FAMILY COURT OF AUSTRALIA
| MEI & YAO AND ANOR | [2020] FamCA 544 |
| FAMILY LAW – PROPERTY – Application by wife seeking a property adjustment – Add backs – Alleged waste by the wife arising out of alleged failure to sign a sub-contract of sale for the sale of a property – Contributions – Trusts – Section 75(2) matters – A declaration that significant property was held on trust by the husband and wife for the husband’s mother |
| Family Law Act 1975 (Cth) ss 75(2) and 79 |
| Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 Draper v Official Trustee in Bankruptcy [2006] FCAFC 57 Muschinski v Dodds [1985] HCA 78 Baumgartner v Baumgartner [1987] HCA 59 Giumelli v Giumelli [1999] HCA 10 Khalif & Khalif and Anor [2020] FamCA 39 |
| APPLICANT: | Ms Mei |
| 1st RESPONDENT: | Mr Yao |
| 2nd RESPONDENT: | Ms Zhou |
| FILE NUMBER: | SYC | 2897 | of | 2017 |
| DATE DELIVERED: | 8 July 2020 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Hobart |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 6, 7, 8 & 9 April 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Carr |
| SOLICITOR FOR THE APPLICANT: | MLH Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Campton SC |
| SOLICITOR FOR THE 1ST RESPONDENT: | Matthews Folbigg Pty Ltd |
| COUNSEL FOR THE 2ND RESPONDENT: | Ms Barnett |
| SOLICITOR FOR THE 2ND RESPONDENT: | Du & Associates |
Orders
THIS COURT DECLARES that Ms Mei (the ‘wife’) and/or Mr Yao (the ‘husband’) hold and/or held their interest in the following properties (‘the properties):-
(a)2 E Street, Suburb F NSW being land comprised in folio identifier … and 4 E Street, Suburb F NSW being land comprised in folio identifier … (the ‘Suburb F property’);
(b)B Street, Suburb C NSW being land comprised in folio identifier … (‘the Suburb C property’);
(c)The proceeds of sale of G Street, Suburb D NSW being land comprised in folio identifier … (‘G Street, Suburb D property’);
(d)Interest (including without limitations any and all choses in action) in the “off-the-plan” property known as H Street, Suburb J NSW being land comprised in folio identifier … (‘the Suburb J property’);
(e)Interest in the refunds of deposit and stamp duty arising from the contract entitlements (including associated choses in action) held by the wife and/or the husband in the “off-the-plan” property at Suburb K (‘the Suburb K property’);
(f)All L Company Shares held in husband’s name; and
(g)The Motor Vehicle 1;
as trustees for Ms Zhou (‘the second respondent’).
A consequential order that the wife and the husband transfer their legal interest/s in the properties to the second respondent within one (1) year from the date of this order, or such other time as is ordered by this Court or a court (provide the request for additional time is made within one (1) year from the date of these orders).
Simultaneously with the transfers of legal title in the properties to the second respondent, she shall cause any personal covenants given by the wife and/or the husband to any mortgagee or charge over any one or other of the properties to be discharged. In the meantime the second respondent shall meet all payments, insurance, rates taxes and the like and of interest and principle in respect of mortgages etc. over the properties and shall indemnify the husband and wife in that respect.
The parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders.
In the event that either of the husband and wife refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders:-
(a)A Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
(b)It shall be sufficient to establish default as provided for in these Order if any document sent by email or by prepaid post or courier to the last known address of that party required to sign and if that document is not returned executed to the sender within fourteen (14) days.
Otherwise than as is provided for in these orders, each party shall relinquish in favour of the other party any claim to any right, title or interest in all items of property presently in the possession, control or custody of the other party including but not limited to real property in China, monies held in any bank, building society or credit union, jewellery, shares, superannuation or life entitlements.
The wife’s application for spousal maintenance is dismissed.
All other extant applications are dismissed except as to costs.
Any application for costs is to be made in accordance with the Family Law Rules 2004 (Cth).
IT IS NOTED that the husband and wife are the joint owners of property in Town O, City P in China (‘the City P property’) and that the property had an agreed value of $280,000 as at the date of hearing.
IT IS CERTIFIED that pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage senior counsel and counsel to attend.
IT IS DIRECTED that all subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
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 Mei & Yao and Zhou 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 HOBART |
FILE NUMBER: SYC 2897 of 2017
| Ms Mei |
Applicant
And
| Mr Yao |
First Respondent
And
Ms Zhou
Second Respondent
REASONS FOR JUDGMENT
INTRODUCTION
These proceedings were heard over four days between 6 and 9 April 2020. It was a time when the Court could not operate in its normal format due to social distancing requirements and the social impact of the Coronavirus Pandemic.
To enable this hearing to occur each of the parties, their respective solicitors and barristers joined in an online hearing, which was both audio and visual. From the Court’s perspective it had, for most of the time, vision of counsel, witnesses and interpreters and each of the parties for almost all of the proceedings. The only time the Court did not have visual contact with those parties was when documents were displayed on the screens from time to time.
The Court had clear vision of the witnesses as they gave evidence.
The parties and their legal advisors remained in personal and private in contact, via mobile telephone, SMS message and other electronic methods during the course of the hearing. This communication was not permitted by each of the parties when they were subject to cross-examination.
The Court thanks the parties, their respective barristers and solicitors for their efforts in embracing the technology and working very hard with it so that this trial could proceed and conclude.
Ms Mei (‘the wife’) and Mr Yao (‘the husband’) met in either December 2009 or January 2010 and were married in late 2010. Their relationship subsisted until they separated on either 29 April 2016 or 6 May 2016. There are no children of the relationship.
Significant assets were accumulated during the course of the parties’ relationship. I have found that these funds primarily, if not wholly, came from the assets and money of husband’s mother Ms Zhou (‘the second respondent’).
The second respondent is a party to these proceedings. This arose following an interim hearing in November 2017 before McClelland J (as he then was) for the wife to have exclusive occupation of a property at Suburb C.[1] That application would have involved forcing the second respondent from that home. That interim application by the wife was dismissed.
[1] Is a property at B Street, Suburb C (‘the Suburb C property).
In early 2018 the second respondent indicated that she intended to commence proceedings in the Supreme Court of New South Wales (‘the Supreme Court litigation’).[2]
[2] See Directions Hearing Registrar Hayward 22 February 2018.
On 11 April 2018, by consent, the parties agreed that the Supreme Court litigation by the second respondent in respect of her claim of equitable ownership of significant property ought to be determined within the Family Court jurisdiction.
That process followed and in June 2018 the second respondent filed an Amended Response to an Initiating Application setting out a statement of her claim for declarations of trust and other alternate equitable remedies in respect of properties at Suburb F[3] and Suburb C.
[3] Is a property E Street, Suburb F (‘the Suburb F property’).
She also sought equitable remedies in relation to the entitlements to proceeds of sale of a Suburb D property (‘G Street Suburb D’), a property under contract at Suburb J, choses in action in relation to a failed purchase of property at Suburb K[4], some shares and a motor vehicle. I have had regard to the pleadings in the second respondent’s Statement of Claim.
[4] In 2013 the parties contracted to purchase an–off-the plan apartment in Suburb K (‘the Suburb K property’).
The second respondent seeks orders set out in her case document.[5] In that, she seeks a declaration of trust in relation to the Suburb F and Suburb C properties, a chose in action arising from the sale of G Street Suburb D, Suburb J property, the Suburb K property, L Company shares and a Motor Vehicle 1 registered in the name the husband. In the alternative she seeks orders in relation to the trust as to whether it is an express trust, resulting trust, or a constructive trust. She also seeks mechanical orders for the transfer of those properties.
[5] Exhibit E10 pages 23 and 24.
In that regard the second respondent says that she will need one year to achieve this given the current travel restrictions between China and Australia. She is prepared to submit to an order that she make the mortgage repayments and pay the expenses of the properties pending the transfer.
The husband supports those orders and in the alterative the properties, referred to above, be transferred to him.
The wife opposes the orders sought by the husband and the second respondent. She seeks orders as set out in her case outline dated 31 March 2020 and prepared by her counsel.[6] These orders include:-
[6] Exhibit E1.
(a)That the husband pay the wife spouse maintenance of $550.00 per week for 4 years from the date of these orders or until her taxable income exceeds $57,000 per year.
(b)That the wife transfer her interest in a property in City P, China to the Husband.
(c)The wife transfer to the husband her interest in:-
(i)the parties’ Suburb C property, subject to the husband being responsible for the mortgage over it;
(ii)Their interest in the off-the-plan property at Suburb J; and
(iii)The stamp duty refund on an off-the-plan purchase of the Suburb K property.
(d)That the husband transfer to the wife, unencumbered:-
(i)the Suburb F property;
(ii)the proceeds of sale of the G Street, Suburb D property;
(iii)his Motor Vehicle 1; and
(iv)The balance of deposit of an off-the-plan purchase of the Suburb K property.
In submissions, counsel for the wife contended that an order be made that the parties join in and sell the City P property. I do not accept that I have the jurisdiction and power to make such orders, and if I did have such authority, in the circumstances of this proceeding I would not have done so. The parties are the joint owners of the City P property and it is a matter for the domestic law of China or its province to determine the use, sale and management of that property. I have declined to make that order or the one set out in the wife’s case outline. However, I did have regard to the agreed value of the City P property in making the orders in these proceedings.
The wife seeks dismissal of the claim by the second respondent.
BACKGROUND
The second respondent is aged 65. There is some evidence that she is in poor health given that she has a history of cancer treatment.
The husband is aged 40 and is presently not employed. I accept his evidence in that regard.
The husband earnt assessable income[7] between 2010 and 2017 as follows:-
- 2010 $36,928
- 2011 $65,006
- 2012 $81,741
- 2013 $21,319
- 2014 $13,070
- 2015 $54,230
- 2016 $97,841
- 2017 $14,858
[7] Exhibit E4 – Tab 29, page 112 onwards of the husband’s trial affidavit.
The wife asserted that the husband was employed by R Pty Ltd in 2010, 2011 and 2012 and from 2015 until 2017 he worked with S Pty Ltd.
In his trial affidavit the husband described his occupation as a business professional and carer. He was a student in Australia from about 2003 to 2008 at which time he commenced secure employment with R Pty Ltd. In December 2010 he commenced employment with S Pty Ltd and was paid about $60,000 a year. He became a manager of that company and worked with them for a number of years. The wife asserted that the husband had said he was employed by T Company in City BB, China and that he had an annual gross income of $569,303.[8] He did this in terms of a loan application but it was not based in fact.
[8] Wife’s trial affidavit paragraph 51.
In 2011 the husband obtained employment with U Company and was earning about $5,800 per month for a period of two years, except the money was paid into an account in China and that those monies were controlled and retained by the wife. I accept his evidence in that regard.
He was engaged to work for V Company and received an income from that entity in the 2017 financial year. He says his employment now is undertaking some tasks for the company which involves about one day a week. These companies (the V Company Group) involve investors from China and I accept that the husband has no beneficial interest in the real estate, which is held in trust for the investors. The husband has some shareholdings, although there was no serious assertion that those holdings have any real value. Most of the companies seemed to be trustee companies.
The husband says he is currently unemployed and is looking for work and that he spends a significant amount of time caring for his mother as needed.[9] There is no evidence that the husband is other than in good health.
[9] Husband’s trial affidavit paragraphs 9 to 18.
The wife is aged 35 years. She is a permanent resident of Australia having immigrated to Australia on a spouse Visa in December 2012. The wife graduated from University in China in 2007 and was working as finance professional with a company in China. She worked for that company until about 2014.
The wife spoke Mandarin and some English at the time the parties met and she has undertaken studies of English since that time. There is evidence that the wife undertook and completed a course to teach English to overseas students which she completed.[10]
[10] Ibid paragraph 25.
In 2012 the wife undertook studies at TAFE in education. In 2013 the wife continued her English studies and received a Certificate for Teaching English. In 2015 the wife commenced studying a further degree, although did not complete this course.
The wife worked at an education centre from 2013.
The wife says that she now regards Australia as her permanent home. She became an Australian citizen in 2017.
The wife asserts that she has some health difficulties and has been seeing a psychologist and needed spinal treatment. She adduced no admissible evidence in relation to those conditions. It is clear that the wife was working in education and returned to China. The wife asserts this was due to her health condition although, no admissible evidence as to her health, apart from a certificate from her then employer, saying she left work because of a ‘health situation’. I am satisfied that the wife has a health capacity to work in education and in finance and the like.
The wife remained in China for six months in 2019 and was supported by her family. She has returned to Australia and is now in receipt of a Newstart Allowance.
In July 2019 the wife applied for admission as a student at the W University.[11] She was accepted to that course in October 2019 to commence in February 2020.[12]
[11] Exhibit E4 pages 105 and 106 (Tab 26).
[12] Ibid page 108 Tab 28.
There are no children of the relationship between the husband and wife.
The second respondent is a permanent resident of Australia. She received a temporary Residence Visa in early 2009 and became a permanent resident of Australia in August 2013.[13]
[13] Second respondent’s trial affidavit paragraph 22 as amended by oral evidence.
The husband and wife met in December 2009 or January 2010 and formed a friendship. The wife travelled to Australia during 2010 and the husband travelled to China. The parties married in late 2010. During 2010 the wife initially lived in an apartment rented for her by the second respondent. She lived in that apartment, at times with her mother, until late 2010. From that date the wife then moved into a house with the husband’s parents. I accept the evidence of the second respondent that the rental on the home was paid for by her and further, that whilst the wife was living with the husband’s parents, including the second respondent, she paid no expenses.
I accept the evidence of the second respondent that she and her husband paid most of the living expenses for the wife from that time, when the wife was living in China until December 2012.
In December 2012 the wife had been granted a spouse visa and she moved to Australia. Initially, she and the husband lived in the husband’s Suburb F property. They then moved to a property purchased at X Street, Suburb Y (‘Suburb Y’).[14]
[14] The parties purchased this property in January 2012.
Between 2009 and 2016 the husband, and at times the wife, purchased various properties in Australia and borrowed monies for the purchase of those properties, about which, I have discussed later in these reasons.
The husband and wife jointly purchased a property at Suburb C in 2014. The husband, wife and the second respondent moved into in February 2015. The second respondent had been living significant times in Australia since 2011 and had lived at Suburb Y prior to the move to Suburb C.
In late April 2016 or early May 2016 the parties separated and the husband left the Suburb C property. The wife continued to live in the Suburb C property as did the second respondent. This arrangement ended in September 2016 when the wife moved out of that home. The husband then returned to live in the Suburb C property with his mother.
Following the wife leaving Suburb C she stayed with a friend and then rented accommodation over the next two years between $270 and $280 per week.
The husband and wife were divorced on … 2017 and that decree became absolute on … 2017.
THE PROCEEDINGS
These proceedings were commenced on 19 September 2017 when the wife filed an Initiating Application seeking interlocutory orders that she have sole use of a motor vehicle and exclusive occupation of the Suburb C property.
That interlocutory application as heard by McClelland J in November 2017, as he then was, and the wife’s application for exclusive occupation of the Suburb C property was dismissed.
The orders and case history of these proceedings are set out in the case outline of the husband.[15] I have had regard to that history. The proceedings were heard by me as outlined earlier.
[15] Exhibit E6 pages 6 to 8.
Any statement of fact in these reasons is to be regarded as a finding of fact unless the contrary is clear from the context of the statement.
THE EVIDENCE
The wife’s documents
The wife relied upon her Initiating Application filed 19 September 2017, her affidavit affirmed and filed 15 November 2019 (‘the wife’s trial affidavit’) and her financial statement filed and affirmed on 15 November 2019.
The wife sought to rely on the affidavit of her mother Ms Z (‘the wife’s mother’) affirmed and filed 11 March 2020. Efforts were made for the wife’s mother to give evidence, however, that proved a little difficult and counsel for the wife withdrew the affidavit although, paragraphs 4 and 5 of that affidavit were tendered in evidence.[16]
[16] Exhibit E15.
The wife provided documents contained in her tender bundle[17] and exhibited to her affidavit.[18]
[17] Exhibit E5.
[18] Exhibit E4.
In addition the wife provided oral evidence and her counsel tendered a number of other documents, to which I have had regard.
The wife also tendered her case outline. I had regard to that in terms of submissions although, where the husband, wife and second respondent all asserted a date, such as birthdays and the like, I treated those as agreed facts.
The wife tendered objections.[19] In addition the wife set out the orders she sought from the Court.[20] I have had regard to that material.
[19] Exhibit E2.
[20] Exhibit E3.
The husband’s documents
The husband relied upon his affidavit filed 19 December 2019 and his financial statement filed 6 April 2020. The case outline prepared by senior counsel acting for the husband, which contained a list of objections and the details of orders sought were also tendered.[21] In addition, the husband prepared a shorter form of tender document being those to which he wished to rely on at the hearing.[22]
[21] Exhibit E6.
[22] Exhibit E7.
There was an issue on the first day of hearing as to whether some documents exhibited to the husband’s affidavit had been or were to be provided to the Court. After some discussions, it was confirmed that that material was contained in Exhibit E7 and it was admitted to evidence without further controversy.
On the afternoon of the first day of hearing some of that material from Exhibit E7 was shared on the Microsoft TEAMS screens, from time to time, to enable the relevant cross-examination.
Senior counsel for the husband tendered his response to objections.[23]
[23] Exhibit E13.
The second respondent’s documents
The second respondent relied upon her Amended Initiating Application filed 22 June 2018 and her affidavit filed 12 March 2020 (‘the second respondent’s trial affidavit’).
The exhibits to the second respondent’s affidavit were tendered in evidence.[24] The second respondent tendered a bundle of documents.[25] In addition the case document prepared by her counsel was tendered[26] as was her response to objections.[27]
[24] Exhibit E8.
[25] Exhibit E9.
[26] Exhibit E10.
[27] Exhibit E11.
Generally
A balance sheet was tendered[28] and this was updated by a tender at the end of the hearing.[29] An amended balance sheet was provided by the husband in the event that the second respondent’s application for the declaration of a trust was successful.[30]
[28] Exhibit E12(1).
[29] Exhibit E12(2).
[30] Exhibit E22.
I have had regard to all of that evidence. However, I made it clear to counsel that with regard to tender bundles (as distinct to exhibits to affidavits) I would only have regard to the documents to which I was taken during the evidence and/or during the submissions. I had regard to the case outlines as submissions and not as proof or acceptance of facts contained in them, except if the facts were conceded by both husband and wife.
The Exhibits
In addition the following documents were tendered:-
Exhibit E14 - the husband’s travel records in and out of Australia between 17 February 2009 and 24 November 2019;
Exhibit E15 - paragraphs 4 and 5 of the wife’s mother’s statement, referred to earlier;
Exhibit E16 - the wife’s financial statement filed 19 September 2017;
Exhibit E17 - the wife’s costs disclosure letter CC Lawyers;
Exhibit E18 - a floor plan of the home at Suburb Y;
Exhibit E19 - calculations of stamp duty for the purpose of evidence of the stamp duty paid on various properties;
Exhibit E20 - the front page of a contract whereby the husband had purchased property at 2 E Street at Suburb C, including car space. This showed a purchase price of $800,000 and evidence of stamp duty of $46,977;
Exhibit E21 - further submissions by counsel for the second respondent in support of her final submissions; and
Exhibit E22 husband’s submissions as to ‘contended finding as to property of husband and wife’; and
Exhibit E23 - an aid for submissions prepared by senior counsel for the husband.
The wife
The wife gave evidence in accordance with her trial affidavit and financial statement. She was not an impressive witness.
As an example, the wife says that she had savings at the time the relationship commenced, but did not specify an amount. The husband asserted that neither he nor the wife owned any significant assets. The husband was not challenged in relation to his evidence with regard to the wife’s assets. I am satisfied, the wife having produced no documents, that neither she nor the husband had any significant assets apart from the properties to which I will later refer.
I accept the wife’s evidence, as it was supported by income tax assessments, that she earnt $18,981, $14,790 and $14,340 in her part-time work during the financial years 2015, 2016 and 2017. I do not accept this reflects the whole of her income.
The wife gave evidence and was cross examined about her time managing and at times residing in the property in her name at G Street, Suburb D. Her actions in respect of that property and her evidence endeavouring to justify that behaviour and the losses that arose out of her vindictive behaviour undermines any weight that a court could give to her evidence.
The wife used the rent collected on this property to fund her lifestyle and allowed the mortgage to fall into arrears. She took possession of this property. She did not make the mortgage repayments and the amount of arrears ran up. This property was subsequently sold by the mortgagee in possession. The wife endeavoured to hide the mortgage situation from the husband and second respondent and in doing so prevented an orderly sale of that property by the husband and the second respondent.
I have discussed these events later in these reasons.
Similarly, the parties contracted to buy a home unit in Suburb K off-the-plan, prior to separation. After separation, the parties were required to settle that purchase. The husband arranged for an agent to find a purchaser to buy the husband’s and wife’s rights under the contract. It was an offer to sub-contract with a gross profit of about $150,000. The wife used that circumstance to endeavour to extract money from the husband and likely the second respondent. At best she inhibited and more likely sabotaged the orderly disposal of that property. Her actions wasted a considerable amount of money.
Listening to the wife giving evidence as to why she would not facilitate that sale of that property was at times painful. She avoided answering the question and tried to deflect blame to others. The wife knew what was going on, she was determined to get money and if she could not get money she would see all suffer financially.
The wife did not try and mitigate or reduce damage in either of the above transactions. In cross examination, the wife prevaricated, and dissembled in terms of her financially aberrant behaviour.
The wife was cross-examined about where she lived in China and in Australia. She prevaricated and obfuscated in relation to the time she spent in those countries. She asserted she did pay some bills, but when pressed to produce the documents she was unable to do so in any meaningful way.
The wife had a significant education history and work history, which she understated in her affidavit. The wife conceded that she was working in education and was being paid between $21 and $22 an hour. When pressed about the baby formula business she operated by purchasing and on selling baby formula and other products in China, she prevaricated in her answers. The wife was making money in that business and endeavoured to conceal that income.
Another example of that disingenuous approach to evidence was the wife’s assertion that she did all of the housework during the relationship, but when taken to her affidavit she stepped back from that assertion.
When she was asked whether the second respondent paid for her expenses in Australia the wife denied it, when it was clear the second respondent was the primary source of the funds of the husband and wife.
The second respondent came to Australia in late 2012 and soon after the Suburb Y property was acquired. No meaningful funds were provided by the husband or the wife and when it was put to the wife that the Suburb Y property had been purchased for the husband’s parents’ house in Australia, the wife asserted she did not know that. I do not believe her. She knew the source of the funds and that neither she nor the husband had those monies to buy that property. It is clear that the second respondent lived in the Suburb Y property and the wife and husband paid no money towards the acquisition of it and paid no money towards the stamp duty or the mortgage.
It was put to the wife and it was the husband’s case and the second respondent’s case that one of the reasons they wanted to move from Suburb Y to Suburb C was to provide a separate and better bathroom for the second respondent due to some health difficulties. The wife denied that contention. I was provided with a copy of the floor plan of the Suburb Y property[31] and I am satisfied that this plan supports, corroborates and makes understandable the second respondent’s evidence as to her concerns for having privacy in or near a bathroom.
[31] Exhibit E18.
The wife was questioned about her knowledge of English and she prevaricated in relation to that line of questions. It was apparent during her cross-examination the wife spoke English clearly and seemed to understand the questions. She has undertaken a number of University Degrees and TAFE studies since arriving in Australia in December 2012, she is now embarking on further studies. This is indicative of a very good understanding of English.
It was submitted by senior counsel for the husband, and I accept, that when difficult questions were asked of the wife she would retreat and ask the interpreter to explain. This happened on numerous occasions. Senior counsel for the husband submitted at least fifty occasions, I did not count them. However, I find that this was a ploy used by the wife to allow her time to think of answers when she was cornered or trapped into giving answers, which she perceived were not in the interests of her case. Many of her answers were not directed to informing the Court as to the truth of various issues, but were answers concocted or dissembled to frame her evidence, whether truthful or not, to assist her assertions which would improve her chances in this litigation.
An example of this reframing of evidence was where after separation the wife withdrew $190,000 from the parties’ bank accounts or from mortgage offset accounts. She withdrew that in cash in August 2016. I have referred to this money elsewhere.
The wife was cross-examined in relation to the purchase of handbags in August 2016 to the value of $17,815. This was a prime example of waste and the wife’s answers in relation to that issue were a collection of obfuscation and fabrication. The wife was cross-examined in relation to the payment of funds to the lawyers. Her answer was that she could not recall those transactions. I do not believe her. Those funds likely came from the money she took after separation.
In cross-examination the wife was asked whether she was looking for finance work of any description. She said she had not looked for such work. She has a capacity to work in that field but chooses not to do so. Similarly, the wife is experienced in education and has made no meaningful endeavours to obtain employment in the education industry.
These parties borrowed monies from banks either directly or through finance brokers. The information provided was clearly, at times, untrue, in terms of employment, income and the like. The wife was cross-examined in relation to the loan application in her name and conceded that it was inaccurate. Neither the husband nor wife were frank in their loan applications to banks and the like.
The wife was cross-examined in relation to the L Company shares being held by the husband for the mother. The wife disagreed with this proposition and said that was not true and said that those monies came from the husband. The wife said she relied upon the information provided by the husband to the banks in relation to loan applications. I do not believe her, she well knew where the husband was working and where the serious capital funds arose. The wife knew what the husband earnt and she knew that capital funds were being proved by the second respondent.
The wife was questioned in relation to payment of rent in City BB and confirmed that she did not pay rent and I refer to comments I have made elsewhere.
The wife was cross-examined in relation to the acquisition of the property in Suburb J, which is still pending and conceded she contributed no monies to that apart from $9,000 towards stamp duty. That sum came from the rent on the G Street Suburb D property.
It is clear that significant amounts of money were provided by the second respondent. The wife eventually, in cross-examination, conceded that those monies could not have come from her earnings and that of the husbands.
In final submissions counsel for the wife said that the one wrong answer would have not damaged the case. I disagree. I reiterate that the wife says what is needed to get the result she wanted. In her material[32] there is a letter from a Housing Pathways officer where it is recorded that the wife had said she had been homeless for three years in terms of seeking accommodation. When cross-examined in relation to this the wife said that there must have been a mistake or that it could not have come from her. I do not believe her. This is part of the wife’s approach in giving evidence or saying things that will assist her case or with that application, her cause.
[32] Exhibit E4 page 92.
Senior Counsel for the husband and counsel for the second respondent each submitted that I should treat the evidence of the wife with great care. I agree with those submissions.
Observing the wife in the witness box and listening to her answers and watching her demeanour enabled me to conclude that there were times when she obfuscated, dissembled and at times fabricated evidence.
The wife spoke English very well and used sophisticated English terms. Her resorting to the interpreter more often appeared to be a delay or defence mechanism while she considered what answers she could give rather than the truthful answers.
I have treated her evidence as being generally unreliable.
The wife’s mother
The wife’s mother provided evidence in terms of a document filed 11 March 2020. She was interposed to give evidence and an interpreter was available.
This witness lives in City BB and unfortunately the particular Microsoft TEAMS connection was poor.
As a consequence Counsel for the wife decided not to press ahead with her evidence. The wife’s mother was offered the availability of giving her evidence at a later time during the trial or by telephone, but the wife did not avail herself of that opportunity.
Paragraphs 4 and 5 of the wife’s mother’s affidavit was tendered in evidence on behalf of the husband at another time during the hearing.
I have only had regard to paragraphs 4 and 5 of that affidavit given the circumstances and given that the wife’s mother was not subsequently called or available for cross-examination.
The husband
The husband provided evidence in these proceedings in terms of his affidavit affirmed 5 December 2019 and filed 9 December 2019 (‘the husband’s trial affidavit’).
There were a number of objections to parts of his affidavit. I have had regard to those objections in terms of assessing the factual material contained in the affidavit.
The husband’s trial affidavit was read into evidence as was the husband’s financial statement of 6 April 2020 which was sworn and affirmed the same day.
There was no serious challenge to the husband’s present financial circumstances, that is, that he was earning no income and that he was presently caring for his mother.
There was significant challenge to his evidence as to his earnings before, during and after the parties relationship. In his financial statement and in his affidavit the husband asserts that:-
(a)the proceeds of sale of the G Street Suburb D property;
(b)the Suburb C property, the Suburb F property, the monies arising from the failed purchase of the Suburb K property;
(c)the entitlement to a refund of stamp duty on the Suburb K property;
(d)the interest in the property at Suburb J;
(e)one half of the City P property;
(f)the properties in City BB;
(g)the shares in L Company;
(h)the Motor Vehicle 1;
is property where he may have or the parties may have equitable title, but that the equitable ownership rests with the second respondent.
In terms of the City P property I determine that the husband and the wife equally own that property (both legally and equitably). Given its agreed value of $280,000 they each have an equity to the value of about $140,000.[33]
[33] It was an agreed fact that this property had value of $280,000 and was owned by the husband and wife.
With regard to the properties in City BB counsel for the wife did not press the interest in that property. From the husband’s financial statement the only significant difference is my finding that his equity in the City P property is $140,000 not $70,000 as asserted.
The husband has superannuation entitlements of $11,191 which I have included in the property of the parties.
The husband was born in China and moved to New Zealand in about 2000, when aged 20, and then moved to Australia in about 2003. He was a student in Australia and between 2008 and 2010 he was employed in a service industry. In 2010 he commenced work with a company who imported equipment from China and sold them in Australia. I have set out what I understand to be his work history earlier in these reasons. He received income of about $60,000 per year for this work. He says, and I accept, that he does not receive any income from this organisation at the present time.
In December 2011 the husband was engaged by U Company and received a monthly salary of about $5,800 per month over a period of two years. This work ended in 2014.
The husband says, and I accept, that the funds were controlled by the wife and were retained by her.
The husband set out details of the corporate entities to which he was involved in his trial affidavit.[34] The first three companies[35] have not traded. There is no evidence adduced as to any trading by those companies.
[34] Paragraphs 140 to 152.
[35] Paragraphs 140, 141 and 142.
The husband was a Director of S Pty Ltd for about one year in 2014. He no longer holds that position and has not done so since December 2014.
In December 2014 the husband incorporated BC Pty Ltd of which he is a director and shareholder. It is through this structure that the husband asserts that he receives income in his role as a Director. This company owns a motor vehicle and his telephone. BC Pty Ltd received an income through V Company of $30,000 in 2017. In the 2018/2019 financial years that company received no income.
The husband says that the costs of running his car and his telephone are provided by funds from his mother, the second respondent. I accept that evidence.
The wife asserted that the husband had some interest or income entitlement through the V Group of companies. V Company Pty Ltd was established in 2013 and the husband was the Secretary of the business. He was allocated one hundred ordinary shares, representing ten per cent of the share-holding of that company.
This Company operated a business under licencing from a holding company. The husband said, and there is no evidence to the contrary, that V Company Pty Ltd did not have any assets of any value.
In 2013 the VB Pty Ltd was established. The husband is Director and Secretary of the entity and it holds no assets.
In 2013 a number of other companies were established which were trustees for unit trusts, these being VC Pty Ltd and VD Company. There was no evidence that the husband had any equity in the property owned by these companies as trustees in unit trusts.
No forensic accounting evidence was adduced as to the value of those companies and any interest which the husband or any of his alter egos may have had in those companies. The husband asserts, and I accept, that the shares he has in the V Company have no value and he will not receive any benefit from the sale.
The husband set up a company called BD Pty Ltd in 2015. His evidence is that the Company did not trade and it was deregistered.
The husband says that he is now living with the second respondent at Suburb C and travels between Australia and China, prior to the Coronavirus travel restrictions being implemented. The husband says he assists with his mother’s care and is not receiving any income and that his support is provided by his mother, the second respondent. He is not currently engaged in employment or looking for employment and given the present circumstances of Australia, that is understandable.
The husband was cross-examined by counsel for the wife in relation to the income he asserted he was earning in various loan applications to Westpac Bank including documentation which he provided to the Bank asserting significant income. The husband frankly conceded that he and those acting on his behalf provided false information to the Bank to enable the financing of those properties including Suburb F, Suburb Y and Suburb C.
The husband denied he worked for the companies as asserted in the letters and that denial is consistent with the evidence of his income, including documentary evidence, for much of the period of the parties’ relationship.
In his trial affidavit the husband provided details of his employment and education and that of the wife. There was some issue as to whether he met the wife in late 2009 or early 2010. Very little rests on this. The husband’s travel records between China and Australia were tendered and it seems to show that the husband left Australia on 21 December 2009 and returned to Australia on 1 March 2010. It is clear that during this time they met and the husband and wife formed their relationship.
They subsequently married in China in late 2010. The husband left Australia on 19 December 2010 and returned to Australia on 13 January 2011, about two months later.
From the husband’s evidence and from a generalised perusal of the travel records of the husband[36] it is apparent that the husband has been a regular visitor to China over many years.
[36] Exhibit E14, documents from Department of Home Affairs.
The husband provided significant financial support for the wife during the relationship including, but not limited to:-
·English classes in 2011;
·Fees for her application for a Visa;
·Training at BE University, which the wife did not complete; and
·The purchase of baby formula for which the husband paid the majority of the cost in Australia and to which the wife took the gross profit.
The husband provided detail as to the baby formula product and other products for which he provided funds to the wife to enable her to purchase the products. He said, and I accept, that he provided about $65,129.[37]
[37] Paragraph 40 husband’s trial affidavit.
The husband gave an estimate as to the profit made by the wife on the resale of these products in China. I accept that the wife retained the whole of the sale proceeds, and did not reimburse the husband for the cost of acquiring these products. This made it a very profitable business for her.
The wife asserts that she was providing these products mainly for friends and this business was of no real commercial value. I do not believe her. I prefer the evidence of the husband in this respect. I am satisfied that the wife ran this business and ran it profitably for a number of years.
The husband’s parents, including the second respondent, were quite affluent in China and I accept that they had made a decision to move to Australia. As a consequence, significant monies were transferred to the husband, and from time to time to the wife, over the period of the parties’ relationship. The husband asserted that, between 2004 and 2017, he received various sums of money from the second respondent, sometimes directly and sometimes through an intermediary. The husband says, and I accept, that the purchase of the Suburb F property, including the stamp duty, was wholly funded by the second respondent and although it was registered in his name he believed the property was being held on trust for his mother, the second respondent. I accept that that was the case, that property has been tenanted since the husband moved out in about 2012.
The husband provided details of the payments in his trial affidavit.[38] Many of these transactions were supported by documentation and they were, to a large extent, supported by the evidence of the second respondent.
[38] Paragraphs 77 to 80.
It is clear that the second respondent transferred somewhere between $4 million dollars and $5 million dollars to the husband over the years of the relationship and that the husband used somewhere between $1 million dollars and $2 million dollars in the acquisition of properties in his name, but clearly using the monies from the second respondent.
In January 2012 the husband purchased a property at Suburb Y, he said he was buying it for the second respondent. This is inconsistent with the evidence of the wife. However, on balance I prefer the evidence of the husband in this regard.
That property housed the husband, the wife and the second respondent, but it was subsequently sold so the parties could move into the home in Suburb C.
In November 2014 the husband and wife purchased a property at Suburb C for $1.65 million dollars. This was funded out of the proceeds of sale of Suburb Y together with a mortgage of about $1.3 million dollars to the Westpac Bank.
I accept that neither the husband nor the wife made any contribution to the purchase of that property. I also accept that the mortgage repayments, payments of council rates, water rates and other expenses in respect of the property was met by the second respondent.
Further, I accept that the second respondent paid for significant renovations on Suburb C which were overwhelmingly funded by her. The husband said the costs of the renovation were about $250,000 and that the decisions were made by the second respondent. The wife disputes this evidence. I prefer the evidence of the second respondent and the husband and I am satisfied that virtually all of the substantive payments to that property came from the second respondent.
There was some evidence that the wife provided some loans to the extent of about three or four thousand dollars however, in the order of the monies spent on this property it was of little consequence.
The wife paid little or no monies in relation to the maintenance and improvement to the Suburb C property.
In June 2013 the husband and wife entered into a contract to purchase a property ‘off-the-plan’ in Suburb K. They paid a deposit of $102,960 and stamp duty of $42,138 which was wholly paid from monies provided by the second respondent.
I accept the evidence, and it is not contentious, that the monies were paid other than by the parties.
In the second half of 2016 there was a requirement from the developer of the Suburb K property for settlement. By that time the husband and wife’s marriage had failed and the second respondent was not prepared to finance the purchase of the Suburb K property. As a consequence the husband found a person or a party who was willing to purchase the property giving the parties a gross profit of about $150,000.
The wife prevaricated and procrastinated in relation to that sale to the extent that it was lost and as a consequence only half of the deposit was refunded. The parties were entitled to a refund on stamp duty.
I am satisfied on the evidence of the husband, supported by the documentation and the evidence of the second respondent that those monies are the money of the second respondent.
The wife endeavoured to extract monies for herself out of that transaction and I make adverse comments about that behaviour elsewhere in these reasons. The wife had, in relation to that property, and in relation to the G Street Suburb D property, adopted a ‘beggar thy neighbour’ approach with regard to the husband and the second respondent.
In January 2016 the husband and wife arranged to purchase a property at Suburb J.
The husband in his trial affidavit asserted that:-
103. I also applied monies I held on trust for and on behalf of [the second respondent] to purchase off the plan, [Suburb J]. The purchase of this property was as an investment made for [the second respondent]. As with the Suburb K property, I intended that the property was her property as she had provided all of the funds to purchase and I was following her instructions to invest.
104. In January 2016, I applied $80,800 of [the second respondent’s] finances by way of a deposit on the Suburb J property.
105. The deposit paid and stamp duty for the Suburb J property was provided solely from funds from [the second respondent]. Neither [the wife] nor myself contributed any funds to the purchase of the Suburb J.
The wife in her trial affidavit asserted that:-
55. In about February 2016, [the husband] and I entered into a contract to purchase a property off the plan at [the Suburb J property]. This property was registered in my sole name.
56. The Suburb J property was due for completion in 2019. An $80,800 deposit was paid. There was a stamp duty obligation of $32,415.09 to the Office of State Revenue. I had received a Legal Notice from the OSR threatening legal action if I did not pay the amount by 9 August 2018. I entered into a payment plan with the OSR with respect to the stamp duty. I paid over time the amount of $9,256.00. The balance was paid following consent orders entered into following the Conciliation Conference on 7 November 2018.
The second respondent in her trial affidavit says:-
71. In or about January 2016, [the husband] used the funds I transferred to him and purchased an off-the-plan property [Suburb J] in [the wife’s] sole name. Again I knew nothing about this. I contend it was in breach of trust. I did not at any time consent to the property being purchased under [the wife’s] name. I only found out about this purchase after the commencement of these proceedings.
72. In or about January 2016, [the husband] paid the deposit on the Suburb J Property in the sum of $80,800.
73. During the course of these proceedings, I became aware that the stamp duty on the purchase of the Suburb J Property remained outstanding and overdue.
74. On 14 September 2018, my solicitors received a letter from [the wife’s] solicitors advising that [the wife] was unable to afford to pay for the stamp duty on the purchase. Exhibited to me and behind Tab 15 of Exhibit “Ms Zhou-1” is a copy of this correspondence.
75. On 17 September 2018, I caused my solicitors to write to [the wife’s] solicitors requesting [the wife] to transfer the contract for purchase of the Suburb J Property to me, in which case I will meet the stamp duty payment so as to avoid any enforcement actions from the state revenue office. Exhibited to me and behind Tab 16 of Exhibit “Ms Zhou-1” is a copy of this correspondence.
76. I did not receive a response to my request.
77. On 7 November 2018, consent orders were made to apply part of the proceeds from the sale of the [G Street Suburb D] Property to the payment of outstanding stamp duty on the Suburb J Property.
78. The stamp duty owed to the Office of State Revenue was subsequently paid off. I agreed to this to preserve the property so that interests and penalties would not continue to accrue on the outstanding stamp duty.
79. I do not know when the Suburb J Property is anticipated to settle.
A deposit of $80,800 was applied as a deposit for the purchase of that property and I am satisfied, on the evidence of the husband and the second respondent that this was provided out of the funds of the second respondent.
The wife asserted she paid about $10,000 in stamp duty in respect of this property, however it is clear that that stamp duty came from the rental on the property on G Street, Suburb D. I am satisfied that all of the expenses in relation to the acquisition of the interest in that property came from the second respondent.
In 2016 the parties found a property at G Street Suburb D. The purchase price of $1 million dollars was provided by funds from the second respondent as well as a mortgage from the Westpac Bank of about $810,000.
At the insistence of the wife the property was registered in her name. I have dealt with the wife’s behaviour with regard to this property elsewhere in these reasons. The evidence of the husband was that the property was tenanted at an income of about $900 per week which was paid towards the mortgage.
It is not in issue that the wife applied these rentals to herself, and at one stage to the stamp duty of the Suburb J property, rather than towards the mortgage on the property. As a consequence the G Street Suburb D property mortgage fell into default. The wife hid those circumstances from the husband and the second respondent and it was only around the middle of 2018 that the circumstances regarding that property were clear.
The husband endeavoured to organise the orderly sale of the property however, the wife would not do so unless monies were paid to her and accommodation was found for her. This was significant waste by the wife in that she acted in a negligent, wanton and reckless way with regard to that property and with regard to her approach to the difficulties with the Suburb K property.
There was complaint by the wife that the husband had transferred monies to his mother for different accounts shortly after separation. The wife asserts that the sum of $1.5 million dollars was transferred.
The wife asserted that the husband deposited $1.1 million dollars into offset accounts by way of deposits of $700,000, $140,000 and $260,000 between April 2016 and September 2018.[39] In response to this the husband said:-
73. In 2016, I continued to hold funds on behalf of [the second respondent]. At her request, I returned those funds to her. I transferred the sum of $200,000 to [the second respondent]. On the 13 April 2016, I transferred the further sum of $700,000 to [the second respondent].
74. In March 2016, there were further transfers from the Westpac account in my name. The funds in this account were funds of [the second respondent]. In March 2016 there were 3 transfers of $200,000. The transfers were for funds for the purchase of the [G Street, Suburb D], for the purchase of a property by [the second respondent] at BF Street Suburb BG and the further transfer was to deposit funds in the offset account for the mortgage on the Suburb F property.
75. In April 2016 there were 4 transfers each of $10,000. These transfers were to Mr BH. The funds transferred were funds of [the second respondent]. The purpose of the transfers was to pay Mr BH for product that he had provided to the business operated by VE Pty Ltd an enterprise owned by [the second respondent] and other investors. At the time the business did not have sufficient funds to pay the creditor of the business and so my mother made the payment on its behalf. I have provided a copy of the invoice for this payment to the lawyer for the wife.
76. Between 2004 and 2017, I received various sums from [the second respondent], sometimes directly to me and at times through an intermediary. I received these funds intending that I was required to invest them on behalf of [the second respondent] as she had instructed me to do so. …
[39] Paragraph 180 of wife’s trial affidavit.
The second respondent’s response to the wife’s assertions of why those funds were transferred to her by the husband was set our her trial affidavit where she said:-
57. It was in about mid-March 2016 I discovered that [the husband] had put the [G Street, Suburb D] Property under [the wife’s] sole name when I attended my bank without [the husband]. I demanded that he return any remaining funds which I had transferred to him back to me. I also demanded him to return the bank investments back to me once the investments mature. I was very angry with him, and very upset.
58. On 24 March 2016, [the husband] transferred to me the sum of $200,000 and on 13 April 2016, he transferred to me a further sum of $700,000, as I told him to. Exhibited to me behind Tab 6 of Exhibit “Ms Zhou-1” is a copy of the bank statements contained these transfers.
I accept the husband’s evidence and find that this was simply the transfer of the monies which the second respondent provided to the husband (and indirectly to the wife) from time to time.
In many ways it is clear that the husband was dependent on the second respondent for many years, including the evidence from the wife who deposes that payments of some $450,000 were made by the second respondent to the husband after separation.[40]
[40] Ibid paragraph 181.
The husband gave evidence that between 2012 and 2014 he received income which was paid into his bank account. He says, and I accept, that there were significant transactions which were made by the wife or likely to have been made by the wife.[41]
[41] Husband’s trial affidavit paragraph 52.
The husband gave evidence of the transfer of about $190,000 following separation.[42] The husband provided evidence of use of funds at or after the time of separation.[43] I generally prefer the evidence of the husband than the wife in terms of those transfers.
[42] Ibid paragraphs 54 to 67.
[43] Ibid paragraphs 132 to 139.
The husband was cross-examined in relation to a joint drawn divorce application. This seemed to be as a challenge to his credit. It was to be a joint application and I am not convinced that it was of significant moment given the approach to frankness by these parties from time to time.
I accept the evidence of the husband that the property at City P was wholly financed by the second respondent. I am not convinced, on balance, that only half of the property was a gift to them and the other half was to be held in trust.
It was interesting during cross-examination that the husband conceded frankly about the incorrect information provided to the bank. He did not dissemble or obfuscate. He made frank concessions that the loan applications and information provided were designed to achieve the loan rather than to provide accurate information to the banks.
The husband gave evidence as to his income between 2010 and 2017, to which I have referred elsewhere. I am satisfied that this is an accurate representation of his account.
The husband was cross-examined about the V group of companies and provided clear and cogent information in that respect.
One of the interesting areas of cross-examination was in relation to earlier financial statement where the husband had accounts in China of $330,000. This account now has $4,000 in it.
It was conceded by the wife that those funds were probably the funds of the second respondent.
Similarly, the husband was questioned in relation to the properties in City BB, but this was not pressed in submissions.
What then should I make of the husband’s evidence? He listened carefully to the questions, he gave frank answers, at times he made admissions against interest, such as with the bank loans and other information as to employment. I was not confident that his evidence in regard to the second respondent’s equitable interest in City P established the asserted trust as to one half.
I have treated his evidence with caution, but the evidence seems to be supported by documents and by the evidence of the second respondent.
The second respondent
The second respondent is the mother of the husband and mother-in-law of the wife.
Given her claim to equitable interest in properties in the names of the parties and entitlements of the parties she became a party to these proceedings as set out earlier in these reasons.
The second respondent was separately represented by both solicitor and counsel during the hearing. She gave evidence in terms of her affidavit affirmed 2 March 2020 and filed on 13 March 2020.
That affidavit was read into evidence subject to weight.
There were a few amendments to the affidavit including the following:-
·In 2004 the second respondent began to transfer assets in China to Australia.
·The second respondent received her temporary Australian Visa in early 2009 and received her permanent residence in August 2013.
There was a factual issue with regard to the reason the husband, wife and second respondent moved from the home in Suburb Y to Suburb C. The second respondent and the husband asserted that it was at the second respondent’s request for better bathroom facilities. As I indicated earlier a copy of the floor plan of the Suburb Y property was tendered in evidence.[44]
[44] Exhibit E18.
The second respondent provided evidence that she had transferred about $5 million dollars to the husband between 2004 and 2017. She gave evidence as to the difficulties of transferring those funds and provided documents supporting that such funds were transferred.[45]
[45] Second respondent’s trial affidavit paragraphs 10 to 16.
The second respondent gave evidence that she moved her residence to Australia in 2011 when clearly she travelled extensively between Australia and China.
The second respondent sets out details of conversations about transferring money to Australia in her trial affidavit.[46]
[46] Ibid paragraph 9.
In her affidavit the second respondent made it clear that the transfer of monies was to provide property for her. She could not speak English and relied upon the husband, her only son. The second respondent says, and I accept, that it was only after separation and in the trying times that followed between late April/early May 2016 and September 2016 when the wife eventually left the Suburb C property, that she became aware that the properties were not in her name.
The second respondent gives evidence as to her concerns and her distress in relation to that discovery.[47]
[47] Ibid paragraphs 16 to 21
I have read this in the context of the evidence of the second respondent in relation to transfer of funds referred to earlier in paragraphs 11 to 14 of her trial affidavit. I accept that all of the capital, stamp duty and costs on the acquisition of the interests in property or choses of action with regard to Suburb F, Suburb Y, Suburb C, the G Street Suburb D, Suburb K and Suburb J were paid from the funds of or due to the second respondent.
I am further satisfied that the loan repayments and almost all of the expenses in relation to those properties including the renovations on Suburb C, were funded by the second respondent.
The second respondent gave evidence in relation to the properties acquired in City BB however, given the submissions of counsel on behalf of the wife that was not pressed.
After the husband and wife separated the wife remained in the Suburb C property for a number of months.
I have read the evidence of the second respondent with regard to the removal of property from her City BB home in early 2017. Given the status of the evidence to which I have referred elsewhere, I am not satisfied that it has been established to the requisite civil standard that the property was taken by the wife.
The second respondent does not enjoy good health and has suffered significant personal difficulties with her husband’s imprisonment in China in recent years. I accept the evidence of the second respondent as set out in her trial affidavit.[48]
[48] Wife’s trial affidavit paragraph 110 to 118
In cross-examination there was some issue as to whether or not the second respondent had transferred $4.9 million dollars or $5 million dollars, little rests on that given the volume of funds, the rivers of gold that flowed from the second respondent to the husband and then through to the wife.
I accept the evidence of the second respondent in relation to the transfer of funds as set out in her trial affidavit.[49]
[49] Ibid paragraphs 57 and 58
The second respondent made some concessions as to the odd purchase of food and other items by the wife and by the husband. However, her evidence was clear that all of the capital payments and much of the other payments were met by her finances.
The second respondent conceded that she did not do the husband’s washing and did not maintain that part of the houses in which they slept and lived.
I accept her evidence as being substantially reliable.
FINDINGS
Money taken by husband after separation.
In her affidavit the wife asserted that the husband had taken about $1.5 million dollars from various accounts, shortly after separation.
I have considered the evidence of the wife, the husband and the second respondent in relation to those withdrawals and on balance I am satisfied that that sum of money is the property of the second respondent.
IVF Treatment
I accept the evidence of the husband and the second respondent that the second respondent paid for the husband and wife’s IVF treatment.
The Suburb C property
As I said earlier the husband and wife jointly purchased the Suburb C property in 2014. The husband, wife and the second respondent moved into the property in February 2015. In late April 2016 or early May 2016 the parties separated and the husband left that home. The wife continued to live in the Suburb C property as did the second respondent. This arrangement ended in September 2016 when the wife moved out of that home.
The wife conceded she provided no monies towards the purchase of the Suburb C property whether by way of a deposit, stamp duty or mortgage repayments. She accepted that the property was renovated.
The second respondent asserted that the renovations cost some $300,000. The wife conceded there were extensive renovations and conceded she provided nothing towards those renovations.
The wife asserted that she purchased curtains and blinds and some furniture for the Suburb C property. The only evidence of any money of significance that the wife spent on the property was some $3,100 towards blinds.
The Suburb K property
In June 2013 the husband and wife agreed to purchase a home unit at Suburb K off-the-plan. They paid a ten per cent deposit of $102,960 and stamp duty of $42,138. I am satisfied on the evidence that all of the funds came from the second respondent. The wife provided no funds for this property.
The arrangements were entered into before separation and the settlement was to take place after separation.
Given the parties separation the second respondent said, and I accept, that she was not prepared to provide funds to the wife or the husband.
In October 2016 a sub-buyer was found for that property. That sub-buyer was willing to pay $1.25 million dollars for the property giving the parties an approximate net profit of about $150,000.
The wife was asked if she would agree to the sale. There was no quick reply and then on 2 November 2016 the wife was warned that if there was a default it could involve a loss of the deposit and perhaps liabilities beyond that. The wife would only agree to the sale if she was paid $100,000.
This was all about the wife and her perceived financial needs. She expressed no concern about the financial outcomes to the husband or to the second respondent. The simple solution would have been to on-sell the property, place the funds in trust and await the outcome of these proceedings. The wife eventually agreed to the sale, however, I accept the husband’s evidence that by that time it was too little too late.
I am satisfied that with this sale and then with the mortgagee sale of G Street, Suburb D the wife embarked upon a course of conduct designed to reduce or minimise the effective value or worth of those assets, and did so by acting, negligently or wantonly with those assets. It could best be described as the wife being ‘bloody minded’ with no regard for the consequences of her actions.
The City P property
It is not in issue that the husband and wife own property in Town O, City P. There is no issue that the City P property was purchased in September 2010, shortly before the parties married.[50] It is an agreed fact that the whole of the purchase price for City P was met by the second respondent and her husband
[50] See paragraph 102 of the second respondent’s trial affidavit filed 12 March 2020.
The parties are in agreement that at least one half of that property was a gift to the husband and wife in anticipation of their wedding.
There is a question as to whether it was a whole gift or a partial gift. The second respondent says in her trial affidavit the following:-[51]
102.… At the time, [the husband] said to me words to the following effect ‘[the wife] asked me to add her name because we are getting married soon and we are planning to obtain a Partner Visa for [the wife] to migrate to Australia with me. We should have some joint assets to show that our relationship is genuine. It would be easier for her to get a Visa’. I agreed for it to be purchased in [the husband] and [wife’s] name. I acknowledge that I gifted 50% of the property to them as a wedding gift and I acknowledge that they beneficially own that share. The remaining 50% is mine’.
[51] Ibid.
The husband says in relation to this property:-[52]
Around the time of our marriage, [City P] was purchased. My mother funded the purchase and paid the purchase price directly to the vendor. Neither I nor the [wife] made any payment to the purchase. The price was $280,000 AUD. The property was registered in the joint names of [the wife] and me. The property comprises a domestic house. [The wife] and I never lived in the property. I have reviewed what my mother has claimed in relation to this property and I do not challenge her claim.
[52] T husband’s trial affidavit paragraph 65.
As to this issue the wife says:-[53]
43.Shortly after the marriage in 2010, the [husband’s] parents purchased a unit in my home town in China, namely in City P, in Region Q. They said at the time that it was a wedding gift to us to give blessing for our marriage. It was registered in both our names. I deny [second respondent’s version of events with respect to ownership of this property. [The husband] said in paragraph 57 of his affidavit sealed 27 September 2018, “[the second respondent] gifted to us a property at City P at Region Q in China”. [The second respondent] made no denial of the City P property being a gift in her affidavit sealed 7 November 2017 but in her later affidavit sealed 25 October 2017, at paragraph 7, she claimed that 50% of that property was only gifted and the other 50% she now holds on trust); and
44.The unit is now vacant. My parents made body corporate payments until 2017.
[53] Wife’s trial affidavit.
The second respondent is asserting that there is either an express trust, constructive trust or a resulting trust in relation to this property. Her evidence is, as is the husband’s evidence, consistent.
The wife asserts that the second respondent has acknowledged the gift of the property to the parties in an earlier affidavit and that was not challenged.
I am not satisfied, on balance, that the trust, under Australian Law, is established. However, my jurisdiction and powers do not extend to property in China.
The parties have agreed that the City P property has a value of $280,000.[54] I will treat the property as having that value and I will note that in the orders.
[54] Exhibit E12 (1) and (2).
I have had regard to the statement of the wife’s mother[55] which is evidence of the City P property being wholly purchased as a wedding gift for the husband and wife.
[55] Exhibit E15.
The G Street Suburb D Property
G Street, Suburb D was purchased for about $1 million dollars in 2016. G Street, Suburb D was subject to a mortgage from the Westpac Bank in the sum of $810,000. There seemed to be no issue as to the acquisition of the property and that it was in the wife’s name. On the evidence, I am satisfied that the whole of the monies provided to acquire this property (other than through the mortgage) came from funds provided by the second respondent.
There is a serious issue as to whether it is the property of the parties or whether it is held on trust for the second respondent. What is clear is that the wife provided no funds towards the purchase price and provided no funds in relation to stamp duty or other acquisition costs.
For the purpose of this hearing it was agreed that that property had a value as at 2 October 2018 of $990,000 and a current value of $1,025,0000. Given the evidence of the significant transfer of funds by the second respondent to the husband, I am satisfied that the deposit, stamp duty and other expenses were paid by the second respondent.
The property was tenanted and the wife had control of the accounts for the rent and in relation to the mortgage payments. The tenant on that property was paying about $900 per week. There was about $829,000 owing on the property at that time. Following separation the husband became aware that the wife had sought to suspend mortgage payments on the basis of financial hardship. As at June 2016 the amount outstanding on that loan was some $817,714.
The loan repayments seem to have been a regular sum over that time of about $4,165 per month. Income went into the account however, withdrawals were made by the wife in August 2016 of two lots of $5,000.
It is significant to add that in the following year, on 6 November 2017, in an interim hearing before McClelland J, as he then was, the wife’s counsel asserted that the wife would commit to paying the mortgage on the Suburb C property and if allowed to retain G Street Suburb D property she would commit to payment of the G Street Suburb D property’.
When cross-examined in relation to this the wife prevaricated, deferred to her interpreter, I do not believe that she did not understand the question, and could not answer. The wife continued to take money from that account. At one stage the wife used the funds to pay some stamp duty and then asserted the stamp duty was paid by her. It was not. It was money taken from the rental account that should have otherwise been applied to the mortgage.
By 2018 there was little or no rent being received and the account was seriously in default with interest charges, default interest and the like. I am satisfied that the wife knew of those circumstances. When questioned she said she needed the money for herself.
These circumstances caused concern to the solicitors for the husband who instructed his solicitors to write to the wife’s then solicitor expressing their concern that the rent was not being applied against the loan.
The husband’s solicitors wrote again on 8 March 2020, there being no reply to their earlier letter. In May of 2018 the second respondent was contacted and informed that a default notice had issued in respect of the mortgage.
The solicitors for the husband wrote to the wife’s solicitors on 4 June 2018. The wife’s solicitors then wrote back to the husband’s solicitors on 5 June 2018 and indicated that the property had been vacated and that the wife was now living in the property. The wife is clearly not making any loan repayments.
The wife, through her solicitors said that:-[56]
Our client would be agreeable to our client residing in the Suburb F unit until this matter is resolved and our client would be prepared to sell the [G Street, Suburb D] property on the condition that she were to retain $100,000 as an interim payment.
[56] Husband’s trial affidavit paragraph 120 – Exhibit” AL”
The property was sold by mortgagee in possession and it seems an agreed fact that the wife’s conduct prevented the retention of the property or its orderly sale. The property was surrendered to the mortgagee with additional fees in terms of arrears in mortgage and default expenses, the amount of which is not clear. The wife acknowledged arrears in her affidavit material of some $15,262 and she seems to sheet this cost home to the husband.
When giving evidence in relation to this property the wife obfuscated and dissembled.
I am satisfied that the wife had accommodation available to her at modest sums. She obtained accommodation in Suburb BK where she lived until February 2019.
I am satisfied that this was the wife doing all she could to exert unreasoned and unreasonable pressure on the husband to provide her with money knowing full well that all of these monies were provided by the second respondent.
Properties in City BB, China
The husband asserts that prior to the marriage his parents purchased property for him in China. He said the property was purchased in his name, but he was not the beneficial owner and sets out the detail of those properties in his trial affidavit.[57]
[57] Paragraphs 60 to 65.
The second respondent referred to those properties in her trial affidavit saying that she had taken proceedings in China to have those properties returned to her name and that she had succeeded in obtaining orders in relation to one of the properties.
In her final submissions, counsel for the wife did not press that the husband had any interest in those properties and said:-[58]
MS CARR:Yes. Now, as to the next item, what that $510,000 referred to the properties in China was for the husband’s first financial statement where he said that the properties in China were about that. But we withdraw that [emphasis added]. Of course, now we have new evidence in the hearing to say – or recently filed – to say that the second respondent has now taken ownership of one of those properties, we believe, in China. We don’t know the values of the other two. So we just ask your Honour to bear that in mind for other parts of the application. Anyway, one of the parts of the application. Certainly, it’s a resource, I suppose. …
[58] Transcript of Proceedings dated 9 April 2020, page 36 lines 19 to 26.
Counsel for the wife said that that sum was not pressed, although she said it was likely to be a resource. However, given the evidence of the husband and the second respondent I am satisfied that the property is not and was not ever property to which the husband had beneficial ownership.
Burglary of the second respondent’s home
The second respondent asserted that in early 2017 goods were stolen from her home in China.[59] The second respondent asserted that significant and valuable items were removed from the home without her knowledge and consent and that these items were taken by the wife.
[59] Paragraphs 95 to 101.
The second respondent added that she showed a friend a photograph of the wife and that the wife was identified, by that friend, as the person who removed the second respondent’s property. However, that friend was not called to give evidence at the trial.
In cross-examination the wife denied that she removed those items.
5.33Furthermore, the conduct of the Wife with respect to the [G Street, Suburb D] property, which caused a mortgagee sale, should be taken into account in assessing the circumstances of the case.
5.34The intention of the Wife is not necessarily material to the determination regarding a constructive trust (see Chiu & Wei and Anor [2006] FamCA 788 per Ryan J at [34]). Justice Watts noted in Khalif & Khalif and Anor [2020] FamCA 39 at [28]:
The remedy of equitable proprietary estoppel can arise as a result of a finding that a party had an “expectation interest” (where the object of the remedy is to put the party in as good as position as they would have been had the other party performed the promise) or a “reliance interest” (where a party has acted to their detriment relying upon the promise).
(Original emphasis)
5.35With respect to the property at Suburb C the parties have treated that property as owned by the Second Respondent with the renovations undertaken. It would be unconscionable for the Wife to assert ownership where she has not made a direct financial contribution to the deposit, to the repayment of the mortgage, to the outgoings, to the renovations.
(Footnotes omitted)
Senior counsel for the husband adopted these submissions as to the law and counsel for the wife took no issue as to this outline of the legal principles which should guide my decision making. As such I have adopted these principles and applied them against the relevant findings of fact.
Express Trust
On the evidence I am satisfied that the husband and the second respondent had agreed that the husband would invest money on behalf of the second respondent and that he held such property on trust for her. Those trusts are evidenced in writing through the affidavits that the husband and second respondent filed and relied upon in these proceedings.
I accept that there was and is a meeting of the minds that the beneficial ownership of the funds and the property acquired with them, is that of the second respondent. This includes the payment of rates and mortgage payments by the husband with the funds of the second respondent.
I am satisfied that the proceeds of sale of the G Street, Suburb C property and the returned deposit from the Suburb K property have been traced back to the initial acquisition of the real property and the payment of stamp duty on the Suburb K property. As such they are beneficially owned by the second respondent. The second respondent’s interest in the Suburb J property arose from funding by her. This includes the $9,256 stamp duty which came from rental on the G Street, Suburb D property and are monies beneficially owned by the second respondent.
Consequently, I determine that the beneficial ownership of properties at Suburb F and Suburb C, the residue of the funds from the aborted purchase of the Suburb K property (including any stamp duty refund, the deposit and stamp duty in relation to the Suburb J property), the Motor Vehicle 2 and the L Company shares is that of the second respondent.
I am satisfied that in the circumstances in this case there is sufficient evidence to establish the express trust asserted by the second respondent.
Constructive Trust
If I am wrong as to the express trust, I am satisfied that there is, in all of the circumstances, a constructive trust in respect of that property.
I find this because I am satisfied that all of that real and personal property are beneficially owned by the second respondent as she paid for them (including mortgage repayments, albeit at times with contributions from arm’s length tenants). Neither the husband nor the wife made any meaningful contribution to those properties (except in terms of some blinds and curtains to the value of $3,100[82] and perhaps some furniture[83] - which contributions were not meaningful in the context of the substantive property acquisitions). I find there was a constructive between the husband and the second respondent as to the beneficial ownership.
[82] Wife’s trial affidavit paragraph 166, and Exhibit Tab 43.
[83] Ibid 33.
I accept that the husband failed to follow instruction from the second respondent to put the property in her name and rather put the properties in the wife’s name, his name or jointly.
I accept that the second respondent relied upon representations made by the husband that he would manage her funds and that she should not lose interest in such property. Leaving legal title in these properties as they presently exists, is unconscionable. In that regard I have taken into account the wife’s conduct in causing the mortgagee sale of the G Street, Suburb D property, the loss on the Suburb K property and her allocation of $190,000 of the second respondent’s money to herself.
Furthermore, the conduct of the wife with respect to the G Street, Suburb D property, which caused a mortgagee sale, should be taken into account in assessing the circumstances of the case.
Given the renovations to the Suburb C property, of between $250,000 and $300,000 the husband and wife effectively treated that property as owned by the second respondent with the renovations undertaken.
For the wife to assert ownership in the circumstance of the funding of the purchase, mortgage repayments and renovations, is unconscionable.
Resulting trust
If I am incorrect as to the express trust and constructive trust, I am satisfied that with regard to the relevant properties there is a resulting trust.
This primarily arises from my findings that the acquisition of that property was to all intents and purposes funded by the second respondent. There was no intention on the part of the second respondent to advance those funds and the property to the husband and or the wife, given the conversations that occurred between the second respondent and the husband, which I accept. As such the presumption of advancement is rebutted, given the facts and findings.
It is contended that the funds paid towards the mortgage (principle and interest) can form part of the resulting trust if that is the intention of the parties (see Bloch v Bloch (1981) 180 CLR 390; [1981] HCA 56).
In this case I have accepted the explanation and evidence of the agreement between the husband and his, non-English speaking, mother that he manage her money and purchase the property for her.
CONCLUSION
Given these facts findings and determinations, I will be making the declarations of trust sought by the second respondent in her Amended Response filed 22 June 2018.
The Section 79A Property Application
Generally
Given the earlier findings I am left with limited property owned by the parties.
The approach of the High Court in Stanford & Stanford (2012) 247 CLR 108 is that the Court, having determined the legal and equitable interests of the parties, needs to consider whether there ought to be property orders at all given the parties’ particular circumstances. The High Court said under s 79(2) of the Act:- [84]
… a court shall not make a property settlement order unless it is satisfied that it is “just and equitable” to do so.
[84] (2012) 247 CLR 108 at page 112.
The High Court said in Stanford:- [85]
It will be recalled that s 79(2) provides that ‘[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order’. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
[85] Ibid at pages 120 to 121.
The High Court then enunciated the three fundamental propositions:- [86]
First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the test of s.79(1)(a) itself, which refers to ‘altering the interests of the parties to the marriage in the property’ (emphasis added). The question posed by s.79(2) us thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
Secondly, although s.79(2) confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion.
…
Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is ‘just and equitable’ to make the order is not to be answered by assuming that the parties’ rights to or interests in martial property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that ‘[c]ommunity of ownership arising from marriage has no place in the common law’ [Hepworth v Hepworth [1963] HCA 49]. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be ‘decided according to the same scheme of legal titles and equitable principles as given the rights of any two persons who are not spouses’ [R v Watson; Ex parte Armstrong [1976] HCA 39]. The question presented by s 79 is whether those rights and interests should be altered.
Thirdly, 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’ [R v Watson; Ex parte Armstrong [1976] HCA 39]. 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.
[86] Ibid.
I am satisfied that it is appropriate for me to consider an order for the adjustment of property as between these parties, having regard to the comments of the High Court in Standford & Stanford (supra) and given the circumstances of these parties, their relationship, their contributions as I have addressed them in these reasons, and the way their property, including superannuation, is distributed at the present time. Given the comments that follow in these reasons, I am satisfied that it may have been appropriate for the Court to exercise jurisdiction and exercise its power to make an adjustment of property as between the parties, but having regard to the broader principles I am satisfied that it would not be just and equitable to make and property order as sought by the wife or otherwise.
The assets and liabilities of the husband and wife
There were a number of exhibits as to the property of the parties.[87] The second exhibit included property which I have determined is beneficially owned by the second respondent. In particular, the balance of proceeds of sale of the G Street Suburb D, the Suburb C property, the Suburb F property, the balance of deposit refunded from the Suburb K property, an entitlement to refund of stamp duty on Suburb K property, the off-the-plan property at Suburb J, the L Company shares and the Motor Vehicle 1.[88]
[87] Exhibit E12(1) balance sheet prepared for the husband, Exhibit E12(2) updated balance sheet of 9 April 2020 prepared for the husband and Exhibit E22 adjusted balance sheet after removal of property of second respondent.
[88] Exhibit E12(2) items 1,2,3,4,5,6,13 and 19.
The property of the parties is s set out in the schedule below, which is taken from Exhibit E22.
The City P property jointly owned by the husband and wife – determined.
$280,000
Husband’s ANZ account …76, amount not in issue.
$1,215
Husband’s Westpac account …11, amount not in issue.
$1,416
Husband’s funds in bank in China, amount not in issue.
$4,000
Joint husband and wife’s Westpac account, amount not in issue.
$263
Wife’s funds in account, amount not in issue.
$2,330
Husband’s superannuation, amount not in issue.
$11,091
Wife’s superannuation, amount not in issue.
$3,621
Total property
$303,936.00
Initially the wife claimed that the husband had some $330,000 in funds in the bank in China however, in submissions her counsel conceded that this sum was $4,000 in submissions. As such I have treated that figure as agreed.
The ownership of the City P property was in issue and I have determined that it is the joint property of the husband and wife. That property was gifted to the husband and wife by the second respondent and her husband. I had regard to that gift in terms of contribution and my overall determination of the property application. I make no declaration as to that property as it is situate in China.
In respect of the parties’ superannuation entitlements, the amounts involved are modest and neither party sought any splitting orders. Given the small amounts, I determine that they ought to be considered in a single list of property of the parties.
Liabilities
I will be making orders that the second respondent is liable for the mortgages over the Suburb C and the Suburb F properties and that she must arrange for the husband and wife to be released from any personal covenants in respect of the mortgages. As such, I will not treat them as liabilities of the husband and/or wife. I intend to require the second respondent to indemnify the husband and wife in relation to those mortgages and to refinance those mortgages within one year.
The wife set out debts totalling $167,106 contained in her financial statement filed 18 November 2019. I excluded the Suburb C mortgage and I note the wife otherwise claims:-
a)Mr BP-for the husband’s father’s prison issue owing $30,000
b)Mr M – legal fee $45,740
c)Mr N – legal fee $ 5,000
d)Mr BT $28,000
e)Mr BU $28,000
f)Mr BV $ 8,000
g)Ms BW $ 3,000
h)Mr BX $ 9,000
i)Legal fees owing to MLH Lawyers $10,366
These debts were not the subject of comment in the wife’s affidavit other than what the wife asserted in paragraph 104 where she said:-
When I was in China, my friends lent me $3,000 and $2,000 to pay my legal fees in April 2019. After I returned to Sydney, I borrowed $2,000 and $4,850 from my uncle to catch up part of my legal fees. I still have unpaid legal bills of $10,366 which was due by May 2019.
All of these debts were put into issue by the husband, see Exhibits E12(1), E12(2) and E22.
Given that the wife was legally represented and having regard to the information contained in Exhibit E17, showing the wife having incurred legal fees of $157,328, I accept that she owes legal fees of $10,366 to MLH lawyers.
As to the other claims, it is not in issue that on 12 November 2015 the wife had $190,000 in a bank account.
In July 2016, after separation, a significant proportion of those funds, $183,016.88, was transferred by the wife to one of her accounts. Those funds were withdrawn from a Sydney branch of the Commonwealth Bank on either 30 July 2016 or 2 August 2016.
This is at a time when the wife had, in the same month, spent $17,815 on handbags which was debited against the husband’s credit card. She was using part of the rent on the G Street, Suburb D property to fund her living expenses.
The wife asserted that she used the $190,000 in about August 2016, to assist in an appeal by the husband’s father in relation to the husband’s father’s imprisonment in China. The wife asserts to the Court that she used this money to pay some unknown person in China to achieve a successful appeal for the husband’s father. The wife refused to name that person. The second respondent denied that such monies were or could have been applied in that way.
It is inherently improbable that the wife used these funds as she asserts. I am satisfied that the wife retained that $190,000 and she likely spent such money on herself. Further, given my concerns about the nature of her evidence, I am not satisfied as to her assertion that she paid money to assist the husband’s father and owes money in that regard. The wife’s evidence in that regard is fabrication.
There was a challenge to the debts raised by the wife and it was open for her to call evidence from the people who allegedly loaned her the money. She did not do so.
It is also significant that the wife has paid legal costs to the extent of about $157,328. This included payments in cash to her former solicitors on 29 January 2018 of some $15,000. It was likely that the wife paid some or all of her legal costs out of the $190,000 fund.
In final submissions, senior counsel for the wife contended:-[89]
Now, it’s to be remembered for the purposes of the wife’s application for leave concerning spouse maintenance and her – otherwise as to her circumstances ... as identified by Ms Barnett that the wife contends that she borrowed great amounts of money from people who I cross-examined her about, Mr and Mrs [G], and you will recall her evidence about these persons being available to give evidence if thought necessary for those persons to be able to verify the fact of the loans or the advance of funds to the wife, and of course there’s an absence of evidence in the wife’s case to documents recording the advance of the funds, whether they be bank statements or loan documents. And we contend that your Honour would not be satisfied on the evidence first of all as to the fact of the alleged advance and secondly that if they were advanced, that they were loans. And the finding we ask your Honour to make is that it’s more likely than not on the balance of probabilities that the moneys were recirculated.
[89] Transcript of Proceedings dated 9 April 2020, page 26, line 14.
I have accepted that submission and made the finding that the money was recirculated.
Consequently, other than the outstanding legal costs, I do not accept the reliability of wife’s evidence as to the other debts. I will disregard them.
Add-backs
The wife sought add-backs against the husband totalling some $1.3 million. For the reasons articulated elsewhere, I am satisfied that these funds were funds of the second respondent. I am not satisfied that it was property accumulated by the parties during the course of the marriage. I am satisfied they were simply part of the monies provided by the second respondent to the husband to acquire property and which the husband has a beneficial interest. I accept the husband’s evidence in that respect and the evidence of the second respondent.
The wife claims an add-back of $14,000 being money taken from her from the husband’s Westpac account. I am satisfied that this was money removed from the wife and it was, in essence, monies of the second respondent.
Contributions
Given the limited nature of the property which is now as set out above, and taken primarily from Exhibit E22, the property falls into three areas. The non-superannuation assets, the superannuation, and the City P property with a value of $280,000, being $140,000 to each of the parties. In that respect, I accept that that property was not the subject of change in Australia as any orders made by this Court in respect of the property would not be enforceable in China.
In terms of contributions each of the parties came to the relationship with limited resources. The wife’s contributions may have been a few thousand dollars, the husband’s substantial assets was the Suburb F property which was in fact beneficially held by the second respondent.
The wife had much of her lifestyle supported, particularly in the first two years of the marriage, when she lived in a unit provided by the second respondent and then at the second respondent’s home. The wife had significant funds and lifestyle provided to her in terms of her accommodation at the Suburb F, Suburb D and Suburb C properties.
The wife had access to thousands of dollars including the $190,000 which she took and applied to herself at the time of separation.
The property in City P was wholly provided by funds from the second respondent and her husband.
Other than the City P property, with the limited assets remaining, the parties have contributed equally.
Section 75(2) of the Act factors
(a) The age and state of health of each of the husband and wife; and
The wife is aged 35 and is in adequate health, and I have discussed her health earlier in these reasons. She has the capacity to work, but chooses not to do so.
The husband is aged 40 and has the capacity to work, but at present choses to care for his mother.
(b) The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife has or is proposing to study in Australia. She has the capacity to work in finance or in the education industry.
The husband is financially supported by the second respondent. He could undertake employment if he chose to do so.
The parties only have one substantial asset, the City P property in China. They otherwise have not significant assets available to them.
The husband has a significant financial resource in terms of monies and accommodation provided by the second respondent.
(c)Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
There are no children of the relationship.
(d)Commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
Neither the husband nor wife have other child or children for whom they have responsibilities.
(e)The responsibilities of either party to support any other person;
The husband and the wife have no other persons to support other than themselves.
(f)Subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) Any law of the Commonwealth, of a State or Territory or of another country; or
(ii) Any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
This wife is not in receipt of a pension. This was not the subject of a relevant submission by the husband.
(g)Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable; and
The parties enjoyed a high standard of living during the relationship. With the events described earlier that standard of living has substantially reduced since separation.
(h)The extent to which the payment of maintenance to the party whose maintenance is under consideration will increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
The wife asserted that she needed support to undertake her tertiary legal studies.
(ha)The effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
The orders do appear to effect the ability of any creditor to recover debt.
(j)The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
The wife effectively contended that the acquisition of property was by her and that her contributions were substantial. I rejected that contention.
(k)The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
I had regard to the duration of the parties’ marriage, otherwise, this was not the subject of any meaningful submission.
(l)The need to protect a party who wishes to continue that party’s role as a parent; and
This was no a relevant consideration.
(m) If either party is cohabiting with another person – the financial circumstances relating to cohabitation; and
This was not a relevant consideration in terms of the wife. In terms of the husband, he was living with his mother and she was supporting him financially. I have regard to that circumstance. Neither the husband nor the wife provided evidence that they had re-partnered.
(n)The terms of any order made or proposed to be made under s 79 in relation to:
(i)the property of the parties; and
(ii)vested bankruptcy property in relation to a bankrupt party; and
I had regard to the property orders in terms of the wife’s spouse maintenance application.
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
This was not the subject of any submission.
(na)Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, or is to provide, or might be liable to provide in the future, for a child of the marriage; and
This was not the subject of any submission.
(o)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
This was not the subject of any submission.
(p)The terms of any financial agreement that is binding on the parties to the marriage; and
This was not a relevant consideration in these proceedings.
(q)The terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
175. This was not a relevant consideration in these proceedings.
I considered these factors in respect of both property and spousal maintenance
Just and Equitable
I discussed the question of exercising the just and equitable powers in Baillieu & Ballieu [2020] FamCA 188 and concluded that I ought not to adjust property in that case. I have considered the same principles in the light of the circumstances of the husband and wife in these proceeding’s.
I considered and accepted the submissions of senior counsel for the husband in his case outline:-[90]
[90] Exhibit E6 pages 21 to 22.
The wife agitates for an exercise of discretion pursuant to section 79 of the Act.
The power to adjust property pursuant to section 79 is restrained by the requirement in the section to determine that it is just and equitable to alter property. Section 79(2) provides that the Court “must not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”.
The husband submits there is an absence of warrant, on the evidence, for finding that it is just and equitable to adjust any property to the wife – that includes the property jointly held at law by the parties in China. It is not the subject of contest that any orders made by this Court as to that property interest will not be recognised in, or will be enforceable in, China.
The husband contends that it would be contrary to fundamental notions of fairness, justice and equity to adjust any property interests in favour of the wife. She has retained the benefit of significant property post separation.
As to the wife’s case, the Judgment of Justice Guest in Pedersen is apposite to the circumstances of this case – that is, the Court must carefully safeguard against using section 79 of the Act as a “source of social engineering or a means of evening up the financial positions for a party to the marriage”.Justice Wilson in Mallett said it was not the purpose of section 79 to “equalise the financial strengths of the parties” he said that section 79 is not to be an “unbounded exercise of distributive justice”.
The High Court has said on a number of occasions that section 79 is not a facility for “palm tree justice”. The Court would not endorse the wife’s ambit claim.
In the event the Court does not accept the case of the 2nd Respondent as to the beneficial ownership of the real property, and as to the balance of the proceeds of sale of the G Street, Suburb D unit and the balance of the deposit refunded on rescission of the contract to purchase units “off the plan”, then the husband contends, consistent with the doctrine identified by the Full Court in Kessey, that such contributions made by his mother were on his behalf, and in the circumstances of this short childless marriage that in reality was for 3.5 years of cohabitation living in the home of his parents, that any such property, as remains legally and beneficially held by the husband pursuant to order of this court, should be adjusted to him.
(Original emphasis)
As I said earlier the High Court in Stanford (supra) made it clear that no order should be made unless the Court is satisfied that in all of the circumstances it is just and equitable to make an order.
To address this question I have identified, according to common law and equitable principles, the existing legal and equitable interests of the parties in the property.
I have under s 79(2) of the Act a broad power to make a property settlement order. It is not a power that is to be exercised according to an unguided judicial discretion. It should be exercised in a principled fashion.
It would seem to me to be inequitable and unjust to make property orders in this case which would vest any further of the remaining property in the wife.
Accordingly, as to property, given the circumstances of the husband and the wife I am not intending to make any property orders adjusting property other than a declaration of ownership that, as against each other, the wife and husband each retain the property that is in their respective names, possession and control, other than that property the subject of the declaration of trust.
This would mean that the husband and wife would each retain their respective $140,000 equity in the City P property.
The husband will retain the modest amounts in the bank accounts and his superannuation.
The wife will retain her modest superannuation and the funds which she allocated to herself shortly before or at the time of separation.
The second respondent and husband sought a self-executing order for a Registrar to execute documents transferring particular real property, funds arising from an agreement to buy real property, shares, and a motor vehicle to her name.
I have considered that submission made by counsel and senior counsel for both the second respondent and the husband and given the conflict that exists between the parties I am satisfied that such order ought to be made in the circumstances of these parties.
Spousal Maintenance
The wife sought spousal maintenance from the husband and given the delay in bringing her application she needed to seek leave under s 44(3) of the Act.
The parties’ marriage was dissolved by an order made in the Federal Circuit Court on … 2017 and that order became absolute on … 2017. The wife’s spousal maintenance application was contained in her Amended Initiating Application filed 3 April 2020. She sought spousal maintenance of $550.00 per week for four years.
As to the substantive application, I accept that the wife has formal finance qualifications obtained by her in China. It is open for her to seek work in finance or the like.
The wife has high level English qualifications such that she believed she was able to study at a Tertiary level. In addition she has education qualifications and worked in that industry for many years.
The wife left Australia in early 2019 and left her long term employment. She returned to Australia later in 2019. I accept submissions by senior counsel for the husband that there was no evidence that the wife had made any applications for employment. She was supported by her parents in China and she had a history of working in that State.
I accept that there is an absence of evidence by the wife of trying to exercise her earning capacities. Her decision to study is a lifestyle decision.
Given her work history, I am satisfied that the wife could support herself adequately, if she sought employment.
Whilst the impact of the economic shutdown may impact on her present ability to obtain paid work it must likewise similarly impact upon the husband.
The maintenance application was brought very late and I am not satisfied that the substantive case is established in any event.
The late claim for spousal maintenance out of time had a significant impact upon the husband’s ability to deal with it. It was submitted on behalf of the husband, and I accept, that he suffered prejudice with the late application. The husband complained that he would have tried to better ascertain the availability of employment for the wife, but was unable to do so because of her late application for spousal maintenance.
The wife was legally represented throughout the proceedings and she would have implied knowledge of the time limits for making such claims. Yet the application was made very late.
If leave were granted I am not satisfied that the wife would have, in all the circumstances have established the need for support given her earning capacity. As such the threshold would not have been crossed.
Further, given the late notice and being out of time, in circumstances where the wife knew or ought to have known about the time limits, I would not have and do not extend the time to enable the wife to commence the application for maintenance. There would be hardship in the form of procedural unfairness to the husband.
There was no evidence as to why the application was not commenced in time.
As such I refuse leave to extend the time for the wife to commence proceedings for spouse maintenance. If I am wrong, I would not have made an order for spouse maintenance in this matter given the facts, findings and determinations set out earlier in these reason.
I certify that the preceding four hundred and one (401) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 8 July 2020.
Associate:
Date: 8 July 2020
- AGLC
- MEI & YAO AND ANOR [2020] FamCA 544
- Case
- [2020] FamCA 544
- Decision Date
CaseChat Overview and Summary
The central legal issue before the court was to determine the true beneficial ownership of the listed assets and to make consequential orders for their transfer. The court was required to ascertain whether the wife and husband held these assets in their own right or on trust for Ms Zhou, and if the latter, to facilitate the transfer of legal title to Ms Zhou and address associated obligations.
Benjamin J reasoned that the wife and husband held the specified properties as trustees for Ms Zhou, applying principles of trust law to the facts before him. The court ordered the wife and husband to transfer their legal interests in these properties to Ms Zhou within one year, with Ms Zhou to discharge any personal covenants to mortgagees and to meet all associated payments and indemnify the wife and husband in that regard. The court also made provisions for the execution of necessary documents by a Registrar of the Court in the event of refusal or neglect by the parties. Furthermore, the court ordered that each party relinquish claims to property in the possession of the other, except as otherwise provided, and dismissed the wife's application for spousal maintenance and all other extant applications, reserving costs.
Orders
Orders of the court
1.
THIS COURT DECLARES that Ms Mei (the ‘wife’) and/or Mr Yao (the ‘husband’) hold and/or held their interest in the following properties (‘the properties):-
(a) 2 E Street, Suburb F NSW being land comprised in folio identifier … and 4 E Street, Suburb F NSW being land comprised in folio identifier … (the ‘Suburb F property’);
(b) B Street, Suburb C NSW being land comprised in folio identifier … (‘the Suburb C property’);
(c) The proceeds of sale of G Street, Suburb D NSW being land comprised in folio identifier … (‘G Street, Suburb D property’);
(d) Interest (including without limitations any and all choses in action) in the “off-the-plan” property known as H Street, Suburb J NSW being land comprised in folio identifier … (‘the Suburb J property’);
(e) Interest in the refunds of deposit and stamp duty arising from the contract entitlements (including associated choses in action) held by the wife and/or the husband in the “off-the-plan” property at Suburb K (‘the Suburb K property’);
(f) All L Company Shares held in husband’s name; and
(g) The Motor Vehicle 1;
as trustees for Ms Zhou (‘the second respondent’).
2.
A consequential order that the wife and the husband transfer their legal interest/s in the properties to the second respondent within one (1) year from the date of this order, or such other time as is ordered by this Court or a court (provide the request for additional time is made within one (1) year from the date of these orders).
3.
Simultaneously with the transfers of legal title in the properties to the second respondent, she shall cause any personal covenants given by the wife and/or the husband to any mortgagee or charge over any one or other of the properties to be discharged. In the meantime the second respondent shall meet all payments, insurance, rates taxes and the like and of interest and principle in respect of mortgages etc. over the properties and shall indemnify the husband and wife in that respect.
4.
The parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders.
5.
In the event that either of the husband and wife refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders:-
(a) A Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
(b) It shall be sufficient to establish default as provided for in these Order if any document sent by email or by prepaid post or courier to the last known address of that party required to sign and if that document is not returned executed to the sender within fourteen (14) days.
6.
Otherwise than as is provided for in these orders, each party shall relinquish in favour of the other party any claim to any right, title or interest in all items of property presently in the possession, control or custody of the other party including but not limited to real property in China, monies held in any bank, building society or credit union, jewellery, shares, superannuation or life entitlements.
7.
The wife’s application for spousal maintenance is dismissed.
8.
All other extant applications are dismissed except as to costs.
9.
Any application for costs is to be made in accordance with the Family Law Rules 2004 (Cth).
10.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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