Li and Meng

[2019] FamCA 181

FAMILY COURT OF AUSTRALIA

LI & MENG [2019] FamCA 181

FAMILY LAW – PROPERTY – Where the parties have property in Australia and China – Where the state of evidence created considerable difficulties in determining what orders are just and equitable between the parties – Where contributions were disputed by each party – Where there was no evidence to support the contentions of parties – Where no party adduced evidence as to non-financial contributions to the property – Where there is no finding in terms of percentages of the net pool of assets and superannuation – Where an order is made for an equal distribution of real estate assets and bank savings.

Family Law Act 1975 (Cth)

Stanford v Stanford (2012) 247 CLR 108

APPLICANT: Ms Li

RESPONDENT: Mr Meng

FILE NUMBER: SYC 6374 of 2012

DATE DELIVERED: 27 March 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 28 February and 1 March 2019

REPRESENTATION

THE APPLICANT: Ms Li appeared for and on her own behalf

THE RESPONDENT: Mr Meng appeared for and on his own behalf

Orders

1. Within three (3) calendar months of the date of these Orders, the husband will pay to the wife a sum of $81,552.

2. Simultaneously with such payment of $81,522 to the wife by the husband, both parties will do all things necessary to effect the transfer to the husband of the whole of the wife's right title to and interest in the property situate at and known as E Street, Suburb F in the State of New South Wales ("the Suburb F property").

3. In the event that the husband fails to make payment to the wife as prescribed by Order 2 both parties will do all things necessary to cause the sale of the Suburb F property, for the best price reasonably obtainable, and to distribute the net proceeds of such sale as follows:

   3.1in payment to the wife of a sum of $81,552 plus interest at the rate prescribed by the Family Law Rules for the time being

   3.2in payment of the balance to the husband.

4. The wife is declared to be solely entitled to the property known as G Street, City H in China.

5. Otherwise each of the parties is declared to be solely entitled to all items of personal property in his and her respective possession.

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 Li & Meng 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 SYDNEY

FILE NUMBER: SYC 6374  of 2012

Ms Li

Applicant

And

Mr Meng

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Ms Li and Mr Meng were parties to proceedings in relation to parenting issues and property settlement, which were listed for trial before me in October 2018.  On 22 October 2018 I made final parenting orders by consent in relation to the parties' son B, who was born in 2007.  Sadly, B suffers from a severe medical condition.

2. The parenting orders which I made by consent provided, in essence, as follows:

   1.        the parties have equal shared parental responsibility for B

   2.        B live with the mother

   3.B spend gradually increasing periods of time with the father, following his receiving assistance from J Medical Centre and equipping his home so as to accommodate the child's disability.

3. These Orders noted that the parties' daughter C, born in 2003, would live and spend time with each of the parties in accordance with her wishes.  The parties' third child, D, was born in 1998 and is 21 years of age.

4. Ultimately, B spends time with the father for three nights per fortnight.

5. After these Orders were made, there remained for determination the competing applications of the parties for alteration of property interests.  These applications could not proceed to hearing in October 2018 because there was no evidence as to the value of a property in City H in China which is owned by the wife.

6. Accordingly, the competing applications for property settlement were listed for hearing on 28 February 2019 and 1 March 2019.  This trial was complicated by the fact that neither of the parties had legal representation and they both required the assistance of an interpreter.

7. In her Initiating Application filed on 14 November 2014 the applicant wife sought orders and declarations to the following effect:

   1.the wife is declared to be the sole owner of a real property situate in City H in China

   2.the wife receive 80 per cent and the husband 20 per cent of the net value of the parties' assets in Australia, including the net proceeds of sale of a property at E Street, Suburb F.

8. In her final submissions, the wife indicated that she sought orders to the following effect:

   1.she is to cause the sale of the City H property and effect an equal division of the proceeds between the parties, after deductions including a sum of $7,000 on account of her expenses for travel to China for that purpose and an amount of $31,748 being unpaid legal fees to her previous solicitors.

   2.The parties cause the sale of the property E Street, Suburb F and effect an equal division of the net proceeds.

9. In a Response to Initiating Application filed on 3 February 2015 the husband sought the following financial orders:

   "5.That the father be declared the sole benefit (sic) owner of the property at [E Street, Suburb F] in Australia.

   6.That the mother compensate the father for his past financial contribution to her current assets in China and Australia to the amount of $95,000.

   7.That the Applicant comply with her general duty of financial disclosure.

   8.That the father have leave to amend this response upon receipt of the disclosure in order 7 above."

10. In his final submissions the husband indicated that he sought orders to the following effect:

    1.the parties do all things necessary to cause the transfer to him of the whole of the wife's interest in the Suburb F property

    2.        the wife retain the City H property.

11. In their affidavits and during the trial, each of the parties alleged a failure of full and frank disclosure on the part of the other.  In particular, they each suggested that the other party has undisclosed bank accounts in both China and Australia.  In her final submissions, however, the wife said words which were translated as "our bank accounts do not contain large amounts".

The evidence and witnesses

1. The applicant wife relied upon her affidavits affirmed on 27 February 2018, 5 October 2018 and 27 February 2019.  During the trial the wife sought and was granted leave to rely upon paragraphs 12 and 13 of her affidavit affirmed on 26 August 2015.  The wife affirmed a Financial Statement on 1 June 2018.

2. The husband relied upon his affidavits affirmed on 28 January 2015, 28 September 2015, 23 January 2018 and 17 October 2018.  The husband affirmed a Financial Statement on 28 May 2018.  Each of the parties

   
   

   cross-examined the other via an interpreter.

3. The state of the evidence created considerable difficulty in the conduct of the trial and in my ability to determine what orders are just and equitable as between the parties.  I did not consider that a further adjournment of the proceedings would have assisted in the preparation of the matter for trial, even with the benefit of further directions.  I appreciate that the parties faced considerable difficulties in conducting their litigation without legal assistance.

Background

1. The wife was born in 1969 in China and is presently aged 49 years.  The husband was born in 1960 in China and currently aged 58 years.  The parties married at City H in 1997 and separated in 2012.  They were divorced by order made in 2013.

2. The husband migrated to Australia in approximately 1990.  In 2002 the wife and D migrated to Australia, under the sponsorship of the husband.

3. Each of the parties acquired a parcel of real estate at an early stage in the marriage.  Annexed to the affidavit of the wife of 27 February 2018 was a copy of a certificate of title in relation to a property K Street, Suburb L, which showed the husband as sole registered proprietor.  The wife deposed that this property was purchased by the husband for $170,000 in 1999 and sold in 2004 for $285,000.

4. The husband maintained that he owned the Suburb L property prior to the marriage.  It appears, however, that he purchased this property after the date of the marriage but prior to the wife and the parties' child D migrating to Australia in 2002.

5. The wife annexed to her affidavit of 27 February 2018 a copy of a letter dated 8 July 2004 from a real estate agent, which referred to a proposed purchase by the parties of a property E Street, Suburb F for $306,500.  The wife deposed that the parties purchased this property jointly for $306,500 in 2004.  There was no evidence as to the details of the finance for this purchase.

6. It appeared to be common ground that the wife purchased a property in City H in 1999.  There was no evidence as to financial details of the wife's acquisition of this property.  The wife alleged that she paid the purchase price from her earnings as a civil servant in China.  The husband contended that she used "money which I gave her cumulatively since 1997 (amounting to over $40,000)".  The husband also deposed that the wife applied funds derived from "investments made largely on the basis of my income and savings in the past".

7. There was no evidence to support the contentions of each of the parties, to the effect that the other holds undisclosed funds in unidentified bank accounts.  I will deal with the issue of bank accounts on the basis of statements which were produced by the wife (Exhibit 2) and the contents of the parties' Financial Statements and Balance Sheets.  Unfortunately, both Financial Statements were out of date by several months.

8. The parties focused considerable attention on a period in 2007 and 2008 when the parties took their son B to China for treatment for his medical condition.  They levelled confusing counter-allegations in relation to the movement of money between China and Australia.  Ultimately, I am unable to make any findings in relation to these unclear allegations.

9. The income of each of the parties, as disclosed in their respective Financial Statements, consists of social security benefits.  The wife receives a carer benefit in relation to B and the husband's income consists of a Newstart allowance.  Both parties receive family tax benefit payments.

Approach to these proceedings

1. In Stanford v Stanford (2012) 247 CLR 108 the majority of the High Court of Australia held as follows at [35]:

   "It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order."

2. Their Honours further observed as follows at [42]:

   "In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship.  It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife.  No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship.

   That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4)."

3. The parties have been divorced since 2013 and have lived separate lives for a number of years. They are joint registered proprietors of the Suburb F property, thus they require orders pursuant to section 79 of the Family Law Act (“the Act”) in order to terminate their financial relationship.  I construe the competing applications of the parties as mutual concessions that it is just and equitable that there be orders for alteration of property interests.  For these reasons, I am comfortably satisfied that it is just and equitable that there be orders for alteration of property interests.

4. The application of section 79 of the Act will determine what orders should be made for alteration of property interests. It is first necessary to determine the assets, liabilities and financial resources of the parties. All relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) of the Act, must be identified and weighed against each other. The matters set out in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2), must be considered and a determination made as to what if any alteration should be made to the entitlements of the parties as earlier assessed on account of contribution.

The assets, superannuation, liabilities and financial resources

Assets

1. The wife annexed to her affidavit of 27 February 2019 a copy of an appraisal of the value of the City H property dated 24 October 2018.  The organisation which provided this report was named "[City H, U Real Estate]"  This appraisal assigned a value of $1,760,487 Yuan to the City H property.  On 4 March 2019, the exchange rate was such that 1 Yuan equalled A$0.21.  Accordingly, the City H property has a value of approximately $369,700.  The husband appeared to accept this appraisal.

2. There was no expert evidence as to the value of the Suburb F property.  I considered that the financial circumstances of each of the parties effectively prohibited them from obtaining any such expert evidence and thus I did not order that they produce a valuation.

3. The husband annexed to his Balance Sheet of 27 February 2019 a market appraisal dated 25 February 2019 from a representative of the N Real Estate franchise at Suburb F.  This appraisal placed the market value of the Suburb F property in the range of $530,000 to $540,000.  The wife provided no basis for her estimate of the value of this property at $575,000.

4. I would not normally make a finding as to the value of a real estate asset on the basis of a market appraisal.  In the present circumstances, however, I can see no better alternative and I will attribute a value of $535,000 to the Suburb F property.

5. The wife produced statements in relation to her O Bank account for the period 31 August 2018 to 31 December 2018 (Exhibit 2).  The balance as at 31 December 2018 was $2,083.  In her Balance Sheet dated 26 October 2018 the wife included her P Bank account  with a balance of $126.00.  I will include these bank balances as assets of the wife.

6. The husband included in his Balance Sheet of 27 February 2019 two Q Bank accounts with balances of $8.45 and $0.52 together with an R Bank account containing $2.77.  I will include these bank accounts as assets of the husband in the Balance Sheet.

7. The husband included in his Balance Sheet "[Ms Li's] assets in China and Australia (please see my previous balance sheet dated 17 9 18)  $555,111.69".  The husband annexed to this Balance Sheet a copy of a letter dated 10 June 2018, which he wrote to a Registrar in support of an application for leave to issue subpoenas.  This letter referred to various annexures to the husband's affidavit of 3 February 2015.

8. These annexures to the husband's affidavit purported to be bank documents which indicated that the wife held accounts with balances as follows on the listed dates:

($)
1.        21.10.11  P Bank Saver …59	10,005.94
2.        21.10.11  P Bank Reward Saver …25	5,106.08
3.        21.10.11  P Bank Basic account …17	1,466.40
28.9.12	6,845.44
4.        21.10.11  P Bank Interest Bearing account …64	0.00
5.        21.10.11  P Bank Interest Bearing account …41	5204.93
6.        1.12.11  P Bank Reward Saver …57	2,500.00
7.        18.11.11  R Bank account …90	4,109.57
8.        31.10.11  S Bank account	1,000.00

1. These annexures also included 2011 statements for bank accounts in the names of the parties' children.  Included also were documents in Chinese script with handwritten comments, to which I attach no evidentiary value.

2. I cannot find that any of these funds still exist, after the passage of over eleven years from the dates of these documents.  The husband purported to include these historic bank savings as assets of the wife.  Further, he calculated a sum of $15,543 which he asserted to be interest on these funds and sought to include that figure as an asset of the wife.

3. The husband also purported to include as assets of the wife credit balances of accounts in China, on the basis of largely unintelligible documents contained in annexures AB1 and AB2 to his affidavit of 3 February 2015.  These account balances appear to be for dates in 2001.  Again, the husband purported to include as an asset of the wife his calculation of interest on these sums.

4. The husband also purported to include as an asset of the wife his calculation of rent which should have been generated by the City H property for a period of 16 years.  There was no evidentiary basis whatsoever for this contention.

5. The husband also purported to include as assets of the wife "several security investment firms in China since 1997".  Again, there was no evidentiary basis at all for this contention.

6. I am far from satisfied that the husband established that the wife holds assets in China to the value of $555,111.69 or, indeed, any other amount.  I reject this contention.

7. The wife put to the husband a list of bank accounts, which she alleged to be undisclosed assets (Exhibit 3).  The husband said "I used up all my savings when I purchased the house in 2004."  The certificate of title for the Suburb F property was issued on 1 September 2004 (annexure C to the affidavit of the wife affirmed on 27 February 2019).  It thus seems likely that the funds held in term deposits were applied to the purchase of this property and, accordingly, do not constitute an existing asset of the husband.

8. In relation to the accounts listed in Exhibit 3, the husband said also that he spent the money held in the T Bank on treatment for B.  There was no evidence to the contrary.

9. For these reasons, I am satisfied that the wife failed to establish that the husband holds undisclosed bank savings.  As noted above, she appeared to abandon that proposition in her final submissions in any event.

Superannuation

1. The husband has a Super benefit with a balance of $23,380.  The wife has no superannuation entitlement.

Liabilities

1. There was no reference in the Financial Statements or Balance Sheets submitted by the parties to any mortgage on the title to the Suburb F property, which thus appears to be an unencumbered asset.  Similarly, there was no indication that there is any encumbrance over the City H property.

1. The wife had a credit card debt of $883 as at 7 January 2019 (Exhibit 2).  She also has a debt of $31,748 for unpaid legal fees to her previous solicitors.

2. The husband deposed to a liability of $5,830 for "translation fees" in his Financial Statement of 28 May 2018.  There was no evidence as to when or why the husband incurred this liability.

3. It seems to me that all of these liabilities were incurred well after the separation in 2012 and should be disregarded for present purposes.  I am conscious that there was no evidence that the wife's former solicitors have taken any action to secure payment of their outstanding fees.  Accordingly, I find that the parties have no liabilities which are relevant for present purposes.

Financial resources

1. There was no evidence that either party has a financial resource.

2. Accordingly, I find the assets, superannuation and liabilities of the parties to be as follows:

Assets	($)
1.        Home unit E Street, Suburb F (J)	535,000
2.        City H property (W)	369,700
3.        O Bank account …39 (W)	2083
4.        O Bank account …17 (W)	126
5.        Three bank accounts of the husband (H)	12
$906,921
($)
Superannuation
6.        Super Benefit (H)	23,380
Liabilities
Nil	0
Financial resources
Nil	0

The letters "H", "W" and "J" signify ownership of assets by the husband, the wife, and the parties jointly.

Contributions

1. On the available evidence it was very difficult to identify the contributions of the parties, other than in general terms.  For example, the evidence did not enable findings to be made in relation to their respective initial contributions.  Their income-earning history was not set out in their affidavits.  The means by which they financed the acquisition of the Suburb F and City H properties was far from clear on the available evidence.

2. Neither party adduced evidence as to non-financial contributions to the acquisition, conservation and improvement of their property.  There was no evidence, for example, of any repairs or renovations to the Suburb F property.

3. There was a dispute in relation to the respective contributions of the parties as homemaker and parent, particularly with regard to the care of B during the marriage.  It is impossible that I make findings as to the comparative levels of care which each of the parties provided to B.  I am not assisted in this respect by the findings of the Administrative Appeals Tribinual of 23 June 2014 as to care percentages for child support purposes (annexure D to the husband's affidavit of 28 January 2015).

4. A Family Report dated 12 September 2018, which was in evidence for the trial in relation to parenting issues in October 2018, provided a history of the parties’ care of C and B since their separation.  The Family Consultant reported that C remained with the husband and spent no time with the wife.  B has lived with the wife since February 2014 and seen the husband at his school each day.  That arrangement was varied by the final parenting Orders made on 22 October 2018.  Ultimately, B will spend three nights per fortnight with the husband and remain in the care of the wife at all other times.

Section 75(2) factors

1. I will refer only to those factors set out in section 75(2) of the Act which are relevant to the present proceedings. Several of these factors have no application to the situation of these parties.

(a)  the age and state of health of each of the parties

1. The husband and the wife are aged 59 and 49 respectively.  The wife deposed that she has been out of the paid workforce since the birth of B and, effectively, she has had sole responsibility for his care since February 2014.

2. The husband has a modest superannuation benefit, which means that he must have held paid employment at some time during the marriage.  The husband referred in his final submissions to a shoulder injury and claimed that he is unable to undertake paid employment.  There was no evidence as to when he last held gainful employment or as to his capacity for paid work.

(b)  the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and

1. Each of the parties receives social security benefits.  According to their respective Financial Statements, the husband and the wife receive a total of $479 and $616 respectively by way of social security payments.

(c)  whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

1. The wife has an onerous responsibility for the care of B, who is 11 years of age.  Once the parenting Orders of 22 October 2018 are implemented fully, the wife will retain responsibility for the majority of B's care.

2. As noted above, the parties' daughter C lives with the husband and spends no time with the wife.  She is 15 years of age and a high school student.

Conclusion

1. In the particular circumstances of these proceedings, and having regard to the state of the evidence, I will not attempt to make contribution findings in terms of percentages of the net pool of assets and superannuation. That being so, it is not feasible that there be an adjustment in percentage terms on account of section 75(2) factors. It seems to me that the best I can do is to make orders which I assess to be just and equitable, having regard to the contributions and section 75(2) factors which were identifiable on the available evidence.

2. The wife contended for an equal division of the proceeds of sale of the City H and Suburb F properties.  She indicated that she sought an interest in the husband's superannuation benefit, which I took to mean a 50 per cent share.  The wife also suggested that sums of $7,000 and $31,748 should be deducted from the net pool, before there is any distribution between the parties.

3. I am not prepared to deduct a sum of $31,748 from the net pool before there is a distribution between the parties.  The practical effect of such an order would be that liability for half of the wife's unpaid legal fees would be sheeted home to the husband.  I can see no reason whatsoever why the husband should bear any liability for the wife's legal fees.

4. I am not prepared to deduct a sum of $7,000 from the net pool, prior to a distribution between the parties, for a number of reasons.  Firstly, there was no evidence that the wife would be required to spend that amount on travel to China to effect a sale of the City H property.  Secondly, I will not order that the wife sell this property when a viable alternative is that she retain this asset.

5. I am unable to make a superannuation splitting order because no notice has been given to the trustee of the husband's fund.  I had no evidence as to when the husband acquired his superannuation and, in particular, whether he made any contributions during the parties' cohabitation.  In these circumstances, I will make no orders in relation to the husband's superannuation.

6. The husband sought orders to the effect that he and the wife retain the Suburb F and City H properties respectively.  The result would be a division as to 58 per cent of the net assets in his favour and 42 per cent to the wife.  I can identify no basis for an outcome more favourable to the husband than the wife, on the basis of the material which was placed before me.

7. It seems to me that the best I can do is to cause an equal distribution between the parties of their real estate assets and bank savings.  These assets have a total value of $906,921, of which 50 per cent equates to $453,461.

8. The wife holds the following assets:

($)
1.        City H property	369,700
2.        O Bank Account …39	2,083
3.        O Bank Account …17	126
$371,909

She thus requires $81,552 to constitute 50 per cent of the parties' assets.

1. This money must come from the husband, if he is to retain the Suburb F property.  I will allow him three months to pay a sum of $81,552 to the wife and, in default, I will order a sale of the Suburb F property and payment of that amount to the wife.  With the limited material available to me, I can do no more to bring about a just and equitable outcome to the proceedings.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 27 March 2019.

Associate:         

Date:  27 March 2019