KONG & LENDI
[2020] FamCA 1091
•18 December 2020
FAMILY COURT OF AUSTRALIA
| KONG & LENDI | [2020] FamCA 1091 |
| FAMILY LAW – CONTESTED INTERIM APPLICATION FOR PART PROPERTY SETTLEMENT – evidence to support each party’s application defective – each party’s application refused. |
| Family Law Act 1975 (Cth), ss 75(2), 78, 79 Family Law Rules 2004 (Cth) |
| Cao & Trong (No. 2) [2019] FamCA 941 Clayton v Bant [2020] HCA 44 Deiter & Deiter [2011] FamCAFC 82 |
| APPLICANT: | Ms Kong |
| RESPONDENT: | Mr Lendi |
| FILE NUMBER: | DGC | 2858 | of | 2020 |
| DATE DELIVERED: | 18 December 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 10 November 2020 |
| DATE OF LAST SUBMISSION: | 17 December 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Nevile & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Smith |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Partners |
Orders
Each party’s application for disbursement to him or her of the sum of $213,477.61 presently standing in the trust account of B Lawyers is dismissed.
This proceeding is referred to a registrar for ongoing case management.
The registrar must arrange for a mediation in this proceeding to be convened by 4pm on 31 March 2021.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kong & Lendi has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: DGC 2858 of 2020
| Ms Kong |
Applicant
And
| Mr Lendi |
Respondent
REASONS FOR JUDGMENT
Introduction
The husband’s application for a partial property settlement came before me while sitting in the Judicial Duty List on 10 November 2020. On that day I ordered each party to file and serve further affidavit material and submissions following which, after 1 December 2020, I informed the parties that the application for a partial property settlement would be determined on the papers.
This is my determination.
Synopsis
For the reasons that follow, in my judgment –
a)neither party has persuaded me that he or she is entitled to the payment of the sum of $213,477.61 being the funds remaining in the B Lawyers Trust Account;
b)those funds should be preserved pending the hearing and determination of the trial of this proceeding;
c)this proceeding should be referred to a registrar for ongoing case management;
d)the registrar must arrange for a mediation in this proceeding to be convened by 4pm on 31 March 2021; and
e)I otherwise dismiss each party’s application for disbursement to him or her of the sum of $213,477.61 presently standing in the trust account of B Lawyers.
Relevant factual recital
This was a contested interlocutory dispute. A substantial body of authority has made holdings of law to the effect that a trial judge in my shoes should only make factual findings on the hearing of a contested interlocutory application with great circumspection.[1] Accordingly, the recital that appears below of the relevant factual background has been distilled from affidavit material filed by the parties which I have examined in the manner least tendentious as circumstances permit.
[1] Marvel v Marvel (2010) 43 Fam LR 348, SS & AH [2010] FamCAFC 13, Deiter & Deiter [2011] FamCAFC 82, Eaby & Speelman [2015] FamCAFC 104, Redmond & Redmond [2014] FamCAFC 155 and my own decision of Pollard & Nordberg [2019] FamCA 365.
Each party[2] sought interim orders dealing with the application of the net proceeds of sale of the land known as C Street, Suburb D (“the Suburb D property”), being the whole of the land more particularly described in certificate of title volume … folio ….
[2] The applicant made that application in paragraph 2 of interim orders sought in her initiating application filed 20 August 2020 and the respondent made his application in paragraph 10 of his response filed 30 September 2020.
Each party filed extensive affidavit material. It is necessary to take the affidavit material filed by each in turn.
The applicant made an affidavit on 19 August 2020. Relevantly distilled, the following were the more important matters that emerged from that affidavit –
a)the wife is 43, having been born in China and the husband is 62 having been born in New Zealand;
b)the wife resides in Australia under a guardian visa the terms of which prevent her from owning real estate in Australia;
c)the parties married in China in 2008, they separated in June 2015 and they divorced in China in May 2016;
d)the parties have a son, born in 2008;
e)the E District Court in China determined that it did not have authority to make orders in relation to any assets in Australia;
f)in June 2016 the parties entered into what the applicant called a “divorce agreement” that the E District Court sealed;
g)in July 2019 the parties entered into what the wife described as a “distribution agreement” that made provision for the distribution of the net sale proceeds of a commercial property, being the Suburb D property as earlier defined;
h)the Australian assets in the respondent’s name include –
i)F Street, Suburb G, Victoria;
ii)H Street, Suburb J, Victoria;
iii)K Street, Suburb L, Victoria;
iv)M Street, Suburb J, Victoria; and
v)the Suburb D property;
i)in early May 2017 the respondent was detained at City O International Airport for allegedly failing to pay child support arrears in accordance with an order made in the E District Court;
j)on 18 July 2017 the respondent was detained at the same airport for allegedly having failed to pay child support arrears in relation to a different period; and
k)she asserted that the respondent had not paid her $374,632.10 (USD) in accordance, so she said, with the divorce agreement.
The wife alleged in her affidavit that the respondent had not complied with the divorce agreement. In particular, she asserted the respondent failed to –
a)transfer to their infant son title to the K Street property and M Street property;
b)pay her rental in respect of those two properties;
c)sell the Suburb D property;
d)pay her rental in respect of the Suburb D property;
e)pay sums due in relation to motor vehicles, a boat and a motorcycle; and
f)pay sums due concerning a loan of $150,000.
She asserted that in mid-2019 the respondent sold the Suburb D property for $650,000 and that after discharging the mortgage debt, the net proceeds of $305,201.15 were deposited in the trust account of a firm of solicitors called B Lawyers. By agreement some of that money in trust has been used to meet the school fees of their son at a private school in Suburb N. The wife said she consented to the release of $80,129.54 from the trust account in order to pay arrears due to Westpac.
She said she has incurred almost $40,000 in legal fees.
The respondent filed a document on 30 September 2020 that purported to be an affidavit yet it was neither sworn not affirmed in accordance with the Family Law Rules. The document appears to have been prepared by the respondent in person. Even though the document suffered from that serious defect, the legal representatives for the wife took no issue on point. In that affidavit, the husband stated as follows –
a)an appeal court in City O determined finally all child support and arrears issues;
b)under the divorce agreement the F Street property and the H Street property were to go to the respondent and the K Street property along with the M Street property were to go to the wife with the Suburb D property being retained jointly for as long as the parties agreed;
c)the parties agreed subsequently that the Suburb D property would be sold and on 7 April 2019 entered into the distribution agreement to address the manner in which the proceeds of sale of the Suburb D property was to be applied;
d)he said all issues concerning property in China, child support and back pay have been determined in China;
e)on 9 May 2017 the applicant lodged caveats on all properties;
f)she has refused to remove those caveats;
g)the applicant agreed to sell the Suburb D property; and
h)the applicant executed the distribution agreement, and the Suburb D property has been sold but the funds have not been disbursed.
On 13 November 2020 David Dudderidge, the wife’s solicitor, made an affidavit to which he exhibited a Chinese and an English translated version of the reasons for decision of the E District Court dated 30 August 2018. Mr Dudderidge deposed to those reasons for judgment being the reasons of the appeal court. On a closer examination of the reasons I was unable to say whether the reasons exhibited as exhibit “DD2” were the reasons of the trial judge or of the appeal court. I say that because –
a)the reasons are headed “civil judgement (sic) of People’s Court of E District, City O Municipality, People’s Republic of China”;
b)the wife is described as the plaintiff and not as the appellant;
c)the husband is described as the defendant and not as the respondent to an appeal;
d)the second page of the document includes a sentence “Following the trial, the case is now concluded”;
e)on the second last page of the reasons judgment was given on five issues;
f)the final page of the reasons incorporates the following comment –
If either of you refuses to accept this judgement (sic), the Plaintiff may, within fifteen days from the date of service of the judgement, (sic) and the Defendant may, within thirty days from the date of service of the judgement (sic) submit an appeal to this Court and, after preparing copies of the appeal according to the number of people in the other party, submit the appeal to City O No. 1 Intermediate People’s Court.
g)that statement quoted in the immediately preceding subparagraph referred to an intermediate people’s court rather than a district court; and
h)no evidence in this case was adduced that the intermediate people’s court had been engaged in this case.
Mr Dudderidge also addressed the renewal of the wife’s guardian visa, due for renewal in mid-February 2021. He said in his 13 November 2020 affidavit (at paragraph 7) that on 12 November 2020 he had a telephone conversation with the applicant’s migration agent, one Mr P. During that conversation Mr P informed Mr Dudderidge that the applicant needed to demonstrate that she had sufficient funds for herself and her son for a 12 months period from February 2021.
The respondent made a further affidavit on 24 November 2020. Relevantly distilled, the respondent deposed to the matters set out below in that affidavit –
a)he lives in Country T and has since December 2016;
b)he is self-employed and the majority shareholder in Q Ltd and he operates a business called “R Business”;
c)he has repartnered with Ms S and they have undertaken a social marriage ceremony that is not legally binding as a marriage;
d)they have a daughter born in 2020;
e)Ms S is engaged full time attending to their daughter;
f)the applicant in this proceeding is a Chinese citizen resident in Melbourne on a guardian visa;
g)during the marriage between the applicant and respondent (2008 to 2015) the respondent worked in City O as an agent of a New Zealand company;
h)the respondent said that during the marriage the applicant did not contribute to family expenses and they engaged maids to perform domestic chores; and
i)during the marriage the respondent said he paid for five separate parcels of real estate.
The respondent separately addressed post-separation events in his 24 November 2020 affidavit. Among the more important issues that arose from that affidavit in relation to post-separation events were the following –
a)the respondent signed the divorce agreement under duress;
b)the applicant threatened the respondent’s employer to have him jailed in China for corruption;
c)the respondent moved to Country T while working for the same New Zealand employer;
d)the respondent has had no face-to-face time with his son since the respondent moved to Country T;
e)the applicant commenced litigation in China in 2017 resulting in the dismissal by the E District Court of the applicant’s applications;
f)the applicant appealed to the People’s Court of the E District which ordered the respondent to pay a modest sum in child support, small amounts for motor vehicles and otherwise rejected the applicant’s claims;
g)the applicant and the respondent have been unable to agree on the distribution of remaining funds from the sale of the Suburb D property;
h)the sum of $213,477.61 is still in trust; and
i)the respondent seeks the proceeds held in trust less $20,000 which he says he is willing to pay to the applicant.
The parties’ submissions
Each party sought orders for the payment of the whole of the sum in trust to him and to her. Each filed written submissions that were useful. It is purposeful to record the more important matters that arose from the submissions of each.
The respondent’s submissions
On behalf of the husband, Mr Smith of counsel contended that the divorce agreement was not a financial agreement for the purposes of the Family Law Act. He also submitted that a useful summary of applicable legal principles including those in Strahan v Strahan[3] was set out in Cao & Trong (No. 2),[4] recorded in paragraph 13 of Mr Smith’s written submissions. Mr Smith contended that –
a)the applicant has $77,000 in a bank account, according to her financial statement filed 20 August 2020;
b)the respondent needs funds to meet litigation expenses;
c)the preliminary balance sheet shows assets of $2,613,477.61 less liabilities of $349,895 thereby deriving a net asset position of $2,263,582.61;
d)the respondent’s contributions throughout the marriage were significantly greater than were the wife’s;
e)the sum sought represents less than 10% of the total net property interests of the parties; and
f)issues about reversal of the sum sought do not arise as ample value exists in remaining Australian assets.
[3] (2009) 42 Fam LR 203.
[4] [2019] FamCA 941.
By way of opposition to the applicant’s proposal for the disbursement of funds in trust to her, Mr Smith advanced a collection of other submissions. Among them were the following –
a)while the wife seeks what she calls interim property orders, in reality she applies for interlocutory declaratory relief and based on the observations in Graham Barclay Oysters Pty Ltd v Ryan[5] an interlocutory declaration is not known to the law;
b)the Chinese courts did not conclusively determine property issues between the parties;
c)Chinese courts have no power to deal with Australian real property, citing Lan & Hao (No 2);[6]
d)to the extent that the wife relies on s 78 for the orders she seeks, that application should be dismissed;
e)to the extent that the wife relies on s 79 of the Family Law Act she has offered no evidence to support an order being made for part property settlement that is just and equitable; and
f)the wife gave no evidence of contributions save that the child lives with her.
[5] (2002) 211 CLR 540, 590.
[6] [2017] FamCAFC 175.
On behalf of the husband, two orders were sought. They were –
1.That within 7 days of the date of these orders the parties do all things and sign all documents to instruct B Lawyers Pty Ltd release to the Respondent the net sale proceeds from the sale of the property located at C Street, Suburb D VIC …, more properly described as Lot … on Registered Plan of Subdivision … and Certificate of Title Volume … Folio …, by way of partial property distribution.
2.The wife’s application for ‘interim property distribution’ be dismissed.
The applicant’s submissions
Mr Dudderidge, the wife’s solicitor, advanced a collection of submissions supporting his contention that under s 79 an interim property order should be made. In no special order, he argued –
a)no dispute emerged that the financial and non-financial contributions of the parties during the marriage were equal;[7]
b)the wife is unemployed and unable to be employed, with no income or other assets, and is unable to receive any government benefits;
c)the wife is required to have sufficient funds to support herself and the child of the marriage to renew her guardian visa;
d)the wife has fulltime care of the child of the marriage and the child is attending a private school as agreed by the parties;
e)the husband holds title of all three of the relevant residential properties in Australia and receives all the rent from them and has done so since separation, and the wife did not receive any of the rent from the Suburb D property since separation;
f)the husband has assets in other countries and financial resources;
g)the husband has been in breach of the divorce agreement since its existence;
h)the husband seeks to reduce the funds the wife is to receive from the B Trust funds by deducting from those funds an amount of $200,000.00 as a joint debt which the husband unilaterally withdrew from the mortgage over the Suburb D Property, noting that the husband seeks to have the distribution agreement declared void on that basis, the B Trust funds would then simply form part of the asset pool to be divided equally in accordance with clause 4.2.6 of the divorce agreement; and
i)the husband has been a senior executive in an international business for many years and was a high-income earner. While the husband states he ceased that employment in August 2020, there is no material in respect to any termination, redundancy, or long service remuneration, or any other financial entitlements. In any event, the husband is the majority owner of two businesses in Country T.
[7] I am unable to accept that contention as the husband said he contributed five parcels of real estate to the marriage and the wife did not work.
Subsequent to the submissions above, on my instructions, my associates brought to the parties’ attention the very recent High Court decision in Clayton v Bant[8] and informed the parties that they had until 4pm on 17 December 2020 within which to file submissions on the application of Clayton v Bant if they chose to do so.
[8] [2020] HCA 44.
On behalf of the wife, Mr Dudderidge filed further submissions on 17 December 2020 in relation to the recent High Court decision in Clayton v Bant. Relevantly distilled, Mr Dudderidge submitted as follows –
a)the City O appeal judgment does not preclude the wife from pursuing her entitlements in this court; and
b)whether the City O appeal judgment binds this court is a matter for trial.
Mr Spender, solicitor for the respondent husband also filed further submissions on point on 17 December 2020. Relevantly paraphrased, he contended as follows –
a)the parties are not bound by the divorce agreement; and
b)there is no substantial correspondence between the rights either party could have sought or did seek in the litigation in China and that which they can seek in this litigation.
Consideration
Many of those contentions were founded on contested facts on which I am required by appellate authority to be most circumspect before accepting.
I am not persuaded that the wife demonstrated a factual basis for the interim property order that she sought. In my view there is merit in the propositions advanced by Mr Smith on point. The evidence is in a state of fluidity at this stage. However, even at this juncture, it is possible to express certain observations about the evidence, namely –
a)whether a fact to be determined is whether the husband contributed five parcels of real estate to the marriage;
b)whether the direct and indirect financial contribution by the wife were in fact modest;
c)whether the direct and indirect financial contribution by the husband were substantial; and
d)whether the wife provided non-financial contributions by raising the parties’ son.
It was readily apparent from Mr Smith’s written submissions that the husband contested this application at an evidentiary level first and foremost. He was entitled to do that. After all, the wife and the husband made identical claims to the same limited fund, being the amount held in trust representing the remaining proceeds of sale of the Suburb D property. Mr Smith argued with some force that the wife had failed to discharge the evidentiary burden that fell to her to discharge.
In my view there is merit in that contention. The wife made little attempt to bring herself within statement of principle in Strahan v Strahan beyond pointing out three times in her written submissions that she was not required to demonstrate the existence of compelling circumstances before an interim property order could be made. There can be no doubt that she is correct in that regard. It seemed that the mainstay of the wife’s request for the interim property order was grounded in four propositions recorded in paragraph 8.2(a)-(d) of her written submissions, namely –
8.2.It is submitted that in all the circumstances, and in consideration of the s.79(4), and s.75(2) factors, it is just and equitable for the Court to make the orders sought in respect to partial property distribution, particularly given:
a.The dire financial position of the Wife, particularly given her inability to earn any income.
b. The significant financial resources of the husband.
c.The orders sought are not inconsistent with the final orders sought by the Husband, and do not exhaust the power of the Court to make final orders.
d. There is no prejudice to the Husband in the orders sought.
Taking them in reverse order, to contend that no prejudice will befall a respondent inverts the proofs. She was required to make out her case for the relief she sought. If she failed to discharge that onus, irrespective of prejudice to the respondent, she failed in her application. As to paragraph 8.2(c) of her submissions, it would be peculiar if her interim application was in fact inconsistent with the final orders she seeks and her submission that the making of an interim property order does not exhaust the court’s power to make final orders does little more than state the learning even at High Court level, on the effect of an interim property order. So far as the contention in paragraph 8.2(b) was concerned, the mere fact of the husband having significant financial resources, if true, would not, in and of itself, make out the applicant’s case for an interim property order. Nor would proof, if true, that the wife is in a “dire financial position”, whatever that meant. It must not be forgotten that she was partly successful in her litigation in the Chinese courts and, on advice, she entered into the divorce agreement that made provision for the son to receive a transfer of two of the five properties brought to the marriage by the husband. However, as the husband stated in paragraph 61 of his 24 November 2020 affidavit, the son is an infant and it is not possible to transfer property in Victoria to a minor. The husband also stated in that same paragraph that his attorney under power agreed with the wife to sell the two properties and that the Suburb D property was agreed to be sold first, which was done. It is apparent that the agreement referred to in that paragraph is likely to be a triable issue and is likely to be contested.
I accept that the wife would prefer to have the funds generated from the sale of the Suburb D property to her use and benefit now. The learning on point requires the court hearing the interim property application to assess the reversibility of the order. Here, a significant risk exists that any order for the wife to receive payment of the sum she seeks will not be reversible.
By the same token, Mr Smith’s argument that the husband requires the money now in trust to meet legal fees was unsubstantiated. No details were given of fees previously incurred and paid nor were details given of estimated fees likely to be incurred. In short, I was not persuaded that the contention in paragraph 17 of Mr Smith’s submissions had been proved where the following was said –
17.To that end, it is submitted that this case falls into the category that one party (namely, the husband) requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused.
No evidence was adduced to make good that point.
Disposition of these applications
In my view neither party has demonstrated an entitlement to be paid the sum of $213,477.61 being the funds presently held in trust by B Lawyers. Serious reversibility issues arise if those funds were disbursed to the wife and I was not persuaded that the basis asserted for the making of the order in favour of the husband, namely costs, has any substantiation or validity.
This proceeding is crying out for mediation. I make an order for a registrar to arrange a mediation by 31 March 2021. I otherwise dismiss both applications for the release of the money held in the trust account of B Lawyers.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 18 December 2020.
Associate:
Date: 18 December 2020
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