Sum and Chia and Ors (No 2)

Case •

[2013] FamCA 927

•

1 November 2013

FAMILY COURT OF AUSTRALIA

SUM & CHIA AND ORS (NO 2) [2013] FamCA 927
FAMILY LAW – PROPERTY – process and procedures
APPLICANT: Ms Sum
RESPONDENT: Mr Chia

2ND RESPONDENT:

Mr Cui

3RD RESPONDENT:

C AA Pty Ltd as trustee for the C Unit Trust

4TH RESPONDENT:

D Pty Ltd as trustee for the E Trust

5TH RESPONDENT:

Ms Ceoi as trustee for the Cui Family Trust
6TH RESPONDENT: Mr Sum

7TH, 8TH, AND 9TH RESPONDENTS

C BB Pty Ltd & F Pty Ltd as trustee for the G Trust & C Pty Ltd as trustee for the C Trust

INDEPENDENT CHILDREN’S LAWYER:
FILE NUMBER: MLC 896 of 2010
DATE DELIVERED: 1 November 2013
PLACE DELIVERED: Melbourne
PLACE HEARD:
JUDGMENT OF: Johns J
HEARING DATE: 1 November 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wilson QC
SOLICITOR FOR THE APPLICANT:
COUNSEL FOR THE 1ST, 4TH, 5TH, 7TH, 8TH, 9TH RESPONDENTS: Mr North SC
SOLICITOR FOR THE RESPONDENT:
COUNSEL FOR THE 3RD RESPONDENT: Ms Dorian
COUNSEL FOR THE 2ND AND 5TH RESPONDENTS: Mr Melilli
COUNSEL FOR THE 6TH RESPONDENT: Mr Witt

Orders

  1. The Husband undertakes to the Court that pending the Wife receiving the payments referred to in Orders 8 and 12 hereof or earlier Order of this Court, he will not, by himself, his servants or agents or howsoever otherwise:

(a)sell, transfer, dispose of or in any way encumber the shares or units held in his name or beneficially on his behalf whether individually or via any corporate or trust entity other than in the ordinary course of business;

(b)resign from any corporate position including as Director, Secretary or Public Officer of any company in respect of which he holds such a position;

(c)resign as appointor or Chiae any trustee of any trusts in respect of which he has involvement either personally or via any corporate entity;

(d)alter any trust deed in any manner of whatsoever including but not restricted to the removal or adding beneficiaries;

(e)do any act or thing or sign any documents which may cause any further allocation of distribution or dividend from C AA Pty Ltd as trustee for the C AA Unit Trust, D Pty Ltd as trustee for the E Trust or any further or other corporate entity and trust which he may have involvement or entitlement;

(f)sell or offer for sale the business conducted by C AA Pty Ltd as trustee for the C AA Unit Trust and/or D Pty Ltd as trustee for the E Trust or any other corporate entity in respect of which money value be held in any bank account in Australia or overseas;

(g)make any further distribution or pay any further dividends from the restrained funds identified in paragraphs 12, 13 and 15 of the Affidavit of the Wife sworn 11 October 2013;

provided that:

(i)C AA Pty Ltd as trustee for the C AA Unit Trust be entitled to apply up to $1,000,000 of the said funds for the payment of expenses incurred in the ordinary course of business; or

(ii)the Husband give to the Wife’s solicitors 30 days’ notice in writing of his intention to commit any act or engage in any transaction not otherwise permitted by the terms of this undertaking; 

(iii)the Husband and the Third, Fourth, Seventh, Eighth and Ninth Respondents are entitled to do such things for the purposes of carrying in to effect the Orders hereafter.

BY CONSENT IT IS ORDERED:

  1. F Pty Ltd as trustee for the H Trust ABN … be granted leave to intervene in these proceedings.

  1. That contemporaneously with the payments referred to in Orders 8 and 12 hereof;

(a)     The Wife and Mr Sum being the 6th Respondent by themselves, their servants and agents do all such things and acts and sign all documents as may be reasonably required to disclaim and renounce for no consideration the Wife's and Mr Sum's rights and interests as an income beneficiary, capital beneficiary or default beneficiary in any of the entities (if any) with which the Husband is associated if and when called upon to do so, including but not limited to:

(i)     The E Trust;

(ii)    The H Trust;

(iii)   The C AA Trust; and

(iv)    The G Trust.

(b)     The Wife and Mr Sum by themselves and their servants and agents do all such things and acts and sign all documents as may be reasonably required to resign for no consideration as a current or successor appointor, guardian or other officeholder in any of the trusts with which the Husband is associated if and when called upon to do so, including but not limited to:

(i)       The E Trust;

(ii)      The H Trust;

(iii)     The C AA Trust; and

(iv)     The G Trust.

(c)      The Wife and Mr Sum do all such things and acts and sign all documents as may be reasonably required to transfer to the Husband in these proceedings for no consideration any shareholding, unit holding or security in any of the entities with which the Husband is associated.

(d)      The Wife do all such things and acts and sign all documents as may be reasonably required to remove the Wife's name from, and to surrender signing rights to, the bank accounts held by the parties.

(e)       The Wife do all such things and acts and sign all documents as may be reasonably required to relinquish for no consideration any interest, right or claim the Wife may have in law, in equity or otherwise in any of the entities with which the Husband is associated.

The Wife do all such things and acts and sign all documents as may be reasonably required to assign any loan account the Wife may have in the entities controlled (as that term is defined by section 50AA of the Corporations Act 2001) directly or indirectly by the Husband to the Husband (f) including but not being limited to the following:

(i)        C AA Pty Ltd;

(ii)      D Pty Ltd;

(iii)     F Pty Ltd Pty Ltd;

(iv)      C BB Pty Ltd;

(v)       C Pty Ltd;

(vi)      E Trust;

(vii)     H Trust;

(viii)   C Unit Trust;

(ix)      G Trust; and

(x)       F Pty Ltd.

  1. That, contemporaneously with the payment referred to in Order 12 hereof, the Wife and Mr Sum ("the Sixth Respondent") by themselves, their servants and agents:

(a)       Disclaim, waive and renounce; and

(b)       Shall do all such acts and things and sign all such documents as may reasonably be required to disclaim, waive and renounce,

the Wife's and/or the Sixth Respondent's claim in relation to the rights and interests of the Second and the Fifth Respondent in C AA Pty Ltd and in the C AA Trust.

  1. That contemporaneously with the payments referred to in Orders 8 and 12 the monies held to the credit of the Husband and the Wife in the Macquarie Bank investment account number … standing in the approximately sum of $480,246.16 be distributed to the Husband.

  1. That within 30 days of signing these Orders the Husband and Wife will do all acts and things and sign any such documents as may be required to close all bank accounts held jointly by the Husband and Wife and any balance shall become the property of the Husband to the absolute exclusion of the Wife.

  1. That contemporaneously with the payments referred to in Orders 8 and 12, the Wife do all such things and acts and sign all documents as may be reasonably required to transfer to the Husband at the sole expense of the Husband the  motor vehicle, registration number ... 

  1. That C BB Pty Ltd pay and the Husband cause C BB Pty Ltd to pay to the Husband the sum of $875,000 within 5 days of the date of these Orders in discharge of the obligations of C BB Pty Ltd to the Husband under these Orders in accordance with section 109J of the Income Tax Assessment Act 1936 (Cth).

  1. That within  7 days of the date of these Orders the Husband pay to the Wife the sum of $875,000.

  1. That C BB Pty Ltd cause to be paid to the Husband the balance of any retained earnings to the Husband within 60 days after payment to the Wife pursuant to Order 8.

  1. The payments by C BB Pty Ltd to the Husband made pursuant to these Orders are:

(a)       to be effected and paid directly by C BB Pty Ltd to the Husband in discharge of its obligations under these Orders;

(b)       not to be effected or paid as remuneration or a payment for service by the Husband;

(c) not to be effected or paid as a loan, advance of money or forgiveness of any debt generally or pursuant to Division 245 of Schedule 1 of the Income Tax Assessment Act 1936 (Cth);

(d) not to be effected as a dividend or distribution generally or pursuant to section 44 of the Income Tax Assessment Act 1936 (Cth);

(e)       not to be directly or indirectly effected or paid by any other entity.

  1. That upon the payment referred to in Orders 8 first having been made F Pty Ltd Pty Ltd as trustee of the H Trust transfer the property situated at I Street, Suburb J and more particularly described in Certificate of Title Lot … and Registered Plan … to the Husband at the sole expense of the Husband.

  1. (a) That within 7 days of the date of these Orders Mr Cui ("the Second Respondent") pay the sum of $325,000 to the Wife.

(b) That as security for the said payment by the Second Respondent pending implementation of subparagraph (a) of this Order the said sum of $325,000.00 be held in his solicitors (Lander and Rogers) trust account pending payment and the said sum not be distributed otherwise than in than accordance with this Order.

12A. That in the event of default of payment by the Husband then the Wife shall be entitled to immediately receive and be paid the sum of money being held in trust in a controlled money account by the Wife’s solicitors Berry Family Law referred to in para 17 of the Affidavit of David William Hanlon filed 14 October 2014 provided that she receive no more of such monies than an amount equal to that by which the Husband is in default;

12B. (a)     Further to paragraph 12 A the wife shall be entitled to apply on short notice for such Orders for enforcement as may be required (“the enforcement application”) for Orders that she be further paid the balance of funds needed to make up the full amount of the husband’s payment referred to in paragraph 8 hereof, such funds to be paid from the husband’s share of the funds held in C AA Pty Ltd as referred to in paragraph 12 of the wife’s Affidavit filed 14th October 2013 which funds are the subject of the Undertakings provided to the Court this day.

(b)     In the event that the wife is required to bring the enforcement application pursuant to (a) hereof, she shall be entitled to payment of her costs for doing so and of obtaining the necessary orders on a solicitor-own client basis from the husband, and on the presentation of these orders, the husband shall be deemed to have consented to the bringing of the enforcement application and the orders made.

  1. That :

(a)       The Husband and Second Respondent (as directors and shareholders of C AA Pty Ltd) shall within 60 days do all acts and things and sign all such documents as may reasonably be required to cause an additional 40 B Class Units in the C AA Trust to be issued and allocated to the Fifth Respondent in accordance with Clause 24 of the C AA Trust Deed for nil value;

(b)       The Fourth Respondent and Fifth Respondent as holders of A Class Units in the C AA Trust consent to the issue and allocation of the B Class Units referred to in 13(a) above to the Fifth Respondent for nil value;

(c)       The Fourth Respondent and the Husband (as the sole director and shareholder of the Fourth Respondent) each undertakes to the Court that the Fourth Respondent will not, and the Husband will not cause the Fourth Respondent to sell, transfer, dispose of or in any way encumber the intellectual property in, and relating to, the computer software program known as "X", such intellectual property does not include the intellectual property in “Y”, ("the Intellectual Property") owned by the Fourth Respondent without having obtained the Second Respondent’s consent in writing so to do;

(d)       C AA Pty Ltd and the Fourth Respondent shall  within 60 days draw and execute a licence agreement with respect to the Intellectual Property which shall include the following terms:

(i)        That the licence is an exclusive licence for C AA Pty Ltd to exploit the Intellectual Property throughout the world for a period of 10 years;

(ii)      That the royalties to be paid by C Pty Ltd are to be fixed at 15 per cent of gross licence sales revenue of C AA Pty Ltd referable to the sale of the Intellectual Property per annum;

(iii)     That the Fourth Respondent cannot sell, transfer, dispose of or in any way encumber the Intellectual Property without the prior written consent of C AA Pty Ltd;

(iv)      That the Fourth Respondent cannot terminate the exclusive licence without giving 12 months written notice to C AA Pty Ltd;

(v)       That for so long as the Husband and the Second Respondent remain the sole directors of and equal shareholders in C AA Pty Ltd the Fourth Respondent shall take direction from C AA Pty Ltd regarding development of features of the Intellectual Property.

(e)       The Second and Fifth Respondents shall indemnify the Husband and the Third and Fourth Respondents with respect to any tax liability arising as a consequence of the issuing or allocation of Units in accordance with (a) hereof.

(f)       C AA Pty Ltd and any successor trustee of the C AA Trust is restrained from allocating or issuing C Class Units in the C AA Trust, the Fifth Respondent is restrained from selling, encumbering or otherwise dealing with its C Class Units in that Trust, and C AA Pty Ltd and any successor trustee of the C AA Trust is restrained from making any distribution of capital under the C AA Trust Deed without the Husband’s consent in writing first having been obtained for any such dealing or action;

(g)       Further to (c) hereof in the event that the Fourth Respondent seeks to sell at arms length the Intellectual Property or any part thereof and distribute 50 per cent of the net after tax proceeds of such sale to the Second Respondent or at his direction the Second Respondent shall not withhold his consent to such sale;

(h)       Further to (f) hereof in the event that C AA Pty Ltd or any successor trustee of the C AA Trust proposes to make a distribution of capital such that 50 per cent of capital so distributed is distributed to the Husband or at his direction he shall not withhold his consent thereto. 

  1. That the Wife otherwise retain to the exclusion of the Husband all real and personal assets and resources in the Wife's ownership, possession or control at the date of these Orders including:

(a)       All bank accounts and investments in her name in Australia and any other country;

(b)       The 2006 motor vehicle registration …;

(c)       The Wife's jewellery;

(d)       The Wife's personal effects; and

(e)       The Wife's Superannuation interests.

(f)       The sum of $653,014 previously received by the Wife.

  1. That the Husband otherwise retain to the exclusion of the Wife all real and personal assets and resources in the Husband's ownership, possession or control at the date of these Orders including:

(a)       All bank accounts and investments in his name;

(b)       The 2010 motor vehicle registration number …;

(c)       The motor vehicle registration number …;

(d)       The Husband's personal effects;

(e)       The Husband's Superannuation interests;

(f)       The Husband's existing interest in the following entities and trusts:

(i)        C AA Pty Ltd;

(ii)      D Pty Ltd;

(iii)     F Pty Ltd Pty Ltd;

(iv)      C BB Pty Ltd;

(v)       C Pty Ltd;

(vi)      E Trust; 

(vii)     H Trust;

(viii)   C AA Trust;

(ix)      G Trust; and

(x)       F Pty Ltd Pty Ltd.

  1. That the Husband indemnify and keep the Wife and the Sixth Respondent indemnified against all taxes and all claims (of any kind or cause) in respect of any loss, damage or injury (of any kind or cause) (including legal fees on a solicitor and own client basis) that the Wife and the Sixth Respondent may sustain as a result of or arising out of:

The Husband's failure, or the failure by C BB Pty Ltd or any other entity in which the Husband has an interest; (a)       

(i)        To give effect to the terms of these Orders;

(ii)      To make the payment pursuant to Order 8; or

(b)       In relation to the Wife's or the Sixth Respondent’s interest as a beneficiary, shareholder, officer, trustee or otherwise in relation to any of the entities with which the Husband is associated, including but not limited to the following entities:

(i)        C AA Pty Ltd;

(ii)      D Pty Ltd;

(iii)     F Pty Ltd Pty Ltd;

(iv)      C BB Pty Ltd;

(v)       C Pty Ltd;

(vi)      E Trust;

(vii)     H Trust;

(viii)   C AA Trust;

(ix)      G Trust; and

(x)       F Pty Ltd Pty Ltd.

  1. That the Wife indemnify and keep the Husband indemnified against all taxes and all claims (of any kind or cause) in respect of any loss, damage or injury (of any kind or cause) (including legal fees on a solicitor and own client basis) that the Husband may sustain as a result of or arising out of the Wife's failure to give effect to the terms of these Orders.

  1. That C BB Pty Ltd and the Husband, on the one hand in respect of the payment referred to in Order 8, and the Second Respondent in respect of the payment referred to in Order 12, indemnify and keep the Wife indemnified against all taxes and all claims (of any kind or cause) in respect of any loss, damage, or injury (of any kind or cause) (including legal fees on a solicitor and own client basis) that the Wife may sustain as a result of or arising out of the said payments made pursuant to Orders 8 and 12.

  1. Unless otherwise specified in these Orders and save for the purposes of any monies due under these or any subsequent Orders:

(a)       each party be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in the possession of such party as at the date of these Orders;

(b)       insurance policies remain the sole property of the owner named therein;

(c)       each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;

(d)       any joint tenancy of the parties in any real or personal estate is hereby expressly severed; and

(e)       that each party be solely liable for any capital gains tax arising from the sale of any asset to which they are entitled pursuant to these Orders and shall pay same when such tax becomes due and payable.

20.      That each party is hereby responsible for their own costs whatsoever associated with these proceedings including but not limited to any costs reserved which may have been the subject of any Court Orders, save that:

(i)     where in paragraphs 2, 4, 5, 6 of these Orders, the Wife and or the Sixth Respondent are required to sign any documents to give effect to the Orders, such documents shall be drawn up by or on behalf of the husband and at his cost;

(ii)    where in paragraph 3 of these Orders, the Wife and or the Sixth Respondent are required to sign any document to give effect to that Order, the relevant documents shall be drawn up by or on behalf of the Second Respondent and at his cost.

  1. Save as aforesaid:

(a)       Paragraph 11 of the Wife’s Further Amended Application filed 6 September 2012 be noted as withdrawn.

(b)        All applications for final orders whether by the Wife, the Husband or any other party herein are otherwise dismissed. 

AND THE COURT DIRECTS:

  1. That all extant Applications of the Wife, Husband, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth and Ninth Respondents be removed from the Pending Cases List maintained by this Honourable Court, and otherwise removed from the list of cases awaiting a trial fixture.

IT IS DIRECTED:

  1. That the Minutes of Consent Orders remain on the Court file.

IT IS CERTIFIED:

  1. That pursuant to Rule 19.50 of the Family Law Rules it was reasonable to engage lawyers, appearing as Counsel, Senior Counsel and two Counsel.

THE COURT NOTES:

A.        That the Husband and Wife intend these Orders shall as far as practicable finally determine the financial relationships between them and avoid further proceedings between them.

  1. That the Husband and Wife intend that these Orders together with the Binding Financial Agreement signed by them and dated 1 November 2013, shall finalise all financial and other relationships between them and avoid further proceedings between them.

  1. Contemporaneously with signing these Orders the Husband and Wife have entered into an agreement pursuant to Section 90D of the Family Law Act whereby each forgoes any maintenance claims against the other.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Sum & Chia & Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 896 of 2010

Ms Sum

Applicant

And

Mr Chia

Respondent

Mr Cui

2nd Respondent

And

C AA Pty Ltd as trustee for the C Unit Trust

3rd Respondent

And

D Pty Ltd as trustee for the E Trust

4th Respondent

And

Ms Ceoi as trustee for the Cui Family Trust

5th Respondent

And

Mr Sum

6th Respondent

And

C BB Pty Ltd & F Pty Ltd as trustee for the G Trust & C Pty Ltd as trustee for the C Trust

7th, 8th, and 9th Respondents

REASONS FOR JUDGMENT

  1. This matter has a long history in this Court.  It is a matter where the wife is aged 37 years.  She’s a health professional.  The husband is 36 years.  He’s a company director.  There are a number of parties to the proceeding, including the second respondent, who is a business partner of the husband.  There are a number of entities either controlled or owned by the husband and/or his partner, the subject of these property proceedings.

  2. These parties commenced their cohabitation in 2005, married in 2006 and separated in either late 2008 or mid 2009, depending on which of the parties’ evidence is accepted.  There is one child of the marriage, Z, who is aged six years. 

  3. The proposed settlement is an adjustment of the parties’ property interests. 

  4. There was a wide variation as to the asset pool, the subject of the proceedings, depending on the valuation of businesses owned and controlled by the husband.  There was a single expert witness who, in round figures, I think put the valuation of the business at $7 million.  At one end of the spectrum, the wife would have been seeking leave to adduce evidence from an expert who would have put those business interests, I think in the range certainly in excess of $15 million.  At the other end of the spectrum, the husband would have sought leave to adduce expert evidence which would have put the business interests at a value at something in the order of a little over $1 million.

  5. What the parties have brought to Court today is a minute of orders signed by them, which compromises all of their applications.  It is a commercial and sensible compromise.  Senior counsel appearing for the husband and the wife each urge me to make these orders as a compromise of the parties’ respective positions.  They submit, together with Mr Melilli, on behalf of the second and fifth respondent, that these proposed orders are just and equitable as between all parties, having regard to the contributions made by each, having regard to section 75(2) factors, and the other factors involving the third parties in this matter.

  6. In light of the submissions made by counsel for all parties I will make orders in the terms of the minute that has been signed by them.  I will grant leave to the company, F Pty Ltd, to intervene in these proceedings.  Their involvement is necessary to give effect to the terms of these orders.  I consider that the orders are just and equitable.

RECORDED:   NOT TRANSCRIBED

I will mark the minute with the letter A.  I will direct that the minutes be engrossed within seven days, and they can be transmitted to my associate, and I will make orders in the terms of those minutes. 

I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 1 November 2013.

Associate:  Alison Power

Date:  1 November 2013

Key Legal Topics

Areas of Law

  • Family Law

  • Civil Procedure

Legal Concepts

  • Consent

  • Costs

  • Remedies

  • Injunction

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