Ming and Dao (No 2)
[2020] FamCA 1124
FAMILY COURT OF AUSTRALIA
| MING & DAO (NO. 2) | [2020] FamCA 1124 |
| FAMILY LAW – PROPERTY – injunctions sought with respect to proceeds of sale – alleged failure to make proper disclosure – complex business structures – valuation of businesses yet to be completed – expedition sought – injunctive relief not granted – expedition not granted – application dismissed – no order as to costs. |
| Fanily Law Rules 2004 (Cth) |
| Cardile & Ors v LED Builders Pty Ltd [1999] HCA 18 Waugh& Waugh [2000] FamCA 1183 |
| APPLICANT: | Mr Ming |
| RESPONDENT: | Ms Dao |
| FILE NUMBER: | SYC | 8463 | of | 2017 |
| DATE DELIVERED: | 16 December 2020 |
| PLACE DELIVERED: | Sydney via videoconference |
| PLACE HEARD: | Sydney via videoconference |
| JUDGMENT OF: | Altobelli J |
| HEARING DATE: | 14 December 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Lloyd SC |
| SOLICITOR FOR THE APPLICANT: | Pigdon Norgate Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Strum QC |
| SOLICITOR FOR THE RESPONDENT: | Diamond Conway Lawyers |
Orders
The application in a case filed 3 December 2020 be dismissed.
The matter be referred to the Listing Coordinator for further listing.
The parties do all acts and things and sign all documents necessary to cause the proceeds of sale of the property Y Street, Suburb B ("the Suburb B Property") to be paid in the following order and priority:
(a)To pay all amounts necessary to discharge the mortgage secured by the Suburb B Property;
(b)To pay all costs and expenses of the sale of the Suburb B Property including legal costs and disbursements, agent's commission, advertising and sale expenses;
(c)To pay the remaining proceeds of sale as to 30% to the husband and 70% to the wife.
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 Ming & Dao has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5463 of 2017
| Mr Ming |
Applicant
And
| Ms Dao |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
By way of an application in a case filed 3 December 2020, supported by an affidavit of 3 December 2020, and a financial statement of 3 July 2020, the husband seeks injunctive orders in relation to the sale proceeds of a property which he owns with his wife at Suburb B (‘Suburb B property’). In effect, the orders he proposed would see the net sale proceeds after payment of the expenses of sale, of utilities and of the mortgage, divided 30 per cent to himself, and the remaining 70 per cent which is agreed to be the wife’s share, to be paid in the husband’s solicitor’s trust account. The husband also sought expedition of a final hearing.
By way of a response to the application in a case, filed on 10 December 2020, and supported by an affidavit of that date, the wife seeks orders that the net sale proceeds be divided 30 per cent to the husband and 70 per cent to her.
Mr Lloyd of Senior Counsel appeared for the wife, and Mr Strum of Queen’s Counsel for the husband, and both provided and filed very useful case outline documents.
By way of background, there are substantive property proceedings between the husband and wife. This seems to be at least the third time this matter has come back to the Court and required its intervention. The pool of assets appears substantial and complex with issues presenting that include valuation, tax liabilities, non-disclosure, contribution and possibly even future needs factors. Based on submissions made by both Counsel, it seems that the parties are about 40 per cent apart, though one cannot but help to get the impression that perhaps there is a bit of sabre-rattling and positioning taking place in this regard.
It is common ground that valuations of the seemingly complex business structures of these parties will be available by February or March 2021. The valuation has been a long time coming. The husband blames the wife for this, but another reasonable impression that can be formed from the material before the Court, is that the COVID-19 pandemic and the tax audit that the wife has been subjected to at least contributed in a major way to the delays in facilitating the valuation in 2020.
The question for the Court is whether or not it should grant the injunctions sought by the husband, or some form of it. And if not, whether or not it should make the orders sought by the wife.
There is urgency as the settlement of the sale of the Suburb B property occurs next Monday, 21 December, followed soon after by the Christmas closure of this Court, and thus, an early determination is required. These reasons are being delivered orally at least in the first instance because of this.
I am satisfied that the applicable law is comprehensibly set out in the Full Court’s decision in Waugh & Waugh [2000] FamCA 1183. There are many relevant paragraphs to which the Court makes reference, including, for example:
a)paragraph [32] as to this Court’s jurisdiction;
b)paragraph [33] as to the applicability and Family Law of principles developed in other areas of law;
c)paragraphs [34] and [35], which refer to the High Court’s decision in Jackson & Sterling Industries Limited [1987] HCA 23;
d)paragraphs [37] – [38], [40] and [42];
e)paragraphs [43] – [44] that refer to the High Court’s decision in Cardile & Ors v LED Builders Pty Ltd [1999] HCA 18;
f)paragraphs [45] and [46], which contain a discussion of the failures of the trial judge in that case to properly implement the principles that have been identified above, and thus, providing a quasi-checklist of factors that can be applied even to this case;
g)paragraph [50] that refers to the Full Court’s decision in Stowe & Stowe [1980] FamCA 92; and
h)paragraphs [52], [56] and [57], which are of by way of implementation of the principles enunciated above to the facts of the case.
So what is the husband’s case? Doing the best the Court can to understand the husband’s case, it seemed to be that the injunctions sought were warranted because of what was contended to be the wife’s persistent failure to disclose in accordance with the Family Law Rules2004 and Court orders and this causing delay, and by inference, he was suggesting obstruction to the valuation process. This was contended to result in a situation where the pool of assets available for distribution was uncertain and the divergence between the respective claims of both spouses so high, there was, he contended, a resulting fear or risk that allowing the wife to access her 70 per cent share of the sale proceeds would put such funds beyond the reach of both the husband and the Court.
The husband’s contentions which I have summarised above, perhaps in a minimalistic way, need to be compared to the evidence that the husband, in fact, leads himself in his affidavit of 3 December 2020, relevant to the orders he seeks. He contends that he has been excluded from participating in the wife’s business activities such that she has sole control of the various corporate structures. He asserts that the litigation has been long-running and, at least inferentially, blames the wife for that. He contends that the wife has delayed the process of valuation, and has either been tardy in or has simply not disclosed as required.
The summary of his case is conveniently found at paragraph 32 of his affidavit, which is reproduced below:
32. I make the current application in circumstances where:
32.1. Ms Dao has the sole control of the companies, and has had sole control since at least March 2017.
32.2. Ms Dao has closed a number of companies and businesses, including Z Company, AA Company and V (Suburb M) and opened new companies since separation. The closing of companies and associated hospitality businesses has resulted in a reduction of assets available for distribution
32.3. Ms Dao has participated in a tax audit (without my input), and had the apparent use of over $1,700,000 as disclosed to the Australian Taxation Office ("ATO"), and she has not satisfactorily accounted for how these funds have been utilised. I refer to paragraphs 114 to 127 below. Ms Dao 's disclosure to the ATO has resulted in a liability to the ATO.
32.4. Ms Dao has not yet finalised her or the companies' tax position for the financial years ended 30 June 2019 and 30 June 2020, and this liability may not be quantified until the ATO has completed their audit.
32.5. Ms Dao has continued to delay the progression of the matter through her failure to provide disclosure in a timely manner and to instruct the single expert.
32.6. If the proceeds of the sale of the Suburb B Property are distributed it may frustrate my claim. Following the sale of the Suburb B Property, the equity available in real property will be about $3,980,000 (not including property in China), while the businesses have previously been valued at $5,820,000 by Ms Dao.
Specifically, in the context of the property and the division of net sale proceeds, what appears to be the zenith of the husband’s case, is found at paragraph 43. The term nadir is perhaps a better description for this paragraph. Other relevant paragraphs include paragraph 44, where the husband estimates that the parties’ real estate holdings in Australia have a net worth of about $4 million and paragraph 46, where he contends that the wife’s value of her businesses at $5.8 million was too low.
Thus, on one view, perhaps a reasonable view, the husband contends that the parties’ net worth is at least $10 million. But he seeks, in these circumstances, to deprive the wife of her 70 per cent share of the net sale proceeds that would equate to around $560,000.
As to the wife’s case, in short, it is that a payment to her of the 70 per cent net proceeds of sale does nothing to hinder, delay or frustrate the husband’s substantive claim in the property settlement because there are ample assets for distribution, as set out in her affidavit. The husband contends that the business entities are not nearly as vast the wife contends, and that the businesses have been badly affected by COVID-19 and now, he claims, the ATO tax audit. Nonetheless, she contends there is still ample equity out of which the husband’s claim can be satisfied, given that she contends a substantial initial contribution.
In discussing the matter, the Court observes that there must be a sound jurisprudential basis for the injunction sought by the husband. The authorities make it clear that it has to be more than what he fears might happen. It has to be more than mere concerns based on what he contends, and which the Court cannot find due to the very nature of these proceedings. In any event, to what he contends to be non-disclosure and delay by the wife who controls most of the parties’ property and total wealth, there must be evidence of a danger of the wife dissipating her share of sale proceeds.
The husband’s claim cannot be justified on the material before the Court, and taking the husband’s case at its highest. None of the matters articulated above are satisfied. There is neither any danger as inferentially asserted by the husband, or the risk that his claim cannot be satisfied. The requisite standard that is set in Waugh and confirmed in later decisions (e.g. Mullen and De Bry [2006] FamCA 1380) is not met by the husband, and therefore, his claim must fail.
The husband also sought expedition. The wife did not oppose this. The Court declines to grant expedition for the following reasons.
Firstly, there is nothing unusual about this case. There is, indeed, nothing about this case that differentiates it from other cases in my docket, many of which are older and equally, if not more, complex. Secondly, the valuations are not completed. Thirdly, the tax audit is ongoing and may crystallise a significant liability. And fourthly, it occurs to the Court that the businesses in question appear to have been particularly susceptible to COVID-19. The passage of time may see these businesses recover from the setbacks that they have experienced, thus potentially affecting valuation. Perhaps this is a case where the parties should not, in fact, be in a rush to finalise their case? Ultimately, these are matters that are entirely left to the parties themselves.
If there is to be a costs application, it can be made in the usual fashion within the timeframe that is prescribed by the Family Law Rules 2004. The matter otherwise goes back to the listings co-ordinator on a date to be advised for any further case management.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Altobelli delivered on
16 December 2020.
Associate:
Date: 11 January 2021
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