Tian and Xiao

[2018] FamCA 816

FAMILY COURT OF AUSTRALIA

TIAN & XIAO [2018] FamCA 816

FAMILY LAW – PROPERTY – parties hold number of assets overseas – limited ability to positively identify property – capacity to deal with overseas superannuation interests – deficiencies in disclosure – significance of husband’s failure to disclose – where husband threatened to put assets beyond reach of wife – significance of cash withdrawals – number of unsupported loans purportedly entered into in relation to Australian property - notional add-backs – where contributions assessed as similar – where wife holds significantly inferior income position – enforceability of orders.  

Family Law Rules 2004 (Cth) ss 75(2), 79.

Black v Kellner (1992) FLC 92-287
Grier & Malphas  (2016) 55 Fam LR 107
In the Marriage of S W and W HWeir (1992) 16 Fam LR 154
Mallet v Mallet (1984) 156 CLR 605
Masoud v Masoud [2016] FamCAFC 24

Stanford v Stanford (2012) 293 ALR 70

APPLICANT: Ms Tian

RESPONDENT: Mr Xiao

FILE NUMBER: CAC 1250 of 2015

DATE DELIVERED: 10 October 2018

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 26 October and 6 December 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Self-representing

SOLICITOR FOR THE RESPONDENT: Self-representing

Orders

1. The balance of the proceeds of sale of B Street, Suburb C, ACT … currently held on trust by D Lawyers are, by virtue of these Orders, the property of Ms Tian (the Wife).

2. The parties forthwith take all steps to cause the monies held on trust, being the proceeds of sale of B Street, Suburb C, ACT … to be paid to the Wife and these Orders are sufficient authority for the Wife to draw upon the proceeds held on trust.

3. Mr Xiao (the Husband) shall forthwith transfer to the Wife the sum of $8,500 to be paid into an account as directed by her in writing.

4. By virtue of these Orders the following motor vehicles (vehicles) are the property of the Wife:

   (a)       Motor vehicle 1 (registration number …); and

   (b)       Motor vehicle 2 (registration number …).

5. The Husband forthwith, and in any event within 14 days, do all things necessary to effect the change in registration of the vehicles to reflect the change in ownership to the Wife and provide the Wife with all keys and paperwork associated with the vehicles.

6. Within a period of six months of the date of these Orders the Husband pay to the Wife the sum of $90,500 AUD together with all interests accrued in accordance with these Orders into an account directed by her in writing.

7. Interest on the amount in the immediately previous Order commences to accrue from the date of the making of the Orders at the rate from time to time prescribed by the Family Law Rules 2004.

8. Each party otherwise retains all property, bank accounts and superannuation in that party’s name.

9. Each party retains and indemnifies the other in respect of all liabilities in that party’s name.

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 Tian & Xiao 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 CANBERRA

FILE NUMBER: CAC 1250 of 2015

Ms Tian

Applicant

And

Mr Xiao

Respondent

REASONS FOR JUDGMENT

Background

1. The Applicant Wife in this matter is Ms Tian, born in 1973; the Respondent Husband is Mr Xiao, born in 1974.  The parties married in China in 1998.  They moved to Australia in about 2012.  The parties separated in about October 2014.  They commenced proceedings on 10 August 2015.  The matter was transferred from the Federal Circuit Court on 14 July 2016.  The parties have two children, X and Y.  The children live on a week about basis between the parents.

2. These proceedings relate to a property dispute between the parties.  The large part of the property of the parties is held in China.  Each party owns an apartment in China, along with superannuation interests.  Since moving to Australia the husband has acquired and disposed of two Australian properties.

3. The fact that the parties hold real estate and superannuation interests in China causes difficulties in attempting to assign value to these interests.

4. The parties conducted the proceedings predominantly through the use of interpreters, English being a second language for each.

Orders Sought:

1. The Wife seeks property orders as contained in her Amended Initiating Application, filed 13 October 2017.  This Application also sought orders in relation to a contravention application, (which was dismissed) and parenting orders.  As the child-related proceedings had been previously resolved, only the property orders are extracted here, being:

   3)The applicant seeks full disclosure of the assets of the respondent so that a fair and equitable division of assets can be done.

   4)Given the applicant’s limited earning capacity and significant contribution to the marriage, that there is a 75% allocation of the ‘total asset pool’ to the applicant.

   5)That in determining the ‘total asset pool’, that an estimate of the value of the assets that [Mr Xiao] has not disclosed is made by the Court, including the assets that are located in China. That this estimate of undisclosed assets be included in the ‘total asset pool’.

   6)That Orders are issued stopping the further movement of all assets of both the applicant and respondent, other than for modest ongoing living expenses, until the property settlement has been implemented.

   7)That the combined total superannuation from both Australia and China be divided equally (i.e. 50% each). That an Order be issued putting effect to this redistribution of the superannuation. That the Order focus on distributing the Australian superannuation given the difficulty in enforcing the redistribution of the respondent’s Chinese superannuation.

   8)If the property settlement awarded to the applicant by the Court is not available in the accessible assets, that the respondent is required to make future payments out of his salary (at a rate of 20% of gross salary) until such time as the sum awarded has been paid by the respondent to the applicant.

   9)That the shortfall in accessible assets reclaimed through deductions from the respondent’s salary (as outlined in the paragraph above), is partly offset by increasing the superannuation awarded to the applicant up to 100% of the combined superannuation value.

2. The Wife provided written submissions to the Court.  These refined and reshaped the result that she seeks:

   Outcome I am seeking

   I will now outline the outcomes that I am seeking from the court:

   I would like both the Chinese and Australian property and other assets including in the financial settlement.

   In determining the “total asset pool”, I ask that an estimate of the value of the assets that [Mr Xiao] has NOT disclosed is made by the court.

   The Chinese assets should include the investments of approximately $140,000 (RMB700,000) in M Bank, together with the gold ingots ($15,000) and the value of the basement storage room ($10,000).

   The Australian assets should include the money made from the sale of the [Suburb C] property and the [Suburb D] land, and the large cash withdrawals.

   After future research it is clear that Mr Xiao’s Chinese superannuation is not transferrable under Chinese law.  However, it is important that this superannuation is included in the ‘total asset pool’.

   Noting my limited future earning capacity and my significant contribution to the marriage I seek a 75% allocation of the ‘total asset pool’.

   As far as possible I would like the Australian assets to be assigned to me as part of the settlement, including all of [Mr Xiao’s] savings in bank and superannuation in Australia.

   The SUV car that [Mr Xiao] recently purchased should also be assigned to me given that only limited accessible Australian assets are available, and noting that until August 2017 he had been driving a smaller more modest vehicle.

   Because of [Mr Xiao’s] hiding and squandering money, it may only be possible for me to get a fair and equitable settlement if [Mr Xiao’s] Chinese apartment were allocated to me.  I therefore seek the allocation of [Mr Xiao’s] apartment through the transfer of property ownership.  However, I have to inform the court that I have very little confidence that [Mr Xiao] would transfer the apartment under his name to me.

   If [Mr Xiao] does not transfer Chinese assets assigned to me, then the financial order should make alternative provisions to make up any shortfall, such as the allocation of a large cash payment which [Mr Xiao] could obtain from the sale of the Chinese property that is in his name.  The court might also wish to consider large ongoing salary deductions although this option could take a long time to make up the shortfall.

   Ensuring the financial settlement is implemented

   Finally I am fearful that if [Mr Xiao] does not like the financial settlement, he will leave Australia with the children and not return, because the children’s passports and birth certificates are kept by [Mr Xiao].  I therefore ask the court to maintain the Order that prohibits the departure of the children from Australia until the financial settlement has been fully implemented.

3. The Husband seeks orders as contained in his Response to an Application in a Case and supporting affidavit, filed 14 December 2016.  The Husband seeks:

   That the Wife choose one of the Chinese properties to retain, and he retain the other.  Should the Wife choose the property currently owned by the Husband, she must pay the Husband an additional $5000 to pay for the costs of changing the registered owner into the Wife’s name.  Should the Wife choose the property currently owned in her name, the Husband shall pay the Wife $5000 as a sign of goodwill.

Material relied upon:

1. The Wife relied upon the following:

   a.Amended Initiating Application filed 13 October 2017;

   b.Affidavit filed 13 October 2017;

   c.Financial Statement filed 12 October 2017; and

   d.Balance Sheet filed 12 October 2017.

2. The Husband relied upon the following:

   a.Balance Sheet filed 25 October 2017;

   b.Financial Statement filed 19 October 2017;

   c.Affidavit filed 12 October 2017;

   d.Response to an Application in a Case filed 14 December 2016; and

   e.Affidavit filed 14 December 2016.

3. The parties agreed that an appropriate exchange rate to apply between Australia and China was RMB5 = $1AUD.

4. As noted above, the parties filed balance sheets.  The Wife filed hers on 12 October 2017, the Husband filed his, incorporating the values asserted by the Wife, on 25 October 2017.  The combined document setting out the parties’ positions is as follows:

Assets
Party	Description	Wife’s value (AUD)	Husband’s value (current) (AUD)	Husband’s value (at separation) (AUD)
W	E Street, City F, China	$267,680	$258,378	$200,000
H	G Street, City F, China	$324,000	$259,768	$200,000
H’s solicitor	Proceeds of sale of B Street, Suburb C, ACT … (held in solicitor’s trust account)	$26,135.30	$26,135.30
H	Motor vehicle 1 (registration number …)	$28,250	$24,990
H	Motor vehicle 2 (registration number …)	$7,000	$7,000
W	Motor vehicle 3	-	$18,500
W	Bank account (Commonwealth Bank – Gold Saver)	0	0	$12,712.70
W	Bank account (Commonwealth Bank – NetBank Saver)	0	0	$17.77
W	Bank account (Commonwealth Bank – Complete Access)	$1,907.18	$1,907.18	$2,376.25
W	China Invest account	-	$11,480	$10,800
W	Bank balance in China	$34.74	Less than $100	Less than $100
H	ANZ Access Advantage account	$2,314.97	$901.33	$4,706.03
H	ANZ On-line Saver account	$6,125.57	$9,125.57	$114.75
ANZ Progress account	0	0	$36,000
H	Westpac Savings account	0	0	$69.84
H	Bank balance in China (Husband)	$112.13	Less than $100	Less than $100
Total:	$675,040	$599,705	$466,797

Add-backs
Party	Description	Wife’s value (AUD)	Husband’s value (current) (AUD)	Husband’s value (at separation) (AUD)
H	Sale B Street, Suburb C, ACT … – where Husband increased mortgage prior to sale of property	$66,576.70
H	Cash withdrawals from Westpac Account No. #29 (from 4 July 2014 to 31 December 2016)	$112,000
H	Withdrawals from NAB Classic Banking (from 25 August 2016 to 13 January 2017)	$36,830
H	Profit from the sale of H Street, Suburb J, ACT	$20,000
H	Investments, shares, stocks in China (Exhibit K & L to W’s affidavit)	$140,000
H	Items removed from the basement of Chinese property at G Street, City F, China	$10,000
H	Gold bars located at the house of the respondent’s parents ([45] W’s affidavit – don’t have evidence)	$15,000
W	Chinese salary and property rent	$36,000	$18,000
Total:	$400,406.70	$36,000	$18,000

Superannuation
Party	Description	Wife’s value (AUD)	Husband’s value (AUD)
W	K Super Fund	$4,037.34	$4,037.34
W	Chinese Super Fund	$2,066.82
H	L Super	$31, 846.03	$32, 891.43
H	Chinese Super Fund	$26,878.13
Total:	$64,828.32	$36,928.77

Evidence as to specific assets

1. It may be seen that few of the items on the balance sheet were agreed by the parties.  The evidence otherwise presented by the parties is generally deficient as to the value to be assigned to the assets. 

2. There is limited evidence as to the value of the parties’ real estate in China, reliant upon a number of hearsay representations and unsupported opinion.  These provided no admissible basis from which to value the properties.  For example, the Husband provided his approximate estimates of the Wife’s properties in China, without adequate supporting basis.  The parties were informed at the commencement of proceedings that such unsupported representations would not be taken into account. 

3. The strongest evidence as to value of the apartments comes from the admissions that each makes via the balance sheet as to the value of the property held in that party’s name.  The values of the Chinese real estate will be taken on that basis.

4. The value of the Husband’s Motor vehicle 1 falls into the same category, that is, in the absence of agreement or expert evidence as to value, the admission as to value by the Husband in the balance sheet forms the best evidence of value.

5. The significance of the Motor vehicle 3 used by the Wife, purchased new in July 2016, is less clear cut.  The Wife’s evidence was that the vehicle is held in her boyfriend’s name, and that she contributed the value of her previous car as a trade in ($5,500), while he financed the balance ($13,490).  The legal title of the car is the boyfriend’s, although the Wife uses the car as her own.  She, by virtue of her portion of the contribution to the purchase of the car, holds an equitable interest in the vehicle of approximately 30 per cent.  She says, and I accept, that the arrangement with her boyfriend is that she will repay him the portion of the purchase price paid by him on the finalisation of the property orders with the Husband, at which point the car will be transferred into her name.  The current value of the vehicle is unknown, but the best approximation is the purchase price of $18,990 from 2016.

6. The parties appeared to agree that in her Australian accounts the Wife holds a total of $1,907.18.

7. They disagree in relation to what the Wife holds in Chinese accounts.  Part of the disagreement is set out in the section that relates to disclosure.  The amount that either party asserts as being the balance of her account in China is inconsequential, and so a finding is not necessary in respect of it (such a finding only being necessary where it can impact on a determination of what is just and equitable in deciding whether to make an adjustment and, if so, what adjustment to make). 

8. The Husband asserts that the Wife holds $11,480 in a silver investment account.  No evidence has been presented that is persuasive of this assertion.  I do not find that the Wife holds such an interest.

9. The disputed amounts asserted for the Husband’s bank account in China are inconsequential and so it is not necessary to make a finding in respect of them.

10. The parties are also in dispute as to what is held by the Husband in his Australian accounts with the ANZ Bank.  Annexure W to the Wife’s affidavit gives a current balance for 29 September 2017 for the Husband’s ANZ online saver at $6,125.57 and Annexure X to the Wife’s affidavit gives a balance for the Husband’s ANZ Access Advantage account at 6 October 2017 of $2,314.97.  The values ascribed to these accounts in the balance sheet by the Wife should be accepted at these amounts.  The Husband’s assertions are not supported by bank records to the contrary.

11. In relation to their superannuation interests, the parties agree as to the Wife’s Australian K Super account at $4,037.34. 

12. The parties’ Chinese superannuation amounts are more problematic, each being unsupported by any adequate evidence of their value.

13. The Wife’s admission through the balance sheet of her Chinese interest being $2,066.82 should be accepted as the value, this being the best evidence of the value.

14. The Husband provided at Exhibit C1 a document said to evidence the operation of the Chinese system of superannuation.  It is hearsay and unqualified opinion evidence.  Absent adequate proof of the provenance or competence of the document to prove such matters, no reliance will be placed upon it.

15. The Wife put to the Husband that his government pension account in China showed a balance of RMB$134,390.65, as demonstrated by Exhibit AA.[1]  The Husband stated that he provided a formal Chinese superannuation balance, which included both an employee and employer contribution, and that this document showed the right amount.  The Wife put to the Husband that his financial statement at Part J listed his pension in China as $6,600, which was inconsistent with the other evidence demonstrating the actual amount to be RMB$134,390.65.  The Wife further put to the Husband that RMB$134,390.65 exchanged to Australian dollars, at the exchange rate of 5:1, is equivalent to $26,878.  The Husband agreed, but said that the relevant Chinese law and regulation regarding superannuation showed why this discrepancy existed.

    [1] Annexure AA of the Wife’s affidavit of 13 October 2017.

16. The Husband stated that, according to formal order from the Chinese Central Government, all individuals were able to take part in a basic superannuation scheme from the time they attained 50 years to the point they reached a government-determined age.  The Husband further stated that in some circumstances, where an individual has already reached the official retirement age, but they have been making contributions for less than 15 years, that person may still be eligible to be paid a basic pension.

17. The Husband stated that he only contributed superannuation for 116 months, and, as this is less than 15 years, he is not eligible to draw upon superannuation under Chinese law.

1. The Husband stated that as the Wife had contributed for 202 months, being more than 15 years, she is therefore able to draw on her superannuation.

2. The Wife disagreed with the Husband’s characterisation of Chinese law, stating that where a person gives up Chinese nationality, and becomes a citizen of another country, a person can draw upon their superannuation immediately.  The Wife stated that if either she or the Husband became Australian citizens, they would be able to draw on the superannuation immediately.  The Wife stated she is not an Australian citizen.

3. The Husband partially agreed with this.  He stated, however, that he is not an Australian citizen.  He also contended that, when a person becomes eligible to draw on their superannuation by virtue of giving up their Chinese nationality, they are only able to withdraw the personal component of their superannuation.  That is, they would be unable to withdraw the component made up of contributions from the person’s employer.  The Husband stated that this is why he gave a value of $6,600 in his financial statement, as this represents the personal value of his superannuation.  The Wife disagreed with this, saying that the Husband’s superannuation should include both employer and personal contributions, and that both can be drawn upon.

4. The Husband stated that he was able to transfer his superannuation in China to the Wife.  The Wife agreed, initially, but said that this process would be difficult to manage.  She stated that transferring the superannuation between accounts in China would be difficult, but initially accepted that the Husband would be legally able to do so.  She expressed concern that if the Husband returned to China, he would change his mind and not comply. 

5. The wife later resiled from the idea that the Chinese superannuation could be transferred from the husband.  In her written submissions the Wife made the following assertion:

   a.After future research it is clear that [Mr Xiao’s] Chinese superannuation is not transferrable under Chinese law.  However, it is important that this superannuation is included in the ‘total asset pool’.

6. It should be observed that neither party demonstrated an expertise in Chinese superannuation law and superannuation arrangements sufficient to allow their evidence to be relied upon to establish any contentious issues relating to their superannuation.

7. What appeared to be common between the parties, and therefore able to be relied upon, is that the Chinese superannuation interest of the Husband is RMB$134,390.65, which, when converted to Australian dollars, at the exchange rate of 5:1, is equivalent to $26,878.  What remains unknown is how that might be able to be accessed by the Husband.  The submissions made by the Wife appear to accept that the monies are unable to be transferred. 

8. Despite the common views of a balance of RMB$134,390.65, the best evidence of what the Husband may be able to ultimately take (in the face of unqualified assertions by each of the parties as to the operation of the Chinese superannuation system), is the amount that he has admitted by his financial statement should be taken as the value of the interest, being the amount that represents his contributions.  That is, AUD$6,600.  It should be acknowledged that his capacity to draw upon this amount is unclear. 

9. The Husband provided a statement for his L Super superannuation up to 30 June 2017.  This showed that the superannuation at 30 June 2017 was $29,256.28.  By his admission in the balance sheets he provides an increased balance of $32,891.43 that should be taken as the value of the interest. 

10. This deals with the assets portion of the balance sheet prepared by the parties.

11. The parties also each sought the adding back of items, either as expended by a party, or as an item still in existence but unable to be identified due to a lack of disclosure.

Disclosure and the pool of assets

1. Significant issues of non-disclosure were raised in the proceedings.

2. Part 13 of the Family Law Rules 2004 (“the Rules”) provides that in financial cases each party is subject to an ongoing duty to make full and frank disclosure of the party’s financial circumstances. This is a duty that exists even independently of the Rules,[2] due to the particular relationships between the parties and the nature of the discretion to be exercised under the Family Law Act 1975 (“the Act”). Additionally, pursuant to Part 13 of the Rules there is a duty to disclose relevant documents under the possession or control of the party.

   [2] See Black v Kellner (1992) FLC 92-287.

3. The significance of non-disclosure varies.  In Weir,[3] the Full Court stated:

   It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.

   It is true that in the case of Monte and Monte (1986) FLC 91 -751, the Full Court said that to found jurisdiction under s79 in relation to property other than that which had been identified, the trial judge was obliged to make a finding as to the existence and value of other undisclosed property, even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identity and value. We confess to some difficulty with this proposition. We should have thought that the Court's jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.

   The difficulty then arises as to what order should be made. However we are troubled by the proposition which seems to arise from Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and insofar as the decision in Monte and Monte supports such a proposition, we do not believe that it should be followed.  

   [3]In the Marriage of S W and W HWeir (1992) 16 Fam LR 154.

4. It is unclear how comfortably Weir sits with the High Court’s observations in Stanford,[4] that a necessary first step is the identification of the legal and equitable interests that the parties hold in property, and that the discretion is targeted to the adjustment of the property interests of the parties, as follows:

   [35] 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.

   The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations.  It does not admit of exhaustive definition.[5] It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules",[6] nevertheless, three fundamental propositions must not be obscured.

   First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text 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) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.

   [4](2012) 293 ALR 70.

   [5]See Mallet v Mallet (1984) 156 CLR 605 at 608 per Gibbs CJ.

   [6]Mallet v Mallet (1984) 156 CLR 605 at 608 per Gibbs CJ.

5. Post-dating Stanford, in Masoud v Masoud [2016] FamCAFC 24 the Full Court stated at [24]:

   It needs to be observed too that it is well recognised that there is a difference between circumstances where there is inadequate disclosure which suggests the existence of undisclosed assets and where it does not (see HDM & MM and Anor [2006] FamCA 47). This is particularly relevant to this case where it was not suggested to the Husband that his failure to produce the trust deed was reflective of undisclosed assets or benefits.

6. How Stanford, Masoud and Weir interact will be discussed further later in the judgment in connection with the fact finding that is influenced by the non-disclosure in this case.

7. The non-disclosure by the Husband, as discussed below, impacts upon the identification of the property interests of the parties.

8. Those disclosure issues touched firstly upon bank accounts held in Australia and China by the Husband, the Husband’s superannuation interests, the value of the Husband’s real estate in China, and an investment in precious metals previously/currently held by the Husband.  The Wife points to incomplete disclosure by the Husband, failing to include all and up-to-date bank statements, shares, and stocks investments statements. 

9. When asked whether she sought an adjournment on the basis of non-disclosure, or whether she wished to proceed with the final hearing, the Wife opted to proceed, on the basis that she would address the Court as to these alleged failures of disclosure.

10. In part the Wife relies upon exhibit CC,[7] to support the assertion of non-disclosure. Exhibit CC is a series of documents and screen shots in Chinese. They do not advance the Wife’s case as to non-disclosure. The issues of non-disclosure will have to be resolved on the basis of other evidence.

    [7] At exhibit CC of the Wife’s affidavit of 13 October 2017.

11. The Wife further outlined failures in disclosure by the Husband at [23] of her affidavit.  This involved failures by the Husband to provide documents relating to loan accounts with the ANZ, and, for a number of other accounts, only providing statements for periods ending well prior to trial.  That is, failing to disclose statements contemporaneous to the hearing.  She was not challenged on this.  These may be accepted to be failures in disclosure.

12. The Wife also complains that the Husband has not provided up to date disclosure of his Australian superannuation interests.  She says that he provided a statement for his L superannuation up to 30 June 2017, rather than October 2017 (the time of the hearing).  This statement showed that the superannuation at 30 June 2017 was $29,256.28.  The Husband gave no evidence of whether he had sought an up to date statement for his superannuation.  However, by his balance sheet he conceded a balance in excess of what was contained in the provided statement.  The basis on which he did so was not the subject of cross examination.

13. It may be concluded from the above that the Husband’s disclosure of Australian accounts has been incomplete, in particular with a failure to provide up to date material for bank accounts, a loan account and his superannuation. 

14. The Husband asserted that the Wife has not fulfilled her disclosure obligations.  By his affidavit of 14 December 2016 the Husband accepts that the Wife has provided to him “3 banks of finance document from China” presumably relating to three accounts.  He then asserts that “she probably can has hundreds or thousands of bank user accounts in China bank system.”  He asserts that because of the risk of multiple accounts in China that this “situation is suits me as well, I can’t be identified how much money I have only through few bank accounts statement.”

15. He then says “this situation asserts that neither party is able to bring full evidence to prove how much money each has in China.”

16. The Husband’s comments above are difficult to understand.  That is, they are ambiguous as to whether he is saying that he has further accounts that cannot be identified, or merely making the point that disclosing some accounts does not establish whether or not there are other accounts.  It would be unsafe to draw the inference that this comment constituted an admission of a failure to disclose.  At the same time, the comments do not constitute a positive assertion by the Husband that he has made good disclosure in relation to his Chinese accounts.

17. His assertion about the mere possibility that the Wife could have multiple accounts (hundreds or thousands), and more accounts than he accepts she has disclosed to him, is insufficient to make good the idea that the Wife has failed in this respect of disclosure.

18. In relation to non-disclosure and credibility in relation to financial matters, the Wife points to the Husband being untruthful in respect of a basement that he owns in China.  The basement was not specifically included by the parties on the balance sheet.  The Wife questioned the Husband about whether he purchased the basement in 2009.  He denied doing so, saying that it came with the apartment.  He said it could not be purchased or sold separately.  He also denied selling the basement in April 2015 for RMB$50,000, saying that it was being used for storage by friends.

19. The Wife then produced evidence to the Husband as to the separate purchase of the basement by the Husband, demonstrating that he had been untruthful about this aspect of his property in China.[8]  On being presented with the document, he accepted that he had in fact purchased the basement on 6 November 2009 for RMB$14,704.[9] That is, his previous positive assertions about the manner of acquisition of the basement were untrue.

    [8] At [44] of the Wife’s affidavit of 13 October 2017.

    [9] Exhibit W4.

20. This aspect of the evidence undermines the credibility of the Husband, in particular in relation to financial matters.

21. It also indicates that he has a separate asset in China to his apartment, being the separately acquired basement.  The Husband was not cross-examined as to whether the basement which he initially asserted is a part of the apartment ownership is, or is not, included in his admitted value for the apartment.  While able to find that it is separate to the apartment, I am unable to conclude that it forms a value over and above that admitted by the Husband for the apartment.

22. The Wife further says that in March 2012 the Husband showed her via online banking that he held RMB700,000 ($140,000) in a bank card account with the M Bank.  She says that he used their money to invest in precious metals and that she did also.  She says that she used some of the proceeds to pay rent in June 2016.  She says that the Husband has not provided disclosure of such accounts.

23. The Wife put to the Husband that in May 2012 he told her that he had invested RMB$700,000 in gold and silver through M Bank (equating to $140,000AUD).  In support of this, that is, the existence of the investment, she stated that the Husband had subsequently sent an email on 16 September 2013 to a friend, Mr N, asking to borrow money as “his [the Husband’s] investments in gold and silver were tied up”.  She further asserted that the Husband had sold the gold upon returning to China in March or April of 2015.

24. In response, the Husband stated that: “I did not have such a big amount of money, and yes, I sent an email to Mr N and it did state investment issues, and yes, [Ms Tian] did invest in silver”.  In his affidavit material at [25] he appears to explain what has happened to the Wife’s precious metals accounts.

25. When asked about whether the reference to not having such a “big amount of money” meant that the Husband had a lesser sum invested, the Husband replied that “there was no such investment”.  He further stated that “just before I came to Australia all the investments were finished, in 2007-2008 I did invest in stocks, and in 2009 I did have in these kinds of investments (investments in precious metals), but after I came to Australia no more”.  The Husband came to Australia in 2012.

26. However, annexures F and L,[10] contain reference in 2013 to the email between the Husband and his friend Mr N (as referred to by the Wife above), where the Husband asked for a loan in relation to purchasing property in Australia.  The Husband there stated that he asked for the loan because he was unable to access his own funds, as at that stage they were tied up in a precious metal investment.  This post-dated the time at which the Husband, in his oral evidence, said that he had already disposed of the investments.

    [10] At annexures F and L of the Wife’s affidavit of 13 October 2017.

27. The Husband’s answers about these investments need to be viewed cautiously in the context of the untruthful evidence given about the basement, as that evidence impacts adversely upon an assessment of his credibility.  This evidence also comes in the context of less than exemplary disclosure being made otherwise on his part.

28. The conflict within the Husband’s answers about there not being an investment of that size, or alternatively that there was no such investment, combined with the inconsistency as to the assertion as to the disposal of the asset with the representation to Mr N, leads to the conclusion that the Husband has neither provided disclosure nor been honest as to his financial circumstances as they relate to such an investment.  It also leads to the conclusion that his assertions as to the disposal of the assets should also not be accepted, beyond the Wife’s acceptance that the gold investment had been sold in March or April of 2015 (approximately six months post separation). 

29. It is not known what proportion of the investment the gold formed, nor how the proceeds of the sale were used.  Also not known is the precise form and content of the silver investment at present.

30. It is in this context that the Wife alleges that on 6 October 2015 the Husband told her that he had closed bank accounts in China and transferred ‘lots’ of his money to his relatives, that he threatened the Wife that she would not be able to get the money if it was in China, and that he threatened to remove the balance of the assets to China.  He denied each of these allegations.  She says that he told her that he had received advice that the Australian courts would not be able to control Chinese assets.

31. While the lack of up to date disclosure in relation to the Australian accounts is not directly suggestive of a particular asset or assets, it adds to the circumstances that justify the court not being “unduly cautious” in relation to findings favourable to the Wife about what has not been disclosed.  Such a conclusion is also fortified by the deception by the Husband in relation to the basement that he acquired in China.  Combining these with the Husband’s threat to remove property from the reach of these proceedings, and with the circumstances of non-disclosure surrounding the silver investment, is indicative of undisclosed assets related to the silver investments. 

32. The circumstances of the disposal of the gold, and the retention of the silver investment contrary to his other evidence, is also consistent with the conversation that the Wife said occurred with the Husband, as outlined above on 6 October 2015, where he threatened to put assets out of reach of the Wife.  The non-disclosure and prevarication of the Husband in relation to the precious metals investment is reflective of the conversation that the Wife says occurred about putting assets out of her reach.  The combination of the problems with the Husband’s evidence about the gold and silver investment, and the Wife’s testimony as to the conversation, lead me to accept both that the conversation threatening to place assets out of reach of the Wife occurred, and that the Husband’s assertion as reported by the Wife, of the relevant amount of the combined gold and silver investment being RMB$700,000 in March 2012, was also made.

1. The Wife also alleges that the Husband has failed to disclose in relation to apartments owned in China.  Specifically, she complains that she has obtained a valuation of the apartment in her name in China,[11] whereas the Husband has not obtained an appropriate valuation.

   [11] Annexure M to the Wife’s affidavit of 13 October 2017.

2. The failure to provide a valuation of the Chinese property does not appear to be properly characterised as a failure in disclosure, but rather leaves a gap in the evidence available to establish the value of the property.  Neither party produced admissible valuations of the property in China.

3. This evidence does not enable to be established the precise make up or identification of the property that is in existence, nor of its value.  However, it should be inferred that, in combination with the gold investment that the Wife says was disposed of in March or April 2015, it initially comprised RMB$700,000.

4. In considering the first step set out in Stanford, it should be recognised that the High Court was not dealing with the circumstance arising here, where property cannot be identified because a party has not disclosed the property interest.  It should also be recognised that the need to identify the property in Stanford was derived from the power being directed to property, and the need to utilise the power contained in s79 in a just and equitable manner. Those two driving forces behind the identification of the property also determine the nature of the findings that are required to justify the use of the power.

5. Here the identification of the undisclosed property needs to be sufficient to justify the exercise of the power as just and equitable.  In Stanford, in relation to the scope of the power it was noted that:

   [46] As has already been emphasised, nothing in these reasons should be understood as attempting to chart the metes and bounds of what is "just and equitable".  Nor is anything that is said in these reasons intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable.

6. The particular countervailing factors here relate to the uncertainty flowing from the failure of the Husband to identify the existence and use of the property, but in a context where the scope of the property can be adequately identified to meet the ends identified in Stanford.  In the light of discussion later in the judgment relating to notional adding back of the gold investment, it is sufficient, in terms of the identification of the property to enable just and equitable orders to be made, to infer that the Husband still holds the silver investment and that, in combination with the gold investment disposed of in 2015, it comprised a value of RMB$700,000.

7. Where such an inference is available and properly drawn, it would be unjust and inequitable to disregard such on the basis that the identification cannot be made with precision, particularly where that imprecision is caused by the party who stands to benefit from that item of property being disregarded.

The disposal of the parties’ Australian property

1. A major issue in the case relates to the manner of acquisition of real property in Australia by the Husband, along with the manner of disposal of that property and use of the proceeds.  In particular, a significant issue arises as to the manner in which he dealt with a property in Suburb C that was the subject of restraint.

2. Orders made 16 December 2016 required, relevantly, that:

   …the Husband intends to sell [B Street, Suburb C] in the Australian Capital Territory.  By consent he is restrained from dealing with the proceeds of the sale other than to:

   a.Discharge any mortgage outstanding on the property;

   b.Pay the expenses of the sale of the property; and

   c.Retain the balance of the proceeds of sale of the property to be held in the trust account of the solicitors acting for the Husband on the sale of the property.

3. An order was also made for the Husband to advise the Wife of the identity of the solicitor acting on the proposed sale of the property.  He did not do so.

4. The Husband increased the mortgage over the Suburb C property on 22 August 2016 by $24,000 (prior to the restraint), and again on 12 January 2017 by $43,000 (after the restraint was imposed).  In order to place this into context it is necessary to set out the manner in which real property was acquired in Australia.

5. The parties moved from China to Australia in early 2012.

6. In September 2013 the Husband borrowed approximately RMB$100,000 (established then as $17,423AUD) from a friend, Mr N.  This was a debt agreed between the Husband and Mr N to be repaid in a year.[12]  The loan was to enable the Husband to purchase real estate and was necessitated as the Husband’s funds were tied up in valuable metals.

   [12] At annexure F of the Wife’s affidavit of 13 October 2017.

7. A property was subsequently purchased in the name of the Husband in Suburb C in July 2014.  The Husband says that the purchase price was $317,000.  The Wife says that the initial mortgage at 4 July 2014 on the Suburb C property was $255,920, which was, in August 2014, split into two loans, a Westpac Rocket Repay Home Loan of $75,513.87 and a Westpac Fixed Options Home loan of $180,000.  This was replaced by an NAB Choice Package Offset Home Loan (“the NAB loan”) of $272,000, which represented an increase in indebtedness.

8. When questioned as to his actions, the Husband readily admitted to increasing the mortgage in August 2016.  He said that he was able to refinance at that point because the fixed term on the original loan had expired.  He stated that as the Suburb C property had appreciated in value he was able to secure an additional $20,000 on the mortgage.  He said that this was used to pay off the existing loan to his friend Mr N, from whom the Husband had borrowed money to pay the deposit for the Suburb C property.

9. The Wife challenged that this was the case on the basis that the loan from Mr N was, on its terms, to be repaid after 12 months and the loan was taken out in about September 2013.  Exhibit W3 shows the obtaining of the loan proceeds on 22 August 2016.  Shortly thereafter, $20,300 was withdrawn from the account, although it does not show where this money went.  However, from the material in the Wife’s case the existence of the loan is adequately supported.[13]  It is not an amount asserted to be owing any longer.  These two factors point to both the existence and payment of the loan by that amount by means of increasing the loan.  They do not point to the loan being repaid from the precious metal investments.

   [13] At annexures F and L of the Wife’s affidavit of 13 October 2017.

10. This transaction happened in advance of the restraining order and, in any event, simply involved a movement of indebtedness from Mr N to the NAB.

11. The parties separated, after this transaction, in about October 2016.

12. On 12 January 2017 the NAB loan was replaced by an ANZ Home Loan of $315,000, again representing an increase in indebtedness of approximately $42,000.  This occurred after the orders were made on 16 December 2016 that provided for the sale of the property and the retention of the proceeds of sale of the property.

13. The second re-financing of the mortgage in January 2017 was undertaken in order to finance the acquisition of land at H Street, Suburb D ACT (“Suburb D”) by the Husband. 

14. On 11 January 2017 the Husband purchased Suburb D for $336,000 with an ANZ loan of $233,800 and, at least as asserted by the Husband, a loan of $50,000 from a friend Mr O and $20,000 from a friend Mr P.[14]  The Husband stated that he did this as he was surprised that the ANZ bank manager required him to pay a 30 per cent deposit for the Suburb D land, as this was greater than the 10 per cent deposit as required for Suburb C.  The alleged borrowings from Mr P and Mr O constituted approximately 20 per cent of the purchase price.  The Husband stated that he used the funds acquired by way of re-financing Suburb C in January to pay the further 10 per cent.

    [14] At Table G Item 9 of the father’s affidavit of 12 October 2017.

15. The Suburb C property was subsequently sold on 10 April 2017 for $350,000, which paid off the outstanding loans and left net proceeds of $26,135.30.

16. The Wife says that the Suburb D land was sold on 1 August 2017 for $360,000.

17. By virtue of this, the Wife says that there should be treated as part of the pool the net receipts of $24,000 ($360,000 less $336,000) from Suburb D, along with the amount paid out of the Suburb C loan toward the purchase ($42,000), totalling $66,000.

18. The Husband alleges that on the sale of Suburb D he repaid Mr O $50,000 and Mr P $20,000 in cash because this was his choice and his friends’ preferences.

19. No evidence, aside from the Husband’s assertion, was led to establish such loans and such repayments.  His assertions are made in the context of the issues identified earlier in respect of his credibility relating to financial assertions, and in the context of an expressed intent to remove property from the reach of the Wife.

20. The Wife’s annexure X evidences a series of transactions conducted by the Husband via his ANZ Access Advantage account around the time of Suburb D’s sale.[15]  On 1 August 2017, the day Suburb D was sold, the Husband received a deposit of $25,604.78.  On 3 August, the Husband received $18,000.  Later that day, the Husband transferred $18,000 via an electronic bank transfer out of his account.  On 8 August, the Husband transferred out another $17,000, and again on 10 August the Husband transferred out a further $6,500.

    [15] At annexure X of the Wife’s affidavit of 13 October 2017.

21. On 21 August the Husband received another payment of $24,000.  Later that day he withdrew $23,010 in cash in Suburb Q.

22. In total, between 1 and 21 August 2017, the Husband received $67,604.78 and withdrew or transferred out of the account $64,510.

23. It is unclear where these funds came from to be transferred into the Husband’s account, nor where they went.  They do not total the loans alleged from Mr P of $20,000 nor of Mr O of $50,000.  They do not appear to correlate to cash withdrawals for the purpose of making payments to either.

24. These transactions will be discussed further below under the discussion relating to cash withdrawals made by the Husband.

25. The Husband says that he deposited net proceeds of $46,000 in his ANZ bank account.  It is not clear how the net proceeds were only $46,000, given the profit margin of $24,000 over the purchase price and the $42,000 paid into the purchase from the Suburb C loan.  This amount combined amount should be treated as the receipt from Suburb D.

26. The Husband stated that he used those proceeds for solicitor’s costs of $5,000 - $6,000, the purchase a new Motor vehicle 1 in August 2017 car for $24,990, and to send $5,000 to his parents in China.  He accepted that the current balance of the remaining proceeds was approximately $10,000, with some portion of that spent on a mattress and household furniture.  It is unclear then what, if any of this amount remains.

27. The inclusion of the Motor vehicle 1 in the balance sheet means that, to the extent that the Wife seeks to add back the profit from Suburb D, the Motor vehicle 1 should not be double counted.  That is, $66,000 less the approximately $25,000 purchase price of the Motor vehicle 1 will be added back.

Add backs

1. In Grier & Malphas[16] Murphy and Kent JJ, on the question of adding back amounts spent post-separation, made the following observations:

   Each of the parties used funds available to them in the approximately four years between separation and trial.  Included in purposes for which the sums were used were the reasonable living expenses of each. So-called “addbacks” are the “exception and not the rule”.  Further, although always of course a matter of discretion it can be said that, in the usual course of events, amounts spent on reasonable living expenses would not often be added back.

   As the Chief Justice points out, with those principles in mind, the trial judge adopted a broad-brush approach to the parties’ respective expenditure. No error is established by reason alone of that approach; authority eschews “overly pernickety analysis” and s 79 demands neither an audit nor an exercise in accounting. However, when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed.

   …

   we agree with the Chief Justice that the evidence discloses a very significant disparity in the sums expended by the parties and that her Honour did not address that disparity or examine the purposes for which the money was used. We repeat that this is a matter of discretion and could have been done either by “adding back” or, as has been suggested as often preferable by decisions of the Full Court, by reference to s 75(2)(o).

   [16](2016) 55 Fam LR 107.

2. The Husband sought notional adding back on account of the Wife, covering two matters.  The first related to income that the Wife received from employment in China during the relationship.  He alleges that she used the income for her own purposes.  The circumstances do not point to an add-back being required to do justice between the parties, particularly in the absence of anything but generalised evidence by the husband on that point.  The fact of the expenditure being during the relationship prima facie means adding back is inappropriate.

3. The second item he sought an add-back for related to the Wife’s receipt and use of rental monies from her property in China, including post-separation.  The Wife, by her material, shows that she is currently reliant on that income.  The Wife is entitled to structure her financial affairs post separation as she chooses, provided that she does not effectively pre distribute the pool of property.  She was entitled to receive and to use the income from the property in China and no circumstance has been identified that adequately justifies the adding back of any such sum.

4. The Wife, by her balance sheet, seeks the notional adding back of a number of items.  Three relate to items described as being in China.

5. Item 15 (investment shares and stocks) is discussed above, being a combination of silver and gold investments.  As indicated previously, the silver investment is currently in existence in the hands of the Husband, albeit undisclosed.  Given this finding, it is not necessary to deal with this amount on a notional basis.  Notional adding back is only necessary as a device to do justice and equity where the asset has been disposed of.

6. The Wife questioned the Husband about statements relating to a gold investment (Exhibit W5).  The current accounts showed insignificant balances.  The Wife accepted elsewhere that she had been told of the disposal of the gold investment in March or April 2015, after the parties had separated.  The Husband stated that he had not included the statements for previous years as between December 2015 and May 2017 there were no transactions.  He explained that he did not provide statements before 2016 because he was not required to.  He said that before that time the parties were together.  It should be observed that this explanation by the Husband is incorrect.  The parties separated in October 2014, the Wife says she was told of the disposal in April 2015, and statements were not provided pre-December 2015.  He also said that an investment was in the Wife’s name, however, it was not made clear which investment or how it related to the gold investment.

7. The failure on the part of the Husband to identify the use of the gold investment, his obfuscation in relation to the worth of that investment (outlined earlier in the discussion), his lack of disclosure regarding the disposal, and his earlier advice to the Wife of the disposal, leads to the inference that the use is an effective pre-distribution being safely drawn.  It was in his hands to explain the use.  Where he has represented to the Wife the intention to put assets out of reach, the absence of such explanation means the inference as to pre-distribution should be drawn.

8. In combination, these matters lead to the conclusion that the pool of assets ought to include both the undisclosed silver investment and the notionally added back gold investment.  The value of the two combined should be taken at the acquisition cost of RMB$700,000.

9. While it may be that their worth has fluctuated since acquisition, the acquisition price is the best evidence available of the current value, and is set in the context of a lack of admissible evidence that there have been fluctuations in value since acquisition.

10. The Wife accepted that she had no evidence of item 16 (items removed from a basement storage area).

11. Item 17 related to gold blocks.  The only evidence of the gold was the Wife’s assertion that the Husband told her that he purchased gold ingots in December 2011, valued at RMB$75,000.  She alleges movement in the market price of gold.  However, at best, the assertion of change in market value must be reliant on a hearsay source and inadmissible.  She accepted that she had no other evidence to establish the existence of the gold blocks.  This evidence has neither the precision described by the wife in relation to the gold and silver investments (the production of the bank statement regarding the money that was used) nor the prevarication exhibited by the husband on questioning. 

12. As to the add-back sought in relation to Suburb D, it ought to be recollected that the property was acquired by the Husband after the parties separated.  To the extent that it used funds from Suburb C, such finds should be accounted for.  To the extent that the Husband profited from the purchase and sale post-separation, his use of such monies does not, of itself, call for a notional adding back of the profit.  Part of the Suburb D proceeds is contained in the balance sheet by virtue of the husband’s motor vehicle.

Cash withdrawals by the Husband

1. The Wife questioned the cash withdrawals made by the Husband both during and after the end of the relationship.  She provided a large number of bank statements to make good her claims of the withdrawals by the Husband.

2. She seeks the adding back of cash withdrawals that she identifies as having been made by the Husband.  The Wife explained the issue in the following manner in her submissions:

   The huge size and frequency of the cash withdrawals that [Mr Xiao] made from July 2014 to October 2017 is not consistent with normal living expenditure.  After separation, [Mr Xiao] withdrew large amounts of cash from three different banks.  In a two-and-a-half year period, [Mr Xiao] withdrew cash of over $112,000 from Westpac, $36,830 from NAB, $60,830 from ANZ.  I only discovered the ANZ cash withdrawals just prior to the final hearing but [Mr Xiao] did not dispute them.[17] 

   These cash withdrawals were made despite [Mr Xiao] using his credit card for daily expenses.  The automatic monthly credit card payments are included in the bank statements that I provided to the court and are an average $3,022 per month.

   The withdrawal of cash was done to make the money inaccessible to the court.

   [Mr Xiao’s] overall explanation for his disposal of the cash is not credible.  For example, he claims to have spent $30,000 during a four weeks holiday to China to visit family in March/April 2015 – a sum of money greater than my total annual taxable income for 2016/2017! (Ref oral evidence on 7 November 2017).

   It is my belief that all or most of the cash withdrawal funds are still available to [Mr Xiao], through a stored cash stockpile and/or by temporarily lodging with a family member.

   [17] At [25]-[28] of the Wife’s affidavit of 13 October 2017.

3. The Wife says that the Husband withdrew cash amounts from his accounts between 4 July 2014 and 31 December 2016 of $112,730 from his Westpac account #29.  The Husband accepted that this was probably the case.  This account was closed in December 2016.

1. The Wife says that further withdrawals were made of approximately $16,800 after the end of the relationship from an NAB Classic Banking account.

2. The Husband also accepted that he had made cash withdrawals between July 2014 and October 2017 from the ANZ account #51, amounting to $60,000.  The Wife says that of this amount $36,830 was in withdrawals between 25 August 2016 and 13 January 2017.  The Husband was asked about a number of these transactions and gave confused and inconsistent answers.  He was unable to distinguish between payments for tickets to China and payment of legal fees.  The transactions were in significant sums, and occurred reasonably proximately to the trial.  His difficulties in identifying the reasons for the withdrawals led to doubts about his credibility in his answers, when contrasted with the certain answers he was able to give for much earlier transactions.

3. The total cash withdrawals made by the Husband from a period of July 2014 until October 2017 was approximately $190,000.  This equates to an average withdrawal of approximately $4,900 per month for 39 months.  As against this, the husband asserted that he made $233,000 between May 2014 and October 2017.[18]  This equates to an average income of $5,682 per month for 41 months.  It was unclear whether this was a net or gross figure.

   [18] At Tables E and F of the husband’s affidavit of 12 October 2017.

4. These withdrawals need to be seen in the context that the husband disclosed a current net after tax income of approximately $1,300 per week in his financial statement of 19 October 2017, as against an expenditure of $1,050 per week (approximately $4,550 per month).  While the Wife alleged that the Husband used one of his three credit cards (for which transaction statements were not provided) to pay for general living expenses, including food, this was not supported.

5. In general terms the use of cash is not inconsistent with the husband’s apparent income.

6. The Husband was cross-examined about a number of transactions, and the fact that on a number of occasions where he said that he had received loans from friends by bank transfer, he said that he had repaid them in cash.  The Wife challenged this evidence and explained the issue as follows:[19]

   [Mr Xiao] claims to have taken loans from his friends [Mr O] and [Mr P] (sic) to the total sum of $70,000 – this money was deposited directly into his bank account.  However, he claims to have repaid the $70,000 in cash in August 2017 but there is no evidence that this money has been retained by his friends.  There was no electronic bank transfer deposit.  I believe that this strategy was used by [Mr Xiao] to hide money from the Court.

   On 7 November 2017 [Mr Xiao] also claimed that he paid $20,030 back to his friend [Mr N] in August 2016 and that his parents paid $1,000 to [Mr N].  However, there is no evidence that shows that [Mr N] received the money.

   [19] In the Wife’s written submission at 4.6; At [30] of the Wife’s affidavit of 13 October 2017.

7. The Husband explained that this cash mode of payment was his friends’ preference and his right.  These answers inspired little confidence in the Husband’s account.  As discussed above, under the heading ‘Disposal of Australian Property’, the cash amounts do not appear to equate to the alleged repayment of loans to Mr P and Mr O.  The Husband has not identified which transactions are supposed to constitute these repayments.  The Husband has provided no proof beyond his assertion of the loans.

8. The loans and the repayments to Mr P and Mr O should not be accepted as proven by the Husband, particularly in the context of his assertion to the Wife that he would put the property out of her reach.  His access to funds is also consistent with the earlier findings relating to the gold and silver investments being used by, or available to, the Husband.

9. The Wife seeks that the cash withdrawal amounts be added back.

10. A number of difficulties arise in respect of these withdrawals and the question of adding back the transactions.  The transactions can be roughly divided into two portions.  One is the transactions that occurred prior to the ending of the parties’ relationship.  The second is those that occurred following separation and leading up to the hearing. 

11. Of those transactions that happened during the relationship the portion attributable to the period of the marriage is not identified.  There is no cogent justification for assigning responsibility to one of the parties nor for now adding back sums spent during the relationship.

12. Of the transactions that occurred following the end of the relationship, a number of observations must be made.  One is that, as a general proposition, following the end of a relationship parties are generally at liberty to conduct their financial affairs independently, provided their use of matrimonial assets does not equate to a premature distribution of that property.

13. The other is the circumstances outlined above that raise concerns that the Husband is engaging in what the Wife claims, being the use of cash to hide his true position.  The evidence was not clear enough to tie this down sufficient to make a definitive finding based on the use of the cash being a pre-distribution of marital assets as opposed to the use of income acquired post separation. However, even if the Wife is correct about the cash, it goes no further than to support the idea that the Husband has other resources than those disclosed, for example, proceeds of the gold investment, or the remaining silver investment. That is, the use of cash, while suspicious in the context of the case, does not add to the findings in relation to the undisclosed silver investment and the added back gold investment.  The unaccepted loans from and repayments to Mr P and Mr O are consistent with there being proceeds from the gold or the silver investments still in existence.  There is not a demonstrated warrant for the adding back of the cash sums in addition to the counting of the gold and silver investments.

14. This means that there should not be an adding back of the cash withdrawals additional to the adding back of the gold investment and identification of the silver investment.

Revised balance sheet

1. The property of the parties can therefore be set out as follows:

Party	Description
W	E Street, City F, China	$267,680
H	G Street, City F China, and Basement in same complex as Husband’s apartment at G Street, City F, China.	$259,768
H’s solicitor	Proceeds of sale of B Street, Suburb C, ACT … (held in solicitor’s trust account)	$26,135.30
H	Motor vehicle 1 (registration number …)	$24,990
H	Motor vehicle 2 (registration number …)	$7,000
W	Motor vehicle 3	Less than 30 per cent of $18,500, i.e. less than       $5,550
W	Total Australian bank accounts	$1,907.18
H	ANZ Access Advantage account	$2,314.97
H	ANZ On-line Saver account	$6,125.57
H	M Bank Precious Metals Investment (including add-back re the gold investment and the undisclosed silver investment)	$140,000           AUD
H	Non-disclosed Australian bank accounts	n/k
Total:	$741,471.02

Party	Description
H	Portion of Suburb C loan used for Suburb D	$42,000

Superannuation
Party	Description	Value
W	K Super Fund	$4,037.34
W	Chinese Super Fund	$2,066.82
H	L Super	$32,891.43
H	Chinese Super Fund	$6,600.00
Total:	$45,595.59

1. The total non-superannuation pool including add-backs is $783,471.02.  Of this the Wife holds $275,137 and the Husband holds $482,199, with a further $26,135.30 held on trust.

2. The total superannuation pool is $45,595.59.  Of this the Wife holds $6,104.16 and the Husband holds $39,491.43.

Evidence as to contributions

1. The Wife gave unchallenged evidence that during the relationship, before the birth of their children, both she and the Husband worked.  She accepted that he received a higher salary than she did.  However, by virtue of her work in the Chinese public service the Wife was also able to acquire an apartment for RMB20,000 in 2003, which the parties were subsequently able to sell for RMB320,000 in 2011.  On her account they combined resources during the relationship.

2. The Husband denies that the Wife had the primary care of the children from their birth.  He says that, because the parties were working, they had assistance, in large part through paid nannies to care for X for much of the period between August 2005 and until September 2013.

3. The Husband alleges that he had sole care of the parties’ son X from January to March 2012, when they first moved to Australia, and before the Wife moved to Australia.

4. The Wife says that she brought about $12,000 to Australia with her that was used for clothing, a plane ticket, fishing and medical treatment for the Wife.

5. The Husband alleges that following separation he had the sole care and support of the children from July 2014 until October 2016.  The Wife disputes the Husband had sole care.  She says that she stayed in the home until October 2014, then in a refuge and had the children during the weekends, although not overnight, with the Husband having them during the week.  From the Wife’s description it may be accepted that the Husband had the bulk of the responsibility for the children during this period.

6. The Wife accepts that October 2016 marked the start of week about care for the children, as by that stage the Wife has obtained suitable accommodation.  Since then the Husband says that the parties share the care equally, although he asserts that he pays in excess of 90 per cent of the child support costs.

7. The Husband asserts that a property settlement agreement was signed by the parties on 2 February 2008.  The document was produced by the Husband, annexed to his affidavit.  On its terms it appears to result in the separation of some assets between the parties and the sharing of others.  By table G the Husband asserted that it had the effect that the parties changed shared assets into assets they each solely owned.  I am unable to determine the binding effect, the purpose, or the relevance of the property settlement agreement.

8. The Husband set out in a table C the earnings of each of the parties from April 1998 until August 2008.  He says that over this period he earned approximately ten times as much as the Wife.  He further set out in table D the earnings of the parties from September 2008 to January 2012, during which time he says that he earnt approximately five times what the Wife earnt.  The table then sets out that in the period January 2012 to April 2014 the parties earned approximately the same amount.

9. The Husband alleges that the Wife did not, while the parties were together in Australia between January 2012 and April 2014, share her income with the family.  He says that while he contributed most of his rental income from his Chinese property to the family, he could not see what the Wife had done with her rental income from China.

10. He says that $30,000 was spent by him on a trip to China in March-April 2015.  At about this time he alleges that a friend from China deposited $31,000 into his account, it being returned to her when she travelled to Australia in July / August 2015.  He says that he provided $10,000 to his parents for a new kitchen.  He asserted that he had a duty to support his parents.  To this end he said that he had paid to his sister, for his parents, $1,000 in 2015 and $5,000 in 2017.

11. He also says that on separation he provided the Wife with $5,000 to “help her settle her life.”

12. Post separation the Husband says his nephew stayed in the Husband’s Chinese property rent free.

13. In table E the Husband asserts that post separation from May 2014 to December 2015 when the parties divorced he earnt approximately $110,000, with the Wife earning approximately $40,000.  In table F, being the period from December 2015 to the swearing of the affidavit, he says he earnt approximately $123,000, with the Wife earning approximately $86,000.

14. In January 2017 the Husband says he spent $5,500 on flooring for the Suburb C property.

15. In April 2017 the Husband says that he borrowed $5,000 from Mr O to travel to China and obtain documents for discovery.  He says that he repaid this in August 2017.

16. In August 2017 the Husband gave $5,000 to his parents and purchased a car.  He produced a document from an auction house setting out that he purchased the vehicle for approximately $25,000.

17. He sets out that he has paid various legal fees.

18. While the Husband had a higher income during the relationship, the nature of the Wife’s employment meant that she was able to acquire property in China to the benefit of the parties.  There is nothing in particular about these different forms of financial contributions that enables me to differentiate qualitatively in the financial contributions.  I am not able to rely on the Husband’s assertion that the Wife did not use her income in a manner of benefit to the family.  His lack of reliability in other areas of his evidence relating to the property of the parties gives little confidence to rely upon his assertions absent support.

19. While he had the primary care of the children for a period of time post separation, after the Wife had left the family home, for a period of about two years from October 2014 to October 2016, again it is difficult to differentiate this contribution to the welfare of the family qualitatively to that of the Wife, who exercised her care of the children under the arduous circumstances of living in a refuge.  It should not be forgotten that her moving into a refuge left the father able to live in the family home with the children, to the benefit of the children.

20. The contributions of the parties should be seen as qualitatively equivalent.

S75(2) matters

1. The parties share the care of the children equally.

2. The Husband notes that he now has an income, after tax, of $2,630 salary and $150 family benefits per fortnight.  As noted above, he does not charge rent for his property in China.  He alleges that the Wife’s after tax income, comprising wages, rental income from China, Child Support and family benefits, is around $2,100-$2,300 per fortnight.  The Husband’s recital of the disparity of their incomes over the duration of the relationship, and following the end of the relationship, speaks strongly to their ongoing difference in capacity to engage in self-support.

3. In reality the Wife undertakes casual work.  Her income is currently reduced because she is studying, and also because of the location of the children’s school, and taking them to school in her week means that she is limited in her ability to work.  The Husband changed the children’s schools without consultation with the Wife in a manner that made transport arrangements easy for him and difficult for the Wife.  Her care of the children of the marriage, while equivalent to that of the Husband, has a significant effect on her ability to derive an income, an effect that is not shared by the Husband.  The Wife’s work is also compromised by a physical injury that she has suffered.

4. The Wife asserted that she also receives some pension income.  She said that this changed depending on what other income she was earning, but averaged at $150 per week.  Her estimate was however demonstrably incorrect.

5. When cross-examined from her bank records, her three most recent payments, spanning three fortnights were $571, $454 and $454.  This represented an average in excess of 50 per cent higher than represented by the Wife.  However, the pension across the previous financial year averaged approximately $203.

6. While this indicated some reliability issues on the part of the Wife understating her income, it also showed that the Wife was in receipt of a low income.  She is in the position of being partially reliant on welfare payments that reduce as she increases her income.  This effect further demonstrates the limited income capacity of the Wife.

7. In her financial statement the Wife set out her weekly rental as $391, based on a monthly rent of $1,564.  The actual sum per week, based on that monthly rent, was close to $360.  Hence the Wife has marginally overstated her rent in her financial statement.

8. These differences lead to some caution in respect of the Wife’s evidence about her income and expenses, in terms of her reliability, but does not cause me to go so far as to find, as was urged by the Husband, that she is a liar.

9. The Wife set out that she receives rental income of $100 per week from her property in China.  The Husband alleged that the Wife’s sister holds the rent.  The Wife denied this and no evidence was brought to support the suggestion that the rent is other than as the Wife sets out in her financial statement.

10. The Wife accepts that she re-partnered in late 2015, with Mr R.  She says that she drives his car, which was bought new in July 2016.  The Wife’s previous car was traded for it, but Mr R paid the balance and the car is in his name.  She denies that she and her partner live together.  No evidence was led to undermine the Wife’s position.

11. The Wife’s income position is significantly inferior to that of the Husband.  Her capacity to achieve a standard of living that is reasonable following the breakdown of the relationship is significantly inferior to that of the Husband.

Discussion

1. The property interests held by the parties have been identified above.

2. During the relationship there was a significant pooling of resources and cooperation in the care and raising of their children.  While they still share that care, the joint cooperation in relation to that, and the cooperation that led to the acquisition of property interests, has come to an end.  Those circumstances point to it being just and equitable to adjust their property interests.

3. As noted above, I am unable to distinguish between the contributions of the parties. The s75(2) factors significantly favour the Wife, as set out above. Throughout their relationship, and following, his ability to derive an income significantly surpassed hers. He continues to work as a public servant in the ACT public service. The Wife works in the service industry. Despite retraining on her part, her prospects remain limited in comparison to his. In this context they will equally share the care of their two children which impacts on the Wife’s capacity to derive an income. This calls for an adjustment in favour of the Wife of the non-superannuation pool of 53 per cent to the Wife and 47 per cent to the Husband (a 6 per cent differential), accompanied by an equalisation of the superannuation pool (as sought by the Wife).

4. The vexing question is how this is to be achieved.  A number of the assets are notionally added back or, by virtue of non-disclosure, unable to be located or described sufficiently to enable an effective order to be made directed to the asset.  This difficulty is accentuated by those assets having either having previously been, or currently being, located in China.  Further, the most substantial assets, being the apartments owned by the parties, are also located in China.

5. This causes limitations in the mode of orders that may be used, restricted, in relation to the overseas interests, to in personam orders directed at the parties.

6. As noted above, the Wife currently holds $275,137 of the total non-superannuation pool, which, including add-backs, is $783,471.02.  The Husband holds $482,199.  A further $26,135.30 is held on trust from the sale of property.

7. A further hurdle appears in relation to the superannuation.  The Wife primarily sought an equalisation of the superannuation.  The total superannuation pool is $45,595.59.  Of this the Wife holds $6,104.16 and the Husband holds $39,491.43.  An equalisation of this pool requires a $17,000 interest to be transferred to the Wife.  There is, however, no evidence to suggest that the trustee is on notice of such a potential outcome.  This precludes the making of a splitting order in relation to the superannuation.  The making of a splitting order is further hampered by a lack of clarity as to the basis upon which the value of the interest was arrived at.  Accordingly, this in turn requires a further adjustment of the non-superannuation interests to effect a just and equitable outcome.

1. Acknowledging that there is a qualitative difference between superannuation and non-superannuation interests, by virtue of the relative inaccessibility of the superannuation interests, the reasonably small amount of superannuation being dealt with here means that the transfer of the same amount in non-superannuation still does justice and equity between the parties.

2. As 53 per cent of the non-superannuation pool is approximately $415,000, this requires a transfer of property to the Wife of $140,000, plus an additional $17,000 in lieu of the superannuation transfer.  This is a payment or transfer of assets in the total of $157,000.  In order to achieve a split as identified above, it is preferable to cause the transfer of assets that are located within Australia as the guarantee of success of the particular orders is higher.

3. Of what is held in the non-superannuation pool in Australia, the Husband holds approximately $8,500 in bank accounts and $32,000 in various motor vehicles.  In the solicitor’s trust account there is approximately $26,000.

4. A transfer of each of these Australian interests to the Wife would total $66,500.  This would require a further payment of $90,500 to be made by the Husband.  Property is available to him for this purpose constituted either by his apartment in China, his silver investment or a combination thereof.  No party identified a restriction in their ability to deal with the apartments that would prevent disposal to fund the payment of orders made by this Court.  It is sensible that some time will need to be allowed in order for this to occur, even though this has not been addressed in evidence.

5. While the Wife sought restraints on the children’s travel to aid in enforcement of the property orders, no application in relation to the children is on foot to enable the making of such an order, even in the event that it could be considered proper.

6. The Wife also sought, as an alternative, the making of orders directed at the income of the Husband in the event of non-payment.  Such an order is premature in the absence of any indication that the Husband would not comply with the orders.  In the event that he does not comply, the occasion may then arise for the consideration of such a mechanism.

I certify that the preceding one-hundred and eighty-one (181) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 10 October 2018.

Associate:

Date:  10 October 2018