FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Wei & Xia (No 5) [2023] FedCFamC1F 679
File number(s): SYC 196 of 2017 Judgment of: HARPER J Date of judgment: 16 August 2023 Catchwords: FAMILY LAW – PROPERTY – Where the husband’s parents have been joined as the Second and Third Respondents (“the parents”) – Finalisation of proceedings delayed caused by COVID-19 – Both wife and husband seek final division of 60 per cent in their favour – Wife seeks transfer to her of three real properties owned by spouse parties as joint tenants – Dispute over inclusion of corporate interest and proceeds from property development project on balance sheet – Factual dispute between parties concerning the source of funds used to acquire properties in Australia – No dispute that in excess of $13 million was transferred from Country F to Australia between 2000 and 2017 – Wife contends husband held senior management positions in family business, that Country F funds were his remuneration or share of profits, and are therefore matrimonial assets – Respondents claim Country F funds were derived from the parents or their corporate interests in Country F – Where parents formed and operated a business in Country F – Wife claimed direct involvement in family company, including full-time work as manager – Findings that wife had no employment role in family business – Findings that husband had failed to disclose exact nature his role in Country F business activities of parents – Parents seek declarations that real properties jointly owned by the spouse parties are held on trust, and transfer of wife’s shares in family company to the mother – Where properties purchased using funds borrowed by the spouse parties – Court holds certain properties held on purchase price resulting trust for the parents in proportion to their contribution – Wife owns 19 out of 100 shares in an Australian company which owns a property in Sydney suburb – Parents own remaining shares – Orders made for wife to transfer shareholding to the mother in exchange for payment of consideration.
FAMILY LAW – PROPERTY – Dispute over spouse parties’ involvement in property development project – Wife contends spouse parties borrowed money from the parents for investment and were subsequently excluded from entitlement to profits – Wife seeks inclusion of profits in the matrimonial pool – Where non-exhaustive discretionary family trust was the direct investor – Wife seeks declaration that family trust is the alter ego of the husband – Where husband and father were original appointors – Amendment subsequently made for father to be sole appointor – Where spouse parties originally included as named beneficiaries – Clear evidence that father had control of family trust, not husband – Trust assets not assets of a party to the marriage – Profits excluded from balance sheet.
FAMILY LAW – PROPERTY – Where parties made several off the plan purchases using funds derived from the parents – Where two deposits were refunded – Where the wife drew money from…
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- Wei & Xia (No 5) [2023] FedCFamC1F 679
- Case
- [2023] FedCFamC1F 679
- Decision Date
CaseChat Overview and Summary
The court meticulously analyzed the evidence and arguments presented by both parties. It found that certain properties were held on trust for the husband's parents, proportional to their financial contributions. The court also ruled that the wife's claims regarding her involvement in the family business and the source of funds used to acquire properties were not substantiated. Furthermore, the court held that the dispositions made by the husband and wife did not defeat any court orders and declined the wife's requests for setting aside certain transfers and variations to the family trust deed. The court also exercised its discretion to completely sever the financial ties between the parties by ordering the sale of all properties and equal division of the proceeds, adjusted slightly in favor of the wife.
In terms of evidence and procedure, the court emphasized the importance of meeting the civil standard of proof and the duty of full and frank disclosure. It noted that the wife had failed to provide critical evidence to support her claims, which affected the credibility of her case. The court also addressed the issue of costs, discharging an earlier costs order due to the complexity and artificial nature of the arguments presented.
Ultimately, the court made comprehensive orders to finalize the property division, enforce trust obligations, and ensure proper disclosure and sale of assets. The orders included declarations regarding the trust holdings of certain properties, mandates for the sale of specified properties, and payments to be made to the parents and the wife. The court also provided guidelines for any future cost applications and dismissed all outstanding applications.
Orders
Orders of the court
THE COURT DECLARES THAT:
1. The Applicant Wife (“wife”) and the First Respondent Husband (“husband”) hold, or at all material times held, on trust for the Second and Third Respondents (“parents”):
(a) 36 per cent of M Street, Suburb N (“M Street”); and
(b) 30 per cent of O Street, Suburb P (“O Street”); and
(c) 29 per cent, being $669,900, of the net proceeds of sale of Q Street Suburb N (“Q Street”).
2. The wife owns 19 of 100 shares in C Pty Ltd (“C Pty Ltd”).
THE COURT ORDERS THAT:
3. Within 60 days, the wife and the husband (“spouse parties”) shall do all acts and things and sign all documents necessary to cause the following properties:
(a) 2 D Street, Suburb E;
(b) M Street; and
(c) O Street
(“the properties”)
to be listed for sale by way of public auction with an agent to be agreed upon between them or, in default of such agreement for more than 14 days, with an agent appointed by the President of the Real Estate Institute of NSW or their nominee (“the agent”) whose decision shall be final and binding upon the parties, in the following manner:
(d) That such auction take place within six weeks from the date of placing the properties for sale by public auction or as soon as possible thereafter;
(e) That the reserve price for such auction shall be as agreed between the spouse parties or failing agreement for more than seven days, as determined by the selling agent, and in that event the parties shall agree to such reserve price;
(f) That the spouse parties shall equally pay all auction expenses as requested by the selling agent as and when they fall due;
(g) That the spouse parties shall do all such acts and things as may be necessary or recommended by the selling agent to properly present the property for sale and make it available for inspection by prospective purchasers;
(h) That any party shall be at liberty to bid for the purchase of the properties at auction;
(i) That the spouse parties shall attend at the auction sale and in the event that the properties are not sold at such auction, then the parties shall if necessary, negotiate with the highest bidder at auction if the reserve price is not reached;
(j) That the wife shall instruct the agent that all communication regarding the sale is to be in writing, or if verbal to be confirmed in writing, and to both parties jointly;
(k) That the spouse parties shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i) Making keys available to the agent;
(ii) Allowing inspection of the properties at all reasonable times requested by the agent;
(iii) Doing or saying nothing to hinder or prevent a sale being effected;
(iv) Ensuring the properties, including the grounds, are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v) Signing all documents requested by the agent in relation to the listing for sale of the properties including but not limited to an agency agreement, except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
(l) That the wife shall instruct such solicitor as is agreed between the parties and failing agreement to be selected by the wife from a list of three solicitors proposed by the husband (“the solicitor”) and the solicitor shall be instructed to include both parties in all communications, and in the absence of the wife making such nomination, the solicitor shall be nominated by the husband; and
(m) That the spouse parties shall each execute a contract for sale in the form prepared by the solicitor having conduct of the sale.
4. In the event any of the properties fails to sell by public auction on the first occasion, such property shall continue to be auctioned (unless otherwise agreed between the parties in writing) at intervals of six (6) weeks or as otherwise recommended by the agent for the best price reasonably obtainable, and for the purposes of any subsequent auction the provisions of Orders 2(e)–(m) shall apply.
5. Upon settlement of the sale of each of the properties, the parties shall do all acts and things and sign all documents as shall be necessary to cause the proceeds of sale to be applied in the following manner and order:
(a) in payment of the costs of and incidental to such sale, including legal costs and disbursements, the agent’s commission, and sale expenses;
(b) in payment of council and water rates and adjustments together with any outstanding strata fees and outgoings;
(c) in reimbursement to either party for any expenses (agreed to in writing between the parties) associated with the sale such as advertising expenses or conveyancing fees;
(d) in discharge of any mortgage registered upon the title;
(e) payment to the parents, or at their direction:
(i) upon settlement of the sale of M Street, an amount equivalent to 36 per cent of the sale price of M Street after the deductions referred to in (a), (b) and (c) above but before discharge of any mortgage referred to in (d);
(ii) upon settlement of the sale of O Street, an amount equivalent to 30 per cent of the sale price of O Street after the deductions referred to in (a), (b) and (c) above but before discharge of any mortgage referred to in (d).
(f) in respect of each property, payment of the balance then remaining equally between the wife and the husband;
(g) from the husband’s share of the balance of the proceeds of sale of either M Street or O Street, whichever is first in time, in payment to the wife of one amount of $9,284.
6. Within 14 days of compliance with Order 5:
(a) the husband and the wife take all necessary steps and execute all necessary documents each to pay to the parents, or at their direction, one half of the following amounts:
(i) $699,000, being the amount held on trust for the parents from the net proceeds of sale of Q Street;
(ii) $77,420, being the refunded deposit arising from the rescinded purchase by the husband and wife of Z Street, Suburb OO;
(iii) $54,000, being the refunded deposit arising from the rescinded purchase by the husband and wife of GG Street, Suburb HH;
(b) the husband pay to the intervenor, V Pty Ltd, the amount of $532,886.72 $492,886.72 together with any interest duly accrued thereon.
7. Except as provided to the contrary by these orders, the wife and the husband shall each:
(a) retain, to the exclusion of the other, all of their right, title and interest in any property, assets, goods or chattels as at the date of these orders;
(b) be responsible for any debts or other liabilities in their name as at the date of these orders.
8. Unless otherwise agreed in writing between the parties, within 28 days of the date hereof, the Third Respondent pay, or cause to be paid, to the wife the amount of $712,500.
9. Simultaneously upon compliance with Order 8, the wife take all necessary steps, including the execution of all necessary documentation, to transfer to the Third Respondent her C Pty Ltd shareholding.
10. Order 9 made on 29 June 2017 17 October 2017, and any accrued, but unsatisfied, liability of the husband pursuant to the said order, be discharged forthwith.
11. Any application seeking an award of costs is to be filed and served with an affidavit in support within 21 days of the date of these orders, and in the event no application is filed within the time specified, there shall be no order as to costs.
12. All outstanding applications be otherwise dismissed.
Background
Background to the litigation
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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