Jong and Yeng and Ors

[2012] FamCA 584

FAMILY COURT OF AUSTRALIA

JONG & YENG AND ORS [2012] FamCA 584

FAMILY LAW – PRACTICE AND PROCEDURE – Review application – Third party corporations – Husband seeking equitable relief – Accrued jurisdiction – Where relief sought by husband would have to be sought by the deregistered company – Where deregistered company has not participated in litigation or made an application – Husband’s claim summarily dismissed

Family Law Act 1975 (Cth)
Corporations Act 2001 (Cth) – s 601AH

APPLICANT: Ms Jong

RESPONDENT: Mr Yeng

2^ND RESPONDENT: W Holdings Pty Ltd

3^RD RESPONDENT: K Enterprises Pty Ltd

4^TH RESPONDENT: Mr H Jong

5^TH RESPONDENT: B Pty Ltd

FILE NUMBER: SYC 3007 of 2008

DATE DELIVERED: 16 February 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 16 February 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bell

SOLICITOR FOR THE APPLICANT: James Lee Solicitors

COUNSEL FOR THE RESPONDENT: Mr Cohen

SOLICITOR FOR THE RESPONDENT: Cambridge Lawyers

COUNSEL FOR THE 2^ND , 3^RD & 4^TH RESPONDENTS:
Mr Campton

SOLICITOR FOR THE 2^ND , 3^RD & 4^TH RESPONDENTS:
James Tung & Co

FOR THE 5^TH RESPONDENT: No appearance

Orders

1. That the husband’s claim against the companies W Holdings Pty Ltd and K Enterprises Pty Ltd set out at paragraphs 4 and 5 of the minute of orders filed in Court on 15 February 2012 marked Exhibit A be summarily dismissed.

2. That the costs of W Holdings Pty Ltd,  K Enterprises Pty Ltd and Mr H Jong be reserved. 

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3007 of 2008

Ms Jong

Applicant

And

Mr Yeng

Respondent

And

W Holdings Pty Ltd

2^nd Respondent

And

K Enterprises Pty Ltd   

3^rd Respondent

And

Mr H Jong

4^th Respondent

And

B Pty Ltd

5^th Respondent

REASONS FOR JUDGMENT

1. This is an application by two corporations, W Holdings Pty Ltd and K Enterprises Pty Ltd , for orders to summarily dismiss a claim by Mr Yeng (“the husband”) in what are substantive matrimonial property proceedings between him and his former wife Ms Jong (“the wife”).  A similar application was heard and dismissed by Loughnan  J on 9 July 2010 when his Honour was a judicial registrar.  That decision was to dismiss an application for summary dismissal by those two companies and also by Mr H Jong, who is the father of the wife in the family law proceedings.  This application now comes before the Court as a review of that determination.

2. The application is vigorously opposed by the husband in the proceedings. 

Background

1. To provide some context to this I shall provide some brief background matters. 

2. The wife was born in 1961 and is 50 years of age.  The husband was born in 1949 and is 62 years of age.  They commenced cohabiting in 1981 and they married in 1982.

3. They separated in late 2006 and their divorce became final in September 2008.  The second respondent in the proceedings is a corporation, W Holdings Pty Ltd.  The shares in this corporation are held by the wife’s parents.  The directors of the corporation are the wife’s father, Mr H Jong, and her brother, Mr S Jong.  The third respondent, and the other relevant corporation at this point, is called  K Enterprises Pty Ltd .

4. This corporation is owned by the wife’s brother, Mr A Jong, and his wife, Ms G Jong, and they are the directors of the corporation.  There is a fourth respondent, the wife’s father, Mr H Jong, and a fifth respondent, which is a corporation called B Pty Ltd.  Shares in this corporation are owned by the husband and the wife equally.  This corporation was deregistered after strike-off proceedings in January 2008.

5. I pause to note that there has been some attention given to the state of this deregistered corporation. Yesterday, I made an order, the effect of which was that the registration of this corporation was to be re-instated pursuant to s 601AH of the Corporations Act 2001 (Cth). One of the effects, as I understand it, of a corporation being deregistered is that any assets of the corporation have passed, as a matter of law, to the Commonwealth.

6. The effect of reinstatement of the registration of the corporation will mean that its property will go back to the corporation.  The corporation has some assets.  There is considerable issue about what they are.  But there is no question that the company has some property.  That, of course, would be relevant property for the purposes of the family law proceedings. 

7. It is common ground that during the marriage the husband and the wife lived with the wife’s parents for significant periods of time.  It is also common ground that over many years the husband worked closely in the family business.  The wife’s father and her brother, Mr S Jong, have been prominent in operating the business. The husband also said that he was prominent in its operation.  This is a matter in issue.  The vehicle through which the business was operated is the company W Holdings Pty Ltd.

8. It is also clear that there has been considerable enmeshment of business activities and financial matters between the husband, the wife and members of the wife’s family, including her father and her brother Mr S Jong, but probably also more widely than that. 

Discussion

1. The husband has alleged that he has been wronged by the company, W Holdings Pty Ltd, and also, to an extent, by the company  K Enterprises Pty Ltd.  He has endeavoured to make such claim against these corporations, which are strangers to the family law proceedings between the husband and the wife.  There has been some issue over a long time between the husband, on the one hand, and the corporations and the wife’s father, on the other hand, about exactly what the nature of the claim being made by the husband against them is.

2. On 18 June 2010, the husband filed points of claim.  The relevant ones for immediate purposes fall under the heading in the points of claim, The D Property/Second Partnership or Joint Venture Agreement.  They read as follows (and I shall substitute the names of the corporations for those of the various respondents in an endeavour to facilitate understanding of this). 

   [W Holdings Pty Ltd] entered into an agreement with [B] Pty Ltd, a company owned jointly by the wife and the husband in which [B] Pty Ltd would contribute $175 000, being half of the purchase price, into the purchase of two houses at [D] “the [D] property”.

   In accordance with that agreement, [B] Pty Ltd has contributed $175 000 towards the purchase price of the [D] property.

   It was a term and condition that the [D] property would be developed into five townhouses and then either sold or rented out.

   It was a term and condition of the agreement that in the event that the developed property was either sold or rented, [B] Pty Ltd would be entitled to 50 per cent of the profit.

   The said development was subsequently completed.  Thereafter, [W Holdings Pty Ltd] sold four of the units and retained one of the units over which it granted leases from time to time, receiving rent.

   In breach of the said agreement, [W Holdings Pty Ltd] did not pay to [B] Pty Ltd its share of the profits of the development of the [D] property, nor has it rendered any accounting.

   In the premises, [W Holdings Pty Ltd] holds the remaining unit at [D] on trust for [B] Pty Ltd.

   In the premises, the proceeds and profits from the sales of the first four units of the [D] development are held on trust for the benefit of [B] Pty Ltd to the extent of the contribution to the proceeds and profits made by [B] Pty Ltd.

   Further, [W Holdings Pty Ltd] has used proceeds of the sale of the first four units of the [D] Property after subdivision and invested the money into [two adjacent properties at C] “the [C] properties”.

   In the premises, [W Holdings Pty Ltd] holds its portion of the [C] properties on trust for [B] Pty Ltd and itself in equal shares.

3. And there are some other points of claim that relate to the corporation  K Enterprises Pty Ltd, which, as I have said, is owned by the wife’s brother, Mr A Jong, and his wife Ms G Jong.  These are as follows.

   The proceeds of the sale of the first four units of the [D] property have been used to acquire the [C] property.

   [K Enterprises Pty Ltd] has acquired a legal interest in the property despite not contributing towards the purchase price of the property.

   In the premises, [K Enterprises Pty Ltd] holds its legal title of the C property on trust for [B] Pty Ltd.

4. After learned counsel for the husband drew my attention to the points of claim, I suggested that I thought there was a need for the husband to set out in a written minute those orders which his client, the husband, was seeking against the corporations.  The relevant parts of that document, are paragraphs 4 and 5.  For convenience I have labelled those Exhibit A.  They are as follows:

   4.Order the second respondent [W Holdings Pty Ltd] to pay to first respondent (the husband) its share of the proceeds made from the “[D] project”.

   And paragraph 5 of the orders is:

   5.To give effect to orders … and 4 order that each party do all things necessary for the sale of [the remaining Unit at D and the two adjacent properties at C] and that the first respondent (husband) receive 50 percent of the proceeds of sale of the said properties.

5. It was submitted on behalf of the husband that his claim properly falls within the accrued jurisdiction of this Court and ought to be heard immediately by this Court rather than have to be determined by the New South Wales Supreme Court.  It was submitted further that in order to determine the pool of available property in the family law proceedings, the husband’s claims against the company must be determined.

6. I must say, I am not persuaded that this is correct.  It is clear that the corporation B Pty Ltd, whatever value it might have, would be amongst the assets of the married parties.  After all, the husband and the wife are the owners of that corporation.  We know that once the corporation B Pty Ltd becomes reregistered, it would have an asset in the form of its legal interest in the remaining D property.

7. The husband’s argument that the corporation B Pty Ltd might have a claim arising out of some action against W Holdings Pty Ltd,  K Enterprises Pty Ltd or the wife’s father would, in my view, only be relevant to the possible value of the corporation, B Pty Ltd as distinct from this corporation being able to be identified as an asset of the husband and the wife.  I am not persuaded that this is a sufficient basis to attract the accrued jurisdiction.

8. There have been numerous arguments about an alleged agreement, about application of the statute of limitations and also about the possible application of equitable principles. 

Conclusion

1. In my view, it is unnecessary to deal with these matters.  In my view, the husband’s application must fail on a different basis.  As Mr Campton, counsel for the second, third and fourth respondents, has pointed out on numerous occasions during the proceedings, it is the husband who is seeking the relief.  But any claim along the lines of that which is asserted by the husband would have to be a claim not by the husband but by the corporation B Pty Ltd, the deregistered corporation.  As Mr Campton has indicated, although B Pty Ltd was joined by the husband as a party to the proceedings, it has not participated in the litigation.  It has not made any application.  In my view, Mr Campton was correct when he submitted that the husband’s claim against the second, third and fourth respondents he represents cannot succeed.  In these circumstances, in my view, the husband’s claim must be dismissed.

I certify that the preceding nineteen (19) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 16 February 2012.

Associate:     

Date:              26 July 2012