JIAN WANG and YAN PING GU and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
[2012] AATA 65
•7 February 2012
[2012] AATA 65
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2009/3537, 3539
Re
JIAN WANG and YAN PING GU
APPLICANTS
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
RESPONDENT
DECISION
Tribunal Mr P W Taylor SC, Senior Member
Date 7 February 2012 Place Sydney In respect to the issues of beneficial ownership and the asserted separation I make the following findings:
(a) Mr Wang and Ms Gu relevantly owned cash funds of approximately $240,000 between August 1995 and September 1996;
(b) On about 10 occasions between about September 1996 and October 1997 Mr Wang and Ms Gu progressively accumulated a total of approximately $600,000 which they held in cash until at least April 2000, and which they were not under any legally binding obligation to repay;
(c) On about 15 occasions during 1998 Mr Wang and Ms Gu progressively accumulated an additional total of approximately $900,000 which they held in cash until at least October 2001, and which they were not under any legally binding obligation to repay;
(d) From April 2000 until May 2004 Mr Wang and Ms Gu were the joint legal and beneficial owners of the Woollahra property;
(e) From October 2001 until May 2004 Mr Wang and Ms Gu were the joint legal and beneficial owners of the Point Piper property;
(f) From May 2004 Mr Wang was the sole legal and beneficial owner of the Woollahra property;
(g) From May 2004 Ms Gu was the sole legal and beneficial owner of the Point Piper property;
(h) Mr Wang and Ms Gu did not live separately and apart, for the purposes of s 4(2) and 4(3) of the Social Security Act 1991, at any time between December 2001 and April 2007.
Pursuant to s 33 of the Administrative Appeals Tribunal Act 1975 the Tribunal directs the applications be listed, for hearing of the remaining issues involved in the determination of the application, on a date to be fixed.
...............[sgd].........................................................
Mr P W Taylor SC, Senior Member
CATCHWORDS
SOCIAL SECURITY – debt – assets test – assets value limit – ownership – funds provided by non resident parents – member of a couple – living separately and apart – findings made
LEGISLATION
Social Security Act 1991 ss 4, 500Q, 573, 573A, 611, 612, 1118
Foreign Acquisitions and Takeovers Act 1975 ss 4, 12A, 21A, 26A
CASES
Calverley v Green (1984) 155 CLR 242
Main v Main (1949) 78 CLR 636
Nelson v Nelson (1995) 184 CLRREASONS FOR DECISION
Mr P W Taylor SC, Senior Member
7 February 2012
Decision under review
Central issues – assets and assets value limits
Applicants’ contentions – parents’ assets
Alternative contention – separation December 2001 to 2009
Separate issues being determined – assets and separation
Cash resources available to Mr Wang and Ms Gu
The nature and timing of Mr Wang and Ms Gu’s cash resources
Absence of records
Delay between fund provision and application
The apparent handling inconsistency – cash hoard and term deposits
Source and application of funds
Suggestions of other income sources
Apparent tardiness of Mr Wang and Ms Gu’s disclosure of these funds, and their assertions about their source
Findings on the fund “transfers”
Character of the cash held between August 1995 and September 1996
Character of the cash held between September 1996 and October 1997
Character of the cash held between October 1997 and late 1998
Character of the cash held after late 1998
The character in which Mr Wang and Ms Gu held the Woollahra property
The character in which Mr Wang and Ms Gu held the Point Piper property
Resulting trust and advancement
Is the parental expectation of repayment relevant?
The separation issue
The nature of the household
Social and sexual aspects of the relationship
Financial aspects of the relationship
The nature of the people’s commitment to each other
Relationship conclusion
Decision
Schedule 1
Schedule 2
Schedule 3
Mr Wang received newstart allowance and parenting payment/allowance between October 1995 and April 2000. For almost four years, between November 2003 and April 2007, he received either newstart allowance or austudy (from August 2004 to March 2005). In February and October 2008 Centrelink officers, acting under the Secretary’s delegation, decided that Mr Wang’s assets value made him ineligible for the social security payments he received. Centrelink sought to recover them as debts to the Commonwealth.
Mr Wang’s wife, Ms Gu, received parenting allowance between 1995 and 1997, newstart allowance for most of the period between 1997 and 2000, and parenting payment for the 7 year period from April 2000 to March 2007. Centrelink decided that she too was ineligible for these payments, because of her assets value. Centrelink decided that payment amounts of over $100,000 were debts recoverable by the Commonwealth.
DECISION UNDER REVIEW
On 19 June 2009 the Social Security Appeals Tribunal formally set aside Centrelink’s decisions. But, in practical reality, the SSAT affirmed both Mr Wang and Ms Gu’s ineligibility, and the related debt, for the payments they received during the following periods:
(a)March 1999 to May 2000: on the basis that Mr Wang and Ms Gu had accumulated cash in excess of the applicable assets value limit (approximately $181,000);
(b)8 March 2001 to October 2001: on the basis that Mr Wang and Ms Gu had accumulated assets (in either term deposits or cash held at home) that exceeded the applicable assets value limit (approximately $200,500);
(c)October 2001 to October 2003: on the basis that Mr Wang and Ms Gu jointly owned two residential properties at Woollahra and Point Piper, then respectively valued at about $1.8m and $3.1m. It is implicit in the decision that even though the SSAT found that Mr Wang and Ms Gu were living apart in this period, their respective joint interests in the property where the other resided, exceeded the applicable assets value limit;
(d)October 2003 to April 2007: on the basis that Mr Wang and Ms Gu were then both living at the Point Piper property, as members of a couple. Consequently, the value of the Woollahra property, whether jointly owned, or solely owned by Mr Wang after May 2004, had to be included in each of their asset values, and exceeded the applicable assets value limit.
CENTRAL ISSUES – ASSETS AND ASSETS VALUE LIMITS
The true relevant ownership of cash Mr Wang and Ms Gu claim to have had, at various times up until at least October 2001, and the beneficial ownership of the Woollahra and Point Piper properties after that date, are central to both Mr Wang, and Ms Gu’s, eligibility for the social security payments they received. This is because parenting payment, newstart allowance and austudy are not payable if the person’s assets exceed the relevant “assets value limit”: Social Security Act 1991 ss 500Q(1), 573 and 611. The relevant assets value limits are similar for parenting payment and austudy, but slightly different for newstart allowance. The asset tests and limits have these relevant general features:
(a)The asset limit for a homeowner who is a “member of a couple”, for the purpose of s 4 of the Social Security Act 1991, is greater than the limit for a single homeowner, but less than the limit for a single non homeowner);
(b)The assets of a person who is a member of couple:
(i)do not include the value of one principal home residence of the person or their partner: see Social Security Act 1991 s 1118(1)(b);
(ii)otherwise do include either all of the partner’s assets or, if the person’s partner is a social security payment recipient, 50% of the couple’s total assets: see Social Security Act 1991 ss 500Q(4)-(5) and 612(1)-(2);
(iii)are excluded from the austudy assets test if the person’s partner has been a newstart or parenting payment recipient: see Social Security Act 1991 s 573A.
APPLICANTS’ CONTENTIONS – PARENTS’ ASSETS
Mr Wang and Ms Gu’s evidence is that Mr Wang’s father provided them with AUD$600,000 at some time probably in the second half of 1996 and, in any event, certainly before October 1997. They also say that Ms Gu’s mother provided her with another AUD$900,000 during 1998.
According to Mr Wang and Ms Gu, Mr Wang’s father’s money was used to purchase the Woollahra property in March 2000. They say that it is his property, even though:
(a)from May 2000 until May 2004, they were the joint registered proprietors of the property;
(b)since May 2004 Mr Wang has been the sole registered proprietor of the property.
Mr Wang and Ms Gu say that Ms Gu’s mother’s money was used to purchase the Point Piper property in August 2001. They say that it is her property, even though:
(a)from October 2001 until May 2004, they were the joint registered proprietors of the property;
(b)since May 2004 Ms Gu has been the sole registered proprietor of the property.
If these contentions were accepted, neither Mr Wang nor Ms Gu’s assets values would be likely to exceed the relevant limits. But, in evaluating these contentions it is material to have regard to the following matters:
(a)Both Mr Wang’s father, and Ms Gu’s mother are, and were at all relevant times, Chinese nationals residing in Shanghai.
(b)There are restrictions on the amount of money that Chinese nationals are permitted to remit abroad. The amounts attributed to Mr Wang’s father and Ms Gu’s mother exceed those restrictions.
(c)Since 1989 it has been an offence under the Foreign Acquisitions and Takeovers Act 1975, punishable by both fine and imprisonment, for foreign persons to enter into any binding agreement by virtue of which they acquire an interest in Australian urban land. For the purposes of the Act, an interest in land includes any arrangement to share profits or income from the use or sale of land. The prohibition applies unless the person first notified the Australian Treasurer of their intention and either:
(i)40 days have elapsed since the notification, or
(ii)the Treasurer has advised no objection to the proposal, see Foreign Acquisitions and Takeovers Act 1975 ss 4, 12A, 21A, 26A.
(d)Neither Mr Wang’s father, nor Ms Gu’s mother ever gave any notification to, nor received any advice from, the Treasurer in relation to the Woollahra or Point Piper properties.
(e)Mr Wang was aware, and probably his father, Ms Gu and her mother were also aware, long before the purchase of the properties, of the general practical effect of the prohibitions contained in the Foreign Acquisitions and Takeovers Act 1975 ss 4, 12A, 21A, 26A and of the likelihood of Commonwealth objection to any purchase of existing residential property by non resident foreign nationals.
ALTERNATIVE CONTENTION – SEPARATION DECEMBER 2001 TO 2009
Mr Wang and Ms Gu’s additional, and in practical reality, alternative contention is that they were not “members of a couple”, for the purposes of the Social Security Act 1991, at any relevant time after 8 December 2001. If this contention was made good it could have the following effect:
(a)Ms Gu’s relevant assets would not include:
(i)the value of Mr Wang’s interest in the Point Piper property (after December 2001);
(ii)the value of Mr Wang’s interest in the Woollahra property after 8 December 2001;
(iii)the value of her interest in the Woollahra property, until after about August 2002, when it ceased to be her principal residence;
(iv)the value of her interest in the Point Piper property, after about March 2003, when it became her principal residence.
(b)Mr Wang’s assets would not include:
(i)the value of Ms Gu’s interest in the Point Piper property (after December 2001);
(ii)the value of Ms Gu’s interest in the Woollahra property after 8 December 2001;
(iii)the value of Mr Wang’s interest in the Woollahra property, until after he stopped living there – sometime in 2003;
(iv)the value of Mr Wang’s interest in the Point Piper property, after he started living there – sometime in 2003.
SEPARATE ISSUES BEING DETERMINED – ASSETS AND SEPARATION
The ultimate practical effect of Mr Wang and Ms Gu’s contention that they were not members of a couple for any relevant period after 8 December 2001, requires careful consideration of the relevant asset tests and limits. The parties are agreed that I should proceed on the basis of addressing the principal issues of beneficial ownership and the asserted separation. Any consequential detailed determination of actual social security payment entitlement in the relevant periods could either be remitted to the Secretary to determine in accordance with my reasons for decision, or the subject of further submissions and evidence from the parties, in the light of the principal findings. I have accordingly directed that all issues concerning the quantification of any debt owed by either of the Applicants will be determined separately and after the determination of all other issues in the proceedings. The purpose of that direction is to confine these reasons to a determination of the ownership and separation issues.
CASH RESOURCES AVAILABLE TO MR WANG AND MS GU
There are good reasons to believe that Mr Wang and Ms Gu had access to substantial funds during the period they received their respective social security payments. They used them to purchase, or to assist in the purchase, of both the Woollahra and Point Piper properties. They also used them for other purposes. I outline their principal transactions in the following paragraphs.
When Mr Wang migrated to Australia with Ms Gu in August 1995 his father provided him with money. The amount was somewhere between US$170,000 and $200,000 (AUD$240,000 – $280,000). Mr Wang obtained a bank cheque in China, brought it with him to Australia, and deposited the money in a term deposit. Later, in October 1996, he and Ms Gu used this money to purchase a unit at Miranda. They lived there with their daughter and, after March 1999, their new born son, until late 1999 or early 2000. In November 1999 they contracted to sell the Miranda unit for $281,500. By 28 January 2000 they had completed the sale of the unit, and the purchasers had become the registered proprietors of the property.
On about 9 March 2000, Mr Wang and Ms Gu contracted to purchase the Woollahra property for $725,000. The transfer was executed, sometime around 13 April 2000, by a solicitor who acted for Mr Wang and Ms Gu. The transfer records that they purchased the property as joint tenants. They became joint registered proprietors of the then unencumbered property on 19 April 2000.
By about March 2001, Mr Wang and Ms Gu opened, and thereafter operated, a number of joint current, and term, deposit accounts with HSBC. The movements on those various accounts, for the period from March 2001 to December 2003, and from January 2004 to December 2007, are summarised in Schedules 1 and 2 to these reasons.
On about 22 August 2001 Mr Wang and Ms Gu contracted to purchase the Point Piper property for $2.272m. They funded the 10 October 2001 purchase completion predominantly with a $1.782 loan from HSBC. This substantial loan was secured by a mortgage, which both Mr Wang and Ms Gu executed, over the Woollahra and the Point Piper properties. The mortgage was registered on the title of both properties on 11 October 2001.
After October 2001, the HSBC bank statements record the regular payment of mortgage interest. The initial interest rate was 5.29% per annum and the monthly interest payments approximated $7,800.
In October 2002 following a development approval granted in October 2001, Mr Wang and Ms Gu signed a building contract for work on the Woollahra property. The contract price for the work, which involved, amongst other things, a second storey addition to the property, was approximately $120,000. A construction certificate for the building work was issued in March 2003. Since prior provision of this certificate was a condition of the development approval, it appears likely that the building work was not carried out until after March 2003.
THE NATURE AND TIMING OF MR WANG AND MS GU’S CASH RESOURCES
Mr Wang and Ms Gu’s Woollahra and Point Piper property purchases occurred years after the asserted fund transfers by their respective parents. That delay provides good reason to question the reliability of their claims about the source of the funds. It, and other matters, certainly provides reason to doubt that the funds were provided at the times, and in the circumstances they claim. Those other matters include the following:
(a)the absence of any records of the funds assertedly provided by the respective parents;
(b)the apparent inconsistency in the asserted handling of the cash funds;
(c)the apparent discrepancy between the amount of the funds assertedly provided, and the level of Mr Wang and Ms Gu’s expenditure;
(d)some HSBC bank documents suggesting that Mr Wang had a substantial employment history and income;
(e)the apparent tardiness of Mr Wang and Ms Gu’s disclosure of these funds, and their assertions about their source.
I will deal with each of these matters in the following paragraphs.
ABSENCE OF RECORDS
Mr Wang said his father started transferring money to Australia in late 1996. The money transfers took place through dealers who arranged parallel currency exchange transactions. The essence of these transactions was that in exchange for the payment of money in either country, the dealers would arrange, at negotiated exchange rates, a corresponding payment in the other country. (I would infer that this was a strategy designed to circumvent the practical effect of restrictions on Chinese residents moving funds out of China.) There were at least 10 transfer transactions. The transfers varied in amount between AUD$50,000 and AUD$70,000. The number of separate transfers, and the variability of the amounts they involved, was partly deliberate and partly an unavoidable feature of the transfer system. To the extent that it was deliberate it was a matter of prudence not to risk all of the money in a single transfer transaction. To the extent that it was unavoidable, it was a consequence of the practical difficulty of ensuring that an appropriate amount of matching currency was available to be handed over in Australia. Mr Wang had visited the dealer’s offices to verify that the proposed exchange transactions were genuine, and to receive the currency involved in the transfers. Before October 1997, when Mr Wang’s father visited him in Australia, the whole of the AUD$600,000 amount had been transferred.
Mr Wang says that in the period from around March 1998 to 1999 Ms Gu’s mother transferred to him from China the equivalent of AUD$900,000. He fixed upon that time because it was shortly after his parents had returned to China, following their visit to Australia between October and December 1997, and at a time when there was a problem between Mr Wang’s parents and Ms Gu. Ms Gu’s mother also said she transferred the money in late 1998 and early 1999. The context in which she gave that evidence in her 28 January 2010 statement suggests that she transferred the money before her March 1999 visit to Australia. Ms Gu’s evidence was that all of the money had been transferred during 1998. All of these transfers between Ms Gu’s mother and Mr Wang involved “dealers” of the kind I described earlier. These were carried out, in varying amounts, on about 15 different occasions.
Ms Gu’s mother had no records of her transfers. Mr Wang’s father did not produce any records of his transfers. Mr Wang said he had no receipts, nor records of any other kind, to evidence any of these dealer facilitated transfer transactions involving his father, or the later transactions involving his mother in law. He could not remember the actual number of transactions. He could not remember the names, or the addresses of any of the dealers, even though he had gone to their offices to collect the money. He did not keep any personal record, or account, of the individual transfers. He did not keep any record of the total amount either his father, or his mother in law, had actually paid. He could not even say whose money, and in what proportions, had been used to make up the term deposits. As he said it was all a “bit complicated” because all the money was combined together and he had not actually stopped to think to differentiate between the respective contributions.
There were two particularly significant aspects of Mr Wang’s evidence in relation to the absence of any record of the asserted transfers by his father and Ms Gu’s mother. The first of these concerned Mr Wang’s account of the source of the funds for the purchase of the Woollahra property. The second concerned what he said about the source of the funds used to purchase the Point Piper property.
In his December 2010 statement Mr Wang said that his parents provided all the money for the $725,000, March 2000 Woollahra property purchase. Bearing in mind the $725,000 purchase price, and the likelihood of additional conveyancing and stamp duty costs, this statement could not be accurate. At one stage in his oral evidence Mr Wang said that “some” of the $281,500 sale price of the Miranda unit had been used, in addition to his father’s $600,000, to complete the Woollahra purchase. At a later stage he said that all of the Miranda sale proceeds had been used to fund the purchase and only about $400,000 of the $600,000 of his father’s transferred funds had been used.
Having recognised that some of his father’s transferred funds had not been used for the Woollahra purchase, Mr Wang said the balance had actually been applied towards the subsequent October 2001 purchase of the Point Piper property. He said that he had tried to explain this to Ms Gu, and it led to a later dispute. This was because Ms Gu thought only her mother’s money had been used to contribute to the Point Piper property purchase.
It is, to my mind, a remarkable consideration that no contemporaneous objective record of any kind was produced to evidence the asserted fund transfers. It is a consideration that invites scepticism of the evidence Mr Wang, his father, Ms Gu and Ms Gu’s mother.
DELAY BETWEEN FUND PROVISION AND APPLICATION
Most of the evidence of Mr Wang, his father and Ms Gu’s mother was to the effect that the funds had been transferred from China by at least October 1997 (in the case of Mr Wang’s father’s funds) and by early 1999 (in the case of Ms Gu’s mother’s funds). But not all of the evidence was consistently clear.
Mr Wang’s December 2010 statement did not give any specific timing for his father’s transfer payments. But the sequence of events set out in the statement suggests they were made after the birth of Mr Wang’s son in early 1999, after the November 1999 contract for the sale of the Miranda property, and close to the time of the March 2000 contract for the purchase of the Woollahra property.
Mr Wang said in his oral evidence that he and Ms Gu sold the Miranda unit because his parents thought it was better to have a house, rather than a unit, and that they were planning to migrate. This statement, like Mr Wang’s December 2010 statement, also suggests that the prospect of his parents’ migration to Australia, and of the combined families living together in one house, was still under active consideration at around the time of the March 2000 Woollahra property purchase.
That apparent timing is consistent with the version of events attributed to Mr Wang in the SSAT’s July 2009 reasons for decision. In the reasons (at paragraph 21) the SSAT describe Mr Wang’s explanation that his parents came to Australia “shortly before” the purchase of the Woollahra property. At that time they were intending to migrate and, in that expectation, had transferred funds for the purchase. According to the evidence noted by the SSAT, the family disagreement that provoked Mr Wang’s parents’ subsequent decision not to migrate to Australia, related specifically to a dispute with Ms Gu about whether her name should be on the title to the Woollahra property. The thrust of this evidence was to the effect that (i) any fund transfers occurred after, and were unrelated to, the purchase of the Miranda unit and (ii) the title dispute occurred sometime around March 2000.
Despite the timing inconsistency between the account I have just summarised and the version in paragraph 20 above, the common feature of both versions was the claim that the relevant transfers occurred at time when Mr Wang’s father was contemplating migrating to Australia. I have real doubt as to whether this was in fact ever really contemplated. (My doubt arises from the facts that (i) it is an undocumented claim by an elderly man about a state of mind relating to events that occurred 15 years ago, (ii) it was not referred to in Mr Wang’s father’s second written statement, (iii) he gave no evidence of enquiry about the prospect of migration, (iv) both of Mr Wang’s parents were elderly at the time, and (iv) both of his siblings still lived in China.) But even accepting the possibility that the contemplation was at one stage real, Mr Wang said his parents subsequently abandoned the idea of migrating, because they and Ms Gu could not get on well enough to live together. Mr Wang’s father said in his oral evidence that he had made that decision after the 1997 visit to Australia and by sometime in early 1998, at the latest.
On this version of events, therefore, all of the AUD$600,000 had been transferred to Mr Wang by sometime before October 1997. By early 1998 it was, on Mr Wang’s version of events, the subject of an instruction from his father to be used for investment in real estate. But despite what he had done with the 1995 payment, despite the supposed character of the transfers as his parents’ investment funds, and despite the fact that he and Ms Gu had joint accounts at both the Commonwealth and National Australia Banks, Mr Wang did not deposit any of the AUD$600,000 in a bank. Nor did he disclose any of the money to Centrelink in application forms he submitted in February and June 1997 in connection with a parenting payment application. In both of those applications Mr Wang said he held no cash at home.
In the present proceedings, Mr Wang says that by late 1997 he in fact had AUD$600,000 that he kept at home, in (or under) a cupboard drawer in the Miranda unit. The contents of the cupboard were subsequently augmented, so Mr Wang says, by the even larger amount transferred by his mother in law. Mr Wang says he kept all of this additional money in the cupboard at the Miranda unit.[1] After using some of the money for the April 2000 settlement of the purchase, and moving to the property in May 2000, he kept the remaining cash at the Woollahra house.
[1] Ms Gu said that she kept the money her mother transferred in a separate case. The detail is unimportant. It was Mr Wang who handled the money and determined how it was applied.
A degree of credulity is required to accept Mr Wang’s evidence that he kept cash in a cupboard for something approximating 3 years (in the case of the transfer involving his father) and at least 21/2 years (in the case of the transfers involving his mother in law). Mr Wang claimed in his oral evidence that at one stage he did enquire about placing the money he received after 1996 on deposit with a bank. He says the bank told him that he would have to decide whether to put the deposit in his name, or in his parents’ names, and that he would have to declare the interest for tax. He claims he saw this as all too complicated, and decided just to keep the money at home.
Mr Wang’s explanation that it was “too complicated” to place the money on deposit, is a vague and facile generality. If it was the fact that the money belonged to his parents or his mother in law, there would have been no real complication in explaining, and formally recording, that fact. In any event, the proposition that any interest earned from a deposit investment would attract a tax liability does not provide a rational basis for preferring a suburban cupboard to an interest bearing deposit with an Australian bank. There must be other reasons for such a preference. At the then contemporary interest rates (assuming they were similar to the 4% to 5% term deposit rates to which I will refer shortly) Mr Wang’s asserted preference for the cupboard, as the place to hold this money, forewent gross pre tax interest income of at least $24,000 per annum on the AUD$600,000 transfer of his father’s funds. It forewent interest income of as much as $60,000 per annum on the full AUD$1.5m amount. Over the period Mr Wang claims he kept the money in the cupboard drawer, the total pre tax interest foregone was, therefore, at least $120,000 and obviously substantial.
It was suggested that this kind of conduct, with its apparent financial imprudence, was of no real significance. The basis of this contention was an assertion that substantial cash retention was common, or at least not uncommon, in some communities. This suggestion carries little weight, even though both Mr Wang’s father, and his mother in law, said that in China the money they used for the fund transfers had been kept at home and not in a bank. The probability of significant cash retention in any particular case depends on the actual circumstances. And in that regard four matters suggest its improbability in the circumstances of the present matter. The first is the absence of any articulated and persuasive reason to prefer substantial cash retention to interest earning deposit with an Australian bank. The second is Mr Wang’s obvious financial nous – evidenced at least by his conduct in 1995, his asserted enquiry in 1996 and his conduct in 2001 (a matter to which I will come). The third is the very idea, investment gain, that supposedly motivated the transfers by both Mr Wang’s father and Ms Gu’s mother. The fourth is the apparent significance of the opportunity cost of merely keeping the money secreted instead of applying it to any investment activity – and in this case the foregone interest income, over the years Mr Wang claims he kept the money in the cupboard, was itself substantial.
THE APPARENT HANDLING INCONSISTENCY – CASH HOARD AND TERM DEPOSITS
I referred in paragraph 12 to the funds Mr Wang brought with him to Australia when he migrated in 1995. Neither his father’s statement nor Mr Wang’s December 2010 statement, referred to the 1995 payment, the bank cheque or the term deposit. Indeed Mr Wang’s statement gave a different explanation for the source of the funds for the 1996 Miranda unit purchase. In his statement Mr Wang said that some of the money used for that purchase was transferred from China via “a commercial exchange facility”. The rest was brought over from China by a friend. This information is not reasonably able to be interpreted as consistent with Mr Wang’s oral evidence about his father’s payment. It is but one of the many inconsistencies that cast grave doubt on the reliability of Mr Wang’s evidence.
The SSAT’s July 2009 reasons for decision do not refer either to the AUD$240,000 Mr Wang brought with him to Australia in 1995, or its origin in his father’s payment. This is despite the fact that the reasons do refer both to the 1996 Miranda unit purchase and to the absence of any mortgage over the property. I infer that Mr Wang did not disclose this 1995 payment, or the term deposit, in the course of the SSAT proceedings. It follows that until his oral evidence in the present proceedings Mr Wang had a different explanation for the source of the funds for the Miranda unit purchase. That different explanation did not involve, and implicitly disavowed, a claim that he received the money from his father. It did not involve any claim that the money relevantly belonged to others. It certainly did not involve any claim that the Miranda unit had relevantly belonged to his father.
Moreover Mr Wang’s assertions about the potential complications of affecting bank deposits with the transferred funds certainly did not dictate his behaviour after February 2001. By that time, after completing the Woollahra property purchase in April 2000, Mr Wang had, on his version of events, something in the vicinity of $1.1m in cash at his Woollahra home. In March 2001 he did start placing substantial sums on term deposit with HSBC. He started these deposits, so he said, on the advice of the bank following his approach about borrowing money in connection with the Point Piper property purchase. He said the bank manager advised him that establishing a term deposit would assist, along with information about his income, in demonstrating the serviceability of any loan for which he might apply.
The term deposit records began (at least so far as the available records reveal) in early March 2001. At that time there were seven term deposits with various maturity dates up to 2 April 2001. There were two deposits in round amounts, and five deposits with balances varying between $13,029.57 and $93,691.81. The seven deposits totalled about $231,000. The interest rates varied between 4.9% and 5.25%. These deposits were all in the joint names of Mr Wang and Ms Gu. Mr Wang said that even after making payments into the term deposit accounts it was still his practice to retain cash at home in an amount of between $50,000 and $100,000.
After April 2001 the total of the term deposit amounts increased monthly. A small part of the increase was the result of interest accumulation. The major reason for the increase was substantial additional deposits. By July 2001 the term deposits had more than doubled, and had reached their maximum balance of $505,400. In August 2001, the month when Mr Wang and Ms Gu contracted to purchase the Point Piper property, the term deposit balance declined by about $110,000.
This pattern of behaviour, in first establishing the term deposits in March 2001, and then progressively increasing the amounts invested in those deposits, is not likely to have been prompted by the contemplation of the specific purchase of the Point Piper property (which occurred at an auction in August 2001). It is more likely to have been associated with a more general contemplation of a substantial mortgage financed purchase. And again that more general contemplation suggests a degree of financial investment sophistication. Mr Wang, and Ms Gu’s, willingness to undertake this course of conduct is not readily reconciled with his claim to have been overawed by the potential “complications” of correct disclosure of the asserted true ownership of the transferred cash funds, or the taxation liability that would have been attracted by interest income. It bespeaks a willingness to engage in the complication of creating an appearance of substantial assets and income, as a means of inducing HSBC’s belief in his ability to service a substantial loan. If Mr Wang was willing to create that appearance in 2001, it is surprising that he did not do so earlier – given his claim about the funds he had secreted in the cupboard at home. That surprise again justifies a sceptical evaluation of the evidence about the source and timing of the asserted fund transfers.
SOURCE AND APPLICATION OF FUNDS
As I pointed out in paragraphs 24 and 25 above, Mr Wang ultimately conceded that his father’s transferred funds had not provided all of the money used to fund the April 2000 purchase of the Woollahra property. He also asserted that some of his father’s transferred funds had actually been used to fund the October 2001 settlement of the purchase of the Point Piper property. He certainly had to concede that Ms Gu’s mother’s transferred funds had only been part of the funds used to settle the Point Piper property purchase. He also had to concede that only part of her funds had been used in the settlement. The approximately $490,000 balance of the Point Piper purchase price was most likely substantially funded by contemporaneous withdrawals from the term deposits. Between August 2001 and 8 November 2001, the term deposit balance declined from about $500,000 to $132,633. This decline is evident from the details set out in Schedule 1 to these reasons.
It follows from this analysis of the term deposit balances, the contributions to the settlement of the Point Piper property purchase, and Mr Wang’s evidence, that whatever funds Mrs Gu’s mother had provided, they certainly did not fund the full purchase price of the Point Piper property. The $490,000 balance of the purchase price, even if (contrary to Mr Wang’s evidence) it had been made up entirely from funds provided by Ms Gu’s mother, was well short of the $900,000 Mr Wang claims she had transferred to him during 1998 and 1999. Furthermore, it is only possible to demonstrate that Mr Wang and Ms Gu certainly had access to cash funds totalling about $635,000 (ie the $490,000 and the $145,000 current and term deposit balance) plus any additional settlement costs they may have paid. This total amount was also rather less than the claimed transfer amount.
After November 2001 the term deposit amounts increased substantially. This progressive increase, between November 2001 and June 2002, is evident from the details set out in Schedule 1 to these reasons. By the end of June 2002 the total term deposit amount was $438,396. This reflected an increase of over $300,000 in just 8 months. The preponderance of the increase appears to have resulted from irregular additional deposits. Sometimes these were deposits of rounded amounts of $20,000. At other times the deposits were more substantial, and for odd amounts. The origin of these additional, irregular, deposits is not readily discernible from the available bank records. They are unlikely to relate to rental income from the properties. Mr Wang’s 2002 tax return discloses gross rental income (derived from the lease of the Point Piper property) of only $38,240 and a net rental loss of $47,649. Ms Gu’s total taxable income for the 2002 year was only $9,196 and did not include any rental income.
It is unclear whether any of the increases in the term deposits were relevantly attributable to Mr Wang’s self employment as a commission agent for several educational colleges dealing with overseas students. The uncertainty arises because of an apparent irregularity, or at least inconsistency, in the available information. In information contained in his 28 November 2003 newstart application to Centrelink, Mr Wang stated that he had operated an overseas student services business from 1 July 1998 until 1 July 2001. He said he had not had any employment since 1 July 2001. Since then he had been relying on “our savings”. There are two elements of curiosity about this information. The first is that Mr Wang did not disclose any business income in his tax return for the 2000 tax year (his earlier returns were not included in the evidence), and only a minor amount for the 2001 tax year. The second is that Mr Wang disclosed a higher level of gross income for the same business for each of the 2002 and 2003 tax years, that is the two years after he said he stopped operating the business. In addition, notwithstanding that the business had ceased operation, and the office lease had expired, he continued to claim rental and other expenses for the business in his 2002 and 2003 tax returns. (The relevant income and expenses are evident from the details set out in Schedule 3 to these reasons.) At least in the absence of explanation, and even allowing for some “run off” of commission payments after Mr Wang assertedly ceased active conduct of the business, these details are difficult to reconcile with the proposition that Mr Wang ceased his self employed business as at 1 July 2001.
The irregular deposits after November 2001 may have come from cash Mr Wang kept at home. Indeed, in July 2002 there was a $400,000 partial repayment of the mortgage loan principal. Mr Wang initially said he paid this off from cash funds he had at home. This occurred supposedly after advice from the bank that it was better for him to pay off as much of the loan as possible. The objective facts about the source of this principal repayment are somewhat different. They again demonstrate the unreliability of Mr Wang’s evidence, and the scrutiny required in order to assess the accuracy of his version of any events.
The available term deposit records indicate that something like $300,000 of the $400,000 July 2002 mortgage principal repayment amount was funded by withdrawal from the maturing term deposits. But there were also other deposits, and the creation of new term deposits. The combined result of these various withdrawals and deposits was that even after the 17 July 2002 principal repayment of $400,000, the total term deposit balance as at 8 August 2002 was still $155,691. It included two new term deposit accounts. The larger one of these deposits (in an amount of about $60,000) had been created on 24 July 2002 (ie after the $400,000 partial loan repayment).
All of this generates an impression that Mr Wang and Ms Gu had continuing access, long after the fund transfers they claim were made by his father and Ms Gu’s mother, and their asserted application to the purchase of the Woollahra and Point Piper properties, to substantial sources of funds. Those funds were in addition to both the October 2001 HSBC mortgage advance, and to the asserted fund transfers by Mr Wang’s father and Ms Gu’s mother. Over a six year period, Mr Wang and Ms Gu applied funds, or committed themselves to expenditure, for at least the purposes indicated in the following summary.
Mr Wang and Ms Gu’s application & commitment of funds 1996 – 2002 1996 Miranda purchase price 231,000 1997 Share purchases by Mr Wang 19,000 2000 Woollahra balance of purchase price 443,500 2001 Point Piper balance of purchase price 490,000 2002 Mortgage principal repayment 400,000 2002 Additional funds on deposit August 2002 155,000 2001 – 2002 Interest payments (14 months @5.29%) 109,979 2001 – 2002 Stamp duty and legal costs (Woollahra and Point Piper – estimated) 110,000 Additional funds held in cash 100,000 Total funds applied 2,058,479 2002 Woollahra renovation costs (contract commitment) 120,000 Total fund applications and commitments 2,178,479
This level of expenditure and commitment substantially exceeds the total (AUD$1.5m) amount of the transfers about which Mr Wang and Ms Gu gave evidence. It casts further doubt on the reliability of the evidence about the undocumented fund transfers from China.
SUGGESTIONS OF OTHER INCOME SOURCES
The apparent insufficiency of the assertedly transferred funds suggests that Mr Wang and Ms Gu enjoyed other undisclosed sources, and perhaps undisclosed income. That suggestion is encouraged by the fact of the October 2001 HSBC mortgage, especially given Mr Wang’s evidence that he started the term deposits in March 2001 as a means of assisting to demonstrate the potential serviceability of a large mortgage loan.
The HSBC bank statements recording the term deposits involved a number of different joint accounts held by Mr Wang and Ms Gu. There was a single statement that included (i) term deposits, (ii) the mortgage loan and (iii) a cash management account (and at least one other deposit account). As at 6 December 2002 Mr Wang and Ms Gu had a total of $170,526 on deposit with HSBC. There is no reference to these deposits in the joint account bank statements issued after 6 December 2002. But an 8 January 2003 HSBC statement, that was issued in Mr Wang’s sole name, includes deposits totalling about $141,000. These deposits have obviously been derived from the moneys previously held in the various joint accounts. On 13 January 2003 Mr Wang applied for a personal deposit account with HSBC. In that application Mr Wang was described as a married “self investor” who owned his own home and had an income above $100,000 per annum. Mr Wang conceded in his oral evidence that he had written these details on the application form.
This evidence, when viewed against the background of Mr Wang’s evidence that he started to place money on term deposits as a means of providing evidence of his likely ability to service a substantial loan (see paragraph 39 above), and the fact of the $1.782m October 2001 mortgage, suggests that both prior to October 2001, and certainly by December 2002, Mr Wang and Ms Gu had successfully presented themselves to a major banking institution as people with substantial assets, and the ability to service a substantial loan. A much later document confirms that suggestion.
From 17 July 2002 until 9 January 2004 the mortgage loan principal remained at its reduced total of $1.382m. In that month Mr Wang and Ms Gu made the first of many subsequent small draw downs against the loan. In May 2004 the original mortgage over both properties was discharged. The Woollahra property was transferred to Mr Wang as sole registered proprietor. The Point Piper property was transferred to Ms Gu as sole registered proprietor. Each of them granted a new mortgage to HSBC over the properties, securing the outstanding loan balance.
By 6 August 2004 the further drawdowns totalled about $144,000 and had increased the mortgage loan principal to $1.526m – still less than the original October 2001 mortgage advance. There were yet further draw downs in November 2004 and February 2005. By then the loan principal had increased to $1.6m.
On 28 January 2005 Mr Wang and Ms Gu applied to HSBC for a $3.55m property loan. The application sought two separate loans of $1m and $2.55m. The loan purpose recorded in the application was the refinancing of existing loans. In this application, which was signed by both Mr Wang and Ms Gu, Mr Wang’s occupation was listed as the General Manager of Shanghai Chen’s Industrial Centre Ltd. His employer’s address and contact details were recorded. In addition, an internal HSBC document checklist noted that a letter from Mr Wang’s employer accompanied the application. The most significant part of the application was Mr Wang’s reported monthly gross salary – $61,538. That is an amount equivalent to an annual pre tax salary of about $740,000.
Mr Wang said that these details were false. He said that HSBC officers had suggested to him that he refinance the existing mortgage. He merely signed the application form. It was the bank officers who included the false information. The SSAT reasons for decision noted that Mr Wang had left Australia only three times, and then only for short periods, between May 2000 and September 2006. The SSAT thought it unlikely that Mr Wang could have had full time employment, during that period, with an employer based in Shanghai. The SSAT also noted that the telephone contact details on the 2005 HSBC application form were different from those recorded on the company’s website (in 2009). The SSAT also noted that the website disclosed that the company had been established only in 2004. For all these reasons the SSAT concluded, apparently correctly, that the employment information in the application form was untrue.
I would not readily accept Mr Wang’s uncorroborated evidence that this wrong information was included in the application form by the HSBC officer who submitted the form. It is difficult to conceive the circumstances in which a disinterested bank officer would merely invent such false information for a very substantial loan application. It is even more difficult to accept that such an officer would then procure a false employment letter (the HSBC internal checklist suggests an employer’s letter was attached to the application) to support the application. It is rather more likely, and Mr Wang’s signature and acknowledgment of the application, also suggests, that Mr Wang himself was the source of the incorrect information. Furthermore, even if it should be accepted that the employment information was instigated by an HSBC officer, Mr Wang’s own evidence about the circumstances in which this application was completed suggests he was contemporaneously aware of, or at least indifferent to, the inaccuracy of the loan application details. On either basis, therefore, the contents of this application illustrate Mr Wang’s willingness to proffer wrong information to promote his economic interests. It provides another reason to doubt the reliability of his evidence where it portrays any events to his and Ms Gu’s potential advantage.
APPARENT TARDINESS OF MR WANG AND MS GU’S DISCLOSURE OF THESE FUNDS, AND THEIR ASSERTIONS ABOUT THEIR SOURCE
In March 2007 Centrelink undertook a review of Ms Gu’s entitlement to social security payments, as a result of information supplied by the Australian Taxation Office. On 13 November 2007 Centrelink initiated action to recover from Mrs Gu overpayment of parenting payment. On 14 November 2007 Centrelink wrote to Ms Gu advising that her assets value exceeded the relevant limit and that, as a consequence, she had not been entitled to any parenting payment for the period from August 2001 until 16 March 2001. The specifically stated basis for Centrelink’s assets value assessment was Ms Gu’s interest, at the relevant times, in the Woollahra and Point Piper properties. Centrelink also wrote to Mr Wang on 14 November 2007. This letter advised Mr Wang that he his assets value exceeded the relevant limit, and he had not been entitled to be paid newstart allowance at any time after 15 May 2004. The stated basis for Centrelink’s assets value assessment was Mr Wang’s status as the sole registered proprietor of the Woollahra property.
Mr Wang responded to Centrelink in a letter dated 11 December 2007. This letter made no reference to Mr Wang’s parents, or to Ms Gu’s mother. It certainly gave no indication that they had provided the funds for the purchase of either property. It did not contest in any way Centrelink’s principal contentions – that Mr Wang owned the Woollahra property, that Ms Gu owned the Point Piper property and that, prior to May 2004, they had been the joint registered proprietors of both properties. All that Mr Wang claimed in his 11 December 2007 letter was that he and Ms Gu had separated in December 2001, and that he had both telephoned Centrelink, and attended Centrelink’s Bondi Junction office. He claimed he had been told that “separation under one roof was hard and complicated” and that “it would be better to keep our relationship as before”.
The absence from the 11 December 2007 letter of any reference to the claims made in the present proceedings about the relevant ownership of the Woollahra and Point Piper properties and, more especially, to the source of the funds used to fund the purchases, is remarkable. Centrelink’s 14 November 2007 letters were explicit in indicating that both the Woollahra and Point Piper properties had been treated, for the purposes of the assets value assessment, as assets of Mr Wang and Ms Gu. Despite that specific indication, nothing Mr Wang put to Centrelink sought to make out a contrary proposition. Instead, by choosing to emphasise a contention that the assessment was flawed because it treated Mr Wang and Ms Gu as members of a couple, Mr Wang’s response arguably, although merely implicitly, conceded the fact of his legal and beneficial ownership of the Woollahra property, and Ms Gu’s similarly extensive ownership of the Point Piper property. That concession was explicitly made in documents Ms Gu submitted on 18 December 2007.
On 18 December 2007 Ms Gu submitted a newstart application form. In this application she said that she was the sole registered proprietor of the Point Piper property. Also on 18 December 2007 Ms Gu submitted a living arrangements form to Centrelink. She had actually had the form completed by, or at least with the assistance of, Mr Wang. In this form Ms Gu indicated, amongst other things, that:
(a)she and Mr Wang had shared accommodation, or intended to share accommodation, since December 2001;
(b)she owned the Point Piper property, and that she and Mr Wang had not purchased together, nor were they paying off, any assets;
(c)the Point Piper property was not being paid off and was not subject to any mortgage payments;
(d)Mr Wang and Ms Gu had no joint bank accounts or investments.
The information in paragraphs (c) and (d) above was demonstrably inaccurate, as both Mr Wang and Ms Gu must have known at the time. But the inaccuracy of that information does not detract from the materiality, and the accuracy, of Ms Gu’s claim that she was the owner of the Point Piper property.
On 9 January 2008 Centrelink advised Mr Wang and Ms Gu that it proposed to affirm its 14 November 2007 decision. A few days later, on 13 January 2008, Mr Wang wrote a further letter to Centrelink requesting reconsideration of the overpayment decision. In this letter he again made no reference to his parents, to any funds they had provided, or to any suggestion that they relevantly owned any interest in either the Woollahra or Point Piper properties. On the contrary, in the 13 January 2008 letter Mr Wang stated that:
(a)sometime after December 2001 he and Ms Gu had reached a financial settlement whereby “she would own the Point Piper house and I would have the Woollahra terrace”;
(b)he had a current mortgage of about $1.55m;
(c)Ms Gu owned the Point Piper property, and it was the only property she owned;
(d)Mr Wang owned the Woollahra property, and it was the only property he owned.
Mr Wang was asked about these letters in the course of his cross examination. He conceded that he had written the letters in response to Centrelink’s action in relying on the value of the two properties to determine that Mr Wang and Ms Gu were not eligible for the payments they had received. He conceded that the letters made no reference to his father and Ms Gu’s mother’s funds or to their supposed ownership of the two properties. He also conceded that he had deliberately not raised these matters in the letters. His explanation for that decision was that it was “too complicated” and he was concerned that Centrelink might think he had not provided correct information. He preferred just to keep things simple.
Mr Wang’s explanation for the contents of his December 2007, and January 2008 letters, and particularly the latter, is really no explanation at all. His assertion that he wanted to keep things simple in his explanation to Centrelink is the very kind of self interested claim to which my very considerable reservations about the reliability of his evidence have a particular application. His assertion provides no justification for having withheld information about what he and Ms Gu contend was the true ownership of the properties. Indeed Mr Wang’s present assertions that any explanation might have been “too complicated” betrays an apprehension about the objective incredibility of the claims. Moreover Mr Wang’s letters, and Ms Gu’s contemporaneous application, were not merely silent about the ownership of the two properties. Ms Gu’s 18 December 2007 application explicitly claimed her personal ownership of the Point Piper property. Mr Wang’s January 2008 letter was equally clear in making positive claims about the ownership of the properties. Those claims no doubt reflected their contemporaneous and accurate understanding of the ownership of the two properties. They are quite inconsistent with the stance Mr Wang and Ms Gu take in the present proceedings.
Almost equally inconsistent with Mr Wang’s claims in the present proceedings, but informatively highlighting the scrutiny to which his evidence must be subjected, is the information that Mr Wang provided to Centrelink in his 25 July 2004 austudy application. In that application Mr Wang provided the following information, and declared it to be complete and correct: (i) that he did not own any real estate, not including the home where he lived, (ii) that his permanent address was at the Point Piper property, (iii) that he owned the home where he lived and (iv) that the home was not held or owned by any company or private trust. The contradiction between this information, specifically the claims that he owned the Point Piper property, but not the Woollahra property, and the assertions Mr Wang made in his January 2008 letter, are stark. They again show Mr Wang’s apparent indifference to accuracy in the promotion of his financial interests.
FINDINGS ON THE FUND “TRANSFERS”
Despite the considerable difficulties in accepting Mr Wang and Ms Gu’s evidence about the timing and amount of the fund transfers they claim were made, and despite the appearance that the transfer amounts were not sufficient to have funded it, the amount of Mr Wang and Ms Gu’s subsequent expenditure and commitments between 2000 and 2006 remains an inescapable fact. Mr Wang denies any material source of funds for that expenditure, other than the transferred funds and the HSBC mortgage. There is no objective evidence to establish that either he or Ms Gu had any other substantial source of funds. In addition, Mr Wang's father and Ms Gu’s mother all say that the fund transfers did occur.
I am inclined, though not without hesitation, to accept the evidence that the AUD$600,000 and AUD$900,000 fund transfers did occur. The scepticism generated by the matters I considered in earlier paragraphs of these reasons is, in my opinion, outweighed by the combination of the following factors:
(a)the fact that substantial cash amounts appear to have been used to fund the Woollahra purchase and at least part of the Point Piper purchase;
(b)the fact that there were, at least after March 2001, substantial deposits to the HSBC term deposit accounts;
(c)the absence of evidence specifically identifying any other source of these funds, and the absence of objective evidence establishing that either Mr Wang or Ms Gu had significant income.
I am also inclined to accept the evidence that the contentious fund transfers had been completed by the end of 1997 (in the case of the transfers made by Mr Wang’s father) and during 1998 (in the case of the transfers made by Ms Gu’s mother). Two considerations have been primarily influential in reaching that conclusion. The first is that the scepticism invited by the long delay between the asserted completion of the fund transfers, and the subsequent property purchases, is obviously reasonable and readily foreseeable. It could have been wholly avoided if the transfers had been claimed to have occurred much closer in time to the relevant purchases – and indeed some of the versions of events contained in Mr Wang and Ms Gu’s written statements tend to give that impression. The fact that the oral evidence ultimately involved claims that the transfers long preceded the purchases, and thus attracted the scepticism to which I have referred, is marginally more suggestive of genuinely attempted recollection than mistake or contrivance. The second consideration is Mr Wang’s failure to raise the fund transfers in his December 2007 and January 2008 letters to Centrelink. Mr Wang’s ownership claims in those letters, and indeed even his presently proffered explanation that it would have been “too complicated” to raise the transfers, are both more consistent with a recollection that the transfers occurred long before, rather than in close proximity to, the contentious property purchases.
Accordingly, I find that:
(a)between August 1995 and about September 1996 Mr Wang had cash funds of at least AUD$240,000, which he held for most of that period in a term deposit;
(b)from the latter part of 1996 until about October 1997 Mr Wang accumulated, and held in cash at his home, an amount which progressively increased (in increments of about $60,000) to a total of $600,000;
(c)after October 1997 Mr Wang held $600,000 in cash at his home;
(d)during 1998 Mr Wang and Ms Gu accumulated, and held in cash at their home, a further amount which progressively increased (again in increments of about $60,000) to a total of about $900,000;
(e)by early 1999 Mr Wang and Ms Gu held $1,500,000 in cash at their home;
(f)in about May 2000 Mr Wang and Ms Gu completed the purchase of the Woollahra property, by using the proceeds of the January 2000 completion of the sale of the Miranda unit, and a further cash amount of about $440,000, but continued to hold the remainder of the total $1.5 million amount in cash at home;
(g)between about March and August 2001 Mr Wang and Ms Gu progressively placed about $500,000 of the amount they previously held in cash on term deposit with HSBC;
(h)between August and about October 2001 Mr Wang and Ms Gu applied approximate $490,000 of the cash amount, including approximately $300,000 of the term deposit amount, towards the settlement of the point Piper property;
(i)after October 2001 Mr Wang and Ms Gu continued to hold the remaining balance of the $1.5 million amount, either in cash or in joint term deposits until about December 2002;
(j)after December 2002 Mr Wang held the approximately $141,488 balance of the term deposits in an account in his own name, but progressively reduced the deposit amount. By about December 2003 the amounts he had previously held on deposit were substantially exhausted.
CHARACTER OF THE CASH HELD BETWEEN AUGUST 1995 AND SEPTEMBER 1996
I indicated in paragraph 37 that neither Mr Wang nor his father had referred to this money in their written statements. The evidence about it only emerged during the course of Mr Wang’s oral evidence and, later, that of his father.
In his oral evidence in the present proceedings Mr Wang said he had asked his father about paying back the $240,000 be brought to Australia in 1995. His father said that he was giving the money to him personally to help him settle in Australia, and that the money was mainly to help him buy a property. When Mr Wang had enough money, he should repay his father. But there was no need to hurry about paying the money back, because he had a young child and had to settle himself and his family in Australia. His father made no reference to paying interest, or to being paid any profits from investment of the money. The discussion about this money was exclusively between Mr Wang and his father. Mr Wang did not think anyone else in his family knew about it.
Mr Wang’s father said that before Mr Wang migrated to Australia he had a private conversation with him in Shanghai. Mr Wang said he had some difficulties and asked to borrow money from his father. He said he would pay it back when he got established. Mr Wang’s father confirmed Mr Wang’s belief that this was a purely private conversation between them. Mr Wang’s father said that he had not even told his wife about this arrangement.
This evidence suffices to establish that the money was, for all presently relevant purposes, either given or lent to Mr Wang to use as his own in establishing himself in Australia. There was an expectation of repayment, but no specific objective criterion to trigger any actual obligation to repay. There was no interest obligation, nor any specific requirement about the permissible use of the money. Both Mr Wang and his father’s evidence characterised it as a very private arrangement between a father and son. No doubt the father retained an expectation that his son would respect his generosity and respond appropriately to changed circumstances. But that expectation did not convey any obligation. It left Mr Wang free to use the money as his own.
I referred in paragraph 24 above to Mr Wang’s differing accounts of the amount of his father’s money that had been applied towards the purchase of the Woollahra property. The claim (in Mr Wang’s December 2010 statement) that his father had provided “all” of the Woollahra purchase funds could only have been accurate if Mr Wang had seen no distinction between the $240,000 his father had provided in 1995 and the later transfers of $600,000. But that possibility is undermined by Mr Wang’s conflicting accounts of the source of the funds that were used to purchase the Miranda unit, and the emphasis he placed on the $600,000 transfers being originally motivated by his parents contemplated migration and, subsequently, by their desire to invest in Australian real estate. It is a view that is effectively contradicted by his father’s evidence that the 1995 transaction was a private and confidential parental advance which, at its highest, was a personal loan.
The money that Mr Wang brought to Australia in 1995 was the proceeds of a parental advance. The money was, in his hands, free of any enforceable restriction or obligation. It was Mr Wang’s money, for all practical and legally enforceable purposes.
CHARACTER OF THE CASH HELD BETWEEN SEPTEMBER 1996 AND OCTOBER 1997
I referred in paragraphs 28 to 31 above to the evidence that Mr Wang’s father transferred the $600,000 amount at a time when he was contemplating migrating to Australia, and for the purpose of funding the purchase of a house in which they would live with Mr Wang and Ms Gu. I also expressed my scepticism about the reality of the contemplated migration.
Mr Wang’s father’s first written statement in these proceedings was a joint statement he signed with his wife. That statement did say that they had transferred the money at a time when they were planning to migrate to Australia. But there is no such assertion contained in Mr Wang’s father’s later statement of February 2011. Indeed that statement says the $600,000 amount was transferred around the end of 1996 as a loan to allow Mr Wang to purchase real estate, at his discretion.
In his oral evidence Mr Wang’s father referred, on more than one occasion, to having an “idea” about migrating to Australia. He made some enquiries in Shanghai about buying properties overseas and was told that unless he had residency it would be quite troublesome. I would infer that the word “troublesome” was used in this context as something of a euphemism. Having regard to the contents of the Foreign Acquisitions and Takeovers Act 1975 (see paragraph 8 above) I would infer that Mr Wang’s father, as a result of his enquiries and discussion with his son, at all relevant times had a practical understanding that it was unlikely that he could lawfully acquire an interest in Australian residential property. This did not particularly trouble him, however. The reason for this was his evidence that (i) he considered it “convenient” for Mr Wang to buy the property and (ii) because they were “family” they could “deal with all issues clearly in the future”.
My inference about the practical effect of Mr Wang’s father’s enquiries in Shanghai is consistent with the evidence Mr Wang gave. He thought his father had made enquiries during his 1997 visit to Australia. In any event, he recalled his father mentioning to him something about the enquiries he had made. It was his understanding that it was very hard, and complicated, for foreign residents to buy existing residential property in Australia. The transcript records Mr Wang as saying “so they just did a lease to me”. The context suggests that Mr Wang used the term “lease” to convey the idea of a “loan” – which was the expression Mr Wang’s father used in his February 2011 statement.
It is objectively more probable than not that Mr Wang’s father would have made enquiries in Shanghai, before he transferred any part of the $600,000 amount, and long before he came to Australia in October 1997. Indeed in his oral evidence Mr Wang’s father specifically said that he gave the money to Mr Wang “because I couldn’t buy property in Australia”. I would infer, therefore, that the characterisation of the transfers as a “loan” to Mr Wang was something that had been agreed upon at the outset, and was dictated by an understanding of the restrictions on foreign resident ownership of Australian residential property. I would not readily infer that the arrangement between Mr Wang and his father about the transfers was a mere strategy intended to satisfy the appearance, but not the substance, of penal Australian legislative provisions relating to foreign ownership.[2]
[2] The same observation applies to the characterisation of the arrangement relating to the funds transferred by Ms Gu’s mother. Ms Gu gave evidence that she and her mother knew that she could not purchase property in Australia. I infer that this evidence conveyed an understanding of the practical effect of the restrictions that existed under the Foreign Acquisitions and Takeovers Act 1975.
I am encouraged to that conclusion by a number of aspects of Mr Wang’s father’s evidence. The first is the statement, in Mr Wang senior’s February 2011 statement that he left the purchase of any property to his son’s discretion. This suggests a disavowal of personal concern with the characteristics of the proposed property purchase, and is more consistent with characterisation of the fund transfers as another parental advance. The second matter is the confusion in Mr Wang father’s oral evidence about the relationship between his fund transfers and the purchase of the Miranda unit. Mr Wang’s father seemed to think that this was a property Mr Wang had purchased as an investment for him.
This proposition was never asserted by Mr Wang himself. And it is surprisingly incongruous that Mr Wang’s father would have regarded the purchase of a $230,000 unit at Miranda as satisfying either of his asserted purchase objectives – namely (i) a large house to provide a future home for the entire combined family after they migrated from China or (ii) an appropriate and secure “investment” in Australian property. This incongruity is, to my mind, so stark and so inconsistent with Mr Wang’s own evidence, that I completely reject his father’s suggestion that the Miranda unit was, in any sense, an asset that Mr Wang purchased as an investment for his father. It is much more likely, and I find, that the Miranda unit was purchased in a manner entirely unrelated to any investment intentions or instructions articulated by Mr Wang’s father.
Mr Wang’s father’s confusion about this matter is useful, nevertheless, in evidencing his subjective conflation of the 1995 advance and the subsequent transfers. This conflation suggests that he had not in fact expressed or conveyed at the time any distinction between the funds that had been provided in 1995, and the money that was the subject of the later transfers.
For these reasons I find that the money Mr Wang held at home between September 1996 and October 1997 was the proceeds of a parental advance loan from his father.
CHARACTER OF THE CASH HELD BETWEEN OCTOBER 1997 AND LATE 1998
The conclusion I have reached in the immediately preceding section of these reasons applies with additional force to the situation after Mr Wang’s father’s October 1997 visit to Australia. It was as a result of that visit, and disagreement with Ms Gu, that Mr Wang’s father says he abandoned the idea of migrating to Australia and sharing a residence with his son and Ms Gu.
There is some scope to argue that, prior to his father abandoning the idea of migration, Mr Wang might have held the transferred funds as a custodian, pending his father’s migration, and subsequent recovery of control of the funds. That argument has little force. If the funds had been transferred solely in anticipation of migration and if, as was asserted, they represented the entirety of the parents’ life savings, it is extremely implausible that Mr Wang’s father would not have caused them to be returned to China. The fact that he did not, when it was a course of action open to him, and when the supposed motive for the original transfers had disappeared, reinforces the conclusion I reached in the preceding section of these reasons. In addition, I do not accept the reality of Mr Wang’s father’s asserted migration intention (I referred to my scepticism of that claim in paragraph 31 above).
But there is no real scope to characterise the transferred funds as held by Mr Wang in any custodian capacity after October 1997. Even Mr Wang’s father says he had abandoned the idea of migration. Nevertheless, he left the transferred money with Mr Wang. Mr Wang’s father described the arrangement as a loan, both his joint statement with his wife, and in his subsequent February 2011 statement. It was also the character Mr Wang ascribed to the transaction in his December 2010 statement (in paragraph 20). And, as I explained in paragraph 81 above, it was also the proper interpretation of his oral evidence in these proceedings.
Whether the arrangement between Mr Wang and his father in relation to the $600,000 amount should be characterised as a loan, in the sense of giving rise to a legally binding repayment obligation is questionable – especially in the light of Mr Wang’s father’s reference, in his oral evidence, to “family” and his confidence that they could “deal with all issues clearly in the future”. Mr Wang’s father had said in his joint statement with his wife, and in his oral evidence, that Mr Wang would have to pay interest on the amount. Mr Wang himself said in the early part of his oral evidence that he understood he would have to pay interest. He also said, as had Mr Wang’s father, that he would have to repay not only the original amount but also “any capital gain” from the sale of the property. Later in his oral evidence Mr Wang was confronted with the incongruity involved in the combination of the asserted obligation to pay both interest and any capital gain. He then said that he had never realised about the interest and what it was going to be like. He had never thought about it in detail when his father provided the money. Even when he kept the money in the cupboard he never thought about the interest. He thought that probably later his father might say that if the value had increased he did not need to pay interest. He said he thought he could always discuss things with his parents “when we sold the Point Piper property”. He said his father had just said that he must definitely pay back the principal “or interest or any increase by value when you sell the property”. He thought it was a choice. But he did not really know whether his father did, or would, ask him to pay interest or not. Based on this evidence, the arrangement between Mr Wang and his father about the transferred funds was one that was to be resolved in the fullness of time, and in the light of whatever situation ultimately prevailed. I do not accept that the arrangement between Mr Wang and his father involved any obligation as such, and certainly no obligation to pay interest.
Neither do I accept the suggestion that the arrangement was one that obliged Mr Wang to apply the funds towards the purchase of real estate as an investment. Investment of that kind may have been contemplated, but it did not become a matter of obligation nor did it extend to all of the money Mr Wang’s father had transferred. As Mr Wang’s father said in his statement, he neither nominated a property nor a price, in connection with the funds that he provided. He left the decision making to Mr Wang’s discretion. That discretion included the freedom to decide not only when and what to purchase, but also the proportion of the funds that should be included as a contribution to the purchase. This conclusion, about the scope of Mr Wang’s decision making freedom in relation to the money is evident from (i) the long delay between the provision of the funds and the subsequent property purchases, (ii) from Mr Wang’s decision not to use all of the amount that his father had transferred, in connection with the purchase of the Woollahra property, and (iii) from the fact that Mr Wang initially purchased a property that he used as a residence with his family, even though his father’s evidence (in his February 2011 statement) was that the purpose of transferring the funds was not to provide Mr Wang with a residence but purely for investment purposes.
It is further evident from both the lack of accounting for the use of the funds and also the diverse uses to which Mr Wang and Ms Gu put the money with which they had been provided. On the findings I have made, Mr Wang and Ms Gu kept all the money at home. They did so for years. Eventually Mr Wang and Ms Gu did use a small portion of the $1.5m on the purchase of the Woollahra house. But they did so with little, if indeed any, real consultation with Mr Wang’s father. They did not use all of the $600,000 amount on the purchase. They did not tell Mr Wang’s father they completed the purchase using only a portion of the money he had provided. They did not tell him they purchased the property in joint names. They did not tell him about the proposed development of the property. They did not tell Mr Wang’s father that some of the money he had provided was actually used in connection with the purchase of the Point Piper property.
And certainly neither Mr Wang nor Ms Gu ever overtly recognised any obligation to Mr Wang’s father in their use of the money. Neither of them has ever:
(a)accounted to Mr Wang’s father for the use of the money;
(b)paid any interest on any of the money to Mr Wang’s father;
(c)repaid any part of the money to Mr Wang’s father.
Conversely, in addition to the two properties they jointly purchased in their own names, they also used the money to pay for:
(a)living expenses;
(b)the purchase, in about 1997 or 1998, of a small number of shares that were held in Mr Wang’s name;
(c)renovations to the Woollahra property;
(d)rent on the Castlereagh Street property they rented for a period in 2002 and 2003;
(e)interest and principal on the Point Piper property mortgage.
Despite the evident complications involved in accurately identifying the various contributions to the Woollahra and Point Piper property purchases, and the other uses of the money, Mr Wang and Ms Gu refrained from any accounting exercise to identify the actual way in which they money had been applied. This indifference to accuracy, and responsibility in the handling of the money is much more consistent with belief in unrestricted ownership of it, than it is with any belief of accountability to others.
For these reasons I find that, in the period after October 1997 Mr Wang and Ms Gu held the funds transferred by Mr Wang’s father merely as the proceeds of a parental advance. They were not subject to any specific obligation to pay interest on the loan funds. There was no specific arrangement about repayment. They had a general discretion how to use the funds and were not required to apply the money for any exclusive purpose. If the funds were applied in a way that ultimately resulted in a realised gain that could be distributed, Mr Wang and Ms Gu were expected to deal with that prospect as a family matter, when and if it arose in the future.
CHARACTER OF THE CASH HELD AFTER LATE 1998
I referred in paragraph 21 above to an amount approximating AUD$900,000 Mr Wang and Ms Gu said her mother provided during 1998.
Mr Wang and Ms Gu did not refer to any AUD$900,000 payment in their December 2010 statements. What each of them said in the statements was they had borrowed $1.782m and that Ms Gu’s “parents” provided the $490,000 balance of the $2.272m purchase price for the Point Piper property. He said that the agreement with Ms Gu’s “parents”[3] was “similar to the one with my parents”. That arrangement was, as Mr Wang had described it, one whereby Mr Wang and Ms Gu were able to live together rent free in a jointly owned house. And it involved a situation where they had the option to either pay interest or an increase in value of the property, in a way that would be the subject of eventual discussion and agreement (see paragraph 90 above).
[3] The evidence was that Ms Gu’s father died in 1989, almost ten years before the 1998 transfers and 12 years before the purchase of the Point Piper property. It is oddly inaccurate that both Mr Wang’s statement and Ms Gu’s statement described the purchase price contribution as having been made by Ms Gu’s “parents”. The oddity is compounded, in Ms Gu’s statement, by the further claim that her “parents” had a dream to live in Australia, had planned to set up a new life in Australia and now wished they had never transferred the money. This evidence is yet another indication that gives substance to my impression that both Mr Wang and Ms Gu’s evidence was infected by a preference for conveying a version of events that was favourable, rather than objectively accurate.
Mr Wang, and Ms Gu’s December 2010 statements are consistent with his letters of December 2007 and January 2008, in appearing to present themselves as the real purchasers of the Point Piper property.
In his oral evidence Mr Wang initially said he thought he spoke to Ms Gu’s mother about the transfers but he did not know exactly. Later he said that he did discuss the arrangement with Ms Gu’s mother, but after she and Ms Gu had spoken. He said he thought that after his parents had left in late 1997, and decided that they would lend their money to Mr Wang and Ms Gu, Ms Gu had told her mother about it. He then mentioned it to Ms Gu’s mother. He explained to her that his father was lending money and that they would use it to buy property and that they would pay back “any interest or any price increase”.
I accept that Mr Wang did not move into the Castlereagh Street unit with the rest of the family, between August 2002 and February 2003. His visits there were brief, though regular – at least fortnightly. I accept that while the rest of the family lived at the unit they did not visit Mr Wang at the Woollahra property.
I find that Mr Wang, more likely than not, moved to the Point Piper property in about the middle of 2003. The HSBC bank statements relating to the accounts in his own name were addressed to him at Point Piper by about 8 July 2003. The address on the joint bank account records was changed to the Point Piper property some time between 8 August 2003 and 8 September 2003. It is also the address he gave in his 2003 tax return. Centrelink’s records give the Point Piper property as his address by November 2003. The Centrelink records suggest that this was a retrospective notification of something that had happened some months earlier. That probability is consistent with the evidence about the proposed development of the Woollahra site, and specifically the issue of a construction certificate for the work, in late March 2003.
I accept that after Mr Wang moved to the Point Piper property he lived in the studio unit on the lower floor, until some time towards the end of 2008. I accept that in that period he did not interact freely with his wife and children living on the upper floor of the Point Piper house. But he at least shared the kitchen and did regularly visit the children. He likely had rather more interaction with his very young son than the restricted contact remembered by his elder daughter, or conceded by Ms Gu. I accept that Ms Gu was primarily involved with the children’s care and predominantly carried out the household tasks, providing little domestic assistance to Mr Wang. But I do not accept that there was either a complete physical segregation or that Ms Gu attended entirely to all household tasks – in that regard I am primarily influenced by (i) the diffidence Mr Wang and Ms Gu displayed in pursuing any “separation” claims in March and September 2004, and March 2005, (ii) the information contained in Ms Gu’s 18 December 2007 application, and (iii) my impression, which I have referred to several times in the course of these reasons, that neither Mr Wang nor Ms Gu are reliable historians in describing matters they perceive to be potentially adverse to their financial interests.
It follows from the findings I have made in the preceding paragraph that Mr Wang’s interaction with his children was rather more limited than would have occurred under totally shared living conditions. But I do not consider that this reflected any diminution of his responsibility, as distinct from his opportunity to become actively involved in, the care and support of the children. In that regard I note that one of Mr Wang’s explanations for the reconciliation that he and Ms Gu say occurred in early 2009 was his concern about his children, greater interaction with them and a kind of intermediary role that his daughter played over time.
SOCIAL AND SEXUAL ASPECTS OF THE RELATIONSHIP
A practically necessary consequence of the findings I have made about the nature of the household arrangements is that Mr Wang and Ms Gu did not have a sexual relationship during the period of their asserted physical separation. Despite my reservations about the real extent of that separation whilst they were still living at Woollahra, I accept that they did not share a bedroom and that this aspect of their relationship likely ceased from about December 2001.
I accept that the altered living arrangements, after at least August 2002, were disclosed to Mr Wang’s parents, Ms Gu’s mother, and that they became known to their siblings, all of whom lived in China. There is no evidence of any other social contact or friendships with which Mr Wang and Ms Gu were involved at any time. There is nothing to reveal how they presented themselves to others, in the course of their ordinary living activities and interactions. There is no evidence of the assessment of the nature of their relationship by friends and regular associates.
It follows that, so far as the evidence reveals, Mr Wang and Ms Gu did not interact socially with others, either before or during their asserted separation, in a way that meaningfully informs the character of their relationship. However, and contrary to what Ms Gu conveyed to Centrelink in her 18 December 2007 “living arrangements” information, they did have another 5 week family holiday in China in September and October 2006. Mr Wang again made, and paid for, all the arrangements involved. On this occasion Mr Wang and his son stayed with his parents, Ms Gu and their daughter, with her mother, but there were visits between the respective grandparents’ homes.
FINANCIAL ASPECTS OF THE RELATIONSHIP
Mr Wang and Ms Gu’s financial circumstances are complex and closely intertwined. That was the situation in December 2001. It remained essentially unchanged during the asserted period of their separation. The interconnection of their financial circumstances operates at two levels. The first is the ordinary activities of providing the financial means and necessities of domestic household life. The second is their interconnection in relation to the Woollahra and Point Piper properties, and the financial arrangements concerning them. These two levels of their interconnection are themselves related.
At least until late December 2007 or early 2008, Mr Wang and Ms Gu operated a joint bank account, into which all of their social security payments were made. This had been the case from the outset. Mr Wang in fact was the active operator of the account. He attended to all the household finances, and financial related obligations, such as the preparation of tax returns. Fortnightly, he personally handed Ms Gu money for food and groceries and her personal needs. She never went to the bank, or even used automatic telling machines, to withdraw funds. He assisted her in her dealings with Centrelink. She relied totally on him.
Mr Wang also attended to all of the additional expenses they incurred. When Ms Gu moved from the Woollahra property, and thereafter to Point Piper, Mr Wang made all the necessary arrangements and attended to their payment. He paid the rent on the Castlereagh Street unit. In fact he used the address of the unit as his business address.
The Woollahra property was originally registered in Mr Wang’s name and Ms Gu’s name as tenants in common. According to Ms Gu, the inclusion of her name on the title had been a matter of some contention, and was achieved only at her insistence. I doubt that there was any contention – and in that regard I accept Mr Wang’s father’s evidence that the matter was not the subject of any discussion.
Ms Gu remained as a joint registered proprietor of the Woollahra property until May 2004. (I have referred to the events leading up to May 2004 earlier in these reasons.) In the meantime, Ms Gu co-operated in the process of obtaining development approval for substantial building work on the property. In October 2002, when she was living at the Castlereagh Street unit, she jointly entered into the building contract for the work.
But by far the most significant aspect of the financial interconnection between Mr Wang and Ms Gu relates to the acquisition of the Point Piper property. I have earlier in these reasons referred to my scepticism of Ms Gu’s evidence that she had expected to be able to purchase the property at auction for much less than the ultimate price. Indeed she said that she expected to secure the property for only around the $900,000 amount that her mother had provided.
There was no substance in this evidence. The reality is that an arrangement to attempt to borrow a substantial sum from HSBC had clearly been put in place long before August 2001. It follows that Mr Wang and Ms Gu must have embarked upon an agreed course of undertaking the risk of a substantial mortgage, and done so with the prospect of substantial gain. They purchased the property in joint names, and secured, without disclosing to Ms Gu’s mother, a joint mortgage advance of $1.782m to fund the purchase. Thereafter, despite the 8 December 2003 agreement to which I have referred, and the changes to the registered title in May 2004, the mortgage funds were progressively drawn on and applied against the various expenses, including those of ordinary living, to which I have referred in paragraph 49 above.
Ultimately, in early 2005, at a time when they assert they were living separately and apart, Mr Wang and Ms Gu co-operated in presenting themselves to HSBC as a married couple, and applied jointly for a loan of $3.55m.
In addition, after the completion of the development work at the Woollahra property, Mr Wang put it out to rental. But in his tax returns he claimed expenses that can only relate to the interest costs associated with the HSBC mortgage that was, at least originally, obtained to fund the purchase of the Point Piper property. This treatment of the borrowing costs suggests a significant interconnection between Mr Wang and Ms Gu’s financial affairs.
THE NATURE OF THE PEOPLE’S COMMITMENT TO EACH OTHER
Mr Wang and Ms Gu were married in 1988. At the start of the period of separation for which they contend (December 2001) their two children were aged 12 and almost 3 years of age. By April 2007, the end of the period to which the decision under review relates, the children were aged 18 and 10. Throughout the period Mr Wang and Ms Gu had kept their financial affairs closely intertwined. Even the 8 December 2003 agreement, and the subsequent title transfers, had no practical effect on the ordinary realities of their relationship. Nor did it make anything other than a formal change to their financial situation and interconnection.
Mr Wang had remained the custodian and manager of all of the financial needs of the family, including the pedestrian tasks of withdrawing money from the bank for Ms Gu and delivering it to her when she required. He assisted her in her dealings with Centrelink. He was available, to the extent that she permitted, to interact with the children. After he took up residence at the Point Piper property that availability was immediate. And even though he began to reside at the Point Piper property before the 8 December 2003 agreement, his residence thereafter occurred with Ms Gu’s permission – a permission that has an added significance after the change of title in May 2004.
Throughout the whole of the asserted separation period neither Mr Wang nor Ms Gu took any steps, despite the 8 December 2003 agreement, to divorce, or even to remove or reduce their financial interconnection. Their failure to pursue action to formalise any dissolution of their marriage is likely to have been a result of at least three considerations – (i) the resolution, in the 8 December 2003 agreement, of whatever controversy divided them about the title formalities of the two properties, (ii) a view that no more extensive or formal resolution of their affairs was practicable or necessary, and (iii) a view that there was some value, at least for the benefit of the children, in maintaining their married status. There was also a likely additional consideration. It was the knowledge that each would, to the extent necessary, support the other if the need arose.
RELATIONSHIP CONCLUSION
The ultimate characterisation of Mr Wang and Ms Gu’s relationship, and whether or not they were living separately and apart is a matter of impression. In some parts of the contentious period the degree of physical separation, and their lesser opportunity for interaction point more forcefully towards a finding that they were living separately and apart. This is true, for example of the period that Ms Gu lived at the Castlereagh Street unit, and the short period before Mr Wang took up residence at Point Piper.
But I think the more important considerations in assessing the proper characterisation of Mr Wang and Ms Gu’s status as members of a couple in the contentious periods are their degree of financial interdependence, and the extent to which they continued to interact, and to co-operate financially throughout the whole of the period. Ms Gu substantially depended on Mr Wang – no doubt comfortable in the knowledge that he would support her, as he did. They deliberately chose to maintain the financial interdependence they created with the purchase of the Point Piper property, notwithstanding that it was open to them to terminate it (by selling the property and redeeming the mortgage). Instead they co-operated for their mutual benefit, even to the extent of seeking to increase the borrowing against the properties. And they chose to maintain their formal married status. In so doing, their occasional, diffident and not entirely consistent, attempts to raise with Centrelink the prospect of establishing their “separate” status betray a contemporary awareness of significant interconnection in their lives and an uncertainty, in their own minds, about whether that was their relationship was in substance “separate”.
As the joint reasons for judgment in Main v Main (1949) 78 CLR 636 indicated, and as the criteria of relevance mandated by s 4(3) of the Social Security Act 1991 suggest, there are many potentially relevant aspects of a relationship in determining whether any particular set of circumstances constitute living “separately and apart”. Some of the relevant considerations are matters of observable fact, some are matters of attitude, repute and even the intangible notion of commitment – perhaps best evidenced by perseverance in the formality of the relationship, and an ultimate willingness to honour its obligations of support. The weight to be given to the presence or absence of particular factors is a matter of impression. My impression is that the duration of the relationship, the elements of perseverance and ultimate commitment of willingness to support, concern about the preservation of the relationship in the interests of the children, and their degree of financial interconnectedness, point against the characterisation of the relationship as one where Mr Wang and Ms Gu lived separately and apart.
I find that Mr Wang and Ms Gu were not living separately and apart at any time during the period of separation for which they contended in the present proceedings.
DECISION
I indicated in paragraph 10 above that these reasons were only concerned with the determination of (i) the relevant ownership of the Woollahra and Point Piper properties, (ii) the relevant ownership of the cash funds which Mr Wang and Ms Gu held prior to the purchase of the properties, and (iii) whether Mr Wang and Ms Gu were not members of a couple, for the purpose of determining their respective assets value limits. I decide those matters as follows:
(a)Mr Wang and Ms Gu relevantly owned cash funds of approximately $240,000 between August 1995 and September 1996;
(b)On about 10 occasions between about September 1996 and October 1997 Mr Wang and Ms Gu progressively received from Mr Wang’s father amounts totalling approximately $600,000 which they held in cash until at least April 2000, and were not under any legally binding obligation to repay;
(c)On about 15 occasions during 1998 Mr Wang and Ms Gu progressively received from Ms Gu’s mother amounts totalling approximately $900,000 which they held (in cash or bank deposits) until at least October 2001, and were not under any legally binding obligation to repay;
(d)From April 2000 until May 2004 Mr Wang and Ms Gu were the joint legal and beneficial owners of the Woollahra property;
(e)From October 2001 until May 2004 Mr Wang and Ms Gu were the joint legal and beneficial owners of the Point Piper property;
(f)From May 2004 Mr Wang was the sole legal and beneficial owner of the Woollahra property;
(g)From May 2004 Ms Gu was the sole legal and beneficial owner of the Point Piper property;
(h)Mr Wang and Ms Gu did not live separately and apart, for the purposes of s 4(2) and 4(3) of the Social Security Act 1991, at any time between December 2001 and April 2007.
Pursuant to s 33 of the Administrative Appeals Tribunal Act 1975 the Tribunal directs the applications be listed, for hearing of the remaining issues involved in the determination of the application, on a date to be fixed.
I certify that the preceding 175 (one hundred and seventy five) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member.
..............[sgd]..........................................................
Associate
Dated 7 February 2012
Date(s) of hearing 28 – 29 June, 5 – 6 September 2011 Solicitor for the Applicants Mr S Hodges Solicitor for the Respondent Ms S Memmott
SCHEDULE 1 HSBC bank account monthly balances 2001 – 2003 month Call Term Shares Total Mortgage Net Net change joint accounts joint 2001 January 26,849 February 25,996 March 115 231,329 25,491 256,935 256,935 April 3,115 268,347 25,452 296,914 296,914 39,979 May 115 342,407 26,034 368,555 368,555 71,642 June 115 383,800 20,331 404,246 404,246 35,691 July 115 505,400 20,331 525,846 525,846 121,600 August 115 394,551 18,973 413,638 413,638 -112,208 September 129 338,207 19,826 358,161 358,161 -55,477 October 13,273 132,633 18,740 164,646 1,782,000 -1,617,354 -1,975,515 November 10,815 193,124 21,495 225,434 1,782,000 -1,556,566 60,788 December 18,601 233,813 21,611 274,024 1,782,000 -1,507,976 48,590 2002 January 15,154 234,663 21,301 271,119 1,782,000 -1,510,881 -2,906 February 24,492 280,457 21,922 326,871 1,782,000 -1,455,129 55,752 March 17,378 331,370 20,758 369,505 1,782,000 -1,412,495 42,634 April 21,280 342,190 18,197 381,668 1,782,000 -1,400,332 12,162 May 27,264 373,377 17,654 418,295 1,782,000 -1,363,705 36,627 June 19,426 438,396 18,507 476,329 1,782,000 -1,305,671 58,034 July 16,619 139,072 18,507 174,198 1,382,000 -1,207,802 97,869 August 26,231 139,396 19,167 184,795 1,382,000 -1,197,205 10,596 September 11,245 149,984 18,740 179,970 1,382,000 -1,202,031 -4,825 October 30,510 132,968 18,197 181,674 1,382,000 -1,200,326 1,705 November 37,026 133,501 17,692 188,219 1,382,000 -1,193,781 6,545 Mr Wang sole a/c December 37,471 104,016 17,537 159,024 1,382,000 -1,222,976 -29,195 2003 January 29,717 62,627 16,955 109,299 1,382,000 -1,272,701 -49,725 February 11,385 62,863 15,752 90,000 1,382,000 -1,292,000 -19,299 March 24,568 43,081 16,451 84,100 1,382,000 -1,297,900 -5,900 April 26,936 43,257 16,490 86,684 1,382,000 -1,295,316 2,583 May 22,655 43,414 17,227 83,296 1,382,000 -1,298,704 -3,388 June 15,977 43,580 17,421 76,978 1,382,000 -1,305,022 -6,317 July 23,368 43,725 18,313 85,407 1,382,000 -1,296,593 8,428 August 38,060 15,896 19,283 73,239 1,382,000 -1,308,761 -12,167 September 23,955 0 19,050 43,005 1,382,000 -1,338,995 -30,234 October 16,702 0 18,430 35,132 1,382,000 -1,346,868 -7,873 November 7,887 0 18,895 26,782 1,382,000 -1,355,218 -8,351 December 1,215 0 19,206 20,421 1,382,000 -1,361,579 -6,361
SCHEDULE 2 HSBC bank account monthly balances 2004 – 2007 month Call Term Shares Total Mortgage Net Net change Mr Wang sole a/c Joint till May 04 2004 January 968 0 19,050 20,018 1,392,000 -1,371,982 -10,403 February 5,638 0 18,313 23,951 1,412,000 -1,388,049 -16,068 March 10,457 0 17,615 28,072 1,428,000 -1,399,928 -11,879 April 10,333 0 17,964 28,297 1,428,000 -1,399,703 225 May 10,850 0 18,080 28,930 1,446,000 -1,417,070 -17,367 June 36,826 0 19,594 56,420 1,506,000 -1,449,580 -32,510 July 26,848 0 19,438 46,286 1,526,000 -1,479,714 -30,134 August 2,747 0 18,701 21,448 1,526,000 -1,504,552 -24,838 September 17,495 0 18,274 35,769 1,556,000 -1,520,231 -15,679 October 21,218 0 18,158 39,376 1,589,000 -1,549,624 -29,393 November 17,821 0 18,934 36,755 1,589,000 -1,552,245 -2,621 December 14,827 0 19,167 33,994 1,589,000 -1,555,006 -2,761 2005 January 7,630 0 20,292 27,922 1,589,000 -1,561,078 -6,072 February 19,401 0 20,913 40,314 1,600,000 -1,559,686 1,392 March 19,759 0 19,710 39,469 1,590,000 -1,550,531 9,155 April 12,396 0 19,012 31,408 1,590,000 -1,558,592 -8,061 May 13,975 0 19,710 33,685 1,590,000 -1,556,315 2,277 June 12,709 0 19,244 31,953 1,590,000 -1,558,047 -1,732 July 11,774 0 19,516 31,290 1,590,000 -1,558,710 -663 August 9,788 0 16,955 26,743 1,590,000 -1,563,257 -4,547 September 9,452 0 15,675 25,127 1,585,000 -1,559,873 3,384 October 12,990 0 16,218 29,208 1,585,000 -1,555,792 4,081 November 8,154 0 14,821 22,975 1,581,000 -1,558,025 -2,233 December 11,593 0 15,481 27,074 1,575,000 -1,547,926 10,099 2006 January 14,301 0 15,636 29,937 1,575,000 -1,545,063 2,863 February 17,816 0 14,860 32,676 1,575,000 -1,542,324 2,739 March 11,071 0 14,278 25,349 1,554,000 -1,528,651 13,673 April 9,669 0 14,976 24,645 1,554,000 -1,529,355 -704 May 17,897 0 14,472 32,369 1,554,000 -1,521,631 7,724 June 10,984 0 14,550 25,534 1,554,000 -1,528,466 -6,835 July 11,512 0 14,899 26,411 1,554,000 -1,527,589 877 August 14,138 0 13,812 27,950 1,554,000 -1,526,050 1,539 September 1,244 0 0 1,244 1,554,000 -1,552,756 -26,706 October 17,690 0 0 17,690 1,568,000 -1,550,310 2,447 November 13,891 0 0 13,891 1,562,000 -1,548,109 2,201 December 7,256 0 0 7,256 1,562,000 -1,554,744 -6,635 2007 January 3,999 0 0 3,999 1,568,000 -1,564,001 -9,257 February 6,896 0 0 6,896 1,560,040 -1,553,144 10,857 March 13,956 0 0 13,956 1,567,060 -1,553,104 40 April 11,016 0 0 11,016 1,567,060 -1,556,044 -2,941 May 11,824 0 0 11,824 1,562,560 -1,550,736 5,308 June 9,001 0 0 9,001 1,561,560 -1,552,559 -1,823 July 9,423 0 0 9,423 1,563,560 -1,554,137 -1,578 August 10,057 0 0 10,057 1,563,560 -1,553,503 635 September 9,015 0 0 9,015 1,559,000 -1,549,985 3,517 October 231 0 0 231 1,542,000 -1,541,769 8,216 November 8,526 0 0 8,526 1,552,000 -1,543,474 -1,704 December 9,554 0 0 9,554 1,550,000 -1,540,446 3,028
| SCHEDULE 3 | ||||||||
| Wang tax returns – Years ended 30 June 2000 – 2007 | ||||||||
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | |
| Income – allowances etc | ||||||||
| Employment | 11385 | |||||||
| Allowances | 4,879 | 0 | 0 | 0 | 5,310 | 6,668 | 9,498 | 6,790 |
| Interest | 5,905 | 11,031 | 13,896 | 6,838 | 958 | 656 | 516 | 402 |
| Dividends | 751 | 1,057 | 1,219 | 1,494 | 1,418 | 1,884 | 2,279 | 1,618 |
| Sub total income | 11,535 | 12,088 | 15,115 | 8,332 | 7,686 | 9,208 | 12,293 | 20,195 |
| Deductions | ||||||||
| Interest and administration | 377 | 350 | 102 | 275 | 760 | 425 | 335 | 995 |
| Business income | ||||||||
| Income (gross) | 12,088 | 43,803 | 29,230 | |||||
| Expenses | ||||||||
| lease & rental | 8,105 | 8,489 | 10,815 | |||||
| other | 16,086 | 21,717 | 2,746 | |||||
| total | 24,191 | 30,206 | 13,561 | |||||
| Business income (net) | -12,103 | 13,597 | 15,669 | |||||
| Rental income | ||||||||
| Gross rent | 38,240 | 38,240 | 45,407 | 104,155 | 94,897 | |||
| Expenses | ||||||||
| lease expenses | ||||||||
| rent expenses | 23,130 | 4,341 | 6,039 | 5,881 | 103,307 | |||
| interest | 62,759 | 52,975 | 39,368 | 98,274 | ||||
| Total expenses | 85,889 | 57,316 | 0 | 45,407 | 104,155 | 103,307 | ||
| Rental income (net) | -47,649 | -19,076 | 0 | 0 | -8,410 | |||
| Total Income or loss | 11,158 | -365 | -19,039 | 4,650 | 6,926 | 8,783 | 11,958 | 10,790 |
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