Sun & Yeng
[2023] FedCFamC1F 565
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Sun & Yeng [2023] FedCFamC1F 565
File number SYC 8025 of 2022 Judgment of WILSON J Date of judgment 7 July 2023 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – PLEADINGS – strikeout application – Mozambique principles. Cases cited Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 56
Barnes v Addy (1874) 144 ER 643
Black v S Freedman & Co (1910) 12 CLR 105
Bosanac v Commissioner of Taxation (2022) 96 ALJR 976
Brazendale v Tasmaid Foods Pty Ltd [1991] FCA 508
British South Africa Co v Companhia de Moçambique [1893] AC 602
Cao & Trong [2019] FamCA 336
Chen v Chen and Anor (No 3) (2020) 63 Fam LR 448
Cook v Flaherty [2021] SASC 73
Emerald & Emerald [2023] FedCFamC1F 183
Goodridge v Beadle (2017) 57 Fam LR 425
Grefeld & Grefeld [2012] FamCAFC 71
Re Vandervell's Trusts [1974] 1 All ER 47
Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491
State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499
Division Division 1 First Instance Number of paragraphs 52 Date of last submission 19 June 2023 Date of hearing 22 May 2023 Place Melbourne and Sydney (via video) Counsel for the applicant Mr L. Glick KC Solicitor for the applicant Lander & Rogers Counsel for the first respondent Mr J. Neo Solicitor for the first respondent Longton Legal Counsel for the second respondent Mr D. Rayment SC with Mr D. Edney Solicitor for the second respondent XR Consulting Pty Ltd ORDERS
SYC 8025 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS SUN
Applicant
AND MR YENG
First Respondent
MS HAU
Second Respondent
order made by
WILSON J
DATE OF ORDER
7 JULY 2023
THE COURT ORDERS THAT –
1.The second respondent’s points of claim dated 23 April 2023 is struck out in its entirety.
2.The second respondent has leave to file and serve any amended points of claim, incorporating pleadings as to all matters of fact said to be foreign law, by noon on 7 September 2023.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
This proceeding is in the Major Complex Financial Proceedings List, in Division 1 of this court and is fixed for trial to commence on 25 September 2023.
On 22 May 2023 at a directions hearing in this case, the parties informed me that the second respondent is the first respondent’s mother, the applicant being the wife in the marital relationship. On that occasion, Mr Glick, One of His Majesty’s Counsel, contended that the second respondent has no presence in the Commonwealth of Australia beyond being named as a party to this litigation, thereby enlivening the operation of the Mozambique principles.[1] Mr Glick KC submitted that by application of the Mozambique principles, the first respondent’s pleadings in relation to Country B land needed to be pleaded with a particular focus in mind. Mr Glick KC submitted that aspects of the second respondent’s pleadings were defective and called for striking out.
[1] British South Africa Co v Companhia de Moçambique [1893] AC 602.
In the Major Complex Financial Proceedings List, pleadings are a frequent feature of litigation. When orders requiring the filing of pleadings are made, those pleadings must be to a standard commensurate with a proceeding in the Federal Court of Australia.
On 22 May 2023 Mr Glick KC outlined the bases on which the wife took issue with the second respondent’s points of claim dated 23 April 2023. Mr Rayment SC told me he was unable to debate the issue on 22 May 2023 because no notice had been given to his client that a challenge would be made to his client’s points of claim. In those circumstances I gave Mr Rayment’s client until 5 June 2023 to file submissions in support of the allegations in the second respondent’s points of claim.
Mr Rayment SC duly provided submissions, as ordered, by 5 June 2023. It became necessary to examine the submissions made about the alleged inadequacies of the second respondent’s contentions in her points of claim. But before doing that it is utile to record that in at least two decisions[2] I have made observations about the need for and adequacy of pleading in certain categories of cases in this court.
[2] Cao & Trong [2019] FamCA 336 and Chen v Chen and Anor (No 3) (2020) 63 Fam LR 448.
As a second matter before descending to the minutiae of the second respondent’s points of claim, it is necessary to record that prior to the 22 May 2023 appearance, the solicitors for the parties had exchanged correspondence about the adequacy of the second respondent’s points of claim. On behalf of the wife, a detailed letter was provided by her solicitors dated 16 May 2023 with particulars of the wife’s critiques about the adequacy of the points of claim filed by the second respondent. Before me, Mr Rayment SC indicated that his submissions concerning the adequacy of the second respondent’s points of claim were limited to the submissions advanced on behalf of the wife during viva voce debate on 22 May 2023, rather than his submissions being directed to the criticism contained in the letters between solicitors.
THE STRIKE OUT ASSERTED
On behalf of the wife, Mr Glick KC submitted that while not every single paragraph of the second respondent’s points of claim was defective, in the upshot, the whole of the points of claim should be struck out and the second respondent should be ordered to start again, afresh, by providing a new version of her points of claim.
Mr Glick commenced by identifying the assertion made by the second respondent in paragraph 12 of her response to the wife’s initiating application. In that paragraph, the second respondent asserted that she sought a declaration that the husband and wife hold their interests in various properties situated in Country B on trust for the second respondent and/or for the second respondent together with her husband from whom she is presently separated.
Mr Glick KC submitted that a pleading in those terms directly engaged the Mozambique principles.
In paragraph 4(a) of the points of claim the second respondent asserted that in or about 2003, C Ltd owned the property known and described as D Street, Suburb E, Region F, Country B (“the City F property”). No objection was taken to that contention. In paragraph 4(b) of the second respondent’s points of claim, she asserted that by reason of some unidentified default by C Ltd, the City F property was to be sold in the exercise of a judgment against C Ltd.
Paragraph 5 was the first paragraph of the second respondent’s points of claim that the wife challenged. In that paragraph, the second respondent alleged that in or about 2003, the second respondent and the wife had a conversation during which the second respondent told the wife that the husband’s parents wanted to buy the City F property but wished to avoid being seen as the purchasers in view of their connection with the debtor company, C Ltd, so the wife and the second respondent agreed –
(a)that the husband’s parents would bid at the auction of the City F property in the name of the wife such that the husband’s parents’ involvement as the intended beneficial purchasers would not be disclosed; and
(b)that if the husband’s parents were successful at auction, the parents would complete the purchase using their own funds such that the City F property would be held in the wife’s name but for the benefit of the husband’s parents.
The second respondent described that arrangement as the C Ltd agreement.
The second respondent alleged that in performance of the C Ltd agreement the husband’s parents were the successful bidders at auction in the wife’s name, they funded the completion of the purchase of the City F property in the wife’s name and since completion of the purchase of the City F property, the husband’s parents have retained control of the City F property along with income generated thereupon and paid outgoings.
The second respondent asserted that the wife holds title to the City F property for the benefit of the husband’s parents.
Mr Glick KC submitted that the assertion that on completion of the purchase the City F property would be held in the wife’s name but for the benefit of the husband’s parents is bereft of detail in important respects. First, Mr Glick submitted that the pleading in paragraph 5 suffered from the formal defects that the agreement alleged was not particularised by the inclusion of details of who allegedly said what to whom. Next, Mr Glick said the statement that the second respondent and the wife “agreed” is an impermissible conclusion especially in circumstances where the material facts giving rise to the assertion of the phenomenon of agreement are not set out.
Both of those proposition had merit.
Further, Mr Glick submitted that once the concept of a beneficial ownership was alleged, it was necessary for the second respondent to plead precisely the conversations that gave rise to the existence of a trust.
Further, Mr Glick submitted that the pleading asserted that land in Country B was the subject of some form of trust and that under the Mozambique principles, if a party asserts that under a foreign jurisdiction land is held on trust, that is a factual matter because foreign law is a fact to be specifically pleaded. Whether Country B law recognises the Anglo Australian equitable principles of trust was not stated.
Mr Glick also submitted that the allegation that the parents purchased land in the name of another is or might amount to an allegation of the existence of a resulting trust.[3] Yet it was not stated whether the concept of a resulting trust is even known under Country B law. But even if such a concept or doctrine were know under Country B law, Mr Glick submitted that in accordance with Mozambique principles, any such concept is foreign law for the purposes of Australian domestic law and as such, the notion or doctrine must be established as a matter of fact.
[3] Bosanac v Commissioner of Taxation (2022) 96 ALJR 976 and Emerald & Emerald [2023] FedCFamC1F 183.
Additionally, Mr Glick submitted in relation to paragraph 5 of the second respondent’s points of claim that the agreement alleged had been pleaded as if it was an agreement according to Australian Law. I asked Mr Glick whether the second respondent was required to demonstrate the existence of consideration. Mr Glick answered by stating that he was not aware whether, under Country B law, consideration was a necessary component of the legal requirements of agreement. He also submitted that paragraph 5 of the points of claim raised issues of agency in respect of which Mr Glick argued that it was not alleged that agency, as may be known under Anglo Australian law, was a concept known to Country B law.
In reliance upon his criticisms about deficiencies in the points of claim in relation to the allegation of the existence of some form of trust, Mr Glick KC focused on paragraph 6(c) of the points of claim, and in particular, the pleaded concept that the husband’s parents “retained control” of the City F property and of the City F property’s income. Mr Glick submitted that material facts had not been pleaded to support the conclusion asserted of the exercise of control, whatever that meant, so Mr Glick contended.
So far as paragraph 7 of the statement of claim was concerned, Mr Glick submitted that the pleaded assertion of benefit was not explained. He submitted that the pleader did not explain whether an assertion of the wife’s holding of the legal title in the City F property for the benefit of the husband’s parents took the form of a trust under Country B law, and if so whether that trust was express or whether a constructive trust was asserted. Mr Glick KC said that the use of the word “trust” in the second respondent’s response and then the use of the word “benefit” in the points of claim may lead the reader (especially the wife) to construe the use of those different words as importing notions that were themselves different and if so, the wife was entitled to an explanation in the form of a properly particularised pleading.
A similar formula of pleading was adopted by the second respondent in relation to properties described as “the City H Properties”. In respect of each, the second respondent asserted that the second respondent and the husband agreed that the husband’s parents would procure the transfer of those properties into the name of the husband who would hold those properties for the benefit of the husband’s parents. That arrangement was described as the City H agreement. The second respondent contended that seven parcels of real property were captured by the City H agreement, title to each of which was said to be held in the husband’s name but for the benefit of his parents.
As like manner as for the C Ltd agreement, the second respondent asserted that in performance of the City H agreement, the husband’s parents procured the transfer of the City H properties into the husband’s name yet at all relevant times subsequent thereto, the husband’s parents have retained control of the City H properties and they have retained control of income derived from the City H properties.
The second respondent asserted in paragraph 11 of her points of claim that the husband holds the legal title to the City H properties for the benefit of the husband’s parents.
In relation to the City H properties, Mr Glick KC made similar submissions as he advanced in respect of the City F property concerning –
(a)the application of the Mozambique principles;
(b)the imprecision of the pleadings, especially the trust alleged; and
(c)whether Anglo Australian jurisprudence in respect of trusts applies at all to land in Country B.
The wife challenged the allegations commencing from paragraph 19 in the points of claim. Unlike the challenge in respect of earlier paragraphs of the points of claim, the assertions in paragraphs 19 and following related to real property in the Commonwealth of Australia. Accordingly, in respect of real property in Australia, Mozambique principles were not applicable. Two parcels of land were pleaded, identified with precision by their certificate of title folio identifier numbers.
As allegations anterior to those about the two parcels of land in Australia, the second respondent asserted that the husband assisted the second respondent to establish certain bank accounts in Australia into which were to be deposited funds from Country B transferred by the second respondent for purposes connected to her application for a significant investor visa under the Migration Act. The second respondent alleged that the husband assisted the second respondent to open two bank accounts with the Commonwealth Bank each of which named the husband as an authorised signatory. The second respondent alleged that she constituted the husband as her agent in transacting on her bank accounts. The second respondent alleged that the husband owed her various fiduciary duties arising out of that agency relationship.
In paragraph 20 of the points of claim the second respondent asserted that in late 2019 the husband drew the sum of $5,851,860 from the second respondent’s bank accounts and deposited that sum in a bank account in his and the wife’s name. In paragraph 21 the second respondent asserted that the husband’s appropriation of the sum of $5,851,860 was in breach of the duties he owed his mother and was a misappropriation. The second respondent further asserted that the husband and wife completed their purchase of the two parcels of land in Australia using almost $2.5 million from the funds misappropriated by the husband from his mother’s bank accounts.
Mr Glick KC submitted that the second respondent does not, and cannot, assert that the wife was in any way fraudulent. Mr Glick said it was not asserted that the fraud was somehow connected to procuring registration of the husband and wife as registered proprietors. Mr Glick submitted that no contention along the lines of Barnes v Addy[4] or Black v S Freedman & Co[5] was made. Mr Glick submitted that no agency in respect of the wife was alleged by the second respondent.
[4] (1874) 144 ER 643.
[5] (1910) 12 CLR 105.
In paragraph 27 the second respondent alleged that the husband acted as the wife’s agent in procuring and using the funds that were applied in the acquisition of the two Australian properties.
The particulars of the alleged agency caused the wife to pursue this strike out application. It is utile to set out the entirety of paragraph 27. It was as follows –
The Wife’s proprietary liability
27 The Husband acted as the Wife’s agent in respect of procuring and utilising the funds with which the [Suburb J] Properties were purchased.
Particulars
While a matter of evidence, such agency is to be inferred from facts including that it was the Husband who in fact procured the entirety of the funds with which the [Suburb J] Properties were purchased (by misappropriating the said funds from [Ms Hau]), and that the Wife did not contribute any amount to the purchase.
Mr Glick argued that the pleading contains no allegation that the wife participated yet the second respondent asserted that the husband acted as the wife’s agent in using funds obtained from the second respondent’s bank accounts. Mr Glick submitted that while the fact of agency was a matter of evidence, the second respondent was required to articulate the matters giving rise to the agency. Mr Glick said that rather than there being an issue of agency, the facts of this case may enliven concepts of a resulting trust with a presumption of advancement.[6] Mr Glick submitted that the facts alleged against the husband amount to a pleading of fraud and when fraud is alleged, a high degree of precision and detail is required in the pleading.[7]
[6] Bosanac v Commissioner of Taxation (2022) 96 ALJR 976 and Emerald & Emerald [2023] FedCFamC1F 183.
[7] For a discussion of the issue, see Goodridge v Beadle (2017) 57 Fam LR 425 (at [112]-[113]).
Mr Glick submitted that absent any allegation that the wife was involved and knew anything about the matter, it would be surprising for the husband’s mother to later assert that the wife did in fact know about the misappropriation and subsequent use of the second respondent’s funds.
The wife complained about the allegation in paragraph 29 of the points of claim that the husband and wife received funds misappropriated by the husband as volunteers. Mr Glick submitted that the use of the concept “volunteers” was curious because the husband was alleged to have paid his mother’s money into his own account. He said the following –
MR GLICK – I’m not sure what that means, “as volunteers”, those benefits being the receipt of the stolen money as volunteers. “Volunteers” are typically – the concept of a volunteer is typically used in Transfer of Land Act provisions as a - - -
HIS HONOUR – Person who hasn’t provided any consideration.[8]
[8] Transcript 22 May 2023 T 18 L 23.
Then the wife addressed the assertion in paragraph 32 where the second respondent contended that the husband and wife have been enriched by way of their interests in the two Australian properties and that it would be unjust for the husband and wife to retain that enrichment. The wife argued that unjust enrichment was canvassed by me in Chen v Chen (No 3)[9] and that relevantly here, where no allegation of participation in the misappropriation is made against the wife, the second respondent’s claim to unjust enrichment as well as restitution[10] is necessarily impacted with the consequence that the points of claim must be recast.
[9] (2020) 63 Fam LR 448.
[10] Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 56.
The wife argued that the whole of the second respondent’s points of claim required recasting and that an order striking it out should be made.
THE SECOND RESPONDENT’S CONTENTIONS
In written submissions dated 7 July 2023, counsel for the second respondent resisted the wife’s criticisms of the points of claim. In précis form, the second respondent contended as follows –
(a)a party in the shoes of the second respondent is under no obligation to plead foreign law;
(b)here, the court can proceed on the assumption that foreign law (that is to say, the law of Country B) is relevantly the same as Australian law with it being up to the defendant (here, the wife) to content that the foreign law is different;[11]
(c)Country B law recognises the husband’s parents as beneficial owners of the Country B properties and that if the wife contends otherwise, it is open to the wife to plead the relevant difference;
(d)the second respondent takes issue with the need for her to plead particulars of the verbal agreement alleged;
(e)there is no obligation on the second respondent to plead Country B law in relation to property being held “for the beneficial interest of the parents”;
(f)the second respondent is not required to plead facts that amount to “control” because the allegation is not essential to the second respondent’s claim and is in the nature of what counsel called a “narrative pleading”;[12]
(g)the assertion by the wife that the second respondent failed to identify the relevant trust is mistaken because “a trust” is a legal conclusion and where material facts are alleged, it is not necessary to plead the legal result;[13]
(h)the wife’s complaint about the assertion of her being the husband’s agent is a complaint about particulars not of fact;
(i)the arrangement between the husband and wife is known to them, not to the second respondent;
(j)the pleadings do not turn on the husband being the wife’s agent but instead turn on concepts of unjust enrichment or moneys had and received; and
(k)in any event, the decision in Grefeld & Grefeld[14] stands for the proposition that an agency arises in the facts of this case.
[11] Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491, 517.
[12] Beach Petroleum NL v Johnson (1991) 105 ALR 456 and State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499.
[13] Re Vandervell's Trusts [1974] 1 All ER 47, Brazendale v Tasmaid Foods Pty Ltd [1991] FCA 508 and Cook v Flaherty [2021] SASC 73.
[14] [2012] FamCAFC 71.
CONSIDERATION
I do not share the second respondent’s enthusiasm for the adequacy of her points of claim. They are defective in many material respects. I make an order for the strike out the points of claim. These are my reasons for so doing.
Cases in the Major Complex Financial Proceedings List in this court usually involve pleadings, having regard to the complexity of the factual or legal issues involved. This case is no exception.
Where pleadings are involved, those pleadings must comply with well known, established and exacting principles. Pleadings to a standard commensurate with a proceeding in the Federal Court of Australia are required.
It is essential to plead exhaustively all material facts supporting a particular proposition being advanced. Material facts and particulars are quite different. Those material facts and relevant particulars subjoined thereto must be in the pleading, not in a schedule to submissions.
The phenomenon of agreement must be preceded by material facts about the parties to the alleged agreement, when the agreement was allegedly made but most importantly, what is said to constitute the agreement so that it is possible to divine that, objectively assessed, the parties reached a concluded agreement on some particular matter. Where the agreement is express, the participants in the exchanges constituting offer and acceptance must be identified. Where that express agreement is said to be verbal, precisely who said what to whom must be pleaded by which it can be assessed, objectively, that an offer was communicated which was accepted.
An assertion that “it was agreed”, without more, is insufficient. That is a conclusion.
I disagree that the second respondent’s assertions in paragraph 6(c) are adequate. In what way the husband’s parents retained control is not stated. The acts, facts, matters, circumstances and things said to constitute such control must be pleaded.
I also disagree that the points of claim in paragraph 7 are adequate. The expression “for the benefit of the parents” raises the concept that the wife presently holds the City F property in a representative capacity. To assert that she so holds the property “for the benefit of the parents” beggars the question, why, and pursuant to what facts and propositions. It could be on some form of trust. If so, the acts, facts and circumstances giving rise to that conclusion must be pleaded. Facts supporting the existence of an express trust will be very different to those supporting the existence of a resulting or constructive trust. Legal principles flowing from the characterisation of the trust will also be different. The wife should not be left guessing at the way the second respondent casts her case. Further, it is inimical to the orderly conduct of the interlocutory phases of this proceeding for the second respondent to be permitted to raise vague, imprecise and inarticulate pleadings. The second respondent must identify the facts that underpin her claims. Whether she can make good those pleadings at trial is something else.
The agency alleged in paragraph 27 must be properly pleaded. It is no answer for the second respondent to assert that the arrangement between husband and wife is unknown to the second respondent. Further, the wife’s involvement in the allegations in paragraph 27 must be set out.
So far as the wife being allegedly implicated in the application of funds misappropriated by the husband is concerned, that is a very serious allegation. Full particulars of all material facts are required. It is an allegation tantamount to fraud.
What is meant by the wife being a volunteer, if relevant, must be underpinned by material facts.
As to the assertion that the second respondent is not required to plead foreign law, I reject the submissions of the second respondent. Foreign law is a question of fact. Matters of fact must be pleaded specifically. It would be most peculiar for me to proceed on the basis that complex legal issues of Anglo Australian jurisprudence on matters of agency, trust or even fraud are identical in Country B. I order the second respondent to plead the matters of fact said to be foreign law.
The second respondent’s points of claim are struck out. If she wishes to replead, the second respondent must file and serve any amended points of claim by noon on 7 September 2023.
The second respondent said she wished to be heard on costs. I will do that. But the question will be why she should not pay the wife’s costs.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson. Associate:
Dated: 7 July 2023
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