Luo and Zeng
[2018] FCCA 1319
•24 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LUO & ZENG | [2018] FCCA 1319 |
| Catchwords: FAMILY LAW – Property – assessment of contributions – s.75(2) factors – adjustments made. |
| Legislation: Family Law Act 1975, ss.75, 79 |
| Cases cited: Bevan & Bevan [2014] FamCAFC 19 |
| Applicant: | MS LUO |
| Respondent: | MR ZENG |
| File Number: | SYC 1232 of 2017 |
| Judgment of: | Judge Obradovic |
| Hearing date: | 16 May 2018 |
| Date of Last Submission: | 16 May 2018 |
| Delivered at: | Parramatta |
| Delivered on: | 24 May 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Cantrall |
| Solicitors for the Applicant: | McLachlan Thorpe Partners |
| Appearing for the Respondent: | In person |
ORDERS
Within seven days of the making of these Orders the parties shall do all acts and things, and sign all documents and instruments necessary to place for sale and sell the property at Property A in the State of New South Wales, folio (“the Property A property”), and the following shall apply:
(a)The Property A property shall be listed for sale by private treaty, with an agent as agreed between the parties, and failing agreement an agent as nominated by the president of the New South Wales Division of the Australian Property Institute (or comparable body).
(b)The listing price of the Property A property shall be as agreed between the parties and failing agreement shall be nominated by the Real Estate agent.
(c)In the event that the parties fail to agree on the solicitor to act on the sale of the Property A property, within 7 days of crystallisation of such disagreement the parties shall forthwith do all things and sign all documents necessary to have the nominee of the President of the New South Wales Law Society select a solicitor to act on the sale, and the parties shall accept such solicitor to act.
In the event the Property A property has not been sold within three months of the date that the property is listed for sale, the parties shall forthwith do all such acts and things, sign all documents and pay all such monies equally as necessary to produce a sale by public auction of the Property A property upon the following terms:
(a)The auctioneer shall be appointed by the agent;
(b)The auction shall take place within 30 days;
(c)The reserve price, unless agreed upon by the parties shall be nominated by the agent;
(d)The parties shall each pay and be responsible for one half of the auctioneers expenses payable before the Property A property is auctioned;
(e)In the event the property does not sell at auction, the property shall be re-listed for auction within a further two months of the date of the previous auction, with the reserve price as agreed upon by the parties, and failing agreement as nominated by the agent.
Upon settlement of the sale of the Property A property the proceeds of the sale shall be applied in the following priority:
(a)Any adjustment of rates, taxes and charges;
(b)Agents’ costs and commission;
(c)Legal costs incurred on the sale;
(d)Such sum as is required to discharge the mortgage to Bank 1 secured on the Property A property;
(e)Such sum as is required to discharge/pay the debts/fees owing by (business omitted) Pty Ltd to the Australian Taxation Office and ASIC including any accountants’ fees or associated fees;
(f)The balance of the sale proceeds thereafter to be disbursed as follows:
(i)53% to the wife; and
(ii)47% to the husband.
Following the payment of the debts/fees owing by (business omitted) Pty Ltd the wife shall forthwith do all acts and things and sign all documents necessary to wind up (business omitted) Pty Ltd.
Orders (b) and (c) below have effect from the operative time:
(a)Pursuant to section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of Ms Luo interest in the Super Fund, the trustee shall pay to Mr Zeng the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $37,700 and there should be a corresponding reduction in the entitlement of the person whom a splittable payment would have been made but for these Orders.
(b)That, having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the superannuation fund.
(c)That operative time for this order is twenty-eight business days after the date of service of the orders on the trustee of the superannuation fund.
(d)The Applicant shall cause her solicitors to serve the trustee of the superannuation fund with these orders forthwith.
Within 14 days of the date of these orders the parties shall do all things necessary to close any joint bank accounts and distribute the balance of such accounts equally between the parties.
Otherwise the Applicant shall retain to the exclusion of the Respondent the following:
(a)All bank accounts in her name;
(b)All superannuation in her name;
(c)All other property and financial resources in the title possession and/or control of the Applicant as at the date of these orders.
Otherwise the Respondent shall retain to the exclusion of the Applicant the following:
(a)All bank accounts in his name;
(b)All superannuation in his name; and
(c)All other property and financial resources in the title possession and/or control of the Respondent as at the date of these orders.
The Applicant shall remain liable for all liabilities and/or claims in her name not dealt with by these orders, including credit cards, and shall forever indemnify the Respondent in relation to such liabilities/claims and in relation to any property she is to receive pursuant to these orders.
The Respondent shall remain liable for all liabilities and/or claims in his name not dealt with by these orders, including credit cards, and shall forever indemnify the Applicant in relation to such liabilities/claims and in relation to any property he is to receive pursuant to these orders.
The parties shall do all acts and things and give all consents and execute all documents in writing necessary to give effect to the orders made herein.
In the event that either party refuses or neglects to execute any Deed or instrument necessary to give effect to all or any of the orders made herein, the Registrar of the Federal Circuit Court of Australia be appointed pursuant to section 106A to execute such Deed or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the said Deed or instrument.
Remove all outstanding issues from the list of cases awaiting finalisation.
NOTATION
A.These orders shall not be entered for a period of 28 days, thus allowing time for the trustee of the Super Fund to apply to have the orders set aside pursuant to Rule 16.05(1) of the Federal Circuit Court Rules2001 (Cth).
IT IS NOTED that publication of this judgment under the pseudonym Luo & Zeng is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
SYC 1232 of 2017
| MS LUO |
Applicant
And
| MR ZENG |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings for adjustment of property interests pursuant to s79 of the Family Law Act1975 (Cth).
The proceedings were commenced by the applicant wife in February 2017. She seeks an order that the parties’ property interests be adjusted 65/35 in her favour.
The husband is the respondent. He seeks an order that there be an equal division of assets.
Both parties agree that the former matrimonial home, being the property at Property A, New South Wales should be sold. This is an order which will be made.
The husband was not legally represented at final hearing. His evidence consisted of an affidavit and financial statement filed at the time of his response.
The wife had filed her trial affidavit in accordance with the directions of the Court.
Both parties were cross-examined, although the husband was in the witness box for a much longer period of time than the wife, and as such the Court had the opportunity of assessing his demeanour for a much longer period of time. The husband was an impressive witness. His evidence was given through an extremely skilled interpreter. The Court formed the view that the husband was a witness of truth. He conceded matters where appropriate, he took direction from the wife’s counsel and the Court where appropriate and he was open and honest in his answers. The wife on the other hand, during the short period of time she was in the witness box, appeared to be a little argumentative and appeared to be more concerned about telling the Court what she wanted to say rather than answering the few questions which were asked of her.
As already noted, the cross-examination of the husband (as one would expect by learned and experienced Counsel) was much more thorough than the cross-examination of the wife (who was cross-examined by a self-represented litigant through an interpreter). Although the husband did not put his own version of certain events to the wife as one would normally have expected of someone versed in cross-examination, the fact is that there was joinder of issue through the parties’ evidence in chief. The result of the way in which cross-examination occurred was that the wife’s evidence in certain aspects was not tested by the husband. But this does not mean that the Court is bound to accept it. The husband gave his own evidence which was tested in cross-examination.[1]
[1] Not every single issue in dispute was put to the husband in cross-examination, nor would the Court expect that it would be. But the cross-examination of the husband was certainly more helpful than the cross-examination of the wife
Ultimately, it was submitted on behalf of the wife that the Court should make the adjustment she sought primarily on the basis of two matters: the wife’s overall greater contributions and the husband’s non-disclosure.
It was submitted on behalf of the husband, that there should be an equal division because they both worked equally hard and that there should be a splitting order of the wife’s superannuation because the husband is older, less able to earn an income and it would be ‘fair’ to do so given these disparities.
The Relevant Legal Principles
The overall approach to the determination of an application for property adjustment orders pursuant to s.79 Family Law Act1975 (Cth) was set out by the High Court in Stanford v Stanford,[2]where their Honours stated:
[2] [2012] HCA 52; (2012) 247 CLR 108
[37] … first, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property… the question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
…
[40]… whether making a property settlement order is ‘just and equitable’ is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[41] Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to “the need to preserve and protect the institution of marriage” identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act…
[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…
Such approach was subsequently considered by the Full Court of the Family Court in Bevan & Bevan[3], Chapman & Chapman[4] and Scott & Danton[5].
[3] [2014] FamCAFC 19
[4] [2014] FamCAFC 91
[5] [2014] FamCAFC 203
In many matters which come before this Court, the requirement of whether it is just and equitable to make any orders is readily satisfied by the fact of the parties’ separation; as there is not and will not thereafter be the joint use of property by the parties. The requirement is so satisfied in this instance.
Once the issue of whether it is just and equitable to make any order is resolved, the Court is to then consider the contributions made by the parties as defined in s.79(4)(a) to (c), the matters set out in s.79(4)(d) to (g) and in particular the subjective considerations as to the parties by having regard to the provisions of s.75(2) in so far as they are relevant.
The Court is then to consider the justice and equity of the actual orders to be made, in the context of the Court’s obligations to make appropriate orders as provided for in s.79(1) of the Act.[6]
[6] see generally Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120
The just and equitable requirement is “one permeating the entire process”[7].
[7] Bevan supra at [86]
Findings of Fact
The husband was born on 1969. He is currently 49 years old.
The wife was born on 1972. She is currently 45 years old.
The wife first moved to Australia in 1999 to study. She graduated in 2001 and commenced employment earning approximately $28,000 per year until she returned to China in 2005. Prior to returning to China in 2005, the wife says she had accumulated some $35,000 in savings, which she held in various bank accounts in Australia with Bank 2. Such moneys remained in those bank accounts until the wife returned to Australia as referred to below.
The parties met in China in about 2007. They were married in 2008, although they started living together in 2007.
While the parties were living in China, the wife who holds a (qualifications omitted), was working until 2007 as an (occupation omitted) and then until 2009 as a (occupation omitted). Whilst working as an (occupation omitted) her income was approximately $1000-$1500 per month, which then increased to $2000 per month when she started working for a different company as a (occupation omitted).
The husband holds a (qualifications omitted). His evidence is that while the parties were living in China he was working for the (employer omitted). The wife’s evidence is that he said to her he had worked for the (employer omitted) but that he was not employed until 2010. She asserts that he said to her he was on “sick leave” but still in receipt of an income. The husband does not depose to his income in China, the wife says he told her he was receiving about $400-$500 per month.
The parties both contributed equally, on the wife’s evidence, to their living and rental expenses while living together in rental accommodation in China. For a period of time the parties lived with the wife’s mother, who was ill with cancer, at reduced rent. The husband at times assisted with the wife’s mother’s care.
In about 2009 the parties decided that they would move to Australia.
It is the husband’s evidence that prior to the move to Australia, he had transferred approximately $38,000 to the wife’s account. The wife on the other hand says that the husband only transferred $10,000, not $38,000. She annexes to her affidavit a bank statement which she says shows the relevant transaction. The difficulty with the wife’s evidence is that the statement is not translated, and it appears that the amount said to be equivalent to $10,000 was transferred in 2009. The parties did not leave for Australia until 2009. The husband did not put any questions to the wife about this in cross-examination. He was asked however whether he had any documents to verify his evidence. On both ends, the evidence is less than satisfactory, particularly given the lack of cross-examination of the wife on the issue.
What is relevant however, is that by the time the parties moved to Australia they had been living together for over two years. There had been intermingling of funds.
In 2009, a sum of approximately $10,000[8] was transferred by the wife from a bank account held in China to a term deposit held in China. The husband’s evidence is that this money was used to pay for medication for his father and other expenses relating to his extended family. The wife’s evidence on the other hand is that the husband told her this money was to be used for his interests in China. The husband not only denied having such a conversation, but he also denied having any assets or interests in China.
[8] There was no cross-examination of the wife on whether this money could be traced back to the money the husband had transferred to the wife earlier this year. As noted in paragraph 26 it is clear that by this stage there had been intermingling of funds for a period of time.
The wife’s evidence is that in 2009, she had approximately $10,000 - $12,000 in her bank account in China, which were accumulated savings[9] from her wages whilst working in China. It appears that such moneys were accumulated during the parties’ relationship. They were used by the parties to pay for airfares, immigration costs and other costs of moving to Australia. The parties brought with them to Australia the money that was left over.
[9] Once again, no questions were put to the wife about the manner in which these savings were accumulated, given the parties’ incomes during the time they lived in China.
When the parties arrived in Australia, they opened up two bank accounts in joint names. The wife’s previous savings in Australia were transferred into one of those accounts. The wife did not commence working until some two months after the parties moved to Australia, and the husband some ten months after the move. The parties therefore lived off the savings brought by them from China and off the wife’s savings she had in Australia for at least a period of two months, if not longer.
Upon moving to Australia, the parties lived in rental accommodation in Suburb A. The house which they rented was a large house and the spare rooms were sub-let by them. They were able to earn significant money from this venture over a number of years. The husband’s evidence is that he was the one who took on the bulk of the responsibility of running the rentals[10]. The Court accepts his evidence in this regard. The husband says that the parties were able to save over $100,000 from this venture over a period of some four years.
[10] Although in saying this it is the wife who would have done the bulk of the books associated with the rentals, consistent with the division of labour throughout the parties’ relationship
The parties both undertook maintenance work of the Suburb A property.
In 2009, the parties established (business omitted) Pty Ltd. Both the husband and the wife were shareholders and directors of this company. The purpose of the company was to start a business that the husband could work in. The company did not conduct any business until approximately 2010 when it entered into a franchise agreement with (Company Omitted) Pty Ltd. The funds for the purchase of the franchise must have had their origin predominantly in the wife’s pre-relationship savings as the parties had no other funds which the Court was told about[11].
[11] In this regard, the amount of money which the husband says was transferred to the wife prior to moving to Australia is in dispute between the parties. The evidence is not satisfactory and the Court is not able to make a finding one way or the other. Certainly there was at least $10,000 which the husband transferred to the wife, but if one considers the money the wife put in a term deposit which was used for the benefit of the husband’s family, then there was no other net savings left over, except as mentioned in paragraph 28 of these reasons, which evidence is problematic in itself.
In 2010, the company purchased a vehicle using moneys from a credit card in the wife’s name.
Since the business was established, the wife performed all of the book-keeping and financial dealings of the company. She essentially made all of the decisions in respect of how the business would be run, including the distribution of earnings. The husband worked in the business and received wages from the company, in essence as assigned by the wife. The husband placed all of his trust into the wife handling the financials of the company.
The parties’ taxable incomes over the years were as follows:
| Year | Wife $ | Husband $ |
| 2011 | 73,926 | 22,168 |
| 2012 | 82,835 | 36,418 |
| 2013 | 96,217 | 37,409 |
| 2014 | 106,615 | 23,665 |
| 2015 | 104,225 | 22,752 |
| 2016 | 96,436 | 28,774 |
The husband worked in the family business between about 2010 and 2016 when he “resigned” as an employee. He did this by notifying the franchisor that he would no longer be (employment omitted). He also put the wife on notice that he would be doing so, a course to which the wife objected. It appears that at this time the husband had asked the wife for the business to purchase a new vehicle, which the wife did not agree to. There was then a heated argument between the parties.
The husband resigned as a director of the company in 2017. The husband disposed of the company’s motor vehicle and retained the sale proceeds in the amount of $9,000.
The wife asserts that the husband’s actions in terminating the (Company Omitted) franchise agreement prevented the parties from assigning the agreement for consideration to a third party. There is no evidence to support this assertion, except the wife’s opinion about the matter.
The wife further asserts that the company has a debt of $5,883 to the Australian Taxation Office in respect of GST. There are no documents issued by the ATO to support the wife’s assertion. However, it is the wife, in any event, who was at all times responsible for the company’s books and as such the Court accepts that she is aware of the company’s taxation liabilities. Those liabilities should be borne by the parties equally.
In November 2013, the parties purchased property at Property A for $715,000. They must have accumulated savings of over $170,000 as they used funds from their joint savings account to pay the 20% deposit of $143,000 and stamp duty in the amount of $27,685.
It is the husband’s unchallenged evidence that he was responsible for the maintenance and upkeep of the Property A property, which included painting, doing repairs as necessary and all other household maintenance. The wife however says that she did some research, placed orders and purchased new noise proof windows for the property which the husband installed.
The parties both performed the usual household chores, including cooking and general clearing and laundry.
In about mid-2013, the husband disclosed to the wife that he had a child from a previous relationship. The parties then discussed making arrangement to have the husband’s child migrate to Australia. The wife assisted the husband in the application of a visa for the child, and assisted the husband in making arrangements for the child’s arrival in Australia. There were significant fees associated with the process, including the husband insisting on DNA testing to confirm that the child was his. Ultimately, the child arrived in 2015 and lived in the Property A property with the parties until April 2016.
The wife submits to the Court that her contribution towards the husband’s child was particularly arduous given that the parties had at that stage separated, but so that the child could have a bedroom of his own she and the husband remained sharing a bedroom. Unfortunately the wife was not cross-examined about this. The husband maintained that they did not separate until April 2016. It is difficult to see why an arrangement where for example the child and the father shared a bedroom was not entered into, rather than the husband and wife sharing a bedroom and bed despite what the wife says was a period when the parties were separated. In any event, the mere fact that the child lived in the Property A property is relevant.
In July 2014, it appears unbeknownst to the husband, the wife borrowed $300,000 from her sister which was paid into the Property A mortgage. This money was repaid to the wife’s sister in April 2015. The wife asserts that this had the effect of saving close to $10,000 in interest.
Throughout the parties relationship the wife was also responsible for managing the parties’ finances; that is she attended to paying all of the bills and managing the parties’ income. The husband did not have any input into the management of the parties’ finances.
The parties are in disagreement about the date of separation. The husband says they separated in April 2016, while the wife says they separated in April 2015.
The husband maintains that the parties separated in April 2016 despite the order for Divorce. He is adamant that he was not shown the Application for Divorce. He says that in all of the documents he has filed in these proceedings, he has always maintained that the date of separation was April 2016.
The parties are divorced. In granting the divorce, the Court made a finding as to the date of separation. That date is April 2015. They lived separated under the one roof until April 2016.
Given that the parties lived under the one roof until April 2016, not much will turn on the date of separation, particularly noting that the Court is to consider the relevant matters as at the date of final hearing.
Post separation the wife withdrew some $20,000 from the joint bank account, which she used for her living expenses and the payment of some medical bills.
Since physical separation, the wife has remained living in the Property A property, and she has been meeting all of the mortgage repayments. She has had the benefit of occupation, but at the same time the burden of upkeep and maintenance, payments of outgoings and repayment of the loan.
A Note on Disclosure
This Court often hears submissions about a party’s failure to fully disclose their financial situation. Such submissions are often misconceived. Reliance is often placed upon court rules of a different court and practices of a different court. The Federal Circuit Court of Australia has its own court rules, practices and procedures; it is those which are applicable in this Court.
The husband was cross-examined at some length about his failure to comply with pre-action procedures and requests for disclosure prior to the commencement of proceedings. Indeed, much of Exhibit 2 dealt with these matters. Some of these requests were made of the husband to email addresses which he said were not his, or to solicitors who the husband said did not hold any instructions to act on his behalf in the family law dispute. In any event, it appears that there had been little if any disclosure pursuant to these requests.
In respect of an obligation to comply with pre-action procedures which are applicable in the Family Court, the Full Court in Thompson and Berg[12] has held as follows:
[12] [2014] FAMCAFC 73 at [48]-[59]
[43] The Federal Circuit Court was established by the Federal Circuit Court Act 1999 (Cth) (“FCCA”). Pursuant to s 43(1) of the FCCA, practice and procedure of the Federal Circuit Court is to be in accordance with the rules of court made under that act, namely the Federal Circuit Court Rules 2001 (Cth) (“FCCR”). Section 43(1) of the FCCA is subject to s 43(2) of that act which, in relation to proceedings conducted under the Family Law Act (and certain child support proceedings), permits the application of the FLR if, in relation to a matter of practice or procedure, the FCCR are insufficient. The FCCR are made by the judges of the Federal Circuit Court under rule-making powers which include powers given by ss 43 and 81 of the FCCA. Section 81 extends the rule making power to the conduct of the business of the Federal Circuit Court. Given the provisions of s 43 of the FCCA, it was probably unnecessary for the judges of the Federal Circuit Court to determine by r 1.05(1) of the FCCR that the practice and procedure of that court is principally governed by the FCCR. The point being, that in this regard the rule does the same thing as the statute.
[44] In addition to the power contained in s 43(2) of the FCCA to apply the FLR in relation to a matter of practice and procedure where the FCCR are insufficient, by rr 1.05(2) and (3) of the FCCR, the Federal Circuit Court may also apply the FLR in relation to a matter of practice and procedure (but not the conduct of the business of the Court) if the FCCR are inappropriate.
[45] Rules 1.05(2) and (3) of the FCCR are set out below:
(2) However, if in a particular case the Rules are insufficient or inappropriate, the Court may apply the Federal Court Rules or the Family Law Rules, in whole or in part and modified or dispensed with, as necessary.
(3) Without limiting subrule (2):
(a) the provisions of the Family Law Rules set out in Part 1 of Schedule 3 apply, with necessary changes, to family law or child support proceedings; and
(b) the provisions of the Federal Court Rules set out in Part 2 of Schedule 3, apply, with necessary changes, to general federal law proceedings.
Note: These Rules have effect subject to any provision made by an Act, or by rules or regulations under an Act, with respect to the practice and procedure in particular matters: see subsection 81(2) of the Act.
[46] It follows that the FCCR is the starting point to establish the rules in relation to practice and procedure to be followed in the Federal Circuit Court. In relation to the FLR which the judges of the Federal Circuit Court have determined apply in the Federal Circuit Court, Schedule 3 of Part 1 of the FCCR is definitive…
…
[48] It is accepted that the FCCR do not contain provisions in relation to pre-action procedures or the responsibility of parties and lawyers in achieving the main purpose of the rules.
[49] There was no argument advanced against the notion that the FLR under consideration are rules in relation to practice and procedure.
[50] Section 38 of the Act and s 38 of the FederalCourt of Australia Act 1976 (Cth) each constitutes provisions which, if the court’s rules in relation to practice and procedure are insufficient, enable the courts to apply the High Court Rules 2004 (Cth) mutatis mutandis. It can be seen from the cases which have considered whether or not the Family Court or Federal Court Rules 2011 (Cth) (“FCR”) were insufficient, that the rules have been found to be insufficient when they were silent on the point (Re: Trade Practices Commission v Milreis Pty Ltd & Ors: Application by Thompsen Publications (Australia) Pty Ltd (1978) 18 ALR 7; In the Marriage of Cantarella (1976) FLC 90-056; In the marriage of Spellson (1989) FLC 92-046).
[51] However, mere silence does not mean a court’s rules are insufficient or inappropriate. As Nygh J said in Rubie & Rubie (1991) FLC 92-253 at [78, 699], a question arises whether the omission of a rule on the point “… is an insufficiency or a defect, without which the Court cannot effectively operate, or whether it is a provision which, for reasons of policy or even sheer neglect, the Court has not seen fit to adopt.”
[52] As a general approach, a court would be slow to conclude that its rules are insufficient or inappropriate where the court has rules of court that:
·form a coherent whole;
·include statements of purpose or objects; and
·provide for the court to give directions in cases of difficulty or doubt (e.g. r 1.09 FLR, r 1.21 FCR) (In the marriage of Lamb (No 2) (1977) FLC 90-232; In the marriage of Dixon (1977) FLC 90-318).
[53] Rules such as r 1.09 FLR and r 1.21 FCR are supplementary to other rules and stand with them in an attempt to ensure that the courts have all the requisite power in their own rules, to conduct and conclude proceedings (Edgar v Greenwood [1910] VLR 137 at [145]; (1909) 16 ALR 6).
[54] However, the FCCR do not contain a provision equivalent to r 1.09 FLR or its FCR counterpart. Lest it be overlooked, r 1.06 FCCR provides that the court may dispense with compliance with its rules. This rule merely supplements the dispensation power by providing that an order of the court prevails over any rule inconsistent with it. Thus, it is not itself a rule which provides a source of power if the rules or court procedures are wanting or in doubt (Survival & Industrial Equipment (Newcastle) Pty Ltd v Owners of the Vessel Alley Cat (1992) 36 FCR 129 at [138]). One effect of the absence in the FCCR of a rule the equivalent of r 1.09 FLR or r 1.21 FCR is that the case for insufficiency or inappropriateness of the FCCR is more readily made. Of course that contention must be answered not only in the context of the FCCR but also the FCCA and any other relevant legislation.
[55] The FCCA provides that the Federal Circuit Court is to:
· operate as informally as possible;
· use streamlined procedures; and
· encourage the use of a range of appropriate dispute resolution processes (s 3(2)).
[56] Of particular relevance to the argument advanced by the husband is s 42 FCCA which requires that the Federal Circuit Court must proceed without undue formality and ensure that the proceedings are not unduly protracted. To the extent there are obligations imposed on lawyers in the conduct of family law proceedings, these are limited to those found in ss 12E and 13B of the Act. Essentially, these concern the provision of prescribed documents and assistance if it appears there is a reasonable possibility the parties may reconcile (which in this case there is not). In relation to family law proceedings one looks to the Act for dispute resolution processes and where provision is made for the court to refer parties to family dispute resolution and attendance at a conciliation conference.
[57] In relation to the husband’s argument concerning disclosure and the provision of documents, s 45 FCCA establishes a rebuttable presumption that discovery and interrogatories will not be permitted (see NAQR & Ors v Minister for Immigration (No 1) [2002] FMCA 271)
[58] What this brief overview demonstrates is that by virtue of the FCCA and the Act the primary judge had relevant and appropriate powers sufficient to order the parties to attend, for example, a further conciliation conference or upon a family dispute resolution practitioner. In relation to discovery, notwithstanding the rebuttable presumption, if the primary judge was satisfied that interrogatories or discovery should be permitted she was able to apply the FLR (relevantly different provisions to those the husband said should be applied) (NAQR & Ors v Minister for Immigration (No 1) (supra)). In other words, those acts contain provisions whereby (in addition to those previously undertaken) processes designed to promote the exchange of information, narrow issues and promote settlement could have been ordered.
[59] Armed with these powers and when considered in the context of ss 3 and 42 FCCA and the objects of the FCCR, we do not consider that the absence of pre-action procedures in the FCCR renders the FCCR insufficient or inappropriate. Every case has a pre-filing history; it is not some esoteric or rarely encountered event that the husband says the FCCR fails to address. The point being that in relation to pre-action procedures, the FCCR are deliberately silent and the same conclusion must be reached in relation to the failure to apply the FLR concerning the obligations on parties and lawyers.
Much was made during the hearing by wife’s Counsel about the husband’s alleged failure to provide full and frank disclosure. While Counsel correctly conceded that this Court had its own practices and procedures, a number of submissions were still made about the issue, albeit with significantly less force than had been foreshadowed at the commencement of the hearing.
When pressed[13], it was difficult for the wife to point to particular documents or class of documents which were not disclosed. The husband had filed his financial statement in April 2017. That document provided disclosure in the sense required by the relevant Court Rules. It was in fact disingenuous of the wife to argue that there had not been transparency in the husband’s case given the evidence that he had filed and served in April 2017, which included not only his financial statement but a lengthy affidavit setting out the relevant matters.
[13] This is not to suggest that the Respondent had an obligation to search for documents. It is a comment relating to requests for documents and a submission that there was a failure to disclose. For example, at paragraph 135 of the Wife’s affidavit she asserts as follows “In his Affidavit deposed 24 April 2017, at paragraph 13, Mr Zeng states that following separation he worked as an (occupation omitted). I have not received any disclosure from Mr Zeng as to his income post separation.” As at the date of filing – namely, 24 April 2017, through his Financial Statement, the husband disclosed income of “$E500” paid by (employer omitted). So not only did the husband depose to his income and employment post separation in his affidavit (paragraphs 13 and 54(1)) but it was also disclosed in his financial statement. To suggest as she does in her affidavit affirmed on 10 October 2017 that the wife had not received any disclosure as to the husband’s income post separation is simply not correct. The Court was not taken to any evidence post the filing of those documents which sought any specific documents which could have been relevant to the issue and which were not provided. This is the type of ‘non-disclosure’ which was a large part of the wife’s case.
In that affidavit the husband for example, affirmed that he had no assets in China. He was criticised at hearing for not disclosing assets which he held in China. The request for “full and frank disclosure” of his assets in China arose out of a conversation the wife and the husband allegedly had in 2009 (which the husband denied) where he said to the wife words to the effect “when we go to Australia I will still need some money here, so it can be paid to my superannuation and to other interests I have in China. We will need to leave some money here for this.” The husband’s evidence is that the money was left, but used for his father’s medication and other expenses for his family. The wife says that there were two further lump sums of $10,000 transferred to China in 2012 and 2013 by the parties. She says that the reasons the husband gave for the transfers was to replace an electricity transformer on one of his properties, to pay maintenance fees on one of his properties and to provide financial assistance to his family. The husband was adamant he did not own any property in China nor that he had any superannuation interests in China.
The wife’s case is that she has always had a superior earning capacity to that of the husband, and indeed that for the entire relationship she supported him and supplemented his income. They lived in rental accommodation in China at the commencement of their relationship. She does not say she did not know about his earlier marriage, and his divorce in China in 2008. She herself has lived in China. The Court infers that given her education level and level of sophistication, that she would well know how to make enquiries of relevant authorities in China to test her suspicion that the husband owned property there. What she relied upon as a ground of an assertion that the husband owned property in China and what she asserted was the basis for a finding that the husband had failed in his obligations for full and frank disclosure was the Civil Judgment by the People’s Court of (omitted) District, (omitted) Province in proceedings (2008) (omitted), the decision being dated 2008. These are the relevant extracts from that decision:
48. “… The plaintiff [the husband] and the defendant [the husband’s first wife (omitted)], together with their relatives applied for the use of residential land for house construction. The ownership of the house has not been determined. The defendant can claim for the rights when the ownership is determined in the future…
49. The defendant believed that there is a joint property of a house built at residential land located at (omitted) District. In considering that this property may involve rights of people not concerned in this case, and the ownership has not been determined, the defendant will not claim the right until the ownership is determined.”
In a letter dated 21 August 2017 (after the husband filed his affidavit and financial statement disclosing his assets, including a statement that he held no assets in China), the wife’s solicitors sent the following request for information by 25 August 2017:
1. All documents evidencing how your client disposed of any assets retained by him pursuant to the enclosed the (sic) 2008 Civil Judgment of the People’s Court of (omitted) District, including translation.
2. Details of all property held by your client in China, including but not limited to bank accounts, investments, superannuation and real property, any document evidencing the value of the same.
It was asserted by the wife that no such documents were produced. What was not provided to the Court was any response from the husband’s solicitors, although it was conceded that there would have been a response to the request. It is difficult to see how a submission that the husband has not been full and frank in relation to assets in China can be maintained when he affirmed that he held no assets and when there is no suggestion in the Civil Judgment that he “retained” any assets pursuant to it.
Next it was submitted that the husband had not supplied any bank statements as requested by the solicitors for the wife in respect of bank accounts held in his name in Australia post separation. It is clear on the evidence that the wife’s solicitors have never received such documents. What the husband said in cross-examination however, is that whenever he received a request from his solicitors to provide any documents, and he had such documents, he provided them to his solicitors.
The wife was aware as a result of the husband’s financial statement what his bank account details were; such details having been disclosed. If the husband had refused to provide her with relevant documents, she had the opportunity of seeking relief from this Court by way of, for example, orders for discovery, interrogatories or even to issue a subpoena to the relevant financial institution, particularly if she had a suspicion that the husband was not “playing ball”. This is not to suggest that the husband did not have obligations of disclosure. It is rather to say that if it is asserted or proven that he has failed in those obligations, there are orders which may be applied for by the other party in such circumstances.
Once again, in the face of her evidence about her superior earnings, her case of superior financial contributions throughout the parties’ relationship, and in the face of the husband’s evidence, it is difficult for the Court to accept that the wife genuinely suspected that the husband was hiding something.
The obligation to provide full and frank disclosure cannot have any meaningful purpose if documents are sought simply for the purpose of being sought, or in the hope that they will catch a party out.
There is no doubt that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts[14].The mere compliance with rules of the court or practice directions does not alter the basic principle of the need for full and frank disclosure. However, disclosure is not an end unto itself. The purpose of full and frank disclosure must be “the need for each party to understand the financial position of the other party, which is at the very heart of cases concerning property”[15].
[14] See for example: Livesey v Jenkins[1985] 1 All ER 106; In the Marriage of Briese (1985) 10 Fam LR 642 ; [1986] FLC 91-713 and Oriolo v Oriolo(1985) 10 Fam LR 665 ; [1985] FLC 91-653
[15] See In the Marriage of Briese (1985) 10 Fam LR 642 ; (1986) FLC 91-713, approved by the Full Court in the case of Oriolo v Oriolo(1985) 10 Fam LR 665 ; [1985] FLC 91-653
It cannot be said by the wife that she did not understand the husband’s financial position having been served with his financial statement and affidavit.
Counsel for the wife also raised the issue of a Jones & Dunkel[16] inference being available to the Court as a result of the husband’s non-disclosure.
[16] (1959) 101 CLR 298
The ‘rule’ in Jones & Dunkel can be explained as follows[17], as far as relevant to these proceedings:
a)The unexplained failure by a party to give evidence or call witnesses, tender documents or other evidence may in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party’s case. The inference entitles the trier of fact to more readily draw any inference fairly to be drawn from the other evidence by reason of the opponent being able to prove the contrary had the party chosen to give or all the evidence;
b)The rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it. The rule cannot be employed to fill gaps in the evidence or to convert conjecture and suspicion into inference;
c)The rule only applies when a party is required to explain or contradict something. No inference can be drawn unless evidence is given of facts requiring an answer. If there is no issue between the parties, there is nothing to answer;
d)The rule cannot be applied where it would not have natural for the party to call the witness or the party might reasonably be expected to call a witness ie. a failure to call evidence which that party was plainly in a position to have given or called; and
e)The evidence of the missing witness must be such as would have elucidated a matter.
[17] See generally J D Heydon, Cross on Evidence, LexisNexis Looseleaf Service [1215] – citations omitted
The Court rejects making any inference pursuant to these principles on the basis of the argued non-disclosure by the husband.
Assessment of Contributions
At best, the husband had about $38,000 at the time the parties moved to Australia, some two years into the relationship. At best, the wife had about $55,000 at about the same time.[18]
[18] made up of her $35,000 in Australia and the $10,000 referred to at paragraph 51
The Court finds that the wife had assets of a greater value than the husband at the commencement of the parties’ relationship. The Court also finds that it was the availability of the wife’s assets which permitted the parties to purchase the (Company Omitted) franchise.
However, the assessment of contributions is not a mathematical exercise. The parties’ overall contributions must be considered, both financial and non-financial, and the matters otherwise within the scope of s79(4). Both parties worked hard throughout their relationship, they pooled their resources together and worked together to make a better life for themselves, each using the skillset they had to the best of their ability.
The parties’ relationship lasted from 2007 to April 2015. The final hearing occurred in May 2018. The findings about their various contributions are noted earlier in these Reasons. For reasons explained above, the Court does not make any adverse finding against the husband in respect of his non-disclosure which might result in a more favourable adjustment of property interests to the wife.
Using a broad brush approach the parties’ overall contributions are assessed at 58/42 to the wife.
Section 75(2) Factors
The husband is 48 and the wife 44. She is the more skilled professional and the higher income earner. If the past is any indicator of the future, the wife will continue to earn an income up to three plus times higher than the husband. The husband’s earning capacity is limited not only because of his limited experience in Australia, but also because of his limited English. He has been struggling to obtain employment throughout his time in Australia.
The husband also has the care of his son who is 17 years old.
The standard of living which the husband has enjoyed post separation has been less than optimal while the wife has remained living in the former matrimonial home.
The s75(2) factors speak strongly of an adjustment in the husband’s favour. An adjustment of 5% in the husband’s favour is therefore warranted.
As such, a property adjustment order in the husband’s favour of 47% and in the wife’s favour of 53% will be made. The Property A property is to be sold.
The wife’s superannuation interests are $96,049 the husband’s $14,000. The evidence supports a splitting order in order to achieve justice and equity between the parties. At the time of filing their respective application and response, neither party had sought a splitting order. It was rather an order the husband sought at final hearing. The trustee of the wife’s superannuation fund does not appear to have been put on notice. Consequently, and in the face of a splitting order, the Court will not enter the orders for a period of 28 days thus allowing the trustee time to apply pursuant to Rule 16.05(1) Federal Circuit Court Rules 2001 (Cth) to have the splitting order varied or set aside.
The residual assets of the parties are not dissimilar in value. Each party will retain the assets which are currently in their name, possession or control, and each will retain all liabilities in their name. The Court has also taken into consideration the proceeds of sale of the company’s vehicle which the husband retained post separation and the $20,000 the wife retained from the parties’ joint bank account post separation. While ultimately this may result in a slightly different percentage adjustment overall, depending on the sale price which is achieved for the Property A property, the result will not be significantly different to the desired effect.
Conclusion
In all of the circumstances, and particularly given the wife’s younger age and higher income earning capacity the orders made are just and equitable.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Date: 24 May 2018
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