WEI & WEI
[2020] FamCA 38
•31 January 2020
FAMILY COURT OF AUSTRALIA
| WEI & WEI | [2020] FamCA 38 |
| FAMILY LAW – PROPERTY – undefended hearing – inadequacy of evidence to determine totality of property falling for division – funds in a solicitor’s trust account the only remaining property. FAMILY LAW – PRACTICE AND PROCEDURE – Equitable Charge – wrongly described by intervenor as an equitable lien – has wife’s former solicitors owed substantial sums in unpaid fees – former solicitors for the wife asserting a claim by way of solicitor’s equitable lien over amount found due to the wife under s 79 – whether solicitor’s claim properly characterised as a “fruits of judgment” lien – held, no. FAMILY LAW – EVIDENCE – serious deficiencies in husband’s evidence in demonstrating the existence of legal and equitable interests in accordance with Stanford v Stanford principles – proper approach to the division of the only asset in Australia, namely the funds in trust. |
| Child Support (Assessment) Act 1989 (Cth) Foreign Evidence Act 1994 (Cth) Foreign Judgments Act 1991 (Cth) |
| Abalos v Australian Postal Commission (1990) 171 CLR 167 Bevan & Bevan (2013) 49 Fam LR 387 Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 Chang & Su (2002) 29 Fam LR 406 Chester v Cassidy Gibson Howlin (1994) 18 Fam LR 463 Coldham v Coldham [2014] FCCA 2377 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 Cooper v Critchley [1955] Ch 431 Cradock v The Scottish Provident Institution (1893) 69 LT 380, 382 Elias v Mitchell [1972] Ch 652 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 Horton v Jones (1935) 53 CLR 475 Husain v O & S Holdings (Vic) Pty Ltd [2005] VSCA 269 In the Marriage of Ahmad (1994) 18 Fam LR 514 In the Marriage of Scott (1994) 17 Fam LR 420 In the Marriage of Spiteri (2005) 33 Fam LR 109 In the MatterOfPetrolink Pty Ltd, Re; Smith v Bone [2014] FCA 1024 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 Owners of SS Hontestroom v Owners of SS Sagaporack; SS Hontestroom v SS Durham Castle [1927] AC 37 Paxton & Paxton [2016] FCCA 1689 Pell v R [2019] VSCA 186 Russo v Bendigo Bank Ltd [1999] VSCA 108 Stanford v Stanford (2012) 247 CLR 108 Upper Hunter Country District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 |
| Professor Frederick Pollock, An Essay on Possession in the Common Law (1888, Oxford Press) Sir Richard Eggleston, Evidence, Proof and Probability (Weidenfeld and Nicolson, 2nd edition, 1983) 192-193 Sir Thomas Bingham, ‘The Judge as Juror: the Judicial Determination of Factual Issues’ (1985) 38(1) Current Legal Problems E. Sykes and S. Walker, The Law of Securities (Law Book Company, fifth ed 1993) |
| APPLICANT: | Ms Wei |
| RESPONDENT: | Mr Wei |
| INTERVENOR: | J Lawyers Pty Ltd |
| FILE NUMBER: | MLC | 530 | of | 2017 |
| DATE DELIVERED: | 31 January 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | The Honourable Justice Wilson |
| HEARING DATE: | 3 & 4 December 2019 and 6 January 2020 |
| DATE OF LAST SUBMISSION: | 6 January 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Not applicable |
| COUNSEL FOR THE RESPONDENT: | Ms M Clarkin Hardy with Mr R Brear on 3 & 4 December 2019 and 6 January 2020 on Mr J Eley |
| SOLICITOR FOR THE RESPONDENT: | Lawren Legal |
| COUNSEL FOR THE INTERVENOR: | Mr R Smith on 3 & 4 December 2019 and 6 January 2020 on Mr G Holmes |
| SOLICITOR FOR THE INTERVENOR: | J Lawyers Pty Ltd |
Orders
The sum of $113 925.95 being 65% of the amount in the trust account is to be paid forthwith to the respondent.
The applicant is entitled to 35% of the sum in trust, namely $61 344.70.
The sum of $61 344.70 referred to in paragraph 2 above is subject to an enforceable equitable charge in favour of J Lawyers Pty Ltd.
The sum of $61 344.70 is to be paid forthwith from the trust account to J Lawyers Pty Ltd.
This proceeding is otherwise dismissed.
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 Wei & Wei 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 MELBOURNE |
FILE NUMBER: MLC 530 of 2017
| Ms Wei |
Applicant
And
| Mr Wei |
Respondent
And
| J Lawyers Pty Ltd |
Intervenor
REASONS FOR JUDGMENT
Introduction
Since the wife in this litigation departed Australia seemingly permanently, the trial of this proceeding was conducted on an undefended basis, the husband seeking orders under s 79 of the Family Law Act for the division of the remaining property and the intervenor seeking orders for the payment to it of what seemed to be the only property remaining.
In these reasons I interchangeably use the words “applicant” and “wife” to refer to Ms Wei and I use the words “respondent” and “husband” to refer to Mr Wei.
Mr R Smith who appeared for the intervenor on the undefended hearing and Ms Clarkin Hardy who, with Mr R Brear, appeared for the husband acknowledged that the only meaningful property remaining in Australia was the corpus in a controlled account held by the intervenor in the sum of $175 270.67 . On behalf of the respondent counsel argued that pursuant to s 79 of the Family Law Act property division orders should be made so that the whole of the amount in the solicitors’ trust account was disbursed to him. Conversely, on behalf of the intervenor it was argued that the whole of the wife’s entitlement pursuant to property settlement orders under s 79 of the Family Law Act was subsumed by the intervenor by operation of the equitable charge it held in respect of unpaid fees with the consequences that the wife’s share of the division of property should be paid to the intervenor.
Synopsis
For the reasons that follow, in my view the amount held in trust by J Lawyers Pty Ltd should be divided as to 65% to the respondent and as to 35% to the applicant. I declare that of the sum to be divided to the wife the amount of $61 344.70 is subject to an enforceable equitable charge in favour of J Lawyers Pty Ltd and that such sum is to be paid forthwith to J Lawyers Pty Ltd from the trust account held by J Lawyers Pty Ltd.
An undefended trial
On 22 November 2019 this proceeding came before me on the hearing of an interim application by the wife to set aside a notice of discontinuance she filed on 12 August 2019. On that day Mr Gerald Holmes of counsel appeared, instructed by J Lawyers Pty Ltd, the solicitors formerly acting for the wife, the trust account of which holds the proceeds of sale of the former matrimonial home. Mr Holmes sought orders for his instructors to intervene. It was common cause that the wife had returned to China and that she was unlikely to participate in the trial of the proceeding. I made various orders requiring the intervenor to provide a copy of invoices totalling the sum it claimed and for it to do so by a particular date. I also made orders requiring the intervenor to file a statement of facts and contentions by a particular date setting out the factual and legal basis for its assertions. I fixed the proceeding for an undefended trial on 3 and 4 December 2019.
Mr Holmes of counsel provided a helpful document that represented his client’s statement of facts and contentions. Relevantly distilled, the propositions of fact he advanced were as follows –
a)the wife now lives in China and the intervenor previously acted for her;
b)the husband and wife commenced cohabitation in January 2007, they married in China in 2007, they separated on 14 December 2016 and they divorced in 2018;
c)their child who is now 10 years of age lives with the father;
d)the totality of property to be divided was difficult to ascertain;
e)the intervenor has invoiced the wife $133 765.39, which sum remains unpaid; and
f)the intervenor holds in trust the sum of $175 270.67.
The wife did not file an outline of case nor submissions in support of any proposition she advanced in this case. In essence, she abandoned this litigation.
The husband relied on his affidavit made 28 June 2019. That was a long affidavit to which he exhibited a large number of documentary exhibits. He also relied on his affidavit made 20 September 2019 and the extensive number of exhibits to that affidavit. He was not cross-examined.
The intervenor relied on the affidavits of Ms M and the exhibits thereto. She was cross examined.
The husband’s evidence
The respondent addressed several matters in his affidavits. Before addressing the details that emerged from the husband’s affidavit material it is necessary to state at once that having read and re-read (on several occasions) the husband’s affidavit material I was struck by the fact that, overwhelmingly, the husband’s statements about the events to which he deposed, the transactions he discussed and the financial movement of funds that he canvassed was largely uncorroborated. His evidence was extremely vague and imprecise. That level of imprecision has weighed heavily on me because it has affected the degree of persuasion I have reached about the events, transactions and financial movement of funds on which the husband relied by way of proofs in this case.
With that general introduction about his evidence, let me now go to the detail of it.
The following is a balanced summary of the evidence the respondent adduced. Necessarily paraphrased it was –
a)the respondent was 57 and the wife 44 at the date of trial;
b)the respondent was previously married in China and has two adult children of that previous marriage;
c)the respondent and applicant married in China in 2007 and have a son who, at the date of the making of the affidavits was nine years of age;
d)the three moved to Australia in November 2013;
e)between November 2013 and December 2016 the three lived in rented accommodation at an address not given, then later in premises in Suburb D and later still in Suburb B;
f)in December 2016 the husband and wife separated at which time the wife and child remained in the Suburb B property;
g)the husband and wife divorced in 2018;
h)the husband married his third wife in 2018;
i)the husband is the primary carer for the parties’ son;
j)the husband, his third wife, the son and the husband’s child with his third wife now live in rented accommodation in Suburb P; and
k)the applicant in this proceeding now lives permanently in China.
The husband stated in his affidavit made 28 June 2019 that the wife had no property when they met and married. He said that when they met his net asset position was valued at AUD $508 615 made up of real estate, a motor vehicle and savings in a bank account. He gave no verification about the existence or value of any of those items. His statement about the existence and value of the real estate in China, the motor vehicle and the sum in a Chinese bank account was assertion only.
The husband said he and the wife entered into what he described as a prenuptial agreement. He exhibited to his affidavit a copy of the so-called pre-nuptial agreement. It was entirely in Chinese. Two sheets of paper as pages 5 and 6 appeared among the bundle of pages that allegedly made up that exhibit. No explanation of their origin was given. The first was headed “Agreement”.The purported English version of it read as follows –
Parties: Mr Wei (Male)
Ms Wei (Female)
Both parties have reached the following agreement through voluntary negotiation on properties involved in the marriage:
I. All properties owned by each party before marriage shall be still owned by each party.
II. During the existence of the marriage relationship, the respective properties acquired shall also be owned by each party, especially properties, creditor’s rights and debts generated from the enterprises invested by each party and other investments, etc., which have nothing to do with the other party.
III. With regard to important decisions to dispose of properties and generate creditor’s rights & debts that do not arise from the necessity of daily life, both parties shall reach an agreement through equal negotiation. If no agreement can be reached, the doer shall inform the third party of the contents of this agreement. Otherwise, the doer shall assume all liabilities.
This agreement takes effect when both parties register for marriage, with one copy for each party. Both have the same legal effect.
Parties: Ms Wei
Mr Wei
May …, 2007
Whoever the alleged translator was gave no evidence. Nor was there evidence given of the circumstances of the translation, especially whether the words in the English language were faithful translations of the Chinese characters that ran over the four pages that preceded pages 5 and 6. Page 6 of the bundle of pages that made up the so-called pre-nuptial agreement was a document headed “Notarised Letter”. It recorded the following –
(2007) City Q Notarization Civil No. …
Applicants:
Party A, Mr Wei, male, born on … 1962, now lives in R Town, City Q, with ID No. of …
Party B, Ms Wei, female, born … 1975, now lives at T Street, City U, V Province, with ID No. …
Notarized item: Agreement
On May …, 2007, Party A and Party B concluded the aforesaid Agreement by consensus, both parties had the capacities for civil rights and civil conducts stipulated by law when entering into the agreement, and the intentions were expressed truly and the contents of the agreement were clear and legal when both parties signed the agreement.
Based on the facts above, it is hereby certified that Mr Wei and Ms Wei signed the aforesaid Agreement at the notary office on May …, 2007, the signing of both parties was in accordance with the provisions of Article 55 of the General Principles of the Civil Law of the People’s Republic of China, the contents of the agreement were in accordance with the provisions of the Marriage Law of the People’s Republic of China, and the signatures & the fingerprints of both parties were true.
Notary Office of City Q, W Province, People’s Republic of China
The relationship between the notarised letter and the so-called prenuptial agreement was not given in evidence. Neither party made any submissions about whether the document described by the husband as a pre-nuptial agreement complied with the provisions of Part VIIIA of the Family Law Act. I assume therefore that either the parties before me did not turn their minds to those provisions or if they did, they considered that the provisions were irrelevant.
In paragraph 29 of his 28 June 2019 affidavit the husband recorded what he said was the entirety of the property between the applicant and the respondent as at the date of the making of his affidavit. He divided the property there listed into property in Australia on the one hand and property in China on the other. He provided no documentary verification of the property recorded in the table. At all events he stated that in Australia, the property of the parties was made up of the following –
a)$180 020.67 being money held in trust by J Lawyers he said was owned jointly by the husband and wife;
b)$222 689.40 being money held in trust by BB Lawyers he said was owned jointly by the husband and wife; and
c)$177 734 described simply as F Pty Ltd he said was owned solely by the husband.
The entry described as F Pty Ltd was not explained. In the table the husband added the words to the reference to that company “t/a G Pty Ltd”.
The husband did not describe his relationship to F Pty Ltd in detail. He did not exhibit a company search to show the nature of its business, its shareholding and directorship and most importantly, what was represented by the sum of $177 734. If that amount somehow purported to be a share valuation, he did not give the basis of it. If that value somehow purported to be the value of work-in-progress of that company, the basis of it was not given. In any event, it was not said how any amount referable to that company was attributable to the husband. No evidence was adduced by the respondent beyond mere assertion in relation to F Pty Ltd.
In his 28 June 2019 affidavit the husband purported to record property he and the wife owned in China. Before addressing the detail of that property it must at once be pointed out that this court has no power as a matter of private international law, to make orders in relation to land under a foreign sovereignty. That legal principle was espoused by the House of Lords in British South Africa Co v Companhia de Mocambique.[1] The rule has enjoyed such widespread application in Australia I need not dwell to record those cases. They are beyond dispute.
[1] [1893] AC 602
The property the husband alleged to have in China was made up of real property, chattels and choses in action, so he said. He recorded them in the manner described below attributing (without verifying) various amounts to each item of property. They were –
a)real estate in W Province, China said to have been owned by the husband and said to have been valued at AUD $1 260;
b)real estate in CC District, City DD China said to have been owned by the wife and said to have been valued at AUD $799,699;
c)a motor vehicle in China said to have been owned by the wife and said to have been valued at AUD $6 000; and
d)cash-at-bank in China said to have been owned by the wife and said to have totalled AUD $184 581.60.
The husband’s attribution of value of property in China was estimated to be AUD $1 571 984.67. That was an estimate, I hasten to add. It was not verified.
The husband asserted that the parties’ liabilities in China were both joint and several and were made up mainly of their indebtedness to various persons. In the passages below I have canvassed whether and if so to what extent those so-called debts were proved as being enforceable or even likely to be called up for payment. That was relevant because the husband’s counsel made a great deal of the point that the debts were enforceable in Australia under legislation permitting enforcement of foreign debts. At this juncture it may be observed that the provisions of the Foreign Judgments Act address reciprocal arrangements for the registration of a judgment obtained overseas.
At all events, the husband asserted that he and the wife were jointly liable in the sum of AUD1 172,525.60 (a very precise amount) on debts they allegedly owed to Ms X Wei, Mr Y Wei and Mr H. No loan agreements were exhibited to verify the existence of that alleged indebtedness. The alleged creditors did not give evidence in this litigation to say the sum stated by the husband was presently owing nor did they give details of the advance and its terms of repayment, the default and the enforceability of the so-called debt.
The husband stated he personally was liable under a loan said to have been advanced to him of AUD $5 999.99 (an extremely precise amount) by Mr EE. No loan agreement was put in evidence to the effect that he or she was owed any amount by the husband.
The husband alleged that he owed AUD $20 000 to someone called Mr FF. No details were given by Mr FF to verify the existence of or details pertaining to that alleged debt.
The respondent also alleged he owed someone called Mr HH the sum of AUD $10 000. Likewise no details to verify the existence of or details pertaining to that alleged debt were given.
The husband said he owed legal fees to his current solicitors of $30 000. He gave no details.
He estimated the total of the liabilities described above to be AUD $1 238 125.59.
The husband said he had superannuation of $4 448.95.
The husband alleged that the wife was the named beneficiary of four policies of life insurance effected with insurers in China. He said the total sum that the wife would receive under those policies was AUD $206 186. He gave an amount, expressed in Chinese yuan, as being what he called the “insurance amount”. Using the precise policy numbers he identified, the policies described below were what he described as a “financial resources”. The Full Court very recently criticised a trial judge for failing to characterise what the trial judge called “financial resources” as property for the purposes of the Family Law Act in Jabour & Jabour.[2] Such a criticism is valid only so long as the item described is in fact and in law “property”, properly so called. A consideration of that issue in reference to policies of life insurance is given below. The life insurance policies identified by the husband were as follows –
a)Insurance Company 1 for CNY 200 000;
b)Insurance Company 2 for CNY 100 000;
c)Insurance Company 3 for CNY 600 000; and
d)Insurance Company 4 for CNY 100 000.
[2] [2019] FamCAFC 78
Counsel for the husband submitted that each policy of life insurance was valid and that all relevant premiums had been paid so as to render the policies valid and subsisting according to their terms. I have considered those submissions in the passages that follow.
Partial property payments
The husband stated in his affidavit made 28 June 2019 that the wife was paid AUD $140 000 in June 2017 from the sale of two motor vehicles. None of those transfers were verified by documentation. For that matter, in the table on page 9 of 47 of his affidavit the husband identified that the wife owned two vehicles that were sold for amounts totalling AUD $90 000. The husband asserted that the sum of AUD $50 000 was transferred to the wife’s bank account from the husband’s. No bank statements to verify the husband’s assertions were exhibited to his affidavit in relation to his transfer of AUD $50 000.
The husband said a partial property payment of AUD $70 000 was made in his favour in June 2017.
The husband asserted that an amount of more than $30 000 needed to be added back. He stated –
a)the sum of $22 117.09 had been withdrawn from the joint account of the wife and the son between January and June 2017; and
b)the proceeds of the sale of furniture the husband said amounted in his estimation to be $8 000 was appropriated by the wife.
No documents were given in evidence to support either assertion made in the immediately preceding paragraph.
In paragraph 31 of his affidavit the husband offered a collection of unquantified assertions, none of which was supported by documentation. Those included his assertion –
a)he contributed his savings and earnings to the daily living expenses of the family and towards the mortgage payments for all properties he (inferentially, the applicant too) had purchased; and
b)the wife spent his (that was the word he used) money on “expensive jewellery, luxury clothing, shoes and bags for her own benefit”.
The husband gave a confusing account of certain property that went beyond the property he said fell for division in this case. For example, he gave an account of real estate in City GG China that he said was transferred by him to a previous wife prior to his marriage to the applicant. Apparently that parcel of land was transferred from his ex-wife to his son then later that land was on-sold by the respondent’s son. The relevance of that parcel of land was not explained by the husband’s counsel.
As with all items of real estate in this proceeding, the City GG property mentioned by the husband in paragraph 33 of his 28 June 2019 affidavit was not the subject of evidence as to value. Counsel for the husband explained that the parties were at a reasonably advanced stage of resolving this proceeding some months ago and for the purposes of those discussions they agreed among themselves that certain real estate would have a particular value. However, those discussions collapsed prior to the trial and, so counsel for the husband informed me, the parties did not obtain valuation evidence for the purpose of the trial of this proceeding. Counsel for the husband told me the wife then left Australia and has not thereafter participated in this litigation.
In the upshot, there was no valuation evidence in this case. Having raised that fact with Ms Clarkin Hardy of counsel, no application was made to adjourn this proceeding and instead at the request of counsel for the husband the case pressed on as an undefended trial.
The husband spoke of property in W Province China in paragraph 34 of his affidavit. In that and in the ensuing paragraphs of his affidavit the husband said his father purchased property in W Province “as a gift to me”. He did not say that the father in fact gave the husband that real estate. The husband invited me to infer that the husband’s father as donor of a gift actually transferred that land to the respondent pursuant to a gift because the respondent stated in paragraph 34 that the land was registered in the respondent’s name. No documentation giving evidence of any gift of that land was adduced. It was open to me to infer that the respondent became the registered owner of that land at the request of the respondent’s father and that no gift of legal ownership (or its equivalent in China) was made.
No submissions were advanced about the inference the respondent was inviting me to draw. Yet a good deal of learning at the highest level applies to what may and what may not amount to an inference that is open to be drawn in the circumstances of a given case. An analysis of that body of law is necessary because in this case I was not persuaded that the inference the respondent invited me to draw amounted to any more than conjecture. Let me explain.
So far as inferences were concerned, the phrase came from the speech to the House of Lords of Lord Robson in Richard Evans & Co Ltd v Astley[3] (“Richard Evans”). His Lordship’s speech was embraced by the High Court of Australia in Bradshaw v McEwans Pty Ltd (“Bradshaw”). [4] There, the High Court famously held as follows –
Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort where direct proof is not available it is enough in the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture (see per Lord Robson, Richard Evans & Co Ltd v Astley [1911] AC 674 at 687). But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise.[5]
[3] [1911] AC 674, 687
[4] (1951) 217 ALR 1
[5] (1951) 217 ALR 1 at 5
That passage was later adopted by the High Court in Luxton v Vines[6] (“Luxton”). In that case, the High Court pointed out that the evidence gave rise to no more than conflicting conjecture of equal degrees of probability where no affirmative inference of fault could reasonably be drawn.
[6] (1952) 85 CLR 352
Inferences from actual facts that are proved are just as much part of the evidence as are those facts themselves. Citing Lord Robson’s speech in Richard Evans, the High Court so held in Holloway v McFeeters[7] (“Holloway”), a case concerning a claim for damages arising from personal injuries the plaintiff sustained in a motor vehicle collision. In that case, the High Court held that it was reasonably open to the jury to find that the death of the deceased was caused wholly or in part by the negligence of the driver of an unidentified vehicle.
[7] (1956) 94 CLR 470
The 1982 decision of the High Court in Girlock (Sales) Pty Ltd vHurrell[8] (“Girlock”) applied earlier High Court authority in Bradshaw, Holloway and Jones v Dunkel.[9] In Girlock, the High Court held that in civil cases (as is this case) where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference and the circumstances must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is not a mere matter of conjecture.
[8] (1982) 149 CLR 155
[9] (1959) 101 CLR 298
The notion of “circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability”[10] was stated about 10 years ago by the High Court in Trustees of the Property of Cummins (a bankrupt) v Cummins.[11] There, the High Court approved of the statements about inferences in Bradshaw, Luxton, Jones v Dunkel and Girlock. Those authorities were drawn together by Collier J in the context of a takeover in Tinkerbell Enterprises Pty Ltd v Takeovers Panel and Ors.[12]
[10] (1951) 217 ALR 1 at 5
[11] (2006) 227 CLR 278
[12] [2012] FCA 1272
In slightly more strident terms but in a manner nevertheless impeccably reasoned, the Honourable Justice Pagone then of the Federal Court of Australia more recently put the matter in the following terms in J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (“Vaughan Super”)[13] –
Inferences require facts from which an inference is capable of being drawn. That requires that the facts relied upon bear probatively upon those inferences which are sought to be drawn.[14]
[13] [2014] FCA 581
[14] [2014] FCA 581 at [19]
A court must not draw an inference where it is but a choice among rival conjectures. Justice Wigney of the Federal Court of Australia so held in In the Matter of Petrolink Pty Ltd, Re; Smith v Bone.[15] A court must not rely on circumstances that do no more than give rise to conflicting inferences of equal degrees of probability. The Federal Court of Australia has said as much in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission.[16]
[15] [2014] FCA 1024 at [17]
[16] (2007) 162 FCR 466
In Lithgow City Council v Jackson,[17] Crennan J of the High Court held that the inferential process may fall short of certainty but a court is not authorised to choose between guesses, even on the ground that one guess seems more likely than another. A similar proposition was upheld by the Full Court of the Federal Court of Australia in Australian Competition and Consumer Commission v Metcash Trading Ltd.[18] Those authorities and others were surveyed by the Full Court of the Federal Court of Australia in Ashby v Slipper.[19]
[17] (2011) 244 CLR 352 at [94]
[18] (2011) 198 FCR 297 at [31]
[19] (2014) 219 FCR 322 at [71]–[78]
Among the more important matters arising from that review of the authorities bearing upon inferences are those set out below. They are –
a)inferences from actual facts that are proved are just as much part of the evidence as are those facts themselves (Holloway);
b)if circumstances are proved in which it is reasonable to find on the balance of probabilities in favour of the conclusion sought, then though the conclusion may fall short of certainty, it is not to be regarded as mere conjecture or surmise (Richard Evans);
c)it is enough if the circumstances appearing in the evidence give rise to a reasonable and direct inference (Girlock); and
d)a court is not authorised to choose between guesses, even on the ground that one guess seems more likely than another (Lithgow City Council).
Whether the respondent’s father in this case gave the husband a gift of land and if so, whether the husband as donee of that gift became the owner of that land was not proved nor was the value of that land proved.
In short, whatever may have been the factual narrative about the land in W Province, no dollar amount was attributed to it still less was admissible evidence adduced in respect of it.
The husband mentioned in paragraph 35 of his affidavit an apartment described as “the [CC] District property” in City DD China. He said that in January 2009 (that is to say, after the end of his marriage to the applicant), the applicant purchased an investment property in CC District, City DD. He did not exhibit any documentation that recoded the acquisition of that property nor did he produce bank statements that enabled me to verify his assertions that “we paid” (to whomever that was a reference) “a small amount of the purchase price and the balance of around $413 308 was met by a home loan. I paid off the home loan in or about October 2012.”
The husband put in evidence a document marked as exhibit “E2” to his affidavit. Several pages thereafter, all part of the same exhibit to the husband’s affidavit, appeared without explanation of how or what they purported to be. At the foot of each page a stamp bearing the signature, translation date and name of a translator was given. However, nowhere was it stated that the information that appeared in the English language was a faithful translation (or for that matter any translation at all) of the Chinese characters on the many pages that preceded the English words. On page 26 of exhibit E2 the name of the applicant appeared as owner and the address on that page corresponded to the address given by the respondent in paragraph 35 of his affidavit. Beyond that I detected little evidentiary significance from exhibit E2.
The respondent did not put into evidence any documentation to substantiate the amount he said he and the applicant paid to acquire the CC District property nor did he verify the home loan the amount of which he gave in the precise sum of $413 308. He did not give any details of the date, manner or source of funds leading to what he said was his paying off of the home loan in October 2012.
In short, I was not persuaded about any aspect of the respondent’s contentions about the CC District property. I was unable to verify as an authentic official document the document among the pages of exhibit E2. It was not a document of which I was entitled or required to take judicial notice. Plus, no useful evidence was given about the value of that property. The assertions in paragraphs 36 and 37 of his affidavit were not proved.
The respondent addressed real estate in HH District, China. He said he purchased that property in 2007, prior to his marriage to the applicant. Without exhibiting any documentation to support his statement, he said the purchase price for that property was CNY 1 600 000 of which he said he personally paid CNY 320 000 and the balance was funded by a mortgagee. He said that in June 2009 that parcel of land was registered in the joint names of the respondent and the applicant at the applicant’s request. The husband stated he used that property as security for business loans he obtained in 2010 and 2011 and for other purposes in respect of a loan obtained in 213. He said he and the applicant sold that property to a purchaser in August 2014 for the sum of CNY 4 050 000. According to the respondent, the sale of that property was effected by instalments and, so he said, no contract of sale was executed for two years or thereabouts with a view to deferring the payment of stamp duty, that is to say, until September 2016. The husband stated that the purchaser moved into that property in September 2014.
The documentation to support the husband’s version of events in relation to the HH District property was scant, to say the least. No bank documentation was exhibited so as to verify the initial acquisition of that property by the respondent nor was his payment of CNY 320 000 verified. The lender’s advance of the unstated balance was not verified. Exhibit E2 to the husband’s affidavit on page 19 spoke only of the wife’s ownership, not the joint ownership of which the respondent spoke in paragraph 39 of his affidavit. No documents were exhibited to support the loans allegedly obtained and the mortgages allegedly given by way of security for those loans. Bank documentation to show how the purchase price or instalments were paid was not produced. Such documentation as existed about any aspect of that property (exhibit S3, for example, to the respondent’s affidavit) was incomplete and unsigned. The respondent purported to verify some aspect of the sale of that property by producing a translated document that the respondent said was a tax payment certificate. However, the certificate stood in the name of the person who allegedly purchased the property. Precisely how the husband came to be in possession of that document was not given in evidence. It seemed peculiar that the respondent was able to procure from the purchaser of the property the purchaser’s stamp duty documentation yet the respondent could not also obtain an affidavit from that purchaser deposing to the details of the purchase.
Without producing any supporting documents, the respondent asserted that the proceeds of sale of the HH District property were applied by his adult daughter at “our direction” which I infer meant at the direction of the applicant and respondent in the manner described in paragraph 49 in the years 2014 and 2015. He said the total of those disbursements (that included a marriage gift to his daughter, flight tickets for the applicant, the respondent and their son, cash exchanges and other amounts) was CNY 4 050 00 being the same amount referred to in paragraph 43 of his affidavit.
The version of events given by the respondent about the acquisition, sale and mortgage of the HH District property was not persuasive. I do not accept it. No source documentation was put in evidence about it. The amounts involved were not small. The absence of bank documentation was significant as was the absence of documents in the nature of contracts for either the sale or the purchase of that item of real estate. No documents were produced showing how the so-called sale price was disbursed. In my view those statements by the respondent were mere assertions, unverified and unsupported.
In the upshot I was not persuaded on the balance of probabilities that the HH District property described by the respondent was an item of property to be brought to account in this litigation. No amounts were verified so it was not possible to reliably attribute any amount to that item of property nor the application of the proceeds he said totalled CNY 4 050 000.
Commencing from paragraph 51 of his affidavit made 28 June 2019, the respondent stated that between 2012 and 2015 relatives and friends in China transferred to accounts maintained by the applicant and respondent the sum of AUD $1 874 000. He prepared four tables that purported to classify those payments, being –
a)one table that he called table A setting out what he described as “his savings in China and the proceeds of sale of [HH] District ” totalling AUD $701 335.20;
b)another table that he called table B setting out what he described as “loan from [Ms X]” totalling AUD $493 625.60;
c)another table that he called table C setting out what he described as “loan from [Mr Y]” totalling AUD $545 900; and
d)a fourth table that he called table D setting out what he described as “loan from [Mr H]” totalling AUD $133 000.
Ms X and Mr Y are his adult children from his first marriage. He did not say who Mr H was. At all events, the tables purported to record in columns the details of separate transactions. Taking table A first, on each line of that table the husband placed entries that set out a date of the transfer of funds, in some instances the bank account into which the transfer was transferred and the name of the transferor, the Australian dollars or Chinese yuan transferred, the transfer fee or the exchange rate associated with that transfer.
No other information was given about the entries on table A. It was plain enough that the respondent was seeking to demonstrate that he and the applicant had been the recipients of advances made from others and that the entries in table A represented loans from those persons and therefore a liability to them.
Several things must be said about the entries on table A. In no special order they were as follows –
a)the transferee of funds, in other words, the payee of those amount, were not solely the applicant and the respondent and no explanation was given for the inclusion of those other persons on the table;
b)the transfers did not take the form in all instances of a transfer to an identified bank account;
c)in all instances, no verification of the source of any payment was given; and
d)even in circumstances where the payment was not made to a bank account of the payee, in all but one instance a transfer fee was involved.
The husband did not identify the documents he examined in order to prepare the information on table A.
The husband asserted that the entries on table A were derived from two sources. The first he said was his savings in China. The second was the proceeds of sale of the HH District property. The entries on table A, especially under the column “transferor name” did not bear that out. I was unable to ascertain precisely what the entries on table A endeavoured to convey.
Table B was intended to demonstrate payments from the husband’s daughter that, according to paragraph 51 of his affidavit that he said, were advances in the nature of loans. No loan documentation was produced by the husband to verify the existence of any such loan. Recognising that in family arrangements, frequently loans are casual arrangements that consist of little more than a request for funds and a very brief and imprecise discussion about when the advance is to be repaid. Seldom is there evidence about discussions about interest and rarely is the arrangement documented. Conversely, in Ashton v Pratt[20] the Court of Appeal of the Supreme Court of New South Wales held that despite the domestic nature of an arrangement, enforceable contractual relations can in certain circumstances, in fact and in law, be generated. The absence of formality of any description in the arrangement said to be a loan often points to the conclusion that the transaction was not a loan at all. Here, the respondent merely characterised a collection of advances from his daughter as a loan. He gave no information about the date of those discussions, who said what to whom, the specifics of the arrangement including the purpose of the advance, what the repayment obligations were, whether the advances were to be interest free, or the daughter’s expectations about when the substantial amount she advanced was to be returned. The daughter did not give evidence to corroborate the respondent’s contention that the amounts recorded on table B were in fact loans. It seemed to me that if the transactions in table B were characterised as loans, each suffered from an insuperable obstacle, namely the arrangement being void for uncertainty along the lines espoused by the High Court in Upper Hunter Country District Council v Australian Chilling and Freezing Co Ltd.[21]
[20](2015) 88 NSWLR 281
[21] (1968) 118 CLR 429
Going to the detail of the entries on table B, all amounts were said to have been paid into either a Westpac account or into an account with JJ Bank. Yet only four transfers came from Ms X. No bank statements from any transferor or the transferees supported the entries on table B.
Precisely why the respondent asserted that the entries on table B represented loans from his daughter when the transferors who allegedly provided loans went beyond the daughter was not stated. It seemed to me that the respondent was not accurately stating how table B was a tabular representation of advances in the nature of loans from his daughter. I was not persuaded on the balance of probabilities that table B represented the applicant’s and the respondent’s indebtedness to Ms X. I attached no weight to the entries on table B.
The respondent stated in paragraph 51 of his affidavit that he and the applicant were indebted to the respondent’s 34 year old son. He said the extent of that indebtedness was AUD $545 900. He purported to support that assertion by reference to the entries on table C. As with the entries on other tables he produced, the respondent did not give details of the arrangement that underpinned the alleged loans between the respondent and his son. In other words, he did not say how and in what circumstances the respondent and his son first came to discuss any advance of funds, how much, the duration of the arrangements, whether the respondent would pay interest, if so at what rate, whether the proposed loan funds were to be deposited into a bank account or whether any particular tranche of funds was to be by way of cash. The respondent did not exhibit even an email that purported to record any arrangement with the respondent’s son for the advance of any amount. No loan agreement or letter was produced by which it may have been possible to say whether there was in truth an arrangement to verify the respondent’s assertion that the respondent was indebted to his son for the very significant amount of AUD $545 900.
When examining table C several matters emerged that caused me concern. First, the respondent stated in his affidavit that the whole of the amount of AUD $545 900 took the form of loan funds from his son. Yet only one transfer was made by the respondent’s son, according to table C, namely the transfer to the respondent dated 25 June 2014. All other transfers on table C came from persons other than the respondent’s son. And only four transfers recorded on table C were made to the applicant and respondent. All other transfers were made to persons having no apparent connection to this case. No explanation was given of the details of the transferors and of the details of the transferees. I was not persuaded that table C faithfully recorded advances made by the respondent’s son totalling AUD $545 900 to the applicant and the respondent. Nor was I persuaded on the balance of probabilities that table C recorded loans. I was unable to say what table C actually recorded. However, I can say that I was not persuaded that the applicant and respondent owed the respondent’s son, Mr Y, the sum of AUD $545 900.
Table D purported to record details of a loan between the applicant and respondent on the one hand and a person known or described as Mr H on the other. The total recorded on that table was AUD $133 000. The entries on table D consisted of four lines and eight columns per line. The first column on the extreme left was the date. The next column to the right was the name of the transferee. The bank account into which a payment was made was next followed by the transferor’s name. To the right was the amount in Australian dollars, then Chinese yuan, the transfer fee and last, the exchange rate. On 13 November 2013, so table D recorded, Mr H transferred AUD $52 000 to the applicant and the respondent by transferring that amount to the Westpac account. Two other amounts were transferred, one in August 2014 the other in December 2014. As with other amounts described by the respondent as loans, no information accompanied the transfers recorded on table D by which it was possible to assess whether an actual loan was involved. The entries in table D may have been gifts as much as they may have been loans. It fell to the respondent to prove that the entries on table D were loans, in fact and in law. It was not possible for me to reach that conclusion. No information at all was given to explain even the circumstances in which the transfers were made. In any event, the first two lines of table D were identical save for the name of the transferor. It was not possible for me to conclude on the balance of probabilities that table D recorded an indebtedness by the applicant and the respondent to Mr H for AUD $133 000. It follows that I was not persuaded about the alleged indebtedness of the applicant or the respondent or one or other of them to Mr H.
Commencing at paragraph 52 of his affidavit the respondent narrated his version of events about an alleged acquisition of property in what the respondent called “the south eastern suburbs”. The respondent’s evidence of that transaction was so poor as to render it near meaningless. In essence, the respondent stated as follows –
a)in or about July 2012 he and the applicant “purchased a property in the south eastern suburbs” (yet he did not even give an address let alone did he exhibit the contract of sale nor bank transfers evidencing payment);
b)the purchase price was AUD $590 000 with stamp duty;
c)the applicant arranged the purchase with assistance from her relatives (he did not say who nor what form that assistance took);
d)he and the applicant paid around AUD $150 000 from funds transferred from China plus cash they brought to Australia and the balance was provided by way of a home loan (the identity of the lender was not given);
e)he borrowed AUD $94 000 from his daughter Ms X (he did not say why he needed those borrowings);
f)between July 2012 and October 2013 the applicant and respondent borrowed funds from Ms X so as to meet monthly mortgage instalments (he did not say how much or to whom those monthly sums were paid);
g)the respondent repaid some of the home loan (he did not say how much or when, nor did he put in evidence bank documentation to show the fact of and amount of any such payments); and
h)the south east property was sold for $625 000 (no contracts of sale was produced).
As has been mentioned above, it was not possible for me to treat the information given about “the south east property” as “property” for the purposes of the Family Law Act. I say that for several reasons. They include the following –
a)no details of the address of that “property” were given;
b)the contact of purchase was not put into evidence;
c)the actual price paid was not given in evidence;
d)no documents from the relevant conveyancing file were adduced in evidence;
e)the purchase price was not specified with precision;
f)who paid the deposit was not said;
g)how the balance of the purchase price was funded was not stated;
h)the identity of the mortgagee was not given;
i)the security taken by the mortgagee was not identified (whether first or second mortgage security);
j)no bank statements were put in evidence yet in paragraph 56 of his affidavit the respondent said he showed his daughter bank statements;
k)no sale contract was produced when the applicant and respondent allegedly sold the land;
l)details of the sale proceeds were not given in the form of a settlement statement;
m)no details were given about the amount paid to the mortgagee to discharge its mortgagee; and
n)no details were given to show how much in funds were disbursed to the applicant and the respondent.
No title details were given.
I was unable to conclude with any degree of persuasion that the respondent gave reliable evidence about the purchase and sale of real estate somewhere in the south eastern suburbs of Victoria in which he once acquired then sold a legal interest in real estate. In accordance with the High Court’s decision in Stanford v Stanford,[22] I was unable to make any findings about that alleged property.
[22](2012) 247 CLR 108
The respondent also provided a narrative about real property allegedly in Suburb D. He did not give –
a)the name of the vendor from whom he and the applicant purchased the property;
b)whether the property was a free-standing dwelling, an apartment, a flat, duplex or something else;
c)the identity of the mortgagee;
d)any bank statements or other contemporaneous details recording the movement of money to acquire the land; or
e)any details of borrowings from any person to meet mortgage payments.
The amounts involved in the purchase of the Suburb D property were said to have been considerable so it was perplexing why such a paucity in proofs existed on this issue.
The narrative given by the respondent was remarkably bereft of detail. It was as follows –
a)on 11 November 2013 he (I infer also the applicant as he used the pronoun “we”) purchased the property at Suburb D for $2 700 000 and paid $148 000 in stamp duty;
b)the purchase price was funded by $900 000 from funds from China and a loan of $2 000 000;
c)he borrowed money from his son to meet mortgage instalments; and
d)in May 2015 the applicant and respondent sold that real estate for AUD $2 965 000.
The respondent did not produce the contract pursuant to which he sold the Suburb D property. Nor did he account for the way the sale price was disbursed. He simply said “we did not make profit this time” (sic).
The respondent’s account of the purchase and sale of the Suburb D property was not persuasive. It consisted of imprecise assertions as to amounts involved. The identity of the vendor from whom the applicant and respondent acquired the property was not given and the contract of purchase was not put into evidence. A home loan was apparently involved yet all aspects of that loan were omitted. No explanation for that omission was offered. Evidence of the payment of the deposit was omitted. Evidence of settlement was omitted. A copy of the relevant certificate of title could have been, but was not, given. Evidence of the payment of rates was not provided. Evidence of the payment of monthly mortgage instalments was not given beyond the respondent’s assertion that he enlisted support from his daughter to make some of those payments. The daughter could have but failed to give evidence to support the respondent’s assertion but that child failed to give evidence to support the respondent’s assertions about meeting the mortgage payments. For the sale of that parcel of real estate, again, no contract was put into evidence nor was a settlement statement showing how the proceeds of sale were disbursed. The absence of those details was significant, especially in relation to monetary amounts as that went to a consideration of issues pertinent to s 92(4) of the Family Law Act. Accordingly, any finding on matters of contributions by the respondent on the one hand and by the applicant on the other must necessarily be very general having regard to the imprecision of the respondent’s own evidence on point.
The respondent gave evidence between paragraphs 82 and 86 of his affidavit of the acquisition and sale of the land at E Street Suburb B. As with all other property transactions given in evidence by the respondent in this case, his account of the purchase and sale of the Suburb B property was equally imprecise. He stated “we purchased the [Suburb B] property” by which I take it he meant to convey that the applicant and the respondent jointly purchased that parcel of land. He did not produce the contract for that purchase. He said the purchase price was $1 400 000 and that stamp duty of $77 000 was levied on that transaction. He said without a single item of documentary verification that “we paid $370 000” of the purchase price with the balance provided by mortgage finance. Unlike with other transactions, for this transaction he gave the name of the mortgagee, National Australia Bank Limited. He said “all the mortgage repayments came from the proceeds of sale of the [Suburb D] Property”. He did not give any details about the monthly mortgage commitment that was involved in the Suburb B real estate so his comment that the mortgage repayments came from the proceeds of sale of another parcel of land was bereft of detail.
The respondent said that on 20 April 2018 “we sold the [Suburb B] property at the price of $1 490 000”. He said $222 689.40 was held on trust by his former solicitors because the Australian Taxation Office sought over $186 000 in capital gains tax. He said nothing further about how the proceeds of sale of the Suburb B property were disbursed. He did not put into evidence the contract for the sale of the Suburb B property nor did he put into evidence a settlement statement showing the disbursement of funds.
In view of the fact that an amount over $220 000 was held in trust following the sale of the Suburb B property, I accept that objective evidence existed about the sale of that real estate. However, the absence of documentation rendered very difficult the task of obtaining reliable information about the actual sums of money involved in arriving at the sum in trust. Based on the raw information available, a fair distillation of the respondent’s contentions concerning the Suburb B property was as follows –
a)it was purchased for $1 400 000;
b)no details of the mortgage funds were given;
c)$370 000 was paid by the applicant and the respondent for the acquisition of the property;
d)it was sold for $1 490 000; and
e)no details were given of the disbursements of the sale price beyond the quarantining of an amount a little over $222 000 for tax.
Conclusions
For the foregoing reasons, the relief I order is as follows –
a)the sum of $113 925.95 being 65% of the amount in the trust account is to be paid forthwith to the respondent;
b)I declare that the applicant is entitled to 35% of the sum in trust, namely $61 344.70;
c)I declare that the sum of $61 344.70 referred to in the preceding alphabetical subparagraph is subject to an enforceable equitable charge in favour of J Lawyers Pty Ltd;
d)I order the sum of $61 344.70 be paid forthwith from the trust account to J Lawyers Pty Ltd; and
e)I otherwise dismiss this proceeding.
I certify that the preceding two hundred and thirty-five (235) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 31 January 2020.
Associate:
Date: 31 January 2020
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