Qian & Xue

Case [2022] FedCFamC1A 93

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Qian & Xue [2022] FedCFamC1A 93  

Appeal from: Xue & Qian [2021] FedCFamC2F 695
Appeal number(s): NAA 91 of 2021
File number(s): BRC 11124 of 2019
Judgment of: ALDRIDGE J
Date of judgment: 21 June 2022
Catchwords: FAMILY LAW – APPEAL – Application for leave to appeal – Appeal against an order which required the appellant to pay a sum of money to the trust account of the solicitors for the respondent and an indemnity costs order – Interim freezing order – Where the appellant received a sum of money and transferred the majority of it to her family members – Where the freezing order exposed the appellant to the risk of punishment for contempt in the event it was not complied with – Freezing orders operate to preserve the status quo – Error of law – No basis for the indemnity order upon the success of the appeal – Leave to appeal granted – Appeal allowed – Relevant orders set aside – Respondent to pay the costs of the appellant in a fixed sum.    
Legislation: Family Law Act 1975 (Cth)
Cases cited:

Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856; [1999] FamCA 745

Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18

Deputy Commissioner of Taxation v Huang (2021) 395 ALR 616; [2021] HCA 43

Jackson v Sterling Industries Ltd (1987) 162 CLR 612; [1987] HCA 23

Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28

National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35

Teo & Guan (2015) FLC 93-653; [2015] FamCAFC 94

Number of paragraphs: 54
Date of hearing: 7 June 2022
Place: Sydney (via video link)
Counsel for the Appellant: Mr Hackett
Solicitor for the Appellant: Evans Brandon Family Lawyers
Counsel for the Respondent: Mr Alexander
Solicitor for the Respondent: Hey Family Law

ORDERS

NAA 91 of 2021
BRC 11124 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION
BETWEEN:

MS QIAN

Appellant

AND:

MR XUE

Respondent

ORDER MADE BY:

ALDRIDGE J

DATE OF ORDER:

21 JUNE 2022

THE COURT ORDERS THAT:

1.The appellant is granted leave to appeal.

2.The appeal is allowed.

3.Order 2(c) and Order 5 made on 22 November 2021 are set aside.

4.The appellant deposit the sum of $100,000 into the trust account of [W Law Firm] to be held on trust for both parties and not disbursed without further court order or written agreement between the parties.

5.The respondent is to pay the appellant’s costs fixed in the sum of $5,436.56.

Note:   The form…

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AGLC
Qian & Xue [2022] FedCFamC1A 93
Case
[2022] FedCFamC1A 93
Decision Date

CaseChat Overview and Summary

The appeal was brought by Ms Qian against an order made in the Federal Circuit and Family Court of Australia in family law proceedings. The order required Ms Qian to pay a sum of money to the trust account of the respondent’s solicitors and imposed an indemnity costs order. Ms Qian appealed the decision on several grounds, including the necessity of the freezing order, the absence of the usual undertaking as to damages, and the absence of any consideration of the husband’s claim and the remaining assets.

The court found that the freezing order was not necessary because the remaining assets in Australia were sufficient to meet any appropriate claim by the husband. The court also found that the absence of the usual undertaking as to damages did not necessarily invalidate the order. However, the court found that the primary judge had made an error of law in not considering the nature and extent of the husband’s claim and whether the remaining assets were sufficient to meet it. The court found that this error was material and that a substantial injustice would result if leave to appeal was refused.

The court allowed the appeal and set aside the orders. The court ordered that Ms Qian deposit the sum of $100,000 into the trust account of the respondent’s solicitors, to be held on trust for both parties and not disbursed without further court order or written agreement between the parties. The court also ordered that the respondent pay the appellant’s costs fixed in the sum of $5,436.56.

Orders

Orders of the court

NAA 91 of 2021

BRC 11124 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MS QIAN

Appellant

AND:

MR XUE

Respondent

ORDER MADE BY:

ALDRIDGE J

DATE OF ORDER:

21 JUNE 2022

THE COURT ORDERS THAT:

1. The appellant is granted leave to appeal.

2. The appeal is allowed.

3. Order 2(c) and Order 5 made on 22 November 2021 are set aside.

4. The appellant deposit the sum of $100,000 into the trust account of [W Law Firm] to be held on trust for both parties and not disbursed without further court order or written agreement between the parties.

5. The respondent is to pay the appellant’s costs fixed in the sum of $5,436.56.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Background

Background to the litigation

Leave to appeal will be granted and the two orders are set aside for the following reasons.BACKGROUND The parties met in 2012 and lived together for a short period in 2013. The parties were married in late 2015 and separated in early September 2017 (according to the husband) or in early October 2017 (according to the wife). Despite the shortness of the relationship and the fact that at its commencement neither party had any significant assets nor earned any income of great significance, the parties managed to acquire several properties whilst it subsisted, often with the help of their relatives. The husband’s evidence was that a property at Town C was purchased in July 2018 for $1,050,000 and registered in the wife’s name. The husband says that the wife sold the property in December 2018 to a friend of her father for $800,000, without informing the husband. The wife agreed that the property was sold for $800,000 and that she transferred $667,00 from the sale proceeds to her parents in repayment of loans made prior to and during the marriage (Wife’s affidavit filed on 20 November 2019, paragraph 9(v)). The husband filed an Initiating Application seeking property settlement orders on 16 September 2019. The husband deposed that he became aware on 17 August 2021 that the Supreme Court of Queensland proceedings over the shareholding in B Pty Ltd had been resolved (Husband’s affidavit filed on 24 August 2021, paragraph 4) and that as a result the wife was to receive a payment of $850,000. The wife’s solicitors were asked to confirm this by a letter sent on 19 August 2021. There was no reply and on 24 August 2021 the husband filed an Application in a Case seeking an urgent injunction restraining the wife from dealing with the proceeds of the action. For reasons that are not apparent, no application for interim ex parte relief was made, for which, in the circumstances, there would have been justification and instead, rather perplexingly, the application was listed for hearing on 22 November 2021. At that hearing, an oral application was made so as to expand the application to include the order for the return of the funds. The wife received $850,000 on 30 August 2021. The next day she withdrew $15,000 and paid it to her brother in part repayment of a loan. She said that this payment occurred before the cheque for the deposit cleared. On 1 September 2021, a further $20,000 was withdrawn and paid to her brother, which was the balance of the loan. On the same day the wife withdrew $50,000 and $650,030 (including a $30 bank fee) which she paid to her sister and father respectively for repayment of loans and, in the father’s case, a further $463,000 to support his business which was struggling as a result of COVID-19. There is no suggestion that the deposit was anything other than the wife’s money or that the payments were in breach of either a court order or undertaking. Rather, the basis for the injunction that was sought was that any disposition of the funds would put them beyond the jurisdiction of the court and diminish the property pool available for distribution.

Evidence

Evidence Before The Court

I shall therefore deal only briefly with the other grounds.Did the evidence before the Court establish the necessity for the order? (Ground 1(a)) It is to be recalled that the purpose of a freezing order is to ensure that the exercise of the Court’s jurisdiction is not frustrated by the removal of assets. Such an order should do the minimum disturbance necessary (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [124]). The wife submitted that the assets remaining in Australia were more than enough to meet any appropriate claim by the husband, particularly having regard to the very short marriage and the extensive assistance from the parties’ parents. Counsel for the wife prepared a balance sheet which sought to demonstrate that the net assets available for division in Australia ranged between $7.5–8.5 million, however it was a contentious document and nothing like it was placed before the primary judge. For those reasons I accord it little weight. More to the point, was the wife’s evidence that three of the properties were in the hands of a bank as mortgagee in possession. It was owed a total of $1,760,000. Valuations conducted in January 2020 gave a combined value to the properties of $2,750,000, leaving a significant surplus. Whether such an amount is sufficient to meet the husband’s claim was never explored. More importantly, a freezing order is only justified if, without it, the exercise of the Court’s jurisdiction would be frustrated. That required a consideration of the nature and extent of the husband’s claim and whether the remaining assets were sufficient to meet it. If so, there was no basis for the order for return of the funds. There is some force in this argument as the primary judge did not undertake such a consideration but this is lost once it is accepted that this issue was not raised before her Honour. In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66, Gummow A-CJ, Kirby, Hayne and Heydon JJ said:120.…when a court is invited to make a discretionary decision, to which many factors may be relevant, it is incumbent on parties who contend on appeal that attention was not given to particular matters to demonstrate that the primary judge’s attention was drawn to those matters, at least unless they are fundamental and obvious. There would therefore be some difficulty with this ground succeeding. See also Metwally v University of Wollongong (1985) 60 ALR 68; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418.What was the effect of the absence of the usual undertaking as to damages? (Ground 1(c)) It may be accepted that, generally speaking, the giving of the usual undertaking as to damages is the usual course when obtaining an interlocutory injunction (National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 559–561). There may be more leeway in applications under the Family Law Act 1975 (Cth) (Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856).

Decision

Reasons for decision

In her Response to the Application in a Case, the wife proposed that the remaining proceeds of the Supreme Court of Queensland action, $100,000, be paid to the trust account of her solicitors and not to be disbursed without an order of the Court or the written agreement of the parties. I understand the payment has occurred. To formalise matters it is appropriate that this order be made. CONCLUSION AND COSTS It can be seen from the above that the decision of the primary judge was erroneous and that a substantial injustice would result if leave to appeal was to be refused (to paraphrase Medlow & Medlow (2016) FLC 93-692 at [57], somewhat to give effect to the above finding). Leave to appeal will be granted. The appeal has been successful. Counsel for the husband properly conceded that the costs order sought was just in the circumstances. The husband will be ordered to pay the wife’s costs fixed in the sum of $5,436.56.

Ratio Decidendi

Legal Principle Established

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