting orders were made by consent at the commencement of the property proceedings.
3.The husband is aged 54 years, and the wife aged 52 years. Both were born in Country C, migrated to Australia around 1979/1980, and were granted Australian citizenship in 1982. They married in 1992 and separated in December 2012.
Issues in Dispute
4.The husband seeks a division of assets which he asserts were accumulated by the parties’ joint endeavours throughout the marriage and thereafter.
5.The wife asserts that to make orders providing for a property settlement to the husband is not just and equitable, because of the husband’s conduct, including disposition of assets subsequent to separation, his conduct in the litigation and his non-disclosure.
6.In the alternative, in the event the court finds that it is just and equitable to make an order adjusting the property between the parties, the wife asserts any such entitlement of the husband should be reduced on account of the husband’s non-disclosure and concealing of assets.
SYNOPSIS
7.I have determined:
a)It is just and equitable to make property orders in favour of the husband;
b)The husband has not fully complied with his obligation for disclosure, despite the issuing of multiple subpoenae;
c)It is appropriate to:
i)To take into account pursuant to s.75(2)(o) of the Act the husband’s divesting of assets subsequent to separation; and
ii)Adopt the approach in Chang & Su [2002] FamCA 156 resulting from the husband’s lack of full and frank disclosure;
d)The asset pool, as determined by me, should be divided 77.5% to the wife and 22.5% to the husband.
Chronology
8.The following table sets out a brief chronology.
Date Events 1991 The husband purchased a one half interest in the property situated at G Street, Suburb H (‘G Street Property’), with Ms SS, his father’s partner. 1992 The parties married and commenced cohabitation in the G Street property. 1994 Both parties ceased their employment, and purchased a finance business, WW Business. 1996 The wife commenced employment at RR Company and the husband obtained a business license. 1996 The property situated at VV Street, Suburb H (‘VV Street Property’) was purchased by the parties. The wife was and still is the registered proprietor. The purchase was funded by the equity in the G Street property. The parties commenced living in the VV Street property. 1998
The husband met Mr XX and Mr YY. They sought to establish joint business ventures, both within Australia and overseas. 2000/2001
The husband and Mr XX established a property management group, F Pty Ltd, which later changed its name to the M Group. The group’s core business was project marketing for building developments.
2001
The property situated at ZZ Street, Suburb D was purchased as an investment property and was registered in the wife’s name.
2001
The parties’ family trust, II Family Trust was established. The husband was appointer of the trust and F Pty Ltd was the trustee. The wife was appointed a director of F Pty Ltd.
2001/2002 The parties commenced purchasing properties in developments, through F Pty Ltd. The purchases were frequently funded by using commission earned from the M Group and the balance funded by the mortgages.
The wife managed the F Pty Ltd property portfolio, including subsequent sales of properties to assist cash flow difficulties.
2002 The parties purchased Ms SS’s half-interest in the G Street Property for $300,000, having valued the property from independent valuations. 2003 The parties purchased the property situated at AA Street, Suburb BBB for $2.045 million The property was registered jointly in the names of the husband and wife, and was their family home. 2003
The wife was appointed sole director and shareholder of F Pty Ltd. She continued to manage assets in her name and the property portfolio of F Pty Ltd.
2003
The husband commenced to manage business assets through HH Pty Ltd as trustee for the HH family trust. The trust was created to receive profits from business ventures.
2004
The wife resigned from her job and began managing (full-time) the investments of F Pty Ltd.
2005
The parties renovated the G Street property, prior to the husband’s parents and brother (Mr CCC Hua) moving into the property.
2006 The Husband, Mr XX and Mr YY purchased property situated at P Street, Suburb P through the M Unit Trust. The property comprised half of one level, which was subsequently subdivided into 14 offices, each with its own title. 2006 Mr YY ceased work with the M Group. The husband commenced frequent and extended travel to Country C. 2007 As a result of the GFC and bank’s tightened lending criteria, the real estate market cooled and the commission stream from the M Group decreased. The parties commenced selling investment properties to maintain a suitable asset/liability ratio. 2008 The wife found out about the birth of the husband’s first son with Ms DDD, in Country C. She alleges that the husband began to pursue non–real estate activities outside Australia. Early 2009 The husband’s second son with Ms DDD was born in Country C. 2009 Due to insufficient cash flow and to reduce debt, the parties sold the following investment properties:
(i) 1 OO Street, Brisbane;
(ii) 2 OO Street, Brisbane;
(iii) 3 OO Street, Brisbane;
(iv) EEE Street, Suburb FFF.
2010 The property situated at 1 & 2 QQ Street, Suburb L was purchased as business premises for the M Group and associated businesses. The property was registered in the name of Z Pty Ltd, as trustee for the Z Trust. The husband and Mr XX were directors of Z Pty Ltd. 2010 The commercial property situated at 3 QQ Street, Suburb L was purchased and registered in the name of N Pty Ltd, as trustee for the Liu Family Unit Trust. The wife and her two sisters (Ms GGG Liu and Ms HHH Liu) each held a one-third interest in the Liu Family Unit Trust. 2010 The wife asserts that she sold the property situated at 1 T Street, Suburb D to her sister, Ms HHH Liu. The Contract of Sale was prepared in November 2010, but back dated to June 2010.
Between 2010 and 2012 Ms HHH Liu transferred to the wife $645,199.1 July 2010 Mr III became a director and shareholder of VVV Pty Ltd. October 2010 The parties purchased the property situated at JJJ Street, Suburb BBB. (‘JJJ Street Property’) for $5.65 million. F Pty Ltd provided a 5% deposit guarantee to enable the purchase. 2011 The following properties are sold to partially fund the above NAB loan for the JJJ Street Property:
(i) AAA Street, Suburb BBB.
(ii) VV Street Property;
(iii) KKK Street, Melbourne;
(iv) LLL Street, Suburb P.
April 2011 The purchase of JJJ Street settled for a total cost of $6 million. $4.35 million was borrowed from NAB. The interest on the loan was $28,000 per month and capital reduction was $13,000 per month. May 2011 The parties travelled overseas to pursue IVF to conceive E. July 2011 The husband introduced Mr MMM to the NNN associates. September 2011 DD Pty Ltd was incorporated. The husband and Mr XX were appointed directors, and OOO Pty Ltd and HH Pty Ltd, each held fifty percent of the shares in the company. October 2011 DD and FF Pty Ltd entered into a joint venture to develop DD Street, Suburb EE. Between October 2011 and late 2014, Mr GG was employed to manage the project. December 2011 Ms QQQ lent Z Pty Ltd and/or Mr XX $200,000. 2012 The child E was born with significant physical impairments. April 2012 NAB locked the parties’ equity line of credit. October 2012 The JJJ Street property was placed on the market for sale. November 2012
The wife sold two properties situated at PP Street, Brisbane and 4 OO Street, Brisbane. Both properties were owned by the II Family Trust.
December 2012
The husband asserts that separation occurred between the parties on 1 December 2012. The wife asserts that separation occurred on 23 December 2012.
January 2013
Husband asserts that Mr XX transferred ownership of VVV Pty Ltd to Ms QQQ, as partial repayment of the monies advanced by Ms QQQ.
January 2013
CC Pty Ltd was deregistered.
April 2013
The husband moved to Country C.
April 2013 The wife sold the following properties:
(i) PP Street, Brisbane (owned by the II Family Trust);
(ii) X Street, Suburb Y;
(iii) LLL Street, Suburb P.
14 June 2013
The husband asserts he had a meeting with Mr XX in City A, Country C. At the meeting the husband asserts that he resigned as director of both M Pty Ltd (M) and Z Pty Ltd, transferred his shares in the companies and units in the TT and Z Trusts, to OOO2 Pty Ltd.
17 June 2013
M4 Pty Ltd (under the directorship of husband and Mr XX) was transferred to BA Pty Ltd. Ms AZ was appointed as a director of the company, with a 20 percent shareholding and OOO2 Pty Ltd with 80 percent shareholding. The company was de-registered in July 2013.
July 2013 The JJJ Street Property was sold with settlement effected in November 2013. 29 July 2013 The M Group affairs email was sent to husband by Mr XX. October 2013 The Wife and E moved to I Street, Suburb D, which is included in the F Pty Ltd property portfolio. December 2013 The husband transferred his shares in M3 Pty Ltd to Mr YY. Early 2015 The husband asserts the Mr MMM paid out the husband’s loan from AH Bank, and that the husband thereafter owes Mr MMM $80,000. March 2015 Mr XX asserts the M unit trust Suburb P properties were refinanced via BR Pty Ltd. 16 March 2015 Refinance of M Suburb P properties with NAB. March 2015 The husband asserts the following M Unit Trust properties were sold:
(i) P Street; and
(ii) 2 P Street.
According to the Property BM settlement disbursement statement dated 26 March 2015, the properties were sold for $3,448,000.
April 2015 HH Pty Ltd (trustee of Hua Family Trust) was deregistered. May 2015 Mr XX and Mr YY ceased to be directors of M Pty Ltd. 2015 The husband was reinstated as director of M Pty Ltd and Z Pty Ltd. In September 2015, the husband again ceased to be a director of Z Pty Ltd. November 2015 Property situated at 2 O Street, Suburb P was sold. January 2016 Property situated at 5 OO Street, Brisbane was sold. March 2016 Property situated at PP Street, Brisbane was sold. April/May 2016 FF Pty Ltd sold the Suburb EE property. July 2016 Property situated at 1 O Street, Suburb P was sold and settled. November 2016 OOO2 Pty Ltd transferred its unit holding in Z Pty Ltd to CJ Pty Ltd. December 2016 The husband and Mr XX sold AE Pty Ltd. 16 December 2016 The husband married Ms DDD. February 2017 DD Pty Ltd was deregistered. July 2017 The husband and Mr MMM entered into an agreement for the husband to manage AR Pty Ltd Queensland development owned by Mr MMM. 20 July 2017 The wife entered into a Deed of Agreement with the NAB, which provided for F Pty Ltd and N Pty Ltd to convert all loans to interest only, and to discharge the loans by 28 June 2018. Procedural History
9.The husband filed an Initiating Application in this Court on 30 July 2013, seeking final property orders. The wife filed a Response to the Initiating Application on 21 February 2014.
10.Thereafter, there have been numerous interim applications and disputes, pertaining primarily to valuations; discovery; appointment of experts; preparation of financial statements of the various entities; sale of properties; and injunctions restraining the parties from dealing with specific assets. I do not propose to refer in detail to previous interlocutory applications.
Proposal of the parties
The Husband
11.The husband’s proposals are set out in his Case Outline filed 6 February 2019.
12.The orders he seeks are as follows:
a)That the wife transfer to the husband the real property situated at and known as K Street, Suburb L, Victoria being more particularly described in Certificate of Title Vol … Folio …(“the Suburb L property”) within 120 days (“the date”).
b)The wife pay or cause to be paid to the Husband the sum of $350,000 (“the payment”) by the date.
c)In the event the whole of the payment in paragraph (b) is not made in full by the wife by the date then such properties registered in the name of the F Pty Ltd and/or the wife personally be sold (“the sale”) to effect the payment in full to him, plus interest at the penalty interest calculated monthly from the due date.
d)In the event of the sale occurring then the proceeds of the sale of any real property be applied as follows:
i)firstly, to pay the costs, commissions and expenses of the sale;
ii)secondly, to discharge any debt secured against the property;
iii)thirdly, in payment of any capital gains tax liability such amount to be held in trust by the wife’s solicitors pending assessment and payment to the Australian Tax Office;
iv)fourthly, to effect the payment and any interest thereon to the husband;
v)fifthly, the balance thereafter to be retained by the wife.
e)The wife do all acts and things at the expense of the husband as may be required to relinquish any interest or benefit she may have in the Hua Family Trust.
f)The husband do all acts and things at the expense of the wife as may be required to relinquish any interest or benefit he may have in the II Family Trust upon receiving the payment in full to him.
g)That pending the payment and the completion of the transfer or the sale, save by further order or written consent of the husband the wife and in her capacity as director of any company be and is hereby restrained from:
i)encumbering or further encumbering any real property in her name or the name of the F Pty Ltd;
ii)entering into any lease for any of those real properties or any part thereof;
iii)renewing any existing lease of any of those real properties or any part thereof;
iv)otherwise doing any act or thing which confers upon any third party any rights in respect of those properties or part thereof.
h)There be liberty to the parties to apply with respect to the sale.
i)Pursuant to s.106A of the Family Law Act 1975, in the event any party fails to sign any document required to give effect to these orders then a Registrar of this Court may sign on behalf of that party.
j)There be an equalisation of the parties’ superannuation in the II Superannuation fund by way of a roll out of 50% of the amount held in the Superannuation CBA Account #...95 to a Superannuation Fund nominated by the husband and thereafter the husband resign from the II Superannuation Fund.
k)Such further and other orders as the Court deems fit.
The Wife
13.The wife’s proposals are set out in her Fourth Amended Response to Initiating Application filed 30 January 2019, as amended by the orders sought at Part I of her Outline of Case dated 6 February 2019.
14.The property orders she seeks are as follows:
a)All previous orders be discharged.
b)The husband’s application filed 29 March 2018 be dismissed.
c)The husband do all acts and things and sign all documents necessary to:
i)appoint the wife the sole appointer of the II Family Trust; and
ii)resign, abandon, renounce, and relinquish any right. power, position or entitlement which he may have in II Family Trust and the Liu Family Unit Trust, including, but not limited to the position of appointer.
d)Pursuant to s 78, it is declared that the wife’s sister, Ms HHH Liu, is the beneficial owner of the property known as 1 T Street, Suburb D, Victoria more particularly described in Certificate of Title, Volume …, Folio ….
e)The husband forthwith indemnify the wife in relation to any liability or claim with any entity (save for F Pty Ltd) including but not limited to:
i)TT Pty Ltd;
ii)M Pty Ltd;
iii)M5 Pty Ltd;
iv)M6 Pty Ltd;
v)M3 Pty Ltd;
vi)M7 Pty Ltd;
vii)M2 Pty Ltd;
viii)M8 Pty Ltd;
ix)M4 Pty Ltd;
x)M9 Pty Ltd;
xi)M10 Pty Ltd;
xii)M11 Pty Ltd;
xiii)M12 Pty Ltd;
xiv)HH2 Pty Ltd;
xv)HH Pty Ltd;
xvi)XX Pty Ltd;
xvii)AJ Pty Ltd;
xviii)AK Pty Ltd;
xix)NNN Pty Ltd;
xx)AL Pty Ltd;
xxi)AM Pty Ltd;
xxii)AN Pty Ltd;
xxiii)AP Pty Ltd;
xxiv)DD Pty Ltd;
xxv)CC Pty Ltd;
xxvi)KK Pty Ltd;
xxvii)AQ Pty Ltd;
xxviii)Z Pty Ltd;
xxix)AR Pty Ltd;
xxx)AR2 Pty Ltd;
xxxi)AS Pty Ltd;
xxxii)AT Pty Ltd:
xxxiii)AV Pty Ltd;
xxxiv)AW Pty Ltd;
xxxv)AX Pty Ltd;
xxxvi)AE Pty Ltd.
f)Pursuant to s.106A, in the event the parties fail to execute any other deed or instrument necessary to give force and effect to these orders, a registrar of the Family Court of Australia is appointed to execute all deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to these orders;
g)Unless otherwise specified in these Orders, and save for the purpose of enforcing any monies due pursuant to these Orders:
i)each party be solely entitled, to the exclusion of the other, to all other property (including choses in action) in the possession of such party as of the date of these Orders;
ii)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
iii)insurance policies remain the sole property of the owner named on the policy; and
iv)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
h)Paragraphs (k) to (n) be binding upon the parties in their roles as trustees of the II Superannuation Fund (“the Fund”).
i)Pursuant to s 90XT(1)(b) of the Family Law Act 1975, whenever a splittable payment becomes payable from the superannuation interest held by the husband in the Fund, the trustees shall pay the wife 100 per cent of each splittable payment and there be a corresponding reduction in the entitlement the husband would have had but for this Order.
j)Paragraph (k) has effect from the operative time and the operative time is four business days from the date of service of a copy of these Orders on the trustees;
k)The trustees shall do all such acts and things and sign all such documents as may be necessary to:
i)calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement created in paragraph (k) of these Orders; and
ii)pay the entitlements whenever a splittable payment becomes payables from the husband’s interest.
l)Within 14 days of the date of these Orders, the trustees shall do such acts and things necessary to:
i)engage CZ Accountants to prepare and finalise any outstanding financials and taxation return at the parties’ equal shared expense; and
ii)to rectify any compliance deficiencies and declare that the Fund is a compliant superannuation fund at the husband’s sole expense.
m)Within 30 days, the husband, at the wife’s expense:
i)resign as a member of the Fund; and
ii)relinquish all claim and entitlement (part, present and future) in relation to the Fund.
n)The husband pay the wife’s costs of and incidental to these proceedings.
o)Such further or other orders as the Court deems fit.
15.As the factual matrix of the dispute is so complex and convoluted, it is appropriate to articulate the central assertions of both the husband and the wife.
Husband’s Assertions
16.The central assertions of the husband’s case are as follows:
i)It is just and equitable to make orders adjusting property between the parties;
ii)The post-separation disposition of the parties’ interests in the M Group should not preclude the court making orders for a property adjustment in favour of the husband;
iii)The wife’s proposal for all of the joint interests in the self-managed superannuation fund to be transferred to her, is an implied consent that it is just and equitable to make orders for a property settlement;
iv)The husband has gone to great lengths to make proper disclosure, by issuing subpoenae, which enabled the wife to rely on documents produced in her case;
v)There should not be any adverse inferences drawn against the husband because of his alleged failure to comply with his disclosure obligations;
vi)The husband does not have any interest in any assets disposed of/transferred by him between the date of separation in December 2012 and trial;
vii)There is no evidence to establish the husband received any benefit from the disposition of any of the M Group entities after 2013;
viii)On 14 June 2013, at a meeting in Country C with his former business partner, Mr XX, he executed transfer documents of his shareholdings in the M Group companies and his units in the M trusts, in favour of Mr XX, and that transaction was genuine;
ix)He disposed of the business assets because of a debt which arose because he had drawn more from the M Group of companies than Mr XX;
x)The parties drawings from the M Group included amounts which were applied for the benefit of the wife and the F Pty Ltd;
xi)The calculation of the disparate drawings between the husband and Mr XX was the ‘M Group affairs email’ of 29 July 2013, which was a genuine document prepared for that purpose;
xii)The document which provided an accurate account of the drawings was prepared by Mr UUU Hua, a bookkeeper employed by the M Group, whose duties included maintaining a record of directors drawings;
xiii)He was unable to obtain a copy of contemporaneous business documents to substantiate the drawing discrepancy because the M Group server had crashed;
xiv)Even if the husband had not transferred his interests in the M Group assets there would only be modest equity in those assets;
xv)Subsequent to 2013, Mr XX had disposed of the units in Z Pty Ltd and M, to arm’s-length third parties, who were not connected with the husband;
xvi)The disposition of the finance business, VVV Pty Ltd, the rental book business, BA Pty Ltd and the newspaper business, AE Pty Ltd, were all legitimate transfers;
xvii)The wife has not pursued a s.106B application against the third parties who currently own the former real estate assets of M and Z Pty Ltd, or any of the M Group former businesses;
xviii)It is not a case where it would be appropriate to add back the value of the divested assets;
xix)The wife does not allege that the disposition of assets amounts to wastage by the husband;
xx)The wife, through F Pty Ltd, and not her sister, Ms HHH Liu, owned 1 T Street, Suburb D, and the property should be included in the assets for distribution between the parties;
xxi)Since separation, because of the wife’s failure to sell properties and her increased borrowings, she has reduced equity in the properties by approximately $1 million;
xxii)The wife’s legal fees of $30,000 paid to AB Firm from the sale of JJJ Street, Suburb BBB and $60,000 paid to AC Lawyers, from the release of the N Pty Ltd monies, should be added back into the asset pool, together with any further amount which may have been applied towards payment of her legal costs.
Wife’s Assertions
17.The central assertions of the wife’s case are as follows:
a)It is not just and equitable to make orders adjusting property between the parties because of the husband’s post-separation disposition of the parties’ interests in the M Group and his lack of full and frank disclosure;
b)The court cannot ignore the husband’s post-separation disposition of the M Pty Ltd and Z Pty Ltd assets, which comprise about 28 -30 % of the asset pool;
c)If the court finds it just and equitable to make a property settlement order, the overall circumstances of the husband’s conduct, including conduct in the litigation, and his non-disclosure, warrant a reduction where any entitlement otherwise arrived at, would be reduced by half;
d)The husband’s transfer of the interests in M and Z Trusts was a sham;
e)There was no meeting on 14 June 2013 in Country C between the husband and Mr XX;
f)The discrepancies and inconsistencies in the suite of transfer documents demonstrates that the documents are not genuine;
g)The M Group affairs email was concocted and is not a true reconciliation of the disparity in drawings between the husband and Mr XX;
h)The husband’s evidence about a crashing server at the M Group and his inability to obtain source documents was not true;
i)The subsequent transfers of the interests in Z Pty Ltd and M unit trusts were not genuine and were to former business associates of the M Group;
j)It is reasonable and appropriate to use the husband’s conduct surrounding the transfer of the M and Z Trust interests as a litmus test of his genuineness, reliability and truthfulness about other business affairs;
k)The accounts of the husband and Mr XX in relation to VVV Pty Ltd, BA Pty Ltd and AE Pty Ltd are not reliable, full or accurate. In this regard the wife concedes that she cannot prove where or how the husband retains an interest in these assets;
l)There was considerable equity in M and Z Trusts if the properties held by the trusts were valued at the date of separation, December 2012, rather than as at June 2013, when the husband asserts he disposed of the interests in M and Z Trusts;
m)The husband did not provide full and frank disclosure and the fact that he subpoenaed some documents does not mean he has provided adequate disclosure;
n)The husband, in cross-examination abandoned the allegation that Ms HHH Liu was not the beneficial owner of 1 T Street, Suburb D;
o)The wife did not reduce the asset pool as alleged by the husband. On the contrary the wife’s conservation of assets post-separation has roughly doubled the assets controlled by her;
p)The wife agrees that her legal fees of $250,000 should be added back into the asset pool, provided the liabilities to her sister and mother, which provided some of the funds for payment, are included in the asset pool.
Documents relied upon by the parties
Husband
18.The husband relied upon the following documents:
a)Third Amended Initiating Application filed 29 March 2018;
b)Affidavit of the husband, filed 4 April 2018;
c)Affidavit of the husband in Reply, filed 4 July 2018;
d)Financial Statement of the husband, filed 4 April 2018;
e)Affidavit of Mr GG, filed 28 March 2018;
f)Affidavit of Mr XX, filed 28 March 2018;
g)Affidavit of Ms QQQ, filed 28 March 2018;
h)Affidavit of Mr MMM, filed 31 March 2018;
i)Affidavit of Ms DDD, filed 4 April 2018;
j)Affidavit of Mr UUU Hua affirmed 7 March 2019;
k)Affidavit of Mr YYY (Accountant) Sworn 14 March 2019.
Wife
19.The wife relied upon the following documents:
a)Fourth Amended Response, filed on 30 January 2019;
b)Third Amended Response, filed 28 May 2018;
c)Wife’s affidavit of evidence, filed 25 May 2018;
d)Valuations of real property undertaken by J Group;
e)Retrospective valuations of real estate undertaken by J Group;
f)Affidavit of Ms GGG Liu (wife’s sister), filed 8 May 2018;
g)Affidavit of Ms CU Liu (wife’s sister), filed 9 May 2018;
h)Affidavit of Ms XXX Liu (wife’s sister), filed 9 May 2018;
i)Affidavit of Ms HHH Liu (wife’s sister), filed 11 May 2018;
j)Affidavit of Dr CT (E’s treating paediatrician), filed 8 May 2018;
k)Affidavit of Mr B (accountant), filed 16 May 2018;
l)Affidavit of Dr CV (wife’s General Practitioner), filed 24 May 2018.
EVIDENCE
20.The standard of proof in this case is the balance of probabilities (s.140 Evidence Act1995 (Cth)).
21.Section 140 of the Evidence Act 1995 (Cth) provides:
(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject matter of the proceeding; and
(c) the gravity of the matters alleged.
22.The husband did not make any formal objections to evidence, as had been agreed between Counsel for the parties.
23.Both Counsel consented to the husband’s witnesses Mr MMM and Ms QQQ giving evidence by video-link from Country C.
24.The wife did not take formal objection to the husband’s affidavits, notwithstanding that the material included opinion and conclusion, which would be inadmissible. Counsel for the wife cross-examined the husband about many of the opinions expressed.
The husband and his witnesses
25.The following witnesses gave evidence on behalf of the husband and were cross-examined:
i)The husband;
ii)Mr XX (husband’s former business partner in M Group);
iii)Mr MMM (husband’s associate who advanced funds to him);
iv)Ms DDD (husband’s current wife);
v)Mr YYY (accountant);
vi)Mr UUU Hua (bookkeeper at M Group);
vii)Ms QQQ ( former business associate);
viii)Mr GG (husband’s former business associate).
26.I will discuss the credit of the husband and each of the witnesses.
The husband
27.The husband was cross-examined over six days by Counsel for the wife. I had significant opportunity to assess his credibility as a witness. His evidence was frequently unreliable, implausible and often appeared to be made up. I did not accept his denials and professed lack of knowledge and memory about certain documents, including the circumstances of the disappearance of the Z Pty Ltd Cheque Book No.1, which was crucial to the purported drawing discrepancy. I do not consider the husband to be a reliable witness.
28.I agree with the submissions of Counsel for the wife, that he was often evasive and non-responsive. He often professed to be unable to remember events or documents and make comments which did not make sense such as “on the face of the paper”.
29.The husband’s contradictory evidence in the earlier affidavits sworn on 18 June 2013 (4 days after the alleged meeting with Mr XX in Country C) and 18 June 2015, that the family assets included interests in the M Group (M and Z Trusts), when he later swore to having transferred his interest in those assets to Mr XX on 14 June 2013, is inexplicable. I do not accept much of his evidence, including the first time he had seen a document which was H-23 to an affidavit affirmed 18 June 2015, namely the M register of unit holders, when it was put to him in cross-examination. When confronted with Mr XX’s travel records which proved that he was not in Country C on 14 June 2013, he attempted to resile from that date as the date on which he met Mr XX in Country C.
30.He was unable to provide any believable evidence or explanation about the discrepancy in the various transfers and unit certificates in the purported register of M. Counsel for the husband, submitted that he was open and forthright and that the flaws or gaps in the document trail should not lead to a finding that the husband was other than truthful in the evidence he gave. I do not accept that submission. I prefer the submission of Counsel for the wife, that the story was an after-the-event attempt to justify the date of 14 June 2013, which appeared on the ASIC documents.
31.The husband during cross-examination attempted to portray himself as unsophisticated and not entirely understanding legal concepts about shares and unit trusts. I do not accept his purported financial naivety, particularly in the context of:
i)Him having worked as an interpreter for 15 years, a licensed estate agent and businessman who had operated his affairs and had accumulated a property portfolio held by a series of discretionary and unit trusts;
ii)The detailed explanation of shares and unit trusts in in his affidavits, including annexure H-1 to his affidavit of 18 June 2013, and paragraphs 24, 25 and 27 of his affidavit sworn 2 April 2013, which is Exhibit W-7.
32.I was left with the impression that the husband had deliberately omitted to place before the court many relevant documents and much relevant evidence which created a sense of uncertainty and confusion around his dealings with and disposition of assets post-separation.
33.An example of his omission of documents was the missing Cheque Book No. 1 of Z Pty Ltd. The husband’s evidence was that he had collected all of the Z Pty Ltd documents and delivered them to ZZZ Accountants in a bag. It is quite clear from the reconciliation of the bank statements provided to ZZZ that whoever prepared the reconciliation had access to that cheque-book. I do not accept the husband’s implausible and unbelievable explanation that he did not know the whereabouts of that cheque-book, or how it came to be in the possession of ZZZ Accountants.
34.Further examples of the husband’s evidence under cross-examination which contradicted his affidavits is referred to elsewhere in these reasons.
35.Where the husband’s evidence differs from the wife’s, I generally prefer the evidence of the wife.
Mr XX
36.Mr XX was the husband’s business partner in the M Group from about 1999/2000 onwards. He was the author of the M Group affairs email dated 29 July 2013, which purported to reconcile the drawings of each of the parties from the M Group, and which was the justification for the husband transferring his interests in M and Z Trusts to Mr XX on supposedly 14 June 2013.
37.Mr XX swore an affidavit on behalf of the husband which was filed on 28 March 2018 and was extensively cross-examined.
38.He did not impress me as a reliable or truthful witness, particularly in relation to the alleged meeting in Country C on 14 June 2013. It was only when confronted with the impossibility of him being in Country C on that day, that he said a meeting did not take place on 14 June 2013.
39.His evidence and that of the husband about the meeting which did not occur on the date asserted by both, was almost identical, which seriously undermines the veracity of both witnesses. He was overly eager to answer questions in a manner favourable to the husband.
40.At paragraph 115 of his final written submissions, Counsel for the wife refers to his different versions of evidence as to whether the signature on page 178 of Exhibit H-15, is his signature. The contradictory answers about the “scribbling signature”, are examples of his equivocal evidence.
41.I do not accept the submissions of Senior Counsel for the husband that Mr XX gave thoughtful and honest evidence. Furthermore, in the context of his denials of having discussed the husband’s evidence with him, he produced to the court, without prompting, a copy of the M Group affairs email (Exhibit W-49).
42.Further examples of his evidence during cross-examination, which contradicted his affidavit are referred to in these reasons.
43.Where Mr XX’s evidence differs from the wife’s and her witnesses, I prefer the evidence of the wife and her witnesses. I generally do not accept Mr XX’s evidence and consider him to be unreliable and unresponsive.
Mr MMM
44.Mr MMM swore an affidavit on behalf of the husband, which was filed on 13 March 2018. He was cross-examined via video-link from Country C with the assistance of an interpreter.
45.When cross-examined about his inability to travel to Australia, Mr MMM’s evidence was that there was no impediment to him travelling to Australia, he had his passport in his possession, and that he’d never been asked by the husband’s lawyers to go to Australia to give evidence. This evidence contradicted the evidence of the husband. His answers about that issue can only mean that either he was not telling the truth or the husband was not telling the truth.
46.His answers otherwise were keen to emphasise that the husband was an honourable man. He was unable to reconcile the dates of the alleged loan with the loan documentation. He was defensive and grandiose in his response to cross-examination.
47.I agree with the submission of Counsel for the wife that as a result of his evidence it is not possible to make any accurate finding about the extent of the husband’s business dealings with Mr MMM in Country C. He was overall an unreliable and unimpressive witness.
Ms DDD (husband’s wife)
48.Ms DDD swore an affidavit on 4 April 2018, in support of the husband. The jurat particulars state that the affidavit was sworn by her without the assistance of an interpreter. Despite swearing the affidavit without an interpreter, she required an interpreter to give evidence.
49.She was cross-examined by Counsel for the wife. I gained the impression that she was guarded in her response to questions and was reluctant to reveal the real extent of her life with the husband in Country C.
50.There were inconsistencies between her evidence about her address and the Country C household record book. Her evidence was not particularly helpful and I do not consider her to be a forthright witness.
Mr YYY
51.Mr YYY, an accountant from ZZZ Accountants, swore an affidavit which was filed on 14 March 2019. His firm was engaged to prepare financial documents and tax returns for the M Group of companies, which were ordered to be prepared by Her Honour Justice Johns.
52.He was an unimpressive witness who did his best to tailor his evidence to minimise any answers which were adverse to the husband’s case. He was not forthright or candid.
53.The lack of documentation in his file about instructions he received to prepare financial statements and tax returns for the group of companies, is breathtakingly deficient.
54.Similarly, his lack of explanation about:
i)the recording of loans in the Z Pty Ltd financial statements for the year ending in 2013, without the same amount being recorded in the corresponding entity, CC Pty Ltd; and
ii)the whereabouts of the Z Pty Ltd Cheque Book No.1, when it had clearly been available to a member of his staff to annotate the bank statements;
was deficient and unacceptable.
55.At the time of the trial, Mr YYY’s firm was owed $183,689 in outstanding fees for the preparation of the financial statements and tax returns. I accept the submission at paragraph 128 of the wife’s final written submissions, that he was financially invested in the proceedings and that limited weight should be placed on his evidence.
Mr UUU Hua
56.Mr UUU Hua, affirmed an affidavit on behalf of the husband filed on 7 March 2019. The affidavit was filed after the evidence of the husband that he relied upon calculations prepared by Mr UUU Hua, for the purposes of reconciliation of drawings between himself and Mr XX.
57.He also attempted to give evidence in the manner most favourable to the husband. He was unable to identify the annexure to his affidavit, UUU-1 as having been prepared by him. He conceded that it was consistent with work that he had previously done whilst working for the M Group.
58.He could not provide any explanation why a payment to Mr XX of $150,000 on 13 August 2010, was excluded from the reconciliation of drawings between the husband and Mr XX.
59.I accept his evidence that the Excel document, which was UUU-1 was able to be edited on a computer. I do not however accept that UUU-1 represents an accurate reconciliation of drawings between Mr XX and the husband, which was prepared by Mr UUU Hua.
60.I also accept his evidence that the M Group server did not crash during the period he was employed by the M Group. His evidence about that was spontaneous and he appeared genuinely surprised at the proposition that the server had crashed.
61.Where his evidence differs from the husband, I prefer the evidence of Mr UUU Hua.
Ms QQQ
62.Ms QQQ swore an affidavit on behalf of the husband, which was filed on 29 March 2018. She was cross-examined via video-link from Country C.
63.Her evidence under cross-examination was confusing and difficult to follow. She referred to additional loans, over and above the $200,000 which she had advanced to the M Group and or Mr XX and the husband.
64.I agree with submissions of Counsel for the wife that her evidence was intended to explain the M Group divesting itself of its interest in VVV Pty Ltd, as a result of inability to repay loans.
65.I was left with the impression that there was much more to the transactions between Ms QQQ, the M Group, Mr XX and the husband, then anybody was prepared to disclose. Other than my comments in these reasons about the loan agreements and the timing of the withdrawal of caveats lodged pursuant to that agreement, I am unable to reach any determination about the exact nature of the transactions between these parties.
Mr GG
66.Mr GG swore an affidavit on behalf the husband on 28 March 2018. The main purpose of his affidavit was to demonstrate that the DD Pty Ltd joint venture with FF Pty Ltd and the NNN project in Country C were disasters.
67.During cross-examination, Mr GG admitted, when faced with documents obtained by the wife pursuant to subpoenae issued to FF Pty Ltd and the Commonwealth Bank, that he actually received $200,000 in management fees from the project, despite having sworn in his affidavit that he did not receive any money that was owing for management services he provided.[1]
[1] Affidavit of Mr GG, sworn 28 March 2018 at [14].
68.I was left with the impression that there was more to Mr GG’s involvement with the husband and Mr XX, than anyone was prepared to admit. I do not accept that he was a candid witness.
The wife and her witnesses
69.The following witnesses gave evidence on behalf of the wife and were cross-examined:
i)Wife;
ii)Ms GGG Liu (wife’s sister);
iii)Ms HHH Liu (wife’s sister).
The wife
70.The wife was cross-examined by Senior Counsel for the husband over a number of days. She obviously found it a trying and emotional experience as many of the events referred to occurred whilst she was caring for the parties’ son E, during the most difficult of circumstances, without any assistance from the husband.
71.She impressed me as intelligent, business savvy and attempted to directly answer questions put to her. I agree with the observations of her Counsel that at times she was flabbergasted and angry about some of the questions. In particular, the proposition that she had increased the F Pty Ltd borrowings by $1 million post-separation, when her evidence was she had struggled immensely to retain the bulk of the property portfolio, which as at the date of trial had increased substantially from the value at separation. She was clearly affected by the difficulties she encountered with the overwhelming debt and the attitude of the bank towards the portfolio of loans.
72.Understandably, some of her evidence was coloured by her obvious disdain for the husband and her justifiable hostile attitude towards the husband, stemming from the disclosure of the husband’s second family in Country C, whilst she thought the marriage between the husband and wife subsisted.
73.However, as stated by the Full Court in Jabour & Jabour [2019] FamCAFC 78, at paragraph [110], it is well established that a trial judge can accept some parts of a witness’s evidence and reject others.
74.Overall, I accept that the wife was a witness of truth. Where the evidence of the wife differs from that of the husband, I prefer her evidence.
Ms GGG Liu
75.Ms GGG Liu was cross-examined by Senior Counsel for the husband. She answered questions in a direct and forthright manner and I accept her as a credible and truthful witness. She was able to substantiate the loans advanced to her sister with relevant bank statements. Where her evidence differs from that of the husband and his witnesses, I prefer her evidence.
Ms HHH Liu
76.Ms HHH Liu was cross-examined by Senior Counsel for the husband. She also answered questions directly and in a forthright manner. I accept her as a credible and truthful witness, who was also able to substantiate loans advanced to her sister with relevant bank statements. Where her evidence differs from that of the husband and his witnesses, I prefer her evidence.
Relevant Legislation
77.Property proceedings between parties to the marriage are governed by the provisions of s.79 of the Family Law Act1975.
78.Section 79(1) of the Act provides that the court may make such orders as it considers appropriate altering the interests of the parties in the property.
79.Section 79(2) of the Act provides as follows:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
80.If the Court is satisfied that it is just and equitable to make an order altering the interests of the parties in property, s.79(4) of the Act sets out the matters which the court must take into account when considering what order (if any) should be made.
81.Section 79(4) of the Act provides as follows:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
82.Prior to the decision of the High Court in Stanford v Stanford [2012] HCA 52 the preferred approach to determine property matters was set out by the Full Court in the matter of In the Marriage of Hickey [2003] FamCA 395.
83.The approach, as set out in Hickey (supra) may be summarised as follows:
i)Firstly, the court should make findings as to the identity and value of the property pool.
ii)Secondly, the court should determine the contributions of the parties both direct and indirect, including financial and non-financial contributions and then determine the contribution based entitlements of each of the parties, as a percentage of the value of the property of the parties.
iii)Thirdly, the court should determine whether any further adjustment should be made to the contribution based entitlements of the parties, after giving consideration to the relevant matters referred to in s.75(2) of the Act.
iv)Fourthly, the court should consider the effect of those findings and decide what order for division of property is just and equitable.
84.In Stanford (supra) the High Court noted that s.79(1) enables the court to make such orders as it considers appropriate. However, prior to making any orders for the adjustment of parties interests in property, the court must determine whether it is just and equitable to make any property orders, or to alter the parties interests in property.
85.In Stanford (supra), the High Court said at [36]:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations, it does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
86.In Bevan & Bevan [2013] FamCAFC 116, the Full Court considered which matters might be taken into account in determining whether it is just and equitable to alter existing property interests.
87.At [84] and [85], Bryant CJ and Thackray J said:
[84] Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79 (4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4) which make clear that in considering “what order (if any) to make, the court must take into account the matters referred to in that subsection.
[85] This requirement to consider the s 79(4) matters, in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, we determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
88.In Bevan (supra) Finn J stated at [169]:
[169] Findings of fact concerning of the parties financial history (i.e. the contributions) and their present circumstances and future prospects made in the context of s 79(4) will also assist, but such findings cannot (according to Stanford) be conclusive in determining whether or not it is just and equitable to make an order altering any particular property interest.
89.The Full Court in Chancellor & McCoy [2016] FamCAFC 256 said at [42]:
[42] In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) (“the Act”) when determining whether it is “just and equitable” to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters.
90.The High Court stated in Stanford (supra) at [37]:
[37] First, it is necessary to begin consideration of whether it is just and equitable to make property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property….The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
91.At [40] in Stanford (supra), the High Court stressed that the question of whether it is just and equitable to make property settlement orders should not be answered by starting with an assumption:
[40] … [T]hat one or other party has the right to have the property of the parties divided between them, or has the right to an interest in a marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s79 (4). The power to make a property settlement order must be exercised. “In accordance with legal principles, including the principles which the act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79 (4) without a separate consideration of s79 (2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
92.The High Court further stated at [42]:
[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
93.In the majority of matters, the decision as to whether or not it is just and equitable for the Court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the court for orders altering their respective property interests.
94.This is not such a case. In this matter, although the parties have separated and both parties have made an application to the court, the husband seeks orders adjusting their respective property interests. However, the wife seeks orders that there be no adjustment of the parties interests in any property, save superannuation, and that the husband’s application for property adjustment pertaining to all other assets, should be dismissed.
95.The Case Outline on behalf of the applicant husband asserts,[2] that as the wife is seeking a superannuation split in her favour of 100% of the parties self-managed superannuation fund, the II superannuation fund, she has conceded that “orders pursuant to s.79 adjusting the existing legal and equitable interests of the parties in the property are appropriately made in these proceedings”.
[2] Husband’ Outline of Case, at [4].
96.In her final written submissions, Senior Counsel for the husband again submitted, that as the wife is seeking an alteration to the parties existing entitlements, therefore, both parties submit it is just and equal to make orders adjusting the existing entitlements to property pursuant to s.79 of the Act.
97.The orders which the wife seeks are premised on the fact that it would not be just and equitable to make an adjustment of the parties’ non-superannuation property.
98.Counsel for the wife, in his final written submissions, at paragraphs 18 to 21 inclusive, addresses the husband’s argument referred to in paragraph 95 hereof. The submissions refer to Stanford and Wallis & Manning [2017] FamCAFC 14, in the context of the “mutuality of the marital relationship”,[3] and “stated and unstated assumptions”[4] as to the use of property and contributions of the parties in their respective roles.
[3] Stanford v Stanford [2012] HCA 52 at [42].
[4] Ibid at [41].
99.The wife submits, in the context of the mutuality of the relationship:
i)there is an unusual factual matrix of the parties’ circumstances;
ii)For many years prior to separation in December 2012, the husband applied only part of his energy to the family and their property, as he was leading a secret double-life in Country C. The first child of his relationship with Ms DDD was born in 2008, four years prior to separation;
iii)the husband acted inconsistently with the usual unstated assumptions of marriage;
iv)the circumstances of the parties are relevant to the issue of justice and equity of each order proposed to be made.
100.Notwithstanding the possible merits of the submissions of Senior Counsel for the husband, that the wife’s application for an adjustment of the superannuation interests of the parties is a concession that it is just and equitable to make orders adjusting the parties existing legal and equitable interests in property and the merits of the submissions of Counsel for the wife referred to in the previous paragraphs, I consider it necessary to embark on an enquiry as to whether it is just and equitable to make any order.
Is it just and equitable to make any order
101.I will now consider whether it is just and equitable to make an order adjusting property in this particular case. In order to do so, I am required to adopt the pathway set out in the relevant authorities and to embark on a separate but very careful deliberation. As previously referred to, Stanford (supra) requires the first step of that inquiry to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The parties existing interests in property
Agreed assets and liabilities
102.The agreed assets and liabilities are set out in the following paragraphs. I have referred to the various assets in a group, according to the owner / registered proprietor.
MS LIU
(Wife)
Item
Type of Asset
Value 2018 ($)
ZZ Street, Suburb D, VIC
Real property
$930,000
(CBA mortgage (account #...47) ZZ Street, Suburb D, VIC)
Mortgage debt
- $338,000
G Street, Suburb H, VIC
Real property
$850,000
U Street, Melbourne
Real property
$330,000
(NAB mortgage U St, Melbourne
(account #...56))
Loan
- $106,060
V Street, Suburb W, VIC
Real property
$620,000
Equity in properties
$2,285,940
Bank Australia account (#...06)
Bank account
$1,176
Bank Australia account (#...27)
Bank account
$5,107
Bank Australia account (#...30)
Bank account
$3,948
NAB (account #...85)
Bank account
$411
Motor vehicle 1
Motor Vehicle
$2000
CBA (473 units)
Shares
$34,529
NAB (545 units)
Shares
$13,554
CQ Bank (119 units)
Shares
$395
CR Bank (79,333 units)
Shares
$555
CS Bank credit card (#...67)
Credit card
- $42,945
Woolworths Money card (#...11)
Credit card
$1,444
Latitude Infinity card (#...01)
Credit card
- $1,365
CBA Diamond Awards card (#...87)
Credit Card
- $3,189
Total Ms Liu $2,306,497
LIU FAMILY UNIT TRUST
(Trustee: N Pty Ltd[5])
[5]N Pty Ltd: II Family Trust have an interest of 40/120 units; Ms HHH Liu Family Trust have an interest of 40/120 units; and Ms GGG Liu has an interest of 40/120 units.
# Item Type of Asset Value 2018 ($) 3 QQ Street, Suburb L, VIC Real property $985,000 Mortgage for 3 QQ Street, Suburb L, VIC Mortgage debt -$579,000 [6] Equity in properties $406,000
Asserted Interest in Liu Family Unit Trust
Whole of the interest asserted by Husband
One-third of the interest asserted by Wife
$406,000
$135,198
[6] Included in total liability to NAB of $4,527,000.
II FAMILY TRUST
(Trustee: F Pty Ltd)
# Item Type of Asset Value 2018 ($) K Street, Suburb L, VIC Real property $1,250,000 I Street, Suburb D, VIC Real property $1,100,000 2 T Street, Suburb D, VIC Real property $1,100,000 1 Q Street R Town, VIC Real property $515,000 2 Q Street R Town, VIC Real property $515,000 LL Street, Suburb CQ, NSW Real property $610,000 MM Street, Suburb NN, NSW Real property $790,000 X Street, Suburb Y, VIC Real property $220,000 Sub-total property
$6,100,000
NAB loan account (#...27) Loan -$4,527,000 N Pty Ltd mortgage for 3 QQ Street, Suburb L, VIC $579,000 Net total $2,152,000 NAB account (#...14) Bank account $2,810 NAB account (#...02) Bank account $26,830 Total II Family Trust $2,181,640
II SELF-MANAGED SUPERFUND
(Trustees: Husband and Wife)
# Item Type of Asset Value 2012 ($) Value ($) CBA Super account (#...21) and Term deposit account (#...95)
Bank account - $115,000 Total II Self-managed Superfund
$115,000
103.The husband’s Asset Table at page 14 of his Case Outline does not include the wife’s bank accounts, motor vehicle 1 or her share portfolio.
104.I have assumed that the husband would not object to the inclusion of additional assets in the pool, and have therefore included those assets as agreed assets.
105.The husband asserts that the whole of the value of the 3 QQ Street, Suburb L (“TTT Company property”) should be included in the pool, whereas the wife asserts a one-third of the nett value of the property should be included in the pool, in accordance with her interest in N Pty Ltd.
106.I have addressed the inclusion in the pool of the value of the TTT Company property later in these reasons.
Additional assets / liabilities both parties agree should be added back into the pool
Legal fees
107.At paragraph 102 of this final written submissions, the husband sought that the wife’s legal fees be added back into the pool, although he was unable to exactly quantify the amount.
108.At paragraphs 252 and 253 of her final written submissions, the wife conceded that, if the court determines it is just and equitable to make an order in favour of the husband, then the legal fees should be added into the pool.
109.In Trevi & Trevi [2018] FamCAFC 173, Murphy J at [31] to [42] inclusive, provides an overview of the relevant authorities and guidelines when dealing with a consideration of add backs of legal fees. Applying the guidelines referred to by Murphy J, I agree that adding back the wife’s legal fees into the pool is appropriate.
110.There is partial agreement about the quantum to be added back. Both parties agree that the following amounts should be included:
i)$30,000 from the proceeds of JJJ Street, Suburb BBB paid to the wife’s then lawyer;
ii)$60,000 from N Pty Ltd deposit paid to the wife’s then lawyers.
111.At paragraph 252 of the final written submissions, Counsel for the wife, conceded:
i)The wife had paid $250,000 in legal fees, from funds which would otherwise be in the pool or paid from borrowings from her sisters, which are included in the wife’s accounting of the pool;
ii)If the debts are included in the pool, then the legal fees paid have to be included as well.
112.I have addressed the evidence pertaining to the loans from the wife’s sisters under the heading ‘Additional assets/liabilities the wife seeks to include in the pool’. I have determined that the liabilities to the wife’s sisters should be included as liabilities in the pool of assets and liabilities. I therefore intend to add back into the pool the sum of $250,000 referrable to the wife’s legal fees.
Additional assets / liabilities husband seeks to include in the pool
113.The additional assets / liabilities the husband sought to include in the asset pool are:
i)The property situated at 1 T Street, Suburb D, which the wife asserts is held on trust for her sister Ms HHH Liu, and the whole of the value of the TTT Company property;
ii)Debt to Mr MMM;
iii)Personal liabilities of the husband, including liabilities incurred post-separation.
114.The husband disputes the asserted liabilities to the wife’s sister, and seeks to exclude from the asset pool the loans which the wife claims are owing to her sisters. I will address the loans to the wife’s family at paragraphs 164 to 176 hereof.
Additional assets / liabilities the wife seeks to include in the asset pool
115.The additional liabilities the wife seeks to include in the asset pool are the loans from her sisters and mother (which includes the liability for rent received from 1 T Street, Suburb D) referred to at items 20, 21 and 22 of Exhibit W-5.
116.The assets the wife seeks to exclude from the asset pool are:
i)The property situated at 1 T Street, Suburb D;
ii)Two-thirds of the value of the TTT Company property (3 QQ Street, Suburb L).
117.It is not clear from the submissions of the wife, whether she seeks to include in the asset pool, the assets which she asserts the husband disposed of post-separation, or whether these assets should be considered in the context of her submissions pertaining to the husband’s reprehensible conduct and failure to provide full and frank disclosure.
118.The husband asserts that the assets he has disposed of post-separation should not be included in the asset pool.
119.For the purposes of ascertaining the asset pool, I shall address each of the assets the husband has disposed of / transferred post-separation. Those assets are as follows:
a)The interest formerly held by the parties in the Z Trust, $218,000, as at December 2012, comprising the following:
Z TRUST
(Trustee: Z Pty Ltd)
# Item Type of Asset Value 2012 ($) 1 & 2 QQ Street, Suburb L, VIC Real property $1,500,000 Mortgage encumbering:
1 & 2 QQ Street, Suburb L, VICMortgage
-$1,064,000
Sub-total Z Trust $436,000 Asserted one-half interest in Z Trust $218,000
b)The interest formerly held by the parties in the M Unit Trust, $612,666, as at December 2012, comprising the following:
M UNIT TRUST
(Trustee: M Pty Ltd[7])
[7] Held by Hua Family Trust (3/9 units).
# Item Type of Asset Value 2012 ($) Value 2012 ($) 1 P Street, Suburb P, VIC
Real property
$2,110,000
4,050,000
(In One Line valuation - includes all units)2 P Street, Suburb P, VIC Real property $2,160,000 Mortgage encumbering P Street, Suburb P, VIC Mortgage
-$2,432,000
-$2,432,000
Total M Unit Trust $1,838,000 $1,618,000
Asserted one-third interest in M Unit Trust $612,666 $539,333
c)The interest in M3 Pty Ltd which was purportedly transferred to VVV Pty Ltd in satisfaction of a liability of $200,000;
d)The interest in the rental book business, M4 Pty Ltd which was purportedly transferred to BA Pty Ltd on 17 June 2013;
e)The interest in AE Pty Ltd;
f)The interest in various property developments including 2 AF Street, Suburb AG, NNN and DD joint venture.
Treatment of disputed assets / liabilities
120.In order to identify the existing legal and equitable interests in property of the parties, I must consider how to treat the assets/liabilities which both parties claim should be included/excluded from the asset pool. I will address each of the disputed asset/liabilities in turn.
Disputed assets / liabilities the husband seeks to include in the pool
1 T Street, Suburb D and TTT Company Property
121.Firstly, I will address the property situated at 1 T Street, Suburb D (“1 T Street property”) and the TTT Company property (3 QQ Street, Suburb L).
122.The husband seeks to include the 1 T Street property as an asset of the parties. The wife asserts that the property is held upon trust for her sister Ms HHH Liu and should be excluded from the asset pool. He also seeks to include the whole of the value of TTT Company, rather than a one-third share, which the wife asserts is in accordance with her shareholding in N Pty Ltd.
123.The wife’s case is that Ms HHH Liu has advanced to her $645,000 which entitles her to ownership of the 1 T Street property. The registered proprietor of the property is F Pty Ltd.
124.In addition to her interest in the 1 T Street property, the wife asserts that Ms HHH Liu is entitled a one-third interest in N Pty Ltd, which owns the TTT Company property.
125.The wife’s evidence about the circumstances of Ms HHH Liu’s acquisition of 1 T Street are set out at paragraphs 295 to 305 of her trial affidavit. Her evidence may be summarised as follows:
i)In 2010, Ms HHH Liu told her she wanted to invest in property in Australia, and the wife initially suggested she purchase a commercial property to lease to the M Group;
ii)She spoke to the husband about the proposed investment and he suggested purchase of a property in the TTT Company development;
iii)The husband suggested that the wife look at 3 QQ Street, Suburb L which was a renovated showroom ready for use, as the M Group had already purchased the other two original offices, which were of initial interest to the wife;
iv)After Ms HHH Liu was consulted, the wife decided to proceed with the purchase and invited her other sister Ms GGG to be involved;
v)The TTT Company property was purchased for $570,000, plus GST by N Pty Ltd, as trustee of the Liu Family unit trust;
vi)The purchase price was to be funded 100% by NAB, with a term deposit as guarantee for the loan;
vii)Around the time of purchase of TTT Company, 1 and 2 T Street, Suburb D were offered to Ms HHH Liu;
viii)Ms HHH Liu commenced forwarding money for the purchase in April 2010;
ix)In June 2010, appraisals for both 1 and 2 T Street, Suburb D were obtained and discussed between Ms HHH Liu and the wife. The appraisals are annexures W-23 and W-24 to the wife’s trial affidavit;
x)On 25 June 2010, during a telephone conversation, Ms HHH Liu advised the wife that she agreed in principle with the range of values for the T Street properties;
xi)On 28 June 2010, the wife emailed Ms HHH Liu the appraisals and advised that she would have documents drawn up on the lower value. Annexure W-25 to the wife’s trial affidavit is a copy of the emails between the wife and Ms HHH Liu;
xii)The contracts were prepared in November 2010 and backdated to 26 June 2010, to reflect the date of the of the agreement for Ms HHH Liu to purchase the property;
xiii)The contract was in the name of N Pty Ltd or nominee, to enable the wife to sign on behalf of Ms HHH Liu, as Ms HHH Liu was not in Australia. The contract provided for a two-year settlement, as the wife was aware the bank would not discharge the mortgage secured against the property, at that time, to enable it to be transferred to Ms HHH Liu;
xiv)Ms HHH Liu transferred funds to the wife totalling $645,199.61 between 21 April 2010 and 27 February 2012;
xv)Of the funds transferred by Ms HHH Liu, $173,700 were deposited into a term deposit with the NAB security for the purchase of the TTT Company property;
xvi)The 1 T Street property will be transferred to Ms HHH Liu when the bank allows a release of the security.
126.The wife was vigorously cross-examined by Senior Counsel for the husband. Her evidence during cross-examination was generally consistent with her evidence in her trial affidavit.
127.Ms HHH Liu’s evidence about the circumstances of her acquisition of the property are set out at paragraphs 4 to 15 of her affidavit sworn 8 May 2018. Her evidence is consistent with the wife’s evidence. Ms HHH Liu was also cross-examined by Senior Counsel for the husband and her evidence was generally consistent with her affidavit. I accept Ms HHH Liu was a forthright and truthful witness, as referred to earlier in these reasons
128.The husband’s evidence about ownership of the 1 T Street property is in his affidavit of 12 July 2018.
129.At paragraph 52 of his affidavit, sworn 12 July 2018, the husband deposes to not being involved with or aware of the dealings between the wife and her sisters.
130.He asserts two reasons why the 1 T Street property should be included in the asset pool, which are as follows:
i)He had no knowledge of the arrangements between the wife and her sisters, and the first he became aware that the 1 T Street property had been “sold” to Ms HHH Liu was during the discovery process of these proceedings; and
ii)It would be inequitable for Ms HHH Liu to contribute $645,200 towards the purchase price of the 1 T Street property and also be entitled to a one-third interest, via N Pty Ltd, in TTT Company;
131.The wife’s evidence is that the husband was aware of the arrangement between herself and Ms HHH Liu for the purchase of TTT Company and the 1 T Street property. Annexure W-30 to her trial affidavit, which is included in Exhibit W-1, is an email between the wife, Ms HHH Liu and Ms GGG Liu.
132.That email, dated Thursday 23 September 2010, which was forwarded by the wife from her F Pty Ltd email address, at 11.57 AM to Ms HHH Liu and Ms GGG Liu and was copied to the husband at his blackberry email address. The email reads as follows:
[Ms HHH Liu], [Ms GGG Liu]
I have attached the statement for our purchase of [TTT Company], the NAB loan is 100% purchase and there is a $173,700 term deposit for the 20% offset. This money belongs to me eventhough, the term deposit is in the name of [N Pty Ltd].
as to the purchase of [1 T Street], the sales price was $600,000. and so far I have receive the following payments.
21/april $50,000 transfer from [CX Bank] to my account in CBA and a cheque of $60,000 was paid to [TTT Company] as the 10% deposit
27/april 166,000 transfer from [CX Bank] to my account in CBA
1/July, $200,000 transfer from [CX Bank] to my account in CBA and a check of $200,000 was paid to NAB to offset the Loan on [TTT Company] at settlement,$30K + stamp duties etc
23/sep, $10,000 from Mum’s account
In total, I have received $426,000 for the purchase of [1 T Street]. so you still owe me $174,000 and I will get the lawyer to set the contract of sale next week.
Can you please check thru your figures, I might have left out some payment from you. if I did, please let me know.
FYI. [Mr Hua]
Thank you sis!
[Ms Liu]
(As per the original)
133.That annexure also includes a further email from the wife to her sisters, Ms HHH Liu and Ms GGG Liu, sent on 24 September 2010 at 11.43 am. The husband was copied in to the email at his Blackberry address. That email reads as follows:
Thanks [Ms HHH Liu], you are correct!
There is another $40,000 from you as per attach [sic] statement, I just did not go back that far!
Therefore, you owe my $134,000 and I will start pro rata the rental income on [1 T Street] from 21/april onward.
[Ms Liu]
134.At paragraph 51 of his affidavit filed 12 July 2018 the husband deposes to only using his blackberry email address “a few times for the purposes of getting access to the blackberry software and supports”.
420.The only assets disposed of by the husband which can be quantified are the interests in M Unit Trust and Z Trust. Having regard to my findings about the date and method of valuation of the M Suburb P property, I have determined the value of the HH Pty Ltd interest in Suburb P properties as at separation was $539,333.
421.The valuation of the HH Pty Ltd interest in the Z Pty Ltd properties as at separation was $218,000. Neither of those assets, as at the date of the trial are available for distribution between the parties. The value of the combined properties, $ 757,333[31] and the asset pool as determined by me is $4,619,889. The parties' interests in the M and Z Trusts as at the date of separation is equivalent to 16% of the current asset pool. The parties’ former interests in M and Z Pty Ltd, as at the date of trial, is equivalent to 28% of the current asset pool.
[31] On the basis on of an ‘in one line’ valuation as at December 2012 in relation to the Suburb P property.
422.I also intend to take into consideration, pursuant to s 75(2)(o) of the Act , the husband’s failure to make full and frank disclosure, in accordance with Jamine & Jamine.
Section 79(4)(f) and (g): any other order affecting a party or child or relevant child support
423.At the commencement of the property proceedings the parties entered into consent orders providing for E to live with the wife and for the wife to have sole parental responsibility for him. As the husband has not had any contact with E since early 2013, the prospect of any relationship between E and the husband seems remote. The wife will therefore be responsible for his full-time care without any assistance from the husband.
424.As previously referred to, post-separation the husband has not made any financial contribution to the care of E. I consider it unlikely that he will do so in the future, or make any attempts to pay child support to provide for E.
Conclusion as to exercise of discretion
425.Having considered the submissions of both the husband and the wife, and the other matters referred to in my discussion of whether it is just and equitable to alter the parties’ existing interests in the property, I am not persuaded by the submissions of the wife that it would not be just and equal to make any order altering property interests in the present matter.
426.In my view the appropriate way to address my findings in relation to the business interests and/or assets which the wife asserts the husband has disposed of or failed to disclose, is to consider the disposition of the assets pursuant to s.75(2)(o) of the Act and in relation to the husband’s failure to make full and frank disclosure, to adopt the approach of the Full Court in Chang & Su [2002] FamCA 156
427.In exercising my discretion, I have, as I am permitted to do, also considered the matters in s.79(4) of the Act, in addition to the matters referred to at paragraphs 385 to 424 hereof.
428.The approach and considerations I must make are as follows:
(a)Attribute value to the assets comprising the property pool;
(b)Identify and give weight to the various contributions of each of the parties as set out in s.7 (4) (a) – (c) and make an assessment as to the entitlements of the parties based on their respective contribution;
(c)Identify the relevant considerations as set out in s.79(4)(d)-(g), including the matters set out in s.75(2) so far as they are relevant, and then decide whether any further adjustment is appropriate;
(d)Consider whether the proposed orders are just and equitable.
429.I am also mindful of the comments of the Full Court in Bevan & Bevan [2013] FamCAFC 116 at [86], that the just and equitable requirement permeates the entire process.
Asset pool
430.The assets and liabilities which are agreed by the parties are set out at paragraphs 102 to 105 hereof.
431.The assets and liabilities which the wife additionally seeks to include in the pool are set out at paragraphs 115 to 116 hereof.
432.The assets and liabilities which the husband additionally seeks to include in the pool are set out at paragraph 113 hereof.
433.At paragraph 340 hereof, I have set out my conclusion as to the existing legal and equitable interests of the parties’ property.
Contributions
434.I have referred to the financial, non-financial and parent and homemaker contributions during the marriage at paragraphs 369 to 384 hereof and post-separation at paragraphs 385 to 408 hereof.
Conclusion as to Contributions
435.Senior Counsel for the husband relied upon the Husband’s Case Outline, where she submitted that:
i)The court should find the parties’ contributions during the marriage were equal;
ii)The debt level of the parties had increased by $616,065 between 2015 and 2018, because the wife had not solely applied the proceeds of sale of properties towards debt reduction and had refinanced the borrowings in 2017, contrary to court orders;
iii)The wife’s post-separation contributions should not be seen as the main reason for an adjustment from equality, rather her care and financial responsibility for E.
436.Counsel for the wife in his Final Submissions, submitted that if an order were to be made in the husband’s favour, regard should be had to the very significant post-separation contributions of the wife.
437.I do not accept the submissions of Senior Counsel for the husband about the wife’s post-separation contributions, for the reasons set out herein.
438.I do not intend to attach percentages to the parties’ initial contributions; those made during the marriage; and post-separation.
439.As the Full Court said in Dickons & Dickons [2012] FamCAFC 154:
[23] We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
[24] There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
440.Having regard to weighing up and assessing the myriad of contributions of the parties, both financial and non-financial, direct and indirect, at the commencement of the relationship, during the relationship and post-separation, and their contributions as homemaker and parents, I assess those contributions as 57.5% to the wife and 42.5% to the husband. Applying that assessment to the asset pool I have determined, results in a contribution differential of $692,984.
Section 79 (4)(d),(e),(f) and (g) and Section 75(2) factors
Section 79(4)(d): the effect of any proposed order upon the earning capacity of either party to the marriage.
441.The orders which I propose to make will not have any effect on the earning capacity of the husband. The wife currently has no earning capacity.
Section 79(4)(e): the matters referred to in s.75(2) so far as they are relevant
442.Paragraphs 410 to 416 hereof refer to the relevant s.75(2) factors.
Section 75(2)(o): any fact or circumstance which in the opinion of the Court, the justice of the case requires to be taken into account
443.I refer to the relevant matters at paragraphs 417 to 422 hereof.
444.The value of the real estate assets disposed of by the husband as at the date of separation was $757,333. The value of those assets as at the date of trial was $1,309,000 calculated as follows:
i)Suburb P properties $ 606,000;
ii)1 and 2 QQ Street properties $703,000;
This should be considered in the context of the asset pool remaining as at the date of trial, which I have determined as $4,619,889.
445.As I have previously remarked in these reasons, I am unable to quantify the current value of the business assets disposed of by the husband post-separation. The only evidence as to the value of the assets was the amount they were disposed of some years ago.
446.There was no evidence contrary to the submissions of Senior Counsel for the husband that the husband derived no benefit from the disposition of the assets post-separation. The husband’s confusing and contradictory evidence renders it impossible to make any finding about the true dealings between Mr XX and the husband.
447.As referred to previously, I have taken into consideration the husband’s failure to make full and frank disclosure. On the balance of probabilities I am not satisfied that the husband has complied with his disclosure obligations.
Conclusion as to future needs
448.Senior Counsel for the husband in the Case Outline submitted that any adjustment from equality should arise from the wife’s future care of E and not from her post-separation contributions. I do not accept that proposition. In the husband’s Case Outline, the range of adjustment for future needs was referred to as between 62% and 70% in favour of the wife, depending on the determination of the asset pool.
449.Counsel for the wife, in his final submissions, submitted that if the Court considered it just and equitable to adjust property between the parties, then an appropriate range would be a division of 75% in favour of the wife and 25% in favour of the husband. If the asset pool were determined in accordance with Exhibit W-51, such an adjustment would provide a property settlement to the husband of approximately $1.1 million.
450.Both parties acknowledged the seriousness of E’s disabilities and the significant and overwhelming responsibilities of the wife to care for him in the future, including his financial support. It was not disputed that E’s care would preclude the wife from engaging in any meaningful employment in the future.
451.I am satisfied that in the context of this case having regard to all relevant s.75(2) factors, there should be an adjustment in favour of the wife of 20%, which is inclusive of an adjustment arising from his failure to make full and frank disclosure. Applying the percentage adjustment to the asset pool as determined by me, would result in an adjustment of $923,977 in favour of the wife for her future needs.
Section 79(4)(f) and (g): any other order affecting a party or child or relevant child support
452.As parenting orders were made by consent between the parties, the wife will have sole care of E and will be financially responsible for him. I refer to E special needs earlier in these reasons.
453.Since the date of separation the husband has not provided any financial support for E, and there was no evidence whether the wife had applied for a child support assessment or intended to do so in the future. Obviously, any assessment of child support for the husband to contribute towards E’s support will be affected by his obligations to provide for the three children of his current marriage.
Adjustment of interests
454.As a result of the findings made relating to contributions and future needs, I am satisfied it is just and equitable to make orders adjusting property between the parties, so that the wife is entitled to 77.5% of the asset pool and husband should receive 22.5% of the asset pool.
455.The adjustment of property which I propose to make must be just and equitable, both in terms of percentage adjustment, in real terms and the orders implementing the adjustment must also be just and equitable.
456.On the asset pool as determined by me this will result in the wife receiving $3,580,413 and the husband receiving $1,039,475.
457.The division of assets will result in the wife retaining her home, I Street, Suburb D, which is valued at $1,100,000 and investments valued at $2,480,413, if there are no realisation costs to give effect to the proposed adjustment.
458.In order to pay the husband, the wife will be required to sell a number of investment properties. The sale of investment properties is likely to crystallise a capital gains tax liability for either the wife or the F Pty Ltd, which, unless orders are made addressing the liability, the wife will be required to pay from her share of the property as adjusted between the parties.
459.In my view, it would not be just and equitable for the wife alone to have to pay capital gains tax or all sale costs from her share of the property pool. The wife did not address which of the properties she would choose to realise to pay the husband his share of property, as I have determined.
460.The husband in his Case Outline sought a transfer of the property situated at K Street Suburb L, which is valued at $1,250,000. The registered proprietor of that property is F Pty Ltd.
461.In her Amended Asset Schedule at paragraph F 4, the wife sets out capital gains tax liabilities arising from various properties, calculated at the highest marginal rate. There was no evidence about the appropriate rate for calculation of capital gains tax, in the event of sale of the properties. In the husband’s Case Outline at paragraph 4 (c) of the orders sought, he refers to the payment of any capital gains tax liability being held in trust pending an assessment of from the Australian tax office. He did not adduce any other evidence about possible capital gains tax which would be crystallised by the sale of properties.
462.Unfortunately, neither party adduced evidence about:
i)The costs which will be incurred to sell property, including agent’s commission and advertising expenses;
ii)Whether the mortgagee would permit a partial discharge of mortgage, to enable a transfer of any specific property;
iii)How many properties the mortgage would require to be sold to reduce the overall borrowings to enable the wife to pay the husband;
iv)The estimated timeframe for sale.
463.I am unable to formulate specific orders for the sale and/or transfer of properties without the evidence referred to in the previous two paragraphs. I have no doubt that the asset pool available for distribution will be significantly reduced by capital gains tax, sale costs and there may well be problems in satisfying NAB, the mortgagee, about the eventual borrowings ratio of the remaining properties.
464.Whilst I am exceedingly reluctant to involve the parties in further court appearances, it is unavoidable. Both parties must be given an opportunity to obtain expert advice and the wife must be afforded an opportunity to consult with the mortgagee.
465.I intend to list the matter for a further mention for each party to make submissions about the orders to implement the division of property between the parties.
Other matters raised by Senior Counsel for the husband
Brown v Dunne Issue
466.Senior Counsel for the wife at paragraph 30 of her Final Written Submissions sets out a number of propositions which she asserts were not put to the husband in cross-examination.
467.In D’Cruz & Pierce [2008] FamCA 819, Dessau J said at [159]:
[159] There is ample authority that what is often referred to as the "rule" in Browne v Dunn is in fact a rule of practice. It is designed to achieve procedural fairness. It is not absolute or fixed and inflexible. Those characteristics of the rule were referred to, for example, in Stern v National Australia Bank (2000) 171 ALR 192, at 203, in which the Full court of the Federal Court observed that it is not ordinarily necessary to put to a party, matters that were clearly at issue in the proceedings.
468.Further, at [162] Dessau J said:
[162] The authenticity of the document was clearly at issue in the proceedings. From early in the hearing, it was asserted that the document was a sham. I am satisfied that there was procedural fairness. Both men had ample opportunity to answer questions that dealt with the document, the events leading to it, their memories of it, and their subsequent actions arising from it.
469.The Full Court, Bryant CJ, Faulks DCJ and O’Ryan J in the appeal, Pierce & D’Cruz and Pierce & T [2010] FamCAFC 99 at [26], stated there was no merit in the complaints made by the appellants in relation to Her Honour’s statements.
470.In this matter, adopting the methodology of Her Honour Dessau J, it was clear to all parties that the following were central issues to the case:
i)The disposition of assets by the husband post-separation;
ii)The husband’s failure to make full and frank discovery of his assets, liabilities and income;
iii)His attempt to defeat the wife’s claim;
iv)The lack of contemporaneous documents about the alleged discrepancy in drawings from the M Group, including the whereabouts of the missing Z Pty Ltd cheque book.
471.After the evidence of Mr YYY, the accountant, the husband was recalled and gave evidence-in-chief and was cross-examined about the documents which were provided to Mr YYY to enable him to prepare the financial statements and tax returns for the M Group companies.
472.I am satisfied that there has been procedural fairness accorded to the husband and that he has had ample opportunity to respond.
I certify that the preceding four-hundred and seventy-two (472) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Williams delivered on 18 October 2019.
Date: 18 October 2019
Appendix A
Trial Exhibits Items exhibited on behalf of Applicant husband
H-1 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “A – Personal Debt”o (A1) Photocopy document headed “Loan Agreement” between BD Pty Ltd (ACN …) as trustee for the BF Family Trust (ABN …) and Mr Hua.
o (A2) Photocopy letter addressed to Mr Hua from Mr BG with reference “Request for further advance under Loan Agreement” (unsigned).
o (A3) Photocopy document headed “Document BH” executed by Mr Hua and Mr MMM.
o (A4) Copy document headed “Document BH” executed by Mr Hua and Mr MMM and attached English translation for the document headed “Document BH”.
H-2 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “B – M payments to F Pty Ltd and Ms Liu (Not Agreed).o (B14) Copy document headed “Premium Business Cheque Account” Commonwealth account number …15, statement 111, in the name of M2 Pty Ltd.
H-3 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ C –Email documents from which table in paragraph 33 and Annexure A were produced – emails produced pursuant to subpoena to NAB 14/08/18:o (C17) Bundle of emails between Mr BJ and Mr Hua and associated bank accounts in the name of Ms Liu.
H-4 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “D – Released Trust Interest – M Unit Trust Financials 2013”:o (D18) M Pty Ltd ACN …, Financial Statements prepared by BG Accountants.
o (D19) The document headed “Trust tax return 2013” for M Unit Trust.
o (D20) Copy NAB letter to directors of M Pty Ltd.
o (D21) Westpac account in the name of M Pty Ltd with account no. …88.
H-5 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “E – Released trust Asset – Z Trust (Mr Hua) 2013 Financials:o (E22) The document headed “Z Trust”, ABN: …, Amended Financial Report 2013 and Tax return 2013.
o (E23) “NAB Business Markets”, NAB loan account number …73, in the name of Z Pty Ltd.
H-6 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “F – 4 AF Street distributions to Z Pty Ltd”:o (F24) The document headed “Business Cheque Account” NAB account number …91, addressed to Z Pty Ltd.
H-7 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under titles “F – 4 AF Street distributions to Z Pty Ltd (Mr Hua)” and “G – AN Pty Ltd financial difficulties (Mr Hua)”o (F25) Email from Mr Hua to Mr BJ.
o (G25) Creditors Statutory Demand and Default Judgment.
H-8 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “H – AY Street Development (Mr Hua)”o (H26) Notice of Termination of Agreement.
H-9 Documents called on by the wife:
o In relation to Annexure C of the husband’s affidavit filed 12/07/18 (advances to the parties from M Group).
o Table 33 of the husband’s trial affidavit filed 6/04/18 (drawings from M Group).
H-10 Documents:
o Email from husband to his solicitor dated 20/05/14 together with two attachments and A3 printout of attachments.
o Coversheet of email dated 12/11/13 from husband to his solicitor (enclosing documents which form the basis of para 33 of husband’s trial affidavit filed 6/04/18).
H-11 Subpoena material from BK Accountants - transfer of company ownership agreement dated 30/12/15. H-12 Supreme Court Writ dated 31/01/18. Plaintiff – FF Pty Ltd and Defendants - Mr Hua, Mr XX and Mr GG. H-13 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ I – Released Trust Interest – M Unit Trust Restructure advice (Mr XX)”:o Letter dated 16/01/19 to Family Court in response to subpoena;
o (27) The document headed BL Accountants response to Subpoena, pages 154-160.
H-14 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ J – Restructure Sale documents for M (Mr XX)”o Property BM settlements statement as at 26/03/15 and attachment
o (28) Property BM Settlement Disbursements sheet and supporting documents, pages 161-174 (page 175 – removed).
H-15 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ K – Released trust Asset – Z Trust (Mr XX)”:o (31) Z Trust meeting if Minutes of Unit Holders – page 178
o (32) Z Trust Certificate – page 179.
o (33) Z Pty Ltd Register of Unit of Holders as at 21/09/16 – page 181.
o (34) Z Pty Ltd Register of Unit of Holders as at 24/11/11 – page 182.
H-16 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ K – Released trust Asset – Z Trust (Mr XX)”:o Photocopy of NAB meeting notes with Mr XX on submissions to increase time with lending facility, pages 196 and 197.
H-17 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ L – Business Interest – VVV Pty Ltd (Mr XX)” Loan agreement 15/12/11:o (26) Photocopy document headed “Loan Agreement” between Ms QQQ, Mr XX and Z Pty Ltd, pages 183 - 190.
H-18 Bundle of documents from Applicant’s Court Book – Volume 1 of 1:
Under title “ M – Business Interest – BA Pty Ltd (Mr XX)”:o (27) The document headed “BA Pty Ltd …”, ASIC current & historical extract, pages 191-195.
H-19 Financial statement to Liu Family Unit Trust 2011-2017. H-20 II Family Trust Compilation Reports for the Financial years ending 30/06/10 to 30/06/17. H-21 Documents:
o Notice to Admit Facts dated 12/07/16 and 14/01/19;
o Notice disputing facts dated 28/01/19.
H-22 Letters between the parties’ solicitors dated 3/10/18, 30/01/19, and 8/02/19 concerning discovery. H-23 Bundle of emails between the wife and Mr BC (of NAB) from 16/02/17 to 21/03/17. H-24 Letter from NAB to The Secretary, F Pty Ltd dated 11/08/17. H-25 Financial Report for the II Family Trust, for the year ending 30/06/17
(part of the bundle of documents in H20).H-26 Letter from husband’s solicitor to wife’s solicitor, dated 15/04/16. H 27 Letter from husband’s solicitor to wife’s solicitor, dated 3/05/16. H-28 F Pty Ltd NAB Statement from 1/08/17 to 29/12/17. H-29 Exhibit “UUU-1” to the affidavit of Mr UUU Hua, affirmed on 7/03/19 and copy of the affidavit, filed on 7/03/19. H-30 Retrospective valuation as at 30/06/13 of Property BM development, dated 2/11/18 prepared by J Group (“Baker Jones valuation”). Items exhibited on behalf of Respondent wife
W-1 Folder of annexures to the affidavit of the wife filed 28/05/18. W-2 Email from Baker Jones Lawyers dated 11/03/2015. Subject: “Re: Hua and Liu – family matter”. W-3 Documents produced pursuant to subpoena addressed to The Department of Home Affairs dated 7/08/18. W-4 Two ASIC documents - Form 484 dated 14/06/13 concerning M Pty Ltd and Z Pty Ltd. W-5 Financial Statement of husband affirmed and filed 30/07/13. W-6 Affidavit of husband affirmed on 18/06/13 and filed 30/07/13. W-7 Affidavit of husband affirmed on 2/04/15 and filed 13/04/15. W-8 Letter from husband’s solicitors (Baker Jones Lawyers) to wife’s solicitors – (AC Lawyers) dated 31/07/2014. W-9 Documents produced pursuant to Subpoena addressed to Ms BN filed 23/04/18. W-10 Emails:
o Email from Mr BP to Mr BQ and Mr XX.
Subject: “FW Credit Round – BR Pty Ltd” – dated: 10/02/15 at 12:28 PM.
o Email from Mr BT to Mr BP subject: “FW: Credit Round – BR Pty Ltd” – dated: 10/02/15 at 8:07AM.
o Email from Mr BU to Mr BT, CC: Mr BV subject: “Credit Round - BR Pty Ltd” – dated: 9/02/15 at 6:05 PM.
W-11 Documents produced pursuant to subpoena to M Pty Ltd dated 23/04/18. W-12 NAB Bank Statements regarding M Pty Ltd:
o Dated 1/11/2012 to 30/11/12.
o Dated 4/02/2015 to 4/05/15.
W-13 InfoTrack company search (ASIC Extract Snapshot) of BW Pty Ltd, ACN …. Date extracted: 18/12/18. W-14 InfoTrack company search (ASIC Extract Snapshot) of VVV Pty Ltd, ACN …. Date extracted: 08/05/18. W-15 o InfoTrack company search (ASIC Extract Snapshot) for M3 Pty Ltd, ACN …. Date extracted: 07/02/19; and
o Document produced pursuant to subpoena addressed to NAB dated 14/01/19.
W-16 Aide Memoire titled “Hua & Liu – Funds Distributed from 2 AF Street 2/6/12 – 25/3/13” with attached bank statements. W-17 Emails:
o Email from Mr Hua to Mr BJ from NAB
subject: “FW 2 AF Street” dated 4/04/12 at 3.14 PM with enclosures.
o Email from Mr Hua to Mr BJ NAB
subject: “FW: Income for HD” dated 26/04/12 at 4.37 PM with enclosures.
W-18 Receipts from Hotel …, City A dated: 1/05/13 to 31/05/13. W-19 Agreement and profitability analysis for development of AR Town Development 1 dated 10/12/16. W-20 Pages 14 – 21 of documents produced pursuant to subpoena addressed to NAB. W-21 Writ for Supreme Court of Victoria at Melbourne between AP Pty Ltd ACN … (Plaintiff) and BX Pty Ltd ACN … (Defendant) dated 7/12/10. Attached Statement of Claim, Affidavit of documents and Notice of Discontinuance. W-22 ASIC Search – personal name extract: Mr Hua. ASIC data extracted 18/04/18. W-23 Loan agreement between Ms QQQ and Mr XX & Z Pty Ltd dated: 15/12/11. W-24 Aide Memoire “Hua & Liu – Loan Repayments to Ms QQQ” and photographs of cheque stubs. W-25 Land Use Victoria Title search (1 QQ Street and 2 QQ Street), caveat and withdrawal of caveat dated 2/04/2014. W-26 Letter from BG Accountants to husband’s solicitor dated 21/07/16. W-27 Letter from husband’s solicitor to Z Pty Ltd dated 23/04/18, including subpoena and documents produced in response to subpoena. W-28 Birth Certificates and translations of BY and BZ. W-29 Country C household record book and its translation. W-30 Emails between parties’ solicitors pertaining to Mr MMM’s travel to Australia dated 31/01/2019 at 2.14 PM. W-31 Letters between parties’ solicitors dated 27/02/2018, 18/04/2018 and 19/04/2018. W-32 Photocopy of cheque book of Z Pty Ltd, starting on 09/10/12. W-33 Contract of sale of City A property in Country C. W-34 Documents:
o Wife’s Aide Memoire as to Mr XX’s drawings from cheque stubs and bank statements as opposed to Annexure C.
o Bundle of bank statements and cheque stubs.
W-35 Bundle of emails dated between 2011 - 2013. W-36 Chain of e-mails commencing 12/04/13. W-37 Bundle of bank statements of the husband’s CBA cash investment account #...49 commencing 1/07/10. W-38 Documents:
o Photocopy of subpoena to Ms CA.
o Bundles of ANZ bank statements
o ANZ bank statement (account number not visible), pages 1-3.
o ANZ bank statement account number #...05, pages 1-25.
W-39 Financial Statement of the husband affirmed and filed on 15/05/15 W-40 Emails between the husband and the wife commencing from 16/09/11 from husband’s BlackBerry, pages 4-35. W-41 Financial Statement for M Pty Ltd as trustee for the M Unit Trust for financial year ending 30/06/10. W-42 Financial statement for M Pty Ltd as trustee for the M Unit Trust for financial year ending 30/06/12. W-43 CC Pty Ltd financial report for the period ending 30/06/13. W-44 Financial Statement for the Z Trust - financial statements for the period ending 30/06/12 prepared by AC Partners. W-45 Bundle of documents between Mr CD and the husband in relation to CE Group commission for transfer of funds from Country C to Australia. W-46 Photocopy of cheque stubs #30 and #42 of F Pty Ltd Account. W-47 ASIC search of AE Pty Ltd. W-48 CBA Business Transaction Account Statement of CF Company commencing 15/10/11. W-49 Documents brought to court by witness Mr XX – “M Group affairs email”. W-50 Court book of annexures to wife’s witness affidavits. W-51 Wife’s amended asset schedule. W-52 Bundle of bank statements and term deposit certificates from NAB for F Pty Ltd and N Pty Ltd. W-53 CBA bank statements:
Statement 21 for the wife.Statement 22 for F Pty Ltd.
W-54 NAB statement of F Pty Ltd commencing 1/12/10 until 31/12/10. W-55 NAB Credit Advice dated 28/06/10 showing a $40,000 deposit from Ms HHH Liu into the N Pty Ltd account, and receipt stub dated 02/07/10 for deposit into the NAB N Pty Ltd account in the amount of $200,000. W-56 Three arch lever folders of documents referred to in the wife’s affidavit sworn on 17/04/19 (Marked for Identification). W-57 Correspondence between the wife’s solicitor and the husband’s solicitor on:
o 15/04/16 (separately marked as exhibit H26).
o 28/04/16.
o 3/05/16 (separately marked as exhibit H27).
W-58 Documents:
o Correspondence between the parties’ solicitors pertaining to the sale of properties.
o Application in a Case and affidavit of the wife in support filed on 25/07/18.
W-59 Wife’s tax return for 2017. W-60 Bundle of NAB bank statements for various mortgage loans. W-61 Documents:
o Photocopy of subpoena issued to NAB on 14 /01/19; and
o NAB bank statements in relation to DD Pty Ltd and FF Pty Ltd produced pursuant to this subpoena.
W-62 NAB Account statements for Z Pty Ltd from 30/06/12 to 25/03/13 (pages 114 to 124 of the Marked for Identification Folder 1 of 3). W-63 Documents:
o Photocopy of subpoena issued to CBA on 14/01/19; and
o Bundle of cheques in relation to DD Pty Ltd produced pursuant to this subpoena.
W-64 ASIC Search – personal name extract: Mr UUU Hua. Data extracted on 03/04/2019 (as redacted and agreed by Counsel). W-65 Retrospective valuation as at 31/12/17 of Property BM development, dated 16/06/18 prepared by J Group (“Szabo valuation”). W-66 Photocopy of unredacted emails dated 12/11/13 and 20/05/14. (Redacted emails tendered as part of Exhibit H 10):
o Attachment 002.pdf to the email dated 12/11/13 forms part of Exhibit H9
o Email of 20/05/14 is an unredacted version of second page of Exhibit H10 and has 5 ‘.jpg’ attachments, which include 3 photographed paged of Exhibit H9 and attachments to Exhibit H10.
W-67 Letter from Mr CG of J Group, dated 17/05/18 to both parties’ solicitors. W-68 Draft Aide Memoire pertaining to documents produced by ZZZ Accountants pursuant to subpoena filed on 15/04/19. W-69 File note: H Hua (undated) produced by ZZZ Accountants pursuant to subpoena filed on 15/04/19. W-70 Bank statement pages of Ms QQQ showing transactions on 05/12/11 and 23/05/13. W-71 Minutes of meetings of VVV Pty Ltd, Board of Directors on 18/02/13 at 12:00 PM to 12:30 PM. W-72 Formal notice of breach of agreement and formal notice to complete (dated 17/02/12) to DD Pty Ltd from FF Pty Ltd. W-73 CBA Business Transaction Account Statements in relation to DD Pty Ltd Project Management Account produced pursuant to subpoena issued CBA on 14/01/19 and various bundle of cheques. W-74 Joint venture agreement between DD Pty Ltd and FF Pty Ltd - dated 13/10/11. W-75 Bundle of email correspondence produced by ZZZ Accountants pursuant to subpoena filed on 15/04/19. W-76 Documents:
o Photocopy of Notice to Admit prepared on behalf of the husband (which includes a copy of Exhibit W71); and
o Notice Disputing Fact or Document prepared on behalf of the wife.
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