Lam & Ho

[2020] FCCA 3581

FEDERAL CIRCUIT COURT OF AUSTRALIA

Lam & Ho [2020] FCCA 3581

File numbers:	MLC 8129 of 2018
Judgment of:	JUDGE O'SHANNESSY
Date of judgment:	16 November 2020
Catchwords:	FAMILY LAW – Interim property – adjournment request – where proceedings currently underway in China.
Legislation:	Family Law Act 1975 (Cth) ss 75(2), 79(5).
Number of paragraphs:	18
Date of hearing:	16 November 2020
Place:	Melbourne
Counsel for the Applicant:	Mr C Dunlop
Solicitor for the Applicant:	Oakfair Lawyers
Counsel for the Respondent:	Dr R Smith
Solicitor for the Respondent:	Tao Jiang Lawyers

ORDERS

MLC 8129 of 2018

BETWEEN:

MS LAM

Applicant

AND:

MR HO

Respondent

ORDER MADE BY:	JUDGE O'SHANNESSY
DATE OF ORDER:	16 NOVEMBER 2020

THE COURT ORDERS THAT:

1.The final hearing of this matter listed today be vacated.

2.The matter be listed for a final hearing on 7 June 2021 at 10.00am (with an estimated hearing time of 3 days).

3.No later than 28 days prior to the final hearing, the applicant wife file and serve any further affidavit upon which she seeks to rely.

4.No later than 14 days prior to the final hearing, the respondent husband file and serve any further affidavit upon which she seeks to rely.

5.The parties do all things and sign all documents necessary to cause the following payments to be made from the parties' offset account (#...89)

(a)The sum of $30,000 to the wife;

(b)The sum of $20,000 to the husband;

With the characterisation of such payments to be determined at final hearing.

6.Costs of today be reserved.

7.The matter be adjourned for a compliance hearing on 17 May 2021 at 9.30am.

AND THE COURT NOTES THAT:

A.The adjournment of the final hearing this day was on the basis that there remains proceedings (or foreshadowed to be such proceedings) before the courts in China with respect to the legal and equitable property interests of the parties, which may impact the outcome of this proceeding

B.In light of Notation A, the Court has ordered these proceedings be adjourned for a period of 6 months, however noting that this adjournment does not establish that the matter will not proceed until the Chinese proceedings have all concluded.

C.If in any proceedings there are allegations of family violence and the provisions of section 102NA of the Family Law Act 1975 apply (see attached Family Violence Information Sheet), any unrepresented party will not be permitted to personally cross-examine the other party/parties.

D.Affected unrepresented parties may apply to the Commonwealth Family Violence and Cross-Examination of Parties Scheme ("the Scheme") for representation but any such application must be made at least 12 weeks prior to the final hearing.

E.Further information about the legislation and the Scheme can be found at Part 4 of the attached Family Violence Information Sheet.

F.If s102NA applies and a party becomes unrepresented after trial directions have been made, that party is required to promptly advise the Court.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment under the pseudonym Lam & Ho is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE
REASONS FOR JUDGMENT

JUDGE O’SHANNESSY

1. These proceedings commenced when the Applicant Wife (‘the Wife’) issued proceedings seeking property relief on 18 July 2018.  The matter was listed for final hearing before me today to deal with two matters:  firstly, the Respondent Husband's (‘the Husband’) application to stay the further hearing of the proceedings or to adjourn the further hearing of the proceedings until the conclusion of proceedings between the parties in China and also the competing property applications of the parties were listed before me. 

2. The parties married in 2009 and they separated in about April 2018, although they remained under the one roof for some time.  The Wife is 37 years of age and engaged in full-time homemaker duties.  The Husband is 39 years of age and is employed on a casual basis as a factory worker.  The parties have an eight year old child, born in 2012.

3. The property proceedings concern essentially six different assets.  Firstly, what is alleged to be, by the Wife, real estate holdings or assets relating to three apartments in China and, alleged by the Husband and supported by his father, an allegation of a substantial debt in the order of $600,000 due to the Husband's father.  The Wife alleges, but without expert evidence, that there is approximately some 1 or $2 million of property in China that should be regarded as property of the Husband and Wife.  The property in Australia relates to the former matrimonial home, which in 2018 had an expert valuation of $650,000 with a mortgage debt of $320,000, leaving equity of approximately $330,000. 

4. In addition to that, the Husband has a motor vehicle worth about $12,000 and about $1200 in the bank account or $13,200 of "keep".  The Wife has a motor car worth about $10,000 and I am told about $1800 in the bank or about $11,800 worth of keep.  The Husband also has superannuation entitlements of about $38,000 and the Wife has nil.  In addition to that, the parties have in their joint names in an account that is offset against the mortgage account to which I referred the sum of approximately $281,000.  One of the principle disputes between the parties is the source of what is, as I understand it, effectively the cash in the offset account. 

5. A significant factual dispute between the parties is whether the sum of approximately $335,000 was advanced by the Husband's father to the Husband or to the Husband and the Wife as a loan in about 2013.

6. It appears to be common ground that this money came in seven tranches of approximately $49,000.  As I understand the Wife's case, it is that a sum very similar to that amount and arriving in similar tranches was, in fact, the property of the Husband and the Wife that was paid to the Husband following the settlement of a compensation claim arising from a compulsory acquisition of property in China.  It is the Husband's case, supported by his father, that that property was the property of the Husband's father alone.  It is the Wife's case that that was property of the Husband and her arising from the compensation claim and she points to a document where she is named as a party to that compensation agreement.

7. The compensation agreement effectively provides that there was to be by way of compensation three properties plus a further cash sum that is specified to be the sum of ¥238,111 Renminbi.  The Husband, supported by his father, alleged that a sum of a tad over $600,000 is owed by the Husband and the Wife to the Husband's father.  As I said, the proceedings commenced with issue in July 2018 and then on 21 September 2018 it appears that the Husband's father issued the first proceeding against the father alone in regard to an allegation that a substantial sum of money and, as I understand, in the same amount of similar as is now alleged was due.  The following month, in October 2018, the Wife issued proceedings in China for a divorce.

8. I am told, although there was no admissible expert evidence as to this regard before me, that for a matrimonial property claim to be made in China it is necessary for a divorce to occur first.  On 16 January 2019 the Husband's father withdrew the claim as originally made.  There may have been another one along the way.  I am now uncertain whether there were two or three claims, but certainly there is a current one that appears to have been issued on 7 July 2020 in regard to the same alleged loan or debt and this time issued against the Husband and the Wife.  The parties recently made final orders relating to the time that the Husband would spend with their eight year old child.

9. The current circumstance is that the former matrimonial home is occupied by the Wife and the substantial mortgage is effectively covered by the offset account. There had previously been proceedings relating to the offset account, where the Husband had withdrawn the funds, but then ultimately returned the bulk of the funds to that account. My associate received over the weekend some detailed submissions from Dr Smith, counsel on behalf of the Husband, as to an adjournment pursuant to section 79(5) of the Family Law Act 1975 (Cth) (‘the Act’). Dr Smith conceded that the same matters he agitated in regard to section 79(5) would be applicable in regard to what I will call an ordinary or straight out adjournment of the matter to ensure justice was done before the parties.

10. The substance of Dr Smith's application was that there would very soon be the crystallisation in China of substantial matters in the proceedings.  That is, the judgment in regard to the Chinese proceedings relating to the debt alleged by the Husband's father would be available relatively soon.  In addition to that, the Wife's case was that she expected judgment in regard to the divorce proceedings, which commenced in 2018, some time relatively soon, in a matter of weeks.  I was told, and I have no reason to doubt the correctness of it notwithstanding the inadmissible form that it came before me, that upon the divorce being granted the Wife would then be able to issue other relief that she sought, which would include the claim relating to what she says is interest she and the Husband has in the three properties.  If she is successful the property pool will be significantly larger. 

11. It is likely that whoever wins the Chinese debt proceedings will seek to have the other party stopped from disputing that result in these proceedings. That may or may not follow. Mr Dunlop of counsel for the Wife told me that an adjustment of the contribution position by reason of reference to section 75(2) factors in this case would be made and should be made. On the basis of the circumstances as they are in Australia and putting aside the issues and allegations relating to debts and ownership of property in China, on the face of it the claim that the Wife would receive some adjustment on account of section 75(2) is a strong one. The extent of the adjustment would be a matter of dispute and ultimate exercise of discretion.

12. In the circumstances where the Australian pool of assets would be about $636,000 plus superannuation of about $38,000 it is easy to see how the determination of a debt in China of an amount equivalent to the asset pool, if that is going to resolve that debt question in these proceedings and/or the determination that the Husband or the Wife or the Husband and the Wife owns somewhere between or around about 1 to $2 million worth of property in China would have a substantial effect on the assessment of section 75(2) factors. The Husband has the great advantage that he is employed. However, he is in modest employment and casually employed. Nonetheless, he is employed. However, he does pay child support.

13. To properly determine the factual issues in the case a significant part of it will turn upon the issue of what I refer to as the 2013 five or seven bundle bucket of money.  In fact, it was not a bucket.  It went into a bank account.  It is common ground that some of that money was applied to the deposit on the home.  The determination of where that money came from and who was entitled to it is very much related to the issue of the loan.  I was troubled as to the state of the evidence being able to ascertain or determine that question of fact at this point in time.  There was no evidence in an acceptable form by either party as to aspects of Chinese law that would be relevant to their claim.

14. However, it was also going to be simply impossible for me to reliably and thoroughly determine section 75(2) factor adjustment when the amount of the property and debt that each party had was not known. It may be that when the matter next comes on I am unable to determine what the situation with the Chinese property is or when it will be determined. I am not determining that these proceedings will be adjourned until the Chinese proceedings are resolved, whenever that may be. Push may come to shove and I may have to determine the proceedings before me on the evidence that I have and do the best that I can.

15. On the other hand, it may be appropriate that the proceedings be further adjourned, depending on the state of the Chinese proceedings, but in the circumstances where it is expected that the divorce will be granted within weeks and that that will enable to Wife to bring her claim in regard to the Chinese property, it appears to me to be unwise and inappropriate to proceed to hear the matter in those circumstances. 

16. The issue of the ownership of the Chinese property or the Husband and the Wife's entitlements thereof is a very significant matter.  I may or may not have been able to determine the issue of the loan without waiting for the Chinese proceedings any further and then, of course, there is the issue of whether the loan would be enforced were it found to be a loan.

17. The degree of uncertainty about those two matters, that is:

    (a)The Chinese property allegation, i.e. substantial or nil, and;

    (b)The Chinese loan issue, i.e. a substantial debt or nil;

    means that I will be better able to do justice between the parties when more information is available and, hopefully, those proceedings have been determined.  That does not mean that I am ruling that I will be bound by the issue of the Chinese proceedings.  However, it may be that one or other of the parties will be so bound, but they are all questions that we will address next time.  So I gave an indication of what my ruling would be prior to lunch and the counsel for the parties have helpfully prepared a minute, which give effect, with some minor tinkering, to what I propose to order and I am grateful to them. 

18. So they are the further reasons and I make the orders as we have them.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of Judge O'Shannessy.

Associate:

Dated:       20 January 2021