Lim and Hou

[2017] FamCA 996

FAMILY COURT OF AUSTRALIA

LIM & HOU [2017] FamCA 996

FAMILY LAW – PROPERTY – application to set aside property order made by consent six years prior – alleged miscarriage of justice – alleged impracticability and impossibility of complying with order – no miscarriage of justice – application dismissed.

APPLICANT: Ms Lim

RESPONDENT: Mr Hou

FILE NUMBER: MLC 9666 of 2009

DATE DELIVERED: 4 December 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 25–29 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: In person

SOLICITOR FOR THE APPLICANT:	Self-represented
COUNSEL FOR THE RESPONDENT:	Ms Tulloch

SOLICITOR FOR THE RESPONDENT:	Carew Counsel Pty Ltd
COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER:	Ms Agresta
SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER:	Victoria Legal Aid

Orders

1. That the application of the husband to set aside property orders made in the Federal Circuit Court on 24 May 2010, which appears in his amended response filed on 10 June 2016, be and is hereby dismissed.

2. IT IS REQUESTED that the Australia Federal Police remove the name of the wife Ms Lim born … 1976 from the Airport Watch List at all points of international arrivals and departures in Australia.

3. That a copy of this order be sent electronically the AFP Operations Coordination Centre by the Melbourne Registry of the Family Court of Australia.

4. That the Subpoenaed Documents Clerk of this Registry return any documents produced on subpoena at the expiration of one calendar month unless an appeal is lodged.

5. Otherwise, this matter be removed from the docket of the Honourable Justice Bennett.

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 Lim & Hou 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: MLC 9666 of 2009

Ms Lim

Applicant Wife

And

Mr Hou

Respondent Husband

REASONS FOR JUDGMENT

Introduction

1. This matter was listed for a hearing of seven days duration for a determination of parenting and financial applications. The parenting proceeding which concerned the parties’ daughter, then aged 15 years, were resolved on the first day of trial when the parties consented to orders that the mother be entitled to relocate their daughter to the United States of America after 21 December 2016 and that the father be entitled to communicate with the daughter by electronic means and, on notice, if he is in the United States of America.

2. The outstanding application is the father’s application which appears in his amended response filed on 10 June 2016 by which he seeks, pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”), to set aside property orders made in the Federal Circuit Court on 24 May 2010 (“the Order”) and further orders to effect a final alteration of property interests between himself and the wife. The husband’s application is opposed by the wife, who seeks to maintain the Order.

3. I am satisfied that the part of the Order cannot be implemented. However, by virtue of both parties coming to the court saying that he or she has no legal or equitable interests referrable to the marriage and little else besides, I have concluded that it is not appropriate to set aside the Order made on 24 May 2010. In short, there is no property which could be subject to a subsequent order or adjustment under s. 79 of the Act.

The parties

1. The husband has, for the purposes of this hearing, been treated as the applicant and the wife has been treated as the respondent. The independent children’s lawyer withdrew from the proceedings once the parenting orders were made.

2. The husband is 47 years of age, having been born in China in 1970. He came to Australia in 1997 and obtained Australian citizenship in 2003. He is a business owner. He is married to Ms B and has two young children, now aged, 4 and 6 years, of that relationship.

3. The wife is 40 years old, having been born in China in 1976. She came to Australia in 2000 and obtained Australian citizenship in 2005. She has previously been a business owner but was not employed at the time of the hearing. The wife has not re-partnered but she has a committed relationship with a man who lives in the US.

Representation & interpreters

1. The husband is represented by Carew Counsel Pty Ltd and Ms Tulloch of counsel appears on his behalf. The wife was represented when she instituted proceedings in November 2015 and has had two firms of lawyers in the course of these proceedings, Forte Family Lawyers until 23 March 2016 and then Chua Tan & Associates who filed a notice of ceasing to act on 20 May 2016. The wife was self-represented at the hearing.

2. Both parties required interpreters in the Cantonese language and those interpreters were provided by the Court at no cost to the parties.

3. In the property proceedings which were finalised on 24 May 2010, the husband was the applicant and was represented by James Au & Associates of Collins Street, Melbourne. The respondent wife was represented by Oakfair Lawyers of Box Hill.

The Order made on 24 May 2010

1. On 24 May 2010, Federal Magistrate Reithmuller, as he then was, made orders by consent of the parties in respect of both property and parenting matters. In relation to property, the orders were:

   1.      The Wife pay to the Husband the sum of $30,000 (“the payment”) on or before the 26^th day of July 2010 (“the date”);

   That contemporaneously with the payment:

   a)The Husband do all such acts and things and sign all such documents as may be required to transfer to the Wife at the expense of the Wife all of his right, title and interest in the real property situate at and known as [C Street, Suburb D], Victoria, …, being the whole of the land more particularly described in Certificate of Title Volume … Folio … (“the real property”);

   b)That contemporaneously the Husband be at liberty to lodge a caveat over the title to the real property, such caveat to expire no later than 3 months from 26 July 2010 (in order to give effect to the same the Husband will provide to the Wife a “Withdrawal of Caveat” duly executed dated no later than 26 October 2010);

   c)That the Husband be at liberty to apply to the Court to extend the operation of the Caveat;

   d)The Wife indemnify the Husband against all payments and liability pursuant to the mortgages registered No. … and … to the ANZ bank (“the mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.

   2.      That the Husband on or before 26 July 2010 do all such acts and things and sign all such documents as may be required to transfer to the Wife at the expense of the Wife all of his interest in the business operated by the parties as [Business E] including signing all necessary documents required to give effect to the dissolution of the business partnership between the Husband and the Wife and the parties take all reasonable steps to transfer the lease of the Business Premises to the Wife.

   3.      That the Wife indemnify the Husband against all debts outstanding in respect of the business partnership referred to in paragraph 2 herein including the lease.

   4.      That the Wife indemnify the Husband against all payments and liabilities pursuant to the mortgage in the parties named with the ANZ bank and pertaining to [Business E].

   5.      That forthwith the Husband do all necessary acts and things and sign all necessary documents to transfer to the Wife at the expense of the Wife all of his right title and interest in the [Japanese] motor vehicle registration number ….

   6. That in the event that either of the parties refuse or neglect to execute any deed or instrument necessary to give effect to these orders, that the registrar of the Federal Magistrates’ Court of Australia at Melbourne be appointed pursuant to s 106A of the Family Law Act to execute the deed or instrument in the name of the relevant party and do all acts and things necessary to give validity and operation to the deed or instrument.

   7.      That pending the transfer of ownership of the former matrimonial home as per paragraph 1 herein:

   a)The Wife have the sole right to occupy the property and during such right of occupation the Wife pay all rates and taxes and like apportionable outgoings of the real property as they fall due;

   b)The parties hold their respective interest in the real property upon trust pursuant to these orders;

   c)Neither party encumber the real property without the consent in writing of the other party.

   8.      Forthwith the Wife provide to the Husband all title and like documents pertaining to the properties owned by her in China to enable the Husband to transfer title of same from the Wife’s name to the Husband’s name.

   9.      The Wife transfer her right, title and interest in the real estate owned by her in China being the two houses in [City F], China and the vacant block of land in China and the Wife do all acts and things to sign all such documents and sign all such documents as may be required to give effect to the transfer from Australia (including providing the Husband with a Power of Attorney to effect the transfers).

   10.    That the Husband indemnify the Wife against all past, present and future payments and liabilities pursuant to any mortgage and/or other encumbrance, rates taxes and charges pertaining to the Chinese property owned by him and or  transferred to him by the Wife.

   11.    The Husband provide documentary evidence to the Wife as to the transfer of Title of the Chinese Properties referred to in paragraph 9 herein as soon as is practicable.

   12.    That the Husband be at liberty to apply to the Court only in the event that paragraph 9 cannot be effected without further order of the Court.

   13.    That unless otherwise specified in these orders and save for the purposes of enforcing any of these orders and/or the payment of any monies due under these or any subsequent orders:

   a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the real property) being deemed to be in the possession of the Wife;

   b)Monies standing to the credit of the parties any joint bank account are to become the property of the Wife;

   c)Each party forgo any claims they may have to any superannuation benefits belonging to or earned by the other;

   d)Insurance policies remain the sole property of the beneficiary named therein;

   e)Each party be solely liable for and indemnify the other against any liability encumbering any items of property to which that party is entitled pursuant to these orders;

   f)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

2. The notations attached to the Order  were as follows:

   A. Pursuant to section 81, Family Law Act, the parties intend these orders shall determine all financial relations between them and avoid further proceedings between them.

   B.     The parties consent to these Orders being filed in such relevant Court in China if necessary to give effect to the transfer of the Chinese property. 

3. At the time of the trial the Order had not been the subject of a Notice to Appeal. The husband had not sought to enforce the Order. The Order had not been varied or set aside.

Applications

1. The husband seeks that the Order made on 24 May 2010 be set aside.[1] He seeks to retain the $30,000 paid to him by the wife pursuant to the Order and that each retain in their own name the properties which he/she holds in China. The husband seeks costs which he says were  thrown away by reason of the wife’s non-engagement in the proceedings and quantifies them at $10,847.

   [1] As a refinement of the husband’s application, in closing addresses, Ms Tulloch indicated that it was only paragraphs 8 to 15 inclusive of the Order that her client seeks be set aside.

2. Consequentially upon the setting aside of the Order, the Husband seeks a final alteration of property interests be effected so that each party retain what he/she has and that the wife pay him $200,000. The husband would otherwise retain property which he has accumulated since separation including a car worth $7,000 and his business interests being a one half share in Business G and a thirty percent interest in Business H, both of which he says “have nil value”. It was contended by Ms Tulloch for the husband $200,000 equates to roughly forty percent of the proceeds of sale of a real property and business which was the wife’s entitlement under the Order and that such a payment to the husband now would constitute a proper and appropriate order for an alteration of property interests under the Act.

3. The wife seeks a dismissal of the husband’s application which would mean that everything stays as it is. The wife’s case is that she has done all that she can to transfer to the husband her entitlement in properties in China from which I infer that, whilst the transfers which the parties contemplated appear not be able to take place, the wife does not mean to retain any Chinese property in her own right.

4. The wife’s financial position, according to her, is that none of the proceeds of sale of the former matrimonial home or the business, approximating $470,000, remain and that she is heavily indebted to her family for in excess of $200,000. This is a position that the husband steadfastly refuses to accept. Counsel for the husband contends that the wife must have unaccounted for sale proceeds of at least $274,000 at her disposal. Unfortunately for the husband, Ms Tulloch has been unable to identify where and in what form that property exists.

Mediation

1. The parties had a private mediation with Mr J of counsel during the hearing but the matter remained unresolved.

Onus and burden of proof

1. The husband, in the position of applicant, bears the onus of proof to satisfy the Court that there has been a miscarriage of justice and also that it is appropriate for the Court to exercise the Court’s discretion to set aside the original orders and consider making further orders under s 79.

2. Section 140 of the Evidence Act 1995 (Cth) provides the relevant test for the Court’s assessment of evidence in this matter: the facts in issue are to be proved by the party with the persuasive onus on the balance of probabilities.

3. A statement of fact is a finding of fact.

Evidence relied upon by each party 

1. The husband relied on the following documents:

   (a)       his amended response to initiating application filed 10 June 2016;

   (b)       his financial statement sworn 31 May 2016;

   (c)       his affidavit affirmed on 22 June 2016;

   (d)       the affidavit of Mr K, senior lecturer, sworn 31 March 2016.

   Initially the wife sought to cross-examine Mr K but then said that she did not want to do so. I treat his evidence as unchallenged.

2. The wife sought to rely on a number of documents in addition to:

   (a)       her trial affidavit affirmed 6 July 2016;

   (b)       her reply filed on 8 July 2016; and

   (c)       her financial statement sworn on 6 July 2016. 

3. Objection was taken to reliance by the wife on affidavit evidence other than her trial affidavit, principally because the material could have been contained in her trial affidavit and because, contrary to rule 15.06 of the Family Law Rules 2004, the wife purported to rely on the evidence for purposes other than the application for which it was originally filed. I overruled the objection to reliance because it appeared that the husband suffered no prejudice if he was similarly permitted to rely on affidavit evidence which he had filed in the earlier concluded proceedings. I then proceeded to deal with the objections to evidence which were, essentially, objections to the wife purporting to give opinion evidence that she was not qualified to give; the evidence was hearsay, argumentative or not relevant. Following the striking out of objectionable material, the wife was permitted to rely on the following extra affidavits:

   a)her affidavit affirmed 23 March 2010, confined to paragraphs 17 to 27, inclusive;

   b)her affidavit filed 13 May 2010, confined to paragraphs 15 to 22, inclusive, and 24 to 40, inclusive;

   c)her affidavit affirmed 4 November 2015, confined to paragraphs 2 to 7, inclusive;

   d)her affidavit affirmed 25 February 2016, confined to paragraphs 24 to 40, inclusive, and paragraphs 45 to 52, inclusive.

4. Objection was taken to some parts of the wife’s trial affidavit, sworn 6 July 2016. As a consequence, parts of paragraphs 7 and 33 were struck out; Paragraphs 12 to 32, inclusive, are irrelevant. Additionally, the wife sought to rely upon an affidavit affirmed by her on 21 July 2016. It is 38 paragraphs long. The narrative deals only partially with financial matters however, it annexes 193 pages of documents.

5. My ruling was that I would permit the wife to use the annexures to the affidavit for ease of reference but I would only have regard to those documents which were identified and tendered or put into evidence during the running of the case. On reflection, the wife said that the only document upon which she relied in the annexures was page 12, which is a letter dated 8 June 2012, from the wife’s then lawyers, Oakfair Lawyers, to the husband’s then lawyers, Moores Legal. It is an offer sent in negotiations but the objection of privilege was withdrawn when certain parts of the letter were obscured.

6. The husband’s affidavit sworn or affirmed on 14 April 2010[2] in the property proceedings was in evidence.

   [2] Folio 18

7. The husband filed and served an outline of case on 22 July 2016.

8. There were numerous exhibits.

9. There has been a regrettable delay in the delivery of this decision. No party has applied to re-open his or her case to adduce further evidence.

Relevant background

1. There are many factual disputes on the evidence but, in the absence of there being legal or equitable interests to adjust under s.79, I will merely note the significant disputes at relevant places in a brief history of the parties’ relationship.

2. The husband alleged that in 1997 his aunt lent him $100,000 which he brought to Australia. Further, that his sister Ms L, repaid the $100,000 to his aunt whereupon the husband owed his sister $100,000. The wife does not accept the husband’s evidence and points to the fact that these transactions allegedly occurred prior to the parties’ relationship. The wife’s case is that any monies owing to the husband’s family have been repaid.  

3. The parties married in 1999 in China but the wife did not arrive in Australia until April 2000.

4. In the original property proceedings, the husband alleged[3] that in September 1999 he purchased the former matrimonial home at C Street, Suburb D (“the Suburb D property”) for $175,000 which he deposed was paid as to $120,000 by way of first mortgage borrowings, $55,000 from his resources and $100,000 from his parents. The wife’s evidence[4] had been that the husband had paid 10 per cent deposit from savings and the balance of the purchase price was provided by way of mortgage finance.

   [3] Husband’s affidavit sworn or affirmed on 14 April 2010 [10]- [11]

   [4] Wife’s affidavit affirmed 23 March 2101 [17A]

5. The parties’ daughter, M was born in 2001. M is the parties only child.

6. In January 2002, one half of the Suburb D property was transferred by the husband to the wife.

1. In 2004 the husband purchased and had “registered in my sole name”[5] the first of the Chinese properties which was vacant land at N Street, Suburb O, City F, China. The husband alleges that the purchase price was RMB270,000 (approximately $50,000). In the affidavit in property proceedings the husband deposed[6] “We firstly bought the land and then built the house. […] the majority of the money for the land and the house was contributed by my parents. My former wife and I did contributed to the house $6,000.00 as gift to my parents as the house was held by me on trust for my parent.” The wife’s evidence[7] had been that the parties paid the whole of the purchase price and, whilst the husband’s family members had occupied the property, the husband and wife had full beneficial ownership.

   [5] Husband’s affidavit sworn or affirmed on 14 April 2010 [20]

   [6] ibid [20]

   [7] Wife’s affidavit affirmed 23 March 2101 [17C]

2. The husband’s evidence in the original property proceedings[8] that “ The second house at 1 P Street, Suburb Q, City F, China was purchased in 2004 for RMB270,000 (approximately $45,000). It is registered under the respondent’s name. RMB125,010 (approximately $20,835) (being 46.3 per cent of the total cost) was contributed by me and the Respondent and I jointly paid the remaining balance of RMB144,990 (approximately $24,265) (being 53.7 per cent of the total cost). The wife’s evidence[9] had been that the parties paid for the property which was rented but that she did not know how the rent was applied.

   [8] Ibid [21]

   [9] Wife’s affidavit affirmed 23 March 2101 [17C]

3. In November 2004 the parties commenced operating Business E in Melbourne. The husband alleges that Business E was purchased in joint names for $155,000 of which $137,000 was borrowed and secured by way of mortgage over the Suburb D property and the balance was from funds held by the husband.

4. The husband’s further evidence in the property proceedings[10] was that:-

   22.The third house at 2 P Street, Suburb Q, City F, China was purchased in 2005 for RMB260,000 (approximately $43,333). It is registered under the Respondent’s name. The amount is jointly paid by the Respondent and I.

   23.Two blocks of vacant land were purchased in 2006 and early 2007 or RMB51,000 and RMB52,000 each (approximately $7,333 each). With one land under my name, whereas the other under the Respondent’s name. The amount is jointly paid by the Respondent and I.

   [10] Ibid

5. The wife’s evidence[11] had been that the third house was purchased for RMB280,000 and vacant properties were purchased at the same time. She says that rental was received initially by the wife's mother. The third house was rented out by the husband and his brother but she was “unaware of how the husband and his brother utilized these monies.”   The husband denies any rent was paid to him or at his direction. In 2007, the wife’s mother went to live in America. The husband’s evidence was that his mother in law handed the keys to the properties to the husband's brother, Mr S and the husband’s parents, who had been living in the property, moved out of the property, The husband said “I don't know, I am not sure” whether the property was tenanted or even occupied after his parents left. The husband did not seek to adduce evidence from the wife’s mother or his brother. The husband confirmed that he is in contact with his brother in China.

   [11] Wife’s affidavit affirmed 23 March 2101 [17C]

6. The husband’s evidence in cross examination was that the vacant blocks were purchased in his name by his mother in law using his identity card.

7. The mortgage on the Suburb D property was repaid in January 2008. Whilst the husband did not initially admit the wife’s assertion that her parents sent $88,000 to her in 2007, he did finally admit under cross examination by the wife that $88,000 was received and used to pay off the mortgage on the Suburb D property.

8. Under cross examination, the husband admitted that the wife’s parents sent them further funds being  US$28,350 in 2007 but said that this was part of a round robin transfer and that he and the wife did not ultimately retain nor benefit from the funds.

9. The parties separated on 15 October 2009, and after a period of separation under the same roof. They were divorced on 11 January 2010.

10. The 2010 property proceedings were contested and each party swore extensive affidavits. The proceedings were concluded with the Order made on 24 May 2010.

11. From 2010 the husband had minimal contact with the parties’ daughter.

12. The Order required the wife to pay the husband $30,000 on 26 July 2010. The $30,000 was not paid by that date. The wife’s oral evidence was that the husband would not affect the transfer of the Suburb D property or business to her and these transfers were required contemporaneously with the payment of $30,000.  The $30,000 was not paid until 5 December 2012 (as described below).

13. The wife alleges[12] that in May 2010 she provided the husband with papers and original documents to facilitate a transfer of the Chinese properties to the husband and executed a power of attorney in July 2010. The wife deposes that there was ongoing discussion about how to transfer the properties and that in late 2010, the parties communicated with a Mr T who had overseen the parties’ purchase and sale of Chinese properties.

    [12] Wife’s affidavit affirmed 25 February 2016 [36]-[37]

14. The husband asserted that he travelled to China from 24 February 2011 to 9 March 2011 to have the properties in China transferred into his name.

15. The husband married his wife, Ms B, in 2011 and they have two children.

16. The husband asserted that from March 2011 to March 2012, he obtained opinions about Chinese law to the effect that he would be unable to obtain legal ownership of the properties in P Street, Suburb Q, City F, China.

17. It is common ground that the wife paid the husband the $30,000 due under paragraph one of the Orders on 5 December 2011. The funds were paid by bank cheque, a copy of which was annexed as “HYL1” to the wife’s affidavit affirmed on 22 July 2016. Under cross examination by the wife, the husband conceded that he had returned to China on two occasions and by the time he accepted the $30,000:-

    a.he believed that the properties in China could not be transferred to him;

    b.he had been advised that he should make a further application to the court, I infer to set aside the Order;

    c.he could not afford to retain solicitors to bring further proceedings for him; and

    d.he took no further proceedings.

    I asked the husband on what basis he accepted the $30,000 and he responded (after corrections) “Well, I knew that the properties couldn't be transferred. But … then I was given the money so I thought I might as well keep it.” Later the husband gave evidence that it was his lawyer’s advice to take the $30,000 thinking he would argue about the properties later if he could afford to do so. He said words to the effect of “I needed the money as well, and my family needed money, and I had waited so long for - for settlement or for money to come my way. She took the business, she took the house leaving me with no financial means.”

18. Under cross examination, the wife conceded that correspondence had been sent between solicitors immediately prior to, and in contemplation of, the payment of $30,000 to the husband. The upshot of this was that the husband “reserves the right to go back to court if the Chinese transfers cannot be finalised.”

19. The husband obtained a statement dated 23 March 2012 from the Committee of P Street confirming that ownership of the Chinese properties remains with the Community.

20. The husband asserted that in 2012 he endeavoured by correspondence between his solicitors and solicitors acting for the wife to resolve the transfer of the Chinese properties.

21. The husband asserted that in 2012/13 he tried to obtain legal representation to bring an application to set aside the Order but he was unable to obtain representation and did not institute any s79A proceedings.

22. In March 2012 the husband provided a transfer of his interest in the Suburb D property to the wife. The wife’s case is that the husband concluded the settlement provided for in the Order is full knowledge of what he says that he had ascertained about the transferability of the Chinese properties.

23. On 13 April 2012, the husband lodged a caveat over the Certificate of Title to the Suburb D property. The wife alleges that the caveat lapsed when challenged by her. She deposes[13] that for a short time after the caveat lapsed the husband’s “solicitors sought to renegotiate the 2010 orders. No agreement was reached”.

    [13] Wife’s affidavit affirmed 25 February 2016 [47]

24. Between 9 July 2012 and the husband’s response filed in this proceeding on 3 December 2015, the husband did not take any enforcement or other action against the wife in relation to the Chinese properties.

25. The wife sold the Suburb D property in 2015 for $560,000. On the completion of the sale in May 2015 the wife obtained a discharge of the mortgage affecting the property for $112,000 and received net proceeds of sale of $427,375.

26. The husband asserted that in June 2015 the wife sold the Business E and received $43,432.

27. On 5 November 2015 the wife filed a parenting application seeking to relocate M’s residence to the United States of America. The husband filed a response and sought injunctions about the wife’s use of the proceeds of sale. The wife filed a reply on 25 February 2016 seeking, inter alia, a dismissal of the husband’s s79A application.

28. The wife does not admit the sums received by her but, by her affidavit affirmed 25 February 2015, she deposes [54] that the “funds in relation to which [the husband] seeks injunctive relief …. Are currently held by my brother in USA. They were transferred to him by me, via friends, between June 2015 and November 2015, prior to filing of [the husband’s] Response.”

29. The husband gave viva voce evidence before me that the Chinese property with a dwelling in his name, is kept untenanted “so that we can use it as a holiday home to go back to when we need to”.  

The law

1. During the hearing, counsel for the husband articulated her client’s case as follows, that the Order should be set aside:-

   a.pursuant to Section 79A(1)(a) because both parties thought that the Chinese properties could be transferred or sold when, in fact, they cannot be and that the situation constitutes a miscarriage of justice or “any other circumstance” under the legislative provision. Counsel for the husband also alleged that the misunderstanding about transferability amounts to common mistake under the law of contract;

   b.pursuant to Section 79A(1)(b) because it is impracticable for the order to be carried out and that the impracticability (lack of ability to transfer) did not become foreseeable or apparent until after the Order was made;

   c.pursuant to Section 79A(1)(c) because the wife has defaulted in transferring the Chinese properties to the husband and it is just an equitable to vary or set aside the Order in substitution.

2. The contention in relation to Section 79A(1)(a) was made for the first time on day three of the hearing.

3. Section 79A of the Act provides:

   Setting aside of orders altering property interests

   (1)         Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

   (a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance;

   (b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for part of the order to be carried out; or

   (c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order;

   …

   the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

4. Although an order may not reflect a party’s actual entitlement pursuant to s 79 that would not of itself necessarily indicate a miscarriage of justice. (See In the marriage ofHolland (1982) 8 Fam LR 233 at p 239).

5. Issues such as delay and hardship are factors to be considered but are not necessarily decisive in the exercise of discretion under s79A.

6. In Cawthorn & Cawthorn,[14] the Full Court (Ellis, Lindenmayer and Joske JJ), considered an appeal where the primary judge had dismissed an application under section 79A by the Husband to set aside orders previously made by consent of the parties. The Husband’s case at trial was that a deterioration in his financial circumstances since the making of the orders made it impracticable for him to carry out the parts of the orders which he had not complied with. In considering the meaning of “impracticable” under s 79A(1)(b), the Full Court agreed with the approach taken by Kay J in La Rocca & La Rocca,[15] and followed by Moss J in Franklin & McLeod,[16]that the provisions in s79A should be construed strictly and the “dichotomy between maintenance orders, which are variable as provided for in the Act, and orders for settlement of property which are basically permanent in their nature” should be preserved. The Full Court, quoted with approval from Kay J’s judgment with one reservation:[17]

   [14] (1998) FLC 92-805

   [15] (1991) FLC 92-222

   [16] (1994) FLC 92-481

   [17] (1991) FLC 92-222

   The Court has a general power in respect of maintenance orders to vary or discharge an order but there should not be a variation unless since the order was made or last varied the circumstances of the person for whose benefit the order was made have so changed, or the circumstances of the person liable to make payments under the order have so changed to justify it in so doing.  
   The distinction between the variability of maintenance orders and the variability of property orders was, in my view, one of the underlying bases upon which the Family Law Act was established…
   …
   My own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the Court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.  
   In standard contractual doctrine, I think that is as comfortably as anywhere described by Russell J. in Re Badische Co. Ltd. (1921) 2 Ch. 331 at 379 , where his Honour said:

   The doctrine of dissolution of a contract by the frustration of its commercial object rests on an implication arising from the presumed common intention of the parties. If the supervening events or circumstances are such that it is impossible to hold that reasonable men could have contemplated that event or those circumstances and yet have entered into the bargain expressed in the document, a term should be implied dissolving the contract upon the happening of the event or circumstances.

   Now, in my view, what the appropriate application of s. 79A(1)(b) ought to be is that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.
   The potential insolvency of one of the parties in the future is not such a matter, in my view. In every case before the Court property values may change, go up or down, business may flourish or not flourish, the vicissitudes of life may affect one of the parties.  

7. The reservation expressed by the Full Court was that, whilst the contractual doctrine of frustration may at times prove to be of assistance, caution should be taken in relying upon authority relating to that doctrine given that the task of the Court is to interpret specific legislative provision.

8. In Cawthorn, the Husband contended that the deterioration in his financial circumstances was because the property that was transferred to him by the Wife under the orders was sold for a sum substantially less than what he had anticipated and one of the Husband’s business partners had embezzled money, as a result of which, his business was required to make significant payments. The Full Court confirmed that “the concept of impracticability contained in s79A(1)(b) is quite different from problems of enforcement that may arise due to a party’s insolvency.” They said that “[a]ll business activities [.] are subject to the vicissitudes of commercial life. Indeed the husband, as an accountant specialising in insolvency, should have been acutely aware of this. Businesses may always be the subject of financial misfortune and it is not necessary, for the purpose of s 79A(1)(b) to be able to predict the precise form or nature of such a misfortune or the manner in which it may arise.”

9. The Full Court distinguished the husband’s circumstances in Cawthorn from those considered in Monticone & Monticone,[18] where the party seeking relief had done made every effort to comply with the orders that had been made and eventually achieved success, though not within the prescribed time.  By contrast, the Husband had only complied with one initial payment to the Wife and made no effort to fulfil his obligations otherwise under those orders. Before the trial judge, there was evidence that the Husband had lived comfortably, reduced his indebtedness and paid for the wedding of a daughter in the meantime and it was clear that the Husband was capable of making a significant attempt to satisfy his obligations but had chosen not to do so.

   [18] (1990) FLC 92-114

10. The Full Court in Cawthorn further stated that “[t]o obtain the relief that he seeks, the husband must establish to the Court that his cause is one which is just and equitable. One of the principal maxims of equity is ''he who comes into equity must come with clean hands''. The husband's hands are, in our view in the circumstances of this case, very far from clean. We would accordingly decline to grant relief pursuant to s 79A(1)(c).”

11. Cawthorn has been applied by this Court in Gull & Gull (No. 2)[19] in 2012, and in Sanger & Sanger,[20] the Full Court held that the interpretation of “impracticable” in Cawthorn was relevant to the context of s 90K(1)(c).

    [19] (2012) 48 FamLR 382

    [20] (2011) FLC 93-484

12. In the matter of Suiker & Suiker (1993) FLC 92-436 at 241 and 242 the Full Court stated:

    241.In our opinion, the necessity for full and frank disclosure of financial matters to the court and the other party are basic to the process of the court and the fundamental aims of the financial legislation contained in s 79 of the Family Law Act 1975.

    …

    242.It is implicit in these passages that the consent to an order must be informed consent. The consent to the order is part of the judicial process on which the court places reliance.  If that consent is based on misleading or inadequate information, then there may, in our opinion a miscarriage of justice either by reason of ‘suppression of evidence’ or by reason of ‘any other circumstance’.

    In this case, counsel for the husband contends that the parties’ lack of knowledge about the lack of transferability of the Chinese properties from the wife to the husband and the husband’s inability to sell any of them constitutes a miscarriage of justice.

13. The Full Court held In the Marriage of Pelerman (2000) 26 Fam LR 505 that

    The Ground of “any other circumstance” appearing in s79A(1)(a) for the purpose of establishing a miscarriage of justice pursuant to that Section has been the subject of interpretation in a number of Full Court decisions.…

    The Full Court then referred to the decision of In the Marriage of Gebert (1990) 14 Fam LR 62 and referred to the summary in which it was stated:

    The passage is important in that it stresses that the words ‘any other circumstance’ are not of unlimited scope but governed by the words ‘miscarriage of justice’.  It also elucidates the proposition that ‘justice means justice according to law’, i.e. it relates to the integrity of the judicial process.

1. The exercise of the judicial discretion set out in s 79A was discussed by the Full Court In the Marriage of Prowse (1993) 18 Fam LR 348. At page 359 the Full Court stated:

   In our opinion, having regard to all of those matters, it was open to his Honour, in the exercise of his discretion, to dismiss the wife’s application under s 79A (1) notwithstanding his assumption (or implied finding) that a ‘miscarriage of justice’ had occurred in relation to the making of the original consent order.

2. In the matter of Barker & Barker (2007) 36 Fam LR 650 the Full Court said:

   120. A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process” … the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation. As the Full Court said in Holland (supra):

   To succeed in an application under s 79A, the wife must show some circumstance leading to a miscarriage of justice. Agreement to a consent order which may not adequately reflect a party’s entitlements under s 79 does not, of itself, show that there has been a miscarriage of justice. There may be cases where the order consented to is so far outside the ambit of what is just and equitable that the court may infer that a party has acted under duress, in ignorance or as a result of incompetent advice.

   …

   123. As previously discussed, in order for a claim under s 79A(1) to succeed, the Court must be satisfied that a miscarriage of justice has resulted. It is not sufficient to merely establish the existence of one or more of the stated grounds, such as suppression of evidence. […]

   124. But s 79A is a remedial section designed to avoid a miscarriage of justice. Where there is some intervening factor known to one party, but not the other, this may lead to a result which is unfair and unjust and can be characterised as a flaw in the judicial process by which the orders were made. There may also be circumstances in which the judicial process could be impugned by a sale after orders were made and in the absence of bad faith by either party or suppression of some relevant fact, if it led to a significant miscarriage of justice.

3. I accept the foregoing statements of law.

Expert evidence of transferability

1. Mr K’s evidence, which was not challenged by the wife in cross examination, was to the effect that ownership in the properties cannot be transferred. That the purported assignments or transfers of the properties to the parties or either of them were “unlawful” and did not confer on either of them rights that they can transfer or assign to one another or to third parties.

2. Mr K swore an affidavit, which was filed on 1 April 2016.  A number of questions were posed by the husband’s solicitor in a letter dated 16 March 2016. To paraphrase, he was asked whether legal ownership of rural property in China is possible;  if legal ownership is not possible, what are the rights attached to the land, and can they be transferred to an arm’s length third party;  what is the process of transfer; what are the practical difficulties in causing such transfers;  how do you value usage rights; are the legal opinion letters earlier obtained by the husband correct;  and if that’s the case that the husband cannot obtain legal ownership, where does it leave him with respect to any interest in the properties, and does it mean that, despite paying money for the properties, the villagers continued to hold the properties.

3. Mr K’s evidence is that, first of all, that there’s no private ownership of land in China.  It’s either state-owned or collectively owned.  Land in urban areas is owned by the state.  The land in rural and suburban areas is owned by the collective.  Although this land cannot be privately owned, the legal system recognises that organisations and individuals may enjoy use rights over the land, such as the right to farm the land, and the collective ownership rights are exercised by the body that represents the members of the collective, and then it says, although the P Street community has the right to exercise collective ownership rights, it does not have the right or power to issue certificates in respect of the residential plots. The power is vested in the city authorities, and the village committee must comply with the laws and regulations. Specifically, Mr K states [13]

   Private ownership of land is not possible.  In addition the assignment transfer or lease of land use rights in respect of collectively owned land such as residential plots is prohibited.

   He agrees with the opinion expressed by PRC Lawyers, and he cites from that opinion [14]:

   The purchases were all undertaken in an unlawful form.  As a result, they are unable to complete the procedures to obtain a collective land use certificate in their names.  There is no legal basis to support any assignment, transfer or sale of these plots.

   He also cites the legal opinion letter from Mr U of V Lawyers, which says the two agreements on transfer and transfers have breached the current law of China and that the husband and wife “cannot obtain the use rights of these four plots on the basis of these documents.” Further, that in accordance with the current laws of China, the buildings on two of these properties in which Ms Hou and Mr Lim invested cannot be registered in their names and the villagers do not have the right to assign, transfer or lease the land use rights to third parties, being the parties in this proceeding. 

4. So, in summary, Mr K’s evidence is that, although the parties paid money to purchase the plots of land in China, the assignment of any interest in the land to them was done illegally by the village committee and in breach of the laws of China, and, because of that, it’s not possible to either transfer the property that the parties think that they own between them, as the court order requires, and it’s not possible for them to sell it to a third party.

Findings

1. The evidence of both parties was unreliable. The wife’s evidence was well demonstrated by Ms Tulloch in cross examination of the wife on the fifth day of the trial to be flawed by her manufacturing of evidence by altering the dates of receipts for supplies to her business. However both parties gave inconsistent evidence about payments and repayments between the initial property proceedings in 2010 and the trial before me. Except where the parties agree, I am unable to have confidence in what either say.

2. I accept the unchallenged expert evidence that the Chinese properties cannot be sold or transferred inter parties.

3. I accept that it is impracticable to put the transfer of properties in China from the wife to the husband into effect.

4. I am satisfied that the husband cannot lawfully sell or alienate the properties which he and the wife thought he owned.  

5. I accept that the husband can occupy the properties in China if he wishes to do so. I cannot make any finding about the value of that right of occupation.

6. I am satisfied that the wife has had the benefit of the proceeds of sale of the Suburb D property and business to which she was entitled under the Order.

7. I accept that the wife’s explanation for how the funds were applied is lacking but, at all relevant times, she was entitled to use the funds as she wished.

8. I am not satisfied that any of the wife’s funds remain.

Discussion

1. In order for me to be satisfied that there has been a miscarriage of justice by any other circumstance within the meaning of s79A(1)(a) or for the carrying out of the order to be impracticable within the meaning of s79A(1)(b), I need to be satisfied that I am able to make an alternative order or remedy under s79 of the Act. In order to do so, I need to identify the legal and equitable interests of the parties or either of them which are sought to be adjusted. I cannot do so in this case because I am not satisfied that either party has legal or equitable interests relevant to this case and, in the case of the wife, any property interests at all.

2. Counsel for the husband referred to Chang v Su (2002) FLC 93-117 on principles of non-disclosure. I accept that, where the court is satisfied in s79 proceedings that there has not been full and frank disclosure by a party, it is open to the court to find an indeterminate undisclosed sum is held by a party and to adjust interests in property without reference to a precise undisclosed sum or an overall pool. However, the non-disclosure authorities, of which Chang v Su is one, come into play in the adjustment process and do not augment the power of the court in the initial task of identifying the legal and equitable interests of the parties or either of them in respect of which adjustment is sought. The non-disclosure cases are relevant to how the court adjusts against ascertained property having regard to monies not disclosed. The non-disclosure cases do not permit the court to construct legal or equitable interests where none exist.  

3. In this case, the applicant husband has failed to demonstrate that it is just and equitable within the meaning of s79(2) for me to make an order altering legal and equitable interests of the parties in property let alone what order would be appropriate within the meaning of s79(1).

4. This may seem to be a harsh result for the husband but, in every respect, the timing of his s79A case was up to him. Had he not sat on his hands and delayed for so many years, there may well have been identifiable interests against which to adjust and he may have succeeded. The difficulty here is that the wife has disposed of funds to which she alone was entitled.

Conclusion

1. For the above reasons, I dismiss the husband’s application.

I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 24 December 2017.

Associate: 

Date:  4 December 2017